• Revenue Growth: Record levels achieved in 2024.
• Deposit Growth: $7 billion increase, 13% growth to $63.2 billion.
• Loan Growth: Average loans grew by 6% for the year.
• Net Interest Margin: Stable at 3.24%.
• Fee Income Growth: 12% increase in 2024.
• Efficiency Ratio: 36.9% in the fourth quarter.
• Net Charge-Offs: $64 million in the fourth quarter.
• Allowance for Credit Losses: $702 million, 1.31% of total loans.
• Common Equity Tier 1 Capital Ratio: 14.3%.
• Share Repurchase: 200,000 shares repurchased at $98 per share.
• Dividend Increase: 9% increase to $0.60 per share.

• Warning! GuruFocus has detected 8 Warning Signs with ISRG.

Release Date: January 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• East West Bancorp Inc (NASDAQ:EWBC) achieved record levels for revenue, fee income, net income, earnings per share, and loans and deposits in 2024.
• The company reported a 9% year-over-year growth in average deposits and a 6% growth in average loans, emphasizing residential and C&I lending.
• East West Bancorp Inc (NASDAQ:EWBC) maintained a stable asset quality with net charge-offs and nonperforming assets both at 26 basis points.
• The company delivered a 13% growth in tangible book value per share and a 17% return on tangible common equity in 2024.
• East West Bancorp Inc (NASDAQ:EWBC) announced a $300 million share repurchase authorization and a 9% increase in the quarterly dividend to $0.60 per share.

Negative Points

• East West Bancorp Inc (NASDAQ:EWBC) faced challenges with two problem credits in the technology sector, leading to increased net charge-offs in the fourth quarter.
• The company expects full-year 2025 net charge-offs to be in the range of 25 to 35 basis points, indicating potential credit risk concerns.
• Operating expenses are expected to increase by 7% to 9% year over year, driven by investments in personnel and technology.
• The company is dealing with the impact of wildfires in Southern California, although direct exposure is expected to be minimal.
• East West Bancorp Inc (NASDAQ:EWBC) anticipates modest economic growth and potential interest rate cuts, which could impact net interest income and margin levels.

Q & A Highlights

Q: How should we think about the investments in people and technology being layered in during the course of the year? A: Christopher Del Moral-Niles, CFO, explained that the investments are intended to prepare the bank for future growth. While expenses may appear high relative to others, they are off a smaller base, and revenue growth is expected to outstrip expense growth, resulting in positive operating leverage.

Q: Is the increase in share buyback a change in philosophy or just for future flexibility? A: Christopher Del Moral-Niles, CFO, stated that the approach remains opportunistic. The bank was opportunistic in the fourth quarter and will continue to be, with flexibility to act in the best interest of shareholders.

Q: Where do you think deposit betas will shake out, and is there room for them to go down further? A: Christopher Del Moral-Niles, CFO, noted that they have been guiding to a 50% beta, and results have been consistent with that. Positive momentum is expected as long as rates are moving lower or expected to move lower.

Q: What is the outlook for C&I growth, and will tariffs impact growth or investment spend? A: Christopher Del Moral-Niles, CFO, mentioned that commitments are up, indicating capacity for growth. Tariffs have not materially impacted growth in the past eight years, and customers have prepared for such scenarios.

Q: What should we expect for CRE loan balances, and is there any incremental credit risk if rates rise? A: Christopher Del Moral-Niles, CFO, stated that CRE growth will be more muted, focusing on C&I and residential growth. The credit profile is strong, and modest rate increases are not expected to impact loans significantly.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.