While normally I am not focused on quarterly earnings reports, in the case of EWBC I am interested in listening in on their earnings conference call tomorrow on April 16 to the extent that it will give greater insight into the risks in EWBC's loan portfolio.

As I may have stated earlier, this seems to be a well-managed company historically, with good growth historically (for a bank).  However, the price has been beaten down of late, down to a trailing PE ratio of 6-7, with some sharp declines in the past few days in advance of the earnings announcement.

If EWBC keeps up its record for earnings and growth, this should be a great investment.  So, the key issue for me is analyzing the risks. 

I've spent some time at the FDIC website at http://www2.fdic.gov/ubpr/UbprReport/SearchEngine/Default.asp , which reports a number of stats on the bank's key ratios and loan portfolio.

My analysis is ongoing and I have not drawn a conclusion.  On the positive side, EWBC has been rasiing contributions to its loan loss reserve, to $88M as of yearend 2007.  However, I also see $64M in non-accrual loans, plus an additional $64K in loans 30-90 days late in payments, suggesting (depending on one's assumptions on how much of this arrearage will get back on track) that the current reserve is unsufficient.  I also see a very high . . . 13.72% . . . non-accrual rate for 1-4 family construction and land development loans, quite a bit higher than 2.31% for EWBC's peers.

What I havent figured out yet is the concentration of these types of loan in the overall EWBC loan portfolio.

I am concerned that, based on the above, EWBC may have to increase its reserves, which would depress earnings.  I just don't have a sense of the magnitude of the risk, for the moment.  The numbers reported above are yearend 2007 . .  .it seems likely, given what I read in the newspapers about the real estate market, that the situation has deteriorated since yearend.