East West Bancorp grew its commercial loans and reduced deposit costs, sending the largest Chinese-American bank to its seventh consecutive quarter of higher profits.
East West reported Wednesday a 14% jump in net income to $71.1 million in the third quarter compared with a year earlier. A 20% increase in loans at the Pasadena, Calif., company from a year earlier, to $14.3 billion, was the main reason.
"Our strong financial performance in the third quarter was driven by healthy growth in our loan and deposit portfolios," East West's chairman and chief executive, Dominic Ng, said in a news release. "As we look to 2013 and beyond, we are confident that we will be able to continue to deliver healthy financial results and return strong value to our shareholders."
Loans outside of those from failed-bank acquisitions grew 3% on a linked-quarter basis and nearly 13% from the prior year. Most of the loan growth came from commercial and trade finance loans, commercial real estate and single family loans, East West said.
Deposits also grew, but East West was able to lower its cost of maintaining them, resulting in a higher net interest income. The net interest income, excluding failed-bank deals, grew more than 8% to $196.3 million from the previous quarter. But it was down 1% from the same time last year.
Overall, East West's net interest margin shrunk 6 basis points to 3.95% on a linked-quarter basis largely because of the low interest-rate environment. East West is projecting a "relatively stable" margin of 3.9% in the fourth quarter.
"Although the interest rate and economic environment continues to be challenging for East West and the banking industry, we are confident that we will continue to perform well," Ng said. "At this point, we believe we are well on our way to another year of record earnings for East West for the full year 2012."
East West, which has $21.8 billion of assets, expects fourth-quarter earnings to reach 47 cents to 49 cents a share, in line with the 48 cents a share posted in the third quarter.
Earnings for the full year are projected to range between $1.87 and $1.89 per share, up almost 18% from the previous year.
