October 18, 2012
East West Bancorp (Nasdaq: EWBC ) reported earnings for its third quarter yesterday afternoon, and the California-based regional bank appears to have gone well. Net income increased 14% from the same quarter last year to $71.1 million, and earnings per share came in just above analysts' expectations at $0.48, an increase of 17% from last year. The bank with a strong link to Greater China experienced its seventh consecutive quarter of earnings-per-share growth, and continuing success may be ahead.
What I was watching
In addition to the income and EPS numbers referenced above, I was also watching for continued improvement nonperforming assets. The bank reported total nonperforming assets below 1% for the 12th consecutive quarter, but nevertheless saw a slight decrease to its capital ratios. Last quarter saw $952 million in total assets beyond the minimal requirements to be considered "well capitalized." This number decreased to $885 million, but it is still well above the minimum requirements.
What to expect going forward
I am still hoping for the bank to improve the quality of its dividend, but if an increase is to happen, I would anticipate it happen with the release of fourth-quarter earnings in January. With a payout ratio around 17%, there is plenty of room to grow the dividend next year. In the meantime, the bank repurchased 2.3 million shares during the quarter, returning additional value to shareholders.
Regional banks are a often a better option than some of their bigger brethren. In fact some of the best opportunities over the next few years can be found there, including one small, under-the-radar bank. It's been called one of The Stocks Only the Smartest Investors Are Buying. You can learn about it, and more, in our exclusive free report. Just click here to keep reading.