East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Q4 2017 Earnings Presentation
22 slides from East West Bancorp's earnings presentation, Jan 25, 2018
Slide 1: EWBC Earnings Results Fourth Quarter 2017
EWBC Earnings Results Fourth Quarter 2017 January 25, 2018
Slide 2: Forward-Looking Statements
Forward-Looking Statements 2 Certain matters set forth herein (including any exhibits hereto) constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company’s current business plans and
Slide 3: Highlights of Full Year & Fourth Quarter 2017 Results
4Q17 Net income $85 million 4Q 2017 Adj. Net income1 $127 million 4Q17 Diluted EPS $0.58 4Q17 Adj. Diluted EPS1 $0.87 Tangible equity1/share $23.13 Record loans $29.1 billion Record deposits $32.2 billion Highlights of Full Year & Fourth Quarter 2017 Results Earnings results. FY 2017 net income of
Slide 4: 4Q17 Earnings Growth and Profitability
$110.7 $128.2 $118.3 $130.5 $126.6 $41.5 $2.2 1.27% 1.49% 1.36% 1.44% 1.35% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% $0 $50 $100 $150 $200 4Q16 1Q17* 2Q17 3Q17* 4Q17* $ in m illi on s Net Income & ROA* Adj. net income Non-GAAP adjustments Adj. return on avg. assets $(41.7) GAAP $84.9 $110.7 $128.2 $118.3 $13
Slide 5: 4Q17 Record Loans of $29.1 billion
9.6 9.9 10.2 10.6 10.7 37% 8.7 9.1 9.1 9.5 9.6 33% 1.6 1.7 1.8 1.9 1.9 7% 3.5 3.7 4.0 4.4 4.7 16%2.1 2.1 2.1 2.1 2.2 7% $0 $10 $20 $30 4Q16 1Q17 2Q17 3Q17 4Q17 4Q17 Loan Mix $ in b il li o n s Total Loans C&I CRE MFR SFR HELOC and Other Consumer 4Q17 Record Loans of $29.1 billion 5 Note: Chart inclu
Slide 6: 4Q17 Record Deposits of $32.2 billion
4Q17 Record Deposits of $32.2 billion 6 DDA = Noninterest-bearing checking deposits. MMDA = Money market deposits. IB checking = Interest-bearing checking deposits. $29.9 $30.5 Q-o-Q Difference Total end-of-period deposits increased $909mm or 3% (+12% LQA). DDA: +1%, or +5% LQA. IB checking &
Slide 7: Total Fees and Other Operating Income
10.2 10.3 10.7 10.8 10.7 3.4 4.5 3.5 3.6 3.0 5.4 5.0 5.9 6.0 6.5 14.4 11.1 12.0 10.2 9.6 7.0 2.5 3.8 6.7 4.7 7.1 5.4 6.2 3.6 4.0 $0 $10 $20 $30 $40 $50 4Q16 1Q17 2Q17 3Q17 4Q17 $ in m ill io n s Total Fees and Other Operating Income Branch fees Wealth management fees Ancillary loan fees & other inco
Slide 8: 4Q17 Summary Income Statement
4Q17 Summary Income Statement 8 % Change vs. ($ in millions, except per share data) 4Q17 3Q17 4Q16 4Q17 Comments Adjusted net interest income $ 312.7 5% 20% Reflects loan growth & loan yield expansion. ASC 310-30 discount accretion income $ 7.0 55% (39)% Includes recoveries. Net interest income
Slide 9: 4Q17 Net Interest Income & Net Interest Margin
3.17% 3.29% 3.41% 3.46% 3.49% 4.13% 4.17% 4.30% 4.35% 4.42% 0.31% 0.32% 0.36% 0.40% 0.43% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 4Q16 1Q17 2Q17 3Q17 4Q17 Adj.* NIM (ex. accretion) Adj.* Loan yield (ex. accretion) Total cost of deposits NIM: Loan Yield & Cost of Deposits 261.1 268.9 283.8 298.6 312.7 11
Slide 10: 4Q17 Efficiency, PTPP Profitability & Tax Items
4Q17 total noninterest expense: $175mm. 4Q17 adj.* noninterest expense of $152mm, up by $13mm or 9% Q-o-Q. Compensation and employee benefits expense increased by $11mm or 14% Q-o-Q: hiring & increases to bonus accrual and restricted stock compensation. 4Q17 adj.* efficiency ratio: 41.6%.
Slide 11: Asset Quality
$17.9 $21.7 $23.6 $25.5 $29.0 1.40% 1.20% 1.12% 1.02% 0.99% 0.00% 1.00% 2.00% 3.00% 4.00% $0 $7 $14 $21 $28 $35 2013 2014 2015 2016 2017 $ in bil ion s Allowance for Loan Losses Gross loans HFI* (excludes HFS) ALLL / Gross loans HFI* $169.6 $132.4 $128.7 $129.6 $115.1 0.69% 0.46% 0.40% 0.37% 0.31% 0
Slide 12: Strong Capital Ratios
$20.27 $23.13 7.0% 8.5% 10.5% 4.0% 8.52% 10.9% 10.9% 12.4% 8.7% 9.12% 11.4% 11.4% 12.9% 9.2% 0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 $5.00 $10.00 $15.00 $20.00 $25.00 Tangible equity per share Tangible equity to tangible assets ratio CET1 risk-based capital ratio Tier 1 risk-based capital ratio Total ri
Slide 13: Management Outlook: Full Year 2018
Management Outlook: Full Year 2018 13 Earnings drivers Initial full year 2018 outlook 2017 FY actual End of Period Loans Increase at a percentage rate of approximately 10%. $29.1 billion, +14% Y-o-Y NIM (excl. impact of ASC 310-30 discount accretion) In the range of 3.65% to 3.75%. 3.42%, +27bps
Slide 14: Appendix
APPENDIX Wy EAST WEST BANK Your financial bridge”
Slide 15: Effective Tax Rate Excluding Tax Cuts and Jobs Act
Appendix: GAAP to Non-GAAP Reconciliation 15 EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) On December 22, 2017, the Tax Cuts and Jobs Act was enacted, which resulted in additional income tax expense recorded in the fourth quarter of 2017. The
Slide 16: Non-GAAP Reconciliation: Adjusted Net Income and EPS
16 (1) Applied statutory tax rate of 42.05%. (2) Annualized. EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ and shares in thousands, except for per share data) (unaudited) As disclosed in the Company’s current report on Form 8-K filed on March 30, 2017, the Company consu
Slide 17: Non-GAAP Reconciliation: Adjusted Net Income and EPS (cont'd)
17 (1) Applied statutory tax rate of 42.05%. (2) Annualized. EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ and shares in thousands, except for per share data) (unaudited) As disclosed in the Company’s current report on Form 8-K filed on March 30, 2017, the Company consu
Slide 18: Adjusted Efficiency and PTPP Ratios
18 Appendix: GAAP to Non-GAAP Reconciliation (cont’d) (1) Annualized. EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) Adjusted efficiency ratio represents adjusted noninterest expense divided by adjusted revenue. Adjusted pre-tax, pre-provision p
Slide 19: Adjusted Efficiency and PTPP Ratios (cont'd)
19 Appendix: GAAP to Non-GAAP Reconciliation (cont’d) (1) Annualized. EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) Adjusted efficiency ratio represents adjusted noninterest expense divided by adjusted revenue. Adjusted pre-tax, pre-provision p
Slide 20: Adjusted Loan Yield and Net Interest Margin
20 Appendix: GAAP to Non-GAAP Reconciliation (cont’d) (1) Annualized. EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) The Company believes that presenting the adjusted average loan yield and adjusted net interest margin that exclude the ASC 310-3
Slide 21: Tangible Equity Reconciliation
21 Appendix: GAAP to Non-GAAP Reconciliation (cont’d) (1) Includes core deposit intangibles and mortgage servicing assets. (2) Applied statutory tax rate of 42.05%. (3) Annualized. EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) The Company uses
Slide 22: Adjusted Return on Average Tangible Equity
22 Appendix: GAAP to Non-GAAP Reconciliation (cont’d) (1) Includes core deposit intangibles and mortgage servicing assets. (2) Applied statutory tax rate of 42.05%. (3) Annualized. EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) Adjusted return o