East West Bancorp(US:EWBC)2026-01-22 23:02Financial Data and Key Metrics Changes - 2025 was a record-breaking year for the company, achieving new full-year record levels in revenue, net interest income, fees, non-interest income, earnings per share, loans, and deposits [5] - End-of-period deposits grew by 6% year-over-year, with significant traction in both non-interest-bearing and time deposits [5] - End-of-period loans also increased by 6%, driven by growth in commercial and industrial (C&I) and residential mortgage lending [5] - Tangible book value per share grew by 17%, and the company generated a 17% return on tangible common equity [6] Business Line Data and Key Metrics Changes - Fee income grew by 12% in 2025, achieving record levels driven by strong performance in wealth management, derivatives, foreign exchange, deposit fees, and lending fees [11] - C&I loan growth in Q4 was primarily driven by new relationships, with expectations for continued strength in 2026 [9] - Residential mortgage lending also performed well, with a strong pipeline expected to contribute consistently to growth [9] Market Data and Key Metrics Changes - The company reported a fourth-quarter net interest income of $658 million, benefiting from short-term liability sensitivity and favorable deposit mix shifts [10] - The cost of deposits decreased by 23 basis points quarter-over-quarter, with a total reduction of 105 basis points since the start of the cutting cycle [10] Company Strategy and Development Direction - The company remains committed to disciplined capital management and delivering top-tier returns for shareholders through prudent growth and robust risk management [7] - A focus on deposit growth through dedicated business checking campaigns is planned to continue into 2026 [8] - The company aims to maintain a balanced growth strategy across multiple loan categories, including C&I, CRE, and residential mortgages [36] 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] - The company is focused on maintaining high performance relative to peers, regardless of economic conditions [22] - Management expects net interest income growth to be in the range of 5%-7% for 2026, driven by balance sheet growth [11] Other Important Information - The board declared a $0.20 increase to the quarterly dividend, raising it to $0.80 per share, a 33% increase [7] - The company’s regulatory capital ratios remain well above regulatory requirements, with a Common Equity Tier 1 capital ratio of 15.1% [16] Q&A Session Summary Question: Loan growth expectations for 2026 - Management acknowledged strong loan growth in Q4 but emphasized caution in projecting future growth due to potential economic volatility [21] Question: Areas of expense growth - The company is investing in technology, hiring for wealth management, commercial banking, and risk management, with a focus on supporting future growth [25][26] Question: Fee income growth trends - Management aims to continue double-digit growth in fee income, supported by investments in various business areas [33] Question: Commercial real estate (CRE) growth opportunities - Management expects to see increased activity in CRE lending, focusing on long-term relationships with experienced operators [34][36] Question: Capital management and buyback strategy - The company will continue to be opportunistic with buybacks, focusing on creating value for shareholders [100] Question: Credit charge-off guidance for 2026 - The increase in charge-off guidance reflects potential individual credit issues, despite overall strong credit metrics [46][48] Question: Net interest margin outlook - Management expects to offset declining rates with balance sheet growth, maintaining a focus on dollar net interest income [52] Question: Deposit costs and trends - The company has been disciplined in managing deposit costs and expects to maintain a beta exceeding 0.5 [45] Question: Blockchain and cryptocurrency integration - Management is monitoring developments in blockchain technology but sees it as still early for significant integration into their services [70]