EWBC - Earnings call transcript Q3 2021

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Operator

Good day, and welcome to East West Bancorp's Third Quarter 2021 Financial Results Conference Call. [Operator Instructions]. I would now like to turn the conference over to Julianna Balicka, Director of Investor Relations. Please go ahead.

Julianna Balicka

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

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

including Please today to adjusted measures. In the bank's addition, pertain call non-GAAP some to filings, Form of this the refer of GAAP to on the reconciliation referenced our X-K numbers. financial numbers regulatory for filed

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

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

Dominic Ng

million. expense growth the drove XX% in annualized growth sheet revenue, pretax with pre-provision to solidified $XXX Strong our results us income earnings for revenue call. we net or our with financial $X.XX drove for I million discipline, organic balance morning, third in X per Julianna. quarter-over-quarter annualized you, joining quarter million. presentation. quarter $XXX the to increase you, XX% morning. $XXX XXXX Good increase The review begin for third Thank reported of income of of This of everyone, Thank will a our Slide share.

recorded XXXX. third million a this for Our profitability industry-leading and X% credit was losses of be pre-provision quarter provision pretax for to We the quarter. negative ratio continues $XX

and continue on XX.X% on average net In sum, a quality Asset at average tangible quarter-over-quarter the Slide At XX.X% equity low. returned on XXXX. attractive healthy decreased time, September equity third X.XX% maintained loan of quarter XXXX. of and remained same charge-offs an for for losses allowance assets to X.X% improve, loans as assets, XX, nonperforming balance X our summary a average sheet. the we of of we presents

our a $XX.X total and As $XX assets reached of loans of total record XXXX, September XX, billion crossed billion.

from grew [$X.XXX XX, Excluding Paycheck XXXX. June total analyzed XX% billion] loans, Protection loans or program

production Year-to-date diversified C&I, key Third the growth loan grew well XX% commercial quarter and were across for real and of mortgage PPP. of months estate. XXXX, loans X our loan annualized, excluding first all residential portfolios

to loan outlook a Throughout loan For increasing the of XXXX, our up are good for this very of that growth third execution In be economic based backdrop. growth from Overall, will strongest anticipate we strong. will continued loan front-line teams. to growth we full our broad-based be C&I this to growth XX%, been rebounding the of range continue on at deposit and all to expect point, continued a And our our from and XXXX. XX%. XXXX, quarter, across portfolios has range we XX% prior year X% the

grew deposits of annualized quarter XX% year making X% $XX.X Non-interest-bearing annualized total deposits XXXX, from $X.X of or ago. up a billion to of a $XX.X XX% record as June of record XX. XX, million and billion, reached up at from As end XX% $XXX up September a September deposits billion total XX, or

strong our X, Slide to capital Turning see you can ratios.

both per capacity Tier XX.X%. for XX.X% would share -- of The XXXX, value stockholders quarter up XXXX, a equity dividend provide common stock XXXX fourth for dividends meaning November common and on of of we cash has And X total tangible the of stock. quarter-over-quarter. record XXXX. had company's XX, East meaningful on share equity X% Book were us common XX, ratio ratio to November X, West As Directors capital with $X.XX of of declared Board future per is growth. payable September

September annualized. on Slide XX% of $XX our Total of a annualized C&I XXXX, sequential loan XX. of growth as with an C&I as annualized excluding June despite grew of June September from XX, Moving and compared XX% the September excluding PPP, increase in this rate, billion On loans, to XX% commitments C&I third $XX.X a portfolio, was quarter. XX as increase lower We as discussion of basis, were PPP, outstanding, of XX% by C&I XX, billion loans rate with of beginning X. which were XX. of achieved slight a XX% strong utilization an average

and expect balances loan to We continue strong quarter. to in in see commitments C&I fourth growth the

also were industries, cross-border By for business. in quarter growth Third strong wholesale total private a growth. came the and loans private exemplified China. Mainland consumer portfolio, United would loans. was June clients loans September loan annualized well of of highlight that loan-to-value X of consists billion loan $XX.X were diversified loan and Growth Hong domicile of well billion in commercial Kong well net consists type general commercial Total X of as in portfolio across loans, XX% diversified Hong indeed and quarter $X.X our of technology, our geography diversified, XX, China as from lending and X% terms from up details I the quarter well estate of from billion the Accounting These XX. low of portfolio real by equity this up entertainment. we of industry. C&I Kong property which branch. States, XX. by $X.X subsidiary teams X% June by domiciled real goods, manufacturing are our and growth this our and shows estate growth in XXXX, bank Slide quarter this our our well-diversified and is and equity, was saw geographies. It spread from

details This annualized quarter, our lines regarding were industrial loans saw mortgage credit. growth CRE which property as mortgage of XX. June we of equity Residential we portfolio, $XX XXXX, mortgage. XX, mortgages growing by X, residential of type home X% strongest multifamily single-family billion provide In and and by from September consists Slide

During our quality will quarter, a which call year origination the statement. quarter. and third the setting XX% from quarter, over we from second million up originated Irene? $XXX to turn income down residential a of Irene by third in asset discussion of more the was ago I now mortgage detailed of for loans, record but

Irene Oh

as as basis Quarter-over-quarter, asset points and of of Year-to-date, loans of XX, total asset basis X.X% by XX XX. September as asset of million quality our loans or ratio nonperforming assets X% to metrics Slide XX% from sequentially XX criticized our Total Overall, loans of points Thanks, loans XX by December improved Dominic. by by basis by assets to nonperforming improve total XX were I'll points down basis ratio Year-to-date, nonperforming assets. XX, the on loan XXXX. metrics start key X.X% continued from points XX%, decreased decreased the $XXX with XX%, quarter-over-quarter. of XX. improved assets criticized September XXXX. billion or criticized to down quality by and $X of were

estate quarter oil and commercial third assets was in and The largely gas nonperforming improvement driven real resolutions. by

$X continued decrease and to loan commitments billion. and now portfolio gas are has oil Our below

to goal our for reduce we previously, is us. the discussed our to losses. this the As On loan about XX, commitments components right This of for was level. Slide size present allowance

The of XXXX, million excluding totaled macroeconomic an in quarter. basis June $XX.X X.XX% XX. net of of loans, $XXX the allowance allowance ratio X.XX% The XX, improved unchanged charge-offs compared $XX.X second with compared the was as points essentially third September at Our quarter loans largely the reduction forecast. in or quarter-over-quarter Net average were in third $XXX million as for of reflects and the XX quarters. million second annualized charge-off both with million PPP

impact And quarter, approximately record the for $XX quarter. These the rate a slide, the are $X primarily losses the $XX in with recorded in million contracts with to $XX quarter. fourth provision the we other income, line on the million quarter, to XX. relate for During mark-to-market to more in On valuation provision slides. compared positive interest derivatives a and adjustments, the similar on and expect in the were investments the with to a under marks third adjustment. of I'll credit negative $X.X in million changes compared in CVA Currently, in negative of third credit discuss $XX which second provision this following the to the investments of statement income. tax the this noninterest summarizes second we line million compared Slide quarter. the other loss negative quarter a income a third of which other credits the included Amortization million are closed key that $XX quarter, million slide a increased noninterest quarter. this second reflecting In quarter statement, moving our included on discussion items income million during detail of now This the of

anticipate that fourth of amortization million. tax the will and investments other the be $XX For quarter, we credits approximately

through the The The the rate was income the key margin third was with XX%, of first X starting XX, that and year-to-date be now $XX expense million and the quarter net tax and for balance XXXX tax rate effective months XX.X%. we XX review year the was tax our effective tax expect sheet. effective will full income approximately Slides XX%.I'll interest of XXXX interest rate average on drivers

annualized, $XXX annualized, PPP the million loans $XXX Third forgiven by and quarter by were X% of linked of grew billion, quarter. quarter XX% during PPP. SBA billion the million excluding $XX our by third $X.X average loans or or

annualized, quarter increased in XX% $X.X growth led $X.X deposits, billion which deposits billion. by were linked quarter of by billion, $XX.X Third or by up noninterest-bearing demand average

strong the $XXX On quarter quarter. from loan-to-deposit growth increased down cash in quarter, asset $XXX deposit million. XX% by in third average deposits the was the securities with grew growth, increased strong billion, With an earning growth. in average deposit the $X and agreements million repurchase the Average ratio reflected XX% third interest-bearing our banks basis, and second by

XX. Slide to Turning

$X to million was and Third of quarter, million West, quarter of $XXX fees million in net of Income million the $XX $XX interest East income was growing third related highest interest deferred XX% the quarterly the income. loans PPP XXXX of in history interest quarter of consisting linked income annualized. by net

a September deferred interest GAAP basis XX, As the third margin quarter, $XX.X X.XX% prior million Quarter-over-quarter, accrete. quarter. points have to loan in and X contracted of the to PPP fees of remaining of the from decrease net we

interest points third PPP, sequentially. X.XX% of adjusted by Excluding net contracted margin quarter X the basis

growth headwind mix. in the interest-bearing from of the our lower margin XX% to growth purchases interest-bearing slide, quarter-over-quarter the The decrease share and of from offset liquidity. the yields the securities you our funds income repo and incremental for bearing XX the interest and with net cash largely of a interest PPP. average quarter noninterest deposit this chart DDA growth. from DDA net a banks incremental expect of excess full lower third was loan due see year, the XX%, margin comes -- average And higher variability deposits of excluding the and a The of cost of asset to margin. this was waterfall came the by the for to growth As the net points agreements. impact was on can robust impact we from by deposit interest driven and increase in strong negative margin Quarter-over-quarter, basis NII

Slide XX. to Turning

XXX, by The X third XXX, XXXX. from of loan the and second in yield XXX the was PPP, the points yield excluding of quarter basis down was loan average adjusted quarter impact

Turning Slide XX. to

points XX. of the for basis from to improvement of September basis as quarter down cost third spot dropped average an total deposits second points XX June XX, X X rate was by basis XX basis on the also Our quarter. of deposits The points points, from

basis renewed the other cost deposits rates, quarter repriced of or higher-rate declined XX of from basis to the drop X as originated current months. The points of CDs of CDs the CDs XX quarter, and rates In weighted points domestic a points, was maturing third paid we in second lowered market quarter. accounts. Our a billion rate X third at of on duration $X.X of blended cost a average average basis the we and

which, CDs the down. $XXX Over a we the XX deposit XX a fourth basis already XXXX, when have of many course blended of higher-priced the domestic quarter, CDs of blended billion $X.X In higher of repriced were points. at rate originated have with rates maturing of rate of basis million points,

million was with and quarter on Quarter-over-quarter decreases the Moving was loan noninterest net and interest of $XX the FX in year-over-year. and second new from fees were customer management. on SBA growth to quarter in XX. fee gains essentially an on fees million, in troughs. income particularly $XX from reflects and income account increase third XX% sale acquisition, fee and in the flat lending and growth second Total compared up swap Year-over-year, $XX Customer-driven loans income in sales gains the rate deposit Slide revenue rebound million, in wealth COVID-related fee beyond offset by for GTS income quarter.

Beyond quarter-to-quarter about for future positive in income trends volatility, we fee year-over-year momentum are the growth. and

to Moving XX. Slide on

Third quarter noninterest million. expense was $XXX

expenses, sequentially. which and third investments expense amortization, expenses due quarter, quarter-over-quarter increase an intangible deposit largest other were in or credits largely charitable $X core loan-related tax in and of The the adjusted and was contributions. to amortization million higher increased noninterest change million of operating X% Excluding other $XXX

efficiency the adjusted XX.X% was third in XX.X% quarter. compared The quarter with ratio second

While we quarter that, technology a capabilities and our our make investments now our achieving We've go. continue Slide outlook full XX. year XXXX full to will relative With to to product updated outlook to offerings. banking updated for efficiency, on people XXXX in review expand I industry-leading and year

outlook. in our year excluding to of XX%, For to XXXX growth, XX%. PPP, to from net of of loan compared expect PPP, we adjusted prior XX% with from XX% in the XXXX full Year-over-year unchanged our year-over-year range X% results range growth, range interest full up of the the income XX%, prior excluding year the

provision macroeconomic -- growth income growth tax outlook, and in interest our growth we growth growth, for excluding Our does expense this our good outlook. though year increased not forecast expect unchanged half expense full prior foundation the Adjusted credit tax from of provision in of book at credit interest be outlook quarter, X%, of noninterest a credit rate amortization in the losses to the This fourth effective is for investments. a of net Based what to shift expect the our full loan XXXX, the million the quarter. point, materially that even we from is X outlook. XXXX $XX in on XXXX net loan it robust a growth change second impact including XX%, third outlook negative We year. recorded year of similar the will prior currently tax approximately

an closing investments call a our quarter. fourth the over that $XX will tax XX% Dominic full approximately of tax for update and now million amortization that, from We of rate. prior year back credits also be other the for anticipate This I'll remarks. outlook is With the turn to

Dominic Ng

call this you, Thank finish In expect questions. we strong up a quarter another will the XXXX. for now Irene. of I outstanding results and closing, to to Operator? open West, was East

Operator

question the comes of from Ebrahim with [Operator first Poonawala America. Instructions]. Bank And

Ebrahim Poonawala

into mentioned you expectations strong XXXX I loan guess, C&I. driven growth Dominic, for by

to for strong revised talk this Just you I X quarters. pretty guidance us, year, you had the mean growth even last

in range. the to we somewhere be As is about XX%, why mid-teens, growth probably XXXX, going loan not think XX%

that rest positively a of year, like in pickup activity demand be is given what industry of about next us levels. of to growth give the risk talking could the a level and pretty sense the Just loan

Dominic Ng

in always I provide trajectory for quarter if call. at point, provide guidance XXXX guidance our we -- XXXX. guidance the and annualized kind that January XX% the early that at now Well, to too going our able will based far, we of look C&I experiencing. right is in so somewhat what I that stage in the continue will the growth we mean, for to we It's good. currently have similar us mean, of pretty at our growth. see to We the this a quarter, year to things on shared to what Xth that in end pipeline fourth XX% be to we're XXXX feel I particularly are But sector be for

Ebrahim Poonawala

it. tied that. just Got to And

the mentioned from up You $X.X the in billion. loans $X.X to China billion sub

are a the there, over and or sub bit doing the the today to that terms of from contribution X year growth in Just lot ago next remind more versus could X forward? years things China going us that you're strategy differently there a lead

Dominic Ng

and In bridge be say terms the And fact, looked we've overall of we the more pride and States West would the East and banking bridge between West. the proposition United knowledge financial our effectively do I in to of from comes like the that, help vice -- at expertise East knowing always the business business both versa. change strategy, regulatory to our of U.S. in And China, business because in and ourselves we China. value can -- Chinese

months, in we to for banking that are So continuing new that XX last U.S. from would -- the build we needs. fact, actually business have to in say tremendously I benefit cross-border able

our that You see growth. C&I in loan

You our see in growth income and that CRE ethics and so absolutely loan treasury fee of some in our management -- growth.

banking business has United the in States. So the cross-border helped tremendously us

Now Hong we the the good, business in the that that China the Hong has and Kong is we have part and continue because Mainland China, because will strategy been to cross-border also always that presence knowledge, part. U.S., both main high-quality have feed our Kong,

mean, Now the growth small. our China What base that -- than because we're meantime, China. the loan is U.S. growing only total only you've but is mind of is Keep that in may in the be the still we in $X.X in percentage loan. higher of obviously, -- billion noticed I X%

clients to say, year, given so at is simply something have it is be let not percentage core But or high-quality looking not own important the that grow and going based and so something is we plenty -- most We're the grow next that got surprising business that their that that asset at is expandable, that's thing because is that it are needs. comfortable XX% to room. within and because should is is a And if profitable. low. XX%, in whatever So to sustainable by, let's on growth they'll base region the we base -- be It's of small, the size all. we're

trying to we like what we sure out we'll clients make aggressively banking with we're percentage work that pretty So much on when do philosophy. with. the that just that's -- grow It's but the actually are good based out And to one, not anything China portfolio all that. And find our there can evens the them. or

cross-border particularly tremendously, this benefiting been banking we've far, so in U.S., off And business.

Operator

next The with Morgan Ken from question comes Stanley. Zerbe

Kenneth Zerbe

two guess I questions.

can how to us adjustment first So sustainability. model help credit rate this think all, that I just contract line? out interest was just but obviously, about you understand great quarter, valuation the want to in of it mean

Irene Oh

really also I is I happening the largely think particular. rates but function component swap Yes. with rate tenure mean around in of adjustment of assumptions CVA that kind it, kind of of a the credit what's

I far the honestly, I that hard point-to-point think the think what's So be if to is that's as largest that's indicator trying you as it's particular. to going to mark quarter-over-quarter. probably that in happening what Ken, helpful, understand follow But model with tenure, in

Kenneth Zerbe

Got it. Understood.

question. just Okay. a then And second

Your outstanding. noninterest-bearing just deposit been growth

Can over quarter. was sequentially just talk it up think driving you XX% I growth? this about that what's

Irene Oh

Small really We're it customers. our accounts of been number meet Across you increased, accounts, the packages that of very if increased. the small look created delighted in from business. that then have we've our We've the at product kind needs successful with branches, with of promotions business customers retail and also the had Yes. deposits. have consumer have we that growth board, the

I capabilities that, and several has made our investments customers. the growth a for last from people, from the think to utilize been we've help that dollar accounts. that perspective commercial able corporate products, really of excited and very the in GTS domestic, perspective, we've And U.S. years the probably with largest be come

with growth, customers long very a is, And the is that trends that, short there and the deposit we are continue. the Realistically, So very system, overall, I something though, Ken, in it certain of think excited the policies, growth we're positive, of we've kind onboarded. that of we is amount could say, there we that well. would of can think continue the and the a -- about excess momentum. realistic stimulus, of I as is the about this certain that monetary and kind think we're amount deposits But that

Operator

Dave from Point. with next question Compass The comes Rochester

David Rochester

momentum that year? that you fund Back on with growth commentary, that cover deposit think was you you Do can effectively if curious loan just guys great. think that growth? growth deposit can all next the you loan are sounded I expecting

Dominic Ng

at currently XX% are loan-to-deposit we Well, ratio.

that we've causing way we is So volume got such income at we obviously there, So cushion margin a growth is that of right? have margin will strong obviously, it -- pressure. interest our plenty The net that's cushion something look lot loan-to-deposit the that of of think room. a the some that I that But overcome this compression. I got

liquidity us would we'll deposit for There a for C&I. that I And to we to be new forth. in provide still we'll and So in, at now. we When be excess not and growth with because new money commitment pipeline for bring expect clients loan be a for it accounts then continued are they continue look so simply operating booking. concern come clients. the market going that to that accounts comes them,

new a back that we in that referral. quite job mention able now did benefit -- do customers PPP, lot still last that want a XXXX, second just of from is we and clients indeed I that goodwill and and due of great lot brought clients. generated in tremendously of half So new goodwill to lot a of And the and year a in it were new to get to to book and through continue a

terms deposit growth somewhat it's would from be on in goodwill, XX velocity has happy, would these I for X, acquisition But deposit in be they PPP -- of may last one sometimes, next that not as situation. continue years. necessarily This so, for XXXX, of unusual that be strong something years that we'll clients up or in expect customer the as X.X the that necessarily So simply not tell side. business. commercial to may new expect pick I year, of sort strong that as XXXX these But going maybe then maybe the maybe got to and several of different continue will it's because

David Rochester

would makes That Good. Yes. fees. to switching my And just follow-up, maybe for sense.

You was growth? you've lot expect you I mentioned but there momentum here. of you how of lines got going see about just to I seeing the a growth. strongest And know it's of for do the a probably lot wondering, that contributing pace future thinking Where difficult, growth forward? are

Dominic Ng

just is mentioned, think a you items, business at generate One that we West if small relationship income I have our banking to as moving for are the exchange deposit that these different because, tremendous about the things. commercial, line foreign X fee that management lot from we East the and over look treasury item. domestic, that like in side. middle-sized -- the cash line management, their areas management treasury are of that growth These

may to I also The that area. other from we treasury say take as it. fees cross-border new two one, management and now and be cross-border clients. the would about addition mentioned business bank the are company are China that that foreign terms working more in subsidiary I actually up mentioned in in Again, pretty Those about United earlier. lot We of U.S. with excited exchange much Chinese States I of the a that -- benefiting situation, not PPP

situation a internal have also We technology improvement. of

platform, system about our product our the X our years, and or As upgrading we offerings. we talked to have last invest technology X in continued in

have larger we a these management clients to with have So that us in commercial the position in cash treasury the area, in offerings, of management put complexity more service needs. terms their particularly much product ability

So growth. all of in having of have kind that resulted this us

business -- doesn't this continue. continue and we West they terms point, Now mean will with at that think probably my start products, I for pace, prospect. take we'll come new forth, continue products. to system provide not to sense We'll look. we'll down. think continue provide of volume -- we need and going so will do product just XXXX hopefully, and up is the stop forward. new will to innovate identifying into we our in. to area, come in a we the that slow geographic better some through wait new continue But continue in to But even would momentum and maintain if even we through to I working East look sit that, capability upgrade then and and develop newer and of too, sort that, And all And

Operator

question comes from with Wells Fargo Jared The Shaw next Securities.

Jared Shaw

the optimism outlook I trending the new down acquiring expecting rate back their back? between, that 'XX holding Can to to that had with I customers? the shifting that starts you you growth own optimism versus guess normal I expectation guess, and your if that success increase the utilization there. you and break difference customers not, back of customers guess Are what's sees And rate? normalization utilization those

Dominic Ng

like U.S. with think going Well, I do how lot the economy be XXXX. utilization is rate in a to to would have the

C&I around with was -- or to loan our growth higher, but you that, range. the look annualized, rate you it commitment our you was the loan XX%, just utilization slightly. in at amount C&I of that something XX% dropped XX% fact, shared as then XX% we at growth XX%, if was But our balance remarks As from growth,

down. we -- coming been X, But customer So we more the just more increase actually that book customers I will utilization. looked didn't keeps X it it ago, expect at actually in funded XXXX, happen, brought that would well, new was even that months loans just I that in yet. expect I haven't What a

be It's of ball our something going I had the I today, of mean, give the it's averaged see many So XXXX. with somehow it clients like as of a or the is time. overall economy to matter in like the less matter to it's up crystal what to I be same. different wish But that time. just the a to confidence portfolio drawing to a to predict industries, line. And we'll start amount more out going well-diversified what

Just like point, some bit will hadn't at a happened. a interest little rate, every year, eventually, hike, we it But wait happen. of it for

start to that also expect would is I rate going rising. at utilization So point some

Jared Shaw

at And continues grow. then it's dividend Okay. payout When look my under just you XX%. ratio, to Capital follow-up. the

What authorization COVID more the more the of then are the management worst have on buyback You buyback are your the capital and now that there. specifically thoughts fears out us? broadly behind

Irene Oh

Yes. would strong time, authorization this that We're form able at go utilize that of We way. we that while to board frankly, returning And the have not optimal because also, and we It's the the the honestly, been quite do we're our to have actions and shareholders growth something take. a -- to optimism in we'd point, the first being that's the most any capital and organic on evaluating point the is with of have. focus we in outstanding. this back that growth at foremost,

on discussion the are On our the sure basis, relative dividend dividend a that make payout to utilization an of also the generally Board. other appropriate, We expectations about yield side, and to the ratio speaking, the evaluate with to want and capital then that's peers. and especially annual relative

Operator

question King next The comes from with Truist. Brandon

Brandon King

see but And multifamily that paydowns What slower last shaking was sources CRE a that, the quarter than quarter? how do of mentioned industrial So you you was and the in it being in to XQ? little the XQ. growth, of out level compared

Irene Oh

is CRE Generally, we that expect tough.

see as far think we lot I that a on competition. as of pricing, the

slightly. we're And we think focus clients And also so that and Overall, quarter on pipeline we we what given then little better fourth at this competing payoffs point pricing at that visibility as to not where maybe do in think also the third has we have, expect, is than Brandon, look decline will the our structure. time, going the been just we be quarter. a

Brandon King

and again mortgage? others I a Okay. and And experiencing this better regions it what quarter. residential performing the volumes. strong comes banks normalization to more are certain refinance remind mix resi just And purchase once volumes? of far was as you when Could origination are us was as of lot a mortgage know than

Irene Oh

markets in speaking, in period excuse this I time, most that's refinanced of time. -- are as in are Brandon, also that have have volume a stats, origination loans where change, we purchase, exact network lots in are then branch our California, happened but have we're is branches, in the through markets New we're York of for strong -- areas Yes, And know, predominantly don't and point of those California Northern I for that me, versus the you the come of of originating we generally Metro. Southern and us, referrals That the think that at these refinanced. branch presence, that California are most

Brandon King

provision Okay. in second And rough like could negative million. guess, million a reserve kind XQ, around, of of the assumptions Is charge-off looks a in around just level your now? I provision XXXX? on some go like loss outlook that based little or quarter. guidance, loan $XXX level that could another below expected with be trough lastly, a with with Or $XXX lower even It the by

Irene Oh

Yes, that's a great question.

As the largely driven you on outlook. the is know, macroeconomic allowance calculation

look provision. drive look think in and On your That not numbers perspective, not are negative I million is complex the that, think something that's we're think to do that we $XXX a I And to depending had realm trough say part I And of we as the I number about it that's quarter. think on possibility -- of or so. basis, portfolio, then driven I of the seeing as outlook. -- fourth that's at there, that that macroeconomic down I XXXX, within come math in I'll by I -- the course, Of and depending the why felt what think as level. if -- is we from on part could that it at a a think we the go-forward book it the the that continues reason improves, negative macroeconomic ultimately, think forecast,

Operator

Brock next question from Vandervliet comes UBS. with The

Brocker Vandervliet

correctly, seems were about Just that If ago. seeing driving number the year a like originations up that's the board where that $X sounded billion just your on closer year-over-year resi there we're from -- it question. following That really what's I'm really are wondering because flat. the got not wondering across to I'm I much up strong. increases if

Dominic Ng

quarter? talking you year-to-date? a about just you about Are Are talking

Brocker Vandervliet

number billion, was XX-something... the thought $XX I Year-over-year,

Dominic Ng

okay. billion so sorry, were year about So -- question? can above is And Year-over-year, that repeat saying the why year-to-date $X that wondering you're it you you strong? origination last the is

Brocker Vandervliet

wondering It I Exactly. just Yes. very that? seems was what's outsized. just driving

Irene Oh

our of for for but down right? have payments, what reduced And unique customer stock, Most we're is very a I this high HELOC We is think originating and product. very single-family them. that's attractive product, base, something

Dominic Ng

combination you're at the think looking because Well, of both. I

Irene Oh

Yes. Single-family and...

Dominic Ng

well months. and we I refi for mean, just XX the done Not really last And just right? have HELOC, not -- actually,

We have consistently done well last the X for with residential mortgage, I would say, X or years.

think industry done about people purchasing come Now because are well have granted, homes. banking COVID, refinancing and more in rates down with have people benefits which and that mortgages to the in business the the everyone

other more refi difference customers beyond The to to overall and there's mean, XX% strong, that because more are than or that, the has been only no our And I the the so pay payment. going the or different that XX%, same really anywhere lot our characteristics of market is a less and extent, on. customers tend market. purchase down But

Brocker Vandervliet

Got it.

in got a as were comfortable where terms rates of investment deploying sense looked of like into could year? cash it And the Okay. the end pretty where you follow-up, securities aggressively levels in quarter. Any

Irene Oh

that. answer. That's a hard the matured, we said quarter. were And of that had. did we in redeployed deployed ongoing of loans we million we the talk cash the PPP some have that actions in quarter, analysis million of question prepared securities $XXX took to and third about we'd levels of that can called as and our we well. the had that additionally, knew deposit remarks, we in cash and so deliberate about the we then what Overall, Also as we $XXX that third I before

than security duration of redeploy rates duration portfolio, our but given of think going. of appropriate, into maintaining we mindful able But of consideration. are we lower took with being to which we So in little of be wanted duration, the a that purchase, speaking, we the keeping bit with kind that the where kind to existing is Generally X/XX just of the as into mind interest did excess this was the earning all assets. cash kind

a focus depending duration have, But the further. been on something that's cash as Now out that really that we've excess activity the this that well. had. In liquidity, not extending quarter, is we're fourth we're certainly, we the evaluating the

Operator

from question The McGratty next Chris with KBW. comes

Christopher McGratty

quarterly a that nice operating guys you of earnings this on inflation keep about the and job costs But over discussion I'm next to really years season and calls and interested, have into to been a lot ability year. into costs. leverage. hold have the the contained year-end There's done I'm wondering

Dominic Ng

didn't Well, back we hold much.

X% promoting to expenses, importantly, spend somewhat talents in we people, and capability, That both have is will in need but within. We view, we in those to then of to my talents and to need the investing been new Frankly, system, X% what if which type things growth spend. and the do improve guidance. we've in the -- then year-to-year into pay to painful our a continue recruiting product maybe most our year to continue then we are X% then and used recall, you to And and year up doing that ratchet out X% and and expenses XXXX. we increase, and have

prudently. support grow care away economy more need the inflation of of that it increasing things require continue to business the from go. If manpower, of of will the out we and to then always kind then we what's then we're goes there in the because that take And also are -- how the itself. going shy to we stronger, continue will we those because business to on anticipation that depends And so even would expenses to spend not And appropriate. revenue spend

more at much going have is philosophy So spend is because at the can West allow we more East go to growth. add prudently whatever profitability I I profit, up focused it sustainable pretty on revenues into the and that is And too wouldn't only more spend we'll more then always wisely. to us by expense Bank. and certain and be looked And percentage that

Christopher McGratty

That's up. could follow great. I If

evident. it revenue revenue -- sounds above that be be might would X% stronger Dominic, reflects to like So it, any correlated that would wage already pressures just anything And growth growth? --

Dominic Ng

is the point, At In we X% XXXX, guidance. the of projected end obviously, this the what provide will year. additional for

Operator

with from Chiaverini comes The next Securities. Wedbush question David

David Chiaverini

wanted pricing. I to loan about ask

C&I it side. about mentioned how CRE, at the yield then originations how for You X.XX%. look loan I average broadly. more loan looks on more the competitiveness curious was the new was that compares in broadly, And the curious to quarter I when I about at

Irene Oh

I'll average just X.XX% at we if speaking, September. far we Yes. about If David, of look for as are. the Single-family information they're Generally can give where go some all look kind new an up through holding where we you of -- yields were, I as you. for on were we okay. of loan them at

bit, at new CRE, at steady, yields about holding where new new for as X.XX% quarter. look yields you loan we of they're up little and before, we If originations originations, from multifamily, were third in were and the far a including X.XX% as really or portfolio C&I so

Operator

[Operator Instructions]. D.A. The with Davidson. next question comes Wright from Clark

Clark Wright

your and My This could about general asked on appointment liquidity deployment. was Wright make balance lookout strategy is appreciate your one the if this to pertains your would for of in impacting that thoughts actually use for question is sheet? earlier get the Clark I I on liquidity Tenner. how call duration, Gary filling and deposit to

Irene Oh

It I'm sorry, and in question? could you repeat came out. the

Clark Wright

would looking thoughts just about was I -- essentially, just your Oh, how duration your strategy? sorry deposit it's it came on liquidity in that. and impacting I I'm -- at deployment

Julianna Balicka

filling for So Clark, in Irene. this Julianna is

repeat the will same We pattern.

of cash our our terms of terms the deposit look expected at of life the In in we duration, for deployment. modeling a deposit take modeling of

of So an -- long say are deposit. life shorter or to say, Customers with those customers a duration lifetime some us, IPO other with actions, expectation for a demand deposits years, demand due of, with we expected history multiple deposits. of life an corporate example, have their

asset. well the whatever cash So into that is we in redeploy in at ability appropriate an terms and our to model attributing that earning balances of then of as the organization forecasting the

Irene Oh

just I'll business larger overall, filling for great for growth we've those seen deposits. a about commercial in, Operating for as Julianna, And before, small add. or that okay, Thanks, accounts, talked in assets. companies, are long-duration whether we

last and evaluate think we'll expect they that, before But we at we've few years, kind of these able has last our improved. changes noted, Julianna deposit deposits also of look make it years, analysis, been I couple of as look duration a I'd the surge deposit before, what something that certainly shorter those, were some of -- say where and as over the with before in we relative with are. life. is that kind to certainly, And part our base of overall, and that to at

Operator

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

Dominic Ng

with you Well, joining to and we of you, January looking in forward are our for speaking you. thank all, Thank call, year. next

Operator

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

now disconnect. may You

East West Bancorp (EWBC) 21 Oct 212021 Q3 Earnings call transcript