East West Bancorp reports net income for first quarter 2014 of $76.7 million

By East West Bank

 

East West Bancorp, Inc. (“East West”) (Nasdaq: EWBC), parent company of East West Bank, the financial bridge between the United States and Greater China, today reported financial results for the first quarter of 2014. For the first quarter of 2014, net income was $76.7 million or $0.54 per diluted share. First quarter earnings included integration and merger expenses of $10.6 million pretax, or $0.04 per diluted share associated with the acquisition of MetroCorp Bancshares, Inc. (“MetroCorp”) which was completed on January 17, 2014.

“East West has started off 2014 with healthy growth and solid profitability. For the first quarter, East West recorded earnings of $76.7 million or $0.54 per share, a $0.04 or 8% increase in earnings per share from the prior year period,” stated Dominic Ng, Chairman and Chief Executive Officer of East West.

“This growth in profitability and earnings per share has been achieved while we also generated strong return on asset and return on equity ratios. For the first quarter 2014, East West achieved a return on average assets of 1.18%, and a return on average equity of 12.05%, both higher than many peers in the banking industry.”

Ng continued, “Quarter to date, total loans increased by 10% or $1.8 billion to a record $19.9 billion and total deposits increased 12% or $2.4 billion to a record $22.8 billion. This balance sheet increase during the first quarter of 2014 was largely driven by our acquisition of MetroCorp, which expands East West’s presence in the Houston and Dallas markets and strengthens our footprint in California. With the acquisition of MetroCorp, we have opportunities to grow in attractive markets and to provide our new customers with our full bridge banking capabilities between the U.S. and China. The integration process is progressing smoothly and the full conversion of all MetroCorp systems is scheduled for completion later this year in June.”

“The strong financial performance for the first quarter was driven by solid loan growth, a 13% increase in the adjusted net interest income from the prior year period, and an increase in the adjusted net interest margin from the prior quarter to 3.45%. This revenue growth was achieved while also maintaining strong credit quality and expense control, with an efficiency ratio of 43.36% for the first quarter,” continued Ng.

“As the financial bridge between the East and the West, we see increasing business opportunities both in the U.S. and in Greater China. We are building lines of business, making investments in people and infrastructure and strengthening our balance sheet so that we are well positioned to capitalize on these growth opportunities to increase shareholder return for 2014 and for many years to come,” concluded Ng.

 

First Quarter 2014 Highlights

• Strong First Quarter Earnings – For the first quarter of 2014, net income was $76.7 million or $0.54 per diluted share. Net income increased 1% or $959 thousand from the fourth quarter of 2013 and 6% or $4.7 million from the first quarter of 2013. Earnings per diluted share decreased 2% or $0.01 from the fourth quarter of 2013 and increased 8% or $0.04 from the first quarter of 2013.

Excluding the impact of MetroCorp related integration and merger expenses in the first quarter 2014, earnings per diluted share was $0.58 or an increase of 5% or $0.03 as compared to fourth quarter 2013.

• Strong Loan Growth – Quarter to date, total loans receivable (including both covered and non-covered loans) increased 10% or $1.8 billion to a record $19.9 billion as of March 31, 2014. Of this increase, $1.1 billion was due to the addition of loans from MetroCorp and $727.7 million stemmed from growth in the East West portfolio, largely driven by growth in commercial and industrial loans.

• Strong Deposit Growth – Total deposits increased $2.4 billion to a record $22.8 billion as of March 31, 2014. Of this increase, $1.3 billion was due to the addition of deposits from MetroCorp and $1.1 billion stemmed from organic growth. During the first quarter, core deposits increased by 13% or $1.9 billion to a record $16.4 billion. As of March 31, 2014, noninterest-bearing demand deposits totaled a record $6.6 billion or 29% of total deposits.

• Strong Capital Levels – Capital levels for East West remain high. As of March 31, 2014, East West’s Tier 1 risk-based capital and total risk-based ratios were 11.2% and 13.0%, respectively, over $550 million greater than the well capitalized requirements of 6% and 10%, respectively.

• Cost of Deposits Down 1 bp from Q4 2013 and Down 7 bps from Q1 2013 – The cost of deposits was 0.30% for the first quarter of 2014, down one basis point from 0.31% in the fourth quarter of 2013 and down seven basis points from 0.37% in the first quarter of 2013.

• Nonperforming Assets of 0.59% of Total Assets – Nonperforming assets to total assets ratio remained well below 1%, as of March 31, 2014. Included in nonperforming assets as of March 31, 2014 are $26.5 million of nonperforming assets from MetroCorp.

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