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East West Bancorp Inc. Reports Operating Results (10-Q)

August 08, 2012 | About:

East West Bancorp Inc. (NASDAQ:EWBC) filed Quarterly Report for the period ended 2012-06-30.

East West Bancorp, Inc. has a market cap of $3.21 billion; its shares were traded at around $21.77 with a P/E ratio of 12.6 and P/S ratio of 2.9. The dividend yield of East West Bancorp, Inc. stocks is 1.8%. East West Bancorp, Inc. had an annual average earning growth of 3.6% over the past 10 years.

Highlight of Business Operations:

Net income for the second quarter of 2012 totaled $70.6 million, compared with $60.5 million for the second quarter of 2011. Diluted earnings per share was $0.47 and $0.39 for the second quarters of 2012 and 2011, respectively. Our annualized return on average total assets increased to 1.32% for the quarter ended June 30, 2012, from 1.12% for the same period in 2011. The annualized return on average common stockholders equity increased to 12.46% for the second quarter of 2012, compared with 11.06% for the second quarter of 2011.

Total assets decreased $442.9 million, or 2.0%, to $21.53 billion as of June 30, 2012, compared to $21.97 billion as of December 31, 2011. The decrease is comprised predominantly of decreases in investment securities of $1.20 billion, loans held for sale of $140.8 million and due from customers on acceptance of $166.8 million. The significant decrease in investment securities was due to calls, maturities and a higher level of sales, to achieve a reduction of exposure in the corporate debt portfolio. The decrease in total assets is partially offset by an increase in cash and cash equivalents of $1.00 billion, which is largely attributed to the excess cash from the sale of investment securities, which as of June 30, 2012 was not yet redeployed into the investment securities portfolio.

Total investment securities available-for-sale decreased 39% to $1.87 billion as of June 30, 2012, compared with $3.07 billion at December 31, 2011. As of June 30, 2012, the investment portfolio had a net unrealized loss of $29.1 million as compared to a net unrealized loss of $60.4 million as of December 31, 2011. Within the portfolio, all categories by security type were in a net unrealized gain position except for corporate debt. Total repayments/maturities and proceeds from sales of investment securities amounted to $606.7 million and $1.10 billion, respectively, during the six months ended June 30, 2012. Proceeds from repayments, maturities, sales, and redemptions were applied towards additional investment securities purchases totaling $482.5 million. We recorded net gains on sales of investment securities totaling $71 thousand and $1.1 million during the second quarter of 2012 and 2011, respectively. For the first half of 2012, we recorded net gains on sales of investment securities totaling $554 thousand, compared with $3.6 million during the first half of 2011. At June 30, 2012, investment securities available-for-sale with a par value of $1.71 billion were pledged to secure public deposits, FHLB advances, repurchase agreements, the FRB discount window, and for other purposes required or permitted by law.

Non-covered other real estate owned includes properties acquired through foreclosure or through full or partial satisfaction of loans. At June 30, 2012, total non-covered OREO was $43.2 million, compared to $29.4 million at December 31, 2011. During the first six months of 2012, the Company had an addition of $32.9 million to OREO due to foreclosures. Additionally, the Company recorded $2.7 million in write-downs. During this period, the Company also had a total of $16.7 million in total proceeds for OREO properties sold resulting in a total net loss on sale of $322 thousand and charges against the allowance for loans losses totaling $624 thousand. As previously mentioned, losses on sales of OREO properties that are sold shortly after they are received in a foreclosure are charged against the allowance for loan losses. During the first six months of 2011, the Company sold a total of $18.4 million in OREO properties for a total net loss on sale of $254 thousand and charges against the allowance for loan losses totaling $279 thousand.

At June 30, 2012, stockholders equity totaled $2.29 billion, a 0.7% decrease from the year-end 2011 balance of $2.31 billion. The decrease is comprised of the following: (1) repurchase of treasury stock pursuant to the stock repurchase program totaling $150.0 million, representing 6,784,227 treasury stock shares; (2) accrual and payment of cash dividends on common and preferred stock totaling $32.7 million during the first six months of 2012; (3) noncredit-related impairment loss on investment securities amounting to $2.9 million, net of tax; and (4) purchase of treasury shares related to vested restricted stock amounting to $1.4 million, representing 63,636 shares. These transactions were offset by: (1) net income of $138.6 million recorded during the first six months of 2012; (2) reclassification adjustment for net gains on securities included in net income of $321 thousand; (3) additional unrealized gain on investments securities available-for-sale, net of tax, of $21.3 million; (4) stock compensation amounting to $7.8 million related to grants of restricted stock, restricted stock units and stock options; and (5) issuance of common stock totaling $2.7 million, representing 274,430 shares, pursuant to various stock plans and agreements. Historically, our primary source of capital has been the retention of operating earnings. In order to ensure adequate levels of capital, we conduct an ongoing assessment of projected sources, needs, and uses of capital in conjunction with projected increases in assets and the level of risk. As part of this ongoing assessment, the Board of Directors reviews the various components of capital and the adequacy of capital.

Read the The complete Report

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Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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