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

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-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.

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This article originally published on Zacks Investment Research (zacks.com).

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