It has been about a month since the last earnings report for East West Bancorp (EWBC). Shares have lost about 0% in that time frame, outperforming the S&P 500.
Will the recent trend continue leading up to its next earnings release, or is East West Bancorp due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
East West Bancorp Q3 Earnings Top on Higher NII & Non-Interest Income
East West Bancorp’s third-quarter 2025 adjusted earnings per share of $2.62 beat the Zacks Consensus Estimate of $2.35. Moreover, the bottom line increased 25.4% from the prior-year quarter’s level.
The results were primarily aided by an increase in NII and non-interest income alongside lower provisions. Also, loan and deposit balances increased sequentially in the quarter. However, higher non-interest expenses acted as a spoilsport.
The quarterly results excluded certain notable items. After considering those, net income available to common shareholders was $368.4 million or $2.65 per share, up from $299.2 million or $2.14 in the prior-year quarter.
Revenues & Expenses Increase
Quarterly net revenues were $778 million, up 18.4% year over year. Moreover, the top line beat the Zacks Consensus Estimate of $723.8 million.
NII amounted to $677.5 million, which increased 18.3% year over year. Further, NIM expanded 29 bps to 3.53%. We expected NII and NIM to be $625 million and 3.32%, respectively.
Total non-interest income was $100.5 million, up 19.1%. An increase in all components, except other investment income and lower gains on available-for-sale debt securities, drove the improvement. We estimated non-interest income to be $89.6 million.
Non-interest expenses totaled $276.9 million, up 22.6% from the prior-year quarter’s level. The rise was due to an increase in all components except occupancy and equipment expense, deposit account expense, deposit insurance premiums and regulatory assessments charges. Our estimate for the same was $253.1 million.
The efficiency ratio was 35.51%, up from 34.34% in the prior-year quarter. A rise in the efficiency ratio indicates a deterioration in profitability.
As of Sept. 30, 2025, net loans held for investment (“HFI”) were $55 billion, reflecting a 1.4% rise sequentially. Further, total deposits rose 2.4% to $66.6 billion.
Credit Quality: A Mixed Bag
Annualized quarterly NCOs were 0.13% of average loans HFI, down 9 bps from the prior-year quarter’s level. The provision for credit losses was $36 million, down 14.3% from the prior-year quarter’s level. Our estimate for the same was $51.8 million.
As of Sept. 30, 2025, non-performing assets amounted to $200.7 million, up 2.7% year over year.
Capital & Profitability Ratios Improve
As of Sept. 30, 2025, the common equity Tier 1 capital ratio was 14.83, up from 14.09 as of Sept. 30, 2024. The total risk-based capital ratio was 16.15, up from 15.39 a year ago.
At the end of the third quarter, the return on average assets was 1.84%, up from 1.62% as of Sept. 30, 2024. Return on average tangible equity was 18.48%, up from 17.08%.
Share Repurchase Update
In the reported quarter, East West Bancorp repurchased roughly 258 thousand shares for $25 million.
2025 Outlook
Management expects loans to increase in the range of 4-6%, driven by relative strength in consumer and residential lending.
Total revenues are expected to rise more than 10%, higher than the prior guidance of 7% increase.
NII growth is expected to be higher than 10%, compared with the previous outlook of 7% rise.
Total operating non-interest expenses are anticipated to increase in the range of 7-9% due to higher headcount and technological expenses, partially offset by lower expected deposit account expenses.
Management expects the NCO rate to be in the range of 10-20 bps, down from the earlier guidance of 15-25 bps.
The effective tax rate is expected to be roughly 23%, with the tax rate for the fourth quarter likely below 23% or closer to 22%.
Further, amortization of tax credit and CRA investment expenses are anticipated to be in the range of $70 million to $80 million.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in estimates review.
The consensus estimate has shifted 6.59% due to these changes.
VGM Scores
Currently, East West Bancorp has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock has a score of B on the value side, putting it in the top 40% for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise East West Bancorp has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
East West Bancorp belongs to the Zacks Banks - West industry. Another stock from the same industry, WaFd (WAFD), has gained 7.4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2025.
WaFd reported revenues of $188.3 million in the last reported quarter, representing a year-over-year change of -0.2%. EPS of $0.72 for the same period compares with $0.70 a year ago.
WaFd is expected to post earnings of $0.74 per share for the current quarter, representing a year-over-year change of +19.4%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for WaFd. Also, the stock has a VGM Score of D.
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East West Bancorp, Inc. (EWBC): Free Stock Analysis Report WaFd, Inc. (WAFD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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