Core Viewpoint - East West Bancorp (EWBC) is currently rated with a Momentum Style Score of A, indicating strong potential for momentum investing [2][11]. Company Performance - EWBC shares have increased by 4.74% over the past week, while the Zacks Banks - West industry has risen by 6.65% during the same period [6]. - Over the past month, EWBC's price change is 21.32%, outperforming the industry's 17.8% [6]. - In the last quarter, EWBC shares rose by 15.66%, and over the past year, they have increased by 42.03%, compared to the S&P 500's gains of 7.34% and 19.81%, respectively [7]. Trading Volume - The average 20-day trading volume for EWBC is 936,419 shares, which serves as a bullish indicator when combined with rising stock prices [8]. Earnings Estimates - In the last two months, 6 earnings estimates for EWBC have been revised upwards, while only 1 has been revised downwards, leading to an increase in the consensus estimate from $8.03 to $8.12 [10]. - For the next fiscal year, 7 estimates have moved higher, with 1 downward revision [10]. Investment Recommendation - Given the strong performance metrics and positive earnings outlook, EWBC is classified as a 2 (Buy) stock with a Momentum Score of A, making it a recommended pick for investors seeking short-term gains [11].

July 23, 2024 Forward-Looking Statements and Additional Information Basis of Presentation Certain financial information in this presentation has not been prepared in accordance with GAAP and is presented on a non-GAAP basis. Investors should refer to the reconciliations included in this presentation and should consider the Company's non-GAAP measures in addition to, not as a substitute for or superior to, measures prepared in accordance with GAAP. These measures may not be comparable to similarly titled mea ...

For the quarter ended June 2024, East West Bancorp (EWBC) reported revenue of $637.9 million, down 1.2% over the same period last year. EPS came in at $2.07, compared to $2.20 in the year-ago quarter. Here is how East West Bancorp performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some ...

East West Bancorp (EWBC) came out with quarterly earnings of $2.07 per share, beating the Zacks Consensus Estimate of $1.97 per share. This compares to earnings of $2.20 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 5.08%. A quarter ago, it was expected that this bank holding company would post earnings of $2 per share when it actually produced earnings of $2.08, delivering a surprise of 4%. Over the last four quarters, the ...

Financial Performance - Net income for the second quarter of 2024 was $288 million, or $2.06 per diluted share, both up 1% quarter-over-quarter[10]. - Net income for Q2 2024 was $288,230, reflecting a 7.6% decline from $312,031 in Q2 2023[46]. - For the first half of 2024, net income was $573,305, a 9.6% decrease from $634,470 in the first half of 2023[47]. - Adjusted net income for the same period was $289,554,000, down from $292,334,000 in the prior quarter[84]. - Total revenue for the three months ended June 30, 2024, was $637,902, down 1.8% from $644,127 in the previous quarter and down 1.5% from $645,377 in the same quarter last year[79]. Asset and Loan Growth - Total assets increased to $72.5 billion as of June 30, 2024, up $1.6 billion from March 31, 2024, and up $3.9 billion, or 6%, year-over-year[8]. - Total loans reached $52.8 billion as of June 30, 2024, an increase of $0.8 billion from the previous quarter and up $3.0 billion, or 6%, year-over-year[21]. - Total loans increased by 6.3% year-over-year to $51.92 billion as of June 30, 2024, compared to $48.85 billion a year earlier[48]. - Total loans outstanding reached $51.922 billion, with commercial and industrial loans at $16.231 billion and commercial real estate loans at $20.342 billion[65]. Deposit Growth - Total deposits were $60.0 billion as of June 30, 2024, reflecting a $1.4 billion, or 2%, increase from March 31, 2024[22]. - Total deposits rose to $59.99 billion, reflecting a 2.5% increase from the previous quarter and a 7.8% increase year-over-year[36]. - The company reported a total of $7,581 million in checking deposits, reflecting an increase from $7,470 million in the previous year[65]. Capital and Ratios - The common equity tier 1 capital ratio increased to 13.74% as of June 30, 2024, indicating strong capital levels[9]. - The total capital ratio improved to 15.05%, compared to 14.84% in the previous quarter and 14.60% year-over-year[41]. - The efficiency ratio improved to 37.1% in the second quarter, compared to 38.3% in the first quarter[25]. - The efficiency ratio for the three months ended June 30, 2024, improved to 37.06%, compared to 38.33% in the previous quarter and 40.56% in the same quarter last year[79]. Interest Income and Expenses - Interest and dividend income for Q2 2024 reached $1,034,414, a 14.2% increase year-over-year from $906,134 in Q2 2023[46]. - Interest expense rose significantly by 41.8% year-over-year to $481,185 from $339,388[46]. - Net interest income after provision for credit losses decreased by 4.5% year-over-year to $516,229 from $540,746[46]. - The net interest margin was 3.27% for the quarter, compared to 3.34% in the previous quarter[51]. Credit Quality - The criticized loans ratio decreased to 2.05% of loans held-for-investment as of June 30, 2024, down from 2.30% in the previous quarter[26]. - The allowance for loan losses increased to $684 million, or 1.30% of loans held-for-investment, as of June 30, 2024[26]. - Total criticized loans as of June 30, 2024, were $1,080,243,000, down from $1,195,058,000 in the previous quarter[88]. - Total nonperforming assets as of June 30, 2024, were $196,282,000, an increase from $164,871,000 in the previous quarter[88]. Shareholder Actions - The company declared a cash dividend of $0.55 per share, payable on August 16, 2024[42]. - Approximately 560 thousand shares of common stock were repurchased for $41 million during Q2 2024, with $49 million remaining in the share repurchase authorization[42]. Future Outlook - The company plans to continue expanding its market presence and investing in new technologies to enhance service delivery[60]. - The company will host a conference call on July 23, 2024, to discuss Q2 2024 earnings and operating developments[43].

East West Bancorp (EWBC) is expected to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended June 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price. While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price chan ...

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 |