East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Q3 2021 Earnings Presentation
24 slides from East West Bancorp's earnings presentation, Oct 21, 2021
Slide 1: EWBC Earnings Results Third Quarter 2021
EWBC Earnings Results Third Quarter 2021 October 21, 2021
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 Third Quarter 2021
Highlights of Third Quarter 2021 Return on Average Assets Adjusted Pre-Tax, Pre-Provision 3Q21 Net Income Income* & Profitability Ratio* $225 million 1.56% $302 1.46% $283 1.26% $260 3Q21 Diluted EPS $ in millions $224 $1.57 $180 1.78% 1.97% 1.95% Record Loans $100 $40.5 billion 3Q20 2Q21 3Q21 3Q20
Slide 4: 09.30.21: Strong, Well-Diversified Balance Sheet
09.30.21: Strong, Well-Diversified Balance Sheet Record Loans as of 09.30.21: $40.5 billion $ in millions, except per share data 09.30.21 06.30.21 Q-o-Q Change ($ in billions) Cash equivalents & ST investments $ 5,708 $ 6,828 $ (1,120) AFS debt securities & repo assets 12,309 10,699 1,610 Gross loan
Slide 5: 09.30.21: Strong Capital Ratios
09.30.21: Strong Capital Ratios ▪ Book value per share of $40.10 as of 09.30.21: +3% Q-o-Q and +11% Y-o-Y. ▪ Tangible equity per share* of $36.75 as of 09.30.21: +3% Q-o-Q and +12% Y-o-Y. ▪ Tangible equity to tangible assets ratio* of 8.62% as of 09.30.21, +8 bps from 06.30.21. ▪ CET1 and Tier 1 cap
Slide 6: 09.30.21: Diversified Commercial Loan Portfolio
09.30.21: Diversified Commercial Loan Portfolio Total Loans: C&I Loans by Industry as % of Total Loans Outstanding Total Resi. Mortgage & Other Consumer 4% General Manufacturing & Wholesale 28% 3% Private Equity 3% Entertainment 2% Real Estate related $40.5 $13.0bn 2% Technology & Life Science billi
Slide 7: 09.30.21: Diversified Commercial Real Estate Portfolio
09.30.21: Diversified Commercial Real Estate Portfolio Total Loans: Total CRE Loans by Property Type as % of Total CRE: Distribution by Total Loans Outstanding Geography WA 3% Total Resi. Mortgage Other & Other Consumer Retail, 9% 7% 28% TX $15.5bn MFR, 8% 8% $15.5 SoCal PPP, 2% $40.5 Total CRE bill
Slide 8: 09.30.21: Low LTV Commercial Real Estate Portfolio
09.30.21: Low LTV Commercial Real Estate Portfolio Total CRE: Distribution by LTV CRE LTV & Size by Property Type >70% >65% to 70% 4% Average Weight. Avg. 6% ($ in mm) Loan Size LTV Retail $ 2.2 mm 49% Multifamily 1.3 mm 51% >60% to 65% <=50% Office 4.0 mm 53% 15% $2.4 million 41% Avg. size of loan
Slide 9: 09.30.21: Low LTV Residential Mortgage Portfolio
09.30.21: Low LTV Residential Mortgage Portfolio Resi. Mortgage: Distribution by Geography Resi. Mortgage: Distribution by LTV TX 2% Other 6% >60% 9% WA 8% <=50% SoCal 41% 39% $11.0 billion $399,000 Resi. Mortgage Avg. loan size* Loans 51% NY Outstanding >55% to 60% Avg. LTV* 27% 40% NorCal >50% to
Slide 10: 09.30.21: Asset Quality Metrics by Portfolio
09.30.21: Asset Quality Metrics by Portfolio Criticized Loans / Total Loans NPAs / Total Assets ▪ Criticized loans down 2% Q-o-Q: $1,010mm as of 09.30.21, or 2.5% of loans, vs. $1,032mm, or 2.6% of loans, as of 3.2% 06.30.21. 3.1% 0.45% 0.45% ▪ YTD, criticized loans down 17%, and the criticized loan
Slide 11: 3Q21: Allowance for Loan Losses & Credit Costs
3Q21: Allowance for Loan Losses & Credit Costs Allowance for Loan Losses Coverage Ratio Provision for Credit Losses & Net Charge-offs $700 $618 $620 $608 0.26% $586 $560 0.20% In $ millions $ in millions 1.73% 1.68% 0.14% 1.62% 0.13% 0.13% 1.52% 1.41% 24.2 24.3 18.8 1.65% 1.61% 10.0 13.4 13.3 13.5 1
Slide 12: 3Q21: Summary Income Statement
3Q21: Summary Income Statement 3Q21 vs. 2Q21 $ in millions, except per share data & ratios 3Q21 2Q21 $ Change % Change Comments Net interest income (ex. PPP) $ 380.5 $ 361.1 19.4 5% ▪ Noninterest income: PPP income 15.2 15.4 (0.2) -1% ▪ Mark-to-market (“MTM”) adjustments in Total net interest income
Slide 13: 3Q21: Average Balance Sheet: Growth & Mix
3Q21: Average Balance Sheet: Growth & Mix Average Loans & Growth ▪ 3Q21 avg. loan growth: +3% LQA (+$338mm Q-o-Q) or +12% LQA ex. PPP (+$1.1bn). Growth in all major loan $38.7 $39.6 $40.0 portfolios, with strongest growth from C&I ex. PPP. $37.2 $37.7 +3% +9% 1.9 1.1 1.8 +6% 1.7 +11% 1.9 10.6 11.1 ▪
Slide 14: 3Q21: Net Interest Income & Net Interest Margin
3Q21: Net Interest Income & Net Interest Margin Net Interest Income & Net Interest Margin ▪ 3Q21 NII: $396mm, +5% Q-o-Q (+20% annualized) from $376mm in 2Q21. 3Q21 NIM: 2.70%, -5 bps Q-o-Q. $396 $376 ▪ 3Q21 adj.* NII (ex. PPP): $380mm, +5% Q-o-Q (+21% $347 $354 ann.) from $361mm in 2Q21. $ in millio
Slide 15: 3Q21: Average Loan Yields
3Q21: Average Loan Yields Adj. Avg. Loan Yield* (in bps) Relative to Prime Rate & LIBOR Loan Portfolio by Index Rate (09.30.21) GAAP Yield: GAAP Yield: GAAP Yield: GAAP Yield: GAAP Yield: 360 bps 368 bps 358 bps 357 bps 361 bps 370 369 360 2% 358 356 400 6% Total fixed 4% 3.25% 18% and hybrid in fix
Slide 16: 3Q21: Average Cost of Deposits
3Q21: Average Cost of Deposits Average Cost of Deposits (in bps) Relative to Fed Funds Rate ▪ Spot rate of total deposits: 0.11% as of 09.30.21 (vs. 0.13% as of 06.30.21). ▪ Spot rate of IB deposits: 0.19% as of 50 09.30.21 (vs. 0.22% as of 06.30.21). 40 ▪ Repricing of maturing CDs to lower rates: 3
Slide 17: 3Q21: Noninterest Income Detail
3Q21: Noninterest Income Detail Fee Income* & Net Gains on Sales of Loans Total noninterest income: $73mm in 3Q21, up from $68mm in 2Q21. $63.1 $62.7 1.5 ▪ Fee income and net gains on sales of loans: $63mm in 2.2 3.3 5% 3Q21, essentially flat compared with 2Q21, and up 31% $54.8 4.7 7% year-over-yea
Slide 18: 3Q21: Operating Expense & Efficiency
3Q21: Operating Expense & Efficiency Adjusted Noninterest Expense* Adj. Noninterest Expense* & Adj. Efficiency Ratio* $166 $165 $167 60.0% $162 $165.6 $165.0 $166.7 $161.5 $154 $ in millions $154.4 24.5 21.9 24.2 15% 40.8% 21.0 39.8% 38.7% 18.8 36.3% 7.5 7.8 8.8 5% 35.6% 8.1 7.1 11.6 11.7 11.6 12.0
Slide 19: Management Outlook: Full Year 2021
Management Outlook: Full Year 2021 FY 2021 expectations Earnings drivers compared with FY 2020 results Prior Outlook 2020 actual End of Period Loans ▪ Increase at a percentage rate of 10% to ▪ Increase at a percentage $36.8 billion (ex. PPP) (ex. PPP) 11% Y-o-Y. rate of 9% to 10% Y-o-Y. +6% Y-o-Y (e
Slide 20: Appendix
APPENDIX ty] EAST WEST BANK Your financial bridge”
Slide 21: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ in thousands) (unaudited) Adjusted efficiency ratio represents adjusted noninterest expense divided by revenue. Adjusted pre-tax, pre-provision profitability ratio represents revenue
Slide 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. Tangible equity and tangible e
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) Return on average tangible equity represents tangible net income divided by average tangible equity. Tangible net income excludes the after-tax impacts of t
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) In April 2020, the Company started accepting applications under the PPP administered by the Small Business Administration (“SBA”) under the Coronavirus Aid,