first_img East West Bancorp, Inc. (Nasdaq: EWBC), parent company of East West Bank, the financial bridge between the United States and Greater China, today reported financial results for the second quarter of 2012. For the second quarter of 2012, net income was $70.6 million or $0.47 per dilutive share. East West increased second quarter net income by $10.0 million or 17% and increased earnings per dilutive share $0.08 or 21% from the prior year period.“Net income for East West for the second quarter of 2012 totaled $70.6 million or $0.47 per share, an increase in earnings per share of 21% compared to the prior year period,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. “East West’s strong financial results for the second quarter are the result of our ability to drive growth and generate strong operating performance quarter after quarter. During the second quarter of 2012, we continued to focus on growing both noncovered loans and low-cost core deposits, and reducing credit costs. Since March 31, 2012, we grew our noncovered commercial and trade finance loans by $180.0 million or 6%, and increased core deposits by $476.9 million or 5% to $11.0 billion.”Ng continued, “The increase in East West’s profitability is due to our success in growing key loan and deposit portfolios, combined with reduced credit costs and strong expense management. During the second quarter of 2012, the provision for loan losses decreased to $15.5 million and net charge-offs totaled $11.7 million, a decrease of 42% and 63%, respectively, from prior year. Nonperforming assets continued to decline, decreasing to $155.7 million or 0.72% of total assets as of June 30, 2012. Further, the efficiency ratio also improved during the second quarter, decreasing from 44% in the first quarter of 2012 to 42%.”“East West continues to outperform peers and the industry, despite the challenging operating environment. We believe that our strong results quarter after quarter demonstrate that our differentiating focus as the premier financial bridge between East and West, provides us with exceptional opportunities to win new customers and strengthen relationships with existing customers. We are pleased with our operating results for the second quarter of 2012 and areexcited about future opportunities to grow our business, increase earnings and return strong value to our shareholders,” concluded Ng. Community News Pasadena Will Allow Vaccinated People to Go Without Masks in Most Settings Starting on Tuesday Second Quarter 2012 Highlights• Strong Second Quarter Earnings – For the second quarter of 2012, net income was $70.6 million or $0.47 per dilutive share. Net income grew 4% or $2.5 million from the first quarter of 2012 and 17% or $10.0 million from the second quarter of 2011. Earnings per dilutive share grew 4% or $0.02 from the first quarter of 2012 and 21% or $0.08 from the second quarter of 2011.• Repurchase of 2.2 Million Shares of Common Stock – During the second quarter of 2012, we repurchased 2.2 million shares of our common stock at a weighted average price of $21.95 per share.• Strong Loan Growth – Quarter to date, noncovered loans, excluding loans held for sale, grew $296.8 million or 3%. This growth was largely due to increases in commercial and trade finance loans, and single family loans, which grew $180.0 million or 6% and $64.8 million or 3%, respectively from March 31, 2012.• Strong Core Deposit Growth – Core deposits increased $476.9 million or 5% to a record $11.0 billion or 64% of total deposits. Total deposits remained unchanged at $17.3 billion, as we continued our strategy to reduce reliance on higher cost time deposits.• Cost of Funds Down 4 bps from Q1 2012 and Down 29 bps from Q2 2011 – The cost of funds improved 4 basis points from the first quarter of 2012 and 29 basis points from the second quarter of 2011 to 0.71% for the second quarter of 2012. Our cost of deposits improved 2 basis points from the first quarter of 2012 and 25 basis points from the second quarter of 2011 to 0.45% for the second quarter of 2012.• Efficiency Ratio Improves to 41.54% – For the second quarter of 2012, the efficiency ratio improved to 41.54% from 44.07% in the first quarter of 2012 and 43.95% in the second quarter of 2011.• Nonperforming Assets Down to 0.72% of Total Assets – Nonperforming assets decreased to $155.7 million, or 0.72% of total assets at June 30, 2012, an $11.5 million or 7% decrease from March 31, 2012 and a $25.5 million or 14% decrease from June 30, 2011.Management GuidanceThe Company is providing guidance for the third quarter and full year of 2012. Management currently estimates that fully diluted earnings per share for the full year of 2012 will range from $1.84 to $1.86, an increase of 15% to 16% from the full year of 2011. Also, this updated guidance for the full year of 2012 is an increase of approximately $0.05 per dilutive share from our previously released guidance.Management currently estimates that fully diluted earnings per share for the third quarter of 2012 will range from $0.45 to $0.47 per dilutive share. This EPS guidance for the third quarter of 2012 is based on the following assumptions:• Stable balance sheet• A stable interest rate environment and an adjusted net interest margin of approximately 4.00%1• Provision for loan losses of approximately $12 to $15 million for the quarter• Total noninterest expense of approximately $100 million for the quarter, net of amounts to be reimbursed by the FDIC• Effective tax rate of approximately 35%Balance Sheet SummaryAt June 30, 2012, total assets equaled $21.5 billion compared to $21.7 billion at March 31, 2012. Average earning assets decreased slightly during the second quarter of 2012, down $14.1 million compared to the prior quarter. The small decrease in total assets and average earning assets during the second quarter was primarily attributable to a decrease in investment securities of $833.0 million, due to sales, calls and maturities, offset by purchases. As of June 30, 2012, excess cash from these activities had not yet been reinvested, resulting in an increase in cash and cash equivalents of $793.8 million.Total loans receivable at June 30, 2012 equaled $14.3 billion, compared to $14.5 billion as of March 31, 2012. During the second quarter noncovered loan balances excluding loans held for sale, grew $296.8 million or 3%. This growth was largely due to increases in commercial and trade finance loans, and single family loans, which grew $180.0 million or 6% and $64.8 million or 3%, respectively.Covered LoansCovered loans totaled $3.4 billion as of June 30, 2012, a decrease of $267.1 million or 7% from March 31, 2012. The decrease in the covered loan portfolio was primarily due to payoffs and paydown activity, as well as charge-offs. The covered loan portfolio is comprised of loans acquired from the FDIC-assisted acquisitions of United Commercial Bank (UCB) and Washington First  International Bank (WFIB) which are covered under loss share agreements with the FDIC. During the second quarter of 2012, we recorded a net decrease in the FDIC indemnification asset and receivable included in noninterest (loss)/income of ($40.3) million, largely due to continued improved credit performance of the UCB portfolio as compared to our original estimate.Deposits and BorrowingsAt June 30, 2012, total deposits equaled $17.3 billion, unchanged from March 31, 2012. In the second quarter of 2012, we continued to execute our strategy to grow low-cost, commercial deposits while reducing our reliance on higher cost time deposits. Core deposits increased to a record $11.0 billion at June 30, 2012, or an increase of $476.9 million or 5% from March 31, 2012. Time deposits decreased by $473.6 million or 7% from March 31, 2012 to $6.3 billion at June 30, 2012. During the second quarter of 2012, the Company prepaid $30.0 million of FHLB advances carrying an effective interest rate of 2.43%, incurring a prepayment penalty of $2.3 million, which is included in noninterest expense.Second Quarter 2012 Operating ResultsNet Interest IncomeNet interest income, adjusted for the net impact of covered loan dispositions, totaled $194.7 million for the second quarter of 2012, a decrease of $9.5 million from $204.2 million in the prior quarter. 1 The core net interest margin, excluding the net impact to interest income of $38.5 million resulting from covered loan activity and amortization of the FDIC indemnification asset, totaled 4.01% for the second quarter of 2012. This compares to a core net interest margin, excluding the net impact to interest income of $14.7 million resulting from covered loan activity and amortization of the FDIC indemnification asset, of 4.21% for the first quarter of 2012.The decrease in the core net interest margin in the second quarter of 2012 compared to the first quarter of 2012 is primarily due to the larger impact of covered loan dispositions and amortization activity in the second quarter and the continued downward repricing of the investment securities and loan portfolios. The extended low interest rate environment continues to be a challenge for East West and the rest of the banking industry. East West continues to look for opportunities to minimize our cost of funds and maximize our asset yields, while also ensuring prudent interest rate risk management. In the second quarter of 2012, East West prepaid $30.0 million of FHLB advances at an average effective cost of 2.43%. The cost of funds decreased 4 basis points from 0.75% in the first quarter of 2012 to 0.71% in the second quarter of 2012.The reduction in the cost of funds and interest expense is primarily due to management’s ongoing actions to reduce high-cost time deposits and grow core deposits. During the second quarter, the Company reduced both the balance of time deposits by 7% and also the average cost of time deposits, which decreased from 0.88% in the first quarter of 2012 to 0.84% in the second quarter of 2012. In addition, the Company increased core deposit balances by 5%, quarter over quarter. These combined actions resulted in an overall reduction in the cost of deposits of 2 basis points to 0.45% for the second quarter of 2012 from 0.47% in the prior quarter. Management expects to maintain a relatively stable net interest margin and expects the adjusted net interest margin to be approximately 4.00% for the third quarter of 2012.Noninterest (Loss)/Income & ExpenseThe Company reported total noninterest (loss) for the second quarter of 2012 of ($11.7) million, a decrease from noninterest income of $21.7 million in the first quarter of 2012 and $12.5 million in the second quarter of 2011. The decrease in noninterest income from the prior quarter and prior year is primarily attributable to an increase in the net reduction of the FDIC indemnification asset and FDIC receivable.Branch fees, letter of credit and foreign exchange income, ancillary loan fees and other operating income increased and totaled $22.2 million in the second quarter of 2012, as compared to $21.6 million in the first quarter of 2012 and $22.1 million in the second quarter of 2011. In addition, included in noninterest (loss) for the second quarter of 2012 were net gains on sales of loans of $6.4 million, and net gains on sales of investment securities of $71 thousand. A summary of fees and other income for the second quarter of 2012, compared to the first quarter of 2012 and 2nd quarter of 2011, is detailed below:Noninterest expense totaled $101.6 million for the second quarter of 2012, a decrease of $13.2 million from the first quarter of 2012 and $16.0 million from the second quarter of 2011.Noninterest expense, excluding amounts to be reimbursed by the FDIC on covered assets and prepayment penalties for FHLB advances, totaled $96.6 million for the second quarter of 2012. A summary of noninterest expense for the second quarter 2012, compared to the first quarter of 2012 and 2nd quarter of 2011, is detailed below: Business: Retail News East West Bancorp Reports Net Income for 2nd Quarter 2012 of $70.6 Million, Up 17% from Prior Year And Earnings Per Share of $0.47, Up 21% from Prior Year Published on Wednesday, July 18, 2012 | 2:08 pm 11 recommended0 commentsShareShareTweetSharePin it Make a comment Total noninterest expense for the second quarter, excluding amounts to be reimbursed by the FDIC on covered assets and prepayment penalties for FHLB advances, decreased $4.7 million or 5% from the first quarter of 2012 to $96.6 million. The decrease in noninterest expense, excluding amounts to be reimbursed by the FDIC on covered assets and prepayment penalties for FHLB advances, was primarily due to a reduction in compensation and employee benefits. Compensation and employee benefits decreased $3.5 million or 8% from the first quarter of 2012 primarily due to a decrease in payroll taxes and an increase in the offset to compensation expense from deferred loan costs due to an increase in origination volume.Credit cycle costs, which include other real estate owned expense, loan related expense, and legal expense decreased $9.7 million or 43% from the first quarter 2012, totaling $12.8 million for the second quarter, as compared to $22.5 million for the first quarter 2012 and $25.7 million for the second quarter of 2011. Of the total credit cycle costs incurred in the second quarter, $3.4 million is related to covered loans and other real estate owned for which we expect that 80% or $2.7 million is reimbursable by the FDIC.Management anticipates that for the third quarter of 2012, noninterest expense will total approximately $100.0 million, net of amounts reimbursable from the FDIC. The effective tax rate for the second quarter was 32.4% as compared to 36.8% in the prior quarter. The decrease in the effective tax rate for the second quarter of 2012 compared to the first quarter of 2012 was primarily due to a $3.0 million benefit from a settlement with the California Franchise Tax Board. The effective tax rate is reduced from the statutory tax rate primarily due to the utilization of tax credits related to affordable housing investments. The expected effective tax rate for the remainder of 2012 is approximately 35%.Credit QualityDuring the second quarter of 2012, the provision for loan losses and nonperforming assets were lower than the previous quarter and the prior year as a result of continued credit quality improvement. The provision for loan losses was $15.5 million for the second quarter of 2012, a decrease of 14% or $2.6 million from the prior quarter, and a decrease of 42% or $11.0 million as compared to the second quarter of 2011. Additionally, nonaccrual loans excluding covered loans, decreased to $112.4 million or 0.78% of total loans as of June 30, 2012.Gross charge-offs totaled $14.8 million and recoveries totaled $3.1 million for the second quarter of 2012. Total net charge-offs increased slightly to $11.7 million for the second quarter of 2012, from $10.3 million in the first quarter of 2012 due to the high level of recoveries during the first quarter of 2012. East West continues to maintain a strong allowance for noncovered loan losses at $219.5 million or 2.03% of noncovered loans receivable at June 30, 2012. This compares to an allowance for noncovered loan losses of $214.3 million or 2.04% of noncovered loans at March 31, 2012 and $213.8 million or 2.29% of noncovered loans at June 30, 2011.The total nonperforming assets, excluding covered assets, to total assets ratio was under 1.00% for the eleventh consecutive quarter with nonperforming assets of $155.7 million or 0.72% of total assets at June 30, 2012. Community News Get our daily Pasadena newspaper in your email box. Free.Get all the latest Pasadena news, more than 10 fresh stories daily, 7 days a week at 7 a.m. Name (required)  Mail (required) (not be published)  Website  First Heatwave Expected Next Week Herbeauty8 Yoga Poses To Overcome Stress And AnxietyHerbeautyHerbeautyHerbeautyThis Trend Looks Kind Of Cool!HerbeautyHerbeautyHerbeauty7 Reasons Why The Lost Kilos Are Regained AgainHerbeautyHerbeautyHerbeautyHe Is Totally In Love With You If He Does These 7 ThingsHerbeautyHerbeautyHerbeautyA Mental Health Chatbot Which Helps People With DepressionHerbeautyHerbeautyHerbeautyWhat’s Your Zodiac Flower Sign?HerbeautyHerbeauty Our capital ratios remain very strong. As of June 30, 2012, our Tier 1 leverage capital ratio totaled 9.7%, our Tier 1 risk-based capital ratio totaled 15.7% and our total risk-based capital ratio totaled 17.3%. East West exceeds well capitalized requirements for all regulatory guidelines by more than $900 million. The Company is focused on active capital management and is committed to maintaining strong capital levels that exceed regulatory requirements while also supporting balance sheet growth and providing a strong return to our shareholders. During the second quarter of 2012, the Company repurchased 2.2 million shares of common stock at an average price of $21.95 per share, or $49.0 million in total cost. Under the repurchase program authorized by East West’s Board of Directors earlier in the year, management has the authority to repurchase up to a total of $200.0 million of the Company’s common stock. As of June 30, 2012, the Company had repurchased a total of 6.8 million shares of common stock under the repurchase program at a total cost of $149.9 million.Dividend PayoutEast West’s Board of Directors has declared third quarter dividends on the common stock and Series A Preferred Stock. The common stock cash dividend of $0.10 is payable on or about August 24, 2012 to shareholders of record on August 10, 2012. The dividend on the Series A Preferred Stock of $20.00 per share is payable on August 1, 2012 to shareholders of record on July 15, 2012.Conference CallEast West will host a conference call to discuss second quarter 2012 earnings with the public on Thursday, July 19, 2012 at 8:30 a.m. PDT/ 11:30 a.m. EDT. The public and investment community are invited to listen as management discusses second quarter results and operating developments. The following dial-in information is provided for participation in the conference call: Call within the US – (877) 317-6789; Call within Canada – (866) 605-3852; International call – (412) 317-6789. A listen-only live broadcast of the call also will be available on the investor relations page of the Company’s website at www.eastwestbank.com. EVENTS & ENTERTAINMENT | FOOD & DRINK | THE ARTS | REAL ESTATE | HOME & GARDEN | WELLNESS | SOCIAL SCENE | GETAWAYS | PARENTS & KIDS Top of the News Home of the Week: Unique Pasadena Home Located on Madeline Drive, Pasadena Subscribe Business News faithfernandez More » ShareTweetShare on Google+Pin on PinterestSend with WhatsApp,Virtual Schools PasadenaHomes Solve Community/Gov/Pub SafetyPASADENA EVENTS & ACTIVITIES CALENDARClick here for Movie Showtimes More Cool Stuff Pasadena’s ‘626 Day’ Aims to Celebrate City, Boost Local Economy Your email address will not be published. Required fields are marked *last_img

Leave a Reply

Your email address will not be published. Required fields are marked *