EWBC - Earnings call transcript Q2 2019

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

Operator

Good morning and welcome to the East West Bancorp 2019 second quarter conference call. All participants during today's call be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event this note, being recorded. Please

time, over to this Development. go I Strategy would conference the Please turn to ahead. Julianna Corporate like and At Balicka, of Director

Julianna Balicka

Good Officer. Executive results of our are Financial West for our Chris. Thank XXXX. you quarter the Dominic Officer Chairman East Oh, and this With Chief review financial to Ng, me Bancorp everyone on you and the Irene joining morning second us Chief of for and thank call conference

materially We caution may number course projections performance regarding the uncertainties. to meaning within would Litigation the or forward-looking of of Reform future from of company of results Act or differ These the to statements the like due risks Safe the the during that you actual forward-looking call, financial make provision and a management the of events Securities XXXX. of may Harbor other statements

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

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

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

be and Relations also recorded As website. being available replay a format reminder, call today's our will in on Investor is

I Dominic. will over turn to now call the

Dominic Ng

summary XXXX thank our will earnings slide for Good joining second Julianna. discussion of quarter us three. on begin and morning for I everyone results you Thank with a you call. our

per share quarter net reported $X.XX share. second $XXX to $X.XX $XXX quarter net first This compared of million or income and of morning, we XXXX million income per

Adjusted was adjusted net previously share increase this expense, tax second Solar. $X.XX $X.XX per quarter, share X% XXXX impact the million $XX share, in to related quarter of The recorded this earnings expense up expense per was claimed to income for credits $XXX.X the of reverse or per tax the $X.XX. of and quarter year-over-year. of an we million second from additional X% certain of first DC During

inverted achieved revenues second the West quarter, million Quarter-over-quarter, we income record XX%, first increase income in and of X% saw also X% $XXX products customer $XXX growth the our $XXX X% million of X%. XXXX. and from in robust demand response by to quarter income yield in reflecting East the for second swap operating Year-over-year, an million in by fee and the curve. net of interest X% net grew of an quarter rate fee from of income interest interest by grew substantial grew increase

operating of in expense of up revenue, The our growth strong improvement our drove in combined by in profitability and points pre-provision control, basis an expansion quarter. second to quarter XXXX, linked X X.XX% pretax, with efficiency the

coverage losses we Additionally, points loan charge-off quarter-over-quarter, XX essentially with total loans X decreased of basis basis net our of at are ratio loans. assets quarter. and stable X.XX% this average while was allowances to non-performing decreased pleased operating points Overall, of the performance assets to for

solid We four. of slide to quarter loan growth. another Turning had

our XX% billion, March major of average XX, June reached from growing and total quarter, and second loans diversified In of across record or portfolios. grew loan annualized XXXX billion linked X% annualized. by Growth quarter loans a year-over-year. was XX% As XXXX, commercial $XX.X consumer $XX by $XXX XX, linked well the by quarter million growing

million were X% Our by annualized. or up by commercial loans $XXX real followed increased X% estate or by which annualized, $XXX million consumer

mortgages. single-family from predominantly was growth loan Consumer

points linked $XXX the average by Our second quarter declined Average X to loans by or yields loan in million C&I basis increased X.XX%. annualized. X% quarter

average adjusted the yields XXXX reflecting income, basis loan in rate an decline fund by accretion and rates. to second X unchanged LIBOR declined quarter X.XX%, Fed point Excluding

see deposit you a year-over-year. or slide up billion March increase XX, X.X that $XX.X X% record total an can $XXX grew annualized five, XXXX June billion to from of and million On XX, or by as XXXX, XX% of

of As during our was quarter. it XX.X% XXXX, XX, June on was based average loan-to-deposit XX.X% and balances ratio the

we As of XX%, currently ratio a are we previously the have are with is stated, comfortable range we at. in which to loan-to-deposit where operating XX%

a trends increased both deposit X reflects deposit basis proactive by and management lower X.XX%. and deceleration of cost linked is deposits. pricing our cost recent to points quarter in Our growing This of from success

an and partially in from particularly deposits, demand growth by decrease this competitive offset I in time cost the in linked a market primarily non-interest-bearing four average annualized, quarters, money pleased For quarter the the grew the had points. second In very the comparison, ranged non-interest-bearing quarter despite to billion deposit increase XX demand in $XX.X a deposits quarter environment. linked am with of basis increase accounts. for by of preceding XX X% from quarter, deposit

owners. products One the of second well our customers. with towards campaign business a very network and demand in was resonates small the successful small geared deposit deposit The business branch includes campaign quarter our of highlights cash management

to We And and aggregate, already bank. meaningful have a granular impact been able growth relationships many the to new, expansion that, we support generate years have can come. for whose to in

slide six. to Turning

return was Our second on on X.XX% and quarter XX.X%. was equity assets return

return reversal assets of impact was XX.X%. on the X.XX% previously operating our the was claimed Excluding tax credits, our on return equity and of operating

macroeconomic return tangible continues Despite Our was execute. and quarter. to volatility, equity XX.X% geopolitical West East this on operating

delivered as and Yet, bottom East Over the has line as attractive profitability. and trade months, past tariffs well ratchet XX loan deposit growth have tensions attractive up. West

XX%. XX% grown deposits and by Year-over-year, have have our grown our loans by

balance is our consistently to target profitability in lines sheet as of various performance our business of been base has ranged important return and quarters. markets. well as among return customer are can the excluding An on our six, nonoperating consumer XX.X% attractive. five-quarter factor commercial maintain metrics and our has for chart XX.X%; the tangible tangible see ability from strong items, XX.X% you slide the our in diversity to XX% to of As reported diversification range past five on of equity our operating consistently The from the our equity

a is that relationship competitive. normal more new and contentious U.S.-China entered

However, recently, some investments balanced. intellectual improve becoming these up changes China has inter-relationship the up more is and direct healthy U.S. business. between cross-border to protections. Most policy economy Constructive made open opportunities foreign new two open for changes such as economies this to growth property

navigate backdrop, role U.S.-China East to dynamic. changing expertise the this more providing our a West the in world, the and bridge the with between play as Against economies financial two clients largest can significant understand

solutions in with banking differentiated approach sustainable our to our current combined give am us continue banking cross-border business that I will a customers. winning core setting. this generate knowledge teams to And Our confident

would call now, to a Irene for income I turn And and over outlook. of more detailed the discussion statement our

Irene Oh

income page we snapshot the a that slide and summary statement On seven, notable Dominic. a of items during shows have you Thank a quarter.

This quarter, for expense $X.XX Solar. previously we related to This credits additional incurred share. per reversal impacted tax tax the DC million income claimed our $XX of EPS by

X%. an quarter quarter in XXXX, Our the adjusted first of this were compared to of $X.XX increase $X.XX EPS

for We reported quarter. the second rate tax an XX% of effective

have would rate been Excluding tax would the expense and tax have credit $XX effective been XX%. our reversal, million tax

this of $XX we XX% tax tax credit the credit The million that the reversal rate our from XXXX. in the be tax or full year, excluding credit the quarter tax investments XX%, For full effective $XX rate year assumes will project of approximately impact tax reversal. approximately including million

these As million $XX XX, we of June of investments. had closed on

slide to eight. on Moving

increased $XXX X% of quarter by year-over-year. net X% by grew million interest income Second quarter and linked

loan growth, interest Second quarter net to interest margin. partially the due largely decrease offset income in the by growth was net

The contracted of by quarter. was second adjusted NIM, six the Both margins interest net and quarter X.XX% basis margin points GAAP the X.XX%. excluding impact accretion, was linked

lower a funding shift. assets, two on lower of point compared two as point first million one follows. the impact It breaks higher continues basis of yields point in including be from interest discounts, the to quarter earning or The other basis The point our down yields, points quarter-over-quarter nominal. A from basis the decrease fees basis was a and impact income a six to cost to decrease two margin decrease NIM. quarter, $X.X accretion decrease net one change second the and funding in mix points from basis $X.X from loan basis million

costs. Dominic deposit time mentioned evident in controlling As his results in already were on This remarks, we our takes making good are quarter. second progress but the

the of March basis X.XX% As end down from XXXX, as period The as only of was June interest-bearing of XX, up by period end by was XX. of as our deposits X.XX% our points of June cost basis X.XX% of of XX, two one from X.XX%, deposits XX. March of point cost

Reserve. improve the irrespective to of here expect by deposit We actions Federal any from cost

our beta implied Federal average beta Cycle-to-date, XXXX, and funds of yields, will change an implied rate funds deposit fed the funds the deposits, Reserve accretion an started in of fed increasing to in of rate. on funding we fed again, total further. cost our be had relative cuts the and December costs in of XX% on reducing XX% excluding course, Of the loan also helpful since rate

our we note, The our which Please part rate interest slide investor deck loan by earnings details slide added has portfolio indices. deck. underlying nine been the a to of our

stability has tied of loan see LIBOR. the the can to continued to tied tied is one-month portfolio to LIBOR X% of our loan contribute is three-month yields You to quarter. XX% to that is This the prime, XX% and this the

June, to weighted context, for the month X.XX% the average our month for of loan or yield the of December. X.XX% for month compared For X.XX% was of March,

fixed balance a have in mortgage total of August our been and XX% ago. loan portfolio, a our product hybrid as our overall pace origination year. loans of success single-family the rate proportion is periods compared year fixed Given XXXX to The change in XX% robust of and in as of sensitivity. began we sensitivity our last reflects loans we to to rate moderating largely offer sheet, June XX-year of of fixed-rate This up increasing the asset of our growth that percentage asset the loan XX,

to with many products, payment requirement. loan and our documentation starting to XX-year and is with residential customers value points. is no our single-family XX% of points XXXX, be At low loan high received our pricing is rate Similar and down for has this a by basis this Current X.XX% It renewing XX been reduced flow product to also loan at beginning of well a today the C&I for floors we renewed reintroduced new loans. loan SFR of originations.

option for And during to we rate originating rate fixed the smaller has quarter comfortable with customer preference the variable loans the curve. due balances, rate although favored more second CRE of are shape the

have investments with with durations. stable essentially higher to securities we managing and addition, portfolio maturating yield flows both been maintain cash longer replacing an In slightly our by yields

$XX million $XX net was to fee XX% turning of XXXX. Total of sales quarter income first on income non-interest increase loans and in and the million, in million $XX totaled Now slide XX. a second the quarter gains from

growth interest and we pleased As primarily quarter. counterweight segment as Dominic an was to income This decreasing its pressures revenue of interest contract discussed, a last rate which million due increase to is fee our from in a in grew income line performance interest $X rate a core business are with the income environment.

enhancement million was by and growth fees quarter, Foreign exchange of related reflecting also including fees denominated evaluation of $X broad-based sheet revenue foreign credit up $X customer in million finance credit reflecting letters by linked issuance and trade Lending exchange quarter-over-quarter. balance and favorable fees, income currency fees foreign increased loan items. income fees. The largely ancillary increased

Moving to slide XX.

million, Second of other quarter tax linked in non-interest a credits $XXX amortization X% investments. decrease the was and to due quarter expense down

tax in adjusted The $XXX Our non-interest largest was quarter. intangibles which down deposit of excluding was are and compensation investments seasonally first credit million, expense, higher by and the in amortization quarter. benefits, employee X% decline linked core generally

XX.X% strong XX% growth With efficiency our income quarter. adjusted quarter, was to second in the ratio the quarter first fee this compared

five XX.X% the past has ratio quarters, ranging adjusted Over to been from XX.X%. our efficiency stable,

pretax, pre-provision X.XX%, the quarter pre-provision X.XX% compared second X% quarter. was pretax, of from $XXX our and Our to quarter income ratio quarter-over-quarter first second profitability XXXX million increased

ratio profitability X.XX%. has past the from X.XX% five to quarters, ranged our pre-provision Over pretax,

and slide coverage Allowance loans assets metrics. had we of In linked critical to continues net quality presentation, and detail asset non-performing XX the charge-offs. decreases out quarter we in be of stable both

total investment for held of of allowance XX, XX of March XX, $XXX basis assets points ago. June XX basis basis points for or assets and assets of as compared total totaled XX, as of Non-performing XX XX XX assets basis losses year a of points $XXX million December to XX $XXX million XXXX of to or million XXXX. and of points or were as basis XX at Our as loan loans points XX compared June points basis total March

in during second in a quarter. to decline largely and assets payoffs quarter decrease non-performing resolutions commercial non-accrual reflects due linked loans The the

NPAs Our be continue levels. low historically at to

net or losses million For provision $XX a we $X decrease from charge-offs quarter or points the loans of net and is second loans ratio basis quarter a $XX million of XX $XX XXXX, were average net our of of annualized credit for of and in was basis points million. XX loans recorded average the nine credit of charge-offs of of basis annualized million first year quarter. ago in charge-off for provision average points XXXX. The the losses This

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

company's declared year-to-date. XXXX the August is stock. August stockholders record The XX, dividend basis XX has to Our XXXX ratios third common regulatory of East stock of West $X.XXX capital quarter on XXXX. to payable on by X, for Board Directors XX common dividend increased cash of points

that, to reviewing XX. move will with slide And our I outlook on XXXX on

This to two outlook of interest current the of range of income XXXX we We we forward end excluding to high previously. net compared October accretion, growth fed XXXX. interest to X.XX% curve, interest the cost, The results margin and income interest net pricing adjusted the of is we be of the for deposit cuts rate also ability In deposit of expect of deposits. how in net depend but have between points anticipated strategy, response each price end of price on advance funds full XX interest of movement. two margin, year deposits will our the low will the exception are to a to to at full year anticipated the function basis interest our particularly or results. Our outlook and reduce in cuts, rate competitors fed X.XX% We accretion updated less impact market X.XX% the active XXXX our rate net will offset and but pressure be seeing basis our rate for through a for higher expectations. at basis able X.X% July our net light price would exception approximately point funds sheet X.XX% growth. impact estimate a of income XX points Achieving interest to assume requests currently that end customers net from to now organic discount unchanged that and compared Accordingly, margin covers we rate cut static to X% deposits. using by to analysis the reduce margin. shock interest now the balance Overall, for

are losses the low double slide. of the credit digits in rate unchanged, income, previously. and to decrease The interest items net outlook the detailed outlook percentage for grow of provision non-interest NIM excluding expect to at in of discount a rate we growth to single compared rest and full our year tax expense, high the rate, rates, With out including due interest a now digit accretion,

that, Dominic the remarks. for back to will now closing call turn With I

Dominic Ng

Thank Irene. you,

the of to with performance the continued solid quarter and the second year. in strong forward the pleased results are second We half of look

with that, open I And Operator? would to the also call now questions. up

Operator

[Operator Instructions].

Our first Securities. from of Jared comes Shaw Wells today question Please Fargo proceed.

Jared Shaw

morning. Good Hi.

Irene Oh

Good morning Jared.

Jared Shaw

look we Maybe guess, on? the that starting with you more Is see going deposit much rest of that? And I strong DDA how the could still out as the the balances. year, side promotion from the in with growth growth on over

Dominic Ng

it to still to August. months there was then it be continues do then extending assess, will And fact, like to Yes. more. early well to really we we it will but the That end And planning it, to in and promotion We grow continue if is of a continue on. is leg we going few March. started in are to

Jared Shaw

Okay.

be And some a we see offset margin of increased if so, concentration pressure? could that there, to potential the

Dominic Ng

is campaign bring you to But that are just is going to deposit down plan scale intent against the thing that wasn't cut. in Fed there knowing anticipation to an to frankly, Quite the business terms of solution to -- We know offset helpful. really small the do, continue the really hoping our as deposit. of because that direction business deposit customers. important more manage this most in fund It to of be it proactively in will year second half interest-bearing interest-bearing really is trying the it rate rate, we

working feel with much also I et that like cetera, understand accordingly is kind that rate branch is be direction, and there ensure work branch lending the down likelihood to interest rate And future our come are and managers, that in get very managers therefore we frontline officers and of that and this to hard they going that level. to relationship appropriate staff going they high rate our to will

that about X,XXX meantime, are the brought grow our having wealth be of a customers I the what personal get in business small deposit kind higher the customers banking the sort not the for think also more we campaign in these and already customers, can more and long account branches only will be of of core over et I likelihood like help to terms the because can get have But that these they have is management that we in important which and us run then customers very is that importantly, that banking, referrals rate, to zero, of will checking non-interest-bearing in cetera. but customers

Jared Shaw

the or it environment response? full the great just that's Obviously, an sales on that's opportunity what's to the guess growth difficult really of effort relationship I the find it Is DDA East a is more driving such in strong West? part growth.

Dominic Ng

bundle We it them of merchant also very card cash several that management services products our of those. online banking easy this from for product we demographics a of with the that in suite we very you combination we resonate a make success then we coming this know doors are will and account. it's services I customers, think to type most we provide and is And of that this going terms focus up. managers laser have package done what that in numbers most will in result regions top provide sign targeting job very, I start really, account small out have really customers. terms these the I business And to there a which that, of on to then of of customers strategic likely in think that our of product on good today. One these can different of and knocking these the have kind visiting that and

think also of mostly it's well-planned coming I So, able type targeting clients of a trained strategic our in with and extremely good community superior our right we branch terms of from than articulate win and that banks the is why that other execution that because what in folks of well product are or focus banking to to and explain staff some banks anticipated. terms center more the originally got lot a mix we the money somehow these are prospective more

Jared Shaw

Great. much. Thanks very

Operator

Ebrahim Please Lynch. Our next proceed. York Bank from New of Merrill question comes Poonawala of

Ebrahim Poonawala

Dominic, morning. if could wondering, growth. Good you was commercial I talk about the loan

So relatively it healthy. looks

where of cycle generally skepticism we growth around given some late sort think concerns. I period in is are there a loan

and side, growth currently? to at and is around get on why pace So, your these bringing this would at a on I where this perspective okay credit love from CRE both you feel coming, thoughts C&I

Dominic Ng

pretty in that concentrated CRE, categories. making earnings growth. not growth as over Well, C&I, it East any of single-family have sure all the our is West particular well have we from mortgages, growth one one that those is have do release coming decent category. diversified seen of And way just you in loan

than terms also mortgage single-family the specific cycle, our commercial at loan-to-value, for when of have lower but mortgages, at very think country. origination view concerns, always at maybe loan-to-value we single-family low of look or your that have you of so, some And know, been late the very most I very, particular we category banks these of in peer and real in focused doing the may any estate at in industry if I it look

that we we pretty about are good loans we So make. where today, feel the

example, Bank, upside single-family at real making concern a our mortgage estate appreciation. have So we East of we But that any is at despite not much can loan-to-value, look about there don't have yes, XX%, that, also upside. you as But of the when may that the is maybe are not prices, much fact borrower for some downside. about lender, that clearly then XX% being West there

making So today. we these pretty about feel comfortable loans are we that

Ebrahim Poonawala

Got everything see it it. look drawn that And is there negotiation where a to-date, China-U.S. doesn't the there is And has business. it impact like, trade been from get to you out. material provide may realize like hard credit any I clarity if It possibility seems I your as do either think this, that from get on anticipate any standpoint? seen so about, to but based impact, you standpoint growth stretched negotiations of far, sort a have out, trade or you, on

Dominic Ng

At under point, that this scenarios. works about we West with our guidance feel East pretty is view our many and confident different

category ends We very engine diversified one If well the and have help of sheet. going other out. healthy, down of environment because external some it stronger balance particular slowing a circumstances, up sort any start balance

for if because media get been quite and at put months, on you can has think have in sort some discussion going engines going. tariff we terms of rhetoric now to out be multiple able headlines, continue of numbers we time these this last XX that this I we and the look to

C&I, is it's this from going at CRE, And looked different if a single-family, quarter all good wrong. categories, testament because all you

more we substantially, we we very, compared size, kind good continue in balance that overall GDP of expected. between that very are and And terms again, to financial are of with be these while U.S. small think our we understand to put China. pretty East in I terms West, our sheet, So the the that of feel importantly, performance able will to we need out we

us are to business for with there of or So plenty get without tariffs.

business. or after that a and down XX%, it's economy by universe much and pie for massive XX%, there that we even are us to are in still universe that can so minute do go that so slowing We if more

we I on important other understanding think knowledge, expertise that we of sure is the terms always banks most longer in thing space. better making have worked the the than

long have circumstances. always under whatever navigate better and as how expertise, As know knowledge better we that we to

there tariff, there So one with is tariff, is another without paradigm, direction.

as a will I competitive, normal U.S.-China little doesn't a other be of new on this So not more little said business. more earlier, remarks doing that my contentious. bit they But hand, mean are in the

As of et negative other companies also used investments in industries. I China mentioned China automobile industries actually to into earlier, in forbidden be have include to welcoming services, and foreign ownership which now are eventually put or financial are to over direct many like in business to have or The U.S. XXX law XXX banking, invest allowed they the maybe insurance, China asset industry down cetera has that only XXX% to be XX% in that XX. shrunken call industries to the and management, not lift, that allow

protection to it that be at those So of more in sort actually look that like protection gain in information they in of law law intellectual providing confidence you strengthen start property environment those and foreign for investment to investing all addition are and China. of all an they and the to putting that

is a forth, there back that of on lot is changes Now reality are the being granted, while is made. gradual and rhetoric's going that political

with to the China West the thing, in our look that a East and other U.S. is still has opportunity a and to population mainly on in United banking strong help from also do are So very, doesn't there customers forget, run, East States going that provide lot that be retail West services the are really don't into business to business. long very have advisory Asian for opportunity focusing vice them plenty to to versa. in to cross-border American And of

branches see you growth and quarter, result in which in our knocking the doors for a substantial small the up As retail is in last on balances. owners, business DDA that step it can

engines So work we plenty on. got have to of

will prospect which caught making undue focus next a portfolio also in ourselves loan get have good we to over-concentration that in sure the diversification in that in pretty never And of I we on addition So particular we six our feel to in and that's and any our we what that, months risk. categories about think that situation would result XXXX. continue

Ebrahim Poonawala

Got it. Thanks for taking my questions.

Operator

question Our proceed. Vandervliet UBS. Brock comes of from next Please

Brock Vandervliet

Great. Thanks for taking my question.

the to of guide follow-up growth speaks on and the that XX% kind one. I from diversification. a other loan that see Just can

So I understand that.

more down business and C&I, digit sequentially. Are not double banking clients much behavior seeing so well just evidences growth C&I the banking drilling the more in among Just bridge slowing year-over-year on tentative the bridge range, some Chinese the was or in of you now?

Irene Oh

Yes.

honestly, think I did Brock, quarter. we the at start year-over-year, in our year-to-date little it slow look and some of first numbers, you a if off bit

and that's quarter-over-quarter at more look growth may you if rate, that So be a bit little normalized level.

to systemic quarter, the year. honestly, of start first and we a slow We are also off got think, seeing anything, I the not

Brock Vandervliet

the you Okay. the this current pickup skipping fees, of to IRC and And curve. to over Is gearing noted sustainable that fee here? shape

Irene Oh

transactions We right stand the of from volumes expect the into continue derivates now the great things levels, the and the and good a Obviously, attractive of That's that's function shape question. how do were. teams. where rates our clients, with that what Yes. fee we that number income of entered curve we a our will with to the have

levels here, expanded couple good our to I pace. capabilities, revenue last years the have levels we the add, also in quarter and I at energy the realistically the the still the as course over probably not a also second think well, of that expanding add offerings of would I will but derivatives.

as interest well. We rate risk are swap customers also more C&I helping our their of

us. of are for line to confident we that this business a So continues strong be

Brock Vandervliet

you. Thank it. Got I the appreciate color.

Operator

comes Please proceed. Ken question Stanley. The Morgan next Zerbe from of

Ken Zerbe

Thanks. Great.

Irene Oh

Ken. morning Good

Ken Zerbe

your get Good morning. did to in I of thinking XX% was you going half comfortable the start. But I same most category target? to to reach Obviously you growth accelerate maybe feel loan of slower back kind the when like, just that that loan the off XXXX is you slightly that's think back question. that guess to categories a thing. going which

Dominic Ng

and I can will think in more a little continue sustain half mortgages second the bit to probably the single-family know. grow

Irene Oh

C&I categories. as right. well, And also All

Dominic Ng

Yes.

seasonality. So C&I there is usually,

We have quarter. always come fourth out much stronger the in

think quarter, West So likelihood much of third that quarter But fourth in I quarter strong. Bank, at may because strong East seasonality. strong coming that's result few the been in the higher. that just as not is It's it we always last years have be the the of fourth coming

Ken Zerbe

Got you.

guys switching where especially think it in of tax And credit Okay. down Can for quarters, bit this amortization, Solar the next terms might couple be you thing? little then given whole of provide quarter. gears, that was terms I in any the DC a guidance

Irene Oh

Yes.

don't expect this at for more from time quarter, equity pickup. any we did second a So impact will point add amount. Solar. results I It's also have the small in we DC some really the

the little So look ballpark year, of a in third that what million lower of are couple is we the or the bit if that line we so. But item offset amortization the a at looking at rest quarter. in

third $XX are in We $XX the showing in quarter million and quarter. fourth million the

that can plug in. you So

Ken Zerbe

benefit, But a income, offset I just several credit I it the very think you sense understand have mean unusual then Got your a all-in, was magnitude? can to does just just imagine I if years? the over impact of on would the when DC of negative that but the question, one about really sneak in all of tax that sort had how get terms compare the can't I benefit of in Solar Perfect. trying kind And kind the to you. last DC credits. one-off received last issue. Solar you of that tax

Irene Oh

to impact credit Ken. DC think, strategy our Solar, our the bottomline tax The investment was benefit, I of from

Ken Zerbe

very much. Thank Okay. All you right.

Operator

from Deer comes Please proceed. of & Partners. Aaron Sandler The next question O'Neill

Aaron Deer

Hi. morning everyone. Good

Irene Oh

Good morning.

Aaron Deer

in growth, Just them syndication bit of some thinking the the guess loan from just is about dig want to little I this team. C&I growth. quarter that strength the of on My the again had you came a your that

are scrutiny leverage with about those? in group? that higher that what that syndicated Given categories, some can credits we seeing employing of you And of credits, kind from are the adding talk are types the underwriting that the particularly you amongst you of

Irene Oh

Yes.

that loans as at percent the a same have relatively and So book of the percent page. a our we our as loan our there, syndications of is C&I team book,

are We looking strict discipline to a of the there maintain diverse really far also to What book. industries, we see to at even and under if quality portfolio our pricing loss. the slightly as sectors, a and maintain credit loan total want is as X% small high a try at we we sell

pretty that are as of the have. we we discipline comfortable that far as So

loan the underwriting same in is we as the Of that as well. books every and the course, other have profit

Aaron Deer

the Can pretty side, then you will confident be the And deposit down next some talk the cost that bring you like couple it Okay. relative are what the a of to those to CDs where maturity or of you on offered you you in the renewal for quarters, able And renewal? sounds here. what deposit think have might volume expecting are? rate rates over be about

Irene Oh

Sure.

and CDs in look then levers it some at also deposit come, really of for when remarks exception accounts. money our the we also from market that maturing we you discussed repricing, are say, So our of priced prepared our some had does as

our the the we The six on rate of portion months, a those approximately on I XX% that look three of we next next can there And weighted CD we maturing. we at when is think honestly, course down. X.XX%, look So total of months, CDs as price that think those those, have book. of fair $X.X coupon average is we over billion where

similar are on CDs the Over slightly that the higher a maturing next three a fourth level cost. the have that months in course after we also of quarter, at

Aaron Deer

Great. Okay. questions. taking my Thanks for

Operator

from Michael Our proceed. of comes SunTrust. next Young Please question

Michael Young

the touch on, we seen rate just are preponderance originations. the we higher moving. fixed to Obviously, overall where strategy Hi. and the wanted of ALCO I have Irene, Thanks question. for

pieces? But You little about as repricing. about there in talk the those of some levers you the things or that like FHLB if move talked mind being particular? So you CD up are a forward in any borrowings we other So pulled have bit? some of could just are

Irene Oh

Yes.

sensitivity of where for sheet on see into are extension. are organically kind enough and we are in look asset perspective, I sensitive. how return asset relative balance that of mentioned we is taking that as a the risk getting comfortable classes the and have shape pivot paid asset we what curve to can we What the we to from prepared So remarks, done,

is So get as we because bit but there little for a products little less such for can our competition. bit engine us, rate fair a that loan we origination have have, the customers offer We single-family a pricing. more

So bit thinks of little now challenging. makes think, out a for like sense the curve, is that, I us. right with long Honestly, for shape the CRE going

but way. customers for slowly that balance expansive an are doing smaller in not We

second funding the actions to in we take the looking cost did of the funding lower side, we was why some the went and On overall that FHLB quarter that reasons was the pivoting and of with borrowing. one

Michael Young

pretty you picture, question in fees but Great. to Obviously, of kind your are bring the a down reduced might just But of kind if revenue of past the for ability a this maybe been more if expense bigger vocal base NII about challenged. Okay. be guide, maybe offsetting that. this little the have is And Dominic. needed, kind

yet. need you it? lever to Is that about right the way So pull that the don't think to feel

Dominic Ng

yes. Well, second look if quarter, our the also looks at thought mean, pretty it in performance you good. I I

need So not would to we going we that in strong that no not standpoint, I revenues would because manage think that of that expenses. be

never to that this the not We in and too evaluate is going that. the continue have there have bank future that are for obviously, purpose. it expenses to going much, will to not that put run we we that way areas to is spend belt. are And most invest the then difficult way run to if in something that are we money in growth forward. And is there for need us a tighten for like that the can We that prudent we

something last fortunate, the too if we XX us not is, dramatically, really that I profitability. to economy to for conducive us continue to we that's it we down that active are always right lower be what forth so reason, and and there whatever And very for managers And wouldn't global very some and and actively do sheet actively to the call that that for obviously I will manage said, expenses, do And the hunker U.S. difficult for suddenly down are like business. need months, are and we we slowed to the, manage thing. put logically our out our continue that balance decent much then origination loan

Michael Young

Okay. Thanks.

Operator

KBW. next of question Our McGratty Chris from Please comes proceed.

Chris McGratty

for on am Dominic, Thanks Great. interested I the in your management. capital updated question. thoughts

Can the have taking update just capital on for you for also buyback, lot are you very accumulated a you might priorities, if out us quickly. of potential remain and growing guys banks to favor and prepare You Thanks. steps be maybe of that?

Dominic Ng

like been looking the I are for we shareholders buyback best has Well, before, with as interest at, of discussion a for discussion. more topic interesting the and the said actively of sort always Board become

see will at, we So equity to have we continue second XX%-plus return find continue loans grow and over XX%. evaluate. to ways the to of as that, again, is of What you we quarter,

So this buyback we this opportunity. to potential evaluate at now, stage continue actively right will

Let's put it like that, yes.

Chris McGratty

you the how growth. back tool would Is capital inorganic entering year? piece other inorganic be thinking about the would And from are of the It momentum. seem necessity return of like Great. organic the of growth half kind given that that the be that, aside a wouldn't

Dominic Ng

been we in have dry have there. opportunities want just any doing. powder, organic is obviously, there what out But acquisition Well, to is growth case we always

Irene Oh

with We Chris. are growth, assuming that's what you referred the inorganic to

Chris McGratty

right. That's

Irene Oh

Yes.

Okay.

Chris McGratty

yes. Okay,

Dominic Ng

pretty have really So of a nothing have open minded. mean, is we are sort against that There religion we I it. specific

all one that always we same we organic our directions out growth. look is sure that We look for there. higher all It on can as buyback, opportunities acquisition, has depends whichever shareholders priority. dividend, will we at where then So the do of all it then make best time. stock and that and first way sometimes the of put those the been is at the And different them at

we do we what decision a care trying sure take are is that So logical sound shareholders. make to of make and our

Chris McGratty

if before on back. I slip the And step can in I margin one Great.

what I think, remarks, on I the fed am in prepared the if a of your that ability, Irene, on might interested kind rate really be cycle-to-date beta about assumed your you was deposit would repricing XX% there beyond said you couple cuts of and hikes. or times? eight thoughts were thought great. CD the nine the betas, kind Any have

Irene Oh

from assumption guidance that given, Yes. are we have we off had With our what the for have that really not betas the historically.

deposit the XX% assuming side. We about are on

Chris McGratty

Thank you. Great.

Operator

of Please next comes from The question Clark Matthew Jaffray. Piper proceed.

Matthew Clark

Hi. Good morning.

Irene Oh

Good morning.

Matthew Clark

you guys in authorize you regulatory yet approval want Have one? on sought Just case do to buyback. the

Irene Oh

you with July but longer that's not necessary as well, the of have know We changes, as Matt, also X. no

Dominic Ng

We regulatory. don't

Matthew Clark

that it just there But I Correct if on update was to I think And no you could Great. equity as am guess, just less, risk. million I then $XX Solar, give need me further wrong. you DC an about to think is us reduce exposure? of why

Irene Oh

Yes.

well. we filing is So year adjustment book with the a the also the for really that are adjustments we that October we and adjustment for making then are in as tax provision return like XXXX, doing are XXXX to tax what

year, that position taking to those that continue have, investments to tax information point we tax we time in the based this are For the the XXXX able at we will we made that credits. and the in comfortable in XXXX on past, receive be

Matthew Clark

you. Thank Okay. Great.

Operator

Davidson. of The next D.A. proceed. question Please Gary from comes Tenner

Gary Tenner

Thanks. Good or as asked, quantified have morning. in DDA to in remarks. that your just questions your all some but the the related remarks? it growth missed my Most effectively been sequential of business prepared you of small deposit it prepared I Is from of had campaign, campaign

Irene Oh

quantified of the come from lot look haven't our campaign. We you did if but in quarter-over-quarter, prepared remarks, a increased

Dominic Ng

small these of very that we business vast the accounts time. at DDA open one majority The are a increase,

Gary Tenner

Okay.

not I obviously say mean are you campaign, when a paying you So rate.

a just there on? is thing marketing and else some sales is going So campaign? blitz Or it

Dominic Ng

Well, are give we like choices. many yoga out Yes. coolers, gifts, mat. backpack, There

Gary Tenner

Okay.

a old-school open deposit. of banking if you So kind

know. you Thank That's Okay. very to all wanted I much.

Operator

comes question Capital Bank of of Markets. Chan The from Montreal next Lana proceed. Please

Lana Chan

growth go just Good funding afternoon. for to sort back loan wanted for this of I of Hi. XX% year. on

borrowings funded embedded margin would you could by and securities? be more be that I through fund assumed able core a that on had to expecting the think of maybe still your growth. that deposit you in guidance, that you are growth case? runoff previously Is most Or

Irene Oh

success that that we in want we Dominic's Yes. we from we will the guidance, XX% our understanding different that prepared seeing, ratio add all range would want. be growth. of that that. we At and loan about comment more stay organically not to little assuming are loan think the have fund something too, remarks, will we that that I of and are within that within That growth. did loan-to-deposit in have point fund we comfortable we certainly that and room, we to a this is of with are we We if avenues have at the able also borrowings are the bit but

Lana Chan

appreciate I you. it. Thank Okay.

Operator

Wedbush Our next Securities. comes of Chiaverini Please proceed. from question David

David Chiaverini

Hi. Thanks. A question on credit quality.

in was a So nice credit are your there improvement $XX I the tariffs on migration down any stress was million. or at curious, from borrowers this loans this non-performing quarter you negative seeing point? about coming

Dominic Ng

out news a headline figure find be how this sort concerned in of And uncertainty of the cause we so is, with challenges market In thought guess, I in terms is that terms issue. bit and a we may of lot have think forth. that tariffs? then you beginning, some disruption the to at have are of having of credit the our and we a it I terms Because drives these quality little customers, that with know, like issues, to that everyone reality a do lot way borrowers of do what deal getting to

the matter fact, now right expected. Asia of some our you a as just and customers because some mean, as relocation I in doing our touring, factories of we are in of have relationship know, Vietnam, managers Thailand

we that deal So aware of to our potential from also every way accordingly. comes totally East West and manage are risk any customer tariffs and it the a different of credit the have single with

of I So fortunately, due as we think do today, have single to a of not dollar tariffs. loss

David Chiaverini

much. very Thanks hear. to Good

Dominic Ng

other any questions, operator? there Are

Operator

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

Dominic Ng

Thank forward to for and I October. Thank you look operator with all in you attending speaking this and thank all you you. conference

Operator

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

disconnect. may You now

East West Bancorp (EWBC) 18 Jul 192019 Q2 Earnings call transcript