East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Q2 2023 Earnings Presentation
25 slides from East West Bancorp's earnings presentation, Jul 20, 2023
Slide 1: EWBC Earnings Results Second Quarter 2023
EWBC Earnings Results Second Quarter 2023 July 20, 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 Second Quarter 2023
Highlights of Second Quarter 2023 Return on Average Assets Adjusted Pre-Tax, Pre-Provision 2Q23 Net Income Income* & Profitability Ratio* $312.0 million 2.01% 1.85% $500 $466 $440 1.66% $420 $370 2Q23 Diluted EPS $ in millions 2.90% $2.20 $340 2.61% 2.38% $260 $180 $100 2Q23 Revenue 2Q22 1Q23 2Q23 2
Slide 4: Strong, Well-Diversified Balance Sheet
06.30.23: Strong, Well-Diversified Balance Sheet % Change Record Loans: $49.8 billion (as of 06.30.23) $ in millions, except per share data 06.30.23 03.31.23 06.30.22 LQA Y-o-Y Cash and cash equivalents & $ 6,395 $ 5,944 $ 2,615 30% 145% ST investments Repo assets 635 654 1,423 -12% -55% $14.2 $15.7
Slide 5: Strong Capital Ratios
06.30.23: Strong Capital Ratios CET1 Capital Ratio Tangible Common Equity Ratio** All capital ratios increased QoQ. +118 EWBC’s capital ratios are some of bps 13.17% the highest among regional banks. 12.68% 13.06% 12.39% -196 +108 ▪ Book value/share as of 06.30.23: bps 9.37% bps 8.66% 8.74% 8.80% $4
Slide 6: Diversified Commercial Loan Portfolio
06.30.23: Diversified Commercial Loan Portfolio Total Loans: C&I Loans by Industry as % of Total Loans Outstanding Total Resi. Mortgage & 5% Private Equity Other Consumer 29% 4% Media & Entertainment 3% Real Estate Investment & Management $49.8 $15.7bn 2% General Manufacturing & Wholesale C&I 2% Inf
Slide 7: Diversified Commercial Real Estate Portfolio
06.30.23: 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 Other MFR, 9.6% & Other Consumer 14% 29% WA 3% Retail, 8.4% SoCal $49.8 $19.9bn $19.9 50% NY billion Total CR
Slide 8: Low LTV Commercial Real Estate Portfolio
06.30.23: Low LTV Commercial Real Estate Portfolio Total CRE: Distribution by LTV1 CRE Size & LTV by Property Type Total Weighted Average >70% ($ in millions) Portfolio Size Avg. LTV1 Loan Size >65% to 70% 4% 6% Multifamily $ 4,764 52% $ 1.7 Retail $ 4,203 48% $ 2.5 Industrial $ 3,798 48% $ 3.2 >60%
Slide 9: CRE Office – Additional Information
06.30.23: CRE Office – Additional Information CRE Office: Geographic Mix by Metro Area CRE Office by Size Segment Avg. loan Balance No. of size Other Regions Other Los Angeles Loan size ($ in mm) Loans ($ in mm) LTV Washington County Other NY: 1% >$30mm $ 259 6 $ 43.1 56% Manhattan: 2% New Jersey: 2
Slide 10: CRE Retail – Additional Information
06.30.23: CRE Retail – Additional Information CRE Retail: Geographic Mix by Metro Area CRE Retail by Size Segment Avg. loan Balance No. of size Other Regions Other Los Angeles Loan size ($ in mm) Loans ($ in mm) LTV County >$30mm $ 302 8 $ 37.7 43% Washington Other NY $20mm - $30mm $ 429 17 $ 25.3 5
Slide 11: Low LTV Residential Mortgage Portfolio
06.30.23: Low LTV Residential Mortgage Portfolio Resi. Mortgage: Distribution by Geography Resi. Mortgage: Distribution by LTV TX 2% Other >60% 9% 9% WA SoCal 7% 39% <=50% $14.2 billion >55% to 60% $435,000 43% 35% Resi. Mortgage Avg. loan size* Loans 51% Outstanding Avg. LTV* NY 27% * Combined LTV
Slide 12: Granular, Diversified Deposit Base
06.30.23: Granular, Diversified Deposit Base Deposits as of 06.30.23: by Segment or Industry as % of Total Deposits China Hong Kong $1.5bn $1.4bn Brokered 3% 3% $3.6bn 6% State & Public Agency $4.5bn 8% Real Estate Property Investment & Management 8% 3% Private Equity 3% Hospitality & Hotels 2% Gene
Slide 13: Solid & Stable Asset Quality Metrics
06.30.23: Solid & Stable Asset Quality Metrics Provision for Credit Losses & Allowance for Loan Losses ▪ Net charge-offs in 2Q23 of $7.5mm, or Net Charge-offs Coverage Ratio annualized 0.06% of avg. loans, vs. $635 0.01% annualized in 1Q23. $596 $620 $27 $25 $26 $563 $583 33 42 55 57 ▪ ALLL coverage
Slide 14: 2Q23: Summary Income Statement
2Q23: Summary Income Statement % Change $ in millions, except per share data 2Q23 1Q23 2Q22 Q-o-Q Y-o-Y Comments Total net interest income $ 566.7 $ 599.9 $ 473.0 -5.5% 20% $ ▪ Net income: 2Q23 EPS of $2.20, compared with Fee income & net GOS of loans* 69.3 66.3 64.8 5% 7% 1Q23 EPS of $2.27. Other n
Slide 15: 2Q23: Net Interest Income & Net Interest Margin
2Q23: Net Interest Income & Net Interest Margin Net Interest Income (“NII”) & Net Interest Margin (“NIM”) ▪ 2Q23 NII: $567mm, -5.5% Q-o-Q. $606 $600 ▪ 2Q23 NIM: 3.55%, -41 bps Q-o-Q. $552 $567 5.16% ▪ Change in NIM driven by higher cost of IB deposits and $473 4.68% deposit mix shift, partially offs
Slide 16: 2Q23: Loan Yields: Average & Spot
2Q23: Loan Yields: Average & Spot Avg. Loan Yield Relative to LIBOR Loan Portfolio by Index Rate (06.30.23) 6% 6.14% 6.33% Avg. Loan 21% Total fixed 5.59% Yield: Avg. yield in 27% rate and 4.75% hybrid in 2Q23: 6.33%. 3.95% 5.09% Coupon spot fixed period: 4.61% rate was 6.45% 18% 39%. 3.90% as of 06
Slide 17: 2Q23: Cost of Deposits: Average & Spot
2Q23: Cost of Deposits: Average & Spot Average Cost of Deposits Relative to Target Fed Funds Rate 2Q23 Average Deposits: $54.3 billion 6.00% ($ in billions) 5.50% 5.00% 4.50% 4.00% 3.09% 3.50% $16.9 $16.3 2.49% 3.00% 30% 31% 2.12% 2.50% 1.74% 1.60% 2.00% 1.06% 1.50% 0.86% 0.51% 1.00% $10.7 $10.4 0.1
Slide 18: 2Q23: Noninterest Income Detail
2Q23: Noninterest Income Detail Fee Income* & Net Gains on Sales of Loans ▪ Total noninterest income: $79mm in 2Q23, up $19mm, or 31% from $60mm in 1Q23. ▪ Other investment income of $4mm in 2Q23 was $69 up $2mm from 1Q23, reflecting the higher $65 $66 income from CRA investments during the 6 1 5 qu
Slide 19: 2Q23: Operating Expense & Efficiency
2Q23: Operating Expense & Efficiency Adjusted Noninterest Expense* Total Revenue & Adjusted Efficiency Ratio* $205 $660 $645 $204 All other $551 $ in millions $181 29 34 Deposit related expenses 32.9% 32 18 31.8% 19 30.5% 11 Computer software & 11 11 Data processing $ in millions 16 10 16 Occupancy
Slide 20: Management Outlook: Full Year 2023
Management Outlook: Full Year 2023 FY 2023 expectations Earnings drivers compared with FY 2022 results Prior Outlook 2022 actual End of Period Loans ▪ Increase in the range of 5% to 7% Y-o-Y. ▪ Unchanged. $48.1 billion (ex. PPP*) PPP impact immaterial. +17% Y-o-Y (ex. PPP*) Net Interest Income ▪ Inc
Slide 21: Appendix
APPENDIX ty] EAST WEST BANK Your financial bridge”
Slide 22: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Adjusted efficiency ratio repr
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) The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Tangible book value, tangible
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) Return on average TCE represents tangible net income divided by average tangible book value. Adjusted return on average TCE represents adjusted tangible net
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) During the first quarter of 2023, the Company recorded a $10.0 million pre-tax impairment write-off of an AFS debt security. Management believes that presen