East West Bancorp Inc (EWBC) 2002 Q4 法說會逐字稿

Good day, ladies and gentlemen, welcome to the fourth quarter 2002 earnings conference. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touch tone telephone. I would now like to turn the call over to Mr. Steven Canup. Please go ahead, sir.

女士們、先生們，大家好，歡迎參加2002年第四季財報發表會。目前，所有參與者均處於只聽模式。稍後我們將進行問答環節，屆時會給予具體指示。會議期間如有任何需要幫助的人，請按按鍵式電話上的星號鍵，然後按數字鍵0。現在我將把通話交給史蒂文·卡納普先生。請繼續，先生。

Thank you. Good morning everyone and thank you for joining us to discuss East West Bancorp’s financial results for the fourth quarter and full year of 2002. In just a moment our Dominic Ng, Chairman, President, and CEO, will provide a summary of our financial performance for the quarter and selected key topics. Then Julia Gouw, our Executive VP, CFO, will review the financial details. We will then open the call to questions.

謝謝。各位早安，感謝各位參加本次會議，共同探討東西銀行2002年第四季及全年的財務表現。稍後，我們的董事長、總裁兼執行長 Dominic Ng 將概述本季的財務表現和一些關鍵議題。然後，我們的執行副總裁兼財務長 Julia Gouw 將審查財務細節。接下來我們將開放提問環節。

First, I would like to caution participants that during the course of the conference call, management may make projections or other forward-looking statements regarding the events our future performance of the company within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. We wish to caution you that these forward-looking statements may differ materially from actual results due to a number of risks and uncertainties.

首先，我想提醒各位參與者，在電話會議期間，管理層可能會根據 1995 年《私人證券訴訟改革法案》的安全港條款，對公司未來的業績做出預測或其他前瞻性陳述。我們謹此提醒您，由於許多風險和不確定因素，這些前瞻性陳述可能與實際結果有重大差異。

For more detailed description of factors that affect company's operating result, we refer you to our filings from the Securities and Exchange Commission, including our annual report on Form 10(k) for the year December 31st, 2001. I’d also like to remind you that today's call is being recorded and is available in replay format at East West Bank.com and streetevents.com. Now I'd like to you turn the call over to Dominic.

有關影響公司經營績效的因素的更詳細說明，請參閱我們向美國證券交易委員會提交的文件，包括我們截至 2001 年 12 月 31 日的 10(k) 表格年度報告。我還要提醒各位，今天的電話會議正在錄音，可以在 East West Bank.com 和 streetevents.com 上收聽重播。現在請把電話交給多明尼克。

Thank you, Steven. Good morning and thank you for joining us. Today we announced financial results for the full quarter and full year 2002 that include earnings per share of 52 cents for the quarter and $2.01 for the year. These figures represent growth and earnings per share of 33% and 25% respectively, and it is the sixth consecutive year of record earnings per share for East West. We are pleased to be able to reward our shareholders not only with another year of quality, record earnings, but also with a continued strengthening of our balance sheet and our banking franchise, particularly in the challenging operating environment.

謝謝你，史蒂文。早安，感謝各位的參與。今天我們公佈了 2002 年第一季和全年的財務業績，其中包括該季度每股收益 52 美分和全年每股收益 2.01 美元。這些數字分別代表成長 33% 和每股收益 25%，這是 East West 連續第六年創下每股收益紀錄。我們很高興能夠回報股東，不僅又一年取得了高品質的業績和創紀錄的盈利，而且還持續加強了我們的資產負債表和銀行業務，尤其是在充滿挑戰的經營環境下。

We work diligently throughout the year to deliver both strong earnings growth and position the bank to capitalize on opportunities in 2003 and beyond. Among the more important achievements in 2002 were a record return on average assets of 1.63%, further growth in core deposits to $1.4b, the highest in our history representing 48% of total deposits, net charge offs for year of only 11 basis points, and a nonperforming asset ratio well within our target range despite the continued soft economy.

我們全年辛勤工作，力求強勁的獲利成長，並使銀行能夠在 2003 年及以後抓住機會。2002 年最重要的成就包括：平均資產回報率創下 1.63% 的紀錄；核心存款進一步增長至 14 億美元，創歷史新高，佔總存款的 48%；年度淨沖銷率僅為 11 個基點；儘管經濟持續疲軟，但不良資產率仍遠低於我們的目標範圍。

Achieving an efficiency ratio of 40% for the year while continuing to make necessary ongoing investments in our platform. In addition to the operating performance, we also undertook a number of key strategic moves during the year, including first the launch of the 99 in store branches, which has further solidified our role as the most dynamic force in the Chinese American retail banking sector. The four branches open to date have made strong contribution to our deposit growth, gathering solid core deposits from retail and small commercial ethnic customers and substantially lower capital and operating costs and traditional branches.

在持續對平台進行必要投資的同時，實現了全年 40% 的效率比率。除了經營業績外，我們今年還採取了一些關鍵的策略舉措，包括首先推出 99 家店內分行，這進一步鞏固了我們作為美籍華人零售銀行業最具活力力量的地位。迄今為止開設的四家分行對我們的存款成長做出了巨大貢獻，從零售和小商業民族客戶那裡獲得了穩定的核心存款，並且大幅降低了資本和運營成本，與傳統分行相比，我們的存款增長速度更快。

These branches have made important contributions to our growth and our long term financial performance. We believe that the full benefit of in store operations will be realized in a more typical interest rate environment that will increase our reinvestment returns on these core deposits. In 2003, we intend to open three new in store branches beginning in the first quarter with one location in Northern California.

這些分支機構為我們的發展和長期財務表現做出了重要貢獻。我們相信，在更正常的利率環境下，店內營運的全部效益將得以實現，這將提高我們核心存款的再投資回報。2003年，我們計劃從第一季開始開設三家新的店內分店，其中一家位於北加州。

Second, expanded international banking platform. Throughout 2002, we further built our international banking capabilities and created additional diversification in our revenue streams. During the year we initiate our financing bank program reaching out to California's middle market exporters to assert exploiting new overseas opportunities. We completed numerous transactions, financing the export of a wide range of goods and services to Asia and Latin America that generated new loans with attractive risk returns.

第二，拓展國際銀行平台。2002 年全年，我們進一步增強了國際銀行業務能力，並實現了收入來源的多元化。今年，我們啟動了融資銀行計劃，旨在幫助加州的中型出口商開拓新的海外市場機會。我們完成了多筆交易，為向亞洲和拉丁美洲出口各種商品和服務提供融資，從而產生了具有吸引力的風險回報的新貸款。

We believe that by focusing on the growing export base, we not only diversify our risk and achieve greater efficiencies and synergies from or international banking division, but also create a new niche where East West has some competitive advantages. In addition to the bank program, we also worked during the year on our new China rep office which formally opened this week. We see numerous opportunities in this new presence, both in our traditional trade finance business, in our bank operation, and in nontraditional roles where East West may assist both American and Chinese firms in finding trading and business partners and a second capital market in both countries.

我們相信，透過專注於不斷成長的出口基礎，我們不僅可以分散風險，從國際銀行部門獲得更高的效率和協同效應，還能創造一個東西方銀行具有競爭優勢的新市場。除了銀行專案之外，我們今年還致力於籌建新的中國代表處，該代表處已於本周正式開幕。我們看到，這個新的業務模式帶來了許多機遇，無論是在我們傳統的貿易融資業務、銀行業務，還是在非傳統領域，東西方都可以協助美國和中國企業尋找貿易和商業夥伴，以及在兩國建立第二個資本市場。

Finally at the end of the year, we'll enter into a definitive agreement for the acquisition of Pacific Business Bank, in short PBB. Like many of our previous acquisitions, the PBB transaction will allow East West to bring greater value to an established relationship banking franchise through expanded products and services and larger lending limits. PBB has built a loyal customer base of manufacturing, service and distribution firms throughout Southern California that has generated both healthy growth in the loan portfolio, but also an attractive core commercial deposit base and contributed to a 65% core deposit ratio.

最後，在年底，我們將就收購太平洋商業銀行（簡稱 PBB）達成最終協議。與我們先前的許多收購一樣，PBB 交易將使 East West 能夠透過擴大產品和服務以及提高貸款限額，為已建立的關係銀行特許經營權帶來更大的價值。PBB 在南加州建立了忠實的製造、服務和分銷公司客戶群，這不僅帶來了貸款組合的健康成長，也帶來了有吸引力的核心商業存款基礎，並促成了 65% 的核心存款比率。

We can bring further value, however, to this customer base through our cash management system, a product that PBB does not currently offer and other deposits and investment services, as well as the ability to capture more customer business through greater single borrower lending limits and great broader lending products. We are also pleased to find an acquisition that shares a natural customer base of our own operation. We believe that the integration of PBB should prove fast and efficient.

然而，我們可以透過現金管理系統（PBB 目前尚未提供的產品）以及其他存款和投資服務，為這部分客戶帶來更多價值，並透過提高單一借款人的貸款限額和更廣泛的貸款產品來吸引更多客戶業務。我們也很高興找到一家與我們自身業務擁有共同天然客戶群的收購對象。我們相信，PBB的整合將會快速且有效率。

Finally, I would like to discuss our initial estimates for 2003 earnings per share. In this morning's release we provided details of the assumption for 2003 performance and our range of estimate for 2003. We remain very confident in our ability to generate solid growth in loans and deposits, to control expenses and to maintain our assets within target level.

最後，我想討論一下我們對 2003 年每股盈餘的初步估計。在今天早上發布的新聞稿中，我們提供了 2003 年業績假設的詳細資訊以及我們對 2003 年業績的估計範圍。我們仍然非常有信心在貸款和存款方面實現穩健增長，控制支出，並將資產維持在目標水平。

Our earnings streams remain, however change from outside factors beyond our control, most importantly the interest rate environment. The most recent interest rate reduced our net interest margin in the fourth quarter by approximately 27 basis points, while our loan growth and the repricing of our time deposit will compensate for much of the rate reductions, our net interest margin will continue to be impacted by the historically low interest rate in 2003.

我們的收益來源依然存在，但會受到我們無法控制的外部因素的影響而發生變化，其中最重要的是利率環境。最近的利率下修使我們第四季的淨利差減少了約 27 個基點，雖然我們的貸款成長和定期存款的重新定價將彌補大部分利率下調的影響，但我們的淨利差仍將受到 2003 年歷史低利率的影響。

In addition, our effective tax rate in 2003 will return to a normalized 37% to 38%, compared to an effective rate for 2002 and parts of 2001 at a 26% to 32% range.

此外，2003 年我們的實際稅率將恢復到正常的 37% 至 38%，而 2002 年和 2001 年部分時間的實際稅率在 26% 至 32% 之間。

Despite these negative factors, we believe that we can continue to provide shareholders the quality earnings growth balance. Based on the flat interest rate environment, we estimate our 2003 earnings per share at approximately $2.25, and with a slight to moderate interest increase to interest rates, add $2.40.

儘管存在這些不利因素，我們相信我們能夠繼續為股東提供高品質的獲利成長平衡。在利率保持不變的環境下，我們估計 2003 年每股收益約為 2.25 美元；如果利率略有或適度上升，則每股收益將增加 2.40 美元。

The lower end of this range represents 28% growth and pretax income and 13% growth in net income. Our higher effective tax rate accounts for the entire differential between pretax and net. On a comparable basis, our pretax income in 2002 increased by 31%. So, on an operational basis, we anticipate earnings growth at approximately same rate as last year, despite a continued challenged interest rate and economic environment.

此範圍的下限代表稅前收入成長 28%，淨收入成長 13%。我們較高的實際稅率可以完全彌補稅前稅額與稅後稅額之間的差額。以可比口徑計算，我們2002年的稅前收入增加了31%。因此，從營運層面來看，儘管利率和經濟環境持續充滿挑戰，我們預計獲利成長速度將與去年大致相同。

The assumptions viewed in this initial estimate include total loan growth of 24%, noninterest income, increases to 12% to 14% and noninterest expense growth of 12% to 14%. Organic growth, excluding the impact of the PBB acquisition will be 15% for loans, 10 to 12% for noninterest income, and 7 to 8% for noninterest expense.

初步估算中考慮的假設包括貸款總額成長 24%，非利息收入成長 12% 至 14%，非利息支出成長 12% 至 14%。不計 PBB 收購的影響，有機成長方面，貸款成長 15%，非利息收入成長 10% 至 12%，非利息支出成長 7% 至 8%。

We believe that these growth rates are the kind of prudent balance between the earnings growth and the protection of shareholder value. In order to compensate for the reduction in interest rate from the high effective tax rates in 2003 and to generate net income, we will require loan growth in the 25% range. We believe that given the current economic environment, such loan growth would not be in the best interest of our shareholders and will not advance our long term goal of maintaining consistent high quality earnings growth and a healthy balance sheet.

我們認為，這些成長率是在獲利成長和保護股東價值之間取得的審慎平衡。為了彌補 2003 年高實際稅率導致的利率下降，並產生淨收入，我們需要貸款成長率達到 25% 左右。我們認為，鑑於當前的經濟環境，這樣的貸款成長不符合我們股東的最佳利益，也不會推進我們維持持續高品質獲利成長和健康資產負債表的長期目標。

I will now turn the call over to Julia to discuss the details of these results.

現在我將把電話交給茱莉亞，讓她來討論這些結果的細節。

Thank you, Dominic. I will review the major financial results for the quarter as well as the current trends in our operations. Earnings per share for the fourth quarter increased 33% to 52 cents, while earnings per share for the full year rose 25% to $2.01. 2002 was the sixth consecutive year of record earn annual earnings for East West. Earnings for the quarter increased due to a combination of higher loans and earning asset balances, growth in noninterest income, and lower expense level offset by a lower interest margin and a higher [inaudible].

謝謝你，多米尼克。我將回顧本季的主要財務業績以及我們目前的營運趨勢。第四季每股收益成長 33% 至 52 美分，全年每股收益成長 25% 至 2.01 美元。 2002 年是 East West 公司連續第六年創下年度獲利紀錄。本季收益成長是由於貸款和生息資產餘額增加、非利息收入成長以及支出水準降低等因素共同作用的結果，但被較低的息差和較高的[聽不清]所抵消。

The net interest margin for the fourth quarter equals 3.78% compared to 4% in the prior year period. A portion of the decrease in the margin was due to the amortization of the premium on two collateralized mortgage obligations. We have traditionally purchased short duration mortgage backed securities with an average maturity of two to four years. Late in December the issue of two of these securities prepaid the entire tranche we purchased causing the amortization of the entire $894,000 premium. This was reflected as a reduction in net interest income and lowered the margins by 12 basis points. The total amount of premium remaining on the balance sheet as of December 31st, 2002 was 738,000 on a total mortgage backed portfolio of $116m. [$160m]

第四季淨利差為 3.78%，而上年同期為 4%。利潤率下降的部分原因是因為兩筆抵押貸款的溢價攤銷。我們歷來購買期限較短的抵押貸款擔保證券，平均期限為兩到四年。12 月下旬，其中兩份證券的發行提前償還了我們購買的全部份額，導致全部 894,000 美元溢價攤銷。這反映在淨利息收入的減少上，導致利潤率下降了 12 個基點。截至 2002 年 12 月 31 日，資產負債表上剩餘的保費總額為 738,000 美元，抵押貸款支持證券組合總額為 1.16 億美元。 [1.6 億美元]

The remaining decline in margin resulted from the debt reduction in the fourth quarter. We believe that we have reached a natural floor for rate on our nonprime deposit and able to make only slight reductions in our rate in response to [inaudible]. Our savings accounts now pick 10 basis points to 15 basis points, money market accounts 10 basis points to 1.25%, and retail checking accounts 10 basis points. We do, however, have the ability to reprice our time deposit which will have a positive impact on our margin in 2003.

利潤率的剩餘下降是由於第四季債務減少造成的。我們認為，我們的非優質存款利率已經達到了自然下限，並且只能對利率做出小幅調整以應對[聽不清楚]。我們的儲蓄帳戶利率現在為 10 個基點至 15 個基點，貨幣市場帳戶利率為 10 個基點至 1.25%，零售支票帳戶利率為 10 個基點。不過，我們有能力重新調整定期存款的價格，這將對我們 2003 年的利潤率產生正面影響。

As of December 31, 2002, the average cost for our time deposits was 2.29% compared to our current rate of 1.5% for a six month CD and 1.75 % for a one year certificate. 58% of our time deposits were repriced for the first half of this year and 94% for full year.

截至2002年12月31日，我們的定期存款平均成本為2.29%，而我們目前的六個月期定期存款利率為1.5%，一年期定期存款利率為1.75%。今年上半年，我們58%的定期存款進行了重新定價，全年則有94%進行了重新定價。

Assuming a flat interest rate environment, the repricing of time deposits combined with our anticipated loan growth, we estimate and net interest margin in the 4% range in the first six months of the year, moving to the 4.2% range for the second half of 2003.

假設利率環境保持不變，定期存款重新定價，加上我們預期的貸款成長，我們估計今年上半年的淨利差在 4% 左右，2003 年下半年將達到 4.2% 左右。

Average earnings assets for the fourth quarter grew by 15% to $3.1b with average loans for the quarter increase 8% to $2.3b. Excluding the impact of loan sales and securitizations, average loans increased by 20%. During the quarter we saw $43m in single family CRA and SBA loans for cash gain as well as secure advertised $35m in single family loans into Fannie Mae securities we retain on the balance sheets.

第四季平均收益資產成長 15% 至 31 億美元，該季度平均貸款成長 8% 至 23 億美元。剔除貸款出售和證券化的影響，平均貸款額增加了 20%。本季度，我們看到 4,300 萬美元的單戶住宅 CRA 和 SBA 貸款獲得現金收益，以及 3,500 萬美元的單戶住宅貸款以房利美證券的形式擔保，這些證券保留在我們的資產負債表上。

The transactions were executed primarily for liquidity and capital management purposes. We have regular trends to the securitization and secondary loan market in order to maximize our liquidity position and believe that such transactions provide East West with flexibility and meeting asset and loan growth objective, while maintaining our capital target.

這些交易主要是為了流動性和資本管理而進行的。我們定期關注證券化和二級貸款市場，以最大限度地提高我們的流動性狀況，並相信此類交易能夠為東西方提供靈活性，實現資產和貸款成長目標，同時保持我們的資本目標。

The acquisition of PBB is a prime example of this philosophy with the recent securitization assisting in our ability to fund the purchase price entirely with cash without the need to waste additional capital or liquidity. We do not anticipate selling any additional loans from our portfolio outside of our normal sales of fixed rate single family mortgages into the market during 2003.

收購 PBB 就是這個理念的絕佳例證，最近的證券化幫助我們能夠完全用現金支付收購價格，而無需浪費額外的資本或流動性。我們預計在 2003 年不會從我們的投資組合中出售任何額外的貸款，除了我們正常向市場出售固定利率單戶住宅抵押貸款之外。

Looking to 2003, we anticipate growth in earnings assets and loans of approximately 20%, including the impact of the acquisition of PBB. This is roughly equal to the growth in 2002, again excluding the impact of loan sales and securitization. This mix of loan growth should be similar to that of last year as well with commercial real estate, multi-family and construction loans making the largest contributions to the portfolio growth.

展望 2003 年，我們預期獲利資產和貸款將成長約 20%，其中包括收購 PBB 的影響。這大致相當於 2002 年的成長，同樣不包括貸款出售和證券化的影響。貸款成長構成應與去年類似，其中商業房地產、多戶住宅和建築貸款對投資組合成長的貢獻最大。

Loan loss provision for the quarter was $2.6m compared to $2.5m a year ago, and equal to the previous three quarters of the year. We expect to provide similar amounts in 2003 in line with the growth in the loan portfolio. The allowance losses at the percentage of total loans increased to 1.5% as of December 31st, 2002, compared to 1.28% at the end of 2001.

本季貸款損失準備金為 260 萬美元，而去年同期為 250 萬美元，與今年前三個季度持平。我們預計 2003 年將提供與貸款組合成長相近的金額。截至 2002 年 12 月 31 日，貸款損失準備金佔貸款總額的比例上升至 1.5%，而 2001 年底則為 1.28%。

We continue to generate healthy growth in noninterest income in the fourth quarter with core noninterest income which excludes nonrecurring gain on sale of loans and other assets and amortization of negative intangibles, increasing 38% to $7m. Total noninterest income for the fourth quarter equals $7.9m, 47% above the year ago period. Higher income from branch loan and letter of credit fee, accounted for the majority of the gains generated from our affordable housing financing practice. Our trade finance activity, our insurance and residential lending group. We estimate the income growth for 2003 of approximately 12% to 14% primarily from similar line items in 2002.

第四季度，我們的非利息收入持續保持健康成長，核心非利息收入（不包括出售貸款和其他資產的非經常性收益以及負無形資產攤銷）增加 38% 至 700 萬美元。第四季非利息收入總額為 790 萬美元，比去年同期成長 47%。分行貸款和信用證手續費帶來的較高收入，占我們經濟適用房融資業務收益的大部分。我們的貿易融資業務、保險和房屋貸款業務。我們估計 2003 年的營收成長率約為 12% 至 14%，主要依據是 2002 年類似的項目。

Noninterest expense remains stable for the quarter, totaling $16.3m, a 1% decrease from a year ago period. The efficiency ratio for the fourth quarter equals 39.67% compared to 46.18% in the year ago quarter.

本季非利息支出維持穩定，總計 1,630 萬美元，比去年同期下降 1%。第四季效率比率為 39.67%，去年同期為 46.18%。

Cash operating expenses which excludes the amortization of intangibles and investments in affordable housing partnerships equal $14.6m, also a 1% decrease from the fourth quarter of 2001 and equal to the level of the third quarter of 2002. The flat expense level reflects lower compensation expenses from lower bonus accrual as well as lower cost of data processing and occupancy expenses.

不包括無形資產攤銷和對經濟適用房合作項目的投資的現金運營支出為 1460 萬美元，比 2001 年第四季度減少了 1%，與 2002 年第三季度的水平持平。費用水準持平反映了由於獎金累積減少而導致的薪酬支出降低，以及資料處理成本和辦公室費用降低。

In 2003 we anticipate a slight increase in occupancy costs associated with the 99 branch in store branches. Overall, we estimate organic expense growth for 2003 in the 7% to 8% range or approximately $4m to $5m and total expense growth of 12% to 14% or $7m to $9m, including the impact of PBB acquisition. This translates into an efficiency ratio in the 40% to 42% range for 2003.

2003 年，我們預計與 99 家分店相關的佔用成本將略有增加。整體而言，我們估計 2003 年有機支出成長在 7% 到 8% 之間，約 400 萬到 500 萬美元；總支出成長在 12% 到 14% 之間，即 700 萬到 900 萬美元，其中包括 PBB 收購的影響。這意味著 2003 年的效率比率在 40% 到 42% 之間。

Our effective tax rate for the quarter was 29.5% compared to 26.3% a year ago. The increase in the tax rate reflects a lower yield on the loans. In addition, during the quarter we recognize tax benefits from the enterprise interest deductions which lowered the effective tax rate. In 2003, we anticipate an effective tax rate, 37% to 38% which reflects our normalized rate using our affordable housing tax credit and the tax benefit.

本季實際稅率為 29.5%，去年同期為 26.3%。稅率上升反映出貸款收益率下降。此外，本季我們也確認了企業利息扣除所帶來的稅務優惠，從而降低了實際稅率。2003 年，我們預計實際稅率為 37% 至 38%，這反映了我們使用經濟適用房稅收抵免和稅收優惠後的正常稅率。

As quality remains our targeted range in the fourth quarter. As we had cautioned last year, nonperforming assets and nonaccrual loans for much of 2002 remained far below normalized levels and were not indicative of our standard expectations. Nonperforming assets as of December 31st were 37 basis points of total assets or $12.2m compared to 20 basis points or $5.8m a year ago. Total nonaccrual loans at December 31st, 2002 equal $8.9m or 38 basis points of total loans compared to $3.7m or 17 basis points a year ago.

第四季度，品質仍然是我們的目標範圍。正如我們去年所警告的那樣，2002 年大部分時間的不良資產和非應計貸款仍然遠低於正常水平，並不符合我們的標準預期。截至 12 月 31 日，不良資產佔總資產的 37 個基點，即 1,220 萬美元，而一年前為 20 個基點，即 580 萬美元。截至 2002 年 12 月 31 日，非應計貸款總額為 890 萬美元，佔貸款總額的 38 個基點，而一年前為 370 萬美元，佔貸款總額的 17 個基點。

Three loans accounted for nearly the entire increase in nonperforming assets and nonaccruals. These loans include one multi-family loan and two commercial business loans. We believe that each of these loans became nonperforming for individual situations and not as a result of a general economic or business deterioration in our core market area. We continue to aggressively pursue settlement of these loans, but believe that they will remain nonperforming for quite a number of quarters.

三筆貸款幾乎佔了不良資產和非應計項目增加的全部金額。這些貸款包括一筆多戶住宅貸款和兩筆商業貸款。我們認為，這些貸款之所以成為不良貸款，是因為個別情況所致，而不是由於我們核心市場區域的整體經濟或商業惡化所致。我們將繼續積極推動這些貸款的結算，但相信這些貸款在未來幾季內仍將處於不良貸款狀態。

For 2002, our goals for nonperforming assets remain on the 50 basis point. Net charge off for the quarter equals $1.5m for an annualized 26 basis points of average loans compare to $1m for an annualized 18 basis point a year ago. For the year the net charge off total $2.5m or 11 basis points, compared to $4.2m or 21 basis points for 2001. We continue to anticipate net charge off for 2003 at or below 35 basis points.

2002 年，我們的不良資產目標仍為 50 個基點。本季淨沖銷額為 150 萬美元，年化平均貸款沖銷率為 26 個基點，而去年同期為 100 萬美元，年化平均貸款沖銷率為 18 個基點。該年度淨沖銷總額為 250 萬美元，即 11 個基點，而 2001 年為 420 萬美元，即 21 個基點。我們繼續預期 2003 年淨沖銷額將達到或低於 35 個基點。

Finally, we remain well capitalized with a capital ratio of 10.2%. We have sufficient capital to support our anticipated growth and expect to maintain our ratios in this general range in 2003.

最後，我們的資本適足率仍達到10.2%，資本適足率良好。我們擁有充足的資金來支持我們預期的成長，並預計在 2003 年將各項比率維持在這一大致範圍內。

I will now turn the call back to Dominic.

現在我將把電話轉回給多明尼克。

Thank you, Julia. Again, thank you for joining this morning's call. We are very pleased with the performance of the bank for 2002 and our ability to generate our sixth year of record earnings for shareholders in the face of a challenging environment and look forward to delivering another year of record earnings in 2003.

謝謝你，茱莉亞。再次感謝您參加今天早上的電話會議。我們對本行 2002 年的業績非常滿意，在充滿挑戰的環境下，我們連續第六年為股東創造了創紀錄的收益，並期待在 2003 年再創佳績。

We believe that we have one of the strongest community bank franchises in the state that not only provides value added products and service to our niche markets, but also continues to produce consistent and quality earnings with an equally strong balance sheet and asset quality. We thank our customers, employees and shareholders for their support in 2002 and for their willingness to be part of our future success as well.

我們相信，我們擁有州內最強大的社區銀行特許經營權之一，不僅為我們的細分市場提供增值產品和服務，而且還持續產生穩定、高品質的收益，同時保持著同樣強勁的資產負債表和資產品質。我們感謝客戶、員工和股東在 2002 年的支持，也感謝他們願意繼續參與我們未來的成功。

I will now open the call to questions.

現在開始接受提問。

Thank you. Ladies and gentlemen, if you have a question at this time, please press the 1 key on your touch tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Again, if you have a question, please press the 1 key now.

謝謝。女士們、先生們，如果您現在有任何疑問，請按您按鍵式電話上的 1 鍵。如果你的問題已得到解答，或者你想從佇列中移除自己，請按井號鍵。再次提醒，如果您有任何疑問，請現在按 1 鍵。

The first question comes from Brett Rabatin from FTN Financial.

第一個問題來自 FTN Financial 的 Brett Rabatin。

Good morning. A couple questions. First, could you, on the premium securities, could you address how you intend to deal with the remaining portion? Are you going to let that cash flow, or what do you intend to do with those securities?

早安.我有幾個問題。首先，關於溢價證券，您能否說明您打算如何處理剩餘部分？您打算讓這筆現金流入市場，還是打算如何處理這些證券？

We will continue to keep the securities because the balance is fairly small. But we do expect a very fast payoff. So most likely the premium, majority of the premium, the $735,000 will be amortized in 2003.

我們將繼續持有這些證券，因為餘額相當少。但我們預計很快就會獲得回報。因此，大部分保費，也就是 735,000 美元，很可能在 2003 年攤提。

So your assumption regarding that is, then, that the cash flow doesn't kick out, then you have to amortize that faster than you anticipate or faster than you originally modeled I should say?

所以你的假設是，如果現金流沒有出現，那麼你就必須比預期或最初建模的速度更快攤提這筆款項？

That's correct.

沒錯。

Okay. And then regarding your fee income guidance for '03, could you give some more color on gain on sale of loans? It looks like to me given your guidance we would assume less than a million for the full year and a gain on sale of loans. And then also wanted to hear thoughts on LCs and how that market looks. It's held up here relatively as well kind of despite some trends.

好的。關於您對 2003 年手續費收入的預測，您能否詳細說明一下出售貸款的收益狀況？依我看來，根據您的指導，我們可以假設全年收入不到一百萬美元，並且會從出售貸款中獲得收益。此外，我還想聽聽大家對LC的看法以及該市場的發展狀況。儘管存在一些趨勢，但它在這裡的表現相對來說還不錯。

Again on sales, on our 2003 guidance, we are reducing the gain on sales this year total about $2m, but we are reducing it to about $1m. In the past few years on the average, we have gain on sales between $1m to $2m. So on the conservative side we project $1m dollars in gain on sales.

再次談到銷售方面，根據我們 2003 年的業績指引，我們將今年的銷售收益總額減少約 200 萬美元，但減少幅度約為 100 萬美元。過去幾年，我們平均每年的銷售收益在 100 萬至 200 萬美元之間。因此，保守估計，銷售收益將達到 100 萬美元。

You're saying $1m?

你是說100萬美元？

That's correct.

沒錯。

Okay. On letter of credit, can you talk about fee income there and what you're expecting those trends to be for this year?

好的。關於信用證，您能否談談這方面的手續費收入，以及您對今年相關趨勢的預期？

We do expect an increase in some of the letters of credit, the income in our projection, only because the balance towards the end of the year in 2002, most of the fee income comes from either [inaudible] or the credit enhancements and the balance of the credit enhancements is higher towards the end. That should continue to 2003.

我們預期部分信用狀收入會增加，這僅僅是因為 2002 年末的餘額，大部分費用收入來自[聽不清楚]或信用增級，而信用增級的餘額在年底較高。這種情況應該會持續到2003年。

Okay. And then on the asset quality front, could you give a little more color on the loans you currently have, the $8.9m of NPAs and what those are related to? I know they were less than $6m in the prior quarter so -- and you obviously moved some stuff to ORE during the fourth Q. So, if you could just walk us through that?

好的。那麼，關於資產品質方面，您能否更詳細地介紹您目前的貸款情況、890萬美元的不良資產以及這些不良資產與哪些方面相關？我知道上一季他們的收入不到600萬美元，所以——而且你們顯然在第四季把一些東西轉移到了ORE。那麼，您能給我們詳細解釋一下嗎？

We have one more Thai family at $3.7m. And we also have two commercial loan , one at $1.5m and the other one at $1.75m. So the majority that we currently have outstanding and the nonperforming assets.

我們還有一個泰國家庭，成交價為 370 萬美元。我們還有兩筆商業貸款，一筆是 150 萬美元，另一筆是 175 萬美元。因此，我們目前大部分的未償債務和不良資產。

Okay. And then you have added about $6m to the reserve this year, which is quite an increase on your reserve level relative to loans. You obviously securitized. I was curious if you could give us your thoughts on reserving for '03.

好的。而且今年你們的儲備金增加了約 600 萬美元，相對於貸款而言，這比你們的儲備金水準有了相當大的成長。你顯然已經進行證券化了。我很好奇您能否談談您對預訂 03 年款的看法。

About 2.6, 2.5, 2.6 per quarter, $10m per quarter, that should be sufficient to keep up with the loan growth.

每季約 2.6、2.5、2.6，即每季 1000 萬美元，這應該足以跟上貸款成長的步伐。

We started the fourth quarter 2001 with an increase of provision for loan losses to $2.5m per quarter. And so we consistently did that in 2002 and then the idea is that with the economic condition that is hard for us to project. We thought it would be better for us to be prudent and also in anticipation of loan growth, so we think that by keeping the provision at that level -- our balance sheet will get stronger and stronger. As time goes by and that's what we expected to continue to do that in 2003.

2001 年第四季開始，我們將貸款損失準備金增加到每季 250 萬美元。因此，我們在 2002 年一直這樣做，但當時的經濟狀況很難預測。我們認為謹慎行事會更好，同時也考慮到貸款成長，因此我們認為，透過將撥備維持在該水平，我們的資產負債表將會越來越強勁。隨著時間的推移，我們也希望在 2003 年繼續這樣做。

Okay. One last question, and then I'll turn it over to someone else. On the Pacific business bank, is that still going to close in March? And how is that going? I know they have a relatively modest NPAs. 25 basis points. I wanted to know how the balance sheet is going?

好的。最後一個問題，問完之後我就把問題交給其他人。關於太平洋商業銀行，它還會在三月關閉嗎？進展如何？我知道他們的不良貸款率相對較低，只有25個基點。我想知道資產負債表的狀況如何？

Yes, we do plan to close in March. In some of their asset quality, based upon our review, they have really cleaned up the loan quality. So, we are not concerned about problem assets as of now.

是的，我們計劃在三月關門。根據我們的審查，他們確實提高了部分資產的質量，尤其是貸款品質。所以，目前我們並不擔心問題資產。

Okay. Thank you.

好的。謝謝。

Thank you.

謝謝。

The next question comes from Jennifer Demba from SunTrust Robinson Humphrey.

下一個問題來自 SunTrust Robinson Humphrey 的 Jennifer Demba。

Good morning. I was wondering if you could give us the deposit balance for the 99 branch stores as of right now and how much loan production have you seen out of those branches?

早安.我想請問您能否提供截至目前99家分行的存款餘額，以及這些分行的貸款發放？

Those branches are predominantly focused on retail deposit generation, and they do actually originate from consumer loans such as mortgages and single family mortgages and also home equity line and auto loans and so forth. But those are relatively few. Their primary focus for the past year has been on the deposit generation.

這些分行主要專注於零售存款業務，而這些存款實際上來自消費貸款，例如抵押貸款、單戶住宅抵押貸款、房屋淨值信貸額度、汽車貸款等等。但這樣的數量相對較少。過去一年，他們的主要工作重點是存款。

As of today, they have over 50 in total, at least four branches which opened. Two opened in late February and then the others opened in late August. And the total deposit generated by these four stores equal to approximately $59m.

截至目前，他們總共有超過 50 家分店，至少有四家分店已經開業。其中兩家於二月下旬開業，其餘的則於八月下旬開業。這四家門市產生的存款總額約為 5,900 萬美元。

Okay. Are you planning any cost promotions with the supermarket this year which would be opening more branches?

好的。今年您是否計劃與超市合作任何成本促銷活動，例如開設更多分店？

We plan to open three more next year. Now I want to emphasize for example, of those, three more this year, I want to emphasize that for the past, you know, that the last two that we opened and also in the future, we're probably not going to be aggressively doing much promotion simply for the fact that even when we get deposits at what we call relatively cheap rate is still relatively speaking compare with the fed fund rate is somewhat high.

我們計劃明年再開設三家分店。現在我想強調的是，例如，今年還有三家分行，我想強調的是，過去我們開設的最後兩家分行以及未來，我們可能不會積極進行太多推廣，原因很簡單，即使我們以所謂的相對低利率獲得存款，但與聯邦基金利率相比，這個利率仍然相對較高。

And therefore, you know, in this kind of rate environment, it doesn't make sense for us to be aggressively doing a lot of promotions. However, these in store branches are still able to generate whatever they need to do. And we think that by the time interest rates start rising we will be getting a lot more aggressive to do promotions and so forth.

因此，你知道，在這種利率環境下，我們積極進行大量促銷活動是沒有意義的。然而，這些店內分店仍然能夠產生他們需要做的任何事情。我們認為，等到利率開始上升時，我們會採取更積極的促銷等措施。

Okay. Thanks.

好的。謝謝。

The next question comes from Campbell Chaney from Sanders Morris Harris.

下一個問題來自桑德斯·莫里斯·哈里斯律師事務所的坎貝爾·錢尼。

I'd like to get back to the margin question, Julia. Can you give us some detailed information such as what was the yield on the overall securities portfolio, the yields on the loans, how the loans priced down so much in the fourth quarter? I know you said 58% of the time deposits reprice in the first half of the year. Can you give us some color on how much of those deposits reprice in the first quarter and how much of those deposits reprice in the second quarter so we can get an idea of how quickly the margin is going to snap back?

茱莉亞，我想回到利潤率的問題。能否提供一些詳細信息，例如整體證券投資組合的收益率、貸款收益率，以及為何貸款價格在第四季度大幅下降？我知道你說過，存款價格在每年上半年有 58% 的機率會重新調整。能否詳細說明一下這些存款中有多少會在第一季重新定價，又有多少會在第二季重新定價，以便我們了解利潤率會以多快的速度恢復？

In some of the first half, 60% is in first quarter and 40% in the second quarter. And almost 90% of all the time deposits were repriced by the end of the year. And our loans, a lot of the loans,are tied to prime rates did not have the floor. So a lot of them repriced down faster than our time deposits.

上半年部分地區，60% 的地區在第一季度，40% 的地區在第二季度。到年底，幾乎90%的定期存款都進行了重新定價。而且我們的許多貸款都與基準利率掛鉤，而基準利率並沒有下限。所以很多產品的降價速度比我們的定期存款降價速度還要快。

Right now, the yield on our loans is -- portfolio is close to 6%, 5.9%, 5.98%, around that area. And the yield opt investment security is about 3%.

目前，我們的貸款收益率——投資組合接近 6%、5.9%、5.98%，大致在這個範圍內。而該投資證券的收益率約為3%。

I want to also point out one other factor. At the end of third quarter and during the fourth quarter we have secure advertised a total of $200m single family mortgages which obviously when we securitize the mortgage, it will reduce our yield for the asset. And that also has an effect to the margin compression.

我還想指出另一個因素。在第三季末和第四季期間，我們已成功發行了總計 2 億美元的單戶住宅抵押貸款，顯然，當我們把這些抵押貸款證券化時，這將降低我們資產的收益率。這也會對利潤率壓縮產生影響。

How much of that impact on margins?

這會對利潤率產生多大影響？

We estimate the impact about 7 to 8 basis points on the margins.

我們估計這將對利潤率產生約 7 至 8 個基點的影響。

Okay, great. And then the CMO, the remaining CM s that are out there, I think the previous question about you can amortize those over 2003, is it going to be pretty even amortization throughout the year?

好的，太好了。至於 CMO，以及剩下的 CM，我認為之前關於能否在 2003 年攤提這些費用的問題，全年攤提是否相當均勻？

We expect it's more front loaded because these are CMOs, so the tranches that used to support this prepayment have been paid off, so it will get faster and faster for the C M O to be paid off. So it would be pretty much like amortized much of the fund loaded.

我們預計前期付款會更多，因為這些是 CMO，所以用於支援預付款的批次已經付清，因此 CMO 的付款速度會越來越快。所以這基本上就等於攤銷了大部分已投入的資金。

You think it will be gone in the first half?

你認為它會在上半場就消失嗎？

Yes, I believe so.

是的，我也這麼認為。

Okay. Great. Thank you.

好的。偉大的。謝謝。

Thanks.

謝謝。

There are no further questions.

沒有其他問題了。

Okay. There is no further question, I want to thank everybody that joined us for this conference call and I look forward to talk to you all in the next conference call in April. Thank you.

好的。沒有其他問題了，感謝各位參加本次電話會議，期待在四月的下次電話會議上與大家再次交流。謝謝。

Ladies and gentlemen, thank you for your participation in today's program. This concludes the conference. You may now disconnect.

女士們、先生們，感謝各位參與今天的節目。會議到此結束。您現在可以斷開連線了。