Wednesday, July 28, 2010

Earnings Reports Are In: FDIC-Assisted Banks Thrive

Umpqua Holdings

Posted on 07/28/10 at 9:18am
by Scott Loeb

Analysts at J.P. Morgan reiterated their Overweight rating on shares of Umpqua Holdings (UMPQ), while increasing their price target to $15 from $13.50.

In their report J.P. Morgan writes, "With the company moving more quickly on offense, a strong pipeline of FDIC targets in its cross-hairs, and well positioned for long-term organic growth, we view the current peer-level valuation on the shares as a buying opportunity."

Umpqua Holdings Corporation operates as the bank holding company for Umpqua Bank that provides commercial and retail banking services to corporate, institutional, and individual customers primarily in the areas of Oregon, northern California, and Washington.

East West Bancorp

By Shanthi Venkataraman

07/28/10 - 10:04 AM EDT

PASADENA,Calif. (TheStreet) -- California-based East West Bancorp(EWBC) swung to profit in the second quarter helped by the improving credit quality and successful integration of the United Commercial Bank acquisition.

Net income for the second quarter came in at $36.3 million or 21 cents a share, compared to a loss of $92.1 million in the year-ago quarter. Analysts were expecting 18 cents a share.

The results included a pre-tax gain of $19.5 million in relation to the FDIC-assisted acquisition of Seattle-based Washington First International Bank (WFIB)in June. East West acquired total assets of $492.6 million, including $313.9 million of loans (net of purchase accounting adjustments) and assumed $395.9 million in deposits. The acquisition was the third FDIC-assisted deal the bank participated in.

Net interest income before provision of losses rose 130 % to $203.62 million from $88.2 million in the year-ago quarter. Net interest margins improved to 3.98% from 2.98% in the second quarter of 2009, as the bank secured funding at lower costs. It grew core deposits by 5% or $359.9 million during the quarter, excluding the impact of WFIB acquisition. Meanwhile, the cost of deposits declined 67 basis points year-on-year to 0.8%

Credit quality showed significant improvement, with provision for loan losses declined 64% to $55.3 million from $151.4 million in June 2009. Net charge-offs declined 59% to $55.2 million. Non -performing assets as a percentage of total assets declined to 0.9% from 1.5%

Management expects that the provision for loan losses and net charge-offs will continue to decrease for the second half of 2010 and range from $35 million to $40 million for the third quarter of 2010.