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 Instructions] 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, Josh. 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 will 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 give a presentation of our company. We will then answer any questions from shareholders. [Operator Instructions] I would like to thank you in advance for your attendance today. A quorum is present, and I will now officially call the meeting to order. I would like to introduce our directors who are in attendance at this virtual meeting: Mr. Manuel Alvarez, Ms. Molly Campbell, Ms. Iris Chan; Ms. Archana Deskus, Mr. Rudy Estrada, Mr. Paul Irving, Mr. Jack Liu, Mr. Lester Sussman, and Dominic Ng, our Chairman. In addition, Brian Gordon, Alysha Horsley, [ Carol Long ] and Kelsey Lusso 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 2021; and three, to ratify KPMG as the company's registered independent 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 the stockholders attending the meeting today and to all of the stockholders who returned their proxies. If anyone in virtual attendance did not return their proxy, 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. [Voting]

Thank you, everyone. I now declare the polls closed. The results of the votes submitted by valid proxy were tabulated prior to this meeting. The holders of more than a majority of our shares have voted: for all of the director 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 2021, also known as Say-on-Pay; and for the ratification of KPMG as the company's independent registered public accounting firm for the year ending December 31, 2022. There being no further business, the formal portion of this meeting is now adjourned. I would like to welcome Dominic Ng, our Chairman, President and CEO, to provide a brief business update and answer any questions that may have been submitted.

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 12% to $60.9 billion as of December 31, 2021. We ended 2021 with loans of $41.7 billion and total deposits of $53.4 billion. Over the past 5 years, loans grew at a compound annual growth rate of 10%, and deposits have grown at a compound annual growth rate of 12%. Our performance in 2021 resulted in tangible equity per share of $37.79 as of December 31, 2021, a growth of 12% year-over-year. Now turning to our earnings performance on the following slide. In 2021, we achieved record earnings and record revenue. Our full year 2021 net income grew 54% year-over-year to $873 million or $6.10 per share, and revenue grew 13% to $1.8 billion. For the year 2021, our return on average assets was 1.47% and the return on equity was 15.7%. 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 2022 results on Slide 6. We earned net income of $238 million or $1.66 per share, which was up by 9% quarter-over-quarter. The first quarter was an excellent start to the year, and highlights include record loans and deposits and expanding net interest margin and positive operating leverage. As of March 31, 2022, loans grew to a record $43.5 billion and deposits grew to a record $54.9 billion. In the first quarter, we generated total revenue of $495 million and earned pretax pre-provision income of $262 million, equivalent to a pretax pre-provision profitability ratio of 2.1%. Overall, we returned 1.6% on average assets and 16.5% on average equity. As you can see in the graph, East West capital ratios are strong. Strong earnings and capital levels have allowed us to consistently return capital to our shareholders since going public in 1999. This has been achieved while we have continued to maintain a conservative capital buffer. At the beginning of this year, we raised our quarterly common stock dividend by 21% to $0.40 per share. And that concludes our presentation. We will now respond to any question that was submitted to our moderator and Head of Investor Relations, Julianna Balicka. Julianna?

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

Okay. Thank you, Julianna. This concludes our annual meeting. Thank you, everyone, for attending and participating in our 2022 Annual Shareholder Meeting. We thank you for your support as shareholders and, we hope, as happy customers. Operator, let's conclude our presentation today.

Thank you. This concludes the meeting. You may now disconnect.