EAST WEST BANCORP INC Q3 FY2024 earnings call

• Dominic Ng: Reported strong quarter with net income $299 million or $2.14 per diluted share, balanced growth in loans and deposits, net interest income up, record fee income, improved credit metrics, and substantial returns for shareholders.
• Christopher Del Moral-Niles: Detailed loan growth by segment, deposit growth and mix, liquidity enhancements with securities and cash, net interest income trends including margin and deposit costs, and non-interest income drivers.
• Irene Oh: Discussed credit trends with improved classified loans, provision for credit losses, net charge-offs, non-performing assets, CRE loan maturities, and regulatory capital ratios remaining strong.

Loans: Average and period end loans each grew 1% quarter-over-quarter. Residential mortgage production was consistent, C&I growth driven by entertainment and private equity verticals, while commercial real estate saw healthy multifamily growth in Q3 with modest overall CRE loan growth expected in Q4. Deposits: Grew average and end-of-period deposits by 3% to a record $61.7 billion, with non-interest-bearing deposits making up 24% of total. Net interest income: Totaled $573 million, a $20 million increase from the second quarter, with a net interest margin of 3.24% (down 3 basis points from prior quarter) driven by greater income from loans and lower deposit costs. Non-interest income: Achieved a record $81 million, up 6% quarter-over-quarter, driven by strength in lending, wealth management, and deposit fees.

• Full year outlook unchanged, expecting end-of-period loan growth in the range of 2% to 4% (already ~2% through Q3) and full year net interest income to decline in the range of 2% to 4% (YTD down 3%).

• Credit risk management remains a focus given CRE loan maturities.
• Market rate fluctuations could impact net interest income and deposit costs.
• Uncertainty in economic conditions affecting loan utilization and customer demand for loans.

Q: Manan Gosalia asked about deposit growth rate rationale and NIM/NII trends.

A: Dominic Ng noted it affords flexibility, and Chris Del Moral-Niles discussed Q4 dynamics and swap impacts.

Q: Dave Rochester inquired about capital, buybacks, and liquidity.

A: Chris Del Moral-Niles spoke about capital priorities, deposit pricing, and securities portfolio optimization.

Q: Jared Shaw asked about capital management without buybacks.

A: Chris Del Moral-Niles outlined growth priority, competitive dividend, non-organic opportunities, and buyback patience.

Q: Ebrahim Poonawala questioned loan growth expectations and branch/market expansion.

A: Dominic Ng and Chris Del Moral-Niles discussed loan growth based on economic conditions and customer commitments, and no current plans for new branches/markets in US or China.

Q: Timur Braziler asked about CRE non-performers and fee income sustainability.

A: Irene Oh clarified CRE allowance drivers, and Dominic Ng and Chris Del Moral-Niles discussed fee income sustainability from various business areas.

Q: Matthew Clark asked about deposit beta and non-interest expense growth.

A: Chris Del Moral-Niles discussed deposit beta assumptions and non-interest expense growth being growth-dependent.

Q: Chris McGratty inquired about NII in Q4 and HQLA planning.

A: Chris Del Moral-Niles and Dominic Ng discussed NII expectations and HQLA planning for $100B asset milestone.

Q: Ben Gerlinger asked about CD rates and beta.

A: Chris Del Moral-Niles discussed CD rate trends and gradual beta path.

Q: Samuel Varga asked about CD Specials and beta path.

A: Chris Del Moral-Niles discussed gradual beta path and CD roll-off rates.

Q: Andrew Terrell clarified deposit cost drops and swap impacts.

A: Chris Del Moral-Niles responded on deposit cost drops and swap roll-off impacts