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

In This Article: 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 Increase Quarterly 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 Deteriorates Annualized 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 Decline As 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 Update In 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 EWBC East 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 and EPS Surprise East West Bancorp, Inc. price-consensus-eps-surprise-chart | East West Bancorp, Inc. Quote Currently, 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 Banks Zions 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. 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 Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research East West Bancorp, Inc. Price, Consensus and EPS Surprise