East West Reports Strong Results
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The fast-growing Chinese American banks East West Bancorp Inc. in San Marino and UCBH Holdings Inc. in San Francisco reported sharply higher second-quarter earnings Thursday on strong growth in lending.
But declining interest rates dragged down profit by 9% from a year earlier at Downey Financial Corp. in Newport Beach, Southern California’s largest savings and loan.
East West reported net income of $14.7 million, or 60 cents a share, up 20% from $12.2 million, or 49 cents, in the same period last year.
The bank said its loan portfolio has grown by 18% this year to more than $2.7 billion, and Chairman Dominic Ng predicted continued growth for the rest of the year.
East West easily beat Wall Street’s earnings expectations of 53 cents a share, and its stock rose $1.56 Thursday to $38.85 on Nasdaq.
Downey earned $18.5 million, or 66 cents a share, down from $20.4 million, or 72 cents, in the second quarter of 2002. Heavy home loan refinancings resulted in a loss of nearly $22 million from the S&L;’s loan-servicing operation, which collects mortgage payments.
That trend could be reversed this quarter, said Friedman Billings Ramsey analyst Laurie Hunsicker, who noted that the yield on the 10-year Treasury bill, which influences mortgage rates, has risen from 3.5% on June 30 to nearly 4%.
If the yield remains in the 4% range, Downey would record a positive income of $5 million on servicing this quarter, Hunsicker said.
Downey’s results came in far short of analysts’ consensus estimates of $1.02 a share in earnings, and its stock fell 32 cents to $42.95 on the New York Stock Exchange.
UCBH, the parent of United Commercial Bank, recorded a profit of $15.4 million, or 35 cents a share, up 57% from $9.8 million, or 24 cents, in last year’s second quarter.
It said new loan commitments totaled $509.5 million, up from $396 million during the first quarter.
UCBH announced its financial results after the close of the markets. Its shares fell 62 cents to $29.61 during regular Nasdaq trading.
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