EWBC - Earnings call transcript Q4 2019

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Operator

Good day and welcome to the East West Bank Corp's Fourth Quarter and Full Year 2019 Earnings Call. All participants will be in a 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 now Julianna Balicka, would like Corporate to to over conference the Director turn Development. I of and Strategy Please ahead. go

Julianna Balicka

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

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

financial on non-GAAP In quarter to earnings fourth and call addition, the please pertains of the our numbers GAAP full year this refer release though referenced to to adjusted numbers, reconciliation measures. for

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

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

Dominic Ng

down of quarter per by we share. everyone earnings year summary Good full X% Julianna. thank million discussion XXX and of on XXXX full or fourth I our for you Slide XXXX of compared Thank net per full share, income year with call. will year XXX a and results X. our for joining $X.XX This net begin XXXX income you us to reported morning $X.XX or million morning

income I'm excluding full year net compared of net adjusted million per reported non-operating share, per net XXX or XXX quarter share, fourth XXXX was of to up non-operating up XXX sorry, items of XX% share. increase the million of or an net third $X.XX excluding XXX to XXX XXXX of full-year million $X.XX $X.XX X% per and Fourth Now, to by share. $X.XX income, income of income quarter income XXXX quarter net $X.XX or compared or by or XXXX adjusted compared the per share also income million we million X% per

and record XX.X with nearly and year, of XXXX loans during increase net and X% XXXX up more East In loans year which year-over-year. achieved both grew the billion, was XXXX. X% of of by our East deposits our record transformational by grew West, from X.X by which for moved X% deposits SSIs a last income which West full than and record per adjusted commercial of XXXX Fourth X% non-interest end X% billion, increase up XX.X XXX and or with double We quarter $X.XX interest XX.X an income decade X% share quarter-over-quarter from our billion, fivefold. record revenue to net ended by of million year grew year-over-year. we X.X year-over-year billion, of an also billion bearing

profitability. substantial years we XX and and sheet, growth strengthening deposits, diversification past in our revenue achieved balance loans, the and the of Over resilience earnings,

by grew earnings XXX% per in decade. diluted the Our also share

tangible on In the diverse foundation performance for assets a years the continued a solid to of model, reflect profitability come. return X.XX%, of on business for a equity and of and financial XX.X%, we is our growth XX.X%. year fourth above Our our strength which XX%. return tangible return is a earned XXXX can ratios, again of in On was equity of Slide trend five on once strong our return fifth equity see profitability quarter. consecutive the the in the This quarter on X, you

Our fourth return equity XXXX on assets a was and X.XX%, quarter return equity return was was on tangible on XX%, XX.X%.

estate, X, mortgage residential well commercial, portfolio Moving is slide between to loan and our balanced loans. commercial real

Over expanding made and broadening generating above lending in has growth building year in loan steadily resulted capabilities, investments and industry people our XX in verticals, specialized commercial years our solutions. our capable diversified the organic we've This infrastructure past year out. of cross-border a platform lending

all total billion, XX.X December I X.X of year Residential grew X.X each. XX% dollar and In as of or just of billion mentioned loan X%. both increase portfolio XX% X.X $X By Mortgage loans year. Commercial last which or terms sectors real average over Full record XXXX grew As three was estate earlier. grew by XX, year-over-year. grew evenly distributed an loans the billion CMI across over XXXX reached billion billion growth X% a

of growth or estate the grew linked increased quarter commercial quarter annualized. linked mortgage residential by increased by XX% which We XXX linked XX% from quarter of XXXX by average real XXX saw X% annualized. billion For quarter by which XX.X fourth followed million loans annualized million or very strong

of loans that of family was on single quarter our of to in the I In XX in move And originations. mortgage review by with the X% history grew outlook. of quarter residential million XXXX West terms Average quarter fact East annualized. will the XXXX best fourth commercial

by fourth was U.S. economy, a the and decrease trade tension XX% loan quarter. Apologize three let year. of Reserve, loan in for The my portfolio West script interest in rate China year in past Instead to growth most a which and slowing tensions seasonally East X% last XX% strong remained wholesale saw trade in and outstanding throughout our in started headwinds decrease me the that, the in an ongoing visible of the At are environment shows escalate to of a commitment back year-over-year. cuts Federal easily go including U.S. we the from average China growth challenging trade high that typically XXXX XXXX achieved a in order. in

As outstanding XX, of of loans of our trade in wholesale X.XX commitments X.X billion have we billion XXXX December portfolio. and

However, less management and active portfolio commercial XXXX. of focus our visible throughout the is what loan is XXXX and

trade Over largely the course risk, years reduce we could manufacturing. of actively in particularly with where credit customers related the indirect the tariff direct past to two or credit exposures wholesale and concentrated higher

only the positioned and and with we knowing geopolitical are new improves. is backdrop today related is confidence was it tariffs less Importantly million. our as charge to portfolio stronger $X our ready better customers we have experienced West starting decade trade loan off East support and than the that

that of signing trade there on more the the January U.S. China we is XXth agreement trade With believe clarity dispute. surrounding the partial

should In should of in volatility uncertainty customers growth. adapted reduced and their two past ability for only allow the them normal to for cross-border addition positive expansion our only West expand our our our have goods resume relationships. and and tariffs grow particular have terms a increased. The exploring investments in bring Furthermore our opportunities project to expected cross-border the bankers cost or the in has for East the over by years of our U.S. of China expansion customer service in table direct firms This the cross-border manufacturing, that manufactured trade Chinese impact cross-border provides expertise loans geopolitical to new operations relations interest of increase United foreign evaluating We from States value U.S. see in China opportunity the renewed the or sectors. customers. purchase energy, to and

strategy Also understand our now advantage are to and U.S. dynamics and than China and expand this China consumer both our based and is the cross-border for future a positioned share Chinese market sector more the vital. West years. about in evolving the the well East ability to nature confident of to market take U.S. XXXX ever in develop is business need of we commercial business

For year growth X%. our full outlook of X% to of loans the current period is for end XXXX

that estate, major portfolios all to C&I. will XXXX of mortgage, commercial and grow across from in We real residential come our loan of expect

was discussion deposits, XXXX for end to as X December Slide ratio on of year Now of a deposit XX.X%. moving our loan to of XX,

checking billion partially decrease in XX the loan year-over-year. a from offset Full X.X ratio accounts exclude XX.X from XX% bearing are a December deposits to record for XX, Average have deposits primarily that with year year. or average Total As we of grew deposit last deposit to growth of billion in X% XXXX, XXXX. previously full year of XX%. operating by as or bearing the a quarter interest happen deposit and first of billion growth comfortable demand stated billion non-interest we range the X.X an in to and X% came XXXX of increase XXXX

non-interest third, first quarter-over-quarter checking the to certain interest in steadily demand bearing for declining grew deposits quarters. and balances, fourth In customer fact after shift second, the to due our a bearing quarter in

fourth XX of to offset fourth quarter of XXXX average the bearing decreased the quarter checking to market money for the and points non-interest XX.X basis Average points higher deposits linked pace is by deposits. grew reduce X.XX% interest bearing a quarter. the by partially billion fourth deposit was by average deposit For of decreased cost quarter accounts in basis demand actively third in we quarter XX cost led growth of quarter interest strong fourth from quarter as average in of a by of growth our annualized. in decrease deposits bearing the and The which deposit XXXX XX% growth follow by time accelerating seasonally cost average in decrease in commercial some customers, X.XX%

cost the same call will turn a results balances. types to Irene since more as December cutting time our at also rate down period quarter we the of September As basis note of period by XXXX end July third of December for down achieved reduction of XXst X.XX% of our of the fed detailed pleased deposit of while XXXX demand XXth. end of points was XXXX. funds I'm the our outlook growing major as at of a by deposits our The fourth the to X.XX% the across non-interest and XX, was over Fed for XX began of in interest deposits quarter. of points the X.XX% cost from end financial that X.X% deposit all in basis XX cost I bearing now discussion from bearing

Irene H. Oh

Page a and tax Thank X notable On the shows a snapshot you during summary quarter. have a items slide and we income statement Dominic. of related that

EPS fourth the diluted reported $X.XX XXXX quarter of and For adjusted EPS we of $X.XX.

additional from effective tax Our third and in a relative year's XX tax our credit million of quarter The the of tax was rate effective tax This rate the expense rate decrease quarter fourth the to and quarter. XX%. and trough was tax of third tax fourth XX XX% resulted expense reserves. million the previous tax compares investments in a to in quarter

the million for Our for XX%. for was million and tax to XX%. tax previously expense was rate tax expense expense was expense Adjusted effective the Included million of was XXXX of claimed income rate effective rate effective of that XXXX the rate and the year year XXXX will in the was our on full tax XXX outlook full projected XXX certain full an credits. XX year full be XXX XX% tax reversal compared XXXX million tax of tax a tax year we effective tax our XX% a In XXXX.

yields, X linked by on X.X fourth interest from XX a was interest quarter a interest income interest in as XX change X, Page basis The basis basis million X.XX%, net of margin discussion of is X from the GAAP X.X% the point point contraction decreased loan XXX income of Moving decrease prior net a quarter-over-quarter fourth follows, or lower quarter net decrease from decrease The yields to a point offset lower net margin on million quarter. quarter. points other GAAP to interest our increase the and the shift, mix by to interest due an of funds. asset from fourth net ASC an discount investment margin. X of were net and in basis the assets investment securities, cost million points added was which interest in the point to basis earning quarter, the higher on including from all X accretion recoveries, lower quarter-over-quarter XXX-XX increase partially securities margin XX basis

accretion adjusted quarter the X The margin points interest basis the net In million interest discount to impact added X.X the quarter discount was accretion margin. X.XX%. excluding fourth net third which was income of

be XXX-XX our of ASC the As impact December in of was accretion million and XXXX of immaterial. margin our XX XXXX XX, accretable the to portion discount net interest beyond net expected interest on and income the is accretion and

XXX-XX ASC As will separately report such the longer accretion. discount no we

repricing interest X.XX. supporting In assume the This In rate of a our margin a is X.XX% of NIM in of will have to margin A a a the X.X and interest benefit XXXX to be average adjusted to net our X.XX%. GAAP quarter billion XXXX X.X another X.XX outlook fourth average we Fed maturing first have outlook we in quarter translates expect of the of rate at of at X.XX%. our quarter net our our we near-term that relative our between stable XXXX that XXXX. time rate we for deposits. interest unchanged to XXXX weighted deposits maturing of rate the margin time In second billion maturing range weighted will outlook tailwind funds margin

weighted billion X.X rate time third quarter X.XX a in of deposits For we interest quarter a rate of the fifth or average X.XX of for interest time at renewed new XXXX renewing from comparison fourth the average XXXX and of down in weighted of deposits. originated

which reference your of loan rate Slide inserted portfolio. the we our detail For interest X underlying provides

Our of fourth average yield quarter X.XX points declined linked quarter. XX basis XXXX by loan

Our in for indices month prime loans rate our rate the is one rate most larger LIBOR. portfolio and loan impactful interest the variable are

demand in Slide the million XX sales and in fourth Interest X XX.X XX quarter, an the million million to Fee XXXX. the be quarter to linked X% million, fourth income for quarter fourth associated quarter rate million The the loans the a a derivative the was million the net quarter, increase contrasts in in at credit Customer increase million of in valuation increase strong total the of quarter. net customer increase long-term related on quarter-over-quarter. income in of the a income to was from rates million gains interest million linked fourth fourth end X products interest million. in XX other was rate of was third hedging quarter XX.X reflecting XX, continued -- the interest adjustments X increase and XX turning the quarter. Now and of quarter, totaled quarter interest X third compared of revenue in

quarter increase linked Slide quarter. expense X% million, was on non-interest Moving to XX, XXX of an fourth

our X.X was which Excluding in change compensation adjusted amortization of was tax of credit CDI quarter. increase quarter of million in The largest an quarter-over-quarter fourth investments non-interest XXXX, was quarter-over-quarter. expense fourth the and increase the a million in million XXX expense X% XXX

was XX.X% compared Our XX.X% quarter. to fourth ratio the quarter third adjusted in efficiency

XX%. Over efficiency leading the past five quarters our industry adjusted ratio has been under

full amortization investments non-interest million XXX excluding of expense it increase XXXX CDI Our XXX an year credit year-over-year. X% tax and and of of was was million,

strengthen continue to adjusted by year XX.X% bankers and in efficiency XXXX was our expense Our year, increase to reflecting XXXX. functions. to ratio risk compared compared to our in add year full increase that to XX.X% driven non-interest line the full largely talented ensure The was and throughout in support an for the we compensation XXXX hires expense that management front XXXX

ongoing been important to grow we investments and technology XXXX and continuing in have to XXXX Additionally customers and commercial our making better in in serve market our consumer share. and

investments banking are new launching Furthermore and better our continuing be we'll new digital Kong customers digital as provide the This of a growth assets core our is XXXX a in the capabilities XXXX our domestic, platform. similar enhanced to tax these in X% digital excluding operating base. of system commercial build cross-border we will investments a credit platform and invest expense distinct growth outlook systems banking with in other consumer rate as our to payment Inclusive banking business, to well of platform Hong hedging for commercial, and and consumer assumes deposit of amortization operating new In platforms XXXX. and ongoing expense needs interactivity our which FX of intangibles. customer these to and efforts tailored

we XX metrics. critical Slide presentation the In quality our of detail asset

basis of XXX of investment million XXth assets basis Non-performing assets as X.XX% XX December of XX, XX, XX Our as XXXX XXXX. XXXX for and as points total or of allowance December December XX, as of million September of were points for compared held to of XXX total and XX September XXXX. XXXX points December compared as points loan total to of assets of as of basis XX, losses totaled basis assets X.XX% XX, or XX loans

year. of off offs on the well cover on the which X charge loan loans for in C&I as X in XX.X XX quarter on quarter for of of loans net on For C&I also of XX credit losses September XXXX status fourth Included compares have annualized quarter to been previously quarter an offs net placed the offs of third XXXX. of that provision or came status charge that XX was from million points earlier provision as were energy of largely XX in and This and million fourth million. our of reported net and non-accrual C&I the XX non-accrual million million a for loan the XXXX. were charge credit forward basis loans a or points as been offs annualized in basis totaled X have charge Other XX, had million a fourth these charge loans, the we million losses reserved average an average

credit Quarter-over-quarter offs quality to loans points compared charge For and XXXX. of the losses XX XXXX to decreased. charge XX net in XX compared million was XX basis year points full be stable. offs Full XXXX. for year asset assets basis million continues to XX non-performing were in million XXXX net or average provision Overall,

to XXX CECL we related compared our September losses As XXXX. losses of of that be the XX, million an increase to of Currently totaled December approximately loan the XXXX. criticized for increase estimate credit XX% will XX, assets from one and allowance for allowance as XXXX December as XX, million day XXX of classified

losses two between forecast Our for in model. XX the of our in XXXX range to XXXX. also be provision a XXXX the million reflects and quality XXXX the that should that asset XXXX. XXX the projected loan our for Further provision as credit that see similar day drive This range and broadly current during expect volatility of outlook growth CECL view our the account as result we outlook into for will projects that million will takes changes

our common ratios increased East East $XX.XX common XX December on grew Moving stock. on XX XX, quarter of ratio XXXX share tangible February dividend company's XX% capital linked on by XX dividend equity to as X% stockholders to increased year-over-year. strong. is stock XX, to payable $X.XXX basis quarter of has west on assets Slide points for by capital per ratios X, tangible Directors Tangible are to of capital The West year-over-year. by ratios and XXXX. of the declared Board XXXX basis year-over-year of and points first XX regulatory XXXX February record to The equity

And that on XXXX XX. to Slide outlook I'll with our move reviewing on

full increase year the of expect full to X% by year end of our to XXXX period we loans XXXX For results compared to X%.

We and will that expect margin X.XX% between GAAP X.XX%. net interest the range

flat income that and rates incorporates expect reflecting rate in in half net interest second change margin and as we in XXXX declining this of from interest for income growth to of loan growth in XXXX. outlook With funds net year-over-year. in range X% no Our XXXX outlook in will well accretion XXXX as decline the the fed interest the

credit million core anticipate We investments X%. provision expect excluding and to for We premiums XXX non-interest of amortization range million. increase the approximately XX tax losses and between expense that will the credit deposit

credit we invest tax will expect XX% XXXX tax Finally we continue effective rate be for investments. project approximately in that to to as the

credit in expect and of an tax XXXX of We approximately investments make million XXX clean historic and project XX%. amortization rate to energy approximately

Dominic million. first call now closing quarter I XXXX With for remarks. XX will For amortization credit tax currently expect the we turn back be will approximately the to that

Dominic Ng

now to will call the open I Irene. you questions. Thank Operator.

Operator

[Operator Instructions].

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

Ebrahim Poonawala

C&I trade from enough you impact I portfolio about of Would on question get on your morning. to done, on be first been both play hiring the China in geographies conversation focused lending how just then terms around has expect your are for of growth. and the and the specialty impact all you what's just been where meaningful been whether well lending like trade love talked the growth there's the XXXX side? thoughts how you've to C&I guess view dispute the around Good into new your that sort and terms in that the Dominic, C&I to wholesale East driving has of markets, verticals on you out going in going West

Dominic Ng

China clients business. etc. share the pay XXX opportunities including exporting goods and our get our going from comfort and many general overall point from signing that which cross-border feel based West billion on you that XXX sectors that States from of signed business in XX manufacturing this to various in United course grow stronger at in of billions our and general different China expect opportunities of investing the who than our buying the make is I comes that in energy growth the are Well, at that we sure will baseline business pockets including more East verticals to condition we more agreement and the the business. and some and attention then also a the resulted industry XXXX clearly those others. areas in banking the U.S. China different when are the from XXXX XXXX call And are services, Greater customers economic for I and Phase addition look to But and we that and growing there was think of this for that C&I with feel that And of start that we that billion gives dispute to many more there clarity to is of and of China to

promising. looking half and in all I particularly say the is second would pretty XXXX XXXX all that in So

Ebrahim Poonawala

topic platform all just Hong revenue, mentioned investments, growth, in of in platform and on the separate it better is growth? consumer should to investments the be benefits should it these in digital here, in deposit guess of in Kong FOREX and I see or a where upsides those we the more just in Got and kind the we expect you of needed higher fee terms on

Dominic Ng

for like new strong us system have FX mean for will I income. Both, lead predominantly to we and the it be be in business when value which deposit But can FX in commercial fee obviously get loans proposition a keep banking for a in mind that will then result too.

but indirect. Now, more that's

I fee part side direct predominant will think really on be customer income. From a digital consumer banking focus that's the base. our core the

And non-interest be more will core account, checking in be next that bearing few deposit and be so and we will forth. for that core deposits, interest think there years. it And the will account checking coming so expect consumer bearing that I

Operator

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

Christopher McGratty

on seeing an current maybe the reserve? believe There's residual some in that for Could on the quarter. of in if notably what you sequentially. I'm maybe address update that's pretty notable you're there in has the stress believe credit bankruptcy I a I'm and thanks kind an in trends I question. concerns quality Thanks. of the improved effects was classifieds in portfolio, interested third the quarter, energy Great, wondering provide earlier

Irene H. Oh

Chris. Yes

in about a identified. a lot if end kind in new as that December. you that and that was look end same really million. detail portfolio, million energy classified questions assets The problem quarter. of been Hopefully there last the is end XX appropriately the the end and bit at of at look more were referring kind December you the loans the hasn't little helps loans, in news the the as the fourth and of haven't of one call we to and we of of those versus our of talked I are downgraded as for some if good -- view XX have as criticized to of think question was the loan million is loans in reserved In September for to been your answer XXX you that that was identified about of earnings of specifically, of problem outstanding just for year September the on earlier total clarify XX million Non-recurring Chris. September levels balances So actually of balances

Operator

question with next Our Please Fargo. ahead. Wells Jared Shaw go comes from

Jared Shaw

Hi, good morning.

Irene H. Oh

Jared. Good morning

Jared Shaw

stronger X% growth assume X%, the loan wholesale of Yeah, saw balances the XXXX if stay that expectation, for looking trade the under a does to growth expectations and trade Phase that confidence in side the the loan or you X resumption that more than on the -- higher with be growth could at business customer more see potential consumers of wholesale pressure we lending?

Dominic Ng

Well, be we exactly is to sideline focusing what X to all our why signed on. start done. And once would holding clarity, that the it's sometime a sort we hopefully remarks is the quarter wholesale my I in on of the I earlier, turn that do in see XXXX. quarter, keep in around and have that be we we we actually stand President something is didn’t. we a positive surge think so to normally a going out, at expect now everybody fourth it's knew balances because trade indicated will and and going fact, have the think to in Phase what and mind say we now be look until signing a as But needs is of portfolio then everyone going gradual get that I be people process last if to you in And

benefit great to exporter they got China. Some because are

while agreement products drop Some because tariff. also the X.X%, as then or XX% those importer the same of even helps. that on And to the that from putting basically agreement stayed XX% not tariffs particular of at to others

know who Now they and forth. the way the in the President from that's or XX% is news coming going not pay that XX% tariffs, so mean rhetorics having XX% to the not or very I even is fact good it's uncertainty now to our or have on for the jumping is those high

credit the last bit for with the people of two them terms managed So in whether costs well to at there, is subsidy, just right seen tariffs have fourth to so cutting it those those a of quarter Chinese we it government nicely retail little dealt or U.S. and managed be have years far. seem it as pass standpoint very having that the to -- taking provide and many had pretty and here in And through through US report for pass tax the tax consumers consumers. also

tariffs overall business -- in a trade the general interest whole lot take in the like year to is plus bit uncertainty But up. forth, I economy few months have the going like comfortable. also think with be of will the dispute little I and think first the of by That's see this all-in-all U.S. see last see normalization would we be looking two many ramp the overall bit with getting expecting clearly trade I the then on up of quarters not climate many the on business the little I when activities to think the in that more substantial for we concern so trade side. of fourth China countries I it is that growth, is more the it and caused U.S. other So trade general of with of picking so a there in shouldn't a settlements just rate and at less of sentiment going more a will the be third that what ought people for It's to or that be expect maybe quarter then now what other will but and way more be but but portfolio that XXXX. I

other protocols C&I be picking hope that bit. we also up we that a hopefully little the are So

outlook of that So we And assumption looking in terms beyond. is have. that at XXXX and

Jared Shaw

a management we of in XXXX, with capital in and come why and in capital about ranges do point? thinking not be guess similar Thanks at capital I and is grow, level. should back else on the know circling just something What at on growing management. calls, other continues saw this capital growth in I buyback, this to TCU substantial ratio help but is and we manage terms the asked still

Dominic Ng

-- conference first including and share I Board would reiterate way. while foremost a friendly calls management before our what guess think than are think I the that I and our more in two team by that we we shareholders I

are we because out our buy that very discussion at buyback. opportunity Board there we we this detailed And versus capital, another pretty this I'm evaluating of sure should review sort of and should next not of Board alternative will we have So sort our back. of Meeting our constantly Meetings in

industry average of do we just asset the and of of at shared One well we call in this as that things return above looked there, equity. return earnings have we

property who that. do intellectual protect being place better government protect mechanism penalize lets or and technology of stay in terms in dynamic companies transfer assume about now Our agreement signed last new to loan entities XX% now has better pushed who interesting to year, on and say any has China this loan we average is that other doing part so and is growth that well. growth we're with pretty that the And still are China right enterprises

even choice much obvious capital are So clarity that potential are XXXX when foreign in all good grown those these few foreign to fact make a Minister West how the wanted of direct in at direct attract attract at China we a wanted buyback. better just when And China there's investment, by investments announced foreign that Vice East have Bank sure to investments. while in And see indication percent. looking we that in we the laws

portfolio down pick build to a any such consumer time. many particular are and if banks very particular further a to wanted need have is spread and opportunity we not great nicely portfolio that sector that some in evenly very of in be spread us to at the what in allow C&I, in it also time will so the Greater We balance or at allow year is China to invest of lever ensure see we that to there likely U.S. put out for and loan an which years other have country our investing and last I that sectors the in deliberately back that to very capital spend that into the sustainable different in XX performance people a deposit diverse us reflect many There portfolio And we stronger profitable to up. infrastructure, residential allow categories have come. can different years slow even only CRE,

to point and those still investments step feel portfolio, we to like continue a and our will we we that loan is and those so But to at We that continue fee would make we making start investments. any buyback. with income, of further diversify improve etc capital in our time excess even that have redundant, obviously

plan. So that's the

Operator

from ahead. go with Vandervliet comes Please question UBS. Brock next Our

Brock Vandervliet

The was question. you couple here. business derivatives a quarter, for great obviously of the Thank quarters great

we FED not? know or to off probably of for the this tail with should You be kind done looking

Irene H. Oh

increase revenue Yeah, at million. net will revenue XX We of look grow line the confident this categories, we're be curve, the of in XXXX from quarter the from the and revenue earlier for the adjustment we look quarter. customer derivatives although items we perspective, the XXXX when second customer there third Brock year other CVA supported at rate the and was expect in income XX all we to fee so XXXX that of don't rate other inversion million, given just interest But volume rounding from really IRC. particular at this contracts able nature you that level if had a in

Brock Vandervliet

you all you, could separately for in points, of dimension what going or basis can got the a be I fun And that forward imagine providing of what of CECL look And analysts. okay. looking number sorts reserve anticipating XX you, you're your to numbers as Got and up expect at you as at with at may true terms as is for is provisions, you offs, us high? too charge help reasonable

Irene H. Oh

Yeah.

a one great view just want is day the question. Brock, of for our reserve. to I kind And, caution, So today that's this

model on may change, we're our particular You finalization there's But, what change forecasts change, know, we actually the that share call still doing models as and to the wanted that some qualitative given factors. the for day have year. were given full provision today is on views year the and traditionally that end the XX% increase guidance On and two the we calculation. from current that our

noted, As the year be changes is incurred that's course more there'll the our the you providing to provision the Likelihood the on of given for kind wider driven to we're volatility range the that have of by that forecast. is and model. the probably kind views compared provision of that over largely

we same Overall factoring. levels that credit with of to similar it gross environment, for think So will and charge is those if that's at when certainly we're be relatively the look in at you. we modeling helpful offs kind XXXX what the numbers, we're

Operator

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

Michael Young

taking sort ask Thanks I I wanted operate you question. of Hey, to within to for to loan morning. you the Dominic good continue to deposit the about ratio. wanted that the easier mentioned it know, to stability where XX% to rates kind the you of as drift and that given here, that think be put rates at maybe lower deposits new on are but range allow you'd may do higher now? to XX%

Irene H. Oh

we first Yeah, we deposits we franchise foremost want I our enough is have franchise. have to value and right, to liquidity, loan and deposit that that fund bank think a for that always core enough core That ensure growth.

more that At of much that do a to to kind -- XX% So, a we address the some question, have higher. we'll additional probably with. do cost not we're kind specifically higher run at higher deposits XX% with bring that range to the on is what lead of reduce cost deposits this if in opportunity -- And we'll range time operating inch up comfortable I of lower that the is that we your have, out. think point

Michael Young

then mentioned seen get moving I initiatives, had and those wanted the up, of particularly year, of consumer on benefits to deposit follow any think if those last as side. focused a demand at couple from if I or a just you the ahead were at update Okay an point? of any beginning we've this

Dominic Ng

in so will continue XXXX, in with well in very that XXXX. went we momentum, and It

year to and banking are to and consumer to business them, and at business last I expect small CPA, keep specific all customers branches small out use help them help our center open accounts time. up to of forth we a to the going in And geared account many team, a them one many, then to one at influence continue lawyers, their there to time. to retail continue so So bringing opened

Operator

Please Gary Turner from question comes with D.A. go Davidson. next Our ahead.

Gary Turner

Good morning. Thanks.

Irene H. Oh

Good morning, Gary.

Gary Turner

quarter typically morning. year-over-year X% the on wanted a question and fourth way. benefit a maybe wholesale loan Good the I look loan not of end having over different do. XXXX a little If a was certainly we at pressured to XXXX you outlook question growth by ask or growth little trade period that in

why help comments loan year maybe for is the it half of a there's better given Dominic positive your wholesale more clarity on rebound wouldn't of for some growth in expectation pace loan or slowdown customers, XXXX of that overall a So better, normalization trade your growth, more segments? for the back a slower as about in outlook other the the

Dominic Ng

based Well, these think that bit expect little going is what is ramp we of overall time I momentum sort to our and to do of project we positive activity a take right up. now current some on that

revise right our Obviously forward. going guidance we X% and therefore we'll momentum project So it X%. see stronger to now, be if to prudently we even actually

Gary Turner

asked rest and my answered. the questions were Okay,

So thank you.

Dominic Non-GAAP

you. Thank

Operator

Instructions]. [Operator

Wedbush David comes Please Chiaverini Securities. Our question go with from next ahead.

David Chiaverini

you. couple questions for Hi, thanks. A

plan follow given you exit portfolio book do planning grow first do you one issues? this or up the So to you the -- I the to or on or to wanted energy, are conversely energy credit reduce

Dominic Ng

be and point, as the this think the to going obviously At is find investors very any that I low everyone to there's of there any are a know hard don't reason in is likelihood The and industry -- days. these growth. in equity because

the put right senior I debt. strong low. do growing order partners us point in deals need therefore, likelihood of to to us to now have have good on is equity at what's So very think Quite frankly, for to very, we this

higher there forth. because so and I will down think will some of reduce probably pay naturally likelihood that portfolio we a be the just

David Chiaverini

housekeeping that. about mentioned but for shifting Thanks expense. credit amortization And for question, a guidance gears, of more you the then tax

year first for million and have quarter, quarter the for second quarter? gave the any the full guidance do XX and you to said, you amount third quarter, fourth but happen You

Irene H. Oh

We help and will at you have But point. that do not this full you. number the year

David Chiaverini

Thank Yep. you.

Operator

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

Dominic Ng

for call. Well, thank you the all joining

the First, many has of special of out birth, Saturday, way. would the be which little see New I it's Year earlier etc, one Rat days the and Golden It's these that Chinese starting a coming business, for to throughout Chinese mind days of customers confusion year, of a a XX gone lot for this longest special new wanted already and of XXX is that will etc. to happen. because because are weddings, New our the celebrating have year my Lunar every of would very, give Year is year this by there This that ever would year, apologize of I a one bit Year the remarks my very

West is Bank East going So to be busy.

Happy most bring that hope like we New Lunar around fortune behalf so to this XX will would my associates on the once to Year. And And years world. at better Thank all of East year that all auspicious you. happens and everyone wish success you West I every Bank only

Operator

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

East West Bancorp (EWBC) 23 Jan 202019 Q4 Earnings call transcript