East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Q2 2022 Earnings Presentation
23 slides from East West Bancorp's earnings presentation, Jul 21, 2022
Slide 1: EWBC Earnings Results Second Quarter 2022
EWBC Earnings Results Second Quarter 2022 July 21, 2022
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: Highlights of Second Quarter 2022
Highlights of Second Quarter 2022 Return on Average Assets Adjusted Pre-Tax, Pre-Provision Net Income Income* & Profitability Ratio* $258 million 1.66% $370 $320 Diluted EPS 1.56% 1.56% $283 $1.81 $ in millions 2.38% 2.10% Record Average Loans 1.97% $44.6 billion $10 0 2Q21 1Q22 2Q22 2Q21 1Q22 2Q22
Slide 4: 06.30.22: Strong, Well-Diversified Balance Sheet
06.30.22: Strong, Well-Diversified Balance Sheet Record Loans as of 06.30.22: $46.5 billion ($ in billions) $ in millions, except per share data 06.30.22 03.31.22 Q-o-Q Change Cash equivalents & ST investments $ 2,615 $ 4,665 $ (2,050) Repo assets 1,423 1,957 (534) $12.6 $15.4 AFS debt securities 6,
Slide 5: 06.30.22: Strong Capital Ratios
06.30.22: Strong Capital Ratios ▪ Book value per share of $39.81 as of 06.30.22: -1% Q-o-Q and +2% Y-o-Y. Tangible equity* per share of $36.44 as of 06.30.22: -1% Q-o-Q and +2% Y-o-Y. ▪ Q-o-Q decline in equity: negative change in accumulated other comprehensive income (“AOCI”) of $206mm, share repur
Slide 6: 06.30.22: Diversified Commercial Loan Portfolio
06.30.22: Diversified Commercial Loan Portfolio Total Loans: C&I Loans by Industry as % of Total Loans Outstanding Total Resi. Mortgage & Other Consumer 5% Private Equity 27% 4% General Manufacturing & Wholesale 3% Entertainment $46.5 $15.4bn 2% Real Estate related C&I 2% Technology & Life Science b
Slide 7: 06.30.22: Diversified Commercial Real Estate Portfolio
06.30.22: Diversified Commercial Real Estate Portfolio Total Loans: Total CRE Loans by Property Type as % of Total CRE: Distribution by Total Loans Outstanding Geography Total Resi. Mortgage WA Other & Other Consumer MFR, 10% 3% 11% 27% $18.5bn Retail, 9% $18.5 SoCal $46.5 TX 51% Total CRE billion 9
Slide 8: 06.30.22: Low LTV Commercial Real Estate Portfolio
06.30.22: Low LTV Commercial Real Estate Portfolio Total CRE: Distribution by LTV CRE Size & LTV by Property Type Total Weighted Average >65% to 70% ($ in millions) Portfolio Size Avg. LTV Loan Size 6% >70% Multifamily $ 4,444 52% $ 1.6 4% Retail $ 4,016 48% $ 2.3 >60% to 65% Industrial $ 3,376 50%
Slide 9: 06.30.22: Low LTV Residential Mortgage Portfolio
06.30.22: Low LTV Residential Mortgage Portfolio Resi. Mortgage: Distribution by Geography Resi. Mortgage: Distribution by LTV TX 2% Other >60% 7% 8% WA >55% to 60% 7% SoCal 41% $12.5 billion 41% $426,000 Resi. Mortgage Avg. loan size* Loans 52% <=50% NY Outstanding Avg. LTV* 38% 27% NorCal >50% to
Slide 10: 06.30.22: Asset Quality Metrics by Portfolio
06.30.22: Asset Quality Metrics by Portfolio NPAs / Total Assets Asset quality of the loan portfolio continues to be strong. 0.38% ▪ Nonperforming assets down 5% Q-o-Q, NPA ratio improved 1 bp Q-o-Q: NPAs were $90mm as of 06.30.22 (0.14% of assets), down from 0.15% of assets 0.28% as of 03.31.22. OR
Slide 11: 2Q22: Allowance for Loan Losses & Credit Costs
2Q22: Allowance for Loan Losses & Credit Costs Allowance for Loan Losses Coverage Ratio Provision for Credit Losses & Net Charge-offs $700 $586 0.13% 0.13% $560 $546 $563 $542 0.10% 0.08% $ in millions $ in millions $13 $13.5 $13.5 $10 $8 $8 1.46% 1.38% 1.30% 1.25% 2Q21 3Q21 4Q21 1Q22 2Q22 1.21% $(7
Slide 12: 2Q22: Summary Income Statement
2Q22: Summary Income Statement 2Q22 vs. 1Q22 $ in millions, except per share data & ratios 2Q22 1Q22 $ Change % Change Comments Total net interest income $ 473.0 $ 415.6 $ 57.4 14% ▪ Record net interest income: $473mm, up Fee income & net GOS of loans* 64.8 65.0 (0.2) -0.2% 14% Q-o-Q (+55% LQA). GOS
Slide 13: 2Q22: Average Balance Sheet: Growth & Mix
2Q22: Average Balance Sheet: Growth & Mix Average Loans & Q-o-Q Change ▪ 2Q22 avg. loan growth: +24% LQA (+$2.5bn Q-o-Q). Growth in all major loan portfolios: CRE (+30% LQA), C&I (+20% LQA), $44.6 and residential mortgage (+22% LQA). $40.5 $42.1 $39.6 $40.0 +24% +3% +6% +16% 12.0 ▪ Strong avg. loan
Slide 14: 2Q22: Net Interest Income & Net Interest Margin
2Q22: Net Interest Income & Net Interest Margin Net Interest Income & Net Interest Margin ▪ 2Q22 record net interest income: $473mm, +14% Q-o-Q (+55% LQA) from $416mm in 1Q22. $500 $473 $416 ▪ 2Q22 NIM: 3.23%, +36 bps Q-o-Q. $ in millions $450 $396 $406 $400 $376 $350 3.23% ▪ Q-o-Q increase in NIM:
Slide 15: 2Q22: Loan Yields: Average & Spot
2Q22: Loan Yields: Average & Spot Avg. Loan Yield (in bps) Relative to Prime Rate & LIBOR Loan Portfolio by Index Rate (06.30.22) 5% 395 Avg. Loan 20% Total fixed 357 361 359 363 Yield: rate and Avg. yield in 32% hybrid in 2Q22: 3.95%, fixed period: 3.93% comprising 3.25% 3.25% 3.25% 3.29% 17% 37%.
Slide 16: 2Q22: Cost of Deposits: Average & Spot
2Q22: Cost of Deposits: Average & Spot Average Cost of Deposits (in bps) Relative to Target Fed Funds Rate 2Q22 Average Deposits: $54.1 billion ($ in billions) 200 175 $8.2 150 15% 125 $23.9 100 $9.7 44% 18% 75 30 50 $12.3 24 21 18 17 23% 14 12 10 10 17 25 0 2Q21 3Q21 4Q21 1Q22 2Q22 Avg. cost of tot
Slide 17: 2Q22: Noninterest Income Detail
2Q22: Noninterest Income Detail Fee Income* & Net Gains on Sales of Loans ▪ Total noninterest income: $65 $65 $63 1 $78mm in 2Q22, compared 3 2 4 with $80mm in 1Q22. 2 4 7 8 6 Gain on Loans ▪ Fee income and net gains on sales of loans: $65mm in 11 IRC Revenue 2Q22: stable Q-o-Q and 13 13 up 3% Y-o-Y
Slide 18: 2Q22: Operating Expense & Efficiency
2Q22: Operating Expense & Efficiency Adjusted Noninterest Expense* Adjusted Efficiency Ratio* 36.3% 35.3% 32.9% $181 $175 $162 24 32 All other 22 9 11 Deposit related 8 11 expenses 10 12 15 Computer software & 15 Data processing $ in millions 15 2Q21 1Q22 2Q22 Occupancy & Equipment Comp and employee
Slide 19: Management Outlook: Full Year 2022
Management Outlook: Full Year 2022 FY 2022 expectations Earnings drivers compared with FY 2021 results Prior outlook 2021 actual End of Period Loans ▪ Increase at a percentage rate of ▪ Increase at a percentage rate of $41.2 billion (ex. PPP) (ex. PPP)* approximately 16% to 18% Y-o-Y. approximately
Slide 20: Appendix
APPENDIX ty] EAST WEST BANK Your financial bridge”
Slide 21: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ 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 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. Tangible equity and tangible e
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) Tangible return on average tangible equity represents tangible net income divided by average tangible equity. Tangible net income excludes the after-tax imp