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East West Bancorp (EWBC) Q2 Earnings In Line, Provisions Up
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East West Bancorp’s (EWBC - Free Report) second-quarter 2020 earnings per share of 70 cents were on par with the Zacks Consensus Estimate. The figure was down 32% from the prior-year quarter.
The results reflect a rise in non-interest income, and improving loan and deposit balances. However, lower net interest income, substantially higher provisions and increase in operating expenses were headwinds.
Net income was $99.4 million, down 33.9% from the year-ago quarter.
Revenues Down, Expenses Rise
Total revenues were $402.4 million, down 4.2% year over year. However, the figure beat the Zacks Consensus Estimate of $383.8 million.
Net interest income (NII) was $343.8 million, which fell 6.4% year over year. Net interest margin (NIM) also declined 69 basis points (bps) to 3.04%.
Non-interest income was $58.6 million, up 11.1% from the year-ago quarter. The upswing was mainly driven by an increase in lending fees, deposit account fees and other investment income.
Non-interest expenses rose 5.6% from the prior-year quarter to $187.7 million. The rise was largely due to higher deposit insurance premiums and regulatory assessments costs, along with data processingcosts and computer software expenses.
Efficiency ratio was 46.64%, up from 42.29% a year ago. A rise in the efficiency ratio indicates deterioration in profitability.
Loans & Deposits Increase
As of Jun 30, 2020, net loans were $36.6 billion, up 3.6% sequentially. Total deposits increased 5.1% from first quarter-end to $40.7 billion.
Credit Quality Worsens
Annualized quarterly net charge-offs were 0.21% of average loans held for investment, up from 0.09% at the end of the prior-year quarter.
As of Jun 30, 2020, non-performing assets were $202.2 million, up 69.5% year over year. Also, provision for credit losses was $102.4 million, significantly up from $19.2 million in the prior-year quarter.
Capital Ratios Improve, Profitability Ratios Deteriorate
Common equity Tier 1 capital ratio was 12.7% as of Jun 30, 2020, up from 12.4% as of Jun 30, 2019. Total risk-based capital ratio was 14.4%, up from 13.9% as of the same date.
At second quarter-end, return on average assets was 0.83%, down from 1.45% as of Jun 30, 2019. Further, as of Jun 30, 2020, return on average tangible equity was 8.96%, down from 17.39% in the corresponding period of 2019.
Our Viewpoint
East West Bancorp is well poised for organic growth on the back of persistent improvement in loan and deposit balances. However, pressure on margins and rising credit costs amid the coronavirus outbreak are near-term concerns.
East West Bancorp, Inc. Price, Consensus and EPS Surprise
Zacks #3 Ranked First Horizon National Corporation (FHN - Free Report) reported second-quarter 2020 adjusted earnings per share of 20 cents, missing the Zacks Consensus Estimate of 21 cents. Further, the bottom line was 52.4% lower than the year-ago figure.
Regions Financial (RF - Free Report) , currently holding a Zacks Rank #4 (Sell), reported second-quarter 2020 adjusted loss of 23 cents per share against earnings of 39 cents recorded in the prior-year period. The Zacks Consensus Estimate was pegged at earnings of 7 cents per share.
Zacks #3 Ranked Zions Bancorporation’s (ZION - Free Report) second-quarter 2020 net earnings per share of 34 cents missed the Zacks Consensus Estimate of 37 cents. Moreover, the bottom line compared unfavorably with the year-ago quarter’s 99 cents per share.
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With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
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Image: Bigstock
East West Bancorp (EWBC) Q2 Earnings In Line, Provisions Up
East West Bancorp’s (EWBC - Free Report) second-quarter 2020 earnings per share of 70 cents were on par with the Zacks Consensus Estimate. The figure was down 32% from the prior-year quarter.
The results reflect a rise in non-interest income, and improving loan and deposit balances. However, lower net interest income, substantially higher provisions and increase in operating expenses were headwinds.
Net income was $99.4 million, down 33.9% from the year-ago quarter.
Revenues Down, Expenses Rise
Total revenues were $402.4 million, down 4.2% year over year. However, the figure beat the Zacks Consensus Estimate of $383.8 million.
Net interest income (NII) was $343.8 million, which fell 6.4% year over year. Net interest margin (NIM) also declined 69 basis points (bps) to 3.04%.
Non-interest income was $58.6 million, up 11.1% from the year-ago quarter. The upswing was mainly driven by an increase in lending fees, deposit account fees and other investment income.
Non-interest expenses rose 5.6% from the prior-year quarter to $187.7 million. The rise was largely due to higher deposit insurance premiums and regulatory assessments costs, along with data processingcosts and computer software expenses.
Efficiency ratio was 46.64%, up from 42.29% a year ago. A rise in the efficiency ratio indicates deterioration in profitability.
Loans & Deposits Increase
As of Jun 30, 2020, net loans were $36.6 billion, up 3.6% sequentially. Total deposits increased 5.1% from first quarter-end to $40.7 billion.
Credit Quality Worsens
Annualized quarterly net charge-offs were 0.21% of average loans held for investment, up from 0.09% at the end of the prior-year quarter.
As of Jun 30, 2020, non-performing assets were $202.2 million, up 69.5% year over year. Also, provision for credit losses was $102.4 million, significantly up from $19.2 million in the prior-year quarter.
Capital Ratios Improve, Profitability Ratios Deteriorate
Common equity Tier 1 capital ratio was 12.7% as of Jun 30, 2020, up from 12.4% as of Jun 30, 2019. Total risk-based capital ratio was 14.4%, up from 13.9% as of the same date.
At second quarter-end, return on average assets was 0.83%, down from 1.45% as of Jun 30, 2019. Further, as of Jun 30, 2020, return on average tangible equity was 8.96%, down from 17.39% in the corresponding period of 2019.
Our Viewpoint
East West Bancorp is well poised for organic growth on the back of persistent improvement in loan and deposit balances. However, pressure on margins and rising credit costs amid the coronavirus outbreak are near-term concerns.
East West Bancorp, Inc. Price, Consensus and EPS Surprise
East West Bancorp, Inc. price-consensus-eps-surprise-chart | East West Bancorp, Inc. Quote
Currently, East West Bancorp carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Zacks #3 Ranked First Horizon National Corporation (FHN - Free Report) reported second-quarter 2020 adjusted earnings per share of 20 cents, missing the Zacks Consensus Estimate of 21 cents. Further, the bottom line was 52.4% lower than the year-ago figure.
Regions Financial (RF - Free Report) , currently holding a Zacks Rank #4 (Sell), reported second-quarter 2020 adjusted loss of 23 cents per share against earnings of 39 cents recorded in the prior-year period. The Zacks Consensus Estimate was pegged at earnings of 7 cents per share.
Zacks #3 Ranked Zions Bancorporation’s (ZION - Free Report) second-quarter 2020 net earnings per share of 34 cents missed the Zacks Consensus Estimate of 37 cents. Moreover, the bottom line compared unfavorably with the year-ago quarter’s 99 cents per share.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, SherazMian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.
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