EWBC - Earnings call transcript Q4 2018

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Operator

Good day and welcome to the East West Bancorp's Fourth Quarter and Full Year 2018 Conference Call. All participants will be listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] And please note this event is being recorded. I would now like to turn the conference over to Julianna Balicka, Director of Strategy and Corporate Development. ahead. go Please

Julianna Balicka

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

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

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

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

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

Dominic Ng

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

in earnings was expanding associates, controlled diligent net the year-over-year by the because to robust stable quality. our efforts thank them This growth, of one like interest of record margins, Our driven of to expense the and of I strong XXXX growth income asset net achievable was Company. for contributing and growth, interest success loan would every X,XXX

For from XXX% per earnings our interest from $XXX X%, up quarter $X.XX interest or share. fourth last or or we and up net $XXX of the share, fourth quarter. fourth share, per net million Quarter-over-quarter, of million our quarter's XXXX, XX income net earnings quarter, the year-over-year record XXX reported in per X.XX% to and of for million $X.XX the $X.XX expanded by reaching margin grew million a

decreased million of to Our X.XX% $XX or just non-performing total assets. assets

of As point XX year-ago were charge-offs December quarter. net basis the XX, similar loans of quarterly to XXXX, and average

Now XX.X%, XX%. X.XX%, turning that return on equity can our was was quarter you on assets return tangible equity see Slide return fourth and to X, on was

attractive. consistently are ratios profitability Our

to operating been tangible for to XX.X%. XX.X% ROA range has quarter X.XX% where ROE has five to XX%, Our XX% been X.XX% been has ROE and

have our States current assisting the and for Chinese I'm and expertise from XXXX Chinese to banks. United to China, the built relationships. the other we are finding exports opportunities and at opportunity growth. direct Despite new beyond, Looking banking actively in United in our States, us decline for about clients existing prospective East West, presence investments differentiates East and the that business the cross-border our West and win towards With deepen Greater excited we client and

and markets environment the up-to-date to knowledge services West business expert and each understanding in to navigate clients by both products meet our unique help conducting cross-border providing needs. essential matching with bankers evolving Our geopolitical them client's East and

Although, some up past advantage multifaceted, portfolio us to year-over-year. hand, taking the activities, the others of diversified and gain West continued the disruption other two back East comfortable X% our wholesale clients that will well are trade scaled our of position growth supporting our success is wholesale on have market trade our in differentiating are are share. well cross-border profitable of we with serve business. Overall, the of The

foreign positive and In XXXX our in XXXX, outlook we to is Our we XXXX, is in and building team fee-based income we another particularly in business. of consumer enhancing our to our And our base. a needs the in as cash upgrading And have our will payments. capabilities we mentioned to make tailor management exchange capabilities previously, consumer banking digital continue improve to for investments cross-border technology invested initiative invest and client in in and platform. cross-border ongoing continue platform

a this Slide Now, on growth Slide deposit number X. moving long and to discussion on quarters number X,

growing December reached XX.X or a from fourth XXXX broad-based was quarter the September annualized the growing linked by grew of quarter, X.X across XXXX, of loans XX% year-over-year. XX% billion by loans annualized. quarter and by portfolio. quarter in billion, average XX% As growth billion XX, linked record our XX.X XX, lending In total fourth Loan

by were followed XX% with or annualized. by up Our strongest quarter-over-quarter commercial mortgage, up in balances annualized, XX% were by and growth or industrial was XXX single-family which million which average XXX loans, million

up XX% XX.X grew from XXXX, deposits December X.X as billion year-over-year. Our or of strong you entertainment and X, XXXX, a and Within million XX% total XX, that saw or annualized On portfolio. increase to billion by an in private this performance or commercial annualized. our equity can X.X see increase XX% of lending, Slide record by CRE we XX, XXX September our loans quarter, billion

over of average certificate by deposits in and and followed our anticipate of fourth outlook. by XXX XX% million quarter by Irene XX% strong market an growth deposit or the up quarter on XX% XX% slow XXX DDA of linked million We by growth billion grew in for basis rates and fourth the up more by year. to growth money of deposit I annualized also will annualized. annualized. first category, or discussion half lead was income XX By detail quarter of account, Our by call kind quarter-over-quarter average or demand statement the million the now, turn XXX annualized, up experienced And seasonally

Irene Oh

net item, you, details including of On and Fourth skip NIM Page XXX of into fourth decreased a have would and summary net Thank interest points adjustment I shows by X.X up previous shot NIM quarter by of net I/O summary expense. loan will income income Dominic. the by X, to We related we the by XXX. of by increased X income this our been net GAAP Slide West. strips, points expanding margin in and snap basis was been have XXX items XXX decreased quarter equivalents, would the X and year-over-year point. interest combination interest Without income X% a a and items. bearing XX%. loan offset average interest deposit right by year-over-year. cash of by was points partially had net quarter X. interest a accretion of XX increase cash yield, Year-over-year basis quarter-over-quarter XXX interest record NIM the grew quarter, slide It growth dive million by interest XX adjusted the certain basis the the interest amortization on million X by adjusted driven have East and basis increase quarter statement, GAAP point which excluding the up key linked in income a for margin that basis impact of an of our and and tax from quarter

Excluding drivers portfolios. yields, increase existing offset basis yields as A our rate XXX-XX on to partially increase GAAP new assets from a increase X XX of decrease by XX from on fourth basis point accretion points points reflected down margin yields higher basis due from stemming discount as upward which in higher basis other the pay that are deposits. re-pricing ASC loans the loans as earnings well points quarter to X the item, X A points loan to basis the expansion income. follows. higher higher across for

variance the end this out NIM demand in Loan change in NIM distributed loaded yield basis evenly growth accounted the equivalent. where to and addition, the cash but lower NIM cash and elevated deposit cash interest quarter quarter. as which like would came decreased cash seasonal also bearing to in strong balance We anticipated was backend points. expectations. expectations a growth deposits throughout moving was quarter, quarter of additional sheet and main including our liquidity of mix fourth point relative fourth as for in In the the expansion, average last more and that's balances growth the deposit had driver X the by quarterly our initially above decline equivalents is growth of and to I

net For interest for even prime increases the XXXX, rate. the with no the we current expectation margin to expanding for expect a modestly full-year

rate. cost December was of X.XX% of change started and XXX-XX as cost, on Cycle about September basis to the on of XXth, to an had basis total of cost XXst, interest average reserves beta as end deposit XXXX, accretion XXth. As since our loan ASC to Fed implied XX% Fed in date, the the deposits yields, and was deposits September in XX increasing points to relative XX% total funds period rates have excluding we funds bearing Federal of the we of points compared our end our X.X% XX December period again, compared

of from cost fourth the third in deposit and from the XX% beta the loan implied in down Our quarter. fourth quarter was up XX% third XX% XX% slide was in in are the total on quarter beta XXXX quarter

million Slide quarter. compared in in prior quarter X, total income to XX.X fourth was XX turning to the million the non-interest Now,

Excluding from million offset income the the quarter decreased interest foreign Customer-driven lower evaluations fourth the million quarter. currency fourth fair rate driven items. selecting essentially FX Quarter-over-quarter volume quarter. to in prior a of the income fees volume swaps as impact for as matter well due a income fees to of $XX FX $XX Quarter-over-quarter credit was compared in balance total $XX increase million sheet greater decrease gains transaction. on the by non-interest in was mark-to-market quarter the sales, transactions of the in and value partially customer flat was prior from all customer derivative

our decrease and XXX tax Slide of a third million onto deposit adjusted million million a was investment quarter. quarter non-interest fourth expense non-interest XXX credit in amortization excluding XXX intangible expense, the with and Moving from core XX, slight

efficiency expense XX.X% generating third growth adjusted revenue compared growth, Our quarter outpaced fourth our improved to positive quarter to as ratio XX.X% in leverage. operating the

XX.X% XX.X% past adjusted has in the the quarters, fourth down to from ratio efficiency Over our range quarter. five

Year-over-year, X basis our million pre-provision XXX by provision was quarter-over-quarter. Our our critical X% pre metrics. from by pretax basis the of of pre-provision detailed X.X% grew quality have presentation, income by Slide XX pre-provision quarter. and points fourth by XX% profitability pretax, quarter income of profitability pretax In pretax, up expanded quarter out And XX is third points. up ratio we asset fourth

year. XXX XXXX for as XX of investment XXXX points basis allowance basis million totaled at end December to XX the XX, loan XXst, quarter December as September last of decreased Non-performing Our and as million full down XX slightly of as third basis of XXXX basis for equivalent December XXXX. end of held or the assets points by points or points of of as and XXX of losses from of compared basis XX points total loan XX, XX XX, XX% XX December million million asset we’re XX, and September, of as of from to XX

credit of XX For or loan basis of basis off XX average net million. of compares average losses we XX million to net XXXX. current charge X XX our This recorded of and points year provision full and charge million a of the for of or XX were XXXX in year the of provision million points loans full a of offs losses

our We continue to charge pace in strong of access to of off provision origination. support loan

XX was fourth points XX loans provision off for of and losses or XX quarter were million basis average of annualized the charge XXXX, million. credit net For recorded the

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

to XX increase common by medium by our the basis at XX capital ratio We given year-over-year. basis near-term dividend our this of followed that to regulatory time outlook organic for balance growth strong Our points believe points is best majored sheet increased use capital term. the

XX stockholders As Slide to I dividend earlier noted record of stock. February of of basis payable for And move February share announced on on East and points in today, first reviving XX, that, XXXX XXXX. quarter Dominic cash stock have outlook to West XX. directors board per by with earnings The common our XXXX on declared the release dividend is XXXX common on X, will

to we key will the diversified of and approximately results, single family. full full-year period compared We in by loan real-estate XXXX increase of our growth For of to year categories XXXX expect across loans C&I XX% end growth the anticipate the support XXXX. deposit commercial

XXXX our a accretion double-digit to a rate. XXX-XX discount interest at new since excluding Please expect low ASC as item added We percentage outlook. that's to publish our net income note grow

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

expect income outlook to that, has of trend expanding the expect funds XXXX. GAAP we full still reported add continued ASC net with to debt in fourth down margin interest XXXX to we XXXX. accretion the points basis and Our And impact additional The rate year margin and incorporates as no well. in in to relative X XXXX increases just and NIM quarter XXX-XX

We tax deposit amortization expect and non-interest core amortization rate. at expense mid-single to premium digit credit a excluding increase

revenue that between the full-year million. ratio efficiency our for imply current XXXX for XXXX. and credit range modest view project growth, Given does XX% positive XX to provision in this in losses leverage We operating our compared will XX million of

in We quality otherwise provision growth similar reflects as be we have expect year-over-year XXXX we that increase in asset the experienced the expect to what to backdrop the XXX. loan broadly in expense

XX% in at call tax credit we the to turn liability in With be remarks. rate to investments anticipate reduce be for for tax we expect invest anticipate that, which that from Finally, We investments levels back rates. the tax credit statutory to to as Dominic tax continue our closing I’ll XXXX, effective now will XXXX. similar

Dominic Ng

you, finish solid had we Thank XXXX. to fourth Irene. In quarter a closing,

of now questions. XXXX. forward We are would with strong that, open in And call another the year to performance financial I to Operator? looking

Operator

you, Thank sir.

will from first today Wells question Our begin Fargo. We [Operator come now Instructions] ahead. go the Please of question-and-answer Shaw will session. Jared

Jared Shaw

a if I a economic some maybe is see the that increase activity? a growth expecting an guidance the start be are what higher we it number level? And less would outlook, coming broader actual slowdown of XX% with we happen to can in Or maybe loan Would than type economic have loan to at a you number? year. this what with guess the XX% saw

Dominic Ng

Well, we did just XX% last year.

XX%. projecting are we this, So

worked as of volume In a out same. more terms of business, probably about we

looking So, any at we’re not particularly slowdown costs that anything or like really at all.

diversified we what commercial growth think our portfolio, from see that, We is see the mortgages. I estate. see we have and from single-family very loan a growth we real

We particularly growth within a -- very C&I portfolio. C&I, also in we C&I, diversified and see have

be in will from like growth quarters, and different comes in different good fourth the So places example a quarter.

the energy business gone then entertainment recall up, equity, and private gas in third Our have call capital up. and quarter portfolio the line oil if and risen you business,

forth or we have our various varies. due different that is cause actually that making all performance So sometimes But say are positive borrowers a way right all we different areas can do industries organic more. just to has that, off growth mean think that off so at in all, various of pay This do with I step quarters with them because that they of this needs comfortable pretty some now different in from and that point likely I'd I quarters, consistently. guidance. and different pay per up, these to and are

situation better, with guidance that are will do obviously do then, get on to possible. the guidance, view pretty if XX%, we -- our to so if going the best and that to this is always later feel more. we we'll We’re And economic update outdo trying do road. to my our down we at stage And good try

Jared Shaw

into a And is think do here? good for of now do the dividend And strong ratio ratio? that guess buyback then, strong. capital natural bank back capital outlook I with maybe capital in XXXX you Would shifting position for have say consider capital the you that a a or to capital, traditional dividends supplementing is, where special with should question the a management beyond you a terms

Irene Oh

As best our -- will Dominic view for we projecting if shareholders. to we the dialog and active will environment, that the we think it, it's and board alternatives have and about organic strong use that’s consider to the that are the in more if mentioned, look then environment grow, of capital the the our at Certainly, and with something continue growth, for ratios for we capital that other the will are is continue capital there that’s Jared. have that shareholders,

Dominic Ng

with discussion board. have our constantly we Yes,

the shareholders very continue discussion. as we far, is up friendly sort one we banks of look into very strong topic to our industry this in really new be in and that’s suitable that formula. So, able equity this the so go clients, we business organically, at so we’re find But of grow non back with buy few are why of to always to return

we that So very stage, condition and our we at West, now ever do right and cycle what are that’s logical East would but what we’re shareholders. obviously, at this change then if

Operator

And come Bank. Please of today from our Dave go quick ahead. next question Rochester will Deutsche

Dave Rochester

Are you billed the guys guidance the of December what guide, and from to this remain the had run-off here? or hike couple impact of expecting liquidity in you you impact that the sort expecting for this A quarter? that NIM are

Irene Oh

Yes, Dave.

did fourth that for increase Overall, increase have far year we same December. and and for of that the our next funds reflect NIM, the level we the an as liquidity well. the expecting in not the in most income do guidance quarter will our are interest XXXX full-year we So, as access as that does in think and of Fed to

the for more you may that have fourth would quarter the excess the the model normalize as of So, full-year that versus help that 'XX liquidity what as we far happen in us would of duration if it at rate out. kind the amount say, as and shorter assets look I to exactly you

Dave Rochester

then And just follow-up. a

to you you some borrowings ways is your securities seems yield running the and Have to some it some fits yield completely you borrowings of in the it your about versus positioning. the rest? to negative actually next spread maybe if and now hits think higher a of that that have your As NIM about support your guys to year, look like over capital guys cash every below repaying off and you thought the have that take CDUs. on some and to rate repositioning of It do right

Just get some to wanted there? thought

Irene Oh

time done time, deal have the we of security to point several just by over impacted From the that looked was think some will additional amortization. the, the last at and repositioning. fourth I negatively we quarter years, I kind out

higher we give securities, duration been being that we taking bit and a we [Ginis]. you. XXX, the higher, Maybe about much agencies, bit on of as similar the for some bank are that, have can risk right able at ex the So where little well. closer redeploy the But subsidiary on at anticipates yields little are offline, assets. do of we not the certainly, buying the overall, too hiring A we more portfolio types in and if we're yielding to so that little reinvesting some with But securities now of cash, detail cash Hong-Kong gives rates would our misleading probably in bit what is at were a are the that look XX. of

Operator

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

Ebrahim Poonawala

the deposits, fair time other the deposits follow on So, bearing you growth want we've the sheet in non-interest to of up grow of and as seen well. I the on amount balance just side where NIM on

without that slower we think the just towards from if absence rate talk right of growth new trying about Is a you way sort in as can So and hikes expect mix NIM growth time standpoint the is you think sense as mix hikes? And on. to about just NIM, of the another I'm continue? has see do just any on shift to my higher to first trajectory about how quarter leg rate understand you then put deposits where outlook of deposit the continued in

Dominic Ng

paying the the of deposit, rate rate of I we've time hike, think announced our now now does matter. for obviously many customers the seen finally start core interest attention to customers we'd retail finally deposit -- because

have still seeing fourth you numbers. So, you converted, quarter noticed have now, what but they're them many of now have

in are fact not grew money accounts. We growing CDs even on market we've just more

our So, customers. have these we continue to discussion dialogue with and

sometimes And more are give you CD, but may customers. the and them a in commercial flexibility, we getting importantly you more not lock

So many of customers of they commercial tuning going on need be the are and nature do because CD. them of the flexibility, really the not so to

pretty I CDs, think look would because you should don't have rate that what doubt bring substantially customers we at just than who much as if conversion I who are without of then, many conversion XXXX, a think the money XXXX. to the checking XXXX core market in new that the from customers high account done we So, bringing in CD it, be new them I less convert and be that, or of as will happen But in customers. regular maybe will rate are say every and some year XXXX.

Ebrahim Poonawala

a it just Dominic. on and Got topic, separate

supported here XX% remains front, I think the of love all growth growth worst around this round where stock weight get we the on Is like a is the year? year. investor from because the credit its Is know think risk last how slowing talked Having slowing? very case on about for feel let's but would mortgage it quarter you standpoint, where tariffs. in Like that like your another updated all commercial I you're and I there grow? do assume to growth guidance is downside get to thoughts tariff in into this, it on an bit that, the China your deal I concerns So and loan said there

Dominic Ng

of on And war center the is listed and but can portfolio the of and while media enough you quarters what our top. will you Yes, XXXX, the East probably year, or to the ten grew trade front by should see the if the slow of comes of end news two the year-over-year. what kind presented West tariffs, magazine, top trade any X% end at the we be at look day exposure actually interesting we

our know West I sometimes perceived to exposure, can the mindset think how to tangible organization always what like while is from navigate. has we're East space, and shining were on advantages be we know and site why key in we situation at we nimble East bank. that’s we very business, that some maybe still that there others are to the know we opportunities And capitalize able away the for apply this West kind crisis of result have

U.S. know that And some opportunities a popped to you on, general year, of to So be is when and always maybe say is but don't there to sure know later done, but we’re My will it’s on going stage, agreement, East the that, position may much more other as find done. it then on West issues as making development stay we be never and knowledgeable, than we to never capitalize going Mostly like China. the some that day-to-day between done. it. sort it’s last basis discussion what I long up. there looks the of I watching all at until is likely, like positive this At all final going

from this Again, actually with areas coming clients trade tell. States, the have China or these thing to dispute. and that money will be of years of that has as and payment share or pretty here. In Chinese single what C&I was it home of we continue better as due single us. much the to that taking is who CRE we do in other family a from restriction mortgage our want seen the we other non-Asian it's and hard for China, single-family investors United to buying customers, slowdown from are gets American But market tariff services had as highlighted may getting The in and shares. far growth is time ago, other so two are besides XXXX, We a of amount single-family in be and the are in I strong peers as also our a substantially homes just to slower growth are that the some domestically in either thought to they And down we that, coming U.S. citizens have mortgages you've reason that that, we than pipeline. family small conclusion our China is mortgage, our they in find the from new we've substantially or mention turnaround past, the that bought strong

focus, to much to XXXX, presented financial results that's pretty it what execute just to put we more So, and pretty much we to you got our will get that than to more West sure earlier. about and able also we get is the about continue much to same, it's do we and we before. that business the execute need execute in East it and that's doing that's we XXXX we make it. be that pretty to that will work the year on we so strategy focus job, and And And to be

Operator

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

Chris McGratty

an that, the To dollar digit from one, guide us point obviously going number, Irene, perhaps income that each mid-single the is of for doesn't do sensitivity in also expense year And sensitivity effect the is? talk basis remind hikes higher? hike, just rates. the can the you the what you include interest extent to get can we rate

Irene Oh

think production higher significantly certainly expense. the nothing and if depending but know that rate we you're that will where I guidance to So, number, or we I lower on the hike don’t maybe that, the compensation have will referring said in really operating our mid-single growth affect overall digit rate substantial. impact environment,

Chris McGratty

us then basis the you sensitivity And points the XX? each remind can just sensitivity, to

Irene Oh

to referring Are NIM? you

Chris McGratty

yes. right, That's

Julianna Balicka

is points the In this X the quarter, net was, on we at we're that per basis of XX. Chris, to the now average, sensitivity Julianna. margin fourth the interest rate saw hike each

Operator

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

Michael Young

get categories. growth, I the been outlook. years. been on wanted flat of historically potentially fee a relatively to to income I couple in closer that’s most color know last just growth the tracking we've little loan bit But

updated cetera. wanted customer a change that's thoughts demand, mix just the or any type see So to growth if of any shift loan in et in

Irene Oh

had flat we where look the the mentioned to last areas FSB as we're compare a example you for lot volume transactions, or at to categories, certain we at year I where happen see think customer less are related year. last relatively grow the the income we is currency, certainly, loan year this we exactly view would with as categories what and growth. RMB there so. If Chinese related related revenue where was more year-over-year of to Year-over-year, to

So there of a in when side driven also in from some little flatness kind the have in areas will those are swaps where the certainly, and for bit we these growth is feel to side able wealth that all work consumer And management, a given rates with we optimistic we’re be XXXX of that categories. do. to expectations future, that the commercial of I from the we at and think curve changing of market XXXX, look

Dominic Ng

be tell that in to I execution relatively will earlier confident feel focus, categories do execution better. they're and these talking and feel that in be I good I that XXXX. all able that. said pretty and it I you think pretty we to we'll focus XXXX, I optimistic they that as better can need members just about feel team But

Michael Young

that all mid single in And a should to we and low and digit single not get we that ratio just expense to digit or year. I cause the the growth together, fees single outlook pretty in that Is mean, something digit like anything if taking interest high this growth income see that or fruition? meaningful would the efficiency then improvement growth. net double-digit maybe that come

Irene Oh

I me. categorize think profitability is operating would And efficiency increase. I we I leverage, Improve. just that will that improvement. correcting do know meaningful. about don’t as with the expect strong Certainly, think Julianna positive we

Operator

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

Matthew Clark

core as I mean to or of that we X% The mid-single X% expense digit guide, to X% X%. think or should X%

thinking might a of be wide how curious that? Just range of

Irene Oh

as single that digit. mid of think We should

Matthew Clark

a get update And lending leverage there. attention your around then on just lot to an of wanted these exposure getting days,

Irene Oh

[X%] leverage have loan total C&I about that book, is our X% total we our lending Sure about exposure book. of of

Operator

question of will Ken from Zerbe ahead. next Please Stanley. go Our Morgan come

Ken Zerbe

guidance, what Just want the well? specifically What on for you specific growth -- are as the little deposit terms to assuming deposit/securities growth. assuming But of in in XXXX growth a more side. securities be you speaking are

Irene Oh

assuming increase not XXXX. in for portfolio substantial Ken point a at this our securities We're

Ken Zerbe

real deposits the strong relatively deposit second it I that whatever given I the presumably then thereafter. and just or or stays question And have that follow-up So stays growth, stable had. guess quickly you then constant

I In terms of betas, actually was sequentially. to it going deposit your say that was lower

expect acceleration deposit Some said we actually also your first terms an you or actually going in increase quarter? in expectation changes have or of that Is pace quarter. that the what of they seeing in talk an deposit beta them the of to in costs the first are

Irene Oh

be quarter to in continue from basis costs maybe have are loans be as that similar exccess adding income fourth we but for first the expect second and we versus bit that anticipate quarter at share that securities fourth interest modeled, the deposit XXXX that. given XX We XXXX, will the what are relative previously also a quarter look modeling the the came I'd in from results modest cost will there when at how the continue where I at points. to think deposits, well a to to growth pace in in more quarter, we a actual the that, about And little to and the rise of of the actual at. in we do we

basis under maybe so. that We XX modeled points X or have

with thinking just that wanted kind understand So to the you you, so were we of what versus share I actual.

Operator

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

Lana Chan

something your else? one ends we swaps on of towards is moderating with tightening sensitivity the Any or Couple potentially to maybe sensitivity of or served this get cycle. asset about later hedges, thoughts questions, as asset your

Irene Oh

and -- rising right now. looks like certainly term we suggest the as end the inversion maybe shorter get it forward the environment of curve rate the that Certainly,

that index back is last below are of mid fully rate Some we the as the the something year, we've loans as thought far I'll the floor, C&I putting things of and below done share mortgages. this with

that sheet we're decrease. to perspective make do a protected sure rates balance from Just if

out discussions we of that we're that Additionally, that yet the have are to something use But considering of something is of is end hedges certainly far, the evaluate and progresses. caller as so that at haven't continue that will December. we the as year

Lana Chan

the have New for What CDs you the just promotions? costs, deposit Chinese guys that. that around of entering Year usually on are know CD I soon. , special your plans then And on other we're side

Irene Oh

do CD Chinese Yes, we promotion Year. New always around

do that this we And Chinese again, some gift and we relevant well. theme. think Year are so will do will this this that nice that offer item will we New And year year's

rate we Now, offering of that we in what quarter lower actually offer than the first is year. in of rate, terms last are

Operator

question will Partners. of from and Our come ahead. go O’Neill next Sandler Aaron Deer Please

Aaron Deer

answered. Most of my been have questions and asked

question a fee in front the on to do around bit you've been businesses, your have anything acquisition Just based some you particular -- discussed little a Any on there? improving chance of management. wealth looking

Dominic Ng

banks At this it that Neither that we as well meaningful that in the you've know right industry the of of has them stock relatively these There very difficult obviously of turning get before explore, is we down our far is out interested have to focusing it own performance. think in back we come so can that be reasonable. organically, we to do execution deposits. price right And others into there problems. And are on into view you is always really I now organic This but people's type a and small acquisition us similar now worked it because for there buyback. to makes us, popular that nice that had find discussion is very, for or will to we both and loan as why one growth financial topics seen organic bit it are little But point, with have has then again, our do good board. the very because growth, targets. like some

standpoint, try much. we that from so be distracted not to too And

I our But suitable problems potentially else's right don’t now, be while, what would some this like distracted. wise, out organization day say that that get we a do So day there distracted occasionally and I'll that on is the for us. organization are the to see and get see I pretty say somebody deals focusing in once Irene at stage whole to But and a all announcing. associates execution. will that’s look will be at much major there I that likelihood lot of

Operator

Gary Davidson. from of go D.A. Please question next come Our will Tenner ahead.

Gary Tenner

something up couple On quality items. of addition there a or questions quarter? the of table, here. that during Just was something NPA your credit not Was previously the that popped that there other was

Irene Oh

Yes, that that what rights. be do associated charge-off par before is to no that that There above. able non-accrual and some with in on expect that and foreclosed was item at was we future was film hopefully near something we to line the or sell that,

Gary Tenner

growth pace the it anything where that. reserves? And then loan about broadly sort is are of steady guidance of that's to qualitative range. time that just Is on -- million, talk timing on $XX know expansion an your question, thoughts might provision with with million just seeing next is $XX Maybe you just want outlook that of in you increase in another of it the giving asset around cycle? sort 'XX the we quality, there you for the you're year, But the

Irene Oh

allowance, The year, be the East probably a substantial West ranging total for allowance. reserve reserves December [XX] at qualitative XXst. of the the was XX% to qualitative end of The continue plus component of our

projections curves insignificant, see GDP appropriate factors not add are we from look as and macro to we we as to factors, there So that When continue evaluate or adjust. growth, where qualitative the should are, the far for the numbers here, looking related XX%, basis we're XXX is The that range at, on XXXX, [ph] that. need of growth to to probably XX loan round PAS we that. with for depending points, certainly for provide loans at

of last think reduction the of the few under substandard total December around we've years, time, also substandard to this we've in point levels, of So it's XXst. X% loans, in those loans backdrop but of somewhat had continued loans. substantial I At reserve as a

likely. to not So is continue draw on that expect to to

expect factors as the all at far the we substantial but we've looked a change allowance our So those provision, are with overall, that in don't methodology.

Operator

next of Brock Our come go ahead. will Vandervliet UBS. Please question from

Brock Vandervliet

last looking or deposits? all quarter of has about in in you so? if What you're the seeing in China of talk How Could and like Asian your terms what the are tone activities subsidiary? terms loans changed at in

Dominic Ng

region. and are of because progress opportunities so loan they And the the growth and is of we much in $X.X region, portfolio the the China continued than And pace have Greater and United capability of today, US-China decent dynamics, value because feel expertise expertise knowledge a they with because they And current teams obviously their our -- built because to their enhanced obviously and our was this so Greater their able Well, that situation smaller identify do [tariff]. the and knowledge. are current to input, -- the percentage clients their I in China nice it today as making understanding deliberately cross-border grow is States, total higher. billion

one in in stride the bringing not only So We're in doing time. China of We're business they the Greater making terms new customer are commercial making side. banking region. customers -- retail a at

all like relationship continue in type banking So, I and activities that so business commercial grow them there, have our to the far, US-China of a to do of beyond. cross-border, of some many expect and new XXXX are sort and

Brock Vandervliet

separate And that you question, call that segment? as large portfolio. the you how around How competitive capital a do portfolio the see mentioned is and intensity

Irene Oh

$X year, call about was PE of the the billion capital outstanding [commitment]. our portfolio, of end -- portfolio $X.X -- billion the As

Dominic Ng

five, able well I in do good. six to grow an And basis years beyond. to mean, so we them about they continue we to ongoing continue doing be and and to and ago they're far started XXXX expect on

Operator

Chiaverini go David from of come ahead. will question Please next our Wedbush. And

David Chiaverini

Couple of questions.

you in lot your of slowing to for XX% GDP a below pre-emptively? in growth a you even would consider slowdown? Or So XXXX. economists slowdown you growth loan guidance slowing consider see a are the growth if Would calling

Dominic Ng

be -- view I down in what forth. GDP like Well, on think -- is that we and to alignment deliberately really based slow with not my that's it's so -- not it's

a there the probably signs stronger portfolio, of sure there think slowdown of we fact like two the like less ago kept either stay for have over to bull Where that years keep had is forth, real we to we two years very charging in We -- a stronger. it's decade we ago. vigilant and we've sort type toward and in on situation, prices need market that to market rising and going lot at more some that monitoring. make see adjustment keep with anticipated almost of more criteria looked of in We of GDP robust in time or two upside up had we condition and sort which going a a be terms And look just to over a don't their or the vigilant more we is credit up. -- of going upside? those seen XXXX. substantially that so like that the going When in potential be estate -- economic is knowing a economic fact stock likelihood, have up. at that's continue to we look is an be and to that's We what scrutinize I portfolio of that in strong terms the started sort making internally. strong and at And we ago our years our standpoint, underwriting

looking the of that make building a envelope sure portfolio credit started push kind careful working management are do continue our we and stay those we that loan much. at so we very risk vigilant And to And things we be better and just -- not too on capability. to and will

If that's loan loans seen. able with organic up be down. to growth slowing dramatic we originate it the cause expect, we've our there what us now, on we've of of not outcome that guidance some situation end right that or kind we projected very kind are strong Our very, any the underwriting substantially like based that obviously

loan to and the the to with but just of to and mean, taking we'd business like what's East it just best to West losses common of we'd kind And so the do principles. our for for run grow sake sense we the grow that's going Bank. want like be basic potentially contradictory I substantial never

-- comfortable with when with it's all, not a feel I something while condition put it the pretty after mean, out. guidance; a it's guidance stick have change. So that we we that I economic to we

like, last the with it's year, we of So that in we'll comfortable adjust US-China it in crisis that sort [won], accordingly Frankly, situation on -- XXX% circumstances. the with based we'll like know not find they opportunities.

our ended push work it, slow way and not It's down up and we Surprisingly, We team getting more have opportunities. growth find just to our may that expected so executed may loan that. too, because guidance. get our through below because we happened, we above our somehow that

obviously at the and we looking then out we're right going if down. so is our us economic every opportunity that who their clients XXXX, there, if we'll helping to thing, and be we're new take what expand and that making portfolio to going that credit the direction do it, But in allow slow knows doing know be what But sure opportunity the go? on existing not is very the business, So to more. is additional clients there is we'll and do to carefully

So that's what are. we

David Chiaverini

to plan couple tightened or follow-up a over of quarters lending quarters? you you that, over next to have at as all standards And past couple the of do the

Dominic Ng

borrowers underwriting It adjust credit or Again, on circumstances depend we our we see it type based the the specific market. of specific in industries. that on -- varies different

I we months. that -- little which a in that the nothing we see keep particular And so then bit -- those condition there, that also -- several the one you on which there direction and up and changing tightened depends -- here can made circumstances with share is -- specific more next

Operator

conference And session. over ladies closing and our Dominic the for gentlemen, to Mr. conclude remarks. back at this Ng question-and-answer will any to I'd time like turn we

Dominic Ng

to call, to for Thank again speaking you. our -- April. forward looking and you all on joining in we're Thank you again

Operator

for concluded. the today's conference thank Ladies now attending and has We you gentlemen, presentation.

You may now disconnect your lines.

East West Bancorp (EWBC) 24 Jan 192018 Q4 Earnings call transcript