We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
East West Bancorp (EWBC) Up 3.4% as Q2 Earnings Beat Estimates
Read MoreHide Full Article
Shares of East West Bancorp (EWBC - Free Report) rallied 3.4% in response to better-than-expected second-quarter 2021 results. Earnings per share of $1.57 outpaced the Zacks Consensus Estimate of $1.38. The bottom line jumped significantly from the prior-year quarter’s 70 cents.
Results reflect higher revenues and negative provisions. The company witnessed a rise in loan and deposits balance during the quarter. However, lower interest rates and rise in operating expenses were the undermining factors.
Net income was $224.7 million, surging substantially from $99.4 million in the year-ago quarter.
Revenues & Expenses Up
Net revenues were $444.9 million, up 11.4% year over year. The top line beat the Zacks Consensus Estimate of $430.23 million.
Net interest income was $376.5 million, jumping 9.5%. Net interest margin contracted 29 basis points (bps) to 2.75%.
Non-interest income was $68.4 million, jumping 22.8%. The improvement largely resulted from higher deposit account fees, foreign exchange income and wealth management fees.
Non-interest expenses were up 2.6% to $189.5 million. The increase was mainly due to rise in all components except occupancy and equipment expense, data processing expense and other operating expense.
Efficiency ratio was 42.60%, down from 46.25% recorded in the prior-year quarter. A fall in the efficiency ratio indicates improvement in profitability.
As of Jun 30, 2021, net loans were $39.5 billion, up 1.3% sequentially. Total deposits increased 6.1% to $52.6 billion.
Credit Quality: Mixed Bag
Annualized quarterly net charge-offs were 0.13% of average loans held for investment, down 8 bps year over year. Provision for credit losses was negative $15 million in the second quarter against a provision of $102.4 million in the prior-year quarter.
As of Jun 30, 2021, non-performing assets were $225.7 million, increasing 11.6%.
Strong Capital & Profitability Ratios
As of Jun 30, 2021, common equity Tier 1 capital ratio was 12.8%, up from 12.7% as of Jun 30, 2020. Total risk-based capital ratio was 14.3%, up from 14.4%.
At the end of the second quarter, return on average assets was 1.56%, up from 0.83% as of Jun 30, 2020. As of Jun 30, 2021, return on average tangible equity was 18.28%, up from 8.96%.
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 are near-term concerns.
East West Bancorp, Inc. Price, Consensus and EPS Surprise
Zions Bancorporation’s (ZION - Free Report) second-quarter 2021 net earnings per share of $2.08 surpassed the Zacks Consensus Estimate of $1.25. The bottom line marks a significant improvement from 34 cents earned in the year-ago quarter.
Hancock Whitney Corporation’s (HWC - Free Report) second-quarter 2021 adjusted earnings per share of $1.37 surpassed the Zacks Consensus Estimate of $1.15. The bottom line improved significantly from the prior-year quarter’s loss of $1.36.
First Horizon National Corporation’s (FHN - Free Report) second-quarter 2021 adjusted earnings per share of 58 cents beat the Zacks Consensus Estimate of 43 cents. Further, the bottom line shows significant improvement from the prior-year quarter’s 20 cents.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
East West Bancorp (EWBC) Up 3.4% as Q2 Earnings Beat Estimates
Shares of East West Bancorp (EWBC - Free Report) rallied 3.4% in response to better-than-expected second-quarter 2021 results. Earnings per share of $1.57 outpaced the Zacks Consensus Estimate of $1.38. The bottom line jumped significantly from the prior-year quarter’s 70 cents.
Results reflect higher revenues and negative provisions. The company witnessed a rise in loan and deposits balance during the quarter. However, lower interest rates and rise in operating expenses were the undermining factors.
Net income was $224.7 million, surging substantially from $99.4 million in the year-ago quarter.
Revenues & Expenses Up
Net revenues were $444.9 million, up 11.4% year over year. The top line beat the Zacks Consensus Estimate of $430.23 million.
Net interest income was $376.5 million, jumping 9.5%. Net interest margin contracted 29 basis points (bps) to 2.75%.
Non-interest income was $68.4 million, jumping 22.8%. The improvement largely resulted from higher deposit account fees, foreign exchange income and wealth management fees.
Non-interest expenses were up 2.6% to $189.5 million. The increase was mainly due to rise in all components except occupancy and equipment expense, data processing expense and other operating expense.
Efficiency ratio was 42.60%, down from 46.25% recorded in the prior-year quarter. A fall in the efficiency ratio indicates improvement in profitability.
As of Jun 30, 2021, net loans were $39.5 billion, up 1.3% sequentially. Total deposits increased 6.1% to $52.6 billion.
Credit Quality: Mixed Bag
Annualized quarterly net charge-offs were 0.13% of average loans held for investment, down 8 bps year over year. Provision for credit losses was negative $15 million in the second quarter against a provision of $102.4 million in the prior-year quarter.
As of Jun 30, 2021, non-performing assets were $225.7 million, increasing 11.6%.
Strong Capital & Profitability Ratios
As of Jun 30, 2021, common equity Tier 1 capital ratio was 12.8%, up from 12.7% as of Jun 30, 2020. Total risk-based capital ratio was 14.3%, up from 14.4%.
At the end of the second quarter, return on average assets was 1.56%, up from 0.83% as of Jun 30, 2020. As of Jun 30, 2021, return on average tangible equity was 18.28%, up from 8.96%.
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 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
Zions Bancorporation’s (ZION - Free Report) second-quarter 2021 net earnings per share of $2.08 surpassed the Zacks Consensus Estimate of $1.25. The bottom line marks a significant improvement from 34 cents earned in the year-ago quarter.
Hancock Whitney Corporation’s (HWC - Free Report) second-quarter 2021 adjusted earnings per share of $1.37 surpassed the Zacks Consensus Estimate of $1.15. The bottom line improved significantly from the prior-year quarter’s loss of $1.36.
First Horizon National Corporation’s (FHN - Free Report) second-quarter 2021 adjusted earnings per share of 58 cents beat the Zacks Consensus Estimate of 43 cents. Further, the bottom line shows significant improvement from the prior-year quarter’s 20 cents.