Western Bancorp said its fourth-quarter earnings would be 5% below analysts' expectations because of recent interest rate cuts.
Since September, the Federal Reserve has cut rates from 4.75% to 4.25%, and economists are forecasting another cut this year. Fast-growing Western, based in Newport Beach, Calif., said the rate cuts have put the squeeze on the bank's net interest margins by as much as 20 basis points.
Analysts had expected Western, with $3.1 billion of assets, to earn 45 cents a share in the fourth quarter.
Western officials also said that the reduction in interest rates would continue to impact its balance sheet throughout 1999.