On July 23, 2024, East West Bancorp Inc (EWBC, Financial) released its 8-K filing for the second quarter of 2024, reporting a net income of $288 million and diluted earnings per share (EPS) of $2.06. This performance surpassed analyst estimates of $1.97 EPS and $554.96 million in revenue.
East West Bancorp Inc is the holding company for East West Bank, a full-service commercial bank with cross-border operations concentrated in the United States and China. East West Bank is one of the few U.S.-based banks with a full banking license in China. The bank's strategy focuses on expanding its deposit base away from time deposits to commercial deposits and has engaged in entertainment partnerships between participants in China and Hollywood.
Performance Highlights
East West Bancorp Inc reported a net income of $288 million for Q2 2024, a 1% increase from the previous quarter's $285 million. The diluted EPS of $2.06 also marked a 1% rise from $2.03 in Q1 2024. The company's return on average assets was 1.63%, return on average common equity was 16.4%, and return on average tangible common equity was 17.5%. Book value per share grew 3% quarter-over-quarter and 14% year-over-year.
"The strength of East West’s diversified business model continued to deliver for our shareholders in the second quarter," said Dominic Ng, Chairman and Chief Executive Officer.
Financial Achievements
East West Bancorp Inc's total loans and deposits each grew by 2% quarter-over-quarter, complemented by record fee income which grew 8%. The bank strategically grew loans in commercial and industrial (C&I) and residential mortgage sectors, and experienced solid growth in business and consumer deposit balances. Fee income saw growth in all categories, with notable strength in foreign exchange income and wealth management.
| Metric | Q2 2024 | Q1 2024 | Change |
|---|---|---|---|
| Revenue | $638 million | $644 million | -1% |
| Pre-tax, Pre-provision Income | $401 million | $397 million | 1% |
| Net Income | $288 million | $285 million | 1% |
| Diluted EPS | $2.06 | $2.03 | 1% |
| Book Value per Share | $52.06 | $50.48 | 3% |
Income Statement and Balance Sheet Insights
Net interest income for Q2 2024 totaled $553 million, a 2% decrease from $565 million in Q1 2024. The net interest margin (NIM) was 3.27%, down 7 basis points from the previous quarter. This decline was primarily due to a higher cost of interest-bearing deposits and a continued deposit mix shift, partly offset by higher asset yields.
Total assets were $72.5 billion as of June 30, 2024, an increase of $1.6 billion from the previous quarter. Total loans were $52.8 billion, up $0.8 billion from Q1 2024, and total deposits were $60.0 billion, an increase of $1.4 billion from Q1 2024.
Challenges and Future Outlook
Despite the positive performance, East West Bancorp Inc faces challenges such as a higher cost of interest-bearing deposits and a shift in deposit mix. The net charge-offs remained stable at 0.18% of average loans, while criticized loans decreased by 10% quarter-over-quarter. Nonperforming assets increased to $196 million from $165 million in the previous quarter, reflecting increases related to C&I loans, residential mortgage loans, and other real estate owned.
"We are confident that our diversified lending approach and disciplined underwriting and monitoring standards will serve us well through the cycle," continued Ng.
East West Bancorp Inc's capital levels remain strong, with a common equity tier 1 (CET1) capital ratio of 13.74% and a total risk-based capital ratio of 15.05% as of June 30, 2024. The company's stockholders' equity to assets ratio was 9.96%, and the tangible common equity ratio was 9.37%.
For more detailed insights and analysis, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from East West Bancorp Inc for further details.
