Note 18 - Employee Benefit Plans

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

18. Employee Benefit Plans

Employee Stock Ownership Plan.

Under the Company’s Amended and Restated Cathay Bank Employee Stock Ownership Plan (“ESOP”), the Company can make annual contributions to a trust in the form of either cash or common stock of the Bancorp for the benefit of eligible employees. Employees are eligible to participate in the ESOP after completing

two

years of service for salaried full-time employees or

1,000

 hours for each of

two

consecutive years for salaried part-time employees. The amount of the annual contribution is discretionary except that it must be sufficient to enable the trust to meet its current obligations. The Company also pays for the administration of this plan and of the trust. The Company has

not

made contributions to the trust since

2004

and does

not

expect to make any contributions in the future. Effective

June 17, 2004,

the ESOP was amended to provide the participants the election either to reinvest the dividends on the Company stock allocated to their accounts or to have these dividends distributed to the participant. The ESOP trust purchased

17,559

shares in

2018,

16,458

shares in

2017,

and

19,377

shares in

2016,

of the Bancorp’s common stock at an aggregate cost of

$706,000

in

2018,

$646,000

in

2017,

and

$600,000

in

2016.

The distribution of benefits to participants totaled

58,988

shares in

2018,

57,014

shares in

2017,

and

103,367

shares in

2016.

As of

December 31, 2018,

the ESOP owned

794,759

shares, or

1.0%,

of the Company’s outstanding common stock.

401

(k) Plan.

In

1997,

the Board approved the Company’s

401

(k) Profit Sharing Plan, which began on

March 

1,

1997.

Salaried employees who have completed

three

months of service and have attained the age of

21

are eligible to participate. Enrollment dates are on the

first

of each month. Participants

may

contribute up to

75%

of their eligible compensation for the year but

not

to exceed the dollar limit set by the Internal Revenue Code. Participants

may

change their contribution election on the enrollment dates. The vesting schedule for the matching contribution is

0%

for less than

two

years of service,

25%

after

two

years of service and from then on, at an increment of

25%

each year until

100%

is vested after

five

 years of service. Effective on

June 

1,

2018,

the Company matches

100%

on the

first

5.0%

of eligible compensation contributed per pay period by the participant, on the

first

day of the following month after

30

days of service. The Company’s contribution amounted to

$3.1

million in

2018,

$2.3

million in

2017,

and

$2.1

million in

2016.

The Plan allows participants to withdraw all or part of their vested amount in the Plan due to certain financial hardship as set forth in the Internal Revenue Code and Treasury Regulations. Participants

may

also borrow up to

50%

of the vested amount, with a maximum of

$50,000.

The minimum loan amount is

$1,000.

Bank-Owned Life Insurance

.

As of

December 31, 2018,

cash surrender value of bank-owned life insurance was

$49.9

million. The Bank is the beneficiary under the policy. In the event of the death of a covered officer, we will receive the specified insurance benefit from the insurance carrier and pay a fixed dollar amount to the beneficiary designated by the officer.