Market Overview

East West Bancorp Reports Net Income for First Quarter 2019 of $164 Million and Diluted Earnings Per Share of $1.12, Increases Quarterly Dividend by 20%

Share:

East West Bancorp, Inc. ("East West" or the "Company") (NASDAQ:EWBC),
parent company of East West Bank, the financial bridge between the
United States and Greater China, today reported its financial results
for the first quarter of 2019. For the first quarter of 2019, net income
was $164.0 million or $1.12 per diluted share. First quarter 2019 return
on average assets was 1.63% and return on average equity was 14.7%.

"We started off the year with solid balance sheet growth. Our total
assets reached a record $42.1 billion. Total loans grew $478 million, or
6% annualized, to a record $32.9 billion from $32.4 billion as of
December 31, 2018," stated Dominic Ng, Chairman and Chief Executive
Officer of East West. "Total deposits grew $834 million, or 10%
annualized, to a record $36.3 billion from $35.4 billion at the end of
2018."

"Our first quarter 2019 net interest margin, excluding the impact of
accretion, was 3.77%1, a quarter-over-quarter increase of
four basis points from 3.73%, and a year-over-year increase of 10 basis
points from 3.67%," continued Ng.

"Our balance sheet growth, the profitability of our business, and our
capital levels are strong. As of March 31, 2019, our tangible equity to
tangible assets ratio2 was 9.9%, an increase of 16 basis
points quarter-over-quarter. I am pleased to announce that East West's
Board of Directors approved a 20% increase to the quarterly common stock
dividend. Our quarterly dividend will increase to $0.275 per share, up
from $0.23 per share. We are optimistic about the year ahead, and look
forward to delivering another year of strong returns for our
shareholders," concluded Ng.

__________________________________

1

  See reconciliation of GAAP to non-GAAP financial measures in Table
12.

2

See reconciliation of GAAP to non-GAAP financial measures in Table
13.

 

HIGHLIGHTS OF RESULTS

  • First Quarter Earnings – First quarter net income was $164.0
    million and diluted earnings per share ("EPS") were $1.12, compared to
    fourth quarter 2018 net income of $173.0 million and diluted EPS of
    $1.18. Excluding an impairment charge in the first quarter, adjusted3
    first quarter net income was $168.9 million and adjusted3
    diluted EPS were $1.16.

    During the first quarter, the
    Company recorded an impairment charge related to certain tax credit
    investments. Included in amortization of tax credit and other
    investments, this impairment charge reduced net income by $7.0 million
    before tax and $4.9 million after tax, impacting EPS by $0.04.
  • Dividend Increase – Second quarter 2019 common stock
    dividend has increased by 20%, or 4.5 cents per share. The new
    quarterly dividend will be $0.275, up from $0.23 per share. At the new
    rate, the annualized dividend will be $1.10, compared to the previous
    annualized rate of $0.92 per share.
  • Net Interest Income and Net Interest Margin – First quarter
    2019 net interest income ("NII") was $362.5 million, compared to
    $369.4 million in the fourth quarter of 2018. Excluding the impact of
    ASC 310-30 discount accretion income, first quarter 2019 adjusted4
    NII was $360.3 million, compared to $363.6 million in the previous
    quarter. First quarter 2019 net interest margin ("NIM") of 3.79% was
    unchanged linked quarter. Excluding the impact of ASC 310-30 discount
    accretion, adjusted4 NIM of 3.77% expanded by four basis
    points linked quarter from 3.73% in the fourth quarter of 2018.
  • Record Loans – Total loans of $32.9 billion as of March 31,
    2019 were up $477.8 million, or 6% linked quarter annualized, from
    $32.4 billion as of December 31, 2018. Total loans grew by $3.3
    billion or 11% year-over-year.
  • Record Deposits – Total deposits of $36.3 billion as of March
    31, 2019 were up $834.3 million, or 10% linked quarter annualized,
    from $35.4 billion as of December 31, 2018. Total deposits grew by
    $3.7 billion or 11% year-over-year.
  • Asset Quality Metrics – The allowance for loan losses
    was $317.9 million, or 0.97% of loans held-for-investment ("HFI"), as
    of March 31, 2019, compared to 0.96% of loans HFI as of December 31,
    2018, and 1.01% of loans HFI as of March 31, 2018. For the first
    quarter of 2019, net charge-offs were $14.4 million, or annualized
    0.18% of average loans HFI, compared to annualized net charge-offs of
    0.20% of average loans HFI for the previous quarter and 0.14% for the
    year-ago quarter. Non-purchased credit impaired ("Non-PCI")
    nonperforming assets were $138.0 million, or 0.33% of total assets, as
    of March 31, 2019, compared to 0.23% of total assets as of December
    31, 2018, and 0.35% of total assets as of March 31, 2018.
  • Capital Levels – Capital levels for East West continue to be
    strong. As of March 31, 2019, stockholders' equity was $4.6 billion,
    or $31.56 per share. Tangible equity5 per common share was
    $28.21 as of March 31, 2019, an increase of 4% linked quarter and 17%
    year-over-year. As of March 31, 2019, the tangible equity to tangible
    assets ratio was 9.9%, the common equity tier 1 ("CET1") capital ratio
    was 12.4%, and the total risk-based capital ratio was 13.8%.

__________________________________

3

  See reconciliation of GAAP to non-GAAP financial measures in Table
10.

4

See reconciliation of GAAP to non-GAAP financial measures in Table
12.

5

See reconciliation of GAAP to non-GAAP financial measures in Table
13.

 
 

QUARTERLY RESULTS SUMMARY

    Quarter Ended
($ in millions, except per share data and ratios)     March 31,

2019

    December 31,

2018

    March 31,

2018

Net income $ 164.0     $ 173.0     $ 187.0
Adjusted net income (1) $ 168.9 $ 173.0 $ 164.9
Earnings per share (diluted) $ 1.12 $ 1.18 $ 1.28
Adjusted earnings per share (diluted) (1)     $ 1.16       $ 1.18       $ 1.13  
Book value per common share $ 31.56 $ 30.52 $ 27.46
Tangible equity (1) per common share $ 28.21 $ 27.15 $ 24.07
Tangible equity to tangible assets ratio (1)     9.87 %     9.71 %     9.38 %
Return on average assets (2) 1.63 % 1.69 %

 

2.03 %
Return on average equity (2) 14.7 % 15.8 %

 

19.3 %
Return on average tangible equity (1)(2)     16.5 %     18.0 %

 

  22.3 %
Adjusted return on average assets (1)(2) 1.68 % 1.69 %
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