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5 Small-Cap Bank Stock Plays for 2013 From Credit Suisse


3. East West Bancorp

Shares of East West Bancorp (EWBC) of Los Angeles closed at $21.62 Wednesday, returning 12% year-to-date, following a 2% return during 2011.

The shares trade for 1.7 times tangible book value, and for 10.8 times the consensus 2013 earnings estimate of two dollars a share. The consensus 2014 EPS estimate is $2.09.

Based on a quarterly payout of 10 cents, the shares have a dividend yield of 1.85%. The company repurchased $50 million worth of common shares during the second quarter.

The company had $4.0 billion in total assets as of Sept. 30. Earnings have been good, with operating ROA improving to 1.31% from 1.14% over the past five quarters. East West Bancorp reported third-quarter earnings available to common shareholders of $69.4 million, or 48 cents a share, increasing from $68.8 million, or 47 cents a share, in the second quarter, and from $60.7 million, or 41 cents a share, in the third quarter of 2011.

Total loans grew by 2% year-over-year, to $14.5 billion as of Sept. 30, however, non-real estate commercial loans were up 9 sequentially and 24% year-over-year, to $3.7 billion. The company's net interest margin -- adjusted to exclude "the net impact to interest income of $25.6 million resulting from covered loan activity and amortization of its FDIC indemnification asset" -- was 3.95% during the third quarter, holding up well in the low-rate environment, as it narrowed from 4.01% the previous quarter and 3.98% a year earlier.

The company provided fourth-quarter guidance, including EPS ranging from 47 to 49 cents, with the margin declining further, to 3.90%.

Clark's price target for East West Bancorp is $26, and he estimates the company will earn $2.05 a share in 2013, with EPS increasing to $2.26 in 2014.

EWBC Chart EWBC data by YCharts

Interested in more on East West Bancorp? See TheStreet Ratings' report card for this stock.

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