East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Q2 2017 Earnings Presentation
18 slides from East West Bancorp's earnings presentation, Jul 20, 2017
Slide 1: EWBC Earnings Results Second Quarter 2017
EWBC Earnings Results Second Quarter 2017 July 20, 2017
Slide 2: Forward-Looking Statements
Forward-Looking Statements 2 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 the Company’s current business plans and
Slide 3: Highlights of Second Quarter 2017 Results
Highlights of Second Quarter 2017 Results Strong earnings results. Net income increased 15% Y-o-Y and EPS increased 14% Y-o-Y Net interest income growth: 2Q17 NII of $290mm was up 7% Q-o-Q Asset sensitivity: loan yield expansion outpaced deposit cost increase and 2Q17 NIM of 3.49% was up by 16
Slide 4: 2Q17 Earnings Growth and Profitability
$103.3 $110.1 $110.7 $128.2 $118.3 $41.5 12.7% 13.1% 12.9% 14.9% 13.0% 15.3% 15.6% 15.3% 17.6% 15.3% 10% 13% 16% 19% 22% 25% $0 $40 $80 $120 $160 $200 2Q16 3Q16 4Q16 1Q17* 2Q17 $ in mi llio ns Net Income & ROE* and Tangible ROE* Net income (LH axis) 1Q17: Gain on commercial property (LH axis) Return
Slide 5: 2Q17 Record Loans of $27.2 billion
9.1 9.3 9.6 10.0 10.2 8.5 8.5 8.7 9.0 9.1 1.4 1.5 1.6 1.7 1.83.2 3.4 3.5 3.7 4.02.1 2.1 2.1 2.1 2.1 0% 20% 40% 60% $0 $10 $20 $30 2Q16 3Q16 4Q16 1Q17 2Q17 $ in bil lio ns Total Loans* C&I CRE MFR SFR Consumer LQA growth rate 38% 38% 38% 38% 37% 35% 34% 34% 34% 34% 6% 6% 6% 6% 6% 13% 14% 14% 14% 15%
Slide 6: 2Q17 Record Deposits of $31.2 billion
9.5 9.5 10.2 10.7 10.5 7.4 7.7 8.2 8.0 8.2 5.6 5.8 5.9 6.0 6.4 5.7 5.6 5.6 5.8 6.1 0% 20% 40% 60% $0 $10 $20 $30 $40 2Q16 3Q16 4Q16 1Q17 2Q17 $ in bil lio ns Total Deposits DDA MMDA IB checking & Savings Time LQA growth rate 2Q17 Record Deposits of $31.2 billion 6 DDA = Noninterest-bearing checking
Slide 7: 2Q17 Fees & Other Operating Income
10.4 10.4 10.2 10.3 10.7 2.8 4.0 3.4 4.5 3.5 4.3 6.1 5.3 5.0 5.9 10.9 10.9 14.4 11.1 12.0 1.4 5.8 7.0 2.5 3.8 6.5 7.7 7.2 5.4 6.2 $0 $10 $20 $30 $40 $50 2Q16 3Q16 4Q16 1Q17 2Q17 $ i n m il li o n s Total Fees and Other Operating Income Branch fees Wealth management fees Ancillary loan fees & other i
Slide 8: 2Q17 Summary Income Statement
2Q17 Summary Income Statement 8 % Change vs. ($ in millions, except per share data) 2Q17 1Q17 2Q16 2Q17 Comments Adjusted net interest income (excl. accretion) $ 283.8 5.6% 18.1% Loan growth & higher interest rates. ASC 310-30 discount accretion income $ 6.3 NM NM Increase due to interest recove
Slide 9: 2Q17 Net Interest Income & Net Interest Margin
240.3 247.0 261.1 268.9 283.8 13.3 7.1 11.6 3.2 6.3 $220 $240 $260 $280 $300 2Q16 3Q16 4Q16 1Q17 2Q17 $ in m illi on s Net Interest Income Adj. net interest income* Accretion income 2Q17 NIM of 3.49% expanded by 16 bps Q-o-Q, and excluding the impact of accretion, adjusted* NIM of 3.41% expanded b
Slide 10: 2Q17 Efficiency and PTPP Profitability
2Q17 total noninterest expense: $169mm. Excluding tax credit amortization and core deposit intangible amortization, 2Q17 adjusted* noninterest expense of $139.5mm increased by a modest 2% Q-o-Q. Compensation expense lower in 2Q, after seasonally higher 1Q. 2Q17 adj. noninterest expense growt
Slide 11: 2Q17 Asset Quality Metrics
Allowance for loan losses to loans HFI was 1.02% as of 06.30.17. Annualized net recoveries of 4 bps in 2Q17. Net recoveries across all loan categories. Greatest impact from net recoveries in C&I: $1.7mm or 7 bps, annualized. NPAs decreased by $12mm, or 8%, Q-o-Q to $133mm; equivalent to 0.
Slide 12: 2Q17 Capital Ratios
$20.27 $21.93 7.0% 8.5% 10.5% 4.0% 8.52% 10.9% 10.9% 12.4% 8.7%8.95% 11.3% 11.3% 12.8% 9.3% 0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 $5.00 $10.00 $15.00 $20.00 $25.00 Tangible equity per share Tangible equity to tangible assets ratio CET1 risk-based capital ratio Tier 1 risk-based capital ratio Total ris
Slide 13: Updated Management Outlook: Full Year 2017
Updated Management Outlook: Full Year 2017 13 Earnings drivers Revised full year 2017 outlook (after 2Q17) Change from prior outlook (after 1Q17) 2016 FY actual 1H17 actual End of Period Loans Increase at a percentage rate in the low double digits. Unchanged. $25.5 billion, +8% Y-o-Y $27.2 billion
Slide 14: Appendix
APPENDIX Wy EAST WEST BANK Your financial bridge”
Slide 15: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation 15 As previously disclosed on the March 30, 2017 Form 8-K, the Company consummated a sale and leaseback transaction on a commercial property and recognized a pre-tax gain on sale of $71.7 million during the first quarter of 2017. The table below shows the co
Slide 16: Appendix: GAAP to Non-GAAP Reconciliation (cont'd)
16 Adjusted pre-tax, pre-provision profitability ratio represents the aggregate of net interest income and adjusted noninterest income less adjusted noninterest expense, divided by average total assets. Adjusted noninterest income excludes the gain on sale of the commercial property (where applicabl
Slide 17: Appendix: GAAP to Non-GAAP Reconciliation (cont'd)
17 The Company believes that presenting the adjusted average loan yield and adjusted net interest margin that exclude the ASC 310-30 discount accretion impact provides clarity to financial statement users regarding the change in loan contractual yields and allows comparability to prior periods. Appe
Slide 18: Appendix: GAAP to Non-GAAP Reconciliation (cont'd)
18 The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Tangible equity and tangible equity to tangible assets ratios are non-GAAP disclosures. Tangible equity represents stockholders’ equity which has been reduced by goodwill