EWBC - Earnings call 4 2023 | East West Bancorp, Inc.

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Operator

Good afternoon, and welcome to the East West Bancorp's Fourth Quarter and Full Year 2023 Earnings Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Adrienne Atkinson, Director of Investor Relations. Please go ahead.

Adrienne Atkinson

Thank you, operator. you, Fourth joining XXXX Quarter thank East to Financial and Bancorp's West and afternoon, everyone, us for review Results. Good Full Year Officer; Financial are Del Chief me Dominic Chairman Chief With Ng, Risk Officer. Moral-Niles, and Officer; Executive Chief Irene Oh, and Christopher Relations being Investor call on is available replay and recorded This be will for our website.

results deck Investor forward-looking may actual Management or other to Relations statements, from referenced may due make may this materially financial measures. is call of uncertainties. during slide number site. The available our differ which risks on a Management non-GAAP projections the and discuss

For the non-GAAP risk factors financial Form X-K more and filings and to refer description please Securities GAAP our filed to today. of a of measures, with detailed including the Commission, the the reconciliation Exchange

now to the Dominic. will turn over call I

Dominic Ng

you, Good Thank for for year-end earnings you, Adrienne. record-breaking XXXX and East our afternoon, year for us another was call. West. joining everyone, thank

record loans interest new net levels revenue, include deposits. highlights and Our for income, net income,

XX,XXX the quarters. commercial, $X resilience XXXX turbulence in of of of deposit by the each the by a more the speak Despite new Our driving past and over adding past results did the bankers. base. customer earlier deposits our of to accounts half grew customers year, our and year, our of the the in persistence loyalty model, business both we this and the X billion We consumer deposit granular

differentiated by was commercial growth loan product our relationships. driven mortgage lending strength and Our our residential the of

continue manage to our proactively credit Asset quality remains and risk. we strong,

just to basis average total just at year-end. assets points nonperforming net XX annual Our points charge-offs X to were basis XXXX asset ratio was and loans

branch by deliver and industry-leading proven efficiency continue network. simple, model our to We supported business effective

on adjusted efforts return tangible return equity a XXXX. drove XX% and assets in a X.X% on average common Our average

pleased and remain on early as we core continued are by customers XXXX. new Looking begin deposit balances growth, we forward, we net driving the on and focused progress

pleased a from quarterly of our has position credit our strong year stability, solid new per common and the started announce the performance $X.XX approved earnings increase dividend am to stock given Board of have to We to strength that I share. XX% levels. a Directors capital

turn our provide quarter over Chris financial to will performance. fourth to now on details Chris? more call the I

Christopher Del Moral-Niles

Thank you, Dominic.

XXXX was Our income fourth million. quarter net $XXX

Excluding the EPS QX securities $X.XX. charge FDIC onetime and gains, adjusted our was

growth remained total real XX% we Turning moderate in platforms. XXXX. compounded to commercial despite our by from first X% resilient years, trend, X grew very West loans last strong has for We of environment, the the residential the originated And the East and expect quarter West and of Slide mortgage loans year, rate. core for billion average on rate at growth scale the estate low-risk, annual low-LTV $X.X of Demand over note East remain X. QX's grown strength going generally our a reflecting pipelines we loans mortgage rising into that to mortgages residential while quite 'XX. healthy

multifamily with to in and We increases declined. industrial relationship clients. solid grew CRE Average both as lending balances saw loans continue in work 'XX office property while we long-standing

QX the growth an quarter and residential mortgage solid utilization balances, end-of-period at Looking in originations. uptick our was C&I driven by continued fourth

expect Looking a overall moderates forward, landing, moderate into soft as assuming the we demand economy well. loan to

continued a be growth diversified loan further leading growth by mortgage expect better in driven strong We and continue residential to C&I to will and our lending, activity portfolio.

year-over-year. loans grown the deposits. to X over volatility note to faster grow West last of half East West in East average Despite than on overall. deposits 'XX, years, that We continued Moving first the has deposits

$X fourth deposit balances. billion quarter adding by show the deposit to continue in We another momentum in

Our the bankers loyalty our customers. resilience and broad-based and our of of dedication the growth reflects focus and

deposits while reduce business focus to consumer brokered our wholesale continue of will noncore use we forward, continuing adding or Looking to and low-cost on funding. granular

to stable margin from interest interest income to Slide X.XX%. dollar QX X. held X% increased our by at net interest Turning net on the income margin third million $XXX net and quarter. We

While hedges basis, drag expected a of hedges cash flow to the NII a money, on now these in better. continue of QX, net that billion some be only will are in our $X.XX mark-to-market cuts rate forward-looking and on make

of protection While approximately cost hedges fourth as valuable to earnings rates us quarter, they the decline. these million provide $XX NII expected are in

we out. outlook, X flatten as Given the QX X current yields to by points continue new costs consensus curve asset decline deposit and continue in forward basis expect normalize to and to economic NIM to

We as benefits to the it expected from NIM and compressed expect QX, balance to begin yields. and cash likely we to and assets begin rates our lower. moving offset expected of hedges thereafter positive be lower rebound lower then costs in further our in QX QX as flow to expected expect funding grow in the kick margin a asset result sheet troughed

turn let's Slide X. yields, asset of Speaking to

the represented 'XX also margin levels assets our of beginning XXXX. the loan by rate in at expectation versus year-end. of portfolio in loans XX% XX% at enhanced rate fixed resilience supported their fixed portfolio for period Our hybrid our is Fixed at of and year-end

Turning to X. funding costs Slide on

basis Our cost quarter. deposits the was XXX points fourth basis from for the average points, quarter XX of up third

we on growing balances as remain core net begin previously deposit laser-focused driving and mentioned, new Dominic customers As XXXX. and growth we

forward, ability about rate optimistic are rapidly operational falling to a reprice non-time deposits our Looking we environment. in

derivative foreign West XX% X fees QX note grown past income We Moving every in annual on lending noninterest that income categories. over rate has income. and and at business' customer growth income. growth the saw reflect fee strength fee continuing exchange the XXXX East fee our a years. to fees in

credit $X left. commissions and over noninterest adjusted years in with adjusted efficiency expense, Adjusted Adjusted Total and XX.X% annual other The Comp card benefits expense trends growth; annual XX% $X efficiency. some quarter. Moving has X% realized the X noninterest our $XXX expenses Slide East operating prior reflecting on million, on and million, are expense fraud noninterest consistently was did with higher compared to quarter. fourth was advertising revenue the delivers past XX. losses West some fourth annually growth. expense expense. grown industry-leading the in ratio did compared the increase increased reflecting XX.X% incentive million increase legal and quarter

in the account rate-driven expect environment. and we expense increase X% driven partially forward, lower to noninterest begins earnings offset comp as range to expense and adjusted to Looking by deposit benefits of in and rate X% credit by year-over-year, lower primarily pressure ease a related expense

the position. will discussion a over for quality of asset to now I Irene? capital turn Irene and call our

Irene Oh

all call. good Chris, and the to on Thank you, afternoon

asset remains portfolio As stable. broadly you our can quality see on Slide the of XX,

The as recorded XX or million XX increase $XX in points, points assets as of recorded increased X.XX% million basis quarter, X modestly to During a we total million third the charge-offs quarter. basis basis to proactive net loans to to decreased of ratio basis investment of December quarter-over-quarter December and a points We basis quarter. from points XX investment. for total the third managing held of for risk. credit held $XX losses for of as X by $XX credit provision loans criticized increased for assets. vigilant continues with X.XX% The nonperforming points fourth quarter our mentioned the point XX loans points the to X September of compared and XX normalize. classified in XX remain credit ratio the Quarter-over-quarter, of XX fourth point basis loan ratio basis decreased from We XX, special loans basis

allowance by loans growth. quarter-over-quarter, real to The million, reflecting $XX estate increased XXX of and total outlook. we Turning consumer for basis prior given resi C&I current are the office remained allowance and unchanged The million, the reserved $X portfolio of reserve commercial $X $X increased to million loans. million our quarter. for We The net points the from primarily allowance XX. the for office economic adequately Slide mortgage loan loan allowance loans for loans the increased loan content losses for increased for believe

XX. Slide to Turning

in XXXX dividend common stock per stock, million East for on February stock quarterly West of company's in record for will $XX during fourth resulting XXXX. of authorization payable the grew while the first of $XXX currently West quarter be XX remains As The common to the available quarter-over-quarter of a of XX% due for common Directors $X.XX in ratios on stands repurchase X, capital has among quarter earnings. of points our well basis of Board most tangible ratio place ratio at industry. all West's capital capitalized our equity These a We million dividends the increase capital XXXX declared to million. the XXXX, levels future dividend. expanded have shown X.X us stockholders banks on X.XX%. this repurchased the February strength buybacks. that share East the XX, XX.X%, robust slide, to of CETX East shares common

to year. I'll XXXX share our now for Chris turn it the outlook over to full

Christopher Del Moral-Niles

our Slide takes consideration you, Thank outlook assumed more in 'XX to profile Irene. XX, in the assumes a and full second growth begin a the on softening forward economy quarter. summarize, year-end modest with with into cuts year To as curve stated XXXX

in loan growth by end activity. relative environment this but driven our to expect of in C&I range the buoyed in demand strength X% lending mortgage X%, We of period a moderating by be residential and to

by X% to comp We the range is X%, range increase X% to noninterest expected expenses. by income expected by in lower the to interest cuts. and benefits expect driven the Adjusted and again offset net deposit driven X%, rate to of related primarily decline of expense partially in

fourth are line points. of First XX be in XX year increasing expected with quarters will the the charge-off 'XX, full within we quarter range expect quarter fall with subsequent charge-offs net to modestly net levels as of to basis

will We effective the for rate year. full modestly expect increase our tax

me his back closing With for that now remarks. Dominic call let the to turn recap,

Dominic Ng

Chris. you, Thank

Let's go XX. Slide to

I'm XX% Bank back, would tangible our growth to to for as and thank associates very in and As by Forbes strong S&P our year-over-year also value Global, I of American marked share top-performing in per our like bank. unwavering dedication by I look recognition from XXXX clients. book a their proud Director performance

returns and any investment economy remain are West, help savings in our mentioned, and But the needs at to and XXXX. environment. projecting the operate customers which in goals deliver meet with same, East rate clients softening shareholders top-tier Chris our economists strong management, capital As to of our are to branch declining and environment thrive, a risk us allowing to commercial a to our prudent

the open call questions. Operator? now to will I

Operator

from [Operator first Ebrahim America. Poonawala Bank with H. comes The question of Instructions]

Ebrahim Poonawala

good you, and afternoon. NII cuts. Chris, the for around question to the rate Maybe sensitivity Thank just the outlook and first

to X% cuts rate to seems get down of rate cuts it actions in Give assume in sense a there May, the just get the further X don't maybe or are we we NII kind And if zero what curve. doing balance neutralizing cuts the us should better. the a of even get rate X lot rate sheet? if So we until proportionately X% -- cuts, like assumes you holds were up forward through that taking

Christopher Del Moral-Niles

Yes, yes. yes and

projected rate So we yes, But the on if sensitivity And a our were will not we if Yes, of think there start number to yield later, of proactively one many better. cuts steps we are better. NII is NII sure are through do manage make do some at rates. year-end, rate will that we as as our deposits benefit particular, taking course focus cuts yes, year. us to in move the will as

Ebrahim Poonawala

And for question, another Noted. maybe I you. guess Dominic,

through year managed results. very last you strong So

maybe like capital portfolios, banking banks maybe sector disruption across It in for feels there's terms sale. You the amount have just levels. a up of moving, people fair of loan solid

us give there? opportunity set in do on looking the disruption terms dollars in putting capitalizing see and the to you out at when investment of sense how actually Just terms XXXX, work you're of a

Dominic Ng

see larger we obviously, continue the peers to difficulty are gone we and a to year. happened financial having certain what a peers, Well, some market well, of last some all extent, of them look and of then our That or two transitioning and into actually lot saw whatnot. are other the

think try direction. we always -- And is the landscape, particular a have is We're always West out because it But so that and from trying been making don't get we sure to to that have prudent portfolio. any one East we go trouble didn't at marginally in all competitive Bank. from I into reason look for we a better diversified

grow. recruiting have East right the there of talents our so there the into we fit into continue sure make then fit very that to And they selective. that We're to talents trying the and own will that of also are are we with culture like them recruiting who business terms are in associates that So forth, and spot, us in out and kind over. the be West out continue our join we'll looking together sweet there and right to bring mindset, and to for talents

going be feel will we'll to fee what the we that able that, which bring our like, customers. do, is grow we'll continue a grow the economy cannot to way existing what find predict West that's exactly diversified to plan. that continue And to able know to is be we'll XXXX, also can but income. we and East with do we so team deposits be and and And be help And customers meaningful support able our to have to loans new

Operator

The next from Citi. Ben comes question Gerlinger with

Benjamin Gerlinger

the year-end assumptions? seeing the what -- for curve, guess success probably first the [indiscernible] half, the in it deposit And speak are a you [indiscernible]. the at be forward Can talk is I half back year the would deposit and in base about What of XXXX you this? it's year-end. implying

Christopher Del Moral-Niles

a So around and your deposit we think Ben, missed portion question unfold. we I question, was think how broadly betas deposit but of your good I betas do think

of there's And so I think a here. thoughts couple

part reasonable uptick have rose. had we We fall. first a to rates The in rates reasonable pricing is downtick beta deposit as expect in a deposit would as

we deposit I cuts think are downtick. on, particularly on recognize of is that a faster. sooner Specifically, could aggressive be expecting or rate if our that north beta X.X we X.X more And be to come the we

we're note be that but around of think move some that we we very clarity the we cuts pace that would to our upside on dependent, we I get And And expect. there's get comfortable we that level will of think if to can path upside think as that the that there's we that I year. Fed can if through the arms course

Operator

up handset speaker pick you're Mr. Gerlinger, by any chance? on could a if you a perhaps if phone,

Benjamin Gerlinger

the tax is think noninterest the you expense should back interest Next had we X% about that of from [indiscernible]? aggressive expense think X% And credit due of in question. to anything cut, mix can to kind just you to [indiscernible] to be there perspective amortization little more backing the growth net that on curious a I I'm number, I to few things was just just [indiscernible] out a but do? how and do bit can know trying

Christopher Del Moral-Niles

We continue a year continued platforms. as to see for businesses our core in and investments XXXX

others, that you make a number XX% efficiency have would right others. franchise. conversations. think than also East that's so a West you've the decision of than also to And of of note we a for recognize than the that while point that long-term heard from maybe would some off growth, just from say, XX% is XX% strength start suggest up growth X% X% lower better a And higher many off is for X% much efficiency we ratio We we lot

Operator

with The next Rochester Compass Dave question Point. from comes

David Rochester

give in On in rough can you just your in impact are this margin you on baking for a you just what cut coming a like assuming that given at single growth a up. NII estimate, guide, And you or what about are deposit And for what the guys BTFP betas? maturity that's of terms assumptions what the NII if are means you from deposit point, talked seeing that?

Christopher Del Moral-Niles

Yes.

we fully So core loan of fund to our growth deposit all expect funding. with

and some, to roll think I in ZIP but some through sensitivity, March. $X way about is the pay expect our course regard think it. year-end. It per that's to per down rolls working the million by of the of program one we're $X.X and we'll million rate it's of the the likelihood exiting code. to in with pay we'll that, over BTFP right And way cut the in all month sort We We'll somewhere to sort in over over year. And down be

David Rochester

could of Great. And with the as to then is fund the you funding are do paydown expecting Or well? that BTFP, that -- that some deposits? with wholesale you

Christopher Del Moral-Niles

We'll just securities over, have avail at is have we'll other end. But Well, flow. We'll we'll coming better-than-expected ourselves we left some. of date, the the If deposit we'll refinance due. growth, March have over some We'll whatever some. better that down deposit of pay at a things. certainly variety roll

David Rochester

Great. loans that expecting maybe banks. loan to one It pretty some this like good. that puts How last And was on sounded be thinking grow are the the about really than faster If you that great. growth then on you're the year? composition larger other pipeline. looking one Obviously, you discuss can takes of would and of that,

Christopher Del Moral-Niles

side, expect we here the on residential contributor that strong been strength past primarily Yes, near is a mortgage the and year, seeing has we're contributor over over strongest will the our the pipeline to certainly growth be which term. the today

Operator

comes from question next with The Davidson. D.A. Tenner Gary

Gary Tenner

follow-up the loan quick on a question growth Just guide.

Given the little year, higher near than in I the of would have a XX% strength back that. growth the thought maybe be annualized, half would of

there of or forward wondering C&I were that quarter in first early seasonal growth in of the the Just about nature that kind normalized Was pull were the any would activity impact in of fourth loan here drawdowns the quarter. kind point-to-point more that outlook? sort

Christopher Del Moral-Niles

We did see in utilization uptick in an December.

our growth be muted And growth to activity utilization XXXX be expect back on lead you residential January. way. CRE so the contributor surprised, came I to levels But would little may bit C&I year. and be as we're that Rochester, will the for growth. CRE But as a hearing from not level rate, nonetheless, side, we mentioned additionally just I And think seeing to our net the Mr. what of from a in will

Irene Oh

us. for And trends different, We'll I'd say, year-end, pretty year-end; not up utilization normal well. as just let's are from year prior pick that the at add, the the it's C&I at

Gary Tenner

just I terms In a rate? wrong And it. income not past case. to as Yes. the I the Got a growth chance and your curious you if fee -- it to But to me guided if when Had Correct not and if you also follow-up hadn't guidance. why then was, look a not I'm back, you. did apologize. just that's cover in of as

Christopher Del Moral-Niles

I've quarter, only last been in numbers. wasn't it here quarter's but one

Operator

comes with Casey question from Haire next The Jefferies.

Casey Haire

I going The amortization first that so, amortization missed the expense this. does that Maybe just that? what apologies if one, if expense is include tax is And ex guide, forward? or

Christopher Del Moral-Niles

excluding tax is items onetime amortization. the and the It excluding

adjusted what those of things. we expense reported which it's is So net

a clean level operating So it's think comes a level, we claim and the bit. expense up

Casey Haire

hitting amortization tax a be will there But the correct? P&L, Okay.

Christopher Del Moral-Niles

yes. be, will There

so And you quarter-to-quarter. quarter's see sometimes from numbers from the bounce can amortization this tax around expense, as can

given specific but a new PAM, for We adopting the may a standard looking you geographically. that, haven't that, also which guide numbers is which we're for at move accounting around

there'll So bottom be the tax those the probably X in result uptick and expense line. slight rate in year-over-year net amortization as a out a reduction to a for will

Casey Haire

Okay. just a buyback strong just to on XX.X% forward still thoughts switching And with appetite going capital, then CETX.

Irene Oh

We do Certainly, Well, We something proud very that's the do that's of capital, months. that's have correct. and we'll something of. remaining over the evaluate coming strong that have we're course authorization. the

Operator

next The from Stanley. comes Morgan Manan with question Gosalia

Manan Gosalia

lag in a beta XX% is in. hear are half of sort your funding of on the you way modeling trough later the kick XXXX the the lower some down? on second you what Because comments that know the little NIM should on 'XX rebound also betas than NIM the costs others in mentioned I your deposit suggesting. But into The downside. are I after

is there? if a little lag bit wondering there of So was I a

Christopher Del Moral-Niles

we have I a little the remember, lag, to amount a driven of that fact a have fair of There's CDs the would on you say, books. bit by

for for next in today, so the CDs in the example, that's Lunar CDs, months. those special will X place market be And our

be February. those us we'll into until January here So August. book They'll July, with

that a of of what lag versus pricing will CDs be there'll so happen. because a today we're And bit the

could lower certainly, to expect months costs participate cuts, timing the the at the and those X of in And over of we roll rate on depending again, the now, from pace So point that as outperform that. we in would fully time. benefit funding

Manan Gosalia

now credit. that for your commercial why up? California to are -- concerns remain and from about a There over right is negotiations hearing you of around also outlook what talk flipping borrowers how maybe given different lot and lower real And book Can the coming given you're going rates estate. Great.

Irene Oh

Yes. assets, question. Thanks. pleased nonperforming ratios, we loan loans are That's precise, a the can classified loans look are as the see the great with what you those down. ratios, And down, We're at reported, when criticized that. from we've nonperforming

categories, the of with grades. office, that see also multifamily, CRE, very up. As coming not We're a we et look loans at that to we're within there lot comfortable cetera, the loan pleased are problem are different new

So as very have certainly, with overall, through we're it's customers, and at today. to went things point, manageable we these buy pleased working to them work years the positive up shore that very this there of see that some down, efforts are those All have that them through are that. we're pay conversations swap, borrowers, but we the couple last caps, all see and

Dominic Ng

Also, opportunity many of many LTV terms the percentage with of loans that as have customers granular. to keep small that it that quite have when very with in our have much have we our so conversations we low comes the to some in is mind And actually refinancing. calls XXXX, portfolio don't XXXX in don't with before and in challenge dealing previous too really a very highlighted of we loans that we due, in well, coming nor neither mature,

that's the banks. some stands really up think reason of why so I So the far well portfolio our other versus

Manan Gosalia

it. Got

as I that sorry still was your talk of reserves? so CRE comfortable it, levels And what level you X.X% were if you last but you quarter. update it on around what it's or if reserve Can did missed keeps with And about office?

Christopher Del Moral-Niles

It's is cited. on X.XX% it year-end, the at Page deck, was up of X.X% and the which XX obviously from you slide

Manan Gosalia

keeps Got it. And what you...

Irene Oh

the process as the us give regular the these comfort. cash that our we're going cash properties, where the clients, leaders, quite are through help network, are supervision, reviews our all borrowers the our all work RMs, team go us credit reverse towards of going things portfolios, And candidly think the together. of flows us all a from on and have and Office those we we and many and all things CRE, a basis loan through and I that

Operator

from next question Sandler. Piper comes with The Clark Matthew

Matthew Clark

around First just one deposits.

this If on bearing you quarter. can here noninterest speak to down your outlook

Just on expectation New X.XX%, looks that website. Year your it then your And the your least might like on relative mix. trough special to is where also Chinese at

just to to thoughts by is going be CDs? continue it forward, going So dominated there growth of kind around

Christopher Del Moral-Niles

In the a certainly expect CD to near be term, contributor. we the in growth first significant quarter

Our current good been banking Lunar very special will consumer out CD on client and the base. attract has for week, been in about that's and that read side private flows early a there positive, both on the the

We encouraged point. of sort are We think we high we're accounts, that deposit from result time. at will we in regard to low XX%, is So which that a level we that to compression at first today, the of see grow XXs. in out have overall of and partly relative demand in that, by XX% we quarter. think over benchmark trending were from bottomed in levels a some and With the previously will we expect noninterest-bearing the

Matthew Clark

book obviously that lift your just think side, includes You at some of on would the slide spot rate get for the deposits a then on a And no resi is sense as spot the XX-year rate on decent that -- like fix But well, longer sheet other rate. X.XX%, And have you is out rates, spot show that you a there, give price well? then related on X.XX%, detail. the in rate Okay. you portfolio mortgage year-end? some on Do at us which hybrids. kind can book, as that just you it for of looks

So questions two that. within

Sorry.

Christopher Del Moral-Niles

Yes.

trend the So aside as mortgages, on I even and out yes, it's some today. year-end X.X% rates here was flattened it at say the to we lower. see, sit the would and from we CDs, started And the basically X.XX% have to start deposit in zone

Irene Oh

at was spot The year-end X.XX. deposits on rate

Operator

next Andrew The with Stephens. Terrell from comes question

Andrew Terrell

throughout just year? moderation of to expense we you little rate bump of to kind year the and see bit. seasonal we're wanted forward the back just and run about earlier half, kind deposit expense out the Chris, circle maybe, to get to It I curve to relief a rate back should then could feels a that guidance in like talk Can you progress the expect the we if especially the cost. get to play from the run how

on So run any throughout would helpful. of kind expenses the rate be the on color year

Christopher Del Moral-Niles

called I think you've that correctly.

first see rate to absent not maybe the savings slight and So quarter. in delay Fed costs a even material in quarter, some we're in deposit-related second action going a the

So those the are the an will see expense third come quarter. that every here move do And through as cost year. we adjustments those and we our savings as comp really in of the the go quarter to going increase benefits benefit normal side, in and to other we on fourth we through salary round first

in the we'll quarter, first impact expenses a And bit as decline numbers quarter, first pick so as the of then offsets in later and the those roll through, will which see coming little up rates at the end the year. they'll

Andrew Terrell

of book us about the in the you earlier, off remind expect I appreciate as about you'd talked just you Okay. we cash the that maybe Great. some the coming bond opportunity if ask flow it. And can can I just think also reduction BTFP XXXX? for

Christopher Del Moral-Niles

a Roughly quarter. billion $XXX or $X.XX million

Operator

comes from with question next Brandon The Securities. King Truist

Brandon King

down. loan in levels uptick the come and just maybe ] you then So could in on give quarter, rates the for utilization if didn't the strong C&I I could And if what concessional but see see comment were? potentially deck, [ your us utilization levels a on we growth expectations the and this

Christopher Del Moral-Niles

XX% The utilization year-end. at level was

in we about softening expect when that with economy, we think a don't look demand demand-dependent we uptick, XXXX. think when say to number I in it's we about -- a question, would away run though. And

Brandon King

SOF the had, Okay. you And then do feel had you how more? you looking particularly position? to currently add on about you your lastly And are hedges and the just

Christopher Del Moral-Niles

the good fourth a call. starting that in our comfort were quarter hedges got certainly We forward

should same mentioned I in money of a money the have but that wonderful in in we're we those As are expecting a put so move glad is comments, them the the already on did. forward be to end I'm outlook And thing. cash usually trade quarter, some which to year, don't always an we the my flow as looking in of the to you

Brandon King

Got it.

say pretty So a is fair you comfortable it? to way feel

Christopher Del Moral-Niles

Absolutely.

Operator

The from Brody comes next question Preston UBS. with

Broderick Preston

And I the just expected way hedges, maturities on things you cash up a need wanted the be aware any there XXXX NII. to follow to beta The we on that billion through on are said you deposit down. flow quick real of earlier the of? swaps couple $X.X a that on then

the through a if down beta you clarify correct -- was Just XQ wanted interpretation? to 'XX. on way that interest-bearing Is XX% deposit that

Christopher Del Moral-Niles

that that at deposits. move of -- in half there the form interest-bearing base will With flow every collectively across on are cash engineers XXXX. the Yes, maturities the in in deposit to Fed material will really no regard costs the rates deposit save Fed funds we hedges, the reduced our of least

points. two early mature However, actually and they the will of in earliest our or are oldest strike 'XX, two lowest trades of

better So it move as we gets 'XX. into

Broderick Preston

you Do X of Okay. happen hedges? amount the to have those dollar

Christopher Del Moral-Niles

underwater X hedges at billion. those are Yes, $X both

And a go decline part they're XXXX, through XXXX first there'll -- be when improve obviously, incrementally they pickup in as the away, probably currently But rates net of the the as move we so they drag. in And as well. quarter.

Broderick Preston

a amortization went in one, my Chris, where adopt show seen to that then, to the a think almost higher season banks, think, other We've couple up clarify I it's I last X tax on rate. effectively, to stuff. earnings And just of wanted tax going Okay. this the I

you wanted similar? adopted treatment, have should that so, I Just guys you expect if some And we if guys amortization. something lumpy ask know that to

itself? in of kind would valleys rate introduce quarter-to-quarter that of peaks the So kind and tax

Christopher Del Moral-Niles

Yes.

seen of a to greater credits. will certain you've our to introduce stability, and on adopting in of volatility be will out the the So that goal tax it help TAM us level dampen

sort tax those be energy credits, continue on the the However, will credits continue us projects level we completed on to service that amortization flow such basis, place with in as placed volatility from line. as will tax to into above and when project in of get service the that of as

forward. a component a and we of types moving state much of steady as and number volatile not of you credits in expense both of goal make do to we dampened It and be think reduced, is this function point and for that activity be about different our a less we So how it rate go to moderate of will our it more how will a But the talking we guys. will making less X.

Operator

The comes Braziler Timur next from Wells Fargo. with question

Timur Braziler

we rates think that seems most. pretty How it actually maybe talk interest then should rates impact up your more as item of as about what just lower fall. rate-agnostic pick And broadly Is residential factors demand the -- interplay product? that line in

Dominic Ng

rate products. product to sensitive Mac unique cater Yes. type think Asian-American always we of Fannie not it's Mae, traditional core Well, customers. relatively think our that like is a that And the really Freddie I anywhere like these

when pretty the home going from not proportionately like would our -- in rate feel pace even higher mortgages So good products we reduction be in going about the rates market. the start down, same normal the

Timur Braziler

it. Got

New specifically, York Okay. portion And what looking your rent that the is you there? what in regulated? of composition portion geographically at And City is and multifamily can then portfolio, more provide

Irene Oh

Yes.

So sector. Southern $X we exposure. is. Gabriel multifamily are there's New million, largest California our no presence California, entire vast rent of state billion York, -- of a our Pasadena, is backyard also regulated have and areas have the York, in that Valley, in we under San portfolio, where In those our New lot in $XXX majority and of the

Operator

follow-up a have Ebrahim Bank Poonawala with H. from America. we of And

Ebrahim Poonawala

we Just XX%. ratio when another about terms question loan-to-deposit in deposit of think liquidity, around

ratio bank Just with HQLA securities, below the do or East as side, line? And operate do lower? more you you expect securities the asset the kind a Or see loan-to-deposit structurally, expect less? Fed do threshold as XX%-plus the has $XXX will a resetting identified that you with more billion even well you dividing West fall cetera, book, of though larger that et to a run on

Christopher Del Moral-Niles

portfolio think will operate to we the yes, be sort yes. migrate to more of Yes, to time, a I are at our from place and the over HQLA-like lower profile. it's ratio loan-to-deposit broadly, even And comfortable in answers likely in a yes expect XXs be.

Operator

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

Dominic Ng

all we you our forward April. in again you, to to call afternoon. looking are thank speaking joining Again, this operator. Back for you to And

Operator

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

now disconnect. You may

East West Bancorp (EWBC) 23 Jan 242023 Q4 Earnings call transcript