East West Bancorp(EWBC)2024-11-08 21:12Financial Performance - Net income for Q3 2024 was $299 million, up $11 million or 4% from Q3 2023, while net income for the first nine months of 2024 decreased by $50 million or 5% year-over-year to $872 million [246]. - Net interest income for Q3 2024 was $572,722 thousand, compared to $570,813 thousand in Q3 2023, reflecting a slight increase of 0.3% [263]. - Total revenue for Q3 2024 was $657,483 thousand, an increase from $647,565 thousand in Q3 2023, while total revenue for the nine months ended September 30, 2024, was $1,939,512 thousand, down from $1,952,781 thousand in the same period last year [427]. - Adjusted diluted EPS for Q3 2024 was $2.09, compared to $2.02 in Q3 2023, and for the nine months ended September 30, 2024, it was $6.22, down from $6.53 in the same period last year [424]. - The return on average tangible common equity (TCE) for Q3 2024 was 17.08%, down from 18.65% in Q3 2023 [425]. Asset and Loan Growth - As of September 30, 2024, total assets increased to $74.5 billion from $69.6 billion at the end of 2023, representing a growth of approximately 4% [243]. - Total loans increased to $53.3 billion as of September 30, 2024, compared to $52.2 billion at the end of 2023, marking a growth of approximately 2% [243]. - Average loans grew by $1.8 billion or 6% year-over-year to $32.9 billion for the first nine months of 2024 [298]. - Total loans reached $52,420,516 thousand in Q3 2024, up from $49,888,862 thousand in Q3 2023, marking an increase of approximately 5.1% [263]. - Total residential mortgage loans amounted to $15.72 billion as of September 30, 2024, compared to $15.11 billion as of December 31, 2023 [331]. Deposits and Funding - Total deposits increased to $61.7 billion as of September 30, 2024, up $5.6 billion or 10% from December 31, 2023 [250]. - The Company experienced a 29% increase in time deposits, which rose to $23.2 billion as of September 30, 2024, from $18.0 billion as of December 31, 2023 [343]. - Uninsured domestic deposits, excluding collateralized and affiliate deposits, totaled $25.9 billion as of September 30, 2024, representing 44% of total domestic deposits [348]. - FHLB advances amounted to $3.5 billion as of September 30, 2024, compared to no advances as of December 31, 2023, indicating a shift in funding strategy [349]. Noninterest Income - Noninterest income for Q3 2024 was $84.8 million, a 10% increase from $76.8 million in Q3 2023, driven by higher lending, wealth management, and deposit account fees [2]. - Noninterest income for the first nine months of 2024 was $248 million, up from $215 million in the same period of 2023, indicating a year-over-year increase of about 15% [244]. - Deposit account fees increased by $3 million or 14% to $26.8 million in Q3 2024 compared to Q3 2023 [3]. - Lending fees rose by $6 million or 30% to $26.5 million in Q3 2024 compared to Q3 2023 [4]. - Wealth management fees surged by $5 million or 80% to $10.7 million in Q3 2024 compared to Q3 2023 [5]. Expenses and Efficiency - Total noninterest expense for Q3 2024 was $226.2 million, a decrease of $26 million or 10% from $252 million in Q3 2023 [6]. - The efficiency ratio improved to 34.40% in Q3 2024 from 38.92% in Q3 2023, indicating better cost management [427]. - Compensation and employee benefits increased by $12 million or 10% to $135.5 million in Q3 2024 compared to Q3 2023 [7]. - Noninterest expense increased by $40.5 million or 16% year-over-year to $296.3 million for the first nine months of 2024, mainly due to higher compensation and employee benefits [298]. Credit Quality and Risk Management - The allowance for loan losses increased to $696.5 million as of September 30, 2024, compared to $668.7 million as of December 31, 2023 [317]. - Nonperforming assets were $195 million, representing 0.26% of total assets as of September 30, 2024, an increase of $81 million or 71% compared to $114 million or 0.16% of total assets as of December 31, 2023 [365]. - The net charge-offs for the three months ended September 30, 2024, were $29,363 thousand, compared to $18,146 thousand for the same period in 2023, indicating a significant increase of 62% [374]. - The Company’s credit risk management focuses on adherence to a well-controlled underwriting and loan monitoring process [360]. - The Credit Risk Management Committee oversees credit risk and evaluates overall credit risk exposure to senior management and the Risk Oversight Committee (ROC) [360]. Capital and Shareholder Returns - Stockholders' equity rose to $7.7 billion as of September 30, 2024, a 10% increase from $7.0 billion as of December 31, 2023 [251]. - The Company declared a fourth quarter 2024 cash dividend of $0.55 per share, consistent with the third quarter 2024 dividend [342]. - The Company maintains a strong capital base to support anticipated asset growth and ensure compliance with regulatory capital guidelines [337]. - The Company's stockholders' equity increased to $7.7 billion as of September 30, 2024, up by $714 million or 10% from $7.0 billion as of December 31, 2023, primarily driven by $872 million of net income [340]. Interest Rate Sensitivity - The net interest income sensitivity to a +200 bps change in interest rates is projected to be 6.4% as of September 30, 2024, compared to 4.6% on December 31, 2023 [402]. - The Company’s net interest income profile indicates an asset-sensitive position, with variable rate loans expected to increase net interest income when interest rates rise [406]. - The Company utilizes interest rate swaps to hedge variability in interest received on floating-rate loans and interest paid on floating-rate borrowings [412]. - The economic value of equity (EVE) sensitivity shows a decrease of (10.2)% for a +200 bps change in interest rates as of September 30, 2024, compared to (10.3)% on December 31, 2023 [410].