Yahoo Finance East West Bancorp Inc (EWBC) (Q1 2024) Earnings Call Transcript Highlights: Strong Performance ...
Net Income: $285 million for Q1 2024.
Earnings Per Share (EPS): $2.03 per diluted share; adjusted EPS $2.08.
Asset Growth: Average assets and loans grew by 1%.
Deposits: Increased by $2 billion, reaching new record levels.
Net Interest Income: $565 million in Q1 2024.
Net Interest Margin (NIM): 3.34% in Q1 2024.
Loan Loss Allowances: Total allowance for loan losses at 1.29%.
Return on Tangible Common Equity: 18%.
Return on Average Assets: 1.6%.
Tangible Book Value Per Share: Grew 2% quarter-over-quarter and 14% year-over-year.
Commercial Real Estate (CRE) Loans: Flat growth in average balances; period-end balances down.
Nonperforming Asset Ratio: 23 basis points at quarter end.
Net Charge-offs: Annualized at 17 basis points.
Release Date: April 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: What's holding you back from being more optimistic about margin and NII, given the loan growth and securities tailwind? A: Christopher J. Del Moral-Niles, CFO, explained that while NII guidance has been raised, deposit mix migration in a higher-for-longer rate environment and higher deposit costs are expected. Additionally, refinancing BTFP with higher-cost CD campaign balances introduces inherent drag.
Q: How should we think about the upper limits of capital and the role of buybacks? A: Christopher J. Del Moral-Niles, CFO, mentioned focusing on maintaining TCE and not warehousing additional capital. Buybacks are considered a last choice but provide flexibility to optimize capital when appropriate.
Q: Can you discuss the expected negative mix shift on the funding side and its impact? A: Christopher J. Del Moral-Niles, CFO, noted that while DDA mix has decreased to 25%, it is expected to bottom in the mid-20s. The ongoing deposit migration depends on the Fed's rate decisions.
Q: Given the migration trends in credit quality, why maintain a benign loss guide? A: Irene H. Oh, Chief Risk Officer, expressed confidence in the granular, loan-by-loan analysis and the current reserving strategy, which is weighted towards a downside scenario, providing a comfortable buffer for potential losses.
Q: What are the drivers for loan growth, and how does the expected economic softening in the second half of the year factor into your projections? A: Christopher J. Del Moral-Niles, CFO, attributed confidence in loan growth to active customer interactions and a strong pipeline, especially in C&I and residential sectors. The softening economy expected in H2 is aligned with the Fed's projections for a managed economic slowdown.
Q: How are you managing the potential risks in the CRE book given the interest derivative contracts and the higher-for-longer rate scenario? A: Christopher J. Del Moral-Niles, CFO, reassured that most customers have hedged their interest rate exposure to the maturity of their loans, minimizing inter-maturity rate rollover risks. The bank's strategy includes growing the fixed-rate portfolio and using swaps to hedge against future rate declines.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
