East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Q1 2024 Earnings Presentation
26 slides from East West Bancorp's earnings presentation, Apr 23, 2024
Slide 1: East West Bancorp, Inc. 1Q24 Earnings Presentation
East West Bancorp, Inc. 1Q Earnings Presentation April 23, 2024 1Q 24
Slide 2: Forward-Looking Statements
Forward-Looking Statements 2 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
Slide 3: 1Q24 Financial Highlights
1Q24 Financial Highlights 3 (1) See reconciliation of GAAP to non-GAAP financial measures in the appendix and in the Company’s earnings press releases ▪ 16% ROACE (18% ROTCE1) ▪ 1.60% ROAA (1.64% Adjusted ROAA1) ▪ TBVPS1 growth: +2% Q-o-Q, +14% Y-o-Y ▪ Repurchased 1.2 million shares; $89 million aut
Slide 4: Loans
Loans 4 Prudent growth in our focus categories, expected to pick up in Q2 ($ in billions) Average Loans End of Period Loan Growth (4Q23 to 1Q24) ($ in millions) +2% 0% +2% Q-o-Q +1% 15.4 15.2 15.4 16.0 16.3 19.2 19.6 20.1 20.4 20.4 13.5 14.1 14.4 14.9 15.2 $48.1 $48.9 $49.9 $51.3 $51.9 1Q23 2Q23 3Q2
Slide 5: Securities Portfolio
($ in billions) $9.9 $9.7 $9.7 $10.2 $5.2 $5.4 $4.4 $5.9 $15.1 $15.1 $14.1 $16.1 2.99% 3.06% 3.17% 3.19% 2Q23 3Q23 4Q23 1Q24 Total Securities & Resale Agreements Cash & Equivalent Total Securities Average Yield $11.8 $4.2 $16.0 3.61% 03.31.24 50% 43% 1% 6% 0% RWA 1%‒20% RWA 21%‒50% RWA 51%‒100% RWA
Slide 6: Deposits
Deposits 6 Core customers entrusted East West with $2 billion of new deposits during Q1; with growth across all customer groups ($ in billions) Average Deposits End of Period Deposit Growth (4Q23 to 1Q24) ($ in millions) ▪ Portfolio Detail (as of 03.31.24) − Nearly 610,000 accounts − Average commerc
Slide 7: Net Interest Income & Net Interest Margin
Net Interest Income & Net Interest Margin 7 NII resilient in the face of higher cost interest-bearing deposits, deposit mix shift ▪ NII down 2% Q-o-Q ▪ NIM down 14bps Q-o-Q ▪ $4.25 billion of active cash flow hedges cost ~$25mm in 1Q24, or 15bps to NIM, but provide incremental protection as SOFR dec
Slide 8: Asset Quality Metrics
Asset Quality Metrics 8 Normalizing credit – NCOs migrating as expected Provision for Credit Losses & Net Charge-offs ($ in millions) Non-Performing Assets Criticized Loans / Loans HFI Criticized Ratio by Loans HFI Portfolio ($ in millions) 3.40% 2.08% 0.40% 3.17% 1.91% 0.40% 3.61% 2.63% 0.46% C&I C
Slide 9: Allowance for Loan Losses
9 Allowance for Loan Losses Adequate reserves across portfolios; notable addition to CRE allowance Allowance for Loan Losses (ALLL) ($ in millions) 09.30.23 12.31.23 03.31.24 Loan Category ALLL ALLL/Loans HFI ALLL ALLL/Loans HFI ALLL ALLL/Loans HFI C&I $ 384 2.42% $ 393 2.37% $ 373 2.28% Total CRE 2
Slide 10: Capital
14.5% 14.8% 14.8% Total Capital Ratio 10.0% 10.2% 10.1% Leverage Ratio 10 Capital Healthy capital position: 1.2 million shares repurchased in 1Q24 1Q24 Highlights ▪ Strong capital − We operate from a position of capital strength ▪ Declared 2Q24 dividend ‒ Payable on May 17, 2024 to shareholders of r
Slide 11: Management Outlook: Full Year 2024
Management Outlook: Full Year 2024 11 Earnings Drivers FY 2024 Expectations vs. FY 2023 Results Economic and Interest Rate Outlook ▪ Resilient 1H24, with a softening economy in the second half ▪ Assuming March 31st forward curve with cuts beginning in Q3 End of Period Loans ▪ Unchanged; growing in t
Slide 12: Appendix
Appendix (Gy) EASTWEST BANK.
Slide 13: East West at a Glance
East West at a Glance 13 $11B Market Cap $71B Assets $59B Deposits 18% ROTCE1 03.31.24 03.31.24 03.31.24 1Q24 4 branches in Asia to support cross-border trade Branch Locations 99 U.S. branches in leading metropolitan markets (1) See reconciliation of GAAP to non-GAAP financial measures in the append
Slide 14: Commercial Loan Portfolio
2% 2% 2% 4% 4% 4% 5% 1% 2% 1% 4% 5% 8% 8% 10% Resi. Mortgage and other consumer $15.3 30% CRE $20.3 39% C&I $16.4 31% Industries with 1% of total loans outstanding1 Commercial Loan Portfolio 14 Over 70% of EWBC’s loans support commercial customers and are well-diversified CRE $20.3bn C&I $16.4bn (as
Slide 15: Commercial Real Estate Portfolio Detail
<=50% 44% >50% to 55% 17% >55% to 60% 16% >60% to 65% 14% >65% to 70% 6% >70% 3% Commercial Real Estate Portfolio Detail 15 (1) Weighted average LTV is based on most recent LTV, using most recent available appraisal and current loan commitment (2) Construction & Land average size based on total comm
Slide 16: CRE Office – Additional Information
36% 5% 14% 8% 7% 5% 6% 2% 5% 7% CRE Office – Additional Information 16 CRE Office: Geographic Mix by Metro Area CRE Office by Size Segment Other Los Angeles County Other SoCal Other Bay Area San Francisco Other CA, 1% Houston Dallas Manhattan, 1% Other TX Washington Other Regions New Jersey, 2% Othe
Slide 17: CRE Retail – Additional Information
30% 4% 18% 10% 2% 4% 5% 1% 2% 3% 6% 3% 11% CRE Retail – Additional Information 17 Other Los Angeles County Downtown Los Angeles and Adjacent Neighborhoods Other SoCal Other Bay Area San Francisco Other CA Houston Dallas Manhattan Other TX Washington Other Regions Other NY Loan Size Balance ($ in mm)
Slide 18: Residential Mortgage Portfolio
Southern California 40% Northern California 16% New York 27% Washington 7% Texas 2% Other 8% <=50% 46% >50% to 55% 12% >55% to 60% 31% >60% 11% Residential Mortgage Portfolio 18 51% Average LTV1 Low LTVs and average loan size (as of 03.31.24) Resi. Mortgage Distribution by LTV1 (as of 03.31.24) $435
Slide 19: Loan Yields
22% 21% 28% 24% 5%Fixed rate Hybrid in fixed rate period Variable - LIBOR + SOFR rates Variable - Prime rate Variable - all other rates Loan Yields 19 Fixed Rate and Hybrid in Fixed Period Loans (% of Total) Loan Portfolio by Index Rate Average Loan Rate by Portfolio (as of 03.31.24) Total fixed rat
Slide 20: Deposit and Funding Cost
Deposit and Funding Cost 20 Average Deposit and Liability Cost Average Deposit Rate by Portfolio 1Q23 2Q23 3Q23 4Q23 1Q24 1.60% 2.12% 2.43% 2.60% 2.84% 2.49% 3.09% 3.45% 3.64% 3.85% 2.60% 3.24% 3.56% 3.73% 3.92% 1Q23 2Q23 3Q23 4Q23 1Q24 Average cost of deposits Average cost of interest-bearing depos
Slide 21: Fees and Noninterest Income
Fees and Noninterest Income 21 Customer and Other Derivative Income Detail ($mm) 1Q23 4Q23 1Q24 Revenue $ 5.0 $ 6.3 $ 3.1 MTM (2.4) (7.2) 0.6 Total $ (2.6) $ (0.9) $ 3.7 Consistent fee income generation ▪ Fee income1 of $71mm in 1Q24, down $2mm, or 3% from $73mm in 4Q23 ‒ Deposit, lending, and wealt
Slide 22: Operating Expense & Efficiency
130 125 123 131 142 29 34 32 37 33 18 19 20 20 22 16 16 15 16 15 11 11 12 11 11 $204 $205 $202 $215 $223 1Q23 2Q23 3Q23 4Q23 1Q24 30.5% 33.1% 34.7% 1.27% 1.23% 1.25% 1Q23 4Q23 1Q24 Operating Expense & Efficiency 22 Best-in-class efficiency Adjusted Noninterest Expense1 ($ in millions) ▪ Total nonint
Slide 23: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation 23 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 r
Slide 24: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation 24 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, tangib
Slide 25: Appendix: GAAP to Non-GAAP Reconciliation
(1) Includes core deposit intangibles and mortgage servicing assets. (2) Applied statutory tax rate of 29.56% for the three months ended March 31, 2024 and December 31, 2023. Applied statutory tax rate of 29.29% for the three months ended March 31, 2023. (3) Annualized. Appendix: GAAP to Non-GAAP Re
Slide 26: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation 26 (1) Applied statutory tax rate of 29.56% for the three months ended March 31, 2024 and December 31, 2023. Applied statutory tax rate of 29.29% for the three months ended March 31, 2023. (2) Annualized. (3) Refer to Slide 25 for the calculation of the retu