East West Bancorp, Inc. (
Q3 2010 Earnings Call
October 26, 2010 10:00 am ET
Kelly Adams - VP
Dominic Ng - Chairman & CEO
Julia Gouw - President & COO
Irene Oh - EVP & CFO
Aaron Deer - Sandler O'Neill
Joe Morford – RBC
Ken Zerbe - Morgan Stanley
Joe Gladue - B. Riley
Julianna Balicka - Keefe, Bruyette & Woods
Lana Chan – BMO Capital Markets
Jennifer Demba - Robinson
Ram Shankar - FBR
Previous Statements by EWBC
» East West Bancorp, Inc. Q2 2010 Earnings Call Transcript
» East West Bancorp, Inc. Q1 2010 Earnings Call Transcript
» East West Bancorp, Inc. Q4 2009 Earnings Call Transcript
» East West Bancorp, Inc Q3 2009 Earnings Conference Call
Good morning and welcome to the East West Bancorp third quarter 2010 earnings conference call and webcast. All participants will be in listen-only mode. (Operator Instructions). After today's presentation, there will be an opportunity to ask questions. (Operator Instructions). Please note this event is being recorded.
I would now like to turn the conference over to Ms. Kelly Adams First, Vice President. Please go ahead.
Good morning, and thank you for joining us to review the financial results of East West Bancorp for the third quarter of 2010. Here to review the results are Dominic Ng, Chairman and Chief Executive Officer; Julia Gouw, President and Chief Operating Officer; and, Irene Oh, Executive Vice President and Chief Financial Officer. We will then open the call to questions.
First, we would like to caution you that during the course of this call, management may make projections or other forward-looking statements regarding events or future financial performance of the company within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may differ materially from the actual results due to a number of risks and uncertainties.
For a more detailed description of factors that affect the company’s operating results, please refer to our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31st, 2009.
Today’s call is also being recorded and will be available in a replay format at eastwestbank.com and streetevents.com.
I will now turn the call over to Dominic.
Thank you Kelly. Good morning, I thank you all for joining us to today’s call. We announced financial results for the third quarter of 2010 yesterday and East West reported earnings of 47 million of $0.27 per diluted share. 10.6 million or $0.06 higher than last quarter. Our results marked a fourth consecutive quarter of product serving for the bank. During this quarter, we selectively proved commercial and trade finance and consumer loan portfolios and also posted strong deposit growth, particularly in low cost core deposits.
Further, we have reduced operating expenditures and are realizing economics up scale from the recent acquisitions, we have made. Just last weekend in fact we successfully completed the core systems integration of Washington First International Bank. With the integrations of both recent acquisitions United Commercial Bank and Washington First International Bank behind us. The Management and audit team members of East West are now concentrating on our assets on our strategic growth initiative and providing better service for our customers.
During our C&I lending platforms is a key area that we have focused on this year. As we continue to focus on throughout 2011. I am pleased to report that we have made solid progress on this front. Quarter-over-quarter commercial and trade finance loans have increased 167.3 million which represents and 11% increase to $1.7 billion of loan balance. This increase in the third quarter of 2010 is the continuation of product C&I loan growth over the end of year. Over the last six months we have increased C&I loan balances by 251.5 million, over 17% by March 31
I would like to point out that these C&I loans figures do not include the covered loan portfolios acquired from the United Commercial Bank and Washington First International Bank. Including the covered loan portfolios the book balance of our total C&I loan portfolio was $2.6 billion as of September 30th, 2010. Both a 90% of our total loan portfolio. We are also pleased to report that along with the loan growth we have also growing deposits. Deposit grew to a record 15.3 billion on $379 million or 3% from June 30th, 2010. This growth was largely driven by growth in core deposit of $290 million or 4% quarter-over-quarter.
We have been successful in achieving deposit growth, while reducing our cost of deposit. Our third quarter cost of deposit has now reduced to 75 basis point. An improvement from the 80 basis point in the second quarter of 2010 and a 124 basis points to the third quarter of 2009.
Our net income of $47 million for the third quarter also kind of (inaudible) problem fatal credit quality. Credit indicators continue to play in a positive direction with East West. And gave for the fourth consecutive quarter all charge offs and provision for loan losses have declined. The provision for loan losses was $38.6 million, a decrease of $16.6 million or 30% compared in the previous quarter, and a decrease $120.6 million, up 76% from the third quarter of 2009.
Total net charge offs go to $45.1 million, a decrease of 10.1 million or 18% on the previous quarter and a decrease of 106.2 million of 70% from the third quarter of last year. Non-covered, non-performing assets have also remained low at 96 basis point to total assets, as of September 30, 2010. This quarter marks a fourth consecutive quarter again, that non-performing asset have been under 100 basis point of total assets. Also early stage delinquencies, on performing loans that are past to 30 to 89 days for 73 million or 54 basis points of total gross loans. Land and construction loans are now down to 4% of total gross loans as we continue to actively manage down these loan portfolios.