East West Bancorp (EWBC) Q1 2012 Earnings Call April 18, 2012 11:30 am ET Executives Kelly Adams -
First, we would like to caution you that during the course of the 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 provision 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 31, 2011.Today's call is also being recorded and will be available in replay format at eastwestbank.com and streetevents.com. I will now turn the call over to Dominic. Dominic Ng Thank you, Kelly. Good morning and thank you, all, for joining us for our earnings call. Yesterday afternoon, we were pleased to report financial results for the first quarter of 2012. East West reported strong earnings of $68 million or $0.45 per diluted share for the first quarter of 2012. As compared to the prior year, East West grew earnings by $12 million or 21% and increased earnings per share by $0.06 or 22%. East West demonstrated operating performance across a number of key areas in the first quarter. Our return on assets improved to 1.26% and our return on equity improved to 12.01%. Our net interest margin is strong. Noninterest income is up. Cost of deposit is down. Credit costs are down. And noninterest expense remains stable. By focusing on attracting and retaining sustainable and profitable clients while maintaining high credit quality and interest rate risk management, we selectively and purposely grew our long and deposit portfolios during the first quarter of 2012. We grew our noncovered loans by $212 million or 2% and increased core deposit by $256 million or 2% to a record $10.6 billion. This increase in our loan portfolio was primarily driven by growth in our single-family residential and commercial and trade finance portfolio, which grew to $2 billion and $3.2 billion, respectively, as of March 31, 2012. Additionally, growth in core deposit was fueled by a 6% increase in the demand deposits to a record $3.6 billion as of quarter end. Our strong results again demonstrated the core strength of our organization and our ability to perform well regardless of the economic conditions.
East West is outperforming many of its peers in overall profitability and our ability to win new business, increase top line revenue and maintained strong expense control. These successes are in part due to prudent decisions and actions we have taken in the past to build a strong foundation for our organization. The same thing, East West is currently taking actions and making investments to ensure future growth opportunities for many years to come.As in the past, in our earnings release, we provided guidance with second quarter of 2012 and the full year. We currently estimate a fully diluted earnings per share for the full year will range from $1.78 to $1.82 per diluted share, or an increase of 11% to 14% from $1.60 per diluted share last year. Also, we currently estimate that fully diluted earning per share for the second quarter will range from $0.43 to $0.45 per diluted share. This earnings per share guidance for the second quarter is based on the following assumptions: A stable balance sheet; a stable interest rate environment; and an adjusted net interest margin of approximately 3.9% to 4%. Provision for loan losses of approximately $15 million to $20 million for the quarter. Total noninterest expense of approximately $100 million for the quarter, net of amounts to be reimbursed by the FDIC. And finally, an effective tax rate of approximately 36%. Read the rest of this transcript for free on seekingalpha.com