East West Bancorp profit rises nearly 9%; Cathay General up 2.5%
East West Bancorp Inc. reported an 8.8% increase in fourth-quarter profit, closing out a year of general improvement at the largest Chinese American bank, and rival Cathay General Bancorp said its earnings rose 2.5%.
The results at East West, announced Wednesday afternoon, were in line with Wall Street’s expectations. The Pasadena company’s stock fell 1 cent to $23.16 before the earnings were released.
East West’s profit margin on lending fell from 4.13% to 3.84% over the course of the year, a common pinch for banks in recent quarters as old loans are paid off and new ones put on the books at lower rates. Deposits and loans rose, while troubled assets dropped along with provisions for loan losses.
The parent of East West Bank said it earned $70.2 million, or 49 cents a share, in the quarter after paying dividends to preferred shareholders. That was up from $64.5 million, or 43 cents a share, in the fourth quarter of 2011.
Assets rose to $22.5 billion from $22 billion over the course of the year.
It was the third straight year of record profit for East West and the eighth consecutive quarter of earnings per share growth, said Dominic Ng, the bank’s chairman and chief executive.
East West said it would raise its annual stock dividend 50% to 60 cents a share, and would buy back $200 million in stock this year, the same as in 2012.
Cathay General, the Los Angeles parent to Cathay Bank, said it earned $24.2 million, or 31 cents a share, after paying preferred dividends, compared with $23.6 million, or 30 cents a share, in the fourth quarter of 2011.
The results fell 2 cents short of analysts’ expectations. The stock fell 19 cents, or about 1%, to $19.78 before the earnings were released Wednesday.
Loan balances grew and nonperforming assets declined at Cathay, the second-largest Asian American bank with $10.7 billion in assets. ‘
Cathay also said that the California Department of Financial Institutions and the Federal Deposit Insurance Corp. had lifted an informal order requiring the bank to raise more capital and improve lending practices.
Cathay said the lifting of this so-called memorandum of understanding would enable it to open more branches over the next two years.
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