East West Bancorp, Inc. · NASDAQ:EWBC
East West Bancorp — Q4 2021 Earnings Presentation
25 slides from East West Bancorp's earnings presentation, Jan 27, 2022
Slide 1: EWBC Earnings Results Fourth Quarter and Full Year 2021
EWBC Earnings Results Fourth Quarter and Full Year 2021 January 27, 2022
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 Fourth Quarter and Full Year 2021
Highlights of Fourth Quarter and Full Year 2021 Return on Average Assets Adjusted Pre-Tax, Pre-Provision Income* & Profitability Ratio* 4Q21 2021 1.46%1.46% 1.47%1.47% Net income Net income 1.39%1.39% 1.24%1.24% $1,147 $218 million $873 million 1.16%1.16% $302 $299 $979 $ in millions 4Q21 2021 $251
Slide 4: 12.31.21: Strong, Well-Diversified Balance Sheet
12.31.21: Strong, Well-Diversified Balance Sheet $ in millions, except per share data 12.31.21 09.30.21 Q-o-Q Change Record Loans as of 12.31.21: $41.7 billion Cash equivalents & ST investments $ 4,649 5,708 $ (1,059) ($ in billions) AFS debt securities & repo assets 12,319 12,309 10 Gross loans (ex
Slide 5: 12.31.21: Strong Capital Ratios
12.31.21: Strong Capital Ratios ▪ Book value per share of $41.13 as of 12.31.21: +3% Q-o-Q and +10.5% Y-o-Y. ▪ Tangible equity per share* of $37.79 as of 12.31.21: +3% Q-o-Q and +12% Y-o-Y. ▪ Tangible equity to tangible assets ratio* of 8.88% as of 12.31.21, +26 bps from 09.30.21. ▪ Dividend increas
Slide 6: 12.31.21: Diversified Commercial Loan Portfolio
12.31.21: Diversified Commercial Loan Portfolio Total Loans: C&I Loans by Industry as % of Total Loans Outstanding Total Resi. Mortgage & Other Consumer 4% Private Equity 27% 4% General Manufacturing & Wholesale 3% Entertainment 2% Real Estate related $41.7 $13.6bn 2% Clean Energy billion C&I 2% Tec
Slide 7: 12.31.21: Diversified Commercial Real Estate Portfolio
12.31.21: 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 Retail, 9% 9% Other Consumer 27% PPP TX $16.2bn MFR, 9% $16.2 SoCal 1% 8% $41.7 Total CRE 53% b
Slide 8: 12.31.21: Low LTV Commercial Real Estate Portfolio
12.31.21: Low LTV Commercial Real Estate Portfolio Total CRE: Distribution by LTV CRE LTV & Size by Property Type >70% Average Weight. Avg. >65% to 70% 5% Loan Size LTV 6% Retail $ 2.2 mm 48% Multifamily 1.4 mm 52% <=50% >60% to 65% Office 3.9 mm 54% $2.5 million 40% 16% Avg. size of loan Industrial
Slide 9: 12.31.21: Low LTV Residential Mortgage Portfolio
12.31.21: Low LTV Residential Mortgage Portfolio Resi. Mortgage: Distribution by Geography Resi. Mortgage: Distribution by LTV TX 2% Other >60% 7% 8% WA 7% SoCal <=50% 41% 39% $11.2 billion $406,000 Resi. Mortgage Avg. loan size* Loans 51% NY Outstanding Avg. LTV* 27% >55% to 60% 41% >50% to 55% Nor
Slide 10: 12.31.21: Asset Quality Metrics by Portfolio
12.31.21: Asset Quality Metrics by Portfolio Criticized Loans / Total Loans NPAs / Total Assets ▪ Criticized loans down 18% Q-o-Q: $833mm as of 12.31.21, or 2.0% of loans, down from $1.0bn, or 2.5% of 3.2% loans, as of 09.30.21. Criticized loan ratio improved 3.1% 0.45% 0.45% by 50 bps Q-o-Q. 2.6% 2
Slide 11: 4Q21: Allowance for Loan Losses & Credit Costs
4Q21: Allowance for Loan Losses & Credit Costs Allowance for Loan Losses Coverage Ratio Provision for Credit Losses & Net Charge-offs $700 $620 $608 $586 $560 $542 0.20% $ in millions $ in millions 0.14% 0.13% 0.13% 1.68% 1.62% 1.52% 24.3 1.41% 18.8 0.10% 1.32% 13.4 13.3 13.5 1.61% 9.8 1.53% 1.46% 1
Slide 12: 4Q21: Summary Income Statement
4Q21: Summary Income Statement 4Q21 vs. 3Q21 $ in millions, except per share data & ratios 4Q21 3Q21 $ Change % Change Comments Net interest income (ex. PPP) $ 396.1 $ 380.5 15.6 4% ▪ Noninterest income: PPP income 9.6 15.2 (5.6) -37% ▪ Mark-to-market (“MTM”) Total net interest income $ 405.7 $ 395.
Slide 13: 4Q21: Average Balance Sheet: Growth & Mix
4Q21: Average Balance Sheet: Growth & Mix Average Loans & Growth ▪ 4Q21 avg. loan growth: +6% LQA (+$572mm Q-o-Q) or +10% LQA ex. PPP (+$1.0bn). Growth in all major loan portfolios, $38.7 $39.6 $40.0 $40.5 with strongest growth from C&I ex. PPP. $37.7 0.7 +9% 1.9 +3% 1.1 +6% 1.7 +11% 1.9 11.1 11.2 ▪
Slide 14: 4Q21: Net Interest Income & Net Interest Margin
4Q21: Net Interest Income & Net Interest Margin Net Interest Income & Net Interest Margin ▪ 4Q21 NII: $406mm, +2.5% Q-o-Q (+10% annualized) from $406 $396mm in 3Q21. 4Q21 NIM: 2.73%, +3 bps Q-o-Q. $396 $376 $347 $354 ▪ 4Q21 adj. NII* (ex. PPP): $396mm, +4% Q-o-Q (+16% ann.) from $380.5mm in 3Q21. $
Slide 15: 4Q21: Average Loan Yields
4Q21: Average Loan Yields Adj. Avg. Loan Yield* (in bps) Relative to Prime Rate & LIBOR Loan Portfolio by Index Rate (12.31.21) 1% GAAP Yield: GAAP Yield: GAAP Yield: GAAP Yield: GAAP Yield: 368 bps 358 bps 357 bps 361 bps 359 bps 7% 369 18% Total fixed 360 358 356 356 400 and hybrid 3.25% in fixed
Slide 16: 4Q21: Average Cost of Deposits
4Q21: Average Cost of Deposits Average Cost of Deposits (in bps) Relative to Fed Funds Rate ▪ Spot rate of total deposits: 0.09% as of 12.31.21 (vs. 0.11% as of 09.30.21). 40 ▪ Spot rate of IB deposits: 0.16% as of 30 12.31.21 (vs. 0.19% as of 09.30.21). 25 24 0.25% ▪ Repricing of maturing CDs to lo
Slide 17: 4Q21: Noninterest Income Detail
4Q21: Noninterest Income Detail Fee Income* & Net Gains on Sales of Loans Total noninterest income: $71.5mm in 4Q21, compared with $73mm in 3Q21. ▪ Fee income and net gains on sales of loans: $63mm in 4Q21, essentially stable compared with both 3Q21 and $63.1 $62.7 $63.3 2Q21, and up 19% year-over-y
Slide 18: 4Q21: Operating Expense & Efficiency
4Q21: Operating Expense & Efficiency Adjusted Noninterest Expense* Adj. Noninterest Expense* & Adj. Efficiency Ratio* $180 $178 60.0% $177.7 $166 $165 $167 $165.6 $166.7 $162 $ in millions $165.0 $161.5 26.4 14% 24.5 21.9 21.0 24.2 39.8% 38.7% 9.1 5% 36.3% 37.2% 35.6% 7.5 7.8 8.1 8.8 11.7 7% 11.7 11
Slide 19: Management Outlook: Full Year 2022
Management Outlook: Full Year 2022 FY 2022 expectations Earnings drivers compared with FY 2021 results 2021 actual End of Period Loans ▪ Increase at a percentage rate of approximately $41.2 billion (ex. PPP) (ex. PPP) 12% Y-o-Y. +12% Y-o-Y (ex. PPP) Adj. Net Interest Income* ▪ Increase at a percenta
Slide 20: Appendix
APPENDIX ty] EAST WEST BANK Your financial bridge”
Slide 21: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation EAST WEST BANCORP, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION ($ 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) 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
Appendix: GAAP to Non-GAAP Reconciliation 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 excludes
Slide 25: 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,