EWBC - Earnings call transcript Q4 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to the East West Bancorp Fourth Quarter and Full Year 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note, that this event is being recorded. I would now like to turn the conference over to Julianna Balicka. ahead. go Please

Julianna Balicka

me Good Officer; us Andrea. We our East like thank everyone, Chief Chairman and XXXX. the you, Bancorp of are financial Officer; call Harbor regarding Thank the a Ng, the Operating Guyett, from the statements during Dominic review the morning, may that Litigation projections Financial or our the Chief due would joining statements the our results management provision With of quarter to the Chief actual the Oh, this within you forward-looking make Private financial for forward-looking Securities Officer. conference may and events Reform for today caution Executive you, and fourth and to differ Safe on of Greg results Irene course West and the of meaning number to risks of Company performance Act materially call, of These uncertainties. other of future or of XXXX. President

a filings XXXX. the factors operating Form to Annual for detailed on refer could December and ended please results, affect the our Company's Report For of the Commission, that including description XX-K Exchange our Securities year XX, with risk more

financial In to quarter refer non-GAAP this to of of earnings reconciliation numbers our release call addition, measures. some adjusted referenced to on GAAP fourth the pertain numbers. Please for the

that is Relations part of call, Investors referencing as this slide we available course the deck the be During on webcast will of site. the and a

turn Dominic. Relations website. in being the As now a Investor formats will replay today's on recorded also and will to our over call available is call reminder, I be

Dominic Ng

has X. which will quarter call. thank achieved year for us diluted This This Thank morning, joining you, Slide of full with year West for $X.XX million I that eighth marks record the consecutive net our discussion everyone, XX% XXXX share, XXXX income fourth record you, our XXXX. $XXX by on summary a East grew Good per we of results or and Julianna. reported earnings earnings. begin morning from

For million enactment diluted the and Act. or which $XX we the share of the to net Tax reported per by were $X.XX million Cut of reduced $XX quarter Jobs due share, of XXXX, $X.XX fourth income per or

quarter this million was impact, were Excluding adjusted share income earnings per $XXX fourth net and $X.XX.

XXXX, $XXX or As linked billion million up loans quarter December XXXX, of from XX, record billion, XX, September our $XX.X year-over-year. or a X% total up annualized and reached $X.X XX%

$X.X linked deposits achieved year-end annualized, and as of up X% We year-over-year. up quarter billion also billion of or XXXX, million $XX.X or XX% record $XXX

quarter-over-quarter quarter and result fourth interest expansion of rates sheet. margin basis last securities grow, full basis between balance of expanding our net driven by $XXX our XXXX from income billion Chinese-American small investment business income States. net business East XXXX of communities our And the the profitability Driven the our net Fourth over net and of Our loan took a sensitive the quarter. increase expanded in grew in income continues to and the margin amount growth, markets ensure share by by was XX% would $X.X interest of the financial as United we capabilities limited balance fixed-rate and year quarter in deliberate $X bridge yields net and West, our in, by rose. few X growth asset and asset interest the We XXXX loans billion to million that by XXXX. grew the and interest market interest linked X% our years sheet and points as interest strength of are the on year-over-year. leading actions The retail X.XX% deepening points XX we're

and and particularly consumer focused built commercial also operating our growing accounts. product capabilities commercial core out frontline deposits, on banking We our staff

rate form the deposit now of the a stable With these rising commercial in base. benefiting from investments and we're actions environment,

XXXX. declined charge-offs of assets XX relatively to points X for the XX, assets remained of of or average year quality XXXX. in Asset by fourth and as Year-over-year points stable were XXXX. XX non-performing December loans basis average basis loans points basis Net XX% quarter $XXX full annualized the of total million for of

X. Now let's to Slide turn page the

strength commercial mentioned X, onetime $X.XX of of These per As earlier, offset impacted items: in can relationships. you in see Cuts full Jobs model. sale several our insurance after of XXXX largely West, were expandable focus per A this year We of other share our and the can profitability. the items Tax from see customer gain share quarter; negative our year on impact reflect East Act XXXX West first East At the We the by the enactment adjusted creating earnings quarter; the business sale and this and on in a each consistent were profitable focus Slide $X.XX. the sustainable, quarter. financial as earnings property this in our in value our we on year of reported customer and of third results believe and the

a full earn up of XX.X%, a basis basis XX return points on year before. XXXX, of XXX return we the year average points, of XX basis the from XXXX, up average points For assets from and equity

and prudent excellence, to benefits maintaining that Looking expanding drove our XXXX, long interest our results factors our from our XXXX margin, growth, sensitivity base, proposition driving net value continued namely, the clients, continue will strong approach out out-performance, financial deposit and underwriting. support core differentiated deposit stable operational expect asset to for we into our disciplined

banking regulatory drive to the capital of for we and backdrop, to risk our as positive and this infrastructure reform are tax industry investing East are and West. as management. we'll strengthen environment, the and technology forward, committed well light our human In and continue business Additionally, in macroeconomic to

our and for and initiated lending specialized retail customers, have building banking experience expanding for digital a including strengthen our segments our to capabilities underway We our teams. create customer to talents cross-border China better various out adding

to I call the As in more franchise, our we over investments revenue. discussion and we to that our Greg can a turn I'm these confident fund will detailed invest And Irene of results. for with increased continue now

Gregory Guyett

Thank I'm start the on and of deposits all Desert for Great. Community related discussing include Dominic. loan Please X. pending sale referencing branches. numbers the growth by of note $XXX deposit X that loan Bank sale Slide $XX million you, I will and and million the balances of held to

in close We first expect quarter to the transaction of the XXXX.

portfolio billion as quarter linked or X, $XX.X Slide to East growing X% $XXX XX% year-over-year. West by annualized a Turning million reached loan XXXX, December XX, record of and

call, third lower function QX, in C&I, in was forward loan certain and QX growth XX% the growth a our few in pull the equity noted our linked closing quarter was a particularly in in annualized. in largely private average days we QX funding quarter industry the this, and As other the specialized sectors. of last of in Reflecting commitments,

at basis. commercial by linked Looking XX% a an quarter million on increased segments, real our $XXX average estate annualized little over or

almost business year-end quarter $X.X business between grew single-family C&I, quarter billion split again linked average mortgage of growth increased linked from by XXXX basis, our model, and and XX% Underscoring or million SFR by or XX% was business. diversified MFR our equally C&I million CRE, $XXX annualized. approximately Our year-end annualized, $XXX XXXX loan including to an on the

quarter by of by linked deposit fourth growth grew money $X.X interest-bearing from demand total end-of-period by growth checking. XX, December accounts, which XX% deposits quarter or growth quarter million $XX.X X% billion year-over-year, quarter annualized, annualized. linked Average million and basis, billion billion X, in XXXX. in Slide increased an or market On On of increased or deposits, which followed increased on as a quarter annualized, grew XX% Average by average XX% XX. driven million checking, nearly million billion. the an quarter-over-quarter noted DDAs record reached by $X.X by $XXX growth basis, XX% or deposits of deposit $XXX which by led growth $XXX deposits fully $XXX and our or interest-bearing linked was September linked our Total loan As XX% was annualized $X.X annualized. funded deposit by

a was from year-end ratio September reduction loan-to-deposit slight Our XX%, XX.

a to quarter. Slide turning in the $XX.X Total X. linked income of million fourth million, decrease was Now quarter non-interest $X.X

operating income a $X.X or loan Derivative Linked-quarter from sales, totaled million fees and X% exchange the quarter. due of fees third Excluding other customer foreign a increased ancillary reflecting down to quarter. commitment income transactions, linked other decreased fees. loan and higher largely on gains $XX.X fees million, previous related income following strong decline and volumes quarter in

declined with by associated hedges, currency income a fee on linked customer-related basis, Excluding increased full quarter, mark-to-market year but X% CVA XX%. changes and

service. Irene our as in client-facing improve Dominic enhancing capabilities now make teams we more in XXXX to cover investments As continue outlook. infrastructure and as cross-border and summarize particularly noted, product the management customer risk clients, quarter our well and to grow our specifics will to

Irene Oh

accretion income was a the of we The the increase On interest Page was X-basis-point drive by a Greg. Thanks, summary largely growth that increased into I'll to which loan linked details items. statement, shows in have a revenue slide in recoveries. increase period, accretion; X, fourth due Slide income snapshot an can starting the net X. forward a we excluding so income, loan skip driven and right key in expansion quarter in quarter on from that yields,

The higher basis our portfolio as XXXX quarter fourth XX than average yield cost points basis deposits December up the XX. on of XXXX, XX XX, was weighted As X points. contractual to September quarter loan points linked X.XX%, basis X.XX% of of was

the basis December increases been XXXX the accounts. basis points XX our increase benefiting The basis by XX our of of to market points sensitivity quarter sheet. up by on linked September linked XX money driven X.XX% XX, Fourth our balance accretion, points impact year-over-year, was from As interest margin net points the and our points by basis deposit margin was deposits compared interest X GAAP quarter as expanded asset of X.XX% X of costs rate excluding of from have XX. adjusted our quarter, largely net basis to an weighted average

XX. Slide to Turning

in was expense, and was a X% linked credit $XXX increase our adjusted of $XX quarter because XXXX amortization fourth million, non-interest deposit employee of million higher costs. $XXX intangibles Our compensation million excluding quarter tax of or benefit non-interest expense and investments core

was increased in hiring accrual XXXX in This result benefit and of expense. a compensation higher and employee stock and restricted quarter-over-quarter largely compensation bonus increase

and quarter adjusted XX.X% our adjusted for fourth ratio to XX.X%. the the efficiency in was quarters, XX.X% efficiency ratio X range past from Our

was XX.X% for For the adjusted the to XXXX, compared efficiency full year ratio XXXX. XX.X%

legislation the The foreign Now of impact affordable $X.XX impacted $X China a spend earnings share. per related of investments about and tax re-measurement $XX re-measurement talk tax like million moment its an million and to fourth The $XX qualified million quarter law or our negatively million impact net I'd our a to undistributed results. from financial new approximately repatriation our by earnings of in deemed $X partnerships, tax our asset, to came of subsidiary. deferred housing on

the result, $X.XX a fourth the $XX $XX and was fourth tax the As million was bringing the expense effective XX%, rate tax quarter quarter or net for income to share. per million

and Excluding million the was tax adjusted fourth tax the of an the the $X.XX net tax resulting share. $XX $XXX adjusted expense in or adjusted effective impact million quarter income was reform, XX%, per of rate

the tax year Excluding with was XX%, expectations. for rate the tax reform, our in line the effective XXXX full

For In are corporate reflecting out presentation, the quality tax effective XX%, the critical and credits. asset an metrics. in of the reduction continued of detail rate investment XX tax to tax XXXX, rate approximately we we projecting Slide federal

past favorable has the and You systemic not years. will issues loan relatively Also, X our stable portfolio. we diversified our see been in over that any do quality see asset

loans, XXXX, as to for X.XX% million for XX, points compared year $XXX million million to year-over-year. charge-offs assets charge-offs the December or XX% XXXX. of $XX held-for-investment, net points decreased and as million million of net the basis September full in full allowance XX as to by of Non-performing of of loans XX, loans XXXX. of X quarter $X basis September loan. X increase and annualized XXXX, charge-offs $XX XX by average December or to were million year fourth quarter assets or as held-for-investment XXXX, XX for basis of were XX, totaled basis X% the decreased The the XXXX, loans of similar $XXX commercial points for compared linked loan or Net points Our or largely of $XXX losses stemmed average total XX, points XX of of basis from quarter during XXXX

East grew XX. per year-over-year. Moving Tangible on remained to $XX.XX ratios share capital Slide by on strong. of ratios as West X% quarter December of and XX, capital linked grew equity XX% XXXX,

is sufficient common $X.XX stock. XX capital support in to to levels points the February X, first per February dividends increased our Board XX of basis to of stock XX, are has East record Our cash by stockholders dividend Directors XXXX. on regulatory year-over-year. capital for XXXX XXXX declared on share view. Current The continued ratios organic growth common of quarter company's payable West

Slide outline Turning of XX for our to an outlook. XXXX

to For the the and full that expect end-of-period increase XX%, compared and XXXX, diversified estate our loans, of of year single-family by real commercial year commercial full results, categories key loans XXXX across approximately mortgages. will we industrial

the We expect deposit loan growth to support growth.

We expect between that X.XX% interest of adjusted accretion, discount to ASC impact net excluding the margin, range and our X.XX%. XXX-XX

September. the funds such, June March, increases in as X and we federal fourth Fed curve Our funds rate outlook incorporates and anticipate rate

amortization increase We credit at expect non-interest single-digit its to expense, excluding and rate. deposit core premium high percentage tax amortization

be does this approximately will our Given our ratio XXXX imply revenue that current growth, for XX%. efficiency view of

does high-single earlier. for that We million. in described $XX $XX credit by and investments into for talents between expense outlook take million XXXX the project and for losses account will range Our Dominic growth technologies provision digit

Finally, current to tax our remarks. the $XX our based excluding rate for million, tax closing With income XX% low turn will associated to expense approximately pipeline, $XXX XXXX. on million the amortization that, housing, I bringing and we credit Dominic of credit tax of investments, effective for back call now anticipate

Dominic Ng

had the associates opportunity strong now XXXX. I in our to another of questions. Thank we I take yet year us X,XXX you, achieve In this performance. outstanding to an to helping open Irene. would call summary, wish thank

Operator

of Please ahead. Securities. go Wells question first comes Fargo Shaw Our from Jared Instructions] [Operator

Jared Shaw

Hi, good morning.

Irene Oh

Good morning.

Jared Shaw

first a Maybe normal assume pull XXXX? this million, to expense when good from there on a we the looking quarter, any just rate $XX.X - compensation of fourth rate the especially side, Or guess, on starting side, at that that accruals with I at additions? growth the quarter that was is as FICA have is look in forward, come we're good may

Irene Oh

Yes.

is discussed it in So did really you prepared third and if And increase and for of the it press quarter relate the amount, the and accrual at release, we fourth quarter, fourth. additional the approximately in as then to to the $XX.X from look that bonus million of kind the the hiring quarter-over-quarter remarks think that's less frankly, restricted so grants of, higher those stock to actually expense. compensation That I being a continuing need, than positive in function it the restricted stock as and expense being things was hire little the the are are we said, we the expense, really because leaving past. quite quite a and people

look of are it's quarter are things quarter we the as not basis when And first there that. So we those items positive. run to look increase XXXX. look at rate, the that as when will discrete But say, first the at for fourth a quarter generally you XXXX at bad in a

Jared Shaw

think exchange the do to And customer And especially to do uncertainty I tax you you guess, just for the around that under. side, maybe was at just How fees, question, much look the expect in my return pressure the lines? situation? those foreign fee second see volumes on the that's been income we of when due

Gregory Guyett

item first in that is say of have in bank absolute more the through capital currency at sort are because than running quarter-by-quarter levels to I look think fairly income I line also and numbers on So low, we the our still statement. have those thing that, would you our China hedges year-over-year the

there the year-over-year I expect So referenced customer I at a we in look that fee sort income, just that's the of question Again, a specific I have. activity that what we think again, related the some you will to linked of that in around terms trend think that good of client be Tax of the the it's future, if fourth lumpy nothing do in think XX% and probably in timing was Act. growth quarter, quarter-by-quarter. I

Operator

Poonawala Ebrahim from America Bank go comes question Merrill next ahead. Lynch. Our of of Please

Ebrahim Poonawala

morning. Good

Gregory Guyett

Morning.

Irene Oh

Morning, Ebrahim.

Ebrahim Poonawala

when investments just ago. including is where Or at fourth could is should think sort loan at early I some are trying it point the guidance in of the actually XX% look made at a better growth to we it's so just and that than growth to the terms you -- hiring I'm the see wondering from XXXX exceeding it realistic today is that very quarter your just year wanted of the loan the because we I'm we look growth in - year? guidance, macro in levels in we that it too backdrop, clear. loan your feels the economy maybe and reform? given tax that tailwinds

Gregory Guyett

let might add. start Well, me and others

certain Tax think customers of the from I I our the what's that, the sure, with of that better is Ebrahim, solidifying and think, because confidence segments there economic economy sort on feels going more for Act growth. of

that's think true. I certainly So

think out the couple Act up go figure right? be through Tax for hand, competition lower to On quarters a of pricing the as out in banks things play to how to other so we're that. much areas, Reform in we couple I of and of mindful shows of the benefit and first we the want see is, going of how One

of given cycle the markets. here fixed to we've estate. go in managing not always long been that how good commercial to real been that Now competition the But a and going thing we very things lenders And lots up about - invest, part seeing run as rate start disciplined, a long in it exposure, cetera. construction carefully our it's other commercial talked I the in we of real think such we'll had like thoughtful is continue be has rates price. we've about bad commercial causes are the et estate end, and and in And to particularly around because portfolio very borrow before, as have, we as remain up, the from we've like as land certain the people portions estate, our real

So the quarters there's couple before wait-and-see that, through a and of to that we guidance, take want us make if cause first all. very number we're at of a like confident things approach change to that sure

Ebrahim Poonawala

about we second in has more noise year get to I'll slowing. you say investment around be my from follow-up as loan relationships, given a think foreign been sort that, a growth, whichever, where China-U.S. And might probably China but your question, we of

there CRE from, growth C&I temper could for As some loan growth should to come traditional we relationships Or in growth? think is outlook about of disruption more growth, guys? essentially risk it sort trade tied you that where is U.S.-based maybe the

Gregory Guyett

So and loan more generally let Dominic areas me that wants say But we're China. I a the answer very maybe mean, to on would investing growth the in with have specifically around. we're focused very talk we situation then things. couple I of about said

numbers significant and are There I growing. we've this that relationships to call, of before established of already States. these So opportunity very don't that where Ebrahim, in think us so that's believe significant we companies clients continue for have continue to have United are the relationships cross-border and a deep serving the talked a on or Chinese area opportunity we we about significant

specialty continue building to expertise. that in invest industries, we Secondly, the

encouraged we argue Of customers course, a in of that and supports opportunity which continue in those come domestic, big this but is for domestic be our not or offshore, very because get there's to certainly Dominic be we you ancillary areas. us. from then trade we can around source continue cross-border flows to third, Chinese-American business, his by but the that the then remarks, opportunities And have growth there's those mentioned business,

Dominic Ng

bank venture from currently and from add contemplating generate need mentioned companies a doors knock see cross-border on Well, and and and that Citibank, compared some them, joint United business, our relatively services how this here, -- that in East door terms perspective, sort call Greg provide small growth with to continue on China loan want that so into well-established there U.S.-China about, have need our as we already our talk to and West, into my China in many we of, still to more just to of relationship that or business And ability China, BofA, from to forth. are that cetera. and them to many I speaking, to still value-added either et like, we can or knock expand States, that

fill us we appetite. in not have fill all for order the will It's need lion's pie amount small of that U.S., in. our massive the trade like us a or China share So to to

In number. the us already to fact, target of has a as loan business those just sliver got growth

standpoint, from view about So that good and actually -- despite the if this reality relatively forth, from about media, think I we is and rhetoric’s trade noise point ultimately, look a small. pretty impact feel the the at so of we in

at are. stage about confident And this right now, feel so we we pretty where

industry. have always is you to thing what and large, in by we that other mind call have, focusing keep strategic in The on very I growth

like talked industry about and vertical don't old U.S. when at looked old on care, media, and the get expanding we we are industries, China, health digital entertainment, the that we that, So manufacturers. this between things we into

places in you on. future, at, hotels that are manufacturing don't these or we industries have that the aluminium, potential maybe steel, like, much look if old tires, those exposure in So past, [ph] maybe that the hit the

Let's talk solar. about

except In fact, that of one we the we clean also very on, the small. that are have focus tech that exposure areas is

tariff it to panels sort in clean different there on forth, to forth and that and they by there installing utility agreements than so states these by the solar solid forward, lending the -- and affect projects East in so that, manufacturing to certain the dramatically due that pretty in increase the and work energy terms affect the not and those companies mandate not move state's companies of to continue West we is forth. to was do solar fact, to is to of X of certain in contractual have And of years that a addition We're would in mandate. satisfy mandate companies area emission would working are terms In if fulfill U.S. and type so side. of

one. that's So

solar business. Secondly, if at you look the

an United is only as fourth in the ranked and currently States. China fifth exporter fact, In

today, solar of actually would than Malaysia, Korea So products and say more that Vietnam, I China. panels export to United South States as

tariff would only And at just It impact largest. It's to China that the world, to of happened the the China. very So many producer they U.S., the they being X.X% you countries. the economy the in largest U.S. way, material are this in which, export look of by other have not even if

that's So forth. put from those that Because to the simply Korea, China, material the more many China South solar likely, relatively the I and to to so these cost, to the Asia, factories U.S. new also technology, impact of standpoint, amount business are comparing in of because think of advance, substantially the is And most not tariffs, up. the is with U.S. it's in in by to for facility, scale enormous capital too panels going in to the to bandwagon take the catch the jump the U.S. tariff Malaysia is jobs going manufacturer together start speaking, to bring the cost encourage new in been to manufacturers immaterial. be making not to and to amount

standpoint, So changes China make this, in from much U.S., of think I it trade. of that disrupting it's But works a from symbolic media. I I view, going reality terms to see point for don't of a this think

be see far we what East would So at impacted. business our right and as continue to happening we not as confident are now -- model that very but what's West is we'll observe Bank,

Operator

from SunTrust. ahead. of Young Please Our comes next go question Michael

Michael Young

impacts your wanted good SIFI you year? the business if your potential the there in expense appetite expect to the growth of Hey, were to Would could you if address threshold. pace that see or this I that impact M&A change either morning.

Gregory Guyett

for mean, let doing the no, in business organic of and Well, that on And to client-facing in and order grow in capitalize we're in both see. of business second take opportunities bankers right investing thing one. growth the and we terms these all I me the to infrastructure salespeople the

billion and contemplated, to continue to And we We'll about in. spend changes But happens invest -- so regardless that the M&A clearly, others get in mark we what growth. maybe Obviously, to do point, organic to to we'll we'll thinking will and for of Washington. going we we we're have do. opportunities we'll right need to it lot do. now. make to required we're $XX we if as at we've businesses have easier some do what have what But, to in that the Whatever do, of want do need don't organic to But growth got to significant add? it invest as us. a so need And do time we just

Dominic Ng

organic makes take that and somebody this our wanted industry we average. really No, are, like justify else's M&A to I somebody we growing problem. much continue and we distracted go of of growth to been above most it's It mean, mean, strong and to so outperform care peers I that, think hard get and then the and buy then I clearly, keep if to the just simply, has that we proposition harder compare

harder specific if that we it's not at it's got accretive price long So price and many those as value We but the different a that acquisitions, West. our I type meaningful obviously, add that identify in are to to the acquisition we East and into we organically fit continue there of focus out -- harder to many very the it that we always can strategically, we very in banks criteria for we as accretive years, But that business because to is that said. is we it and model, have do. there, criteria continue find bank do the and are right for run, that expand as will feel we the a

fine the much there. too about so organic going growth, with doing are what worry we our we're since landscape but - So to out not acquisition

Michael Young

and my changes you just this you if next that ask have any SALT at And could tax to year, with single-family you expect second but I the pretty Okay. all good the question do residential growth decelerate provision, expect if impact, year?

Dominic Ng

loan Well, loan our $XXX,XXX? average average our size is Irene, - size? what's

Irene Oh

we Correct, loans of last originated year. the that

Dominic Ng

Yes.

is So the limit $XXX,XXX. and we -

but that their non-deductibility, the out. pipeline, for estate stage is the we rooms we as wanted have going. perception right going there. real risk this several At the limited a look extent we what that where figure So this pretty decent market, residential we equity affect to today, are some affected risk residential -- of home a to still real us we now, estate right to But not if because watch to deductibility extent healthy at now, months a we line, pipeline got have think take what something to market, I it's is

Irene Oh

to And last let me give just add perspective. some some color year our from originations

a And total of between the remaining evenly XX%, The of XX% million million it X,XXX $X $X plus. the distributed that, about and threshold was somewhat $XXX,XXX the and we approximately So $XXX,XXX. originated loans. under of

So impact, that far prior really at the when look is the we $XXX,XXX from deductibility million it threshold. the the $X as to as

that substantial as Obviously, far people those so not origination, able the million as to So percentage, than already isn't our deduct were $X that. plus.

the from I'm So not so loan perspective, with that originations, concerned. a terribly

Operator

Our Clark question next Jaffray. comes Please from go ahead. of Piper Matthew

Matthew Clark

morning. good Hi,

Dominic Ng

Morning.

Matthew Clark

- capital management. on wanted ask Just the you to on about -

thoughts around tax too, And generating any lengthy. helpful guess, update generating capital would payout this with your obviously, I'm the guys agreement a more lot assuming of ratio You in going be cut. a kind I they're be internally, on of you're lot BSA are, to what dividend the because are latest environment?

Gregory Guyett

invest and let saying, generate as been So our then we the fund know to to highest continue. I mean, first, organic in that is, organic and me and focus I on growth to growth. business start biggest and we've will that

to have sitting significant here we think today, opportunities. And very we so continue

in any we've we'll not And going something talked that's to policies the and business the from that organic cetera. we've that -- And growth make investment as so play talked ensure to we're a growth to be go continue customers quick year to obviously, out about continue decisions the through about. we et changes and the and revisit standpoint, going how support to competitive standpoint, serve and we be we're our we or see things from to

Irene Oh

Matt, I'll your maybe just comment. Yes. And to add, last

dividend the that what we not in mentioned, as impact it's have to payout, need we're does where function ratio the of to an far as growth not at to invest Greg sure business. powder our dry But have the As clarify, dividend there is because a and that the agreement. written impacted loan payout really make the we looking of or

Matthew Clark

tax I decline 'XX, amortization and a we on investment somewhat Is assume beyond know bit. that the bit further I understand, would up would credit 'XX? I would tax tax then little up little down bump and the kind tax tax out. expense rate credit-related fair rate rate No, of to take as it's a But in the look the little a okay. And go and the investments

Irene Oh

Yes.

do to frankly, forecast. with So look point Certainly, at start our When rate we to continued information investments we active point pipeline tax-advantaged as kind this IRRs the -- impact in sharing, a the to returns But be of tax similar look on XXXX beyond, to different long as based kind we going shared make quite the tax attractive. for the et based of amortization of investment in overall, just cetera. have those we for see as does expect are like of I'm on saying and at what active have had say, strategy strategy at and When overall, investments. actual the let's sense, the is comfortable the in be I'll far this time, XXXX, time, look by investment credit related revenue, 'XX. as we the we that

Matthew Clark

we it that normalizes quarter 'XX? a talked here in you of Okay. previously was million on $X.X the going And quarter, assume for then I just the Should kind forward? think it accretion up. about

Irene Oh

I in modeling. Yes. the use That's would what

number, And did have million million bit now recovery. or as million, or you $X well the the is aware, $X we don't little about quarter, exact remaining so. a are have so $X of de I minimis. This accretion

I think we million have so. or only $XX

Operator

question from KBW. next comes McGratty Our go ahead. Please of Chris

Chris McGratty

Dominic, morning. good Thanks for said… you taking Hey, question. think I the

Irene Oh

Hi…

Chris McGratty

we How to growth a about Or think there of that be loan thinking Good said earning about the have thinking a should remix the plug a of the Thanks. in growth in there? occur year? bit strategy investment mix? remarks, big in we balance How morning, piece sheet, you asset growth in is I your should deposit be prepared kind the of the Not fully portfolio? would fund year. the

Irene Oh

XXXX. security we with strategy we and ensure at a as the think we're securities is remix that And the liquidity. fund Yes, deposit on that We have I for we'll books. far remix have really the growth not think to the look have don't book that something as to loans the the the that we'll loan the anticipating growth,

Chris McGratty

that obviously, line operating I angle ratio, now. right pretty we about. efficiency you look then you, it Is spread of have the If about good or of talked you Or going from this that way fallout? Okay, maintain XX% there at guys more the you have think you ratio a top a that operating the Irene, story environment? great. Thanks. leverage, would is a have not kind in of certain leverage to the attempt efficiency If the and

Irene Oh

of ratio. third earnings quarter had calculation, I think the we discussion on call, efficiency an the in-depth mechanics the about

won't isn't quite it or are our ratio at, sure a make is I metric. and want expense So Certainly, revenues we go are growing, there we there. certain to really, looking that are control. But what we appropriate ensuring frankly,

So the that, line to increase. continues bottom overall,

that ratio. we we at investments So ensure and XXXX we that that at look when mix But investments look So but we beyond, to that make at, -- to we're make that we a we the something necessarily the look want sure certainly, need specific it just perspective. is right? growth, not that of future from

Gregory Guyett

is the front changes office into least this bank investments make a be talked that particularly investments today. to can such I We're necessary they improving, the revenue able investment. and in fund sitting revenue growth And be we those we just today, beyond revenue a of be excellence, buckets way business. and that X would expectation to continue clearly, the Right. several look I've that our expense. about honestly, manage been are and our we before investment we'll that end we very this as that very that we're in that and Dominic I just operational investments terms as Dominic And on history gone in at and off, add part enhancing in has and grow of growth one toggled don't the the most that about: front-office and we've able we calls the the situation, XXXX then of would making both business. infrastructure important for And think of add confident, the of, paying into that confident exactly talked can expense the can sitting I we But that's discussed; here that. then is fall in to point up at is maintaining to fund the here

Operator

Zerbe ahead. Our with go comes next from Morgan Ken Please question Stanley.

Ken Zerbe

you just Hi, morning. is but Good could commercial growth lines how from new meaningfully Are side? imagine specialty business thank in any I to or growth specialty you. Well, of existing? most considering coming the the more on from that potentially are guys would coming about the most existing, add

Gregory Guyett

would reflecting specialized there, estate of across real single which board, highlight based some our growth the is I I course, Chinese as cross-border model. I said industries, and commercial States diversified in to of the in degree Chinese, mean, I is business highlight sort business. coming our and our prepared our and, remarks, business And our Well, would the here United linked American to family. our

I mentioned to health growth areas So for do all made areas investments to look of your continue of particularly, industries were doing where business we're in is care add on. those, we focused think, And part we've specialized this think, add. will we contribute very I the to where in think which, in individuals some XXXX. talented, before, question, to we was We care we health one the to think,

been lot of in talked digital look at that say putting for also adding specialized we've as our and would you call about I has been a for our a behind entertainment of industries, here us. is cross-border resources one of and areas one part a a example, where resources one growing which And success or Los in of of hometown growing and we it's lot the that's specialty. that's the separate could focus and But industry in media, we've particularly and obviously, it entertainment China. our of some in so entertainment, that's out resident’s call Angeles, you it could

of investments. couple look add where those to So are resources and of we're examples for continuing

Ken Zerbe

revenue understand the operating And new in are phase growth. fair technology where et sort versus or out mean, But just is of this investments, obviously, right? based and then operating of side I you of people, a on and expenses year, it just higher? this And can you're in guess, so is leverage high terms relatively tech dial every are what the up But might leverage? that I you're expense growth. about I'm we higher just a how much about hear of getting new Okay. new wondering the keep something that the much of broader on expense down that cetera. the I sort normal, we permanently growth right, putting bit

Gregory Guyett

-- is bulk Well, a certainly that to technology. Yes. say I bulk the the people technology areas. a be would would is that But in investment our support correct a I all, of our ongoing I characterization refreshing of investment. there's the our and front in people. it It's it's not say first mean, component think investment office, people of of its

I supporting before go think the model. we in enterprise about all those of and talked that risk management, investment business areas risk our growth diversified the around

And investments. the bulk so that's the of

appropriate So obviously, I be don't certainly, we technology investment to continue there's up the all to technology, think standards. ongoing to that its sure make

Dominic Ng

this area, like should West is technology East the customer-focused at as within being that even think I that and customer-centric. Bank the And bank we look

we our basically, banking, when upgrading looking trend the customer then and will follow lifestyle the needs So at demographics mean, terms And that's you're why digital just then to services just of capability people continue the and the what use I to. move continue we to what and -- their we're forward mobile appropriately. and banking, service in provide something of how will evolve on they, that's how that the banking

on maybe and spend many the a I be, on money bit and cybersecurity. we more now, no, today, Someday will banking, years AI. that mobile maybe And digital then robotics little from made VR, there's mean, banking there --

And place. needs that in -- the we're would stuff trend. be we're ensure one sure And make have to scalable so we costs their that going we Bank the or a ensure this want that those just technology timing the our infrastructure not that I of going be sure financial like. do that output, result to it. hesitate organization, we enough invest to to that think, ourselves that not continue will to we efficiency, as have competitive. West output we've to become that with always to to that expertise in falling things things would know effectively, day, the these of very when But performance follow want, we and to people have they are to behind. as accordingly an arrive. the we is that that situations make these continue put to investments behind, in those because we additional that's will at excellence, necessary operational I we that want complement strong, at wanted obviously, with that of this right compete don't organization these to stage we'll always have that at we provide make differences, those whatever right the somewhat then of I the when position adjust far many whatever the do sure will so got will move put service to All ultimately, efficient not now, manage what banking that, and forward, very, East we all kind We to having mean, work just the but And sure make would we there's we, you are be technology -- when more we people cannot do to are when to stage of one in

the and they able invest falling States, good line about Many think in our in not innovation have manufacturers able not talked been did in earlier the is that are business not of facility. assembly the to because not go caused them what They a just properly inefficient in did properly invest back technology, simply example equipments, -- United compete which an ineffective I to to solar that behind. not our with to in world. in to I that U.S. well the properly did invest did compete they have the others them

And example the -- is customers don't of a use to want want is so to what force mean, I a for good ourselves we customer a you into VHS customer don't when that Betamax. to movie, get a streaming looking and

sure to we'll try here stay of top what the technology like to that is do continue of make we'll sort we So proper what and future the customer right provide to are on the accordingly. needs in

Operator

Markets. Lana from comes BMO Please of ahead. Chan Capital question go next Our

Lana Chan

Hi, good morning.

XXXX? and bit betas in faster growth are for your XX% costs in of deposit baking your fund industry-wide Curious, kind about faster XXXX. Just than deposit you trends little of the to your was that than mean, a into What able with terms that on look what growth. I seems in growth being target as deposit growth comments we deposit in loan question and earlier XXXX deposit

Irene Oh

business small corporate the retail Yes. from also. And the I our think, great our funding sources, you customers question. deposit coming at and Lana, it's and look so a the that's When our diversified and network, customers,

So we're we opportunities and something customers, happen. that very ensure with have. see that be the there the Certainly, to fund that, as hard and our growth confident of will we're we'll that that the that's we growth at kind working that we able loan that and do analysis

With guidance, occurred will betas deposit the increasing factored what the be margin that from we XXXX. in in have

that going aren't think increase, deposit I unrealistic as it's rates betas to those to increase. continue think to

of look from categories. we rate a of deposits and really when you specifically probably, out perspective, and at to at XX% betas it category market different at break with But we of more roughly, it were look that money XX%. looking deposit types within deposit So a per it

Lana Chan

ability of follow-up I funding as loan mix, that earning some of there just liquidity assets. And growth fund additional to there Thank a Okay. you. on well? other the use mean, the Is side other to

Irene Oh

Yes, definitely.

and the we we there core have I mix make earning the have, funding. mix enough think the that loan-to-deposit that assets to of with want there. natural we sure have availability we Certainly, is

something loan-to-deposit we But and us. continue our focus So on. option that's for that given is where ratio is that an the to certainly liquidity,

Operator

Our Deutsche of next question Please David ahead. comes go Bank. from Rochester

David Rochester

guys. Hey. Good morning,

Dominic Ng

morning. Good

Irene Oh

Morning.

David Rochester

expenses similar growth a model Is on in guys If assume in growth decision similar you loan XXXX to regard what's were there? it dial had you revenue or that, up range? amount in growth expense depending to kind of something pace to with going would of that folks Just or loan a if growth, or of down what had your range that ability XXXX? to you XX% sensitivity the XX%

Gregory Guyett

I we that trying think clear that guidance Again, our think we're expense make need very be reflects in the to that we to investments the business.

than see embedded so on line. and outlook don't wouldn't given, managers, don't individuals current the we sort growth. I us publicly, we've find see the office, you increasing onboard. plans the necessarily we if we've bit But already I would mean, little when that as the you that And if even client-facing, better I more, that guidance did expense our that on it I depending bring I particularly lumpy expense salespeople, we've doing on know better got performance we've in are think them in provided us significant top think front even and our relationship again, be said, growth of had be pretty can a that and loan I

David Rochester

Okay.

could pair a a stronger, sounds invest desire if if at then back you see or to don't to growth you needed need like. if growth were that But So were it slower. more, you all

Gregory Guyett

onboard thing get to there's in, equation. the We're a will also are of people and risk amount to done we obviously, level that No. exceedingly think that certain But and them, integrate be year capacity management change. mindful of things only may on human them the of hire that and to the we're side made. year investments go and needed making It's out

is adjust making humanly business. and East there West do any that given doing culture and period of to sure at can to how people approach of right part Bank And you the so time. that And are hiring the limitations just again, they of much

Operator

to conference Ng back our closing question-and-answer the I for session. any concludes over This remarks. to turn like Dominic would

Dominic Ng

I and better forward looking just had for you even and XXXX. great us the to joining want we at all year, call for to are year we a thank a

So thank you.

Operator

now presentation. has conference you The for today's concluded. attending Thank

disconnect. may now You

East West Bancorp (EWBC) 25 Jan 182017 Q4 Earnings call transcript