East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Q3 2024 Earnings Presentation
27 slides from East West Bancorp's earnings presentation, Oct 22, 2024
Slide 1: East West Bancorp, Inc. 3Q24 Earnings Presentation
East West Bancorp, Inc. 3Q Earnings Presentation October 22, 2024 3Q 24
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: Financial Highlights
Financial Highlights 3 (1) See reconciliation of GAAP to non-GAAP financial measures in the appendix and in the Company’s earnings press releases ▪ 1.62% Return on Average Assets (ROAA) ▪ 16.2% ROACE (17.4% ROTCE1) YTD ▪ Book value per share of $55.30, up $3.24 Q-o-Q, including AOCI accretion impact
Slide 4: C&I Loans
C&I Loans 4 Consistent growth in our categories of focus, with YTD growth of 2% ($ in billions) Average Loans End of Period Loan Growth (2Q24 to 3Q24) ($ in millions) +1% -1% +2% Q-o-Q +1% +2% +$485mm CRE (ex. Multifamily)Residential mortgage & other consumer Multifamily 15.3 15.5 15.4 15.3 15.1 4.8
Slide 5: Fifth consecutive quarter of $1 billion+ customer deposit growth
$(69) $148 $625 $996 Greater China Commercial Banking - U.S. Treasury - (Wholesale, Brokered) Consumer and Business Banking - U.S. Deposits 5 Fifth consecutive quarter of $1 billion+ customer deposit growth ($ in billions) Average Deposits End of Period Deposit Growth by Segment (2Q24 to 3Q24) ($ in
Slide 6: Cash and Securities
58% 36% 1% 5% 0% RWA 1%‒20% RWA 21%‒50% RWA 51%‒100% RWA ($ in billions) Cash and Securities 6 Enhanced liquidity while supporting earnings with high-quality liquid assets ▪ Securities portfolio well-positioned as a source of liquidity, interest rate risk management, and earnings support − 94% of in
Slide 7: Net Interest Income & Net Interest Margin
$571 $575 $565 $553 $573 3.48% 3.48% 3.34% 3.27% 3.24% 3Q23 4Q23 1Q24 2Q24 3Q24 NII NIM Net Interest Income & Net Interest Margin 7 Growing dollar NII while reducing average interest-bearing cost Q-o-Q ▪ Reduced average time, money market, and savings deposit cost Q-o-Q − Aggressively reduced CD pri
Slide 8: Fee Income
Fee Income 8 Record total quarterly fee income, driven by deepening customer relationships and consistent sales execution ▪ Fee income1 of $81mm, up over $4mm, or +6% from $77mm − Lending Fee growth (+$2mm) driven by greater syndication activity − Deposit Account Fee growth (+$1mm) driven by increas
Slide 9: Asset Quality Metrics
3.61% 3.14% 1.07% 0.46% 2.85% 3.13% 1.03% 0.46% 2.92% 2.99% 1.45% 0.51% $42 $37 $25 $37 $42 $18 $20 $23 $23 $29 3Q23 4Q23 1Q24 2Q24 3Q24 Provision for credit losses Net charge- offs Asset Quality Metrics 9 Trends remained strong – NCOs normalizing as expected Provision for Credit Losses & Net Charge
Slide 10: Allowance for Loan Losses
10 Allowance for Loan Losses Continued to bolster CRE reserves Allowance for Loan Losses (ALLL) ($ in millions) 09.30.23 06.30.24 09.30.24 Loan Category ALLL ALLL/Loans HFI ALLL ALLL/Loans HFI ALLL ALLL/Loans HFI C&I $ 384 2.42% $ 380 2.25% $ 378 2.22% Total CRE 211 1.04 249 1.23 265 1.30 Multifamil
Slide 11: Capital
9.0% 9.4% 9.3% 9.4% 9.7% Tangible Common Equity Ratio 14.7% 14.8% 14.8% 15.1% 15.4% Total Capital Ratio 10.2% 10.2% 10.1% 10.4% 10.4% Leverage Ratio Highlights 09.30.23 06.30.2403.31.24 11 Capital Healthy capital position, with TCE1 benefiting from Accumulated Other Comprehensive Income (AOCI) earnb
Slide 12: Unchanged Management Outlook: Full Year 2024
Unchanged Management Outlook: Full Year 2024 12 Earnings Drivers YTD FY 2024 Expectations vs. FY 2023 Results Economic and Interest Rate Outlook ▪ Assuming September 30th forward curve End of Period Loans +2% ▪ Growing in the range of 2% to 4% Y-o-Y Net Interest Income -3% ▪ NII to decline 2% to 4%
Slide 13: Appendix
EASTWE ST BANK Appendix
Slide 14: East West at a Glance
East West at a Glance 14 $11B Market Cap $74B Assets $62B Deposits 17% ROTCE1 09.30.24 09.30.24 09.30.24 3Q24 4 branches in Asia to support cross-border business Branch Locations 98 U.S. branches in leading metropolitan markets (1) See reconciliation of GAAP to non-GAAP financial measures in the app
Slide 15: Commercial Loan Portfolio
Resi. Mortgage and other consumer $15.8 30% CRE $20.4 38% C&I $17.1 32% 1% 2% 1% 4% 5% 7% 8% 10% 2% 2% 2% 4% 4% 4% 6% Industries with 1% of total loans outstanding1 Commercial Loan Portfolio 15 Over 70% of EWBC’s loans support commercial customers, with diversification across industry and asset type
Slide 16: Commercial Real Estate Portfolio Detail
<=50% 47% >50% to 55% 16% >55% to 60% 15% >60% to 65% 13% >65% to 70% 6% >70% 3% Commercial Real Estate Portfolio Detail 16 (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 comm
Slide 17: CRE Office – Additional Information
37% 6% 13% 7% 7% 3% 4% 4% 6% 7% CRE Office – Additional Information 17 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, 3% Othe
Slide 18: CRE Retail – Additional Information
29% 4% 17% 9% 2% 5% 6% 1% 2% 3% 6% 3% 12% CRE Retail – Additional Information 18 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 19: CRE Multifamily – Additional Information
CRE Multifamily – Additional Information 19 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 LTV portfolio, low average loan size CRE Multifamily by S
Slide 20: Residential Mortgage Portfolio
<=50% 48% >50% to 55% 12% >55% to 60% 29% >60% 11% Southern California 40% Northern California 16% New York 26% Washington 7% Texas 2% Other 9% Residential Mortgage Portfolio 20 51% Average LTV1 Low LTVs and average loan size (as of 09.30.24) Resi. Mortgage Distribution by LTV1 (as of 09.30.24) $437
Slide 21: Loan Yields
21% 21% 29% 24% 5%Fixed rate Hybrid in fixed rate period Variable - LIBOR + SOFR Variable - Prime rate Variable - all other rates Loan Yields 21 Hedge Impact and Outlook Loan Portfolio by Index Rate Average Loan Rate by Portfolio (as of 09.30.24) Total fixed rate and hybrid in fixed period: 42% 56%*
Slide 22: Deposit and Funding Cost
Deposit and Funding Cost 22 Average Deposit and Liability Cost Average Deposit Rate by Portfolio 3Q23 4Q23 1Q24 2Q24 3Q24 2.43% 2.60% 2.84% 2.96% 2.98% 3.45% 3.64% 3.85% 3.94% 3.93% 3.56% 3.73% 3.92% 4.07% 4.05% 3Q23 4Q23 1Q24 2Q24 3Q24 Average cost of deposits Average cost of interest-bearing depos
Slide 23: Operating Expense & Efficiency
38.9% 37.0% 34.4% 1.16% 1.25% 1.20% 3Q23 2Q24 3Q24 Operating Expense & Efficiency 23 Best-in-class efficiency Total Operating Noninterest Expense1 ($ in millions) ▪ Total operating noninterest expense of $221mm, consistent with prior quarter − Deposit-related Expense decline (-$2mm), reflecting FDIC
Slide 24: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation 24 EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) Three Months Ended Nine Months Ended September 30, 2024 June 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Net interest income before
Slide 25: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation 25 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. During the third and second
Slide 26: Appendix: GAAP to Non-GAAP Reconciliation
(1) Includes core deposit intangibles and mortgage servicing assets. There were no core deposit intangibles in the 2024 periods presented Appendix: GAAP to Non-GAAP Reconciliation 26 EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) The Company use
Slide 27: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation 27 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. Tangible net income excludes the after-tax impacts of the am