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East West Bancorp (EWBC) Q1 Earnings Beat, Stock Declines
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East West Bancorp’s (EWBC - Free Report) first-quarter 2022 earnings per share of $1.66 surpassed the Zacks Consensus Estimate of $1.53. The bottom line reflects a rise of 15.6% from the prior-year quarter.
Results were primarily aided by growth in revenues and marginally lower expenses. The company witnessed a rise in loan balances in the quarter. Moreover, supported by the rise in interest rates, net interest margin (NIM) witnessed year-over-year growth. However, an increase in provisions was a headwind. Probably because of this, shares of the company lost 1% following the release.
Net income was $237.7 million, up 15.9% from the year-ago quarter.
Revenues Improve, Expenses Decline Marginally
Net revenues were $495.4 million, rising 16.1% year over year. The top line beat the Zacks Consensus Estimate of $481.5 million.
Net interest income was $415.6 million, growing 17.5% year over year. NIM expanded 16 basis points (bps) to 2.87%.
Non-interest income was $79.7 million, increasing 9.4% year over year. The improvement was driven by an increase in all fee income components, except for interest rate contracts and other derivative income, and wealth management fees.
Non-interest expenses were down marginally to $189.5 million. The fall was due to a decline in occupancy and equipment expenses, data processing expenses, legal expenses and costs related to the amortization of tax credit, and other investments.
The efficiency ratio was 38.25%, down from 44.79% recorded in the prior-year quarter. A fall in the efficiency ratio indicates a rise in profitability.
As of Mar 31, 2022, net loans were $42.9 billion, up 4.4% sequentially. Total deposits were $54.9 billion, up 3% from the previous quarter.
Credit Quality: A Mixed Bag
Annualized quarterly net charge-offs were 0.08% of average loans held for investment, down 6 bps year over year. As of Mar 31, 2022, non-performing assets were $94.4 million, down 63.4% year over year.
However, provision for credit losses was $8 million against nil provision in the prior-year quarter.
Capital Ratios Deteriorate, Profitability Ratios Improve
As of Mar 31, 2022, common equity Tier 1 capital ratio was 12.6%, down from 12.7% as of Mar 31, 2021. Total risk-based capital ratio was 13.9%, down from 14.3%.
At the end of the first quarter, return on average assets was 1.56%, up from 1.50% as of Mar 31, 2021. Return on average tangible equity was 18.00%, up from 17.17%.
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. The company's impressive capital deployment activities reflect a strong balance sheet and liquidity position, through which it will keep enhancing shareholder value.
East West Bancorp, Inc. Price, Consensus and EPS Surprise
Truist Financial’s (TFC - Free Report) first-quarter 2022 adjusted earnings of $1.23 per share handily surpassed the Zacks Consensus Estimate of $1.12. The bottom line grew 4.2% from the prior-year quarter.
Truist Financial’s results were aided by modest average loan growth and provision benefits. However, lower revenues, a rise in expenses and relatively lower rates were the major headwinds.
U.S. Bancorp (USB - Free Report) reported first-quarter 2022 earnings per share of 99 cents, which beat the Zacks Consensus Estimate of 93 cents. However, the bottom line compares unfavorably with the prior-year quarter’s figure of $1.45.
U.S. Bancorp’s results were supported by an increase in revenues, loan growth and lower non-performing assets. USB’s capital position was decent in the quarter. However, higher expenses and elevated provision for credit losses were the offsetting factors.
Fifth Third Bancorp (FITB - Free Report) reported first-quarter 2022 earnings (excluding after-tax impacts of certain items) of 69 cents per share, missing the Zacks Consensus Estimate of 70 cents. Including the impacts of these items, earnings per share were 68 cents, indicating a 27% year-over-year decline.
Fifth Third’s performance displays a revenue decline primarily due to a fall in the fee income. Margin contraction and capital position deterioration played spoilsports for FITB.
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East West Bancorp (EWBC) Q1 Earnings Beat, Stock Declines
East West Bancorp’s (EWBC - Free Report) first-quarter 2022 earnings per share of $1.66 surpassed the Zacks Consensus Estimate of $1.53. The bottom line reflects a rise of 15.6% from the prior-year quarter.
Results were primarily aided by growth in revenues and marginally lower expenses. The company witnessed a rise in loan balances in the quarter. Moreover, supported by the rise in interest rates, net interest margin (NIM) witnessed year-over-year growth. However, an increase in provisions was a headwind. Probably because of this, shares of the company lost 1% following the release.
Net income was $237.7 million, up 15.9% from the year-ago quarter.
Revenues Improve, Expenses Decline Marginally
Net revenues were $495.4 million, rising 16.1% year over year. The top line beat the Zacks Consensus Estimate of $481.5 million.
Net interest income was $415.6 million, growing 17.5% year over year. NIM expanded 16 basis points (bps) to 2.87%.
Non-interest income was $79.7 million, increasing 9.4% year over year. The improvement was driven by an increase in all fee income components, except for interest rate contracts and other derivative income, and wealth management fees.
Non-interest expenses were down marginally to $189.5 million. The fall was due to a decline in occupancy and equipment expenses, data processing expenses, legal expenses and costs related to the amortization of tax credit, and other investments.
The efficiency ratio was 38.25%, down from 44.79% recorded in the prior-year quarter. A fall in the efficiency ratio indicates a rise in profitability.
As of Mar 31, 2022, net loans were $42.9 billion, up 4.4% sequentially. Total deposits were $54.9 billion, up 3% from the previous quarter.
Credit Quality: A Mixed Bag
Annualized quarterly net charge-offs were 0.08% of average loans held for investment, down 6 bps year over year. As of Mar 31, 2022, non-performing assets were $94.4 million, down 63.4% year over year.
However, provision for credit losses was $8 million against nil provision in the prior-year quarter.
Capital Ratios Deteriorate, Profitability Ratios Improve
As of Mar 31, 2022, common equity Tier 1 capital ratio was 12.6%, down from 12.7% as of Mar 31, 2021. Total risk-based capital ratio was 13.9%, down from 14.3%.
At the end of the first quarter, return on average assets was 1.56%, up from 1.50% as of Mar 31, 2021. Return on average tangible equity was 18.00%, up from 17.17%.
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. The company's impressive capital deployment activities reflect a strong balance sheet and liquidity position, through which it will keep enhancing shareholder value.
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
Truist Financial’s (TFC - Free Report) first-quarter 2022 adjusted earnings of $1.23 per share handily surpassed the Zacks Consensus Estimate of $1.12. The bottom line grew 4.2% from the prior-year quarter.
Truist Financial’s results were aided by modest average loan growth and provision benefits. However, lower revenues, a rise in expenses and relatively lower rates were the major headwinds.
U.S. Bancorp (USB - Free Report) reported first-quarter 2022 earnings per share of 99 cents, which beat the Zacks Consensus Estimate of 93 cents. However, the bottom line compares unfavorably with the prior-year quarter’s figure of $1.45.
U.S. Bancorp’s results were supported by an increase in revenues, loan growth and lower non-performing assets. USB’s capital position was decent in the quarter. However, higher expenses and elevated provision for credit losses were the offsetting factors.
Fifth Third Bancorp (FITB - Free Report) reported first-quarter 2022 earnings (excluding after-tax impacts of certain items) of 69 cents per share, missing the Zacks Consensus Estimate of 70 cents. Including the impacts of these items, earnings per share were 68 cents, indicating a 27% year-over-year decline.
Fifth Third’s performance displays a revenue decline primarily due to a fall in the fee income. Margin contraction and capital position deterioration played spoilsports for FITB.