East West Bancorp, Inc.

Good morning, and welcome to the EastWest Bancorp's second quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal 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 your telephone keypad. To withdraw your question, please press star, then two. We ask that you limit yourself to one question and one follow-up. Please note that this event is being recorded. I would now like the conference over to Diana Trinh, Vice President and Investor Relations Officer. Please go ahead.

Thank you, Anthony. Good morning, and thank you, everyone, for joining us to review the financial results of East West Bancorp's second quarter 2023. Joining me 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. The slide deck referenced on this call 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 filings 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, and 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 solid results. revenue, pre-tax pre-provision, profitability, efficiency, and earnings all improved from a year ago. Second quarter 2023 net income of $312 million and diverted earnings per share of $2.20 were both up 21 percent from the prior year period. For the second quarter, both deposits and loans grew 7 percent link quarter annualized to $55.7 billion for deposits and $49.8 billion for loans. A hallmark for EastWest has been our consistent financial performance throughout various interest rate and market cycles while maintaining high capital ratios. Our profitability and return levels continue to be industry-leading. For the second quarter, we returned 1.85% on average assets and 21% on average tangible common equity. Net interest margin of 3.55%, although down from the first quarter, was a healthy margin in the current environment. And asset quality continued to be outstanding with net charge-offs six basis points annualized. Slide four presents a summary of our balance sheet. As of June 30, 2023, total loans reached a record $49.8 billion, an increase of $906 million, or 7% annualized from March 31st. Second quarter average loan growth was 6% annualized from first quarter. Growth in average residential mortgage and commercial real estate loans was partially offset by a decrease in average commercial and industrial loans. Total deposits were $55.7 billion as of June 30, 2023, an increase of $921 million, or 7% annualized from March 31st. Second quarter average deposit were up from the year-ago quarter but down 669 million or 5% annualized from the first quarter. During the second quarter, growth in average interest-bearing checking and time deposit were offset by decline in other deposit categories, which reflect customers seeking higher yields in a rising interest rate environment. Our deposit book is well diversified by deposit type, and 30% of total deposit were in non-interest-bearing demand deposit as of June 30, and our loan-to-deposit ratio was 90%. Turning to slide five, as shown on this slide, all of our capital ratios expanded quarter over quarter due to the strength of our earnings. East-West capital ratios continue to be amount the highest for regional banks. Also on this slide, a performer capital calculation as of June 30. The key takeaway is that our capital is very strong. The performer capital ratios adjusting for investment security marks and the allowance for loan losses not already included. show very solid capital ratios. Including these items, tangible common equity improved to 9.37% as of June 30. Quarter over quarter, our tangible book value per share increased 3%. East-West board of directors have declared third quarter 2023 dividends for the company's common stock. The quarterly common dividend of 48 cents per share will be payable on August 15, 2023 to stockholders of record on August 1, 2023. Moving on to a discussion about loan portfolio, beginning with slide six. As of June 30, 2023, C&I loans outstanding worth $15.7 billion, up by $28 million, or 1% annualized from the prior quarter end and up 2% year-over-year. As shown on this slide, our CNI portfolio continues to be well diversified by industry and sector. Where the China loans decrease, 11% linked quarter annualized to $2.1 billion as of June 30. Slide seven and eight show the details of our commercial real estate portfolio. which is well diversified by geography and property type. Further, we have a seasoned customer base and a low LTV CRE portfolio. The average loan-to-value for our commercial real estate portfolio is 51%. Also, we typically originate amortized loans with a final maturity of 7 to 10 years. As of June 30, Only 3% of the income-producing CLE portfolio matures in the second half of 2023, and another 7% only matures in 2024. Total commercial real estate loans were $19.9 billion as of June 30, 2023, up 10% annualized from March 31, and up 7.5% year-over-year. Credit quality for our loan portfolio remains very strong. Criticized CRE loans to total CRE loans decreased from 2.4% as of March 31st to 1.8% as of June 30th due to upgrades for loans with improved cash flows and loan payoff. We remain vigilant and proactive in managing our credit risk. Given the attention on CRE, we have provided more details about our office and retail commercial real estate loans on slide 9 and 10. As you can see on slide 9, our office commercial real estate portfolio is very granular with few large loans. We have only six loans that are greater than $30 million in size, which is only 11% of our office CRE loans. The weighted average loan-to-value of our office CLU portfolio is a low 52%, and the loan-to-value is consistently low across the different loan size segments. The portfolio is well diversified by geography with limited exposure to the downtowns or central business districts. In the office markets, we primarily lend in. On slide 10, you can see that our retail commercial real estate portfolio is also very granular with few large loans. We have only eight loans that are greater than $30 million in size, which is only 7% of our retail CRE loans. The rate of average loan-to-value of our retail CRE portfolio is a low 48%, and the loan-to-value is also consistently low across different loan size segments. The portfolio is well diversified by geography, and the footprint largely reflects 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 like to highlight that 81 percent of our HELOC commitments were in first lien positions as of June 30, 2023. Residential mortgage loans totaled $14.2 billion as of June 30, up 12 percent lien quota annualized, and up 13 percent year over year. Slide 12 brings out our deposit mix by segment and further by industry for commercial deposits. Our deposits total $55.7 billion as of June 30, 2023, an increase of 7% linked quarter annualized and 2% year-over-year. We have over 570,000 deposit accounts at EastWest as of June 30, and our average commercial deposit account size is approximately $366,000. Our retail branch-based consumer deposit totaled 32 percent of our deposits and have an average size of approximately $38,000. Our commercial deposits are well diversified by industry. We do not have significant depositors or sectors concentration. I will now turn the call over to Irene for a more detailed discussion about asset quality and income statement.