East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Q3 2020 Earnings Presentation
24 slides from East West Bancorp's earnings presentation, Oct 22, 2020
Slide 1: EWBC Earnings Results Third Quarter 2020
EWBC Earnings Results Third Quarter 2020 October 22, 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 bus
Slide 3: Summary of Third Quarter 2020 Results
Summary of Third Quarter 2020 Results Return on Average Assets Adjusted* Pre-Tax, Pre-Provision 3Q20 Net Income Income & Profitability Ratio $160 million $263 1.58% $249 1.26% $250 $219 3Q20 Diluted EPS 2.42% $200 2.08% $1.12 1.74% 0.83% $150 2.30% $100 Record Loans $50 $37.4 billion 0.25% 0.25% $-
Slide 4: 09.30.20: Strong, Well-Diversified Balance Sheet
09.30.20: Strong, Well-Diversified Balance Sheet $ in millions, except per share data 09.30.20 06.30.20 $ Change Record Loans as of 09.30.20: $37.4 billion ($ in billions) Cash equivalents & ST investments $ 5,206 $ 5,065 $ 141 AFS debt securities & repo assets 5,749 5,145 604 $1.8 Gross loans (ex.
Slide 5: 09.30.20: Strong Capital Ratios
09.30.20: Strong Capital Ratios ▪ Growing Equity: Book value per share of $36.22 as of 09.30.20: +3% Q-o-Q and +8% Y-o-Y. ▪ Tangible equity* per share of $32.85 as of 09.30.20: +3% Q-o-Q and +9% Y-o-Y. ▪ Tangible equity* to tangible assets ratio of 9.3% as of 09.30.20, increased from 9.2% as of 06.3
Slide 6: 09.30.20: Diversified Commercial Loan Portfolio
09.30.20: Diversified Commercial Loan Portfolio Total Loans: C&I Loans by Industry as % of Total Loans Outstanding Total Residential Mortgage & 3% General Manufacturing & Wholesale Other Consumer 3% Private Equity 25% 3% Oil & Gas $11.5 billion 2% Entertainment $37.4 C&I 2% Real Estate Related 2% Te
Slide 7: 09.30.20: Diversified Commercial Real Estate Portfolio
09.30.20: 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 & 7% Other Consumer Retail, 9% 25% TX 6% PPP $14.7 billion MFR, 8% $14.7 5% $37.4 Total CRE
Slide 8: 09.30.20: Low LTV Commercial Real Estate Portfolio
09.30.20: Low LTV Commercial Real Estate Portfolio Total CRE: Distribution by LTV CRE LTV & Size by Property Type Average Weight. Avg. ($ in mm) Loan Size LTV >65% to 70% >70% 7% 5% Retail $ 2.2 mm 50% <=50% 40% Multifamily 1.2 mm 51% $2.4 million Office 3.9 mm 53% Avg. size >60% to 65% Industrial 2
Slide 9: 09.30.20: Low LTV Single Family Mortgage Portfolio
09.30.20: Low LTV Single Family Mortgage Portfolio SFR: Distribution by Geography SFR: Distribution by LTV TX 2% Other >60% 7% 10% WA <=50% 8% 32% SoCal 42% $386,000 $7.8 billion Avg. outstanding Single-family SFR size mortgage 53% NY >55% to 60% Avg. LTV 27% >50% to 55% 45% 13% NorCal 14% ▪ Single-
Slide 10: 09.30.20: Low LTV Home Equity Line of Credit Portfolio
09.30.20: Low LTV Home Equity Line of Credit Portfolio HELOC: Distribution by Geography HELOC: Distribution by LTV* >60%: 3%: Other 6% WA 11% >55% to 60% SoCal 35% $367,000 $1.5 billion 47% Avg. HELOC NY HELOC <=50% 12% commitment 55% Loans 48% outstanding Avg. LTV* NorCal * Combined LTV 24% for 1st
Slide 11: COVID-19 Loan Deferral Statistics
3Q20: COVID-19 Loan Deferral Statistics Loans on Deferral: Deferrals 06.30.20 Deferrals 09.30.20 9.30 vs. 6.30 Deferrals 10.20.20 10.20 vs. 09.30 Full vs. Partial Payment $ in mm, except $ Deferral % of Loan $ Deferral % of Loan $ Deferral % of Loan ratios Balance Portfolio Balance Portfolio $ % Bal
Slide 12: Allowance for Loan Losses & Credit Costs
3Q20: Allowance for Loan Losses & Credit Costs Allowance for Loan Losses Coverage Ratio Provision for Credit Losses & Net Charge-offs 102 2.50% $632 $618 $557 $ in millions 74 $ in millions 1.78% 2.00% 0.26% $483 1.73% 0.26% $500 0.21% 1.55% $358 1.39% 0.10% 1.70% 1.50% 0.01% 1.65% 38 1.03% 22 24 1.
Slide 13: 09.30.20: Asset Quality Metrics by Portfolio
09.30.20: Asset Quality Metrics by Portfolio Special Mention Loans Classified Loans Nonperforming Assets ▪ Criticized loans: 3.9% of total loans as of Mix by Portfolio Mix by Portfolio Mix by Portfolio 09.30.20, or $1,481mm, +18% Q-o-Q. (subset of Classified) $6 $29 ▪ Special Mention: 1.9% of total
Slide 14: Summary Income Statement
3Q20: Summary Income Statement 3Q20 vs. 2Q20 $ in millions, except per share data 3Q20 2Q20 $ Change % Change Notable Items Net Interest Income $ 324.1 $ 343.8 $ (19.6) -6% Fee income & net gains on sales of ▪ 2Q20 included gains on sales of AFS 48.0 52.2 (4.2) -8% loans* debt securities of $10mm, d
Slide 15: Average Balance Sheet: Growth & Mix
3Q20: Average Balance Sheet: Growth & Mix 45 Average Loans & Growth $45.0 ▪ 3Q20 avg. loans grew $19mm Q-o-Q. Growth in CRE and resi. 40 $37.1 $37.2 mortgage offset by decrease in C&I and other consumer. $33.7 $34.5 $35.2 $40.0 1.5 1.8 35 0.2% $35.0 ▪ 3Q20 avg. deposit growth of 3% Q-o-Q (+13% LQA).
Slide 16: Net Interest Income & Net Interest Margin
3Q20: Net Interest Income & Net Interest Margin Adj.* Net Interest Income & Adj.* Net Interest Margin ▪ 3Q20 NII: $324mm, -6% Q-o-Q from $344mm in 2Q20. ▪ 3Q20 adj.* NII: $318mm, -2% Q-o-Q from $323mm in 2Q20. $367 $362 $363 ▪ 3Q20 NIM: 2.72%, down 32 bps Q/Q. Adj.* NIM: 2.77%, down 19 bps Q/Q. $323
Slide 17: Average Loan Yields
3Q20: Average Loan Yields Adj.* Avg. Loan Yield vs. Prime & LIBOR Average Loan Yield (in bps) by Portfolio in 2020 GAAP Yield: 4.71% 3.98% 576 4.42% 3.90% 476 3.70% 453 468 463 447 435 430 GAAP 377 356 3.25% 3.25% Yield: 343 343 3.60% C&I: 70% CRE: 74% SFR: 55% HELOC: 1.41% LIBOR or LIBOR or Hybrid
Slide 18: Average Cost of Deposits
3Q20: Average Cost of Deposits Avg. Cost of Deposits (in bps) Relative to Fed Funds Rate ▪ Spot rate of total deposits: 0.29% as of 09.30.20 (vs. 2.30% 0.33% avg. in 3Q20). 1.83% ▪ Spot rate of IB deposits: 0.46% as of 09.30.20 (vs. 0.50% avg. in 3Q20). 149 1.42% 134 117 ▪ For historical context 3Q1
Slide 19: Noninterest Income Detail
3Q20: Noninterest Income Detail Fee Income & Net Gains on Sales of Loans * Total noninterest income: $50mm in 3Q20 vs. $59mm in 2Q20. 60.0 ▪ Fee income and net gains on sales of loans: $54.4 $48mm in 3Q20, down $4mm or -8% Q-o-Q. $52.5 $52.2 $50.9 ▪ Lending fees: $19mm in 3Q20, down $3mm Q-o-Q. 50.0
Slide 20: Operating Expense & Efficiency
3Q20: Operating Expense & Efficiency Adjusted* Noninterest Expense Adj.* Noninterest Expense & Adj.* Efficiency Ratio $159 $165 $161 180.0 $170 $153 $154 70.0% $165.3 $158.6 $160.6 160.0 $153.3 $154.4 37.7% 38.3% 38.5% 38.1% 41.3% $ in millions 23.3 20.8 23.4 17.8 16.2 11% 140.0 9.4 9.5 8.4 5% 7.1 9
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) Adjusted efficiency ratio represents adjusted noninterest expense divided by revenue. Adjusted pre-tax, pre-provision profitability ratio represents revenue
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 equity and tangible e
Slide 24: 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) In April 2020, the Company started accepting applications under the PPP administered by the Small Business Administration (“SBA”) under the Coronav