East West Bancorp Q4 Earnings Lag on High Provisions, Stock Falls 4.2%

Shares of East West Bancorp, Inc. EWBC lost 4.2% in the after-market trading session on lower-than-expected quarterly results. Its fourth-quarter 2024 adjusted earnings per share (EPS) of $2.08 lagged the Zacks Consensus Estimate of $2.17. Nonetheless, the bottom line increased 4% from the prior-year quarter’s level.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.The results were primarily aided by an increase in net interest income (NII) and non-interest income, alongside lower non-interest expenses. Also, deposit and loan balances increased sequentially in the quarter. However, higher provisions were a headwind.The quarterly results excluded certain notable items. After considering the same, net income available to common shareholders was $293.1 million or $2.10 per share, up from $239 million or $1.69 per share in the prior-year quarter.For 2024, adjusted EPS was $8.30, which missed the Zacks Consensus Estimate of $8.38. Also, the bottom line declined 2.8% from the previous year’s level. Net income (GAAP) was $1.17 billion, up marginally from the 2023 level. Our estimate for the metric was $1.18 billion.EWBC’s Revenues Rise, Expenses FallQuarterly net revenues were $675.8 million, up 3.2% year over year. Moreover, the top line beat the Zacks Consensus Estimate of $654.3 million.Full-year revenues totaled $2.61 billion, up marginally year over year. The top line surpassed the Zacks Consensus Estimate of $2.59 billion.NII amounted to $587.6 million, which increased 2.2% year over year. However, net interest margin (NIM) contracted 24 basis points (bps) to 3.24%. We expected NII and NIM to be $563.5 million and 3.22%, respectively.Total non-interest income was $88.2 million, up 10.3%. The improvement was driven by an increase in all the components except customer derivative revenues, lower net gains on sales of loans, lower net gains on AFS debt securities and a fall in other income. We had estimated non-interest income to be $85.8 million.Non-interest expenses totaled $250 million, down 14% from the prior-year quarter’s level. The decline was mainly due to a significant fall in the deposit insurance premiums and regulatory assessments cost and amortization of tax credits and CRA investments. Our estimate for the same was $234 million.The efficiency ratio was 36.92%, down from 44.34% in the prior-year quarter. A decline in the efficiency ratio indicates an improvement in profitability.As of Dec. 31, 2024, net loans held for investment (HFI) were $53 billion, reflecting a roughly 1% rise sequentially. Total deposits increased 2.4% to $63.2 billion.Credit Quality Deteriorates for East West BancorpAnnualized quarterly net charge-offs were 0.48% of average loans HFI, up 33 bps from the prior-year quarter’s level. As of Dec. 31, 2024, non-performing assets amounted to $194.1 million, up 70.2% year over year.The provision for credit losses was $70 million, up 89.2% from the prior-year quarter’s level. Our estimate for the same was $31.7 million.EWBC’s Capital & Profitability Ratios ImproveAs of Dec. 31, 2024, the common equity Tier 1 capital ratio was 14.28%, up from 13.31% as of Dec. 31, 2023. The total risk-based capital ratio was 15.59%, up from 14.76% a year ago.At the end of the fourth quarter, the return on average assets was 1.55%, up from 1.37% as of Dec. 31, 2023. Return on average tangible equity was 16.07%, up from 15.26%.East West Bancorp’s Share Repurchase UpdateIn the reported quarter, East West Bancorp repurchased roughly 0.2 million shares for $20 million.On Jan. 22, 2025, EWBC announced an additional authorization of up to $300 million, increasing the total authorization available to $329 million.Our View on EWBCEast West Bancorp is well-poised for organic growth on continued improvement in loan and 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 fourth-quarter 2024 EPS of $1.34 surpassed the Zacks Consensus Estimate of $1.26. Moreover, the bottom line surged 71.8% from the year-ago quarter’s figure.ZION’s results were primarily aided by higher NII and non-interest income. Higher loans and deposits were other positives. However, higher provisions and a rise in adjusted non-interest expenses were major headwinds.F.N.B. Corporation’s FNB fourth-quarter 2024 adjusted EPS of 38 cents beat the Zacks Consensus Estimate of 33 cents. The bottom line was flat year over year.Results were aided by growth in NII and non-interest income. Higher loans and deposits were other positives. However, higher provisions and adjusted expenses were the undermining factors for FNB.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>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 ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks