East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — BancAnalysts Association of Boston Conference 2022
31 slides from East West Bancorp's conference presentation, Nov 3, 2022
Slide 1: EWBC Investor Overview & Earnings Results Third Quarter 2022
EWBC Investor Overview & Earnings Results Third Quarter 2022 BancAnalysts Association of Boston Conference November 3, 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: East West Bank at a Glance
East West Bank at a Glance East West Bank is the largest publicly traded bank headquartered in Southern California with 120+ locations in the U.S. and China UNITED STATES CHINA 116 Locations across 8 states 8 Locations 74 Branches in California 5 2 6 8 7 41 3 Branches: 1 Hong Kong 2 Shanghai 3 Shant
Slide 4: History of Balance Sheet Growth
History of Balance Sheet Growth Total Assets Tangible Equity* per Share $60.9 $37.79 $52.2 $33.85 $ in billions $31.15 $41.0 $44.2 $27.15 $37.1 $23.13 12.31.17 12.31.18 12.31.19 12.31.20 12.31.21 12.31.17 12.31.18 12.31.19 12.31.20 12.31.21 ▪ 2021 total asset growth: 17% Y-o-Y. ▪ 2021 tangible equit
Slide 5: Loans & Deposits: How Our Mix Has Changed
Loans & Deposits: How Our Mix Has Changed Loans as of 12.31.99: Record Loans as of 09.30.22: Mix Change by Category: $1.5 billion $47.5 billion 1 12.31.99 63% Total $0.3 2 09.30.22 39% CRE ($ in billions) 20% $13.2 28% $18.7 39% 1 12.31.99 17% $0.2 $1.0 63% C&I 17% 2 09.30.22 33% $15.6 33% Resi. 1 1
Slide 6: Loan Mix: How We Compare with Other Banks
Loan Mix: How We Compare with Other Banks EWBC vs. Peer Bank Group Medians: 06.30.22 Commercial Real Estate Loans Commercial & Industrial Loans 52% 50% 42% 40% 41% 33% 33% 16% 20% 9% Money Center Large Regional Community EWBC Money Center Large Regional Community EWBC Banks Regional Banks Banks Bank
Slide 7: History of Earnings Growth and Profitability
History of Earnings Growth and Profitability Net Income Diluted Earnings per Share $873 $6.10 $704 $ in millions $674 $4.81 $4.61 $568 $3.97 $506 $3.47 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Return on Average Assets Return on Average Equity Pandemic- Pandemic- 1.83% related 17.0% related
Slide 8: Revenue: How Our Mix Has Changed
Revenue: How Our Mix Has Changed Total Revenue in 1999: Total Revenue in 9-mos ‘22: Mix Change by Category: $87 million $1,674 million $5 $17 Net Interest 6% 12.31.99 NII 83% $10 1% Income 9-mos ‘22 86% ($ in millions) 11% $217 $1,440 Customer- 13% 86% 12.31.99 Core Fees 11% driven $72 9-mos ‘22 13%
Slide 9: Profitability: How We Compare with Other Banks
Profitability: How We Compare with Other Banks Money Center Large Regional Bank Regional Bank Community Bank Bank Median Median Median Median EWBC* Revenue* 3.2% 3.8% 3.4% 3.5% 3.4% 1H22 annualized / average assets Operating Expense* (2.0)% (2.3)% (2.0)% (1.9)% (1.2)% Credit Provision Tax Expense Ne
Slide 10: EWBC Earnings Results: 3Q22
EWBC Earnings Results: 3Q22 ty] EAST WEST BANK Your financial bridge”
Slide 11: Highlights of Third Quarter 2022
Highlights of Third Quarter 2022 Return on Average Assets Adjusted Pre-Tax, Pre-Provision Net Income Income* & Profitability Ratio* $295 million 1.86% $432 1.66% $420 $370 Diluted EPS $2.08 $ in millions 1.46% $340 $302 2.72% $260 2.38% Record Average Loans $180 1.95% $46.9 billion $100 3Q21 2Q22 3Q
Slide 12: 09.30.22: Strong, Well-Diversified Balance Sheet
09.30.22: Strong, Well-Diversified Balance Sheet Record Loans as of 09.30.22: $47.5 billion ($ in billions) $ in millions, except per share data 09.30.22 06.30.22 Q-o-Q Change Cash equivalents & ST investments $ 2,794 $ 2,615 $ 179 Repo assets 893 1,423 (530) AFS debt securities 5,906 6,256 (350) $1
Slide 13: 09.30.22: Strong Capital Ratios That Expanded Q-o-Q
09.30.22: Strong Capital Ratios That Expanded Q-o-Q ▪ Book value per share of $40.17 as of 09.30.22: +1% Q-o-Q and +0.2% Y-o-Y. ▪ Tangible equity* per share of $36.80 as of 09.30.22: +1% Q-o-Q and +0.1% Y-o-Y. ▪ Tangible equity to tangible assets ratio* of 8.35% as of 09.30.22, +6 bps from 06.30.22.
Slide 14: 09.30.22: Diversified Commercial Loan Portfolio
09.30.22: Diversified Commercial Loan Portfolio Total Loans: C&I Loans by Industry as % of Total Loans Outstanding Total Resi. Mortgage & 4% Private Equity Other Consumer 28% 4% General Manufacturing & Wholesale 3% Entertainment 2% Real Estate related $47.5 $15.6bn 2% Technology & Life Science C&I 2
Slide 15: 09.30.22: Diversified Commercial Real Estate Portfolio
09.30.22: 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% 12% 28% $18.7bn Retail, 8% NY SoCal $47.5 $18.7 Total CRE 5% 51% billio
Slide 16: 09.30.22: Low LTV Commercial Real Estate Portfolio
09.30.22: Low LTV Commercial Real Estate Portfolio Total CRE: Distribution by LTV CRE Size & LTV by Property Type >70% Total Weighted Average >65% to 70% 3% ($ in millions) Portfolio Size Avg. LTV1 Loan Size 6% Multifamily $ 4,559 52% $ 1.6 Retail $ 3,992 48% $ 2.3 Industrial $ 3,475 49% $ 2.9 >60%
Slide 17: 09.30.22: Low LTV Residential Mortgage Portfolio
09.30.22: Low LTV Residential Mortgage Portfolio Resi. Mortgage: Distribution by Geography Resi. Mortgage: Distribution by LTV TX 2% Other >60% 7% 7% WA 8% SoCal >55% to 60% 40% <=50% $13.0 billion 41% $434,000 39% Resi. Mortgage Avg. loan size* Loans 51% Outstanding Avg. LTV* NY 27% NorCal >50% to
Slide 18: 09.30.22: Solid & Stable Asset Quality Metrics
09.30.22: Solid & Stable Asset Quality Metrics NPAs / Total Assets ▪ Criticized loans decreased Q-o-Q by $117 million, or 11%, to $905mm as of 09.30.22. Special mention loans decreased 20% Q-o-Q & classified loans were 0.28% essentially unchanged. ▪ Criticized loans ratio improved 29 bps Q-o-Q to 1.
Slide 19: 3Q22: Allowance for Loan Losses & Credit Costs
3Q22: Allowance for Loan Losses & Credit Costs Allowance for Loan Losses Coverage Ratio Provision for Credit Losses & Net Charge-offs $700 0.13% $563 $583 $560 $542 $546 0.10% $27 0.08% $ in millions $ in millions $13.5 $13.5 0.06% $10 $8 $8 $7 1.38% 1.30% 1.25% 1.23% 1.21% $(7) $(10) $(10) $200 0.5
Slide 20: 3Q22: Summary Income Statement
3Q22: Summary Income Statement 3Q22 vs. 2Q22 $ in millions, except per share data & ratios 3Q22 2Q22 $ Change % Change Comments Total net interest income $ 551.8 $ 473.0 $ 78.8 17% ▪ Record net interest income: $552mm, up 17% Q-o-Q (+66% LQA). Fee income & net GOS of loans* 69.0 64.8 4.2 6.5% ▪ Cust
Slide 21: 3Q22: Average Balance Sheet: Growth & Mix
3Q22: Average Balance Sheet: Growth & Mix Average Loans & Q-o-Q Change ▪ 3Q22 avg. loan growth: +20% LQA (+$2.2bn Q-o-Q). Growth in all major loan portfolios: residential mortgage $46.9 $44.6 (+$978mm), CRE (+$960mm), and C&I (+$296mm). $40.5 $42.1 $40.0 +20% +6% +16% 11.4 +24% 12.0 13.0 ▪ Strong av
Slide 22: 3Q22: Net Interest Income & Net Interest Margin
3Q22: Net Interest Income & Net Interest Margin Net Interest Income & Net Interest Margin ▪ 3Q22 record net interest income: $552mm, +17% Q-o-Q (+66% LQA) from $473mm in 2Q22. $552 ▪ 3Q22 NIM expansion: 3.68%, +45 bps Q-o-Q. $ in millions $473 $396 $406 $416 3.68% ▪ Q-o-Q increase in NIM: higher loa
Slide 23: 3Q22: Loan Yields: Average & Spot
3Q22: Loan Yields: Average & Spot Avg. Loan Yield (in bps) Relative to LIBOR Loan Portfolio by Index Rate (09.30.22) 5% Avg. Loan 21% Total fixed 475 Yield: Avg. yield in rate and 395 30% hybrid in 361 359 363 400 3Q22: 4.75%, comprising fixed period: 4.65% in avg. 17% 2.46% 38%. coupon rate plus 0.
Slide 24: 3Q22: Cost of Deposits: Average & Spot
3Q22: Cost of Deposits: Average & Spot Average Cost of Deposits (in bps) Relative to Target Fed Funds Rate 3Q22 Average Deposits: $54.1 billion ($ in billions) 350 300 250 $9.4 200 17% $22.4 150 41% $9.9 86 19% 100 51 21 30 50 $12.4 12 10 18 10 17 17 23% 7/1/2021 10/1/2021 1/1/2022 4/1/2022 7/1/2022
Slide 25: 3Q22: Noninterest Income Detail
3Q22: Noninterest Income Detail Fee Income* & Net Gains on Sales of Loans ▪ Total noninterest income: $76mm in 3Q22, compared with $78mm in 2Q22. ▪ Fee income and net gains on sales of $69 loans: $69mm in 3Q22: up 7% Q-o-Q $65 2 (+26% ann.) and up 10% Y-o-Y. $63 1 4 Gain on Loans 4 2 ▪ Q-o-Q increas
Slide 26: 3Q22: Operating Expense & Efficiency
3Q22: Operating Expense & Efficiency Adjusted Noninterest Expense* Total Revenue & Adjusted Efficiency Ratio* $627 $196 $551 $181 $469 29 All other $167 32 Deposit related 35.6% 12 expenses 32.9% 24 31.2% 11 Computer software & 11 Data processing 9 16 10 Occupancy & $ in millions 12 Equipment 3Q21 2
Slide 27: 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 ▪ Unchanged. $41.2 billion (ex. PPP) (ex. PPP)* approximately 16% to 18% Y-o-Y. +12% Y-o-Y (ex. PPP) Net Interest In
Slide 28: Appendix
APPENDIX ty] EAST WEST BANK Your financial bridge”
Slide 29: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ 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 30: 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 31: 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
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