East West Bancorp Q1 Earnings Top on Higher NII & Fee Income, Stock Up

Shares of East West Bancorp, Inc. EWBC rose 3.5% in the after-market trading session on better-than-expected quarterly results. Its first-quarter 2025 adjusted earnings per share (EPS) of $2.09 beat the Zacks Consensus Estimate of $2.05. Moreover, the bottom line increased marginally from the prior-year quarter’s level.The results were primarily aided by an increase in net interest income (NII) and non-interest income. Also, loan balances increased sequentially in the quarter. However, higher provisions and non-interest expenses alongside lower deposits were headwinds.The quarterly results excluded the FDIC special assessment charge. After considering this, net income available to common shareholders was $290.3 million or $2.08 per share, up from $285.1 million or $2.03 in the prior-year quarter.EWBC’s Revenues & Expenses IncreaseQuarterly net revenues were $692.3 million, up 7.6% year over year. Moreover, the top line beat the Zacks Consensus Estimate of $671.3 million.NII amounted to $600.2 million, which increased 6.2% year over year. Further, net interest margin (“NIM”) expanded 1 basis point (bps) to 3.24%. We expected NII and NIM to be $579.2 million and 3.27%, respectively.Total non-interest income was $92.1 million, up 17.3%. The improvement was driven by an increase in all the components except derivative mark-to-market and credit valuation adjustments, other investment income and other income. We estimated non-interest income to be $87.5 million.Non-interest expenses totaled $252.1 million, up 2.3% from the prior-year quarter’s level. The rise was mainly due to a significant increase in the computer and software-related expenses, other operating expenses and amortization of tax credits and CRA investments. Our estimate for the same was $256 million.The efficiency ratio was 36.36, down from 38.19 in the prior-year quarter. A decline in the efficiency ratio indicates an improvement in profitability.As of March 31, 2025, net loans held for investment (“HFI”) were $53.5 billion, reflecting a roughly 1% rise sequentially. On the other hand, total deposits declined marginally to $63.1 billion.East West Bancorp Credit Quality DeterioratesAnnualized quarterly net charge-offs were 0.12% of average loans HFI, down 5 bps from the prior-year quarter’s level. As of March 31, 2025, non-performing assets amounted to $182.2 million, up 10.5% year over year.The provision for credit losses was $49 million, up 96% from the prior-year quarter’s level. Our estimate for the same was $42 million.EWBC’s Capital Ratios Improve, Profitability Ratios DeclineAs of March 31, 2025, the common equity Tier 1 capital ratio was 14.32, up from 13.53 as of March 31, 2024. The total risk-based capital ratio was 15.63, up from 14.84 a year ago.At the end of the first quarter, the return on average assets was 1.56%, down from 1.60% as of March 31, 2024. Return on average tangible equity was 15.92%, down from 17.60%.East West Bancorp’s Share Repurchase UpdateIn the reported quarter, East West Bancorp repurchased roughly 0.9 million shares for $85 million. As of March 31, 2025, $244 million of authorization remained available for repurchase.Our View on EWBCEast West Bancorp is well-poised for organic growth with decent loan improvement and solid deposit balances, relatively higher interest rates and diversified fee income streams. However, a rise in expenses and a weak asset quality amid a tough operating backdrop are likely to hurt the bottom line.East West Bancorp, Inc. Price, Consensus and EPS Surprise East West Bancorp, Inc. price-consensus-eps-surprise-chart | East West Bancorp, Inc. QuoteCurrently, EWBC 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 BanksZions Bancorporation’s ZION first-quarter 2025 adjusted EPS of $1.24 beat the Zacks Consensus Estimate of $1.20. Moreover, the bottom line surged 29.2% from the year-ago quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)ZION’s results were primarily aided by higher NII and non-interest income. Also, higher loans were another positive. However, higher provisions and a rise in adjusted non-interest expenses were major headwinds.F.N.B. Corporation’s FNB first-quarter 2025 earnings of 32 cents per share outpaced the Zacks Consensus Estimate of 30 cents. However, the figure was down from adjusted earnings of 34 cents in the prior-year quarter.Results benefited from growth in NII. Higher loans and deposits were other positives. However, higher provisions, expenses and a slight fall in non-interest income were the undermining factors for FNB.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Zions Bancorporation, N.A. (ZION): Free Stock Analysis Report F.N.B. Corporation (FNB): Free Stock Analysis Report East West Bancorp, Inc. (EWBC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks