Exhibit 99.1
East West Bancorp, Inc. 135 N. Los Robles Ave., 7th Fl. Pasadena, CA 91101 Tel. 626.768.6800 Fax 626.817.8838 | ![]() |
![](https://capedge.com/proxy/8-K/0001069157-10-000025/newsreleasegraphic4.jpg)
FOR FURTHER INFORMATION AT THE COMPANY:
Irene Oh
Chief Financial Officer
(626) 768-6360
EAST WEST BANCORP REPORTS THIRD QUARTER 2010 NET INCOME OF $47.0 MILLION OR $0.27 PER SHARE
Pasadena, CA – October 25, 2010 – East West Bancorp, Inc. (Nasdaq: EWBC), parent company of East West Bank, one of the nation’s premier regional banks, today reported financial results for the third quarter of 2010. For the third quarter of 2010, net income was $47.0 million and net income available to common stockholders was $0.27 per diluted share.
“We are pleased to report strong third quarter earnings of $47.0 million, an increase of 29% from the second quarter of 2010. East West has consistently improved core profitability each and every quarter in 2010,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. “During the third quarter we grew non-covered commercial and trade finance loan balances by $167.3 million or 11% to $1.7 billion. We grew core deposits by $290.3 million or 4% to a record $8.5 billion and total deposits to a record high of $15.3 billion.”
“For East West, credit costs have now declined for the past four consecutive quarters. Quarter over quarter, net charge-offs decreased $10.1 million or 18%, provision for loan losses decreased $16.6 million or 30% and nonperforming assets remained under 1% of total assets.”
Ng concluded, “Last week we seamlessly completed the core systems integration of Washington First International Bank. With the integrations of both United Commercial Bank and Washington First International Bank behind us, East West is 100% focused on profitably growing our core business and serving our customers.”
2010 Quarterly Results Summary
For the three months ended, | % Change | |||||||||||||||
Dollars in millions, except per share | September 30, 2010 | June 30, 2010 | March 31, 2010 | Q3 vs. Q2 2010 | ||||||||||||
Net income (loss) | $ | 47.0 | $ | 36.3 | $ | 24.9 | 29 | % | ||||||||
Net income (loss) available to common shareholders | 40.2 | 30.2 | 18.8 | 33 | % | |||||||||||
Earnings per share (diluted) | 0.27 | 0.21 | 0.13 | 29 | % | |||||||||||
Return on average assets | 0.93 | % | 0.73 | % | 0.49 | % | 27 | % | ||||||||
Return on average common equity | 8.11 | % | 6.26 | % | 4.71 | % | 30 | % | ||||||||
Tier 1 risk-based capital ratio | 17.9 | % | 18.9 | % | 18.9 | % | -5 | % | ||||||||
Total risk-based capital ratio | 19.7 | % | 20.8 | % | 20.9 | % | -5 | % |
East West has increased profitability each quarter of 2010, growing net income 46% in the second quarter to $36.3 million and 29% in the third quarter to $47.0 million. Quarter over quarter, diluted earnings per share grew $0.08 or 62% in the second quarter and $0.06 or 29% in the third quarter.
Third Quarter 2010 Highlights
· | Third Quarter Earnings – For the third quarter 2010, net income was $47.0 million, an increase of $10.6 million over net income of $36.3 million reported in the second quarter of 2010 and an increase of $115.5 million over a net loss of $68.5 million reported in the third quarter of 2009. |
· | Strong Net Interest Margin –The core net interest margin, excluding the net impact to interest income of $5.5 million resulting from the disposition of covered loans, totaled 3.98% for the quarter. The third quarter core net interest margin of 3.98% reflected no change from the second quarter and an increase from 3.20% in the third quarter of 2009. (See reconciliation of the GAAP financial measure to this non-GAAP financial measure in the tables attached.) |
· | Strong C&I Loan Growth – Quarter to date, non-covered commercial and trade finance loans grew $167.3 million or 11% to $1.7 billion. |
· | Significant Deposit Growth – Core deposits grew to a record $8.5 billion as of September 30, 2010, an increase of $290.3 million or 4% from June 30, 2010. Additionally, time deposits grew $89.0 million or 1% resulting in total deposits of a record $15.3 billion as of September 30, 2010. |
· | Net Charge-offs Down 18% from Q2 2010, Down 70% from Q3 2009 – Net charge-offs declined to $45.1 million, a decrease of $10.1 million or 18% from the prior quarter and a decrease of $106.2 million or 70% from the third quarter of 2009. |
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· | Nonperforming Assets Remains Below 1% – Nonperforming assets remain low at $196.3 million, or 0.96% of total assets. This is the fourth consecutive quarter East West has reported a nonperforming assets to total assets ratio under 1.00%. |
· | Reduction in Noninterest Expense – Total noninterest expense excluding expenses to be reimbursed by the FDIC, totaled $92.1 million in the third quarter, a decrease of $10.2 million or 10% as compared to the second quarter of 2010. This figure represents an improvement from our noninterest expense guidance of $105 million. (See reconciliation of the GAAP financial measure to this non-GAAP financial measure in the tables attached.) |
· | Strong Capital Levels – As of September 30, 2010, East West’s Tier 1 risk-based capital and total risk-based capital ratios were 17.9% and 19.7%, respectively, significantly higher than the well-capitalized requirements of 6% and 10%, respectively. |
Management Guidance
The Company is providing guidance for the fourth quarter and the full year of 2010. Management currently estimates that fully diluted earnings per share for the fourth quarter of 2010 will range from $0.28 to $0.31 per diluted share resulting in earnings per share for the full year 2010 of $0.89 to $0.92. This EPS guidance is based on the following assumptions:
· | Stable balance sheet with an increase in average earning assets to $17.9 billion, |
· | A stable interest rate environment and a net interest margin between 4.00% and 4.10%, |
· | Provision for loan losses of approximately $25 million to $30 million for the quarter, |
· | Total noninterest expense of approximately $95 million, net of amounts to be reimbursed by the FDIC, |
· | Effective tax rate of approximately 36%. |
Balance Sheet Summary
At September 30, 2010, total assets were $20.4 billion as compared to $20.0 billion at June 30, 2010. During the third quarter, total loans decreased $157.8 million or 1% to $13.6 billion as a result of a decrease in covered loan balances of $300.0 million, offset by an increase in non-covered loans of $142.2 million. Investment securities increased $830.3 million or 40% during the quarter to $2.9 billion as a result of purchases of $1.7 billion of short-term corporate securities and agency securities, offset by sales of $177.4 million, as well as normal maturities, calls and paydowns. Deposits increased $379.3 million or 3% to $15.3 billion. During the quarter, we continued to deploy cash and short-term investments into shorter duration investment securities.
Gross loans at September 30, 2010 totaled $13.6 billion compared to $13.7 billion at June 30, 2010. During the quarter non-covered loan balances increased $142.2 million or 2%, to $8.6 billion at September 30, 2010. This increase in non-covered loans was largely driven by a $167.3 million increase in commercial and trade finance loans and a $111.4 million increase in consumer loans. The increases in the commercial and trade finance and consumer portfolios were partially offset by reduction in the commercial real estate,
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construction and land portfolios. The net increase in non-covered loans was offset by decreases in the covered loan portfolio. Covered loans totaled $5.0 billion at September 30, 2010, as compared to $5.3 billion at June 30, 2010. The decrease in the covered loan portfolio was due to expected amortization paydowns, payoff and charge-off activity.
Deposit balances increased to a record $15.3 billion at September 30, 2010, compared to $14.9 billion at June 30, 2010. Total core deposits increased to a record $8.5 billion as of September 30, 2010, or an increase of $290.3 million or 4% from June 30, 2010. The increase in core deposits was largely driven by a $175.7 million or 7% increase in noninterest-bearing demand deposits which grew to a record $2.6 billion as of September 30, 2010.
Third Quarter 2010 Operating Results
Net Interest Income
Although the low interest rate environment continues to be a challenge for the industry, our net interest income has remained solid. Throughout 2010, East West has focused on maintaining a strong loan yield, improving the yield on other earning assets and growing low-cost core deposits. East West reduced the cost of deposits to 0.75% for the third quarter of 2010, down from 0.80% in the second quarter of 2010 and 1.24% in the third quarter of 2009. Further, through strategic actions taken earlier in 2010 to lower borrowing costs, East West has reduced the costs of funds to 1.11% for the third quarter of 2010, as compared to 1.17% for the second quarter of 2010 and 1.88% in the third quarter of 2009.
The core net interest margin, excluding the net impact to interest income of $5.5 million resulting from the disposition of covered loans, totaled 3.98% for the quarter, reflecting no change from the second quarter and an increase compared to 3.20% in the third quarter of 2009. The net impact of $5.5 million relates to dispositions of covered loans including early payoffs as well as charge-offs. (See reconciliation of the GAAP financial measure to this non-GAAP financial measure in the tables attached.) Management believes that this adjusted net interest margin provides more clarity on the core net interest income and net interest margin, comparability to prior periods and the ongoing performance of the Company.
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Noninterest Income
Noninterest income for the third quarter totaled $29.3 million, compared to noninterest income of $35.7 million in the second quarter of 2010 and a loss of $11.9 million in the third quarter of 2009. Noninterest income for the second quarter of 2010 included a purchase accounting gain of $19.5 million from the acquisition of Washington First International Bank (WFIB). The loss in the third quarter of 2009 was primarily due to impairment losses on investment securities.
Included within noninterest income for the third quarter is an increase in the FDIC indemnification asset and receivable of $5.8 million. This amount is primarily comprised of an increase of $7.8 million due to expenses reimbursable by the FDIC offset by a decrease of $5.5 million due to the disposition of covered loans. Of the $7.8 million of expenses reimbursable by the FDIC, $4.6 million is related to net writedowns and expenses on other real estate owned, and $3.2 million is related to legal and other loan related expenses. Additionally, we recorded a net increase of $3.5 million related to discount accretion on the FDIC indemnification asset, settlement adjustments and recoveries.
During the third quarter we recorded $4.2 million in gains on sales of loans, primarily from the sale of student loans. We also sold $177.4 million in investment securities at a gain of $2.8 million and recorded impairment losses on investment securities totaling $888 thousand related to pooled trust preferred securities.
As compared to the third quarter of 2009, branch fees increased by $3.3 million or 70%, letters of credit fees and commissions increased $904 thousand or 46%, and ancillary loan fees increased $1.1 million or 93%, primarily due to the acquisition of United Commercial Bank (UCB). In total, fees and other operating income increased $7.2 million or 71% for the third quarter of 2010 as compared to third quarter of 2009. A summary of these fees and other operating income items is detailed below:
Quarter Ended | Quarter Ended | % Change | ||||||||||
September 30, 2010 | September 30, 2009 | (Yr/Yr) | ||||||||||
Noninterest income: | ||||||||||||
Branch fees | $ | 7,976 | $ | 4,679 | 70 | % | ||||||
Letters of credit fees and commissions | 2,888 | 1,984 | 46 | % | ||||||||
Ancillary loan fees | 2,367 | 1,227 | 93 | % | ||||||||
Other operating income | 4,178 | 2,294 | 82 | % | ||||||||
Total fees & other operating income | $ | 17,409 | $ | 10,184 | 71 | % |
Noninterest Expense
Noninterest expense totaled $99.9 million for the third quarter of 2010 compared to $125.3 million for the second quarter of 2010. The primary reason for the decrease in noninterest expense was due to a decrease in other real estate owned expenses to $5.7 million in the third quarter, compared to $21.0 million in the second quarter. In the second quarter, other real estate owned expenses were largely related to writedowns on covered assets which were foreclosed on. Additionally, in the third quarter, we recorded gains on sale of other real estate owned of $3.4 million, largely related to one asset, which reduced the net other real estate owned expenses to $5.7 million. Further, we recorded prepayment penalties of $3.9 million on FHLB advances in the second quarte r which were included in other operating expenses. There were no FHLB advance prepayments in the third quarter.
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A summary of the noninterest expenses for the third quarter, compared to the second quarter is detailed below:
Quarter Ended | Quarter Ended | |||||||
($ in thousands) | September 30, 2010 | June 30, 2010 | ||||||
Total noninterest expense: | $ | 99,945 | $ | 125,318 | ||||
Amounts to be reimbursed on covered assets (80% of actual expense amount) | 7,834 | 19,103 | ||||||
Prepayment penalty for FHLB advances | - | 3,900 | ||||||
Noninterest expense excluding reimbursement amounts and prepayment penalty for FHLB advances | $ | 92,111 | $ | 102,315 |
Under the loss share agreements with the FDIC, 80% of eligible expenses on covered assets are reimbursable from the FDIC. In the third quarter, we incurred $9.8 million in expenses on covered loans and other real estate owned, 80% or $7.8 million of which we expect to be reimbursed by the FDIC and which is recorded as an increase to the FDIC receivable as noninterest income.
Management anticipates that in the fourth quarter of 2010, noninterest expense will be approximately $95 million, net of amounts reimbursable from the FDIC.
The effective tax rate for the third quarter was 36.1% compared to 38.1% in the prior quarter and 43.5% in the prior year period. The effective tax rate is reduced from the statutory tax rate primarily due to the utilization of tax credits related to affordable housing investments.
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Credit Management
Credit metrics continue to improve. For the fourth consecutive quarter, both net charge-offs and the provision for loan losses have declined. The provision for loan losses was $38.6 million for the third quarter of 2010, a decrease of $16.6 million or 30% compared to the previous quarter and a decrease of $120.6 million or 76% from the third quarter of 2009. Total net charge-offs decreased to $45.1 million for the third quarter, a decrease of $10.1 million or 18% from the previous quarter and a decrease of $106.2 million or 70% from the third quarter of 2009. Management expects that the provision for loan losses will continue to decrease and range from $25 million to $30 million for the fourth quarter of 2010.
Nonperforming assets, excluding covered assets have remained low at $196.3 million or 0.96% of total assets at September 30, 2010. This compares to 1.84% of total assets at September 30, 2009. Nonperforming assets, excluding covered assets, as of September 30, 2010 included nonaccrual loans totaling $179.4 million and REO assets totaling $16.9 million.
Credit quality has remained stable in our commercial real estate portfolio. Net charge-offs on commercial real estate loans were low at 1.36%, annualized, of total average commercial real estate loans for the third quarter. Nonperforming commercial real estate loans increased by $41.2 million, but still remain low at 1.74% of total non-covered commercial real estate loans. Land and construction loan balances have declined even further during the quarter to less than 3% of total assets at September 30, 2010.
Notwithstanding the improvements noted above, we have maintained a strong allowance for non-covered loan losses at $240.3 million or 2.79% of non-covered loans receivable at September 30, 2010, to cover inherent losses in the portfolio. This compares to an allowance for loan losses of $249.5 million or 2.94% at June 30, 2010 and $230.7 million or 2.74% of outstanding loans at September 30, 2009.
As discussed above, all loans acquired from UCB and WFIB were recorded at estimated fair value as of the acquisition dates. East West entered into loss sharing agreements with the FDIC that cover future losses incurred on nearly all the UCB and WFIB legacy loans.
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Capital Strength
Capital Strength | ||||||||||||
(Dollars in millions) | ||||||||||||
Well Capitalized Regulatory Requirement | Total Excess Above Well Capitalized Requirement | |||||||||||
September 30, 2010 | ||||||||||||
Tier 1 leverage capital ratio | 10.8 | % | 5.00 | % | $ | 1,131 | ||||||
Tier 1 risk-based capital ratio | 17.9 | % | 6.00 | % | 1,407 | |||||||
Total risk-based capital ratio | 19.7 | % | 10.00 | % | 1,145 | |||||||
Tangible common equity to tangible asset | 7.96 | % | N/A | N/A | ||||||||
Tangible common equity to risk weighted assets ratio | 13.5 | % | 4.00 | %* | 1,121 | |||||||
As there is no stated regulatory guideline for this ratio, the SCAP guideline of 4.00% tangible common equity has been used. |
East West remains committed to maintaining strong capital levels that exceed regulatory requirements. As of the end of the third quarter of 2010, our Tier 1 leverage capital ratio totaled 10.8%, Tier 1 risk-based capital ratio totaled 17.9% and the total risk-based capital ratio totaled 19.7%. East West exceeds well capitalized requirements for all regulatory guidelines by over $1.0 billion.
Dividend Payout
East West’s Board of Directors has declared fourth quarter dividends on the common stock and Series A Preferred Stock. The common stock cash dividend of $0.01 is payable on or about November 24, 2010 to shareholders of record on November 10, 2010. The dividend on the Series A Preferred Stock of $20.00 per share is payable on November 1, 2010 to shareholders of record on October 15, 2010.
About East West
East West Bancorp is a publicly owned company with $20.4 billion in assets and is traded on the Nasdaq Global Select Market under the symbol “EWBC”. The Company’s wholly owned subsidiary, East West Bank, is one of the largest independent commercial banks headquartered in California with over 130 locations worldwide, including the U.S. markets of California, New York, Georgia, Massachusetts, Texas and Washington. In Greater China, East West’s presence includes a full service branch in Hong Kong and representative offices in Beijing, Shanghai, Shenzhen and Taipei. Through a wholly-owned subsidiary bank, East West’s presence in Greater China also includes full service branches in Shanghai and Shantou and representative offices in Beijing and Guangzhou. For more information on East West Bancorp, visit the C ompany's website at www.eastwestbank.com.
Forward-Looking Statements
This release may contain forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and accordingly, the cautionary statements contained in East West Bancorp’s Annual Report on Form 10-K for the year ended Dec. 31, 2009 (See Item I -- Business, and Item 7 -- Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations), and other filings with the Securities and Exchange Commission are
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incorporated herein by reference. These factors include, but are not limited to: the effect of interest rate and currency exchange fluctuations; competition in the financial services market for both deposits and loans; EWBC’s ability to efficiently incorporate acquisitions into its operations; the ability of borrowers to perform as required under the terms of their loans; effect of additional provisions for loan losses; effect of any goodwill impairment, the ability of EWBC and its subsidiaries to increase its customer base; the effect of regulatory and legislative action, including California tax legislation and an announcement by the state’s Franchise Tax Board regarding the taxation of Registered Investment Companies; and regional and general economic conditions. Actual results and perfor mance in future periods may be materially different from any future results or performance suggested by the forward-looking statements in this release. Such forward-looking statements speak only as of the date of this release. East West expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in the Bank’s expectations of results or any change in event.
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CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||
(In thousands, except per share amounts) | ||||||||||||
(unaudited) | ||||||||||||
September 30, 2010 | June 30, 2010 | December 31, 2009 | ||||||||||
Assets | ||||||||||||
Cash and cash equivalents | $ | 934,694 | $ | 1,185,944 | $ | 835,141 | ||||||
Short-term investments | 381,799 | 447,168 | 510,788 | |||||||||
Securities purchased under resale agreements | 350,000 | 230,000 | 227,444 | |||||||||
Investment securities | 2,907,349 | 2,077,011 | 2,564,081 | |||||||||
Loans receivable, excluding covered loans (net of allowance for loan | ||||||||||||
losses of $240,286, $249,462 and $238,833) | 8,323,684 | 8,177,966 | 8,246,685 | |||||||||
Covered loans, net | 4,975,502 | 5,275,492 | 5,598,155 | |||||||||
Total loans receivable, net | 13,299,186 | 13,453,458 | 13,844,840 | |||||||||
Federal Home Loan Bank and Federal Reserve stock | 216,738 | 223,395 | 217,002 | |||||||||
FDIC indemnification asset | 874,759 | 947,011 | 1,091,814 | |||||||||
Other real estate owned, net | 16,936 | 16,562 | 13,832 | |||||||||
Other real estate owned covered, net | 137,353 | 113,999 | 44,273 | |||||||||
Premiums on deposits acquired, net | 82,755 | 86,106 | 89,735 | |||||||||
Goodwill | 337,438 | 337,438 | 337,438 | |||||||||
Other assets | 878,239 | 849,229 | 782,824 | |||||||||
Total assets | $ | 20,417,246 | $ | 19,967,321 | $ | 20,559,212 | ||||||
Liabilities and Stockholders' Equity | ||||||||||||
Deposits | $ | 15,297,971 | $ | 14,918,694 | $ | 14,987,613 | ||||||
Federal Home Loan Bank advances | 1,018,074 | 1,022,011 | 1,805,387 | |||||||||
Securities sold under repurchase agreements | 1,045,664 | 1,051,192 | 1,026,870 | |||||||||
Subordinated debt and trust preferred securities | 235,570 | 235,570 | 235,570 | |||||||||
Other borrowings | 28,328 | 35,504 | 67,040 | |||||||||
Accrued expenses and other liabilities | 406,879 | 365,386 | 152,073 | |||||||||
Total liabilities | 18,032,486 | 17,628,357 | 18,274,553 | |||||||||
Stockholders' equity | 2,384,760 | 2,338,964 | 2,284,659 | |||||||||
Total liabilities and stockholders' equity | $ | 20,417,246 | $ | 19,967,321 | $ | 20,559,212 | ||||||
Book value per common share | $ | 13.75 | $ | 13.31 | $ | 14.47 | ||||||
Number of common shares at period end | 146,508 | 147,939 | 109,963 | |||||||||
Ending Balances | ||||||||||||
September 30, 2010 | June 30, 2010 | December 31, 2009 | ||||||||||
Loans receivable | ||||||||||||
Real estate - single family | $ | 1,059,913 | $ | 1,033,155 | $ | 930,840 | ||||||
Real estate - multifamily | 971,155 | 985,194 | 1,025,849 | |||||||||
Real estate - commercial | 3,425,852 | 3,500,273 | 3,606,179 | |||||||||
Real estate - land | 259,979 | 297,364 | 370,394 | |||||||||
Real estate - construction | 317,165 | 354,547 | 458,292 | |||||||||
Commercial | 1,696,173 | 1,528,863 | 1,512,709 | |||||||||
Consumer | 886,124 | 774,746 | 624,784 | |||||||||
Total loans receivable, excluding covered loans | 8,616,361 | 8,474,142 | 8,529,047 | |||||||||
Covered loans, net | 4,975,502 | 5,275,492 | 5,598,155 | |||||||||
Total loans receivable | 13,591,863 | 13,749,634 | 14,127,202 | |||||||||
Unearned fees, premiums and discounts | (52,391 | ) | (46,714 | ) | (43,529 | ) | ||||||
Allowance for loan losses on non-covered loans | (240,286 | ) | (249,462 | ) | (238,833 | ) | ||||||
Net loans receivable | $ | 13,299,186 | $ | 13,453,458 | $ | 13,844,840 | ||||||
Deposits | ||||||||||||
Noninterest-bearing demand | $ | 2,571,750 | $ | 2,396,087 | $ | 2,291,259 | ||||||
Interest-bearing checking | 762,633 | 685,572 | 667,177 | |||||||||
Money market | 4,190,448 | 4,162,129 | 3,138,866 | |||||||||
Savings | 955,278 | 946,043 | 991,520 | |||||||||
Total core deposits | 8,480,109 | 8,189,831 | 7,088,822 | |||||||||
Time deposits | 6,817,862 | 6,728,863 | 7,898,791 | |||||||||
Total deposits | $ | 15,297,971 | $ | 14,918,694 | $ | 14,987,613 |
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
(In thousands, except per share amounts) | ||||||||||||
(unaudited) | ||||||||||||
Quarter Ended | ||||||||||||
September 30, 2010 | June 30, 2010 | September 30, 2009 | ||||||||||
Interest and dividend income | $ | 231,400 | $ | 253,533 | $ | 147,924 | ||||||
Interest expense | (48,595 | ) | (49,910 | ) | (52,044 | ) | ||||||
Net interest income before provision for loan losses | 182,805 | 203,623 | 95,880 | |||||||||
Provision for loan losses | (38,648 | ) | (55,256 | ) | (159,244 | ) | ||||||
Net interest income (loss) after provision for loan losses | 144,157 | 148,367 | (63,364 | ) | ||||||||
Noninterest income (loss) | 29,315 | 35,685 | (11,880 | ) | ||||||||
Noninterest expense | (99,945 | ) | (125,318 | ) | (46,064 | ) | ||||||
Income (loss) before benefit for income taxes | 73,527 | 58,734 | (121,308 | ) | ||||||||
Provision (benefit) for income taxes | 26,576 | 22,386 | (52,777 | ) | ||||||||
Net income (loss) | 46,951 | 36,348 | (68,531 | ) | ||||||||
Preferred stock dividend, inducement, and amortization of preferred stock discount | (6,732 | ) | (6,147 | ) | (10,620 | ) | ||||||
Net income (loss) available to common stockholders | $ | 40,219 | $ | 30,201 | $ | (79,151 | ) | |||||
Net income (loss) per share, basic | $ | 0.27 | $ | 0.21 | $ | (0.91 | ) | |||||
Net income (loss) per share, diluted | $ | 0.27 | $ | 0.21 | $ | (0.91 | ) | |||||
Shares used to compute per share net income (loss): | ||||||||||||
- Basic | 146,454 | 146,372 | 86,538 | |||||||||
- Diluted | 147,113 | 147,131 | 86,538 | |||||||||
Quarter Ended | ||||||||||||
September 30, 2010 | June 30, 2010 | September 30, 2009 | ||||||||||
Noninterest income (loss): | ||||||||||||
Branch fees | $ | 7,976 | $ | 8,219 | $ | 4,679 | ||||||
Increase (decrease) in FDIC indemnification asset and FDIC receivable | 5,826 | (9,424 | ) | - | ||||||||
Net gain on sale of loans | 4,177 | 8,073 | 8 | |||||||||
Letters of credit fees and commissions | 2,888 | 2,865 | 1,984 | |||||||||
Net gain on sale of investment securities | 2,791 | 5,847 | 2,177 | |||||||||
Impairment loss on investment securities | (888 | ) | (4,642 | ) | (24,249 | ) | ||||||
Ancillary loan fees | 2,367 | 2,369 | 1,227 | |||||||||
Gain on acquisition | - | 19,476 | - | |||||||||
Other operating income | 4,178 | 2,902 | 2,294 | |||||||||
Total noninterest income (loss) | $ | 29,315 | $ | 35,685 | $ | (11,880 | ) | |||||
Noninterest expense: | ||||||||||||
Compensation and employee benefits | $ | 38,693 | $ | 41,579 | $ | 15,875 | ||||||
Occupancy and equipment expense | 13,963 | 13,115 | 6,262 | |||||||||
Loan related expenses | 6,316 | 5,254 | 2,197 | |||||||||
Other real estate owned expense | 5,694 | 20,983 | 767 | |||||||||
Deposit insurance premiums and regulatory assessments | 5,676 | 4,528 | 6,057 | |||||||||
Legal expense | 5,301 | 6,183 | 1,323 | |||||||||
Amortization of premiums on deposits acquired | 3,352 | 3,310 | 1,069 | |||||||||
Data processing | 2,646 | 3,046 | 1,079 | |||||||||
Consulting expense | 1,612 | 1,919 | 759 | |||||||||
Amortization of investments in affordable housing partnerships | 1,442 | 2,638 | 1,709 | |||||||||
Other operating expense | 15,250 | 22,763 | 8,967 | |||||||||
Total noninterest expense | $ | 99,945 | $ | 125,318 | $ | 46,064 |
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||
(In thousands, except per share amounts) | ||||||||
(unaudited) | ||||||||
Year To Date | ||||||||
September 30, 2010 | September 30, 2009 | |||||||
Interest and dividend income | $ | 803,636 | $ | 439,180 | ||||
Interest expense | (155,484 | ) | (175,359 | ) | ||||
Net interest income before provision for loan losses | 648,152 | 263,821 | ||||||
Provision for loan losses | �� | (170,325 | ) | (388,666 | ) | |||
Net interest income (loss) after provision for loan losses | 477,827 | (124,845 | ) | |||||
Noninterest income (loss) | 56,549 | (24,285 | ) | |||||
Noninterest expense | (364,173 | ) | (155,382 | ) | ||||
Income (loss) before benefit for income taxes | 170,203 | (304,512 | ) | |||||
Provision (benefit) for income taxes | 61,988 | (126,790 | ) | |||||
Net income (loss) before extraordinary item | 108,215 | (177,722 | ) | |||||
Extraordinary item, net of tax | - | (5,366 | ) | |||||
Net income (loss) after extraordinary item | $ | 108,215 | $ | (183,088 | ) | |||
Preferred stock dividend, inducement, and amortization of preferred stock discount | (19,017 | ) | (42,986 | ) | ||||
Net income (loss) available to common stockholders | $ | 89,198 | $ | (226,074 | ) | |||
Net income (loss) per share, basic | $ | 0.66 | $ | (3.19 | ) | |||
Net income (loss) per share, diluted | $ | 0.61 | $ | (3.19 | ) | |||
Shares used to compute per share net income (loss): | ||||||||
- Basic | 134,396 | 70,967 | ||||||
- Diluted | 146,993 | 70,967 | ||||||
Year To Date | ||||||||
September 30, 2010 | September 30, 2009 | |||||||
Noninterest income (loss): | ||||||||
Decrease in FDIC indemnification asset and FDIC receivable | $ | (47,170 | ) | $ | - | |||
Impairment loss on investment securities | (10,329 | ) | (61,896 | ) | ||||
Net gain on sale of investment securities | 24,749 | 7,378 | ||||||
Gain on acquisition | 27,571 | - | ||||||
Branch fees | 24,953 | 14,463 | ||||||
Net gain on sale of loans | 12,250 | 19 | ||||||
Letters of credit fees and commissions | 8,493 | 5,768 | ||||||
Ancillary loan fees | 6,425 | 4,812 | ||||||
Other operating income | 9,607 | 5,171 | ||||||
Total noninterest income (loss) | $ | 56,549 | $ | (24,285 | ) | |||
Noninterest expense: | ||||||||
Compensation and employee benefits | $ | 131,051 | $ | 49,492 | ||||
Other real estate owned expense | 44,689 | 16,480 | ||||||
Occupancy and equipment expense | 39,022 | 19,950 | ||||||
Deposit insurance premiums and regulatory assessments | 21,785 | 18,950 | ||||||
Loan related expenses | 14,567 | 5,274 | ||||||
Legal expense | 14,391 | 4,856 | ||||||
Prepayment penalty for FHLB advances | 13,832 | - | ||||||
Amortization of premiums on deposits acquired | 10,046 | 3,286 | ||||||
Data processing | 8,174 | 3,362 | ||||||
Amortization of investments in affordable housing partnerships | 7,117 | 5,121 | ||||||
Consulting expense | 5,672 | 1,879 | ||||||
Other operating expense | 53,827 | 26,732 | ||||||
Total noninterest expense | $ | 364,173 | $ | 155,382 |
12
SELECTED FINANCIAL INFORMATION | ||||||||||||
(In thousands) | ||||||||||||
(unaudited) | ||||||||||||
Average Balances | Quarter Ended | |||||||||||
September 30, 2010 | June 30, 2010 | September 30, 2009 | ||||||||||
Loans receivable | ||||||||||||
Real estate - single family | $ | 1,051,914 | $ | 989,744 | $ | 888,106 | ||||||
Real estate - multifamily | 984,589 | 998,090 | 1,036,080 | |||||||||
Real estate - commercial | 3,452,114 | 3,530,045 | 3,552,897 | |||||||||
Real estate - land | 273,571 | 317,291 | 460,256 | |||||||||
Real estate - construction | 342,388 | 383,846 | 855,446 | |||||||||
Commercial | 1,591,042 | 1,492,560 | 1,360,223 | |||||||||
Consumer | 803,430 | 845,104 | 318,758 | |||||||||
Total loans receivable, excluding covered loans | 8,499,048 | 8,556,680 | 8,471,766 | |||||||||
Covered loans | 5,105,793 | 5,137,863 | - | |||||||||
Total loans receivable | 13,604,841 | 13,694,543 | 8,471,766 | |||||||||
Investment securities | 2,482,951 | 2,202,676 | 2,327,346 | |||||||||
Earning assets | 17,692,002 | 17,525,796 | 11,911,186 | |||||||||
Total assets | 20,097,142 | 19,886,269 | 12,635,277 | |||||||||
Deposits | ||||||||||||
Noninterest-bearing demand | $ | 2,436,031 | $ | 2,300,228 | $ | 1,335,131 | ||||||
Interest-bearing checking | 731,267 | 663,936 | 342,922 | |||||||||
Money market | 4,162,847 | 3,968,293 | 2,160,722 | |||||||||
Savings | 960,927 | 961,374 | 421,844 | |||||||||
Total core deposits | 8,291,072 | 7,893,831 | 4,260,619 | |||||||||
Time deposits | 6,719,637 | 6,714,972 | 4,398,704 | |||||||||
Total deposits | 15,010,709 | 14,608,803 | 8,659,323 | |||||||||
Interest-bearing liabilities | 14,910,922 | 14,874,635 | 9,625,524 | |||||||||
Stockholders' equity | 2,360,025 | 2,310,623 | 1,543,822 | |||||||||
Selected Ratios | Quarter Ended | |||||||||||
September 30, 2010 | June 30, 2010 | September 30, 2009 | ||||||||||
For The Period | ||||||||||||
Return on average assets | 0.93 | % | 0.73 | % | -2.17 | % | ||||||
Return on average common equity | 8.11 | % | 6.26 | % | -27.12 | % | ||||||
Interest rate spread (2) | 3.90 | % | 4.45 | % | 2.78 | % | ||||||
Net interest margin (2) | 4.10 | % | 4.66 | % | 3.20 | % | ||||||
Yield on earning assets (2) | 5.19 | % | 5.80 | % | 4.93 | % | ||||||
Cost of deposits | 0.75 | % | 0.80 | % | 1.24 | % | ||||||
Cost of funds | 1.11 | % | 1.17 | % | 1.88 | % | ||||||
Noninterest expense/average assets (1) | 1.89 | % | 2.32 | % | 1.37 | % | ||||||
Efficiency ratio (3) | 47.64 | % | 56.56 | % | 39.99 | % | ||||||
(1) Excludes the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalty for FHLB advances. | ||||||||||||
(2) Yields on certain securities have been adjusted upward to a "fully taxable equivalent" basis in order to reflect the effect of income which is exempt from federal income taxation at the current statutory tax rate. | ||||||||||||
(3) Represents noninterest expense, excluding the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, investments in affordable housing partnerships and prepayment penalty for FHLB advances, divided by the aggregate of net interest income before provision for loan losses, excluding nonrecurring adjustments and noninterest income, excluding impairment loss on investment securities and gain on acquisition and the decrease in FDIC indemnification asset and FDIC receivable. |
13
SELECTED FINANCIAL INFORMATION | ||||||||
(In thousands) | ||||||||
(unaudited) | ||||||||
Average Balances | Year To Date | |||||||
September 30, 2010 | September 30, 2009 | |||||||
Loans receivable | ||||||||
Real estate - single family | $ | 990,806 | $ | 695,034 | ||||
Real estate - multifamily | 1,017,883 | 852,216 | ||||||
Real estate - commercial | 3,519,178 | 3,511,979 | ||||||
Real estate - land | 315,618 | 521,696 | ||||||
Real estate - construction | 391,444 | 1,051,940 | ||||||
Commercial | 1,496,885 | 1,411,609 | ||||||
Consumer | 793,670 | 261,128 | ||||||
Total loans receivable, excluding covered loans | 8,525,484 | 8,305,602 | ||||||
Covered loans | 5,175,251 | - | ||||||
Total loans receivable | 13,700,735 | 8,305,602 | ||||||
Investment securities | 2,291,588 | 2,546,488 | ||||||
Earning assets | 17,584,474 | 11,874,514 | ||||||
Total assets | 20,049,938 | 12,584,000 | ||||||
Deposits | ||||||||
Noninterest-bearing demand | $ | 2,323,950 | $ | 1,292,852 | ||||
Interest-bearing checking | 672,817 | 351,933 | ||||||
Money market | 3,868,588 | 1,826,626 | ||||||
Savings | 971,381 | 416,011 | ||||||
Total core deposits | 7,836,736 | 3,887,422 | ||||||
Time deposits | 6,914,615 | 4,586,027 | ||||||
Total deposits | 14,751,351 | 8,473,449 | ||||||
Interest-bearing liabilities | 15,191,062 | 9,627,681 | ||||||
Stockholders' equity | 2,321,690 | 1,538,284 | �� | |||||
Selected Ratios | Year To Date | |||||||
September 30, 2010 | September 30, 2009 | |||||||
For The Period | ||||||||
Return on average assets | 0.72 | % | -1.94 | % | ||||
Return on average common equity | 6.47 | % | -27.46 | % | ||||
Interest rate spread (2) | 4.74 | % | 2.51 | % | ||||
Net interest margin (2) | 4.93 | % | 2.97 | % | ||||
Yield on earning assets (2) | 6.11 | % | 4.95 | % | ||||
Cost of deposits | 0.83 | % | 1.50 | % | ||||
Cost of funds | 1.19 | % | 2.15 | % | ||||
Noninterest expense/average assets (1) | 2.22 | % | 1.56 | % | ||||
Efficiency ratio (3) | 54.30 | % | 48.67 | % | ||||
(1) Excludes the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalty for FHLB advances. | ||||||||
(2) Yields on certain securities have been adjusted upward to a "fully taxable equivalent" basis in order to reflect the effect of income which is exempt from federal income taxation at the current statutory tax rate. | ||||||||
(3) Represents noninterest expense, excluding the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, investments in affordable housing partnerships and prepayment penalty for FHLB advances, divided by the aggregate of net interest income before provision for loan losses, excluding nonrecurring adjustments and noninterest income, excluding impairment loss on investment securities and gain on acquisition and the decrease in FDIC indemnification asset and FDIC receivable. |
14
QUARTER TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Quarter Ended | ||||||||||||||||||||||||
September 30, 2010 | September 30, 2009 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Volume | Interest | Yield (1) | Volume | Interest | Yield (1) | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Short-term investments and interest bearing deposits in other banks | $ | 736,658 | $ | 2,362 | 1.27 | % | $ | 897,527 | $ | 1,856 | 0.82 | % | ||||||||||||
Securities purchased under resale agreements | 648,136 | 2,410 | 1.46 | % | 91,033 | 2,153 | 9.25 | % | ||||||||||||||||
Investment securities (2) | 2,482,951 | 15,725 | 2.51 | % | 2,327,346 | 28,567 | 4.87 | % | ||||||||||||||||
Loans receivable | 8,499,048 | 116,029 | 5.42 | % | 8,471,766 | 114,512 | 5.36 | % | ||||||||||||||||
Loans receivable - covered | 5,105,793 | 94,057 | 7.31 | % | - | - | - | |||||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stocks | 219,416 | 817 | 1.49 | % | 123,514 | 918 | 2.97 | % | ||||||||||||||||
Total interest-earning assets | 17,692,002 | 231,400 | 5.19 | % | 11,911,186 | 148,006 | 4.93 | % | ||||||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||||
Cash and due from banks | 668,277 | 124,708 | ||||||||||||||||||||||
Allowance for loan losses | (253,078 | ) | (244,542 | ) | ||||||||||||||||||||
Other assets | 1,989,941 | 843,925 | ||||||||||||||||||||||
Total assets | $ | 20,097,142 | $ | 12,635,277 | ||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Checking accounts | 731,267 | 550 | 0.30 | % | 342,922 | 286 | 0.33 | % | ||||||||||||||||
Money market accounts | 4,162,847 | 7,103 | 0.68 | % | 2,160,722 | 6,830 | 1.25 | % | ||||||||||||||||
Savings deposits | 960,927 | 818 | 0.34 | % | 421,844 | 608 | 0.57 | % | ||||||||||||||||
Time deposits | 6,719,637 | 20,028 | 1.18 | % | 4,398,704 | 19,246 | 1.74 | % | ||||||||||||||||
Federal Home Loan Bank advances | 1,020,640 | 5,725 | 2.23 | % | 1,046,056 | 11,172 | 4.24 | % | ||||||||||||||||
Securities sold under repurchase agreements | 1,047,697 | 12,189 | 4.55 | % | 1,018,321 | 12,140 | 4.66 | % | ||||||||||||||||
Subordinated debt and trust preferred securities | 235,570 | 1,685 | 2.80 | % | 235,570 | 1,760 | 2.92 | % | ||||||||||||||||
Other borrowings | 32,337 | 497 | 6.01 | % | 1,385 | 2 | 0.57 | % | ||||||||||||||||
Total interest-bearing liabilities | 14,910,922 | 48,595 | 1.29 | % | 9,625,524 | 52,044 | 2.15 | % | ||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||||
Demand deposits | 2,436,031 | 1,335,131 | ||||||||||||||||||||||
Other liabilities | 390,164 | 130,800 | ||||||||||||||||||||||
Stockholders' equity | 2,360,025 | 1,543,822 | ||||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 20,097,142 | $ | 12,635,277 | ||||||||||||||||||||
Interest rate spread | 3.90 | % | 2.78 | % | ||||||||||||||||||||
Net interest income and net interest margin | $ | 182,805 | 4.10 | % | $ | 95,962 | 3.20 | % | ||||||||||||||||
Net interest income and net interest margin, adjusted (3) | $ | 177,294 | 3.98 | % | ||||||||||||||||||||
(1) Annualized | ||||||||||||||||||||||||
(2) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate. | ||||||||||||||||||||||||
(3) Amounts exclude the net impact of covered loan dispositions of $5.5 million. |
15
YEAR TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Year To Date | ||||||||||||||||||||||||
September 30, 2010 | September 30, 2009 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Volume | Interest | Yield (1) | Volume | Interest | Yield (1) | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Short-term investments and interest bearing deposits in other banks | $ | 914,471 | $ | 7,405 | 1.08 | % | $ | 835,769 | $ | 7,341 | 1.17 | % | ||||||||||||
Securities purchased under resale agreements | 455,824 | 11,303 | 3.27 | % | 64,286 | 4,695 | 9.63 | % | ||||||||||||||||
Investment securities (2) | 2,291,588 | 50,656 | 2.96 | % | 2,546,488 | 88,472 | 4.65 | % | ||||||||||||||||
Loans receivable | 8,525,484 | 354,973 | 5.57 | % | 8,305,602 | 336,997 | 5.42 | % | ||||||||||||||||
Loans receivable - covered | 5,175,251 | 376,840 | 9.74 | % | - | - | - | |||||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stocks | 221,856 | 2,473 | 1.49 | % | 122,369 | 1,969 | 2.15 | % | ||||||||||||||||
Total interest-earning assets | 17,584,474 | 803,650 | 6.11 | % | 11,874,514 | 439,474 | 4.95 | % | ||||||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||||
Cash and due from banks | 547,403 | 120,493 | ||||||||||||||||||||||
Allowance for loan losses | (254,153 | ) | (210,015 | ) | ||||||||||||||||||||
Other assets | 2,172,214 | 799,008 | ||||||||||||||||||||||
Total assets | $ | 20,049,938 | $ | 12,584,000 | ||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Checking accounts | 672,817 | 1,691 | 0.34 | % | 351,933 | 1,003 | 0.38 | % | ||||||||||||||||
Money market accounts | 3,868,588 | 23,405 | 0.81 | % | 1,826,626 | 18,664 | 1.37 | % | ||||||||||||||||
Savings deposits | 971,381 | 3,234 | 0.45 | % | 416,011 | 1,969 | 0.63 | % | ||||||||||||||||
Time deposits | 6,914,615 | 62,749 | 1.21 | % | 4,586,027 | 73,297 | 2.14 | % | ||||||||||||||||
Federal Home Loan Bank advances | 1,427,903 | 20,905 | 1.96 | % | 1,200,713 | 38,191 | 4.25 | % | ||||||||||||||||
Securities sold under repurchase agreements | 1,039,636 | 36,775 | 4.66 | % | 1,007,912 | 36,016 | 4.71 | % | ||||||||||||||||
Subordinated debt and trust preferred securities | 235,570 | 4,823 | 2.70 | % | 235,570 | 6,211 | 3.48 | % | ||||||||||||||||
Other borrowings | 60,552 | 1,902 | 4.14 | % | 2,889 | 8 | 0.37 | % | ||||||||||||||||
Total interest-bearing liabilities | 15,191,062 | 155,484 | 1.37 | % | 9,627,681 | 175,359 | 2.44 | % | ||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||||
Demand deposits | 2,323,950 | 1,292,852 | ||||||||||||||||||||||
Other liabilities | 213,236 | 125,183 | ||||||||||||||||||||||
Stockholders' equity | 2,321,690 | 1,538,284 | ||||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 20,049,938 | $ | 12,584,000 | ||||||||||||||||||||
Interest rate spread | 4.74 | % | 2.51 | % | ||||||||||||||||||||
Net interest income and net interest margin | $ | 648,166 | 4.93 | % | $ | 264,115 | 2.97 | % | ||||||||||||||||
Net interest income and net interest margin, adjusted (3) | $ | 551,080 | 4.19 | % | ||||||||||||||||||||
(1) Annualized | ||||||||||||||||||||||||
(2) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate. | ||||||||||||||||||||||||
(3) Amounts exclude the net impact of covered loan dispositions of $97.1 million. |
16
QUARTERLY ALLOWANCE FOR LOAN LOSSES RECAP | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Quarter Ended | ||||||||||||||||||||
9/30/2010 | 6/30/2010 | 3/31/2010 | 12/31/2009 | 9/30/2009 | ||||||||||||||||
LOANS | ||||||||||||||||||||
Allowance balance, beginning of period | $ | 249,462 | $ | 250,517 | $ | 238,833 | $ | 230,650 | $ | 223,700 | ||||||||||
Allowance for unfunded loan commitments and letters of credit | 1,133 | (1,115 | ) | (808 | ) | (1,161 | ) | (1,051 | ) | |||||||||||
Provision for loan losses | 38,648 | 55,256 | 76,421 | 140,000 | 159,244 | |||||||||||||||
Net Charge-offs: | ||||||||||||||||||||
Real estate - single family | 14,620 | 3,257 | 3,426 | 7,083 | 8,034 | |||||||||||||||
Real estate - multifamily | 7,526 | 7,552 | 4,860 | 8,425 | 7,231 | |||||||||||||||
Real estate - commercial | 11,779 | 11,836 | 8,201 | 13,305 | 23,105 | |||||||||||||||
Real estate - land | 4,236 | 9,765 | 26,828 | 20,390 | 39,988 | |||||||||||||||
Real estate - residential construction | 3,087 | 3,086 | 11,642 | 48,919 | 32,535 | |||||||||||||||
Real estate - commercial construction | 977 | 8,548 | 2,029 | 21,355 | 23,051 | |||||||||||||||
Commercial | 2,546 | 10,563 | 6,422 | 5,789 | 14,956 | |||||||||||||||
Trade finance | (7 | ) | (88 | ) | (54 | ) | 2,569 | 2,256 | ||||||||||||
Consumer | 293 | 677 | 575 | 2,821 | 87 | |||||||||||||||
Total net charge-offs (recovery) | 45,057 | 55,196 | 63,929 | 130,656 | 151,243 | |||||||||||||||
Allowance balance, end of period (3) | $ | 244,186 | $ | 249,462 | $ | 250,517 | $ | 238,833 | $ | 230,650 | ||||||||||
UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT: | ||||||||||||||||||||
Allowance balance, beginning of period | $ | 10,042 | $ | 8,927 | $ | 8,119 | $ | 6,958 | $ | 5,907 | ||||||||||
Provision for unfunded loan commitments and letters of credit | (1,133 | ) | 1,115 | 808 | 1,161 | 1,051 | ||||||||||||||
Allowance balance, end of period | $ | 8,909 | $ | 10,042 | $ | 8,927 | $ | 8,119 | $ | 6,958 | ||||||||||
GRAND TOTAL, END OF PERIOD | $ | 253,095 | $ | 259,504 | $ | 259,444 | $ | 246,952 | $ | 237,608 | ||||||||||
Nonperforming assets to total assets (1) | 0.96 | % | 0.98 | % | 0.89 | % | 0.91 | % | 1.84 | % | ||||||||||
Allowance for loan losses on non-covered loans to total gross non-covered loans at end of period | 2.79 | % | 2.94 | % | 2.93 | % | 2.80 | % | 2.74 | % | ||||||||||
Allowance for loan losses on non-covered loans and unfunded loan commitments to total gross non-covered loans at end of period | 2.89 | % | 3.06 | % | 3.03 | % | 2.90 | % | 2.82 | % | ||||||||||
Allowance on non-covered loans to non-covered nonaccrual loans at end of period | 133.95 | % | 139.31 | % | 143.62 | % | 137.91 | % | 112.82 | % | ||||||||||
Nonaccrual loans to total loans (2) | 1.32 | % | 1.30 | % | 1.27 | % | 1.23 | % | 2.43 | % | ||||||||||
(1) Nonperforming assets excludes covered loans and covered REOs. Total assets includes covered assets. | ||||||||||||||||||||
(2) Nonaccrual loans excludes covered loans. Total loans includes covered loans. | ||||||||||||||||||||
(3) Included in the allowance is $3.9 million related to covered loans. This allowance is related to drawdowns on commitments that were in existence | ||||||||||||||||||||
as of the acquisition dates and therefore, are covered under the loss share agreements with the FDIC. Allowance on these subsequent drawdowns is | ||||||||||||||||||||
accounted for as part of our general allowance. |
17
EAST WEST BANCORP, INC | ||||||||||||||||||||
TOTAL NON-PERFORMING ASSETS, EXCLUDING COVERED ASSETS | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
AS OF SEPTEMBER 30, 2010 | ||||||||||||||||||||
Total Nonaccrual Loans | ||||||||||||||||||||
90+ Days Delinquent | Under 90+ Days Delinquent | Total Nonaccrual Loans | REO Assets | Total Non-Performing Assets | ||||||||||||||||
Loan Type | ||||||||||||||||||||
Real estate - single family | $ | 5,359 | $ | - | $ | 5,359 | $ | 947 | $ | 6,306 | ||||||||||
Real estate - multifamily | 10,386 | 6,263 | 16,649 | 3,088 | 19,737 | |||||||||||||||
Real estate - commercial | 28,786 | 30,799 | 59,585 | 6,730 | 66,315 | |||||||||||||||
Real estate - land | 32,443 | 14,760 | 47,203 | 4,680 | 51,883 | |||||||||||||||
Real estate - residential construction | 2,068 | - | 2,068 | 92 | 2,160 | |||||||||||||||
Real estate - commercial construction | 17,188 | 4,077 | 21,265 | 830 | 22,095 | |||||||||||||||
Commercial | 6,653 | 20,084 | 26,737 | 223 | 26,960 | |||||||||||||||
Trade Finance | - | - | - | - | - | |||||||||||||||
Consumer | 427 | 91 | 518 | 346 | 864 | |||||||||||||||
Total | $ | 103,310 | $ | 76,074 | $ | 179,384 | $ | 16,936 | $ | 196,320 | ||||||||||
AS OF JUNE 30, 2010 | ||||||||||||||||||||
Total Nonaccrual Loans | ||||||||||||||||||||
90+ Days Delinquent | Under 90+ Days Delinquent | Total Nonaccrual Loans | REO Assets | Total Non-Performing Assets | ||||||||||||||||
Loan Type | ||||||||||||||||||||
Real estate - single family | $ | 14,835 | $ | - | $ | 14,835 | $ | 395 | $ | 15,230 | ||||||||||
Real estate - multifamily | 13,180 | 5,521 | 18,701 | 3,131 | 21,832 | |||||||||||||||
Real estate - commercial | 15,778 | 2,569 | 18,347 | 7,047 | 25,394 | |||||||||||||||
Real estate - land | 43,775 | 5,292 | 49,067 | 2,541 | 51,608 | |||||||||||||||
Real estate - residential construction | 1,454 | 23,370 | 24,824 | 2,272 | 27,096 | |||||||||||||||
Real estate - commercial construction | 22,997 | 449 | 23,446 | 830 | 24,276 | |||||||||||||||
Commercial | 19,310 | 8,994 | 28,304 | - | 28,304 | |||||||||||||||
Trade Finance | - | - | - | - | - | |||||||||||||||
Consumer | 1,436 | 104 | 1,540 | 346 | 1,886 | |||||||||||||||
Total | $ | 132,765 | $ | 46,299 | $ | 179,064 | $ | 16,562 | $ | 195,626 | ||||||||||
AS OF DECEMBER 31, 2009 | ||||||||||||||||||||
Total Nonaccrual Loans | ||||||||||||||||||||
90+ Days Delinquent | Under 90+ Days Delinquent | Total Nonaccrual Loans | REO Assets | Total Non-Performing Assets | ||||||||||||||||
Loan Type | ||||||||||||||||||||
Real estate - single family | $ | 3,262 | $ | - | $ | 3,262 | $ | 264 | $ | 3,526 | ||||||||||
Real estate - multifamily | 10,631 | - | 10,631 | 2,118 | 12,749 | |||||||||||||||
Real estate - commercial | 11,654 | 18,450 | 30,104 | 5,687 | 35,791 | |||||||||||||||
Real estate - land | 27,179 | 42,666 | 69,845 | 4,393 | 74,238 | |||||||||||||||
Real estate - residential construction | 17,179 | - | 17,179 | 540 | 17,719 | |||||||||||||||
Real estate - commercial construction | - | 17,132 | 17,132 | 830 | 17,962 | |||||||||||||||
Commercial | 8,002 | 16,765 | 24,767 | - | 24,767 | |||||||||||||||
Trade Finance | - | - | - | - | - | |||||||||||||||
Consumer | 114 | 146 | 260 | - | 260 | |||||||||||||||
Total | $ | 78,021 | $ | 95,159 | $ | 173,180 | $ | 13,832 | $ | 187,012 | ||||||||||
AS OF SEPTEMBER 30, 2009 | ||||||||||||||||||||
Total Nonaccrual Loans | ||||||||||||||||||||
90+ Days Delinquent | Under 90+ Days Delinquent | Total Nonaccrual Loans | REO Assets | Total Non-Performing Assets | ||||||||||||||||
Loan Type | ||||||||||||||||||||
Real estate - single family | $ | 6,189 | $ | - | $ | 6,189 | $ | 648 | $ | 6,837 | ||||||||||
Real estate - multifamily | 11,211 | 652 | 11,863 | 1,147 | 13,010 | |||||||||||||||
Real estate - commercial | 17,381 | 16,040 | 33,421 | 2,330 | 35,751 | |||||||||||||||
Real estate - land | 23,568 | 33,610 | 57,178 | 4,020 | 61,198 | |||||||||||||||
Real estate - residential construction | 55,130 | - | 55,130 | 12,238 | 67,368 | |||||||||||||||
Real estate - commercial construction | 10,784 | - | 10,784 | 3,680 | 14,464 | |||||||||||||||
Commercial | 11,783 | 13,227 | 25,010 | 122 | 25,132 | |||||||||||||||
Trade Finance | 3,666 | 1,785 | 5,451 | - | 5,451 | |||||||||||||||
Consumer | 293 | 676 | 969 | - | 969 | |||||||||||||||
Total | $ | 140,005 | $ | 65,990 | $ | 205,995 | $ | 24,185 | $ | 230,180 |
18
EAST WEST BANCORP, INC. | ||||
GAAP TO NON-GAAP RECONCILIATION | ||||
(In thousands) | ||||
(Unaudited) | ||||
The tangible common equity to risk weighted asset and tangible common equity to tangible asset ratios is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. As the use of tangible common equity to tangible asset is more prevalent in the banking industry and with banking regulators and analysts, we have included the tangible common equity to risk-weighted assets and tangible common equity to tangible asset ratios. | ||||
As of | ||||
September 30, 2010 | ||||
Stockholders' Equity | $ | 2,384,760 | ||
Less: | ||||
Preferred Equity | (370,882 | ) | ||
Goodwill and other intangible assets | (421,309 | ) | ||
Tangible common equity | $ | 1,592,569 | ||
Risk-weighted assets | 11,785,125 | |||
Tangible Common Equity to risk-weighted assets | 13.5 | % | ||
As of | ||||
September 30, 2010 | ||||
Total assets | $ | 20,417,246 | ||
Less: | ||||
Goodwill and other intangible assets | (421,309 | ) | ||
Tangible assets | $ | 19,995,937 | ||
Tangible common equity to tangible asset ratio | 7.96 | % | ||
Operating noninterest income is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. There are noninterest income line items that are non-core in nature. Operating noninterest income excludes such non-core noninterest income line items. The Company believes that presenting the operating noninterest income provides more clarity to the users of financial statements regarding the core noninterest income amounts. | ||||
Quarter Ended | ||||
September 30, 2010 | ||||
Noninterest income | $ | 29,315 | ||
Add: | ||||
Impairment loss on investment securities | 888 | |||
Less: | ||||
Net gain on sale of investment securities | (2,791 | ) | ||
Net gain on sale of loans | (4,177 | ) | ||
Increase in FDIC indemnification asset | (5,826 | ) | ||
Operating noninterest income (non-GAAP) | $ | 17,409 | ||
Quarter Ended | ||||
September 30, 2009 | ||||
Noninterest income | $ | (11,880 | ) | |
Add: | ||||
Impairment loss on investment securities | 24,249 | |||
Less: | ||||
Net gain on sale of investment securities | (2,177 | ) | ||
Net gain on sale of loans | (8 | ) | ||
Operating noninterest income (non-GAAP) | $ | 10,184 |
19
GAAP TO NON-GAAP RECONCILIATION | ||||
(In thousands) | ||||
(Unaudited) | ||||
Operating noninterest expense is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. These are noninterest expense line items that are non-core in nature. Operating noninterest expense excludes such non-core noninterest expense line items. The Company believes that presenting the operating noninterest expense provides more clarity to the users of financial statements regarding the core noninterest expense amounts. | ||||
Quarter Ended | ||||
($ in thousands) | September 30, 2010 | |||
Total noninterest expense: | $ | 99,945 | ||
Amounts to be reimbursed on covered assets (80% of actual expense amount) | 7,834 | |||
Noninterest expense excluding reimbursement amounts | $ | 92,111 | ||
Quarter Ended | ||||
($ in thousands) | June 30, 2010 | |||
Total noninterest expense: | $ | 125,318 | ||
Amounts to be reimbursed on covered assets (80% of actual expense amount) | 19,103 | |||
Prepayment penalty for FHLB advances | 3,900 | |||
Noninterest expense excluding reimbursement amounts and prepayment penalty for FHLB advances | $ | 102,315 |
20
EAST WEST BANCORP, INC. | ||||||||||||
GAAP TO NON-GAAP RECONCILIATION | ||||||||||||
(In thousands) | ||||||||||||
(Unaudited) | ||||||||||||
The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. The net interest margin includes amounts that are non-core in nature. As such, the Company believes that presenting the net interest income and net interest margin excluding such non-core items provides additional clarity to the users of financial statements regarding the core net interest income and net interest margin, comparability to prior periods and the ongoing performance of the Company. | ||||||||||||
Quarter Ended September 30, 2010 | ||||||||||||
Average Volume | Interest | Yield (1) | ||||||||||
Total interest-earning assets | $ | 17,692,002 | $ | 231,400 | 5.19 | % | ||||||
Net interest income and net interest margin | $ | 182,805 | 4.10 | % | ||||||||
Less net impact of covered loan dispositions | (5,511 | ) | ||||||||||
Net interest income and net interest margin, excluding | ||||||||||||
net impact of covered loan dispositions | $ | 177,294 | 3.98 | % | ||||||||
Year to Date September 30, 2010 | ||||||||||||
Average Volume | Interest | Yield (1) | ||||||||||
Total interest-earning assets | $ | 17,584,474 | $ | 803,650 | 6.11 | % | ||||||
Net interest income and net interest margin | $ | 648,166 | 4.93 | % | ||||||||
Less net impact of covered loan dispositions | (97,086 | ) | ||||||||||
Net interest income and net interest margin, excluding | ||||||||||||
net impact of covered loan dispositions | $ | 551,080 | 4.19 | % | ||||||||
(1) Annualized. |
21