East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Q3 2023 Earnings Presentation
24 slides from East West Bancorp's earnings presentation, Oct 19, 2023
Slide 1: Third Quarter 2023 Earnings Presentation
East West Bancorp, Inc. Third Quarter 2023 Earnings Presentation October 19, 2023
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: Third Quarter 2023 Performance
Third Quarter 2023 Performance Key Metrics Highlights Loans – Period End ▪ Net income of $288 million, diluted EPS of $50.9 $2.02 $ in billions $49.8 $47.5 +7% − Record 3Q revenue and net interest Y-o-Y income 09.30.22 06.30.23 09.30.23 ▪ Diversified loan growth across all categories Deposits – Peri
Slide 4: Summary Balance Sheet
Summary Balance Sheet EWBC’s balance sheet position is strong, well-diversified and efficient $ Change % Change Highlights $ in millions, except per share data 09.30.23 06.30.23 Q-o-Q 09.30.22 Q-o-Q Y-o-Y B ▪A Grew customer Cash and equivalents, ST investments $ 5,363 $ 7,030 $ (1,667) $ 3,687 -24%
Slide 5: Commercial Loan Portfolio
Commercial Loan Portfolio Well diversified by loan type, C&I diversified by industry and sector Total Loans C&I Loans by Industry (as of 09.30.23) (as % of Total Portfolio Loans) Resi. Mortgage & 5% Private Equity Other Consumer $14.6bn 4% Media & Entertainment 29% 3% Real Estate Investment & Mgmt.
Slide 6: Commercial Real Estate Portfolio
Commercial Real Estate Portfolio Our CRE portfolio is well diversified and has been below FFIEC guidelines since 2009 CRE Loans by Type Total CRE Distribution by Geography (as % of Total CRE, 09.30.23) (as of 09.30.23) Const. & Land, 4% All other CRE, 6% Healthcare, 4% Multifamily 24% Other 15% WA 3
Slide 7: Commercial Real Estate Portfolio Detail
Commercial Real Estate Portfolio Detail Low LTVs and granular, many loans have full recourse and personal guarantees Distribution by LTV1 Size and LTV by Property Type (as of 09.30.23) (as of 09/30.23) >70% Total 3% Portfolio Weighted Average >65% to 70% 6% Size Avg. LTV1 Loan Size ($bn) (%) ($mm) M
Slide 8: 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 09.30.23 (as of 09.30.23) Outstandings >60% ▪ $14.6bn loans outstanding 11% ▪ +3% Q-o-Q and +12% Y-o-Y 51% <=50% $436,000 Average >55% to 4
Slide 9: Solid & Stable Asset Quality Metrics
Solid & Stable Asset Quality Metrics Net Charge-offs ▪ Net charge-offs of $18mm, or annualized Allowance for Loan Losses 0.14% of avg. loans, vs. 0.06% in 2Q23 Coverage Ratio ▪ Provision for credit losses: $42mm for $620 $635 $656 3Q23 compared with $26mm for 2Q23 $ in millions $ in millions $583 $5
Slide 10: Capital Ratios
Capital Ratios Strong capital levels – all ratios increased Q-o-Q Highlights 14.6%14.7% ▪ Very strong capital 13.6% 13.2%13.3% − We operate from a position of 12.3% capital strength − Hypothetical adjustments for 10.0%10.2% 9.6% 10.0% AFS + HTM security marks 8.8% 9.0% and on- and off- balance sheet
Slide 11: Total Deposit Portfolio
Total Deposit Portfolio Granular and diversified by segment, customer type Deposits by Segment as % of Total Deposits Highlights (as of 09.30.23, $ in billions) ▪ Grew customer deposits by $53.9 $55.7 $55.1 $1bn Q-o-Q $3.6 $2.0 $3.9 $2.9 $3.0 Wholesale $3.0 $4.5 $4.4 − Commercial up $600mm $4.0 Grea
Slide 12: Average Balance Sheet: Growth & Mix
Average Balance Sheet: Growth & Mix Avg. Earning Asset (“AEA”) Mix & Average Loans Average Deposits Avg. Loan-to-Deposit (“LTD”) Ratio $54.1 $54.3 $55.2 $48.9 $49.9 $46.9 9.4 4% 8% 8% 16.3 16.6 17% 14.4 16% 15% 13.0 14.1 9.9 $ in billions $ in billions 10.7 10.1 12.4 18.6 19.6 20.1 90% 90% 10.4 12.2
Slide 13: Net Interest Income & Net Interest Margin
Net Interest Income & Net Interest Margin Record third quarter NII, growth Q-o-Q Net Interest Income (NII) & Net Interest Margin (NIM) Highlights $606 $600 ▪ 3Q23 NII up 1% Q-o-Q $552 $567 $571 5.43% ▪ 3Q23 NIM down 7bp Q-o-Q 5.16% $ in millions 4.68% ▪ NIM Drivers 3.98% 3.68% − Higher cost of inter
Slide 14: Loan Yields
Loan Yields Average Loan Yield vs. 1M SOFR Loan Portfolio by Index Rate (as of 09.30.2023) 6.33% 6.51% 6.14% 5.59% Fixed rate 4.75% 6% 5.03% 5.29% Hybrid in fixed 4.61% 22% rate period Total fixed 3.87% Coupon Spot 25% rate and Rate as of Variable - LIBOR hybrid in fixed 2.42% 09.30.23: + SOFR rates
Slide 15: Deposit Cost
Deposit Cost Average Deposit Cost Relative to Target Fed Funds Rate 6% 5% 3.45% 4% 3.09% 2.49% 2.43% 3% 2.12% 1.74% 1.60% 2% 0.86% 1.06% 0.51% 1% 0% 3Q22 4Q22 1Q23 2Q23 3Q23 Average cost of deposits Average cost of interest-bearing deposits Target Fed Funds rate Deposit Spot Rate vs. Loan Coupon Spo
Slide 16: Noninterest Income
Noninterest Income Consistent relationship-based fee base Fee Income1 Highlights ▪ Total noninterest income $69 $67 $67 − $77mm in 3Q23, down $2mm, 6 or 2% from $79mm in 2Q23 4 6 7 − Other investment income of 9 6 $2mm down from $4mm Q-o- IRC Revenue Q, reflecting higher equity 10 13 12 recognition
Slide 17: Operating Expense & Efficiency
Operating Expense & Efficiency Industry-leading efficiency supporting profitability Adjusted Noninterest Expense1 Highlights ▪ Total noninterest expense of $205 $202 $252mm $196 ▪ Adjusted noninterest expense1 34 32 down $3mm Q-o-Q 29 All other − Reflects decreases in 12 19 20 consulting expense, 11
Slide 18: Management Outlook: Full Year 2023
Management Outlook: Full Year 2023 Largely reaffirming prior guidance, updating outlook for tax items Earnings Drivers FY 2023 Expectations vs. FY 2022 Results 2022 Actual End of Period Loans ▪ Increase in the range of 5% to 7% Y-o-Y. PPP impact $48.1 billion (ex. PPP1) immaterial +17% Y-o-Y (ex. PP
Slide 19: Appendix
APPENDIX ty] EAST WEST BANK Your financial bridge”
Slide 20: CRE Office – Additional Information
CRE Office – Additional Information Low LTVs across different size segments, low average loan size CRE Office: Geographic Mix by Metro Area CRE Office by Size Segment (as of 09.30.23) (as of 09.30.23) Avg. Balance No. of Other Loan Size Loan Size LTV ($ in mm) Loans Regions ($ in mm) Washington Othe
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 09.30.23) (as of 09.30.23) Avg. Balance No. of Other Loan Size Loan Size LTV ($ in mm) Loans Regions ($ in mm) 11% Washington
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