East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Q4 2022 Earnings Presentation
23 slides from East West Bancorp's earnings presentation, Jan 26, 2023
Slide 1: EWBC Earnings Results Fourth Quarter and Full Year 2022
EWBC Earnings Results Fourth Quarter and Full Year 2022 January 26, 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 Fourth Quarter and Full Year 2022
Highlights of Fourth Quarter and Full Year 2022 Return on Average Assets Adjusted Pre-Tax, Pre-Provision Income* & Profitability Ratio* 4Q22 2022 Net income Net income 2.08% $1,600 $337 million $1.1 billion 1.86% 1.80% $478 1.39% 1.47% $432 $ in millions $440 $1,147 4Q22 2022 $360 $299 2.95% 2.55% D
Slide 4: 12.31.22: Strong, Well-Diversified Balance Sheet
12.31.22: Strong, Well-Diversified Balance Sheet Record Loans as of 12.31.22: $48.2 billion $ in millions, except per share data 12.31.22 09.30.22 Q-o-Q Change ($ in billions) Cash equivalents & ST investments $ 3,621 $ 2,794 $ 827 Repo assets 792 893 (101) AFS debt securities 6,035 5,906 129 $13.4
Slide 5: 12.31.22: Strong Capital Ratios That Expanded Q-o-Q
12.31.22: Strong Capital Ratios That Expanded Q-o-Q ▪ Book value per share of $42.46 as of 12.31.22, +6% Q-o-Q. Stockholders’ equity to assets ratio of 9.33% as of 12.31.22, +28 bps Q-o-Q. ▪ Tangible equity* per share of $39.10 as of 12.31.22, +6% Q-o-Q. Tangible equity to tangible assets ratio* of
Slide 6: 12.31.22: Diversified Commercial Loan Portfolio
12.31.22: Diversified Commercial Loan Portfolio Total Loans: C&I Loans by Industry as % of Total Loans Outstanding Total Resi. Mortgage & 5% Private Equity & Fund Finance Other Consumer 28% 4% Media & Entertainment 3% Real Estate Investment & Management 2% General Manufacturing & Wholesale $15.7bn $
Slide 7: 12.31.22: Diversified Commercial Real Estate Portfolio
12.31.22: 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 MFR, 9% Other & Other Consumer 3% 12% 28% Retail, 8% $19.1bn NY $19.1 SoCal $48.2 51% Total CRE 5% billion
Slide 8: 12.31.22: Low LTV Commercial Real Estate Portfolio
12.31.22: Low LTV Commercial Real Estate Portfolio Total CRE: Distribution by LTV CRE Size & LTV by Property Type Total Weighted Average >70% ($ in millions) Portfolio Size Avg. LTV1 Loan Size >65% to 70% 4% 6% Multifamily $ 4,573 52% $ 1.6 Retail $ 4,076 49% $ 2.4 Industrial $ 3,617 48% $ 3.0 >60%
Slide 9: 12.31.22: Low LTV Residential Mortgage Portfolio
12.31.22: 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% 40% 41% $13.3 billion 38% $434,000 Resi. Mortgage Avg. loan size* Loans 51% Outstanding Avg. LTV* NY 27% NorCal >50% to
Slide 10: 12.31.22: Solid & Stable Asset Quality Metrics
12.31.22: Solid & Stable Asset Quality Metrics NPAs / Total Assets ▪ Criticized loans decreased Q-o-Q by $9mm, or 1%, to $896mm as of 12.31.22. 0.17% ▪ Classified loans decreased 2% Q-o-Q to $427.5mm & special mention loans 0.15% 0.16% 0.16% decreased 0.5% Q-o-Q to $468.5mm. 0.14% ▪ Criticized loans
Slide 11: 4Q22: Allowance for Loan Losses & Credit Costs
4Q22: Allowance for Loan Losses & Credit Costs Allowance for Loan Losses Coverage Ratio Provision for Credit Losses & Net Charge-offs $596 $583 $563 $546 0.10% $27 $542 0.08% $25 $ in millions $ in millions 0.08% $13.5 0.06% $10 $10 $8 $8 $7 1.30% 1.25% 1.24% 1.21% 1.23% $(7) $(10) $400 1.00% $(25)
Slide 12: 4Q22: Summary Income Statement
4Q22: Summary Income Statement 4Q22 vs. 3Q22 $ in millions, except per share data & ratios 4Q22 3Q22 $ Change % Change Comments Total net interest income $ 605.5 $ 551.8 $ 53.7 10% ▪ Record net interest income: $605.5mm, up 10% Q-o-Q (+39% LQA). Fee income & net GOS of loans* 66.0 69.0 (3.0) -4.5% ▪
Slide 13: 4Q22: Average Balance Sheet: Growth & Mix
4Q22: Average Balance Sheet: Growth & Mix Average Loans & Q-o-Q Change ▪ 4Q22 avg. loan growth: +6% LQA (+$753mm Q-o-Q). $44.6 $46.9 $47.6 Growth in all major loan portfolios: CRE (+$298mm), $40.5 $42.1 +20% +6% residential mortgage (+$241mm), and C&I (+$214mm). +24% 13.0 13.2 +16% 12.0 11.4 ▪ Loans
Slide 14: 4Q22: Net Interest Income & Net Interest Margin
4Q22: Net Interest Income & Net Interest Margin Net Interest Income & Net Interest Margin ▪ 4Q22 record net interest income: $605.5mm, $605.5 +10% Q-o-Q (+39% ann.). $552 $473 3.98% ▪ 4Q22 NIM expansion: 3.98%, +30 bps Q-o-Q. $406 $416 ▪ Balance sheet hedging: Added $3.25bn of swaps $ in millions 3.
Slide 15: 4Q22: Loan Yields: Average & Spot
4Q22: Loan Yields: Average & Spot Avg. Loan Yield (in bps) Relative to LIBOR Loan Portfolio by Index Rate (12.31.22) 559 4% Avg. Loan 21% Total fixed 475 Yield: Avg. yield in rate and 4Q22: 5.59%, 30% hybrid in 395 359 363 3.90% comprising fixed period: 5.53% in avg. 18% 39%. coupon rate plus 2.46%
Slide 16: 4Q22: Cost of Deposits: Average & Spot
4Q22: Cost of Deposits: Average & Spot Average Cost of Deposits (in bps) Relative to Target Fed Funds Rate 4Q22 Average Deposits: $55.0 billion ($ in billions) 500 450 400 350 $12.1 300 22% 250 $21.4 174 39% 200 $9.3 106 150 17% 86 100 51 $12.2 18 17 30 50 10 10 17 22% 10/1/2021 1/1/2022 4/1/2022 7/
Slide 17: 4Q22: Noninterest Income Detail
4Q22: Noninterest Income Detail Fee Income* & Net Gains on Sales of Loans ▪ Total noninterest income: $65mm in 4Q22, $69 compared with $76mm in 3Q22. 2 $66 $63 4 1 ▪ Fee income and net gains on sales of 4 Gains on Sales of 2 Loans loans: $66mm in 4Q22: down 4.5% Q-o-Q 2 9 6 (-18% ann.) and up 4% Y-o
Slide 18: 4Q22: Operating Expense & Efficiency
4Q22: Operating Expense & Efficiency Adjusted Noninterest Expense* Total Revenue & Adjusted Efficiency Ratio* $670 $627 $196 $477 $192 $ in millions $178 37.2% 29 31.2% 28.7% 32 All other 26 12 Deposit related 13 expenses 9 11 $ in millions 11 Computer software & 4Q21 3Q22 4Q22 12 16 Data processing
Slide 19: Management Outlook: Full Year 2023
Management Outlook: Full Year 2023 FY 2023 expectations Earnings drivers compared with FY 2022 results 2022 actual End of Period Loans ▪ Increase at a percentage rate in the high single-digits $48.1 billion (ex. PPP*) Y-o-Y. PPP impact immaterial. +17% Y-o-Y (ex. PPP*) Net Interest Income ▪ Increase
Slide 20: APPENDIX
APPENDIX ty] EAST WEST BANK Your financial bridge”
Slide 21: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ 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