East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Q1 2023 Earnings Presentation
28 slides from East West Bancorp's earnings presentation, Apr 20, 2023
Slide 1: EWBC Earnings Results First Quarter 2023
EWBC Earnings Results First Quarter 2023 April 20, 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: Highlights of First Quarter 2023
Highlights of First Quarter 2023 Return on Average Assets Adjusted Pre-Tax, Pre-Provision Income* & Profitability Ratio* 1Q23 1Q23 Net Income Adj. Net Income* 2.08% 2.05% GAAP ROAA: $322.4 million $329.5 million 2.01% $500 $478 $466 $ in millions $420 1.56% $320 2.95% 2.90% 1Q23 1Q23 $340 Diluted EP
Slide 4: Strong, Well-Diversified Balance Sheet
03.31.23: Strong, Well-Diversified Balance Sheet Record Loans as of 03.31.23: $48.9 billion $ in millions, except per share data 03.31.23 12.31.22 Q-o-Q Change ($ in billions) Cash and cash equivalents & $ 5,944 $ 3,621 $ 2,323 ST investments Repo assets 654 792 (138) $13.9 $15.6 AFS debt securities
Slide 5: Strong Capital Ratios
03.31.23: Strong Capital Ratios CET1 Capital Ratio Tangible Common Equity Ratio** All capital ratios increased Q-o-Q. +129 Regulatory capital ratios are well in bps +97 13.06% bps excess of requirements for well- 12.68% 12.58% 9.34% 8.66% 8.74% capitalized institutions. -177 -37 bps bps ▪ EWBC’s cap
Slide 6: Diversified Commercial Loan Portfolio
03.31.23: Diversified Commercial Loan Portfolio Total Loans: C&I Loans by Industry as % of Total Loans Outstanding Total Resi. Mortgage & 5% Private Equity Other Consumer 28% 4% Media & Entertainment 3% Real Estate Investment & Management $48.9 $15.6bn 2% General Manufacturing & Wholesale 2% Infrast
Slide 7: Diversified Commercial Real Estate Portfolio
03.31.23: 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 Other & Other Consumer MFR, 10% WA 14% 28% $19.4bn 3% Retail, 8% SoCal $48.9 Total CRE $19.4 50% NY billion 4
Slide 8: Low LTV Commercial Real Estate Portfolio
03.31.23: Low LTV Commercial Real Estate Portfolio Total CRE: Distribution by LTV1 CRE Size & LTV by Property Type Total Weighted Average >70% ($ in millions) Portfolio Size Avg. LTV1 Loan Size 4% >65% to 70% Multifamily $ 4,682 52% $ 1.7 6% Retail $ 4,145 48% $ 2.4 Industrial $ 3,661 48% $ 3.1 >60%
Slide 9: CRE Office – Additional Information
03.31.23: CRE Office – Additional Information CRE Office: Geographic Mix by Metro Area CRE Office by Size Segment ($ in millions) Avg. loan Balance No. of size Other Regions Other Los Angeles Loan size ($ in mm) Loans ($ in mm) LTV County Washington Other NY: $26 >$30mm $ 271 7 $ 38.8 57% Manhattan:
Slide 10: CRE Retail – Additional Information
03.31.23: CRE Retail – Additional Information CRE Retail: Geographic Mix by Metro Area CRE Retail by Size Segment ($ in millions) Avg. loan Balance No. of size Other Regions Other Los Angeles Loan size ($ in mm) Loans ($ in mm) LTV County Washington >$30mm $ 268 7 $ 38.3 41% Other NY $376 $20mm - $3
Slide 11: Low LTV Residential Mortgage Portfolio
03.31.23: Low LTV Residential Mortgage Portfolio Resi. Mortgage: Distribution by Geography Resi. Mortgage: Distribution by LTV TX 2% Other >60% 8% 8% WA 7% SoCal >55% to 60% <=50% $13.8 billion 40% 37% $434,000 42% Resi. Mortgage Avg. loan size* Loans 51% Outstanding Avg. LTV* NY 27% * Combined LTV
Slide 12: Granular, Diversified Deposit Base
03.31.23: Granular, Diversified Deposit Base Deposits as of 03.31.23: by Segment or Industry as % of Total Deposits China Hong Kong $1.6 bn $1.4 bn 3% 3% State & Public Brokered Agency $3.7 bn Real Estate Property Investment & $4.5 bn 7% 7% Management 8% 3% Private Equity 2% Hospitality & Hotels 2%
Slide 13: Securities Portfolio & Liquidity Management
03.31.23: Securities Portfolio & Liquidity Management AFS debt securities: fair value of $6.3bn as of Borrowing Capacity, Cash & Cash Equivalents 03.31.23, up by 4% from $6.0 billion as of 12.31.22. as of 03.31.23 ($ in billions) ▪ Gross unrealized losses: $771mm, or 11% of amortized cost, as of 03.
Slide 14: Solid & Stable Asset Quality Metrics
03.31.23: Solid & Stable Asset Quality Metrics NPAs / Total Assets 0.16% 0.16% ▪ Nonperforming assets: decreased 6% Q-o-Q to $93mm as of 0.15% 0.14% 0.14% 03.31.23 (0.14% of assets), down from $100mm (0.16% of assets) as of 12.31.22. ▪ Criticized loans ratio: up 1 bp Q-o-Q to 1.87% of loans HFI as o
Slide 15: Allowance for Loan Losses & Credit Costs
1Q23: Allowance for Loan Losses & Credit Costs Allowance for Loan Losses Coverage Ratio Provision for Credit Losses & Net Charge-offs $620 $ in millions $596 0.08% $27 $25 $583 0.08% $20 $563 $ in millions $546 $13.5 0.06% $10 $8 $8 $7 0.01% $1 1.27% $(7) 1.25% 1.23% 1.24% 1.21% 1Q22 2Q22 3Q22 4Q22
Slide 16: Summary Income Statement
1Q23: Summary Income Statement 1Q23 vs. 4Q22 $ in millions, except per share data 1Q23 4Q22 $ Change % Change Comments Total net interest income $ 599.9 $ 605.5 $ (5.6) -1% ▪ Reported vs. adjusted EPS: -$0.05 of EPS from Fee income & net GOS of loans* 66.3 66.0 0.3 0.5% impairment loss on subordinat
Slide 17: Average Balance Sheet: Growth & Mix
1Q23: Average Balance Sheet: Growth & Mix Average Loans & Q-o-Q Change ▪ 1Q23 avg. loan growth: +1% Q-o-Q (+$543mm). Change by portfolio: residential mortgage (+$335mm), CRE (+$312mm), $46.9 $47.6 $48.1 C&I (-$95mm). $44.6 $42.1 +20% 13.0 +6% 13.2 +5% 13.5 ▪ 1Q23 AEA growth: +2% Q-o-Q, reflecting lo
Slide 18: Net Interest Income & Net Interest Margin
1Q23: Net Interest Income & Net Interest Margin Net Interest Income (“NII”) & Net Interest Margin (“NIM”) ▪ 1Q23 NII: $600mm, -1% Q-o-Q. NIM: 3.96%, -2 bps Q-o-Q. ▪ Change in NII reflects 1Q day count (90 days) vs. 4Q (92 $605.5 $600 days). Equalizing for day count, the +2% Q-o-Q AEA growth $552 mor
Slide 19: Loan Yields: Average & Spot
1Q23: Loan Yields: Average & Spot Avg. Loan Yield Relative to LIBOR Loan Portfolio by Index Rate (03.31.23) 6.14% 6% 5.59% Avg. Loan 21% Total fixed Yield: 4.75% Avg. yield in rate and 28% 3.95% 1Q23: 6.14%, hybrid in 3.63% 4.61% comprising fixed period: 6.11% in avg. 18% 39%. 3.90% coupon rate plus
Slide 20: Cost of Deposits: Average & Spot
1Q23: Cost of Deposits: Average & Spot Average Cost of Deposits Relative to Target Fed Funds Rate 1Q23 Average Deposits: $55.0 billion ($ in billions) 5.00% 4.50% 4.00% 3.50% $15.1 2.49% 3.00% 27% $19.7 2.50% 36% 1.74% 1.60% 2.00% 1.06% 1.50% $8.9 0.86% 17% 0.51% 1.00% $11.3 0.17% 0.30% 20% 0.10% 0.
Slide 21: Noninterest Income Detail
1Q23: Noninterest Income Detail Fee Income* & Net Gains on Sales of Loans ▪ Total noninterest income: $60mm in 1Q23. Excluding the debt security write-off ($10mm), adjusted noninterest income** was $70mm in 1Q23, up from $65mm in 4Q22. 66.0 $66.3 65.0 0.5 ▪ Fee income and net gains on sales of loans
Slide 22: Operating Expense & Efficiency
1Q23: Operating Expense & Efficiency Adjusted Noninterest Expense* Total Revenue & Adjusted Efficiency Ratio* $670 $660 $204 $192 All other $495 29 $ in millions $175 32 Deposit related expenses 35.3% 24 18 13 Computer software & 30.5% 11 28.7% 9 Data processing 11 $ in millions 11 16 Occupancy & 1Q
Slide 23: Management Outlook: Full Year 2023
Management Outlook: Full Year 2023 FY 2023 expectations Earnings drivers compared with FY 2022 results Prior Outlook 2022 actual End of Period Loans ▪ Increase in the range of 5% to 7% Y-o-Y. ▪ Increase at a percentage $48.1 billion (ex. PPP*) PPP impact immaterial. rate in the high single- +17% Y-o
Slide 24: Appendix
APPENDIX ty] EAST WEST BANK Your financial bridge”
Slide 25: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance. Adjusted efficiency ratio repr
Slide 26: 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. TCE and TCE ratio are non-GAAP
Slide 27: 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 TCE. Adjusted return on average TCE represents adjusted tangible net income divided
Slide 28: 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 first quarter of 2023, the Company recorded a $10.0 million pre-tax impairment write-off of an AFS debt security. Management believes that presen