EWBC - Earnings call transcript Q4 2021

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Operator

Good day, and welcome to the East West Bancorp’s Fourth Quarter 2021 Financial Results Conference Call. All participants will be in a listen -only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Julianna Balicka, Director of Investor Relations. ahead. go Please

Julianna Balicka

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

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

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

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

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

Dominic Ng

This will per for financial everyone, morning. Thank for XXXX. of of earnings call. quarter our us the our morning slide X of results share our we Thank reported presentation. of income review and fourth $XXX earnings the net of joining you, million, Julianna. begin for with you, Good I $X.XX

and earnings loan record million Record on by equity This East revenue was of driven X.X% West billion year full total XX.X% deposit $X.X the PPP, of by XX%, net achieved of assets XX%. on full year-over-year, share. $XXX $X.XX For returned excluding year, record XX% growth year full income per by grew the total XX%. and of full year. We tangible and year for growth of total grew

of environment. criticized outstanding fourth loans and fee growth, criticized we industry financial decreased were a also robust down and quarter improved X.X% XXXX. maintained of will income Year from position credit was a prospects loan based, New encouraged are loan broad coverage as for We're loans loan starting We our that XXXX efficiency the of quality. At assets reserve of our new XX%, non-performing Our in of leading charge growth the consecutive believe The quarter quarter allowances growth XXXX The loans annualized December basis the the decreased. and by off in by XXXX we're performance ratio the In momentum by interest XX, New XXXX low reflected asset year fourth time, net Year substantially XX% XXXX, from and excellent. same each for a for to strength. continue We're XX points. diversified, decreased starting favorable income losses, healthy the

last deposit management cash strengthen investments market over that base. the for we several Our in our expectations years and well payment products related services have have to made rising rates. from balance is core interest current helped sheet benefit and positioned to Further

non-interest-bearing XXXX, made XX, up December a deposits, total XX% of West. demand deposits of record East As for

efficiency. history We long standing have leading a of industry

it experience and will in revenue, to was our the expenses continue management enhance strategic our XXXX. XXXX, In expand ratio factors Put XX% control efficiency priorities years sheet. presents adjusted earnings scalability. will in to Our summary and customer while and Slide and drive we of coming a profitability low these X together, growth a in balance beyond. and strengthen investing robust during the risk strong all growth

or XX, of across loans loans, $X.X excluding high $XX.X annualized On reached December Paycheck XXXX. fourth record $X.X average and Protection quarter September third total year real in PPP, billion, mortgage or $XX.X average deposit Program in basis, quarter. were deposit total of excluding XX, Total by quarter X% up September total loans, deposits. XXXX of demand of an residential and was from growth XXXX billion, fourth grew estate. billion year-over-year. annualized grew XXXX, XX% by non-interest-bearing December unchanged from XX, grew and the by a total As driven XX% by or XXXX from billion a ago, quarter. XX, annualized commercial XX% billion essentially by growth third loans well-balanced Loan On the XX% from basis, C&I, $X.X as from strong an

capital largely quarter-over-quarter. ratios X, to can strong our Turning stable you slide see

equity growth. had XX, X and common which a of of capital meaningful with Tier XX.X% for XXXX, a capacity of December future As us total we XX.X%, ratio ratio provides

on the dividend new beginning is XX.X% from record book year-over-year. in of announce share, West board $X.XX dividend East to per annual per per a X, XXXX and a Our the increase that XX, to directors of The XX% $X.XX of quarter equivalent increased will XXXX. an equity common stock to $X.XX first pleased share and tangible I'm take February payable per value on per to quarterly approved stockholders dividend effect February XX% share share share. to increased

C&I $XX.X sequentially annualized total from also December by PPP loans equity growth quarter in and will Now be has XX% us Total entertainment year-over-year. across general XXXX, an been moving on X. portfolio, at that unchanged our end were of increase year, annualized wholesale. were XX billion of September specialized we of $XX.X beginning teams, and commitments C&I year-over-year. outstanding, private growth a geographies and manufacturing By up the our and our continue XX, growth C&I for loan excluding period from of was XX% up diversified to of to XX%. XX% XXXX, our discussion From C&I C&I December verticals. in record Quarter-over-quarter, from we utilization industry, as strong outlook. lending and up diversified as saw Throughout billion well the Slide XX% with XX, expect net fourth

billion cautious X X We demand have are that assuming and that is details property of shows unchanged. of will are the An low line which estate loans year-over-year. the Total our value trend loan and value by and commercial type annualized December current our upside utilization as loans. utilization commercial September commercial of loans. real strengthening ongoing markets, by XXXX, geography the X% about up our in by estate consists was to pandemic XX a from up portfolio, We're improvement and on growth. Total Slide real impact to XX, levels optimistic estate economy XX% long-term provide near-term well-diversified but may about in and expectations. real $XX.X loans

fact single-family of lines mortgage by XX we and CRE. and This loans annualized of home residential type were XX% billion provide quarter, growth as December consists In our of portfolio, mortgages, multifamily strongest slide the retail in property in mortgage credit. X% which and up saw net Residential we XXXX equity mortgages were details XX, by year-over-year. $XX.X X, regarding

full-year statement. down call residential income which asset During detailed $X of about XXXX I turn and year-over-year. X% the billion, was quality Irene to now fourth for and a the were Originations quarter, Irene? X% for will an mortgage the discussion quarter-over-quarter XX% of year-over-year. of loan, we up billion originated increase $X.X more over

Irene Oh

year-over-year. XX of of sale $XXX.X from X% ratio non-performing total of a total non-performing XXXX. report basis real basis points Thank The you, criticized of XX%. Dominic. XX% asset total million loans XX, XX December in assets as non-performing decreased were XX, December the substantially slide by non-performing by improved I'll estate improved $XXX assets outstanding The XX% were of during The as of quality asset XX% upgrades loans assets points million Year-over-year, as change X.X% property. XXXX. to pleased course December our of start of XX. of ratio of quality owned down and by as XX, to fourth XXXX. the December basis of of from as points to our down payoffs Total XXX XX, December decreased of December metrics December and on balances million XXXX, by XXXX. loans XX, assets were down XXXX, XXXX, gas with commercial improved. million C&I as that non-performing the as and of quarter XX, of Total Quarter-over-quarter, criticized commitments reflects December XX, assets $XXX in and and very loans to I'm loans X.X% asset the sequentially by Quarter-over-quarter, $XXX loan as XX. to decreased metrics XXXX, oil

We Year-over-year, the $X with of we On sector. of size billion risk of commitments substantially. XX, the losses. this components our has profile present are allowance slide these improved comfortable portfolio the loan for borrowers under for in

metrics continue improvement variant. We moderately $XXX Our as believe December fourth the the $XXX the allowance million September the down the $XXX and points of in of a to of for XX, year. coverage loans million in due XXXX, a quarter exposures. annualized, gas an offset estate the by was of pandemic quarter pools the will decline points to reflects backdrop from net This downside XX for Fourth were average quarter. to scenario better improvements for our uncertainty and quarter. net Omicron compared change that was or ratio PPP quarter-over-quarter allowance totaled CRE The XX basis in loan related million weightings $XXX coming ratio as XX. loans current and million, and million basis the higher for annualized $XX.X oil third excluding $XX third with charge-off million The real partially charge-offs operating allowance

basis For the prior charge-off the points XX to of points, for net full the XX year. compared was year ratio basis XXXX

year believe to Assuming to full XXXX for year net full modestly improve, the continues from levels. that charge-offs improve will the XXXX the we economy

in the to in compared million CBA. marks non-interest summarizes on with million On million this our other CBA $X.X excluding now this provision starting the or $XX of million of income interest line Fourth recorded loans quarter $X changes the derivatives and full million, $XX same year through the tax or Amortization included we offset non-interest in negative slide other $X.X annualized for and other quarter The the margin in the on income billion billion on million XXXX interest rate primarily adjustment, as in of investments credits contracts included I'll moving line and quarter with improved income. linked the due are quarter slide were guidance And the year $XXX of which decreased in billion a an $XX our I'll the the macroeconomic and our annualized. third credit drivers key full in given XXXX. XXXX. discuss the negative credits the with with income of investments line slide the XX% in the more Quarter-over-quarter of impact This fourth amortization as slides variability following income a rate discussion to in third balance of statement, relate period. XX. in the PPP same statement rate, compared average quarter, the which mark-to-market These portfolio. quarter. growth tax million key was XX The fourth X% which for XX% losses, of third a partially grew the forecast, required net $XX.X partially that the to During items net slides. detail an review credit loan for effective the $XX sheet. reflects largely for to quarter. XX, losses We closed of provision a allowances the for in average $X.X interest of of was now and quarter by a by recorded and tax by

and cash deposits average growth by non-interest led by $XX.X billion the deposits yielding XX bearing or equivalents and increased quarter basis quarter $XXX we quarter, billion securities. annualized retail $XXX $X.X were and XX% cash yielding agreements or by up loans, higher by During X% by banks points million linked with cash Average of and into demand deposits, deployed decrease and Fourth interest $XXX million. million, annualized. increased loans which bearing securities and

the XX% previously third ratio we're to low We quarter. deposit a ratio quarter, to from in Our was the comfortable unchanged percent the with range. third communicated operating loan-to-deposit that average XXs up loan

shoring in focus always up loan rate core the for today a Although withstand deposit ratio growth starting point interest of environment us rising is with pricing nature with pressure East a West, a deposit our of the asset flexibility loan-to-deposit to provides portfolio. XX% sensitive

net the million income the in of slide quarterly $XXX XXXX of XX% was growing history linked interest Turning West, interest income by highest East net quarter quarter to XX. annualized. Fourth

income XX% fees Income Excluding interest $XX and in grew PPP, was of deferred in annualized the interest by million consisting PPP to quarter, net fourth $X million income. quarter. the loans of million fourth of related $X

of on to from GAAP we had a of book. fees As the income net remaining interest X.XX% in deferred $X into December margin loan PPP basis quarter, increase an accrete The to XX, X quarter. million expanded $XXX million fourth points of the prior loan

the of expanded X.XX% basis by PPP, quarter points NIM fourth sequentially. adjusted Excluding X

lower quarter of adjusted the margin waterfall the favorable slide, As you reflects shift, in with cost net mix the on the can the see bearing asset chart interest the from earning deposits. interest fourth expansion combined

quarter the $XX.X December loans billion rates or their from fourth basis floors, which was the as was loan $X.X X.XX%, points Of less billion fully variable quarter. from PPP, third the average XX, yield rate of adjusted the floor XX, and slide rate. to impact million loan our and $X.X XX unchanged of excluding indexed $XXX yield below or Turning of had billion

billion basis XX rate. basis from points floor the to or points $X.X Another XX

of accounts slide to from cost deposits basis The points average to declined rate deposits grow was an points, higher the by points continued lower Turning rate the total spot repricing quarter. as blended of XX and points points quarter. maturing cost on deposits XX, XX. costs $X.X basis in XX. XX lower September In the domestic duration points, from CDs cost basis X four December third quarter X we of renewed of weighted basis improvement and fourth dropped X equilibrium. to basis reduce of our CDs we cost reached average down Also of fourth as basis The deposits. billion of CDs points The at rate of from originated XX a The the a rates was of has quarter saw average the a fourth or months. of third quarter, an basis decrease for X

the partially quarter slide income income, last lower interest fees derivative by and on and foreign from total account three on other and million cash lending fee Moving income XX% and $XX income and to consecutive sales the rate Customer XXXX. the of on foreign in on in third growth in $XX.X sales related with net $XX acquisitions and customer deposit increased of Year-over-year, contract reflects non-interest volumes, was loans. from income COVID management revenue particularly compared XX, fee the offset quarters were fees year-over-year. gains up the growth rebound quarter. million, loans management fourth were fees and gains and stable fees, largely driven account essentially Quarter-over-quarter troughs lower exchange of transaction SBA beyond for new wealth fees exchange XA deposit in lending

our momentum from growth income the quarter fee volatility positive businesses to trends XXXX and ongoing beyond. in in about quarter Beyond we’re and

non-interest fourth million. $XXX to expense slide Moving was XX quarter on

contributions. credits intangible investments increase Excluding activity million was This expense and the full bonus higher deposit quarter business amortization, other incentive $XX or non-interest expense related driven million compensation and higher in tax quarter, and in to $XXX amortization the expense by year was charitable sequentially. core of X% and an adjusted growth fourth fourth of

X% for year with adjusted of also XXXX XXXX. in XXX year-over-year. XXXX XX% slide year over year efficiency on year improved of was the non-interest third efficiency And our full was expense and was XX% ago now quarter. full the The For that, I'll compared in The points quarter $XXX basis ratio XXXX quarter XX% outlook introduce XX. XX% with adjusted and million the the full adjusted up from ratio by fourth

For to year-over-year the for growth, similar excluding full loan PPP expect year excluding XXXX, XXXX in PPP. we XX% currently growth approximately

loans. We XXXX, and commercial strong led from expect by in portfolios major loan by driven our well-diversified and industrial loan growth of production all

of We rate loan income well sensitive interest reflects is four stays This funds the growth, is investment Fed in are funds our rate forward Underpinning to The outlook. of year-over-year on January sheet. adjusted to as June, in as assuming non-interest year-over-year. assumptions net increases our September and excluding XX%. XX, which of in rate growth that C&I our income XX% the anticipated utilization a impact expense interest of X% March, modeling, asset our XX% as growth, range in interest credit amortization XXXX, excluding PPP of unchanged assumes current in our curve data hikes In balance X% our factoring XXXX Fed are December. Adjusted a XX% we deposits. tax on

our we in into reinvest in a benefit people, of our expect revenue business, rates portion As to that back from support initiatives. to technology our revenue growth, we rising strategic investing

positive revenue We leverage in result year-over-year. to expect outlook and our expense operating

product In for below was $XX anticipate be expect for basis provision modest XXXX. points currently ratio, charge XXXX, which full items, we will terms the XX million. off year of a that the net in in improvement We credit losses

tax will XX%, effective We tax expect XXXX of credit the the of XX% impact to investments the Dominic There rate in will the for full rate rate of call approximately XX% with in turn XXXX. tax year to investments. effective in This to line remarks. the tax be credit placed closing be With into that, back quarterly over due variability now I’ll tax includes service. timing

Dominic Ng

XXXX Thank us Year, work Tiger their I us. an associates year all Year prosperity the I hard health West. February you, to with Irene. to delivering performance. New also customers Operator? dedication financial I and Xst a hope thank was East wish and to Tuesday. while excellence of is Happy to I and of open X,XXX the brings strong take wish call outstanding will team Lunar a Happy over now our New our for on up enabling year the to serve to In the throughout for closing, next of Year questions. unwavering and this coming opportunity which everyone XX want

Operator

you. Thank

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

Ebrahim Poonawala

a perspective just deposit And us if if know Could balances so mean could you I quarter-over-quarter. so the are maybe terms end you flat Good morning. in what with start could ratio about of do deposit thinking be – debt some side? low I I'm were loan you give especially relatively growth? you just in year? the deposits, meaningful in deposit the we on incremental expect assuming And this course all management ratio. period how referenced should you around treasury light rise to you investments wondering, growth, the of of through made

Irene Oh

on we point A we thus kind our financials, deposit you good. noted can the flattish and as did the growth, was And with quite call year activity, the out rebounded. still see that but that, have question. Great of I'll in also kind of customer see deposit growth far deposits in average year-to-date

the activity a balance mentioned, right for I customer As driver deposit at XX/XX. was the

a the going obviously remarks, it’s With slightly mentioned the we're our loan East in For XXXX, for XXXX. Ebrahim, priority as growth in prepared about And earnings? be I growth. growth deposit a the less realistically priority just West, for to XXXX. in going maybe driver what's deposit always modeling, to of be X% assuming a is

Dominic Ng

years, commercial years. focusing figure let accounts, our going demand deposit. our we've investments serve both and in and was have. also several incrementally single – that just last resulted we clients, at and to year on then looking best that's really the have the add we clients the Well, specifically how core in made we the non-interest-bearing maybe Many which of and throughout And me commercial been tremendous every growth, what that non-interest-bearing deposit system for our growth and payment at banking out on commercial for digital consumer – also of can operating

XX, As we call, it is, as that the indicated in of December was XX% XXXX.

than West have we we to loan that those year that, or the growth. So deposit growth the seen, as is you at XX%. for loan a to drive at last continue ratio we have higher East will two, have and situation But deposit much growth deposit

is to focusing asset to do But need that that's, the chase deposits, a we’ll to have we just lending we need focusing want of it to answer more and to growing terms be that’s keep that's We put continue of quality reason, don't on. obviously in core a we deposits. side. obviously, would, part support growth? loan So deposit we high because on not comfortable and on, our are so The more that

Ebrahim Poonawala

referenced Understood. yourself strategic And just and earlier. priorities, as a follow you Dominic up,

can either investments should if on you're growth, on elaborate the like that manifesting we about side? or making that, Just revenue fee the think income wondering and you on how where lending

Dominic Ng

our XX focusing addition investments, related products technology making are be further emphasis on are investment just terms on the banking, payment continue both that. and next we we We us consumer to in there digital I and more in to treasury more how and products, are management wealth also area that commercial, an do area also was five mentioned putting in in as going we to that, putting to is better sort this and like see to of great we earlier, opportunity of management. And years cash we the management improve for

we that business. them bankers years. commercial ago, the banking. both to them banking, only in three management industry verticals bankers, also two and can We XX the additional add or bankers, various adding of new to over Now, wealth we for This addition last on some some of consumer grow it, are on new years started,

XXXX. pandemic. going so, four XXXX, making we in started the to commercial have Chicago that banking Obviously for middle very right mention, that, months office the our we But in of We did growth addition In started or in decent in in of we do in I office are a little middle anything also couldn't business geographically. because guess, the pandemic Chicago.

that So further. grow to we expect even

areas expand of we of will and West geographic some continue that make East look to sense that So other field for at into. like we to sort think that the be will

adding enhancing people, the and I beyond. appropriate and of are and all risk enterprise of adding capability those So technology will product XXXX overall think areas to we our improve further management, incrementally that one by in one, type

Operator

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

Chris McGratty

I Dominic, the stable guide. you Good Hey. utilization in prepared your you're see did if outlook question. What C&I, that guess you to a I said two-part ask for that want move up? do in morning. point thumb much think the lead about remarks, it assuming move of then to up incremental is And a to? think would it will there how rule take growth I for

Dominic Ng

incrementally Well, growth that I'm improved, obviously, terms if sure in would pretty that this you of know, loan increase the so. balances outstanding

Irene Oh

of of as share. we mentioned, I year-over-year can numbers been Like when utilizations well. if very kind Yeah, the and to these increased look the in When we it's at have about quarter-over-quarter customers, the we as the current to with at for similar went levels, the to we clients $X.X compared pandemic to billion prior increase. look course levels that, substantially fact, back utilization pre-pandemic

Chris McGratty

the How moves comments And fee opportunities. it touched capital interested quarter the we then to I'm And income higher. environment the around great. business which might your in wealth That's rate and quarter? markets evolving just you should management, that your how around secondarily, affect on Okay. about think

Irene Oh

Yeah.

that's broker partially the fourth In I the in think to did the the our other But item. dealer. have so income a kind line higher of volume is we income fee capital low. related on quarter, markets,

at grow expect I that we also that we've that, well. and in grown your Year-over-year XXXX that think management as that part I think be what wealth Chris. nicely was might Overall you're So will question. look of continue to, referring to for

Dominic Ng

to, be put of in ago look that substantially to see management years you substantially that we so an know, that area was grown back years like it’s would in then higher improving at, a effort one that is potential and I and four numbers than say wealth wanted of we headed high Yeah or that and it seven think higher from back, also that you Treasury the exchange is maybe multi ago five if management we today. six, going is now priorities, area foreign than do look the cash I years the of to number another as I that and today, what terms have going is management those three area we be like years

Operator

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

Jared Shaw

that Hi, on good assumption the on amortization offset? with the the guidance morning. I guess just tax tax circling back for what's credit costs rate,

Irene Oh

or me right and credit that I $XXX XXXX. believe, get of for year about or assuming amortization the million away, Let you for full tax of

Jared Shaw

sort Okay, natural energy, And the with now environment – improvement a what improvement a is, we you and allowance of obviously in it's do CECL. as on for the had smaller through as ratio? impact energy the that given thanks. through to think book ratio the at day loans look below looking What's the out year, it the the economic bit the then, for the looking little credit one allowance great we've like the year gone the of improved

Dominic Ng

great a question. That's Yeah.

million plays were Oil allowance ex-PPP. for the on see do size and you at come we’re levels that that, end, definitely from trends And and to at lower glass $XXX million the that So lower as CECL. than Overall, $XXX a a year decreases. our about these energy it of we around down especially portfolio $XX can expect as year-over-year million to and that as the less certainly for we the is when factor portfolio – we was certainly say portfolio look of the one driver book rest [indiscernible], day where would in and in the the the that’ll allowance. impact required allowance as and to has absolute the has the XXXX But from have and factor that metrics of the CRE more the the for for largest I XXXX that the I for honestly, provided, be portfolio the a quality will continued of the allowance, so we in and ratios also dollars the probably particular, performance the think and the credit come improve. that balance metrics down, and

Operator

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

Dave Rochester

morning, guys. good Hey,

XX each and what as just you're want to guide, to Thanks. the point be of what's of that then NII growth interest the impact in here? rates that basis you're level factoring you've assuming well? understand On securities in got medium-term that expecting you're I rate hike And the the

Dominic Ng

Right We're the questions. Great million the now in be modeling our and per Yeah. hike we with growth securities books. not real $XX in impact the would about guidance, XXXX. assuming expect

of Some at we're in that happens the will not that mentioned that growth. I rate, deposit be also V-curve think be we've increase guidance the with to the liquidity has for something looking bit, you driver and major kind the assuming the the of But the and any and factored actually is that rates. little and changes NII with that in a related will what flattened

Irene Oh

Yeah.

me clarify a full she said the Irene, comment one over from for year Let basis. million that's hike, as $XX

the time at if various to not, were just coming factor you're points the time, So have also. of you’d in hikes in timing

Dave Rochester

Yeah, medium that a out for rates, doesn't much sound like move it so those term you're makes sense, and interest here? that assuming it's from

Dominic Ng

Correct.

Dave Rochester

you. Got

Irene Oh

even of would the be increases, And is we Most about really in increase XX%. that do the the that in rate that book. of growth from the fact, NII without in factoring growth we’re loan expect NII really

Dave Rochester

XXXX. on just Perfect. growth solid second then just income, my question in had And the fee as

treasury you already about to You've made management. talked the enhancements

this You've added in on What XXXX are XXXX on, your appropriate at well. on be growth pace Do would you the XXXX? think for saw project thoughts as folks to that point? we

Irene Oh

fee total over year-over-year. The XX% income Yeah. grew

in if that I for say in would items some level may we’re kind I recur in happened that to going we’re growth XXXX, expect know XXXX. As don't we had particular, XXXX of modeling that of not

of their SBIC equity Some from we investments adjustments. had, CDA of a lot positive kind the of up picked

income customer modeling core nicely roughly we're related assuming, fee So on we about grow XX% do that. that. will year-over-year that, and we're expect but not And

Operator

question go next Please comes from with Jefferies. O’Hara Our G. ahead.

G. O’Hara

morning. Yeah. Thanks, good

want sensitivity? Just million the the being to sensitivity, input kind per on deposit assumptions that just asset are follow-up the appreciate beta are $XX that for hike, what but of

Irene Oh

Yeah.

do deposit level cycle But higher so. DDA expect like we're that overall last beta of have bearing, we data With we’re mix XX% assuming level the operating the for modeling, XX% portfolio, lower interest deposits, much honestly a assuming the of of of we the course change. compared higher deposit overall or to no total accounts, with

G. O’Hara

Okay.

XX% the is of cycle, necessarily the for through first couple So hikes. that not

Irene Oh

right. going couple that's the be lower. of hikes our right, question assumption That's leading first beta is but the there, the to And, is

G. O’Hara

you. Got

in Okay. level to end at on deployment, where what fourth to period you're billion. more And room minimum the basis, comfort as give a liquidity Could Is nice you is of your then there? quarter down there a obviously $X.X just a the move go? reminder sort us just

Irene Oh

more is say I’d room grow. a Yeah. bit to there little

the needs that overall, Our probably that. deposits. a on little more to evaluating pace what there's But happening is of what's function a room our of with bit really liquidity are, grow

Operator

Our Truist. next from comes question Brandon King go Please with ahead.

Brandon King

Hey, good morning.

to guidance. your to XXXX. some how in lead and offs, that could impact there'll and wanted this I year, higher any wondering on interest mentioned know So, first banks environment I pay lower had have if paydowns upcoming growth, wanted know be CRE, to to for what yeah, touch in specifically on I the loan I was or lower assumption was higher compared rate

Dominic Ng

think I so, too. are Yeah, we hoping

– first or the the year of with last – of a for there all, fact, refi two. were there lot activities are In well,

is activities think I ray on. other like expect that gone less and refi sort of a exercise. going thing lot very of those so little picking the what of maybe up bit. a our And are type little clients And a I bit through the of

a reduce XXXX. would down it’s in down, than pay of that help the hopefully pay XXXX fact, and less So for slightly in we assumption we do our part expect experience

Brandon King

composition I guide, the bonus X% Is outlook expense incentive to so the that off was payouts? potential expenses the XXXX. for what current I wondering know of and compensation. of in XXXX based on particularly and in expected expected is in growth as then well, And growth be, Okay. the

Irene Oh

is increase The expense related expected the in and growing organization. a employee Yeah. Brandon, non-interest largely to compensation we’re benefits.

what dissimilar activity that saw compensation driver soon expecting revenue the that. perspective grow new kind Dominic that expect from mentioned the Chicago's you not well. the of the loan be front it's office office also hires to hopefully afterwards, say, riding We’re very growth new in increases, teams book. for throughout will to or that back the in and honestly most non-interest the of let’s But as and expense and we XXXX largest

Operator

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

Brock Vandervliet

ex-hikes. to that I Hi, just confirm the – just good up I XX% to NII number, good morning. Irene. wanted morning, wanted say, be would

Irene Oh

Yeah. That's expectation. Correct. our

Brock Vandervliet

four kind surprised that add I'm of don't don't it. – Got hikes – don't add more. And

Irene Oh

Yeah. I We is the of the shape the it it of I probably. – think is of part No. – [indiscernible]. Part timing.

shape I we're of and side. the kind also, what think the talked assuming is the on of little the about it's one the maybe compression of deposit then factors also curve as the also we're a loan we evaluating bit betas other it,

and and we And again, little So to is with December fourth be XXXX, forget, with very in hike just the late impact third is year. do further has hike We also growth the the that. of right. don't timing afterwards. this in And guidance realistic expect want the that our

sounds it course work you. it impressive sounds the until the happy model year. to the over So four-hike with be out you work We'd through of

Brock Vandervliet

know, in commercial ethnic associate the that, the size you now Okay. a no efforts, these new And calling seeing we that general with you of commercial terms growth what ties whatsoever? seeing or client calling – growth and there's that have are relationships just a of client Chinese – follow-up of many efforts. that is the you're The bank you're where to would

Dominic Ng

West have I what cover we consistent, of, quite and we and cross-border footprint, mean, those And in then growth. If home sort banking we growing. from our And see customers space cetera. verticals lines dominant we many mortgages, the trade American Bank we US reasons seeing would And also with activities and the that's when East that the consumer business. didn't coming well. in side, those good single why of been We obviously some are that banking banks compete well consumer geographical banking are that cross-border to have covers sustainable when growth and last have getting growth from both. C&I also area. you've profitable of to continue family within financial US-China and retail continue at deposit, the institution situation CRD quite bank, equity that's we business happening, Chinese a is And industry the et regional it the this looked from advantage the with stop different years four have at cover the we West this East business one tariff that like sustainable, in

know, business. So of exchange and then you foreign course,

So in with we well to are both areas. going expand continuing

similar confidence And beyond see so we'll we and far, have that full XXXX trend.

Operator

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

Gary Tenner

morning. good Thanks,

you in XXXX, on that. ended well three very In about as main the obviously growth thinking guide Just you're the among gave loan growth and loan being up the XXXX, distributed segments.

more of include if any loan from in sort just So asking in where versus comes your, shift XXXX XXXX. growth expectations

Dominic Ng

Yeah.

mortgage slowed lead. from And in naturally, would for activities from in from in little you be what residential the expect are market fact, years, CRE, quarter then lead, bit. few down see refi what the the notice a because tend and the is we past, and environment rate In onward the the we XXXX mortgages past in I probably taking the C&I have to in XXXX and third the single-family we C&I that and started

fact, like So wouldn't percent few single-family expect kind have ago, plus in mortgages years we growth. of those XX a to

to likely, CRE faster we to grow expect So C&I to see single-family. than lead be the most and

we In C&I. bit outlook, CRE then little a and XX% growth, fact, single-family mortgages. are growth as predicting in And from higher steady our both

Gary Tenner

the in of tell for refi XXXX? – what you mix us what single-family purchase your was Can and

Irene Oh

full know if refi. have mix don't definitely purchase I versus our originations the pivot year, a towards but that for I

Operator

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

Matthew Clark

Hi, morning. good

long growth much SFR, outlook that pricing actively a come follow-up on guys, the got question is up. from market. little, of in challenged the curve relates competition on you the to away obviously backed you Are more a space how there loan slower and more your recall as I Just it and guys prepay ends is activity? involved based steep. At least The

Irene Oh

We to wasn't really want various kind we that clarify. the really pricing XXXX low kind points, that. pricing levels the the caps were discontinued and and mortgage of we too I did of of at Yeah, thought It XX-year pricing competition. was for during it course

that assuming not refi well For decrease factor we're refi and is really our help XXXX, that guidance and levels the when if at us really to payoff look the really been had can that and a so that we and experiencing diminishes. the lot from play we activity a certainly going huge that

Matthew Clark

then… And Okay.

Irene Oh

market. very still robust It’s

depending is the strong originations first us, a which all for offerings, line very product, their our really most HELOC on needs, customers, very product right, of know on And network as are also of our branch you through Our are single-family. pipeline similar still lot it's HELOC’s the and HELOC’s. the

Matthew Clark

Got it.

in shifting portfolio, dollar is And then us remind great. can late? portfolio trade finance that the basis Okay, business of how and you’re that large to the on a you trends seeing

Dominic Ng

we Do [indiscernible] have to on this?

Irene Oh

if know we No, exactly portfolio of at number. that get year the will you I we don't have breakout that Matt, end.

portfolio overall. our see trade book a and is manufacturing general really slide wholesale lot the composition a of X, If the of at you C&I you kind the of look

our we overall, I seen utilizations where with those is the customers. for category in up trades But really think Now, pick on of trending commentary the it haven’t utilization, I’d certainly, line that say kind upward.

Operator

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

Dominic Ng

thank want forward speaking you just looking Well, joining our to we I and everyone are in call, with again April. for to Bye-bye.

Operator

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

now disconnect. may You

East West Bancorp (EWBC) 27 Jan 222021 Q4 Earnings call transcript