East West Bancorp, Inc. (EWBC) Earnings Call Transcript & Summary

Hello, and welcome to the annual Meeting of Stockholders of East West Bancorp. Please note that today's meeting is being recorded. [Operator Instruction] It is now my pleasure to turn today's meeting over to Lisa Kim, General Counsel and Corporate Secretary of East West Bancorp. Ms. Kim, the floor is yours.

Thank you, operator. Good afternoon. Welcome to the Annual Shareholders Meeting of East West Bancorp. I am Lisa Kim, General Counsel and Corporate Secretary of East West Bancorp. And today, I am also the Inspector of elections. We'll first conduct the formal agenda items for the annual meeting, which I anticipate will be brief. And then Dominic Ng, our Chairman, President and CEO of East West Bancorp will have a presentation on our company and answer any questions from shareholders. If any shareholders have questions of general interest relating to the business before this meeting, please submit them now via the virtual meeting website before voting begins so that they may be compiled and answered. I would like to thank you in advance for your attendance today. A quorum is present, and so I will now officially call the meeting to order. I would like to introduce our directors who are in attendance at this virtual meeting. Ms. Molly Campbell; Ms. Iris Chan; Mr. Chana Deskus; Mr. Rudy Asada; Mr. Paul Irving; Mr. Jack Lu; Mr. Lester Susman; and Mr. Dominic Ing, our Chairman. In addition, Nicole Galil, Cameron Sanders and others as representatives of KPMG, our independent auditors, are also in attendance. The first order of business is the notice of annual meeting of stockholders. The notice of annual meeting of stockholders indicates that the annual meeting of stockholders of East West Bancorp will be held for the following purposes: One, election of directors; Two, to approve on an advisory basis, our executive compensation for 2020; and Three, to approve the 2021 stock incentive plan; and Four, to ratify KPMG as the company's independent registered public accounting firm for this year. The notice of meeting has been mailed to all stockholders. I now declare the opening of the polls for voting on the proposals in the proxy statement mailed to each stockholder of record. I would like to express my appreciation to all of the stockholders attending the meeting today and to all the stockholders who have returned their proxies. If anyone in virtual attendance did not return their boxy, please submit your vote now via the virtual meeting website. Additionally, any stockholder attending the meeting today, who have previously returned a proxy and would like to revoke that proxy for any reason, please resubmit your vote now via the virtual meeting website. Thank you, everyone. I now declare the polls closed. The results of the votes submitted by valid proxy were had related prior to this meeting. The holders of more than a majority of our shares have voted. 4, all of the directors nominees set forth in the proxy. The nominees accordingly have now been duly elected as directors of East West Bancorp to serve until their respective successors have been elected and qualified. For the advisory vote regarding our executive compensation for 2020, also known as say on pay. For the approval of the 2021 stock incentive plan. And for the ratification of KPMG as the company's independent registered public accounting firm for the year ending December 31, 2021. There being no further business, the formal portion of the meeting is now adjourned. I would like to welcome Dominic Ng, our Chairman, CEO and President, who will now provide a brief business update and answer any questions that may have been submitted. Dominic?

Thank you, Lisa. I would like to thank everyone for joining us in our virtual annual meeting, including our auditors and directors. And now I will provide a brief update of our company's performance, beginning with Slide 4 of the presentation. On Slide 4, you can see a 5-year history of East West's strong balance sheet growth. Over the past 5 years, total assets grew at a compound annual growth rate of 11% to a record $52.2 billion as of December 31, 2020. We ended 2020 with record loans of $38.4 billion and record deposits of $44.9 billion. Both loans and deposits have grown at a compound annual growth rate of 11% and over the past 5 years. 2020 was an unprecedented year as the world grappled with the global COVID-19 pandemic. As an essential business, is was actively supported all of our customers, commercial and consumer, and navigating the financial challenges and impacts of the penem. In 2020 and 2021 and we helped our customers receive nearly 13,000 SBA Paycheck Protection Program loans, totaling $2.7 billion. Our performance in 2020 resulted in tangible equity per share of $33.85 as of December 31, 2020. Now turning to our earnings performance on the following slide. Our full year 2020 net income was $568 million or $3.97 per share. Due to the pandemic, the provision for credit losses, which was $210 million in 2020 compared with $99 million in 2019 and compared with 0 provision for credit loss in the first quarter of 2021. In 2020, our return of average equity -- average asset was 1.16% compared with the peer bank median of 0.83%. And the return on equity was 11.2% compared with a peer bank media of 7.7%. On both metrics, our profitability ranked in the top quintile when compared to the other publicly traded bank with $20 billion to $200 billion in assets. Our history of growth and profitability reflects the strength of our diverse business model. Which provides a strong foundation from which to navigate in any economic environment. Moving on to our first quarter 2021 results on Slide 6. We earned net income of $205 million or $1.44 per share, which was up 25% quarter-over-quarter. The first quarter was a strong start to the year and highlights include strong loan and deposit growth, robust revenue growth and decreased operating expenses. As of March 31, 2021, loans growth grew to a record $39.6 billion, and deposits grew to a record $49.5 billion. In the first quarter, we generated total revenue of $427 million and earned pretax pre-provision income of $262 million, equivalent to a pretax pre-provision profitability ratio of 1.91%. Due to an improved macroeconomic outlook and stable asset quality, we did not record any provision for credit losses. Overall, we returned 1.5% on average assets and 15.6% on average equity. As you can see in the graph, East West capital ratios are strong. In fact, we have some of the highest capital ratios among regional banks. Our strong earnings and capital levels have allowed us to consistently return capital to our shareholders since going public in 1999. At the beginning of this year, we raised our quarterly common stock dividend by 20% to $0.33 per share. And that concludes our presentation. We'll now respond to any questions that we were submitted to our operator. Operator -- no moderator.

Thank you, Mr. Chairman. I show no questions from shareholders via the web.

Thank you. This concludes our annual meeting. And thank you, everyone, for attending and participating in our 2020 annual shareholder meeting, we thank you for your support as shareholders, and we hope to have you as customers. Operator?

Thank you. And this concludes the meeting. You may now disconnect.