East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Q2 2021 Earnings Presentation
25 slides from East West Bancorp's earnings presentation, Jul 22, 2021
Slide 1: EWBC Earnings Results Second Quarter 2021
EWBC Earnings Results Second Quarter 2021 July 22, 2021
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 2021
Highlights of Second Quarter 2021 Return on Average Assets Adjusted Pre-Tax, Pre-Provision 2Q21 Net Income Income* & Profitability Ratio* $225 million 1.50% 1.56% $283 $262 2Q21 Diluted EPS $ in millions 0.83% $246 $1.57 2.05% 1.91% 1.97% Record Loans $40.1 billion 2Q20 1Q21 2Q21 2Q20 1Q21 2Q21 Adj.
Slide 4: 06.30.21: Strong, Well-Diversified Balance Sheet
06.30.21: Strong, Well-Diversified Balance Sheet Record Loans as of 06.30.21: $40.1 billion $ in millions, except per share data 06.30.21 03.31.21 Q-o-Q Change ($ in billions) Cash equivalents & ST investments $ 6,828 $ 5,361 $ 1,467 AFS debt securities & repo assets 10,699 9,949 750 Gross loans (ex
Slide 5: 06.30.21: Strong Capital Ratios
06.30.21: Strong Capital Ratios ▪ Book value per share of $39.10 as of 06.30.21: +5% Q-o-Q and +11% Y-o-Y. ▪ Tangible equity per share* of $35.75 as of 06.30.21: +5% Q-o-Q and +12% Y-o-Y. ▪ Tangible equity to tangible assets ratio* of 8.5% as of 06.30.21, stable relative to 03.31.21. ▪ CET1 and Tier
Slide 6: 06.30.21: Diversified Commercial Loan Portfolio
06.30.21: Diversified Commercial Loan Portfolio Total Loans: C&I Loans by Industry as % of Total Loans Outstanding Total Resi. Mortgage & Other Consumer 4% General Manufacturing & Wholesale 27% 3% Private Equity 3% Entertainment 2% Oil & Gas $40.1 $12.4bn 2% Real Estate related billion C&I 2% Clean
Slide 7: 06.30.21: Diversified Commercial Real Estate Portfolio
06.30.21: Diversified Commercial Real Estate Portfolio Total Loans: Total CRE Loans by Property Type as % of Total CRE: Distribution by Total Loans Outstanding Geography WA 3% Total Resi. Mortgage Other & Other Consumer Retail, 9% 7% 27% TX $15.4bn MFR, 8% 7% $15.4 PPP $40.1 SoCal 4% Total CRE NY bi
Slide 8: 06.30.21: Low LTV Commercial Real Estate Portfolio
06.30.21: Low LTV Commercial Real Estate Portfolio Total CRE: Distribution by LTV CRE LTV & Size by Property Type >70% Average Weight. Avg. 4% Loan Size LTV >65% to 70% ($ in mm) 6% Retail $ 2.2 mm 49% Multifamily 1.3 mm 51% >60% to 65% 15% <=50% Office 4.1 mm 53% $2.4 million 42% Avg. size of loan
Slide 9: 06.30.21: Low LTV Single Family Residential Mortgages
06.30.21: Low LTV Single Family Residential Mortgages SFR: Distribution by Geography SFR: Distribution by LTV TX 2% Other >60% 8% 12% WA <=50% 6% SoCal 33% 39% $389,000 $8.9 billion Avg. size of loan SFR Loans outstanding Outstanding 53% Avg. LTV NY >55% to 60% 33% 41% >50% to 55% NorCal 14% 12% ▪ S
Slide 10: 06.30.21: Low LTV Home Equity Lines of Credit
06.30.21: Low LTV Home Equity Lines of Credit HELOC: Distribution by Geography HELOC: Distribution by LTV* >60% ,1% Other 6% WA 11% >55% to 60% 41% SoCal $413,000 $1.9 billion 46% Avg. size of NY HELOC Loans commitment 12% Outstanding 49% <=50% 51% Avg. LTV* NorCal 25% * Combined LTV for 1st and 2nd
Slide 11: 06.30.21: Asset Quality Metrics by Portfolio
06.30.21: Asset Quality Metrics by Portfolio Criticized Loans / Total Loans NPAs / Total Assets ▪ Criticized loans down 15% Q-o-Q: $1,032mm as of 06.30.21, or 2.6% of loans HFI, vs. $1,217mm, or 3.1% of loans HFI, as of 03.31.21. 3.2% 3.1% 0.45% 0.45% ▪ Special mention: $387mm as of 06.30.21, -23% Q
Slide 12: 2Q21: Allowance for Loan Losses & Credit Costs
2Q21: Allowance for Loan Losses & Credit Costs Allowance for Loan Losses Coverage Ratio Provision for Credit Losses & Net Charge-offs $700 $632 $618 $620 $102 $608 $586 $100 0.35% $ in millions $ in millions $483 0.26% 1.78% 1.73% 1.68% 1.62% 0.21% 1.52% 0.20% 1.39% 1.70% 0.14% 0.13% 1.65% 1.61% 1.5
Slide 13: 2Q21: Summary Income Statement
2Q21: Summary Income Statement 2Q21 vs. 1Q21 $ in millions, except per share data & ratios 2Q21 1Q21 $ Change % Change Comments Net interest income (ex. PPP) $ 361.1 $ 338.7 22.4 7% ▪ Noninterest income: PPP income 15.4 15.0 0.4 2% ▪ Q-o-Q increase in other investment Total net interest income $ 376
Slide 14: 2Q21: Average Balance Sheet: Growth & Mix
2Q21: Average Balance Sheet: Growth & Mix Average Loans & Growth ▪ 2Q21 avg. loan growth: +9% LQA (+$893mm Q-o-Q) or +10% LQA ex. PPP (+$954mm). Growth in all major loan portfolios. $37.7 $38.7 $39.6 ▪ 2Q21 avg. deposit growth: +20% LQA (+$2.3bn Q-o-Q). Growth $37.1 $37.2 +0.2% +6% +11% 1.9 +9% 1.9
Slide 15: 2Q21: Net Interest Income & Net Interest Margin
2Q21: Net Interest Income & Net Interest Margin Net Interest Income & Net Interest Margin ▪ 2Q21 NII: $376mm, +6% Q-o-Q (+26% annualized) from $354mm in 1Q21. 2Q21 NIM: 2.75%, +4 bps Q-o-Q. $376 $344 $347 $354 ▪ 2Q21 adj.* NII (ex. PPP): $361mm, +7% Q-o-Q (+27% ann.) $324 3.04% from $339mm in 1Q21.
Slide 16: 2Q21: Average Loan Yields
2Q21: Average Loan Yields Adj. Avg. Loan Yield* (in bps) Relative to Prime Rate & LIBOR ▪ Essentially stable loan yields: 2Q21 GAAP Yield: GAAP Yield: GAAP Yield: GAAP Yield: GAAP Yield: avg. loan yield: 3.57%, -1 bp Q-o-Q. 398 bps 360 bps 368 bps 358 bps 357 bps ▪ Ex. PPP, 2Q21 adj. avg. loan 390 3
Slide 17: 2Q21: Average Cost of Deposits
2Q21: Average Cost of Deposits Average Cost of Deposits (in bps) Relative to Fed Funds Rate ▪ Spot rate of total deposits: 0.13% as of 06.30.21 (vs. 0.16% as of 03.31.21). 71 ▪ Spot rate of IB deposits: 0.22% as of 06.30.21 (vs. 0.26% as of 03.31.21). 50 ▪ Repricing of maturing CDs to lower rates: 4
Slide 18: 2Q21: Noninterest Income Detail
2Q21: Noninterest Income Detail Fee Income* & Net Gains on Sales of Loans Total noninterest income: $68mm in 2Q21, down from $73mm in 1Q21. $63.1 1.5 3% ▪ Fee income and net gains on sales of loans: $63mm in 2.2 3% 2Q21, up by $8mm from $55mm in 1Q21 (+15% Q-o-Q). $54.8 $52.2 $53.1 8.0 13% 0.1 1.7 ▪
Slide 19: 2Q21: Operating Expense & Efficiency
2Q21: Operating Expense & Efficiency Adjusted Noninterest Expense* Adj. Noninterest Expense* & Adj. Efficiency Ratio* $165.6 $165.0 $166 $165 60.0% $161.5 $162 $153.3 $154.4 $154 $ in millions 23.5 20.7 19.9 12% $153 19.2 17.5 8.5 9.0 40.8% 39.8% 9.2 6% 38.4% 38.7% 8.4 11.6 36.3% 9.1 11.7 11.6 7% 12
Slide 20: Management Outlook: Full Year 2021
Management Outlook: Full Year 2021 FY 2021 expectations Earnings drivers compared with FY 2020 results Prior Outlook 2020 actual End of Period Loans ▪ Increase at a percentage rate of 9% to ▪ Increase at a percentage $36.8 billion (ex. PPP) (ex. PPP) 10% Y-o-Y. rate approx. 8% Y-o-Y. +6% Y-o-Y (ex.
Slide 21: Appendix
APPENDIX ty] EAST WEST BANK Your financial bridge”
Slide 22: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) Adjusted efficiency ratio represents adjusted noninterest expense divided by revenue. Adjusted pre-tax, pre-provision profitability ratio represents revenue
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 equity and tangible e
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 tangible equity represents tangible net income divided by average tangible equity. Tangible net income excludes the after-tax impacts of t
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) In April 2020, the Company started accepting applications under the PPP administered by the Small Business Administration (“SBA”) under the Coronavirus Aid,