East West Bancorp(US:EWBC)2022-07-21 20:25Financial Data and Key Metrics Changes - The company reported net income of $258 million and earnings per share of $1.81 for Q2 2022, with earnings per share growing 38% annualized from Q1 2022 [8] - Total revenue reached $551 million, growing 45% linked quarter annualized, including record net interest income of $473 million [8] - Adjusted pre-tax, pre-provision income grew 62% linked quarter annualized, with profitability ratios expanding, returning 1.7% on average assets, 18% on average equity, and 20% on average tangible equity [9][10] Business Line Data and Key Metrics Changes - The loan portfolio reached a record high of $46.5 billion, with average loans growing 24% linked quarter annualized [14] - C&I loans outstanding were $15.4 billion, increasing 15% annualized from Q1 2022, while total C&I commitments were $22 billion, up 20% annualized [19] - Total commercial real estate loans were $18.5 billion, up 37% annualized from Q1 2022, with strong growth in multifamily and industrial segments [21] - Residential mortgage loans totaled $12.5 billion, growing by 33% annualized from Q1 2022 [22] Market Data and Key Metrics Changes - Average non-interest-bearing demand deposits increased 8% linked quarter annualized, totaling 44% of average deposits for Q2 [12] - Total deposits were $54.3 billion as of June 30, 2022, with average total deposits growing 1% linked quarter annualized [16] Company Strategy and Development Direction - The company updated its loan growth outlook for the full year to a range of 16% to 18%, up from 13% to 15% previously, reflecting strong year-to-date performance [14][39] - The company is focused on maintaining a diversified loan portfolio and prudent risk management to navigate changing economic conditions [13] - The management emphasized a conservative approach to growth expectations in light of rising interest rates and potential economic uncertainty [15][49] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's position to navigate the current economic environment, highlighting strong capital and liquidity [44] - The management acknowledged potential slowdowns in loan growth due to rising interest rates impacting refinancing activities and consumer behavior [15][49] - The company expects to continue growing deposits, particularly in retail banking, despite potential volatility in commercial accounts [73][75] Other Important Information - The company repurchased $100 million of common stock during the quarter, reflecting a commitment to shareholder returns while maintaining a conservative approach [17][67] - The board declared a quarterly dividend of $0.40 per share, payable on August 15, 2022 [18] Q&A Session Summary Question: Loan growth outlook and potential slowdown - Management indicated that the guidance assumes a slowdown in the second half due to rising interest rates affecting refinancing and consumer activity [46][49] Question: Deposit beta assumptions and NII guidance - Management expects deposit beta to increase but remains confident in the stability of their retail banking deposit franchise [50][51] Question: Loan growth in China and expectations - Management reported strong performance in China despite recent lockdowns, with continued growth in diverse C&I business [56][59] Question: Efficiency ratio and investment decisions - Management stated that while they do not target a specific efficiency ratio, they remain disciplined in spending while making necessary investments [63][65] Question: Buyback strategy and market conditions - Management emphasized a prudent approach to buybacks, balancing shareholder returns with capital preservation amid economic uncertainty [67][69] Question: Deposit levels and potential risks - Management expressed confidence in the stability of retail deposits, while monitoring commercial accounts for potential volatility [73][75] Question: Guidance for overall deposit growth and loan-to-deposit ratio - Management expects deposits to grow for the year, with a comfortable loan-to-deposit ratio in the high 80s to low 90s [78][81]