East West Bancorp, Inc. (NASDAQ:EWBC) Q1 2018 Earnings Conference Call - Final Transcript

Apr 19, 2018 • 11:30 am ET


East West Bancorp, Inc. (NASDAQ:EWBC) Q1 2018 Earnings Conference Call - Final Transcript


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Good morning and welcome to the East West Bancorp First Quarter 2018 Earnings Conference Call. All participants will be in a listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note, today's event is being recorded.

With that, I'd like to turn the conference over to Julianna Balicka. Please go ahead.

Julianna Balicka

Thank you. Good morning, and thank you, everyone, for joining us to review the financial results of East West Bancorp for the first quarter of 2018. With me on this conference call today are Dominic Ng, our Chairman and Chief Executive Officer; Greg Guyett, our President and Chief Operating Officer; and Irene Oh, our Chief Financial Officer.

(Forward-Looking Cautionary Statements)

In addition, some of the numbers referenced on this call pertain to adjusted numbers. Please refer to our first quarter earnings release for the reconciliation of GAAP to non-GAAP financial measures. During the course of this call, we will be referencing a slide deck that is available as part of the webcast and on the Investors Relations site. As a reminder, today's call is being recorded and will also be available in replay formats on our Investor Relations Web site. During the question-and-answer session, we ask that you limit your questions to two.

I will now turn the call over to Dominic.

Dominic Ng

Thank you, Julianna. Good morning and thank you everyone for joining us for first quarter 2018 earnings call. I would begin our discussion with a summary of results on slide three. This morning, we reported first quarter 2018 net income of $187 million or $1.28 per diluted share, which grew by 120% from the fourth quarter of 2017. Our first quarter return on assets was over 2% and our return on equity was 19%. As of March 31, 2018, our total loans reached a record $29.6 billion up $547 million or 8% linked quarter annualized from December 31, 2017.

On the deposit side, total deposits grew $389 million or 5% annualized to a record $32.6 billion more than fully offset sale of Desert Community Bank's deposits and branches which closed in March. Adding back the $640 million of deposits sold from Desert Community Bank profit growth would have been $1 billion in the first quarter or 12% annualized. In the first quarter, our net interest margin expanded by 16 basis points reflecting the benefits of higher interest rates on our assets and balance sheet and impact of demand deposits in our deposit mix. As of March 31, demand deposits account made up 36% of our total deposits.

Now, let's move on the next slide, slide number four, profitability. This quarter, we earned a gain of $22 million after tax from the sale of Desert Community Bank branches as mentioned earlier. We sold eight branches, $614 million of deposits and $59 million of related loans. The gain translated to $0.15 per share, adjusted first quarter net income of $165 million and earnings per share of $1.13 grew by 30% linked