East West Bancorp Inc. said Thursday that profit rose 33% for the fourth quarter and 28% for the full year, but investors who had hoped for more battered the stock of the San Marino bank.
The parent of East West Bank earned $12.6 million, or 52 cents a share, during the quarter, up from $9.5 million, or 41 cents, in the last quarter of 2001. Yearly earnings rose to $49.5 million, or $2.01 a share, from $38.9 million, or $1.61.
East West, which has a large Chinese American clientele, has been a favorite among banking analysts, who had expected profit of 53 cents a share for the quarter. Its stock fell nearly 11% on the earnings news, although it recovered to close down $1.83 at $35.49 on Nasdaq.
One problem for East West was a smaller-than-expected margin between what it paid for deposits and what it earned on loans, a significant decline that "shocked people," said Scott Valentin, an analyst with Friedman, Billings, Ramsey & Co. in Arlington, Va.
Nonperforming assets, including noncurrent loans, also rose, though at just 0.37% of total assets as of Dec. 31 -- up from 0.20% at the end of 2001 -- they remain low by industry standards.
Analysts said investors also worried about the company's earnings expectations for this year. East West said it expected to earn $2.25 to $2.30 a share in 2003, compared with analysts' consensus expectations of $2.29 a share.
"Some people interpreted that as downward guidance on earnings," said RBC Capital Markets analyst Mark Agah in San Francisco, who noted that East West's price-to-earnings ratio is among the highest for small commercial banks.
"People think they need perfect performance and upwards guidance" because East West is so well-regarded, Agah said.
But Valentin said he thought that the sell-off in the stock was "kind of harsh," attributing it to growth investors who sell the first time a company misses expectations.
Elsewhere in California, Oakland-based Golden West Financial Corp., the parent of World Savings, said its fourth-quarter profit rose 9% as loans and deposits hit record levels and the percentage of troubled loans declined.
Golden West earned $249 million, or $1.60 a share, up from $228 million, or $1.44.
For the year, its profit rose to $958 million, or $6.12 a share, from $813 million, or $5.07, an increase of 18%.
Golden West's shares fell 29 cents to $73.89 on the New York Stock Exchange.