CATHAY BANCORP INC, DEF 14A, 1998-03-20

CATHAY BANCORP INC
DEF 14A, 1998-03-20
STATE COMMERCIAL BANKS

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<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. ____)

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(c)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

Cathay Bancorp, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and
0-11.

1) Title of each class of securities to which transaction applies:

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2) Aggregate number of securities to which transactions applies:

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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

-------------------------------------------------------------------

4) Proposed maximum aggregate value of transaction:

-------------------------------------------------------------------

5) Total fee paid:

-------------------------------------------------------------------

[ ] Fee previously paid with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

1) Amount previously paid:

-------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:

-------------------------------------------------------------------
3) Filing Party:

-------------------------------------------------------------------

4) Date Filed:

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<PAGE> 2

CATHAY BANCORP, INC.
777 NORTH BROADWAY
LOS ANGELES, CALIFORNIA 90012

To the stockholders of Cathay Bancorp, Inc.:

We are pleased to invite you to attend the Annual Meeting of
Stockholders of Cathay Bancorp, Inc. to be held at 777 North Broadway, Los
Angeles, California 90012, on Monday, April 20, 1998, at 5:00 p.m., Pacific
Time.

The stockholders will be asked to elect four Class II directors of
Cathay Bancorp, Inc. to serve until 2001 and to consider and vote upon the
Cathay Bancorp, Inc. Equity Incentive Plan.

We look forward to seeing you at the Annual Meeting.

Sincerely yours,

/s/ WILBUR K. WOO

Wilbur K. Woo
Secretary

<PAGE> 3

CATHAY BANCORP, INC.
777 NORTH BROADWAY
LOS ANGELES, CALIFORNIA 90012

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 20, 1998
----------------

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Cathay
Bancorp, Inc. ("Bancorp") will be held at 777 North Broadway, Los Angeles,
California 90012, on Monday, April 20, 1998, at 5:00 p.m., Pacific Time, to
elect four Class II directors of Bancorp to serve until the 2001 annual meeting
of stockholders and their successors have been elected and qualified, to
consider and vote upon the Cathay Bancorp, Inc. Equity Incentive Plan and to
consider such other matters as may properly come before the Annual Meeting or
any adjournments of the Annual Meeting. The Board of Directors is not aware of
any other business to come before the Annual Meeting.

The Board of Directors has selected March 6, 1998 as the record date
(the "Record Date") for the Annual Meeting. Holders of record of Bancorp's
Common Stock at the close of business on that date will be entitled to receive
notice of, and to vote at, the Annual Meeting.

Please vote, sign and date the enclosed Proxy card and return it in the
accompanying envelope, which does not require postage if mailed in the United
States. IT IS IMPORTANT THAT PROXY CARDS BE RETURNED PROMPTLY EVEN IF YOU PLAN
TO ATTEND THE ANNUAL MEETING.

You are invited to attend the Annual Meeting in person. If you attend
the Annual Meeting, you may choose to revoke your Proxy and vote in person at
the meeting. If you do so, your Proxy card will be disregarded.

By Order of the Board of Directors

/s/ WILBUR K. WOO

Wilbur K. Woo
Secretary

Los Angeles, California
March 20, 1998

<PAGE> 4

CATHAY BANCORP, INC.
777 NORTH BROADWAY
LOS ANGELES, CALIFORNIA 90012

- --------------------------------------------------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
April 20, 1998
- --------------------------------------------------------------------------------

GENERAL

Cathay Bancorp, Inc., a Delaware corporation ("Bancorp"), was
incorporated by Cathay Bank, a California-chartered bank, on March 1, 1990 to
act as the holding company for Cathay Bank. Pursuant to a reorganization and
merger approved by the shareholders of Cathay Bank in July 1990 (the
"Reorganization"), Bancorp became the parent of Cathay Bank on December 10,
1990. On that date, each outstanding share of the common stock of Cathay Bank
was converted into the right to receive one share of the common stock of Bancorp
(the "Common Stock"). On November 18, 1996, Bancorp acquired First Public
Savings Bank, F.S.B. ("First Public"), through the merger (the "First Public
Merger") of First Public into Bancorp's wholly owned subsidiary, Cathay Bank. In
connection with the First Public Merger, Bancorp issued 905,735 shares of its
Common Stock.

This Proxy Statement is being furnished to the holders of record of
Common Stock in connection with the solicitation of proxies, including the proxy
granted by the enclosed Proxy card, by the Bancorp Board of Directors for use at
the 1998 Annual Meeting of Stockholders of Bancorp to be held on Monday, April
20, 1998 and at any adjournments of the Annual Meeting (the "Annual Meeting").
At the Annual Meeting, Bancorp stockholders will be asked to elect four Class II
directors to serve until the 2001 annual meeting of stockholders and their
successors have been elected and qualified, to consider and vote upon the Cathay
Bancorp, Inc. Equity Incentive Plan (the "Stock Plan") and to consider any other
business that may properly be brought before the Annual Meeting.

Stockholders are urged to vote by completing the enclosed Proxy card and
returning it signed and dated in the enclosed postage-prepaid envelope. If the
enclosed Proxy card is properly completed and is received by Bancorp before the
voting, the shares of Common Stock represented by the Proxy card will be voted
as directed on the Proxy card. If no direction is made, the shares will be voted
FOR the election of each of the nominees named below as directors and FOR the
approval of the Stock Plan. Under Delaware law, the inspector of elections for
the Annual Meeting may consider evidence that he deems to be reliable to
reconcile proxies and ballots submitted by banks, brokers, their nominees or
similar persons that represent more votes than the holder of a proxy is
authorized by the recordholder to cast or more votes than the stockholder holds
of record.

The Bancorp Board of Directors knows of no additional proposal that will
be presented for consideration at the Annual Meeting. The persons designated as
proxy holders reserve the right to vote the shares in accordance with their best
judgment on any proposal that does properly come before the Annual Meeting or to
vote the shares for other persons if any nominee for director becomes
unavailable to serve.

A proxy may be revoked at any time before its exercise by filing a
written notice of revocation with the Secretary of Bancorp or by delivering to
Bancorp a later signed and dated Proxy card. A proxy may also be revoked if the
person executing the Proxy card is present at the Annual Meeting and decides to
vote in person. This Proxy Statement was first mailed to stockholders on or
about March 20, 1998.

1
<PAGE> 5

QUORUM AND VOTING

The Board of Directors has fixed the close of business on March 6, 1998
(the "Record Date") as the date for determining stockholders of record entitled
to notice of, and to vote at, the Annual Meeting. Each stockholder of record is
entitled to one vote for each share of Common Stock registered in the
stockholder's name. Cumulative voting is NOT available for the election of
directors.

It is important that stockholders be represented in person or by proxy
at the Annual Meeting. The presence at the Annual Meeting, in person or by
proxy, of the holders of a majority of the outstanding shares of Common Stock is
necessary to constitute a quorum for the transaction of business. If
insufficient shares are represented at the Annual Meeting to constitute a
quorum, to elect the nominees for director or to approve the Stock Plan, the
Annual Meeting may be adjourned to permit further solicitation of proxies.

Abstentions and broker non-votes (i.e., votes withheld by brokers on
non-routine proposals in the absence of instructions from beneficial owners) are
counted for purposes of establishing a quorum but will not be counted, and will
have no effect, in determining whether a nominee or the nominees have been
elected. Persons receiving a plurality of the votes cast at the Annual Meeting
will be elected directors. Plurality means that persons who receive the largest
number of votes cast are elected as directors up to the maximum number of
directors to be chosen at the Annual Meeting. For purposes of the vote on the
proposal to approve the Stock Plan, abstention votes (but not broker non-votes)
are counted in determining the total number of votes cast and thus have the
effect of a vote against the proposal.

On the Record Date, there were 8,952,338 shares of Common Stock
outstanding. This figure includes 34,519 outstanding rights to receive Common
Stock that are held by former holders of Cathay Bank common stock and that have
not yet been submitted for exchange into Common Stock pursuant to the
Reorganization, and 34,000 outstanding rights to receive Common Stock that are
held by former holders of First Public common stock and that have not yet been
submitted for exchange into Common Stock in connection with the First Public
Merger.

PRINCIPAL HOLDERS OF SECURITIES

Based on Schedules 13G filed with Bancorp and with the Securities and
Exchange Commission (the "SEC"), the persons and groups listed in the following
table are the beneficial owners of more than five percent of Common Stock.
Bancorp is not aware of any other person or group who beneficially owned more
than five percent of Common Stock on the Record Date.

<TABLE>
<CAPTION>
Amount and Nature
of Beneficial of Percentage of
Name and Address of Ownership of Common Stock
Beneficial Owner Common Stock Beneficially Owned
---------------- ------------ ------------------
<S> <C> <C>
Cathay Bancorp Employee Stock 565,669 1/ 6.32%
Ownership Plan and Trust ("ESOPT") -
777 North Broadway
Los Angeles, California 90012
</TABLE>

- ----------
1/ Shares of Common Stock beneficially owned by the ESOPT are allocated on an
annual basis among ESOPT participants. Once shares of Common Stock are so
allocated, each participant has the power to direct the vote of his or her
allocated shares; the ESOPT Committee has sole power to vote and dispose of
all unallocated shares of Common Stock beneficially owned by the ESOPT. As
of the Record Date, the ESOPT held 10,788 unallocated shares of Common
Stock. As of the Record Date, Messrs. Cheng, Chan, Ching, Poon and Tang were
members of the ESOPT Committee.

2
<PAGE> 6

As of the Record Date, directors and officers of Bancorp and their
affiliates (including the ESOPT) were entitled to vote approximately 1,732,855
shares of Common Stock, representing approximately 19.36% of the outstanding
shares of Common Stock. If shares held by the ESOPT that have been allocated to
persons other than directors and officers of Bancorp are excluded from such
total, as of the Record Date the directors and officers of Bancorp were entitled
to vote 1,296,030 shares of Common Stock, representing approximately 14.48% of
the outstanding shares of Bancorp. Bancorp has been informed that the directors
and officers of Bancorp intend to vote FOR each of the nominees for director and
FOR the proposal to approve the Stock Plan.

ELECTION OF DIRECTORS

Pursuant to Bancorp's Certificate of Incorporation, Bancorp's Board of
Directors may consist of between three and 25 directors. The Board currently
consists of eleven directors, each of whom is also a director of Cathay Bank.
The Board has three classes of directors. The term of office of each class of
directors is three years. The current term of the Class II directors will expire
at the 1998 Annual Meeting of Bancorp stockholders, the current term of the
Class III directors will expire at the 1999 Annual Meeting of Bancorp
stockholders, and the current term of the Class I directors will expire at the
2000 Annual Meeting of Bancorp stockholders.

The stockholders of Bancorp are being asked to elect four Class II
directors of Bancorp, who will hold office until the 2001 Annual Meeting of
Stockholders and until their successors have been elected and qualified. It is
intended that votes will be cast pursuant to the Proxy card for the four
nominees named below, all of whom are currently directors of Bancorp and of
Cathay Bank and have served continuously in these capacities since the dates
indicated opposite their respective names. If any nominee named in this Proxy
Statement becomes unavailable for any reason, or if any vacancy on the Bancorp
Board of Directors should occur before the election, the shares represented by
any proxy voting for that nominee will be voted for the person, if any, that may
be designated by the Board of Directors to replace that nominee or to fill that
vacancy on the Board. The Board of Directors, however, has no reason to believe
that any nominee will be unavailable or that any vacancy on the Board of
Directors will occur.

The following table sets forth the periods each current director has
served as a director of Bancorp and of Cathay Bank, and the principal
occupations of each director for at least the past five years. It also sets
forth information, as of the Record Date, with respect to the beneficial
ownership, as that term is defined under rules and regulations of the SEC, of
the outstanding Common Stock by each director, each executive officer named in
the Summary Compensation Table below and by all the directors and officers of
Bancorp as a group.

The information set forth in the following table as to shares of Common
Stock owned has been furnished by each director and named executive officer.

<TABLE>
<CAPTION>
Director Common Stock Percentage
Principal of Beneficially Ownership
Occupations and Bancorp Owned on on
Name Age Directorships Since March 6, 1998 March 6, 1998
----- --- ------------- ----- ------------- -------------
<S> <C> <C> <C> <C> <C>
Nominees for Election at
the Annual Meeting
for Term Ending
in 2001 (Class II)
- ------------------
Ralph Roy Buon-Cristiani 72 Director of Cathay 1990 123,937 1/ 1.38% 1/
Bank since 1981; - -
retired doctor of
veterinary medicine.
</TABLE>

3
<PAGE> 7

Kelly L. Chan 2/ 51 Director of Cathay 1990 90,546 3/ 1.01% 3/
- Bank since 1981; - -
owner of interest
in Phoenix Bakery,
Inc., a retail
bakery in Los
Angeles,
California, since
1984.

Dunson K. Cheng 53 Chairman of the 1990 159,672 4/ 1.78% 4/
Board of Directors - -
of each of Bancorp,
Cathay Bank and
Cathay Investment
Company ("CIC")
since 1994;
President of
Bancorp since 1990;
President of Cathay
Bank since 1985 and
director of Cathay
Bank since 1982;
Secretary of CIC
from 1985 until
1994; Chief
Executive Officer
of CIC since 1995
and director of CIC
since 1984.

Chi-Hung Joseph Poon 51 Director of Cathay 1990 22,398 5/ 0.25% 5/
Bank since 1981; - -
Director of CIC since
1984; Secretary and
Chief Financial
Officer of CIC since
1994; President of
Edward Properties,
Inc. since 1981 (real
estate development).

Directors Currently
Serving Term Ending
in 1999 (Class III)
- -------------------
George T.M. Ching 83 Vice-Chairman of the 1990 107,165 6/ 1.20% 6/
Board of Directors - -
of Bancorp since
1990; Vice-Chairman
of the Board of
Directors of Cathay
Bank since 1985,
President of Cathay
Bank from 1962
until 1985 and
director of Cathay
Bank since 1962;
President of CIC
since 1985 and
director of CIC
since 1984.
</TABLE>

4
<PAGE> 8

<TABLE>
<CAPTION>
Director Common Stock Percentage
Principal of Beneficially Ownership
Occupations and Bancorp Owned on on
Name Age Directorships Since March 6, 1998 March 6, 1998
----- --- ------------- ----- ------------- -------------
<S> <C> <C> <C> <C> <C>
Wing K. Fat 2/ 71 Director of Cathay 1990 125,243 7/ 1.40% 7/
- Bank since 1972; - -
owner of interest
in a Chinese-
American restaurant
in Sacramento,
California, for
over 40 years.

Wilbur K. Woo 82 Secretary of Bancorp 1990 174,878 8/ 1.95% 8/
since 1990; - -
Secretary of the
Board of Directors
of Cathay Bank since
1980 and director of
Cathay Bank since
1978; Director of
CIC since 1987.

Directors Currently
Serving Term Ending
in 2000 (Class I)
- -----------------
Michael M.Y. Chang 61 Director of Cathay 1990 154,978 9/ 1.73% 9/
Bank since 1983; - -
self-employed
attorney at law
since 1971.

Patrick S.D. Lee 63 Director of Cathay 1990 64,786 10/ 0.72% 10/
Bank since 1983; -- --
Director of CIC
since 1984;
President of T.C.
Construction
Corporation from
1972 through 1997
(construction and
development of
commercial and
residential real
estate); Vice
President and
co-owner of T.C.
Realty, Inc.
(property
management).

Anthony M. Tang 44 Executive Vice 1990 217,078 11/ 2.42% 11/
President of Bancorp -- --
and Cathay Bank
since 1994; Senior
Vice President of
Bancorp and Cathay
Bank from 1990 until
1994; Chief
Financial Officer
and Treasurer of
Bancorp since 1990;
Chief Lending
Officer of Cathay
Bank since 1985;
</TABLE>

<PAGE> 9

and director of
Cathay Bank since
1986.

Thomas G. Tartaglia 74 Director of Cathay 1990 15,955 12/ 0.18% 12/
Bank since 1986; -- --
formerly Executive
Vice President of
Cathay Bank from
1984 until 1990.

All directors and 1,296,030 13/ 14.48% 13/
officers -- --
as a group (15 persons)
</TABLE>

- ----------

1/ Includes 15,582 shares which Dr. Buon-Cristiani holds as custodian for his
grandchildren.
2/ Kelly L. Chan is the nephew, by marriage, of Wing K. Fat.
3/ Includes approximately 12,761 shares held by the Kelly and Barbara Chan
Living Trust, approximately 2,795 shares held by Mr. Chan as custodian for
his children, approximately 6,671 shares held by Chansons Properties, 50,000
shares held as Trustee of the WHFC Chan Grandchildren Sprinkling Trust and
10,788 shares held as unallocated shares by the ESOPT. Mr. Chan is a member
of the ESOPT Committee and, as such, may be deemed to be a beneficial owner
of unallocated ESOPT shares.
4/ Includes approximately 56,066 shares held by the Dunson Cheng and Cynthia
Cheng Trust, approximately 19,706 shares held by the ESOPT which have been
allocated to Mr. Cheng's account through the Record Date and 10,788 shares
held as unallocated shares by the ESOPT. Mr. Cheng is a member of the ESOPT
Committee and, as such, may be deemed to be a beneficial owner of
unallocated ESOPT shares.
5/ Includes 10,788 shares held as unallocated shares by the ESOPT. Mr. Poon is
a member of the ESOPT Committee and, as such, may be deemed to be a
beneficial owner of unallocated ESOPT shares.
6/ Includes 88,057 shares held by the Ching Family Trust, approximately 2,721
shares held by Mr. Ching's wife and 10,788 shares held as unallocated shares
by the ESOPT. Mr. Ching is a member of the ESOPT Committee and, as such, may
be deemed to be a beneficial owner of unallocated ESOPT shares.
7/ Includes approximately 58,389 shares held by Fat Family Trust, approximately
62,141 shares held by Frank Fat, Inc., and approximately 4,712 shares held
by Frank Fat Properties.
8/ Consists entirely of shares held by Mr. Woo as trustee of a living trust
established by Mr. Woo and his wife.
9/ Includes approximately 93,742 shares held by Mr. Chang and his wife,
approximately 31,236 shares held by Mr. Chang as custodian for his children
and approximately 30,000 shares held by Mr. Chang's wife as custodian for
their children.
10/ Consists entirely of shares held by Mr. Lee as trustee of the Lee Trust.
11/ Includes 23,349 shares held by Mr. Tang as custodian for his children,
approximately 46,277 shares held by Mr. Tang's wife and approximately 16,983
shares held by the ESOPT which have been allocated to Mr. Tang's account
through the Record Date and 10,788 shares held as unallocated shares by the
ESOPT. Mr. Tang is a member of the ESOPT Committee and, as such, may be
deemed to be a beneficial owner of unallocated ESOPT shares.
12/ Consists of 10,608 shares held by the Thomas G. Tartaglia Trust and 5,347
shares held by the ESOPT which have been allocated to Mr. Tartaglia's
account through the Record Date.
13/ Includes a total of 74,904 held by the ESOPT that have been allocated to the
directors and officers through the Record Date and 10,788 shares held as
unallocated shares by the ESOPT.

6
<PAGE> 10

THE BOARD OF DIRECTORS

Regular meetings of the Bancorp Board of Directors are generally held on
a monthly basis, while special meetings are called when necessary. The Bancorp
Board of Directors held 12 meetings during 1997. During the fiscal year ended
December 31, 1997, each director attended 75% or more of the meetings of the
Bancorp Board.

During the fiscal year ended December 31, 1997, the Bancorp Board of
Directors had two standing committees, the Audit Committee and the Executive
Committee. The Bancorp Board of Directors does not have a nominating committee
or a committee performing similar functions.

AUDIT COMMITTEE

During the fiscal year ended December 31, 1997, the Audit Committee
consisted of Ralph Roy Buon-Cristiani (Chairman), Kelly L. Chan, Michael M.Y.
Chang and Thomas Tartaglia. Mr. Cheng also served on the Audit Committee
ex-officio in his capacity as President and chief executive officer. This
committee oversees Bancorp's financial reporting on behalf of the Bancorp Board
of Directors; recommends to the Bancorp Board of Directors and stockholders the
independent auditors who will perform the annual audit; reviews with the
independent auditors the proposed scope of, fees for, and results of the annual
audit; reviews the system of internal accounting controls and the scope and
results of internal audits with the independent auditors, the internal auditors
and Bancorp management; considers the audit and non-audit services provided by
the independent auditors, the proposed fees to be charged for each type of
service, and the effect of non-audit services on the independence of the
independent auditors; and performs any other tasks that may be assigned to it by
the Board of Directors. The Audit Committee met 16 times during 1997 and each
committee member attended 75% or more of the meetings of this committee.

EXECUTIVE COMMITTEE

During the fiscal year ended December 31, 1997, the Executive Committee
consisted of Dunson K. Cheng (Chairman and serving in an ex-officio capacity, as
President and chief executive officer of Bancorp), George T.M. Ching, Anthony M.
Tang and Thomas G. Tartaglia. This committee has been delegated authority to
exercise all powers of the Bancorp Board of Directors in the intervals between
Board meetings, except those powers delegated to other committees and those that
by statute, charter or bylaws are reserved to the full Board of Directors. The
Executive Committee met 12 times during 1997 and each committee member attended
75% or more of the meetings of this committee.

COMPENSATION OF DIRECTORS

The persons currently serving as directors of Bancorp are the same
persons who currently serve as directors of Cathay Bank. As a result, the
current policy for compensation of directors is that Cathay Bank pays each
Cathay Bank director who is not also a full-time officer of Bancorp, Cathay Bank
or CIC an annual fee of $13,200 plus $200 for each Cathay Bank Board committee
meeting (other than loan committee meetings) and $250 for each Cathay Bank Board
loan committee meeting attended by the director. In 1997, Cathay Bank also paid
each Cathay Bank non-employee director a $3,375 bonus and paid F. Chow Chan and
Gerald T. Deal, as directors emeritus, an annual fee of $4,800 and a $1,125
bonus. CIC currently pays each of its directors who is not a full-time officer
of CIC, Bancorp or Cathay Bank an fee of $200 for each of its Board of Directors
meetings attended. Bancorp, Cathay Bank and CIC reimburse directors for
out-of-pocket expenses incurred in attending meetings of the Boards of Directors
and Board committees and in traveling on company business. In addition to
director fees paid to such persons, in 1997, Cathay Bank paid $14,190 to Mr. Woo
as salary for his service as an officer, and CIC paid $21,285 to Mr. Ching as an
officer and $1,800 to Mr. Lee as an employee. Directors are also eligible to
receive stock option grants and restricted stock awards under the Stock Plan,
subject to the approval of the Stock Plan by the stockholders. See "Proposal to
Approve the Cathay Bancorp, Inc. Equity Incentive Plan" for further information
concerning the Stock Plan.

7
<PAGE> 11

INFORMATION CONCERNING MANAGEMENT COMPENSATION

REMUNERATION OF EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

The following tables sets forth information regarding the compensation
for services in all capacities paid or accrued for the calendar year ended
December 31, 1997, by Bancorp or Cathay Bank (a) to the chief executive officer
of Bancorp and (b) to the four most highly compensated executive officers and
significant employees of either Bancorp or Cathay Bank.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
=================================================================================================
Annual Compensation
--------------------------------
Other
Annual All Other
Name and Principal Compen- Compen-
Position Year Salary Bonus sation 2/ sation
($)1/ ($) ($) - ($)
-
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dunson K. Cheng, Chairman of the 1997 $339,217 $300,000 $4,613 $14,818 3/
-
Board of Directors, President and 1996 314,190 195,000 3,860 15,007 4/
-
Chief Executive Officer of Bancorp 1995 289,949 144,000 4,897 18,100 5/
-
and Cathay Bank
- -------------------------------------------------------------------------------------------------
Anthony M. Tang, Executive 1997 150,500 110,000 -- 15,190 6/
-
Vice-President and Chief Financial 1996 138,000 78,917 -- 14,340 7/
-
Officer/Treasurer of Bancorp and 1995 129,000 62,000 -- 15,111 8/
Executive Vice-President and Chief -
Lending Officer of Cathay Bank
- -------------------------------------------------------------------------------------------------
Milly W. Joe, Senior Vice-President 1997 98,184 50,517 -- 12,952 9/
-
and Cashier of Cathay Bank 1996 93,555 39,016 -- 13,391 10/
--
1995 88,500 34,164 -- 13,391 11/
--
- -------------------------------------------------------------------------------------------------
Irwin Wong, Senior Vice-President 1997 98,636 62,465 710 14,327 12/
--
for Branch Administration of Cathay 1996 91,945 41,621 454 13,663 13/
--
Bank 1995 88,187 30,840 78 13,377 14/
--
- -------------------------------------------------------------------------------------------------
Elena Chan, Senior Vice-President 1997 90,736 61,800 -- 11,652 15/
--
and Chief Financial Officer of 1996 84,200 41,232 -- 11,195 16/
--
Cathay Bank 1995 78,200 35,430 -- 10,461 17/
--
- -------------------------------------------------------------------------------------------------
</TABLE>

1/ Includes amounts deferred by the named officers under the Cathay Bancorp's
401(k) Profit Sharing Plan (the "401(k) Plan").

2/ The amounts reported in this column reflect the incremental cost to Bancorp
of automobiles provided to the named officers. Excludes other perquisites
and personal benefits paid to each named officer as such other perquisites
and personal benefits, in each instance, were less than the lesser of
$50,000 or 10% of the total annual salary and bonus set forth above.

3/ This amount consists of $1,758 in group life insurance premiums, $2,873 in
health insurance premiums, $7,328 in employer contribution to the ESOPT and
$2,859 in employer contribution under the 401(k) Plan.

8
<PAGE> 12

4/ This amount consists of $2,424 in group life insurance premiums, $2,877 in
health insurance premiums and $9,706 in employer contribution to the ESOPT.
5/ This amount consists of $5,212 in group term life insurance premiums, $2,965
in health insurance premiums and $9,923 in employer contribution to the
ESOPT.
6/ This amount consists of $1,570 in group life insurance premiums, $3,727 in
health insurance premiums, $7,350 in employer contribution to the ESOPT and
$2,543 in employer contribution under the 401(k) Plan.
7/ This amount consists of $1,268 in group life insurance premiums, $3,334 in
health insurance premiums and $9,738 in employer contribution to the ESOPT.
8/ This amount consists of $1,277 in group term life insurance premiums, $3,878
in health insurance premiums and $9,956 in employer contribution to the
ESOPT.
9/ This amount consists of $1,443 in group life insurance premiums, $2,867 in
health insurance premiums, $6,996 in employer contribution to the ESOPT and
$1,646 in employer contribution under the 401(k) Plan.
10/ This amount consists of $2,281 in group life insurance premiums, $2,877 in
health insurance premiums and $8,833 in employer contribution to the ESOPT.
11/ This amount consists of $2,104 in group term life insurance premiums, $2,907
in health insurance premiums and $8,380 in employer contribution to the
ESOPT.
12/ This amount consists of $1,607 in group life insurance premiums, $3,743 in
health insurance premiums, $7,314 in employer contribution to the ESOPT and
$1,663 in employer contribution under the 401(k) Plan.
13/ This amount consists of $1,549 in group life insurance premiums, $3,358 in
health insurance premiums and $8,756 in employer contribution to the ESOPT.
14/ This amount consists of $1,510 in group term life insurance premiums, $3,894
in health insurance premiums and $7,973 in employer contribution to the
ESOPT.
15/ This amount consists of $1,307 in group life insurance premiums, $1,738 in
health insurance premiums, $7,078 in employer contribution to the ESOPT and
$1,529 in employer contribution under the 401(k) Plan.
16/ This amount consists of $1,228 in group life insurance premiums, $1,718 in
health insurance premiums and $8,249 in employer contribution to the ESOPT.
17/ This amount consists of $1,002 in group term life insurance premiums, $1,815
in health insurance premiums and $7,644 in employer contribution to the
ESOPT.

CATHAY BANCORP, INC. 401(k) PLAN

In 1997, the Board approved the Cathay Bancorp, Inc. 401(k) Profit
Sharing Plan (the "401(k) Plan"), which began on March 1, 1997. Salaried
employees who have completed one year of service and have attained the age of 21
are eligible to participate. Enrollment dates are on January 1st and July 1st of
each year. Participants may contribute up to 15% of their compensation for the
year, not to exceed the dollar limit set by the Internal Revenue Service (the
"IRS"). Participants may change their contribution election on the enrollment
dates. Bancorp matches 50% of the participants' contribution up to 4% of their
compensation. The vesting schedule for matching contribution is 0% for less than
two years of service, 25% after two years of service and from then on, at an
increment of 25% each year until 100% vested after five years of service. In
1997, Bancorp's contribution amounted to $138,000. The 401(k) Plan allows
participants to withdraw all or part of their vested amount in the 401(k) Plan
due to certain financial hardships as designed by the IRS. Participants may also
borrow up to 50% of the vested amount, up to a maximum of $50,000.
The minimum loan amount is $1,000.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Board of Directors of Bancorp does not have a compensation
committee. No executive officer is separately compensated for services rendered
to Bancorp. With the exception of Ms. Joe, Mr. Wong and Ms.

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<PAGE> 13

Chan, the executive officers hold positions with both Bancorp and Cathay Bank.
Ms. Joe, Mr. Wong and Ms. Chan are executive officers of Cathay Bank only and
are not considered to be executive officers of Bancorp. Accordingly, decisions
regarding the compensation of executive officers, including the President and
chief executive officer, are made by the Compensation Committee of the Board of
Directors of Cathay Bank, subject to review and approval by the Board of
Directors of Cathay Bank. In the fiscal year ended December 31, 1997, the
members of the Compensation Committee of Cathay Bank were Dunson K. Cheng,
Chairman, George T.M. Ching, Chi-Hung Joseph Poon, Thomas G. Tartaglia and Kelly
L. Chan, each of whom also was a director of Bancorp during 1997. Mr. Cheng, the
chairman of the Compensation Committee of Cathay Bank, is also the Chairman,
President and chief executive officer of Cathay Bank and of Bancorp. Mr. Cheng
also is a member of the Boards of Directors of Cathay Bank and of Bancorp. Mr.
Cheng does not participate in, and excuses himself from, those portions of any
meeting of the Board of Directors or the Compensation Committee of Cathay Bank
in which his compensation is discussed or established.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

GENERAL

The Compensation Committee of the Board of Directors of Cathay Bank
establishes general policies on executive compensation as well as the actual
salary, bonus and discretionary benefits of the President and chief executive
officer of Bancorp and Cathay Bank, of the Executive Vice-President of Bancorp
and Cathay Bank, and of each Senior Vice-President of Cathay Bank. Decisions by
the Cathay Bank Compensation Committee are subject to review and approval by the
full Board of Directors of Cathay Bank.

The compensation program for executive officers, including the President
and chief executive officer, currently consists of base salary, annual cash
bonus, participation in Bancorp's ESOPT (Employee Stock Ownership Plan and
Trust),1/ certain matching contributions under the 401(k) Plan, life insurance
in an amount equal to three times base salary and the same medical, dental and
disability benefits as provided to other Cathay Bank employees. In 1998, such
officers will also be eligible to participate in the Stock Plan, subject the
approval of the Stock Plan by the stockholders.

The Cathay Bank Compensation Committee believes that to reward, provide
incentives to and retain capable management, each of the executive officers
should receive compensation that is both competitive and reflective of Cathay
Bank's and Bancorp's performance. In addition, the Compensation Committee
believes individual compensation should reflect the experience, performance and
responsibility level of that individual.

- --------
1/ Participation in the ESOPT is available to all salaried employees who
have completed at least two full years of service. Each participant's share of
Bancorp's annual contribution to the ESOPT, including the share of each
participating executive officer, is calculated by dividing the participant's
total "units" by the total "units" of all ESOPT participants for that year. Each
ESOPT participant is granted one "unit" for each year of service and one "unit"
for each one hundred dollars of eligible compensation. The Board of Directors
determines the amount of Bancorp's annual contribution to the ESOPT in light of
Bancorp's earnings in the prior plan year. Bancorp's annual contribution is made
in cash. The cash contributed by Bancorp to the ESOPT is invested by the ESOPT's
trustees in shares of Bancorp's Common Stock. Each participant's benefits under
the ESOPT consists of the cash (or cash equivalents) and shares of Bancorp's
Common Stock allocated to the participant's ESOPT account in accordance with the
above-described formula. Under the ESOPT, each participant's benefits are 100%
vested and without risk of forfeiture. Benefits under the ESOPT are distributed
to the participant in accordance with the rules of the ESOPT and generally begin
when the participant attains the age of 65 (or upon death or disability) or
after the lapse of five years following termination of employment.

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<PAGE> 14

As a result of changes to the Internal Revenue Code adopted in 1993,
publicly held corporations generally are not permitted a federal income tax
deduction for compensation paid to certain officers, to the extent that such an
officer's compensation exceeds $1 million in a taxable year. An exception may
apply to performance-based payments that are approved in advance by a majority
vote of the stockholders. Bancorp has not previously paid compensation at levels
that would cause this limitation to apply to Bancorp, and has no current plans
to do so in the future. The Compensation Committee has not adopted any formal
policy concerning the possible application of this limitation, should an officer
in the future appear to merit compensation in excess of the limitation. The
Compensation Committee will continue to review the issue and monitor whether any
such payments would be structured so as to qualify as performance-based
compensation that would be deductible.

BASE COMPENSATION

As part of the process of establishing base salaries, the Compensation
Committee reviews the performance of each executive officer in relation to the
overall performance of Cathay Bank and considers factors such as the experience
and responsibility of each individual, including performance of special projects
and assignments. Because the Committee believes that the evaluation of
performance should not be reduced to a formula, the Committee considers a wide
range of performance criteria, including objective factors such as earnings and
profits and subjective factors such as individual performance. In establishing
each executive officer's base salary, the Compensation Committee generally gives
the most weight to the subjective evaluation of the performance of the
individual in relation to the performance of Cathay Bank followed by a
consideration of the officer's level of responsibility, experience and then an
evaluation of objective performance factors, without any particular magnitude
being assigned to this order of factors. The size of the base salary for each
executive officer is determined by the above-mentioned subjective evaluation of
the individual's performance, a comparison of the compensation levels paid to
the individual in past years in relation to the individual's performance in
those years and Bancorp's and Cathay Bank's general financial condition,
profitability and results from operations. After accounting for the First Public
Merger, Bancorp's 1996 total assets increased by approximately 38.34% over 1995
levels, its 1996 stockholders' equity grew by approximately 25.30% over the 1995
figure, its return on average assets remained the same at 1.05% in 1996 and
1995, respectively, and its earnings per share increased from $1.36 in 1995 to
$1.66 in 1996. The Compensation Committee considered these financial performance
data and the level of responsibilities in giving executive officers an increase
in base salaries in April 1997 (approximately 5% to 10%). The Compensation
Committee further notes that Bancorp's financial outlook has continued to
improve. Bancorp's 1997 total assets increased by approximately 7.85% over 1996
levels, its 1997 stockholders' equity grew by approximately 14.72% over the 1996
figure, its return on average assets increased from 1.05% in 1996 to 1.29% in
1997 and its earnings per share increased from $1.66 in 1996 to $2.26 in 1997.

It should be noted that the Compensation Committee does not review
objective data on the financial condition, profitability and results from
operations of Bancorp and Cathay Bank in a vacuum. In deciding compensation
levels of executives (whether it is base salary or bonuses), the Compensation
Committee reviews objective data in light of the financial performance of other
similar banks, Bancorp's and Cathay Bank's relative advantages and disadvantages
in the banking industry and the obstacles and challenges presented to the
particular executive in attempting to achieve the goals of Bancorp and Cathay
Bank.

The Compensation Committee also reviews the base compensation of
executive officers in equivalent positions paid by banks considered competitive
with Cathay Bank and, in particular, executive officer compensation reported in
the survey issued by the California Banker's Association (the "CBA"). The CBA
survey consists of a review of executive compensation at banks with total assets
over $1 billion, all of which are located in California. Substantially all of
Bancorp's operations are located in California and its assets were approximately
$1.5 billion at December 31, 1996, after accounting for the First Public Merger
($1.6 billion at December 31, 1997). Actual base salaries (and bonuses) paid to
the executive officers in fiscal 1997 compared to the median salaries in the CBA
survey as follows: Chairman, chief executive officer and President -- actual
base salary of $339,217 compared to the median base salary of chief executive
officers in the CBA survey of $345,617 (actual bonus of $300,000 compared to the
median bonus of chief executive officers in the CBA survey of $204,750); Senior
Vice-President for Branch Administration -- actual base salary of $98,636
compared to the median base salary of Branch Administrators in the CBA survey of
$96,000 (actual bonus of $62,465 compared to the median

11
<PAGE> 15

bonus of Branch Administrators in the CBA survey of $27,844); Senior
Vice-President and Chief Financial Officer -- actual base salary of $90,736
compared to the median base salary of Chief Financial Officer in the CBA survey
of $125,504 (actual bonus of $61,800 compared to the median bonus of Chief
Financial Officer in the CBA survey of $40,735). Comparative salary and bonus
data was not available for all positions and, with the following positions, the
Compensation Committee gave more weight to the subjective factors discussed
above in setting actual base salary and bonus: Executive Vice-President and
Chief Lending Officer (actual base salary of $150,500 and actual bonus of
$110,000) and Senior Vice-President and Cashier (actual base salary of $98,184
and actual bonus of $50,517).

In addition to these surveys, the Compensation Committee considers data
comparing the percentage change in cumulative total stockholder return on
Bancorp's Common Stock with the percentage change in cumulative total
stockholder return on the Standard & Poors 500 and the SNL Western Bank Index.
See "Comparative Stock Performance" below for a graph comparing cumulative
stockholder return data for Bancorp, the Standard & Poors 500 Index and the SNL
Western Bank Index. The SNL Western Bank Index is a market weighted index
including every publicly traded bank located in the States of Alaska,
California, Hawaii, Nevada, Oregon and Washington.

ANNUAL CASH BONUS

The annual cash bonus paid to each executive officer, including the
Chairman, President and chief executive officer, is determined, in the
discretion of the Compensation Committee, on the basis of the overall
performance and profitability of Cathay Bank and Bancorp in the fiscal year then
ending and the Committee's subjective evaluation of the individual officer's
performance and responsibility in relation to company performance. Overall
performance and profitability is determined with reference to the following
factors listed in order of importance: net income, return on average assets,
return on stockholders' equity and percentage increase or decrease in total
assets, loans and deposits. The size of the annual bonus for each officer is
determined by the above-mentioned evaluation of the performance of Bancorp and
Cathay Bank in relation to the contributions perceived by the Compensation
Committee made by the officer to achieve the overall level of financial
performance of Bancorp and Cathay Bank, and by a comparison of the size of
annual bonuses paid to the officer in past years with respect to the
individual's performance in those years, the base salaries of the executives and
the length of employment with Bancorp and Cathay Bank and the overall
performance and profitability of Bancorp and Cathay Bank in those years. See
also "CEO Compensation" below.

CEO COMPENSATION

In April 1997, the Compensation Committee increased Mr. Cheng's annual
base salary by approximately 10% to $339,217 and in December 1997 the Committee
awarded Mr. Cheng a $300,000 cash bonus. Mr. Cheng's total base salary and bonus
in 1997 was $639,217, up from $509,190 in 1996. The increase in Mr. Cheng's
compensation in 1997 reflects Bancorp's and Cathay Bank's growth and improved
profits as well as the additional responsibilities on an ongoing basis following
that the First Public Merger. In setting Mr. Cheng's compensation, the
Compensation Committee considered Mr. Cheng's management ability, his growing
responsibilities and the fact that Cathay Bank sustained steady growth in 1997.
As an indication of such growth, Bancorp's total assets and deposits as of
December 31, 1997 were up 7.85% and 6.18% respectively, from December 31, 1996
levels, and net income increased 51.01% from $13,315,951 in 1996 to $20,107,738
in 1997. Although Mr. Cheng is a member of Cathay Bank's Compensation Committee,
he does not participate in, and excuses himself from, those portions of any
meeting in which his compensation is discussed or established.

Generally, Mr. Cheng's base salary is determined primarily with
reference to a subjective evaluation made by the Compensation Committee of his
performance in the immediately preceding year, the growth of Bancorp and Cathay
Bank (a percentage increase or decrease in total assets, loans and deposits) in
the immediately preceding year, the percentage increase or decrease in net
income in the immediately preceding year, and a comparison of his level of
compensation with chief executive officers at other banks of a similar size
operating in California. The base salary and total cash compensation paid to Mr.
Cheng in fiscal 1997 was $339,217 and $639,217, respectively, compared with the
median base salary and total cash compensation of chief executive officers
listed in

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<PAGE> 16

the CBA survey of $345,617 and $540,617, respectively. See "Base Compensation"
above for a description of the CBA survey. The bonus paid to Mr. Cheng is based
generally on the performance and management of Bancorp and Cathay Bank.
Specifically, in determining Mr. Cheng's bonus, the Compensation Committee
considers the percentage increase or decrease in net income occurring during the
year in which the bonus is paid and any growth in total assets, loans and
deposits experienced during that year. The bonus paid to Mr. Cheng in fiscal
1997 was $300,000, compared with the median bonus/incentive compensation paid to
chief executive officers listed in the CBA survey of $204,750. See "Base
Compensation" above for a description of the CBA survey.

George T.M. Ching Dunson K. Cheng
Thomas G. Tartaglia Chi-Hung Joseph Poon
Kelly L. Chan

COMPARATIVE STOCK PERFORMANCE

The graph below compares the percentage change in the cumulative total
stockholder return on Bancorp's Common Stock from December 31, 1992 through
December 31, 1997 with the percentage change in the cumulative total return on
the Standard & Poors 500 Index (the "S&P 500 Index") and the SNL Western Bank
index (the "SNL Western Bank Index") for the same period. Bancorp will furnish,
without charge, upon the written request of any person who is a stockholder of
record as of March 6, 1998, a list of the companies included in the SNL Western
Bank Index. Requests for this information should be addressed to Wilbur K. Woo,
Secretary, Cathay Bancorp, Inc., 777 North Broadway, Los Angeles, California
90012. This graph assumes the investment of $100 in Bancorp's Common Stock on
December 31, 1992 and an investment of $100 in each of the S&P 500 Index and the
SNL Western Bank Index on that date.

[GRAPH]

<TABLE>
<CAPTION>
Period Ending December 31,
----------------------------------------------------------------
Index 1992 1993 1994 1995 1996 1997
- ----------------------------- ---------- ----------- ---------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Cathay Bancorp Inc. $100.00 $ 79.66 $ 78.04 $ 93.86 $123.16 $235.06
S&P 500 100.00 110.08 111.53 153.44 188.52 251.44
SNL Western Bank Index 100.00 114.57 113.43 190.22 270.43 398.65
</TABLE>

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<PAGE> 17

INCORPORATION OF COMPENSATION AND PERFORMANCE INFORMATION

The information contained in the above sections of this Proxy Statement
captioned "INFORMATION CONCERNING EXECUTIVE COMPENSATION," "COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION" and "COMPARATIVE STOCK PERFORMANCE"
shall not be deemed to be incorporated by reference by any general statement
incorporating by reference this Proxy Statement, or any part hereof, into any
filing under the Securities Act of 1933, as amended (the "1933 Act") or the
Securities Exchange Act of 1934, as amended (the "1934 Act"), except to the
extent that Bancorp expressly incorporates such information in such filing by
reference. The information contained in the above sections of this Proxy
Statement captioned "COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION"
and "COMPARATIVE STOCK PERFORMANCE" and shall not be deemed to be soliciting
material or otherwise be deemed to be filed under the 1933 Act or the 1934 Act,
except to the extent that Bancorp requests that such information be treated as
soliciting material or expressly incorporates such information in any such
filing by reference.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires that Bancorp's executive officers and directors and persons who own
more than ten percent of Bancorp's Common Stock timely file initial reports of
ownership of Bancorp's Common Stock and other equity securities, and reports of
changes in such ownership, with the Securities and Exchange Commission and the
Nasdaq Stock Market. Bancorp has instituted procedures to receive and review
such insider reports. After a review of such insider reports, Bancorp believes
that all required reports have been timely filed, except that Kelly Chan was
late in filing one Form 4 for a gift of 500 shares to him and 500 shares to his
spouse of Bancorp Common Stock on December 27, 1997. Mr. Chan subsequently
disclosed this transaction on a timely filed Form 5.

CERTAIN TRANSACTIONS

BANKING TRANSACTIONS

Some of the directors and officers of Bancorp or of Cathay Bank, members
of their families, and the companies with which they are associated have been
customers of, and have had banking transactions with, Cathay Bank in the
ordinary course of Cathay Bank's business since Cathay Bank began operations,
and Cathay Bank expects to have such banking transactions in the future. All
loans and commitments to lend included in these transactions were made in
compliance with applicable laws and on substantially the same terms, including
interest rates and collateral, as those prevailing in Cathay Bank at the time
for comparable transactions with other persons of similar creditworthiness and,
in the opinion of the management of Cathay Bank, did not involve more than a
normal risk of collectibility or present any other unfavorable features. The
aggregate balance of secured and unsecured loans made or authorized to be made
directly to the directors and executive officers of Bancorp or of Cathay Bank,
members of their families, and entities with which they were associated was
$7,308,319 at December 31, 1997, which represented 5.38% of Bancorp's
stockholders' equity at that date.

OFFICE LEASE

T.C. Realty, Inc., a California corporation owned by Patrick S.D. Lee
and his spouse, leases to Cathay Bank approximately 8,912 square feet of office
space in downtown Los Angeles. During 1997, Cathay Bank paid T.C. Realty
approximately $128,328 to lease this space. Under the terms of a new three-year
lease entered into in February, 1998, annual payments under the lease in 1998
are expected to be approximately $106,944.

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<PAGE> 18

INDEMNITY AGREEMENTS

Bancorp's Bylaws provide for the indemnification by Bancorp of its
agents, including its directors and officers, to the maximum extent permitted
under Delaware law. In May 1991, Bancorp entered into indemnity agreements with
its directors and certain of its officers. These indemnity agreements permit
Bancorp to indemnify an officer or director to the maximum extent permitted
under Delaware law and prohibit Bancorp from terminating its indemnification
obligations as to acts of any officer or director that occur before the
termination. Bancorp believes the indemnity agreements will assist it in
attracting and retaining qualified individuals to serve as directors and
officers of Bancorp. Bancorp's Certificate of Incorporation also provides for
certain limitations on the liability of directors, as permitted by Delaware law.
The indemnifications and limitations on liability permitted by the certificate
of incorporation, bylaws and the indemnity agreements are subject to the
limitations set forth by Delaware law.

PROPOSAL TO APPROVE THE CATHAY BANCORP, INC. EQUITY INCENTIVE PLAN

GENERAL

At the Annual Meeting, Bancorp's stockholders will be asked to approve
the Cathay Bancorp, Inc. Equity Incentive Plan (the "Stock Plan"). The Stock
Plan authorizes the issuance of up to 1,075,000 shares of Bancorp's Common Stock
(subject to adjustment in the event of a merger, reorganization,
recapitalization, stock dividend, stock split or other change in corporate
structure affecting the Common Stock) pursuant to awards granted thereunder.
Such shares may consist, in whole or in part, of authorized and unissued shares
or treasury shares or shares reaquired in private transactions or open market
purchases. Awards may be in the form of stock options or restricted stock. The
number of shares subject to awards granted to a single participant in any year
may not exceed 100,000. Approximately 498 persons, of whom two are executive
officers of Bancorp, nine are directors who are not executive officers, and
approximately 487 are employees (including officers who are not executive
officers), are expected to be eligible to participate in the Stock Plan. As of
March 6, 1998, the average of the bid and ask prices of Bancorp's Common Stock
was $33.375 per share. A copy of the Stock Plan is set forth in Exhibit A to
this Proxy Statement, and the description of the Stock Plan contained in this
Proxy Statement is qualified in its entirety by this reference thereto.

BACKGROUND

On February 19, 1998, Bancorp's Board of Directors adopted the Stock
Plan, subject to the approval of the Stock Plan by the stockholders. The Stock
Plan is intended to strengthen Bancorp by providing selected employees and
directors of Bancorp and its subsidiaries an opportunity to participate in
Bancorp's future by offering them an opportunity to acquire stock in Bancorp so
as to retain, attract and motivate them. Administration of the Stock Plan may be
either by the Board or, upon delegation by the Board, by a committee of the
Board (in either case, the "Committee"). The Board currently intends to appoint
a Committee for the Stock Plan in accordance with the terms of the Stock Plan.
The Committee may select employees, including officers and directors, and
non-employee directors of Bancorp and its subsidiaries to receive awards under
the Stock Plan and has broad discretion to determine the amount and type of
awards and terms and conditions of individual awards. Individual awards will
generally be based on a person's present and potential contribution to Bancorp.
No awards have been made under the Stock Plan. Grants under the Stock Plan will
be made at the discretion of the Committee and, accordingly, are not yet
determinable. However, the present intention is to grant only stock options, to
grant such stock options over the entire life of the Stock Plan and to have any
stock options granted under the Stock Plan become exercisable in 20% increments
over a five year period (subject to termination in the event of the
participant's termination of employment, disability or death). As a result, on
average, the annual aggregate issuance of stock options is presently expected to
be equal to approximately 1.2% of the currently outstanding shares of Common
Stock.

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<PAGE> 19

DESCRIPTION OF THE STOCK PLAN

General. Awards may be granted in the form of stock options ("Options")
or restricted stock ("Restricted Stock"). Any award may be granted either alone
or in addition to other awards granted under the Stock Plan. The Committee may
condition the grant of the award upon the attainment of specified company, group
or division performance goals or other criteria, which need not be the same for
all participants. No award may be granted under the Stock Plan on or after
February 18, 2008, but outstanding awards may extend beyond that date.

Options. Options granted under the Stock Plan may be incentive stock
options ("ISOs" or "Incentive Stock Options") within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"), or nonqualified
stock options ("NQOs" or "Non-Qualified Options"). The exercise price of Options
may not be less than the fair market value of the shares subject to the option
on the date of the grant. The term of any Option granted under the Stock Plan
may not exceed ten years. Certain other limitations are also applicable to ISOs
in order to take advantage of the favorable tax treatment that may be available
for ISOs.

Restricted Stock. Restricted Stock awards consist of non-transferable
shares of Common Stock of Bancorp, for such consideration as is determined by
the Committee (but is not less than the par value of such Common Stock). The
Committee may provide for the lapse of the transfer restrictions over a period
of not more than ten years, or may accelerate or waive such restrictions, in
whole or in part, based on service, performance or other criteria determined by
the Committee.

Other Provisions. The consideration payable for, upon exercise of, or
for tax payable in connection with, an award may be paid in cash or by delivery
of other property, including securities of Bancorp, as authorized by the
Committee. Except as indicated above, Bancorp will not receive any consideration
upon the grant of any awards. Unless otherwise provided in the applicable award
agreement or by the Committee, awards generally may be exercised at any time
within three months after a participant's employment terminates (but only to the
extent exercisable or payable at the time of termination). If termination is due
to the participant's death or disability, the award may be exercised for one
year thereafter (but only to the extent exercisable or payable at the time of
death or disability). Shares issued under an award may be subject to a right of
repurchase by Bancorp. No award shall be assignable or otherwise transferable by
a participant other than by will or by the laws of decent and distribution.

The Committee may adjust the performance goals and measurements
applicable to awards. The Committee also may waive in whole or in part any or
all restrictions, conditions, vesting or forfeiture with respect to any award
granted under the Stock Plan. In the event of a change in control of Bancorp (as
defined in the Stock Plan), the Bancorp Board may, among other things,
accelerate the vesting of outstanding awards, and value and cash out awards on
the basis of the change of control price determined under the Stock Plan.

The Board may amend, alter or discontinue the Stock Plan or any award at
any time, except that the consent of a participant is required if the
participant's rights under an outstanding award would be impaired. In addition,
no amendment, alteration or discontinuance of the Stock Plan will require the
approval of the stockholders of Bancorp except (i) an increase in the total
number of shares reserved for issuance pursuant to awards under the Stock Plan;
(ii) with respect to provisions solely as they relate to ISOs, to the extent
required for the Stock Plan to comply with Section 422 of the Code; (iii) to the
extent required by other applicable laws, rules or regulations; or (iv) to the
extent the Board otherwise concludes that stockholder approval is advisable. The
Stock Plan will constitute an unfunded plan. The Committee may authorize the
creation of trusts or arrangements to meet the obligations under the Stock Plan
to deliver stock or make payments.

FEDERAL INCOME TAX CONSEQUENCES.

The following is a brief summary of complex statutory and regulatory
provisions in effect at the date of this Proxy Statement which are subject to
change at any time. The summary is necessarily general in nature and does not
purport to be complete. Actual federal income tax consequences to a particular
participant will depend in part on the individual's own circumstances and on
market values of Bancorp's shares at relevant times. In

16
<PAGE> 20

addition, various foreign, state and local laws may provide tax consequences
that vary significantly from the federal income tax consequences described
below.

Incentive Stock Options. ISOs are intended to constitute "incentive
stock options" within the meaning of Section 422 of the Code. ISOs may be
granted only to employees of Bancorp and its eligible subsidiaries (including
directors who are also employees). An optionee does not recognize taxable income
upon either the grant or exercise of an ISO. However, the excess of the fair
market value of the shares purchased upon exercise over the option exercise
price (the "Option Spread") is includable in the optionee's "alternative minimum
taxable income" ("AMTI") for purposes of the alternative minimum tax ("AMT").
The Option Spread is generally measured on the date of exercise and is
includable in AMTI in the year of exercise. Special rules regarding the time of
AMTI inclusion may apply for shares subject to repurchase right or other
"substantial risk of forfeiture" (including, in the case of each person subject
to the reporting requirements of Section 16 of the Exchange Act, limitations on
resale of shares imposed under Section 16(b) of the Exchange Act) within the
meaning of the Code.

If an optionee holds the shares purchased under an ISO for at least two
years from the date the ISO is granted and for at least one year from the date
the ISO is exercised, any gain from a sale of the shares other than to Bancorp
is taxable as capital gain which is mid-term gain, long-term gain or qualified
5-year gain, with maximum tax rates of 28% for holding periods more than one
year but not more than 18 months (mid-term gain), 20% for holding periods more
than 18 months (long-term gain), and, for shares purchased after the year 2000,
18% for holding periods more than five years (qualified 5-year gain). Under
these circumstances, Bancorp would not be entitled to a tax deduction at the
time the ISO is exercised or at the time the stock is sold. If an optionee were
to dispose of stock acquired pursuant to an ISO before the end of the required
holding periods (a "Disqualifying Disposition"), the amount by which the market
value of the stock at the time the ISO is exercised exceeds the exercise price
(or, if less, the amount of gain realized on the sale) is taxable as ordinary
income, and Bancorp is entitled to a corresponding tax deduction. Such income is
subject to information reporting requirements and may become subject to income
and employment tax withholding. Gain from a Disqualifying Disposition in excess
of the amount required to be recognized as ordinary income is capital gain.
Optionees are required to notify Bancorp immediately prior to making a
Disqualifying Disposition. If stock is sold to Bancorp rather than to a third
party, the sale may not produce capital gain or loss. A sale to Bancorp will
constitute a redemption of such shares, which could be taxable as a dividend
unless it is "substantially disproportionate," a "complete redemption" of all of
the optionee's shares in Bancorp or "not essentially equivalent to a dividend"
within the meaning of the Code. The timing and amount of income from a
Disqualifying Disposition and the beginning of the optionee's capital gain or
loss holding period may be affected if option stock is acquired subject to a
repurchase right or other "substantial risk of forfeiture" (including in the
case of each person subject to reporting requirements of Section 16 of the
Exchange Act, limitations on resale of shares imposed under Section 16(b) of the
Exchange Act).

Nonqualified Stock Options. An optionee is not taxable upon the award of
a NQO. Federal income tax consequences upon exercise depend upon whether the
shares thereby acquired are subject to a "substantial risk of forfeiture." If
the shares are not subject to a substantial risk of forfeiture, or if they are
so restricted and the optionee files an election under Section 83(b) of the Code
(a "Section 83(b) Election") with respect to the shares, the optionee will have
ordinary income at the time of exercise measured by the Option Spread on the
exercise date. The optionee's tax basis in the shares will be the fair market
value of the shares on the date of exercise, and the capital gain or loss
holding period also will begin on or immediately after that date. If the shares
are subject to a substantial risk of forfeiture and no Section 83(b) Election is
filed, the optionee will not be taxable upon exercise, but instead will have
ordinary income on the date the restrictions lapse, in an amount equal to the
difference between the amount paid for the shares under the NQO and their fair
market value as of the date of lapse; in addition, the optionee's holding period
will begin on the date of the lapse. Whether or not the shares are subject to a
substantial risk of forfeiture, the amount of ordinary income taxable to an
optionee who is an employee at the time of grant constitutes "supplemental
wages" subject to withholding of income and employment taxes by Bancorp, and
Bancorp receives a corresponding income tax deduction.

Upon sale, other than to Bancorp, of shares acquired under a NQO, an
optionee generally will recognize capital gain or loss to the extent of the
difference between the sale price and the optionee's tax basis in the shares,
which will be subject to different maximum capital gains tax rates depending on
the holding period in the shares,

17
<PAGE> 21

as described above in "Incentive Stock Options." If stock is sold to Bancorp,
rather than to a third party, the sale may not produce capital gain or loss. A
sale of shares to Bancorp will constitute a redemption of such shares, which
could be taxable as a dividend unless the redemption is "substantially
disproportionate," a "complete redemption" of all of the optionee's shares in
Bancorp or "not essentially equivalent to a dividend" within the meaning of the
Code.

Restricted Stock. Upon receipt of Restricted Stock, a recipient
generally has taxable income in the amount of the excess of the then fair market
value of the Common Stock over any consideration paid for the Common Stock (the
"spread"). However, if the Common Stock is subject to a "substantial risk of
forfeiture" and the recipient does not make a Section 83(b) Election, the
recipient will have taxable income upon lapse of the "substantial risk of
forfeiture," rather than at receipt, in an amount equal to the spread on the
date of lapse. The taxable income constitutes "supplemental wages" subject to
income and employment tax withholding, and Bancorp receives a corresponding
income tax deduction. The consequences upon sale or disposition of Restricted
Stock generally are the same as for Common Stock acquired under a NQO (see
above).

Restrictions on Deductibility of Compensation. The Stock Plan permits
acceleration and vesting of Awards and Options in the event of a change in
control of Bancorp. If a change in control occurs and such acceleration and
vesting is permitted, then the value that thereby accrues to an employee who is
also an officer or stockholder of Bancorp or its subsidiaries, or who is "highly
compensated" (which, generally, means among the highest paid one percent of all
employees of Bancorp and its subsidiaries) may constitute an "excess parachute
payment." In general, payments are "excess parachute payments" if they are
triggered by a change in control and exceed three times the recipient's average
compensation from Bancorp over the preceding five years (or term of service if
shorter). "Excess parachute payments" are not deductible by Bancorp and are
subject to a 20 percent excise tax that is imposed on the recipient but that
must be withheld by Bancorp, in addition to any income taxes imposed on the
recipient.

Compensation paid to the Chief Executive Officer and the next four most
highly compensated officers is not deductible by Bancorp to the extent that it
exceeds $1 million in a tax year of Bancorp unless it constitutes qualified
performance-based compensation and certain other conditions are satisfied. While
Bancorp may attempt to cause compensation paid under the Stock Plan to qualify
as "performance-based" for this purpose, when consistent with the goals of the
Stock Plan, certain discretionary features of the Stock Plan may prevent such
compensation from so qualifying.

VOTE REQUIRED

The affirmative vote of a majority of the shares of Common Stock present
or represented at the Annual Meeting and entitled to vote thereon is required to
adopt this proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE STOCK
PLAN.

INDEPENDENT AUDITORS

KPMG Peat Marwick LLP, independent auditors, audited Bancorp's accounts
for the fiscal year ended December 31, 1997 and have been selected as Bancorp's
independent auditor for 1998. Representatives of KPMG Peat Marwick LLP are
expected to attend the Annual Meeting and will have an opportunity to make a
statement if they wish to do so. They may also respond to questions from
stockholders or their representatives.

ANNUAL REPORT ON FORM 10-K

On or before March 31, 1998, Bancorp will file with the Securities and
Exchange Commission an Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, together with applicable financial statements

18
<PAGE> 22

and schedules. BANCORP WILL FURNISH, WITHOUT CHARGE, UPON THE WRITTEN REQUEST OF
ANY PERSON WHO IS A STOCKHOLDER OF RECORD AS OF MARCH 6, 1998, A COPY OF THE
ANNUAL REPORT ON FORM 10-K TOGETHER WITH THE FINANCIAL STATEMENTS AND SCHEDULES.
Upon written request, Bancorp will provide to any stockholder a copy of the
exhibits to the Annual Report on Form 10-K. Requests should be addressed to
Monica Chen, Assistant Secretary, Cathay Bank, 777 North Broadway, Los Angeles,
California 90012, telephone number (213) 625-4700.

SOLICITATION OF PROXIES

The cost of soliciting proxies will be paid by Bancorp. In addition to
use of the mails, proxies may be solicited personally or by telephone, facsimile
or telegraph by officers, directors and employees of Bancorp and its
subsidiaries who will not be specially compensated for these solicitation
activities. Arrangements will also be made with brokerage houses and other
custodians, nominees and fiduciaries for forwarding solicitation materials to
the beneficial owners of shares held of record by these persons, and Bancorp
will reimburse these persons for their reasonable expenses incurred in
forwarding the materials.

STOCKHOLDER PROPOSALS FOR 1999
ANNUAL MEETING OF STOCKHOLDERS

Any stockholder of Bancorp who wishes to present a proposal for
inclusion in Bancorp's 1999 proxy solicitation materials must set forth the
proposal in writing and file it with the Secretary of Bancorp on or before
November 20, 1998.

OTHER MATTERS

As of the date of this Proxy Statement, the Bancorp Board of Directors
knows of no other matters to be brought before the Annual Meeting other than the
proposals specifically listed in the Notice of Annual Meeting of Stockholders.
Nevertheless, if further business is properly presented, the persons named as
proxies on the accompanying Proxy card will vote the shares in their discretion
in accordance with their best judgment.

Whether or not you currently plan to attend the Annual Meeting in
person, please mark your vote on the accompanying Proxy card, then sign, date
and return the Proxy card in the enclosed postage-paid envelope as soon as
possible.

By Order of the Board of Directors

/s/ WILBUR K. WOO

Wilbur K. Woo
Secretary

Los Angeles, California
March 20, 1998

<PAGE> 23

EXHIBIT A
---------
CATHAY BANCORP, INC.
EQUITY INCENTIVE PLAN
---------------------

SECTION 1. PURPOSE; DEFINITIONS.

(a) Purpose. The purpose of the Plan is to provide selected eligible
employees and directors of Cathay Bancorp, Inc., a Delaware corporation, its
subsidiaries and affiliates an opportunity to participate in the Company's
future by offering them an opportunity to acquire stock in the Company so as to
retain, attract and motivate them.

(b) Definitions. For purposes of the Plan, the following terms have the
following meanings:

(i) "Award" means any award under the Plan, including any Option
or Restricted Stock Award.

(ii) "Award Agreement" means, with respect to each Award, the
signed written agreement between the Company and the Plan participant setting
forth the terms and conditions of the Award.

(iii) "Board" means the Board of Directors of the Company.

(iv) "Change in Control" has the meaning set forth in Section
7(a).

(v) "Change in Control Price" has the meaning set forth in
Section 7(c).

(vi) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute.

(vii) "Commission" means the Securities and Exchange Commission
and any successor agency.

(viii) "Committee" means the Committee referred to in Section 2,
or the Board in its capacity as administrator of the Plan in accordance with
Section 2.

(ix) "Company" means Cathay Bancorp, Inc., a Delaware
corporation.

(x) "Disability" means disabled within the meaning of Section
22(e)(3) of the Code.

(xi) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.

(xii) "Fair Market Value" means as of any given date (a) if the
Stock is listed on any established stock exchange or a national market system,
either the closing sale price for the Stock or the closing bid if no sales were
reported, or the average of the bid and ask prices, as selected by the Committee
in its discretion, as quoted on such system or exchange, as reported in The Wall
Street Journal; or (b) in the absence of an established market for the Stock,
the fair market value of the Stock as determined by the Committee in good faith.

(xiii) "Incentive Stock Option" means any Option intended to be
and designated as an "incentive stock option" within the meaning of Section 422
of the Code.

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(xiv) "Nonqualified Stock Option" means any Option that is not an
Incentive Stock Option.

(xiv) "Option" means an option granted under Section 5.

(xvi) "Plan" means this Cathay Bancorp, Inc. Equity Incentive
Plan, as amended from time to time.

(xvii) "Restricted Stock" means an Award of Stock subject to
restrictions, as more fully described in Section 6.

(xviii) "Restriction Period" means the period determined by the
Committee under Section 6(b).

(xix) "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the
Exchange Act, as amended from time to time, and any successor rule.

(xx) "Stock" means the Common Stock, par value $.01 per share, of
the Company, and any successor security.

(xxi) "Subsidiary" has the meaning set forth in Section 424 of
the Code.

(xxii) "Tax Date" means the date defined in Section 8(f).

(xxiii) "Termination" means, for purposes of the Plan, with
respect to a participant, that (a) if the participant is a director of the
Company, he or she has ceased to be, for any reason, a director and (b) if the
participant is an employee, he or she has ceased to be, for any reason, employed
by the Company, a subsidiary or an affiliate.

SECTION 2. ADMINISTRATION.

(a) Committee. The Plan shall be administered by the Board or, upon
delegation by the Board, by a committee of the Board that will satisfy Rule
16b-3 and Section 162(m) of the Code, as in effect with respect to the Company
from time to time. In connection with the administration of the Plan, the
Committee shall have the powers possessed by the Board. The Committee may act
only by a majority of its members, except that the Committee may from time to
time select another committee or one or more other persons to be responsible for
any matters so long as the selection comports with the requirements of Section
162(m) of the Code and Rule 16b-3. The Board at any time may abolish the
Committee and revest in the Board the administration of the Plan.

(b) Authority. The Committee shall grant Awards to directors and
eligible employees. In particular and without limitation, the Committee, subject
to the terms of the Plan, shall:

(i) select the directors, officers and other employees to whom
Awards may be granted;

(ii) determine whether and to what extent Awards are to be
granted under the Plan;

(iii) determine the number of shares to be covered by each Award
granted under the Plan; and

(iv) determine the terms and conditions of any Award granted
under the Plan and any related loans to be made by the Company, based upon
factors determined by the Committee.

(c) Committee Determinations Binding. The Committee may adopt, alter and
repeal administrative rules, guidelines and practices governing the Plan as it
from time to time shall deem advisable, may interpret the terms and provisions
of the Plan, any Award and any Award Agreement and may otherwise supervise the

A-2
<PAGE> 25

administration of the Plan. Any determination made by the Committee pursuant to
the provisions of the Plan with respect to any Award shall be made in its sole
discretion at the time of the grant of the Award or, unless in contravention of
any express term of the Plan or Award, at any later time. All decisions made by
the Committee under the Plan shall be binding on all persons, including the
Company and Plan participants.

SECTION 3. STOCK SUBJECT TO PLAN.

(a) Number of Shares. The total number of shares of Stock reserved and
available for issuance pursuant to Awards under this Plan shall be 1,075,000
shares. Such shares may consist, in whole or in part, of authorized and unissued
shares or treasury shares or shares reacquired in private transactions or open
market purchases, but all shares issued under the Plan, regardless of source,
shall be counted against the 1,075,000 share limitation. If any Option
terminates or expires without being exercised in full or if any shares of Stock
subject to an Award are forfeited, or if an Award otherwise terminates without a
payment being made to the participant in the form of Stock, the shares issuable
under such Option or Award shall again be available for issuance in connection
with Awards. Any Award under this Plan shall be governed by the terms of the
Plan and any applicable Award Agreement.

(b) Adjustments. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split or other change in
corporate structure affecting the Stock, such substitution or adjustments shall
be made in the aggregate number of shares of Stock reserved for issuance under
the Plan, in the number and exercise price of shares subject to outstanding
Options, and in the number of shares subject to other outstanding Awards, as may
be determined to be appropriate by the Committee, in its sole discretion;
provided, however, that the number of shares subject to any Award shall always
be a whole number.

SECTION 4. ELIGIBILITY.

Awards may be granted to all employees, including officers and
directors, and non-employee directors of the Company, its subsidiaries and
affiliates.

SECTION 5. STOCK OPTIONS.

(a) Types. Any Option granted under the Plan shall be in such form as
the Committee may from time to time approve. The Committee shall have the
authority to grant to any participant Incentive Stock Options, Nonqualified
Stock Options or both types of Options.

(b) Incentive Stock Options. Incentive Stock Options may be granted only
to employees of the Company, its parent (within the meaning of Section 424 of
the Code) or a Subsidiary. Any portion of an Option that is not designated as,
or does not qualify as, an Incentive Stock Option shall constitute a
Nonqualified Stock Option.

(i) Option Term. The term of each Option shall be fixed by the
Committee, but no Option shall be exercisable more than 10 years after the date
the Option is granted. If, at the time the Company grants an Incentive Stock
Option, the optionee owns directly or by attribution stock possessing more than
10 percent of the total combined voting power of all classes of stock of the
Company, or any parent or Subsidiary of the Company, the Incentive Stock Option
shall not be exercisable more than five years after the date of grant.

(ii) Grant Date. The Company may grant Options under the Plan at
any time and from time to time before the Plan terminates. The Committee shall
specify the date of grant or, if it fails to, the date of grant shall be the
date of action taken by the Committee to grant the Option.

A-3
<PAGE> 26

(iii) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be equal to at least the Fair Market Value on
the date of grant; provided, however, that if, at the time the Company grants an
Incentive Stock Option, the optionee owns directly or by attribution stock
possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company, or any parent or Subsidiary of the Company,
then the exercise price shall be not less than 110 percent of the Fair Market
Value on the date the Incentive Stock Option is granted.

(iii) Exercisability. Subject to the other provisions of the
Plan, an Option shall be exercisable in its entirety at grant or at such times
and in such amounts as are specified in the Award Agreement evidencing the
Option. The Committee, in its absolute discretion, at any time may waive any
limitations respecting the time at which an Option first becomes exercisable, in
whole or in part, including acceleration in connection with a reorganization of
the Company if there are no adverse consequences to the Company therefrom.

(v) Method of Exercise; Payment. To the extent the right to
purchase shares has accrued, Options may be exercised, in whole or in part, from
time to time, by written notice from the optionee to the Company stating the
number of shares being purchased, accompanied by payment of the exercise price
for the shares.

SECTION 6. RESTRICTED STOCK.

(a) Price. The Committee may grant Restricted Stock to a participant.
The grantee shall pay such consideration therefor as determined by the
Committee, but no less than the par value of the Stock.

(b) Restrictions. Subject to the provisions of the Plan and the Award
Agreement, during the Restriction Period set by the Committee, commencing with,
and not exceeding 10 years from, the date of such Award, the participant shall
not be permitted to sell, assign, transfer, pledge or otherwise encumber shares
of Restricted Stock. Within these limits, the Committee may provide for the
lapse of such restrictions in installments and may accelerate or waive such
restrictions, in whole or in part, based on service, performance or such other
factors or criteria as the Committee may determine.

(c) Dividends. Unless otherwise determined by the Committee, with
respect to dividends on shares of Restricted Stock, dividends payable in cash
shall be automatically reinvested in additional Restricted Stock, and dividends
payable in Stock shall be paid in the form of Restricted Stock.

(d) Termination. Except to the extent otherwise provided in the Award
Agreement and pursuant to Section 6(b), in the event of a Termination during the
Restriction Period, all shares still subject to restriction shall be forfeited
by the participant.

SECTION 7. CHANGE IN CONTROL

(a) Definition of "Change in Control". For purposes of Section 7(b), a
"Change in Control" means the occurrence of any one of the following:

(i) Any "person," as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, a subsidiary, an affiliate,
or a Company employee benefit plan, including any trustee of such plan acting as
trustee) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 35 percent or more of the combined voting power of the Company's
then outstanding securities;

(ii) The solicitation of proxies (within the meaning of Rule
14a-1(k) under the Exchange Act and any successor rule) with respect to the
election of any director of the Company where such solicitation is for any
candidate who is not a candidate proposed by a majority of the Board in office
prior to the time of such election; or

A-4
<PAGE> 27

(iii) The dissolution or liquidation (partial or total) of the
Company or a sale of assets involving 30 percent or more of the assets of the
Company, any merger or reorganization of the Company whether or not another
entity is the survivor, a transaction pursuant to which the holders, as a group,
of all of the shares of the Company outstanding prior to the transaction hold,
as a group, less than 70 percent of the shares of the Company outstanding after
the transaction, or any other event which the Board determines, in its
discretion, would materially alter the structure of the Company or its
ownership.

(b) Impact of Event. In the event of a "Change in Control" as defined in
Section 7(a), but only if and to the extent so specifically determined by the
Board in its discretion, which determination may be amended or reversed only by
the affirmative vote of a majority of the persons who were directors at the time
such determination was made, acceleration and valuation provisions no more
favorable to participants than the following may apply:

(i) Any Option outstanding as of the date such Change in Control
is determined to have occurred and not then exercisable and vested shall become
fully exercisable and vested.

(ii) The restrictions and limitations applicable to any
Restricted Stock shall lapse, and such Restricted Stock shall become fully
vested.

(iii) The value (net of any exercise price) of all outstanding
Options and Restricted Stock, unless otherwise determined by the Committee at or
after grant and subject to Rule 16b-3, shall be cashed out on the basis of the
"Change in Control Price," as defined in Section 7(c), as of the date such
Change in Control is determined to have occurred or such other date as the Board
may determine prior to the Change in Control.

(c) Change in Control Price. For purposes of this Section 7, "Change in
Control Price" means the highest price per share paid in any transaction
reported on the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation System or paid or offered in any bona fide
transaction related to a potential or actual Change in Control of the Company at
any time during the preceding 60-day period as determined by the Board, except
that, in the case of Incentive Stock Options, such price shall be based only on
transactions reported for the date on which the Board decides to cash out such
Options.

SECTION 8. GENERAL PROVISIONS.

(a) Award Grants. Any Award may be granted either alone or in addition
to other Awards granted under the Plan. Subject to the terms and restrictions
set forth elsewhere in the Plan, the Committee shall determine the
consideration, if any, payable by the participant for any Award and, in addition
to those set forth in the Plan, any other terms and conditions of the Awards.
The Committee may condition the grant or payment of any Award upon the
attainment of specified performance goals or such other factors or criteria,
including vesting based on continued service on the Board or employment, as the
Committee shall determine. Performance objectives may vary from participant to
participant and among groups of participants and shall be based upon such
Company, subsidiary, group or division factors or criteria as the Committee may
deem appropriate, including, but not limited to, earnings per share or return on
equity. The other provisions of Awards also need not be the same with respect to
each recipient. Unless specified otherwise in the Plan or by the Committee, the
date of grant of an Award shall be the date of action by the Committee to grant
the Award. The Committee may also substitute new Options for previously granted
Options, including previously granted Options having higher exercise prices.

(b) Award Agreement. As soon as practicable after the date of an Award
grant, the Company and the participant shall enter into a written Award
Agreement identifying the date of grant, and specifying the terms and conditions
of the Award. Options are not exercisable until after execution of the Award
Agreement by the Company and the Plan participant, but a delay in execution of
the Award Agreement shall not affect the validity of the Option grant.

(c) Certificates; Transfer Restrictions. All certificates for shares of
Stock or other securities delivered under the Plan shall be subject to such
stock transfer orders, legends and other restrictions as the

A-5
<PAGE> 28

Committee may deem advisable under the rules, regulations and other requirements
of the Commission, any market in which the Stock is then traded and any
applicable federal, state or foreign securities law.

(d) Termination. Unless otherwise provided in the applicable Award
Agreement or by the Committee, in the event of Termination for any reason other
than death or Disability, Awards held at the date of Termination (and only to
the extent then exercisable or payable, as the case may be) may be exercised in
whole or in part at any time within three months after the date of Termination
or such lesser period specified in the Award Agreement (but in no event after
the expiration date of the Award). If Termination is due to death or Disability,
Awards held at the date of Termination (and only to the extent then exercisable
or payable, as the case may be) may be exercised in whole or in part by the
participant in the case of Disability, by the participant's guardian or legal
representative or by the person to whom the Award is transferred by will or the
laws of descent and distribution, at any time within one year from the date of
Termination or any lesser period specified in the Award Agreement (but in no
event after the expiration of the Award).

(e) Delivery of Purchase Price. If and only to the extent authorized by
the Committee, participants may make all or any portion of any payment due to
the Company:

(i) with respect to the consideration payable for an Award;

(ii) upon exercise of an Award; or

(iii) with respect to federal, state, local or foreign tax
payable in connection with an Award, by delivery of (x) cash, (y) check, or (z)
any property other than cash (including a promissory note of the participant or
shares of Stock or securities) so long as, if applicable, such property
constitutes valid consideration for the Stock under, and otherwise complies
with, applicable law. No promissory note under the Plan shall have a term
(including extensions) of more than five years or shall be of a principal amount
exceeding 90 percent of the purchase price paid by the borrower.

(f) Tax Withholding. Unless the Committee permits otherwise, the
participant shall pay to the Company in cash, promptly when the amount of such
obligations becomes determinable (the "Tax Date"), all applicable federal,
state, local and foreign withholding taxes that the Committee in its discretion
determines to result, (i) from the lapse of restrictions imposed upon an Award,
(ii) upon exercise of an Award, or (iii) from a transfer or other disposition of
shares acquired upon exercise or payment of an Award, or otherwise related to
the Award or the shares acquired in connection with an Award.

A participant who has received an Award or payment under an Award may,
to the extent, if any, authorized by the Committee in its discretion, make an
election to (x) deliver to the Company a promissory note of the participant on
the terms set forth in Section 8(e), or (y) tender any such securities to the
Company to pay the amount of tax that the Committee in its discretion determines
to be required to be withheld by the Company; provided, however, that such
election shall be subject to the disapproval of the Committee.

Any shares or other securities so withheld or tendered shall be valued
by the Committee as of the date they are withheld or tendered; provided,
however, that Stock shall be valued at Fair Market Value on such date. The value
of the shares withheld or tendered may not exceed the required federal, state,
local and foreign withholding tax obligations as computed by the Company.

(g) No Transferability. No Award shall be assignable or otherwise
transferable by the participant other than by will or by the laws of descent and
distribution. During the life of a participant, an Award shall be exercisable,
and any elections with respect to an Award may be made, only by the participant
or participant's guardian or legal representative.

(h) Adjustment of Awards; Waivers. The Committee may adjust the
performance goals and measurements applicable to Awards (i) to take into account
changes in law and accounting and tax rules, (ii) to make such adjustments as
the Committee deems necessary or appropriate to reflect the inclusion or
exclusion of the

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<PAGE> 29

impact of extraordinary or unusual items, events or circumstances in order to
avoid windfalls or hardships, and (iii) to make such adjustments as the
Committee deems necessary or appropriate to reflect any material changes in
business conditions. In the event of hardship or other special circumstances of
a participant and otherwise in its discretion, the Committee may waive in whole
or in part any or all restrictions, conditions, vesting, or forfeiture with
respect to any Award granted to such participant.

(i) Non-Competition. The Committee may condition its discretionary
waiver of a forfeiture, the acceleration of vesting at the time of Termination
of a participant holding any unexercised or unearned Award, the waiver of
restrictions on any Award, or the extension of the expiration period to a period
not longer than that provided by the Plan upon such participant's agreement (and
compliance with such agreement) (i) not to engage in any business or activity
competitive with any business or activity conducted by the Company and (ii) to
be available for consultations at the request of the Company's management, all
on such terms and conditions (including conditions in addition to (i) and (ii))
as the Committee may determine.

(j) Dividends. The reinvestment of dividends in additional Restricted
Stock at the time of any dividend payment pursuant to Section 6(c) shall only be
permissible if sufficient shares of Stock are available under Section 3 for such
reinvestment (taking into account then outstanding Awards).

(k) Regulatory Compliance. Each Award under the Plan shall be subject to
the condition that, if at any time the Committee shall determine that (i) the
listing, registration or qualification of the shares of Stock upon any
securities exchange or for trading in any securities market or under any state
or federal law, (ii) the consent or approval of any government or regulatory
body or (iii) an agreement by the participant with respect thereto, is necessary
or desirable, then such Award shall not be consummated in whole or in part
unless such listing, registration, qualification, consent, approval or agreement
shall have been effected or obtained free of any conditions not acceptable to
the Committee.

(l) Rights as Shareholder. Unless the Plan or the Committee expressly
specifies otherwise, an optionee shall have no rights as a shareholder with
respect to any shares covered by an Award until the stock certificates
representing the shares are actually delivered to the optionee. Subject to
Sections 3(b) and 6(c), no adjustment shall be made for dividends or other
rights for which the record date is prior to the date the certificates are
delivered.

(m) Beneficiary Designation. The Committee, in its discretion, may
establish procedures for a participant to designate a beneficiary to whom any
amounts payable in the event of the participant's death are to be paid.

(n) Additional Plans. Nothing contained in the Plan shall prevent the
Company, a subsidiary or an affiliate from adopting other or additional
compensation arrangements for its directors and employees.

(o) No Employment Rights; No Right to Directorship. Neither the adoption
of this Plan nor the grant of any Award hereunder shall (i) confer upon any
employee any right to continued employment nor shall it interfere in any way
with the right of the Company, a subsidiary or an affiliate to terminate the
employment of any employee at any time; or (ii) confer upon any participant any
right with respect to continuation of the participant's membership on the Board
or shall interfere in any way with provisions in the Company's Certificate of
Incorporation and Bylaws relating to the election, appointment, terms of office,
and removal of members of the Board.

(p) Rule 16b-3. With respect to persons subject to Section 16 of the
Exchange Act, transactions under this Plan are intended to comply with the
applicable conditions of Rule 16b-3 under the Exchange Act. To the extent any
provision of this Plan or action by the Committee fails to so comply, it shall
be adjusted to comply with Rule 16b-3, to the extent permitted by law and deemed
advisable by the Committee. It shall be the responsibility of persons subject to
Section 16 of the Exchange Act, not of the Company or the Committee, to comply
with the requirements of Section 16 of the Exchange Act; and neither the Company
nor the Committee

A-7
<PAGE> 30

shall be liable if this Plan or any transaction under this Plan fails to comply
with the applicable conditions of Rule 16b-3, or if any such person incurs any
liability under Section 16 of the Exchange Act.

(q) Governing Law. The Plan and all Awards shall be governed by and
construed in accordance with the laws of the State of California.

(r) Use of Proceeds. All cash proceeds to the Company under the Plan
shall constitute general funds of the Company.

(s) Unfunded Status of Plan. The Plan shall constitute an "unfunded"
plan for incentive and deferred compensation. The Committee may authorize the
creation of trusts or arrangements to meet the obligations created under the
Plan to deliver Stock or make payments; provided, however, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements shall be consistent with the "unfunded" status of the Plan.

(t) Assumption by Successor. The obligations of the Company under the
Plan and under any outstanding Award may be assumed by any successor
corporation, which for purposes of the Plan shall be included within the meaning
of "Company".

(u) Limitation on Award Grants. The Company may not grant Awards under
the Plan for more than 100,000 shares to any one participant in any calendar
year.

SECTION 9. AMENDMENTS AND TERMINATION.

The Board may amend, alter or discontinue the Plan or any Award, but no
amendment, alteration or discontinuance shall be made which would impair the
rights of a participant under an outstanding Award without the participant's
consent. No amendment, alteration or discontinuance shall require shareholder
approval except:

(a) an increase in the total number of shares reserved for issuance
pursuant to Awards under the Plan; or

(b) with respect to provisions solely as they relate to Incentive Stock
Options, to the extent required for the Plan to comply with Section 422 of the
Code; or

(d) to the extent the Board otherwise concludes that shareholder
approval is advisable.

SECTION 10. EFFECTIVE DATE OF PLAN.

The Plan shall be effective as of February 19, 1998, but all Awards
shall be conditioned upon approval of the Plan (a) at a duly held stockholders'
meeting by the affirmative vote of the holders of a majority of the shares of
Stock of the Company represented in person or by proxy at the meeting and
entitled to vote thereon, or (b) by an action by written consent of the holders
of a majority of the voting power of the shares of the Company entitled to vote.

SECTION 11. TERM OF PLAN.

No Award shall be granted on or after February 18, 2008, but Awards
granted prior to February 18, 2008 may extend beyond that date.

A-8

<PAGE> 31
CATHAY BANCORP, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, APRIL 20, 1998

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF CATHAY BANCORP, INC.

Dunson K. Cheng, George T.M. Ching and Wilbur K. Woo, or any of them,
with power of substitution, are hereby appointed as Proxies and authorized to
represent and to vote as designated on the reverse the undersigned's shares of
Cathay Bancorp, Inc. common stock at the Annual Meeting of Stockholders to be
held at 777 North Broadway, Los Angeles, California, at 5:00 p.m., Pacific
time, on April 20, 1998, and at any and all adjournments thereof.

(CONTINUED AND TO BE SIGNED ON OTHER SIDE.)
<PAGE> 32

A [X] Please mark your
votes as in this
example.

WITHHOLD
FOR all the nominees AUTHORITY
listed at right (except to vote for all
as indicated to the nominees listed
contrary below) at right Nominees:
Ralph Roy Buon-Cristiani
(1) ELECTION OF [ ] [ ] Kelly L. Chan
CLASS II Dunson K. Cheng
DIRECTORS OF Chi-Hung Joseph Poon
CATHAY BANCORP, INC.

INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE THE NAME OF THAT NOMINEE ON
THE LINE PROVIDED BELOW.

- -----------------------------------------------------

(2) PROPOSAL TO APPROVE THE CATHAY BANCORP, FOR AGAINST ABSTAIN
INC. EQUITY INCENTIVE PLAN: [ ] [ ] [ ]

(3) OTHER BUSINESS. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the Annual Meeting or any
adjournments thereof.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES LISTED IN PROPOSAL 1 AS CLASS II
DIRECTORS OF CATHAY BANCORP, INC. AND FOR PROPOSAL 2 TO APPROVE THE CATHAY
BANCORP, INC. EQUITY INCENTIVE PLAN.

The undersigned acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement dated March 20, 1998.

Please sign and return this Proxy even if you intend to be present at
the Annual Meeting. This Proxy may be revoked as set forth in the accompanying
Proxy Statement, and the shares may be voted by the holder at the Annual
Meeting.

PLEASE MARK ABOVE, THEN DATE AND SIGN THIS PROXY BELOW AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.

Signature of Stockholder _____________________________

Dated __________________, 1998

Note: Joint owners should each sign. Trustees and others acting in a
representative capacity should indicate the capacity in which they sign. Please
sign exactly as name appears on the Proxy.