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1. Company Snapshot

1.a. Company Description

East West Bancorp, Inc.operates as the bank holding company for East West Bank that provides a range of personal and commercial banking services to businesses and individuals.It operates through three segments: Consumer and Business Banking, Commercial Banking, and Other.


The company accepts various deposit products, such as personal and business checking and savings accounts, money market, and time deposits.Its loan products include mortgage and home equity, commercial and residential real estate, working capital lines of credit, construction, trade finance, letters of credit, commercial business, affordable housing loans, asset-based lending, asset-backed finance, project finance, and equipment financing, as well as financing services to clients needing a financial bridge to facilitate their business transactions between the United States and China.The company also provides various wealth management, treasury management, foreign exchange, and interest rate and commodity risk hedging services; and mobile and online banking services.


As of January 27, 2022, it operated approximately 120 locations in the United States and China; full-service branches in Hong Kong, Shanghai, Shantou, and Shenzhen; and representative offices in Beijing, Chongqing, Guangzhou, Taipei, and Xiamen.East West Bancorp, Inc.was incorporated in 1998 and is headquartered in Pasadena, California.

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1.b. Last Insights on EWBC

East West Bancorp's recent momentum is driven by its robust Q3 earnings, which surpassed estimates, fueled by a 25% jump in net interest income and strong non-interest income. The company's solid fundamentals, including its high profitability and ample capital, have garnered attention from analysts, with many citing its growth potential and reasonable valuation. Institutional investors, such as Elizabeth Park Capital Advisors and California Public Employees Retirement System, have increased their stakes in the company, demonstrating confidence in its prospects. According to analysts, East West Bancorp's niche banking opportunity and strong business expansion plans make it an attractive investment opportunity for 2026, with some analysts backing it as one of the top bank stocks to watch, as reported by The Motley Fool and other financial outlets.

1.c. Company Highlights

2. East West Bancorp Surpasses Expectations with Record 2025 Performance

East West Bancorp, Inc. reported a stellar 2025 with revenues, net interest income, fees, non-interest income, earnings per share, loans, and deposits all reaching new full-year highs. The company's earnings per share (EPS) came in at $2.52, beating analyst estimates of $2.48. The strong financial performance was driven by a 6% year-over-year growth in end-of-period deposits and loans, fueled by commercial and industrial (C&I) and residential mortgage lending. The tangible book value per share grew 17%, and the company generated a 17% return on tangible common equity.

Publication Date: Jan -25

📋 Highlights
  • 2025 Full-Year Growth:: Achieved record highs in revenue, net interest income, fees, non-interest income, EPS, loans, and deposits, with 6% YoY growth in end-of-period deposits and loans.
  • Dividend Increase:: Raised quarterly dividend to $0.80/share (33% increase), reflecting strong capital position and commitment to shareholder returns.
  • ROTE & Tangible Book Value:: Delivered 17% return on tangible common equity and 17% growth in tangible book value per share, outperforming industry benchmarks.
  • 2026 Guidance:: Targets 5-7% loan growth and 5-7% net interest income growth, with fee income expansion aiming for double-digit growth exceeding balance sheet growth.
  • Asset Quality & Capital Strength:: Maintained net charge-offs at 11 bps for 2025, low non-performing assets, and a 15.1% Common Equity Tier 1 ratio, exceeding regulatory requirements.

Balance Sheet Strength and Growth Prospects

The company's balance sheet continues to demonstrate strength, with a Common Equity Tier 1 capital ratio of 15.1% and a tangible common equity ratio of 10.5%, well in excess of regulatory requirements. For 2026, East West Bancorp expects end-of-period loan growth to be in the range of 5% to 7%, driven by continued strength in C&I and residential mortgage production. The company also aspires to grow fee income at a faster pace than the overall balance sheet growth, targeting a double-digit trajectory.

Asset Quality and Credit Loss Allowance

East West Bancorp's asset quality metrics continue to outperform the industry, with net charge-offs of 8 basis points or $12 million in the fourth quarter and 11 basis points or $60 million for the full year of 2025. The allowance for credit losses was increased to $810 million, maintaining a 1.42% reserve level. The company's guidance for 2026 charge-offs is $26 million, slightly up from previous guidance, driven by individual credits rather than systemic issues.

Valuation and Dividend Yield

With a Price-to-Tangible Book Value (P/TBV) ratio of 1.73, the company's valuation appears reasonable. The Dividend Yield stands at 2.16%, and the Board declared a $0.20 increase to the quarterly dividend, up to $0.80 per share, a 33% increase. The company's strong capital position and commitment to delivering top-quartile returns support its ability to continue growing its dividend.

Outlook and Guidance

The company's net interest margin outlook remains asset-sensitive, with expectations to offset declining rate effects with balance sheet growth. East West Bancorp has been dynamically hedging for the outlook and reduced cash flow hedge headwinds, expecting tailwinds in 2026. The company is focused on making investments in technology and staffing to meet the needs of its customers and expects to continue growing, with a focus on talent-driven expansion and a 7-9% expense growth guidance for 2026.

3. NewsRoom

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East West Bancorp: Still A Winner, Just Not A Bargain

Feb -10

Source: seekingalpha.com

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East West Bancorp, Inc. (EWBC) Presents at Bank of America Financial Services Conference 2026 Transcript

Feb -10

Source: seekingalpha.com

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East West Bancorp, Inc. $EWBC Shares Sold by Thrivent Financial for Lutherans

Feb -07

Source: defenseworld.net

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Dominic Ng Sells 50,000 Shares of East West Bancorp (NASDAQ:EWBC) Stock

Feb -06

Source: defenseworld.net

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Reviewing Zions Bancorporation, N.A. (NASDAQ:ZION) and East West Bancorp (NASDAQ:EWBC)

Feb -05

Source: defenseworld.net

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Market Today: Palantir beats, Disney warns; oil slides

Feb -02

Source: gurufocus.com

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First Look: Gold Slumps, Disney (DIS) Beats, Oracle (ORCL) Plans $50B

Feb -02

Source: gurufocus.com

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East West Bancorp Q4 Earnings Call Highlights

Jan -24

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.93%)

6. Segments

Consumer and Business Banking

Expected Growth: 6.5%

East West Bancorp's 6.5% growth in Consumer and Business Banking is driven by strong loan growth, fueled by a robust California economy, increasing demand for commercial and industrial loans, and a growing presence in the mortgage market. Additionally, the bank's focus on digital transformation, customer acquisition, and relationship-based banking has contributed to the segment's growth.

Commercial Banking

Expected Growth: 7.5%

East West Bancorp, Inc.'s 7.5% commercial banking growth is driven by strong loan demand, particularly in commercial real estate and C&I lending. Additionally, the bank's strategic expansion into new markets, improved operating efficiency, and a favorable interest rate environment have contributed to its growth. Furthermore, the bank's focus on relationship-based banking and customer acquisition has also supported its growth momentum.

Other

Expected Growth: 6.0%

East West Bancorp's 6.0% growth is driven by strong loan growth, particularly in commercial and industrial loans, as well as solid deposit growth. The bank's focus on the California market, where economic growth is robust, also contributes to its growth. Additionally, the bank's efficient operations and solid credit quality support its profitability and growth.

7. Detailed Products

Consumer Banking

East West Bancorp, Inc. offers a range of consumer banking products and services, including checking and savings accounts, credit cards, personal loans, and mortgages.

Commercial Banking

The company provides commercial banking services, including cash management, commercial lending, and trade finance, to small and medium-sized businesses.

Wealth Management

East West Bancorp, Inc. offers wealth management services, including investment management, trust services, and financial planning, to individuals and families.

Treasury Management

The company provides treasury management services, including cash management, foreign exchange, and risk management, to corporate clients.

International Banking

East West Bancorp, Inc. offers international banking services, including trade finance, foreign exchange, and correspondent banking, to clients with international business needs.

8. East West Bancorp, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

East West Bancorp, Inc. operates in a highly competitive banking industry, where customers have various alternatives for their banking needs. However, the company's strong brand reputation and extensive branch network help to mitigate the threat of substitutes.

Bargaining Power Of Customers

East West Bancorp, Inc.'s customers have limited bargaining power due to the company's large customer base and diversified product offerings. Additionally, the company's strong relationships with its customers help to reduce the bargaining power of customers.

Bargaining Power Of Suppliers

East West Bancorp, Inc. has a diversified supplier base, which reduces the bargaining power of suppliers. The company's strong financial position and long-term relationships with suppliers also help to mitigate the bargaining power of suppliers.

Threat Of New Entrants

The banking industry has high barriers to entry, including regulatory hurdles and significant capital requirements. This makes it difficult for new entrants to enter the market, reducing the threat of new entrants for East West Bancorp, Inc.

Intensity Of Rivalry

The banking industry is highly competitive, with many established players competing for market share. East West Bancorp, Inc. faces intense competition from other banks and financial institutions, which can lead to pricing pressures and reduced market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 40.10%
Debt Cost 4.61%
Equity Weight 59.90%
Equity Cost 10.86%
WACC 8.36%
Leverage 66.94%

11. Quality Control: East West Bancorp, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

120.54$

Current Price

120.54$

Potential

-0.00%

Expected Cash-Flows