861842--3/16/2010--CATHAY_GENERAL

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Difficult economic and market conditions have adversely affected our industry. We are subject to a memorandum of understanding with the Federal Reserve Bank of San Francisco, or the FRB SF, and the Bank is subject to a memorandum of understanding with the California DFI and the FDIC and we may be subject to further supervisory action by bank supervisory authorities that could have a material negative effect on our business, financial condition, and the value of our common stock. U.S. and international financial markets and economic conditions could adversely affect our liquidity, results of operations, and financial condition. We may be required to make additional provisions for loan losses and charge off additional loans in the future, which could adversely affect our results of operations. The allowance for credit losses is an estimate of probable credit losses. Actual credit losses in excess of the estimate could adversely affect our results of operations and capital. We are subject to extensive laws and regulations and supervision, and may become subject to future laws and regulations and supervision, if any, that may be enacted, that could limit or restrict our activities, may hamper our ability to increase our assets and earnings and could adversely affect our profitability. We may experience goodwill impairment. Liquidity risk could impair our ability to fund operations and jeopardize our financial condition. Our business is subject to interest rate risk and fluctuations in interest rates could reduce our net interest income and adversely affect our business. We have engaged in expansion through acquisitions and may consider additional acquisitions in the future, which could negatively affect our business and earnings. We may in the future engage in FDIC-assisted transactions, which could present additional risks to our business. Inflation and deflation may adversely affect our financial performance. As we expand our business outside of California markets, we will encounter risks that could adversely affect us. Our loan portfolio is largely secured by real estate, which has adversely affected and may continue to adversely affect our results of operations. Our use of appraisals in deciding whether to make a loan on or secured by real property does not ensure the value of the real property collateral. We face substantial competition from larger competitors. The short term and long term impact of the new Basel II capital standards and the forthcoming new capital rules to be proposed for non-Basel II U.S. banks is uncertain. We are dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect our prospects. Managing reputational risk is important to attracting and maintaining customers, investors and employees. Natural disasters and geopolitical events beyond our control could adversely affect us. Adverse conditions in Asia could adversely affect our business. Because of our participation in the TARP Capital Purchase Program, we are subject to several restrictions including restrictions on compensation paid to our executives. Our information systems may experience an interruption or breach in security. Our need to continue to adapt to our information technology systems to allow us to provide new and expanded services could present operational issues and require significant capital spending. Certain provisions of our charter, bylaws, and rights agreement could make the acquisition of our company more difficult. Our financial results could be adversely affected by changes in accounting standards or tax laws and regulations. The price of our common stock may fluctuate significantly, and this may make it difficult for you to sell shares of common stock owned by you at times or at prices you find attractive. Statutory restrictions and restrictions by our regulators on dividends and other distributions from the Bank may adversely impact us by limiting the amount of distributions the Bancorp may receive. State laws and our regulators may restrict our ability to pay dividends. The terms of our outstanding preferred stock limit our ability to pay dividends on and repurchase our common stock and there can be no assurance of any future dividends on our common stock generally. Our outstanding preferred stock impacts net income available to our common stockholders and earnings per common share, and the Warrant as well as other potential issuances of equity securities may be dilutive to holders of our common stock. The issuance of additional shares of preferred stock could adversely affect holders of common stock, which may negatively impact your investment. Our outstanding debt securities restrict our ability to pay dividends on our capital stock. We may need to raise additional capital which may dilute the interests of holders of our common stock or otherwise have an adverse effect on their investment.

Full 10-K form ▸

861842--3/16/2010--CATHAY_GENERAL_BANCORP