East-West Bancorp (NASDAQ: EWBC) reported Q4 EPS of $0.87, $0.04 worse than the analyst estimate of $0.91.

HLIGHTS OF RESULTS

• Full Year and Fourth Quarter Earnings – Full year 2017 net income of $505.6 million grew by 17% year-over-year from $431.7 million; full year 2017 diluted earnings per share (“EPS”) of $3.47 grew by 17% from $2.97 in the previous year. Fourth quarter 2017 net income of $84.9 million and diluted EPS of $0.58 were reduced by $41.7 million1, or $0.291 per share, due to the enactment of the Tax Cuts and Jobs Act. This reduction in earnings was primarily attributable to the remeasurement of the net deferred tax asset as a result of the reduced corporate tax rate. Fourth quarter 2017 adjusted1 net income of $126.6 million and adjusted1 diluted EPS of $0.87 increased by 14% year-over-year, and decreased by 3% linked quarter.
• Net Interest Income Growth and Net Interest Margin Expansion – Net interest income totaled $319.7 million for the fourth quarter of 2017, an increase of $16.5 million or 5% linked quarter. Accounting Standard Codification (“ASC”) 310-30 discount accretion income was $7.0 million for the fourth quarter of 2017, compared to $4.5 million for the third quarter of 2017. Excluding discount accretion income, fourth quarter 2017 adjusted2 net interest income of $312.7 million increased by $14.1 million or 5% sequentially, due to loan growth and the expansion of loan yields. Fourth quarter 2017 net interest margin (“NIM”) of 3.57% expanded by five basis points linked quarter; adjusted2 NIM of 3.49% expanded by three basis points linked quarter.
• Record Loans – Total loans of $29.1 billion as of December 31, 2017 were up $528.4 million or 2%, from $28.5 billion as of September 30, 2017. Total loans grew by $3.5 billion or 14% year-over-year. Quarter-over-quarter, all major loan categories grew; the strongest sequential quarter loan growth came from the single-family residential mortgage portfolio.
• Record Deposits – Total deposits of $32.2 billion as of December 31, 2017 were up $908.5 million or 3%, from $31.3 billion as of September 30, 2017. Total deposits grew by $2.3 billion or 8% year-over-year. The strongest sequential quarter deposit growth came from interest-bearing checking and money market deposits. Noninterest-bearing demand deposits of $10.9 billion made up 34% of deposits as of December 31, 2017.
• Pending Sale of Desert Community Bank Branches – In November 2017, East West Bank announced the sale of its eight Desert Community Bank (“DCB”) branches and related assets and liabilities. As of December 31, 2017, branch assets held-for-sale (“HFS”) were $91.3 million, of which loans HFS were $78.1 million and deposits HFS were $605.1 million. Loans HFS were primarily commercial real estate and commercial and industrial loans. Deposits HFS were primarily composed of noninterest-bearing demand accounts and savings deposits. All regulatory approvals necessary for this transaction have been received, and the sale is expected to close in the first quarter of 2018.
• Asset Quality Metrics – The allowance for loan losses was $287.1 million, or 0.99% of loans held-for-investment (“HFI”), as of December 31, 2017, compared to $285.9 million, or 1.00% of loans HFI, as of September 30, 2017. For the fourth quarter of 2017, annualized net charge-offs were 0.22% of average loans HFI, compared to annualized net charge-offs of 0.06% of average loans HFI for the previous quarter. Full year 2017 net charge-offs were 0.08% of average loans HFI. Non-purchased credit impaired (“Non-PCI”) nonperforming assets decreased to $115.1 million, or 0.31% of total assets, as of December 31, 2017, from $117.0 million, or 0.32% of total assets, as of September 30, 2017.

For earnings history and earnings-related data on East-West Bancorp (EWBC) click here.