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Here's How Much You'd Have If You Invested $1000 in East West Bancorp a Decade Ago

·4 min read

For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.

Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.

What if you'd invested in East West Bancorp (EWBC) ten years ago? It may not have been easy to hold on to EWBC for all that time, but if you did, how much would your investment be worth today?

East West Bancorp's Business In-Depth

With that in mind, let's take a look at East West Bancorp's main business drivers.

Headquartered in Pasadena, CA, East West Bancorp is the bank holding company for East West Bank. Incorporated in 1998, the company serves as a financial bridge between the United States and China by providing various consumer as well as commercial banking services to the Asian-American community.

East West Bancorp operates through more than 120 locations in the United States and in China. In the United States, the company has branches in California, Texas, New York, Washington, Georgia, Massachusetts and Nevada, while in China, it has offices in Hong Kong, Shanghai, Shantou, Shenzhen, Beijing, Chongqing, Guangzhou and Xiamen. It has a banking subsidiary based in China - East West Bank (China) Limited.

East West Bancorp has three operating segments:

Consumer and Business Banking (43.5% of total revenues in 2021): The segment mainly offers financial service products and services to consumer and commercial customers through the company’s branch network and digital banking platform in the United States.

Commercial Banking (51.2%): Through its commercial lending offices in the U.S. and China, the segment mainly focuses on generating commercial loans and deposits. Also, it offers a wide variety of international finance, trade finance, and cash management services and products.

Other (5.3%): This segment acts as an administrative support to the above-mentioned segments. All the centralized functions, including treasury activities and other eliminations of inter-segment amounts, have been included in this segment.

In 2014, East West Bancorp acquired MetroCorp Bancshares, Inc. In 2018, the company, through its subsidiary East West Bank, divested eight Desert Community Bank branches, and related assets and liabilities.

As of Jun 30, 2022, East West Bancorp had $62.1 billion in total assets, $45.9 billion in net loans held for investment, $54.3 billion in total deposits and $5.6 billion in stockholders’ equity.

Bottom Line

Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in East West Bancorp a decade ago, you're probably feeling pretty good about your investment today.

According to our calculations, a $1000 investment made in August 2012 would be worth $3,258.59, or a gain of 225.86%, as of August 3, 2022, and this return excludes dividends but includes price increases.

In comparison, the S&P 500 gained 199.72% and the price of gold went up 6.44% over the same time frame.

Analysts are forecasting more upside for EWBC too.

Shares of East West Bancorp have outperformed the industry over the past year. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters. Its second-quarter 2022 results reflected higher loans and interest rates and an increase in provisions. Robust loan and deposit balances, rising rates and a strong organic growth strategy are likely to keep supporting financials in the quarters ahead. However, steadily increasing operating expenses might hurt the company's bottom line to some extent, while deteriorating credit quality remains another major near-term concern. Yet, the company's impressive capital deployment activities reflect a strong balance sheet and liquidity position, through which it will likely be able to keep enhancing shareholder value. The company’s manageable debt level is another positive.

Shares have gained 5.68% over the past four weeks and there have been 6 higher earnings estimate revisions for fiscal 2022 compared to none lower. The consensus estimate has moved up as well.
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