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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.
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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 Fall
Quarterly 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.