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East West Bancorp (EWBC) Q1 Earnings & Revenues Beat Estimates

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East West Bancorp’s (EWBC - Free Report) first-quarter 2021 earnings per share of $1.44 outpaced the Zacks Consensus Estimate of $1.23. Also, the bottom line jumped 44% from the prior-year quarter.

Results reflect rise in non-interest income and nil provisions. Also, the company witnessed a rise in loan and deposits balance during the quarter. However, decline in net interest income, mainly due to lower interest rates, was a major undermining factor. Also, operating expenses increased during the quarter.

Net income was $205 million, surging 41.5% from the year-ago quarter.

Revenues & Expenses Up

Net revenues were $426.6 million, up 2% year over year. Further, the top line beat the Zacks Consensus Estimate of $406.55 million.

Net interest income came in at $353.7 million, down 2.5% year over year. Net interest margin also contracted 73 basis points (bps) to 2.71%.

Non-interest income was $72.9 million, jumping 31.3%. The improvement largely resulted from higher deposit account fees, interest rate contracts and other derivative income, net gains on sales of loans, foreign exchange income and wealth management fees.
 
Non-interest expenses were up 6% to $191.1 million. The increase was primarily due to rise in all components except occupancy and equipment expense, legal expense and other operating expense.

Efficiency ratio was 44.79%, up from 43.12% recorded in the prior year quarter. A rise in the efficiency ratio indicates deterioration in profitability.

As of Mar 31, 2021, net loans were $39 billion, up 3.2% sequentially. Total deposits increased 10.4% to $49.5 billion.

Credit Quality: Mixed Bag

Annualized quarterly net charge-offs were 0.14% of average loans held for investment, up 13 bps year over year.

As of Mar 31, 2021, non-performing assets were $258.1 million, surging 71%. However, provision for credit losses was nil in the first quarter against a provision of $73.9 million in the prior-year quarter.

Capital & Profitability Ratios Improve

As of Mar 31, 2021, common equity Tier 1 capital ratio was 12.7%, up from 12.4% as of Mar 31, 2020. Total risk-based capital ratio was 14.3%, up from 13.9%.

At the end of the first quarter, return on average assets was 1.50%, up from 1.30% as of Mar 31, 2020. Further, as of Mar 31, 2021, return on average tangible equity was 17.17%, up from the 12.93%.

Our View

East West Bancorp is well poised for organic growth on continued improvement in loan and deposit balances, and efforts to improve fee income. However, pressure on margins and rising operating costs amid the pandemic are near-term concerns.

East West Bancorp, Inc. Price, Consensus and EPS Surprise

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 sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Performance of Other Banks

Washington Federal’s (WAFD - Free Report) second-quarter fiscal 2021 (ended Mar 31) earnings of 56 cents per share surpassed the Zacks Consensus Estimate of 49 cents. Further, the figure reflects a year-over-year rise of 19.1%.

Commerce Bancshares Inc.’s (CBSH - Free Report) first-quarter 2021 earnings per share of $1.11 surpassed the Zacks Consensus Estimate of 96 cents. Also, the bottom line surged significantly from the 42 cents earned in the prior-year quarter.

Synovus Financial (SNV - Free Report) reported first-quarter 2021 adjusted earnings of $1.21 per share, which handily beat the Zacks Consensus Estimate of 93 cents, aided by solid mortgage banking income. Also, the bottom line increased 17.4% from the prior-year quarter figure.

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