East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Barclays Investor Conference 2024
44 slides from East West Bancorp's conference presentation, Sep 6, 2024
Slide 1: East West Bancorp, Inc. 3Q24 Investor Update
East West Bancorp, Inc. 3Q24 Investor Update September 2024
Slide 2: Forward-Looking Statements and Additional Information
Forward-Looking Statements and Additional Information 2 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
Slide 3: Updated Management Outlook: Full Year 2024
Updated Management Outlook: Full Year 2024 3 Earnings Drivers FY 2024 Expectations vs. FY 2023 Results Economic and Interest Rate Outlook ▪ Unchanged; moderating economic growth in the second half ▪ Cuts expected to begin in September End of Period Loans ▪ Lower, growth in the range of 2% to 4% Y-o-
Slide 4: East West: A Leading Regional Bank with Cross-Border Capabilities
East West: A Leading Regional Bank with Cross-Border Capabilities 4 $11.7B Market Cap $52.4B Loans $60.9B Deposits 17.6% ROTCE1 08.31.24 08.31.24 08.31.24 1H24 4 branches in Asia to support cross-border business Branch Locations 98 U.S. branches in leading metropolitan markets (1) See reconciliation
Slide 5: History of Success and Well-Positioned to Drive Responsible Growth
History of Success and Well-Positioned to Drive Responsible Growth 5 The Beginning 1973 - 2013 The Past Decade 2014 - 2023 Today, Tomorrow, and Beyond 2024+ ▪ Founded as a savings and loan with a mission to serve underbanked Asian American immigrants in Los Angeles ▪ Converted to a state-chartered c
Slide 6: A Top U.S. Bank, Operating at Scale within our Niche
A Top U.S. Bank, Operating at Scale within our Niche 6 Source: S&P Capital IQ (1) Excludes trust banks, card banks, and foreign bank subsidiaries A Top 25 U.S. Bank by Assets1 A Top 15 U.S. Bank by Market Cap1 Largest Asian Affinity Bank in the U.S.1 Rank Bank Total Assets ($B) (as of 06.30.24) 1 JP
Slide 7: Foundational Strengths
7 Foundational Strengths Attractive market niche with high-growth demographics, and decades of cross-border expertise Well-diversified loan portfolio, with a balance of C&I, commercial real estate, and residential mortgage loans Granular core customer deposit base, supported by a branch network loca
Slide 8: Well-Positioned for Growth Trends
1.6 2.4 3.3 4.4 5.7 1990 2000 2010 2020 2030 Projection Resident U.S. Population, Persons of Chinese Descent1 (in millions) 1992 1997 2002 2007 2012 2017 2022 2027 Nominal GDP2 United States Greater China United States - Outlook Greater China - Outlook 30-Year CAGR +5% 30-Year CAGR +12% +4% Growth +
Slide 9: Consumer and Business Banking
$588 East West Bank Deposits per Branch1 ($ in millions) Consumer and Business Banking 9 $35B Avg. Deposits $19B Avg. Loans $320MM Revenue $152MM Net Income 98 Efficient, Strategically Located Domestic Branches… …Unique Products and Services… …Well-Positioned in Dense, Attractive Markets Universal S
Slide 10: Commercial Banking
Commercial Banking 10 Art Finance Media and Entertainment Commercial Real Estate Clean Energy Manufacturing & Wholesale Private Equity 2Q24 data unless otherwise noted $21B Avg. Deposits $33B Avg. Loans $312MM Revenue $126MM Net Income …With A Future Driven by ExpertiseA Track Record of Sustained Gr
Slide 11: A Diversified Loan Portfolio
2% 2% 2% 4% 4% 4% 6% Resi. Mortgage and other consumer $15.6 29% CRE $20.3 39% C&I $16.9 32% 1% 2% 1% 4% 5% 8% 8% 10% Industries with 1% of total loans outstanding1 A Diversified Loan Portfolio 11 CRE $20.3bn C&I $16.9bn Total Portfolio, as of 06.30.24 Total Loan Portfolio $52.8bn (1) Industries wit
Slide 12: Stable, Balanced Income Streams
Stable, Balanced Income Streams 12 Consumer and Business Banking Mortgage Banking Deposits Wealth Management Small Business Banking Branch and Digital Delivery Commercial Banking Middle Market C&I Asset Based Lending Cross-Border Business Commercial Real Estate Treasury Management, Payments Risk Man
Slide 13: Best-in-Class Efficiency
Best-in-Class Efficiency 13 East West maintains a significant structural advantage on both sides of the balance sheet (as of 06.30.24) Deposits per Full-Time Equivalent Employee Occupancy & Equipment Expense $ i n m ill io n s Simple, proven business model (as of 06.30.24) Loans per Full-Time Equiva
Slide 14: Strong Profitability Compared to Peers
17.5% Peer 17 Peer 15 Peer 18 Peer 1 Peer 4 Peer 12 Peer 9 Peer 3 Peer 20 Peer 8 Peer 19 Peer 13 Peer 11 Peer 6 Peer 2 Peer 7 Peer 21 EWBC Peer 10 Peer 5 Peer 16 Peer 14 1.63% Peer 17 Peer 15 Peer 18 Peer 12 Peer 1 Peer 4 Peer 21 Peer 7 Peer 19 Peer 11 Peer 3 Peer 9 Peer 6 Peer 20 Peer 10 Peer 5 Pee
Slide 15: Robust Credit Performance
Robust Credit Performance 15 East West has outperformed peers on credit over the past decade, driven by lower losses in resi. mortgage, CRE HighlightsNet Charge-off Ratio (%, annualized) Average Net Charge-off Ratio (2014 – 1H24) (%, annualized) ▪ Low LTVs and average loan sizes − Many loans have fu
Slide 16: Top-Quartile Capital Position Compared to Peers
Top-Quartile Capital Position Compared to Peers 16 Tangible Common Equity Ratio1 Total Capital RatioCET1 RatioLeverage Ratio (as of 06.30.24) (as of 06.30.24) (as of 06.30.24) (as of 06.30.24) 9.4% Peer 12 Peer 21 Peer 10 Peer 5 Peer 11 Peer 3 Peer 4 Peer 16 Peer 6 Peer 19 Peer 7 Peer 17 Peer 14 Pee
Slide 17: Consistent Top-Quartile Shareholder Returns
50% 55% 132% 200% 41% 57% 117% 1-Year 5-Year 10-Year EWBC Peer Median Peer Top Quartile Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 Aug-19 Aug-20 Aug-21 Aug-22 Aug-23 Aug-24 EWBC Peer Median Consistent Top-Quartile Shareholder Returns 17 Total Shareholder Return (TSR)1 (1) Market data as of 08.30.24. EWBC pe
Slide 18: Appendix
EASTWE ST BANK Appendix
Slide 19: 2Q24 Financial Highlights
2Q24 Financial Highlights 19 (1) See reconciliation of GAAP to non-GAAP financial measures in the appendix and in the Company’s earnings press releases ▪ 1.6% ROAA ▪ 16.4% ROACE (17.5% ROTCE1) ▪ Tangible common equity ratio1 at 9.37% ▪ TBVPS1 growth: +3% Q-o-Q, +15% Y-o-Y ▪ Repurchased approximately
Slide 20: Loans
14.9 15.3 15.5 15.4 15.3 4.7 4.8 4.9 5.0 5.0 14.0 14.4 14.9 15.2 15.4 15.3 15.4 16.0 16.3 16.2 $48.9 $49.9 $51.3 $51.9 $51.9 2Q23 3Q23 4Q23 1Q24 2Q24 C&I $(57) $90 $217 $525 CRE (ex. Multifamily) Multifamily Residential mortgage & other consumer C&I Loans 20 Consistent residential mortgage productio
Slide 21: Deposits
16.9 16.3 15.9 15.0 14.7 10.7 10.1 9.5 9.5 9.3 10.4 12.2 12.8 13.6 13.7 16.3 16.6 17.2 19.3 21.0 $54.3 $55.2 $55.4 $57.4 $58.7 2Q23 3Q23 4Q23 1Q24 2Q24 $(231) $95 $693 $882 Wholesale Greater China Consumer and Private Banking Commercial and Business Banking Deposits 21 Fourth consecutive quarter of
Slide 22: Net Interest Income & Net Interest Margin
Net Interest Income & Net Interest Margin 22 NII, NIM resilient amid higher interest-bearing deposit cost, continued mix shift ▪ NII down 2%, NIM down 7bps ▪ Impact of cash flow hedges unchanged (~$25mm, or 15bps to NIM) HighlightsNet Interest Income (NII) & Net Interest Margin (NIM) Q-o-Q Impact to
Slide 23: Fees and Noninterest Income
Fees and Noninterest Income 23 Record total quarterly fee income, with solid growth in every fee business category ▪ Fee income1 of $77mm, up $6mm, or +8% from $71mm, with growth in all fee categories ▪ Total noninterest income of $85mm included net gains on debt securities of $2mm; mark- to-market
Slide 24: Asset Quality Metrics
0.97% 1.06% 1.10% 1.25% 1.22% 0.66% 0.95% 0.77% 1.05% 0.83% 1.63% 2.01% 1.87% 2.30% 2.05% 06.30.23 09.30.23 12.31.23 03.31.24 06.30.24 Classified loans / Loans HFI Special mention loans / Loans HFI $26 $42 $37 $25 $37 $8 $18 $20 $23 $23 0.06% 0.14% 0.15% 0.17% 0.18% 2Q23 3Q23 4Q23 1Q24 2Q24 Provisio
Slide 25: Allowance for Loan Losses
$635 $656 $669 $670 $684 1.28% 1.29% 1.28% 1.29% 1.30% 06.30.23 09.30.23 12.31.23 03.31.24 06.30.24 ALLL ALLL/Loans HFI 25 Allowance for Loan Losses Grew CRE reserves by 23% year-over-year; office reserves now at 3.10% Allowance for Loan Losses (ALLL) ($ in millions) 06.30.23 03.31.24 06.30.24 Loan
Slide 26: Capital
8.8% 9.0% 9.4% 9.3% 9.4% Tangible Common Equity Ratio 06.30.23 03.31.2412.31.23 26 Capital Healthy capital position: approximately 560,000 shares repurchased in 2Q24 Highlights ▪ Strong capital − We operate from a position of capital strength ▪ Declared 3Q24 dividend ‒ Paid on August 16, 2024 to sha
Slide 27: Commercial Real Estate Portfolio Detail
Commercial Real Estate Portfolio Detail 27 (1) Weighted average LTV is based on most recent LTV, using most recent available appraisal and current loan commitment (2) Construction & Land average size based on total commitment 50% Average LTV1 Low LTVs and granular, many loans have full recourse and
Slide 28: CRE Office – Additional Information
37% 6% 13% 7% 7% 6% 5% 2% 5% 7% CRE Office – Additional Information 28 CRE Office: Geographic Mix by Metro Area CRE Office by Size Segment Other Los Angeles County Other SoCal Other Bay Area San Francisco Other CA, 1% Houston Dallas Manhattan, 1% Other TX Washington Other Regions New Jersey, 2% Othe
Slide 29: CRE Retail – Additional Information
30% 4% 18%10% 2% 4% 5% 1% 2% 3% 6% 3% 11% CRE Retail – Additional Information 29 Other Los Angeles County Downtown Los Angeles and Adjacent Neighborhoods Other SoCal Other Bay Area San Francisco Other CA Houston Dallas Manhattan Other TX Washington Other Regions Other NY Low LTVs across different si
Slide 30: CRE Multifamily – Additional Information
30% 3% 13% 8% 6% 7% 6% 2% 3% 2% 3% 3% 4% 3% 6% CRE Multifamily – Additional Information 30 Other Los Angeles County Downtown Los Angeles and Adjacent Neighborhoods Other SoCal Other Bay Area San Francisco Other CA Houston Dallas Manhattan Other TX, 1% Washington Other Regions Other NY Low LTVs portf
Slide 31: Residential Mortgage Portfolio
<=50% 47% >50% to 55% 12% >55% to 60% 30% >60% 11% Residential Mortgage Portfolio 31 51% Average LTV1 Low LTVs and average loan size (as of 06.30.24) Resi. Mortgage Distribution by LTV1 (as of 06.30.24) $436,000 Average loan size2 (1) Combined LTV for 1st and 2nd liens; based on commitment (2) Avera
Slide 32: Loan Yields
21% 21% 29% 24% 5%Fixed rate Hybrid in fixed rate period Variable - LIBOR + SOFR Variable - Prime rate Variable - all other rates Loan Yields 32 Fixed Rate and Hybrid in Fixed Period Loans (% of Total) Loan Portfolio by Index Rate Average Loan Rate by Portfolio (as of 06.30.24) Total fixed rate and
Slide 33: Deposit and Funding Cost
Deposit and Funding Cost 33 Average Deposit and Liability Cost Average Deposit Rate by Portfolio 2.12% 2.43% 2.60% 2.84% 2.96% 3.09% 3.45% 3.64% 3.85% 3.94% 3.24% 3.56% 3.73% 3.92% 4.07% 2Q23 3Q23 4Q23 1Q24 2Q24 Average cost of deposits Average cost of interest-bearing deposits Average cost of inter
Slide 34: Securities Portfolio
($ in billions) $9.9 $9.7 $9.7 $10.2 $11.9 $5.2 $5.4 $4.4 $5.9 $4.1 $15.1 $15.1 $14.1 $16.1 $16.0 2.99% 3.06% 3.17% 3.19% 3.93% 2Q23 3Q23 4Q23 1Q24 2Q24 Total Securities & Resale Agreements Cash & Equivalent Total Securities Average Yield Securities Portfolio 34 Maintained an appropriate level of on
Slide 35: Operating Expense & Efficiency
31.8% 34.7% 34.3% 1.22% 1.25% 1.23% 2Q23 1Q24 2Q24 125 123 131 142 134 34 32 37 33 38 19 20 20 22 21 16 15 16 15 15 11 12 11 11 11 $205 $202 $215 $223 $219 2Q23 3Q23 4Q23 1Q24 2Q24 Operating Expense & Efficiency 35 Best-in-class efficiency Adjusted Noninterest Expense1 ($ in millions) ▪ Total nonint
Slide 36: Credit Ratings
Credit Ratings 36 East West Bancorp, Inc. East West Bank Fitch (as of March 20, 2024) Standard & Poor’s (as of May 1, 2024) Fitch (as of March 20, 2024) Standard & Poor’s (as of May 1, 2024) Long-term Issuer Rating BBB BBB BBB BBB+ Short-term Issuer Rating F2 A2 F2 A2 Ratings Outlook Stable Stable S
Slide 37: Environmental, Social and Governance ("ESG") Highlights
Environmental, Social and Governance (“ESG”) Highlights 37 Largest Minority-Operated Depository Institution. East West Bank is the largest FDIC-insured, minority-operated depository institution headquartered in the U.S., serving communities with diverse ethnicities and socio-economic backgrounds in
Slide 38: Seasoned Management Team
38 Seasoned Management Team Dominic Ng Chairman and Chief Executive Officer 1991 Christopher Del Moral-Niles, CFA Executive Vice President and Chief Financial Officer 2023 Lisa Kim Executive Vice President, General Counsel and Corporate Secretary 2020 Gary Teo Executive Vice President and Chief Huma
Slide 39: Diverse, Highly Engaged Board of Directors
39 Diverse, Highly Engaged Board of Directors Manuel P. Alvarez Founding Principal BridgeCounsel Strategies, LLC Molly Campbell Infrastructure Advisor Department of the Treasury, Office of Technical Assistance Archana Deskus Former Executive Vice President and Chief Technology Officer PayPal Holding
Slide 40: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation 40 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 r
Slide 41: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation 41 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 book value, tangib
Slide 42: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation 42 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 tangible book value. Adjusted return on average TCE represents adjusted tangible
Slide 43: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation 43 (1) Applied statutory tax rate of 29.56% for the three month and six months ended June 30, 2024, and the three months ended March 31, 2024. Applied statutory tax rate of 29.29% for the three and six months ended June 30, 2023 (2) Annualized (3) Refer to S
Slide 44: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation 44 ($ in millions) Three Months Ended June 30, 2024 Line of Business Financial Performance Total Revenue Commercial Banking $ 312 Consumer and Business Banking 320 Other 6 Total Company 638 Less: Other (6) Total Company excluding Other $ 632 Percent of Total
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