As previously reported, BofA/Merrill analyst Ebrahim Poonawala downgraded Cullen/Frost (CFR) to Underperform from Neutral given the stock's premium valuation and the downside EPS risk from lower rates he sees in his estimates, which he notes are 5% below consensus for 2020.The analyst also highlighted East West Bancorp (EWBC), on which he has a Buy rating, as a pairs trade idea, as he expects management to most likely reduce its spread revenue guidance for 2019 and that stock is currently trading at a "deeply discounted" valuation.

Common Equity Tier 1, Tier 1 and Total Risk-Based Capital Ratios at the end of Q1 were 13.41%, 13.89% and 15.35%, respectively. Q1 net interest income on a taxable-equivalent basis was $411.4M, down 3.4% vs. the prior year period. Net interest margin was 3.48% vs. 3.41% for 4Q23 and 3.47% for 1Q23. Q1 reported a credit loss expense of $13.7M and net charge-offs of $7.3M vs. a credit loss expense of $16.0M and net charge-offs of $10.9M for 4Q23 and a credit loss expense of $9.1M and net charge-offs of $8.8M for 1Q23. "The solid earnings for the first quarter show the results of our organic growth strategy and the hard work of our bankers," said CEO Phil Green. "The steady increase in loans and consistent growth in both commercial and consumer relationships reflect Frost's enduring strength and stability. We continue to make investments to fuel the sustained growth of our business into the future, including opening the second new location in our Austin expansion on April 1 of this year. I want to commend all the Frost bankers who continue to provide world-class service to more people throughout the state as we pursue our organic growth initiatives."

Truist raised the firm's price target on East West Bancorp to $86 from $90 and keeps a Buy rating on the shares as part of a broader Q1 earnings recap research note on Regional and Community Banks. The firm now sees Fed funds rate forecast shifting to zero cuts in 2024 and four 25bps cuts in 2025, the analyst tells investors in a research note. Truist adds that its revisions for the bank forecast a trough in net interest income in Q2 of 2024, followed by growth through 2025 as balance sheet growth, loan yield improvement from higher origination yields, and more favorable swaps carry offsetting Fed rate cuts in 2025.