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First Quarter 2017
INVESTOR PRESENTATION
May 2017
Safe Harbor Statement
2
This presentation may include forward-looking statements that involve
inherent risks and uncertainties. East West Bancorp, Inc. cautions readers
that a number of important factors could cause actual results to differ
materially from those in any forward-looking statements. These factors
include economic conditions and competition in the geographic and business
areas in which East West Bancorp and its subsidiaries operate, inflation or
deflation, fluctuation in interest rates, legislation and governmental regulations,
investigation of acquired banks and other factors discussed in the Company’s
filings with the SEC.
East West Profile
GREATER CHINA
10 Locations5 Full-service branches
5 Representative offices
3
Seattle
Las Vegas
Los Angeles
San Diego
Houston
Dallas AtlantaNew York
Boston
Across 60+ cities in 10 metropolitan areas
UNITED STATES
120+ Locations
89 U.S. branches in California
Chongqing
Beijing
Taipei
Guangzhou Xiamen
Shanghai &
Shanghai FTZ
Hong Kong
ShantouShenzhen
East West Bank is the largest independent bank based in Los Angeles, CA.
With $35 billion in total assets, 44 years of operating history, and 2,900 associates,
East West Bank is the leading bank serving the Asian community in the U.S.
130+ LOCATIONS
THROUGHOUT
San Francisco
East West Bank Milestones
4
1973First EWB Branch
opens for business.
First S&L bank serving
the Asian American
market in Southern
California.
1999EWBC begins
to trade on
Nasdaq.
2009Acquired $10 billion
United Commercial
Bank and doubled
asset size to over
$20 billion.
Acquired China
banking license.
2016Net income:
$432 million
and assets of
$35 billion.
1991Assets
exceed
$1 billion.
1995Converted
to state
chartered
commercial
Bank.
1998Initiated
management-
led buyout.
2005Annual net
income
exceeds
$100 million.
2007First full-service
branch in Greater
China opened in
Hong Kong.
2014Presence expanded
in TX and CA with
acquisition of
$2 billion in assets
MetroCorp.
Opened new
branches in
Shanghai FTZ and
Shenzhen.
1980sBranch network
expanded in CA.
The
Beginning
Going
Public
Size
Doubles
Expansion in
TX and CAToday
East West Bank’s Advantage
China is the 2nd largest
world economy.
Foreign direct investment in
the U.S. continues to rise.
Cross-border trade between
U.S. and Greater China
companies is strong.
EWB is 1 of 3 U.S. banks
with a banking license in
China.
10 locations in Greater
China.
Largest U.S. bank serving
the Asian community.
Among the top 30 largest
public banks.
Bank of choice for new
Chinese-American
immigrants.
Ranked by Forbes as top
15 of America’s best
banks since 2010.
Knowledge and
experience in:
Culture
Geography
Economics
Business practices
Well-connected with
business leaders and
service professionals.
Cross-border products
and services.
Long-term relationship
building.
THE U.S.
FACTOR
THE CHINA
FACTOR
BRIDGE
BANKING
EXPERTISE
VALUE FOR
CUSTOMERS
5
Help navigate complicated
business transactions.
Broaden opportunities with
our partners and resources.
Customized solutions meet
the unique financial needs
across various industries.
Beyond banking approach
helps customers assimilate
seamlessly into a new
country.
Rank Total Assets (as of 03.31.17) Ticker $ Billion Rank Market Cap (as of 05.01.17) Ticker $ Billion
1 JPMorgan Chase & Co. JPM 2,546.3 1 JPMorgan Chase & Co. JPM 309.3
2 Bank of America Corporation BAC 2,247.7 2 Wells Fargo & Company WFC 272.1
3 Wells Fargo & Company WFC 1,951.6 3 Bank of America Corporation BAC 235.5
4 Citigroup Inc. C 1,821.6 4 Citigroup Inc. C 163.7
5 U.S. Bancorp USB 449.5 5 U.S. Bancorp USB 87.5
6 PNC Financial Services Group, Inc. PNC 370.9 6 PNC Financial Services Group, Inc. PNC 58.8
7 Capital One Financial Corporation COF 348.5 7 Bank of New York Mellon Corporation BK 49.1
8 Bank of New York Mellon Corporation BK 337.5 8 Capital One Financial Corporation COF 39.4
9 State Street Corporation STT 236.8 9 BB&T Corporation BBT 35.4
10 BB&T Corporation BBT 220.5 10 State Street Corporation STT 31.6
11 SunTrust Banks, Inc. STI 205.6 11 SunTrust Banks, Inc. STI 28.0
12 Citizens Financial Group, Inc. CFG 150.3 12 M&T Bank Corporation MTB 24.1
13 Fifth Third Bancorp FITB 140.2 13 Northern Trust Corporation NTRS 20.7
14 KeyCorp KEY 134.5 14 KeyCorp KEY 20.4
15 Regions Financial Corporation RF 124.5 15 Citizens Financial Group, Inc. CFG 18.9
16 M&T Bank Corporation MTB 123.2 16 Fifth Third Bancorp FITB 18.6
17 Northern Trust Corporation NTRS 121.5 17 Regions Financial Corporation RF 16.7
18 Huntington Bancshares Incorporated HBAN 100.0 18 First Republic Bank FRC 14.7
19 First Republic Bank FRC 76.5 19 Huntington Bancshares Incorporated HBAN 14.2
20 Comerica Incorporated CMA 73.0 20 Comerica Incorporated CMA 12.6
21 Zions Bancorporation ZION 65.5 21 SVB Financial Group SIVB 9.5
22 SVB Financial Group SIVB 46.4 22 Zions Bancorporation ZION 8.2
23 People's United Financial, Inc. PBCT 40.3 23 East West Bancorp, Inc. EWBC 8.0
24 Signature Bank SBNY 40.3 24 Signature Bank SBNY 7.7
25 Popular, Inc. BPOP 40.3 25 PacWest Bancorp PACW 6.1
26 East West Bancorp, Inc. EWBC 35.3 26 Cullen/Frost Bankers, Inc. CFR 6.1
27 First Citizens BancShares, Inc. FCNCA 34.0 27 People's United Financial, Inc. PBCT 6.0
28 BOK Financial Corporation BOKF 32.6 28 Commerce Bancshares, Inc. CBSH 5.6
29 Synovus Financial Corp. SNV 30.7 29 BOK Financial Corporation BOKF 5.5
30 Cullen/Frost Bankers, Inc. CFR 30.5 30 Synovus Financial Corp. SNV 5.2
Bank Rankings by Total Assets and Market Cap
6
Source: S&P Global Market Intelligence.
Strong Balance Sheet Growth
7
Total Assets Stockholders' Equity
Total Loans
* CAGR from December 31, 2007 – March 31, 2017.
Total Deposits
($ in billions)
$77
$165
$243$278 $293
$346$385
$432
$128
$42
2009 2010 2011 2012 2013 2014 2015 2016 1Q17*
Net Earnings Gain on sale of building
$0.33
$0.83
$1.58$1.87
$2.09$2.41
$2.66$2.97
$0.88
$0.28
2009 2010 2011 2012 2013 2014 2015 2016 1Q17*
Diluted EPS Gain on sale of building
Diluted EPS
Strong Earnings Growth
8
UCBH
acquisition
Nov. 2009
doubles
bank size
Net Earnings ($ in millions)
+12%+11%
+15%+12%
+18%
+12%+11%+18%
+6%+14%
$170
$1.16
* 1Q17 comprised of operating earnings and gain on sale of commercial property. See reconciliation of GAAP to non-GAAP financials in the Company’s 1Q17 earnings release.
+19%
y-o-y
(oper.*)
+19%
y-o-y
(oper.*)
5.65%
7.96%8.46% 8.60% 8.71%
8.29% 8.20%8.52%
8.79%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
2009 2010 2011 2012 2013 2014 2015 2016 1Q17
Tangible Equity to Tangible Assets Ratio
$7.75
$10.87$12.22
$13.58$14.39
$16.30
$18.15$20.27
$21.20
2009 2010 2011 2012 2013 2014 2015 2016 1Q17
Tangible Equity per Share
Steadily Growing Equity While Maintaining Robust TCE
9
+32 bps+14 bps +11 bps (42) bps (9) bps
+11% +6%+13%
+11%
+12%
UCBH
acquisition
Nov. 2009
doubles
bank size
+5%
+27 bps
2.18%2.04% 2.09%
1.89%
2015 Full-Year
2016 Full-Year
2017 FirstQuarter
(adjusted*)
2016 IndustryAverage
Adjusted* Pre-tax, Pre-provision Profitability Ratio
12.7% 13.1%14.9%
8.9%
2015 Full-Year
2016 Full-Year
2017 FirstQuarter
(adjusted*)
2016 IndustryAverage
Return on Average Equity
1.27% 1.30%1.49%
1.06%
2015 Full-Year
2016 Full-Year
2017 FirstQuarter
(adjusted*)
2016 IndustryAverage
Return on Average Assets
Outperforming Peers on Key Profitability Metrics
10
Note: Industry average based on FDIC’s 4Q16 Quarterly Banking Profile for FDIC insured banks with asset size $10bn to $250bn. Source: FDIC and S&P Global Market Intelligence.
* See reconciliation of GAAP to non-GAAP financials in the Company’s Earnings Press Releases. 1Q17 results exclude the impact from gain on sale of commercial property.
10%
2%
50%
1%
41.8% 44.2% 43.3%56.0%
2015 Full-Year
2016 Full-Year
2017 FirstQuarter
(adjusted*)
2016 IndustryAverage
Adjusted* Efficiency Ratio
Highlights of First Quarter 2017 Results
Solid operating results Net income of $170mm and diluted EPS of $1.16 up by 53% Q-o-Q.
Adjusted net income1,2 and adj. diluted EPS1,2 grew 16% Q-o-Q.
NII increase driven by strong loan growth and impact of recent interest rate rise, offset by decreased accretion income. 1Q17 NII of $272mm down <$1mm from $273mm in 4Q16. 1Q17 NIM of 3.33% up +2 bps Q-o-Q.
Excluding discount accretion, adj. NII2 of $269mm was up 12% LQA annualized and adj. NIM2 was up 12 bps.
Disciplined expense management: industry-leading adj. efficiency 2 ratio of 43.3%, up by 9 bps linked quarter.
Controlled credit costs: annualized NCO ratio of 8 bps in 1Q17.
Loans grew 15% LQA Broad-based growth: increases across all commercial and retail categories.
Deposits grew 9% LQA Non-IB demand deposits reached a record $10.7bn, or 35% of deposit mix.
Sale & leaseback of commercial property in 1Q Strengthened capital ratios: after-tax gain of $41.5mm or $0.28/share.
Sale price: $120.6mm. Pre-tax gain: $85.4mm, of which $71.7mm recognized in 1Q17 and $13.7mm deferred over the term of the lease.
11
Net
income
$169.7
million
Adj. net
income1,2
$128.2
million
Diluted
EPS
$1.16
Adj. diluted
EPS1,2
$0.88
Tangible equity2/share
$21.20
Record loans
$26.5 billion
Record deposits
$30.5 billion
1 Adjusted net income and adjusted diluted EPS exclude the impact of the commercial property sale in 1Q17. 2 See reconciliation of GAAP to non-GAAP financials in the Company’s 1Q17 earnings release.
Updated Management Outlook: Full Year 2017
12
Earnings drivers Revised full year 2017 outlook
(after 1Q17)
Change from prior
outlook
(at year-end)
2016 FY
actual
1Q17
actual
End of Period Loans Increase at a percentage rate in the low
double digits.
Loan growth supported by deposit growth.
Raise from high single
digit growth.
$25.5 billion,
+8% Y-o-Y
$26.5 billion,
+15% LQA
NIM
(excl. impact of ASC
310-30 discount
accretion)
3.35% to 3.45%.
Favorable asset sensitivity position to
support NIM expansion.
Increase from 3.20%-
3.40%.
3.15% 3.29%
Noninterest Expense
(excl. tax credit
investment & core
deposit intangible
amortization)
Increase at a percentage rate in the low
single digits.
Unchanged. $538 million,
+14% Y-o-Y
$137 million,
-5% LQA
Provision for Credit
Losses
In the range of $40 mm to $50 mm. Unchanged. $27 million $7 million
Tax Items
(renewable energy &
historical tax credits)
Tax credit investments of $95mm.
Associated tax credit amortization of $75mm.
Effective tax rate ranging from 26% to 29%.
Tax credit investments
of $90mm and tax credit
amortization of $80mm.
Effective tax
rate:
24.6%
Effective tax
rate:
25.6%
Interest Rates Outlook incorporates the current forward rate
curve.
Two additional Fed Funds rate increases in
2017: in June and Nov.
Three Fed Funds rate
increases in June, Sep.,
and Dec.
Fed Funds
increased
+25bps in Dec.
2016.
Fed Funds
increased
+25bps in Mar.
2017.
$107.5 $103.3 $110.1 $110.7 $128.2
$41.5
1.33%1.27%
1.33%1.27%
1.49%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
$0
$40
$80
$120
$160
$200
1Q16 2Q16 3Q16 4Q16 1Q17 *
Net Income & ROA
1Q17: Gain on sale of building (LH axis) Net income (LH axis) (oper. in 1Q17)
Return on Avg. Assets (RH axis) (oper. in 1Q17)
$107.5 $103.3 $110.1 $110.7 $128.2
$41.5
13.6%
12.7%13.1% 12.9%
14.9%
10%
12%
14%
16%
18%
20%
$0
$40
$80
$120
$160
$200
1Q16 2Q16 3Q16 4Q16 1Q17 *
Net Income & ROE
1Q17: Gain on sale of building (LH axis) Net income (LH axis) (oper. in 1Q17)
Return on Avg. Equity (RH axis) (oper. in 1Q17)
$0.74 $0.71 $0.76 $0.76
$0.88
$0.28
0%
5%
10%
15%
20%
25%
30%
35%
40%
$0.40
$0.60
$0.80
$1.00
$1.20
1Q16 2Q16 3Q16 4Q16 1Q17 *
Diluted EPS & EPS Growth
1Q17: Gain on building sale (LH axis) Diluted EPS (LH axis) (oper. in 1Q17)
Diluted EPS growth (RH axis) (oper. in 1Q17)
1Q17 Earnings Growth and Profitability
13
In $
$ in
mill
ions
* 1Q17 financials adjusted for the impact of the commercial property sale. See reconciliation of GAAP to non-GAAP financial measures in the Company’s 1Q17 earnings release.
0%
$ in
mill
ions
1Q17 GAAP net income of $170mm, EPS of $1.16, ROA
of 1.97% and ROE of 19.7%.
Excluding the commercial property sale gain in 1Q17,
adjusted EPS of $0.88 grew by 16% Q-o-Q.
Consistently attractive profitability:
5-quarter range of ROA*: 1.27% to 1.49%.
5-quarter range of ROE*: 12.7% to 14.9%.
Return on average tangible equity of 23.2% in 1Q17.
Excluding the property sale gain, 17.6% in 1Q17*,
compared to 15.3% in 4Q16 and 16.5% in 1Q16.
$1.16
$169.7
$169.7
8.8 9.1 9.3 9.6 9.9
8.4 8.5 8.5 8.7 9.0
1.3 1.3 1.4 1.6 1.73.1 3.2 3.4 3.53.72.1 2.1 2.1 2.12.1
0%
20%
40%
60%
$0
$10
$20
$30
1Q16 2Q16 3Q16 4Q16 1Q17
C&I CRE MFR
SFR Consumer LQA growth rate
1Q17 Record Loans of $26.5 billion
14
Q-o-Q Difference
Total loans increased $964mm or 4% (+15% LQA).
Broad-based growth across commercial and retail
business segments.
Growth by loan category: CRE (+3%), C&I (+3%),
SFR (+5%), and MFR (+9%).
Strong performance from specialty verticals in
Energy, Entertainment, and Private Equity Funds.
Good growth in traditional C&I with expanding line
utilizations in 1Q: typically, a seasonally weaker
quarter.
Strong 1Q growth rate supports increased full year 2017
outlook.
Loan portfolio mix balanced between commercial,
commercial real estate, and consumer loans (which
includes SFR & MFR).
Regulatory CRE to total capital: 265% as of 03.31.17.
* Totals may not add up due to rounding.
CRE = CRE, construction and land. Consumer = predominantly HELOCs.
Loan Portfolio Mix
$ in
bill
ions
EOP Total Loans
$26.5*$25.5*$24.8*$24.3*$23.8*
37% 38% 38% 38% 37%
35% 35% 34% 34% 34%
6% 6% 6% 6% 7%
13% 13% 14% 14% 14%
9% 8% 8% 8% 8%
1Q16 2Q16 3Q16 4Q16 1Q17
C&I CRE MFR SFR Consumer
Specialized Industry Verticals: Cross-Border Growth
15
Total Loans
$26.5 bn
C&I loans
$9.9 bn or 37%
Specialized Industry
$3.7 bn or 37%
Includes Includes
Portfolio distribution data as of March 31, 2017.
* Other Specialized Lending comprises Agriculture, Clean Tech, Equipment Finance,
Health Care and Life Science.
Specialized Industry lending verticals have grown to $3.7 bn, or 32% YoY, from $2.8 bn as of 03.31.16. Growth in these niches is driven by Bridge Banking, EWBC’s strategy of facilitating cross-border commercial opportunities.
Less than 50%:36%
51% to 55%:15%
56% to 60%:17%
61% to 65%:18%
66% to 70%:7%
71% to 75%:3%
Over 75%:4%
CRE concentration under FFIEC guidelines as of 03.31.17 was 265%, compared to 260% as of 12.31.16,
and down from 279% as of 03.31.16.
Room in 2017 to prudently grow CRE loans for high quality projects, while remaining below the 300%
FFIEC exposure threshold.
16
Diversified Commercial Real Estate Portfolio
* Total CRE portfolio of $9.0 billion includes construction & land loans, which were $685 million as of 03.31.17. Construction & land excluded from LTV distribution chart.1 LTV based on current loan balance and appraisal value at origination or renewal.
CRE* Property Type Distribution (as of 03.31.17) CRE* LTV Distribution (as of 03.31.17)
$9.0 billionCRE loan
portfolio
$2.2 millionAvg. outstanding
CRE loan size
52%Avg. LTV1
Retail, 34%
Industrial, 17%
Offices, 16%
Hotel/Motel, 14%
Other, 11%
Construction & land, 8%
1Q17 Record Deposits of $30.5 billion
17
Q-o-Q Difference
Total deposits increased $652mm or 2% (+9% LQA).
Back-end loaded deposit growth: avg. deposits
modestly decreased by 0.4%.
DDA growth: +5% EOP / -0.5% avg.
IB checking & savings growth: +2% EOP / -1% avg.
MMDA growth: -2% EOP / -3% avg.
Time deposit growth: +4% EOP / +3% avg.
DDAs grew to a record $10.7 billion as of 03.31.17.
Stable deposit mix throughout year, with gradually
increasing share of demand deposits.
Over past 5 quarters, share of DDAs in total
deposits ranged from 33% to 35%.
Over past 5 quarters, share of time deposits in total
deposits ranged from 19% to 21%.
EOP loan-to-deposit ratio of 86.7%.
Avg. loan-to-deposit ratio of 87.8%. Decreased by
quarter-end with timing of deposit growth.
Room to support organic loan growth, and room to
maintain discipline in deposit pricing.
$30.5*$29.9*$28.6*$28.2*$28.6*
33% 34% 33% 34% 35%
27% 26% 27% 27% 26%
19% 20% 20% 20% 20%
21% 20% 20% 19% 19%
1Q16 2Q16 3Q16 4Q16 1Q17
DDA MMDA IB checking & Savings Time
9.5 9.5 9.5 10.2 10.7
7.6 7.4 7.7 8.2 8.0
5.4 5.6 5.85.9 6.1
6.1 5.7 5.65.6 5.8
0.0%
20.0%
40.0%
60.0%
$0
$10
$20
$30
$40
1Q16 2Q16 3Q16 4Q16 1Q17
DDA MMDA IB checking & Savings
Time LQA growth rate
$ in
bill
ions
EOP Deposits
Deposit Portfolio Mix
* Totals may not add up due to rounding.
1Q17 Summary Income Statement
18
% Change vs.
($ in millions, except per share data) 1Q17 4Q16 1Q16 1Q17 Comments
Adjusted net interest income (excl. accretion) $ 268.9 3.0% 12.6% Loan growth & higher interest rates.
ASC 310-30 discount accretion income $ 3.2 (72.1) (75.8) Declined, as anticipated.
Net interest income $ 272.1 (0.2) 7.9
Fees & operating income $ 38.8 (18.4) 12.3 Decrease from MTM adjustments.
Customer-related fee income grew Q-o-Q.
Net gains on sales of fixed assets $ 72.0 NM NM Sale of commercial property in SF.
Net gains on sales of loans & securities $ 5.2 415.6 (9.4)
Total Noninterest income $ 116.0 137.8 186.4
Adjusted noninterest expense $ 136.9 (1.3) 5.0 Q-o-Q reduction in consulting expenses.
Tax credit and other investment amortization $ 14.4 (36.6) 1.4 Expecting $20mm/qtr. rest of year.
Amortization of core deposit intangibles $ 1.8 (4.8) (13.6)
Total Noninterest expense $ 153.1 2.1 4.4
Provision for credit losses $ 7.1 (32.4) 390.8 Low level of charge-offs and limited
downward loan risk rating migration.
Income tax expense $ 58.3 15.6 56.8 New stock-based comp. accounting: lower
tax expense by $4.4mm or $0.03/sh.
Net income $169.7 53.3% 57.9% Effective tax rate of 25.6%.
Diluted EPS $ 1.16 52.6% 56.8%
Adjusted diluted EPS * $ 0.88 15.5% 18.5% Excludes commercial property sale.
* Adjusted EPS exclude the impact from the commercial property sale. See reconciliation of GAAP to non-GAAP financial measures on slides 14-17 and in the Company’s 1Q17
Earnings Release.
1Q17 NIM of 3.33% expanded by 2 bps Q-o-Q.
1Q17 loans yield of 4.23% declined by 10 bps Q-o-Q
because of decreased accretion income.
Excluding the impact of accretion income, adjusted NIM
of 3.29% expanded by 12 bps Q-o-Q.
Benefitted from a rising interest rate environment.
Impact from change in adj. loan yields: +3 bps Q-o-Q.
Impact from change in earning asset yields: +4 bps Q-o-Q.
Impact from change in deposit costs: -1 bp Q-o-Q from
MMDA, offset by +1 bp Q-o-Q from CDs.
Earning assets mix shift (more loans): +7 bps Q-o-Q.
Funding mix shift (more borrowings): -2 bps Q-o-Q.
238.9 240.3 247.0
261.1
268.9 13.3 13.3 7.2
11.6 3.2
$220
$240
$260
$280
1Q16 2Q16 3Q16 4Q16 1Q17
Adj. net interest income * Accretion income
1Q17 Net Interest Income & Net Interest Margin
19
Adjusted* NIM: Adj.* Loan Yield & Cost of Deposits
* See reconciliation of GAAP to non-GAAP financials in the Company’s 1Q17 earnings release.
$252.2$253.6 $254.1
$272.7 $272.1
1Q17 total NII of $272mm decreased by <$1mm Q-o-Q
due to declining ASC 310-30 discount accretion income.
Anticipating quarterly accretion run-rate of $3mm going
forward.
Remaining ASC 310-30 accretion discount of $47mm as
of 03.31.17, of which approx. $32mm expected to
accrete as income.
Adjusted NII, excluding accretion income, of $269mm
increased by 12% LQA.
Driven by loan growth & higher loan yields in 1Q17.
$ in
mill
ions
Net Interest Income
10.2 10.4 10.4 10.2 10.3
3.1 2.84.0 3.4 4.5
3.6 4.3
6.15.4
5.0
9.610.9
10.9 14.411.1
2.51.4
5.8
7.0
2.55.66.5
7.6
7.2
5.4
$0
$10
$20
$30
$40
$50
1Q16 2Q16 3Q16 4Q16 1Q17
Branch fees Wealth management fees
Ancillary loan fees LC fees & FX income
Derivative fees & other income Other fees & operating income
1Q17 Fees & Other Operating Income
20
Total Fees and Other Operating Income Q-o-Q Difference
Excluding net gains on sale of loans, securities, and
fixed assets, fees and other operating income of $39mm
decreased by $8.7mm or 18%.
Most customer-related fee income categories increased;
decrease in total fee income reflects mark-to-market
and valuation changes.
Branch fees increased by $0.1mm.
Letters of credit fees increased by $0.7mm to
$8.4mm in 1Q17.
Customer-related FX income increased in 1Q17, but
total FX income declined largely due to valuation
changes associated with currency hedges.
Ancillary loan fees declined by $0.4mm.
Wealth management fees increased by $1.2mm.
Fees from assisting customers to hedge interest
rates increased by $1.4mm to $3.6mm in 1Q17, but
total derivative fees and other income of $2.5mm
declined by $4.5mm primarily due to a mark-to-
market valuation adjustments related to changes in
interest rates.
$34.6$36.3
$44.9
$47.5
$38.8
$ in m
illio
ns
1Q17 Efficiency and PTPP Profitability
21
Adj.* Operating Expense & Efficiency Ratio
$ in
mill
ions
1
Adj.* PTPP Income & PTPP Profitability Ratio
$ in
mill
ions
* See reconciliation of GAAP to non-GAAP financials in the Company’s 1Q17 Earnings Release.
1Q17 total noninterest expense: $153mm.
Excluding tax credit amortization and core deposit
intangible amortization, 1Q17 noninterest expense of
$137mm decreased by 1% Q-o-Q.
Declining consulting and other expenses offset
seasonal increases in compensation expense.
Industry-leading, adj.* efficiency ratio a key bank strength.
43.3% in 1Q17, up by 9 bps Q-o-Q.
5-quarter adj. efficiency ratio range of 44.8% to 43.2%.
Consistent adjusted* pre-tax, pre-provision profitability
ratio.
5-quarter PTPP profitability range of 2.01% to 2.10%.
1Q17 adj.* PTPP profitability ratio of 2.09% essentially
stable Q-o-Q and increased by 8 bps Y-o-Y.
NII growth driven by loan growth and higher interest
rates, fully offsetting decline from accretion income.
Disciplined expense management and industry-
leading efficiency ratio.
Customer fee income growth, excluding mark-to-
market adjustments.
$130.3 $132.8
$135.9 $138.7 $136.9
44.5% 44.6% 44.8%43.2% 43.3%
20%
30%
40%
50%
$100
$120
$140
$160
1Q16 2Q16 3Q16 4Q16 1Q17
Adj. operating expense* (LH axis) Adj. efficiency ratio* (RH axis)
$162.4 $165.0 $167.6 $182.8 $179.6
2.01%2.04% 2.03%
2.10% 2.09%
1.20%
1.40%
1.60%
1.80%
2.00%
2.20%
$0
$50
$100
$150
$200
$250
1Q16 2Q16 3Q16 4Q16 1Q17 *
Adj. PTPP income* (LH axis) Adj. PTPP profitability ratio* (RH axis)
Allowance coverage of loans HFI ticked down to 0.99% as
of 03.31.17, reflecting limited downward migration of loans
into substandard risk categories.
Annualized NCO ratio of 8 bps in 1Q17 near historically low
levels, down by 5 bps Q-o-Q and down 1 bp Y-o-Y.
NPAs increased by $15mm linked quarter to $145mm or
0.41% of total assets at the end of 1Q17, up from 0.37% at
the end of 4Q16 but down from 0.51% at the end of 1Q16.
Two unrelated loans (a C&I and a CRE) drove the
increase in NPAs.
Both loans fully collateralized at 03.31.17.
1Q17 Asset Quality Metrics
22
* Nonperforming assets and net charge-offs exclude purchased credit impaired loans. HFI represents held-for-investment.
$ in
mill
ions
Provision Expense and Net Charge-offs* Ratio
$ in
mill
ions
Nonperforming Assets*
Allowance for Loan Losses
$ in
mill
ions
23
1Q17 Capital Ratios
EWBC’s Solid Capital Position
Capital ratios increased by 20 to 30 bps in 1Q17.
Our core earnings and the sale of the commercial property during the quarter strengthened capital ratios across the
board.
Current capital levels are sufficient to support continued organic growth.
7.0%
8.5%
10.5%
4.0%
8.52%
10.9% 10.9%
12.4%
8.7%8.79%
11.1% 11.1%
12.6%
9.0%
Tangible equity to tangibleassets ratio
CET1 capital ratio Tier 1 risk-based capitalratio
Total risk-based capitalratio
Tier 1 leverage capital ratio
Basel III Fully Phase-in Minimum Regulatory Requirement EWBC 12.31.16 EWBC 03.31.17
$ 20.27
$ 21.20
Tangibleequity per
share
Providing a Healthy Dividend to Stockholders
24
400% or $0.64 per share increase in dividends since 2011
*Annualized based on dividend rate for the first and second quarters of 2017.
EWBC has consistently paid an annual dividend on the common stock
since going public in 1999
Net Interest Income Volatility as of 12/31/16 Given a 12-Month Demand Deposit Migration of:
$1.0 billion $2.0 billion $3.0 billion
Change in Interest Rates : % change $ in mm in EPS % change $ in mm in EPS % change $ in mm in EPS
+200 bps 19.7% $203.4 + $ 1.06 17.0% $175.5 + $ 0.91 14.2% $146.6 + $ 0.76
+100 bps 10.3% $106.4 + $ 0.55 8.5% $87.8 + $ 0.46 6.8% $70.2 + $ 0.36
Net Interest Income Volatility:
31-Dec-2016 31-Dec-2015
Change in Interest Rates : % change $ in mm in EPS % change $ in mm in EPS
+ 200 bps 22.4% $231.3 + $ 1.20 18.5% $175.8 + $ 0.81
+ 100 bps 12.0% $123.9 + $ 0.64 9.6% $91.2 + $ 0.42
- 100 bps -6.8% ($70.2) - $ (0.36) -4.0% ($38.0) - $ (0.17)
- 200 bps -7.5% ($77.4) - $ (0.40) -4.6% ($43.7) - $ (0.20)
Interest Rate Sensitivity
25
The increase in EWBC’s interest rate sensitivity between 12/31/16 and 12/31/15 was primarily due to growth in core deposits, which now make up 81% of total deposits.
Brokered deposits are 5% of total deposits, and institutional deposits are 10% of total, both essentially stable relative to the past several quarters.
Due to the growth in core deposits, a surge deposit study was conducted to identify the amount of volatile deposits and to estimate the likelihood of run-off in various interest rate environments.
Betas: Retail Money Market – 53%; Commercial MMA – 65%; NOW – 28%; and Savings – 15%.
EWBC’s Net Interest Income Sensitivity to Selected Interest Rate Scenarios (as of December 31, 2016)
Note: NII sensitivity translated into $ and EPS using annualized YTD16 NII and FY 2015 NII, and the effective tax rate in each period.
Loan Portfolio: Underlying Interest Rate Detail
26
EWBC’s loan portfolio is predominantly linked to Prime Rate and short-term LIBOR, a profile that has been consistent over time.
Over 80% of EWBC’s loan portfolio is variable rate (this includes hybrid loans in variable period), and <10% is fixed rate.
Less than $1.0bn of variable rate and hybrid loans, or 3.5% of total loans, have an index rate below floors. Approximately 34% of these would cross above floor rates with the next 25bps move in interest rates, and another 24% would cross with a second 25bps move. The weighted average distance below floors is 75bps.
Weighted avg. next repricing/maturity date of the total loan portfolio is <1.25 years. The weighted avg. date of repricing for loans below floors is 5 months, stable linked quarter.
EWBC’s Loan Portfolio Breakdown: Fixed, Hybrid, & Variable Rate Loans (as of March 31, 2017)
Note: Hybrid loans shows those sti l l in fixed rate period. Hybrid loans already subject to variable rate are shown in Variable loans.
Note: Loans gross of deferred fees, premiums, or discounts.
Gross Loans: Fixed, Hybrid, & Variable Rate Loans (as of 03.31.17)
% of % of
$ in mm. total loans $ in mm. category
True Fixed rate loans 2,232.8 8.4%
Hybrid: no floors 174.5 0.7%
Hybrid: Interest rates above floors 2,431.4 9.2%
Of which, linked to Prime 567.6 23.3%
Of which, linked to 1M Libor 1.9 0.1%
Of which, linked to Other Libor 486.8 20.0%
Hybrid: Interest rates below floors 110.9 0.4%
Hybrid: Interest rates at floors 41.8 0.2%
Subtotal: Hybrid loans 2,758.6 10.4%
Variable: no floors 14,243.5 53.7%
Of which, linked to Prime 5,553 39%
Of which, linked to 1M Libor 4,481 31%
Of which, linked to Other Libor 1,894 13%
Variable: Interest rate above floors 6,013.5 22.7%
Of which, linked to Prime 3,750 62%
Of which, linked to 1M Libor 1,248 21%
Of which, linked to Other Libor 545 9%
Variable: Interest rate at floors 318.9 1.2%
Variable: Interest rate below floors 825.5 3.1%
Of which, linked to Prime 386 47%
Of which, linked to 1M Libor 210 25%
Of which, linked to Other Libor 125 15%
Subtotal: Variable rate loans 21,401.3 80.6%
Other (NPLs, premiums, discounts) 154.1 0.6%
Total gross loans 26,548.1 100.0%
Key Focus Areas
27
Expand
MARKET
OPPORTUNITY
LONG-TERM
SHAREHOLDER
VALUE
Grow
CORE
DEPOSITS
Maintain good
ASSET
QUALITY
Maintain solid
NII* & NIM*
Enhance
RISK
MANAGEMENT
Build
FEE-BASEDbusinesses
Focus on
BRIDGE
BANKING
*NII = Net Interest Income. NIM = Net Interest Margin
Control
EXPENSES
Deliver
HIGH
PROFITABILITY
Appendix: GAAP to Non-GAAP Reconciliation
28
Quarter Ended
March 31, 2017 December 31, 2016 March 31, 2016
Net income (a) $ 169,736 $ 110,734 $ 107,516
Less: Gain on sale of the commercial property, net of tax (1) (b) (41,526 ) — —
Adjusted net income (c) $ 128,210 $ 110,734 $ 107,516
Diluted weighted average number of shares outstanding (d) 145,732 145,428 144,803
Diluted EPS (a)/(d) $ 1.16 $ 0.76 $ 0.74
Diluted EPS impact of gain on sale of the commercial property, net of tax (b)/(d) (0.28 ) — —
Adjusted diluted EPS $ 0.88 $ 0.76 $ 0.74
Average total assets (e) $ 34,928,031 $ 34,679,137 $ 32,486,723
Average stockholders’ equity (f) $ 3,493,396 $ 3,423,405 $ 3,181,368
Return on average assets (2) (a)/(e) 1.97 % 1.27 % 1.33 %
Adjusted return on average assets (2) (c)/(e) 1.49 % 1.27 % 1.33 %
Return on average equity (2) (a)/(f) 19.71 % 12.87 % 13.59 %
Adjusted return on average equity (2) (c)/(f) 14.88 % 12.87 % 13.59 %
(1) Applied statutory tax rate of 42.05%.
(2) Annualized.
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 computation of the diluted earnings per common share excluding the after-tax effect of the gain on sale of the commercial property, return on
assets excluding the after-tax effect of the gain on sale of the commercial property and return on equity excluding the after-tax effect of the gain on sale of the commercial property. Management believes
that eliminating the effects of the gain on sale of the commercial property makes it easier to analyze the results by presenting them on a more comparable basis.
29
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 applicable). Adjusted noninterest expense excludes the reversal of a legal accrual (where applicable), the amortization of tax
credit and other investments and the amortization of core deposit intangibles. The ratios presented below provide clarity to financial statement users regarding the ongoing performance of the Company and
allow comparability to prior periods. Quarter Ended
March 31, 2017 December 31, 2016 March 31, 2016
Net interest income before provision for credit losses (a) $ 272,122 $ 272,702 $ 252,204
Total noninterest income 116,023 48,800 40,513
Less: Gain on sale of the commercial property (71,654 ) — —
Adjusted noninterest income (b) $ 44,369 $ 48,800 $ 40,513
Net interest income and adjusted noninterest income (a)+(b) = (c) $ 316,491 $ 321,502 $ 292,717
Total noninterest expense $ 153,073 $ 149,904 $ 146,606
Less: Legal accrual reversal — 13,417 —
Amortization of tax credit and other investments (14,360 ) (22,667 ) (14,155 )
Amortization of core deposit intangibles (1,817 ) (1,909 ) (2,104 )
Adjusted noninterest expense (d) $ 136,896 $ 138,745 $ 130,347
Adjusted pre-tax, pre-provision income (c)-(d) = (e) $ 179,595 $ 182,757 $ 162,370
Average total assets (f) $ 34,928,031 $ 34,679,137 $ 32,486,723
Adjusted pre-tax, pre-provision profitability ratio (1) (e)/(f) 2.09 % 2.10 % 2.01 %
Adjusted noninterest expense (1)/average assets (d)/(f) 1.59 % 1.59 % 1.61 %
Adjusted efficiency ratio represents adjusted noninterest expense divided by the aggregate of net interest income and adjusted noninterest income. The Company believes that presenting the adjusted
efficiency ratio shows the trend in recurring overhead-related noninterest expense relative to recurring net revenues. This provides clarity to financial statement users regarding the ongoing performance of
the Company and allows comparability to prior periods.
Quarter Ended
March 31, 2017 December 31, 2016 March 31, 2016
Adjusted noninterest expense (g) $ 136,896 $ 138,745 $ 130,347
Net interest income and adjusted noninterest income (h) $ 316,491 $ 321,502 $ 292,717
Adjusted efficiency ratio (g)/(h) 43.25 % 43.16 % 44.53 %
(1) Annualized.
Appendix: GAAP to Non-GAAP Reconciliation (cont’d)
30
The Company believes that presenting the adjusted average loan yields and adjusted net interest margin that exclude the ASC 310-30 impacts provides clarity to financial statement users regarding the ongoing
performance of the Company and allows comparability to prior periods.
Appendix: GAAP to Non-GAAP Reconciliation (cont’d)
Quarter Ended
Yield on Average Loans March 31, 2017 December 31, 2016 March 31, 2016
Interest income on loans (a) $ 272,061 $ 272,188 $ 253,542
Less: ASC 310-30 discount accretion income (3,233 ) (11,601 ) (13,347 )
Adjusted interest income on loans (b) $ 268,828 $ 260,587 $ 240,195
Average loans (c) $ 26,087,178 $ 25,033,196 $ 23,819,273
Add: ASC 310-30 discount 48,566 54,664 76,736
Adjusted average loans (d) $ 26,135,744 $ 25,087,860 $ 23,896,009
Average loan yields (1) (a)/(c) 4.23 % 4.33 % 4.28 %
Adjusted average loan yields (1) (b)/(d) 4.17 % 4.13 % 4.04 %
Net Interest Margin
Net interest income (e) $ 272,122 $ 272,702 $ 252,204
Less: ASC 310-30 discount accretion income (3,233 ) (11,601 ) (13,347 )
Adjusted net interest income (f) $ 268,889 $ 261,101 $ 238,857
Average interest-earning assets (g) $ 33,095,396 $ 32,736,669 $ 30,598,462
Add: ASC 310-30 discount 48,566 54,664 76,736
Adjusted average interest-earning assets (h) $ 33,143,962 $ 32,791,333 $ 30,675,198
Net interest margin (1) (e)/(g) 3.33 % 3.31 % 3.32 %
Adjusted net interest margin (1) (f)/(h) 3.29 % 3.17 % 3.13 %
(1) Annualized.
31
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 and other intangible assets. Given that the use of such measures and ratios are more prevalent in the
banking industry, and used by banking regulators and analysts, the Company has included them for discussion.
Appendix: GAAP to Non-GAAP Reconciliation (cont’d)
March 31, 2017 December 31, 2016 March 31, 2016
Stockholders’ equity $ 3,565,954 $ 3,427,741 $ 3,216,781
Less: Goodwill (469,433 ) (469,433 ) (469,433 )
Other intangible assets (1) (33,843 ) (35,670 ) (39,676 )
Tangible equity (a) $ 3,062,678 $ 2,922,638 $ 2,707,672
Total assets $ 35,342,126 $ 34,788,840 $ 33,109,169
Less: Goodwill (469,433 ) (469,433 ) (469,433 )
Other intangible assets (1) (33,843 ) (35,670 ) (39,676 )
Tangible assets (b) $ 34,838,850 $ 34,283,737 $ 32,600,060
Tangible equity to tangible assets ratio (a)/(b) 8.79 % 8.52 % 8.31 %
Adjusted return on average tangible equity represents adjusted tangible net income divided by average tangible equity. Adjusted tangible net income excludes the after-tax effect of the amortization of core
deposit intangibles, the after-tax effect of the amortization of mortgage servicing assets and the after-tax effect of the gain on sale of the commercial property.
Quarter Ended
March 31, 2017 December 31, 2016 March 31, 2016
Net Income $ 169,736 $ 110,734 $ 107,516
Add: Amortization of core deposit intangibles, net of tax (2) 1,053 1,106 1,219
Amortization of mortgage servicing assets, net of tax (2) 266 106 763
Tangible net income (c) $ 171,055 $ 111,946 $ 109,498
Less: Gain on sale of the commercial property, net of tax(2) (41,526 ) — —
Adjusted tangible net income (d) $ 129,529 $ 111,946 $ 109,498
Average stockholders’ equity $ 3,493,396 $ 3,423,405 $ 3,181,368
Less: Average goodwill (469,433 ) (469,433 ) (469,433 )
Average other intangible assets (1) (34,987 ) (36,354 ) (40,946 )
Average tangible equity (e) $ 2,988,976 $ 2,917,618 $ 2,670,989
Return on average tangible equity (3) (c)/(e) 23.21 % 15.26 % 16.49 %
Adjusted return on average tangible equity (3) (d)/(e) 17.57 % 15.26 % 16.49 %
(1) Includes core deposit intangibles and mortgage servicing assets.
(2) Applied statutory tax rate of 42.05%.
(3) Annualized.