East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Q4 2023 Earnings Presentation
25 slides from East West Bancorp's earnings presentation, Jan 23, 2024
Slide 1: Fourth Quarter and Full Year 2023 Earnings Presentation
East West Bancorp, Inc. Fourth Quarter and Full Year 2023 Earnings Presentation January 23, 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements Forward-Looking Statements This presentation contains forward-looking statements that are intended to be covered by the safe harbor for such statements provided by the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and e
Slide 3: Full Year 2023 Highlights
Full Year 2023 Highlights Key Metrics Highlights Net Income & Adjusted Pre-tax ▪ Record full year revenue and earnings Pre-Provision Income (PTPP)1 Net Income Adjusted PTPP1 − Revenue of $2.6 billion, up $263 million, 11% Y-o-Y +12% $1.8 − Net income of $1.2 billion, or $8.18 per diluted share $ in
Slide 4: Loans
Loans Prudent growth that bolsters diversification Average Loans End of Period Loan Growth (3Q23 to 4Q23) ($ in billions) ($ in millions) 4 Year Q-o-Q CAGR +3% $49.5 +10% $45.3 C&I $717 +5% $39.7 14.2 +14% $36.8 12.4 $33.4 10.7 9.3 8.4 Residential 19.8 mortgage & $488 17.9 +11% other consumer +3% 15
Slide 5: Deposits
Deposits Over $1 billion in customer deposit growth within the quarter Average Deposits End of Period Deposit Growth (3Q23 to 4Q23) ($ in billions) ($ in millions) 4 Year Q-o-Q CAGR +2% +11% Consumer $471 +3% $54.3 $55.0 $51.5 9.5 8.5 16.3 +13% Commercial $355 +1% $40.8 $36.0 12.4 9.5 12.4 Greater C
Slide 6: Net Interest Income & Net Interest Margin
Net Interest Income & Net Interest Margin Grew NII as higher loan balances and yields offset rate pressure, driving stable NIM Net Interest Income (NII) & Net Interest Margin (NIM) 4Q23 Highlights ($ in millions) ▪ NII up 1% Q-o-Q $606 $600 $567 $571 $575 ▪ NIM stable Q-o-Q 3.98% 3.96% ▪ $4.25 billi
Slide 7: Loan Yields
Loan Yields Fixed Rate and Hybrid in Fixed Period Loans (% of Total) Loan Portfolio by Index Rate (as of 12.31.23) 42% 41% Fixed rate 39% 39% 39% 6% 38% 37% Hybrid in fixed rate period 22% Total fixed 35% rate and 25% hybrid in fixed Variable - LIBOR + SOFR rates period: 42% 20% Variable - Prime rat
Slide 8: Deposit and Funding Cost
Deposit and Funding Cost Average Deposit and Liability Cost 3.56% 3.64% 3.73% 3.24% 3.45% 3.09% 2.49% 2.60% 2.43% 2.60% 2.12% 1.74% 1.80% 1.60% 1.06% 4Q22 1Q23 2Q23 3Q23 4Q23 Average cost of deposits Average cost of interest-bearing deposits Average cost of interest-bearing liabilities Average Depos
Slide 9: Fees and Noninterest Income
Fees and Noninterest Income Greater customer activity drove an increase in fee income within the quarter Fee Income1 4Q23 Highlights ($ in millions) 4-Year ▪ Fee income1 of $73mm in 4Q23, up $6mm, CAGR or 9% from $67mm in 3Q23 +10% $276 ▪ Foreign exchange income, wealth $258 Customer management fees
Slide 10: Operating Expense & Efficiency
Operating Expense & Efficiency Best-in-class efficiency Adjusted Noninterest Expense1 4Q23 Highlights ($ in millions) 4-Year ▪ Total noninterest expense of $290mm CAGR ‒ Impacted by $70mm of FDIC Special +6% Assessment-related expense +3% Computer $827 Software & Data ▪ Adjusted noninterest expense1
Slide 11: Asset Quality Metrics
Asset Quality Metrics A solid foundation, with 2023 annual net charge-offs of 9bps Provision for Credit Losses & Net Charge-offs Non-Performing Assets ($ in millions) ($ in millions) $116 $42 $114 $37 $100 $104 $93 $25 $26 $20 $18 $20 $10 $8 $1 0.14% 0.16% 0.14% 0.17% 0.15% 0.16% 0.08% 0.06% 0.15% 0
Slide 12: Allowance for Loan Losses
Allowance for Loan Losses Adequate reserves across portfolios Allowance for Loan Losses (ALLL) ($ in millions) $656 $669 $635 $620 $596 1.28% 1.29% 1.28% 1.27% 1.24% $400 12.31.22 03.31.23 06.30.23 09.30.23 12.31.23 ALLL ALLL/Loans HFI Composition of ALLL by Portfolio ($ in millions) 12.31.22 09.30.
Slide 13: Capital
Capital Healthy capital position: 1.5 million shares repurchased in 4Q23, 15% increase to 1Q24 dividend Key Ratios Highlights 14.7% 14.8% ▪ Very strong capital 14.0% 13.3% 13.3% − We operate from a position of capital 12.7% strength ▪ 15% dividend increase 10.2% 10.2% ‒ Declared 1Q24 dividend of $0.
Slide 14: Management Outlook: Full Year 2024
Management Outlook: Full Year 2024 Earnings Drivers FY 2024 Expectations vs. FY 2023 Results FY 2024 Expectation Economic and Interest Rate ▪ Softening economy with modest growth Outlook ▪ Assuming a year-end forward curve with cuts beginning in Q2 End of Period Loans ▪ Growing in the range of 3% to
Slide 15: Full Year 2023 Highlights (Continued)
Full Year 2023 Highlights (Continued) Key Metrics Designations and Awards Tangible Book Value/Share(1) $46.27 +18% Y-o-Y $43.29 $42.33 $41.28 $39.10 12.31.22 03.31.23 06.30.23 09.30.23 12.31.23 (1) See reconciliation of GAAP to non-GAAP financial measures in the appendix and in the Company’s earning
Slide 16: Appendix
Appendix | EAST WEST BANK
Slide 17: Commercial Loan Portfolio
Commercial Loan Portfolio Over 70% of EWBC’s loans support commercial customers and are well-diversified Commercial Loans by Type (as % of Total Portfolio Loans, 12.31.23) Total Loan C&I CRE Portfolio $16.6bn $20.5bn $52.2bn Private Equity 5% C&I 9% Multifamily $16.6 4% 32% Media & Entertainment Rea
Slide 18: Commercial Real Estate Portfolio Detail
Commercial Real Estate Portfolio Detail Low LTVs and granular, many loans have full recourse and personal guarantees Distribution by LTV1 Size and LTV by Property Type (as of 12.31.23) (as of 12.31.23) >70% >65% to 70% 3% Total Portfolio Weighted Average 6% Size Avg. LTV1 Loan Size ($bn) (%) ($mm) M
Slide 19: Residential Mortgage Portfolio
Residential Mortgage Portfolio Well-diversified by geography, with low LTVs and average loan size Resi. Mortgage Distribution by LTV1 Portfolio Highlights as of 12.31.23 (as of 12.31.23) Outstandings >60% ▪ $15.1bn loans outstanding 10% ▪ +3% Q-o-Q and +13% Y-o-Y 51% >55% to <=50% $436,000 60% 46% A
Slide 20: CRE Office – Additional Information
CRE Office – Additional Information Low LTVs across different size segments, low average loan size CRE Office: Geographic Mix by Metro Area CRE Office by Size Segment (as of 12.31.23) (as of 12.31.23) Other Regions Avg. Balance No. of Washington 7% Loan Size Loan Size LTV ($ in mm) Loans ($ in mm) O
Slide 21: CRE Retail – Additional Information
CRE Retail – Additional Information Low LTVs across different size segments, low average loan size CRE Retail: Geographic Mix by Metro Area CRE Retail by Size Segment (as of 12.31.23) (as of 12.31.23) Other Avg. Balance No. of Regions Loan Size Loan Size LTV ($ in mm) Loans ($ in mm) 11% Other Washi
Slide 22: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Adjusted efficiency ratio repr
Slide 23: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Tangible book value, tangible
Slide 24: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) Return on average TCE represents tangible net income divided by average tangible book value. Adjusted return on average TCE represents adjusted tangible net
Slide 25: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) During the fourth quarter of 2023, the Company recorded a $70.0 million pre-tax FDIC special assessment charge (included in Deposit insurance premiums and r