East West Bancorp(US:EWBC)2026-01-22 23:00Financial Data and Key Metrics Changes - In 2025, East West Bancorp achieved record levels in multiple categories including revenue, net interest income, fees, non-interest income, earnings per share, loans, and deposits, with a 6% year-over-year growth in both deposits and loans [4][5] - The tangible book value per share grew by 17%, and the return on tangible common equity was also 17% [5] - A quarterly dividend increase of 33% was announced, raising it to $0.80 per share [5][14] Business Line Data and Key Metrics Changes - The end-of-period loans grew by 6%, driven by growth in commercial and industrial (C&I) and residential mortgage lending [4][6] - Fee income increased by 12% in 2025, achieving record levels across various fee-based businesses [10][11] - The efficiency ratio for the fourth quarter was reported at 34.5%, with total operating non-interest expenses growing by 7.5% [11][12] Market Data and Key Metrics Changes - The bank's core deposit growth was prioritized, with a 1% improvement in demand deposit accounts (DDA) to 25% of total deposits [6] - The net interest income for the fourth quarter was $658 million, benefiting from balance sheet growth and favorable deposit mix shifts [9] - The bank expects total loan growth in 2026 to be in the range of 5%-7%, driven by continued strength in C&I and residential mortgage production [16] Company Strategy and Development Direction - The company remains committed to disciplined capital management and aims to deliver top-tier returns through prudent growth and robust risk management [5][14] - Investments in technology and hiring are expected to drive future growth, with a focus on wealth management and commercial banking [24][58] - The bank is exploring inorganic growth opportunities to bolster fee income, while maintaining a strong capital position [51][53] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic outlook for 2026, anticipating stronger loan growth compared to 2025 [20][21] - The bank is focused on maintaining high performance relative to peers, regardless of economic conditions [21] - Credit quality remains strong, with low levels of net charge-offs projected for 2026 [13][17] Other Important Information - The allowance for credit losses was increased from $791 million to $810 million, maintaining a ratio of 1.42% [14] - The bank's Common Equity Tier 1 capital ratio stands at 15.1%, well above regulatory requirements [14] Q&A Session Summary Question: Loan growth expectations for 2026 - Management acknowledged strong loan growth in Q4 but emphasized caution in projections due to seasonal patterns and economic uncertainties [19][20] Question: Expense growth areas - The bank is focusing on technology investments, hiring for wealth management, commercial banking, and risk management as key areas driving expense growth [24] Question: Fee income growth trends - Management aspires to continue double-digit growth in fee income, supported by investments in various business segments [26][27] Question: Commercial real estate (CRE) growth opportunities - There is an expectation for increased activity in CRE lending, but the bank will remain selective in partnerships [30][31] Question: Capital management and buyback strategy - The bank will continue to manage buybacks opportunistically, focusing on creating shareholder value without urgency [73] Question: Credit charge-off guidance for 2026 - The increase in charge-off guidance reflects potential individual credit migrations, despite overall strong credit quality [36][37] Question: Net interest margin outlook - The bank expects to offset declining rates with balance sheet growth, maintaining a focus on dollar net interest income [40][41] Question: Deposit costs and beta trends - Management is confident in maintaining a deposit beta exceeding 0.5, with a current beta of 0.6 [34][35]