East West Loss Widens on Charges

0

East West Bancorp Inc. said its second quarter net loss increased 347 percent from a year ago because the bank took a large provision for loan losses and an impairment charge for investment securities that had fallen in value.

Shares rose Thursday morning on the Pasadena bank holding company’s more upbeat outlook for the rest of the year.

The parent of East West Bank late Wednesday reported a second quarter loss of nearly $116 million (-$1.83 per share), compared with a loss of nearly $26 million (-41 cents) a year ago. Analysts surveyed by Thomson Reuters on average had expected the company to report a loss of 42 cents per share.

The company said that the net loss was primarily caused by a $151 million provision for loan losses, which is money set aside to cover souring loans, and a $37 million impairment on investment securities.

Net interest income, before provision for loan losses, was more than $88 million. Total deposits grew to a record $8.7 billion, up 14 percent from a year earlier.

The net interest margin was 2.98 percent, a 24 basis point increase from the first quarter. Looking ahead, the company estimates its net interest margin will grow to between 3.10 percent and 3.15 percent in the third quarter, and between 3.20 percent and 3.25 percent in the fourth quarter.

“With our recent actions that have increased tangible common equity by (more than) $148 million, we believe that we have more than enough capital to withstand this prolonged downturn in the economy and will continue to work aggressively to reduce problem assets.” Chief Executive Dominic Ng said in a statement.

East West shares were up 38 cents, or 6 percent, to $6.82 in midday trading on the Nasdaq.

No posts to display