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Table of Contents

As filed with the Securities and Exchange Commission on March 30, 2015

Registration No. 333-            


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



CATHAY GENERAL BANCORP
(Exact name of registrant as specified in its charter)



Delaware
(State or other jurisdiction of
incorporation or organization)
  6022
(Primary Standard Industrial
Classification Code Number)
  95-4274680
(I.R.S. Employer
Identification Number)

777 North Broadway
Los Angeles, California 90012
(213) 625-4700
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)



Lisa L. Kim
SVP, General Counsel and Secretary
Cathay General Bancorp
777 North Broadway
Los Angeles, California 90012
(213) 625-4700
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)



David E. Shapiro, Esq.
Brandon C. Price, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
(212) 403-1000
  Jentai Tsai
Asia Bancshares, Inc.
135-34 Roosevelt Avenue
Flushing New York 11354
(718) 961-9898
  P.L. Lamb, Esq.
Steven Godsberg, Esq.
Lamb & Barnosky, LLP
534 Broadhollow Road, Suite 210
Melville, NY 11747
(631) 694-2309



Approximate date of commencement of the proposed sale of the securities to the public:
As soon as practicable after this Registration Statement becomes effective and upon completion of the Merger described in the
enclosed proxy statement/prospectus.

           If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

           If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

           If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

           Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o
(Do not check if a
smaller reporting company)
  Smaller reporting company o

           If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

CALCULATION OF REGISTRATION FEE

               
 
Title of each class of securities
to be registered

  Amount to be
registered(1)

  Proposed maximum
offering price per
unit

  Proposed maximum
aggregate offering
price(2)

  Amount of
registration fee(3)

 

Common Stock, par value $0.01 per share

  3,465,000   Not Applicable   $20,996,050   $2,439.74

 

(1)
Represents the estimated maximum number of shares of the Registrant's common stock estimated to be issued in connection with the merger described herein based upon the number of shares of Asia Bancshares common stock, par value $10 per share, outstanding as of March 27, 2015.

(2)
Based on the aggregate book value of the shares of Asia Bancshares, Inc. equity securities to be cancelled in the merger described herein as of March 27, 2015, the last practicable date prior to the date of the filing of this registration statement, reduced by estimated cash to be paid per Rule 457(f)(3). Asia Bancshares, Inc. is a private company and no market exists for its equity securities.

(3)
Determined in accordance with Section 6(b) of the Securities Act by multiplying the estimated aggregate offering price of the securities to be registered by 0.0001162.

           The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such dates as the Commission, acting pursuant to said Section 8(a), may determine.

   


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Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document shall not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

PRELIMINARY—SUBJECT TO COMPLETION—DATED MARCH 30, 2015

GRAPHIC

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

[            ], 2015

Dear Asia Bancshares Shareholders:

         The board of directors of Asia Bancshares, Inc. (which we refer to as Asia Bancshares), has agreed to a merger of Asia Bancshares with and into Cathay General Bancorp (which we refer to as Cathay). The details of the merger are set forth in the Agreement and Plan of Merger, dated as of January 20, 2015, as amended on March 9, 2015, and as it may be further amended from time to time, between Cathay and Asia Bancshares, Inc. (which we refer to as the merger agreement). Simultaneously with the merger, Asia Bancshares' bank subsidiary, Asia Bank will merge with and into Cathay's bank subsidiary, Cathay Bank.

         If the merger is completed, shareholders of Asia Bancshares will receive aggregate merger consideration of approximately $126 million, subject to adjustment pursuant to the merger agreement. The merger consideration to be received per share of Asia Bancshares common stock, which we refer to as the per share merger consideration, will be calculated by dividing the aggregate merger consideration by the number of shares of Asia Bancshares common stock outstanding immediately prior to the effective time of the merger. Therefore, the precise amount of the aggregate merger consideration and the resulting per share merger consideration will not be known until shortly before the closing of the merger.

         Shareholders of Asia Bancshares will be entitled to elect to receive, subject to proration, for each share of Asia Bancshares common stock that they own (other than shares owned by Cathay or Asia Bancshares, or by shareholders that have asserted and not withdrawn dissenter's rights in accordance with the New York Business Corporation Law), the per share merger consideration in cash or shares of Cathay common stock. Based on these elections, between 45% to 55% of the outstanding shares of Asia Bancshares common stock will receive Cathay common stock as merger consideration and the remainder will receive cash; however if the average closing price of Cathay common stock (as defined below) is lower than $20, then 41% of the value of the aggregate merger consideration as measured at closing will be payable in Cathay common stock. The number of shares of Cathay common stock that will be received in respect of the per share merger consideration will be equal to the exchange ratio. The exchange ratio is calculated by dividing the per share merger consideration by the volume weighted average price per share of Cathay common stock on the Nasdaq Global Select Market, on each of the 10 consecutive trading days ending on the fifth trading day prior to the date of the merger, which we refer to as the Cathay average closing price. However, if the Cathay average closing price is less than $20, the exchange ratio is the per share merger consideration divided by $20 and if the Cathay average closing price is greater than $27, the exchange ratio is the per share merger consideration divided by $27. Cathay's common stock is traded on The NASDAQ Global Select Market under the symbol "CATY." On January 20, 2015, the last trading day prior to the announcement of the merger, the last reported sale price of Cathay common stock on The NASDAQ Global Select Market was $23.38. On [            ], 2015, the most recent practicable date prior to the printing of this proxy statement/prospectus, the last reported sale price of Cathay common stock on The NASDAQ Global Select Market was $[            ]. We urge you to obtain current stock price quotations for Cathay common stock.

         The merger cannot be completed unless shareholders holding not less than two-thirds of the shares of Asia Bancshares common stock outstanding as of the close of business on [            ], 2015, the record date for the special meeting, vote in favor of the adoption of the merger agreement at the special meeting. The special shareholders' meeting will be held on [            ], 2015 at [      ] a.m., local time, at [            ]. Failure to vote will have the same effect as voting against the adoption of the merger agreement. If you sign and return your proxy card without specifying your vote, your shares will be voted in favor of the approval of the merger.

         The Asia Bancshares board of directors has carefully considered the merger and the terms of the merger agreement and believes that the terms of the merger are fair, advisable and in the best interest of Asia Bancshares and its shareholders. Accordingly the Asia Bancshares board of directors unanimously recommends that Asia Bancshares shareholders vote "FOR" adoption of the merger agreement. In considering the recommendation of the board of directors of Asia Bancshares, you should be aware that certain directors and executive officers of Asia Bancshares and Asia Bank will have interests in the merger that may be different from, or in addition to, the interests of Asia Bancshares shareholders generally. See the section entitled "Interests of Certain Persons in the Merger" beginning on page [      ] of the accompanying proxy statement/prospectus.

         The proxy statement/prospectus describes the merger agreement, the merger and the documents related to the merger. In addition to being a proxy statement of Asia Bancshares, this proxy statement/prospectus is also the prospectus of Cathay for the Cathay common stock that will be issued in connection with the merger. Please read carefully the entire proxy statement/prospectus, including the section entitled "Risk Factors" beginning on page [    ], for a discussion of the risks relating to the proposed merger, and the Appendices and documents incorporated by reference.

  On behalf of the board of directors,

 

Jentai Tsai

  Chairman of the Board and Chief Executive Officer

         Neither the Securities and Exchange Commission nor any state securities commission, has approved or disapproved the merger, the securities to be issued in the merger or the other transactions described in this document or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

         The securities to be issued in the merger are not savings or deposit accounts or other obligations of any bank or non-bank subsidiary of either Cathay General Bancorp or Asia Bancshares, Inc., and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

         The date of this proxy statement/prospectus is [            ], 2015 and it is first being mailed or otherwise delivered to Asia Bancshares shareholders on or about [            ], 2015.


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ASIA BANCSHARES, INC.
135-34 Roosevelt Avenue
Flushing, New York 11354


NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO THE SHAREHOLDERS OF ASIA BANCSHARES:

        A special meeting of shareholders of Asia Bancshares will be held on [                        ], 2015 at [                            ], local time, at [                            ]. The special meeting is being held to consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of January 20, 2015, as amended by amendment no. 1 on March 9, 2015, and as it may be further amended from time to time, between Cathay General Bancorp, a Delaware corporation, and Asia Bancshares, Inc., a New York corporation.

        The record date for the special meeting is [                        ], 2015. Only holders of record of Asia Bancshares common stock at the close of business on the record date are entitled to notice of, and to vote at, the special meeting. All shareholders of record as of that date are cordially invited to attend the special meeting in person. Adoption of the merger agreement requires the affirmative vote of the holders of not less than two-thirds of the shares outstanding and entitled to vote thereon at the Asia Bancshares special meeting. As of the record date, there were [            ] shares of Asia Bancshares common stock outstanding and entitled to vote at the special meeting.

        Asia Bancshares' board of directors has unanimously approved the merger agreement, has determined the merger agreement and the transactions contemplated thereby, including the merger, are in the best interests of Asia Bancshares and unanimously recommends that Asia Bancshares shareholders vote "FOR" adoption of the merger agreement. In considering the recommendation of the board of directors of Asia Bancshares, you should be aware that certain directors and executive officers of Asia Bancshares and Asia Bank will have interests in the merger that may be different from, or in addition to, the interests of Asia Bancshares shareholders generally. See the section entitled "Interests of Certain Persons in the Merger" beginning on page [      ] of the accompanying proxy statement/prospectus.

        Under the New York Business Corporation Law, (hereinafter "NYBCL"), holders of record of Asia Bancshares who do not vote in favor of the adoption of the merger agreement have the right to seek and obtain payment of the fair value of their shares if the merger is completed, but only if they follow the procedures and satisfy the conditions prescribed by the NYBCL. A copy of the applicable statutes regarding dissenters' rights is attached as Appendix D to the accompanying proxy statement/prospectus. For an explanation of your dissenters' rights and how to exercise them, please see the discussion under the heading "The Merger—Dissenters' Rights" beginning on page [      ].

        Your vote is very important, regardless of the number of shares of Asia Bancshares that you own. If you do not vote your shares, it will have the same effect as voting against the merger.

        The enclosed proxy statement/prospectus describes the special meeting, the merger, the documents related to the merger and other related matters. We urge you to read the proxy statement/prospectus, including any documents incorporated in the proxy statement/prospectus by reference, and its appendices carefully and in their entirety.

        Whether or not you plan to attend the special meeting, please complete, sign, date and promptly return the accompanying proxy using the enclosed envelope. If you attend the special meeting and vote in person, your vote by ballot will revoke any proxy previously submitted.

    By Order of the Board of Directors,

 

 

Jentai Tsai
Chairman of the Board and Chief Executive Officer

Flushing, New York
[                            ], 2015


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REFERENCES TO ADDITIONAL INFORMATION

        This proxy statement/prospectus incorporates important business and financial information about Cathay from other documents filed with the U.S. Securities and Exchange Commission, or SEC, that are not included in or delivered with this proxy statement/prospectus. For a listing of documents incorporated by reference into this proxy statement/prospectus, please see the section entitled "Where You Can Find More Information" beginning on page [    ] of this proxy statement/prospectus. You can obtain any of the documents filed with the SEC by Cathay at no cost from the SEC's website at http://www.sec.gov. You may also request copies of these documents, including documents incorporated by reference in this proxy statement/prospectus, at no cost by contacting Cathay General Bancorp at the following address:

Cathay General Bancorp
777 North Broadway
Los Angeles, California 90012
(213) 625-4700

        You will not be charged for any of these documents that you request. To obtain timely delivery of these documents, you must request them no later than five business days before the date of the special meeting. This means that Asia Bancshares shareholders requesting documents must do so by [            ], 2015, in order to receive them before the special meeting.

        In addition, if you have questions about the merger or the Asia Bancshares special meeting, need additional copies of this proxy statement/prospectus or need to obtain proxy cards or other information related to the proxy solicitation, you may contact Jeffrey Hsu at the following address and telephone number:

Asia Bancshares, Inc.
135-11 Roosevelt Avenue
Flushing, New York 11354
Telephone number (718) 961-9898

        Asia Bancshares does not have a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, is not subject to the reporting requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and accordingly does not file documents or reports with the SEC.



TABLE OF CONTENTS

 
  Page  

QUESTIONS AND ANSWERS ABOUT THIS DOCUMENT AND THE MERGER

    1  

SUMMARY

   
9
 

SELECTED HISTORICAL FINANCIAL DATA OF CATHAY

   
18
 

SELECTED HISTORICAL FINANCIAL DATA OF ASIA BANCSHARES

   
19
 

MARKET VALUE OF CATHAY COMMON STOCK

   
20
 

MARKET VALUE OF ASIA BANCSHARES COMMON STOCK

   
21
 

FORWARD-LOOKING STATEMENTS

   
22
 

RISK FACTORS

   
23
 

ASIA BANCSHARES SPECIAL MEETING OF SHAREHOLDERS

   
29
 

Date, Time, Place

   
29
 

Matters to Be Considered

   
29
 

Recommendation of Asia Bancshares' Board of Directors

   
29
 

Record Date; Shares Outstanding and Entitled to Vote

   
29
 

Quorum

   
29
 

Vote Required

   
29
 

Voting of Proxies; Incomplete Proxies

   
30
 

Revocability of Proxies and Changes to an Asia Bancshares Shareholder's Vote

   
30
 

Solicitation of Proxies

   
30
 

Attending the Meeting

   
31
 

Assistance

   
31
 

THE MERGER

   
32
 

Background of the Merger

   
32
 

Asia Bancshares' Reasons for the Merger; Recommendation of Asia Bancshares' Board of Directors

   
34
 

Opinion of Asia Bancshares' Financial Advisor

   
37
 

Asia Bank Group Members

   
41
 

Certain Asia Bancshares' Unaudited Prospective Financial Information

   
46
 

Structure of the Merger

   
47
 

Merger Consideration

   
47
 

Adjustments

   
48
 

Election Procedure

   
49
 

Allocation Calculation

   
51
 

Regulatory Approvals Required for the Merger

   
52
 

Board of Directors, Management and Operations After the Merger

   
54
 

i


 
  Page  

Nasdaq Listing

    54  

Material United States Federal Income Tax Consequences of the Merger

   
54
 

Accounting Treatment

   
57
 

Dissenters' Rights

   
57
 

Interests of Certain Persons in the Merger

   
60
 

THE MERGER AGREEMENT

   
62
 

Explanatory Note Regarding the Merger Agreement

   
62
 

Structure of the Merger

   
62
 

Effective Time

   
63
 

Organizational Documents

   
63
 

Conduct of Business Prior to Effective Time

   
63
 

Regulatory Matters

   
66
 

Cathay Covenants Relating to Employee Matters

   
66
 

Indemnification and Insurance

   
67
 

Non-Solicitation

   
67
 

Company Adverse Recommendation Change

   
69
 

The Special Meeting

   
70
 

Conditions to the Merger

   
71
 

Termination

   
72
 

Termination Fee

   
73
 

Representations and Warranties

   
73
 

VOTING AND SUPPORT AGREEMENTS

   
75
 

COMPARISON OF CATHAY COMMON STOCK WITH ASIA BANCSHARES COMMON STOCK

   
76
 

INFORMATION ABOUT CATHAY

   
85
 

INFORMATION ABOUT ASIA BANCSHARES

   
85
 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ASIA BANCSHARES

   
88
 

WHERE YOU CAN FIND MORE INFORMATION ABOUT CATHAY

   
102
 

LEGAL MATTERS

   
104
 

EXPERTS

   
105
 

INDEX TO ASIA BANCSHARES' FINANCIAL STATEMENTS

   
F-1
 

 

APPENDIX A:

 

AGREEMENT AND PLAN OF MERGER AND AMENDMENT NO. 1

APPENDIX B:

 

THE KAFAFIAN GROUP, INC. FAIRNESS OPINION, DATED JANUARY 20, 2015

APPENDIX C:

 

FORM OF VOTING AGREEMENT

APPENDIX D:

 

NYBCL APPRAISAL STATUTES

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QUESTIONS AND ANSWERS ABOUT THIS DOCUMENT AND THE MERGER

        The following questions and answers are intended to briefly address some commonly asked questions that you may have regarding the merger and the Asia Bancshares special meeting. We urge you to read carefully the remainder of this proxy statement/prospectus because the information in this section does not provide all of the information that might be important to you with respect to the merger and the Asia Bancshares special meeting. Additional important information is also contained in the documents incorporated by reference into this proxy statement/prospectus. See "Where You Can Find More Information" beginning on page [      ] of this proxy statement/prospectus.

        References in this proxy statement/prospectus to "Asia Bancshares" refer to Asia Bancshares, Inc., a New York corporation. References in this proxy statement/prospectus to "Cathay" refer to Cathay General Bancorp, a Delaware corporation. Unless the context otherwise requires, references to Asia Bancshares and Cathay will include such entities' respective subsidiaries and affiliates.

Q:
What is the purpose of this proxy statement/prospectus?

A:
This document serves both as a proxy statement of Asia Bancshares and as a prospectus for Cathay common stock. As a proxy statement, it is being provided to you by Asia Bancshares, because the board of directors of Asia Bancshares is soliciting your proxy to vote to approve the proposed merger of Asia Bancshares with and into Cathay. As a prospectus, it is being provided to you by Cathay, because Cathay is offering shares of its common stock in connection with the merger.

This proxy statement/prospectus includes important information about the merger, the merger agreement, a copy of which is attached as Appendix A to this proxy statement/prospectus and the special meeting. Asia Bancshares shareholders should read this information carefully and in its entirety. The enclosed voting materials allow shareholders to vote their shares without attending the special meeting in person.

Q:
When and where will the special meeting take place?

A:
Asia Bancshares will hold a special meeting of its shareholders on [                    ], 2015 at [            ] a.m., local time, at [            ].

Q:
What constitutes a quorum for the special meeting?

A:
The presence at the special meeting, in person or by proxy, of holders of a majority of the outstanding shares of Asia Bancshares common stock entitled to vote at the special meeting will constitute a quorum for the transaction of business. Abstentions will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.

Q:
Does my vote matter?

A:
Yes. The merger cannot be completed unless the merger agreement is adopted by the Asia Bancshares shareholders. For shareholders, if you fail to submit a proxy or vote in person at the special meeting, or vote to abstain, this will have the same effect as a vote "AGAINST" the adoption of the merger agreement.

Q:
What is the vote required to approve the merger agreement at the special meeting?

A:
Adoption of the merger agreement requires the affirmative vote of the holders of two-thirds of the outstanding shares of Asia Bancshares common stock as of the close of business on [                    ],

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Q:
How do I vote?

A:
To vote, please indicate on the enclosed proxy card how you want to vote and then sign, date and mail your proxy card in the enclosed envelope as soon as possible so that your shares will be represented at the special meeting.

Q:
What happens if I return my proxy but do not indicate how to vote my shares?

A:
If you sign and return your proxy card, but do not provide instructions on how to vote your shares, your shares will be voted "FOR" adoption of the merger agreement. If you return an unsigned proxy card, your proxy will be invalid, and your shares will not be voted at the special meeting.

Q:
How does the Asia Bancshares board of directors recommend that I vote at the special meeting?

A:
The board of directors of Asia Bancshares unanimously recommends that Asia Bancshares shareholders vote "FOR" the adoption of the merger agreement. See the section entitled "The Merger—Recommendation of the Asia Bancshares Board of Directors; Asia Bancshares' Reasons for the Merger" beginning on page [      ] of this proxy statement/prospectus.

Q:
Can I change my vote after I have mailed my signed proxy card?

A:
Yes. You may revoke any proxy at any time before it is voted by (1) signing and returning a proxy card with a later date, (2) delivering a written revocation letter to Asia Bancshares' corporate secretary, or (3) attending the special meeting in person, notifying the corporate secretary and voting by ballot at the special meeting. Attendance at the special meeting will not automatically revoke your proxy. A revocation or later-dated proxy received by Asia Bancshares after the vote will not affect the vote. Asia Bancshares' corporate secretary's mailing address is Asia Bancshares, Inc., 135-34 Roosevelt Avenue, Flushing, New York, Attention: Tom W.H. Yuan, Corporate Secretary.

Q:
What if I abstain from voting?

A:
If you fail to vote or mark "ABSTAIN" on your proxy, it will have the same effect as a vote "AGAINST" the proposal.

Q:
Can I attend the special meeting and vote my shares in person?

A:
Yes. All shareholders of record are invited to attend the special meeting and can vote in person at the special meeting. If you are not a shareholder of record, you must obtain a proxy, executed in your favor, from the record holder of your shares, to be able to vote in person at the special meeting. If you plan to attend the special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership. In addition, you must bring a form of personal photo identification with you in order to be admitted. Asia Bancshares reserves the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification. The use of cameras, sound recording equipment, communications devices or any similar equipment during the special meeting is prohibited without Asia Bancshares' express written consent.

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Q:
Are there any voting agreements in place with Asia Bancshares shareholders?

A:
Yes. Certain directors and executive officers of Asia Bancshares and their family members who beneficially own in the aggregate 622,868.94 shares of Asia Bancshares common stock, which represents approximately [      ]% of the outstanding shares of Asia Bancshares as of the record date, have entered into voting agreements with Cathay in the form attached to this proxy statement/prospectus as Appendix B pursuant to which they, solely in their capacity as shareholders of Asia Bancshares, will agree to vote all of their shares of Asia Bancshares common stock in favor of the merger agreement. These voting agreements will terminate if the merger agreement is terminated.

A copy of the form of voting and support agreement is attached as Appendix B to this proxy statement prospectus.

Q:
What will Asia Bancshares shareholders receive in the merger?

A:
If the merger is completed, shareholders of Asia Bancshares will receive aggregate merger consideration of approximately $126 million, subject to adjustment pursuant to the merger agreement. See "The Merger Agreement—Adjustments to Aggregate Merger Consideration." The merger consideration to be received per share of Asia Bancshares common stock, which we refer to as the per share merger consideration, will be calculated by dividing the aggregate merger consideration by the number of shares of Asia Bancshares common stock outstanding immediately prior to the effective time of the merger. Therefore, the precise amount of the aggregate merger consideration and the resulting per share merger consideration will not be known until shortly before the closing of the merger.

Shareholders of Asia Bancshares (other than shares owned by Cathay or Asia Bancshares, or by shareholders that have asserted and not withdrawn dissenters' rights in accordance with the NYBCL) will be entitled to elect to receive, subject to proration, the per share merger consideration in cash or shares of Cathay common stock for each share of Asia Bancshares common stock that they own. Based on these elections, between 45% to 55% of the outstanding shares of Asia Bancshares common stock will receive Cathay common stock as merger consideration and the remainder will receive cash; however if the average closing price of Cathay common stock (as defined below) is lower than $20, then 41% of the value of the aggregate merger consideration, as measured at closing, will be payable in Cathay common stock. The number of shares of Cathay common stock that will be received in respect of the per share merger consideration will be equal to the exchange ratio. The exchange ratio is calculated by dividing the per share merger consideration by the volume weighted average price per share of Cathay common stock on the Nasdaq Global Select Market, on each of the 10 consecutive trading days ending on the fifth trading day prior to the date of the merger, which we refer to as the Cathay average closing price. However, if the Cathay average closing price is less than $20, the exchange ratio is the per share merger consideration divided by $20 and if the Cathay average closing price is greater than $27, the exchange ratio is the per share merger consideration divided by $27.

For illustrative purposes only, if there are no adjustments to the $126 million aggregate merger consideration, the number of shares of Asia Bancshares at closing is the same as on [            ], the most recent practicable date before the mailing of this proxy statement/prospectus, and the Cathay average closing price is equal to the closing price of Cathay common stock on [            ], the most recent practicable date before the mailing of this proxy statement/prospectus, each Asia Bancshares shareholder would be entitled to receive either $[            ] in cash or [            ] shares of Cathay common stock per share of Asia Bancshares common stock. We urge you to obtain current market quotations for shares of Cathay common stock.

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Q:
Will the shares of Cathay common stock received by Asia Bancshares shareholders in the merger be listed on the Nasdaq upon the completion of the merger?

A:
Yes. The shares of Cathay common stock to be issued in connection with the merger have been registered under the Securities Act of 1933, as amended, and will be listed on The NASDAQ Global Select Market under the symbol "CATY."

Q:
How do I elect the form of consideration I prefer to receive?

A:
Each Asia Bancshares shareholder will be sent an election form and transmittal materials containing instructions for use in effecting the surrender of shares of Asia Bancshares common stock in exchange for the merger consideration which will be mailed to Asia Bancshares shareholders no less than thirty-five (35) days prior to the anticipated effective time of the merger or on such other date as the Asia Bancshares and Cathay mutually agree (the "mailing date"). The election form allows an Asia Bancshares shareholder to indicate the number of his or her shares of Asia Bancshares such shareholder elects to convert into Cathay common stock and the number of shares such shareholder elects to convert into cash, or to indicate that the shareholder makes no election. Asia Bancshares and Cathay will make available Election Forms as may reasonably be requested to persons who become holders of Asia Bancshares common stock between the record date for mailing election forms and 5:00 p.m., California time, on the date that is the thirtieth day following the mailing date, or such other time as the parties may mutually agree, the "election deadline."

To make a valid election, an Asia Bancshares shareholder must submit a properly completed and signed election form and transmittal materials so that it is actually received by American Stock Transfer and Trust Company, Cathay's exchange agent, on or prior to the election deadline in accordance with the instructions on the election form. See "The Merger Agreement—Election Form."

Q:
May I submit an election form if I vote against the merger?

A:
Yes. You may submit an election form even if you vote against the merger agreement.

Q:
May I change my election once it has been submitted?

A:
Yes. You may revoke your election with respect to all or a portion of your shares of Asia Bancshares common stock by delivering written notice of your revocation to the exchange agent by the election deadline.

If an election is properly revoked with respect to shares of Asia Bancshares common stock represented by stock certificates, the certificates representing such shares will be promptly returned upon written request of the holder who submitted them to the exchange agent and the holder will be deemed to have made no election with respect to such shares unless and until a new election form is submitted, which must be received by the exchange agent by the election deadline

You will not be entitled to revoke or change your election or sell your shares of Asia Bancshares common stock after the election deadline.

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Q:
What happens if I do not make an election prior to the deadline?

A:
If you fail to submit a valid election form to the exchange agent prior to the election deadline, then you will be deemed to have made no election and will receive either shares of Cathay common stock, cash or a combination of shares of Cathay common stock and cash for your shares, depending on the elections made by other shareholders.

Q:
Will I receive the form of merger consideration that I elect?

A:
You will receive the form of merger consideration that you elect if the Asia Bancshares shareholders do not elect to receive more of that form of consideration than is available under the merger agreement. If Asia Bancshares shareholders elect to receive more of one form of consideration than is available, we will allocate the available amount ratably among the Asia Bancshares shareholders electing to receive that form of consideration, and those Asia Bancshares shareholders will receive the other form of consideration for the balance of their Asia Bancshares shares. Accordingly, you may receive a form of merger consideration that differs from your election.

Pursuant to the Agreement and Plan of Merger, a minimum of 45% of the outstanding Asia Bancshares shares will be converted into the right to receive Cathay common stock and a maximum of 55% of the outstanding Asia Bancshares shares will be converted into the right to receive Cathay common stock; however, if the Cathay average closing price immediately prior to the effective time of the merger is less than $20, then the minimum number of Asia Bancshares shares necessary for the stock consideration to represent 41% of the value of the aggregate merger consideration as of the closing will be converted into the right to receive Cathay common stock and the remainder will be converted into the right to receive cash. For a detailed description of these allocation procedures, please see the discussion under the heading "The Merger—Allocation Calculation."

Q:
Will I receive any fractional shares of Cathay common stock as part of the merger consideration?

A:
No. Cathay will not issue fractional shares in the merger. As a result, the total number of shares of Cathay common stock that you will receive in the merger will be rounded down to the nearest whole number. You will receive a cash payment for the value of any remaining fraction of a share of Cathay common stock that you would otherwise have been entitled to receive.

Q:
Do any of Asia Bancshares' or Asia Bank's directors or executive officers have interests in the merger that may differ from those of Asia Bancshares shareholders?

A:
Asia Bancshares' and Asia Bank's directors and executive officers may have interests in the merger that are different from, or in addition to, their interests as Asia Bancshares' shareholders. The members of Asia Bancshares' board of directors were aware of and considered these interests, among other matters, in evaluating the merger agreement and the merger, and in recommending the Asia Bancshares shareholders adopt the merger agreement. For a description of these interests, refer to the section entitled "Interests of Certain Persons in the Merger" beginning on page [    ] of this proxy statement/prospectus and the section entitled "The Merger Agreement—Cathay Covenants Relating to Employee Matters" beginning on page [    ] of this proxy statement/prospectus.

Q:
When will the merger occur?

A:
We currently expect to complete the merger during the second quarter of 2015 and have agreed that the merger will occur no earlier than May 15, 2015. Following that date, the merger will occur once the conditions to the merger are satisfied or waived (to the extent permitted by applicable

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Q:
How will I receive the merger consideration to which I am entitled?

A:
After receiving the proper documentation from you, following the effective time, the exchange agent will deliver to you the Cathay common stock and cash to which you are entitled. More information on the documentation you are required to deliver to the exchange agent may be found under the caption "The Merger Agreement—Election Procedure" beginning on page [            ] of this proxy statement/prospectus.

Q:
Should I send in my stock certificates with my proxy card?

A:
No, please do not send your stock certificates with your proxy card. The exchange agent will mail or deliver an election form and transmittal materials. Before the election deadline, you should send your Asia Bancshares stock certificates to the exchange agent, together with a completed and signed election form and transmittal materials. See "The Merger—Election Procedure."

Q:
Whom may I contact if I cannot locate my stock certificate(s)?

A:
If you are unable to locate your original Asia Bancshares stock certificate(s), you should contact Asia Bancshares, Inc., 135-11 Roosevelt Avenue, Flushing, New York 11354, Attention: Jeffrey Hsu, Telephone number (718) 961-9898.

Q:
Am I entitled to dissenter's rights in connection with the merger?

A:
Under the NYBCL, holders of record of Asia Bancshares who do not vote in favor of the adoption of the merger agreement have the right to dissent from the merger and obtain payment of the fair value of their shares if the merger is completed, but only if they follow the procedures and satisfy the conditions prescribed by the NYBCL. A copy of the applicable statutes regarding dissenters' rights is attached as Appendix D to the accompanying proxy statement/prospectus. For an explanation of your dissenters' rights and how to exercise them, please see the discussion under the heading "The Merger—Dissenters' Rights."

Q:
What are the U.S. federal income tax consequences of the merger to Asia Bancshares shareholders?

A:
The obligation of Cathay and Asia Bancshares to complete the merger is conditioned upon the receipt of legal opinions from their respective counsel to the effect that the merger will qualify as a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (hereinafter the "Code").

Provided that the merger qualifies as a reorganization for United States federal income tax purposes, the specific tax consequences of the merger to an Asia Bancshares shareholder will depend upon the form of consideration such Asia Bancshares shareholder receives in the merger.

If you receive solely shares of Cathay common stock (and no cash other than cash in respect of a fractional share of Cathay common stock) in exchange for your Asia Bancshares common stock, then you generally will not recognize any gain or loss (except with respect to the cash received in respect of a fractional share of Cathay common stock).

If you receive solely cash in exchange for your Asia Bancshares common stock, then you generally will recognize gain or loss equal to the difference between the amount of cash you receive and your cost basis in your Asia Bancshares common stock. Generally, any gain recognized upon the exchange will be capital gain, and any such capital gain will be long-term

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Q:
What do I need to do now?

A:
We encourage you to read this proxy statement/prospectus in its entirety. Important information is presented in greater detail elsewhere in this document, and documents governing the merger are attached as appendices to this proxy statement/prospectus. In addition, much of the business and financial information about Cathay that may be important to you is incorporated by reference into this document from documents separately filed by Cathay with the Securities and Exchange Commission.

Following review of this proxy statement/prospectus, please complete, sign and date the enclosed proxy card and return it in the enclosed envelope as soon as possible so that your shares can be voted at Asia Bancshares' special meeting of shareholders.

Q:
What risks should I consider?

A:
You should review carefully the discussion of "Risk Factors." You should also review the factors considered by the Asia Bancshares board of directors in approving the Agreement and Plan of Merger. See "The Merger—Background of the Merger" and "The Merger—Asia Bancshares' Reasons for the Merger; Recommendation of, and Factors Considered by, Asia Bancshares' Board of Directors."

Q:
What are the conditions to completion of the merger?

A:
In addition to the adoption of the merger agreement by Asia Bancshares shareholders as described above, completion of the merger is subject to the satisfaction or waiver (to the extent permitted by law) of a number of other conditions, including the approval of the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the California Department of Business Oversight, the accuracy of representations and warranties under the merger agreement (subject to the materiality standards set forth in the merger agreement), Asia Bancshares' and Cathay's performance of their respective obligations under the merger agreement

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Q:
What happens if the merger is not completed?

A:
If the merger agreement is not adopted by Asia Bancshares shareholders or if the merger is not completed for any other reason, shareholders will not receive any consideration for their shares of Asia Bancshares common stock. Instead, Asia Bancshares will remain an independent company. Asia Bancshares is required to pay Cathay a termination fee of $4 million if the merger agreement is terminated in certain circumstances. See the section entitled "The Merger Agreement—Termination Fee" beginning on page [            ] of this proxy statement/prospectus.

Q:
Who can help answer my questions?

A:
If you have questions about the merger, the meeting or your proxy, or if you need additional copies of this document or a proxy card, you should contact:

        Asia Bancshares, Inc.
135-11 Roosevelt Avenue
Flushing, New York 11354
Attention: Jeffrey Hsu
Telephone number: (718) 961-9898

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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SUMMARY

        The following summary highlights selected information from this proxy statement/prospectus and may not contain all of the information that is important to you as a shareholder of Asia Bancshares. Accordingly, we urge you to carefully read the entire proxy statement/prospectus, including the appendices, and the other documents to which we refer in order to fully understand the merger. Each item in this summary includes a page reference directing you to a more complete description of that topic. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by following the instructions under the section entitled, "Where You Can Find More Information" beginning on page [      ] of this proxy statement/prospectus.

Parties to the Merger Agreement (Page [      ])

Cathay General Bancorp

        Cathay, headquartered in Los Angeles, California, is a Delaware corporation and is a bank holding company registered under the Bank Holding Company Act of 1956, as amended (the "BHC Act"). Cathay is the holding company for Cathay Bank, a California state-chartered bank. Founded in 1962, Cathay Bank offers a wide range of financial services. Cathay Bank currently operates 33 branches in California, nine branches in New York State, one in Massachusetts, two in Houston, Texas, three in Washington State, three in the Chicago, Illinois area (and one drive-through location), one in New Jersey, one in Nevada, one in Hong Kong and representative offices in Taipei and Shanghai.

        As of December 31, 2014, Cathay had total assets of approximately $11.5 billion, total loans of approximately $8.9 billion, total deposits of approximately $8.8 billion and approximately $1.6 billion in shareholders' equity.

        Cathay common stock trades on The NASDAQ Global Select Market under the symbol "CATY."

Asia Bancshares, Inc.

        Asia Bancshares is a New York corporation, incorporated in 1986, which is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, and parent of Asia Bank, National Association, a national bank with four branches. As of December 31, 2014, Asia Bancshares and its subsidiaries had consolidated total assets of $533.2 million, deposits of $453.1 million and stockholders' equity of $77.7 million. Asia Bank had 69 full-time and 11 part-time employees as of December 31, 2014.

The Merger (Page [      ])

        The merger agreement provides for the merger of Asia Bancshares with and into Cathay, with Cathay as the surviving entity after the merger. As a result of the merger, Asia Bancshares will cease to exist as a separate entity.

        Simultaneously with the merger, Asia Bancshares' wholly owned bank subsidiary, Asia Bank, will merger with and into Cathay's wholly owned bank subsidiary, Cathay Bank, with Cathay Bank as the

 

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surviving entity after the bank merger. As a result of the bank merger, Asia Bank will cease to exist as a separate entity.

        The merger agreement is attached as Appendix A to this document. We encourage you to read the merger agreement in its entirety.

The Merger Consideration (Page [      ])

        If the merger is completed, shareholders of Asia Bancshares will receive aggregate merger consideration of approximately $126 million, subject to adjustment pursuant to the merger agreement. See "The Merger Agreement—Merger Consideration; Adjustments." The per share merger consideration will be calculated by dividing the aggregate merger consideration by the number of shares of Asia Bancshares common stock outstanding immediately prior to the effective time of the merger. Therefore the precise amount of the aggregate merger consideration and the resulting per share merger consideration will not be known until shortly before the closing of the merger.

        Shareholders of Asia Bancshares (other than shares owned by Cathay or Asia Bancshares, or by shareholders that have asserted and not withdrawn dissenters' rights in accordance with the NYBCL) will be entitled to elect to receive, subject to proration, for each share of Asia Bancshares common stock that they own, the per share merger consideration in cash or shares of Cathay common stock. Based on these elections, between 45% to 55% of the outstanding shares of Asia Bancshares common stock will receive Cathay common stock as merger consideration and the remainder will receive cash; however if the average closing price of Cathay common stock (as defined below) is lower than $20, then 41% of the value of the aggregate merger consideration as measured at closing will be payable in Cathay common stock. The number of shares of Cathay common stock that will be received in respect of the per share merger consideration will be equal to the exchange ratio. The exchange ratio is calculated by dividing the per share merger consideration by the volume weighted average price per share of Cathay common stock on the Nasdaq Global Select Market, on each of the 10 consecutive trading days ending on the fifth trading day prior to the date of the merger, which we refer to as the Cathay average closing price. However, if the Cathay average closing price is less than $20, the exchange ratio is the per share merger consideration divided by $20 and if the Cathay average closing price is greater than $27, the exchange ratio is the per share merger consideration divided by $27.

        For illustrative purposes only, if there are no adjustments to the $126 million aggregate merger consideration, the number of shares of Asia Bancshares at closing is the same as on [      ], the most recent practicable date before the mailing of this proxy statement/prospectus, and the Cathay average closing price is equal to the closing price of Cathay common stock on [      ], the most recent practicable date before the mailing of this proxy statement/prospectus, each Asia Bancshares shareholder would be entitled to receive either $[      ] in cash or [      ] shares of Cathay common stock per share of Asia Bancshares common stock. We urge you to obtain current market quotations for shares of Cathay common stock.

        Only whole shares of Cathay common stock will be issued in connection with the merger. Accordingly, Asia Bancshares shareholders will receive cash, without interest, in lieu of any fractional share of Cathay common stock they otherwise would be entitled to receive.

Market Price and Share Information (Page [      ])

        The following table sets forth the closing sale prices per share of Cathay common stock as reported on The NASDAQ Global Select Market on January 20, 2015, the last trading day before we

 

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announced the transaction, and on [      ], 2015 the most recent practicable trading day before the date on which this proxy statement/prospectus was mailed to Asia Bancshares's shareholders.

Date
  Cathay Closing
Share Price
 

January 20, 2015

  $ 23.38  

[      ], 2015

  $ [      ]  

        The market price of Cathay common stock will fluctuate prior to the effective time of the merger. Therefore, you should obtain current market quotations for Cathay common stock. Cathay common stock is listed on The NASDAQ Global Select Market under the symbol "CATY." See "Comparative Stock Price and Dividend Information—Cathay common stock."

You May Elect to Receive Stock or Cash Consideration, Subject to Proration

        Under the merger agreement, unless you provide a notice of dissent under New York law, you may elect to receive either:

        Because a minimum of 45% of the outstanding Asia Bancshares shares will be converted into the right to receive Cathay common stock and a maximum of 55% of the outstanding Asia Bancshares shares will be converted into the right to receive Cathay common stock in the merger (or, in the event the Cathay average closing price is below $20, the minimum number of Asia Bancshares shares necessary for the stock consideration to represent 41% of the value of the aggregate merger consideration as of the closing will be converted into the right to receive Cathay common stock and the remainder will be converted into the right to receive cash), the form of merger consideration that you will receive will depend in part on the elections made by other Asia Bancshares shareholders. If Asia Bancshares shareholders elect to receive more of one form of consideration than is available, we will allocate the available amount ratably among the Asia Bancshares shareholders electing to receive that form of consideration, and those Asia Bancshares shareholders will receive the other form of consideration for the balance of their Asia Bancshares shares. Accordingly, you may receive a form of merger consideration that differs from your election. See "The Merger—Allocation Calculation" for a more detailed discussion of allocation procedures under the Agreement and Plan of Merger.

        Prior to the effective time of the merger, an exchange agent will mail or deliver an election form with instructions for making your election as to the form of consideration that you prefer to receive in the merger. The available elections, election procedures and deadline for making elections are described under the heading "The Merger—Election Procedure." If you fail to submit a valid election form that is received by the exchange agent on or before the election deadline, you will receive either Cathay common stock or cash for each of your shares of Asia Bancshares stock, depending upon what remains available after the considering the elections made by other Asia Bancshares shareholders.

Interests of Certain Persons in the Merger (Page [      ])

        Certain officers and members of the board of directors of Asia Bancshares and Asia Bank may have interests in the transaction that are different from, or in addition to, the interests of shareholders of Asia Bancshares' common stock generally. The members of the board of directors of Asia Bancshares were made aware of these differing interests and potential conflicts, and considered them, among other matters, in its decision to declare advisable the merger agreement and the merger and in

 

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recommending to the shareholders of Asia Bancshares that the merger be approved. These interests include:

        For a more detailed discussion of these interests, see "Interests of Certain Persons in the Merger" beginning on page [      ].

Material United States Federal Income Tax Consequences of the Merger (Page [      ])

        The obligation of Cathay and Asia Bancshares to complete the merger is conditioned, among other things, upon the receipt of legal opinions from their respective counsel to the effect that the merger will qualify as a "reorganization" within the meaning of Section 368(a) of the Code.

        Provided that the merger qualifies as a reorganization for United States federal income tax purposes, the specific tax consequences of the merger to an Asia Bancshares shareholder will depend upon the form of consideration such Asia Bancshares shareholder receives in the merger.

        Generally, any gain recognized upon the exchange will be capital gain, and any such capital gain will be long-term capital gain if you have established a holding period of more than one year for your shares of Asia Bancshares common stock. Depending on certain facts specific to you, any gain could instead be characterized as ordinary dividend income.

        For a more detailed discussion of the material United States federal income tax consequences of the transaction, see "Material United States Federal Income Tax Consequences of the Merger" beginning on page [      ].

        The consequences of the merger to any particular Asia Bancshares shareholder will depend on that shareholder's particular facts and circumstances. Accordingly, you are urged to consult your tax advisor to determine your tax consequences from the merger.

 

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Recommendation of the Asia Bancshares Board of Directors; Asia Bancshares' Reasons for the Merger (Page [      ])

        Asia Bancshares' board of directors, after careful review and consideration of the terms of the merger agreement, unanimously approved the merger agreement. Asia Bancshares' board of directors believes that the merger and the merger agreement are fair to and in the best interests of Asia Bancshares and its shareholders and unanimously recommends that the shareholders of Asia Bancshares vote "FOR" approval and adoption of the merger agreement and the transactions contemplated by the merger agreement, including the merger.

        For more information concerning the background of the merger, the recommendation of Asia Bancshares' board of directors and the reasons for the merger and the recommendation, please see the discussions under "The Merger—Background of the Merger" and "The Merger—Recommendation of Asia Bancshares' Board of Directors" beginning on page [      ].

The Asia Bancshares Special Meeting (page [      ])

        The special meeting of Asia Bancshares shareholders will be held on [      ], 2015 at [      ] a.m. local time, at [      ]. At the special meeting, Asia Bancshares shareholders will be asked to approve a proposal to adopt the Agreement and Plan of Merger, dated as of January 20, 2015, as amended by amendment no. 1 on March 9, 2015, and as it may be further amended from time to time, between Cathay General Bancorp, a Delaware corporation, and Asia Bancshares, Inc., a New York corporation.

        Only holders of record at the close of business on [      ] will be entitled to vote at the special meeting. Each share of Asia Bancshares common stock is entitled to one vote on the proposal to be considered at the Asia Bancshares special meeting. As of the record date, there were [      ] shares of Asia Bancshares common stock entitled to vote at the special meeting. As of the record date, the directors and executive officers of Asia Bancshares beneficially owned and were entitled to vote approximately [      ] shares of Asia Bancshares common stock representing approximately [      ]% of the shares of Asia Bancshares common stock outstanding on that date. Certain directors and executive officers of Asia Bancshares and their family members who beneficially own in the aggregate 622,868.94 shares of Asia Bancshares common stock, representing approximately [      ]% of the outstanding shares of Asia Bancshares common stock as of the record date, have entered into voting agreements with Cathay in the form attached to this proxy statement/prospectus as Appendix B pursuant to which they, solely in their capacity as shareholders of Asia Bancshares, will agree to vote all of their shares of Asia Bancshares common stock in favor of the merger agreement and against any competing transaction, and be subject to customary restrictions on transfer and no solicitation restrictions prior to the closing of the merger. These voting agreements will terminate if the merger agreement is terminated.

        To approve the merger agreement, holders of two-thirds of the outstanding shares of Asia Bancshares common stock entitled to vote at the special meeting must vote in favor of approving the merger agreement. Because approval is based on the affirmative vote of two-thirds of the shares outstanding, your failure to vote or abstention will have the same effect as a vote against adoption of the merger agreement.

Opinion of Asia Bancshares' Financial Advisor (Page [      ])

        The Kafafian Group, Inc. has served as financial advisor to Asia Bancshares in connection with the merger. It has given an opinion to the Asia Bancshares board of directors that, as of January 20, 2015, the consideration Cathay will pay for the Asia Bancshares common stock is fair to Asia Bancshares shareholders from a financial point of view. The Kafafian Group's opinion is expressly based upon, and subject to, the assumptions made, matters considered and qualifications and limitations stated in the opinion. A copy of the opinion delivered by The Kafafian Group is attached to this document as Appendix B. You should read the opinion carefully and in its entirety.

 

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Regulatory Approvals (Page [      ])

        Subject to the exception described below, both Asia Bancshares and Cathay have agreed to use their reasonable best efforts to obtain all regulatory approvals required to complete the transactions contemplated by the merger agreement. The key approvals required for the merger and the bank merger are the approval of the Board of Governors of the Federal Reserve Board (which we refer to as the Federal Reserve), the California Department of Business Oversight (which we refer to as the CDBO) and the Federal Deposit Insurance Corporation (which we refer to as the FDIC). Cathay and Asia Bancshares have filed applications and notifications to obtain the required regulatory approvals.

        Although neither Asia Bancshares nor Cathay knows of any reason why it cannot obtain these regulatory approvals in a timely manner, Asia Bancshares and Cathay cannot be certain when or if they will be obtained. Further, Cathay will not be required to take any action in connection with obtaining the regulatory approvals that would reasonably be expected, individually or in the aggregate, to materially impair the anticipated benefits to Cathay for the transactions, which we refer to as a "burdensome condition".

Conditions to Completion of the Merger (Page [      ])

        Completion of the merger is subject to the satisfaction or waiver (to the extent permitted by applicable law) of certain conditions, including, among others:

        In addition, Cathay's obligation to effect the merger is subject to satisfaction or waiver (to the extent permitted by applicable law) of the following additional conditions:

 

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        In addition, Asia Bancshares's obligation to effect the merger is subject to satisfaction or waiver (to the extent permitted by applicable law) of the following additional conditions:

Non-Solicitation (Page [      ])

        As more fully described in this proxy statement and in the merger agreement, and subject to the exceptions summarized below, Asia Bancshares has agreed not to (1) solicit, initiate, encourage or knowingly facilitate any inquiries or proposals regarding a company takeover proposal (as defined in the merger agreement), (2) engage in, continue or participate in any discussions or negotiations regarding, or furnish to any other person any information in connection with or for the purpose of encouraging or facilitating, a company takeover proposal or (3) approve, recommend or enter into any agreement with respect to a company takeover proposal.

        However, before the adoption of the merger agreement by the Asia Bancshares shareholders, if Asia Bancshares' board of directors determines in good faith (after consultation with its outside legal and financial advisors) that a bona fide, unsolicited, written competing takeover proposal is or is reasonably expected to result in a Company Superior Proposal (as defined under "The Merger Agreement—Non-Solicitation"), Asia Bancshares is permitted to:

        Asia Bancshares is required to notify Cathay within 24 hours if it provides any nonpublic information and/or enters into discussions with a third party, or if it receives any competing takeover proposal or request for information relating to a possible competing takeover proposal.

Change in Recommendation (Page [      ])

        The merger agreement generally provides that, subject to certain exceptions described below, the Asia Bancshares board of directors will not make a Company Adverse Recommendation Change (as defined under "The Merger Agreement—Non-Solicitation").

 

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        However, at any time before the Asia Bancshares shareholder approval is obtained, but not after it is obtained, if (i) the Asia Bancshares board of directors determines in good faith, after consultation with its financial advisor and outside legal counsel, that a bona fide, unsolicited company takeover proposal that, did not result from a knowing or intentional breach of the no solicitation provisions in the merger agreement, constitutes a Company Superior Proposal (as defined in "The Merger Agreement—Non-Solicitation"), and (ii) the failure to make a Company Adverse Recommendation Change would constitute a violation of its fiduciary duties under applicable law, and (iii) the Asia Bancshares board of directors has complied with its obligations to provide Cathay at least five business days' prior written notice and to negotiate with Cathay in good faith during such notice period, to the extent that Cathay wishes to negotiate, to enable Cathay to propose revisions to the merger agreement, the Asia Bancshares board of directors may make a Company Adverse Recommendation Change.

Termination (Page [      ])

        The Agreement and Plan of Merger may be terminated either before or after it is approved by the Asia Bancshares shareholders:

Termination Fee (Page [      ])

        If the merger agreement is terminated under certain circumstances, including circumstances involving competing transaction proposals, including a Company Adverse Recommendation Change by Asia Bancshares' board of directors, Asia Bancshares may be required to pay Cathay a termination fee of $4 million. The termination fee could discourage other companies from seeking to acquire or merge with Asia Bancshares.

 

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Comparison of Shareholders' Rights (Page [      ])

        The rights of Asia Bancshares shareholders are governed by New York law, as well as Asia Bancshares' amended certificate of incorporation and amended and restated bylaws. After completion of the merger, the rights of the former shareholders of Asia Bancshares receiving Cathay common stock upon the completion of the merger will be governed by Delaware law, as well as Cathay's certificate of incorporation and bylaws. For more detailed information regarding a comparison of your rights as a shareholder of Asia Bancshares and Cathay, see "Comparison of Cathay Common Stock with Asia Bancshares Common Stock."

Dissenters' Rights (Page [      ])

        Asia Bancshares shareholders have dissenters' rights under the NYBCL in connection with the merger. Asia Bancshares shareholders who do not vote in favor of the adoption of the merger agreement and who otherwise comply with the applicable provisions of the NYBCL will be entitled to dissent from the merger and obtain payment of the fair value of their shares if the merger is completed. Any shares of Asia Bancshares common stock held by a shareholder who has not voted in favor of the adoption of the merger agreement and who has exercised dissenters' rights for such shares in accordance with the NYBCL, will not be converted into a right to receive the merger consideration, unless such shareholder fails to perfect, withdraws or otherwise loses such shareholder's right to dissent under the NYBCL. If, after the consummation of the merger, such holder of Asia Bancshares common stock fails to perfect, withdraws or otherwise loses his or her or its rights to dissent, each such share will be treated as if it had been converted as of the consummation of the merger into a right to receive the merger consideration as shares that made no election.

        You are encouraged to read these provisions carefully and in their entirety. Due to the complexity of the procedures for exercising dissenters' rights, Asia Bancshares shareholders who are considering exercising such rights are encouraged to seek the advice of legal counsel. Failure to strictly comply with these provisions will result in the loss of dissenters' rights. See the section entitled "The Merger—Dissenters' Rights" beginning on page [      ] of this proxy statement/prospectus for additional information and the text of Sections 623 and 910 of the NYBCL reproduced in their entirety as Appendix D to this proxy statement/prospectus.

Accounting Treatment of the Merger (Page [      ])

        Cathay prepares its financial statements in accordance with accounting principles generally accepted in the United States of America, which we refer to as GAAP. The merger will be accounted for using the acquisition method of accounting. Cathay will be treated as the acquirer for accounting purposes.

Risk Factors (Page [      ])

        You should consider all the information contained in or incorporated by reference into this proxy statement/prospectus in deciding how to vote for the proposal presented in the proxy statement/prospectus. In particular, you should consider the factors described under "Risk Factors."

 

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SELECTED HISTORICAL FINANCIAL DATA OF CATHAY

        The following table presents selected financial information for Cathay as of and for the years ended December 31, 2014, 2013, 2012, 2011 and 2010. The annual historical information for Cathay set forth below is derived from its audited consolidated financial statements as of and for fiscal years 2010 through 2014.

        You should read the information regarding Cathay that is set forth below together with Cathay's historical consolidated financial statements and related notes, which are contained in its Annual Report on Form 10-K for the year ended December 31, 2014, which is incorporated by reference into this proxy statement/prospectus. See "Where You Can Find More Information" beginning on page [      ] of this proxy statement/prospectus.


Cathay General Bancorp
Selected Consolidated Financial Information

 
  Year Ended December 31,  
 
  2014   2013   2012   2011   2010  
 
  (Dollars in thousands, except share and per share data)
 

Income Statement

                               

Interest income

  $ 418,647   $ 406,996   $ 429,744   $ 453,571   $ 489,594  

Interest expense

    75,866     82,300     108,491     139,881     191,688  

Net interest income before provision for credit losses

    342,781     324,696     321,253     313,690     297,906  

(Reversal)/Provision for credit losses

    (10,800 )   (3,000 )   (9,000 )   27,000     156,900  

Net interest income after provision for credit losses

    353,581     327,696     330,253     286,690     141,006  

Securities gains

    6,748     27,362     18,026     21,131     18,695  

Other non-interest income

    33,779     32,945     28,481     29,761     13,556  

Non-interest expense

    174,313     193,833     192,589     185,566     175,711  

Income/(loss) before income tax expense

    219,795     194,170     184,171     152,016     (2,454 )

Income tax expense/(benefit)

    81,965     70,435     66,128     51,261     (14,629 )

Net income/(loss)

    137,830     123,735     118,043     100,755     12,175  

Less: net income attributable to noncontrolling interest

        592     605     605     610  

Net income attributable to Cathay General Bancorp

    137,830     123,143     117,438     100,150     11,565  

Dividends on preferred stock

        (9,685 )   (16,488 )   (16,437 )   (16,388 )

Net income/(loss) attributable to common stockholders

  $ 137,830   $ 113,458   $ 100,950   $ 83,713   $ (4,823 )

Net income/(loss) attributable to common stockholders per common share

                               

Basic

  $ 1.73   $ 1.44   $ 1.28   $ 1.06   $ (0.06 )

Diluted

  $ 1.72   $ 1.43   $ 1.28   $ 1.06   $ (0.06 )

Cash dividends paid per common share

  $ 0.29   $ 0.08   $ 0.04   $ 0.04   $ 0.04  

Weighted-average common shares

                               

Basic

    79,661,571     78,954,898     78,719,133     78,633,317     77,073,954  

Diluted

    80,106,895     79,137,983     78,723,297     78,640,652     77,073,954  

Statement of Condition

   
 
   
 
   
 
   
 
   
 
 

Investment securities

  $ 1,318,935   $ 1,586,668   $ 2,065,248   $ 2,447,982   $ 2,843,669  

Net loans(1)

    8,740,268     7,897,187     7,235,587     6,844,483     6,615,769  

Loans held for sale

    973             760     2,873  

Total assets

    11,516,846     10,989,286     10,694,089     10,644,864     10,801,986  

Deposits

    8,783,460     7,981,305     7,383,225     7,229,131     6,991,846  

Federal funds purchased and securities sold under agreements to repurchase

    450,000     800,000     1,250,000     1,400,000     1,561,000  

Advances from the Federal Home Loan Bank

    425,000     521,200     146,200     225,000     550,000  

Long-term debt

    119,136     121,136     171,136     171,136     171,136  

Total equity

    1,602,888     1,458,971     1,629,504     1,515,633     1,436,105  

Common Stock Data

   
 
   
 
   
 
   
 
   
 
 

Shares of common stock outstanding

    79,814,553     79,589,869     78,778,288     78,652,557     78,531,783  

Book value per common share

  $ 20.00   $ 18.24   $ 17.12   $ 15.75   $ 14.80  

Profitability Ratios

   
 
   
 
   
 
   
 
   
 
 

Return on average assets

    1.26 %   1.17 %   1.11 %   0.94 %   0.10 %

Return on average stockholders' equity

    8.95     8.00     7.48     6.78     0.81  

Dividend payout ratio

    16.76     5.15     2.68     3.14     27.16  

Average equity to average assets ratio

    14.04     14.73     14.87     13.98     12.45  

Efficiency ratio

    45.48     50.35     52.37     50.90     53.22  

 

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SELECTED HISTORICAL FINANCIAL DATA OF ASIA BANCSHARES

        The following table presents selected financial information for Asia Bancshares as of and for the years ended December 31, 2014, 2013, 2012, 2011 and 2010. The annual historical information for Asia Bancshares set forth below is derived from its audited consolidated financial statements as of and for fiscal years 2010 through 2014.

 
  Asia Bancshares
Selected Consolidated Financial Data

As of and for the Year Ended
 
 
  2014   2013   2012   2011   2010  
 
  (Dollars in thousands, except ratios, share and per share data)
 

SUMMARY OF OPERATIONS:

                               

Interest income

  $ 22,453   $ 21,933   $ 21,711   $ 22,327   $ 23,125  

Interest expense

    1,897     1,821     2,462     2,852     4,316  

Net interest income before

                               

provision for credit losses

    20,556     20,112     19,249     19,475     18,809  

(Reversal)/Provision for credit losses

    278     789     286     374     1,586  

Net interest income/(loss) after provision

                               

for credit losses

    20,278     19,323     18,963     19,101     17,223  

Securities gains (losses)

    0     0     0     0     77  

Non-interest income

    1,083     1,268     1,437     1,045     1,142  

Non-interest expense

    11,283     10,853     10,701     10,233     10,187  

Income/(loss) before income tax expense

    10,078     9,738     9,699     9,913     8,255  

Income tax expense/(benefit)

    4,709     4,371     4,346     4,452     3,704  

Net income/(loss)

  $ 5,369   $ 5,367   $ 5,353   $ 5,461   $ 4,551  

Net income per common share, basic

  $ 3.68   $ 3.68   $ 3.67   $ 3.74   $ 3.12  

Cash dividends paid per common share

            2.50     2.50      

Weighted-average common shares, basic

    1,460     1,460     1,460     1,460     1,338  

STATEMENT OF CONDITION:

   
 
   
 
   
 
   
 
   
 
 

Investment securities

    2,196     2,262     2,545     3,150     3,284  

Net loans(1)

    423,266     408,271     383,541     356,576     366,844  

Total assets

    533,230     474,731     464,905     436,767     424,201  

Deposits

    453,022     399,868     395,123     367,858     357,327  

Total equity

    77,696     72,327     66,960     65,258     63,447  

Common stock Data

   
 
   
 
   
 
   
 
   
 
 

Shares of common stock outstanding

    1,460     1,460     1,460     1,460     1,460  

Book value per common share

  $ 53.21   $ 49.54   $ 45.86   $ 44.70   $ 43.46  

Profitability Ratios

   
 
   
 
   
 
   
 
   
 
 

Return on average assets

    1.07 %   1.14 %   1.15 %   1.22 %   1.03 %

Return on average stockholders' equity

    7.65     7.73     7.94     8.24     7.45  

Dividend payout ratio

            68.12     66.84      

Average equity to average assets ratio

    13.99     14.83     14.50     14.89     13.81  

Efficiency ratio

    47.94     46.78     47.93     43.78     41.84  

(1)
Net loans represent gross loans net of loan participations sold, allowance for loan losses, and unamortized deferred loan fees.

 

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MARKET VALUE OF CATHAY COMMON STOCK

        Cathay common stock is quoted on The NASDAQ Global Select Market under the symbol "CATY." The following table sets forth, for the periods indicated, the high and low sale prices for Cathay common stock as reported on The NASDAQ Global Select Market, and dividends per share on Cathay common stock.

 
  High   Low   Cash
Dividend
Declared
 

2012

                   

First quarter

  $ 18.19   $ 14.93   $ 0.01  

Second quarter

    18.16     15.18     0.01  

Third quarter

    18.14     15.71     0.01  

Fourth quarter

    19.82     16.61     0.01  

2013

   
 
   
 
   
 
 

First quarter

  $ 20.66   $ 19.06   $ 0.01  

Second quarter

    20.99     18.37     0.01  

Third quarter

    24.68     21.05     0.01  

Fourth quarter

    27.63     22.95     0.05  

2014

   
 
   
 
   
 
 

First quarter

  $ 26.37   $ 22.76   $ 0.05  

Second quarter

    26.47     23.10     0.07  

Third quarter

    26.81     24.81     0.07  

Fourth quarter

    27.02     24.04     0.10  

 

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MARKET VALUE OF ASIA BANCSHARES COMMON STOCK

        Asia Bancshares common stock is privately held and not quoted on a stock exchange or market, and no broker makes a market in the stock. Stock transfer records maintained by Asia Bancshares indicate that there have been relatively infrequent transactions in Asia Bancshares stock. Sales and purchases of shares of Asia Bancshares common stock are privately negotiated, and Asia Bancshares may not be aware of the price for those transactions. As a result, trading price data is very limited and may not accurately reflect the actual market value of the shares.

        At the record date, the [                ] outstanding shares of Asia Bancshares common stock were held by approximately [                ] holders of record.

        The board of directors of Asia Bancshares has the authority to declare and pay a dividend to its shareholders. The last dividend paid to Asia Bancshares' shareholders was on December 20, 2012. The total dividend amount was $3,650,111.69.

 

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FORWARD-LOOKING STATEMENTS

        This proxy statement/prospectus contains certain forward-looking information about Cathay, Asia Bancshares, and the combined company after the closing of the merger that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. In some cases, you can identify forward-looking statements by words such as "may," "hope," "will," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential," "continue," "could," "future" or the negative of those terms or other words of similar meaning. You should carefully read forward-looking statements, including statements that contain these words, because they discuss the future expectations or state other "forward-looking" information about Cathay, Asia Bancshares and the combined company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of Cathay, Asia Bancshares and the combined company. Forward-looking statements speak only as of the date this proxy statement/prospectus is made and we assume no duty to update such statements.

        In addition to factors previously disclosed in reports filed by Cathay with the SEC, risks and uncertainties for each institution and the combined institution include, but are not limited to: the possibility that any of the anticipated benefits of the proposed merger will not be realized or will not be realized within the expected time period; the risk that integration of Asia Bancshares' operations with those of Cathay will be materially delayed or will be more costly or difficult than expected; the inability to close the merger in a timely manner; the inability to complete the merger due to the failure of Asia Bancshares shareholders to adopt the merger agreement; diversion of management's attention from ongoing business operations and opportunities; the failure to satisfy conditions to completion of the merger in a timely manner or at all, including receipt of required regulatory and other approvals; the failure of the proposed merger to close for any other reason; the challenges of integrating and retaining key employees; the effect of the announcement of the merger on Cathay's, Asia Bancshares' or the combined company's respective customer relationships and operating results; the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; changes in accounting and regulatory guidance applicable to banks; and general competitive, economic, political and market conditions and fluctuations.

        You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement/prospectus or the date of any document incorporated by reference in this proxy statement/prospectus. All subsequent written and oral forward-looking statements concerning the merger or other matters addressed in this proxy statement/prospectus and attributable to Cathay or Asia Bancshares or any person acting on their behalf, are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, Cathay and Asia Bancshares undertake no obligation to update these forward-looking statements to reflect events, developments or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of future events.

 

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RISK FACTORS

        In addition to general investment risks and the other information contained in or incorporated by reference into this proxy statement/prospectus, including the matters addressed under the section "Cautionary Statement Regarding Forward-Looking Statements," you should carefully consider the following risk factors in deciding how to vote for the proposal presented in this proxy statement/prospectus. In addition, you should read and consider the risks associated with each of the businesses of Asia Bancshares and Cathay because these risks will relate to the combined company. Descriptions of some of these risks can be found in the Annual Report on Form 10-K filed by Cathay for the year ended December 31, 2014, as updated by other reports filed with the SEC, which are filed with the SEC and incorporated by reference into this proxy statement/prospectus. You should also consider the other information in this proxy statement/prospectus and the other documents incorporated by reference into this proxy statement/prospectus. See "Where You Can Find More Information."

The value of the merger consideration is subject to change based on various factors.

        If the merger is completed, shareholders of Asia Bancshares will receive aggregate merger consideration of approximately $126 million, but this amount is subject to adjustment pursuant to the merger agreement and will be decreased by the tax-effected amount of certain expenses of Asia Bancshares related to the transaction, and increased by the amount, if any, by which the closing net book value of Asia Bancshares exceeds a specified target net book value, as described in "The Merger Agreement—Adjustments to Aggregate Merger Consideration." This adjustment could result in the aggregate merger consideration being greater than, less than, or equal to $126 million at closing. The final amount of the aggregate merger consideration and the resulting per share merger consideration will not be known until immediately prior to the closing. The amount of the per share merger consideration will also depend on the number of shares of Asia Bancshares common stock outstanding immediately prior to the closing.

        In addition, the value of the stock portion of the merger consideration is subject to changes based on fluctuations in the value of Cathay common stock. The number of shares of Cathay common stock that will be received in respect of the per share merger consideration will be equal to the exchange ratio. The exchange ratio is calculated by dividing the per share merger consideration by the volume weighted average price per share of Cathay common stock on the NASDAQ Global Select Market, on each of the 10 consecutive trading days ending on the fifth trading day prior to the date of the merger, which we refer to as the Cathay average closing price. However, if the Cathay average closing price is less than $20, the exchange ratio is the per share merger consideration divided by $20 and if the Cathay average closing price is greater than $27, the exchange ratio is the per share merger consideration divided by $27. Accordingly, the actual number of shares and the value of Cathay common stock delivered to Asia Bancshares shareholders will depend on the Cathay average closing price, and the value of the shares of Cathay common stock delivered for each share of Asia Bancshares common stock, may be greater than, less than, or equal to the nominal value of the per share merger consideration.

        The market value of Cathay common stock will fluctuate during the period before the date of the special meeting of Asia Bancshares shareholders to vote on the adoption of the merger agreement, during the 10 trading day period that the exchange ratio will be based upon, and during the time between the last day of the 10 trading day period and the time Asia Bancshares shareholders receive merger consideration in the form of Cathay common stock, as well as thereafter. It is impossible to accurately predict the market price of Cathay common stock at the effective time or during the period over which the Cathay average closing stock price is calculated and, therefore, impossible to accurately predict the number or value of the shares of Cathay common stock that an Asia Bancshares shareholder will be delivered in the merger. Stock price changes may result from a variety of factors,

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including general market and economic conditions, changes in Cathay's businesses, operations and prospects, and regulatory considerations. Many of these factors are beyond Cathay's control.

        Accordingly, at the time of the special meeting, Asia Bancshares shareholders will not know or be able to calculate with certainty the market value of the merger consideration they would receive upon completion of the merger. You should obtain current market quotations for shares of Cathay common stock before you vote.

The market price of Cathay common stock after the merger will continue to fluctuate.

        Upon completion of the merger, some holders of Asia Bancshares common stock will receive Cathay common stock. Unlike Asia Bancshares, which is a private company, Cathay is a public company and shares of Cathay common stock are listed on the NASDAQ. The market price of Cathay common stock may fluctuate significantly following consummation of the merger and former holders of Asia Bancshares common stock could lose the value of their investment in Cathay common stock. The stock market has experienced significant price and volume fluctuations in recent times, which could have a material adverse effect on the market for, or liquidity of, the Cathay common stock, regardless of Cathay's actual operating performance. In addition, Cathay's business differs in important respects from that of Asia Bancshares, and accordingly, the results of operation of the combined company may be affected by factors different from those currently affecting the independent results of operation of Asia Bancshares or of Cathay as independent companies.

Asia Bancshares shareholders may not receive the form of merger consideration that they elect.

        The form of merger consideration that you will receive will depend in part on the elections made by other Asia Bancshares shareholders. If Asia Bancshares shareholders elect to receive more of one form of consideration than is available, the available amount will be allocated ratably among the Asia Bancshares shareholders electing to receive that form of consideration, and those Asia Bancshares shareholders will receive the other form of consideration for the balance of their Asia Bancshares shares. Accordingly, you may receive a form of merger consideration that differs from your election. A minimum of 45% of the outstanding Asia Bancshares shares will be converted into the right to receive Cathay common stock and a maximum of 55% of the outstanding Asia Bancshares shares will be converted into the right to receive Cathay common stock in the merger; however in the event the Cathay weighted average closing price is below $20 per share, 41% of the value of the merger consideration as measured at closing will be payable in Cathay common stock, and accordingly, the form of merger consideration that you will receive will depend in part on the market price of Cathay common stock. See "The Merger—Allocation Calculation" for a more detailed discussion of allocation procedures under the merger agreement.

Because of the closing conditions in the merger agreement and the ability of either Asia Bancshares or Cathay to terminate the merger agreement in specific instances, there can be no assurance when or if the merger will be completed.

        The completion of the merger is subject to the satisfaction or waiver of a number of closing conditions, including the adoption of the merger agreement by Asia Bancshares shareholders, the approval of the Federal Reserve, the FDIC and the CDBO, the accuracy of representations and warranties under the merger agreement (subject to the materiality standards set forth in the merger agreement), Asia Bancshares' and Cathay's performance of their respective obligations under the merger agreement in all material respects, receipt of material third party consents and approvals, provision by Asia Bancshares of evidence of title insurance policies regarding certain properties, the absence of a material adverse effect (as described in the merger agreement) on Asia Bancshares following January 20, 2015, and the Cathay average closing price being equal to or above $17.50. The parties also have the right to terminate the merger agreement under certain circumstances. There can

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be no assurance that the parties will be able to meet the closing conditions of the merger agreement or that closing conditions that are beyond their control will be satisfied or waived. If Cathay and Asia Bancshares are unable to meet all the conditions or such conditions are otherwise not satisfied or waived, the parties will not be required, or able, to complete the merger. See "The Merger Agreement—Termination."

Necessary regulatory approvals may not be obtained or may be obtained with conditions, which may jeopardize completion of the merger or reduce the anticipated benefits of the merger.

        Before the merger may be completed, Cathay and Asia Bancshares must obtain various regulatory approvals or consents, including approvals from the Federal Reserve, the CDBO and the FDIC. These regulators may not grant approval or consent, or may impose conditions on the completion of the merger or require changes to the terms of the merger. Such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on or limiting the revenues of Cathay following the merger. There can be no assurance as to whether the regulatory approvals will be received, the timing of those approvals, or whether any conditions will be imposed. Further, Cathay will not be required to take any action in connection with obtaining the regulatory approvals that would reasonably be expected, individually or in the aggregate, to materially impair the anticipated benefits to Cathay for the transactions, which could result in the merger not being completed. See "The Merger—Regulatory Approvals Required for the Merger."

Combining the two companies may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the merger may not be realized.

        Cathay and Asia Bancshares have operated and, until the completion of the merger, will continue to operate, independently. The success of the merger, including anticipated benefits and cost savings, will depend, in part, on Cathay's ability to successfully combine and integrate the businesses of Cathay and Asia Bancshares. It is possible that the pendency of the merger and/or the integration process could result in the loss of key employees, loss of customers, higher than expected costs, diversion of management attention of both Cathay and Asia Bancshares, increased competition, the disruption of either company's ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company's ability to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits and cost savings of the merger. If Cathay experiences difficulties with the integration process, the anticipated benefits of the merger may not be realized fully or at all, or may take longer to realize than expected, which may adversely affect the value of Cathay common stock, including those shares that Asia Bancshares shareholders receive as consideration for the merger. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of Cathay and Asia Bancshares during this transition period and for an undetermined period after completion of the merger on the combined company. In addition, the actual cost savings of the merger could be less than anticipated.

The merger agreement limits Asia Bancshares' ability to pursue other transactions and may discourage other companies from trying to acquire Asia Bancshares for greater consideration than what Cathay has agreed to pay.

        The merger agreement contains provisions that make it more difficult for Asia Bancshares to sell its business to a person other than Cathay. These provisions include a general prohibition on Asia Bancshares soliciting any acquisition proposal or offer for a competing transaction. In some circumstances upon termination of the merger agreement, Asia Bancshares may be required to pay to Cathay a termination fee of $4 million. Further, there are only limited exceptions to Asia Bancshares' agreement that Asia Bancshares' board of directors will not withdraw or modify in a manner adverse to

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Cathay, the recommendation of Asia Bancshares' board of directors in favor of the adoption of the merger agreement.

        These provisions might discourage a potential third party that has an interest in acquiring all or a significant part of Asia Bancshares from considering or proposing that acquisition, even if that party were prepared to pay consideration with a higher per share cash or market value than that market value proposed to be received or realized in the merger, or might result in a potential competing acquirer proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances.

The loan portfolios may not perform as expected.

        Cathay's performance and prospects after the merger will depend to a significant extent on the performance of the combined loan portfolios of Cathay Bank and Asia Bank, and ultimately on the financial condition of their respective borrowers and other customers. The existing loan portfolios of the two banks differ to some extent in the types of borrowers, industries and credits represented. In addition, there are differences in the documentation, classifications, credit ratings and management of the portfolios. As a result, Cathay Bank's overall loan portfolio after the merger will have a different risk profile than the loan portfolio of either Asia Bank or Cathay Bank before the merger. The performance of the two loan portfolios will be adversely affected if any of such factors is worse than currently anticipated. In addition, to the extent that Cathay does not retain present customers or incurs additional expenses in retaining them, there could be adverse effects on future consolidated results of operations of Cathay following the merger.

Certain of the directors and officers of Asia Bancshares and Asia Bank may have interests in the merger that are different from those of Asia Bancshares' shareholders generally that may have influenced their decisions to support or recommend that you approve the merger.

        When considering the recommendation of Asia Bancshares' board of directors that Asia Bancshares shareholders adopt the merger agreement, Asia Bancshares shareholders should be aware that directors and executive officers of Asia Bancshares and Asia Bank have interests in the merger that may be different from or in addition to those of Asia Bancshares' shareholders. The interests include among others, payments to certain officers of Asia Bancshares and Asia Bank in respect of certain severance, retention and retirement benefits and rights of directors and officers of Asia Bancshares and its subsidiaries to ongoing indemnification and insurance coverage by the surviving company for acts or omissions occurring prior to the merger. See the section entitled "Interests of Certain Persons in the Merger." As a result of these interests, these directors and officers of Asia Bancshares and Asia Bank might be more likely to support and to vote in favor of the proposal described in this proxy statement/prospectus than if they did not have these interests. Asia Bancshares' shareholders should consider whether these interests might have influenced these directors and executive officers to support or recommend adoption of the merger agreement.

Asia Bancshares shareholders will have less influence as shareholders of Cathay than as shareholders of Asia Bancshares.

        Asia Bancshares shareholders currently have the right to vote in the election of the board of directors of Asia Bancshares and on other matters affecting Asia Bancshares. Upon completion of the merger, shareholders of Asia Bancshares who receive Cathay common stock in the merger and become a shareholder of Cathay will have a percentage ownership of Cathay that is significantly smaller than their percentage ownership of Asia Bancshares. Because of this, shareholders of Asia Bancshares will have less influence on the management and policies of Cathay than they have now on the management and policies of Asia Bancshares.

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Termination of the merger agreement could negatively impact Asia Bancshares.

        If the merger agreement is terminated, there may be various consequences. For example, Asia Bancshares' businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger. If the merger agreement is terminated and Asia Bancshares' board of directors seeks another merger or business combination, Asia Bancshares shareholders cannot be certain that Asia Bancshares will be able to find a party willing to pay the equivalent or greater consideration than that which Cathay has agreed to pay in the merger. In addition, if the merger agreement is terminated under certain circumstances relating to competing transaction proposals, Asia Bancshares will have to pay Cathay a termination fee of $4 million.

The fairness opinion obtained by Asia Bancshares from its financial advisor will not reflect changes in circumstances between signing the merger agreement and the completion of the merger.

        Asia Bancshares' financial advisor, The Kafafian Group, rendered an opinion as to the fairness of the merger dated January 20, 2015, to the Asia Bancshares' board of directors. Asia Bancshares has not obtained an updated fairness opinion as of the date of this proxy statement/prospectus from The Kafafian Group. Changes in the operations and prospects of Asia Bancshares or Cathay, general market and economic conditions and other factors that may be beyond the control of Asia Bancshares and Cathay, and on which the fairness opinion was based, may significantly alter the value of Asia Bancshares or Cathay or the prices of shares of Asia Bancshares common stock or Cathay common stock by the time the merger is completed. The opinion does not speak as of the time the merger will be completed or as of any date other than the date of such opinion. Because Asia Bancshares does not anticipate asking its financial advisor to update its opinion, the opinion will not address the fairness of the merger consideration, from a financial point of view, at the time the merger is completed. The opinion is attached as Appendix B to this proxy statement/prospectus. For a description of the opinion that Asia Bancshares received from its financial advisor, see "The Merger—Opinion of Financial Advisor." For a description of the other factors considered by Asia Bancshares' board of directors in determining to approve the merger, see "The Merger—Asia Bancshares' Reasons for the Merger; Recommendation of Asia Bancshares' Board of Directors."

The shares of Cathay common stock to be received by Asia Bancshares shareholders as a result of the merger will have different rights from the shares of Asia Bancshares common stock.

        Upon completion of the merger, Asia Bancshares shareholders will become Cathay shareholders and their rights as shareholders will be governed by the certificate of incorporation and bylaws of Cathay. The rights associated with Asia Bancshares common stock are different from the rights associated with Cathay common stock. Please see "Comparison of Stockholder Rights" for a discussion of the different rights associated with Cathay common stock.

The unaudited prospective financial information included in this proxy statement/prospectus may not be predictive of actual future results.

        The unaudited prospective financial information in this proxy statement/prospectus is presented for the purpose of providing certain information provided by Asia Bancshares' management to Cathay and to The Kafafian Group in connection with part of the analysis performed by The Kafafian Group in order to render its fairness opinion of the merger to the board of directors of Asia Bancshares. The unaudited prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, or GAAP. This information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement/prospectus are cautioned not to place undue reliance on the

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unaudited prospective financial information. Neither Asia Bancshares' independent auditors nor any other independent accountants have compiled, examined, or performed any procedures with respect to the unaudited prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or the achievability of the results predicted. The inclusion of such unaudited prospective financial information in this proxy statement/prospectus should not be regarded as an indication that such information will be predictive of actual future events or actual future results. Changes in the future operations and prospects of Asia Bancshares may be effected by general business, economic, financial and market conditions, many of which are beyond Asia Bancshares' control, are not reflected in the unaudited prospective financial information. In addition, the unaudited prospective financial information included in this proxy statement/prospectus does not give effect to the impact of the merger. For more information, see "Certain Unaudited Prospective Financial Information" beginning on page [      ].

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ASIA BANCSHARES SPECIAL MEETING OF SHAREHOLDERS

        This section contains information for Asia Bancshares shareholders about the special meeting that Asia Bancshares has called to allow its shareholders to consider and approve the merger agreement. Asia Bancshares is mailing this proxy statement/prospectus to you, as an Asia Bancshares shareholder, on or about [      ], 2015. Together with this proxy statement/prospectus, Asia Bancshares is also sending to you a notice of the special meeting of Asia Bancshares shareholders and a proxy card that Asia Bancshares' board of directors is soliciting for use at the special meeting and at any adjournments or postponements of the special meeting.

Date, Time, Place

        The special meeting of Asia Bancshares shareholders will be held on [      ], 2015 at [      ] a.m., local time, at [      ].

Matters to Be Considered

        At the special meeting of shareholders, you will be asked to consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of January 20, 2015, as amended by amendment no. 1 on March 9, 2015, and as it may be further amended from time to time, between Cathay General Bancorp, a Delaware corporation, and Asia Bancshares, Inc., a New York corporation.

Recommendation of Asia Bancshares' Board of Directors

        Asia Bancshares' board of directors has determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable, fair to Asia Bancshares shareholders and in the best interests of Asia Bancshares and its shareholders and has unanimously approved the merger and the merger agreement. Asia Bancshares' board of directors unanimously recommends that Asia Bancshares shareholders vote "FOR" adoption of the merger agreement. See "The Merger—Asia Bancshares' Reasons for the Merger; Recommendation of Asia Bancshares' Board of Directors" for a more detailed discussion of Asia Bancshares' board of directors' recommendation.

Record Date; Shares Outstanding and Entitled to Vote

        Asia Bancshares' board of directors has fixed the close of business on [      ], 2015 as the record date for determining the holders of shares of Asia Bancshares common stock entitled to receive notice of and to vote at the special meeting. At the close of business on the record date, there were [            ] shares of common stock issued and outstanding held by [            ] holders of record.

        Holders of record of Asia Bancshares common stock as of the record date are entitled to one vote per share.

Quorum

        The presence at the special meeting, in person or by properly executed proxy, of the holders of record of a majority of the issued and outstanding shares of Asia Bancshares common stock entitled to vote at the special meeting will constitute a quorum for the transaction of business. All shares of Asia Bancshares common stock, whether present in person or represented by proxy, including abstentions, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the Asia Bancshares special meeting.

Vote Required

        The affirmative vote of not less than two-thirds of all shares of Asia Bancshares common stock outstanding and entitled to vote thereon at the special meeting is required to approve the merger

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agreement. Because approval is based on the affirmative vote of two-thirds of shares outstanding, failure to vote with respect to the proposal to approve the merger agreement or an abstention will have the same effect as a vote against adoption of the merger agreement.

        As of the record date, Asia Bancshares' directors and executive officers beneficially owned and were entitled to vote approximately [            ] shares of Asia Bancshares common stock, representing approximately [      ]% of the total outstanding shares of Asia Bancshares common stock. Certain directors and executive officers of Asia Bancshares and their family members who beneficially own and have the right to vote 622,868.94 shares, or approximately [      ]% of the shares of Asia Bancshares common stock outstanding as of the record date, have agreed to vote their shares in favor of adoption of the merger agreement.

Voting of Proxies; Incomplete Proxies

        Each copy of this proxy statement/prospectus mailed to holders of Asia Bancshares common stock is accompanied by a proxy card with instructions for voting. You should complete and return the proxy card accompanying this proxy statement/prospectus, regardless of whether you plan to attend the special meeting.

        Asia Bancshares shareholders should not send Asia Bancshares stock certificates with their proxy cards.

        All shares represented by valid proxies that Asia Bancshares receives through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card. If you sign your proxy card, but make no specification on your proxy card as to how you want your shares voted, your proxy will be voted "FOR" adoption of the merger agreement. No matters other than the matters described in this proxy statement/prospectus are anticipated to be presented for action at the special meeting or at any adjournment or postponement of the special meeting.

Revocability of Proxies and Changes to an Asia Bancshares Shareholder's Vote

        You may revoke your proxy at any time before the vote is taken at the special meeting by: (1) signing and returning a proxy card with a later date before the special meeting; (2) delivering a written revocation letter to Asia Bancshares' corporate secretary before the special meeting; or (3) attending the special meeting in person, notifying the corporate secretary of your revocation and voting by ballot at the special meeting.

        Any shareholder entitled to vote in person at the special meeting may vote in person regardless of whether a proxy has been previously given. However, the mere presence of a shareholder at the special meeting without voting will not constitute revocation of a previously given proxy.

        Written notices of revocation and other communications about revoking your proxy should be addressed to:

Asia Bancshares, Inc.
135-34 Roosevelt Avenue
Flushing, New York 11354
Attention: Tom W.H. Yuan, Corporate Secretary

Solicitation of Proxies

        If necessary, Asia Bank may use several of its regular employees, who will not be specially compensated, to solicit proxies from the Asia Bancshares shareholders, either personally or by telephone, facsimile, letter or other electronic means.

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Attending the Meeting

        All shareholders of record are invited to attend the special meeting and can vote in person at the special meeting. If you are not a shareholder of record, but you are the beneficial owner of shares of Asia Bancshares common stock, you must obtain a proxy, executed in your favor, from the record holder of your shares, to be able to vote in person at the special meeting. If you plan to attend the special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership. In addition, you must bring a form of personal photo identification with you in order to be admitted. Asia Bancshares reserves the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification. The use of cameras, sound recording equipment, communications devices or any similar equipment during the special meeting is prohibited without Asia Bancshares' express written consent.

Assistance

        If you have any questions concerning the merger or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus or need help voting your shares of Asia Bancshares common stock, please contact:

Asia Bancshares, Inc.
135-11 Roosevelt Avenue
Flushing, New York 11354
Attention: Jeffrey Hsu
Telephone number (718) 961-9898

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THE MERGER

        The following is a brief description of the material aspects of the merger. There are other aspects of the merger that are not discussed below, but that are contained in the merger agreement. You are being asked to approve the merger agreement, and you are urged to read the merger agreement carefully. The merger agreement is attached to this proxy statement/prospectus as Appendix A and is incorporated by reference into this document.

Background of the Merger

        As part of its ongoing consideration and evaluation of its long-term prospects and strategies, Asia Bancshares' board of directors and senior management have regularly reviewed and assessed its business strategies and objectives, including potential strategic opportunities. Over the past year, in light of the age of several key members of the senior management team and of the board of directors and the likely impending retirement of such members in the relative near-term, the board of directors of Asia Bancshares has considered its strategic alternatives, including a potential strategic combination with another financial institution. In contemplating such a transaction, the board of directors was focused on enhancing value for the shareholders of Asia Bancshares, in a manner that would provide greater liquidity to the shareholders of Asia Bancshares, and provide the opportunity to continue to own shares in a resulting financial institution that would maintain and grow the company's current franchise and continue to service the communities and customer base with which Asia Bancshares created and developed relationships since it first began its operations.

        Bearing that in mind, the board of directors began to explore the opportunities for a merger and the financial institutions that could potentially meet Asia Bancshares' criteria for a merger partner. During 2014, the board received several indications of interest from financial institutions to merge with Asia Bancshares or to acquire all of the common stock of Asia Bancshares. The board of directors reviewed and discussed each of the indications of interest and discussed them with their legal counsel, Lamb and Barnosky, LLP ("Lamb and Barnosky"). In each instance, the board determined that a merger with, or acquisition by, the potential merger partner or acquirer was not in the best interest of the shareholders of Asia Bancshares common stock. The reasons the board of directors reached this conclusion and did not pursue negotiations with those potential partners varied, but included: the determination by the board of directors that the purchase price or merger consideration offered in the transaction was insufficient and was not likely to be increased to a satisfactory level through negotiation; the board of directors' skepticism of the potential partner's having sufficient capital or the ability to raise sufficient capital to complete the proposed transaction; the risk that the proposed transaction would not receive the required regulatory approvals, and the risk that the transaction would not be completed within a timely manner.

        In November 2014, the board of directors retained the services of Nai-Ching Sun, a commercial business broker, to identify and introduce to Asia Bancshares, prospective purchasers meeting Asia Bancshares' criteria, who were interested in a merger transaction. Shortly thereafter, Mr. Sun introduced Asia Bancshares' chairman of the board of directors, Jentai Tsai to Dunson K. Cheng, the Chairman of the board of directors of Cathay. Mr. Tsai and Mr. Cheng knew each other and were familiar with each other's company because, over the years, they had general discussions regarding the similarities of their companies and the potential to join forces in the future. On November 20, 2014, following several preliminary conversations between Mr. Tsai and Mr. Cheng regarding the potential for a strategic business combination between Cathay and Asia Bancshares, Cathay delivered a non-binding letter of intent which made a proposal for the merger of Cathay and Asia Bancshares with total consideration of $126 million payable to the holders of Asia Bancshares common stock based on a target total book value for Asia Bancshares of $78.75 million, with the total consideration being increased on a dollar for dollar basis to the extent that Asia Bancshares' book value at the closing of the transaction exceeded $78.75 million. The letter of intent also provided for the merger consideration

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to be paid in cash and in common stock of Cathay at the election of the shareholders of Asia Bancshares common stock, subject to a minimum of 45% and a maximum of 55% of the outstanding shares of Asia Bancshares being converted into the right to receive Cathay common stock, and contemplated that the transaction that would be structured to qualify as a "reorganization" within the meaning of Section 368(a) of the Code. It also emphasized the importance of retention for integration purposes and the success of the combined franchise, and provided for the establishment, by Cathay, of a pool to be used for retention, severance and/or retirement commitments to Asia Bank's key management and employees. Based on the indications of interest that the board of directors previously received and the bank merger climate in recent years, the board of directors concluded that a superior proposal was not likely to be forthcoming from additional introductions to or identifications of potential merger partners. Later that day, Asia Bancshares and Cathay entered into a Non-Disclosure Agreement to permit each other to conduct preliminary due diligence in connection with the potential transaction.

        Following receipt of the letter of intent from Cathay, Mr. Tsai advised the board and consulted with Lamb and Barnosky. The consensus of the members of the board was to direct Mr. Tsai to continue to negotiate the terms of the letter of intent. Between November 20 and December 1, 2014, Mr. Tsai had written and telephone communications with Mr. Cheng regarding certain aspects of the letter of intent and during this time period Asia Bancshares and Cathay exchanged financial information about their respective companies as part of their preliminary due diligence review. Following these discussions, Cathay submitted a revised letter of intent on December 1, 2014, which amended the original proposal from Cathay to provide, among other things, for the willingness of Cathay to register with the Securities and Exchange Commission, the common shares to be issued to the shareholders of Asia Bancshares who elect to receive the merger consideration in the form of common shares of Cathay so that such shares would be freely tradable upon receipt, an agreement not to close the transaction prior to May 15, 2015 and confirmation that Asia Bancshares would have the opportunity to conduct customary reverse due diligence on Cathay. Mr. Tsai discussed the proposal with the members of the board of directors and Lamb & and Barnosky. With the approval of the members of the board of directors, Mr. Tsai executed the non-binding letter of intent from Cathay dated December 1, 2014 as an indication of Asia Bancshares willingness to proceed with further discussions regarding a potential transaction. The letter of intent did not create an obligation on the part of either company with respect to a potential transaction.

        On December 5, 2014, Cathay sent an initial proposed draft merger agreement to Asia Bancshares. On December 6 and 7, 2014 representatives of Cathay conducted an on-site due diligence examination of Asia Bank's loan portfolio at the Asia Bank's Loan Center in Flushing, New York. On December 17, 2015, Asia Bancshares' board of directors met to review the status of the proposed merger with Cathay. Mr. Tsai, along with Lamb and Barnosky provided an overview of the proposed transaction and an update on the status of the negotiations of a merger agreement. The members of the board of directors discussed the need for a professional evaluation by a third party as to whether the terms of the final, negotiated terms of the merger were fair to the holders of Asia Bancshares common stock, and the estimates for the cost and the time of completion that had been obtained for those services. The board of directors authorized Mr. Tsai to engage The Kafafian Group for that purpose, which it determined to engage on the basis of its qualifications, industry experience, reputation and past assistance with providing financial advisory services to financial institutions. The board of directors also authorized Mr. Tsai and Lamb and Barnosky to continue negotiations with Cathay and to finalize a merger agreement that is in substantial accordance with the terms set forth in the letter of intent dated December 1, 2014, that the board will review and determine whether or not to approve.

        On December 23, 2014, Lamb and Barnosky sent a revised draft of the merger agreement to Cathay's outside counsel, Wachtell, Lipton, Rosen & Katz ("Wachtell Lipton"). Over the next few weeks, Cathay and Asia Bancshares continued their negotiation of the merger agreement as well as the

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form of voting agreement to be signed by certain stockholders of Asia Bancshares. During this time, the parties resolved the remaining open items in the merger agreement.

        On January 20, 2015, the board of directors of Asia Bancshares met to consider the terms of the proposed merger with Cathay. At the meeting, members of Asia Bancshares management reported on the status of the due diligence of Cathay and the status of the negotiations with Cathay. Representatives of Lamb and Barnosky reviewed with the board its fiduciary duties and the proposed financial terms of the transaction with Cathay and additional information, including the terms of the voting and support agreements that were proposed to be executed at the same time as the merger agreement by members of the board of directors. Representatives of The Kafafian Group reviewed its financial analysis of the proposed transaction with the board and rendered their oral opinion (subsequently delivered in writing at the conclusion of the meeting), as described in "Opinion of Asia's Financial Advisor", that as of January 20, 2015, and based upon and subject to the assumptions, considerations, qualifications and limitations set forth in the written opinion, the consideration to be received by the shareholders of Asia Bancshares common stock, pursuant to the agreement, was fair to such shareholders, from a financial point of view. Asia Bancshares' management, Lamb and Barnosky and The Kafafian Group took questions from the board of directors regarding the merger and the agreement.

        Following those discussions and presentations by management and Asia Bancshares' advisors, the members of Asia Bancshares board of directors reviewed and discussed the proposed merger and related matters, including the factors described under "Asia Bancshares' Reasons for the Merger; Recommendations." After these deliberations, Asia Bancshares' board of directors determined that the merger, the agreement and the transactions contemplated by the agreement were advisable and in the best interests of Asia Bancshares and its shareholders, and the directors voted unanimously to approve the merger, to approve and adopt the agreement and to recommend that Asia Bancshares' shareholders approve and adopt the merger agreement.

        Subsequently, the merger agreement and related agreements were executed and delivered on January 20, 2015, and the following day, the transaction was announced in a press release issued jointly by Cathay and Asia Bancshares.

        On March 9, 2015, the parties amended the merger agreement to increase the employee pool from $3.4 million to up to $3.8 million due to certain staffing considerations following the announcement of the merger agreement. The amendment was approved by the Asia Bancshares board of directors on March 6, 2015 by unanimous written consent.

Asia Bancshares's Reasons for the Merger; Recommendation of Asia Bancshares's Board of Directors

        After careful consideration, Asia Bancshares' board of directors, at a meeting held on January 20, 2015 and again by written consent on March 6, 2015, unanimously determined that the merger agreement and the transactions contemplated by the merger agreement were advisable and in the best interests of Asia Bancshares and its stockholders and approved the merger agreement and the transactions contemplated by the merger agreement, including the merger. Accordingly, Asia Bancshares' board of directors recommends that Asia Bancshares shareholders vote "FOR" approval and adoption of the merger agreement at the Asia Bancshares special meeting.

        In reaching its decision, the board of directors, with advice from its financial and legal advisors, considered a number of factors, including the following:

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        The reasons set forth above are not intended to be exhaustive, but a summary of the material factors considered by Asia Bancshares' board of directors in approving the merger agreement. Although each member of Asia Bancshares' board of directors individually considered these and other factors, the board did not collectively assign any specific or relative weights to the factors considered and did not make any determination with respect to any individual factor. The board collectively made its determination with respect to the merger based on the conclusion reached by its members, in light of the factors that each of them considered appropriate, that the merger is in the best interests of Asia Bancshares and its shareholders. Asia Bancshares' board of directors realized that there can be no assurance about future results, including results expected or considered in the factors listed above. The board concluded, however, including based on discussions with senior management and its financial and legal advisors, that the potential positive factors outweighed the potential risks of entering into the merger agreement.

        The foregoing discussion of the information and factors considered by the Asia Bancshares Board is forward-looking in nature and this information should be read in light of the factors described under the section entitled "Forward-Looking Statements" beginning on page [    ] of this proxy statement/prospectus.

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Opinion of Asia Bancshares' Financial Advisor

        By letter dated December 15, 2014, Asia Bancshares engaged The Kafafian Group to render an opinion as to the fairness, from a financial point of view, to the holders of Asia Bancshares common shares ("Common Shares"), of the consideration to be paid pursuant to the merger agreement.

        The board of directors of Asia Bancshares engaged The Kafafian Group based on The Kafafian Group's qualifications, industry experience, reputation and past assistance with providing financial advisory services to financial institutions. The Kafafian Group, as part of its financial advisory business, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, and valuations for corporate and other purposes. In the ordinary course of business, The Kafafian Group provides consulting services to financial institutions, including performance measurement; profitability outsourcing; strategic, capital, and business planning; regulatory assistance; profit improvement; and various other financial advisory services. The Kafafian Group has not provided any services to either Asia Bancshares or Cathay within the past two years.

        At the request of Asia Bancshares board of directors, representatives of The Kafafian Group participated in a special board meeting held on January 20, 2015, at which the Asia Bancshares board of directors considered the proposed merger with Cathay. At that meeting, representatives of The Kafafian Group made a presentation to the board of directors of The Kafafian Group's analyses relating to the proposed transaction and, in particular, of The Kafafian Group's determination regarding the fairness, from a financial point of view, of the proposed merger consideration to be paid to Asia Bancshares' shareholders. At that meeting, The Kafafian Group issued its written opinion that the merger consideration to be paid to Asia Bancshares' shareholders by Cathay pursuant to the merger agreement was fair from a financial point of view. Except as discussed herein, no limitations were imposed by Asia Bancshares board of directors upon The Kafafian Group with respect to investigations made or procedures followed in rendering The Kafafian Group's fairness opinion.

        The full text of The Kafafian Group's written fairness opinion is attached to this proxy statement/prospectus as Appendix B and is incorporated herein by reference. Asia Bancshares' shareholders are urged to read the opinion in its entirety for a description of the procedures followed, assumptions made, matters considered, and qualifications and limitations of The Kafafian Group's analyses. The Kafafian Group's opinion addressed to the board of directors of Asia Bancshares is directed only to the merger consideration to be paid to Asia Bancshares' shareholders and does not constitute a recommendation as to how any shareholder of Asia Bancshares should vote with respect to the merger or any other matter. The Kafafian Group's opinion speaks only as of the date of the opinion.

        In rendering its opinion, The Kafafian Group, among other things:

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        The Kafafian Group spoke with certain members of senior management and other representatives of Asia Bancshares and Cathay to discuss the foregoing, as well as matters The Kafafian Group deemed relevant. As part of its analyses, The Kafafian Group took into account its assessment of general economic, market and financial conditions, its experience in similar transactions, as well as its experience in and knowledge of the banking industry. The Kafafian Group's opinion is based upon conditions as they existed and could be evaluated on the respective dates thereof and the information made available to The Kafafian Group through the respective dates thereof.

        The Kafafian Group assumed and relied upon the accuracy and completeness of all of the financial and other information reviewed and/or discussed for the purposes of its opinion, without independent investigation. The Kafafian Group assumed that the financial forecasts relied upon by The Kafafian Group were prepared on a basis that reflected the best currently available estimates and judgments of senior management of each of Asia Bancshares and Cathay and were based on reasonable assumptions, estimates and judgments. Any estimates contained in the analyses performed by The Kafafian Group are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by these analyses. Additionally, estimates of the values of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities might actually be sold.

        The Kafafian Group did not make any independent evaluation or appraisals of either Asia Bancshares or Cathay or their respective assets or liabilities, nor was it furnished with any such appraisals. The Kafafian Group has not made a review of the loans or loan loss reserves or reviewed any individual loan files of Asia Bancshares or Cathay. The Kafafian Group did not conduct a physical inspection of any properties or facilities of Asia Bancshares or Cathay. The Kafafian Group also assumed, without independent verification, that the aggregate allowances for loan losses for Asia Bancshares and Cathay were adequate.

        On January 20, 2015, The Kafafian Group rendered its written fairness opinion to the Asia Bancshares board of directors. The summary set forth below does not purport to be a complete description of the analyses performed by The Kafafian Group in connection with the merger. The preparation of a fairness opinion involves various determinations as to the most appropriate and relevant methods of financial analysis and the application of these methods to the particular circumstances. Therefore, the fairness opinion is not readily translated to a summary description and as such, The Kafafian Group believes that its analyses must be considered as a whole. Only selecting portions of The Kafafian Group's analyses and of the factors considered by The Kafafian Group could create for a reader of the materials an incomplete view of the evaluation process underlying the opinion. No one component of the analyses performed by The Kafafian Group was assigned a greater significance than another component. Taken as a whole, The Kafafian Group believes these analyses support the conclusion that the merger consideration to be paid by Cathay to Asia Bancshares' shareholders is fair, from a financial point of view, to Asia Bancshares' shareholders.

        Proposal Summary—As a result of the merger, each outstanding share of common stock of Asia Bancshares shall cease to be outstanding and shall be converted into the right to receive consideration for each share of common stock that the shareholder owns (the "Per Share Consideration"). The shareholders of Asia Bancshares' common stock will be permitted to elect to receive the Per Share Consideration in cash or shares of Cathay common stock subject to (i) a maximum of 55% of the outstanding shares of Asia Bancshares' common stock being converted into common stock of Cathay,

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subject to clause (iii) (the "Maximum Stock Conversion Number"), (ii) a minimum of 45% of the outstanding shares of Asia Bancshares' common stock being converted into common stock of Cathay, subject to clause (iii) (the "Minimum Stock Conversion Number"), given (iii) that if the Cathay volume weighted average price on each of the 10 consecutive trading days ending on the fifth trading day prior to the date of the merger is less than $20.00 per share, the minimum number of shares necessary for the value of the stock consideration to represent 41% of the value of the merger consideration at closing will be converted into Cathay common stock (the "Designated Stock Conversion Number"). The value of the shares of Cathay common stock received in respect of the Per Share Consideration may be greater than, equal to or less than the value of the cash received in respect of the Per Share Consideration, depending upon the mix of merger consideration elected by shareholders of Asia Bancshares' common stock, the Cathay closing price and the applicable Exchange Ratio. The merger consideration was determined by negotiation between Cathay and Asia Bancshares and was not determined by The Kafafian Group. The exact terms of the merger consideration, Exchange Ratio, Maximum Stock Conversion Number, Minimum Stock Conversion Number and Designated Stock Conversion Number are more fully set forth in the merger agreement.

        Contribution Analysis—The Kafafian Group reviewed the contribution made by each of Asia Bancshares and Cathay to various balance sheet and income statement categories of the combined company based on financial data at or for the quarter ended September 30, 2014. The Kafafian Group analyzed the contributions of each of Asia Bancshares and Cathay to the combined company under a wide range of merger consideration scenarios. Assuming the merger consideration was comprised of 55% stock and 45% cash to the shareholders of Asia Bancshares common stock, the analysis showed that Asia Bancshares would contribute the following percentages to the combined company:

        Going-Concern Range of Value Analysis—The Kafafian Group evaluated commonly used income approaches that could be used to estimate the going-concern value of Asia Bancshares as an independent company. The Kafafian Group ultimately decided to use a capitalized earnings method to evaluate the range of value for Asia Bancshares' common stock. The primary assumption made by The Kafafian Group was that Asia Bancshares would continue to operate as an independent company. The capitalized earnings model for Asia Bancshares uses a projected net income stream, applies a terminal earnings multiple to last period's net income and then discounts the net income stream and terminal value to arrive at a present value for a share of Asia Bancshares' common stock. The range of value produced by the capitalized earnings model analysis was then compared to the Per Share Consideration value per share of $86.30 (assuming that the aggregate merger consideration is $126 million and based on the number of shares of Asia Bancshares' outstanding at January 20, 2015) that was offered to shareholders of Asia Bancshares common stock by Cathay.

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        The following additional assumptions were made by The Kafafian Group in preparing a range of value for Asia Bancshares on a going-concern basis:

        The following table summarizes the results of the capitalized earnings model:

 
  Trading Price / Earnings
Multiple (x)
 
Discount Rate   12.0   14.0   16.0  
  9.00 % $ 38.04   $ 44.38   $ 50.72  
  11.00 % $ 34.76   $ 40.55   $ 46.35  
  13.00 % $ 31.82   $ 37.12   $ 42.42  

        The Kafafian Group noted that the Per Share Consideration was 113% greater than the midpoint value per common share of $40.55.

        Although the capitalized earnings method is a widely used valuation methodology, it relies on numerous assumptions, including balance sheet and earnings growth rates, discount rates, and market trading multiples that may ultimately be materially different than those actually realizable or available in the capital markets. Therefore, the range of value developed by The Kafafian Group does not purport to be indicative of the actual values or expected values of Asia Bancshares common stock.

Peer Group Analysis:

        An integral part of the evaluation of Asia Bancshares is to compare the financial condition and financial performance of Asia Bancshares to commercial banking organizations that possess characteristics similar to that of Asia Bancshares. For the purpose of the peer analysis, financial information for Asia Bancshares, to the extent available, and Asia Bank was used for comparative purposes. The Kafafian Group undertook a series of "Peer Group" comparisons as part of its analyses of the potential range of value of Asia Bancshares on a going-concern basis. For the purposes of The Kafafian Group's analysis, three peer groups were prepared (the "Asia Bank Peers").

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        Asia Bank—The Kafafian Group compared certain of Asia Bank's financial condition and financial performance measures to three groups of financial institutions. The financial condition and financial performance data for Asia Bank's and all companies in the peer groups was as of or for the latest twelve months ended September 30, 2014. For those peer group members that were publicly traded companies, market data were as of January 16, 2015.

        The first peer group was termed by The Kafafian Group as "Relational Peers," Companies in this peer group were included based on four screening criteria (i) publicly-traded commercial banks or holding companies with total assets between $250 million and $750 million, (ii) were headquartered in any state in the U.S., (iii) had a non-performing assets to total assets ratio as of September 30, 2014 of less than 1.00% and, (iv) had commercial real estate loans to total loans comprised of greater than 60% of the total loan portfolio as of September 30, 2014. The Kafafian Group has listed the nine (9) companies that comprise the Relational Peers are shown in the table below labeled "Asia Bank Peer Group Members."

        The second peer group was termed by The Kafafian Group as "MSA Peers," Companies in this peer group were included based on three screening criteria (i) publicly-traded commercial banks or holding companies with total assets between $250 million and $750 million, (ii) located in the Northeast and, (iii) were headquartered in metropolitan areas as classified by SNL Financial, L.C. The ten (10) companies that comprise the MSA Peers are shown in the table below labeled "Asia Bank Peer Group Members."

        The third peer group was termed by The Kafafian Group as "National Peers," Companies in this peer group were included based on two screening criteria (i) publicly-traded commercial banks or holding companies with total assets between $250 million and $750 million, (ii) were headquartered in any state in the U.S. There are 286 companies that comprise the National Peers and are not shown in the table below labeled "Asia Bank Peer Group Members."

Asia Bank Peer Group Members

Relational Peers   MSA Peers
Bank of Santa Clarita   Allegheny Valley Bancorp, Inc.
Capital Bank of New Jersey   Bancorp of New Jersey, Inc.
CommerceWest Bank   Country Bank
Farmers and Merchants Bank   Enterprise Bank
First Miami Bancorp, Inc.   First American International Corp.
Focus Business Bank   IBW Financial Corporation
Open Bank   National Capital Bank of Washington
Plaza Bank   Patriot National Bancorp, Inc.
Seacoast Commerce Banc Holdings   SBT Bancorp, Inc.
    VSB Bancorp, Inc.

Note: National Peers not listed due to length of list.

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        The following table provides a summary comparison of Asia Bank's financial condition and financial performance to that of the median for each of the Asia Bank Peers:

(financial data at or for the latest twelve months ended
September 30, 2014)
  Asia
Bank
  Relational
Peers
(Median)
  MSA
Peers
(Median)
  National
Peers
(Median)
 

Total Assets ($000s)

  $ 492,002   $ 386,223   $ 422,193   $ 435,117  

Equity/ Assets (%)

    14.53     10.06     9.19     9.87  

Tang. Equity/ Tang. Assets (%)

    14.53     10.06     9.19     9.64  

Loans/ Deposits (%)

    98.99     81.81     83.31     80.79  

NPAs/ Total Assets (%)

    0.61     0.31     1.43     1.49  

Reserves/ NPAs (%)

    192.39     259.60     61.73     60.06  

Net Interest Margin (%)

    4.26     4.13     3.41     3.59  

Non-Int. Income/ Average Assets (%)

    0.23     0.60     0.74     0.71  

Non-Int. Expense/ Average Assets (%)

    2.24     2.82     3.08     3.06  

Efficiency Ratio (FTE basis) (%)

    50.36     70.05     78.47     72.97  

Non-Int. Income/ Operating Rev. (%)

    5.09     16.89     19.82     17.30  

Return on Average Assets (%)

    1.10     0.90     0.47     0.74  

Return on Average Common Equity (%)

    7.73     7.89     5.47     7.46  

Market Capitalization ($millions)

        $ 40.8   $ 34.9   $ 39.8  

Price/ Book (%)

          98.08     96.01     96.20  

Price/ Tangible Book (%)

          101.03     97.38     99.98  

Price/ LTM Earnings (x)

          15.4     14.3     12.6  

Dividend Yield (%)

          0.95     2.04     2.34  

        The following table compares Asia Bancshares' September 30, 2014 book value per share to (i) the low, midpoint and high values from the capitalized earnings model and (ii) the imputed value of Asia Bancshares based on the median price/book for each of the three peer groups that comprise the Asia Bancshares' Peers.

 
  Values from Capitalized
Earnings Model
  Valuations Imputed from Asia
Bancshares' Peers (Price/Book)
 
Asia Bancshares Book Value per Share 09/30/2014
  Min   Mid   Max   Relational   MSA   National  

$52.39

  $ 31.82   $ 40.55   $ 50.72   $ 51.38   $ 50.30   $ 50.40  

        The Kafafian Group noted that the Per Share Consideration of $86.30 was above imputed values per share for Asia Bancshares.

        Cathay General Bancorp—The Kafafian Group compared certain of Cathay's financial condition and financial performance measures to three groups of financial institutions that are believed to possess characteristics similar to that of Cathay (the "Cathay Peers"). The financial condition and financial performance data for Cathay and all companies in the peer groups was as of or for the latest twelve months ended September 30, 2014. For those peer group members that were publicly traded companies, market data was as of January 16, 2014.

        The first peer group was termed by The Kafafian Group as "Proxy Peers," Companies in this peer group were included based on the institutions represented in Cathay's 2013 Proxy Statement (any member involved in a merger/acquisition was eliminated). The 14 companies that comprise the Proxy Peers are shown in the table below labeled "Cathay Peer Group Members."

        The second peer group was termed by The Kafafian Group as "Relational Peers," Companies in this peer group were included based on four screening criteria (i) publicly-traded commercial banks or holding companies with total assets between $5 billion and $15 billion, (ii) were headquartered in any

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state in the U.S., (iii) had a non-performing assets to total assets ratio as of September 30, 2014 of less than 2.50% and, (iv) had an efficiency ratio for the last twelve months ended September 30, 2014 of less than 60%. The 18 companies that comprise the Relational Peers are shown in the table below labeled "Cathay Peer Group Members."

        The third peer group was termed by The Kafafian Group as "National Peers," Companies in this peer group were included based on two screening criteria (i) publicly-traded commercial banks or holding companies with total assets between $5 billion and $15 billion, (ii) were headquartered in any state in the U.S. The 47 companies that comprise the National Peers are not shown in the table below labeled "Cathay Peer Group Members."

Proxy Peers   Relational Peers
Bank of Hawaii Corporation   Bank of Hawaii Corporation
BBCN Bancorp, Inc.   BBCN Bancorp, Inc.
City National Corporation   Community Bank Systems, Inc.
CVB Financial Corp.   CVB Financial Corp.
East West Bancorp, Inc.   Farmers & Merchants Bank of Long Beach First Financial Bankshares, Inc.
MB Financial, Inc.   Glacier Bancorp, Inc.
National Penn Bancshares, Inc.   Great Western Bancorp, Inc.
PacWest Bancorp   Home BancShares, Inc.
PrivateBancorp, Inc.   International Bancshares Corporation
Prosperity Bancshares, Inc.   National Penn Bancshares, Inc.
SVB Financial Group   Pinnacle Financial Partners, Inc.
Umpqua Holdings Corporation   Sterling Bancorp
Valley National Bancorp   Texas Capital Bancshares, Inc.
Western Alliance Bancorporation   United Bankshares, Inc.
    United Community Banks, Inc.
    WesBanco, Inc.
    Western Alliance Bancorporation

Cathay Peer Group Members

Note: National Peers not listed due to length of list.

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        The following table provides a summary comparison of Cathay financial condition and financial performance to that of the median for each of the Cathay Peers:

(financial data at or for the latest twelve months ended
September 30, 2014)
  Cathay
General
Bancorp
  Proxy
Peers
(Median)
  Relational
Peers
(Median)
  National
Peers
(Median)
 

Total Assets ($billions)

  $ 11.6   $ 15.6   $ 7.5   $ 7.5  

Equity/ Assets (%)

    13.54     11.19     12.79     12.15  

Tang. Equity/ Tang. Assets (%)

    11.11     9.15     9.52     8.87  

Loans/ Deposits (%)

    101.73     87.53     82.98     86.93  

NPAs/ Total Assets (%)

    1.87     0.77     0.99     1.02  

Reserves/ NPAs (%)

    77.84     97.95     76.54     76.44  

Net Interest Margin (%)

    3.34     3.62     3.70     3.65  

Non-Int. Income/ Avg. Assets (%)

    0.31     0.73     0.69     1.07  

Non-Int. Expense/ Avg. Assets (%)

    1.60     2.31     2.31     2.82  

Efficiency Ratio (FTE basis) (%)

    47.00     54.14     54.30     61.95  

Non-Int. Income/ Operating Rev. (%)

    9.13     17.01     18.03     24.00  

Return on Avg. Assets (%)

    1.24     1.13     1.14     1.07  

Return on Avg. Common Equity (%)

    8.91     9.86     9.59     8.65  

Market Capitalization ($millions)

  $ 1,883.4   $ 2,449.8   $ 1,524.8   $ 1,156.7  

Price/ Book (%)

    119.92     141.46     148.18     123.76  

Price/ Tangible Book (%)

    150.22     201.91     205.89     167.41  

Price/ LTM Earnings (x)

    14.1     16.0     16.2     15.7  

Dividend Yield (%)

    1.69     2.66     2.66     2.54  

        The Kafafian Group noted that the Cathay's valuation metrics were lesser than those of the median for each of the Cathay Peers. The Kafafian Group also noted that the median estimate made by security analysts that follow Cathay for a one year target stock price for Cathay as of January 16, 2015 was $27.86 per share.

        Comparable Transaction Analysis—The Kafafian Group reviewed various financial condition, financial performance and acquisition multiples for four groups of institutions that The Kafafian Group believed to have characteristics similar to that of Asia Bancshares (the "Asia Bancshares Comp. Deal Groups"). The Kafafian Group then compared the acquisition multiples for the Cathay and Asia Bancshares transaction relative to the median acquisition multiples derived from the transactions that comprised the Asia Bancshares Comp. Deal Groups.

        The first set of transactions included commercial bank transactions announced after January 1, 2012 where the target bank was (i) located in either the Mid-Atlantic or Northeast region of the U.S., (ii) had a transaction value between $75 million to $150 million and, (iii) excluded any transactions involving private equity investors. The criteria resulted in a list of eight (8) merger and acquisition transactions that possessed characteristics similar to that of the merger ("Deal Value Comp. Deals"). The median transaction pricing metrics for this group are shown in the table below.

        The second set of transactions included commercial bank transactions announced after January 1, 2012 where the transaction (i) had a transaction value between $75 million to $150 million, (ii) the target bank had a non-performing assets to total assets ratio at announcement of less than 1.00%, (iii) the target bank was located in any state in the U.S. and, (iv) excluded any transaction involving private equity investors. The criteria resulted in a list of eight (8) merger and acquisition transactions that possessed characteristics similar to that of the merger ("High Credit Quality Comp. Deals"). The median transaction pricing metrics for this group are shown in the table below.

        The third set of transactions included commercial bank transactions announced after January 1, 2012, where the target bank was (i) located in either the Mid-Atlantic or Northeast region of the U.S.,

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(ii) had commercial real estate loans to total loans greater than 60% of the total loan portfolio at announcement and, (iii) excluded any transactions involving private equity investors. The criteria resulted in a list of five (5) merger and acquisition transactions that possessed characteristics similar to that of the merger ("High CRE Comp. Deals"). The median transaction pricing metrics for this group are shown in the table below.

        The fourth and final set of transactions included commercial bank transactions announced after January 1, 2012, where the target bank was (i) located in either New York or New Jersey, (ii) had a return on average equity for the twelve months previous to the announcement date that was greater than or equal to 5.00% and, (iii) excluded any transactions involving private equity investors. The criteria resulted in a list of eleven (11) merger and acquisition transactions that possessed characteristics similar to that of the merger ("NJ / NY Comp. Deals"). The median transaction pricing metrics for this group are shown in the table below.

        The following table compares certain valuation metrics of the transaction between Cathay and Asia Bancshares to certain valuation metrics of the Asia Bancshares Comp. Deal Groups:

Transaction Valuation Metric
  Cathay/
Asia
Bancshares
  Deal Value
Comp. Deals
  High Credit
Quality
Comp. Deals
  High CRE
Comp. Deals
  NJ / NY
Comp. Deals
 

Deal Value ($M)

  $ 126.0   $ 97.5   $ 113.9   $ 26.9   $ 135.0  

Price/ Book (%)

    164.73     154.39     157.71     110.61     132.07  

Price/ Tangible Book (%)

    164.73     164.79     162.26     110.61     151.10  

Price/ LTM EPS (x)

    22.7     26.3     17.9     14.2     18.8  

Price/ Deposits (%)

    30.14     17.17     17.17     17.88     17.24  

Franchise Premium/ Core Deposits (%)

    16.7     8.47     8.24     0.73     7.84  

        The Kafafian Group then compared the Per Share Consideration for the merger with the imputed value per common share for Asia Bancshares based on select median transaction metrics for three (3) of the Asia Bancshares Comp. Deal Groups. The High CRE Comp. Deals were not included as they resulted in the lowest imputed values. The following table summarizes the imputed value for Asia Bancshares on a change-of-control basis using certain transaction value metrics from the Deal Value Comp. Deals, High Credit Quality Comp. Deals and the NJ/NY Comp. Deals:

 
  Deal Value Comp. Deals   High Credit Quality
Comp. Deals
  NJ / NY Comp. Deals  
Asia Bancshares Book Value per Share
09/30/2014
  Price/
Book
  Price/
Tang.
Book
  Price/
LTM
EPS
  Price/
Book
  Price/
Tang.
Book
  Price/
LTM
EPS
  Price/
Book
  Price/
Tang.
Book
  Price/
LTM
EPS
 

$52.39

  $ 80.88   $ 86.33   $ 96.86   $ 82.62   $ 85.00   $ 65.91   $ 69.19   $ 79.16   $ 69.19  

        The Kafafian Group noted that the Per Share Consideration of $86.30 compared favorably to the imputed values. The Kafafian Group also noted that Asia Bancshares had a substantially higher level of capital than the median capital levels for the Asia Bancshares Comp. Deal Groups.

        In evaluating the various financial condition, financial performance, trading multiples and acquisition multiples for the proposed Cathay / Asia Bancshares transaction, it is important to note that no company or transaction in the preceding analyses is identical to Asia Bancshares, Cathay, or the merger. Accordingly, an analysis of the results of the foregoing is not mathematically precise; rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading value of the companies to which they are being compared. The range of value resulting from the foregoing analyses should not be taken to represent The Kafafian Group's view of the actual value of Asia Bancshares, Cathay or the combined company.

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        Compensation of The Kafafian Group and Other Relationships—Asia Bancshares paid The Kafafian Group a fee of $60,000 upon the rendering of its fairness opinion. The Kafafian Group will be reimbursed for reasonable out-of-pocket expenses incurred in connection with its engagement and Asia Bancshares has agreed to indemnify The Kafafian Group against certain liabilities. The Kafafian Group will not receive any other compensation from Asia Bancshares as a result of its engagement.

Certain Asia Bancshares Unaudited Prospective Financial Information

        Asia Bancshares does not as a matter of course make public long-term projections as to future revenues, earnings or other results due to, among other reasons, the uncertainty of the underlying assumptions and estimates. However, Asia Bancshares has included in this proxy statement/prospectus certain unaudited prospective financial information regarding its anticipated future operations that were made available to its board of directors and to The Kafafian Group in connection with the analysis and fairness opinion it was engaged to prepare in connection with the potential merger with Cathay. None of Asia Bancshares or The Kafafian Group or any other person makes any representation as to the accuracy of such information or the future performance of Asia Bancshares. The inclusion of such unaudited prospective financial information in this proxy statement/prospectus should not be regarded as an indication that such information will be predictive of actual future events nor construed as financial guidance. It should not be relied on and should not be regarded as an indication that Asia Bancshares, or The Kafafian Group or any other person considered, or now considers, this information to be necessarily predictive of actual future results.

        The prospective financial information constitutes forward-looking information and is subject to risks and uncertainties that could cause actual results to differ materially from the results forecasted in such prospective information. Such unaudited prospective financial information reflects numerous estimates and assumptions with respect to Asia Bancshares' performance, industry performance, general business and economic conditions, competition and other matters specific to Asia Bancshares business, all of which are difficult to predict and many of which are beyond the control of Asia Bancshares. There can be no assurance that such unaudited prospective financial information will be predictive or that actual results will not be significantly higher or lower than estimated. For other facts that could cause actual results to differ, please see the sections entitled "Risk Factors" and "Forward Looking Statements" beginning on pages [    ] and [    ], respectively, of this proxy statement/prospectus.

        The unaudited prospective financial information does not give effect to the merger, including the impact of negotiating or executing the merger agreement, the expenses that may be incurred in connection with consummating the merger, the effect of any business or strategic decision or action that has been or will be taken as a result of the merger agreement having been executed, or the effect of any business or strategic decisions or actions which would likely have been taken if the merger agreement had not been executed, but which were instead altered, accelerated, postponed or not taken in anticipation of the merger.

        The unaudited prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, or GAAP. This information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement/prospectus are cautioned not to place undue reliance on the unaudited prospective financial information. Neither Asia Bancshares' independent auditors nor any other independent accountants have compiled, examined, or performed any procedures with respect to the unaudited prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or the achievability of the results predicted.

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        Asia Bancshares does not intend to update or otherwise revise any of such unaudited prospective financial information to reflect circumstances existing after the date made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying such prospective financial information are no longer appropriate, except as may be required by applicable law.

        The following table presents unaudited prospective financial information based upon information of Asia Bank initially prepared in January 2014 and updated in January 2015 that was provided to The Kafafian Group by Asia Bancshares' management. This prospective financial information was reviewed and discussed by Asia Bancshares' management with The Kafafian Group and used and relied on by The Kafafian Group in connection with the issuance of its fairness opinion to the board of directors of Asia Bancshares. At the time the financial forecasts and projections were prepared in January 2014 and updated in January 2015, they represented the best estimates and judgments of Asia Bancshares' management, which prepared the forecasts and projections in good faith.


Summary Financial Forecasts and Projections of Asia Bancshares
for the Years Ending December 31,
(all amounts are approximate)

(Dollars in thousands, except
per share data)

  2014   2015   2016   2017   2018   2019  

Net Income

  $ 5,551   $ 5,802   $ 6,051   $ 6,389   $ 6,734   $ 7,096  

Shares outstanding

    1,460,044     1,460,044     1,460,044     1,460,044     1,460,044     1,460,044  

Average diluted shares

    1,460,044     1,460,044     1,460,044     1,460,044     1,460,044     1,460,044  

Earnings per Share

  $ 3.80   $ 3.97   $ 4.14   $ 4.38   $ 4.61   $ 4.86  

Total Assets

  $ 496,836   $ 532,593   $ 560,389   $ 590,380   $ 621,896   $ 655,013  

Total Intangible Assets

    0     0     0     0     0     0  

Total Equity

    76,491     82,293     88,343     94,732     101,466     108,562  

Tangible Book Value Per Share

  $ 52.39   $ 56.36   $ 60.51   $ 64.88   $ 69.49   $ 74.36  

Return on Average Assets

    1.14 %   1.13 %   1.11 %   1.11 %   1.11 %   1.11 %

Return on Average Equity

    7.46 %   7.31 %   7.09 %   6.98 %   6.86 %   6.76 %

Tangible Equity/ Assets

    15.40 %   15.45 %   15.76 %   16.05 %   16.32 %   16.57 %

Structure of the Merger

        The merger agreement provides for the merger of Asia Bancshares with and into Cathay, with Cathay as the surviving entity after the merger. As a result of the merger, Asia Bancshares will cease to exist as a separate entity.

        Simultaneously with the merger, Asia Bancshares' wholly owned bank subsidiary, Asia Bank, will merger with and into Cathay's wholly owned bank subsidiary, Cathay Bank, with Cathay Bank as the surviving entity after the bank merger. As a result of the bank merger, Asia Bank will cease to exist as a separate entity.

        The merger agreement is attached as Appendix A to this document. We encourage you to read the merger agreement in its entirety.

Merger Consideration

        If the merger is completed, shareholders of Asia Bancshares will receive aggregate merger consideration of approximately $126 million, subject to adjustment pursuant to the merger agreement. See "The Merger Agreement—Merger Consideration; Adjustments." The per share merger

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consideration will be calculated by dividing the aggregate merger consideration by the number of shares of Asia Bancshares common stock outstanding immediately prior to the effective time of the merger. Therefore, the precise amount of the aggregate merger consideration and the resulting per share merger consideration will not be known until shortly before the closing of the merger.

        Shareholders of Asia Bancshares (other than shares owned by Cathay or Asia Bancshares, or by shareholders that have asserted and not withdrawn dissenters' rights in accordance with the NYBCL) will be entitled to elect to receive, subject to proration, for each share of Asia Bancshares common stock that they own, the per share merger consideration in cash or shares of Cathay common stock. Based on these elections, between 45% to 55% of the outstanding shares of Asia Bancshares common stock will receive Cathay common stock as merger consideration and the remainder will receive cash, however, if the average closing price of Cathay common stock (as defined below) is lower than $20, then 41% of the value of the aggregate merger consideration as measured at closing will be payable in Cathay common stock. The number of shares of Cathay common stock that will be received in respect of the per share merger consideration will be equal to the exchange ratio. The exchange ratio is calculated by dividing the per share merger consideration by the volume weighted average price per share of Cathay common stock on the NASDAQ Global Select Market, on each of the 10 consecutive trading days ending on the fifth trading day prior to the date of the merger, which we refer to as the Cathay average closing price. However, if the Cathay average closing price is less than $20, the exchange ratio is the per share merger consideration divided by $20 and if the Cathay average closing price is greater than $27, the exchange ratio is the per share merger consideration divided by $27.

        For illustrative purposes only, if there are no adjustments to the $126 million aggregate merger consideration, the number of shares of Asia Bancshares at closing is the same as on [      ], the most recent practicable date before the mailing of this proxy statement/prospectus, and the Cathay average closing price is equal to the closing price of Cathay common stock on [      ], the most recent practicable date before the mailing of this proxy statement/prospectus, each Asia Bancshares shareholder would be entitled to receive either $[      ] in cash or [      ] shares of Cathay common stock per share of Asia Bancshares common stock. We urge you to obtain current market quotations for shares of Cathay common stock.

        Only whole shares of Cathay common stock will be issued in connection with the merger. Accordingly, Asia Bancshares shareholders will receive cash, without interest, in lieu of any fractional share of Cathay common stock they otherwise would be entitled to receive.

Adjustments

        The aggregate merger consideration is equal to $126 million less (x) the tax-effected amount of certain expenses of Asia Bancshares related to the transaction plus (y) the amount, if any, by which the closing net book value of Asia Bancshares exceeds target net book value of $78.75 million.

        The tax-effected amount of transaction expenses is equal to the sum of (a) 30% of the fee payable pursuant to the Finder's Fee Agreement between Asia Bancshares and Nai-Ching Sun relating to the merger (the "Finder's Fee") plus (b) the product of (i) 0.552 multiplied by (ii) the sum of (w) the aggregate amount of costs, expenses, fees or other payments to financial advisors, attorneys, or other third party advisors or representatives in connection with merger that are incurred by Asia Bancshares after the date of the most recent month-end balance sheet and at or prior to the closing together with those amounts accrued on (or paid prior to the date of) the most recent month-end balance sheet, in each case whether payable before, at or after the closing other than the Finder's Fee plus (x) 70% of the Finder's Fee plus (y) the cost of the directors' and officers' liability insurance policy purchased by Asia Bancshares prior to the closing for the benefit of its existing directors and officers plus (z) the amount of any special bonus Asia Bancshares may pay to its current employees prior to the closing, if any.

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        The closing net book value of Asia Bancshares is equal to the net book value as of the most recent month-end balance sheet plus (x) an aggregate daily net income adjustment based on the number of days between closing and the most recent month-end balance sheet plus (y) the tax-effected amount of transaction expenses already accrued on the most recent-month end balance sheet or paid prior to the date of such balance sheet plus (z) the tax-effected amount of the employee pool payments (which are described in more detail in the section entitled "Interests of Certain Persons in the Merger" on page [      ]) that are already accrued on the most recent-month end balance sheet or paid prior to the date of such balance sheet.

Election Procedure

        Election Right.    Subject to the allocation mechanism described in the next section, each Asia Bancshares shareholder will have the right to elect to receive with respect to such shareholder's shares of Asia Bancshares common stock:

        Shares of Asia Bancshares common stock with respect to which the shareholder fails to make an effective election prior to the election deadline, or with respect to which the holder properly revokes an effective election but fails to make a subsequent effective election prior to the election deadline, will be deemed to be "undesignated shares," as explained below.

        An Asia Bancshares shareholder who perfects his or her dissenters' rights under the NYBCL will receive the fair value for his or her shares in cash, as determined pursuant to the procedures under the NYBCL and will not receive any merger consideration. See "Dissenters' Rights" below. Any dissenting shares as to which dissenters' rights are not properly exercised will be treated as undesignated shares.

        As described above in "Merger Consideration," because there are limitations on the minimum and maximum amounts of shares of Asia Bancshares common stock, which may be converted into the right to receive Cathay common stock as merger consideration, there is no assurance that a holder of Asia Bancshares common stock will receive the form of consideration that he or she elects with respect to all shares subject to the election.

        Election Form.    An election form and customary transmittal materials containing instructions for use in effecting the surrender of Asia Bancshares stock certificates, in exchange for the merger consideration will be mailed to Asia Bancshares shareholders separately following the mailing of this proxy statement/prospectus and no less than thirty-five (35) days prior to the anticipated effective time of the merger or on such other date as the Asia Bancshares and Cathay mutually agree (the "Mailing Date"). The election form allows an Asia Bancshares shareholder to indicate the number of his or her shares of Asia Bancshares such shareholder elects to convert into Cathay common stock and the number of shares such shareholder elects to convert into cash, or to indicate that the shareholder makes no election. Asia Bancshares and Cathay will make available election forms to persons who become holders of Asia Bancshares common stock between the record date for mailing election forms and the election deadline (as defined below).

        Shareholders of Asia Bancshares common stock who wish to elect the type of merger consideration they will receive in the merger should carefully review and follow the instructions set forth in the election form. Shares of Asia Bancshares common stock as to which the shareholder has not made a valid election prior to the election deadline or as to which the shareholder has revoked an election but has not made a subsequent valid election prior to 5:00 p.m., California time, on the date that is the

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thirtieth day following the Mailing Date, or such other time as the parties may mutually agree, the "election deadline", will be deemed to be undesignated shares.

        To make a valid election, an Asia Bancshares shareholder must submit a properly completed and signed election form and transmittal materials so that it is actually received by American Stock Transfer and Trust Company, Cathay's exchange agent, on or prior to the election deadline in accordance with the instructions on the election form. An election form will be deemed properly completed only if an election is indicated for each share of Asia Bancshares common stock covered by such election form. Any shareholder who fails to deliver a properly completed election form to the exchange agent on or before the election deadline, or who fails to redeliver a properly completed election form after an election has been revoked on or before the election deadline, will not have made a valid election, and the shares of Asia Bancshares common stock owned by such shareholder will be deemed to be undesignated shares.

        An election may be revoked or changed by the shareholder submitting the election form at or prior to the election deadline. The exchange agent will have reasonable discretion to determine whether any election, revocation, withdrawal or change has been properly or timely made and to disregard immaterial defects in the election forms, and any decisions of Cathay and Asia Bancshares required by the exchange agent and made in good faith in determining such matters will be binding and conclusive. Neither Cathay nor the exchange agent will be under any obligation to notify any shareholder of any defect in any election form. If an election is revoked and any certificates have been transmitted to the exchange agent, Cathay will cause such certificates to be promptly returned without charge to the person submitting the revoked election form upon written request to that effect from the shareholder who submitted such election form.

        All shares of Cathay common stock issued to shareholders of Asia Bancshares in the merger will be deemed issued as of the effective time of the merger, but until Asia Bancshares stock certificates are surrendered for exchange, a shareholder will not receive any dividends or other distributions that may be declared after the effective time with respect to the shares of Cathay common stock into which the Asia Bancshares shares may have been converted. Such dividends or other distributions will accrue, however, and when the Asia Bancshares certificates are surrendered, Cathay will pay any such unpaid dividends or other distributions, as well as any cash into which any of the shares may have been converted, without interest.

        As of the effective time, there will be no transfers on the stock transfer books of Asia Bancshares of any shares of Asia Bancshares common stock. If certificates representing shares of Asia Bancshares common stock are presented to Cathay for any reason after the completion of the merger, they will be cancelled and exchanged for the merger consideration into which the shares of Asia Bancshares common stock represented by those certificates shall have been converted.

        At any time following the first anniversary of the effective time (or such earlier date immediately prior to such time when the amounts would otherwise escheat to or become property of any governmental entity), Cathay will be entitled to require the exchange agent to deliver to it any portion of the merger consideration not disbursed to shareholders of Asia Bancshares common stock, and thereafter such holders shall be entitled to look only to Cathay (subject to abandoned property, escheat or other similar laws) as general creditors with respect to the merger consideration payable upon due surrender of their Asia Bancshares common stock, without interest. Notwithstanding the foregoing, neither Cathay nor the exchange agent will be liable to any Asia Bancshares shareholder for merger consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

        If any certificate for Asia Bancshares common stock has been lost, stolen or destroyed, the exchange agent or Cathay, as applicable, will issue the merger consideration to the holder of such certificate upon the making of an affidavit of such fact by such holder, provided that the exchange

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agent, in its reasonable discretion and as a condition to such payment, may require the owner of such lost, stolen or destroyed certificate to deliver a customary indemnity agreement or provide a bond in a customary amount.

Allocation Calculation

        As described above in "Merger Consideration," pursuant to the merger agreement, a minimum of 45% of the outstanding Asia Bancshares shares will be converted into the right to receive Cathay common stock and a maximum of 55% of the outstanding Asia Bancshares shares will be converted into the right to receive Cathay common stock; provided, however, if the Cathay average closing price is less than $20, then the minimum number of Asia Bancshares shares necessary for the stock consideration to represent 41% of the value of the aggregate merger consideration as of the closing will be converted into the right to receive Cathay common stock and the remainder will be converted into the right to receive cash (with this number of shares representing both the maximum and minimum number of shares of Asia Bancshares common stock that can be converted into shares of Cathay common stock in this situation).

        In the following discussion, "stock election shares" means shares of Asia Bancshares common stock with respect to which the shareholder has elected to receive shares of Cathay common stock and "cash election shares" means shares of Asia Bancshares common stock with respect to which the shareholder has elected to receive cash. The "maximum stock conversion number" is the maximum number of shares of Asia Bancshares common stock that can be converted into shares of Cathay common stock under the terms of the merger agreement and the "minimum stock conversion number" is the minimum number of shares of Asia Bancshares common stock that can be converted into shares of Cathay common stock under the terms of the merger agreement.

        Oversubscription of the Stock Consideration.    If the aggregate number of stock election shares is greater than the maximum stock conversion number, then:

        Oversubscription of the Cash Consideration.    If the aggregate number of stock election shares is less than the minimum stock conversion number, then

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        Number of Stock Elections is Greater than or Equal to the Minimum Stock Conversion Number and Less than or Equal to the Maximum Stock Conversion Number.

        If the aggregate number of stock election shares is greater than or equal to the minimum stock conversion number and less than or equal to the maximum stock conversion number, then

        The allocation calculations described above will be prepared by Cathay prior to the effective time and furnished to Asia Bancshares at least two (2) business days prior to the effective time showing the manner of calculation in reasonable detail or to the extent final calculations cannot be prepared prior to the effective time, a preliminary calculation shall be furnished to Asia Bancshares at least two (2) business days prior to the effective time showing the manner of calculation in reasonable detail. Any calculation of a portion of a share of Cathay common stock shall be rounded to the nearest ten-thousandth of a share, and any cash payment shall be rounded to the nearest cent

        Because the stock consideration can fluctuate in value and the exchange ratio is fixed, if the Cathay average price is below $20 or above $27, the economic value of the per share merger consideration received by Asia Bancshares shareholders who receive the Cathay common stock may, as of the date of receipt by them, be more or less than the amount of the per share merger consideration received by Asia Bancshares shareholders who receive cash.

Regulatory Approvals Required for the Merger

        Cathay and Asia Bancshares have agreed to use their reasonable best efforts to obtain all regulatory approvals required to complete the transactions contemplated by the merger agreement. These approvals include approval from the Federal Reserve, the CDBO and the FDIC. Cathay and Asia Bancshares have filed the applications and notifications to obtain the required regulatory approvals.

        The transactions contemplated by the merger agreement are subject to approval by the Federal Reserve pursuant to the Bank Holding Company Act of 1956, as amended (which we refer to as the "BHC Act"). Cathay has submitted an application pursuant to the BHC Act and Regulation Y seeking the prior approval of the Federal Reserve Board for Asia Bancshares to merge with and into Cathay. The Federal Reserve Board takes into consideration a number of factors when acting on such applications. These factors include the financial and managerial resources (including consideration of the competence, experience, and integrity of the officers, directors, and principal shareholders, as well as the pro forma capital ratios) and future prospects of the combined organization. The Federal Reserve Board also considers the effectiveness of the applicant in combatting money laundering, the convenience and needs of the communities to be served, as well as the extent to which the proposal would result in greater or more concentrated risks to the stability of the U.S. banking or financial system. The Federal Reserve Board may not approve a proposal that would have significant adverse effects on competition or on the concentration of resources in any banking market.

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        The merger of Asia Bank with and into Cathay Bank is subject to approval by the FDIC pursuant to the Bank Merger Act. Cathay Bank has submitted an application pursuant to the Bank Merger Act seeking the prior approval of the FDIC for Asia Bank to merge with and into Cathay Bank.

        The FDIC takes into consideration a number of factors when acting on applications under the Bank Merger Act. These factors include the financial and managerial resources (including consideration of the competence, experience, and integrity of the officers, directors, and principal shareholders) and future prospects of the combined organization. The FDIC also considers the effectiveness of the applicant in combatting money laundering, the convenience and needs of the communities to be served, as well as the extent to which the proposal would result in greater or more concentrated risks to the stability of the U.S. banking or financial system. The FDIC may not approve a proposal that would have significant adverse effects on competition or on the concentration of resources in any banking market.

        In reviewing the convenience and needs of the communities to be serviced, the Federal Reserve and the FDIC will consider the records of performance of the relevant insured depository institutions under the Community Reinvestment Act of 1977 (which we refer to as the "CRA"). Furthermore, the Bank Merger Act, the BHC Act and applicable regulations require published notice of, and the opportunity for public comment on, these applications. The Federal Reserve and the FDIC take into account the views of third party commenters, particularly on the subject of the merging parties' service to their respective communities, and any comments provided by third parties could prolong the period during which the applications are under review by the Federal Reserve and the FDIC.

        Transactions approved under section 3 of the BHC Act or the Bank Merger Act generally may not be completed until 30 days after the approval of the applicable federal agency is received, during which time the Department of Justice (which we refer to as the "DOJ") may challenge the transaction on antitrust grounds. With the approval of the applicable federal agency and the concurrence of the DOJ, the waiting period may be reduced to no less than 15 days. The commencement of an antitrust action would stay the effectiveness of such an approval unless a court specifically ordered otherwise. In reviewing the merger, the DOJ could analyze the merger's effect on competition differently than the Federal Reserve or FDIC, and thus it is possible that the DOJ could reach a different conclusion than the Federal Reserve or FDIC regarding the merger's effects on competition. A determination by the DOJ not to object to the merger may not prevent the filing of antitrust actions by private persons or state attorneys general.

        The prior approval of the CDBO will be required under the California Financial Code to merge Asia Bank with and into Cathay Bank. In reviewing the merger of Asia Bank with Cathay Bank, the CDBO will take competitive considerations into account, as well as capital adequacy, quality of management and earnings prospects, in terms of both quality and quantity. The CDBO will also take into account the record of performance of the companies and depository institutions concerned in meeting the credit needs of the entire community, including low- and moderate-income neighborhoods, served by such companies and depository institutions. The CDBO will take into account CRA ratings when considering approval of the proposed transaction. In considering the merger, the California Financial Code also requires the CDBO to consider whether the proposed transaction is unfair, unjust or inequitable to the bank being acquired or to its depositors, creditors or shareholders.

        We cannot assure you that all of the regulatory approvals described above will be obtained and, if obtained, we cannot assure you as to the timing of such approvals, our ability to obtain the approvals on satisfactory terms or the absence of litigation challenging such approvals. We also cannot assure you that the DOJ will not attempt to challenge the transactions on antitrust grounds or for other reasons and, if such a challenge is made, we cannot assure you as to its result. The parties' obligation to complete the merger is conditioned upon the receipt of all required regulatory approvals.

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Board of Directors, Management and Operations After the Merger

        At the effective time of the merger, Asia Bancshares will merge with and into Cathay. As a result, Asia Bancshares will cease to exist as a separate entity, and all of its assets, liabilities and operations will be held and managed by Cathay as the surviving entity in the merger.

        Asia Bancshares' directors will cease to hold board positions at the effective time of the merger. Cathay's boards of directors and principal executive officers will not change as result of the merger.

NASDAQ Listing

        Cathay common stock is listed for trading on The NASDAQ Global Select Market under the symbol "CATY."

Material United States Federal Income Tax Consequences of the Merger

        This section describes the anticipated material United States federal income tax consequences of the merger to U.S. holders of Asia Bancshares common stock who exchange shares of Asia Bancshares common stock for shares of Cathay common stock, cash, or a combination of shares of Cathay common stock and cash pursuant to the merger.

        For purposes of this discussion, a "U.S. holder" is a beneficial owner of Asia Bancshares common stock who for United States federal income tax purposes is:

        If a partnership (including for this purpose any entity treated as a partnership for United States federal income tax purposes) holds Asia Bancshares common stock, the tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding Asia Bancshares common stock, you should consult your tax advisor.

        This discussion addresses only those Asia Bancshares shareholders that hold their Asia Bancshares common stock as a capital asset within the meaning of Section 1221 of the Code, and does not address all the United States federal income tax consequences that may be relevant to particular Asia Bancshares shareholders in light of their individual circumstances or to Asia Bancshares shareholders that are subject to special rules, such as:

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        In addition, the discussion does not address any alternative minimum tax or any state, local or foreign tax consequences of the merger, nor does it address any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010.

        The following discussion is based on the Code, its legislative history, existing and proposed regulations, thereunder, and published rulings and decisions, all as currently in effect as of the date hereof, and all of which are subject to change, possibly with retroactive effect. Any such change could affect the continuing validity of this discussion.

        Cathay and Asia Bancshares have structured the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code. The obligation of Cathay to complete the merger is conditioned upon the receipt of an opinion from Wachtell, Lipton, Rosen & Katz, counsel to Cathay, to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the merger will qualify as a "reorganization" within the meaning of Section 368(a) of the Code. The obligation of Asia Bancshares to complete the merger is conditioned upon the receipt of an opinion from Lamb & Barnosky, counsel to Asia Bancshares, to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the merger will qualify as a "reorganization" within the meaning of Section 368(a) of the Code. Neither of these opinions is binding on the Internal Revenue Service or the courts. Cathay and Asia Bancshares have not requested and do not intend to request any ruling from the Internal Revenue Service as to the United States federal income tax consequences of the merger. Accordingly, each Asia Bancshares shareholder should consult its tax advisor with respect to the particular tax consequences of the merger to such holder.

        In addition, because an Asia Bancshares shareholder may not necessarily receive cash and shares of Cathay common stock in the proportion that such shareholder has elected, it will not be possible for holders of Asia Bancshares common stock to determine the specific tax consequences of the merger to them at the time of making the election.

        Tax Consequences of the Merger Generally to Holders of Shares of Asia Bancshares Common Stock.    If the merger is treated as a reorganization within the meaning of Section 368(a) of the Code, the tax consequences are as follows:

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        If holders of Asia Bancshares common stock acquired different blocks of Asia Bancshares common stock at different times or at different prices, any gain or loss will be determined separately with respect to each block of Asia Bancshares common stock and such holders' cost basis and holding period in their shares of Cathay common stock may be determined with reference to each block of Asia Bancshares common stock. Any such holders should consult their tax advisors regarding the manner in which cash and Cathay common stock received in the exchange should be allocated among different blocks of Asia Bancshares common stock and with respect to identifying the basis or holding periods of the particular shares of Cathay common stock received in the merger.

        Gain that holders of Asia Bancshares common stock recognize in connection with the merger generally will constitute capital gain and will constitute long-term capital gain if such holders have held (or are treated as having held) their Asia Bancshares common stock for more than one year as of the date of the merger. Long-term capital gain of non-corporate holders of Asia Bancshares common stock is generally taxed at preferential rates. In some cases, if a holder actually or constructively owns Cathay stock other than Cathay stock received pursuant to the merger, the recognized gain could be treated as having the effect of a distribution of a dividend, in which case such gain would be treated as dividend income. Because the possibility of dividend treatment depends primarily upon each holder's particular circumstances, including the application of the constructive ownership rules, holders of Asia Bancshares common stock should consult their tax advisors regarding the application of the foregoing rules to their particular circumstances.

        Cash Received Instead of a Fractional Share of Cathay Common Stock.    A holder of Asia Bancshares common stock who receives cash instead of a fractional share of Cathay common stock will generally be treated as having received the fractional share pursuant to the merger and then as having sold that fractional share of Cathay common stock for cash. As a result, a holder of Asia Bancshares common stock will generally recognize gain or loss equal to the difference between the amount of cash received and the cost basis in his or her fractional share interest as set forth above. Except as described above, this gain or loss will generally be capital gain or loss, and will be long-term capital gain or loss

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if, as of the effective date of the merger, the holding period for such shares is greater than one year. The deductibility of capital losses is subject to limitations.

        Backup Withholding and Information Reporting.    Payments of cash to a holder of Asia Bancshares common stock may, under certain circumstances, be subject to information reporting and backup withholding, unless the holder provides proof of an applicable exemption satisfactory to Cathay and the exchange agent or furnishes its taxpayer identification number, and otherwise complies with all applicable requirements of the backup withholding rules. Any amounts withheld from payments to a holder under the backup withholding rules are not additional tax and will be allowed as a refund or credit against the holder's United States federal income tax liability, provided the required information is furnished to the Internal Revenue Service.

        The preceding discussion is intended only as a summary of material United States federal income tax consequences of the merger. It is not a complete analysis or discussion of all potential tax effects that may be important to you. Thus, you are strongly encouraged to consult your tax advisor as to the specific tax consequences resulting from the merger, including tax return reporting requirements, the applicability and effect of federal, state, local, and other tax laws and the effect of any proposed changes in the tax laws.

Accounting Treatment

        Cathay prepares its financial statements in accordance with accounting principles generally accepted in the United States of America, which we refer to as GAAP. The merger will be accounted for using the acquisition method of accounting. Cathay will be treated as the acquirer for accounting purposes.

Dissenters' Rights

        Holders of Asia Bancshares common stock entitled to vote on the adoption of the agreement are entitled to dissent from the merger and obtain the fair value of their Asia Bancshares common stock in cash in accordance with the procedures established by New York law.

        Sections 623 and 910 of the NYBCL provide that, if the merger is consummated, holders of Asia Bancshares common stock entitled to vote at the special meeting on the adoption of the agreement who object to the merger in writing prior to the vote by the holders of Asia Bancshares common stock on the adoption of the agreement and who follow the procedures specified in Section 623 (summarized below), will have the right to receive cash payment of the fair value of their Asia Bancshares common stock. A copy of Section 623 and Section 910 of the NYBCL is attached as Appendix D to this proxy statement/prospectus. The express procedures of Section 623 must be followed precisely; if they are not, a holder of Asia Bancshares common stock will lose his or her right to dissent. As described more fully below, such "fair value" would potentially be determined in judicial proceedings, the result of which cannot be predicted. We cannot assure you that holders of Asia Bancshares common stock exercising dissenters' rights will receive consideration equal to or greater than the value of the Cathay common stock to be owned by them and/or cash paid to them following completion of the merger.

        The statutory procedures outlined below are complex. What follows is a summary, which is qualified in its entirety by reference to the full text of Section 623 and Section 910 of the NYBCL. Holders of Asia Bancshares common stock wishing to exercise their dissenters' rights should consult with their own legal advisors to ensure that they fully and properly comply with the requirements of New York law.

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        Any holder of Asia Bancshares common stock who is entitled to vote on the adoption of the agreement will have the right to receive a cash payment of the fair value of his or her Asia Bancshares common stock and the other rights and benefits provided in Section 623, if such shareholder:

        A vote against adoption of the agreement will not satisfy the requirement of filing a written objection. Failure to vote against adoption of the agreement will not waive an Asia Bancshares shareholder's right to receive payment if the shareholder has filed a written objection in accordance with Section 623 and has not voted in favor of adoption of the agreement. If a shareholder abstains from voting on adoption of the agreement, this will not waive his or her dissenter's rights so long as the appropriate written objection to the merger is properly and timely filed. Since a signed proxy left blank will be voted for adoption of the agreement, any Asia Bancshares shareholder who wishes to exercise his or her dissenter's rights must either vote against adoption of the agreement or abstain. Written objection at this time may not be required from any shareholder to whom Asia Bancshares did not give proper notice of the special meeting of Asia Bancshares shareholders contemplated by this proxy statement/prospectus.

        A holder of Asia Bancshares common stock may not dissent as to less than all Asia Bancshares common stock held of record that he or she owns beneficially. A nominee or fiduciary may not dissent on behalf of any beneficial owner of Asia Bancshares common stock as to less than all Asia Bancshares common stock of such owner held of record by the nominee or fiduciary.

        All written objections to the merger and notices of election to dissent should be addressed to:

Asia Bancshares, Inc.
135-34 Roosevelt Avenue
Flushing, New York 11354
Attention: Jeffrey Hsu

        If the agreement is adopted by holders of Asia Bancshares common stock, within 10 days after such approval, Asia Bancshares will give written notice of the approval by registered mail to each holder of Asia Bancshares common stock who filed a timely written objection or from whom objection was not required, except for any shareholder who voted in favor of adoption of the agreement. Any holder of Asia Bancshares common stock from whom objection was not required and who elects to dissent must file with Asia Bancshares, within 20 days after the giving of notice to him or her, a written notice of election to dissent, stating his or her name and residence address, the amount of Asia Bancshares common stock as to which he or she dissents and a demand for payment of the fair value for his or her Asia Bancshares common stock.

        Either at the time of filing of the notice of election to dissent or within one month thereafter, a dissenting Asia Bancshares shareholder must submit the certificates representing his or her dissenting Asia Bancshares shares to Asia Bancshares. Asia Bancshares shall note conspicuously on the certificates

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that a notice of election has been filed and will then return the certificates to the shareholder. Any Asia Bancshares shareholder who fails to submit his or her certificates for notation within the required time shall, at the option of Asia Bancshares upon written notice to such Asia Bancshares shareholder within 45 days from the date of filing such notice of election to dissent, lose his or her dissenter's rights unless a court, for good cause shown, otherwise directs.

        Within 15 days after the expiration of the period within which Asia Bancshares shareholders may file their notices of election to dissent, or within 15 days after the completion of the merger, whichever is later (but in no case later than 90 days after Asia Bancshares shareholders adopt the agreement), Asia Bancshares will make a written offer by registered mail to each Asia Bancshares shareholder, who has filed a notice of election, to pay for his or her dissenting shares at a specified price, which Asia Bancshares considers to be their fair value. If the merger has occurred, Asia Bancshares must accompany the offer by an advance payment to each shareholder who has submitted his or her stock certificates of an amount equal to 80% of the amount of the offer. Acceptance of such payment does not constitute a waiver of any dissenters' rights. The offer must be made at the same price per share to all the dissenting Asia Bancshares shareholders. If, within 30 days after the making of an offer, Asia Bancshares and any dissenting Asia Bancshares shareholders agree on the price to be paid for dissenting shares, the balance of payment for the shares must be made within 60 days after the making of the offer or the completion of the merger, whichever is later, and upon surrender of the certificates representing such Asia Bancshares shares.

        If Asia Bancshares fails to make an offer to dissenting Asia Bancshares shareholders within the 15-day period described above, or if it makes the offer and any dissenting Asia Bancshares shareholder fails to agree with Asia Bancshares within 30 days thereafter upon the price to be paid for his or her shares, Asia Bancshares is required, within 20 days after the expiration of whichever is the applicable of the two periods, to institute a special proceeding in the Supreme Court of the State of New York for the County of Queens to determine the rights of dissenting Asia Bancshares shareholders and to fix the fair value of their shares. If Asia Bancshares fails to institute a proceeding within the 20-day period, any dissenting shareholder may institute a proceeding for the same purpose not later than 30 days after the expiration of the 20-day period. If a dissenting shareholder does not institute a proceeding within the 30-day period, all dissenters' rights are lost unless the court, for good cause shown, otherwise directs.

        During each proceeding, the court will determine whether each dissenting shareholder is entitled to receive payment for his or her shares and, if so, will fix the value of such shares as of the close of business on the day prior to the date Asia Bancshares shareholders voted to adopt the agreement, taking into consideration the nature of the transaction giving rise to the shareholder's right to receive payment for his or her dissenting shares and its effects on Asia Bancshares and its shareholders, the concepts and methods then customary in relevant securities and financial markets for determining the fair value of shares of a corporation engaging in a similar transaction under comparable circumstances and all other relevant factors. The court shall determine the fair value of the shares without a jury and without referral to an appraiser or referee. The court will also award interest on such amount to be paid from the completion of the merger to the date of payment unless the court finds that an Asia Bancshares shareholder's refusal to accept Asia Bancshares' offer of payment was arbitrary, vexatious or otherwise not in good faith. Each party to such proceeding will bear its own costs and expenses unless the court finds that the Asia Bancshares shareholder's refusal to accept Asia Bancshares' offer was arbitrary, vexatious or otherwise not in good faith, in which case Asia Bancshares' costs will be assessed against any or all dissenting Asia Bancshares shareholders who are parties to such proceeding. The court, in its discretion, may also apportion or assess any part of the dissenting Asia Bancshares shareholder's costs against Asia Bancshares if it finds that the fair value of the shares as determined materially exceeds the amount which Asia Bancshares offered to pay, or that no offer or advance payment was made by Asia Bancshares, or that Asia Bancshares failed to institute such special

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proceeding within the specified period, or that the action of Asia Bancshares in complying with its obligations under Section 623 was arbitrary, vexatious or otherwise not in good faith. Within 60 days following the final determination of the proceeding, Asia Bancshares shall pay to each dissenting Asia Bancshares shareholder the amount found to be due him or her, upon the shareholder's surrender of all certificates representing dissenting shares.

        The enforcement by an Asia Bancshares shareholder of his or her right to receive payment for shares in accordance with Section 623 excludes the enforcement by such shareholder of any other right to which he or she might otherwise be entitled by virtue of his or her ownership of shares (unless the shareholder withdraws his or her notice of election or the merger is abandoned), except that the shareholder will retain the right to bring or maintain an appropriate action to obtain relief on the grounds that the merger will be or is unlawful or fraudulent as to him or her. An Asia Bancshares shareholder's notice of election may be withdrawn at any time prior to his or her acceptance in writing of an offer to purchase his or her dissenting shares by Asia Bancshares, but no withdrawal may be made later than 60 days from the completion of the merger (unless Asia Bancshares failed to make a timely offer) without the written consent of Asia Bancshares. In order for a withdrawal of an Asia Bancshares shareholder's notice of election to be effective, it must be accompanied by a return to Asia Bancshares of any advance payment made to such shareholder.

        If the merger is approved by the requisite vote of the shareholders of Asia Bancshares at the special meeting, then following the closing of merger, Cathay will assume the obligations of Asia Bancshares under Section 623.

Interests of Certain Persons in the Merger

        In considering the recommendation of Asia Bancshares' board of directors to vote "FOR" the adoption of the merger agreement, shareholders of Asia Bancshares common stock should be aware that certain officers of Asia Bancshares and its wholly owned subsidiary, Asia Bank, and members of the board of directors of Asia Bancshares and Asia Bank may have interests in the transaction that are different from, or in addition to, the interests of shareholders of Asia Bancshares' common stock generally. The members of the board of directors of Asia Bancshares were made aware of these differing interests and potential conflicts, and considered them, among other matters, in evaluating and negotiating the merger agreement and the merger and in recommending to the shareholders of Asia Bancshares that the merger be approved.

        Severance and Retention Benefits.    Pursuant to the merger agreement, Asia Bancshares and Cathay agreed to pay certain severance, retention and retirement benefits to the executive officers of Asia Bank. As a result, prior to the closing date of the merger, Asia Bank will make the following payments to the individuals listed below, subject to each individual's continued employment with Asia Bank through the payment date.

Name
  Retention Payment  

Jen-Tai Tsai

    918,272  

Wu-Hsing Liao

    693,837  

Kathy Huang

    381,646  

Shou-Wen Hsu

    354,738  

Chean-Kuo Cheng

    175,569  

Phuong L. Quach

    98,074  

Lei-Lei Kong

    73,398  

        In addition, Shou Wen Hsu, the Chief Lending Officer and Executive Vice President of Asia Bank will be paid the sum of $100,000 provided that he accepts full time employment from Cathay Bank following the merger and that he remains an employee of Cathay Bank for a period of two years after

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the closing of the merger. The payment of this retention benefit will be made to Mr. Hsu following the two-year anniversary of his employment by Cathay Bank.

        Indemnification and Insurance.    The merger agreement provides that for six (6) years after the effective time of the merger, Cathay will indemnify and hold harmless each of the present and former directors and officers of Asia Bancshares and its subsidiaries against any judgments, fines, losses, claims, damages, liabilities, costs, expenses (including reasonable attorney's fees) and amounts paid in settlement arising out of or pertaining to matters existing or occurring at or prior to the effective time of the merger.

        The merger agreement further provides that, prior to closing, Asia Bancshares will purchase a six (6)-year prepaid directors' and officers' liability insurance "tail policy" that provides directors' and officers' liability insurance covering those persons who are currently covered by Asia Bancshares' directors' and officers' liability insurance policies with coverage no less favorable, as a whole, than the terms of such current insurance coverage with respect to claims arising from or related to facts or events which occurred at or prior to the effective time of the merger.

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THE MERGER AGREEMENT

        This section describes the material terms of the merger agreement. The description in this section and elsewhere in this proxy statement/prospectus is qualified in its entirety by reference to the complete text of the merger agreement, a copy of which is attached as Appendix A and is incorporated by reference into this proxy statement/prospectus. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. You are encouraged to read the merger agreement carefully and in its entirety. This section is not intended to provide you with any factual information about Cathay or Asia Bancshares. Such information can be found elsewhere in this proxy statement/prospectus and in the public filings Cathay makes with the SEC, as described in the section entitled "Where You Can Find More Information" beginning on page [    ] of this proxy statement/prospectus.

Explanatory Note Regarding the Merger Agreement

        The merger agreement is included to provide you with information regarding its terms. The merger agreement contains representations and warranties by Cathay, on the one hand, and by Asia Bancshares, on the other hand, which were made solely for the benefit of the other party for purposes of that agreement. The representations, warranties and covenants made in the merger agreement by Cathay and Asia Bancshares were qualified and subject to important limitations agreed to by Cathay and Asia Bancshares in connection with negotiating the terms of the merger agreement. In particular, in your review of the representations and warranties contained in the merger agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purpose of establishing circumstances in which a party to the merger agreement may have the right not to consummate the merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the merger agreement, rather than establishing matters as facts about Cathay or Asia Bancshares at the time they were made or otherwise. The representations and warranties also may be subject to a contractual standard of materiality different from that generally applicable to stockholders and reports and documents filed with the SEC and were qualified by the matters contained in the confidential disclosure schedules that Cathay and Asia Bancshares each delivered in connection with the merger agreement and certain documents filed with the SEC. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement/prospectus, may have changed since the date of the merger agreement. Information about Cathay and Asia Bancshares is set forth elsewhere in this proxy statement/prospectus and in the case of Cathay, other public filings made with the SEC, which are incorporated by reference into this proxy statement/prospectus. See the section entitled "Where You Can Find More Information" beginning on page [    ].

Structure of the Merger

        Asia Bancshares will merge with and into Cathay, and Asia Bancshares will cease to exist. Simultaneously with the merger of Asia Bancshares into Cathay, Asia Bancshares' bank subsidiary, Asia Bank, will merge with and into Cathay's bank subsidiary, Cathay Bank, and Asia Bank will cease to exist.

        As described in detail in the section entitled "The Merger—Merger Consideration," upon completion of the merger, shareholders of Asia Bancshares (other than shares owned by Cathay or Asia Bancshares, or by shareholders that have asserted and not withdrawn dissenters' rights in accordance with the NYBCL) will be entitled to receive for each share of Asia Bancshares common stock that they own, the per share merger consideration in cash or shares of Cathay common stock based upon the elections made by shareholders of Asia Bancshares, subject to pro ration.

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Effective Time

        The closing of the merger will take place on the later of (i) May 15, 2015 and (ii) the fifth (5th) business day after the satisfaction or waiver of the conditions to the merger (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver of such conditions), or at such other place, date and time as Asia Bancshares and Cathay may agree in writing; provided that Cathay will have a one-time option to postpone the closing for up to 30 days beyond the date on which the closing would otherwise occur by providing written notice, specifying the date on which the postponed closing shall occur, to Asia Bancshares not less than two (2) business days prior to the anticipated closing.

        On the closing date, Asia Bancshares and Cathay shall file (i) with the Secretary of State of the State of New York, a certificate of merger, executed in accordance with, and containing such information as is required by, the relevant provisions of the New York law, and (ii) with the Secretary of State of the State of Delaware, a certificate of merger, executed in accordance with, and containing such information as is required by, the relevant provisions of Delaware law. The merger will become effective at such time as the certificates of merger have been filed with the Secretary of State of the State of New York and Secretary of State of the State of Delaware or at such time as is agreed between the parties and specified in the certificates of merger, in accordance with the relevant provisions of New York and Delaware law.

Organizational Documents

        At the effective time, the amended and restated certificate of incorporation and the amended and restated bylaws of Cathay will become the certificate of incorporation and bylaws of the surviving company.

Conduct of Business Prior to Effective Time

        From January 20, 2015 until the effective time of the merger, except as expressly required or permitted by the merger agreement, as required by applicable law, pursuant to certain exceptions or with the prior written consent of Cathay, Asia Bancshares shall, and shall cause each of its subsidiaries to:

        The merger agreement also provides that, during the period from January 20, 2015, until the effective time of the merger, Asia Bancshares will not, except as expressly required or permitted by the merger agreement, as required by applicable law, pursuant to certain exceptions or with the prior written consent of Cathay, among other things:

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        In addition, the merger agreement provides that from January 20, 2015 until the effective time of the merger, except as expressly required or permitted by the merger agreement, as required by applicable law, pursuant to certain exceptions or with the prior written consent of Asia Bancshares, Cathay will not:

Regulatory Matters

        Cathay and Asia Bancshares have agreed to use their reasonable best efforts to obtain all regulatory approvals required to complete the transactions contemplated by the merger agreement. However, notwithstanding the foregoing, nothing in the merger agreement will require Cathay to take any action, or commit to take any action, or agree to any condition or restriction, in connection with obtaining any regulatory approvals that would reasonably be expected to, individually or in the aggregate, materially impair the anticipated benefits to Cathay and its subsidiaries of the merger, which we refer to as a burdensome condition.

Cathay Covenants Relating to Employee Matters

        Under the merger agreement, Cathay agrees to provide all Asia Bank's employees as of the effective time of the merger, for as long such employees remain employed by Cathay or its subsidiaries, with compensation opportunities and employee benefits that are substantially comparable in the aggregate to the compensation opportunities and employee benefits provided to similarly situated employees of Cathay and its subsidiaries. This commitment will be deemed satisfied if Cathay continues the compensation opportunities and employee benefit plans generally provided to Asia Bancshares employees immediately prior to the effective time of the merger.

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        Cathay further agrees that, with respect to any employee benefit plans of Cathay or its subsidiaries providing benefits to any Asia Bank employee after the effective time of the merger, Cathay shall:

        To the extent permitted by Cathay's applicable 401(k) plan, Cathay shall permit the Asia Bank employees who are then actively employed to make rollover contributions of "eligible rollover distributions" (within the meaning of Section 401(a)(31) of the Code, but excluding loans), in the form of cash, in an amount equal to the full account balance (excluding loans) distributed to such Asia Bank employees from Asia Bank's 401(k) plan to Cathay's 401(k) plan.

        Cathay and Asia Bancshares have also agreed to establish a pool of up to $3.8 million to fund severance, retention and retirement commitments to certain employees of Asia Bank, subject to reduction to the extent necessary to ensure that no such payment would be treated as an "excess parachute payment" for purposes of Sections 280G and 4999 of the Code. In addition, prior to the closing date of the merger, Asia Bancshares has committed to pay amounts due in respect of annual and other short-term incentive plans, with any payments due in respect of performance periods that are ongoing as of the closing date to be prorated based on the portion of the performance period elapsed as of such date. Cathay has also agreed to continue the employment of certain employees of Asia Bank for two years following the closing date of the merger or to pay severance to any such employee upon his or her earlier involuntary termination of employment without cause.

Indemnification and Insurance

        The merger agreement provides that for six (6) years after the effective time of the merger, Cathay will indemnify and hold harmless each of Asia Bancshares' directors and officers against any judgments, fines, losses, claims, damages, liabilities, costs, expenses (including reasonable attorney's fees) and amounts paid in settlement.

        The merger agreement further provides that, prior to closing, Asia Bancshares will purchase a six (6) year prepaid directors' and officers' liability insurance "tail policy" that provides directors' and officers' liability insurance covering those persons who are currently covered by Asia Bancshares' directors' and officers' liability insurance policies with coverage no less favorable, as a whole, than the terms of such current insurance coverage with respect to claims arising from or related to facts or events, which occurred at or prior to the effective time of the merger.

Non-Solicitation

        The merger agreement provides that Asia Bancshares shall, and shall cause each of its affiliates and its and their respective officers, directors, employees, agents, financial advisors, investment bankers, attorneys, accountants and other representatives (collectively "representatives"):

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        Asia Bancshares further shall not release any third party from, or waive, amend or modify any provision of, or grant permission under any standstill or confidentiality provision in any agreement to which Asia Bancshares is a party other than any waiver, amendment, modification or permission under a confidentiality provision that does not, and would not be reasonably likely to, facilitate, encourage or relate in any way to a Company Takeover Proposal or a potential Company Takeover Proposal; provided that if the Asia Bancshares board of directors determines in good faith, after consultation with its outside legal counsel that the failure to take such action would be in violation of the directors' fiduciary duties under applicable Law, Asia Bancshares may waive any such standstill provision solely to the extent necessary to permit a third party to make, on a confidential basis to the Asia Bancshares board of directors, a Company Takeover Proposal, conditioned upon such third party agreeing that Asia Bancshares shall not be prohibited from providing any information to Cathay (including regarding any such Company Takeover Proposal).

        If at any time after January 20, 2015 and prior to obtaining Asia Bancshares shareholder approval, Asia Bancshares or any of its representatives, receives a bona fide, unsolicited written Company Takeover Proposal from any person, that did not result from Asia Bancshares' or its representatives' breach of the non-solicitation provisions of the merger agreement, and if the Asia Bancshares board of directors determines in good faith, after consultation with independent financial advisors and outside legal counsel, that such Company Takeover Proposal constitutes or is reasonably expected to lead to a Company Superior Proposal (as defined below) and that the failure to take such action would be in violation of the directors' fiduciary duties under applicable law, then Asia Bancshares and its representatives may, (A) furnish, pursuant to an acceptable confidentiality agreement, information (including non-public information) with respect to Asia Bancshares to the person who has made such Company Takeover Proposal; provided, that Asia Bancshares shall concurrently with the delivery to such person, provide to Cathay any non-public information concerning Asia Bancshares that is provided or made available to such person or its representatives, unless such non-public information has been previously provided to Cathay; and (B) engage in or otherwise participate in discussions or negotiations with the person making such Company Takeover Proposal and its representatives regarding such Company Takeover Proposal. Asia Bancshares shall promptly (and in any event within 24 hours) notify Cathay if Asia Bancshares furnishes non-public information and/or enters into discussions or negotiations with a third-party.

        Asia Bancshares will promptly (and in no event later than 24 hours after receipt) notify Cathay in writing in the event that Asia Bancshares or any of its representatives receives a Company Takeover Proposal or a request for information relating to Asia Bancshares that is reasonably likely to lead to or that contemplates a Company Takeover Proposal. The notice will include the identity of the person making the Company Takeover Proposal and the material terms and conditions thereof. Asia Bancshares shall keep Cathay reasonably informed, on a current basis, as to the status of (including any developments, discussions or negotiations) such Company Takeover Proposal (including by promptly (and in no event later than 24 hours after receipt) providing to Cathay copies of any correspondence, proposals, indications of interest, and/or draft agreements relating to such Company Takeover Proposal).

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Company Adverse Recommendation Change

        The Asia Bancshares board of directors shall not (each of the following a "Company Adverse Recommendation Change"):

        In addition, the Asia Bancshares board of directors shall not authorize, cause or permit Asia Bancshares to enter into any letter of intent, memorandum of understanding, agreement (including an acquisition agreement, merger agreement, joint venture agreement or other agreement), commitment or agreement in principle with respect to any Company Takeover Proposal (other than an acceptable confidentiality agreement in accordance with the terms of the merger agreement).

        However, prior to the time Asia Bancshares shareholder approval is obtained, but not after, the Asia Bancshares board of directors may make a Company Adverse Recommendation Change with respect to a bona fide, unsolicited Company Takeover Proposal that did not result from a breach of the merger agreement, if and only if, prior to taking such action, the Asia Bancshares board of directors determines in good faith, after consultation with independent financial advisors and outside legal counsel, that (i) such Company Takeover Proposal constitutes a Company Superior Proposal and (ii) the failure to take such action would constitute a violation of the Asia Bancshares board of directors' fiduciary duties under applicable law;

        Prior to making a Company Adverse Recommendation Change, Asia Bancshares must provide Cathay at least five business days' prior written notice of its intention to take such action, and specifying the reasons therefor, including the terms and conditions of, and the identity of the person making, any such Company Superior Proposal. Asia Bancshares shall also provide to Cathay a copy of the Company Superior Proposal and any related agreements or documentation and will negotiate in good faith with Cathay during such notice period to enable Cathay to propose revisions to the terms of the merger agreement such that it would cause such Company Superior Proposal to no longer constitute a Company Superior Proposal. At the end of the notice period, the Asia Bancshares board of directors will consider in good faith any revisions to the terms of the merger agreement proposed by Cathay, and determine, after consultation with its independent financial advisors and outside legal counsel, whether the Company Superior Proposal would nevertheless continue to constitute a Company Superior Proposal and whether the failure of the Asia Bancshares board of directors to change its recommendation would violate the directors' fiduciary duties under applicable law.

        For purposes of the above, "Company Takeover Proposal" means any inquiry, proposal or offer from any person (other than Cathay) relating to, or that may lead to, in a single transaction or a series

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of related transactions, (A) a merger, consolidation, business combination, recapitalization, binding share exchange, liquidation, dissolution, joint venture or other similar transaction involving Asia Bancshares, (B) any acquisition of 15% or more of the outstanding Asia Bancshares common stock or securities of Asia Bancshares representing more than 15% of the voting power of Asia Bancshares, (C) any acquisition (including the acquisition of stock in any subsidiary of Asia Bancshares) of assets or businesses of Asia Bancshares, including pursuant to a joint venture, representing 15% or more of the consolidated assets, revenues or net income of Asia Bancshares, (D) any tender offer or exchange offer that if consummated would result in any person beneficially owning 15% or more to the outstanding Asia Bancshares common stock or securities of Asia Bancshares representing more than 15% of the voting power of Asia Bancshares or (E) any combination of the foregoing types of transactions if the sum of the percentage of consolidated assets, consolidated revenues or earnings and Asia Bancshares common stock (or voting power of securities of Asia Bancshares other than Asia Bancshares common stock) involved is 15% or more.

        "Company Superior Proposal" means a bona fide, unsolicited written Company Takeover Proposal (A) that if consummated would result in a third party (or in the case of a direct merger between such third party and Asia Bancshares, the shareholders of such third party) acquiring, directly or indirectly, more than 50% of the outstanding Asia Bancshares common stock or more than 50% of the assets of Asia Bancshares, taken as a whole and (B) that the Asia Bancshares board of directors determines in good faith, after consultation with its independent financial advisors and outside legal counsel, taking into account all financial, legal, regulatory and other aspects of such proposal, including all conditions contained therein and the person making such Company Takeover Proposal, is reasonably likely to be completed on the terms proposed on a timely basis, is not subject to any due diligence contingency, and is fully financed with available cash on hand, or is otherwise fully backed by written financing commitments in full force and effect and (taking into account any changes to the merger agreement proposed by Cathay in response to such Company Takeover Proposal), is more favorable to Asia Bancshares shareholders from a financial point of view than the merger.

The Special Meeting

        Asia Bancshares shall take all action necessary in accordance with applicable laws and its organizational documents to set a record date for, duly give notice of, convene and, as soon as reasonably practicable after the effective date of this proxy statement/prospectus, hold a meeting of its shareholders for the purpose of obtaining the Asia Bancshares shareholder approval.

        In the event that there are not sufficient votes to constitute a quorum or approve the adoption of the merger agreement at the time of the special meeting, the Chairman of the board of directors of Asia Bancshares may adjourn the special meeting to a later date or dates in order to permit further solicitation of proxies. If it is necessary to adjourn the special meeting, no notice of the adjourned special meeting is required to be given to shareholders (unless the adjournment is for more than 30 days or if a new record date is fixed), other than an announcement at the special meeting of the hour, date and place to which the special meeting is adjourned.

        The special meeting may not be postponed, adjourned or otherwise delayed except (i) with the prior written consent of Cathay or (ii) to the extent required by applicable law for Asia Bancshares' shareholders to review any supplemental or amended disclosure which Asia Bancshares has determined in good faith (after consultation with outside counsel) is necessary under applicable law. If an adjournment is permitted pursuant to the preceding sentence, the Chairman of the board of directors of Asia Bancshares may adjourn the special meeting to a later date or dates and no notice of the adjourned special meeting is required to be given to shareholders (unless the adjournment is for more than 30 days or if a new record date is fixed), other than an announcement at the special meeting of the hour, date and place to which the special meeting is adjourned. Except as expressly permitted under the merger agreement and as described above in "—Company Adverse Recommendation

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Change," the Asia Bancshares board of directors shall continue to recommend that Asia Bancshares shareholders vote in favor of the merger and include such recommendation in this proxy statement/prospectus and Asia Bancshares shall solicit, and use its reasonable best efforts to obtain, the shareholder approval at the special meeting. However, if the Asia Bancshares board of directors has effected a Company Adverse Recommendation Change, then Asia Bancshares board of directors may submit the merger agreement to its shareholders without recommendation.

Conditions to the Merger

        The obligations of Cathay and Asia Bancshares to consummate the merger are subject to the satisfaction or waiver on or before the effective time of the merger of the following conditions:

        In addition, Cathay's obligation to effect the merger is subject to satisfaction or waiver of the following additional conditions:

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        In addition, Asia Bancshares's obligation to effect the merger is subject to satisfaction or waiver of the following additional conditions:

        If these conditions are not satisfied or waived, the merger agreement may be terminated. The merger agreement may also be terminated upon the occurrence of certain other events. See "—Termination."

Termination

        The Agreement and Plan of Merger may be terminated prior to the effective time of the merger:

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Termination Fee

        In the event the merger agreement is terminated in the following circumstances, Asia Bancshares is required to pay to Cathay a termination fee of $4 million:

Representations and Warranties

        The Agreement and Plan of Merger contains customary mutual representations and warranties by each party relating to, among other things: corporate organization; capitalization; corporate authority; consents and approvals; reports; financial statements; broker's fees; absence of certain changes or events; legal proceedings; compliance with applicable law; agreements with regulatory agencies; and reorganization.

        In addition, Asia Bancshares makes representations and warranties relating to, among other things: taxes and tax returns; employee benefit matters; certain contracts; risk management instruments; environmental liability; investment securities and commodities; property; intellectual property; related party transactions; state takeover laws; company information; loan matters; loan portfolio; insurance; and opinion of financial advisor, and Cathay has made representations and warranties relating to availability of financing for the merger.

        A material adverse effect means, with respect to Asia Bancshares or Cathay, as the case may be, any fact, change, event, occurrence, condition or development which (i) has, or would reasonably be expected to have, a material adverse effect on the business, properties, assets, liabilities, results of operations or condition (financial or otherwise) of such party and its subsidiaries taken as a whole or (ii) prevents or materially impairs the ability of such party to timely consummate the transactions contemplated by the merger agreement. However, a material adverse effect with respect to clause (i) of

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the preceding sentence shall not be deemed to include the impact of (A) changes after the date of the merger agreement in GAAP, (B) changes after the date of the merger agreement in laws of general applicability to companies in the industries in which such party and its subsidiaries operate, (C) changes after the date of the merger agreement in global, national or regional political conditions (including the outbreak of war or acts of terrorism) or in economic or market conditions affecting other companies in the industries in which such party and its subsidiaries operate, (D) the announcement of this merger agreement, or (E) a decline in the trading price of a party's common stock or the failure, in and of itself, to meet earnings projections, but not, in either case, including the underlying causes thereof; except, with respect to clauses (A), (B) or (C), to the extent that the effects of such change are disproportionately adverse to the business, properties, assets, liabilities, results of operations or condition (financial or otherwise) of such party and its subsidiaries, taken as a whole, as compared to other companies in the industry in which such party and its Subsidiaries operate).

        The representations and warranties of the parties do not survive the effective time of the merger.

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VOTING AND SUPPORT AGREEMENTS

        Certain directors and executive officers of Asia Bancshares and their family members who beneficially own in the aggregate 622,868.94 shares of Asia Bancshares common stock, or approximately [            ]% of the outstanding shares of Asia Bancshares common stock as of the record date, have entered into voting agreements with Cathay in the form attached to this proxy statement/prospectus as Appendix C (the "voting and support agreements").

        Under the voting and support agreements, these shareholders have agreed that, at any meeting of Asia Bancshares' shareholders and on every action or approval by written consent of the shareholders, they will vote:

        These shareholders also have agreed (with some limited exceptions) not to (a) sell, transfer, assign, tender in any tender or exchange offer, pledge, encumber, hypothecate or similarly dispose of (by merger, by testamentary disposition, by operation of law or otherwise) (a "Transfer"), either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the Transfer of any shares, (b) deposit any shares into a voting trust, or (c) agree (whether or not in writing) to take any of the actions referred to in the foregoing clause (a) or (b) prior to the earlier to occur of consummation or termination of the merger agreement pursuant to its terms. Cathay may in its discretion waive any of its rights under the voting and support agreements.

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COMPARISON OF CATHAY COMMON STOCK WITH ASIA BANCSHARES COMMON STOCK

        As a result of the merger, holders of Asia Bancshares common stock who receive Cathay common stock will become shareholders of Cathay. As a holder of Cathay common stock, you will have similar (but not identical) rights to those that you currently have with your shares of Asia Bancshares common stock.

        The discussion below is a summary of various rights of shareholders and is not intended to be a complete statement of all rights. The discussion is qualified in its entirety by reference to the amended and restated certificate of incorporation and bylaws of Cathay and the amended certificate of incorporation and amended and restated bylaws of Asia Bancshares as well as the provisions of New York, Delaware and federal law.

Authorized Capital Stock

        Cathay's authorized capital stock consists of: (a) 100,000,000 shares of common stock, par value $0.01 per share and (b) 10,000,000 shares of preferred stock, par value $0.01 per share. The Cathay board of directors is authorized, without further shareholder action, to issue other shares of preferred stock with such designations, preferences and rights as the Cathay board of directors may determine.

        Asia Bancshares' amended certificate of incorporation authorizes 2,000,000 shares of common stock, par value $10.00 per share, and 250,000 shares of preferred stock, par value $0.01 per share. Subject to the limitations in Asia Bancshares' amended certificate of incorporation, the Asia Bancshares board of directors is authorized, without further shareholder action, to issue shares of preferred stock with such designations, preferences and rights as the Asia Bancshares board of directors may determine.

Issuance of Common Stock

        As of December 31, 2014, there were 79,814,553 shares of Cathay common stock issued and outstanding, 4,207,565 shares of Cathay common stock held in treasury and 4,329,762 shares of common stock reserved for issuance under Cathay's employee and director stock option plans. There are no shares of Cathay preferred stock that are issued and outstanding.

        As of December 31, 2014, there were 1,460,044.38 shares of Asia Bancshares common stock issued and outstanding. There are no shares of Asia Bancshares preferred stock that are issued and outstanding.

Liquidation Rights

        In the event that Cathay is liquidated, the holders of Cathay common stock are entitled to share, on a pro rata basis, Cathay's remaining assets after provision for liabilities and following the payment of the full amount of liquidation preference to the holders of any outstanding shares of preferred stock, if any, outstanding. The Cathay board of directors is authorized to determine the liquidation rights of any other preferred stock that may be issued.

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        In the event that Asia Bancshares is liquidated, the holders of Asia Bancshares common stock are entitled to share, on a pro rata basis, Asia Bancshares' remaining assets after provision for liabilities and following the payment of the full amount of liquidation preference to the holders of any outstanding shares of preferred stock, if any, outstanding. The Asia Bancshares board of directors is authorized to determine the liquidation rights of any other preferred stock that may be issued.

Preemptive Rights

        Cathay's shareholders do not have preemptive rights to subscribe to any additional securities that may be issued by Cathay.

        Asia Bancshares' shareholders do not have preemptive rights to subscribe to any additional securities that may be issued by Asia Bancshares.

Voting Rights

        All voting rights are currently vested in the holders of Cathay common stock with each share being entitled to one vote. Cathay's shareholders generally do not have cumulative voting rights for the election of directors. However, if any shareholder controls 40% or more of Cathay's voting stock, Cathay's shareholders are permitted to cumulate their votes in the election of directors.

        All voting rights are currently vested in the holders of Asia Bancshares common stock with each share being entitled to one vote. Asia Bancshares' shareholders do not have cumulative voting rights for the election of directors.

Shareholder Action without a Meeting

        Subject to the rights of the holders of any class or series of preferred stock of Cathay, any action required or permitted to be taken by the shareholders of Cathay must be effected at an annual or special meeting of shareholders of Cathay and may not be effected by any consent in writing by such shareholders.

        Any action required or permitted to be taken by Asia Bancshares shareholders by vote at an annual or general meeting may, in lieu of a meeting, be taken by unanimous written consent of holders of all outstanding shares entitled to vote on such action.

Shareholder Vote on Certain Business Combinations

        Cathay's amended and restated certificate of incorporation provides that certain transactions with an "interested shareholder" or its affiliates or associates be approved by 80% or more of the voting power of the then-outstanding shares of stock of Cathay entitled to vote in the election of directors

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(the "voting stock"), voting together as a single class. Such supermajority approval is not required if the transaction in question (i) is approved by a majority of disinterested directors of Cathay or (ii) satisfies (if the transaction involves any cash or other consideration to the shareholders of Cathay solely in their capacity as shareholders of Cathay) certain price and procedural requirements. An "interested shareholder" is defined as (a) a person who is, or has publicly disclosed a plan or intention to become, a beneficial owner of more than 10% of the voting power of the voting stock or (b) an affiliate or associate of Cathay as defined under the Securities Exchange Act of 1934, who at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 10% of more of the voting power of the then-outstanding voting stock. The affirmative vote of at least 80% of the voting power of all of the then-outstanding shares of the voting stock, voting together as a single class, is required to alter, amend or repeal this provision of Cathay's amended and restated certificate of incorporation.

        Under Section 903 of the NYBCL, the consummation by Asia Bancshares of a merger or consolidation requires the approval of the board of directors and two-thirds of the votes of all outstanding shares entitled to vote thereon.

        In addition, Asia Bancshares' amended certificate of incorporation provides that any merger or consolidation of Asia Bancshares or any sale, lease, exchange or other disposition of all or substantially all of its assets to or with any other corporation, person or other entity, requires the affirmative vote of the holders of at least 75% of the outstanding shares of stock of Asia Bancshares entitled to vote at a meeting called for that purpose. However, the preceding sentence does not apply if the board of directors approves such action by a resolution adopted by 75% of the members of the board of directors. Additionally, the voting requirement mentioned above does not apply if: (i) the action does not change any shareholder's relative voting power in such successor entity; (ii) the action provides for the application of the voting provisions on a business combination that are contained in Asia Bancshares' amended certificate of incorporation (without any amendment, change, alteration or deletion) to apply to any successor of Asia Bancshares; or (iii) the action transfers all or substantially all of Asia Bancshares' assets to a wholly-owned subsidiary of Asia Bancshares.

Special Meetings of Shareholders

        Special meetings of Cathay shareholders, unless otherwise prescribed by statute, may only be called, at any time, by the Chairman of the board of directors, the President or by a majority of the members of the board of directors.

        Special meetings of Asia Bancshares shareholders may only be called, at any time, by the Chairman of the board of directors, the President or by the members of the board of directors.

Dividends

        The payment of dividends by any bank or bank holding company is subject to government regulation, in that regulatory authorities may prohibit banks and bank holding companies from paying dividends in a manner that would constitute an unsafe or unsound banking practice. In addition, a bank may not pay cash dividends if doing so would reduce the amount of its capital below that necessary to meet minimum applicable regulatory capital requirements. State laws also limit a bank's ability to pay dividends.

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        Dividends may be paid on Cathay common stock when, as and if declared by the Cathay board of directors out of funds legally available for the payment of dividends. In addition, the Cathay board of directors may issue other preferred stock that is entitled to such dividend rights as the board of directors may determine, including priority over the common stock in the payment of dividends.

        The ability of Cathay to pay dividends depends on its ability to receive dividends or other distributions from its subsidiaries. The limitations and restrictions imposed by statute or regulation may limit the amount of dividends

        Asia Bancshares amended and restated bylaws provide that, subject to applicable law, Asia Bancshares may declare and pay dividends at such times and in such amounts as the board of directors may, in its absolute discretion, determine and designate.

Amendment of Certificate of Incorporation and Bylaws

        The Delaware General Corporation Law authorizes a corporation's board of directors to make various changes of an administrative nature to its certificate of incorporation, including increasing the number of outstanding shares in proportion to a stock split or stock dividend in the corporation's own shares. Other amendments to a corporation's certificate of incorporation must be recommended to the shareholders by the board of directors, unless the board determines that, because of a conflict of interest or other special circumstances, it should make no recommendation and must be approved by a majority of all votes entitled to be cast by each class of shareholders that has a right to vote on the amendment.

        Cathay's amended and restated certificate of incorporation provides that the affirmative vote of the holders of at least 80% of the voting power of all of the then-outstanding shares of the capital stock of Cathay entitled to vote generally in the election of directors shall be required to alter, amend or repeal certain provisions in such certificate of incorporation, such as those regarding action by written consent, amendment of bylaws, election of directors or business combinations with interested shareholders. The Cathay board of directors may, by a majority vote of the directors, amend Cathay's amended and restated bylaws (however, if there is an interested shareholder at the time, the amendment requires the approval of a majority of the disinterested directors). The shareholders of Cathay also have power to amend Cathay's amended and restated Bylaws by the affirmative vote of the holders of at least 80% of the voting power of all of the then-outstanding shares of the capital stock of Cathay entitled to vote generally in the election of directors.

        Under New York law, and subject to limited exceptions, amendments to the certificate of incorporation must be approved by vote of a majority of all outstanding shares entitled to vote on the proposed amendment, except that provisions of the certificate of incorporation requiring a greater or class vote may only be amended by such greater or class vote. In addition, an amendment that negatively affects, in certain ways, holders of shares of a class or series requires authorization by a majority of the votes of all outstanding shares of the affected class or series.

        The amended certificate of incorporation of Asia Bancshares expressly requires the affirmative vote of 80% of the shares entitled to vote in the election of directors to amend the provisions governing: (i) the restriction on certain business combinations involving a person that is the beneficial owner of twenty percent or more of the outstanding shares of stock of Asia Bancshares; (ii) the ability

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of the board of directors to oppose a tender or other offer of Asia Bancshares common stock; and (iii) the minimum vote required to amend the provisions of the certificate of incorporation described in (i) and (ii) of this sentence.

        Asia Bancshares' amended and restated bylaws provide that the bylaws may be amended, repealed or suspended by the vote of the shareholders holding a majority of the shares entitled to vote in an election of directors. Other than a bylaw fixing the number of directors (the amendment of which requires the vote of the shareholders holding a majority of the shares entitled to vote in an election of directors), the bylaws may also be amended, repealed or suspended by the vote of a majority of the entire board of directors. Any bylaw adopted by the board of directors may be amended, repealed or suspended by shareholders entitled to vote as stated above.

Board of Directors

        Cathay's amended and restated certificate of incorporation provides that the board must be staggered, divided into three classes, as nearly equal in number as reasonably possible. Cathay's board currently consists of twelve (12) members, each of whom has a staggered three-year term.

        Asia Bancshares' amended and restated bylaws provide that each director serves until the next annual meeting of the shareholders and until his/her successor is duly elected and qualified. Asia Bancshares' board currently consists of 11 members.

Nomination to the Board of Directors

        Only persons who are nominated in accordance with the procedures set forth in the Cathay amended and restated bylaws shall be eligible for election as directors. Nominations of persons for election to the board of directors of Cathay may be made at the direction of the board of directors or by the nominating committee thereof or, to the extent authorized by applicable law, by any shareholder of Cathay who is a shareholder of record at the time of notice provided for in the Cathay amended and restated bylaws, who is entitled to vote for the election of directors at the meeting and who complies with the notice procedures set forth in the bylaws and with applicable law.

        Asia Bancshares' amended and restated bylaws provide that any nominations by shareholders for directors to be elected at an annual meeting of shareholders must be submitted to the Secretary in writing by shareholders holding at least 5% of the outstanding common stock of Asia Bancshares not later than the close of business on the 30th day immediately preceding the date of the meeting. Nominations not made in accordance with the preceding requirement may be disregarded in the discretion of the chairman or presiding officer of the meeting.

Removal

        Cathay's directors may be removed from office prior to the expiration of their term only for cause and upon the vote of at least 80% of the combined voting power of the company.

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        Asia Bancshares' amended and restated bylaws provide that, subject to the rights of the holders of preferred stock, any or all of the directors may be removed, either with or without cause, at any time by a majority vote of the shareholders present at any meeting called for such purpose.

Vacancies

        Under Cathay's amended and restated bylaws, and subject to the rights of the holders of preferred stock, newly created directorships resulting from any increase in the number of directors and any vacancies on the board of directors resulting from death, resignation, disqualification, removal or other cause shall be filled only by the affirmative vote of a majority of the remaining directors then in office, even though there may be less than a quorum of the board of directors; provided, however, that in the event that at the time of such vacancy or newly created directorship any stockholder owns 10% or more of Cathay's outstanding common stock, then, in addition to the vote of a majority of the remaining directors then in office, the filling of such vacancy or newly created directorship will require the approval of a majority of the directors who are unaffiliated with the 10% stockholder.

        Any director appointed to fill a vacancy will hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such director's successor is elected and qualified. No decrease in the number of directors will shorten the term of any incumbent director. If the number of directors is changed, any increase or decrease shall be apportioned among the three board classes so as to make all classes as nearly equal in number as possible. If, consistent with the preceding requirement, the increase or decrease may be allocated to more than one class, the increase or decrease may be allocated to any such class the board of directors selects in its discretion.

        Under New York law, vacancies occurring on the board of directors by reason of the removal of directors without cause may be filled only by a vote of the stockholders unless the certificate of incorporation or bylaws provide otherwise. Under New York law, newly created directorships resulting from an increase in the number of directors and vacancies occurring in the board for any reason (except the removal of directors without cause) may be filled by vote of the board unless a provision of the certificate of incorporation or the by-laws, provides that such newly created directorships or vacancies shall be filled by vote of the shareholders.

        Pursuant to the amended and restated bylaws of Asia Bancshares, subject to the rights of the holders of preferred stock, vacancies on the board of directors, including newly created directorships resulting from an increase in the number of directors, shall be filled by a majority vote of the shareholders present at a duly called meeting, except vacancies not exceeding one-third (1/3) of the entire board, without regard to such vacancy, may be filled by the affirmative vote of a majority of the directors then in office. Pursuant to New York law, a director elected to fill a vacancy, unless elected by the stockholders, shall hold office until the next meeting of stockholders at which the election of directors is in the regular order of business, and until such director's successor has been elected and qualified. Pursuant to the bylaws of Asia Bancshares, directors elected to fill a vacancy shall hold office for the balance of the unexpired term.

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Dissenters' Rights

        Under Delaware Law, appraisal rights are generally available for shares of any class or series of a corporation in a merger or consolidation; provided that, except in certain circumstances, no such rights are available for the shares of any class or series of stock which, at the record date for the meeting held to approve such transaction, were either (1) listed on a national securities exchange or (2) held of record by more than 2,000 shareholders; and further provided that no rights are available to shareholders of the surviving corporation if the merger does not require their approval.

        Under New York law, stockholders may, under certain circumstances, exercise a right of dissent from certain corporate actions and obtain payment for the fair value of their shares. For example, subject to certain exceptions, dissenters' rights are available under New York law to any stockholder of a constituent corporation in the event of a merger if such stockholder is entitled to vote upon the merger and the stock held by such stockholder is not listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. Neither Asia Bancshares' amended and restated certificate of incorporation nor its amended bylaws grant any dissenters' rights in addition to the statutorily prescribed rights. Stockholders who desire to exercise their dissenters' rights must satisfy all of the conditions and requirements set forth in the NYBCL in order to maintain these rights and obtain any payment due in respect of the exercise of these rights.

Limitation of Personal Liability of Directors and Officers

        Under the Delaware General Corporation Law, indemnification of directors and officers is authorized to cover judgments, amounts paid in settlement and expenses arising out of actions where the director or officer acted in good faith and in or not opposed to the best interests of the corporation, and, in criminal cases, where the director or officer had no reasonable cause to believe that his or her conduct was unlawful. Unless limited by the corporation's certificate of incorporation, Delaware Law requires indemnification if the director or officer is wholly successful on the merits of the action. Cathay's amended and restated certificate of incorporation and amended and restated bylaws provide that Cathay shall indemnify its directors, officers, employees and its agents to the fullest extent authorized by law.

        Under Section 722 of the NYBCL, a corporation may indemnify its directors and officers made, or threatened to be made, a party to any action or proceeding related to service as a director or officer, except for stockholder derivative suits, if the director or officer acted in good faith and for a purpose that he or she reasonably believed to be in, or, in the case of service to another corporation or enterprise, not opposed to the best interests of the corporation, or, with respect to criminal proceedings, had no reasonable cause to believe his or her conduct was unlawful. In the case of stockholder derivative suits, the corporation may indemnify a director or officer if he or she acted in good faith for a purpose that he or she reasonably believed to be in, or, in the case of service to another corporation or enterprise, not opposed to the best interests of the corporation, except that no indemnification may be made in respect of (i) a threatened action, or a pending action that is settled or otherwise disposed of, or (ii) any claim, issue or matter as to which such individual has been adjudged to be liable to the corporation, unless and only to the extent that the court in which the action was brought, or, if no action was brought, any court of competent jurisdiction, determines, upon

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application, that, in view of all the circumstances of the case, the individual is fairly and reasonably entitled to indemnity for the portion of the settlement amount and expenses as the court deems proper.

        Any individual who has been successful on the merits or otherwise in the defense of a civil or criminal action or proceeding will be entitled to indemnification. Except as provided in the preceding sentence, unless ordered by a court pursuant to Section 724 of the NYBCL, any indemnification under the NYBCL as described in the immediately preceding paragraph may be made only if, pursuant to Section 723 of the NYBCL, indemnification is authorized in the specific case and after a finding that the director or officer met the requisite standard of conduct by the disinterested directors if a quorum is available, or, if the quorum so directs or is unavailable, by (i) the board of directors upon the written opinion of independent legal counsel or (ii) the stockholders. Further, New York law permits a corporation to purchase directors and officers insurance.

        Asia Bancshares' amended and restated bylaws provide that the directors and officers of the corporation shall be indemnified to the fullest extent permitted under New York law. The board of directors, may also, in its discretion, cause Asia Bancshares to maintain insurance for the indemnification of directors and officers, covering any expenses incurred in any proceeding and any liabilities asserted against any of them in such capacity, except that no insurance may provide for indemnification in connection with material acts of active and deliberate dishonesty. The board of directors may also, in its discretion, provide indemnification to the employees of Asia Bancshares to the same extent as provided to its directors and officers, and maintain liability insurance for employees with regard to their actions on behalf of the Asia Bancshares.

Anti-Takeover Provisions

        The Delaware General Corporation Law provides that a stockholder acquiring more than 15% of the outstanding voting shares of the corporation (an "interested stockholder") but less than 85% of such shares may not engage in certain business combinations with the corporation for a period of three years subsequent to the date on which the stockholder became an interested stockholder unless prior to such date, the board of directors of the corporation approves either the business combination or the transaction, which resulted in the stockholder becoming an interested stockholder, or the business combination is approved by the board of directors and by the affirmative vote of at least 662/3% of the outstanding voting stock that is not owned by the interested stockholder. Cathay has not opted out of this provision.

        In addition, Cathay's amended and restated certificate of incorporation provides that certain combinations with a stockholder acquiring more than 10% of the outstanding voting shares of the corporation must be approved by the affirmative vote of at least 80% of the outstanding voting stock that is not owned by the such 10% interested stockholder unless the transaction is either approved by a majority of disinterested directors or the offer meets certain fair price provisions.

        Section 912 of the NYBCL generally provides that a New York corporation may not engage in a business combination with an interested stockholder for a period of five years following the interested stockholder's becoming such. Such a business combination would be permitted where it is approved by the board of directors before the interested stockholder's becoming such. Covered business combinations include certain mergers and consolidations, dispositions of assets or stock, plans for liquidation or dissolution, reclassifications of securities, recapitalizations and similar transactions. An interested stockholder is generally a stockholder owning at least 20% of a corporation's outstanding voting stock. In addition, New York corporations may not engage at any time with any interested stockholder in a business combination other than: (i) a business combination approved by the board of

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directors before the stock acquisition, or where the acquisition of the stock had been approved by the board of directors before the stock acquisition; (ii) a business combination approved by the affirmative vote of the holders of a majority of the outstanding voting stock not beneficially owned by the interested stockholder at a meeting called for that purpose no earlier than five years after the stock acquisition; or (iii) a business combination in which the interested stockholder pays a formula price designed to ensure that all other stockholders receive at least the highest price per share that is paid by the interested stockholder and that meets certain other requirements.

        A corporation may opt out of the interested stockholder provisions described in the preceding paragraph by expressly electing not to be governed by such provisions in its bylaws, which must be approved by the affirmative vote of a majority of votes of the outstanding voting stock of such corporation and is subject to further conditions. Asia Bancshares' amended certificate of incorporation expressly provides that the provisions of Section 912 of the NYBCL shall apply to any business combination of the corporation.

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INFORMATION ABOUT CATHAY

Cathay General Bancorp

        Cathay, headquartered in Los Angeles, California, is a Delaware corporation and is a bank holding company registered under the Bank Holding Company Act of 1956, as amended (the "BHC Act"). Cathay is the holding company for Cathay Bank, a California state-chartered bank. Founded in 1962, Cathay Bank offers a wide range of financial services. Cathay Bank currently operates 33 branches in California, nine branches in New York State, one in Massachusetts, two in Houston, Texas, three in Washington State, three in the Chicago, Illinois area (and one drive-through location), one in New Jersey, one in Nevada, one in Hong Kong and representative offices in Taipei and Shanghai.

        As of December 31, 2014, Cathay had total assets of approximately $11.5 billion, total loans of approximately $8.9 billion, total deposits of approximately $8.8 billion and approximately $1.6 billion in shareholders' equity.

        Cathay common stock trades on The NASDAQ Global Select Market under the symbol "CATY."


INFORMATION ABOUT ASIA BANCSHARES

Asia Bancshares, Inc.

        Asia Bancshares is a New York corporation which is registered as a bank holding company under the BHC Act. Asia Bancshares is the parent of Asia Bank, a national banking association. As of December 31, 2014, Asia Bancshares and its subsidiaries had consolidated total assets of $533.2 million, deposits of $ 453.1 million and stockholders' equity of $77.7 million. Asia Bancshares had 69 full-time and 11 part-time employees as of December 31, 2014.

        Asia Bancshares was incorporated under the laws of New York State in 1986. At the direction of the board of directors, pursuant to a plan of reorganization, the former stockholders of Asia Bank became the stockholders of Asia Bancshares. Since commencing business, Asia Bancshares has functioned primarily as the holder of all of Asia Bank's common stock. Asia Bancshares has two other direct wholly-owned subsidiaries, Asia Realty Corp. and Asia Realty II Corp., each of which is a New York State corporation and is used to hold other real estate owned property recovered in the foreclosure of a mortgage held by Asia Bank.

        Asia Bank has one wholly owned subsidiary, Asia Real Estate Corp., a Delaware corporation that owns a commercial building (leased to five tenants) and a residential condominium, both located in Rockville, Maryland.

        As of December 31, 2014, Asia Bank employed 80 full-time equivalent individuals on a full- and part-time basis. There are no employees of its subsidiaries.

        Asia Bancshares' principal executive offices are located at 135-34 Roosevelt Avenue, Flushing, New York 11354. Asia Bancshares' telephone number is (718) 961-6721. For additional information about Asia Bancshares, see "Where You Can Find More Information" beginning on page [        ].

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        Asia Bank attracts deposits through its branches in Manhattan and Queens, New York and in Rockville, Maryland. All of the consumers and businesses that it serves are located within the communities where its branches are located.

        Asia Bank's primary lending market includes the New York City metropolitan area. Within Asia Bank's lending market, the majority of businesses are considered small businesses, and lending tends to be concentrated within commercial real estate and small professional businesses. Asia Bank makes loans for office and retail properties, industrial properties, professional offices, parking garages and other commercial projects. Asia Bank also makes permanent mortgage loans for multifamily housing developments.

        Federal banking laws, regulations and policies, as well as New York State laws, extensively regulate Asia Bancshares and Asia Bank, including prescribing standards relating to capital, earnings, dividends, the repurchase or redemption of shares, loans or extensions of credit to affiliates and insiders, internal controls, information systems, internal audit systems, loan documentation, credit underwriting, asset growth, impaired assets and loan-to-value ratios. The regulatory framework is intended primarily for the protection of depositors, federal deposit insurance funds and the banking system as a whole and not for the protection of security holders.

        Asia Bancshares is a legal entity separate and distinct from Asia Bank and its other subsidiaries. As a bank holding company, Asia Bancshares is regulated under the BHC Act, and is subject to inspection, examination and supervision by the Federal Reserve.

        Asia Bank is organized as a national bank and is subject to extensive regulation and supervision by the Office of the Comptroller of the Currency (the "OCC"), as its chartering agency, and by the FDIC, as its insurer of deposits. Asia Bank must file reports with the OCC and the FDIC concerning its activities and financial condition, in addition to obtaining regulatory approvals prior to entering into certain transactions such as mergers with, or acquisitions of, other depository institutions in which Asia Bank would be the surviving entity. Furthermore, Asia Bank is periodically examined by the OCC and the FDIC to assess compliance with various regulatory requirements, including safety and soundness considerations.

        Asia Bancshares itself owns no physical properties. The corporate headquarters of Asia Bancshares are located at 135-34 Roosevelt Boulevard, Flushing, New York in space leased and partially occupied by Asia Bank as a branch. Asia Bank occupies three additional locations, including branches in Elmhurst and Manhattan and a branch in Rockville, Maryland. Asia Bank, owns in fee the buildings in which it operates a branch at 82-62 Broadway, Elmhurst, NY, and 23 Chatham Square New York, NY. Asia Real Estate Corporation, a subsidiary of Asia Bank, owns in fee the building in which Asia Bank operates a branch at 650 Hungerford Drive Rockville, MD. Asia Bank also occupies the premises at 135-11 Roosevelt Avenue, Flushing, NY as its loan center under an operating lease agreement. Management believes that the physical facilities are suitable and adequate and at present are being fully utilized.

        The premises owned by Asia Real Estate Corporation at 650 Hungerford Drive Rockville, MD, is a commercial office building with five additional units that are leased to third parties pursuant to lease

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agreements. The premises owned by Asia Real Estate Corporation at 648 Ivy League Lane Rockville, MD is a single family residential condominium leased to a third party.

        There are no legal proceedings currently pending against Asia Bancshares.

        In April 2014, an adversary proceeding was commenced against Asia Bank in the United States Bankruptcy Court for the District of New Jersey by Charles A. Stanziale, Jr., as the Chapter 7 Trustee for 15 Engle Street, LLC and Kim's Provisions, Co., Inc. (Case No. 12-21053). While neither Kim's Provisions nor 15 Engle Street were borrowers of Asia Bank, both of the debtor entities were controlled by Ki Kim who was the guarantor of commercial loans made by Asia Bank to two borrowers, 152 Northern, LLC and Le Monde Vert, LLC. In the adversary proceeding, the U.S. Bankruptcy Trustee sought to recover from Asia Bank certain amounts allegedly paid indirectly by Mr. Kim to Asia Bank as payment of those borrowers' loan obligations to Asia Bank. The total amount of those alleged payments was $430,850.49. In February 2015, Asia Bank and the U.S. Bankruptcy Trustee reached a settlement in the adversary proceeding, whereby Asia Bank agreed to pay the U.S. Bankruptcy Trustee the sum of $107,771.62. The settlement of this matter is currently pending approval of the U.S Bankruptcy Court.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF ASIA BANCSHARES

Critical Accounting Policies

        The discussion and analysis of the Company's consolidated balance sheets and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues, and expenses, and related disclosures of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

        Management of the Company considers the following to be critical accounting policies:

        Accounting for the allowance for credit losses involves significant judgments and assumptions by management, which have a material impact on the carrying value of net loans. The judgments and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances as described in "Allowance for Credit Losses" below.

Highlights

Statement of Operations Review

Net Income

        Net income for 2014, was $5,369,000, representing a slight increase when compared to net income for 2013 of $5,367,000. Basic earnings per share for 2014 was $3.68 compared to $3.68 for 2013 due primarily to an increase in net interest income of $445,000 and a decrease in the provision for loan losses of $511,000, which were partially offset by higher other operating expenses of $264,000 and lower wire transfer fee income of $102,000.

        Return on average stockholders' equity was 6.91% and return on average assets was 1.07% for 2014, compared to a return on average stockholders' equity of 7.42% and a return on average assets of 1.13% for 2013.

Financial Performance

 
  Twelve months ended
December 31,
 
 
  2014   2013  

Net income

  $ 5,369   $ 5,367  

Basic earnings per common share

  $ 3.68   $ 3.68  

Return on average assets

    1.07 %   1.13 %

Return on average total stockholders' equity

    6.91 %   7.42 %

Efficiency ratio

    47.94 %   46.78 %

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Net Interest Income Before Provision for Credit Losses

        Net interest income before provision for credit losses increased $445,000, or 2.2%, to $20.6 million for 2014 compared to $20.1 million for 2013. The increase was due primarily to the increase in loan interest income as a result of the $15.0 million increase in average loan balances.

        The net interest margin was 4.17% for 2014, compared to 4.41% for 2013. The decrease in the net interest margin was due mainly to the decrease in the yield on interest bearing assets.

        For 2014, the yield on average interest-earning assets was 4.55% and the cost of funds on average interest-bearing liabilities was 0.53%. In comparison, for 2013, the yield on average interest-earning assets was 4.81% and the cost of funds on average interest-bearing liabilities was 0.54%. The interest spread, defined as the difference between the yield on average interest-earning assets and the cost of funds on average interest-bearing liabilities, decreased to 4.02% for 2014 from 4.27% for 2013.

        The following table sets forth certain information relating to the Company's consolidated statements of financial condition and its consolidated statements of income for the periods indicated and reflects average interest-earning assets, average interest-bearing liabilities, and the average yields and rates paid on those assets and liabilities for 2014 and 2013. Average outstanding amounts included in the table are daily averages.

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Interest-Earning and Interest-Bearing Liabilities  
 
  Twelve months ended December 31,  
 
  2014   2013  
(Dollars in thousands)
  Average
Balance
  Interest
Income/
Expense
  Average
Yield/
Rate(1)(2)
  Average
Balance
  Interest
Income/
Expense
  Average
Yield/
Rate(1)(2)
 

Interest earning assets:

                                     

Commercial loans

  $ 14,324   $ 699     4.88 % $ 14,738   $ 769     5.22 %

Residential mortgage loans

    2,345     132     5.63     2,575     154     5.98  

Commercial mortgage loans

    402,309     21,163     5.26     382,358     20,660     5.40  

Real estate construction loans

    1,384     85     6.14     10     1     6.74  

Other loans and leases

    29     4     13.79     54     8     14.81  

Total loans and leases(1)

    420,391     22,083     5.25     399,735     21,592     5.40  

Taxable securities

    2,222     103     4.64     2,376     112     4.71  

Federal Funds Sold

    31,000     97     0.31     30,750     87     0.28  

Federal Home Loan Bank stock

    1,377     83     6.03     1,377     83     6.03  

Interest bearing deposits

    38,462     87     0.23     21,778     59     0.27  

Total interest-earning assets

    493,452     22,453     4.55     456,016     21,933     4.81  

Non-interest earning assets:

                                     

Cash and due from banks

    3,115                 2,682              

Other non-earning assets

    13,231                 16,383              

Total non-interest earning assets

    16,346                 19,065              

Less: Allowance for loan losses

    (5,769 )               (5,636 )            

Deferred loan fees

    (440 )               (360 )            

Total assets

  $ 503,589               $ 469,085              

Interest bearing liabilities:

                                     

Interest bearing demand accounts

  $ 20,696   $ 72     0.35   $ 20,785   $ 71     0.34  

Money market accounts

    93,427     426     0.46     86,930     406     0.47  

Savings accounts

    62,324     124     0.20     60,042     118     0.20  

Time deposits

    181,482     1,274     0.70     168,741     1,226     0.73  

Total interest-bearing deposits

    357,929     1,896     0.53     336,498     1,821     0.54  

Non-interest bearing liabilities:

                                     

Demand deposits

    67,637                 59,814              

Other liabilities

    2,324                 2,375              

Total equity

    75,699                 70,398              

Total liabilities and equity

  $ 503,589               $ 469,085              

Net interest spread(3)

                4.02 %               4.27 %

Net interest income(3)

        $ 20,557               $ 20,112        

Net interest margin(3)

                4.17 %               4.41 %

(1)
Yields and amounts of interest earned include loan fees. Non-accrual loans are included in the average balance.

(2)
Calculated by dividing net interest income by average outstanding interest-earning assets.

(3)
Net interest income, net interest spread, and net interest margin on interest-earning assets have been adjusted to a fully taxable-equivalent basis using a statutory federal income tax rate of 35%.

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        The following table summarizes the changes in interest income and interest expense on a tax equivalent basis attributable to changes in volume and changes in interest rates:

Taxable-Equivalent Net Interest Income–Changes Due to Rate and Volume(1)  
 
  Twelve months ended December 31,
2014-2013
Increase (Decrease) in
Net Interest Income Due to:
 
(Dollars in thousands)
  Changes in
Volume
  Changes in
Rate
  Total
Change
 

Interest-earning assets:

                   

Loans and leases

    1,096     (605 )   491  

Taxable securities

    (7 )   (2 )   (9 )

Federal Home Loan Bank stock

             

Deposits with other banks

    39     (11 )   28  

Federal funds sold

    1     9     10  

Total changes in interest income

    1,129     (609 )   520  

Interest-bearing liabilities:

                   

Interest bearing demand accounts

    1         1  

Money market accounts

    30     (10 )   20  

Savings accounts

    5     1     6  

Time deposits

    90     (42 )   48  

             

             

             

Total changes in interest expense

    126     (51 )   75  

Changes in net interest income

    1,003     (558 )   445  

(1)
Changes in interest income and interest expense attributable to changes in both volume and rate have been allocated proportionately to changes due to volume and changes due to rate.

Provision for Credit Losses

        Provision for credit losses was $278,000 for 2014 compared to $789,000 for 2013. The provision for credit losses was based on the review of the adequacy of the allowance for loan losses at December 31, 2014. The provision or reversal for credit losses represents the charge against or benefit toward current earnings that is determined by management, through a credit review process, as the amount needed to establish an allowance that management believes to be sufficient to absorb credit losses inherent in the

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Asia Bank's loan portfolio, including unfunded commitments. The following table summarizes the charge-offs and recoveries for the periods indicated:

 
  For the twelve months ended
December 31,
 
 
  2014   2013  
 
  (In thousands)
 

Charge-offs:

             

Commercial loans

  $   $  

Construction loans

         

Real estate loans(1)

    256     669  

         

Total charge-offs

    256     669  

Recoveries:

             

Commercial loans

        32  

Construction loans

         

Real estate loans(1)

    7     7  

         

         

Total recoveries

    7     39  

Net charge-offs

  $ 249   $ 630  

(1)
Real estate loans include commercial mortgage loans, residential mortgage loans, and equity lines.

Non-Interest Income

        Non-interest income, which includes revenues from depository service fees, wire transfer fees, and other sources of fee income, was $1,083,000 for 2014, a decrease of $185,000, or 14.6%, compared to $1,268,000 for 2013. The decrease in non-interest income in 2014 was primarily due to a decrease of $185,000 in wire transfer fees as a result of decreased emphasis on this service during 2014.

Non-Interest Expense

        Non-interest expense increased $430,000, or 4.0%, to $11,283,000 in 2014 compared to $10,853,000 in 2013 primarily as a result of higher director fees paid in 2014 as well as additional professional fees paid in relation to the proposed merger. The efficiency ratio was 47.94% in 2014 compared to 46.78% in 2013.

Income Taxes

        The effective tax rate for 2014 was 46.7% compared to 44.9% for 2013. The effective tax rate increased in 2014 as a result of the higher proportion of income earned in New York City during 2014 compared to 2013.

Financial Condition

Assets

        Total assets were $533.2 million at December 31, 2014, an increase of $58.5 million, or 12.3%, from $474.7 million at December 31, 2013, primarily due to a $15 million increase in loans and a $53.1 million increase in deposits.

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Loans

        Gross loans were $429.5 million at December 31, 2014, an increase of $15.0 million, or 3.6%, from $414.5 million at December 31, 2013, primarily due to increases of $11.9 million in commercial mortgage loans. The following table sets forth the classification of loans by type, mix, and percentage change as of the dates indicated:

 
  December 31,
2014
  % of
Gross Loans
  December 31,
2013
  % of
Gross Loans
  % Change  
 
  (Dollars in thousands)
 

Type of Loans

                               

Commercial real estate

  $ 375,398     87.41 % $ 373,654     90.15 %   0.47 %

Construction and land development

    2,921     0.68     253     0.06     1054.55  

Residential real estate

    45,044     10.49     35,826     8.64     25.73  

Commercial and Industrial

    1,999     0.47     1,098     0.26     82.06  

Consumer

    4,103     0.95     3,630     0.89     13.03  

Gross loans

  $ 429,465     100 % $ 414,461     100 %   3.62 %

Allowance for loan losses

    (5,764 )         (5,735 )         0.51  

Unamortized deferred loan fees

    (435 )         (455 )         (4.40 )

Total loans, net

  $ 423,266         $ 408,271           3.67 %

Non-performing Assets

        Non-performing assets include loans past due 90 days or more and still accruing interest, non-accrual loans, and other real estate owned. The Asia Bank's policy is to place loans on non-accrual status if interest and/or principal is past due 90 days or more, or in cases where management deems the full collection of principal and interest unlikely. After a loan is placed on non-accrual status, any previously accrued but unpaid interest is reversed and charged against current income and subsequent payments received are generally first applied towards the outstanding principal balance of the loan. The loan is generally returned to accrual status when the borrower has brought the past due principal and interest payments current and, in the opinion of management, the borrower has demonstrated the ability to make future payments of principal and interest as scheduled.

        The loan portfolio is reviewed on a regular basis for problem loans. During the ordinary course of business, management becomes aware of borrowers that may not be able to meet the contractual requirements of the loan agreements. Such loans are placed under closer supervision with consideration given to placing the loans on non-accrual status, the need for an additional allowance for loan losses, and (if appropriate) partial or full charge-off.

        The ratio of non-performing assets to total assets was 1.33% at December 31, 2014, compared to 1.79% at December 31, 2013. Total non-performing assets decreased $1.4 million, or 16.5%, to $7.1 million at December 31, 2014, compared to $8.5 million at December 31, 2013, primarily due to repayments of nonaccrual loans.

        As a percentage of gross loans plus OREO, Asia Bank's non-performing assets decreased to 1.65% at December 31, 2014, from 2.04% at December 31, 2013. The non-performing portfolio loan coverage ratio, defined as the allowance for loan losses to non-performing loans, increased to 81.3% at December 31, 2014, from 67.57% at December 31, 2013.

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        The following table presents non-performing assets and troubled debt restructurings (TDRs) at December 31, 2014 compared to December 31, 2013:

(Dollars in thousands)
  December 31, 2014   December 31, 2013   % Change  

Non-performing assets

                   

Accruing loans past due 90 days or more

  $   $      

Non-accrual loans:

                   

Commercial real estate loans, excluding land loans

    1,367     2,209     (38 )

Commercial loans

    90     383     (77 )

Residential mortgage loans

    5,633     5,896     (4 )

Total non-accrual loans:

  $ 7,090   $ 8,488     (16 )

Total non-performing loans

    7,090     8,488     (16 )

Other real estate owned

             

Total non-performing assets

  $ 7,090   $ 8,488     (16 )

Accruing troubled debt restructurings (TDRs)

  $ 259   $     100  

Allowance for loan losses

 
$

5,764
 
$

5,735
   
1
 

Allowance for off-balance sheet credit commitments

    56     56      

Allowance for credit losses

  $ 5,820   $ 5,791     1  

Total gross loans outstanding, at period-end

  $ 429,465   $ 414,461     4  

Allowance for loan losses to non-performing loans, at period-end

    81.30 %   67.57 %      

Allowance for loan losses to gross loans, at period-end

    1.34 %   1.38 %      

Non-accrual Loans

        At December 31, 2014, total non-accrual loans were $7.1 million, a decrease of $1.4 million, or 16.5%, from $8.5 million at December 31, 2013. The allowance for the collateral-dependent loans is calculated based on the difference between the outstanding loan balance and the value of the collateral as determined by recent appraisals, sales contracts, or other available market price information. The allowance for collateral-dependent loans varies from loan to loan based on the collateral coverage of the loan at the time of designation as non-performing. Non-accrual loans also include those troubled debt restructurings that do not qualify for accrual status.

Impaired Loans

        A loan is considered impaired when it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement based on current circumstances and events. The assessment for impairment occurs when and while such loans are on non-accrual as a result of delinquency status of over 90 days or receipt of information indicating that full collection of principal is doubtful, or when the loan has been restructured in a troubled debt restructuring. Non-accrual impaired loans, including TDRs, are not returned to accrual status unless the unpaid interest has been brought current and full repayment of the recorded balance is expected or if the borrower has made six consecutive monthly payments of the scheduled amounts due, and TDRs are reviewed for continued impairment until they are no longer reported as TDRs.

        At December 31, 2014, recorded investment in impaired loans totaled $7.2 million and was comprised of non-accrual loans of $6.9 million and accruing TDRs of $0.3 million. At December 31, 2013, recorded investment in impaired loans totaled $8.4 million and was comprised of non-accrual loans of $8.4 million. At December 31, 2014 and 2013, none of the allowance for loan losses was allocated for impaired loans.

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        The following table presents impaired loans and related allowance as of the dates indicated:

 
  Impaired Loans  
 
  December 31, 2014   December 31, 2013  
 
  Unpaid
Principal
Balance
  Recorded
Investment
  Allowance   Unpaid
Principal
Balance
  Recorded
Investment
  Allowance  
 
  (In thousands)
 

With no allocated allowance

                                     

Commercial loans

  $   $   $   $ 391   $ 293   $  

Real estate construction loans

                         

Commercial mortgage loans

    1,322     1,322         2,560     2,170      

Residential mortgage loans and equity lines

    6,038     5,892         5,783     5,633      

Subtotal

  $ 7,360   $ 7,214   $   $ 8,734   $ 8,096   $  

With allocated allowance

                                     

Commercial loans

  $   $   $   $   $   $  

Real estate construction loans

                         

Commercial mortgage loans

                         

Residential mortgage loans and equity lines

                263     263     8  

Subtotal

  $   $   $   $ 263   $ 263   $ 8  

Total impaired loans

  $ 7,360   $ 7,214   $   $ 8,997   $ 8,359   $ 8  

Loan Concentration

        Most of Asia Bank's business activities are with customers located in the predominantly Asian areas of New York City, New York and the State of Maryland. Asia Bank has no specific industry concentration, and generally its loans are collateralized with real property or other pledged collateral of the borrowers. Loans are generally expected to be paid off from the operating profits of the borrowers, refinancing by another lender, or through sale by the borrowers of the collateral. There were no loan concentrations to multiple borrowers in similar activities which exceeded 10% of total loans as of December 31, 2014, or as of December 31, 2013.

        The federal banking regulatory agencies issued final guidance on December 6, 2006, regarding risk management practices for financial institutions with high or increasing concentrations of commercial real estate ("CRE") loans on their balance sheets. The regulatory guidance reiterates the need for sound internal risk management practices for those institutions that have experienced rapid growth in CRE lending, have notable exposure to specific types of CRE, or are approaching or exceeding the supervisory criteria used to evaluate the CRE concentration risk, but the guidance is not to be construed as a limit for CRE exposure. The supervisory criteria are: (1) total reported loans for construction, land development, and other land represent 100% of the institution's total risk-based capital, and (2) both total CRE loans represent 300% or more of the institution's total risk-based capital and the institution's CRE loan portfolio has increased 50% or more within the last thirty-nine months. Total loans for construction, land development, and other land represented 4% of the Bank's total risk-based capital as of December 31, 2014, and 0.4% as of December 31, 2013. Total CRE loans represented 486% of total risk-based capital as of December 31, 2014, and 517% as of December 31, 2013.

Allowance for Credit Losses

        Asia Bank maintains the allowance for credit losses at a level that is considered adequate to absorb the estimated and known risks in the loan portfolio and off-balance sheet unfunded credit commitments. Allowance for credit losses is comprised of the allowance for loan losses and the reserve

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for off-balance sheet unfunded credit commitments. With this risk management objective, Asia Bank's management has an established monitoring system that is designed to identify impaired and potential problem loans, and to permit periodic evaluation of impairment and the adequacy level of the allowance for credit losses in a timely manner.

        In addition, Asia Bank's Board of Directors has established a written credit policy that includes a credit review and control system which it believes should be effective in ensuring that Asia Bank maintains an adequate allowance for credit losses. The Board of Directors provides oversight for the allowance evaluation process, including quarterly evaluations, and determines whether the allowance is adequate to absorb losses in the credit portfolio. The determination of the amount of the allowance for credit losses and the provision for credit losses is based on management's current judgment about the credit quality of the loan portfolio and takes into consideration known relevant internal and external factors that affect collectability when determining the appropriate level for the allowance for credit losses. The nature of the process by which Asia Bank determines the appropriate allowance for credit losses requires the exercise of considerable judgment. Additions to the allowance for credit losses are made by charges to the provision for credit losses. While management utilizes its best judgment based on the information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond Asia Bank's control, including the performance of its loan portfolio, the economy, changes in interest rates, and the view of the regulatory authorities toward loan classifications. Identified credit exposures that are determined to be uncollectible are charged against the allowance for credit losses. Recoveries of previously charged off amounts, if any, are credited to the allowance for credit losses. A weakening of the economy or other factors that adversely affect asset quality could result in an increase in the number of delinquencies, bankruptcies, or defaults, and a higher level of non-performing assets, net charge-offs, and provision for credit losses in future periods.

        The allowance for loan losses was $5,764,000 and the allowance for off-balance sheet unfunded credit commitments was $56,000 at December 31, 2014, which represented the amount believed by management to be sufficient to absorb credit losses inherent in the loan portfolio, including unfunded commitments. The allowance for loan losses represented 1.34% of period-end gross loans and 81.3% of non-performing loans at December 31, 2014. The comparable ratios were 1.38% of period-end gross loans and 67.57% of non-performing loans at December 31, 2013.

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        The following table sets forth information relating to the allowance for loan losses, charge-offs, recoveries, and the reserve for off-balance sheet credit commitments for the periods indicated:

 
  Twelve months ended December 31,  
 
  2014   2013  
 
  (Dollars in thousands)
 

Allowance for Loan Losses

             

Balance at beginning of period

  $ 5,735   $ 5,577  

Reversal for credit losses

    278     789  

Charge-offs:

   
 
   
 
 

Commercial loans

        (98 )

Construction loans-residential

         

Construction loans-other

         

Real estate loans

    (256 )   (571 )

         

         

Total charge-offs

    (256 )   (669 )

Recoveries:

   
 
   
 
 

Commercial loans

        32  

Construction loans-residential

         

Construction loans-other

         

Real estate loans

    7     7  

         

         

Total recoveries

    7     39  

Balance at end of period

  $ 5,764   $ 5,735  

Reserve for off-balance sheet credit commitments

             

Balance at beginning of period

  $ 57   $ 47  

Provision/(reversal) for credit losses/transfers

    (1 )   10  

Balance at end of period

  $ 56   $ 57  

Average loans outstanding

             

during period ended

  $ 416,378   $ 401,570  

Total gross loans outstanding, at period-end

  $ 429,465   $ 414,461  

Total non-performing loans, at period-end

  $ 7,090   $ 8,488  

Ratio of net charge-offs to average

             

loans outstanding during the period

    0.08 %   0.21 %

Provision for loan losses to average

             

loans outstanding during the period

    0.09 %   0.26 %

Allowance for loan losses to

             

non-performing loans at period-end

    81.30 %   67.57 %

Allowance for loan losses to

             

gross loans at period-end

    1.34 %   1.38 %

        Our allowance for loan losses consists of the following:

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        The table set forth below reflects Asia Bank's management's allocation of the allowance for loan losses by loan category and the ratio of each loan category to the total average loans as of the dates indicated:

 
  December 31, 2014   December 31, 2013  
(Dollars in thousands)
  Amount   Percentage of
Loans in Each
Category
to Average
Gross Loans
  Amount   Percentage of
Loans in Each
Category
to Average
Gross Loans
 

Type of Loan:

                         

Commercial loans

  $ 20     0.3 % $ 9     0.2 %

Residential mortgage loans(1)

    493     8.5     389     6.7  

Commercial mortgage loans

    5,178     90.0     5,302     92.4  

Real estate construction loans

    37     0.6     3     0.1  

Installment and other loans

    36     0.6     32     0.6  

Total

  $ 5,764     100 % $ 5,735     100 %

(1)
Residential mortgage loans includes equity lines.

Deposits

        Total deposits were $453.0 million at December 31, 2014, an increase of $53.1 million, or 13.3%, from $399.9 million at December 31, 2013, primarily due to a $31.1 million, or 35.3%, increase in money market deposits, a $16.1 million, or 78.0%, increase in time deposits over $100,000 and a

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$10.6 million, or 17.3%, increase in non-interest bearing demand deposits. The following table displays the deposit mix as of the dates indicated:

 
  December 31, 2014   % of Total   December 31, 2013   % of Total  
 
  (Dollars in thousands)
 

Deposits

                         

Non-interest-bearing demand deposits

  $ 71,639     15.8 % $ 61,004     15.3 %

NOW deposits

    22,361     4.9     21,606     5.4  

Money market deposits

    119,111     26.3     88,051     22.0  

Savings deposits

    62,599     13.8     61,337     15.3  

Time deposits under $100,000

    66,448     14.7     73,076     18.3  

Time deposits of $100,000 or more

    110,864     24.5     94,794     23.7  

Total deposits

  $ 453,022     100.0 % $ 399,868     100.0 %

Off-Balance-Sheet Arrangements and Contractual Obligations

        The following table summarizes Asia Bank's contractual obligations to make future payments as of December 31, 2014. Payments for deposits and borrowings do not include interest. Payments related to leases are based on actual payments specified in the underlying contracts.

 
  Payment Due by Period  
 
  1 year
or less
  More than
1 year but
less than
3 years
  3 years or
more but
less than
5 years
  5 years
or more
  Total  
 
  (In thousands)
 

Contractual obligations:

                               

Deposits with stated maturity dates

  $ 140,023   $ 34,446   $ 2,843   $   $ 177,312  

Long-term debt

                     

Operating leases

    832     1,737     773         3,342  

Total contractual obligations and other commitments

  $ 140,855   $ 36,183   $ 3,616   $   $ 180,654  

        In the normal course of business, Asia Bank enters into various transactions, which, in accordance with U.S. generally accepted accounting principles, are not included in its consolidated balance sheets. Asia Bank enters into these transactions to meet the financing needs of its customers. These transactions include commitments to extend credit and standby letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the condensed consolidated balance sheets.

        Loan Commitments.    Asia Bank enters into contractual commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes. Substantially all of Asia Bank's commitments to extend credit are contingent upon its customers maintaining specific credit standards at the time of loan funding. Asia Bank minimizes its exposure to loss under these commitments by subjecting them to credit approval and monitoring procedures. Asia Bank's management assesses the credit risk associated with certain commitments to extend credit in determining the level of the allowance for credit losses.

Capital Resources

        Total equity was $77.7 million at December 31, 2014, an increase of $5.4 million, or 7.5%, from $72.3 million at December 31, 2013, due to the net income for 2014.

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Capital Adequacy Review

        The Company's management seeks to maintain the Company's capital at a level sufficient to support future growth, protect depositors and stockholders, and comply with all applicable regulatory requirements.

        The Company's and Asia Bank's regulatory capital continued to exceed the regulatory minimum requirements as of December 31, 2014. The capital ratios of Asia Bank place it in the "well capitalized" category which is defined as institutions with a Tier 1 risk-based capital ratio equal to or greater than 6.0%, total risk-based capital ratio equal to or greater than 10.0%, and Tier 1 leverage capital ratio equal to or greater than 5.0%.

        The following table presents the Company's and Asia Bank's capital and leverage ratios as of December 31, 2014, and December 31, 2013:

 
  Asia Bancshares Inc.   Asia Bank, NA  
 
  December 31, 2014   December 31, 2013   December 31, 2014   December 31, 2013  
(Dollars in thousands)
  Balance   %   Balance   %   Balance   %   Balance   %  

Tier 1 capital (to risk-weighted assets)

  $ 77,696     18.67   $ 73,076     18.24   $ 72,724     17.68   $ 67,287     16.80  

Tier 1 capital minimum requirement

    16,648     4.00     16,025     4.00     16,454     4.00     16,025     4.00  

Excess

 
$

61,048
   
14.67
 
$

57,051
   
14.24
 
$

56,270
   
13.68
 
$

51,262
   
12.80
 

Total capital (to risk-weighted assets)

  $ 82,846     19.91   $ 78,093     19.49   $ 77,874     18.93   $ 72,304     18.05  

Total capital minimum requirement

    33,295     8.00     32,050     8.00     32,909     8.00     32,050     8.00  

Excess

 
$

49,551
   
11.91
 
$

46,043
   
11.49
 
$

44,965
   
10.93
 
$

40,254
   
10.05
 

Tier 1 capital (to average assets)

                                                 

— Leverage ratio

  $ 77,696     14.75   $ 73,076     15.34   $ 72,724     13.94   $ 67,287     14.19  

Minimum leverage requirement

    21,066     4.00     19,050     4.00     20,873     4.00     18,968     4.00  

Excess

 
$

56,630
   
10.75
 
$

54,026
   
11.34
 
$

51,851
   
9.94
 
$

48,319
   
10.19
 

Risk-weighted assets

  $ 416,190         $ 400,625         $ 411,357         $ 400,625        

Total average assets(1)

  $ 526,652         $ 476,254         $ 521,819         $ 474,194        

(1)
The quarterly total average assets reflect all debt securities at amortized cost, equity security with readily determinable fair values at the lower of cost or fair value, and equity securities without readily determinable fair values at historical cost.

        The Company's management believes that, as of December 31, 2014, the Company and Asia Bank would meet all capital adequacy requirements under the Basel III rules on a fully phased-in basis as if such requirements were currently in effect.

Liquidity

        Asia Bank's liquidity is based on its ability to maintain sufficient cash flow to meet maturing financial obligations and customer credit needs, and to take advantage of investment opportunities as they are presented in the marketplace. Asia Bank's principal sources of liquidity are growth in deposits and repayments from loans. At December 31, 2014, Asia Bank's liquidity total coverage ratio (defined as total overall coverage capacity over total funds to be covered) was 82.44% which is over our policy requirement of 70%.

        Approximately 81.9% of Asia Bank's time deposits mature within one year or less as of December 31, 2014. Some outflow of these deposits may be anticipated upon maturity due to the keen competition in Asia Bank's marketplace. However, based on historical run-off experience, Asia Bank

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expects that the outflow will be minimal and can be replenished through its normal growth in deposits. Asia Bank's management believes the above-mentioned sources will provide adequate liquidity to Asia Bank to meet its daily operating needs.

        The Company's principal source of liquidity is dividends from Asia Bank. No dividends were paid by Asia Bank to the Company during 2013 or 2014 and Asia Bank does not expect to pay a dividend in 2015.

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WHERE YOU CAN FIND MORE INFORMATION ABOUT CATHAY

        Cathay has filed with the SEC a registration statement under the Securities Act that registers the distribution to Asia Bancshares shareholders of the shares of Cathay common stock to be issued in connection with the merger. This proxy statement/prospectus is a part of that registration statement and constitutes the prospectus of Cathay in addition to being a proxy statement for Asia Bancshares shareholders. The registration statement, including the attached exhibits and schedules, contains additional relevant information about Cathay and Cathay common stock.

        You may read and copy this information at the Public Reference Room of the SEC at 100 F Street, NE, Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330. You may also obtain copies of this information by mail from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates, or from commercial document retrieval services.

        The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, like Cathay, who file electronically with the SEC. The address of the site is http://www.sec.gov. The reports and other information filed by Cathay with the SEC are also available at Cathay's website at http://www.cathaybank.com. The web addresses of the SEC and Cathay are included as inactive textual references only. Except as specifically incorporated by reference into this proxy statement/prospectus, information on those web sites is not part of this proxy statement/prospectus.

        The SEC allows Cathay to incorporate by reference information in this proxy statement/prospectus. This means that Cathay can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be a part of this proxy statement/prospectus, except for any information that is superseded by information that is included directly in this proxy statement/prospectus.

        This proxy statement/prospectus incorporates by reference the documents listed below that Cathay previously filed with the SEC. They contain important information about the companies and their financial condition.

CATHAY SECURITIES AND EXCHANGE COMMISSION
FILINGS (SEC FILE NUMBER 001-31830):
  PERIOD OR DATE FILED(1)

Annual Report on Form 10-K

  Year ended December 31, 2014

Current Reports on Form 8-K

 

Filed on January 21, 2015 (both) and March 23, 2015 (however, we do not incorporate by reference any information under Item 2.02, Results of Operations and Financial Condition)

Definitive Proxy Statement

 

Filed on April 10, 2014

Description of Cathay Common Stock on Form 8-A

 

Filed on September 16, 1999, including any amendment or report filed to update such description


(1)
To be updated prior to filing

        In addition, Cathay also incorporates by reference additional documents that it files with the SEC under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act between the date of this proxy statement/prospectus and the date of the Asia Bancshares special meeting. These documents include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.

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        Cathay has supplied all information contained or incorporated by reference in this proxy statement/prospectus relating to Cathay and Asia Bancshares has supplied all information relating to Asia Bancshares.

        Documents incorporated by reference are available from Cathay without charge, excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference as an exhibit in this proxy statement/prospectus. You can obtain documents incorporated by reference in this proxy statement/prospectus by requesting them in writing or by telephone from the company at the following addresses:

Cathay General Bancorp
777 North Broadway
Los Angeles, California 90012
Attn: Investor Relations
(213) 625-4700

        Asia Bancshares shareholders requesting documents must do so by [            ] to receive them before the special meeting. You will not be charged for any of these documents that you request. If you request any incorporated documents from Cathay, Cathay will mail them to you by first class mail, or another equally prompt means, within one business day after receiving your request.

Asia Bancshares

        Asia Bancshares does not have a class of securities registered under Section 12 of the Exchange Act, is not subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act, and accordingly does not file documents and reports with the SEC.

        If you have any questions concerning the merger or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus or need help voting your shares of Asia Bancshares common stock, please contact:

Asia Bancshares, Inc.
135-11 Roosevelt Avenue
Flushing, New York 11354
Attention: Jeffrey Hsu
Telephone number: (718) 961-9898

        Cathay has not authorized anyone to give any information or make any representation about the merger or the company that is different from, or in addition to, that contained in this proxy statement/prospectus or in any of the materials that have been incorporated in this proxy statement/prospectus. Therefore, if anyone does give you information of this sort, you should not rely on it. If you are in a jurisdiction where offers to exchange or sell, or solicitations of offers to exchange or purchase, the securities offered by this proxy statement/prospectus or the solicitation of proxies is unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this proxy statement/prospectus does not extend to you. The information contained in this proxy statement/prospectus speaks only as of the date of this proxy statement/prospectus unless the information specifically indicates that another date applies.

        This proxy statement/prospectus is dated [            ], 2015.

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LEGAL MATTERS

        The validity of the shares of Cathay common stock to be issued in connection with the merger will be passed upon for Cathay by Wachtell, Lipton, Rosen & Katz. Certain federal income tax consequences of the merger will be passed upon for Cathay by Wachtell, Lipton, Rosen & Katz and for Asia Bancshares, by Lamb & Barnosky, LLP.

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EXPERTS

        The consolidated financial statements of Cathay as of December 31, 2014 and 2013, and for each of the years in the three-year period ended December 31, 2014, and management's assessment of the effectiveness of internal control over financial reporting as of December 31, 2014 have been incorporated by reference herein and in the registration statement in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.

        The balance sheets of Asia Bancshares, Inc. as of December 31, 2014 and 2013, and the related statements of income, changes in stockholders' equity and cash flows for the years then ended, have been included in this Registration Statement in reliance upon the report of Crowe Horwath LLP, independent auditors, and upon the authority of said firm as experts in accounting and auditing.

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ASIA BANCSHARES, INC.

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014 and 2013

CONTENTS

INDEPENDENT AUDITOR'S REPORT

  F-2

CONSOLIDATED BALANCE SHEETS

 
F-4

CONSOLIDATED STATEMENTS OF INCOME

 
F-5

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

 
F-6

CONSOLIDATED STATEMENTS OF CASH FLOWS

 
F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 
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GRAPHIC

       



 

 

Crowe Horwath LLP
Independent Member Crowe Horwath International

 


INDEPENDENT AUDITOR'S REPORT

Board of Directors
Asia Bancshares, Inc. and Subsidiaries
Flushing, New York

Report on the Financial Statements

        We have audited the accompanying consolidated financial statements of Asia Bancshares, Inc. and Subsidiaries, which comprise the consolidated balance sheets as of December 31, 2014 and 2013, and the related consolidated statements of income, changes in stockholders' equity, and cash flows for the years then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

        Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

        Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

        An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

        We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Opinion

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Asia Bancshares, Inc. and Subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

/s/ Crowe Horwath LLP

New York, New York

March 24, 2015

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2014 and 2013

 
  2014   2013  

ASSETS

             

Cash and due from banks

  $ 65,620,943   $ 21,614,769  

Federal funds sold

    30,000,000     30,000,000  

Total cash and cash equivalents

    95,620,943     51,614,769  

Time deposits with other financial institutions

        240,000  

Investment securities

             

Held to maturity (fair value of $2,393,344 and $2,400,325 in 2014 and 2013)

    2,195,611     2,262,291  

Loans, net

    423,265,669     408,270,502  

Federal Reserve Bank ("FRB") stock

    1,376,950     1,376,950  

Bank premises and equipment, net

    6,040,574     5,787,293  

Interest receivable

    1,664,538     1,634,121  

Other assets

    3,065,775     3,545,181  

Total assets

  $ 533,230,060   $ 474,731,107  

LIABILITIES AND STOCKHOLDERS' EQUITY

             

Deposits

             

Non-interest bearing

  $ 71,639,186   $ 61,004,087  

Interest bearing

    381,382,722     338,863,483  

Total deposits

    453,021,908     399,867,570  

Interest payable

    752,156     824,351  

Other liabilities

    1,759,946     1,712,221  

Total liabilities

    455,534,010     402,404,142  

Stockholders' equity

             

Preferred stock, $0.01 par value; 250,000 shares authorized, none issued and outstanding for 2014 and 2013

         

Common stock, $10 par value; 2,000,000 shares authorized, 1,460,044 shares issued and outstanding for 2014 and 2013

    14,600,444     14,600,444  

Surplus

    30,604,578     30,604,578  

Retained earnings

    32,491,028     27,121,943  

Total stockholders' equity

    77,696,050     72,326,965  

Total liabilities and stockholders' equity

  $ 533,230,060   $ 474,731,107  

   

See accompanying notes to consolidated financial statements.

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Years ended December 31, 2014 and 2013

 
  2014   2013  

Interest income

             

Loans, including fees

  $ 22,082,951   $ 21,591,993  

Investment securities

    102,746     112,270  

Federal funds sold

    97,209     87,340  

Other

    169,991     141,739  

    22,452,897     21,933,342  

Interest expense

             

Deposits

    1,896,442     1,821,197  

Net interest income

    20,556,455     20,112,145  

Provision for loan losses

    278,000     789,000  

Net interest income after provision for loan losses

    20,278,455     19,323,145  

Other income

             

Service charges and fees

    1,054,763     1,144,045  

Other

    28,275     124,168  

    1,083,038     1,268,213  

Other expenses

             

Salaries and benefits

    6,292,854     6,206,575  

Occupancy and equipment

    1,623,490     1,543,496  

Other

    3,367,000     3,103,321  

    11,283,344     10,853,392  

Income before income taxes

    10,078,149     9,737,966  

Provision for income taxes

    4,709,064     4,371,134  

Net income

  $ 5,369,085   $ 5,366,832  

Basic earnings per share

  $ 3.68   $ 3.68  

Weighted average shares outstanding

    1,460,044     1,460,044  

   

See accompanying notes to consolidated financial statements.

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Years ended December 31, 2014 and 2013

 
  Preferred
Stock
  Common
Stock
  Surplus   Retained
Earnings
  Total  

Balances at January 1, 2013

  $   $ 14,600,444   $ 30,604,578   $ 21,755,111   $ 66,960,133  

Net income

                5,366,832     5,366,832  

Balances at December 31, 2013

        14,600,444     30,604,578     27,121,943     72,326,965  

Net income

                5,369,085     5,369,085  

Balances at December 31, 2014

  $   $ 14,600,444   $ 30,604,578   $ 32,491,028   $ 77,696,050  

   

See accompanying notes to consolidated financial statements.

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2014 and 2013

 
  2014   2013  

Cash flows from operating activities

             

Net income

  $ 5,369,085   $ 5,366,832  

Adjustments to reconcile net income to net cash provided by operating activities

             

Depreciation and amortization

    377,234     364,003  

Amortization and accretion of securities

    1,813     2,195  

Net gain on sale of foreclosed assets

        (47,663 )

Provision for loan losses

    278,000     789,000  

Changes in

             

Interest receivable

    (30,417 )   (8,145 )

Other assets

    222,651     (985,226 )

Interest payable

    (72,195 )   (213,037 )

Other liabilities

    304,480     (72,496 )

Net cash provided by operating activities

    6,450,651     5,195,463  

Cash flows from investing activities

             

Held to maturity securities:

             

Proceeds from principal payments

    64,867     280,205  

Maturities of time deposits in other financial institutions

    240,000     240,000  

Proceeds from the sale of foreclosed assets

        3,080,000  

Net change in loans

    (15,273,167 )   (27,621,768 )

Purchase of bank premises and equipment

    (630,515 )   (427,511 )

Net cash (used in) investing activities

    (15,598,815 )   (24,449,074 )

Cash flows from financing activities

             

Net change in deposits

    53,154,338     4,745,050  

Net cash provided by financing activities

    53,154,338     4,745,050  

Net change in cash and cash equivalents

    44,006,174     (14,508,561 )

Cash and cash equivalents at beginning of year

    51,614,769     66,123,330  

Cash and cash equivalents at end of year

  $ 95,620,943   $ 51,614,769  

Supplemental cash flow information

             

Loans transfer to foreclosed assets

  $   $ 2,103,678  

Interest paid

  $ 1,968,637   $ 2,034,234  

Income taxes paid, net of refunds

  $ 5,048,000   $ 5,097,425  

   

See accompanying notes to consolidated financial statements.

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014 and 2013

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        Nature of Operations and Principles of Consolidation:    The consolidated financial statements include the accounts of Asia Bancshares,  Inc. (collectively, "the Company"), and its wholly owned subsidiaries, Asia Bank, N.A. (the "Bank"), Asia Real Estate Corp. ("Asia REC"), Asia Realty Corporation, and Asia Realty II Corporation. All significant intercompany accounts and transactions have been eliminated in consolidation.

        Organized in 1984, the Bank, with its headquarters in Flushing, New York, is an interstate bank operating in New York and Maryland. The Bank's primary strategy is to provide banking products and services to the local Asian communities. The Bank offers traditional deposit products, including checking, savings, and time deposit accounts. In terms of credit practices, the Bank offers commercial mortgages, commercial and industrial loans, construction loans, business lines of credit, letters of credit, and Small Business Administration ("SBA") and Overseas Credit Guarantee Fund (Taiwan) ("OCGF") loans. The OCGF is a program administered by the Taiwanese government that is similar to SBA lending, whereby a portion of the Bank's loans to local businesses are guaranteed by the Taiwanese government. Consumer loans offered include residential mortgages, home improvement loans, personal loans, and overdraft protection.

        Subsequent Events:    The Bank has evaluated subsequent events for recognition and disclosure through March 24, 2015, which is the date the financial statements were available to be issued.

        Use of Estimates:    To prepare financial statements in conformity with accounting principles generally accepted in the United States of America management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

        Cash Flows:    For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, and federal funds sold. Generally, federal funds are sold for one-day periods. Net cash flows are reported for loan and deposit transactions.

        Interest-Bearing Deposits in Other Financial Institutions:    Interest-bearing deposits in other financial institution mature within three years and are carried at cost.

        Investment Securities:    The Bank is required to classify its investment security portfolio into one of three categories: trading securities, securities available for sale, and securities held to maturity. Securities classified as held to maturity are carried at amortized cost when management has the positive intent and ability to hold such securities to maturity. There are no investment securities classified as trading or available for sale.

        Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Gains and losses on sales are based on the amortized cost of securities sold. Securities are written down to fair value when a decline in fair value is not temporary.

        Management evaluates securities for other-than-temporary impairment ("OTTI") on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings.

        For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For equity securities, the entire amount of impairment is recognized through earnings.

        Federal Reserve Bank ("FRB") Stock:    The Bank is a member of its Regional FRB. FRB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on an ultimate recovery of par value. Both cash and stock dividends are reported as income.

        Loans:    Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, deferred loan fees and costs, and an allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments.

        Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Non-accrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. A loan is moved to non-accrual status in accordance with the Company's policy, typically after 90 days of non-payment.

        All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

        Allowance for Loan Losses:    The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management's judgment, should be charged-off.

        The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired or loans otherwise classified as substandard or doubtful.

        A loan is impaired when full payment under the loan terms is not expected. Commercial and commercial real estate loans are individually evaluated for impairment. If a loan is impaired, a portion

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan's existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Large groups of smaller balance homogeneous loans, such as smaller balance consumer and residential real estate loans are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.

        The general component covers non-classified loans and is based on historical loss experience adjusted for current factors. The current factors for which the Bank evaluates, when determining adjustments to the historical loss factors, include changes to or the strength of the Bank's underwriting and related policies and procedures, economic trends within the tri-state area, changes within the composition of the portfolio, related to either changes in underlying loan types or the underlying past due or non-accrual status within that loan type, changes in management and staff, trends within the underlying collateral values, regulatory factors, and evaluation of credit concentrations.

        The following portfolio segments have been identified: Commercial, Commercial Real Estate, Construction and Land Loans, Residential Real Estate and Consumer.

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        Other Real Estate Owned:    Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed.

        Bank Premises and Equipment:    Land is carried at cost. Bank premises and equipment are stated at cost less accumulated depreciation computed principally on the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the useful lives of the improvements or the corresponding lease terms.

        Long-term Assets:    Premises and equipment and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

        Income Taxes:    Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. Temporary differences are primarily the result of timing differences in depreciation expense and the allowance for loan losses. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

        A tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded.

        The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

        Earnings Per Share:    Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. Earnings per share is restated to reflect stock dividends for all periods presented. There are no potentially dilutive securities.

        Loss Contingencies:    Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the financial statements.

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        Restrictions on Cash:    From time to time, cash on hand or on deposit with the Federal Reserve Bank is required to meet regulatory reserve and clearing requirements. However, as of year-end 2014 and 2013, no requirement was necessary.

        Fair Value of Financial Instruments:    Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

        Reclassifications:    Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no impact on prior year net income or stockholders equity.

NOTE 2—INVESTMENT SECURITIES

        Year-end securities were as follows for December 31, 2014 and 2013:

Held to Maturity
  Amortized
Cost
  Unrecognized
Gains
  Unrecognized
Losses
  Fair Value  

2014

                         

FNMA notes and bonds

  $ 2,010,447   $ 176,215   $   $ 2,186,662  

FHLMC notes and bonds

    185,164     21,518         206,682  

  $ 2,195,611   $ 197,733   $   $ 2,393,344  

2013

                         

FNMA notes and bonds

  $ 2,071,134   $ 119,934   $   $ 2,191,068  

FHLMC notes and bonds

    191,157     18,100         209,257  

  $ 2,262,291   $ 138,034   $   $ 2,400,325  

        The amortized cost and fair value of investment securities at December 31, 2014, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 
  Held to Maturity  
 
  Amortized
Cost
  Fair Value  

Due after ten years

  $ 2,195,611   $ 2,393,344  

        All securities held by the Company as of December 31, 2014 and 2013, were in unrealized gain positions.

        There were no sales of investment securities for the years ended December 31, 2014 and 2013.

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 3—LOANS

        A summary of loans by class at year-end follows:

 
  2014   2013  

Commercial real estate

             

Non owner occupied

  $ 281,819,329   $ 277,956,672  

Owner occupied

    78,305,032     77,382,512  

Multifamily

    15,273,315     18,314,052  

Construction and land development

    2,920,820     252,584  

Residential real estate

             

One-to-four family

    45,044,123     35,826,403  

Commercial and industrial

    1,998,911     1,098,030  

Consumer

             

Home equity

    3,863,159     3,380,348  

Loans to individuals

    240,000     250,000  

Overdrafts

    94     5  

    429,464,783     414,460,606  

Deferred loan fees, net

    (435,184 )   (454,784 )

Allowance for loan losses

    (5,763,930 )   (5,735,320 )

Loans, net

  $ 423,265,669   $ 408,270,502  

        At year-end 2014 and 2013, certain officers and directors, and companies in which they have a beneficial interest, were indebted to the Bank in the aggregate amount of $1,638,516 and $1,647,663, respectively.

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 3—LOANS (Continued)

        The following table presents the activity in the allowance for loan losses by portfolio segment for the years ended 2014 and 2013:

 
  Commercial   Commercial
Real Estate
  Construction
and Land
  Residential
Real Estate
  Consumer   Total  

December 31, 2014

                                     

Allowance for loan losses:

                                     

Beginning balance

  $ 8,849   $ 5,302,119   $ 3,333   $ 389,211   $ 31,808   $ 5,735,320  

Provision for loan losses

    12,900     (124,748 )   34,028     97,035     258,785     278,000  

Loans charged off

    (1,850 )               (254,467 )   (256,317 )

Recoveries

        263         6,664         6,927  

Total ending allowance balance

  $ 19,899   $ 5,177,634   $ 37,361   $ 492,910   $ 36,126   $ 5,763,930  

December 31, 2013

   
 
   
 
   
 
   
 
   
 
   
 
 

Allowance for loan losses:

                                     

Beginning balance

  $ 42,867   $ 5,135,822   $ 6,900   $ 351,657   $ 39,254   $ 5,576,500  

Provision for loan losses

    (66,081 )   830,767     (3,567 )   35,327     (7,446 )   789,000  

Loans charged off

        (664,470 )       (4,437 )       (668,907 )

Recoveries

    32,063             6,664         38,727  

Total ending allowance balance

  $ 8,849   $ 5,302,119   $ 3,333   $ 389,211   $ 31,808   $ 5,735,320  

        The Bank is primarily a commercial mortgage lender against collateral properties located in nineteen different counties within its identified marketing territories. Queens, Manhattan and Brooklyn, New York, are the largest concentration areas with approximately three quarters of outstanding mortgages held against properties located in those three boroughs. Loans to underlying businesses are also varied. There are twenty-five existing different types of property loans on the books with stores and apartments, retail stores and multi-use collectively approximating 38.95% of total mortgage loans at year-end 2014. Notwithstanding this geographic and property type diversity, the Bank's exposure to possible future credit loss may be adversely affected by changes in local economic and employment conditions.

Credit Quality Indicators

        The Bank categorizes loans based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Bank analyzes loans individually by classifying the loans as to credit risk. This analysis includes all commercial real estate loans and commercial loans and also includes residential and home equity loans delinquent greater than ninety days. This analysis is performed on a rotating quarterly basis for performing non-delinquent loans. For delinquent loans analysis is performed more frequently. For performing non-delinquent residential, home equity and consumer loans the Bank classifies these as pass rated loans.

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 3—LOANS (Continued)

        The Bank uses an eight-point credit risk grading system that sorts loans into risk categories based on the relevant information about the financial strength of borrowers and their ability to service debt. Information evaluated includes current financial information, historical payment experience, collateral and current economic trends, among other factors. The Bank analyzes loans individually by segregating them as to perceived credit risk. This analysis is performed no less frequently than on a quarterly basis. Four pass grades are used to rate borrowers: Superior, Good, Satisfactory and Watch. Additionally, four other grades are assigned to loans that are subject to adverse criticism. They are:

        As of December 31, 2014 and 2013, the Bank did not have any loans considered doubtful or loss.

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 3—LOANS (Continued)

        As of December 31, 2014 and 2013, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

 
  Pass   Special
Mention
  Substandard   Total  

December 31, 2014

                         

Commercial real estate—non owner occupied

  $ 277,935,298   $ 3,693,423   $ 190,608   $ 281,819,329  

Commercial real estate—owner occupied

    72,380,421     4,747,756     1,176,855     78,305,032  

Construction and land development

    2,920,820             2,920,820  

Multifamily

    15,273,315             15,273,315  

One-to-four family

    40,211,136         4,832,987     45,044,123  

Home equity

    3,063,159         800,000     3,863,159  

Commercial and industrial

    1,909,119         89,792     1,998,911  

Loans to individuals

    240,000             240,000  

Overdrafts

    94             94  

Total

  $ 413,933,362   $ 8,441,179   $ 7,090,242   $ 429,464,783  

December 31, 2013

   
 
   
 
   
 
   
 
 

Commercial real estate—non owner occupied

  $ 273,357,194   $ 3,655,200   $ 944,278   $ 277,956,672  

Commercial real estate—owner occupied

    70,001,893     6,115,983     1,264,636     77,382,512  

Construction and land development

    252,584             252,584  

Multifamily

    18,314,052             18,314,052  

One-to-four family

    30,729,947         5,096,456     35,826,403  

Home equity

    2,580,348         800,000     3,380,348  

Commercial and industrial

    715,283         382,747     1,098,030  

Loans to individuals

    250,000             250,000  

Overdrafts

    5             5  

Total

  $ 396,201,306   $ 9,771,183   $ 8,488,117   $ 414,460,606  

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 3—LOANS (Continued)

        The following table presents the aging of the recorded investment in past due loans as of December 31, 2014 and 2013, by class of loans:

 
  Loans Not
Past Due
  30 - 59 Days
Past Due
  60 - 89 Days
Past Due
  Greater Than
90 Days
Past Due
Accruing
  90 Days
Past Due
and on
Nonaccrual
  Total  

December 31, 2014

                                     

Commercial real estate—non owner occupied

  $ 281,111,767   $ 516,954   $   $   $ 190,608   $ 281,819,329  

Commercial real estate—owner occupied

    76,638,890         489,287         1,176,855     78,305,032  

Construction and land development

    2,920,820                     2,920,820  

Multifamily

    15,273,315                     15,273,315  

One-to-four family

    40,211,136                 4,832,987     45,044,123  

Home equity

    3,063,159                 800,000     3,863,159  

Commercial and industrial

    1,909,119                 89,792     1,998,911  

Loans to individuals

    240,000                     240,000  

Overdrafts

    94                     94  

Total

  $ 421,368,300   $ 516,954   $ 489,287   $   $ 7,090,242   $ 429,464,783  

December 31, 2013

                                     

Commercial real estate—non owner occupied

  $ 276,884,592   $ 127,802   $   $   $ 944,278   $ 277,956,672  

Commercial real estate—owner occupied

    74,905,923         1,211,953         1,264,636     77,382,512  

Construction and land development

    252,584                     252,584  

Multifamily

    18,314,052                     18,314,052  

One-to-four family

    30,729,947                 5,096,456     35,826,403  

Home equity

    2,580,348                 800,000     3,380,348  

Commercial and industrial

    715,283                 382,747     1,098,030  

Loans to individuals

    250,000                     250,000  

Overdrafts

    5                     5  

Total

  $ 404,632,734   $ 127,802   $ 1,211,953   $   $ 8,488,117   $ 414,460,606  

        Nonaccrual loans and loans due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 3—LOANS (Continued)

        The following table represents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2014 and 2013:

 
  Allowance for Loan Losses   Loan Balances  
 
  Individually
Evaluated for
Impairment
  Collectively
Evaluated for
Impairment
  Total   Individually
Evaluated for
Impairment
  Collectively
Evaluated for
Impairment
  Total  

December 31, 2014

                                     

Commercial

  $   $ 19,899   $ 19,899   $   $ 1,998,911   $ 1,998,911  

Commercial real estate

        5,177,635     5,177,635     1,321,774     374,075,902     375,397,676  

Construction and land loans

        37,361     37,361         2,920,820     2,920,820  

Residential real estate

        492,909     492,909     5,092,374     39,951,749     45,044,123  

Consumer

        36,126     36,126     800,000     3,303,253     4,103,253  

Total

  $   $ 5,763,930   $ 5,763,930   $ 7,214,148   $ 422,250,635   $ 429,464,783  

December 31, 2013

   
 
   
 
   
 
   
 
   
 
   
 
 

Commercial

  $   $ 8,849   $ 8,849   $ 292,955   $ 805,075   $ 1,098,030  

Commercial real estate

        5,302,119     5,302,119     2,169,278     371,483,958     373,653,236  

Construction and land loans

        3,333     3,333         252,584     252,584  

Residential real estate

    7,809     381,402     389,211     5,096,456     30,729,947     35,826,403  

Consumer

        31,808     31,808     800,000     2,830,353     3,630,353  

Total

  $ 7,809   $ 5,727,511   $ 5,735,320   $ 8,358,689   $ 406,101,917   $ 414,460,606  

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 3—LOANS (Continued)

        The following table presents information related to loans individually evaluated for impairment by class of loans as of years-ended 2014 and 2013:

 
  Unpaid
Principal
Balance
  Recorded
Investment
  Allowance for
Loan Losses
Allocated
  Average
Recorded
Investment
 

December 31, 2014

                         

Commercial real estate—non owner occupied

  $ 182,410   $ 182,410   $   $ 708,208  

Commercial real estate—owner occupied

    1,139,364     1,139,364         1,173,166  

Construction and land development

                 

Multifamily

                 

One-to-four family

    5,238,385     5,092,374         5,093,901  

Home equity

    800,000     800,000         800,000  

Commercial and industrial

                146,478  

Loans to individuals

                 

Total

  $ 7,360,159   $ 7,214,148   $   $ 7,921,753  

December 31, 2013

                         

Commercial real estate—non owner occupied

  $ 944,278   $ 944,278   $   $ 2,650,106  

Commercial real estate—owner occupied

    1,615,607     1,225,000         1,234,315  

Construction and land development

                 

Multifamily

                818,607  

One-to-four family

    5,246,905     5,096,456     7,809     5,017,955  

Home equity

    800,000     800,000         800,000  

Commercial and industrial

    390,607     292,955          

Loans to individuals

                 

Total

  $ 8,997,397   $ 8,358,689   $ 7,809   $ 10,520,983  

 

 
  2014   2013  

Interest income recognized during the time period that loans were impaired, using accrual or cash-basis method of accounting

  $ 21,949   $ 97,447  

        As of December 31, 2014 and 2013, the Company has a recorded investment in troubled debt restructurings of $2,158,700 and $2,833,646, respectively. There were no specific allowance allocations applied to these loans as of December 31, 2014 and 2013.

        During the year ending December 31, 2014, there were no loans modified as troubled debt restructurings. During the year ending December 31, 2013, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan.

        Modifications involving a reduction of the stated interest rate of the loan were for periods up to twelve months.

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Table of Contents


ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 3—LOANS (Continued)

        The following table presents loans by class modified as troubled debt restructurings that occurred during the year ending December 31, 2013:

 
  Number
of Loans
  Pre-Modification
Balance
  Post-Modification
Balance
 

Commercial real estate—non owner occupied

    1   $ 113,753   $ 110,550  

Commercial real estate—owner occupied

    2     1,064,150     1,064,150  

Total

    3   $ 1,177,903   $ 1,174,700  

        A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms. There were no defaults in 2014 and 2013 of loans modified within the previous twelve months.

        The terms of certain other loans were modified during the year ending December 31, 2014, that did not meet the definition of a troubled debt restructuring. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be insignificant. These loan modifications are not considered material.

        In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of it debt in the foreseeable future without the modification. This evaluation is performed under the company's internal underwriting policy.

NOTE 4—BANK PREMISES AND EQUIPMENT

        Year-end premises and equipment were as follows:

 
  2014   2013  

Land

  $ 1,301,200   $ 1,301,200  

Building

    7,748,028     7,429,787  

Leasehold improvements

    271,698     184,053  

Furniture, fixtures and equipment

    798,972     1,103,485  

    10,119,898     10,018,525  

Less accumulated depreciation

    (4,079,324 )   (4,231,232 )

  $ 6,040,574   $ 5,787,293  

        Depreciation and amortization expense amounted to $377,234 and $364,003 in 2014 and 2013.

        The Company leases its main banking location under a lease agreement with a real estate company owned by an officer of the Company, which expires on March 31, 2018. Total rental income paid to this related party approximated $498,000 for the years ended December 31, 2014 and 2013. Additional office space is currently leased that expires in October 31, 2019. Rent expense incurred under the main banking location and additional office space leases was $812,529 for 2014 and 2013, respectively. Rent

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 4—BANK PREMISES AND EQUIPMENT (Continued)

commitments under noncancelable operating leases were as follows, before considering renewal options that generally are present.

2015

  $ 832,416  

2016

    856,302  

2017

    880,894  

2018

    479,729  

2019

    293,472  

Thereafter

     

Total

  $ 3,342,813  

NOTE 5—INCOME TAXES

        The components of the provision for income taxes were as follows:

 
  2014   2013  

Current federal

  $ 3,230,805   $ 2,600,421  

Current state and local

    1,616,609     1,505,921  

Deferred federal

    (164,928 )   163,066  

Deferred state and local

    26,578     101,726  

  $ 4,709,064   $ 4,371,134  

        Year-end deferred tax assets and liabilities are as follows:

 
  2014   2013  

Deferred tax assets

  $ 3,188,035   $ 2,588,682  

Deferred tax liabilities

    (1,029,507 )   (568,504 )

Net deferred tax asset

  $ 2,158,528   $ 2,020,178  

        The effective tax rate differs from the statutory tax rate due to state and local taxes. As of December 31, 2014 and 2013, The Bank and its subsidiaries had no unrecognized tax benefits or accrued interest and penalties recorded. This is not expected to change.

        In 2014, New York State enacted comprehensive tax reform provisions with significant impact on financial institutions. As a result of this legislation, beginning in 2015, the Bank will calculate its tax obligation to New York based upon the largest of a calculated income tax liability, a tax liability based upon average equity capital or a minimum filing fee. Also, effective January 1, 2015, banks under $8 billion in total assets are permitted to claim a subtraction from New York taxable income equal to 50% of the net interest income on loans secured by residential real estate located within the state and on small business loans to customers within the state, provided the principal balance of these loans is less than $5 million.

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 6—DEPOSITS

        Time deposits that meet or exceed the Federal Deposit Insurance limit of $250,000 were $35,451,922 and $32,089,635 at year end 2014 and 2013 respectively.

        The scheduled maturities of all time deposits were as follows:

2015

  $ 140,022,577  

2016

    26,247,745  

2017

    8,199,365  

2018

    1,819,959  

2019

    1,022,630  

  $ 177,312,276  

NOTE 7—LOAN COMMITMENTS AND OTHER RELATED ACTIVITIES

        The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include standby letters of credit and commitments to extend credit in the form of unused lines of credit. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

        At December 31, 2014 and 2013, the Bank had the following financial instruments, substantially all of which were at variable rates, whose approximate contract amounts represent normal credit risk:

 
  2014   2013  

Standby letters of credit

  $ 256,755   $ 275,490  

Commitments to extend credit

    15,606,703     14,333,023  

        Standby letters of credit represent conditional commitments issued by the Bank to guarantee the performance of a third party. The credit risk involved in issuing these letters of credit is essentially the same as the risk involved in extending loans to customers. Collateral held, if any, varies but primarily includes certificates of deposit.

        Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Bank evaluates each customer's creditworthiness on a case-by-case basis. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Collateral held, if any, varies but primarily includes real estate.

NOTE 8—REGULATORY MATTERS

        The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative

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Table of Contents


ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 8—REGULATORY MATTERS (Continued)

measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings, and other factors.

        Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of Total and Tier I capital (as defined in the regulations) to risk weighted assets (as defined), and of Tier I capital to average assets (as defined). Management believes, as of December 31, 2014 and 2013, that the Bank meets all capital adequacy requirements to which it is subject.

        As of December 31, 2014 and 2013, the most recent notification by the Office of the Comptroller of the Currency classified the Bank as well capitalized. To be categorized as well capitalized, the Bank must maintain minimum Total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the following table. There are no conditions or events since that notification that management believes have changed the institution's category.

        The Bank's actual and required capital amounts and ratios are presented below at year-end (in thousands). The Company's capital amounts are not materially different from the Bank's amounts.

 
  Actual   For Capital
Adequacy
Purposes
  To Be Well
Capitalized
Under Prompt
Corrective
Action Provisions
 
 
  Amount   Ratio   Amount   Ratio   Amount   Ratio  

2014

                                     

Total capital (to risk-weighted assets)

  $ 77,874     18.93 % $ 32,909     8.00 % $ 41,136     10.00 %

Tier I capital (to risk-weighted assets)

    72,724     17.68     16,454     4.00     24,681     6.00  

Tier I capital (to average assets)

    72,724     13.94     20,873     4.00     26,091     5.00  

2013

   
 
   
 
   
 
   
 
   
 
   
 
 

Total capital (to risk-weighted assets)

  $ 72,304     18.05 % $ 32,050     8.00 % $ 40,063     10.00 %

Tier I capital (to risk-weighted assets)

    67,287     16.80     16,025     4.00     24,038     6.00  

Tier I capital (to average assets)

    67,287     14.19     18,968     4.00     23,710     5.00  

        The Company's principal source of funds for dividend payments is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid by the Bank in any calendar year is limited to the current year's net profits, as defined, combined with the retained net profits of the preceding two years. As of December 31, 2014 and 2013, $7,638,444 and $4,080,420 was available for dividends, respectively.

NOTE 9—EMPLOYEE BENEFIT PLAN

        The Bank has a profit sharing plan (the "Plan") for all qualified employees. The terms of the Plan call for contributions to be made by the Bank equal to 5% of each qualified employee's base salary. Qualified employees vest, over a six-year period, in the Bank's contributions. Expense recognized by the Bank related to the Plan was $170,469 and $173,336 for 2014 and 2013, respectively.

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 10—FAIR VALUE

        Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

        Impaired Loans:    The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

        Assets and Liabilities Measured on a Recurring Basis:    There are no assets and liabilities measured at fair value on a recurring basis at December 31, 2014 and 2013.

Assets and Liabilities Measured on a Non-Recurring Basis

        Impaired Loans:    There were no impaired loans measured for impairment using the fair value of the collateral for collateral dependent loans at December 31, 2014. Impaired loans measured for impairment using the fair value of the collateral for collateral dependent loans, had a book value of $263,469, with a valuation allowance of $7,809 at December 31, 2013. The impaired loans measured for impairment using fair value of the collateral as of December 31, 2013, consisted of one one-to-four family property which was valued using the sales comparison approach including discounts for comparable sales between 6.5% and 20%.

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ASIA BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2014 and 2013

NOTE 10—FAIR VALUE (Continued)

        The carrying amount and estimated fair value of financial instruments, excluding those shown above, (in thousands) at year end were as follows:

 
  2014   2013  
 
  Carrying
Amount
  Fair
Value
  Carrying
Amount
  Fair
Value
 

Financial assets

                         

Cash and cash equivalents

  $ 95,621   $ 95,621   $ 51,615   $ 51,615  

Time deposits in other financial institutions

            240     240  

Securities held to maturity

    2,196     2,393     2,262     2,400  

Loans, net

    423,266     439,134     408,271     412,986  

FRB stock

    1,377     N/A     1,377     N/A  

Accrued interest receivable

    1,664     1,664     1,634     1,634  

Financial liabilities

                         

Deposits

    453,022     439,093     399,868     397,921  

Accrued interest payable

    752     752     824     824  

        The methods and assumptions used to estimate fair values are described as follows.

        Carrying amount is the estimated fair value for cash and cash equivalents, time deposits in other financial institutions, accrued interest receivable and payable, demand deposits, and variable rate loans and deposits that reprice frequently and fully. Security fair values are based on market prices or dealer quotes, and if no such information is available, on the rate and term of the security and information about the issuer. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life of credit risk. Fair values for impaired loans are estimated using discounted cash flow analysis or underlying collateral values. It is not practicable to determine the fair value of FRB stock due to restrictions placed on its transferability. The fair value of off-balance sheet items is based on the current fees or cost that would be charged to enter into or terminate such arrangements and is not material.

NOTE 11—SUBSEQUENT EVENTS

        In January 2015, the Company signed a definitive merger agreement with Cathay General Bancorp, headquartered in Los Angeles, California. Pursuant to the merger agreement, the Company will merge with and into the Cathay General Bancorp, with Cathay General Bancorp as the surviving entity.

        Simultaneously with the merger, Asia Bancshares' wholly owned bank subsidiary, Asia Bank, will merge with and into Cathay's wholly owned bank subsidiary, Cathay Bank, with Cathay Bank as the surviving entity after the bank merger. As a result of the bank merger, Asia Bank will cease to exist as a separate entity.

        The transaction has been approved by the Boards of Directors of the Company and Cathay General Bancorp. Completion of the transaction is subject to customary closing conditions, including the receipt of required regulatory approvals and the approval of the Company's stockholders.

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Appendix A

EXECUTION VERSION


AGREEMENT AND PLAN OF MERGER

between
CATHAY GENERAL BANCORP
and
ASIA BANCSHARES, INC.



DATED AS OF JANUARY 20, 2015


Table of Contents


TABLE OF CONTENTS

    ARTICLE I
THE MERGER
   

1.1

 

The Merger

 

A-1
1.2   Closing   A-1
1.3   Effective Time   A-2
1.4   Effects of the Merger   A-2
1.5   Organizational Documents of the Surviving Corporation   A-2
1.6   Directors   A-2
1.7   Officers   A-2
1.8   Reservation of Right to Change Structure   A-2
1.9   Bank Merger and other Subsidiary Mergers   A-2
1.10   Tax Consequences   A-3

 

 

ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES

 

 

2.1

 

Effect on Capital Stock

 

A-3
2.2   Exchange of Certificates   A-5
2.3   Company Election Procedures   A-7

 

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

 

3.1

 

Corporate Organization

 

A-10
3.2   Capitalization   A-10
3.3   Authority; No Violation   A-11
3.4   Consents and Approvals   A-12
3.5   Reports   A-12
3.6   Financial Statements   A-12
3.7   Broker's Fees   A-13
3.8   Absence of Certain Changes or Events   A-14
3.9   Legal Proceedings   A-14
3.10   Taxes and Tax Returns   A-14
3.11   Employee Benefit Matters   A-15
3.12   Compliance with Applicable Law   A-17
3.13   Certain Contracts   A-18
3.14   Agreements with Regulatory Agencies   A-20
3.15   Risk Management Instruments   A-20
3.16   Environmental Liability   A-20
3.17   Investment Securities and Commodities   A-21
3.18   Property   A-21
3.19   Intellectual Property   A-22
3.20   Related Party Transactions   A-22
3.21   State Takeover Laws   A-23
3.22   Company Information   A-23
3.23   Loan Matters   A-23
3.24   Loan Portfolio   A-24
3.25   Insurance   A-24

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3.26   Opinion of Financial Advisor   A-25
3.27   Reorganization   A-25


 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CATHAY

 

 

4.1

 

Corporate Organization

 

A-25
4.2   Capitalization   A-25
4.3   Authority; No Violation   A-26
4.4   Consents and Approvals   A-26
4.5   Reports   A-27
4.6   Financial Statements   A-27
4.7   Broker's Fees   A-28
4.8   Absence of Certain Changes or Events   A-28
4.9   Legal Proceedings   A-28
4.10   Compliance with Applicable Law   A-28
4.11   Agreements with Regulatory Agencies   A-29
4.12   Available Funds   A-30
4.13   Reorganization   A-30

 

 

ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS

 

 

5.1

 

Conduct of Business Prior to the Effective Time

 

A-30
5.2   Company Forbearances   A-30
5.3   Cathay Forbearances   A-33

 

 

ARTICLE VI
ADDITIONAL AGREEMENTS

 

 

6.1

 

Regulatory Matters; Third Party Consents

 

A-33
6.2   Access to Information   A-34
6.3   Employee Benefit Plans   A-35
6.4   Indemnification; Directors' and Officers' Insurance   A-36
6.5   Additional Agreements   A-36
6.6   Notice of Changes   A-36
6.7   Public Announcements   A-37
6.8   Takeover Statutes   A-37
6.9   No Solicitation of Alternative Transactions   A-37
6.10   Registration Statement/Proxy Statement   A-40
6.11   Company Shareholders' Meeting   A-41
6.12   Transaction Litigation   A-41

 

 

ARTICLE VII
CONDITIONS PRECEDENT

 

 

7.1

 

Conditions to Each Party's Obligation to Effect the Merger

 

A-42
7.2   Conditions to Obligations of Cathay   A-42
7.3   Conditions to Obligations of the Company   A-43

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ARTICLE VIII
TERMINATION AND AMENDMENT

 

 

8.1

 

Termination or Abandonment

 

A-44
8.2   Effect of Termination   A-45
8.3   Termination Fee   A-45

 

 

ARTICLE IX
GENERAL PROVISIONS

 

 

9.1

 

Nonsurvival of Representations, Warranties and Agreements

 

A-46
9.2   Expenses   A-46
9.3   Notices   A-47
9.4   Interpretation; Definitions   A-47
9.5   Disclosure Schedule   A-58
9.6   Counterparts   A-58
9.7   Entire Agreement   A-58
9.8   Governing Law; Jurisdiction   A-58
9.9   Waiver of Jury Trial   A-58
9.10   Assignment; Third Party Beneficiaries   A-59
9.11   Specific Performance   A-59
9.12   Delivery by Facsimile or Electronic Transmission   A-59

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AGREEMENT AND PLAN OF MERGER

        AGREEMENT AND PLAN OF MERGER, dated as of January 20, 2015 (this "Agreement"), between Cathay General Bancorp, a Delaware corporation ("Cathay") and Asia Bancshares, Inc., a New York corporation (the "Company").


W I T N E S S E T H:

        WHEREAS, the parties intend that the Company shall be merged with and into Cathay (the "Merger"), whereupon the separate corporate existence of the Company shall cease and Cathay shall continue as the surviving company;

        WHEREAS, the Board of Directors of the Company (the "Company Board of Directors") has (i) unanimously determined that it is in the best interests of the Company and its shareholders, and declared it advisable, to enter into this Agreement, (ii) approved the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger and (iii) resolved to recommend adoption of this Agreement by the shareholders of the Company;

        WHEREAS, the Board of Directors of Cathay has (i) unanimously determined that it is in the best interests of Cathay and its shareholders, and declared it advisable, to enter into this Agreement and (ii) approved the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger;

        WHEREAS, concurrently with the execution of this Agreement and as a condition and inducement to Cathay's willingness to enter into this Agreement, certain shareholders of the Company have entered into Voting and Support Agreements (each a "Voting and Support Agreement") and collectively the "Voting and Support Agreements") in connection with the Merger;

        WHEREAS, for federal income tax purposes, it is intended that the Merger shall qualify as a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and this Agreement is intended to be and is adopted as a plan of reorganization for purposes of Sections 354 and 361 of the Code; and

        WHEREAS, the parties desire to make certain representations, warranties and agreements in connection with the Merger and also to prescribe certain conditions to the Merger.

        NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained herein, and intending to be legally bound hereby, the parties agree as follows:


ARTICLE I

THE MERGER

        1.1    The Merger.     At the Effective Time, upon the terms and subject to the conditions set forth in this Agreement and in accordance with the applicable provisions of the New York Business Corporation Law (the "NYBCL") and the Delaware General Corporation Law (the "DGCL"), the Company shall merge with and into Cathay, whereupon the separate corporate existence of the Company shall cease, and Cathay shall continue its existence under the laws of the State of Delaware as the surviving corporation in the Merger (the "Surviving Corporation").


        1.2
    Closing.     The closing of the Merger (the "Closing") shall take place at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York at 10:00 a.m., local time, on the later of (i) May 15, 2015 and (ii) the fifth (5th) Business Day after the satisfaction or waiver (to the extent permitted by applicable Law) of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or

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waiver of such conditions), or at such other place, date and time as the Company and Cathay may agree in writing; provided that Cathay shall have a one-time option to postpone the Closing for up to 30 days beyond the date on which the Closing would otherwise occur by providing written notice to the Company not less than two Business Days prior to the anticipated Closing. Such written notice shall specify the date on which the postponed Closing shall occur. The date on which the Closing actually occurs is referred to as the "Closing Date."


        1.3
    Effective Time.     On the Closing Date, the Company and Cathay shall file (i) with the Secretary of State of the State of New York a certificate of merger, executed in accordance with, and containing such information as is required by, the relevant provisions of the NYBCL, and (ii) with the Secretary of State of the State of Delaware a certificate of merger, executed in accordance with, and containing such information as is required by, the relevant provisions of the DGCL, in each case in order to effect the Merger (the "Certificates of Merger"). The Merger shall become effective at such time as the Certificates of Merger have been filed with the Secretary of State of the State of New York and Secretary of State of the State of Delaware or at such time as is agreed between the parties and specified in the Certificates of Merger in accordance with the relevant provisions of the NYBCL and the DGCL (such time is hereinafter referred to as the "Effective Time").


        1.4
    Effects of the Merger.     The effects of the Merger shall be as provided in this Agreement and in the applicable provisions of the NYBCL and the DGCL.


        1.5
    Organizational Documents of the Surviving Corporation.     


        1.6
    Directors.     The directors of Cathay immediately prior to the Effective Time shall be the directors of the Surviving Corporation and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.


        1.7
    Officers.     The officers of Cathay immediately prior to the Effective Time shall be the officers of the Surviving Corporation and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.


        1.8
    Reservation of Right to Change Structure.     Notwithstanding any other provision of this Agreement to the contrary, subject to the prior written consent of the Company (which consent shall not be unreasonably withheld, conditioned or delayed), Cathay may, at any time prior to the Effective Time, to the extent permitted by Law without a further vote of the shareholders of the Company, change the method of effecting the Merger or the making of Merger Consideration available to the Company's shareholders if, and to the extent, it deems such change to be necessary, appropriate or desirable; provided, however, that no such change shall alter or change the Merger Consideration or the status of the Merger as a "reorganization" within the meaning of section 368(a) of the Code.


        1.9
    Bank Merger and other Subsidiary Mergers.     

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        1.10
    Tax Consequences.     It is intended that the Merger shall qualify as a "reorganization" within the meaning of Section 368(a) of the Code, and that this Agreement is intended to be and is adopted as a "plan of reorganization" for the purposes of Sections 354 and 361 of the Code.


ARTICLE II

CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES

        2.1    Effect on Capital Stock.     At the Effective Time, by virtue of the Merger and without any action on the part of Cathay, the Company or the holder of any shares of Company Common Stock:

A-3


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A-4


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        2.2
    Exchange of Certificates.     

A-5


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A-6


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        2.3
    Company Election Procedures.     

A-7


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A-8


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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        Except as Previously Disclosed by the Company, the Company hereby represents and warrants to Cathay as stated in this Article III. No investigation by Cathay or its representatives shall affect or be deemed to modify or waive the representations and warranties set forth herein.


        3.1
    Corporate Organization.     


        3.2
    Capitalization.     

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        3.3
    Authority; No Violation.     

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        3.4
    Consents and Approvals.     Except for (i) the filing of applications and notices, as applicable, with the Nasdaq, (ii) the filing of any required applications, filings and notices as applicable, with (A) the Federal Reserve Board, (B) the CDBO and (C) the FDIC, and approval of the foregoing applications and filings, (iii) the filing of the Certificates of Merger with the Secretary of State of the State of New York and the Secretary of State of Delaware, (iv) the filing of the Bank Merger Certificates, (v) the filing with the SEC of the Registration Statement in which the Proxy Statement will be included as a prospectus, and declaration of effectiveness of the Registration Statement and (vi) such filings and approvals as are required to be made or obtained under the securities or "Blue Sky" laws of various states in connection with the issuance of the shares of Cathay Common Stock pursuant to this Agreement, no consents or approvals of or filings or registrations with any Governmental Entity are necessary in connection with (A) the execution and delivery by the Company of this Agreement or (B) the consummation by the Company of the Merger, the Bank Merger and the other transactions contemplated hereby.


        3.5
    Reports.     The Company and each of its Subsidiaries have timely filed all reports, registrations and statements, together with any amendments required to be made with respect thereto, that they were required to file since January 1, 2011, if any, with (i) any state regulatory authority, (ii) the SEC, (iii) the Federal Reserve Board, (iv) the FDIC, (v) the OCC, (vi) the CFPB, (vii) any foreign regulatory authority and (viii) any SRO ((i) – (viii), collectively "Regulatory Agencies"), including, without limitation, any report, registration or statement required to be filed pursuant to the Laws of the United States, any state, any foreign entity, or any Regulatory Agency, and have paid all fees and assessments due and payable in connection therewith. Except for normal examinations conducted by a Regulatory Agency in the ordinary course of the business of the Company and its Subsidiaries, no Regulatory Agency has initiated or has pending any proceeding or, to the Knowledge of Company, investigation into the business or operations of the Company or any of its Subsidiaries since January 1, 2011. There (x) is no unresolved violation, criticism, or exception by any Regulatory Agency with respect to any report or statement relating to any examinations or inspections of the Company or any of its Subsidiaries and (y) has been no formal or informal inquiries by, or disagreements or disputes with, any Regulatory Agency with respect to the business, operations, policies or procedures of the Company or any of its Subsidiaries since January 1, 2011.


        3.6
    Financial Statements.     

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        3.7
    Broker's Fees.     With the exception of the engagement of Nai-Ching Sun, neither Company nor any Company Subsidiary nor any of their respective officers or directors have employed any broker, finder or financial advisor or incurred any Liability for any broker's fees, commissions or finder's fees in connection with the Merger or other transactions contemplated by this Agreement. The Company

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has Made Available to Cathay a true, correct and complete copy of the Finder's Fee Agreement, dated as of November 20, 2014 by and between Nai-Ching Sun and the Company (the "Finder's Fee Agreement"), which is the only engagement letter or other Contract between the Company and Nai-Ching Sun relating to the Merger and the other transactions contemplated by this Agreement.


        3.8
    Absence of Certain Changes or Events.     


        3.9
    Legal Proceedings.     


        3.10
    Taxes and Tax Returns.     

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        3.11
    Employee Benefit Matters.     

A-15


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A-16


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        3.12    Compliance with Applicable Law.     

A-17


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        3.13
    Certain Contracts.     

A-18


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        3.14
    Agreements with Regulatory Agencies.     Neither the Company nor any of its Subsidiaries is subject to any cease-and-desist or other order or enforcement action issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has been since January 1, 2011, a recipient of any supervisory letter from, or since January 1, 2011, has adopted any policies, procedures or board resolutions at the request or suggestion of any Regulatory Agency or other Governmental Entity that currently restricts in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its ability to pay dividends, its credit or risk management policies, its management or its business (each, whether or not set forth in the Company Disclosure Schedule, a "Company Regulatory Agreement"), nor has the Company or any of its Subsidiaries been advised since January 1, 2011, by any Regulatory Agency or other Governmental Entity that it is considering issuing, initiating, ordering, or requesting any such Company Regulatory Agreement.


        3.15
    Risk Management Instruments.     All interest rate swaps, caps, floors, option agreements, futures and forward contracts and other similar derivative transactions and risk management arrangements, whether entered into for the account of the Company, any of its Subsidiaries or for the account of a customer of the Company or one of its Subsidiaries, were entered into in the ordinary course of business and in accordance with applicable rules, regulations and policies of any Regulatory Agency and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations of the Company or one of its Subsidiaries enforceable in accordance with their terms except as may be limited by the Enforceability Exceptions, and are in full force and effect. The Company and each of its Subsidiaries have duly performed in all material respects all of their material obligations thereunder to the extent that such obligations to perform have accrued, and, to the Company's Knowledge, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder.


        3.16
    Environmental Liability.     

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        3.17
    Investment Securities and Commodities.     


        3.18
    Property.     

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        3.19
    Intellectual Property.     


        3.20
    Related Party Transactions.     Except as set forth in Section 3.20 of the Company Disclosure Schedule, there are no transactions or series of related transactions, Contracts, arrangements or understandings, nor are there any currently proposed transactions or series of related transactions, between the Company or any of its Subsidiaries, on the one hand, and any current or former director or "executive officer" (as defined in Rule 3b-7 under the Exchange Act) of the Company or any of its Subsidiaries or any holder of 5% of more of the Company Common Stock (a "Significant Holder") (or any of such Person's immediate family members or Affiliates) on the other hand, except those of a type available to employees of Company or its Subsidiaries generally.

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        3.21    State Takeover Laws.     The Board of Directors of the Company has taken all actions that may be required to render inapplicable to this Agreement and the transactions contemplated hereby any "moratorium," "control share," "fair price," "takeover" or "interested shareholder" Law (any such Laws, "Takeover Statutes"). No Takeover Statutes will prohibit, restrict or impair the performance of the Company's obligations under this Agreement.


        3.22
    Company Information.     The information relating to the Company and its Subsidiaries which is provided by the Company or its representatives for inclusion in any document filed with any Governmental Entity in connection herewith or in the Proxy Statement, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading.


        3.23
    Loan Matters.     

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        3.24
    Loan Portfolio.     


        3.25
    Insurance.     Section 3.25 of the Company Disclosure Schedule lists each insurance policy maintained by or on behalf of the Company and its Subsidiaries as of the date hereof and a true and complete copy of each such policy has been Made Available to Cathay prior to the date hereof. All premiums due in respect of such insurance policies have been paid in full. All of such insurance policies are in full force and effect, and neither the Company nor any Subsidiary is in material default with respect to any of its obligations under any of such insurance policies. To the Knowledge of the Company, as of the date of this Agreement, (i) there is no threatened termination of, or threatened

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material premium increase with respect to, any of such policies other than increases in connection with the Company's annual renewal process and (ii) there is no material claim pending regarding the Company or any of its Subsidiaries under any of such policies as to which coverage has been questioned, denied or disputed by the underwriters of such policies.


        3.26
    Opinion of Financial Advisor.     The Company Board of Directors has received the opinion of The Kafafian Group to the effect that, as of the date thereof and subject to the assumptions, limitations, qualifications and other matters considered in the preparation thereof, the Merger Consideration to be received by the holders of Company Shares in the Merger pursuant to this Agreement is fair, from a financial point of view, to such holders. The Company shall, promptly following the execution of this Agreement by all parties, furnish an accurate and complete copy of said opinion to Cathay solely for informational purposes. The Company and Cathay have been authorized by The Kafafian Group to permit the inclusion of such opinion in its entirety and references thereto in the Proxy Statement.


        3.27
    Reorganization.     The Company has not taken any action and is not aware of any fact or circumstance that could reasonably be expected to prevent the Merger from qualifying as a "reorganization" within the meaning of Section 368(a) of the Code.


ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF CATHAY

        Except (i) as Previously Disclosed by Cathay or (ii) as disclosed in any Cathay Reports publicly filed under Sections 13(a), 14(a) or 15(d) of the Exchange Act by Cathay with the SEC since December 31, 2013, and prior to the date hereof (but disregarding risk factor disclosures contained under the heading "Risk Factors," or disclosures of risks set forth in any "forward-looking statements" disclaimer or any other statements that are similarly non-specific or cautionary, predictive or forward-looking in nature), Cathay hereby represents and warrants to the Company as stated in this Article IV. No investigation by the Company or its representatives shall affect or be deemed to modify or waive the representations and warranties set forth herein.


        4.1
    Corporate Organization.     


        4.2
    Capitalization.     

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        4.3
    Authority; No Violation.     


        4.4
    Consents and Approvals.     Except for (i) the filing of applications and notices, as applicable, with the Nasdaq, (ii) the filing of any required applications, filings and notices as applicable, with (A) the Federal Reserve Board, (B) the CDBO and (C) the FDIC, and approval of the foregoing applications and filings, (iii) the filing of the Certificates of Merger with the Secretary of State of the State of New York and the Secretary of State of the State of Delaware, (iv) the filing of the Bank Merger Certificates, (v) the filing with the SEC of the Registration Statement in which the Proxy Statement will be included as a prospectus, and declaration of effectiveness of the Registration Statement, and (vi) such filings and approvals as are required to be made or obtained under the securities or "Blue Sky" laws of various states in connection with the issuance of the shares of Cathay Common Stock pursuant to this Agreement, no consents or approvals of or filings or registrations with any Governmental Entity are necessary in connection with (A) the execution and delivery by Cathay of this Agreement or (B) the consummation by Cathay of the Merger, the Bank Merger and the other transactions contemplated hereby.

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        4.5
    Reports.     Cathay and each of its Subsidiaries have timely filed all reports, registrations and statements, together with any amendments required to be made with respect thereto, that they were required to file since January 1, 2011 with any Regulatory Agencies, including, without limitation, any report, registration or statement required to be filed pursuant to the Laws of the United States, any state, any foreign entity, or any Regulatory Agency, and have paid all fees and assessments due and payable in connection therewith. Except for normal examinations conducted by a Regulatory Agency in the ordinary course of the business of Cathay and its Subsidiaries, no Regulatory Agency has initiated or has pending any proceeding or, to the Knowledge of Cathay, investigation into the business or operations of Cathay or any of its Subsidiaries since January 1, 2011. There (i) is no unresolved violation, criticism, or exception by any Regulatory Agency with respect to any report or statement relating to any examinations or inspections of Cathay or any of its Subsidiaries and (ii) has been no formal or informal inquiries by, or disagreements or disputes with, any Regulatory Agency with respect to the business, operations, policies or procedures of Cathay or any of its Subsidiaries since January 1, 2011.


        4.6
    Financial Statements.     

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        4.7
    Broker's Fees.     Neither Cathay nor any of its Subsidiaries nor any of their respective officers or directors have employed any broker, finder or financial advisor or incurred any Liability for any broker's fees, commissions or finder's fees in connection with the transactions contemplated by this Agreement.


        4.8
    Absence of Certain Changes or Events.     


        4.9
    Legal Proceedings.     


        4.10
    Compliance with Applicable Law.     

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        4.11
    Agreements with Regulatory Agencies.     Except as set forth in Section 4.11 of the Cathay Disclosure Schedule, neither Cathay nor any of its Subsidiaries is subject to any cease-and-desist or other order or enforcement action issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has been ordered to pay any civil monetary penalty by, or has been since January 1, 2011, a recipient of any supervisory letter from, or since January 1, 2011, has adopted any policies, procedures or board resolutions at the request or suggestion of any Regulatory Agency or other Governmental Entity that currently restricts in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its ability to pay dividends, its credit or risk management policies, its management or its business (each, whether or not set forth in the Cathay Disclosure Schedule, a "Cathay Regulatory Agreement"), nor has Cathay or any of its Subsidiaries been advised since January 1, 2011, by any Regulatory Agency or other Governmental Entity that it is considering issuing, initiating, ordering or requesting any such Cathay Regulatory Agreement.

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        4.12    Available Funds.     As of the Closing, Cathay will have sufficient funds available to it to deliver the maximum cash portion of the Merger Consideration.


        4.13
    Reorganization.     Cathay has not taken any action and is not aware of any fact or circumstance that could reasonably be expected to prevent the Merger from qualifying as a "reorganization" within the meaning of Section 368(a) of the Code.


ARTICLE V

COVENANTS RELATING TO CONDUCT OF BUSINESS


        5.1
    Conduct of Business Prior to the Effective Time.     During the period from the date of this Agreement to the Effective Time, except as expressly required or permitted by this Agreement, or as required by applicable Law, or with the prior written consent of Cathay, the Company shall, and shall cause each of its Subsidiaries to, (a) conduct its business in the ordinary course, (b) use reasonable best efforts to maintain and preserve intact its business organization, assets, employees and relationships with regulators, customers, suppliers, employees, licensors and licensees and other third parties, and (c) take no action that is intended to or would reasonably be expected to result in the failure of any of the conditions set forth in Article VII.


        5.2
    Company Forbearances.     During the period from the date of this Agreement to the Effective Time, except as required by applicable Law, and, except as expressly required or permitted by this Agreement, the Company shall not, and shall not permit any of its Subsidiaries to, without the prior written consent of Cathay:

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        5.3
    Cathay Forbearances.     During the period from the date of this Agreement to the Effective Time, except as required by applicable Law, and except as expressly required or permitted by this Agreement, Cathay shall not, without the prior written consent of the Company:


ARTICLE VI

ADDITIONAL AGREEMENTS

        6.1    Regulatory Matters; Third Party Consents.     

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        6.2
    Access to Information.     

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        6.3
    Employee Benefit Plans.     

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        6.4
    Indemnification; Directors' and Officers' Insurance.     


        6.5
    Additional Agreements.     If at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement (including, without limitation, any merger between a Subsidiary of Cathay, on the one hand, and a Subsidiary of the Company, on the other) or to vest the Surviving Corporation with full title to all properties, assets, rights, approvals, immunities and franchises of any of the parties to the Merger, the proper officers and directors of each party to this Agreement and their respective Subsidiaries shall take all such necessary action as may be reasonably requested by Cathay.


        6.6
    Notice of Changes.     

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        6.7
    Public Announcements.     The Company and Cathay agree that the initial press release to be issued with respect to the execution and delivery of this Agreement shall be in a form agreed to by the parties and that the parties shall consult with each other before issuing any press release or making any public announcement with respect to this Agreement and the transactions contemplated hereby and shall not issue any such press release or make any such public announcement without the prior consent of the other party (which shall not be unreasonably withheld, delayed or conditioned); provided, however, that a party may, without the prior consent of the other party (but after prior consultation, to the extent practicable in the circumstances) issue such press release or make such public statement to the extent required by applicable Law or the applicable rules of any stock exchange.


        6.8
    Takeover Statutes.     The Company and its Subsidiaries shall not take any action that would cause the transactions contemplated by this Agreement to be subject to requirements imposed by any Takeover Statute. If any Takeover Statute may become, or may purport to be, applicable to the transactions contemplated hereby and thereby, each of Cathay and the Company and the members of their respective Boards of Directors shall grant such approvals and take such actions as are necessary so that the transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of any Takeover Statute on any of the transactions contemplated by this Agreement.


        6.9
    No Solicitation of Alternative Transactions.     

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        6.10    Registration Statement/Proxy Statement.     

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        6.11
    Company Shareholders' Meeting.     


        6.12
    Transaction Litigation.     The Company shall give Cathay the opportunity to participate, at Cathay's expense, in the Company's defense or settlement of any shareholder litigation against the Company and/or its directors or executive officers relating to the transactions contemplated by this Agreement, including the Merger. The Company agrees that it shall not settle or offer to settle any litigation commenced prior to or after the date of this Agreement against the Company or its directors, executive officers or similar persons by any shareholder of the Company relating to this Agreement, the

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Merger, or any other transaction contemplated hereby without the prior written consent of Cathay, which consent shall not be unreasonably withheld, conditioned or delayed.


ARTICLE VII

CONDITIONS PRECEDENT

        7.1    Conditions to Each Party's Obligation to Effect the Merger.     The respective obligations of the parties to effect the Merger shall be subject to the satisfaction (or, to the extent permitted by applicable Law, the waiver by Cathay and the Company) at or prior to the Effective Time of the following conditions:


        7.2
    Conditions to Obligations of Cathay.     The obligation of Cathay to effect the Merger is also subject to the satisfaction, or waiver by Cathay, at or prior to the Effective Time, of the following conditions:

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        7.3
    Conditions to Obligations of the Company.     The obligation of the Company to effect the Merger is also subject to the satisfaction or waiver by the Company at or prior to the Effective Time of the following conditions:

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ARTICLE VIII

TERMINATION AND AMENDMENT

        8.1    Termination or Abandonment.     Notwithstanding anything in this Agreement to the contrary, this Agreement may be terminated and abandoned at any time prior to the Effective Time, whether before or after any approval of the Merger by the shareholders of the Company:

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        8.2    Effect of Termination.     In the event of termination of this Agreement pursuant to Section 8.1, this Agreement shall terminate (except that the Confidentiality Agreement and the provisions of Section 8.2, Section 8.3 and Article IX shall survive any termination), and there shall be no other Liability on the part of the Company, on the one hand, or Cathay, on the other hand, to the other except (i) as provided in Section 8.3 or (ii) Liability arising out of or resulting from fraud or any willful and material breach of any provision of this Agreement occurring prior to termination (in which case the aggrieved party shall be entitled to all rights and remedies available at law or in equity).


        8.3
    Termination Fee.     

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ARTICLE IX

GENERAL PROVISIONS

        9.1    Nonsurvival of Representations, Warranties and Agreements.     None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time, except for Section 6.4 and for those other covenants and agreements contained herein and therein which by their terms apply or are to be performed in whole or in part after the Effective Time.


        9.2
    Expenses.     Except as otherwise set forth herein, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expense.

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        9.3
    Notices.     All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, telecopied (with confirmation), delivered by registered or certified mail (return receipt requested) or delivered by an express courier (with confirmation) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

and


        9.4
    Interpretation; Definitions.     

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        9.5
    Disclosure Schedule.     


        9.6
    Counterparts.     This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.


        9.7
    Entire Agreement.     This Agreement (including the documents and the instruments referred to herein) together with the Confidentiality Agreement constitutes the entire agreement among the parties and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.


        9.8
    Governing Law; Jurisdiction.     


        9.9
    Waiver of Jury Trial.     Each party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues, and therefore each such party hereby irrevocably and unconditionally waives, to the extent permitted by Law at the time of institution of the applicable litigation, any right such party may have to a trial by jury in respect of any litigation directly or indirectly arising out of or relating to this Agreement or the transactions

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contemplated by this Agreement. Each party certifies and acknowledges that: (i) no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver; (ii) each party understands and has considered the implications of this waiver; (iii) each party makes this waiver voluntarily; and (iv) each party has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 9.9.


        9.10
    Assignment; Third Party Beneficiaries.     Neither this Agreement nor any of the rights, interests or obligations shall be assigned by any of the parties hereto (whether by operation of Law or otherwise) without the prior written consent of the other party. Any purported assignment in contravention hereof shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Except as otherwise specifically provided in Section 6.4, this Agreement (including the documents and instruments referred to herein) is not intended to confer upon any Person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein.


        9.11
    Specific Performance.     Each party hereto agrees that irreparable damage would occur if any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached or threatened to be breached. It is accordingly agreed that each party hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the performance of the terms and provisions hereof (including the parties' obligation to consummate the Merger and the Bank Merger) in the Delaware Courts, without bond or other security being required, this being in addition to any other right, remedy or cause of action to which such party is entitled at law or in equity.


        9.12
    Delivery by Facsimile or Electronic Transmission.     This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments or waivers hereto or thereto, to the extent signed and delivered by means of a facsimile machine or by e-mail delivery of a ".pdf" format data file, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or e-mail delivery of a ".pdf" format data file to deliver a signature to this Agreement or any amendment hereto or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or e-mail delivery of a ".pdf" format data file as a defense to the formation of a contract and each party hereto forever waives any such defense.

[Signature Page Follows]

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        IN WITNESS WHEREOF, Cathay and the Company have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.


 

 

CATHAY GENERAL BANCORP

 

 

By:

 

/s/ DUNSON K. CHENG

        Name:   Dunson K. Cheng
        Title:   Chairman of the Board,
President and Chief Executive Officer

 

 

ASIA BANCSHARES, INC.

 

 

By:

 

/s/ JENTAI TSAI

        Name:   Jentai Tsai
        Title:   Chairman

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AMENDMENT NO. 1 TO THE AGREEMENT AND PLAN OF MERGER

        This AMENDMENT NO. 1 (this "Amendment"), dated as of March 9, 2015, to that certain Agreement and Plan of Merger (the "Merger Agreement"), dated as of January 20, 2015, by and between CATHAY GENERAL BANCORP, a Delaware corporation ("Cathay") and ASIA BANCSHARES, INC., a New York corporation (the "Company"), is made and entered into by Cathay and the Company. Capitalized terms used, but not defined, herein shall have the meanings given to such terms in the Merger Agreement, and all references to Articles and Sections herein are references to Articles and Sections of the Merger Agreement.

        WHEREAS, Cathay and the Company are parties to the Merger Agreement;

        WHEREAS, Section 6.3(e) of the Merger Agreement provides for an Employee Pool of approximately $3.4 million and due to certain staffing considerations following the announcement of the Merger Agreement, the parties desire to amend the Merger Agreement to increase the size of the Employee Pool to up to $3.8 million;

        NOW, THEREFORE, in consideration of the foregoing and the agreements contained herein, and intending to be legally bound hereby, Cathay and the Company agree as follows:


        Section 1.
    Amendment to Section 6.3(e) of the Merger Agreement.     Section 6.3(e) of the Merger Agreement shall be amended and restated in its entirety to read:


        Section 2.
    Company Disclosure Schedule.     Before entry into this Amendment, the Company delivered to Cathay an amendment to Section 6.3(e) of the Company Disclosure Schedule. Cathay hereby consents to such amendment and from and after the date of this Amendment, the term "Company Disclosure Schedule" as used in the Merger Agreement shall mean the Company Disclosure Schedule that includes the amendment to Section 6.3(e) thereof.


        Section 3.
    Amendments; Waivers.     The following section with the heading "Amendments; Waivers" shall be added as Section 8.4 of the Merger Agreement: "At any time prior to the Effective Time, any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of a waiver, by the party granting the waiver, and in the case of an amendment, by Cathay and the Company; provided, however, that after receipt of Company Shareholder Approval, if any such amendment or waiver shall by applicable Law require further approval of the shareholders of the Company, the effectiveness of such amendment or waiver shall be subject to the approval of the shareholders of the Company. Notwithstanding the foregoing, no failure or delay by any party hereto in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder."


        Section 4.
    Confirmation of Merger Agreement.     Other than as expressly modified pursuant to this Amendment, all of the terms, conditions and other provisions of the Merger Agreement are hereby ratified and confirmed and shall continue to be in full force and effect in accordance with their respective terms.


        Section 5.
    References.     All references to the Merger Agreement (including "hereof," "herein," "hereunder," "hereby" and "this Agreement") shall refer to the Merger Agreement as amended by this Amendment. Notwithstanding the foregoing, references to the date of the Merger Agreement (as amended hereby) and references in the Merger Agreement to "the date hereof," "the date of this Agreement" and terms of similar import shall in all instances continue to refer to January 20, 2015.


        Section 6.
    Company Authority Relative to Amendment.     The Company has the requisite corporate power and authority to enter into and, subject to the Company Shareholder Approval, to consummate the transactions contemplated by the Merger Agreement as amended by this Amendment. The


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execution, delivery and performance by the Company of this Amendment and the consummation of the transactions contemplated hereby, including the Merger, have been duly and validly authorized by the Company Board of Directors and, except for the Company Shareholder Approval, no other corporate proceedings on the part of the Company or vote of the Company's shareholders are necessary to authorize the consummation of the transactions contemplated by the Merger Agreement, as amended by this Amendment, including the Merger. This Amendment has been duly and validly executed and delivered by the Company and, assuming this Amendment constitutes the legal, valid and binding agreement of Cathay, this Amendment constitutes the legal, valid and binding agreement of the Company and is enforceable against the Company in accordance with its terms, except as such enforcement may be subject to the Enforceability Exceptions.


        Section 7.
    Cathay Authority Relative to Amendment.     Cathay has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by the Merger Agreement as amended by this Amendment. The execution, delivery and performance by Cathay of this Amendment and the consummation of the transactions contemplated hereby, including the Merger, have been duly and validly authorized by all necessary corporate action on the part of Cathay, and no other corporate proceedings on the part of Cathay or vote of Cathay's stockholders is necessary to authorize the consummation of the transactions contemplated by the Merger Agreement, as amended by this Amendment, including the Merger. This Amendment has been duly and validly executed and delivered by Cathay and, assuming this Amendment constitutes the legal, valid and binding agreement of the Company, this Amendment constitutes the legal, valid and binding agreement of Cathay and is enforceable against Cathay in accordance with its terms, except as such enforcement may be subject to the Enforceability Exceptions.


        Section 8.
    Miscellaneous.     The provisions of Article IX of the Merger Agreement shall apply to this Amendment mutatis mutandis, and to the Merger Agreement as modified by this Amendment, taken together as a single agreement, reflecting the terms as modified hereby.

[Signature page to follow]

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        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.


 

 

CATHAY GENERAL BANCORP

 

 

By:

 

/s/ DUNSON K. CHENG

        Name:   Dunson K. Cheng
        Title:   Chairman of the Board,
President and Chief Executive Officer

   

[Signature Page to Amendment No. 1]


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ASIA BANCSHARES, INC.

 

 

By:

 

/s/ JENTAI TSAI

        Name:   Jentai Tsai
        Title:   Chairman

   

[Signature Page to Amendment No. 1]


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Appendix B


GRAPHIC

  2001 Route 46, Suite 209, Parsippany, New Jersey 07054
Tel 973-299-3000
Fax 973-299-1002

January 20, 2015

Board of Directors
Asia Bancshares, Inc.
135-34 Roosevelt Avenue
Flushing, NY 11354

Members of the Board of Directors:

        You have requested our opinion as to the fairness, from a financial point of view, to the holders of Asia Bancshares, Inc. ("Asia Bancshares", or the "Company") common shares ("Common Shares"), of the consideration to be paid pursuant to the Agreement and Plan of Merger dated January 20, 2015 (the "Agreement") by and between the Company and Cathay General Bancorp ("Cathay").

        As a result of the Merger, as defined in the Agreement, each outstanding Common Share of the Company shall cease to be outstanding and shall be converted into the right to receive Per Share Cash Consideration. Asia Bancshares, Inc. Common Share holders will be permitted to elect to receive, either in whole or in part, the value of Per Share Cash Consideration as (i) up to 55% common stock of Cathay, subject to certain conditions (the "Maximum Stock Conversion Number"), (ii) at least 45% of cash, subject to certain conditions (the "Minimum Stock Conversion Number"), or (iii) a combination of Cathay common stock of less than 55% and cash greater than 45%, given (iv) that if the Cathay volume weighted average price is less than $20.00 per share, the Per Share Stock Consideration will equal at least 41% of the Merger Consideration (the "Designated Stock Conversion Number"). The Per Share Stock Consideration may be greater than, equal to or less than the Per Share Cash Consideration, depending upon the mix of Merger Consideration elected by an Asia Bancshares, Inc. Common Share holder, the Cathay closing price and the applicable Exchange Ratio. The exact terms of the Merger Consideration, Exchange Ratio, Maximum Stock Conversion Number, Minimum Stock Conversion Number and Designated Stock Conversion Number are more fully set forth in the Agreement.

        The Kafafian Group, Inc. ("TKG"), as part of our financial advisory business, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, and valuations for corporate and other purposes. In the ordinary course of business TKG provides consulting services to financial institutions, including performance measurement; profitability outsourcing; strategic, capital, and business planning; regulatory assistance; profit improvement; and various other financial advisory services. TKG has not provided any services to either the Company or Cathay within the past two years.

        In rendering this opinion, TKG, among other things:


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        TKG spoke with certain members of senior management and other representatives of Asia Bancshares and Cathay to discuss the foregoing, as well as matters TKG deemed relevant. As part of its analyses, TKG took into account its assessment of general economic, market and financial conditions, its experience in similar transactions, as well as its experience in and knowledge of the banking industry. TKG's opinion is based upon conditions as they existed and could be evaluated on the respective dates thereof and the information made available to TKG through the respective dates thereof.

        TKG has assumed and relied upon the accuracy and completeness of all of the financial and other information reviewed and/or discussed for the purposes of its opinion, without independent investigation. TKG assumed that financial forecasts were reasonably prepared on basis reflecting the best currently available estimates and judgments of senior management and are based on reasonable assumptions, estimates and judgments. Any estimates contained in the analyses performed by TKG are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by these analyses. Additionally, estimates of the values of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities might actually be sold.

        TKG did not make any independent evaluation or appraisals of either Asia Bancshares or Cathay or their respective assets or liabilities, nor was it furnished with any such appraisals. TKG has not made a review of the loans or loan loss reserves or reviewed any individual loan files of Asia Bancshares or Cathay. TKG did not conduct a physical inspection of any properties or facilities of Asia Bancshares or Cathay. TKG also assumed, without independent verification, that the aggregate allowances for loan losses for Asia Bancshares and Cathay were adequate.

        TKG relied upon assurances from management of Asia Bancshares and Cathay that they are not aware of any facts or circumstances that may cause the information reviewed by it to contain a misstatement of omission of a fact material to its opinion. TKG has assumed that the Merger will be completed in accordance with the terms of the Agreement and all applicable laws and regulations. TKG has assumed in all respects material to its analysis that all of the representations and warranties contained in the Agreement and all related agreements were true and correct, that each party to such agreements will perform all of the covenants required to be performed by such party under such agreements and that the conditions precedent in the Agreement have not been nor will be waived. TKG has assumed that there are no factors that would delay or subject to any adverse conditions, any necessary regulatory or governmental approval and that all conditions to the completion of the Merger will be satisfied without any waivers or modifications to the Agreement. Furthermore, that in the

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course of obtaining the necessary regulatory, contractual, or other consents or approvals for the Merger, no restrictions, including any divestiture requirements, termination or other payments or amendments or modifications, will be imposed that will have a material adverse effect on the future results of operations or financial condition of the combined entity or the contemplated benefits of the Merger, including the cost savings, revenue enhancements and related expenses expected to result from the Merger. TKG also has assumed that there has been no material change to Asia Bancshares' or Cathay's assets, financial condition, results of operations, business or prospects since the date of the last financial statements made available to us.

        This opinion is being furnished for the use and benefit of the Board of Directors of Asia Bancshares, Inc. and is not a recommendation to any shareholder as to how such shareholder should vote at any meeting of shareholders called to consider and vote upon the Agreement.

        Based upon and subject to the foregoing, it is our opinion that as of the date hereof, the Merger Consideration, as provided and described in the Agreement is fair from a financial point of view, to the holders of Asia Bancshares, Inc. Common Shares.

Very truly yours,

/s/ The Kafafian Group, Inc.

The Kafafian Group, Inc.

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Appendix C

VOTING AND SUPPORT AGREEMENT

        This Voting and Support Agreement (this "Agreement") is made and entered into as of [      ], 2015, by and between Cathay General Bancorp, a Delaware corporation ("Cathay") and [      ] ("Stockholder").

        WHEREAS, Cathay and Asia Bancshares, Inc., a New York corporation (the "Company"), propose to enter into an Agreement and Plan of Merger, dated as of the date hereof (as it may be amended from time to time, the "Merger Agreement"), which provides, among other things, for the merger the Company with and into Cathay (the "Merger"), whereupon the separate corporate existence of the Company shall cease and Cathay shall continue as the surviving corporation, upon the terms and subject to the conditions set forth in the Merger Agreement (capitalized terms used herein without definition shall have the respective meanings specified in the Merger Agreement);

        WHEREAS, Stockholder owns shares of common stock, par value $10.00 per share, of the Company ("Common Stock") (together with any other shares of capital stock of the Company acquired (whether beneficially or of record) by Stockholder after the date hereof, including any shares of Common Stock acquired by means of purchase, dividend or distribution, or issued upon the exercise of any stock options or warrants or the conversion of any convertible securities or otherwise, being collectively referred to herein as the "Shares"); and

        WHEREAS, as a condition to the willingness of Cathay to enter into the Merger Agreement and as an inducement and in consideration therefor, Stockholder is entering into this Agreement.

        NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, intending to be legally bound, the parties hereto agree as follows:


ARTICLE I
VOTING; GRANT AND APPOINTMENT OF PROXY

        Section 1.1    Voting.     From and after the date hereof until the earlier of (a) the consummation of the Merger and (b) the termination of the Merger Agreement pursuant to and in compliance with the terms therein (such earlier date, the "Expiration Date"), Stockholder irrevocably and unconditionally hereby agrees that at any meeting (whether annual or special and each adjourned or postponed meeting) of the Company's stockholders, however called, or in connection with any written consent of the Company's stockholders, if applicable, the Stockholder will (i) appear at such meeting or otherwise cause all of the Shares to be counted as present thereat for purposes of calculating a quorum and (ii) vote or cause to be voted (including by proxy or written consent, if applicable) all of the Shares (A) in favor of the adoption of the Merger Agreement and the approval of the transactions contemplated thereby, including the Merger; (B) in favor of any proposal to adjourn or postpone such meeting of the Company's stockholders to a later date if there are not sufficient votes to adopt the Merger Agreement, (C) against any action, proposal, transaction, or agreement that relates to a Company Takeover Proposal, without regard to the terms of such Company Takeover Proposal; and (D) against any action, proposal, transaction or agreement that would reasonably be likely to (i) result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company contained in the Merger Agreement, or of Stockholder contained in this Agreement or (ii) prevent, materially impede or materially delay the Company's or Cathay's ability to consummate the transactions contemplated by the Merger Agreement, including the Merger (clauses (A) through (D), the "Required Votes").


        Section 1.2
    Grant of Irrevocable Proxy; Appointment of Proxy.     


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        Section 1.3
    Restrictions on Transfers.     Stockholder hereby agrees that, from the date hereof until the Expiration Date, it shall not, directly or indirectly, (a) sell, transfer, assign, tender in any tender or exchange offer, pledge, encumber, hypothecate or similarly dispose of (by merger, by testamentary disposition, by operation of law or otherwise) (a "Transfer"), either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the Transfer of any Shares, other than any Transfer made solely for estate planning purposes or to a charitable institution for philanthropic purposes, but only if, in each case, prior to the effectiveness of such Transfer, the transferee agrees in writing to be bound by the terms hereof and notice of such Transfer is delivered to Cathay pursuant to Section 5.2 hereof, (b) deposit any Shares into a voting trust, or (c) agree (whether or not in writing) to take any of the actions referred to in the foregoing clause (a) or (b).


        Section 1.4
    Inconsistent Agreements.     Stockholder hereby covenants and agrees that, except for this Agreement, he or she (a) shall not enter into at any time while this Agreement remains in effect, any voting agreement or voting trust with respect to the Shares and (b) shall not grant at any time while this Agreement remains in effect, a proxy, consent or power of attorney with respect to the Shares.


ARTICLE II
NO SOLICITATION

        Section 2.1    No Solicitation.     Prior to the Expiration Date, Stockholder (in his or her capacity as a stockholder of the Company) shall not and shall cause his or her officers, directors, employees, agents, advisors and other representatives (the "Stockholder Representatives") not to, directly or indirectly, (a) initiate, solicit or knowingly encourage or knowingly take or continue any other action to facilitate the submission of any inquiry, indication of interest, proposal or offer that constitutes, or would reasonably be expected to lead to, a Company Takeover Proposal, (b) participate in any discussions or negotiations regarding, or that would reasonably be expected to lead to any Company Takeover Proposal (other than to inform a Person of the existence of this Section 2.1 and Section 6.10 of the Merger Agreement), (c) furnish any non-public information or data regarding the Company or any of its Subsidiaries to, or afford access to the properties, personnel, books and records of the Company to, any Person (other than Cathay, its Subsidiaries and its Representatives) in connection with or in response to or in circumstances that would reasonably be expected to lead to, any Company Takeover Proposal, or (d) resolve or agree to do any of the foregoing. If, prior to the Expiration Date,

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Stockholder receives any Company Takeover Proposal, then Stockholder will promptly (and in any event within 24 hours) notify Cathay and the Company of the identity of the Person making and the material terms of such Company Takeover Proposal.


        Section 2.2
    Capacity.     Stockholder is signing this Agreement solely in his or her capacity as a stockholder of the Company and nothing contained herein shall in any way limit or affect any actions taken by any Stockholder or Stockholder Representative in his or her capacity as a director of the Company, and no action taken in any such capacity as a director shall be deemed to constitute a breach of this Agreement.


ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF STOCKHOLDER

        Section 3.1    Representations and Warranties.     Stockholder represents and warrants to Cathay as follows: (a) Stockholder has full legal right and capacity to execute and deliver this Agreement, to perform Stockholder's obligations hereunder and to consummate the transactions contemplated hereby, (b) this Agreement has been duly executed and delivered by Stockholder and the execution, delivery and performance of this Agreement by Stockholder and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Stockholder and no other actions or proceedings on the part of Stockholder are necessary to authorize this Agreement or to consummate the transactions contemplated hereby, (c) this Agreement constitutes the valid and binding agreement of Stockholder, enforceable against Stockholder in accordance with its terms, (d) the execution and delivery of this Agreement by Stockholder does not, and the consummation of the transactions contemplated hereby and the compliance with the provisions hereof will not, conflict with or violate any Laws or agreement binding upon Stockholder or the Shares, nor require any authorization, consent or approval of, or filing with, any Governmental Entity, (e) Stockholder owns, beneficially and of record, or controls the Shares listed in Annex A to this Agreement, and (f) Stockholder owns, beneficially and of record, or controls all of the Shares free and clear of any proxy, voting restriction, adverse claim or other Lien (other than any restrictions created by this Agreement) and has sole voting power with respect to the Shares and sole power of disposition with respect to all of the Shares, with no restrictions on Stockholder's rights of voting or disposition pertaining thereto, and no person other than Stockholder has any right to direct or approve the voting or disposition of any of the Shares.


        Section 3.2
    Covenants.     Stockholder hereby:

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ARTICLE IV
TERMINATION

        This Agreement shall terminate and be of no further force or effect on the Expiration Date. Notwithstanding the preceding sentence, this Article IV and Article V shall survive any termination of this Agreement. Nothing in this Article IV shall relieve or otherwise limit any party of liability for willful breach of this Agreement.


ARTICLE V
MISCELLANEOUS

        Section 5.1    Expenses.     Each party shall bear their respective expenses, costs and fees (including attorneys' fees, if any) in connection with the preparation, execution and delivery of this Agreement and compliance herewith, whether or not the Merger is effected.


        Section 5.2
    Notices.     Any notice, request, instruction or other document to be given hereunder by any party to the others shall be in writing and delivered personally or sent by registered or certified mail, return receipt requested and postage prepaid, or by facsimile (providing confirmation of such facsimile transmission):

or to such other Persons or addresses as may be designated in writing by the party to receive such notice as provided above.


        Section 5.3
    Amendments; Waivers.     Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed (i) in the case of an amendment, by Cathay and Stockholder, and (ii) in the case of a waiver, by the party (or parties) against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege

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hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.


        Section 5.4
    Assignment.     No party to this Agreement may assign any of its rights or obligations under this Agreement, including by sale of stock, operation of law in connection with a merger or sale of substantially all the assets, without the prior written consent of the other party hereto.


        Section 5.5
    No Partnership, Agency, or Joint Venture.     This Agreement is intended to create, and creates, a contractual relationship and is not intended to create, and does not create, any agency, partnership, joint venture or any like relationship between the parties hereto.


        Section 5.6
    Entire Agreement.     This Agreement and the Merger Agreement constitute the entire agreement, and supersede all other prior and contemporaneous agreements, understandings, undertakings, arrangements, representations and warranties, both written and oral, among the parties with respect to the subject matter hereof.


        Section 5.7
    No Third-Party Beneficiaries.     This Agreement is not intended to confer upon any Person other than the parties hereto any rights or remedies hereunder.


        Section 5.8
    Jurisdiction; Specific Enforcement; Waiver of Trial by Jury.     The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed, or were threatened to be not performed, in accordance with their specific terms or were otherwise breached. It is accordingly agreed that, in addition to any other remedy that may be available to it, including monetary damages, each of the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement exclusively in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware), and all such rights and remedies at law or in equity shall be cumulative. The parties further agree that no party to this Agreement shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 5.8 and each party waives any objection to the imposition of such relief or any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument. In addition, each of the parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other party hereto or its successors or assigns, shall be brought and determined exclusively in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any federal court sitting within the State of Delaware). Each of the parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above named courts, (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by applicable Law, any claim that (i) the suit, action or proceeding in such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. To the fullest extent permitted by applicable Law, each of the parties hereto hereby consents to the service of

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process in accordance with Section 5.2; provided, however, that nothing herein shall affect the right of any party to serve legal process in any other manner permitted by Law. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.


        Section 5.9
    Governing Law.     This Agreement, and all claims or causes of action (whether at law, in contract or in tort or otherwise) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance hereof, shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.


        Section 5.10
    Interpretation.     (a) The words "hereof", "herein", and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; (b) the words "date hereof," when used in this Agreement, shall refer to the date set forth in the Preamble; (c) the terms defined in the singular have a comparable meaning when used in the plural, and vice versa; (d) the terms defined in the present tense have a comparable meaning when used in the past tense, and vice versa; (e) any references herein to a specific Section or Article shall refer, respectively, to Sections or Articles of this Agreement; (f) wherever the word "include", "includes", or "including" is used in this Agreement, it shall be deemed to be followed by the words "without limitation"; (g) references herein to any gender includes each other gender; (h) the word "or" shall not be exclusive; (i) the headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof; and (j) the parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event that an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.


        Section 5.11
    Counterparts.     This Agreement may be executed in any number of counterparts, each such counterpart (including any facsimile or electronic document transmission of such counterpart) being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement.


        Section 5.12
    Severability.     The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability or the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision; and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

[Signature Pages Follow]

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        IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date and year first written above.


 

 

CATHAY GENERAL BANCORP

 

 

By:

 

    
       
Name:
Title:

 

 

STOCKHOLDER

 

 

By:

 

    
       
Name:

   

[Signature Page to Voting and Support Agreement]


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Annex A

Stockholder
  Number of Shares

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PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 20.    INDEMNIFICATION OF DIRECTORS AND OFFICERS

        Cathay's restated bylaws provide for indemnification of its officers, directors, employees and agents to the fullest extent permitted by Delaware law. Cathay's amended and restated certificate of incorporation also contains a provision, consistent with Delaware law, reducing or eliminating director liability in certain circumstances.

        Section 145 of the Delaware Corporation Law provides that corporations may indemnify an individual made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative, because the individual is or was a director, officer, employee or agent of the corporation, against liability incurred in the proceeding if the person acted in good faith and reasonably believed his conduct was in the corporation's best interest or was not opposed to the corporation's best interest.

        Section 145(c) further provides that a corporation shall indemnify an individual who was fully successful on the merits or otherwise in any proceeding to which the director or officer was a party because the individual was or is a director or officer of the corporation, for reasonable expenses incurred by the director in connection with the proceeding. Section 145(g) provides that a corporation may purchase and maintain insurance on behalf of the corporation or who, while a director, officer, employee or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against or incurred by the individual in that capacity or arising from the individual's status as a director, officer, employee or agent.

DIRECTORS' AND OFFICERS' LIABILITY INSURANCE

        Cathay General Bancorp currently maintains policies of directors' and officers' liability insurance.

        Under the merger agreement, prior to the closing of the merger, Asia Bancshares may purchase a "tail policy" covering persons currently covered by Asia Bancshares' directors' and officers' liability insurance policies for a period of up to six years from the effective time of the merger with respect to claims arising from or related to facts or events which occurred at or prior to the effective time of the merger.

ITEM 21.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

  2.1   Agreement and Plan of Merger among Cathay General Bancorp and Asia Bancshares, Inc. dated January 20, 2015 (Appendix A to the Proxy Statement/Prospectus)

 

2.2

 

Amendment No. 1, dated March 9, 2015, to the Agreement and Plan of Merger among Cathay General Bancorp and Asia Bancshares, Inc. dated January 20, 2015 (Appendix A to the Proxy Statement/Prospectus)

 

3.1

 

Restated Certificate of Incorporation. Previously filed with the Securities and Exchange Commission on March 16, 2010, as an exhibit to Cathay's Annual Report on Form 10-K for the year ended December 31, 2009, and incorporated herein by reference.

 

3.1.1

 

Amendment to Restated Certificate of Incorporation. Previously filed with the Securities and Exchange Commission on March 16, 2010, as an exhibit to Cathay's Annual Report on Form 10-K for the year ended December 31, 2009, and incorporated herein by reference.

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  3.2   Amended and Restated Bylaws, effective February 20, 2014. Previously filed with Securities and Exchange Commission as an exhibit to Cathay's Annual Report on Form 10-K for the year ended December 31, 2014 and incorporated herein by reference.

 

5.1

 

Opinion of Wachtell, Lipton, Rosen & Katz*

 

8.1

 

Opinion of Lamb & Barnosky LLP as to tax matters*

 

8.2

 

Opinion of Wachtell, Lipton, Rosen & Katz as to tax matters*

 

23.1

 

Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 5.1)*

 

23.2

 

Consent of KPMG LLP

 

23.3

 

Consent of Crowe Horwath LLP

 

23.4

 

Consent of Lamb & Barnosky LLP (included in Exhibit 8.1)*

 

23.5

 

Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 8.2)*

 

24.1

 

Power of Attorney

 

99.1

 

Form of Voting and Support Agreement by and among Cathay General Bancorp and certain shareholders of Asia Bancshares (Appendix C to the Proxy Statement/Prospectus)

 

99.2

 

Consent of The Kafafian Group, Inc.

 

99.3

 

Form of Asia Bancshares Proxy Card*

*
To be filed by amendment.

ITEM 22.    UNDERTAKINGS.

        Undertakings required by Item 512 of Regulation S-K:

        The undersigned registrant hereby undertakes as follows:

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        The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one (1) business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

        The undersigned Registrant hereby undertakes to supply by means of post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

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SIGNATURES

        In accordance with the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that the Registrant meets all of the requirements of filing on Form S-4 and authorized this Registration Statement to be signed on its behalf by the undersigned, in the City of Los Angeles, State of California on March 30, 2015.

    CATHAY GENERAL BANCORP

 

 

By:

 

/s/ DUNSON K. CHENG

Dunson K. Cheng
Chairman, President and Chief Executive Officer

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.


 

 

 

 

 

 

 
/s/ DUNSON K. CHENG

Dunson K. Cheng
  Chairman of the Board, Director, President and Chief Executive Officer (Principal Executive Officer)   March 30, 2015

/s/ HENG W. CHEN

Heng W. Chen

 

Executive Vice President, Chief Financial Officer, and Treasurer (Principal Financial and Accounting Officer)

 

March 30, 2015

*

Michael M. Y. Chang

 

Director

 

March 30, 2015

*

Kelly L. Chan

 

Director

 

March 30, 2015

*

Thomas C. T. Chiu

 

Director

 

March 30, 2015

*

Nelson Chung

 

Director

 

March 30, 2015

*

Felix S. Fernandez

 

Director

 

March 30, 2015

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*

Jane Jelenko
  Director   March 30, 2015

*

Patrick S. D. Lee

 

Director

 

March 30, 2015

*

Ting Y. Liu

 

Director

 

March 30, 2015

*

Joseph C. H. Poon

 

Director

 

March 30, 2015

*

Peter Wu

 

Director

 

March 30, 2015

*

Anthony M. Tang

 

Director

 

March 30, 2015

*By

 

/s/ LISA L. KIM

Lisa L. Kim
Attorney-in-Fact

 

 

 

 

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EXHIBIT INDEX

  2.1   Agreement and Plan of Merger among Cathay General Bancorp and Asia Bancshares, Inc. dated January 20, 2015 (Appendix A to the Proxy Statement/Prospectus)

 

2.2

 

Amendment No. 1, dated March 9, 2015, to the Agreement and Plan of Merger among Cathay General Bancorp and Asia Bancshares, Inc. dated January 20, 2015 (Appendix A to the Proxy Statement/Prospectus)

 

3.1

 

Restated Certificate of Incorporation. Previously filed with the Securities and Exchange Commission on March 16, 2010, as an exhibit to Cathay's Annual Report on Form 10-K for the year ended December 31, 2009, and incorporated herein by reference.

 

3.1.1

 

Amendment to Restated Certificate of Incorporation. Previously filed with the Securities and Exchange Commission on March 16, 2010, as an exhibit to Cathay's Annual Report on Form 10-K for the year ended December 31, 2009, and incorporated herein by reference.

 

3.2

 

Amended and Restated Bylaws, effective February 20, 2014. Previously filed with Securities and Exchange Commission as an exhibit to Cathay's Annual Report on Form 10-K for the year ended December 31, 2014 and incorporated herein by reference.

 

5.1

 

Opinion of Wachtell, Lipton, Rosen & Katz*

 

8.1

 

Opinion of Lamb & Barnosky LLP as to tax matters*

 

8.2

 

Opinion of Wachtell, Lipton, Rosen & Katz as to tax matters*

 

23.1

 

Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 5.1)*

 

23.2

 

Consent of KPMG LLP

 

23.3

 

Consent of Crowe Horwath LLP

 

23.4

 

Consent of Lamb & Barnosky LLP (included in Exhibit 8.1)*

 

23.5

 

Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 8.2)*

 

24.1

 

Power of Attorney

 

99.1

 

Form of Voting and Support Agreement by and among Cathay General Bancorp and certain shareholders of Asia Bancshares (Appendix C to the Proxy Statement/Prospectus)

 

99.2

 

Consent of The Kafafian Group, Inc.

 

99.3

 

Form of Asia Bancshares Proxy Card*

*
To be filed by amendment.

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