East West Bancorp(US:EWBC)2024-04-24 00:35Financial Data and Key Metrics Changes - First quarter 2024 net income was $285 million or $2.03 per diluted share, with adjusted earnings per share at $2.08, up 3% from the fourth quarter [3] - Return on tangible common equity was 18% and return on average assets was 1.6% [4] - Tangible book value per share grew 2% quarter-over-quarter and 14% year-over-year [4] - Net interest income for Q1 was $565 million, with a net interest margin of 3.34%, which compressed more than expected [114] Business Line Data and Key Metrics Changes - Average loans increased by 1%, with residential mortgages showing durable demand despite seasonal slowdowns [98][100] - Average commercial and industrial (C&I) balances grew 2%, while commercial real estate (CRE) loans remained flat [10][113] - Average deposits grew by $2 billion, reflecting a 4% increase and reaching record levels [11] Market Data and Key Metrics Changes - The criticized loans ratio increased to 2.3% of loans, with special mention loans rising to 1.05% [103] - Non-performing assets ratio was 23 basis points at quarter end, with annualized net charge-offs up by 2 basis points to 17 basis points [112] Company Strategy and Development Direction - The company aims to support customer lending growth while maintaining a conservative balance sheet [99] - Focus on adding granular consumer and business deposits, with a strategy to optimize capital through buybacks and dividends [41][106] - The company expects to see loan growth pick up in Q2, driven by strong residential mortgage and C&I portfolios [116] Management's Comments on Operating Environment and Future Outlook - Management anticipates further net interest margin (NIM) compression in Q2 due to deposit mix shifts but expects asset growth to stabilize NIM later in the year [39] - The economic outlook suggests a resilient first half with a potential softening in the second half, leading to expectations of rate cuts beginning in Q3 [116] - The company remains vigilant in managing credit risks and expects quarterly net charge-offs to be in the range of 15 to 25 basis points [138] Other Important Information - The company repurchased 1.2 million shares for approximately $82 million during the first quarter [41] - Regulatory capital ratios remain well above requirements, with a common equity Tier 1 capital ratio of 13.5% [91] Q&A Session Summary Question: What are the drivers for loan growth from here? - Management expects loan growth to pick up in Q2, driven by strong customer interactions and existing pipelines [124] Question: How does the company view the impact of rate cuts on net interest income? - The company anticipates that rate cuts will begin in Q3 and expects a decline in net interest income in the range of 2% to 4% [116] Question: What is the company's strategy regarding talent acquisition? - The company is selective in hiring new talent, focusing on individuals who fit the East West Bank culture and values [71][72]