East West Bancorp, Inc.

Good morning, and welcome to the EastWest Bank Corp. First Quarter 2021 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Juliana Baliska, Director of Strategy and Corporate Development. Please go ahead.

Thank you, Betsy. Good morning, and thank you, everyone, for joining us to review the financial results of EastWest Bancorp for the first quarter of 2021. With me on this conference call are Dominic Ng, our Chief Executive Officer, and Irene Oh, our Chief Financial Officer. We would like to caution you that during the course of the call, management may make projections or other forward-looking statements regarding events or future financial performance of the company within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may differ materially from the actual results due to a number of risks and uncertainties. For a more detailed description of risk factors that could affect the company's operating results, please refer to our filings with the Securities and Exchange Commission. including our annual report on Form 10-K for the year ended December 31, 2020. In addition, some of the numbers referenced on this call pertain to adjusted numbers. Please refer to our first quarter earnings release for the recent release of GAAP to fund GAAP financial measures. During the course of this call, we will be referencing the project that's available as part of the webcast and on the Investor Relations site. As a reminder, today's call is being recorded and will also be available in replay format on our Investor Relations website. I will now turn the call over to our Chairman and CEO, Dominic Ng.

Thank you, Juliana. Good morning. Thank you, everyone, for joining us for our earnings call. I will begin the review of our financial results with slide three of our presentation. This morning, we reported first quarter 2021 net income of $205 million, or $1.44 per share, which was up by 25% quarter over quarter. The first quarter was a strong start to the year. Highlights include strong loan and deposit growth, robust revenue growth and decreasing operating expenses, all driving pre-tax, pre-provision growth of 4% or 17% annualized. In the first quarter, we earned $262 million of pre-tax, pre-provision income on total revenue of $427 million. Furthermore, due to an improved macroeconomic outlook and stable asset quality, we did not record any provision for credit losses in the first quarter. We returned 1.5% on average assets, 15.6% on average equity, and 17.2% on average tangible equity for the quarter. Our attractive returns reflect the strong financial performance in the first quarter of 2021. Slide 4 presents a summary of our balance sheet. As of March 31st, 2021, total loans reached a record of $39.6 billion, growing by $1.2 billion, or 13% annualized, from December 31st, 2020. Paycheck protection program loans totaled $2.1 billion as of March 31st, 2021. During the first quarter, the company funded $5,075 million PPP loans, totaling $828 million. Since the PPP program launched in 2020, East West Bank funded a total of 12,517 loans, totaling $2.6 billion through March 31, 2021. Excluding PPP, total loans grew by 8%, linked quarter annualized in the first quarter. at the top of our previous guidance range for the year. Accordingly, based on current pipelines and economic trends, we are updating our loan growth outlook for the full year to 8%, compared with a range of 6% to 8% previously. First quarter average loan of $38.7 billion grew by 11% linked quarter annualized, or 9% annualized, excluding PPP. Growth was broad-based across all our major loan portfolios, with the strongest growth from residential mortgage. Deposit growth for the quarter was exceptional. As of March 31, 2021, total deposit reached a record of $49.5 billion, growing by $4.7 billion, or 42% annualized from December 31. Non-interest-bearing deposit grew 65% annualized, to a record $18.9 billion as of March 31, 2021, making up 38% of total deposit as of March 31, up from 36% a quarter ago and up from 31% a year ago. We are pleased with the deposit growth and related growth in deposit account fees. which are up 47% year over year to 15.4 million. We have continually invested in our digital banking platform and treasury management product capabilities, allowing us to win large customers with more complex cash management needs. At the same time, we have developed deposit products tailored to meet the needs of our small business customers. a segment that has been growing nicely for some time now. Our ability to compete for and win both large and small deposit customers laid a good foundation for future growth as the economy recovers and business activity increases. Turning to slide five, you can see our strong capital ratio. As of March 31, 2021, we had a common equity tier 1 ratio of 12.7% and a total capital ratio of 14.3%, which provides us with a meaningful capacity to support all of our customers in their growth and expansion plans as the economy reopens and rebounds from COVID-related restrictions. East-West Board of Directors has declared second quarter 2021 dividends for the company's common stock. The common stock Cash dividend of 33 cents is payable on May 17, 2021 to stockholders of record on May 3, 2021. Moving on to a discussion about loan portfolio, beginning with slide six. CNI loans outstanding excluding PPP were 12 billion as of March 31, 2021, declining 55 million or 2% annualized from December 31, 2020. Total CNI commitments were $17.2 billion as of March 31, 2021, a quarter-over-quarter increase of $137 million, or 3% analyzed. The decline in outstanding balance reflects pay down in January, but on an average basis, CNI loans, excluding PPP, grew by 5% analyzed in the first quarter. We are comfortable that our CNI loan growth will accelerate through the year based on our year-to-date growth in commitments, current pipelines, and a strengthening economy. As you know, it takes time for commitments to materialize into balanced outstanding. Slide 7 and 8 show the essential details of our commercial real estate portfolio. Total commercial real estate loans were $15.1 billion as of March 31st, 2021. This portfolio grew by $280.5 million, or 8%, annualized from December 31st, 2020. On an average basis, total CLE loans grew by 6% annualized in the first quarter. This run rate of growth is stronger than we had originally expected because of higher origination volumes, from our poor traditional CLE lending customers, as well as lower than anticipated payoffs. We expect the CLE payoffs to take up in the second quarter, but for the full year, we are comfortable that our total CLE loan growth will be supported by continued good demand from our customers as the economy reopens and rebalances. In slides 9 and 10, we provide details regarding our single-family residential loans and home equity lines. During the first quarter, we originated 1.1 billion of residential mortgage loans, an increase of 5% quarter-over-quarter and 45% year-over-year. This was a record quarter of residential mortgage originations for East-West, and we are seeing the momentum continue into April. Single-family residential loans were $8.5 billion as of March 31, 2001. This portfolio grew by $338 million, or 17% annualized, from December 31. On an average basis, single-family residential loans grew by 16% annualized in the first quarter. Home equity lines outstanding were $1.7 billion as of March 31, up $147 million, or 37% annualized from December 31st. Including unfunded commitments, total commitments on the Home Equity Alliance were $3.6 billion as of March 31st, up by 32% main quarter annualized. The utilization rate remained steady at 48%. On an average basis, Home Equity Alliance grew by 28% annualized in the first quarter. I will now turn the call over to Irene for a more detailed discussion on asset quality and income statement.