Core Viewpoint - East West Bancorp, Inc. (EWBC) is positioned favorably for an upcoming earnings report, with positive trends indicated by recent earnings estimate revisions [1][2]. Earnings Estimate Revisions - Analysts have recently raised their earnings estimates for EWBC, which is typically a precursor to an earnings beat [2]. - The Most Accurate Estimate for the current quarter stands at $2.24 per share, slightly above the Zacks Consensus Estimate of $2.23 per share, indicating a positive adjustment in expectations [3]. Earnings ESP and Historical Performance - EWBC has a Zacks Earnings ESP of +0.47%, suggesting a favorable outlook heading into earnings season [3]. - Historical data shows that stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% chance of delivering positive surprises and have averaged over 28% in annual returns [4]. Investment Consideration - Given the positive earnings estimate revisions and the current Zacks Rank of 3 (Hold), EWBC may be a stock worth considering for investors ahead of the earnings report [5].

Group 1 - East West Bancorp, Inc (NASDAQ: EWBC) is highlighted as a top stock due to three unexplored reasons [1] - The fundamentals of East West Bancorp are described as very good, indicating strong financial health [1] - The article expresses an interest in discussing obscure stocks alongside well-known companies like HSBC and Watches of Switzerland [1]

Core Viewpoint - East West Bancorp (EWBC) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with stock price movements, particularly due to institutional investors' reliance on these estimates for valuation [4][6]. - For East West Bancorp, the recent increase in earnings estimates suggests an improvement in the company's underlying business, likely leading to upward pressure on its stock price [5][8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a proven track record of performance, where Zacks Rank 1 stocks have generated an average annual return of +25% since 1988 [7][9]. - The upgrade of East West Bancorp to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10]. Earnings Estimate Revisions - East West Bancorp is projected to earn $8.82 per share for the fiscal year ending December 2025, with no year-over-year change, but the Zacks Consensus Estimate has increased by 2% over the past three months [8].

Group 1 - East West Bancorp, Inc. (EWBC) has reached a key level of support, indicated by a "golden cross" where the 50-day simple moving average has crossed above the 200-day simple moving average [1][2] - A golden cross is a bullish technical chart pattern that suggests a potential breakout, typically involving a short-term moving average crossing above a longer-term moving average [2][3] - EWBC has experienced a 13.6% increase over the last four weeks, indicating strong upward momentum [4] Group 2 - The company has a positive earnings outlook for the current quarter, with two upward revisions in earnings estimates over the past 60 days [4] - The Zacks Consensus Estimate for EWBC has also increased, reinforcing the bullish sentiment around the stock [4][5] - Investors are encouraged to monitor EWBC for potential gains due to the combination of technical indicators and positive earnings revisions [5]

Core Insights - East West Bancorp (EWBC) has demonstrated a strong track record of wealth creation, particularly for long-term investors [1] Company Performance - An investment in East West Bancorp made at the start of the century would have yielded significant returns, indicating the bank's ability to generate high-quality earnings over time [1]

Core Insights - East West Bancorp, Inc. (EWBC) has revised its net interest income (NII) and revenue guidance for 2025, expecting NII growth at or above the higher end of the previously stated 4-6% range and revenue growth to exceed 6% from an earlier projection of 5-7% [1][3][8] Financial Performance - The company anticipates continued positive impacts on NII due to deposit repricing conducted in the first quarter, which has stabilized the mix of non-interest-bearing and interest-bearing products [2] - Total revenues are now expected to rise more than 6% this year, with a focus on robust fee growth in non-interest income through treasury deposit services and foreign exchange solutions [3][8] Balance Sheet and Growth - EWBC has experienced modest increases in deposits and loans this year, maintaining its loan growth guidance at 4-6% for 2025 [3] - The outlook for total operating non-interest expenses remains unchanged, with an expected increase of 7-9% due to higher headcount and technological expenses, partially offset by lower deposit account expenses [4] Client Management and Strategy - Clients of East West Bancorp have effectively managed tariff impacts over the past nine years by diversifying supply chains and relocating production, demonstrating resilience amid changing trade dynamics [5][8] Shareholder Value - The company has announced an additional share repurchase plan of $300 million, with $244 million of authorization available for repurchase as of March 31, 2025 [6] Stock Performance - Over the past year, EWBC shares have gained 34.2%, outperforming the industry's growth of 24.9% [7]

Summary of East West Bank Conference Call Company Overview - **Company**: East West Bank - **Industry**: Banking and Financial Services Key Points and Arguments Client Sentiment and Tariff Impact - Clients have been proactive in dealing with tariffs for nearly a decade, indicating a consistent approach to trade dynamics [4][5] - Activity levels among clients have stabilized, contrary to expectations of a decline, providing a solid base for the second quarter [5][6] - Clients are making decisions without waiting for clarity on future tariff changes, demonstrating a readiness to adapt [6][7] Supply Chain Adjustments - Many clients have diversified their supply chains, moving production to locations such as Mexico and the U.S. [10][12] - Clients are shipping inventory to mitigate risks associated with tariffs, indicating a strategic approach to inventory management [11][12] Economic Environment - The broader U.S. consumer demand remains strong, positively influencing client performance and bank operations [13][14] - Employment dynamics in Southern California are positive, contributing to a stable economic output [13] Financial Performance - Deposits and loans have increased modestly quarter over quarter, aligning with the bank's guidance [14] - The bank anticipates NII (Net Interest Income) growth above the higher end of previous guidance due to positive trends in loan and deposit growth [20][21] Loan Growth and Asset Sensitivity - Loan growth is projected at 4% to 6%, with current trends suggesting a potential for higher growth [21][24] - The bank is adjusting its asset sensitivity, moving towards a more balanced approach in response to market conditions [31][32] Commercial and Industrial (C&I) Growth - Growth is observed in sectors such as entertainment and alternative energy, with ongoing investments in these areas [34][35] - Trade finance activity has stabilized, contributing positively to the bank's balance sheet [36] Private Credit and NDFI Loans - The bank views its relationship with private credit firms as more of a partnership rather than competition, focusing on lower leverage opportunities [37][40] - NDFI (Non-Depository Financial Institution) loans are growing, particularly in sectors like solar energy, with a low default risk profile [42][44] Residential Mortgage and Commercial Real Estate (CRE) - Residential mortgage growth remains stable, with consistent new volume added to the balance sheet [46] - The bank is strategically managing its CRE exposure to reduce concentration, focusing on existing profitable relationships [47][48] Efficiency and Growth Strategy - East West Bank maintains a better efficiency ratio than peers due to a straightforward business model focused on core markets [52][53] - The bank is expanding into new markets such as Dallas, Houston, and New York, seeking to capitalize on growth opportunities [55][61] Fee Growth Opportunities - The bank is investing in core treasury deposit services and expanding payment processing capabilities, which are expected to drive fee growth [66][70] Credit Quality and Capital Management - Credit quality remains stable, with no significant deterioration observed despite macroeconomic uncertainties [71][72] - The bank's CET1 ratio stands at 14.3%, indicating a strong capital position, with a cautious approach to buybacks in the current environment [75][76] Additional Important Insights - The bank's focus on tailored solutions for core customers allows for targeted growth strategies without overextending resources [52][53] - The management emphasizes the importance of finding the right talent to drive expansion in new markets [56][58] - The bank remains vigilant and opportunistic regarding capital return strategies, adapting to market conditions as necessary [76][77]

[Forward-Looking Statements](index=4&type=section&id=FORWARD-LOOKING%20STATEMENTS) Forward-looking statements are based on current assumptions and subject to inherent uncertainties and risks that could cause actual results to differ materially - Forward-looking statements are subject to known and unknown risks and uncertainties, and readers **should not place undue reliance on them**[10](index=10&type=chunk) - Key risk factors include changes in **local, regional, and global business, economic, and political conditions**, soundness of other financial institutions, changes in laws or regulatory environment, and changes in interest rates[11](index=11&type=chunk) [PART I — FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This part presents the unaudited consolidated financial statements and detailed notes for the quarterly period ended March 31, 2025 [Item 1. Consolidated Financial Statements](index=6&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This item provides the unaudited consolidated financial statements, offering a snapshot of the company's financial position and performance [Consolidated Balance Sheets (Unaudited)](index=6&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) The balance sheets detail the company's financial position, showing a slight increase in total assets driven by AFS debt securities and loans Consolidated Balance Sheet Highlights | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Total Assets | 76,165,013 | 75,976,475 | | Cash and cash equivalents | 3,448,284 | 5,250,742 | | AFS Debt Securities | 12,384,912 | 10,846,811 | | Loans held-for-investment (net) | 53,517,878 | 53,024,585 | | Total Deposits | 63,052,105 | 63,175,023 | | Total Liabilities | 68,235,548 | 68,253,421 | | Total Stockholders' Equity | 7,929,465 | 7,723,054 | [Consolidated Statement of Income (Unaudited)](index=7&type=section&id=Consolidated%20Statement%20of%20Income%20(Unaudited)) The income statement shows a 2% year-over-year increase in net income, driven by higher net interest and noninterest income Consolidated Income Statement Highlights | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Total interest and dividend income | 1,031,802 | 1,023,617 | | Total interest expense | 431,601 | 458,478 | | Net interest income before provision | 600,201 | 565,139 | | Provision for credit losses | 49,000 | 25,000 | | Total noninterest income | 92,102 | 78,487 | | Total noninterest expense | 252,148 | 246,374 | | Income before income taxes | 391,155 | 372,252 | | Income tax expense | 100,885 | 87,177 | | Net Income | 290,270 | 285,075 | | Basic EPS | 2.10 | 2.04 | | Diluted EPS | 2.08 | 2.03 | [Consolidated Statement of Comprehensive Income (Unaudited)](index=8&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income%20(Unaudited)) Comprehensive income increased significantly due to positive net changes in unrealized gains on AFS debt securities and cash flow hedges Consolidated Comprehensive Income Highlights | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Net income | 290,270 | 285,075 | | Net changes in unrealized gains (losses) on AFS debt securities | 57,285 | (2,317) | | Net changes in unrealized gains (losses) on cash flow hedges | 31,280 | (46,330) | | Other comprehensive income (loss) | 90,245 | (42,137) | | Comprehensive Income | 380,515 | 242,938 | [Consolidated Statement of Changes in Stockholders' Equity (Unaudited)](index=9&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Stockholders'%20Equity%20(Unaudited)) Total stockholders' equity increased by $206 million, driven by net income and other comprehensive income, offset by share repurchases Changes in Stockholders' Equity | Metric | Amount ($ in thousands) | | :--- | :--- | | Balance, January 1, 2025 | 7,723,054 | | Net income | 290,270 | | Other comprehensive income | 90,245 | | Issuance of common stock | 13,186 | | Repurchase of common stock (stock compensation) | (17,747) | | Repurchase of common stock (repurchase program) | (85,442) | | Cash dividends on common stock | (84,101) | | Balance, March 31, 2025 | 7,929,465 | [Consolidated Statement of Cash Flows (Unaudited)](index=10&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows%20(Unaudited)) The cash flow statement details a net decrease in cash, with increased cash from operations offset by higher usage in investing activities Consolidated Cash Flow Highlights | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | 277,886 | 266,239 | | Net cash used in investing activities | (2,035,470) | (1,871,576) | | Net cash (used in) provided by financing activities | (45,677) | 1,201,987 | | Net decrease in cash and cash equivalents | (1,802,458) | (404,183) | | Cash and cash equivalents, end of period | 3,448,284 | 4,210,801 | [Notes to Consolidated Financial Statements (Unaudited)](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes provide crucial details on the basis of presentation, accounting policies, and specific financial instruments [Note 1 — Basis of Presentation and Current Accounting Developments](index=12&type=section&id=Note%201%20%E2%80%94%20Basis%20of%20Presentation%20and%20Current%20Accounting%20Developments) The interim financial statements are prepared per U.S. GAAP and should be read in conjunction with the 2024 Form 10-K - The interim financial statements are presented in accordance with U.S. GAAP and should be read in conjunction with the **2024 Form 10-K**[33](index=33&type=chunk) - New accounting pronouncements adopted on January 1, 2025 (ASU 2023-05 and ASU 2024-02) **did not have a material impact** on the Consolidated Financial Statements[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 2 — Fair Value Measurement and Fair Value of Financial Instruments](index=12&type=section&id=Note%202%20%E2%80%94%20Fair%20Value%20Measurement%20and%20Fair%20Value%20of%20Financial%20Instruments) This note details fair value measurement practices, categorizing financial instruments into Level 1, 2, or 3 based on input observability - The company categorizes assets and liabilities into three levels based on the fair value hierarchy, with **Level 1** for quoted prices in active markets, **Level 2** for observable inputs, and **Level 3** for unobservable inputs[35](index=35&type=chunk)[40](index=40&type=chunk) Assets Measured at Fair Value on a Recurring Basis | Asset Category | Level 1 ($ in thousands) | Level 2 ($ in thousands) | Level 3 ($ in thousands) | Total Fair Value ($ in thousands) | | :--- | :--- | :--- | :--- | :--- | | AFS debt securities | 930,981 | 11,453,931 | — | 12,384,912 | | Affordable housing partnership, tax credit and CRA investments, net (Equity securities) | 21,280 | 4,235 | — | 25,515 | | Other assets (Equity securities) | 630 | — | — | 630 | | Gross derivative assets | — | 513,479 | 418 | 513,897 | Liabilities Measured at Fair Value on a Recurring Basis | Liability Category | Level 1 ($ in thousands) | Level 2 ($ in thousands) | Level 3 ($ in thousands) | Total Fair Value ($ in thousands) | | :--- | :--- | :--- | :--- | :--- | | Gross derivative liabilities | — | 448,965 | 15,119 | 464,084 | - **Level 3** fair value measurements for recurring items primarily consist of warrant equity contracts issued by private companies and liability-classified contingently issuable shares related to the Rayliant investment[51](index=51&type=chunk) [Note 3 — Securities Purchased under Resale Agreements and Sold under Repurchase Agreements](index=22&type=section&id=Note%203%20%E2%80%94%20Securities%20Purchased%20under%20Resale%20Agreements%20and%20Sold%20under%20Repurchase%20Agreements) This note details resale and repurchase agreements, highlighting their role in credit risk management and balance sheet offsetting - Gross securities purchased under resale agreements were **$425 million** as of both March 31, 2025, and December 31, 2024[69](index=69&type=chunk) - Overnight gross securities sold under repurchase agreements with unrelated counterparties were **$270 million** as of March 31, 2025, with no such agreements as of December 31, 2024[70](index=70&type=chunk) - The company manages credit exposure from these transactions using **master netting agreements and collateral arrangements**, and did not hold any reserves for credit impairment for these agreements[68](index=68&type=chunk) [Note 4 — Securities](index=24&type=section&id=Note%204%20%E2%80%94%20Securities) This note details the AFS and HTM debt securities portfolios, showing a $1.5 billion increase in AFS securities while HTM remained stable AFS Debt Securities | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Amortized Cost | 12,962,469 | 11,505,775 | | Gross Unrealized Gains | 27,372 | 15,273 | | Gross Unrealized Losses | (604,929) | (674,237) | | Fair Value | 12,384,912 | 10,846,811 | HTM Debt Securities | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Amortized Cost | 2,905,341 | 2,917,413 | | Gross Unrealized Losses | (470,049) | (529,659) | | Fair Value | 2,435,292 | 2,387,754 | - As of March 31, 2025, the company had **536 AFS debt securities** in a gross unrealized loss position, primarily due to interest rate movement and spread widening, but **no credit impairment was recognized**[84](index=84&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) [Note 5 — Derivatives](index=30&type=section&id=Note%205%20%E2%80%94%20Derivatives) This note describes the use of derivative instruments to manage interest rate and foreign currency risks and to assist customers - The company uses **interest rate swaps and collars** as cash flow hedges to manage variability in interest received on floating-rate commercial loans[102](index=102&type=chunk) Derivative Financial Instruments | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Notional Amount (Cash flow hedges) | 4,250,000 | 5,250,000 | | Fair Value Assets (Cash flow hedges) | 25,982 | 5,647 | | Fair Value Liabilities (Cash flow hedges) | 12,153 | 35,211 | - Derivatives not designated as hedging instruments include interest rate, commodity, and foreign exchange derivatives entered into with customers and **offsetting economic hedges** with third-party financial institutions[105](index=105&type=chunk) [Note 6 — Loans Receivable and Allowance for Credit Losses](index=37&type=section&id=Note%206%20%E2%80%94%20Loans%20Receivable%20and%20Allowance%20for%20Credit%20Losses) This note details the loan portfolio composition, credit quality, and a $33 million increase in the allowance for credit losses Loans Held-for-Investment | Loan Type | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Commercial & Industrial (C&I) | 17,460,744 | 17,397,158 | | Total Commercial Real Estate (CRE) | 20,529,960 | 20,274,944 | | Total Residential Mortgage | 16,211,399 | 15,987,074 | | Total Loans Held-for-Investment | 54,252,734 | 53,726,637 | Allowance for Credit Losses | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Allowance for loan losses | 734,856 | 702,052 | | Allowance for unfunded credit commitments | 40,464 | 39,526 | | Total allowance for credit losses | 775,320 | 741,578 | - The increase in the allowance for credit losses was primarily driven by **net loan growth, qualitative risk assessment, and a cautious economic outlook** reflecting concerns about inflation and high interest rates[157](index=157&type=chunk) [Note 7 — Affordable Housing Partnership, Tax Credit and Community Reinvestment Act Investments, Net](index=50&type=section&id=Note%207%20%E2%80%94%20Affordable%20Housing%20Partnership%2C%20Tax%20Credit%20and%20Community%20Reinvestment%20Act%20Investments%2C%20Net) This note details investments in affordable housing, tax credit, and CRA projects, which qualify for CRA consideration and tax credits - The company invests in affordable housing projects and other tax credit initiatives for CRA purposes, utilizing the **proportional amortization method (PAM)** for eligible investments[161](index=161&type=chunk)[163](index=163&type=chunk) Investment Balances | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Total Assets | 930,058 | 926,640 | | Total Unfunded Commitments | 382,583 | 407,864 | Tax Credits and Amortization | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Total tax credits and benefits | 49,300 | 58,162 | | Total amortization | 44,012 | 50,377 | [Note 8 — Goodwill](index=53&type=section&id=Note%208%20%E2%80%94%20Goodwill) Total goodwill remained unchanged at $466 million, with a qualitative assessment in Q1 2025 concluding no impairment existed - Total goodwill was **$466 million** as of both March 31, 2025, and December 31, 2024, with **no impairment identified** after a qualitative assessment in Q1 2025[169](index=169&type=chunk) - The company's investment in Rayliant included **$101 million of equity method goodwill** as of March 31, 2025[170](index=170&type=chunk) [Note 9 — Federal Home Loan Bank Advances and Long-Term Debt](index=54&type=section&id=Note%209%20%E2%80%94%20Federal%20Home%20Loan%20Bank%20Advances%20and%20Long-Term%20Debt) FHLB advances remained at $3.5 billion, with available borrowing capacity totaling $10.3 billion as of March 31, 2025 Debt Balances | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Junior subordinated debt | 32,079 | 32,001 | | FHLB advances | 3,500,000 | 3,500,000 | - The Bank's available borrowing capacity from FHLB advances totaled **$10.3 billion** as of March 31, 2025, secured by real estate loans[173](index=173&type=chunk) [Note 10 — Commitments and Contingencies](index=54&type=section&id=Note%2010%20%E2%80%94%20Commitments%20and%20Contingencies) This note outlines credit-related commitments totaling $12.04 billion, with an estimated loss exposure of $40 million Credit-Related Commitments | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Loan commitments | 9,107,690 | 9,128,040 | | Commercial letters of credit and SBLCs | 2,932,661 | 2,917,029 | | Total | 12,040,351 | 12,045,069 | - The estimated exposure to loss from these commitments is included in the allowance for unfunded credit commitments, totaling **$40 million** as of March 31, 2025[178](index=178&type=chunk) - The company is a party to various legal actions but does not believe any pending proceedings would have a **material adverse effect** on its financial condition[181](index=181&type=chunk)[182](index=182&type=chunk) [Note 11 — Stock Compensation Plans](index=56&type=section&id=Note%2011%20%E2%80%94%20Stock%20Compensation%20Plans) This note details stock compensation plans, with total costs of $13.2 million for Q1 2025 and $85 million of unrecognized costs Stock Compensation Costs | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Stock compensation costs | 13,186 | 12,989 | | Related net tax benefits | 2,655 | 783 | - As of March 31, 2025, there was **$58 million** of unrecognized compensation costs for time-based RSUs and **$27 million** for performance-based RSUs[186](index=186&type=chunk) [Note 12 — Stockholders' Equity and Earnings Per Share](index=57&type=section&id=Note%2012%20%E2%80%94%20Stockholders'%20Equity%20and%20Earnings%20Per%20Share) Diluted EPS increased to $2.08, and the company authorized an additional $300 million for stock repurchases Earnings Per Share | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Basic EPS | $2.10 | $2.04 | | Diluted EPS | $2.08 | $2.03 | - The company's Board of Directors authorized an additional **$300 million** for common stock repurchases on January 22, 2025, valid until December 31, 2026[189](index=189&type=chunk)[378](index=378&type=chunk) [Note 13 — Accumulated Other Comprehensive Income (Loss)](index=57&type=section&id=Note%2013%20%E2%80%94%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) AOCI improved from a loss of $(585) million to $(495) million, driven by unrealized gains on debt securities and cash flow hedges Changes in AOCI | Metric | Amount ($ in thousands) | | :--- | :--- | | Balance, January 1, 2025 | (585,260) | | Net unrealized gains (losses) arising during the period (Debt Securities) | 57,377 | | Net unrealized gains (losses) arising during the period (Cash Flow Hedges) | 26,325 | | Net unrealized gains (losses) arising during the period (Foreign Currency Translation) | (1,012) | | Amounts reclassified from AOCI | 7,555 | | Balance, March 31, 2025 | (495,015) | - The net change in AOCI for the three months ended March 31, 2025, was a **gain of $90.245 million**, a significant improvement compared to a loss of $42.137 million in the same period of 2024[190](index=190&type=chunk) [Note 14 — Business Segments](index=58&type=section&id=Note%2014%20%E2%80%94%20Business%20Segments) This note describes the company's three reportable operating segments and the internal funds transfer pricing process used for reporting - The company operates through three segments: **Consumer and Business Banking, Commercial Banking, and Treasury and Other**, defined by customer type and services[194](index=194&type=chunk) - The internal **funds transfer pricing (FTP)** process charges a cost to fund loans and allocates credits for funds from deposits, using internal FTP rates to measure segment profitability[198](index=198&type=chunk) Income (Loss) Before Income Taxes by Segment | Segment | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Consumer and Business Banking | 175,177 | 202,577 | | Commercial Banking | 162,296 | 205,135 | | Treasury and Other | 53,682 | (35,460) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=60&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This item provides a comprehensive discussion of the company's results of operations, financial condition, liquidity, and capital resources [Overview](index=63&type=section&id=Overview) East West Bancorp is a bank holding company focused on the U.S. and Asia, monitoring potential impacts of new tariffs and regulations - East West Bancorp, Inc. is a bank holding company with **$76.2 billion in total assets** as of March 31, 2025, focusing on U.S. and Asia markets through consumer, commercial, and treasury segments[205](index=205&type=chunk) - Recent economic developments, including **new tariffs**, have raised concerns about economic growth, inflation, and market volatility, potentially affecting loan demand and performance[206](index=206&type=chunk) - The company is monitoring **California Climate Reporting Laws** (SB 253, SB 261, SB 219) and SEC climate disclosure rules, engaging a third-party firm for implementation[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) [Financial Review](index=65&type=section&id=Financial%20Review) The financial review highlights a 2% year-over-year increase in net income to $290 million, driven by higher revenue and improved efficiency Financial Highlights | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Net interest income before provision for credit losses | 600,201 | 565,139 | | Noninterest income | 92,102 | 78,487 | | Total revenue | 692,303 | 643,626 | | Net income | 290,270 | 285,075 | | Diluted earnings per share | 2.08 | 2.03 | | Return on average assets (ROAA) | 1.56 % | 1.60 % | | Efficiency ratio | 36.42 % | 38.28 % | - Total assets reached **$76.2 billion** as of March 31, 2025, an increase of $189 million from December 31, 2024, driven by AFS debt securities and net loans[220](index=220&type=chunk) - Stockholders' equity was **$7.9 billion** as of March 31, 2025, up $206 million or 3% from December 31, 2024, contributing to a book value per share of $57.54[220](index=220&type=chunk) [Results of Operations](index=66&type=section&id=Results%20of%20Operations) This section analyzes operating results, focusing on the drivers behind the 2% increase in net income for Q1 2025 compared to Q1 2024 [Net Interest Income](index=66&type=section&id=Net%20Interest%20Income) Net interest income increased by 6% to $600 million, and net interest margin increased by one basis point to 3.35% for Q1 2025 Net Interest Income and Margin | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net interest income before provision for credit losses ($ in thousands) | 600,201 | 565,139 | | Net interest margin | 3.35 % | 3.34 % | - Average interest-earning assets increased by **$4.6 billion (7%)** year-over-year to $72.7 billion, driven by a $5.2 billion increase in AFS debt securities and $1.4 billion in loan growth[223](index=223&type=chunk) - The average cost of funds **decreased by 33 basis points** year-over-year to 2.64% for Q1 2025, mainly due to a 30 basis point decrease in the average cost of deposits[229](index=229&type=chunk)[230](index=230&type=chunk) [Noninterest Income](index=71&type=section&id=Noninterest%20Income) Noninterest income increased by 17% to $92 million, driven by higher wealth management, foreign exchange, and lending fees Noninterest Income Breakdown | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Commercial and consumer deposit-related fees | 27,075 | 24,948 | | Lending and loan servicing fees | 26,230 | 22,925 | | Foreign exchange income | 15,837 | 11,469 | | Wealth management fees | 13,679 | 8,637 | | Total noninterest income | 92,102 | 78,487 | - The increase in wealth management fees was due to **higher customer demand** for products like fixed-rate bonds and fixed income annuities[240](index=240&type=chunk) [Noninterest Expense](index=71&type=section&id=Noninterest%20Expense) Noninterest expense increased by 2% to $252 million, mainly due to higher operating expenses and compensation and benefits Noninterest Expense Breakdown | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Compensation and employee benefits | 146,435 | 141,812 | | Deposit account expense | 9,042 | 12,188 | | Computer and software related expenses | 13,314 | 11,344 | | Deposit insurance premiums and regulatory assessments | 10,385 | 19,649 | | Other operating expense | 41,541 | 32,458 | | Amortization of tax credit and CRA investments | 15,742 | 13,207 | | Total noninterest expense | 252,148 | 246,374 | - The decrease in deposit insurance premiums was primarily due to a **lower FDIC special assessment charge** ($1 million in Q1 2025 vs. $10 million in Q1 2024)[245](index=245&type=chunk) [Income Taxes](index=72&type=section&id=Income%20Taxes) Income tax expense increased by 16% to $101 million, with the effective tax rate rising to 25.8% from 23.4% Income Tax Analysis | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Income before income taxes | 391,155 | 372,252 | | Income tax expense | 100,885 | 87,177 | | Effective tax rate | 25.8 % | 23.4 % | [Operating Segment Results](index=72&type=section&id=Operating%20Segment%20Results) This section breaks down financial performance by operating segment, highlighting varying contributions and changes in net income - **Consumer and Business Banking** net income decreased by 14% year-over-year, primarily due to lower net interest income from decreased interest rates[253](index=253&type=chunk) - **Commercial Banking** net income decreased by 21% year-over-year, mainly due to a decline in net interest income and an increased provision for credit losses[255](index=255&type=chunk) - **Treasury and Other** segment income before income taxes significantly increased by $89 million, primarily due to a $98 million increase in net interest income[258](index=258&type=chunk) [Balance Sheet Analysis](index=75&type=section&id=Balance%20Sheet%20Analysis) This section analyzes key balance sheet components, including debt securities, loans, deposits, and regulatory capital ratios [Debt Securities](index=75&type=section&id=Debt%20Securities) The debt securities portfolio is managed for interest income and liquidity, with AFS securities increasing 14% to $12.4 billion - AFS debt securities increased by **$1.5 billion (14%)** from December 31, 2024, to $12.4 billion, mainly due to purchases of GNMA securities[267](index=267&type=chunk) - Pre-tax net unrealized losses on AFS debt securities were **$578 million** as of March 31, 2025, an improvement from $659 million as of December 31, 2024[267](index=267&type=chunk) - All HTM debt securities are issued, guaranteed, or supported by the U.S. government, resulting in a **zero credit loss assumption** and no allowance for credit losses[269](index=269&type=chunk) [Loan Portfolio](index=78&type=section&id=Loan%20Portfolio) The diversified loan portfolio increased by 1% to $54.25 billion, with commercial loans constituting 70% of the total Loan Portfolio Composition | Loan Type | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Commercial & Industrial (C&I) | 17,460,744 | 17,397,158 | | Total Commercial Real Estate (CRE) | 20,529,960 | 20,274,944 | | Total Consumer | 16,262,030 | 16,054,535 | | Total Loans Held-for-Investment | 54,252,734 | 53,726,637 | - The C&I loan portfolio is **well-diversified by industry**, with real estate investment & management, capital call lending, and media & entertainment being the largest sectors[276](index=276&type=chunk) - The total CRE loan portfolio has a weighted-average LTV ratio of **49%** and is primarily concentrated in **California (68%)**[277](index=277&type=chunk)[279](index=279&type=chunk) [Foreign Outstandings](index=84&type=section&id=Foreign%20Outstandings) International branches in Hong Kong and China hold significant financial assets, each representing 3% of total consolidated assets Foreign Branch Assets | Branch | Cash and cash equivalents ($ in thousands) | AFS debt securities ($ in thousands) | Loans held-for-investment ($ in thousands) | Total Assets ($ in thousands) | % of Total Consolidated Assets | | :--- | :--- | :--- | :--- | :--- | :--- | | Hong Kong | 752,879 | 741,528 | 964,130 | 2,465,208 | 3% | | China Subsidiary Bank | 652,847 | 126,572 | 1,172,225 | 1,977,880 | 3% | Foreign Branch Revenue | Branch | Total Revenue ($ in thousands) | % of Total Consolidated Revenue | | :--- | :--- | :--- | | Hong Kong | 17,813 | 3% | | China Subsidiary Bank | 7,752 | 1% | [Capital](index=84&type=section&id=Capital) The company maintains a strong capital base, with stockholders' equity increasing by 3% to $7.9 billion as of March 31, 2025 - Stockholders' equity increased by **$206 million (3%)** to $7.9 billion as of March 31, 2025, primarily due to net income and other comprehensive income[292](index=292&type=chunk) - The company's Board of Directors authorized an additional **$300 million** for common stock repurchases on January 22, 2025[293](index=293&type=chunk) - The company paid a quarterly common stock cash dividend of **$0.60 per share** in Q1 2025, up from $0.55 per share in Q1 2024[294](index=294&type=chunk) [Deposits](index=85&type=section&id=Deposits) Deposits, the primary funding source, totaled $63.1 billion, with a slight decrease driven by changes in checking and demand deposits Deposit Composition | Deposit Type | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Noninterest-bearing demand | 15,169,775 | 15,450,428 | | Interest-bearing checking | 7,591,847 | 7,940,692 | | Time deposits | 23,664,707 | 23,215,772 | | Total deposits | 63,052,105 | 63,175,023 | - The loan-to-deposit ratio was **86%** as of March 31, 2025, up from 85% as of December 31, 2024[325](index=325&type=chunk) - Uninsured domestic deposits represented **44% of total domestic deposits** as of March 31, 2025, down from 46% at December 31, 2024[298](index=298&type=chunk) [Regulatory Capital and Ratios](index=86&type=section&id=Regulatory%20Capital%20and%20Ratios) The company and its subsidiary bank continue to exceed all "well-capitalized" regulatory capital requirements under Basel III Capital Rules Regulatory Capital Ratios | Ratio | March 31, 2025 (Company) | December 31, 2024 (Company) | Minimum Regulatory Requirements including Capital Conservation Buffer | Well-Capitalized Requirements | | :--- | :--- | :--- | :--- | :--- | | Common Equity Tier 1 (CET1) capital | 14.3 % | 14.3 % | 7.0 % | 6.5 % (Bank only) | | Tier 1 capital | 14.3 % | 14.3 % | 8.5 % | 8.0 % | | Total capital | 15.6 % | 15.6 % | 10.5 % | 10.0 % | | Tier 1 leverage | 10.5 % | 10.4 % | 4.0 % | 5.0 % (Bank only) | - Total risk-weighted assets increased by **$424 million to $55.4 billion** from December 31, 2024, primarily due to loan growth[305](index=305&type=chunk) - The **CECL transition provision**, which allowed for a phase-out of the initial adoption impact on regulatory capital, was no longer in effect as of March 31, 2025[301](index=301&type=chunk) [Risk Management](index=87&type=section&id=Risk%20Management) The company operates under a Board-approved enterprise risk management program to identify, manage, monitor, and report various risks [Credit Risk Management](index=88&type=section&id=Credit%20Risk%20Management) Credit risk is managed through a robust framework, with criticized loans increasing by 6% while nonaccrual loans decreased by 4% - Criticized loans increased by **$72 million (6%) to $1.2 billion** during Q1 2025, primarily due to higher criticized CRE loans[314](index=314&type=chunk) - Nonaccrual loans decreased by **$6 million (4%) to $153 million** as of March 31, 2025, driven by paydowns and charge-offs of commercial nonaccrual loans[318](index=318&type=chunk) Nonperforming Assets | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Total nonaccrual loans | 153,200 | 159,018 | | OREO, net | 29,003 | 35,077 | | Total nonperforming assets | 182,203 | 194,095 | | Nonperforming assets to total assets | 0.24 % | 0.26 % | [Liquidity Risk Management](index=91&type=section&id=Liquidity%20Risk%20Management) The company manages liquidity risk by maintaining liquid assets and diverse funding sources, with total available liquidity at $36.1 billion - The company's primary funding source is deposits, totaling **$63.1 billion** as of March 31, 2025, with a loan-to-deposit ratio of 86%[325](index=325&type=chunk) Available Liquidity | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | 3,448,284 | 5,250,742 | | Unused secured borrowing capacity from FHLB | 10,337,616 | 9,928,152 | | Unused secured borrowing capacity from FRB | 13,226,882 | 12,383,005 | | Unpledged securities | 9,018,423 | 7,819,531 | | Total available liquidity | 36,063,993 | 35,429,628 | - The parent company, East West, held **$359 million in on-hand liquidity** as of March 31, 2025, primarily from cash dividends from its subsidiary, East West Bank[334](index=334&type=chunk) [Market Risk Management](index=94&type=section&id=Market%20Risk%20Management) Market risk, primarily interest rate risk, is managed by the ALCO using simulation models and interest rate sensitivity analyses - The company is primarily exposed to **interest rate risk** due to mismatches in asset and liability cash flows from lending and deposit-taking activities[338](index=338&type=chunk) - The company transitioned its net interest income volatility simulations from a **static to a dynamic balance sheet approach** and adopted market forward rates[341](index=341&type=chunk) Net Interest Income Sensitivity Analysis | Change in Interest Rates (in bps) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | +200 | 4.2 % | 4.7 % | | +100 | 3.2 % | 3.5 % | | -100 | (3.7)% | (4.0)% | | -200 | (6.5)% | (7.4)% | [Critical Accounting Policies and Estimates](index=99&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights critical accounting policies involving significant judgments, including allowance for credit losses and fair value estimates - Critical accounting policies and estimates include **allowance for credit losses, fair value estimates, goodwill impairment, and income taxes**, all involving subjective judgments[363](index=363&type=chunk) [Reconciliation of GAAP to Non-GAAP Financial Measures](index=99&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section provides reconciliations of non-GAAP measures like ROATCE and tangible book value per share to their GAAP equivalents Return on Average Tangible Common Equity (ROATCE) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net income ($ in thousands) | 290,270 | 285,075 | | Tangible net income (non-GAAP, $ in thousands) | 290,476 | 285,292 | | Return on average common equity (ROAE) | 14.96 % | 16.40 % | | Return on average tangible common equity (ROATCE) (non-GAAP) | 15.92 % | 17.60 % | Tangible Book Value Per Share | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Book value per share | $57.54 | $55.79 | | Tangible book value per share (non-GAAP) | $54.13 | $52.39 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=101&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item refers to other sections for quantitative and qualitative disclosures regarding the company's market risk - Disclosures about market risk are provided in **Note 5 (Derivatives)** and **Item 2. MD&A (Market Risk Management)**[370](index=370&type=chunk) [Item 4. Controls and Procedures](index=101&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - The company's disclosure controls and procedures were deemed **effective** as of March 31, 2025, following an evaluation by management, including the CEO and CFO[371](index=371&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter ended March 31, 2025[373](index=373&type=chunk) [PART II — OTHER INFORMATION](index=102&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This part contains other information not included in the financial statements, such as legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=102&type=section&id=Item%201.%20Legal%20Proceedings) This item refers to Note 10 for information on legal proceedings, which is incorporated by reference - Information on legal proceedings is incorporated by reference from **Note 10 — Commitments and Contingencies**[375](index=375&type=chunk) [Item 1A. Risk Factors](index=102&type=section&id=Item%201A.%20Risk%20Factors) This item states that there have been no material changes to the company's risk factors as presented in its 2024 Form 10-K - **No material changes** to the company's risk factors have occurred since the 2024 Form 10-K filing[376](index=376&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=103&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item summarizes common stock repurchase activity during Q1 2025, with $244 million remaining under its repurchase programs Issuer Purchases of Equity Securities | Calendar Month | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased (in millions) | | :--- | :--- | :--- | :--- | | January | — | $— | $329 | | February | 476,900 | $97.58 | $283 | | March | 441,449 | $88.09 | $244 | | First quarter | 918,349 | $93.02 | | - The company repurchased **918,349 shares** of common stock in Q1 2025, with **$244 million remaining** under its authorized repurchase programs[377](index=377&type=chunk) [Item 5. Other Information](index=103&type=section&id=Item%205.%20Other%20Information) No directors or Section 16 reporting officers adopted or terminated any Rule 10b5-1 trading arrangement during the quarter - **No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements** were adopted or terminated by directors or Section 16 officers during Q1 2025[379](index=379&type=chunk) [Item 6. Exhibits](index=103&type=section&id=Item%206.%20Exhibits) This item lists the exhibits filed with the quarterly report, including corporate governance documents, certifications, and XBRL files - The exhibits include corporate governance documents, employment agreements, **Sarbanes-Oxley Act certifications**, and Inline XBRL taxonomy documents[381](index=381&type=chunk) [GLOSSARY OF ACRONYMS](index=105&type=section&id=GLOSSARY%20OF%20ACRONYMS) This section provides a comprehensive list of acronyms used throughout the report and their corresponding definitions - The glossary defines key acronyms used in the report, such as **AFS** (Available-for-sale), **HTM** (Held-to-maturity), **CECL** (Current expected credit Losses), and **ROATCE** (Return on average tangible common equity)[383](index=383&type=chunk) [SIGNATURE](index=106&type=section&id=SIGNATURE) This section contains the signature of the registrant, certifying the due authorization of the report - The report is signed by **Christopher J. Del Moral-Niles, Executive Vice President and Chief Financial Officer** of East West Bancorp, Inc., on May 9, 2025[386](index=386&type=chunk)

Company Overview - East West Bancorp (EWBC) is headquartered in Pasadena and has experienced a price change of -10.97% this year [3] - The company currently pays a dividend of $0.6 per share, resulting in a dividend yield of 2.81%, which is lower than the Banks - West industry's yield of 3.33% and the S&P 500's yield of 1.65% [3] Dividend Performance - The current annualized dividend of $2.40 represents a 9.1% increase from the previous year [4] - Over the past 5 years, East West Bancorp has increased its dividend 5 times, achieving an average annual increase of 18.60% [4] - The company's payout ratio is currently 29%, indicating that it paid out 29% of its trailing 12-month EPS as dividends [4] Earnings Growth - The Zacks Consensus Estimate for EWBC's earnings for 2025 is $8.74 per share, reflecting a year-over-year growth rate of 5.30% [5] Investment Considerations - EWBC is considered a compelling investment opportunity due to its strong dividend profile and current Zacks Rank of 3 (Hold) [7] - The company is positioned as a strong dividend play, appealing to income investors despite the general trend of high-yielding stocks struggling during periods of rising interest rates [7]

Financial Data and Key Metrics Changes - The company reported record revenue for the first quarter of 2025, with end-of-period loans growing 1% quarter-over-quarter to a new record level of $54 billion [6][7] - Net interest income increased to $600 million, up $12 million from Q4, and net interest margin rose by 11 basis points to 3.35% [20][21] - The return on tangible common equity was nearly 16%, and the return on average assets was 1.6% [10] Business Line Data and Key Metrics Changes - Fee income grew by 8%, driven by strong customer activity across various categories [8][21] - Residential mortgage origination remained steady, with a strong pipeline for Q2, while commercial real estate balances also grew [16] - The efficiency ratio for Q1 was 36.4%, indicating industry-leading efficiency [22] Market Data and Key Metrics Changes - The non-performing assets ratio decreased by two basis points to 24 basis points at quarter-end [9][25] - The criticized loans ratio increased to 2.3%, with classified loans rising to 1.38% [25][28] - The allowance for loan losses increased to 1.35% of total loans, reflecting a proactive approach to credit risk management [26][28] Company Strategy and Development Direction - The company aims to capitalize on opportunities arising from economic uncertainties while maintaining a strong capital position [13][28] - There is a focus on diversifying revenue streams and enhancing fee income through customer engagement and service expansion [7][21] - The management emphasized the importance of a strong balance sheet to support customers and navigate economic challenges [13][60] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are adapting to economic uncertainties and diversifying supply chains, which positions the company favorably [11][12] - The company remains vigilant regarding credit risk and is prepared for potential economic downturns [26][60] - Future loan growth will depend on economic conditions, with a cautious approach to lending in uncertain times [62][66] Other Important Information - The company repurchased approximately 920,000 shares for $85 million and distributed $85 million to shareholders via dividends [29][30] - The effective tax rate for 2025 is expected to be below 23% [31] Q&A Session Summary Question: Why is the NII guide not moving higher? - The guidance remains appropriate due to anticipated rate cuts and current economic outlook [35] Question: Can the deposit beta be sustained? - The positive momentum may slow as the forward curve flattens, but the company expects to remain above the 50% guide [37] Question: What is the outlook for capital return and buybacks? - The company will continue to be opportunistic with buybacks while maintaining a strong position to support customers [45][46] Question: Are current tariff risks larger than in previous years? - Clients are better prepared now compared to 2017, and the company is actively engaging with clients to manage risks [50][52] Question: How does the company view loan growth opportunities? - The company has the capital and balance sheet to support clients, but loan growth will depend on economic conditions [60][62] Question: What is the strategy for growing fee income? - The company focuses on domestic lending fees and wealth management, with some fees tied to cross-border activity [71] Question: Can you elaborate on the allowance build rationale? - The allowance increase was driven by a higher weighting for downside scenarios due to economic uncertainties [74] Question: What are the expectations for expenses in the coming quarters? - The company remains comfortable with its expense guidance while continuing to invest in technology and infrastructure [80] Question: What is the strategy for security purchases in liquidity management? - The focus is on purchasing high-quality liquid assets, primarily Ginnie Mae securities [120]