East West Bancorp, Inc. (NASDAQ:EWBC) reported its financial results for the first quarter of 2016. For the first quarter of 2016, net income was $107.5 million or $0.74 per diluted share.
First Quarter Highlights
- Strong First Quarter Earnings – Net income totaled $107.5 million or $0.74 per diluted share for the first quarter of 2016. Compared with the fourth quarter of 2015, net income increased $15.7 million and earnings per diluted share increased $0.11, both up by 17%.
Compared with the first quarter of 2015, net income for the first quarter of 2016 increased $7.5 million and earnings per diluted share increased $0.05, both up by 7%.
- Record Loans – Total gross loans receivable of $23.8 billion as of March 31, 2016 were up $105.0 million from $23.7 billion as of December 31, 2015. Excluding the impact of $243.7 million in loans sold and securitized, the organic loan growth was $348.7 million or 6% annualized during the first quarter of 2016. The loan growth during the first quarter of 2016 was largely driven by increases in commercial real estate, consumer and single-family real estate loans, partially offset by a decrease in commercial loans.
- Record Deposits – Total deposits of $28.6 billion as of March 31, 2016 were up $1.1 billion or 4% from $27.5 billion as of December 31, 2015. This growth was largely due to an increase in noninterest-bearing demand deposits of $804.8 million or 9% and money market deposits of $705.5 million or 10%, resulting in record core deposits of $22.5 billion as of March 31, 2016.
- Net Interest Income and Margin Expansion – Both net interest income and net interest margin increased quarter over quarter. For the first quarter of 2016, the net interest income increased $5.3 million or 2% to $252.2 million and net interest margin increased six basis points to 3.32% compared to 3.26% for the fourth quarter of 2015.
- Improved Capital Ratios – East West’s Common Equity Tier 1 (“CET1”) capital ratio was 10.7% as of March 31, 2016, compared to 10.5% as of December 31, 2015. The total risk-based capital ratio was 12.4% as of March 31, 2016, compared to 12.2% as of December 31, 2015.
- Increased Financial Returns – Return on average assets increased to 1.33% for the first quarter of 2016, up 19 basis points from 1.14% for the fourth quarter of 2015. Return on average equity increased to 13.59% for the first quarter of 2016, up 192 basis points from 11.67% for the fourth quarter of 2015.
Management Guidance
The Company is providing guidance for the second quarter and full year of 2016. Management currently estimates that fully diluted earnings per share for the full year of 2016 will range from $2.86 to $2.90, an increase of $0.20 to $0.24 or 8% to 9% from $2.66 for the full year of 2015 and an increase from the previously disclosed guidance range of $2.80 to $2.84 for the full year of 2016.
This EPS guidance for the remainder of 2016 assumes:
- Federal funds target rate increases 25 basis points in September of 2016. The previously disclosed guidance had assumed the federal funds target rate would increase 25 basis points each in July and December 2016.
- A net interest margin ranging from 3.25% to 3.35% for the remainder of 2016.
- Organic loan growth of approximately 8.00% for the full year 2016.
- Provision for loan losses of approximately $15 million for the remainder of 2016.
- Noninterest expense of approximately $155 million to $160 million per quarter, including the amortization of tax credit and other investments of approximately $18 million per quarter.
- An effective tax rate of 25.8% for the remainder of 2016.
Management currently estimates that fully diluted earnings per share for the second quarter of 2016 will range from $0.69 to $0.71, based on the assumptions stated above.
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East West Bancorp, Inc. earnings per share showed an increasing trend of 10.6% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 307%.Analysts project EPS growth over the next 5 years at 9%. It has EPS annual growth over the past 5 fiscal years of 26.4% when sales declined -0.8. It reported 4.9% sales growth, and 7% EPS growth in the last quarter.
The stock is trading at $38.6, up 42.41% from 52-week low of $27.25. The stock trades down -15.26% from its peak of $46.5 and 9.66% above the consensus price target of $42.33. Its volume clocked up at 0.82 million shares which is lower than the average volume of 1 million shares. Its market capitalization currently stands at $5.58B.
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