Insights by Cathay

Dear Cathay Bank Client,

Last Friday, California regulators closed SVB Financial Group — commonly known as Silicon Valley Bank — and the Federal Deposit Insurance Corporation (FDIC) was appointed as receiver to administer its assets. We assure you that Cathay Bank, with 60 years of sound, prudent operations, is in a strong financial position and your deposits with us are secure.

It is important to know that Cathay Bank and Silicon Valley Bank are very different banks, with distinct business models and levels of risk. Silicon Valley Bank’s investment portfolio was more than 55% of the total assets with high concentration on lower yielding Treasuries and long-term mortgage back securities, whereas Cathay Bank’s investment portfolio is only 7% of our total assets with no exposure to cryptocurrencies. In addition, Silicon Valley Bank’s deposit base was heavily concentrated in riskier technology businesses, start-ups, and venture capital with very large balances. Cathay Bank’s deposit base is much more granular and is well-diversified in consumer and- small-medium businesses, with little exposure to the technology industry. In fact, 96% of our deposit accounts have less than $250,000 in balance and well within the FDIC insured limit. This diversification reduces our exposure to any one client or industry and helps ensure that Cathay Bank is well-positioned to serve you even as conditions in the economy change. This prudent approach has served us well for more than 60 years and is a core part of our plan to serve our clients for the next 60 years and beyond.

Cathay Bank has a strong balance sheet, ample access to cash, reliable access to capital, and a disciplined approach to managing risk.

• Strong financial footing: Cathay Bank achieved record annual net income of $360.6 million for 2022, with significant year-over-year earnings growth and an expanded net interest margin. Our strong performance underpins our ability to access capital and better positions Cathay Bank to serve clients.
• Robust balance sheet and ample liquidity: Cathay Bank has ample liquidity on the balance sheet and high levels of the capital banking regulators require. Our Tier 1 Capital Ratio is 12.75% compared to the minimum requirement of 8.5% and our Tier 1 Leverage Ratio is 10.53% compared to the minimum requirement of 4.0%. Additionally, on Sunday the United States Federal Reserve Board announced a new Bank Term Funding Program, which enhances access to liquidity across the banking system and bolsters its capacity to safeguard deposits.
• Prudently Managed Securities Portfolio: Cathay Bank does not have any securities in the “held to maturity” status and unrealized losses in the Bank’s securities portfolio have already been reflected in our book value. 

You can continue to bank with us with the knowledge that your money is safe. We thank you for trusting us for your banking needs, and we look forward to continuing to serve as your bank of choice. Please do not hesitate to reach out to your usual Cathay Bank representative if there is anything we can do to assist you.

Thank you.

Chang M. Liu

President & Chief Executive Officer