East West Bancorp, Inc.

Q4 2022 Earnings Conference Call


spk_0: the and about going to be eat when that card fourth quarter and for year twenty twenty two on a conference call oh to defense will be in a and ought to do need assistance please signal a conference specialist suppressing the garden zero after today's presentation there will be an opportunity to ask questions to ask the question you may present our than one on a touchstone phone to withdraw your question is a superstar been to please note this event is being recorded i would now like it told the conference or which is juliana the legal directive often that you really should see the go ahead
spk_1: thank you bye savvy morning and thank you everyone for joining east west bank course fourth quarter and four year twenty twenty two earnings cops with dominic or chairman and chief executive officer and irene oh or chief financial officer this call is being recorded and will be available for replay on investor relations website three the remarks dominic irene will reference the flight deck that is available on our investor relations sites management may make protections are other forward looking statements which may differ materially from the actual results to to a number of risks and uncertainties and management may discuss non yeah financial measures for a more detailed descriptions of the risk that actors and a week conciliation of captain on gaf financial measures please refer to our filings that the securities and exchange commission including to form a case filed today i will now turn to call over to dominic
spk_2: thank you juliana
spk_3: good morning and thank you everyone for joining us for earnings call i will begin to review of our financial results with slide three of our presentation a song financial performance in two thousand and twenty two was characterized by strong revenue growth which was driven by strong long vowels and that interest margin expansion in a rising interest way environment combined was disciplined expense management and solid and
spk_4: table as a quality
spk_5: together all these drivers result in industry leading profitability
spk_3: both for the full year and the fourth quarter of two thousand and twenty two this was achieved record earnings of one point one billion or
spk_5: seven dollars ninety two cents per share for the food you have two thousand and twenty two an increase of thirty percent year over year
spk_3: or two thousand twenty two total revenue of two point three billion was our highest ever and grew twenty nine percent year over year
spk_5: a pretax pre positioning tom of one point six billion grew forty percent year over year in two thousand and twenty two we returned a one point eight percent on assets and twenty one percent on tangible equity for the food you
spk_3: now for the fourth quarter of two thousand and twenty two reporters that income of three hundred thirty seven million and earnings per share of two dollars thirty seven cents which grew fifty five percent annualized quarter over quarter our industry leading returns would two point one percent on assets and twenty five percent on tangible equities for the fourth quarter our fourth quarter pre tax free provision profitability was nearly three percent not as good a size for and sly for presents a summary of our bouncy as of september seasonal as of december thirty first two thousand and twenty two total loans reached an all time high of forty eight point two billion an increase of seven hundred seventy one million or six percent annualized from september thirty
spk_5: fourth quarter average long growth was likewise six percent analyzed average long growth in the fourth quarter was well balanced between our major long for photos of commercial really say residential mortgage and commercial and industrial total deposits were records sixty six days as of december thirty first two thousand and twenty two an increase of two point one billion or sixteen present analyzed some september thirty fourth quarter average deposit grow was seven percent analyzed sloth was driven by time deposits reflecting be successful branch based
spk_6: cd campaign during the fourth quarter
spk_5: i'll deposit book as well diversified by deposit type and thirty eight percent of total deposits were in non interest bearing demand deposits as of december thirty first hour long to deposit ratio decrease to eighty percent eighty six percent of the end of the year from eighty eight percent as of september thirty turning to slide size as you can see an exhibit or dislike or our capital ratios expanded quarter over quarter
spk_3: as of december thirty first two thousand twenty two when a common equity tier one ratio of twelve point seven percent
spk_7: a total capital ratio of switching present
spk_3: and a tangible common equity ratio of eight point seven percent
spk_5: quarter over quarter of book value and are tangible equity pusher increased six percent i'm pleased to announce that is was board of directors approved a twenty percent increase to the quality common stock dividends
spk_6: some forty cents per share to forty accents for sure and equivalent to an and who do didn't have a dollar ninety two cents per share
spk_5: the new dividend would take effect in the first quarter table on several twenty first two thousand twenty three to stop photos of record on february six two thousand and twenty three moving on to a discussion about loan portfolio beginning with sly six
spk_7: as of december thirty first two thousand and twenty two cm allies loans outstanding worth fifteen point seven billion
spk_5: one surely up to present and realized and of eleven percent year over year
spk_4: i'll see an ipo photo is well diversified by industry and sector
spk_5: flight seven and eight show the details of our commercial this before
spk_3: which is well diversified by geography and property type and consists of low loan to value loans
spk_7: total commercial to say laws was nineteen point one billion as of december thirty first two thousand and twenty two up a present and realized from september thirty and of eighteen percent year over year
spk_6: in slide nine would provide details regarding our residential mortgage before your which consists of single family mortgages and home equity line of credit
spk_5: how residential mortgage loans a primary originated through his was bank branches
spk_7: i would highlight that eighty two percent of our sheila commitment
spk_5: we're in a first lean position as of december thirty first two thousand twenty two residential mortgage loans totaled thirteen points rebellion as of december thirty first two thousand twenty two up nine percent annualized from september thirty and of nineteen percent year over year i would now turn to call over to i read for more detailed discussion of our a qualities and interesting
spk_8: i read thank you dominic of out i asked hobby the metrics and proponent of are allowed to losses on flights ten analysts the ass apology mark and used to be stable and strong quarter of a four or five months decrease one percent and the criticized motivational basis for classifies as special mention loans decreased from already low level as of september such a year and the down to forty thousand ratio was sixteen weeks point that and unchanged quarter of a foreigner top jobs continue to be a moment during the fourth quarter we recorded that charges of ten million or basis points compared with net charges
spk_9: six cases point in the third quarter or allowance total five hundred and ninety six million as of december thirty first one twenty four blown up from one twenty three as of september thirtieth
spk_10: during the fourth quarter we ported a provision for credit losses of twenty five million compared with twenty seven million for the third quarter well as a party remain strong and the current credit environmentally benign we continue to remain vigilant about planet we're actively monitoring the loan portfolio and taking plastic measures to build our law
spk_8: arms for loan losses and now moving to discussion of our income statement on flight while to slide summarizes the key line items of become statements are childless got some more detail on the phone slides of note amortization of tax credit and and other investments in the fourth quarter was sixty five million compared with twenty million the the third quarter at the same time the
spk_1: yes quarterly effective tax rate was thirteen percent in the fourth quarter compared with twenty three percent in the third quarter
spk_8: this fluctuation is due to tax credit investments our clothes in the fourth quarter and the related projects that were placed into service this resulted in a more effective tax rate and an increase in the amortization expenses for the fourth quarter for the full year of twenty twenty two years after tax rate was twenty percent now i'm here with see drivers of my net interest income and editors margin on flights thirteen to sixteen was average balance as dumb as mentioned in his remarks fourth quarter average loan book six percent analyze was well balanced among our major alone an average deposit growth of seven percent and was reflected a successful branch based upon the counter or average loan to deposit ratio was stable quarter of a quarter and eighty seven percent average on interest bearing demand deposits stayed up to thirty nine percent of our average deposits in the fourth quarter
spk_9: apply for forty fourth quarter twenty twenty two has interests of six hundred and five point five million with the fires quarterly net interest income in the history of these was going through a for someone for and allies or net interest margin of three ninety eight expanded thirty basis points quarter of a quarter
spk_8: as you can see from the waterfall chart on the slide that interests margin expansion in the fourth quarter reflected impact of higher alone and rooting out at you which increases editors margin by eighty two this point partially offset by fifty two basis point of comparison from the funding size aren't as interesting work benefited from rising benchmark interest rates because as with that are out sensitive loan portfolio to preserve net interest income when interest rates go down we added three point two five billion of swaps and callers and twenty twenty two which included one billion added early in the fourth quarter turning the flight fifteen the fourth quarter average low yield was by sixty nine an increase of eighty four basis points quarter over quarter the average alone the of comprise and average coupon yelled of by sixty three sealed adjustments which contributed six basis points to the overall low yield in the fourth quarter i'll december thirty first the spot poupon wave of our loans was five ninety two and the slice we also presents a coupon spot yields for each major loan portfolio or the last five quarter as you can see the positive impact and rising interest rate on each of a local for as loans of repriced and total sixty one percent of our loan portfolio was variable rates including thirty percent linked the primary and twenty seven percent to live or so for race i would also highlight that over forty percent of our variable rate commercial real estate loans some customer level of interest rate of congress and place to clarify this is distinct from the balance sheet and i discussed a minute ago with the customer level derivative contracts we've helped our customers enter into low level of interest rate swaps collars and caps currently structured to help protect customers against rising that service costs at the same time the loans remain variable rate on our balance sheets and the bank benefits from the acid sensitivity
spk_11: trying to slide sixties or average cost of deposits for the fourth quarter was one hundred and six basis points of fifty five basis points from the third quarter or spot rate on total deposits was one hundred and thirty four basis points at december thirty first year over year increase of one hundred and twenty five bases
spk_8: this rounds late to a twenty nine percent cumulative beta relative to the four hundred twenty five bases point increase in the targets that funds rate of a same period in comparison to the cumulative beta on our lawn has been to the a person as our load coupon spot rate increase two hundred forty eight basis points the over year we started a rising interest rate cycle from a position of strength which historically high level of demand deposits for each one thing and strong liquidity this of pulsar the assets of the sensitivity benefits of our variable rate loan portfolio supporting strong revenue growth cycle we are pleased with the lives in deposit beta cycle today this has come to careful deposit cost management with a twenty nine percent cumulative data cycle to date we are outperforming prior rising interest rate cycles with thirty nine percent above average deposits and interest bearing accounts and with the growth that we have had in
spk_12: read management products and services since before the pandemic we feel comfortable about continuing to navigate the current cycle well
spk_8: moving on to see and come on slide seventeen total non interest income and before
spk_9: sixty five percent down from seventy six percent in the third quarter customer driven see income and that game on sales of lungs were sixty six million down for and a half percent or eighteen percent analyze from the third quarter and not four percent from a year ago year over year we saw growth cause most of our fee income lines of this
spk_8: this movie landslide eighty fourth quarter nine inches expense was two hundred and fifty seven million excluding hours and passports and other batsman and corner positive has a glamorous decision adjusted not interest expense with one hundred and ninety two million into the third quarter down to percent for a reporter for some reason and was given by lower compensation an employee benefits expats once again we generated strong positive on
spk_13: for lovers the total revenue growth and twenty seven percent and was in the fourth quarter process of control decrease in expenses the fourth quarter adjusted efficiency ratio was twenty nine percent compared to thirty one percent in the third quarter or just had pre tax supervision income group forty three percent me quarter analyze and are pre tax
spk_8: people version or away with an attractive to ninety five in the fourth quarter and with that on our do you are updated outlook for the full year of twenty twenty three on slide nineteen for the for your twenties the verge of twenty twenty two two currently expect your with your loan roads and the high single digit percentage range we expect production of from all of our major loan for follows and twenty twenty three year over year we accept net interest income growth in the low twenty percent wage rate wage underpin eating our interest income assumptions is afford interest rate her as a beer and which assumes a peak said funds target rate of five percent by april twenty twenty three and a year and said funds to rate of four seventy five what the cotton made in the year and our modeling we assume that deposit betas will continue to rise and twenty twenty adjusted not interest expense growth excluding task for the development amortization in the age of ten to eleven season we expect our revenue an expense outlook to result and positive operating leverage year over year and terms of credit for twenty twenty three the provision books losses will largely be driven by changes in the map or economic outlook we are providing our expectations for bush charges which are expected to be in line with our recent was part of experience as macro economic conditions stay stable for contest the bros term of ratio with a basis for twenty two
spk_12: on you tube and seventeen basis points and twenty twenty one as a quality today is excellent and the potential losses from any problem loans are limited however realistically of the economic backgrounds see weekend we would expect to see some credit normalization from the very low levels today
spk_8: in terms of tax items we probably expect that approximately one hundred sixty million in task what an investment excludes low income housing costs are so close his own service and twenty twenty three and therefore the part of our tax rates have permission from employer that have put an average age related to be friends should be approximately ninety five percent of the
spk_5: smith amount for the four years for the first quarter twenty twenty three me except and ninety two million of these tax credits will be reflected in the tax rate calculation the tax credits amortization to be approximately twenty two million for the border there will be quarterly variability in the tax way and the tax credit amherst
spk_14: patience to the timing of tax when investments place into service with that are now in the call back over to dominant for closing remarks
spk_3: thank you i mean and closing two thousand and twenty two was an excellent years east west without highest ever earnings revenue loans and deposits and the achievement of industry leading profitability metrics our annual earnings now exceeds one billion dollars
spk_5: we look forward to two thousand and twenty three with excitement as we celebrate our fifty year anniversary
spk_3: the bank and our customers have come a long way since nineteen seventy three
spk_15: throughout our history the pillar of also says has been and continues to be our spirit of gone above and beyond to service our customers
spk_3: we are honored to be the bank of choice for clients and wish to thank all associates for the dedication and contribution to making our bank a success lastly
spk_0: i want to take this opportunity to wish everyone are happy lunar new year meet a year of the rabbit brain health prosperity and happiness to all of us are now open up the call to questions operator thank you we will now begin to question and answer session you may pay than one on the catch it on thought if you are using the speaker phone please pick up your hands said before if at any time your question have been addressed and you would like to withdraw your question please visit our than two
spk_16: in the interest of time please limit yourself to one question and one follow up at the time we will pause momentarily to a similar roster
spk_17: the first question comes from the rochester with concept point please go ahead
spk_16: a good morning as as quarter by us
spk_8: my first questions on the and i died on flights sixteen you guys highlight the of the total deposits aid or to my doctor says you get forty seven percent interest bearing deposit data to in the last year was wondering what the possibility of baking and to the guide at this point and a he mentions the expected positives and rise to this year are you say
spk_18: mid thirties or upper thirties to the overall cycle you taking something higher than that and and then how do you think about the grow from here what that means for borrowing levels which are still very well thanks
spk_8: at way as pointed out earlier models
spk_16: i got a yes be forty percent or twenty twenty three and at the same time for interest bearing deposits and deposit data sixty percent and as bastard and with our and items that we have of the increase in the low twenty percent overall i think what the good growth that we've had and deposits in general along
spk_8: with are successful campaigns for see that are lower than others as competitors in the market at this point in time i think we'll be able to continue to find ourselves with the deposits certainly that were very opportunistic and look at that from the perspective of cost
spk_0: great and then just one follow up on me on the back end of the year when you lose your fed rate cuts was curious what you're expecting for the deposit cost movements
spk_19: as resulted i caught are you thinking that you'll get immediate benefit are you thinking there might be a little bit of a lag there with the first couple shots
spk_20: thanks yeah i did it so late in the year at this point that around now not making that again thanks
spk_8: the next question comes from london go sally oh let's go ahead
spk_21: hi good morning
spk_8: morning i wanted to i've gone on the head is that you've been putting on the books can you speak to me the home with those might and dragged along better as for thought scour the remaining of the red side so the rate hike cycle and also when now the said against cutting rates and there are also how much more you plan to do on your hedging efforts from yeah
spk_9: yeah great question how certainly the specifics of how much that been task and as quoted a i'm not have that like know we can get the that information after the call
spk_20: certainly you as we started adding that you know fourth quarter third quarter the was a little bit of impact is far
spk_22: largely against the crv loans that we have kind of
spk_23: are we have a plan to find ocean
spk_20: sloths and also colors that we put on at this point in time scale in discussion was our alcoves committee probably another couple billion that we would love to jail but certainly were opportunistic not us and also die waiting the overall balance sheets and the positioning of that so that's something that will continue to evaluate see what we think makes the most sam's given the changes in the interest were environment as well
spk_8: he it and is there a bottom we can think about on name and the than the the said the cutting or is that too early to say right now
spk_10: i think it's too early to say
spk_24: yeah israel die again
spk_3: turn out there and then i am in i did just on credit in november you emphasize that mean like everyone else you've been watch for for a normalization on credit
spk_25: and and you're focused on now early detection of any any cracks in the in the reviews or you've been making has there been any covenant breaches any other cracks the not
spk_26: i need i think certain lay on individual no basis that is happening right but overall i think we're we're very positive from the perspective
spk_27: on credit as we do continue to do these reviews on a commercial blocks or consumer books the routes what positive is are not a lot a new problem on same loans at be working through last couple years continue to be things that we work through a not a lot of new problems in that process so that's certainly something that we still it
spk_4: and positions as well
spk_3: dawood been actively managing diaz
spk_0: loan portfolio overall
spk_28: so as you can see in the criticized as a percentage you know
spk_29: to be denied so so far surprisingly you know as course there's very very good we
spk_3: look at the rising interest way obviously that's why we've been aggressively managing the proposal and see how it goes and always do this ongoing long review and so far so good the next question comes from a threat him who now i know it back some a company for head he good morning
spk_30: i guess maybe just sticking with some acid quality so of appreciate that
spk_3: what he just said dominic you haven't seen any to within that would fall your but is dead or timing issue or when he dislikes his tenure showing how into seats are you have gone up on his loan portfolio is is it's timing is your do you feel good about the loan book and the ability of these borrowers to observe
spk_29: there if the fed funds were to be goddard five percent they should be able to handle this it doesn't become a credit issue for you to as like dc good about that do have visibility into that wow when it comes when you say timing issue we obviously when we do our stress test and is what assays we obviously projecting so it's not something that we just saw looking at it as of today whether they can handle and so forth so from that perspective we feel pretty good about ah
spk_3: the liquidity level of our clients you know in terms of the cash flow that they've been getting some existing business so i guess i guess in a way that what we what would notice his dad dad the castle
spk_31: it's still pretty good i think is really coming back down to the economy the economy's too strong now if you look at itself would we project a much more deteriorating economy or that will be very different at this point we don't see you know things are going pretty well
spk_32: got it and they us are just separately in terms of loan good to appreciate the lower growth guidance it just looked was in terms of what are the pockets i know id mentioned you expect loan good across categories but any particular verticals any markets we're seeing mostly and and more marketing opportunities of you think about
spk_3: growth and maybe potential put up such a price on that good
spk_32: i'm i think overall we always been very
spk_3: solstice in having a more diverse as i go
spk_33: southern deaths and point there's always gonna be one particular industry vertical or here and there that seems to do a bit better than the others
spk_3: however overall it's a get too far we rein it in any way so that standpoint that's why you always see a much more ah even kill more than ours a diverse type also known for forty or the we have here is because we actually manages
spk_34: so but i would say that i mean as just
spk_3: looking at you know maybe out a couple of weeks so far know we do have a few more like of private equity capital call and commitments that we have region a that
spk_0: a third i would expect out if he continued go and out to russian would probably have a stronger p p long growth and then also
spk_35: last year you know that we actually have surprisingly you know for a decent
spk_36: well some our way to china region and so despite the and done it and so we expected that you know they may be able to continue to do quite well now obviously have a much smaller balance you know that as a percentage growth they're doing pretty well so we may have a few other different areas that
spk_37: we'll be able to set up you know cosa we also have a
spk_38: very strong competitive teams
spk_37: within the organization everybody wanted to do that if you know so as soldiers expected you know different him was was step up and different quarter
spk_39: the next question comes from grand and came with truly security has
spk_8: pig morning
spk_39: morning
spk_37: these the i wanted to canada
spk_8: touch again on the in iii guide in particular your outlook for the trajectory in ages margin it appears
spk_21: the more just a slap from for you love as you cooked his we had the goddess is from that i'm curious what your such as ah as far as it's to now i'm going to the year or so you with the for rape her scientists
spk_8: yeah yeah i my focus is really morandi and i bandana we do expect when we look at our guidance me the know good amount of my guys of as well and we do expect the and i to grow from the fourth quarter level of them
spk_3: actually more about the population of what happens from foreigner that are both we expect to be positive twenty twenty race
spk_40: well that's a a daily regards to your outlook for the party growth on what areas old categories of the pods dc most ago coming from in could you talk more about your due to kind of mitigate losses he did yeah
spk_7: every question ice when we get our deposit up for follow in our customers one other thing is that what we benefit from as just the diversity of customers we have certainly are in order to why can't they remain competitive we had these deposits city campaigns enough
spk_41: one quarter and we have one right now price at below market but attractive enough race and also six month duration we don't want that to go to mom
spk_42: and so that is something that we continue to do relative to other kind of funny cause right now we think it's the trap that it's also you know our customer base of stays with us and have a larger relationship with us when we luck out for twenty twenty three and where we say deposits are going to girl i say across the board although realistically in
spk_3: that kind of right environment it's hard to maintain the deposit balances in the dd a accounts at the level that we have be pre rising rates here we are still on board in new customers all the time pipelines are strong on the deposit side so we're we're very kind of positive about what we're doing investment that we made and treasury man where's my cash management products services certainly or something that we are seeing a benefit today
spk_43: i wanted to highlight also i think sdf
spk_44: at the height of excess liquidity which is doing ppp time you know back
spk_3: in does
spk_45: late two thousand twenty
spk_3: because of covert we had like a maybe to
spk_7: when all the way up to close to forty three percent of
spk_3: as a percentage of de da to do have non interest bearing deposit two dogs and tired deposits for forty forty three percent
spk_44: today we down to thirty eight percent
spk_3: so as you can see there was a lot and liquidity and
spk_46: but bye
spk_47: i nature even adults interest way rising and so forth you expect as d of
spk_48: d success and quantities would not be sustainable so we are actually very pleased throw the last few quarters watching our non interest bearing deposit and see what the present you said and i'm kind of each quarter to up on one basis point and so forth and as so
spk_49: fossil good so we drop know like now to sodium still thirty percent as a lot of non interest bearing deposit seductive and on the by the way the other part of said we continue bring in new customers we continue to bring new commercial customers with you on board
spk_47: this new relationship one at a time so in time it will continue to grow to not interested in deposit it just as there are some excess of the quality that in a relationship what do market rate
spk_50: in terms of deposit it is today
spk_51: actually there are people are moving some of the they be accessed excess liquidity to put into what a money market accounts on if you see these account and so forth so that's why you see that derosa
spk_52: some gradual reduction on on into staring deposits downs but in terms of number of cows to keep going on
spk_47: the next question comes from crazy hair with jeffrey please go ahead
spk_48: yeah thanks more guys to start wanted to follow up on on alone growth outlook
spk_26: i was wondering
spk_3: how was yours we're assuming for utilization rate in your guide and then any color on on how long pipelines are are shaping up vs nine thirty
spk_53: now at this point in time or not assuming that changing utilization rate casey we're assuming flat from where we're at
spk_3: okay i understood and then ah
spk_26: i'm a he side
spk_54: the you know everything's still pretty benign and and holding stable
spk_3: i was wondering is is that is that true also for the ah the or two billion dollars for jury in china which obviously gets a lot of attention from investors
spk_0: ah china china's even better
spk_55: so the always have a very very strong you know
spk_56: pristine you know loan portfolio and so it is still exactly the same you know
spk_57: so we feel that with the
spk_56: economy opening up
spk_0: i think it would only to the help us
spk_58: better while we don't expect that there will be some sudden surge of goma origination in two thousand and twenty three because a lot you can be open up is gonna steal tech little be time for business to sort of fact get back on track it would probably benefit us more in two thousand and twenty fourth and two thousand and twenty three
spk_56: the next question from gary tenure with the david
spk_59: he's gonna hit
spk_60: i get more in a scorecard on for gary tenor
spk_61: our beat a dead horse but just in terms of the the longer again on are you expecting it to be front and loaded or for say crossed the corners
spk_62: ah we're assuming that it isn't fun and moda that agile be or our made a little bit more in the latter half of the yeah
spk_14: gotta the rest my question of answer taking recorder
spk_3: thank you
spk_61: the next question comes from chris macready this t v of please go ahead
spk_5: take more it's com dominic on capital i think that the dividend was a pretty strong signal given given how much kappa you haven't done that is assurance i'm a that's really the only capital return that you're contemplating right now given given economy and know you've been resistant to the buyback put just want to see if this is cindy change until now
spk_63: i just wanted to set me up and resistant
spk_14: yeah we did hundred million in the second for such a joy to do we you have two hundred fifty four million outstanding that we can execute anytime he was obvious has been approved by the board
spk_64: last year and and you know we have the opportunity up opportunistic intensify that they have to look at a certain in a full quarter which has racked up twenty five percent return of a tangible equity
spk_65: so
spk_3: we obviously not one of those things i really need to do this however we are always you know shareholders friendly so if we ever see that there's great opportunity we absolutely will use the of capital at the right moment i thought what what what we did in the second quarter of for one hundred million was a quick execution because at that time for that price sure how much on tap right out you know so but we wait we have to be would also be mindful in a one of the greg advantage of these was trying to look at our capital ratio today and is there a ton of somewhat benign canonic environment
spk_5: and and we because of the it because of the interest rates are doubts we are doing extraordinary well from a return of equity return of as standpoint however has just been a completely different economic
spk_3: situation had it been like of six seven percent unemployment rate interest way we're in a much higher level that business were having trouble
spk_7: we adapt point having just kind of capital
spk_37: absolutely
spk_16: give our customers much stronger confident about why they want to be banking would east west and the others so as always mindful that does has been doing rudy rudy well for us
spk_56: back in two thousand and eight and two thousand and nine to in global financial crisis somehow somewhere which has have a bit more capital in our peers and sought out i'm mostly customer says you more comfortable with us so we always the their minds or that so that's once you reach the other thing is that we don't want to ah
spk_1: not have some access capital just in case it they're even potential acquisition opportunity and so forth know so we're very choosy in terms of of potential acquisitions however you know if there's something available or we always ready to execute so all of that you know is a combination of multiple factors say has to be where we are today and but one way the other feel very comfortable where we are and it's if it ever in a in a situation that we feel that the stock price of what about the other reason that we feel are all maybe somehow there's not enough of a confidence of that we we wanted to to some guy that was absolutely who stepped in would do the right thing so you can count on that
spk_66: yeah thank you thank you for perspective takes own it's just dumb i do on acid attacks or am not the us
spk_0: the tax expert but i want to make sure i understand that the cadence of of the amortization so i you said roughly ninety five percent of the one fifty or will flow through the am line stuff like a little over one hundred and forty i think he won his little over twenty
spk_67: can you help us with the tax rates because it looks like amortization last year was decent amount lower on the tax rate was twenty so i'm i'm coming to a tax rate kind of amid albert teens based on this guy of want to try to make a mistake like it i chris this is julian
spk_68: it's to the tax rate it will vary depending on your assumptions for pretax income whistles area with your assumptions for provision for credit costs obviously in terms attack somewhere decision on a full your bassist when you look at one hundred and fifty million of tax credits think of it as and ninety five percent of that will go into the taxpayer them recent however we booked a more to say so
spk_69: when the credits closed and go into service therefore for what's on the docket for the first quarter to twenty two million that means amortization rate in quarters two three and four will be higher in order to come up into that full year ninety five percent as credits clothes and go into service so he wrote in their side effects for the
spk_8: first quarter ninety two million of tax credits will be sex recalculation and that will go on up through the years and i can follow up with you offline isolation if you like
spk_39: the next question comes from jared chavez as fargo see to go ahead
spk_1: a good morning thank you
spk_67: yes yeah i guess when you look at the the moves you made with swaps in callers
spk_70: and the potential to add more is your goal to get to serve eliminate all that as insensitivity earlier much of that insensitivity earlier
spk_8: and twenty three or how should we be thinking about just your general as insensitivity positioning over the first two quarters
spk_1: gallery pasta
spk_50: say that that is
spk_0: as far as insensitivity what we wanna make sure is that when we look at the balance you than the loan portfolio that me i see
spk_71: avowedly what we think this might happen
spk_29: hedge kind of risk that we see from and she's right perspective ah but still expected yeah success is it was change up okay and then by all have any any outlook on the fee income lines
spk_72: and and what you're seeing in terms of potential for growth there
spk_3: among the different lines
spk_5: question on the and income i would say that area that ah if you break that down as far as things that are within our control things that have to do was investments that we made growth that we see with our customers know that's going rate for going grey market kind of through bed factors being sad
spk_73: maybe we don't have control over i think that's gonna continue to be challenging especially the look at it from the perspective of mark to market on the derivatives and then also that said that bounces around but aside from that we expect that
spk_61: amanpour customer perspective and the growth perspective or still see those increases
spk_64: next question is a follow up from the for know i love with bank of america has
spk_74: a thank you
spk_75: i guess to so wanted to follow up on nov china in terms of one given that he opening that's underway in china does that it
spk_5: maybe stronger growth opportunities as you think about this year and how are you thinking about allocating more capital to that business and i appreciate a lot of the business is kind of cross border and this go across borders connectivity but would love to your if did i increase growth opportunities emerging in china and also only would love to hear your views me
spk_3: as is know the chair of a big big how do you see that relationship evolving and feeding more opportunity for the bank given it's cities positioning think you
spk_5: i'm in terms of the opening of china is not just a lighter sort of like a post pandemic opening da da da da da ability to travel
spk_76: in and out of china and so do i have no idea of foreign investments to do at ease about d not having to restriction to do quarantine and so full of that's actually as as a big factor because of many of our management team have not been back to china for the last
spk_14: ooh three years and so i think does likewise the same thing for many of these of business who are around the world who are doing business in china and and they were restricted by that and them with this opening up i think that's a huge factor that the health substantially as was the second part
spk_77: his stupidity
spk_3: chinese government new policies towards business are obviously did last two or three years
spk_7: the business sectors were having some for time what are you and now social media hi tech video gaming know entertainment
spk_3: the state
spk_61: education you name it
spk_3: every one of these sectors the hamburgers because of cost of a much
spk_6: more challenging policy or with regulation that came up that hinder the ability to go now it just for the last few weeks thanks turn in a completely different direction of government are providing support to the real estate sectors they also really getting much more business friendly to these other industries etc
spk_64: and so with that
spk_78: we also see that housed foreign investments
spk_61: are getting does license approved and getting death
spk_7: let's say additional investment to get majority shares are also sign off and so forth so we do see that at this stage the business opportunity to much better now than reflected on nice west bank we have always has been mainly focusing on ah
spk_64: cross border business and so i think that would this additional opening up than now did more business friendly kind of policies
spk_3: clearly it would encourage cross border diseases please keep in mind that despite the of from the us i that we can see that may be dead
spk_7: attitude towards china has not improved
spk_79: but on the other hand we order to keep in mind is that the business that been restricted a usually related to national security issues
spk_7: the highly sensitive or maybe some very very high level technology
spk_5: biotech type of business the quite frankly that east west moody do not have anything to do with an hour focuses on he's very very
spk_7: common like an electronics
spk_64: garments and and and business
spk_61: items that import export or investments
spk_5: to bowl shores that to the consumer markets and excedrin that are not related to national security issue so we do few that do plenty of room to grow in even during the pandemic
spk_80: when china literally was shut down against
spk_0: a sideboard we still fun way to go along with you bring in addition of new customers so we expect us to continue to blow but i don't think that he was will be an organization that just because of this of new opening that would just a rapidly trying to push a lot of capital in there
spk_81: or and we're going to continue to stay steady and will continue to be observing the market and the sure we make the wise choice but i expect expected in terms of a sustainable growth opportunities in the greater china region and also particular as you mention throughout asia
spk_3: we feel pretty confident that
spk_0: that will be something that we expect us

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