East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Q4 2020 Earnings Presentation
27 slides from East West Bancorp's earnings presentation, Jan 28, 2021
Slide 1: EWBC Earnings Results Fourth Quarter 2020
EWBC Earnings Results Fourth Quarter 2020 January 28, 2021
Slide 2: Forward-Looking Statements
Forward-Looking Statements Forward-Looking Statements 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 our current bus
Slide 3: Highlights of Fourth Quarter 2020
Highlights of Fourth Quarter 2020 Adjusted* Pre-Tax, Pre-Provision Return on Average Assets Income & Profitability Ratio 4Q20 Net Income 1.68% $269 $164 million $251 $250 $224 1.26% 1.24% $200 2.40% 4Q20 Diluted EPS 1.90% $1.15 $ in millions 1.78% $150 1.83% $100 Record Loans $50 $38.4 billion 0.25%
Slide 4: 12.31.20: Strong, Well-Diversified Balance Sheet
12.31.20: Strong, Well-Diversified Balance Sheet $ in millions, except per share data 12.31.20 09.30.20 $ Change Record Loans as of 12.31.20: $38.4 billion Cash equivalents & ST investments $ 4,828 $ 5,206 $ (378) ($ in billions) AFS debt securities & repo assets 7,005 5,749 1,256 Gross loans (ex. P
Slide 5: 12.31.20: Strong Capital Ratios
12.31.20: Strong Capital Ratios ▪ Growing Equity: Book value per share of $37.22 as of 12.31.20: +3% Q-o-Q and +8% Y-o-Y. ▪ Tangible equity* per share of $33.85 as of 12.31.20: +3% Q-o-Q and +9% Y-o-Y. ▪ Tangible equity* to tangible assets ratio of 9.3% as of 12.31.20, essentially unchanged from 9.3
Slide 6: 12.31.20: Diversified Commercial Loan Portfolio
12.31.20: Diversified Commercial Loan Portfolio Total Loans: C&I Loans by Industry as % of Total Loans Outstanding Total Residential Mortgage & 4% General Manufacturing & Wholesale Other Consumer 3% Private Equity 26% 3% Oil & Gas 2% Entertainment $12.1 billion 2% Real Estate Related $38.4 C&I 2% Te
Slide 7: 12.31.20: Diversified Commercial Real Estate Portfolio
12.31.20: Diversified Commercial Real Estate Portfolio Total Loans: Total CRE Loans by Property Type as % of Total CRE: Distribution by Total Loans Outstanding Geography WA Total Residential 3% Other Mortgage & Retail, 9% 7% Other Consumer 26% TX MFR, 8% 7% PPP $14.8 billion $14.8 SoCal 4% $38.4 Tot
Slide 8: 12.31.20: Low LTV Commercial Real Estate Portfolio
12.31.20: Low LTV Commercial Real Estate Portfolio Total CRE: Distribution by LTV CRE LTV & Size by Property Type >70% 4% Average Weight. Avg. >65% to 70% ($ in mm) Loan Size LTV 7% Retail $ 2.2 mm 49% Multifamily 1.3 mm 51% >60% to 65% <=50% 15% $2.4 million 41% Office 4.0 mm 53% Avg. size of loan
Slide 9: 12.31.20: Low LTV Single Family Residential Mortgages
12.31.20: Low LTV Single Family Residential Mortgages SFR: Distribution by Geography SFR: Distribution by LTV TX 3% Other >60% 7% 10% <=50% WA 32% 7% SoCal 42% $388,000 $8.2 billion Avg. size of loan SFR loans outstanding outstanding 53% NY >55% to 60% Avg. LTV 28% 44% >50% to 55% 14% NorCal 13% ▪ S
Slide 10: 12.31.20: Low LTV Home Equity Lines of Credit
12.31.20: Low LTV Home Equity Lines of Credit HELOC: Distribution by Geography HELOC: Distribution by LTV* >60%: 2% Other 5% WA 11% >55% to 60% 38% SoCal $378,000 NY $1.6 billion 47% Avg. size of <=50% 12% HELOC loans commitment 53% outstanding 48% Avg. LTV* NorCal 25% * Combined LTV for 1st and 2nd
Slide 11: 4Q20: COVID-19 Loan Deferral Statistics
4Q20: COVID-19 Loan Deferral Statistics Loans on Deferral: Deferrals 06.30.20 Deferrals 09.30.20 9.30 vs. 6.30 Deferrals 12.31.20 12.31 vs. 9.30 Full vs. Partial Payment $ in mm, except $ Deferral % of Loan $ Deferral % of Loan $ Deferral % of Loan Total Loans ratios Balance Portfolio Balance Portfo
Slide 12: 12.31.20 Asset Quality Metrics by Portfolio
12.31.20 Asset Quality Metrics by Portfolio NPAs / Total Assets Classified Loans / Total Loans Special Mention Loans / Total Loans ▪ Nonperforming Assets: $235mm as of 12.31.20, -10% Q-o-Q. 0.52% 2.0% 1.9% ▪ Accruing loans 30-89 days past 0.45% due: 0.13% of total loans as of 1.7% 1.5% 12.31.20, or
Slide 13: 4Q20: Allowance for Loan Losses & Credit Costs
4Q20: Allowance for Loan Losses & Credit Costs Allowance for Loan Losses Coverage Ratio Provision for Credit Losses & Net Charge-offs $632 $618 $620 $102 $557 $483 1.78% 1.73% 1.68% $ in millions $74 0.26% $ in millions 1.55% 0.21% 0.20% $358 1.39% 1.70% 1.65% 1.61% 0.10% 0.01% 1.03% $24 $24 $19 $19
Slide 14: 4Q20: Summary Income Statement
4Q20: Summary Income Statement 4Q20 vs. 3Q20 $ in millions, except per share data 4Q20 3Q20 $ Change % Change Comments Net Interest Income $ 346.6 $ 324.1 $ 22.5 7% ▪ Amortization of tax credit & other Fee income & net gains on sales of 53.1 48.0 5.1 10% investments: 4Q20 was lower because it loans*
Slide 15: 4Q20: Average Balance Sheet: Growth & Mix
4Q20: Average Balance Sheet: Growth & Mix ▪ 4Q20 avg. loan growth: +6% LQA (+$565mm Q-o-Q). Total Average Loans & Growth residential mortgage: +16% LQA; C&I (ex. PPP): +5% LQA; total CRE: $37.1 $37.2 $37.7 +3% LQA. $34.4 $35.2 1.5 1.8 1.7 +23% 0.2% +6% ▪ 4Q20 avg. deposit growth: +31% LQA (+$3.2bn Q
Slide 16: 4Q20: Net Interest Income & Net Interest Margin
4Q20: Net Interest Income & Net Interest Margin Adj.* Net Interest Income & Adj.* Net Interest Margin ▪ 4Q20 NII: $347mm, +7% Q-o-Q from $324mm in 3Q20. ▪ 4Q20 NIM: 2.77%, +5 bps Q-o-Q. $362 $363 $323 $318 $333 ▪ 4Q20 adj.* NII: $333mm, +5% Q-o-Q from $318mm in 3Q20. 3.47% 3.44% ▪ 4Q20 adj.* NIM: 2.
Slide 17: 4Q20: Average Loan Yields
4Q20: Average Loan Yields Adj.* Avg. Loan Yield vs. Prime & LIBOR Average Loan Yield (in bps) by Portfolio in 2020 C&I: 71% LIBOR or CRE: 75% LIBOR or SFR: 51% Hybrid in HELOC: Prime- GAAP Yield: GAAP Yield: GAAP Yield: Prime w/ weigh. avg. Prime w/ weigh. avg. fixed-rate period. 32% based w/ weigh.
Slide 18: 4Q20: Average Cost of Deposits
4Q20: Average Cost of Deposits Avg. Cost of Deposits (in bps) Relative to Fed Funds Rate ▪ Spot rate of total deposits: 0.22% as of 12.31.20 (vs. 0.25% avg. in 4Q20). 1.83% ▪ Spot rate of IB deposits: 0.35% as of 12.31.20 (vs. 0.40% avg. in 4Q20). 1.42% ▪ Continued decrease in deposit costs: reprici
Slide 19: 4Q20: Noninterest Income Detail
4Q20: Noninterest Income Detail 60.0 Fee Income* & Net Gains on Sales of Loans Total noninterest income: $70mm in 4Q20, up by $54.4 $15.5mm from $54.5mm in 3Q20 (+28% Q-o-Q). $52.5 $52.2 $53.1 3.0 5% ▪ Fee income and net gains on sales of loans: 50.0 $48.0 $53mm in 4Q20, up $5mm from $48mm (+10% Q-o
Slide 20: 4Q20: Operating Expense & Efficiency
4Q20: Operating Expense & Efficiency Adjusted* Noninterest Expense Adj.* Noninterest Expense & Adj.* Efficiency Ratio $165 $161 $166 70.0% $170 $153 $154 $165.3 $165.6 $160.6 38.1% 38.4% 38.4% 40.8% 39.8% $153.3 $154.4 $ in millions 26.5 23.5 14% 22.0 19.2 17.5 8.5 5% 9.4 9.5 8.4 9.1 11.7 7% 11.2 10
Slide 21: Management Outlook: Full Year 2021
Management Outlook: Full Year 2021 FY 2021 expectations Earnings drivers compared to FY 2020 results 2020 actual End of Period Loans ▪ Increase at a percentage rate of 6% to 8% Y-o-Y. $36.8 billion (ex. PPP) (ex. PPP) +6% Y-o-Y (ex. PPP) Adj.* Net Interest Income ▪ Adj. NII growth expected to be gen
Slide 22: Appendix
APPENDIX ty] EAST WEST BANK Your financial bridge”
Slide 23: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) During the fourth quarter of 2020, the Company recorded $10.7 million in pre-tax recovery and $5.1 million in uncertain tax position related to the Company’
Slide 24: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) Adjusted efficiency ratio represents adjusted noninterest expense divided by revenue. Adjusted pre-tax, pre-provision profitability ratio represents revenue
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. Tangible equity and tangible e
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) Adjusted return on average tangible equity represents adjusted tangible net income divided by average tangible equity. Adjusted tangible net income excludes
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) In April 2020, the Company started accepting applications under the PPP administered by the Small Business Administration (“SBA”) under the Coronavirus Aid,