CATY Bears Build Into Earnings as Shorts Hit One-Year High

Cathay General Bancorp reports third-quarter results today, and the regional lender arrives at the print carrying its heaviest short position in at least a year.

Short interest has risen sharply since mid-September, climbing 33% over the past month to reach 5.23% of the free float. That is roughly 3.56 million shares borrowed against the stock, up from around 2.5 million just six weeks ago. The weekly pace has not slowed: shorts added another 4.4% in the most recent week alone, keeping the pressure building even as the stock itself gained 2.7%. Close peers moved slightly faster. UBSI, FNB, and UCB each rose between 3.2% and 6.3% on the week, leaving CATY a touch behind the peer median at $60.63.

Options positioning has tilted defensive alongside the short build. The put/call ratio climbed to 1.0, a reading that sits 2.4 standard deviations above its 20-day average of 0.98. That gap is narrow in absolute terms but represents the most protective lean in options relative to recent history. The borrow market, however, shows no sign of stress. Availability is running at 1,237%, meaning there are more than twelve shares available to lend for every one currently borrowed. Cost to borrow is just 0.43%, near the low end of its recent range. The lending pool is ample, and the short build reflects a directional view rather than any squeeze dynamic.

The Street has been slow to update its view ahead of today. The most recent analyst action came from StoneX in late September, which initiated with a Hold. Before that, four firms raised their targets after the July quarter, with KBW moving to $67 and DA Davidson to $66, both maintaining neutral-equivalent ratings. Piper Sandler has held an Underweight throughout, raising its target to $53 while the stock now trades above $60. The mean target is $65, roughly 7% above the current price, a modest premium that reflects a consensus view that the stock is fairly valued but not cheap. The bear argument centres on a declining allowance for credit losses, the risk of higher credit costs, and margin pressure; the bull case points to a two-basis-point quarter-over-quarter expansion in net interest margin to 3.27% and a loan book that FDIC call report data shows has grown for five consecutive quarters.

FDIC data also records the largest Q2 total assets for the bank on record since 2024, reaching $24.6 billion. The FDIC call report series has not yet been tested against Cathay's reported figures long enough to establish a lead relationship, so the reading is colour rather than a directional signal on today's print.

Insider activity over the past 90 days has run net negative, with open-market sales of around $2.3 million on a net basis. Director Richard Sun sold shares across four separate transactions between late July and early September. The transaction codes in the CFO's recent activity were compensation-related exercises and tax withholdings rather than discretionary sales, which limits their signal value. The director sales, by contrast, were open-market transactions and represent the cleaner read on insider sentiment ahead of results.

Today's print will test whether the loan book expansion and margin stability that justified the post-July target upgrades can hold in a quarter where credit quality trends and deposit costs are still the main variables in contention.