East West Bancorp, Inc.

Good day and welcome to the East West Bank Corp first quarter 2023 earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 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 Diana Trinh, Vice President and Investor Relations Officer. Please go ahead.

Thank you, Betsy. Good morning, and thank you, everyone, for joining us to review the financial results of EastWest Bancorp's first quarter 2023. Joining me today are Dominic Ng, Chairman and Chief Executive Officer, and Irene Oh, Chief Financial Officer. This call is being recorded and will be available for replay on our Investor Relations website. We will be referencing a slide deck during the call that is available on our Investor Relations site. Management may make projections or other forward-looking statements which may differ materially from the actual results due to a number of risks and uncertainties. And management may discuss non-GAAP financial measures. For a more detailed description of the risk factors and a reconciliation of GAAP to non-GAAP financial measures, please refer to our filing with the Securities and Exchange Commission, including the Form 8-K filed today. I will now turn the call over to Dominic.

Thank you, Diana. 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 2023 net income of $322 million and diluted earnings per share of $2.27. Excluding an impairment loss on the subordinate debt security of a failed bank, which was $7 million after tax, adjusted net income was $329.5 million in the first quarter, and adjusted earnings per share were $2.32. Adjusted earnings per share increased 40% year-over-year. Profitability is industry-leading. For the first quarter of 2023, our adjusted returns were 2.05% on average assets and 23% on average tangible common equity. First quarter pre-tax, pre-provision profitability was 2.9%. Slide four presents a summary of our balance sheet. As of March 31st, 2023, total loans reached a record 48.9 billion, an increase of 697 million or 1% from December 31st. First quarter average loan growth was likewise 1%. Average growth in residential mortgage and commercial real estate loans was partially offset by a modest decrease in average commercial and industrial loss. Total deposits were $54.7 billion as of March 31st, 2023, a decrease of $1.2 billion, or 2% from December 31st. First quarter average deposits were essentially unchanged from the fourth quarter. In the first quarter, Time deposits grew due to successful branch-based Lunar New Year CD campaigns. This was offset by declines in other deposit categories, which reflected customers seeking higher yields in a rising interest rate environment and the banking industry disruption in mid-March. Deposit book is well diversified by deposit type and 33% of total deposit were in non-interest-bearing demand accounts as of March 21st, 2023. Our loan-to-deposit ratio was 89% as of March 31st. Turning to slide five, as shown in the exhibits on this slide, all of our capital ratios expanded quarter over quarter. As of March 31st, we had a common equity tier one ratio of 13.06% up 38 basis point quarter over quarter, a total capital ratio of 14.5% up 50 basis point quarter over quarter, and a tangible common equity ratio of 8.74% up eight basis point quarter over quarter. where capital ratios are some of the highest among regional banks. Also on this slide are performer capital calculations as of March 21, 2023. The key takeaway is that our capital is very strong. In this slide, we provided performer capital ratios adjusting for available for sale and how to maturity security marks that are not already included. in the capital ratios and also for on and off balance sheet allowance not already included in the capital ratios. Over the quarter, our book value per share grew 5% and our tangible book value per share increased 6%. Whereas, Board of Directors has declared second quarter 2023 dividends for the company's common stock The quarterly common dividend of 48 cents will be payable on May 15, 2023 to stockholders of record on May 1, 2023. Moving on to a discussion of our loan portfolio, beginning with slide six. March 31, 2023, C&I loans outstanding were $15.6 billion, down only $69 million, or 0.4%. from prior quarter end and up 5% year over year. As shown on this slide, our CNI portfolio continues to be well diversified by industry and sector. Where the China loans increased 1% in the quarter to 2.2 billion as of March 31st, 2023. By seven and eight, show the details of our commercial real estate portfolio, which is well diversified by geography and property type, and consists of low loan-to-value loans. Total commercial real estate loans were $19.4 billion as of March 31, 2023, up 2 percent from December 31, and up 14 percent year-over-year. The quality of our The loan portfolio remains very strong. However, given the attention on CRE, we have added more details about our office and retail commercial real estate loans on slides 9 and slide 10. You can see on slide 9, our office commercial real estate portfolio is very granular with few large loans. We have only seven loans totaling $271 million that are greater than $30 million in size. The rated average loan-to-value of our office commercial real estate portfolio is a low 52 percent, and the loan-to-value is consistently low across loan size segments. The portfolio is well diversified by geography with limited exposure to downtown and central business district areas. In slide 10, you can see that our retail commercial real estate portfolio is also fairly granular with few large loans. We have only seven loans totaling $268 million, which are greater than $30 million in size. The rate of average loan-to-value of our retail commercial real estate portfolio is a low 48%. and the loan-to-value is also consistently low across loan size segment. The portfolio's well diversified geography and the footprint largely reflect our branch network. In slide 11, we provide details regarding our residential mortgage portfolio, which consists of single-family mortgages and home equity lines of credit. Our residential mortgage loans are primarily originated through our branch network. I would highlight that 82% of our HELOC commitments were in a first lean position as of March 31st, 2023. Residential mortgage loans total $13.8 billion as of March 31st, up 3% from December 31st, and up 19% year-over-year. We added a new slide to provide more information about our granular, diversified deposit base. Slide 12 illustrates our deposit mix by segment and also industry for commercial deposits. Deposits total 54.7 billion as of March 31st, 2023, a decrease of 2% quarter over quarter, and less than half a percent year over year. We have over 550,000 deposit accounts at EastWest. And our average commercial deposit account size is approximately 375,000. And our retail branch-based consumer deposit, which total 33% of our deposit, have an average size of approximately 40,000. Commercial deposits are well diversified by industry. Our largest commercial deposit industry segment at 7% is real estate property investment and management. These deposits are predominantly thousands of operating accounts for individual properties that our commercial real estate customers own. As of March 31st, out of our $52.5 billion in domestic deposits, insured or otherwise collateralized deposits were $29.6 billion, and the domestic uninsured deposit ratio improved to 44 percent, down from 50 percent as of December 31, 2022. Since the industry disruption in mid-March, our associates have worked with customers to expand their FDIC insurance coverage, primarily through the utilization of fully insured suite programs And as of yesterday, April 19, 2023, the domestic uninsured deposit ratios improved to 41 percent. We'll now turn the call over to Irene for a more detailed discussion of our securities portfolios, liquidity management, asset quality, and income statement. Irene.