East West Bancorp (EWBC) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $288 million, or $2.06 per diluted share, with 2% sequential growth in both loans and deposits and a return on average assets of 1.63%.

• Record quarterly fee income of $77 million, up 8% sequentially, driven by foreign exchange, wealth management, and customer derivative revenue.

• Asset quality remained strong with stable net charge-offs at 0.18% of average loans and a non-performing asset ratio of 0.27%, while criticized loans decreased 10% quarter-over-quarter.

• Book value per share rose 3% quarter-over-quarter and 14%-15% year-over-year; tangible book value per share increased 3% and 15%, respectively.

• Recognized as the top-performing bank above $50 billion in assets by Bank Director magazine for the second consecutive year.

Financial highlights

• Net interest income for Q2 was $553 million, down 2% sequentially and year-over-year; net interest margin declined 7 bps sequentially and 28 bps year-over-year to 3.27%.

• Return on average assets was 1.6%-1.63%; return on tangible common equity was 17.5%-17.54%.

• Adjusted noninterest expense was $219 million, down 10% year-over-year, with an adjusted efficiency ratio of 34.3%.

• Allowance for loan losses stood at 1.30% of loans; CRE allowance at 3.10%.

• Total assets reached $72.5 billion, up 2% from Q1 2024 and 6% year-over-year.

Outlook and guidance

• Full-year end-of-period loan growth expected in the 3%-5% range; net interest income projected to decline 2%-4% year-over-year.

• Adjusted noninterest expense expected to increase 6%-8% for the year, mainly due to compensation and technology investments.

• Effective tax rate guidance lowered to 21%-23%; full-year tax credit amortization expense expected at $60-$65 million.

• Net charge-offs anticipated in the range of 15-25 bps for subsequent quarters.

• NIM expected to compress modestly before stabilizing, with dollar NII rising due to balance sheet growth.