A rare drop in profit for East West
Saying the sagging economy was taking a toll, East West Bancorp reported a rare decline in profit Monday and slashed its estimate of 2008 earnings by 20%.
After a $9-million provision for loan losses, the Pasadena-based business lender earned $37.2 million, or 59 cents a share, in the fourth quarter, down 5% from $39.1 million, or 63 cents, a year earlier. Revenue rose 10% to $215.4 million.
Developers who borrowed from banks such as East West to build condos and homes are having trouble selling them, bank Chairman and Chief Executive Dominic Ng said.
The decline in profit was the first for East West since shortly after the Sept. 11, 2001, terrorist attacks, Ng said.
For all of 2006, East West earned $161.2 million, $2.60 per share, up 12% from $146.4 million, $2.35 a share, in 2006. Revenue rose 19% to $824.9 million.
The bank, whose depositors are mainly Chinese American, said it expected to set aside $24 million for loan losses this year, double its provision for 2007. It projected an annual profit of $2.05 to $2.10 a share. Wall Street analysts had expected $2.52 a share in 2008.
East West reported its earnings after the stock market closed. Its shares rose $1.23, or 5.2%, to $24.89 in regular trading, but fell $1.01, or 4%, to $23.88 after hours.
Cathay General Bancorp of Los Angeles, East West’s rival in the Chinese American niche, last week reported $30.9 million in fourth-quarter profit, or 62 cents a share, up 1%, from $30.5 million, or 58 cents, a year earlier. For the year, Cathay earned $125.5 million, or $2.46 a share, up from $117.6 million, or $2.27.
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