Core Insights - East West Bancorp (EWBC) has consistently beaten earnings estimates, with an average surprise of 5.44% over the last two quarters [1][5]. Earnings Performance - For the last reported quarter, East West Bancorp achieved earnings of $2.08 per share, surpassing the Zacks Consensus Estimate of $2 per share, resulting in a 4% surprise [5]. - In the previous quarter, the company was expected to report earnings of $1.89 per share but delivered $2.02 per share, yielding a surprise of 6.88% [5]. Earnings Estimates - Recent estimates for East West Bancorp have been trending upward, with a positive Earnings ESP (Expected Surprise Prediction) indicating a strong potential for an earnings beat [6][8]. - The current Earnings ESP for East West Bancorp is +1.21%, suggesting that analysts are optimistic about the company's earnings prospects [8]. Zacks Rank and Predictive Power - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings beat, with historical data indicating that nearly 70% of stocks with this combination produce a positive surprise [7][8].

Core Insights - The article discusses a screening process for identifying high-quality dividend-paying companies in the Financials sector, highlighting Mastercard (MA) as an elite performer and East West Bancorp (EWBC) as an elite value [2][9]. Dividend Growth Investment - Dividend growth investors seek companies with a history of consistent and increasing payouts, which provide a growing income stream while minimizing the need to sell shares [3]. - The compounding effect of reinvesting dividends can significantly accelerate portfolio growth, especially when combined with long-term capital appreciation [3]. - Three options for dividend growth investors include buying ETFs, building a selective portfolio, or blending both strategies [3]. Screening Process for Financials - The Financials sector comprises 682 companies, with 465 paying dividends, ranking just behind Utilities and REITs [4]. - Eight screening criteria are applied to identify high-quality long-term compounders, including a minimum of five years of increasing dividends and a minimum five-year revenue growth rate of 5% [4]. - This screening process narrows down the pool of dividend payers to 23 companies [4]. Elite Performer: Mastercard (MA) - Mastercard has a strong competitive position, benefiting from a highly efficient business model and significant investments in emerging technologies [7]. - The company has shown impressive growth metrics, including a 5-year revenue CAGR of 11.0% and a 3-year EPS CAGR of 24.5% [8]. - Despite a Quant Rating of F for valuation, Mastercard is considered reasonably priced relative to its historical averages, with a current share price target around $440 [7]. Elite Value: East West Bancorp (EWBC) - East West Bancorp is the sixth largest regional bank in the U.S., with a market cap of $10 billion and a strong position in China-U.S. business relations [9]. - The bank ranks first in several key metrics, including Tier 1 Capital Ratio (12.87) and EPS (3-year CAGR of 21.6%) [9]. - The average price target among Wall Street analysts is $88.60, with a recommendation to initiate or add to a position up to $76 [10]. ETF Considerations - Financials are heavily weighted in major dividend-focused ETFs, with significant holdings in companies like JPMorgan Chase (JPM), Visa (V), and Mastercard (MA) [11]. - Investors should be aware of the companies they are invested in through these ETFs and consider adjusting their positions accordingly [11].

East West Bancorp, Inc. (EWBC) remains well-poised for growth on the back of decent loan growth, low-cost deposits, higher rates and diversified fee income streams. However, elevated expenses and weak asset quality are major headwinds. EWBC primarily emphasizes an organic growth strategy that is evident from the company's net interest income (NII) growth, which is the primary source of its revenues. While the metric dipped in 2020 on account of a tough operating backdrop, the same experienced a 12% compound ...

[Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This report contains forward-looking statements subject to risks and uncertainties, where actual results may differ materially - This report contains forward-looking statements based on current assumptions and are subject to risks and uncertainties. These statements are not guarantees of future performance and actual results could differ materially[10](index=10&type=chunk) - Key factors that could cause results to differ from forward-looking statements include, but are not limited to[11](index=11&type=chunk)[13](index=13&type=chunk) - Changes in the global economy, inflation, and interest rate environment - The soundness of other financial institutions and impacts from bank failures - Changes in laws or the regulatory environment - Shifts in trade, monetary, and fiscal policies, particularly between the U.S. and China - Fluctuations in commercial and consumer real estate markets - Cyber-attacks and technology disruptions - Future credit quality and performance [PART I — FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Consolidated Financial Statements](index=6&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) Unaudited consolidated financial statements for Q1 2024 show total assets increased to **$70.9 billion**, driven by available-for-sale securities and deposits, while net income decreased to **$285.1 million** due to lower net interest income and higher expenses [Consolidated Balance Sheet](index=6&type=section&id=Consolidated%20Balance%20Sheet) Total assets increased to **$70.9 billion** as of March 31, 2024, driven by available-for-sale debt securities, with deposits growing to **$58.6 billion** and a shift from BTFP to FHLB borrowings Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$70,875,670** | **$69,612,884** | | Cash and cash equivalents | $4,210,801 | $4,614,984 | | Available-for-sale debt securities, at fair value | $8,400,468 | $6,188,337 | | Loans held-for-investment, net | $51,322,224 | $51,542,039 | | **Total Liabilities** | **$63,852,438** | **$62,662,050** | | Total deposits | $58,560,624 | $56,092,438 | | BTFP borrowings | $0 | $4,500,000 | | FHLB advances | $3,500,000 | $0 | | **Total Stockholders' Equity** | **$7,023,232** | **$6,950,834** | [Consolidated Statement of Income](index=7&type=section&id=Consolidated%20Statement%20of%20Income) Net income for Q1 2024 decreased to **$285.1 million** from **$322.4 million** YoY, primarily due to a 6% drop in net interest income and a 13% rise in noninterest expense Income Statement Summary (in thousands, except per share data) | Income Statement Item | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total interest and dividend income | $1,023,617 | $835,506 | | Total interest expense | $458,478 | $235,645 | | **Net interest income before provision** | **$565,139** | **$599,861** | | Provision for credit losses | $25,000 | $20,000 | | Total noninterest income | $78,988 | $59,978 | | Total noninterest expense | $246,875 | $218,447 | | **Net Income** | **$285,075** | **$322,439** | | **Diluted EPS** | **$2.03** | **$2.27** | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key accounting updates, including ASU 2023-02 adoption, impacted retained earnings by **$9 million**, while total loans remained stable at **$52.0 billion** and criticized loans increased to **$1.2 billion** - The company adopted ASU 2023-02 on January 1, 2024, which expanded the scope of the proportional amortization method (PAM) for tax credit investments, resulting in a **$9 million** decrease to opening retained earnings[35](index=35&type=chunk) - As of March 31, 2024, the company had **$8.4 billion** in Available-for-Sale (AFS) debt securities and **$2.9 billion** in Held-to-Maturity (HTM) debt securities at amortized cost, with the AFS portfolio having gross unrealized losses of **$736.5 million** primarily due to interest rate movements[78](index=78&type=chunk) - The company uses various derivative instruments to manage interest rate and foreign currency risks, with derivatives designated as hedging instruments having a notional amount of **$5.3 billion** and non-hedging derivatives **$21.9 billion** as of March 31, 2024[100](index=100&type=chunk) - Total loans held-for-investment were stable at **$52.0 billion** as of March 31, 2024, with commercial loans representing **70%** of the portfolio and consumer loans making up the remaining **30%**[120](index=120&type=chunk) - During Q1 2024, the company repurchased **1,181,851** shares of common stock for **$82 million** under its authorized stock repurchase program, with approximately **$89 million** remaining available for future repurchases as of March 31, 2024[195](index=195&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=60&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 2024 net income decreased 12% to **$285 million** due to lower net interest income and margin compression, while total assets grew to **$70.9 billion** with increased deposits and strong capital ratios [Financial Review](index=62&type=section&id=Financial%20Review) Q1 2024 net income declined 12% to **$285 million**, with diluted EPS at **$2.03**, driven by lower net interest income and higher noninterest expense, though total assets reached **$70.9 billion** Q1 2024 vs Q1 2023 Performance Summary (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income | $285,075 | $322,439 | | Diluted EPS | $2.03 | $2.27 | | Net Interest Income | $565,139 | $599,861 | | Noninterest Expense | $246,875 | $218,447 | | ROA | 1.60% | 2.01% | | ROE | 16.40% | 21.15% | | Net Interest Margin | 3.34% | 3.96% | - **Asset Growth**: Total assets increased by **$1.3 billion** (2%) from year-end 2023 to **$70.9 billion**[220](index=220&type=chunk) - **Deposit Growth**: Total deposits grew by **$2.5 billion** (4%) from year-end 2023 to **$58.6 billion**[220](index=220&type=chunk) - **Borrowings Shift**: Total borrowings decreased by **$1.1 billion**, with a **$4.5 billion** payoff of BTFP borrowings offset by a **$3.5 billion** increase in FHLB advances[220](index=220&type=chunk) - **Strong Capital**: Book value per share increased to **$50.48** from **$49.64** at year-end 2023[220](index=220&type=chunk) [Results of Operations](index=63&type=section&id=Results%20of%20Operations) Q1 2024 operating results show a 6% decline in net interest income to **$565.1 million** due to higher funding costs, while noninterest income rose 32% and noninterest expense increased 13% - Net interest margin compressed by **62 bps** year-over-year to **3.34%**, as the average cost of funds rose **128 bps** to **2.97%**, while the yield on average interest-earning assets increased by only **53 bps** to **6.04%**[221](index=221&type=chunk)[223](index=223&type=chunk)[228](index=228&type=chunk) - Noninterest income increased by **$19 million** (32%) YoY, primarily due to a **$10 million** impairment write-off on an AFS debt security in Q1 2023 not recurring in Q1 2024, along with higher lending and wealth management fees[237](index=237&type=chunk)[241](index=241&type=chunk) - Noninterest expense increased by **$28 million** (13%) YoY, mainly due to a **$12 million** increase in compensation and a **$12 million** increase in deposit insurance premiums, which included a **$10 million** additional FDIC special assessment charge[243](index=243&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk) [Balance Sheet Analysis](index=72&type=section&id=Balance%20Sheet%20Analysis) The balance sheet expanded to **$70.9 billion** as of March 31, 2024, with AFS securities growing to **$8.4 billion** and the loan portfolio stable at **$52.0 billion**, maintaining a conservative CRE LTV - The AFS debt securities portfolio increased by **36%** to **$8.4 billion** from year-end 2023, mainly due to purchases of GNMA securities, with **99%** of the AFS portfolio rated investment grade[263](index=263&type=chunk)[265](index=265&type=chunk) - Total loans held-for-investment were stable at **$52.0 billion**, with the portfolio composed of **70%** commercial loans (**$36.6 billion**) and **30%** consumer loans (**$15.3 billion**)[268](index=268&type=chunk)[269](index=269&type=chunk) - The total CRE loan portfolio of **$20.3 billion** is well-diversified by property type and has a weighted-average LTV of **50%**, with office properties constituting **11%** of the CRE portfolio[276](index=276&type=chunk)[277](index=277&type=chunk) [Capital](index=81&type=section&id=Capital) The company maintained strong capital ratios, with CET1 at **13.5%**, exceeding 'well-capitalized' requirements, while stockholders' equity increased to **$7.0 billion** and **$82 million** in stock was repurchased Regulatory Capital Ratios | Ratio | March 31, 2024 (Company) | Well-Capitalized Requirement | | :--- | :--- | :--- | | Common Equity Tier 1 | 13.5% | 6.5% (Bank) | | Tier 1 Capital | 13.5% | 8.0% (Bank) | | Total Capital | 14.8% | 10.0% (Bank) | | Tier 1 Leverage | 10.1% | 5.0% (Bank) | - During Q1 2024, the company repurchased **1,181,851** shares for **$82 million**, with **$89 million** remaining available under the stock repurchase program as of March 31, 2024[292](index=292&type=chunk) - A quarterly cash dividend of **$0.55** per share was paid in Q1 2024, and another **$0.55** per share dividend was declared for Q2 2024[295](index=295&type=chunk) [Deposits and Other Sources of Funding](index=82&type=section&id=Deposits%20and%20Other%20Sources%20of%20Funding) Total deposits increased by **$2.5 billion** to **$58.6 billion**, with a shift towards higher-cost time deposits, while BTFP borrowings were repaid and replaced by FHLB advances Deposit Composition (in thousands) | Deposit Type | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Noninterest-bearing demand | $14,798,927 | $15,539,872 | | Interest-bearing checking | $7,570,427 | $7,558,908 | | Money market | $13,585,597 | $13,108,727 | | Time deposits | $20,771,280 | $18,043,464 | | **Total Deposits** | **$58,560,624** | **$56,092,438** | - Uninsured domestic deposits, after adjusting for collateralized and affiliate deposits, were **$23.4 billion**, or **42%** of total domestic deposits, a stable ratio compared to year-end 2023[301](index=301&type=chunk) [Risk Management](index=84&type=section&id=Risk%20Management) Risk management includes an ERM framework, with criticized loans increasing to **$1.2 billion** and nonperforming assets to **$165 million**, while liquidity remains strong at **$30.1 billion** - Criticized loans increased by **22%** from year-end 2023 to **$1.2 billion**, representing **2.30%** of loans held-for-investment[317](index=317&type=chunk)[319](index=319&type=chunk) - Nonperforming assets rose **45%** to **$165 million**, or **0.23%** of total assets, up from **0.16%** at year-end 2023[320](index=320&type=chunk) - Total liquidity sources, including cash and borrowing capacity, stood at **$30.1 billion** as of March 31, 2024[334](index=334&type=chunk) Net Interest Income Sensitivity (Instantaneous Shift) | Change in Interest Rates (bps) | % Change in NII (Mar 31, 2024) | | :--- | :--- | | +200 | 2.7% | | +100 | 2.0% | | -100 | (3.2)% | | -200 | (6.6)% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=94&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risk disclosures are referenced in the MD&A and Note 6, with interest rate risk identified as the primary exposure - The company's disclosures regarding market risk are detailed in Item 2 (MD&A - Risk Management) and Note 6 (Derivatives) of this Form 10-Q[377](index=377&type=chunk) [Item 4. Controls and Procedures](index=94&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report[378](index=378&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[380](index=380&type=chunk) [PART II — OTHER INFORMATION](index=95&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=95&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions, but management does not anticipate a material adverse effect on its financial condition - The company is involved in various legal actions in the ordinary course of business, but management does not expect them to have a material adverse effect on its financial condition[188](index=188&type=chunk)[383](index=383&type=chunk) [Item 1A. Risk Factors](index=95&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since the 2023 Annual Report on Form 10-K - No material changes to the risk factors disclosed in the company's 2023 Form 10-K have occurred[384](index=384&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=96&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2024, the company repurchased **1,181,851** common shares for **$82 million**, with **$89 million** remaining available under the repurchase program Q1 2024 Stock Repurchase Activity | Calendar Month | Total Shares Purchased | Average Price Paid per Share | Approximate Dollar Value Remaining (in millions) | | :--- | :--- | :--- | :--- | | January | 0 | $0.00 | $172 | | February | 1,181,851 | $69.76 | $89 | | March | 0 | $0.00 | $89 |

Shares of East West Bancorp, Inc. (EWBC) gained 2.92% in after-market trading following the release of better-than-expected first-quarter 2024 results. Adjusted earnings per share of $2.08 surpassed the Zacks Consensus Estimate of $2.00. However, the bottom line declined 10.3% from the prior-year quarter.Results were primarily aided by an increase in non-interest income. Also, deposit balances increased sequentially in the quarter. However, lower net interest income (NII) and higher expenses and provisions ...

Financial Data and Key Metrics Changes - First quarter 2024 net income was $285 million or $2.03 per diluted share, with adjusted earnings per share at $2.08, up 3% from the fourth quarter [3] - Return on tangible common equity was 18% and return on average assets was 1.6% [4] - Tangible book value per share grew 2% quarter-over-quarter and 14% year-over-year [4] - Net interest income for Q1 was $565 million, with a net interest margin of 3.34%, which compressed more than expected [114] Business Line Data and Key Metrics Changes - Average loans increased by 1%, with residential mortgages showing durable demand despite seasonal slowdowns [98][100] - Average commercial and industrial (C&I) balances grew 2%, while commercial real estate (CRE) loans remained flat [10][113] - Average deposits grew by $2 billion, reflecting a 4% increase and reaching record levels [11] Market Data and Key Metrics Changes - The criticized loans ratio increased to 2.3% of loans, with special mention loans rising to 1.05% [103] - Non-performing assets ratio was 23 basis points at quarter end, with annualized net charge-offs up by 2 basis points to 17 basis points [112] Company Strategy and Development Direction - The company aims to support customer lending growth while maintaining a conservative balance sheet [99] - Focus on adding granular consumer and business deposits, with a strategy to optimize capital through buybacks and dividends [41][106] - The company expects to see loan growth pick up in Q2, driven by strong residential mortgage and C&I portfolios [116] Management's Comments on Operating Environment and Future Outlook - Management anticipates further net interest margin (NIM) compression in Q2 due to deposit mix shifts but expects asset growth to stabilize NIM later in the year [39] - The economic outlook suggests a resilient first half with a potential softening in the second half, leading to expectations of rate cuts beginning in Q3 [116] - The company remains vigilant in managing credit risks and expects quarterly net charge-offs to be in the range of 15 to 25 basis points [138] Other Important Information - The company repurchased 1.2 million shares for approximately $82 million during the first quarter [41] - Regulatory capital ratios remain well above requirements, with a common equity Tier 1 capital ratio of 13.5% [91] Q&A Session Summary Question: What are the drivers for loan growth from here? - Management expects loan growth to pick up in Q2, driven by strong customer interactions and existing pipelines [124] Question: How does the company view the impact of rate cuts on net interest income? - The company anticipates that rate cuts will begin in Q3 and expects a decline in net interest income in the range of 2% to 4% [116] Question: What is the company's strategy regarding talent acquisition? - The company is selective in hiring new talent, focusing on individuals who fit the East West Bank culture and values [71][72]

For the quarter ended March 2024, East West Bancorp (EWBC) reported revenue of $644.13 million, down 2.4% over the same period last year. EPS came in at $2.08, compared to $2.32 in the year-ago quarter.The reported revenue represents a surprise of +0.84% over the Zacks Consensus Estimate of $638.75 million. With the consensus EPS estimate being $2.00, the EPS surprise was +4.00%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall S ...

East West Bancorp (EWBC) came out with quarterly earnings of $2.08 per share, beating the Zacks Consensus Estimate of $2 per share. This compares to earnings of $2.32 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 4%. A quarter ago, it was expected that this bank holding company would post earnings of $1.89 per share when it actually produced earnings of $2.02, delivering a surprise of 6.88%.Over the last four quarters, the c ...

East West Bancorp, Inc. 135 N. Los Robles Ave., 7th Fl. Pasadena, CA 91101 Tel. 626.768.6000 NEWS RELEASE FOR INVESTOR INQUIRIES, CONTACT: Christopher Del Moral-Niles, CFA Adrienne Atkinson Chief Financial Officer Director of Investor Relations T: (626) 768-6860 T: (626) 788-7536 E: chris.delmoralniles@eastwestbank.com E: adrienne.atkinson@eastwestbank.com EAST WEST BANCORP REPORTS NET INCOME FOR FIRST QUARTER OF 2024 OF $285 MILLION AND DILUTED EARNINGS PER SHARE OF $2.03 Pasadena, California – April 23, 2 ...

East West Bancorp, Inc. (EWBC) is well-positioned for revenue growth on the back of steady loan demand, higher rates and sustained client acquisition efforts. However, an escalated expense base and weak asset quality remain near-term headwinds.EWBC’s organic growth strategy is reflected in its net interest income (NII) growth trajectory. Despite a dip in its NII in 2020 (owing to a tough operating backdrop), the metric witnessed a compound annual growth rate (CAGR) of 12% over the last four years ended 2023 ...