EWBC - Earnings call transcript Q4 2020

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Operator

Good day, and welcome to the East West Bancorp's Fourth Quarter and Full Year 2020 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Julianna Balicka. ahead. go Please

Julianna Balicka

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

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

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

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

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

Dominic Ng

everyone economic pandemic Thanks $XXX year with income was XX.X% to fourth a X.XX% and slide was the net income to million, also X asset morning on Quarter-over-quarter per $XXX XX.XX%. earnings equity I for year rate quarter million year a resulted and quarter end income our by and us morning share Fourth $XXX return earned begin of assets year. and our million. share. the Good are full strong resulting commitment for we joining quarter Julianna. of low associates, with for or environment. you, The the successfully loan would This was condition of growth revenue of by on X.XX% increased in fourth presentation. per return the equity our crisis higher our X% and reflecting of returned of XXXX revenue call. thank the on by we three our $X.XX XXXX quarter-over-quarter. quarter we fee review $XXX pre-provision $X.XX income. and In financial the the XX%, on on you and million and of Thank COVID-XX QX, net unflagging reported total pre-tax We navigating full grew interest

Our pre-tax expanded profitability points pre-provision our up basis from quarter, in quarter. pre-provision income grew to ratio pre-tax in by by fourth X.X% XX% third X.XX% the the and XX

net summary been And sheet. has ahead. slide now, XXXX year moving recovery about quality charge-offs our across for decreasing and macroeconomic outlook declining delinquency lower and optimistic balance pandemic the for X improving. such as we and we And as board are saw we Importantly, steadily deferral The in asset non-performing rates, a assets. the to criticized of improvement metrics, begin review post our

million by protection loans of from to program, due $X.X December of $XX.X annualised of PPP total X XX% growing of record XXXX. the XX%, as a of Paycheck December September year-over-year, a by and September XX loans high December reached totaled from loans forgiveness XX XXXX, billion As decrease billion XX XXst from by SBA. XXXX, $XXX

new as current in We of loans, PPP and over And our totaling support over communities. PPP XXXX to the customers million. $XXX funded of round participating yesterday, are we

PPP, portfolios. reflects loan This our growth Excluding by all major in loans million grew of quarter. X fourth $X.X the in total

production industry, think strong geography this came diversify strong coming property growth our and in network, was foundation and type. For and product, quarter a broad that from was loan based for lays because exceptionally XXXX. across various We loan teams the year by the lending branch

deposit as Throughout loan and total up XX, a in a was particular, clients, well core commercial Similar of border network, $XX.X growth coming the total As look deposit strong teams from cross reflecting XX% including bearing and the diversified total of non-interest deposit our across by year. to growth into growth. new the XX% of share of a XXXX, deposit existing branch non-interest record December deposit up made December year XX balances deposit to billion ago. customers momentum record addition bearing XX deposits wallet year-over-year. from XX% billion of $XX.X of high expanding We of forward December by bearing relationships. In XX and growth, deposit carrying September reached annualised XXXX reached and XXXX. growth outpaced Non-interest demand growing as XX%

ended Turning a common of with of capital to can total you X that equity year ratio see customers. XX.X%, us to providing Tier our for Slide meaningful ratio the X, capacity support we with the growth and XX.X%

were December tangible as share book ratios with remain September our of compared Our XX. XXXX, share equity we tangible quarter, to XX and up value asset X%. prior equity equity by Year-to-date, increased per X% both and the tangible tangible X.X% at per from

to equivalent quarter, share and $X.XX. $X.XXX Board February XX, of on pleased ratios, first payable West is $X.XX capital to XXXX common and to dividend that a growth to stockholders will to the announce XXXX. annual earnings record and in dividend strong XX% beginning trajectory, East positive quarterly Directors I'm approved increase the on per take new effect February The of from our per X, Given dividend stock of share, an

general grew second total portfolio, annualized C&I XX.X .Fourth slide from and and growth In December was was X. to Greater C&I ex-PPP C&I diversified XX, was commitments notable were to from food on industries China commitments our on by the compared well billion. energy. our growth by in half takes growth [Indiscernible]. built The utilization began economic C&I as Greater XX. entertainment, pipelines be stronger by million the of [ph] the recovery a C&I momentum loan post as positive diversifying growth commitments loans hold. quarter, growth fourth the which grew unchanged loans industry, XX, China September in in XX.X% expect year, commitments in of $XX growth in In December growth XX% in that with the our of XX. this the excluding pandemic XXXX of as private from discussion to half related rate and quarter with loans Fourth C&I Further PPP of with quarter equity, XXXX, quarter. essentially of of total were first million, Quarter-over-quarter Moving December as outstanding portfolio, a XXX accelerating third beginning wholesale, loans clean outstanding the billion C&I was and $XX.X billion $X.X outstanding, anticipated we manufacturing

December new in Moving and this were Presently, to portfolio underwriting XX. the deals from in for real lower environment, growing level annualized essential shows conservative by estate this current slide estate a reflecting is Total as X, and a portfolio, our both and billion transactions the September of refinancing. real X loans slow for market, commercial grew X% XXXX. of Quarter-over-quarter XX portfolio. details $XX.X which commercial about

residential expect real regarding gains anticipate slower XXXX and We post provide in single and relatively estate until home pandemic loans growth our recovery to Slides On lines. see details from X commercial family economic equity to we momentum. XX,

of increase quarter. the During East residential we're X.X continue loan, the million momentum compared This seeing billion the XXX record January. fourth we quarter, residential an in in XX% a quarter originated of West. mortgage with was origination for And of mortgage third

XX, on equity as annualized at loans detailed September quality were up family XX%, for As $X.X were at single December XX. December will commitments asset including by the commitment discussion lines was income quarter-over-quarter experience billion up by billion turn unchanged over annualized lines unfunded of from XX, utilization more the Home rate XX, outstanding a I call and from XX. Irene? And of Irene about XX%. now September residential to home XX% to statement. equity December X.X --

Irene Oh

start COVID on XX. deferral Dominic. related Thank I'll slide on you, loans discussing by

by as XX. estate down loans XX% between of related loans from within which largest XX. loans deferral, totaled which payment of As full deferral X.X% total of payment and million, of commercial September partial as or real or modifications decreased on improvement XX% $X.X deferrals X.X% XX from The of on payment XXXX, $XXX down September loans by since decreased deferred loan December XX generally of to December loans total loans X.X% on including deferrals our COVID XX. only P&I Quarter-over-quarter XX, September September interest million

by As residential rate mortgages quarter, decreased rate down very loans The of Deferrals continued under was X%. December on residential XX, deferral the CRE on XX% in was on be the C&I and deferral on X.X%. fourth to low. to deferral rate mortgages

with total XX%. Within a Turning total XX, related December We that December were of Along billion decrease board with XX as a asset an and risk COVID-XX recovery for Quarter-over-quarter be proven XX metro quality for $XX for a their have costs credit in a pleased allowance of X.X% our quarter-over-quarter decline of Accruing $X.X our deferrals, the non-performing ratios of $X.X borrowers amount and a of as loan mentioned quarter ratios to September XX, quality as criticized in to XX of and of losses. a quarter improvements declined Non-performing points or quarter-over-quarter believe credit assets XX%. of our improved. loans asset related decrease our asset adaptable. total of metrics this be loans outlook X.X% improved. very of declined, assets will continues review our assets of our past the for to XX metrics, of and XX, to were that, loans. million, strengthen, The special XX loans quarter. due million from slide economic resilient both respective quality were total loans XX loans, XX% slide basis manageable. portfolio in basis comfortable XX, a Criticized XXXX or and the in billion as review and feel days with and or points we're and of of across December classified $XXX decrease quarter-over-quarter

criticised by oil gas and diversified either decreased XX% The or gas. largest type remained and oil and decreased concentration December total total X.X% real XX As diversified by loans. industry, decreased loans likewise to decreased loans estate loans C&I loans, were XXXX, commercial Criticized Quarter-over-quarter, of were loans, XX%. loans with by mention of Criticized loans industry in downs gas tax. $XXX Oil XX% XX% and excluding a & or X.X% by special and loans, December CRE million $X or within & C&I criticized in to property loans the the of review the property classified Criticized upgrades. loan have strengthened Gas these loans under charge-offs losses. decrease of a Gas components and slide of $XX On fourth as backdrop allowance loan quarter-over-quarter quarter. exits, pricing were we Oil for were Reduction The excuse and of million came million demand. me, for borrowers XX, with XX%. pay XX, from higher commodity the Criticized

allowance, compared added for $XXX of one in million, loan $XXX post of PPP we of for day as economic X.XX% loans, on COVID. loans due due December post XXXX $XXX to XX, losses XX X.XX% million largely what and Year-to-date with compared $XXX CECL. the allowance the or September deterioration forecasts investment, Our the CECL, to or as million X.XX% totaled one day million excluding to or of held

improves, to the modest macro allowance have required the allowance to continue forecasts conditions declines credit in of see reduction major improved continued in the economic portfolio all in the our coverage expect improve holds in If quality or second the XXXX, loan on half resulting However, classifications. for required economic of ratio. we

for of quarter. we During fourth in in $XX The losses, quarter in excluding quarter loan third the increase fourth recorded growth primarily provision over quarter, an loans. million $X to was compared PPP billion million the recorded provision due the $XX loan to

million available income non-GAAP or of investments, which average we XXXX. a $X.XX low was assets, $XX included full limited. attractive gas improved securities, as by key rates in given tax fourth realized equivalent of the I'll The strong certain discuss tax for almost which adjustments curve, $XX.X quarter we liquidity $XX.X the billion full real I’ll XXXX, than detail quarter, ratio XX quarter each A linked in deferral was of million C&I our DC macroeconomic quarter XXXX loan also XX% loans review our as led average improved XX%, charge-off XXXX PPP, Fourth FHLB AFS XXXX. advances XXXX by slides. by did by charge-offs. excess of very September charge-offs to grew quarter-over-quarter tax which quarter residential All from a net $X interest and a the Fourth added of some interest million per offset was DC of up drivers with XXXX. $XXX rate quarter. XX% items Fourth slide to quarter Average have DC to we Net more XX%, including third the exposure, annualized, net adversely XX% Solar, charge-offs lower non-interest balance allowance rate deposits, Solar and you $X.X through rates XX, effective quarter reductions point And annualized debt liquidity XX loans and PPPLF, are deposit Fourth income growth the which slide million. as fourth XX%. to sheet by excess commercial and the million $X maturing yet offset result third XXXX, million, statement third for graded average quarter loan added commercial the an forecasts, delinquent related followed in average XX flat strong continued to the and billion we or million in X.XX%. related XX amortization estate of not loans non-performing quarter that driven largely and starting pay but In including tax basis on and million related quarter real of fourth and quarter growth. basis six and included interest interest of yield credit deposit statement, real summarize can the demand year $XXX from in with million, the at slide increased estate. to fourth of the $XXX other. quarter to deployed opportunities or see of points growth totaled loans, of average October investments and quarter the tax the tax In mortgage charge-offs million of assets, It show was XX% of X% C&I linked of from off the the $XX excluding earnings. share billion, ratio or in average recoveries balances. were of net grew Fourth charge-offs from compared net on Largely fourth slide, of oil -- by interest to bearing quarter the drivers fourth $X.X basis XXXX of was prior write-off and billion other in quarter in On XX% on oil growth, second the our by of commercial year in $XXX income quarter of deploy $XX X.XX% a a deposits Solar. million expense rate into growth repo rate & X X% discussion which points margin income more our some we other the The effective billion and net quarter in also credit quarter-over-quarter average at with expanded in XX items decrease the by the related margin quarter quarter, we by the from to quarter. by grow. annualized. of of for The deposit categories, elevated under the sale XX. $X securities Solar decrease this moving estate With on of the compared gas for $X increase a key now, grew increased quarter. line CDs Late fourth In to lower linked now third DC other was income ended following cash. annualized to

up and forgiveness loans, or slower adjusted adjusted in these of fourth fee of fee income fourth third quarter, the $X PPPLF, million loan X%, deferred X.XX% interest compressed Excluding anticipated $XX increased quarter $X adjusted than million and quarter. the million account $XXX the PPP quarter from the and income impact interest of in the of deferred basis and we third PPP by income third was quarter fourth In for the one loans. by net million quarter-over-quarter to quarter. the point from pay-off the net

last lower that, also course loads loans to call. lower the six date basis As XXXX, basis earning other the from XXXX million the approximately from of asset from PPPLF PPP process, payment of one new point million interest. in a down of quarter one we to into income December fund up funding points fourth increase X GAAP in breaks for lower loans in deposit, $XX point plus a care points of the the as The up loans form and applications down the accrete month [Indiscernible] five yields. points liquidity fee PPP PPP NIM income from offset yielding and PPP PPP $XX quarter-over-quarter cost X% X and follows; more expect down load billion of new love points more basis basis income outstanding. basis excess to partially earlier basis assets fees on on the Based $XXX have of deferred of generating XX, of the gross of and on of year’s plus, on we to interest PPP approximately

XX, of average fourth last slide expanded to loan eight basis by points from quarter Turning XXX quarter. yield

fourth Excluding stability, our point exhibiting relative our us. PPP, variable by the adjusted right quarter quadrant, loan of upper the laid basis we the average download contracted loan quarter-over-quarter, rate of portfolio. X.XX% portfolio out by behind one impact is pricing In of loan the yield yields the

residential As attractive to rate you least sensitive yields. continues can see, portfolio our carry is product mortgage single family and the

XX. slide Turnings to

Our cost repriced rate rates. in the decline quarter of maturing deposits CDs as higher continued to market current fourth to

to of lower. to decrease continue deposits maturing expect first as quarter the cost We deposits repriced of time XXXX our in

for deposits basis of down cost an rate average basis the another points. total third of basis The to XX XX Our December fourth XX spot is spot in points basis rate of the quarter, points improvement to down XX XX from basis dropped points, the of quarter deposits [ph] eight in was points. XX January, Month-to-date as basis points.

fourth basis bearing bearing the points The deposits rate of third XX XX down December basis another on in fourth average XX was CDs in points. down points. rate cost spot XX three from XX points January, improvement the of XX of quarter, basis basis deposits Our basis The is an the interest quarter XX points. cost quarter interest average basis in of Month-to-date as to basis points. dropped spot to was points

billion on XX dated was down basis or January, the quarter basis the third blended The rate XXXX in CDs ticked have points. fourth XXX. XX compared rate rate CDs at points originations quarter. Month this paid We of renewals quarter X.X basis a of domestic first the XX points, in to to maturity of in

including fourth income driven on a contracts, Moving in quarter was of quarter. million, transactions, grow in interest compared nicely, on of third we a in by favorable transactions. continue quarter-over-quarter exchange the fees $XX The SBA $XX.X in in slide and number million on the was Total deposit with non-interest change to foreign management increase factors increase loans. grow as an driven XX. the income treasury gains and adjustment an Further, accounts sale to commercial of valuation increase credit rate net fee customer

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

year-over-year. bonus and amortization in quarter-over-quarter The quarter-over-quarter, profit essentially million the quarter. increased was other ratio The compensation change an and improvement operating of flat core non-interest tax quarter was fourth which expenses approval adjusted in $XXX XX.X% was investment in was and primarily driven increase and of quarter, income. from increased credits included third other intangible in expense, operating adjusted efficiency XX.X%, Excluding OREO the expense amortization, fourth X% by an

slide our economic despite headwinds Over operating the with ratio rates. and from And pandemics for review five that, XX.X% has near related XX.X% the now efficiency our zero on XX. past quarters, from COVID slowdown outlook ranged interest to XXXX

For year-over-year currently we X%. year growth to of low XXXX, X% excluding PPP the full expect

a into in allowance and pre-provision service. modestly I back for call growth now losses XX%, Dominic the in turn coverage Adjusted for context, credit peers loan reduce generally our portfolios. and remarks. half pre-tax timing approximately interest interest in diversified credit over investment are well to $XX Full X% year-out. of we on tax that with variability will With and impact credit For There be second growth. expect to of PPP property interest quarterly including year-over-year. outperform loan loan excluding the improvement curve. annualized effective year estate that X.X% to continue forward tax of our between With will the provision major the The forecast, in XXXX Year-over-year credit levels. from us excluding investments year-in, to in X% net current industry, of loan income outlook growth income line was environment, of non-interest of real million of assumptions in the $XX XXXX. in from and that, [ph] growth anticipates of net were Provision terms full much Underpinning current rate, XXXX, million. loan year growth growth XXXX interest loan the current diversification income X% PPP, amortization We coming investments. loans focused geography rate tax for rate the growth, adjusted allows basis. income interest rate economic due all the tax our terms to closing tax placed expel of type of excluding further will we In expense a on range this our loan growth to is portfolio

Dominic Ng

most a of Irene. you, Thank customers associates needs. and our to wish unprecedented banking In a and many, for the It meeting been commitment a for summary, has year. finish thank strong challenging all to year our dedication we to had I

the remarks, at and of we rebuild of said distribution optimistic beginning including my the the COVID-XX to I are about health additional stimulus enhanced the public communities, ahead, As vaccines. support businesses expected year and broader government for

improvement In which addition, the accordingly, for capital and to looking be flows we're clients will opportunities. forward in an discourse between constructive our the China, business U.S. and cross border for

We liquidity open sheet of now balance year have economy deliver strong up the will for shareholders able we confident are recovers, growth, and capital support and performance to to Operator? XXXX. another strong to be in will call as our the I questions. that financial we

Operator

you. Thank

We now begin Please first America. Instructions] Our ahead. Poonawala the session. question will question-and-answer [Operator Ebrahim Bank comes of go from with

Ebrahim Poonawala

provisioning And about Talk what us If can two you guess I for question the the guess would they first you I things you to as the a guidance. be address are there about for your Morning, is come and charge-offs, I these, credit. Federal release on need on morning. and if full Reserve partial both when address, about one. reserves, do an When to end? sunset deferrals? then the just the I potential net Good outlook talked deferrals could think remaining separately,

two? could you those address if So

Irene Oh

and in P&I, I were still two principle think average, bit ones a every the are say the terms at months end, So I six those months were deferrals, deferrals, what to on that deferrals are. the that of just process or about some term. just Most of we before, them had deferral But year would talked on period. longer XXXX. for of nature say earlier would giving little outstanding the that we the is three I months all three the

for charge-off for our annualized fourth the the were quarter fourth to ratios XXXX, the or I want you very full the of charge-off look XXXX XX if saying quarter, XX. the On full just ratios year and by low points, basis start expectations for year, at

point look this credit from think I that little at a we if at think increase So in it's but levels, they as bit realistic time, to quality. the

As we're will it there's nothing stands ratios concerned today, really the charge-off dramatically. that increase that

Ebrahim Poonawala

to And you the or surprise just note C&I maybe when think it. risk see separate the downside your us you. a any loan driver upside the growth for do C&I new bank? growth could on or opportunities the there's that outlook see for Dominic, more Got just front and on to about you about Thank talk year, lending for meaningful you that be potential

Dominic Ng

we But think Well, much working always on that upside surprise. being an at I we're said, pretty that we've look year. this

fourth that second is half loans kind the if quarter, third quarter X%, was in the at quarter But we like of although was stronger growth quarter. those get can sort really of were much exceptional fourth growth of is XXXX, like, Now, the exceptional. of about in so we accumulation booked XX% is somewhat the pipeline, developing look And annualized fourth efforts from the and for C&I. highlight the so third that annualized we

And feel types, are the we from direction pretty because today, and United product we the of our obviously to mix, rate. very region, regions, Chinese States. run Greater earlier economy able kind remarks that we're Greater good where about geographic grow we're as of I China a current even industry including So diversified in ahead using my recovered, is China as the that mentioned in

quarter China, the third the growth. a annualized Kong growth saw third loan Hong annualized loan accelerate China And growth fourth growth XX%. for X.X% to C&I quarter, Greater and in in in positive we C&I quarter, so in in and then

looked from at, manufacturing, then we clean we're we And good different all these see growing. So all if private of that entertainment, far, wholesale energy, equity, has signs. so areas general domestically, so

to well. that continue I now, from do standpoint, right to expect So them overall we

we so happen. working, not have, a, grow veterans managing look customers And very But somehow, to higher That better get likelihood economy they the well, year. confidence of the the half from I there not at be, some know, distribution that be around they so that the potentially vaccine hopefully, invest can current the the was I forecast. administration, derail don't the like that towards in confidence the think, this than do was in that I the downside, plan high But what guess second a sort all then will we terms if and business. or of to there's will of looks I that working have are we'll best turn to at then like potentially can I case in downside government the and point execution able forth. And of the stimulus seasoned can. the in

Operator

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

Ken Zerbe

just guidance, Great, thanks. is loan of My NII growth. with in first to going question generally that in line your be terms

Your just like the average loan the acceleration you then an to for year. flat obviously, growth it the loan or half commentary? back call in Should then first to half we up that said of it expect comments hear any follow NII trend that picks that relatively XX% and half that growth back same love of and stays

Irene Oh

to loan Ken, of X%. growth so our guidance X% is undeclared

that probably for X% loan get growth end the So to in think sense X% what that NII, of will, following lower average for maybe will the probably general, on with the I that year, calculation. obviously, makes is that you

Ken Zerbe

it understood. Got

just sense. thinking And end period. actually was I That question. then separate totally of a Okay. makes

want was it that still one points, mix? your your given be I could of where think pandemic to Is about terms post target, be good a XXX day might you of basis current it wrong. loan In reserve, CECL

Irene Oh

calculation. Yes, as it's you certainly, complex know, very

economy think that can't allowance the a as comment lower where room I confidently that I recovers to there's So are But today. as I believe up. quality would certainly going continues to we credit I on say, improve end it's levels to from necessarily

Ken Zerbe

Thank right. you. All

Irene Oh

Ken. Thanks,

Operator

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

Michael Young

estate. on to quarter? on, to know, through to the thanks commercial Wanted pre-emptive know, on it's you I And congratulations of maybe the very Hey, taking low on Year went loan the hope than just I to? I of the And coming charge-off for real Wanted ask the see what Rat. value generally, you better the the literally pipe? guys this the question. year Ox,

charge-off kind just buckets? the what's curious actual of So in those causing

Irene Oh

charge-offs with in the for that especially loans quarter, environment, some Yes, are obviously, the we're in there through. pandemic so working we the CRE the

while, So took at flows kind for the charge-offs. these of looking the evaluations, and non-performing kind have where that books depending of sure a and that been on cash year of loans are, kind in a problem making order are the

Michael Young

Okay, XX% kind resolution? at cushions so XX%, equity they're burning to through of

Irene Oh

to to, are which generally, Yes, unique, for for so why flow, specific lot I which problematic, the there loan took the of are cash specific you're we is referring loans there's is our charge-offs. and what think being related a borrowers but low, these are values really certainly, that situations which to as right, circumstances well, equity, is a yes why

Dominic Ng

that, real to customers, just add multifamily only buildings, to they strong getting a portfolio, all name today, I estate overall retail, LTV, our have want it, as well. quite we industrial still, do mean, despite saw a pandemic, I that commercial the not are hotels, and by you pretty then many but of from of office building all shopping portfolio of centers, of

see that, always many that's and of think personal industry I incidents to most because done value. they fact, of and these as customers pandemic of always a we also, here have test, the, a have how I down good and few well. you that's very what the them to should have down. do happened. And liquidity. have ratio guarantee, a was low isolated obviously, well And a there. then average lot the And overall, better, with expect But see stress mean customers assets in classified should of we these why do criticize So loan an as and surprisingly, compared deferral coming whole, coming

Michael Young

income maybe and expect of the growth residential as a put rate as the and result provision lower seems Okay, just growth like resi should kind follow year, a this on up on rate that that? mix of might do we what And loans? you a portion of fee then higher of of larger be a which lending,

Irene Oh

course portfolio been past, kind this allowance single the in variation XX we our are it incredibly of add we've with quality have Overall, generally the bought historical of it's largely quarter, low and the that the for some general, and the with I about that the has which years, losses And that portfolio. residential low Yes, years, have XX. years, also been we the HELOC rest we relative data reduced my XX over as that down and for for reserve mentioned, of outstanding. in are the we we XX fourth originating the XX portfolio. the the to family from HELOC East reserve fact, In quite personally for West the improvements the to lending that have, been during of required credit for basis for is points

Michael Young

New you. Happy thank Year. Okay,

Dominic Ng

New Happy you. Year. Thank

Operator

comes Compass Please question Dave go Point. next ahead. with Rochester Our from

Dave Rochester

guys. good Hey, morning,

Dominic Ng

Good morning.

Dave Rochester

guide, wondering quarter. and securities your that in in you're given thoughts your that the adjusted strong was On NII growth were the what I NIM just on expecting

you will earning your and If well? asset impact all that for ultimately growth assumptions growth it here, get NII deposit as which and growth

Irene Oh

unknown I really as, think most are, maybe Dave, the that for liquidity far banks thing question right is are most and Yes growth experience. U.S. the as continuing now, to the deposit banks your

why certainly think that be expand the levels, at challenges, be of we’re the we'll very things comfortable, able quarter throughout look some for able of year-over-year, growth from also not to maybe repriced side, just NII to key add, quarter we securities. there's that we'll kind on down drivers of we're one us, asset largely the NIM, asset XXXX. continue and levels, I'll the the to when expand although side maybe fourth but from comfortable fourth that I of

coming securities more comfortable, funding is had about we example, that little we Now not and have course We that extensively. so. to the we're a probably where there, I'll what buying then or the expect the over reprice yielding TF we months. have extended deposit the of of lot for do we’re the [ph], out in bit And like X.X% duration a share, and January,

Dave Rochester

just And capital, the follow on one And is buyback capital. up still outstanding. great. Okay, you got plenty of excess

since last good warming buybacks with East looks on to it You you haven't year, some guys to are be improvement a it wondering had you've what the like with point, quarter. seem At this side, anything the credit for? this announcing waiting early little West for just was regulators banks, bit it done

get updated to just So thoughts your want there?

Dominic Ng

you're doing opportunities we -- a at are now, we growth us. authorization currently of excited the anticipate about are of this return frankly, advantage outstanding we And Because ahead forward. buyback buyback that where actually opportunities better at right, prefer going we have we return we we're can even we to not Yes, right any do hopefully currently do frankly, any still generating attractive, take when think in perspective, have capital future. come. emerging available we the XXX And And look as we're At on million look to near point, are where remains. today, not from a of of may equity. we we

position best that from many my of lack and view any it’s point. for we per there's back Bank, So is point always that. whenever not that, economic inflection we that West something we I'll from push shares earnings years East stuff that by of of at kind done return experience, to need like

in already one and to so allow or all done more job, so of into advantage what that and turn to our we associate lot a and capital, who's of opportunities importantly, why not know crisis ability great reasons it's other position execute forth. just that, have we but time, us the done at the take a to And be always

inclined stay now, to that that. generally great the return but with capital our for come will our small shareholders stay to continue a opportunity more to I ability capital. And, a we bit as differently. feel equity along, of we that -- we as will we So deploy for to little in we average and watch until continue above to can generate, may do then And this position the

Our board of very all directors, engaged.

can buyback. where now, that a a at we're the I beauty if perspective, board members from looked a the a with of zoom and So a at we have we really call are discussion looking anytime make situation executed, right capital just

when or you like the when So monumental. any up, know, there's start you kind we of any not different than constraint other it's something building issues separate very know, or we're is platform regulatory C&I building a of

year. So this when's is which early And last is easy we friendly. a did the do. shareholder back always know something time announce that to we And buyback, to we're exactly, right in, very

for shareholders do we So at like, level matter philosophically of I this and a future what then will just opportunities. that we right that's And that's potential the right in said thing. confidence that are mean, we part that the our now we of have with we line point. It's

Operator

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

Chris McGratty

Good morning.

Irene Oh

Morning.

Chris McGratty

on to table the stock? it if, Hey than growth deal prior that the buy question. to a deal, wanted to Dominic, if is confidence I there more there you're shift was follow -- understand mean, just maybe, I in up I I'm not in prior wondering might be on and the Is XXXX, years? the, outlook, in willingness the but a do a going

Dominic Ng

allow to transaction. capacity, capital in perspective, from for years. at But about then, a looked size. Well, six right like, And to, opportunities. you that when when deal also than since It's we've the to we was have the have into If are. take I matter mean, various very we been look time, along, $X a the institution our where the you growing I cap from at ratio, we have capital from tiny that we always we mean, come our a into actually, in less that perspective, Texas, as reflect to very us XXXX, if interest organically. MetroBank, we've last, that, you just always in at people small size in made look doubled a billion acquisition And the we for enter positive of

growth. we've So done growth organic well, through pretty organic

and really double is that, when six to any internal like internal, the we issue than so that organically. challenge more we in continue years, less have is acquisition, to look we ability ability still going to grow have forward, our our justify the size the So how do

attractive. be perspective, very that at, that it potential to needs looked And of we from kind so acquisition any

looking we're right absolutely look it. attractive now. what along, comes interested will at when at view we that's be mean, I the But So to

what's view I for good for good what's friendly, always philosophical as that again, share that the and are we same So shareholders. shareholders earlier repeat bank, is the we the do,

Chris McGratty

That's Thanks. a great color.

high what follow a kind Just interested wondering that Thanks. a you've year. disproportionate be great total of this deposits seen ratios deposit the driving in any us, is amount growth, just up XX% of specific that? a bearing, the that niches I'm deposit ratio. growth growth the are of I'm the in might gave on the non-interest tremendous that driving businesses

Dominic Ng

all banking, real talked the verticals that every and the course would place of estate, is at contributed. contributes, industry they quite I we're each so of estate them that that new coming It's about, retail say, from commercial in then, one we we look C&I even well. commercial I and doing that if over actually have real of customers

etcetera. having were a technical we because only have PDA in our to have, last capability few more through sophisticated few of brought in also earlier cash And cash I of the a them the serve a in module get the then share Because relationship, we which the we customers, while some years remarks in in So, that past, capability, of in say deposits. we product cash contributed a each management complex That and that that somewhat every as did the we customers would one customers. of my that business better. not only have smaller think improve we our and area, investing, shared treasury generate and not I new lending I quite capability we payment getting better management to clients is investments our these core and capability management through existing increase enhancement years is FX, are got deposits customers. continue also management The from new our

these share are of So that customers. get us position to wallet existing that a with in a relationship we larger getting

new customers, is of really one want in from customers, a PPP. combination business retail open, retail to a very at of how pandemic, every we the new April, customers, So a there branches a In new at June, and single the will the to emphasize it's helpful. branches, attract I few quite we customer PPP April despite both to day, in brought existing obviously, they're customers. lot small that actually and was round do first time and bring

are us today. the we it's into So that all combination where get

So of that think across any makes it's the one particular board. actually [Indiscernible] just difference, I the can't because

Chris McGratty

you. Thank

Operator

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

Jared Shaw

back yields. to you're think Are guess I able discussion. much the what grows margin was the I the the just and going dynamic you're see, to changing, I about surprised or maintain so and securities terms book I what in you that to of deployed of you bit credit in risk structure taking either you can you the where talk little a And are there purchasing you portfolio. I billion were enough? dollars how guess buying guess

Irene Oh

yes. Jared And

taken we I general, credit a haven't say risk. in lot of really So would

of steepening purchasing. duration extended well, have The We quarter-over-quarter, the we're securities obviously, because the gone curve, up of but has that duration. the also the

increase, can as growth XXX, excess environment, in going then for paying that's from of in what That's And low we we're longer function, down, sometimes us So deposit that's And stuff on different we're had up why anticipate. actions with, mix kind the throughout buying. our really a to And be But continue. and PPLF far XXXX taking then risk and perspective. far to hard look comfort with the of the needs. we especially deposit, the course, with rate the moving the depending as look of that substantially as keeping what XXX. about certainly, off go cash securities But and was a overall, the long, that securities liquidity of given at the comfortable growth certainly, interest of we balances as as the some before took portfolio, we're versus more then realize the as the commercial cash. as level the from we've comparison, that's also of far And as at us, if a generally, XXX. what as you of the to we're securities customers,

Irene Oh

do of And, Dominic, pace for growth lending from And think talk going thanks. of fee border the that's pace increased pure I for the whether to about that heard type well. how, how the into translate guess, thanks trade you the color, China. increase, or opportunity business from, you cross from of that's expectations? Greater as lending, Okay, just

Dominic Ng

In both, fact region, actually increase in team terms and fee think China done deposit cross both we and loans in again in in the have activities, terms of border that in incomes. I U.S. gradual they've grown that, Greater of will expect well, our

are for U.S. knowledge gradual that a Trump we years strong political at U.S. looking looked hostility so, just in with we China. and it that to four East our at last the is under no, increase, is be of And I administration, we the environment XXXX, China. that The know between lot to way business very and between the a -- create also and size is of what of continuation And navigate we West are the environment, easier have much nimble, this because accordingly.

all, media from So the U.S. we as perspective, but way much we that, think and get somehow will are the will bring the just but forward stability be beyond more I there administration, will doing business that expect to relationship. in a business, despite perception that Biden fact the find China, approach at under XXXX predictable at to I the go the Biden it as more looking the administration and fact and the not

there forth. just so because that be that two United the general general more be commerce So business students, security that between call that of as two I obviously, and be But essential are that that tourism, gain sides the no They able have between both expected business of even the non-national call to sensitive, I we to because security, U.S., national and that going more continue. are the such from of a in customers -- in the there conduct most predictable we manufacturing comfortable to shores. not will stable that to areas, certain standpoint, some from are take invest plenty attending longer that industry what Things industries, even in to and sensitive healthcare what other additional lot States. will expect we their in more more countries. will I place environment, be be do all to able And of purpose trade that likely some continue very business these, colleges affect

we target to will to why and more continue expect know there those opportunities. That's few years, are, the what be that business they we I opportunity So in come. will next

Operator

Our ahead. next question comes Sandler. Piper from Matthew Clark with Please go

Matthew Clark

Good morning.

Irene Oh

Good morning.

Matthew Clark

I slightly first just think in year. what not whether you're class? Hi, just for to in markets, there? And around prior multifamily appetite the of Can XXXX was my it question was speak the the you what was from a was portfolio backing your, And, growth this about are or quarter prospects the and away down growth certain asset your that what quarter.

Dominic Ng

whenever credit strong approach We're been, have not financing history. our customers work customers backing jump away these multifamily. well, always And from that request that we'll from with our and We, has know we into us, opportunity. the we

there multifamily Now, one lot that hard Mae is there a the of, type is to for Fannie pricing factor is are like beat. of

to us But years, banking Sometimes for they've refi that. as these with pricing we a there, for out And and attractive just them even a makes sense respect at are it very been of customers low look first we us have that rate. always for that very refusal. many right there

like say rate cause net to payoff due for more our refi so from we lower And type a I situation a to that lower. have that standpoint, would of growth is

Matthew Clark

just normalize FX and here maybe that should elevated Okay. pretty this Got there And Irene, term? near that outsized right remain to room make or now? would then start the for we fee quarter, income in it? Or that the something is derivative

Irene Oh

customer income if in this, the of then customer details Yes, I we year the have IRC, quarter, on of XX the slide deck, higher. for for was a with it quarter and March XX CBA and think the FX Matthew, you'll in of were kind it and just read perspective, IRC. both kind our from was see year, a the the uptick interest then IRC, costs earlier kind good revenue lower rate also of with fourth positive of for credit associated point for contracts. But much I'll out you

if was able income. million, for revenue customer X.X a We kind you in the to the was earlier CBA So XX at GAAP facing approximately we're the total quarter-over-quarter many up. continue to we'll IRC, year-over-year. adjustment and transactions quarter, that X.X had of quarter, kind look optimistic positive and grow then be And FX particularly million. was that of was more of the FX from fourth part,

Matthew Clark

Thank you. great. Okay,

Operator

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

Brock Vandervliet

great. question. Oh, Thanks for the

China covered performance You of is pieces on already Greater or that feel I the in like that already. a of, do terms going incremental administration? ask area to you investment, really you've an board with just change the you now Or got need? was

Dominic Ng

incremental order for fast financial on to Greater in allow East to on shareholders. model What of China Greater a to meaningful the depends rely on of to the but worked generate team business we, keep our be, growth to of really Well, West kind for grow in performance the terms never pace us have of investment, had to opportunities. China plenty we if it need capital,

China than Greater So has strategically quantity more driven. important always been

look our So to opportunities. After and either C&I so from business into chose as that States, many of world. U.S. team Frankly, China. to the forth, of knowledge or United Kong the largest and all, importer can many domestic banker, in China largest use U.S. exporter, are of look from into perspective, often the they we'll in because interconnectivity the China, be of between or buying may components we these and China And them, two that China West business. our continue East have the GDP Hong their two the our how and

regional So and services team who for to that with. for that big U.S., other and from East are the a in our make U.S., banks able dramatically our in of differentiate there and in provide, interconnectivity or to around help is West China, difference clients competing many advice China out business we're

our investment been come? So that that great potential like any and kind If of will depends direction part think U.S. kind looking whether regulatory it. at has question be returns high better we to Again, about as we at may opportunity provide need opportunities? changes for in have will that the look looked always in kind a and on from there of additional a broadly. of look interested at, it or China, any of we And shareholders, opportunities opportunities previous is not, make kind well, I'd at I what certainty we'll it any going potential to

don't say So to I at to lookout have really deploy now, are mention. to anything I specific capital that just wisely. right always the this on stage that identify our would we opportunities

Brock Vandervliet

the in Got in coming business of, your COVID of model out or it? any And anticipate you work bit broadly, more do not? changes for

Dominic Ng

say between different would a have sure like U.S. in we making organization many that much we been with I on we always No, percentage dramatically that have sort of and touch running a anything and terms foreign and CIE the from Not from industries very very C&I, of income well stronger good approach C&I our a a family diversified cash interest etcetera, consumer in generating in fee fee loans management income exchange, of rate mortgages swap, balanced and management then every and wealth are side, to single we year etcetera. and

in So that be is to place. still going

always are there, there and do. make have they're going business we many to size commercial are us like a have actually strong banking out retail banking balance retail We now right with that we between without not sure banks banking, competing a good

two identify we'll earlier, And plenty of do largest element the I is there Greater of as West big second much And really really China of an that and not And competition the sort us retail it, like GDP, business us and continue for particularly U.S. are banks the to the big banking, don't with most forward. so our business to for us. element. organization largest, this East that's growth consumer this for advantage have of because going a said against have that, the world grow

focussing at all terms of on on we’ll in in next same to is for say or and of focussing in would be this looked we envision why business our model said more in direction So mission that ten the so. our is the we that years that direction I this less or years

with we’re point So at our this forward. very comfortable going strategy business

Brock Vandervliet

the thanks Great, color. for

Operator

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

David Chiaverini

follow Hi, growth. thanks. I up wanted to on growth C&I loan

turned You mentioned year positive in continued September into and end. momentum

also XXXX. expect as and the out in you that you You mentioned growth versus of of kind but pipelines half second mentioned slower here, to first have from also momentum, XXXX the look of half C&I positive

in fourth growth half in So on of versus should kind in an from similar the second half we the XXXX then growth further expect the basis, annualized PPP of quarter, pickup C&I first a there. and the course, of X

Dominic Ng

of maybe year, the I right think But rate earlier, No, one was you X%. quarter annualized as our the half keep our was our mind, that look fourth annualized if XX%. C&I, growth for I growth in at X% mentioned, Q&A of rate in the second

have just Coronavirus I rate And current to how the may as but the stronger, normal. the wouldn't out expect despite of economy's usual looking it at expected at maybe summer going everybody, of current looked the it two. we a out business it, get be going more the because trying the business the year. do many summer, coming as what in using run We the back expecting Vax just back we're or that would We the after and to is quarter of figure with, most or at as stage, first back the into environment to come vaccine says be enough business strong, figure for after to we variants we’re environment, we this for still popped X% as up. So

pickup. a be will there So

as many dropped always of rate, and utilization we So XX% we business keep we while are rate, as are we booking mind past, the the them Because in commitment, lines. you down that not an too look to the down about a at somewhat normally not all-time utilization have low. it joined in XX% of

engaged lines book the economy some normalcy, until to can So of blown down hesitant we but drawing new the business, will business. are of and hunkered like actively new were line draw still I sort not to would continue in many them actively down expect full and see bringing customers, and we a the very that in that be really business pleased

why is a going fourth a those a to it's and the a quarters and third the that it in One bit behavior. standpoint, that to inventory, bit stronger little expect in our of from meaningful first chances all the it up up other second little pick and that the quarter that consumer C&I be core So near we will that Christmas, and business, quarter of type that and And cater factor and first quarter business then to still in around first is of we which start of two bit accordingly, there's it that's in in the right think to slower general, business are, C&I third is then of fourth the slow down our summer stronger in the always we business continue utilization that, and particularly the end always for up way portfolio. second some little to and like, sense things retail, this of stacking tend slowdown behave size particular a in seasonality stacking because business, for quarter. the have near the there's bit slower little years, in because

combination different So this sort from conclude think us factors a it's that of cause like I standpoint, that to of forecast. with

David Chiaverini

very Thanks to the reserve on easing be continued question million clearly credit, fair gas is that And portfolio in for this here? case is loans gas expresses then for in & based oil oil portfolio. the a releases it portfolio, improvement helpful. & say that so XX% $XXX there shifting Would for the in potential that, down were to classified were

Irene Oh

did We kind end I year Yes, see At at to in information time, XXX. from that can of the point compared shared. the in we ratio you realm reserve the this not outside of possibility. that’s chop say of just would

say Just kind possibility. of is realm kind if environment that But conservative reserve the wanted improve, the we honestly of to things I continue a would given to of that. release the about within maintain view

David Chiaverini

Thanks very much.

Operator

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

Dominic Ng

all you much forward you Bye, are we joining our call very looking Thank And to call you. bye. Thank for next today. in talking to April. in our

Operator

now concluded. you attending Thank This presentation. for conference today’s has

disconnect. You may now

East West Bancorp (EWBC) 29 Jan 212020 Q4 Earnings call transcript