DB:EW2

Stock Analysis Report

East West Bancorp

Executive Summary

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 in the United States and Greater China.

Rewards

Trading at 61.1% below its fair value

Earnings are forecast to grow 4.47% per year

Pays a high and reliable dividend of 2.35%

Risk Analysis

High level of non-cash earnings



Snowflake Analysis

Flawless balance sheet established dividend payer.


Similar Companies

Share Price & News

How has East West Bancorp's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: EW2 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-0.5%

EW2

11.0%

DE Banks

0.1%

DE Market


1 Year Return

-9.2%

EW2

4.4%

DE Banks

14.1%

DE Market

Return vs Industry: EW2 underperformed the German Banks industry which returned 4.4% over the past year.

Return vs Market: EW2 underperformed the German Market which returned 14.1% over the past year.


Shareholder returns

EW2IndustryMarket
7 Day-0.5%11.0%0.1%
30 Day0.5%19.0%0.2%
90 Day8.5%26.1%3.3%
1 Year-7.1%-9.2%7.8%4.4%17.6%14.1%
3 Year-10.2%-14.8%-2.7%-7.5%14.8%4.8%
5 Year34.1%22.3%-4.8%-28.2%22.2%5.4%

Price Volatility Vs. Market

How volatile is East West Bancorp's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is East West Bancorp undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: EW2 (€43.2) is trading below our estimate of fair value (€110.99)

Significantly Below Fair Value: EW2 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: EW2 is good value based on its PE Ratio (10.1x) compared to the Banks industry average (18.2x).

PE vs Market: EW2 is good value based on its PE Ratio (10.1x) compared to the German market (20.9x).


Price to Earnings Growth Ratio

PEG Ratio: EW2 is poor value based on its PEG Ratio (2.3x)


Price to Book Ratio

PB vs Industry: EW2 is overvalued based on its PB Ratio (1.4x) compared to the DE Banks industry average (0.9x).


Next Steps

Future Growth

How is East West Bancorp forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

4.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: EW2's forecast earnings growth (4.5% per year) is above the savings rate (-0.4%).

Earnings vs Market: EW2's earnings (4.5% per year) are forecast to grow slower than the German market (13.3% per year).

High Growth Earnings: EW2's earnings are forecast to grow, but not significantly.

Revenue vs Market: EW2's revenue (8% per year) is forecast to grow faster than the German market (5% per year).

High Growth Revenue: EW2's revenue (8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: EW2's Return on Equity is forecast to be low in 3 years time (12.9%).


Next Steps

Past Performance

How has East West Bancorp performed over the past 5 years?

14.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: EW2 has a high level of non-cash earnings.

Growing Profit Margin: EW2's current net profit margins (45.1%) are lower than last year (49.8%).


Past Earnings Growth Analysis

Earnings Trend: EW2's earnings have grown by 14.7% per year over the past 5 years.

Accelerating Growth: EW2's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: EW2 had negative earnings growth (-4.2%) over the past year, making it difficult to compare to the Banks industry average (-7%).


Return on Equity

High ROE: EW2's Return on Equity (13.4%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is East West Bancorp's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: EW2 has a low level of unsold assets or inventory.

Debt Coverage by Assets: EW2's debt is covered by short term assets (assets are 3.8x debt).


Financial Institutions Analysis

Asset Level: EW2's level of assets compared to its equity is low.

Allowance for Bad Loans: EW2 has a sufficient allowance for bad loans.

Low Risk Liabilities: EW2's liabilities are made up of primarily low risk sources of funding.

Loan Level: EW2 has an acceptable proportion of non-loan assets held.

Low Risk Deposits: EW2's loans are broadly funded by customer deposits.

Level of Bad Loans: EW2 has an appropriate level of bad loans (0.35%)


Next Steps

Dividend

What is East West Bancorp's current dividend yield, its reliability and sustainability?

2.35%

Current Dividend Yield


Dividend Yield vs Market

company2.3%marketbottom25%1.3%markettop25%3.6%industryaverage2.6%forecastin3Years2.6%

Current dividend yield vs market & industry

Notable Dividend: EW2's dividend (2.35%) is higher than the bottom 25% of dividend payers in the German market (1.31%).

High Dividend: EW2's dividend (2.35%) is low compared to the top 25% of dividend payers in the German market (3.57%).


Stability and Growth of Payments

Stable Dividend: EW2's dividends per share have been stable in the past 10 years.

Growing Dividend: EW2's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (22.8%), EW2's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: EW2's dividends in 3 years are forecast to be well covered by earnings (25.5% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

9.5yrs

Average management tenure


CEO

Dominic Ng (60yo)

28.1yrs

Tenure

US$7,587,684

Compensation

Mr. Dominic Ng has been the Chairman and Chief Executive Officer of East West Bancorp, Inc. since 1992 and serves as its President since August 24, 2018. Mr. Ng has also been Chairman and Chief Executive O ...


CEO Compensation Analysis

Compensation vs Market: Dominic's total compensation ($USD7.59M) is above average for companies of similar size in the German market ($USD3.36M).

Compensation vs Earnings: Dominic's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Dominic Ng
Chairman28.1yrsUS$7.59m0.38% $24.5m
Irene Oh
Executive VP & CFO10.1yrsUS$2.00m0.042% $2.7m
Douglas Krause
Executive VP24.1yrsUS$1.45m0.043% $2.8m
Andy Yen
Executive VP and Head of International & Commercial Banking15.1yrsUS$911.03k0.039% $2.5m
Catherine Zhou
Executive VP2.3yrsUS$1.89m0.0017% $110.7k
Emily Wang
Director of Marketing0yrsno datano data
Julianna Balicka
Director of Strategy & Corporate Development0yrsno datano data
Gary Teo
Head of HR5.1yrsno datano data
Bennett Pozil
Head of Corporate Banking - East West Bank and Executive Vice President of East West Bank8.8yrsno datano data
Robert Lo
Head of Commercial Real Estate Banking - East West Bank and Executive VP of East West Bank6.1yrsno datano data

9.5yrs

Average Tenure

57yo

Average Age

Experienced Management: EW2's management team is seasoned and experienced (9.5 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Dominic Ng
Chairman28.1yrsUS$7.59m0.38% $24.5m
Rudolph Estrada
Lead Director6.6yrsUS$380.50k0.011% $707.2k
Herman Li
Independent Director22.1yrsUS$211.50k0.027% $1.7m
Chi Husan Liu
Independent Director22.1yrsUS$215.00k0.015% $948.5k
Paul Irving
Independent Director9.8yrsUS$199.50k0.021% $1.3m
Iris Chan
Independent Director9.8yrsUS$199.50k0.018% $1.2m
Archana Deskus
Independent Director0.3yrsno data0.0013% $83.7k
Lester Sussman
Independent Director4.3yrsUS$213.50k0.0094% $604.2k
Molly Campbell
Independent Director5.5yrsUS$192.00k0.0057% $364.8k

9.8yrs

Average Tenure

64yo

Average Age

Experienced Board: EW2's board of directors are considered experienced (9.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: EW2 insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

East West Bancorp, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: East West Bancorp, Inc.
  • Ticker: EW2
  • Exchange: DB
  • Founded: 1998
  • Industry: Regional Banks
  • Sector: Banks
  • Market Cap: US$6.961b
  • Listing Market Cap: US$6.435b
  • Shares outstanding: 145.63m
  • Website: https://www.eastwestbank.com

Number of Employees


Location

  • East West Bancorp, Inc.
  • 135 North Los Robles Avenue
  • 7th Floor
  • Pasadena
  • California
  • 91101
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
EWBCNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDFeb 1999
EW2DB (Deutsche Boerse AG)YesCommon StockDEEURFeb 1999

Biography

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 in the United States and Greater China. It operates in 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, time deposits, and individual retirement accounts. Its loan products include commercial and residential real estate, lines of credit, construction, trade finance, letters of credit, commercial business, housing loans, asset-based lending, and equipment financing, as well as financing to clients needing a financial bridge to facilitate their business transactions between the United States and Greater China. The company also provides various wealth management, treasury management, foreign exchange, and interest rate and commodity hedging risk management services; and Internet-based services comprising online banking services. As of January 24, 2019, it operated approximately 130 locations in California, Georgia, Massachusetts, Nevada, New York, Texas, and Washington; 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 founded in 1998 and is headquartered in Pasadena, California. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/18 22:09
End of Day Share Price2020/02/18 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.