East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Q1 2020 Earnings Presentation
25 slides from East West Bancorp's earnings presentation, Apr 23, 2020
Slide 1: EWBC Earnings Results First Quarter 2020
EWBC Earnings Results First Quarter 2020 April 23, 2020
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 busi
Slide 3: East West Response to COVID-19
East West Response to COVID-19 Employees Customers . Quickly mobilized to assure continuity of Commercial: business operations and maintain ability to serve customers, with enhanced safety . SBA Paycheck Protection Program: measures at all offices and branches. Processed and funded over $1.5 billion
Slide 4: Highlights of First Quarter 2020 Results
Highlights of First Quarter 2020 Results Profitability: Returns on Assets & Equity 2.00% 40.0% 1Q20 1.68% 1.74% 1.67% 1.58% Net Income 30.0% 1.30% $145 million 17.4% 17.0% 15.7% 16.6% 20.0% 12.9% 1Q20 15.1% 15.5% 14.1% 14.9% 10.0% 11.6% Diluted EPS 0.00% 0.0% $1.00 1Q19* 2Q19* 3Q19 4Q19* 1Q20 ROAA R
Slide 5: Summary Balance Sheet
1Q20: Summary Balance Sheet $ in millions, except per share data 03.31.20 12.31.19 % Change Notable Items Cash equivalents & ST investments $ 3,374 $ 3,457 -2% . Strong, well-diversified balance sheet. AFS debt securities & repo assets 4,556 4,177 9% Gross loans, net of discounts $ 35,895 $ 34,779 3
Slide 6: Strong Capital Ratios
1Q20: Strong Capital Ratios . Book value per share of $34.67 as of 03.31.20: +0.6% Q-o-Q and +10% Y-o-Y. . Tangible equity* per share of $31.27 as of 03.31.20: +0.4% Q-o-Q and +11% Y-o-Y. . Capital return to shareholders: . Buyback: $145.9mm, or 4.5mm shares, of common stock repurchased in 1Q20 thro
Slide 7: Record Loans of $35.9 billion
1Q20: Record Loans of $35.9 billion Loan Mix as of 03.31.20: $35.9 billion . EOP loan growth: 3% Q-o-Q (+13% LQA). ($ in billions) . Driven by growth in C&I (+15% LQA), total CRE (+12% LQA) and residential mortgage (+13% LQA). $9.1 . Avg. loan growth: 2% Q-o-Q (+9% LQA), driven by growth 25% in CRE
Slide 8: Diversified Commercial Loan Portfolio
1Q20: Diversified Commercial Loan Portfolio Total Loans: C&I Loans by Industry as % of Total Loans Outstanding (as of 03.31.20) Total Residential Mortgage & 4% General Manufacturing & Wholesale Other Consumer 25% 4% Oil & Gas $12.6 billion 4% Private Equity Total C&I 3% Entertainment Total Loans 35%
Slide 9: Well-Balanced Commercial Real Estate Portfolio
1Q20: Well-Balanced Commercial Real Estate Portfolio Total Loans: Total CRE Loans by Property Type as % of Total CRE Geographic Distribution Total Loans Outstanding (as of 03.31.20) (as of 03.31.20) Total Residential Other 9% WA Mortgage & 3% 7% Other Consumer Retail, 9% TX 25% $14.2 billion 6% Tota
Slide 10: Low LTV Commercial Real Estate Portfolio
1Q20: Low LTV Commercial Real Estate Portfolio LTV Distribution of Total CRE (as of 03.31.20) LTV & Size by Property Type (as of 03.31.20) 66% to 70% over 70% 6% 5% Average Weight. Avg. ($ in mm) Loan Size LTV Retail $ 2.1 mm 49% 61% to 65% Multifamily 1.2 mm 52% 12% Office 3.7 mm 51% $2.3 million A
Slide 11: Selected Commercial Real Estate Portfolios
1Q20: Selected Commercial Real Estate Portfolios Hospitality CRE Portfolio* (as of 03.31.20) Retail CRE Portfolio* (as of 03.31.20) Construction & Land Portfolio* (as of 03.31.20) * Distribution based on loans outstanding. * Distribution based on loans outstanding. * Construction & Land portfolio di
Slide 12: Low LTV Single Family Mortgage Portfolio
1Q20: Low LTV Single Family Mortgage Portfolio Geographic Distribution of SFR LTV Distribution (as of 03.31.20) Residential Mortgage (as of 03.31.20) Over 60%: 6% Other 9% WA 9% Under 50%: 36% SoCal $380,000 $8.9 billion 44% Avg. outstanding Residential SFR size 56% to 60%: NY mortgage 23% 23% 52% A
Slide 13: Allowance for Credit Losses & Credit Costs
1Q20: Allowance for Credit Losses & Credit Costs Allowance for Credit Losses (“ACL”) Coverage Ratio Provision for Credit Losses: Reserve Build vs. Loan Growth 0.26% $557 0.18% CECL $483 0.09% 0.10% 0.01% 1.55% $358 1.39% Total: $74 $287 $311 Total: $38 23% $ $ inmillions 1.03% 0.99% $ inmillions 0.9
Slide 14: Asset Quality Metrics
1Q20: Asset Quality Metrics Criticized Loans & Criticized Loan Ratios Net Charge-offs (“NCO”) & NCO Ratio $53 $999 $953 $976 $976 $826 $40 2.82% 2.87% 2.81% 2.78% 2.51% $23 0.16% $ $ inmillions $ $ inmillions 0.13% 0.01% 1.29% 1.32% 1.32% 0.08% 1.25% 1.25% $1 03.31.19 06.30.19 09.30.19 12.31.19 03.3
Slide 15: Record Deposits of $38.7 billion
1Q20: Record Deposits of $38.7 billion Deposit Mix as of 03.31.20: $38.7 billion . EOP loan-to-deposit ratio of 92.8% as of 03.31.20. ($ in billions) . EOP deposit growth of 4% Q-o-Q (+15% LQA). . Avg. deposit growth of 0.2% Q-o-Q (+1%). $7.6 20% $11.8 . Growth in avg. MMDA: $421mm (+20% LQA). 30% .
Slide 16: Summary Income Statement
1Q20: Summary Income Statement $ in millions, except per share data 1Q20 4Q19 $ Change % Change Notable Items Net Interest Income $ 362.7 $ 368.2 $ (5.5) -1% . Q-o-Q decline in noninterest income Fee income & net gains on sales of 54.4 52.5 1.9 4% loans* driven by a negative change to the credit val
Slide 17: Net Interest Income & Net Interest Margin
1Q20: Net Interest Income & Net Interest Margin Net Interest Income . 1Q20 NII: $362.7mm, down by $5.5mm or 1.5% Q-o-Q. . 1Q20 NIM: 3.44%, down 3 bps Q-o-Q. $362 $367 $370 $368 $363 . Against a backdrop of materially lower interest rates in +1% +1% -0.4% -1.5% 1Q20, declines in earning asset yields
Slide 18: Net Interest Margin: Yields & Rates
1Q20: Net Interest Margin: Yields & Rates Loan Portfolio Distribution by Index Rate as of 03.31.20 . 1Q20 avg. loan yield: 4.71%, down 20 bps Q-o-Q. . Change in monthly loan yields between Mar. & Feb. 2020: 6% . Monthly SFR loan yield essentially unchanged 13% . 30 bps decline in monthly C&I loan yi
Slide 19: Noninterest Income Detail
1Q20: Noninterest Income Detail Fee Income & Net Gains on Sales of Loans * Total noninterest income: $54.0mm in 1Q20 vs. $63.0mm 60.0 in 4Q19. $54.4 $52.5 . Fee income and net gains on sales of loans: $50.9 0.9 2% $48.9 1.2 $54.4mm in 1Q20, up $1.9mm or +4% Q-o-Q. 50.0 2.1 14.1 26% . IRC and other d
Slide 20: Operating Expense & Efficiency
1Q20: Operating Expense & Efficiency Adjusted* Noninterest Expense Noninterest Expense & Efficiency Ratio $165 70.0% $161 $160 $159 $161 180.0 $165.3 $160.8 $159.8 $158.6 $160.6 39.8% 160.0 38.0% 37.7% 38.3% 38.5% 26.7 26.8 24.8 26.8 24.2 15% 140.0 3.2 2.1 2.1 1.2 1% 4.5 2.6 6.0 6.1 4% 5.4 3.6 9.2 1
Slide 21: APPENDIX
APPENDIX ty EAST WEST BANK Your financial bridge
Slide 22: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands, except per share data) (unaudited) During the first and fourth quarters of 2019, the Company recorded a $7.0 million pre-tax impairment charge and $1.6 million pre-tax
Slide 23: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) Adjusted efficiency ratio represents adjusted noninterest expense divided by revenue. Adjusted pre-tax, pre-provision profitability ratio represents revenue
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) The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Tangible equity and tangible e
Slide 25: Appendix: GAAP to Non-GAAP Reconciliation (cont'd)
Appendix: GAAP to Non-GAAP Reconciliation (cont’d) 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