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 |
| NEWS RELEASE | |
FOR FURTHER INFORMATION AT THE COMPANY:
Irene Oh
Chief Financial Officer
(626) 768-6360
EAST WEST BANCORP REPORTS NET INCOME FOR SECOND QUARTER 2013 OF $74.0 MILLION, UP 5% FROM PRIOR YEAR AND EARNINGS PER SHARE OF $0.52, UP 11% FROM PRIOR YEAR
Pasadena, CA – July 17, 2013 – East West Bancorp, Inc. (“East West”) (Nasdaq: EWBC), parent company of East West Bank, the financial bridge between the United States and Greater China, today reported financial results for the second quarter of 2013. For the second quarter of 2013, net income was $74.0 million or $0.52 per dilutive share. East West increased second quarter net income by $3.5 million or 5% and increased earnings per dilutive share $0.05 or 11% from the prior year period.
“East West is pleased to report solid earnings of $74.0 million or $0.52 per share for the second quarter of 2013, an increase in earnings per share of 11% from the prior year period,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. “Our financial results for the second quarter of 2013 were driven by strong loan originations, resulting in an increase in total loans receivable of 6% or $920.8 million during the quarter to a record $16.3 billion as of June 30, 2013. Currently, high quality loan growth is challenging for the banking industry. Our unique value proposition as the bridge between East and West allows us to successfully and prudently grow our loan portfolio. Further, during the quarter, we grew total deposits to a record $19.3 billion and non-interest bearing demand deposits to a record $5.1 billion, or 27% of total deposits.”
Ng continued, “For the second quarter of 2013, East West achieved a return on equity of 12.59%, and a return on assets of 1.29%. Our results for the second quarter of 2013 mark the ninth consecutive quarter East West has increased both net income and earnings per share. East West has strong earnings and a healthy balance sheet, resulting in high capital levels. During the second quarter, we completed the $200 million stock repurchase program approved by the Board earlier in the year. Year to date, we have repurchased 8 million shares of common stock."
“We are pleased with the strong results for the second quarter of 2013 and believe East West is on track for another year of record earnings. I am confident that as the economic environment continues to improve in the U.S., East West will continue to be able to expand our market share, grow our profitability, and deliver strong financial results for our shareholders,” concluded Ng.
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Quarterly Results Summary
| Quarter Ended | ||||||||||||
| Dollars in millions, except per share | June 30, 2013 | March 31, 2013 | June 30, 2012 | |||||||||
| Net income | $ | 74.02 | $ | 72.09 | $ | 70.56 | ||||||
| Net income available to common shareholders | $ | 72.30 | $ | 70.38 | $ | 68.84 | ||||||
| Earnings per share (diluted) | $ | 0.52 | $ | 0.50 | $ | 0.47 | ||||||
| Tangible book value per common share | $ | 13.55 | $ | 13.66 | $ | 12.67 | ||||||
| Return on average assets | 1.29 | % | 1.30 | % | 1.32 | % | ||||||
| Return on average common equity | 12.59 | % | 12.45 | % | 12.46 | % | ||||||
Net interest income, adjusted (1) | $ | 192.17 | $ | 184.62 | $ | 194.65 | ||||||
Net interest margin, adjusted (1) | 3.62 | % | 3.62 | % | 4.01 | % | ||||||
| Cost of deposits | 0.33 | % | 0.37 | % | 0.45 | % | ||||||
| Efficiency ratio | 40.40 | % | 43.28 | % | 41.54 | % | ||||||
Second Quarter 2013 Highlights
| ● | Strong Second Quarter Earnings – For the second quarter of 2013, net income was $74.0 million or $0.52 per dilutive share. Net income grew $1.9 million or 3% from the first quarter of 2013 and $3.5 million or 5% from the second quarter of 2012. Earnings per dilutive share grew 4% or $0.02 from the first quarter of 2013 and 11% or $0.05 from the second quarter of 2012. |
| ● | Capital Actions – During the second quarter of 2013, we repurchased 4.5 million shares of our common stock at a weighted average price of $25.18 per share for a total cost of $113.0 million and completed the $200 million stock repurchase program authorized by the Board in January 2013. Further, on May 1, 2013, we converted all shares of the Series A Preferred Stock into 5.6 million shares of common stock. |
| ● | Strong Capital Levels – Capital levels for East West remain high. As of June 30, 2013, East West’s Tier 1 risk-based capital and total risk-based ratios were 12.9% and 14.3%, respectively, compared to the well capitalized requirements of 6% and 10%, respectively. |
| ● | Strong Loan Growth – Quarter to date, total loans receivable (including both covered and non-covered loans) grew 6% or $920.8 million to a record $16.3 billion as of June 30, 2013. This growth was due to a 9% or $1.2 billion increase in non-covered loans, partially offset by a decrease in loans covered under loss-share agreements of 9% or $248.4 million, quarter to date. The strong growth in non-covered loans was due to increases in commercial and industrial loans, consumer loans, single family residential loans, and commercial real estate loans. |
| ● | Strong Deposit Growth – Total deposits increased to record levels, increasing 2% or $346.5 million to a record $19.3 billion as of June 30, 2013. During the second quarter, core deposits increased by 3% or $428.8 million to a record $13.3 billion. The strong growth in core deposits for the quarter was fueled by a 6% or $290.4 million increase in noninterest-bearing demand deposits to a record $5.1 billion as of June 30, 2013. |
| ● | Efficiency Ratio Improves – For the second quarter of 2013, the efficiency ratio improved to 40.40% from 43.28% in the first quarter of 2013 and 41.54% in the second quarter of 2012. |
| ● | Nonperforming Assets Down to 0.57% of Total Assets – Nonperforming assets decreased to $133.5 million, or 0.57% of total assets at June 30, 2013, a $26.0 million or 16% decrease from March 31, 2013 and a $22.2 million or 14% decrease from June 30, 2012. |
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Management Guidance
The Company is providing guidance for the third quarter and full year of 2013. Management currently estimates that fully diluted earnings per share for the full year of 2013 will range from $2.05 to $2.09, an increase of $0.16 to $0.20 or 8% to 11% from $1.89 for the full year of 2012. This EPS guidance for the remainder of 2013 is based on a stable balance sheet, total loan growth of approximately $250 million per quarter, (including both covered and non-covered loans), an adjusted net interest margin ranging from 3.50% to 3.60%1, provision for loan losses of approximately $5.0 million to $7.5 million per quarter, noninterest expense, adjusted for FDIC reimbursements, of approximately $95.0 million to $97.5 million per quarter, and an effective tax rate of 34%.
Management currently estimates that fully diluted earnings per share for the third quarter of 2013 will range from $0.51 to $0.53 per dilutive share, based on the assumptions stated above.
The guidance for the third quarter and for the full year of 2013 does not include the impact of the additional $100.0 million stock repurchase program authorized by the Board of Directors of East West and discussed elsewhere in this release.
Balance Sheet Summary
At June 30, 2013, total assets increased $206.5 million or 1% to $23.3 billion compared to $23.1 billion at March 31, 2013. Average earning assets also increased during the second quarter, up 3% or $593.6 million to $21.3 billion compared to the prior quarter. The increase in average earning assets during the second quarter was primarily attributable to increases in average balances for non-covered loans.
Total loans receivable increased to $16.3 billion at June 30, 2013, compared to $15.4 billion at March 31 2013. This quarter to date increase in loans receivable stemmed from growth in the non-covered loan portfolio, partially offset by a decrease in the covered loan portfolio. During the quarter, the Company purchased approximately $270.0 million of insurance premium financing loans, which are included in the commercial and consumer loan portfolios, as applicable. Excluding the impact of this loan portfolio purchase, non-covered loans receivable increased 7% or $899.3 million quarter to date, largely due to increases in commercial and industrial, single family and commercial real estate loans.
Covered Loans
Covered loans, net of discount totaled $2.5 billion as of June 30, 2013, a decrease of $248.4 million or 9% from March 31, 2013. The decrease in the covered loan portfolio was primarily due to payoffs and paydown activity, as well as charge-offs.
The covered loan portfolio is comprised of loans acquired from the FDIC-assisted acquisitions of United Commercial Bank (UCB) and Washington First International Bank (WFIB) which are covered under loss-share agreements with the FDIC. During the second quarter of 2013, we recorded a net decrease in the FDIC indemnification asset and receivable included in noninterest (loss)/income of ($47.9) million, largely due to the continuing payoffs and the continuing improved credit performance of the UCB portfolio as compared to our original estimate. Under the loss-share agreements with the FDIC, East West Bank is required to pay the FDIC a calculated amount if specific thresholds of losses are not reached. Included in the net decrease in the FDIC indemnification asset and receivable of ($47.9) million for the second quarter of 2013 is an expense of $15.4 million for this liability due to the continuing strong credit performance of the covered portfolios.
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Deposits
At June 30, 2013, total deposits reached a record $19.3 billion, an increase of 2% or $346.5 million from $18.9 billion at March 31, 2013. In the second quarter of 2013, we continued to execute our strategy to grow low-cost, commercial deposits while reducing our reliance on time deposits. Core deposits increased to a record $13.3 billion at June 30, 2013, an increase of 3% or $428.8 million from March 31, 2013. The increase in core deposits during the second quarter of 2013 was largely driven by an increase in noninterest-bearing demand deposits which increased by 6% or $290.4 million to a record $5.1 billion as of June 30, 2013. Time deposits decreased by 1% or $82.3 million from March 31, 2013 to $6.0 billion at June 30, 2013.
Second Quarter 2013 Operating Results
Net Interest Income
Net interest income, adjusted for the net impact of covered loan dispositions, totaled $192.2 million for the second quarter of 2013, an increase of 4% or $7.6 million from $184.6 million for the first quarter of 2013. The core net interest margin, excluding the net impact to interest income of $35.5 million resulting from covered loan activity and amortization of the FDIC indemnification asset, totaled 3.62% for the second quarter of 2013. This compares to a core net interest margin of 3.62% and 4.01%, excluding the net impact to interest income of $24.7 million and $38.5 million resulting from covered loan activity and amortization of the FDIC indemnification asset, for the first quarter of 2013 and second quarter of 2012, respectively.1
The core net interest margin totaled 3.62% for the second quarter of 2013, reflecting no change from the first quarter of 2013. The increase in the core net interest margin compared to the guidance provided in the prior quarter earnings release was largely due to stronger than expected loan growth and also a result of the improvement in both the composition and the cost of deposits.
During the second quarter, the cost of funds decreased to 0.55%, a decrease of 5 basis points from the first quarter of 2013. Additionally, interest expense for the second quarter of 2013 was $27.7 million, a decrease of 5% or $1.4 million from the first quarter of 2013. The reduction in the cost of funds and interest expense for the quarter is primarily due to the growth of lower cost, core deposits and a reduced reliance on time deposits. The Company increased core deposit balances by 3% or $428.8 million, quarter over quarter. These combined actions resulted in a reduction in the cost of deposits to 0.33% for the second quarter of 2013, a reduction of 4 basis points from 0.37% in the prior quarter.
Noninterest (Loss)/ Income & Expense
The Company reported total noninterest (loss)/income for the second quarter of 2013 of ($12.4) million, compared to a noninterest loss of ($2.1) million and ($11.7) million in the first quarter of 2013 and the second quarter of 2012, respectively. The additional ($10.3) million of noninterest loss in the current quarter compared to the first quarter of 2013 is due to changes in the net reduction of the FDIC indemnification asset and FDIC receivable.
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Branch fees, letter of credit and foreign exchange income, ancillary loan fees and other operating income totaled $30.3 million in the second quarter of 2013, an increase of 26% or $6.3 million from $24.0 million in the first quarter of 2013 and an increase of 37% or $8.1 million from $22.2 million in the second quarter of 2012. In addition, included in noninterest income for the second quarter of 2013 were net gains of $5.3 million on sales of $123.5 million of investment securities. A summary of fees and other operating income for the second quarter of 2013, compared to the first quarter of 2013 and second quarter of 2012 is detailed below:
| Quarter Ended | % Change | |||||||||||||||
| ($ in thousands) | June 30, 2013 | March 31, 2013 | June 30, 2012 | (Yr/Yr) | ||||||||||||
| Branch fees | $ | 8,119 | $ | 7,654 | $ | 7,821 | 4 | % | ||||||||
| Letters of credit fees and foreign exchange income | 9,075 | 7,398 | 5,101 | 78 | % | |||||||||||
| Ancillary loan fees | 2,634 | 2,052 | 2,188 | 20 | % | |||||||||||
| Other operating income | 10,504 | 6,901 | 7,097 | 48 | % | |||||||||||
| Total fees & other operating income | $ | 30,332 | $ | 24,005 | $ | 22,207 | 37 | % | ||||||||
Noninterest expense totaled $94.4 million for the second quarter of 2013, a decrease of 2% or $1.9 million from the first quarter of 2013 and a decrease of 7% or $7.2 million from the second quarter of 2012.
Noninterest expense, excluding the impact of reimbursable (payable) amounts from (to) the FDIC on covered assets and prepayment penalties for FHLB advances, totaled $91.5 million for the second quarter of 2013.1 A summary of noninterest expense for the second quarter of 2013, compared to the first quarter of 2013 and second quarter of 2012 is detailed below:
| ($ in thousands) | Quarter Ended | |||||||||||
| June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||||||
| Total noninterest expense | $ | 94,420 | $ | 96,355 | $ | 101,608 | ||||||
Amounts to be reimbursed by the FDIC on covered assets (80% of actual expense amount) * | 2,910 | (61 | ) | 2,683 | ||||||||
| Prepayment penalties for FHLB advances | - | - | 2,336 | |||||||||
| Noninterest expense excluding reimbursable amounts and prepayment penalties for FHLB advances | $ | 91,510 | $ | 96,416 | $ | 96,589 | ||||||
| * | Pursuant to the shared-loss agreements, the FDIC reimburses the Company 80% of eligible losses with respect to covered assets. The FDIC also shares in 80% of the recoveries or gains with respect to covered assets. During the three months ended March 31, 2013, the Company had a net $61 thousand payable to the FDIC, mainly due to a net gain on sale of OREOs. |
Total noninterest expense for the second quarter, excluding the impact of reimbursable (payable) amounts from (to) the FDIC on covered assets and prepayment penalties for FHLB advances, decreased 5% or $4.9 million from the prior quarter to $91.5 million for the second quarter of 2013. The decrease in noninterest expense, quarter over quarter was primarily due to compensation and employee benefits. Compensation and employee benefits decreased $3.7 million or 8% from the first quarter 2013, resulting from a decrease in payroll taxes and an increase in the offset to compensation expense from deferred loan costs due to an increase in origination volume.
The effective tax rate for the second quarter was 33.8% as compared to 32.3% in the prior quarter. The effective tax rate for the first quarter 2013 was reduced by the impact of $1.6 million from the retroactive extension of certain exemptions as part of the American Taxpayer Relief Act of 2012 which was signed into law in 2013.
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Credit Quality
Non-covered Loans
The Company recorded provision for loan losses for non-covered loans of $8.3 million for the second quarter of 2013. This compares to a reversal of provision for loan losses of $762 thousand for the first quarter of 2013, and a provision for loan losses of $16.6 million for the second quarter of 2012. The increase in the provision for loan losses for non-covered loans compared to the prior quarter was largely due to the increase in non-covered loan balances during the second quarter of 2013. Total net charge-offs on non-covered loans totaled $4.0 million for the second quarter of 2013, an increase from net charge-offs of $540 thousand in the first quarter of 2013.
Nonaccrual loans, excluding covered loans, totaled 0.69% of total loans or $112.0 million as of June 30, 2013, a decrease from both 0.83% of total loans at March 31, 2013 and 0.78% of total loans at December 31, 2012. The nonperforming assets to total assets ratio also decreased, down to 0.57% as of June 30, 2013, compared to 0.69% as of March 31, 2013, and 0.72% as of June 30, 2012.
The allowance for non-covered loan losses was $233.5 million or 1.73% of non-covered loans receivable at June 30, 2013. This compares to an allowance for non-covered loan losses of $228.8 million or 1.85% of non-covered loans at March 31, 2013 and $219.5 million or 2.03% of non-covered loans at June 30, 2012.
Covered Loans
During the second quarter of 2013, the Company recorded a provision for loan losses of $186 thousand, on covered loans outside of the scope of ASC 310-30 and $537 thousand on covered loans within the scope of ASC 310-30. As these loans are covered under loss-sharing agreements with the FDIC, for any charge-offs, the Company records income of 80% of the charge-off amount in noninterest income as a net increase in the FDIC receivable, resulting in a net impact to earnings of 20% of the charge-off amount.
Capital Strength
| (Dollars in millions) | ||||||||||||
| June 30, 2013 | Well Capitalized Regulatory Requirement | Total Excess Above Well Capitalized Requirement | ||||||||||
| Tier 1 leverage capital ratio | 8.8 | % | 5.00 | % | $ | 860 | ||||||
| Tier 1 risk-based capital ratio | 12.9 | % | 6.00 | % | 1,063 | |||||||
| Total risk-based capital ratio | 14.3 | % | 10.00 | % | 672 | |||||||
| Tangible equity to tangible assets ratio | 8.1 | % | N/A | N/A | ||||||||
| Tangible equity to risk weighted assets ratio | 12.1 | % | N/A | N/A | ||||||||
Our capital ratios remain very strong. As of June 30, 2013, our Tier 1 leverage capital ratio totaled 8.8%, our Tier 1 risk-based capital ratio totaled 12.9% and our total risk-based capital ratio totaled 14.3%.
The Company is focused on active capital management and is committed to maintaining strong capital levels that exceed regulatory requirements while also supporting balance sheet growth and providing a strong return to our shareholders. East West's Board of Directors authorized a stock repurchase program in January of 2013 for up to $200.0 million of the Company's common stock, which the Company completed during the second quarter 2013. The Company repurchased 4.5 million shares of common stock at an average price of $25.18 per share or a total cost of $113.0 million, during the second quarter of 2013. In addition, on July 17, 2013, East West's Board of Directors authorized a new repurchase program to buy back up to $100.0 million of the Company's common stock.
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Additionally, on May 1, 2013, the Company converted all 85,710 shares of Series A Preferred Stock into 5.6 million shares of common stock.
Dividend Payout and Capital Actions
East West’s Board of Directors has declared third quarter dividends for the common stock. The common stock cash dividend of $0.15 is payable on or about August 15, 2013 to shareholders of record on July 31, 2013.
Conference Call
East West will host a conference call to discuss second quarter 2013 earnings with the public on Thursday, July 18, 2013 at 8:30 a.m. PDT/11:30 a.m. EDT. The public and investment community are invited to listen as management discusses second quarter results and operating developments. The following dial-in information is provided for participation in the conference call: Calls within the US – (888) 317-6016; Calls within Canada – (855) 669-9657; International calls – (412) 317-6016. A listen-only live broadcast of the call also will be available on the investor relations page of the Company's website at www.eastwestbank.com.
About East West
East West Bancorp is a publicly owned company with $23.3 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 banks headquartered in California. East West is a premier bank focused exclusively on the United States and Greater China markets and operates over 120 locations worldwide, including in the United States 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, 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 a representative office in Guangzhou. For more information on East West Bancorp, visit the Company's website at www.eastwestbank.com.
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Forward-Looking Statements
Certain matters set forth herein (including any exhibits hereto) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company’s current business plans and expectations regarding future operating results. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties include, but are not limited to, local, regional, national and international economic, political or industry conditions and events and the impact they may have on us and our customers; our ability to attract deposits and other sources of liquidity; continued deterioration in values of real estate in California and other states where our bank makes loans, both residential and commercial; our ability to manage the loan portfolios acquired from FDIC-assisted acquisitions within the limits of the loss protection provided by the FDIC; changes in the financial performance and/or condition of our borrowers; changes in the level of nonperforming assets, reserve requirements, and charge-offs; the effect of changes in laws, regulations, and accounting standards, and related costs of these changes; inflation, interest rate, securities market and monetary fluctuations; changes in the competitive environment among financial and bank holding companies and other financial service providers; changes in our organization, management; the adequacy of our enterprise risk management framework; the ability to manage our growth and the effect of acquisitions we may make and the integration of acquired businesses and branching efforts; our success at managing the risks involved in the foregoing items and other factors set forth in the Company’s public reports including its Annual Report on Form 10-K for the year ended December 31, 2012, and particularly the discussion of risk factors within that document.
1 See reconciliation of the GAAP financial measure to the non-GAAP financial measure in the tables attached.
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| EAST WEST BANCORP, INC. | ||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||
| (In thousands, except per share amounts) | ||||||||||||
| (unaudited) | ||||||||||||
| June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||||||
| Assets | ||||||||||||
| Cash and cash equivalents | $ | 1,050,214 | $ | 1,736,865 | $ | 2,459,614 | ||||||
| Short-term investments | 330,438 | 379,029 | 254,714 | |||||||||
| Securities purchased under resale agreements | 1,450,000 | 1,400,000 | 675,000 | |||||||||
| Investment securities | 2,667,172 | 2,588,993 | 1,873,739 | |||||||||
| Loans receivable, excluding covered loans (net of allowance for loan | ||||||||||||
| losses of $233,480, $228,796 and $219,454) | 13,509,241 | 12,346,538 | 10,693,466 | |||||||||
| Covered loans (net of allowance for loan losses of | ||||||||||||
| $9,629, $10,110 and $7,173) | 2,504,315 | 2,752,269 | 3,416,613 | |||||||||
| Total loans receivable, net | 16,013,556 | 15,098,807 | 14,110,079 | |||||||||
| Federal Home Loan Bank and Federal Reserve Bank stock | 134,250 | 144,831 | 171,971 | |||||||||
| FDIC indemnification asset | 219,942 | 276,834 | 409,287 | |||||||||
| Other real estate owned, net | 21,433 | 32,324 | 43,222 | |||||||||
| Other real estate owned covered, net | 29,836 | 28,567 | 35,577 | |||||||||
| Premiums on deposits acquired, net | 51,501 | 53,875 | 61,480 | |||||||||
| Goodwill | 337,438 | 337,438 | 337,438 | |||||||||
| Other assets | 1,002,626 | 1,024,392 | 1,093,613 | |||||||||
| Total assets | $ | 23,308,406 | $ | 23,101,955 | $ | 21,525,734 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||||
| Deposits | $ | 19,282,207 | $ | 18,935,702 | $ | 17,341,872 | ||||||
| Federal Home Loan Bank advances | 314,022 | 313,494 | 362,885 | |||||||||
| Securities sold under repurchase agreements | 995,000 | 995,000 | 995,000 | |||||||||
| Long-term debt | 137,178 | 137,178 | 212,178 | |||||||||
| Accrued expenses and other liabilities | 322,048 | 377,462 | 318,859 | |||||||||
| Total liabilities | 21,050,455 | 20,758,836 | 19,230,794 | |||||||||
| Stockholders' equity | 2,257,951 | 2,343,119 | 2,294,940 | |||||||||
| Total liabilities and stockholders' equity | $ | 23,308,406 | $ | 23,101,955 | $ | 21,525,734 | ||||||
| Book value per common share | $ | 16.40 | $ | 16.55 | $ | 15.51 | ||||||
| Tangible book value per common share | $ | 13.55 | $ | 13.66 | $ | 12.67 | ||||||
| Number of common shares at period end | 137,705 | 136,578 | 142,646 | |||||||||
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| EAST WEST BANCORP, INC. | ||||||||||||
| TOTAL LOANS AND DEPOSIT DETAIL | ||||||||||||
| (In thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| AS OF JUNE 30, 2013 | ||||||||||||
| Non-covered | Covered, net of discount | Total loans receivable | ||||||||||
| Loans receivable | ||||||||||||
| Real estate - single family | $ | 2,575,975 | $ | 290,501 | $ | 2,866,476 | ||||||
| Real estate - multifamily | 929,867 | 459,921 | 1,389,788 | |||||||||
| Real estate - commercial | 3,917,082 | 987,521 | 4,904,603 | |||||||||
| Real estate - land and construction | 233,302 | 263,445 | 496,747 | |||||||||
| Commercial | 4,709,675 | 442,788 | 5,152,463 | |||||||||
| Consumer | 1,160,013 | 69,768 | 1,229,781 | |||||||||
| Total loans receivable, excluding loans held for sale | 13,525,914 | 2,513,944 | 16,039,858 | |||||||||
| Loans held for sale | 245,026 | — | 245,026 | |||||||||
| Total loans receivable | 13,770,940 | 2,513,944 | 16,284,884 | |||||||||
| Unearned fees, premiums and discounts | (28,219 | ) | — | (28,219 | ) | |||||||
| Allowance for loan losses | (233,480 | ) | (9,629 | ) | (243,109 | ) | ||||||
| Net loans receivable | $ | 13,509,241 | $ | 2,504,315 | $ | 16,013,556 | ||||||
| June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||||||
| Loans receivable | ||||||||||||
| Real estate - single family | $ | 2,575,975 | $ | 2,334,913 | $ | 2,017,877 | ||||||
| Real estate - multifamily | 929,867 | 919,220 | 912,941 | |||||||||
| Real estate - commercial | 3,917,082 | 3,754,434 | 3,444,957 | |||||||||
| Real estate - land and construction | 233,302 | 241,878 | 299,739 | |||||||||
| Commercial | 4,709,675 | 4,280,789 | 3,418,637 | |||||||||
| Consumer | 1,160,013 | 843,794 | 700,719 | |||||||||
| Total non-covered loans receivable, excluding loans held for sale | 13,525,914 | 12,375,028 | 10,794,870 | |||||||||
| Loans held for sale | 245,026 | 226,635 | 137,812 | |||||||||
| Covered loans, net of discount | 2,513,944 | 2,762,379 | 3,423,786 | |||||||||
| Total loans receivable | 16,284,884 | 15,364,042 | 14,356,468 | |||||||||
| Unearned fees, premiums and discounts | (28,219 | ) | (26,329 | ) | (19,762 | ) | ||||||
| Allowance for loan losses on non-covered loans | (233,480 | ) | (228,796 | ) | (219,454 | ) | ||||||
| Allowance for loan losses on covered loans | (9,629 | ) | (10,110 | ) | (7,173 | ) | ||||||
| Net loans receivable | $ | 16,013,556 | $ | 15,098,807 | $ | 14,110,079 | ||||||
| Deposits | ||||||||||||
| Noninterest-bearing demand | $ | 5,128,894 | $ | 4,838,523 | $ | 3,828,116 | ||||||
| Interest-bearing checking | 1,483,854 | 1,443,546 | 1,044,439 | |||||||||
| Money market | 5,172,192 | 5,184,111 | 4,913,524 | |||||||||
| Savings | 1,544,935 | 1,434,896 | 1,254,072 | |||||||||
| Total core deposits | 13,329,875 | 12,901,076 | 11,040,151 | |||||||||
| Time deposits | 5,952,332 | 6,034,626 | 6,301,721 | |||||||||
| Total deposits | $ | 19,282,207 | $ | 18,935,702 | $ | 17,341,872 | ||||||
10
| EAST WEST BANCORP, INC. | ||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
| (In thousands, except per share amounts) | ||||||||||||
| (unaudited) | ||||||||||||
| Quarter Ended | ||||||||||||
| June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||||||
| Interest and dividend income | $ | 255,353 | $ | 238,423 | $ | 266,362 | ||||||
| Interest expense | (27,709 | ) | (29,132 | ) | (33,205 | ) | ||||||
| Net interest income before provision for loan losses | 227,644 | 209,291 | 233,157 | |||||||||
| (Provision for) reversal of loan losses, excluding covered loans | (8,277 | ) | 762 | (16,595 | ) | |||||||
| (Provision for) reversal of loan losses on covered loans | (723 | ) | (5,089 | ) | 1,095 | |||||||
| Net interest income after provision for loan losses | 218,644 | 204,964 | 217,657 | |||||||||
| Noninterest loss | (12,354 | ) | (2,099 | ) | (11,655 | ) | ||||||
| Noninterest expense | (94,420 | ) | (96,355 | ) | (101,608 | ) | ||||||
| Income before provision for income taxes | 111,870 | 106,510 | 104,394 | |||||||||
| Provision for income taxes | 37,855 | 34,419 | 33,837 | |||||||||
| Net income | 74,015 | 72,091 | 70,557 | |||||||||
| Preferred stock dividend | (1,714 | ) | (1,714 | ) | (1,714 | ) | ||||||
| Net income available to common stockholders | $ | 72,301 | $ | 70,377 | $ | 68,843 | ||||||
| Net income per share, basic | $ | 0.52 | $ | 0.51 | $ | 0.48 | ||||||
| Net income per share, diluted | $ | 0.52 | $ | 0.50 | $ | 0.47 | ||||||
| Shares used to compute per share net income: | ||||||||||||
| - Basic | 137,536 | 137,648 | 142,107 | |||||||||
| - Diluted | 137,816 | 143,519 | 147,786 | |||||||||
| Quarter Ended | ||||||||||||
| June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||||||
| Noninterest loss: | ||||||||||||
| Branch fees | $ | 8,119 | $ | 7,654 | $ | 7,821 | ||||||
| Decrease in FDIC indemnification asset and FDIC receivable | (47,905 | ) | (31,899 | ) | (40,345 | ) | ||||||
| Net (loss) gain on sales of loans | (354 | ) | 94 | 6,375 | ||||||||
| Letters of credit fees and foreign exchange income | 9,075 | 7,398 | 5,101 | |||||||||
| Net gain on sales of investment securities | 5,345 | 5,577 | 71 | |||||||||
| Net gain on sale of fixed assets | 228 | 124 | 37 | |||||||||
| Ancillary loan fees | 2,634 | 2,052 | 2,188 | |||||||||
| Other operating income | 10,504 | 6,901 | 7,097 | |||||||||
| Total noninterest loss: | $ | (12,354 | ) | $ | (2,099 | ) | $ | (11,655 | ) | |||
| Noninterest expense: | ||||||||||||
| Compensation and employee benefits | $ | 42,026 | $ | 45,731 | $ | 42,863 | ||||||
| Occupancy and equipment expense | 13,706 | 13,808 | 13,057 | |||||||||
| Loan related expenses | 3,573 | 3,584 | 4,175 | |||||||||
| Other real estate owned (gain on sale) expense | (1,188 | ) | (984 | ) | 4,486 | |||||||
| Deposit insurance premiums and regulatory assessments | 3,875 | 3,782 | 3,323 | |||||||||
| Prepayment penalties for FHLB advances | — | — | 2,336 | |||||||||
| Legal expense | 5,467 | 4,444 | 4,150 | |||||||||
| Amortization of premiums on deposits acquired | 2,375 | 2,409 | 2,838 | |||||||||
| Data processing | 2,200 | 2,437 | 2,197 | |||||||||
| Consulting expense | 1,003 | 454 | 1,568 | |||||||||
| Amortization of investments in affordable housing partnerships | 5,064 | 4,283 | 4,425 | |||||||||
| Other operating expense | 16,319 | 16,407 | 16,190 | |||||||||
| Total noninterest expense | $ | 94,420 | $ | 96,355 | $ | 101,608 | ||||||
11
| EAST WEST BANCORP, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||
| (In thousands, except per share amounts) | ||||||||
| (unaudited) | ||||||||
| Year To Date | ||||||||
| June 30, 2013 | June 30, 2012 | |||||||
| Interest and dividend income | $ | 493,776 | $ | 520,412 | ||||
| Interest expense | (56,841 | ) | (68,337 | ) | ||||
| Net interest income before provision for loan losses | 436,935 | 452,075 | ||||||
| Provision for loan losses, excluding covered loans | (7,515 | ) | (33,074 | ) | ||||
| Provision for loan losses on covered loans | (5,812 | ) | (526 | ) | ||||
| Net interest income after provision for loan losses | 423,608 | 418,475 | ||||||
| Noninterest (loss) income | (14,453 | ) | 10,085 | |||||
| Noninterest expense | (190,775 | ) | (216,371 | ) | ||||
| Income before provision for income taxes | 218,380 | 212,189 | ||||||
| Provision for income taxes | 72,274 | 73,549 | ||||||
| Net income | 146,106 | 138,640 | ||||||
| Preferred stock dividend | (3,428 | ) | (3,428 | ) | ||||
| Net income available to common stockholders | $ | 142,678 | $ | 135,212 | ||||
| Net income per share, basic | $ | 1.03 | $ | 0.93 | ||||
| Net income per share, diluted | $ | 1.03 | $ | 0.92 | ||||
| Shares used to compute per share net income: | ||||||||
| - Basic | 137,592 | 143,727 | ||||||
| - Diluted | 141,573 | 149,414 | ||||||
| Year To Date | ||||||||
| June 30, 2013 | June 30, 2012 | |||||||
| Noninterest (loss) income: | ||||||||
| Branch fees | $ | 15,773 | $ | 15,484 | ||||
| Decrease in FDIC indemnification asset and FDIC receivable | (79,804 | ) | (45,763 | ) | ||||
| Net (loss) gain on sales of loans | (260 | ) | 11,554 | |||||
| Letters of credit fees and foreign exchange income | 16,473 | 11,172 | ||||||
| Net gain on sales of investment securities | 10,922 | 554 | ||||||
| Net gain on sale of fixed assets | 352 | 73 | ||||||
| Impairment loss on investment securities | — | (99 | ) | |||||
| Ancillary loan fees | 4,686 | 4,196 | ||||||
| Other operating income | 17,405 | 12,914 | ||||||
| Total noninterest (loss) income | $ | (14,453 | ) | $ | 10,085 | |||
| Noninterest expense: | ||||||||
| Compensation and employee benefits | $ | 87,757 | $ | 89,272 | ||||
| Occupancy and equipment expense | 27,514 | 26,575 | ||||||
| Loan related expenses | 7,157 | 8,656 | ||||||
| Other real estate owned (gain on sale) expense | (2,172 | ) | 15,351 | |||||
| Deposit insurance premiums and regulatory assessments | 7,657 | 7,315 | ||||||
| Prepayment penalties for FHLB advances | — | 3,657 | ||||||
| Legal expense | 9,911 | 11,323 | ||||||
| Amortization of premiums on deposits acquired | 4,784 | 5,711 | ||||||
| Data processing | 4,637 | 4,661 | ||||||
| Consulting expense | 1,457 | 3,035 | ||||||
| Amortization of investments in affordable housing partnerships | 9,347 | 8,891 | ||||||
| Other operating expense | 32,726 | 31,924 | ||||||
| Total noninterest expense | $ | 190,775 | $ | 216,371 | ||||
12
| EAST WEST BANCORP, INC. | ||||||||||||
| SELECTED FINANCIAL INFORMATION | ||||||||||||
| (In thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Average Balances | Quarter Ended | |||||||||||
| June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||||||
| Loans receivable | ||||||||||||
| Real estate - single family | $ | 2,444,883 | $ | 2,255,091 | $ | 1,991,863 | ||||||
| Real estate - multifamily | 924,552 | 895,202 | 914,223 | |||||||||
| Real estate - commercial | 3,800,664 | 3,663,328 | 3,458,288 | |||||||||
| Real estate - land and construction | 224,509 | 245,928 | 313,992 | |||||||||
| Commercial | 4,478,848 | 4,206,571 | 3,278,965 | |||||||||
| Consumer | 1,225,830 | 961,813 | 785,341 | |||||||||
| Total loans receivable, excluding covered loans | 13,099,286 | 12,227,933 | 10,742,672 | |||||||||
| Covered loans | 2,641,324 | 2,844,992 | 3,572,300 | |||||||||
| Total loans receivable | 15,740,610 | 15,072,925 | 14,314,972 | |||||||||
| Investment securities | 2,582,899 | 2,632,823 | 2,487,725 | |||||||||
| Earning assets | 21,289,420 | 20,695,793 | 19,508,910 | |||||||||
| Total assets | 22,994,664 | 22,576,638 | 21,527,394 | |||||||||
| Deposits | ||||||||||||
| Noninterest-bearing demand | $ | 4,882,823 | $ | 4,479,746 | $ | 3,724,399 | ||||||
| Interest-bearing checking | 1,440,538 | 1,285,270 | 978,085 | |||||||||
| Money market | 5,089,063 | 5,118,495 | 4,831,665 | |||||||||
| Savings | 1,499,428 | 1,423,090 | 1,232,663 | |||||||||
| Total core deposits | 12,911,852 | 12,306,601 | 10,766,812 | |||||||||
| Time deposits | 5,993,464 | 6,068,759 | 6,474,566 | |||||||||
| Total deposits | 18,905,316 | 18,375,360 | 17,241,378 | |||||||||
| Interest-bearing liabilities | 15,468,377 | 15,341,224 | 15,118,148 | |||||||||
| Stockholders' equity | 2,331,306 | 2,376,260 | 2,305,942 | |||||||||
| Selected Ratios | Quarter Ended | |||||||||||
| June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||||||
| For The Period | ||||||||||||
| Return on average assets | 1.29 | % | 1.30 | % | 1.32 | % | ||||||
| Return on average common equity | 12.59 | % | 12.45 | % | 12.46 | % | ||||||
| Interest rate spread | 4.09 | % | 3.90 | % | 4.61 | % | ||||||
| Net interest margin | 4.29 | % | 4.10 | % | 4.81 | % | ||||||
| Yield on earning assets | 4.81 | % | 4.67 | % | 5.49 | % | ||||||
| Cost of deposits | 0.33 | % | 0.37 | % | 0.45 | % | ||||||
| Cost of funds | 0.55 | % | 0.60 | % | 0.71 | % | ||||||
Noninterest expense/average assets (1) | 1.52 | % | 1.61 | % | 1.72 | % | ||||||
Efficiency ratio (2) | 40.40 | % | 43.28 | % | 41.54 | % | ||||||
| (1) | Excludes the amortization of intangibles, amortization of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalties for FHLB advances. |
| (2) | Represents noninterest expense, excluding the amortization of intangibles, amortization of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalties for FHLB advances, divided by the aggregate of net interest income before provision for loan losses and noninterest income, excluding items that are non-recurring in nature. |
13
| EAST WEST BANCORP, INC. | ||||||||
| SELECTED FINANCIAL INFORMATION | ||||||||
| (In thousands) | ||||||||
| (unaudited) | ||||||||
| Average Balances | Year To Date | |||||||
| June 30, 2013 | June 30, 2012 | |||||||
| Loans receivable | ||||||||
| Real estate - single family | $ | 2,350,511 | $ | 1,934,946 | ||||
| Real estate - multifamily | 909,959 | 922,737 | ||||||
| Real estate - commercial | 3,732,375 | 3,470,374 | ||||||
| Real estate - land and construction | 235,160 | 331,972 | ||||||
| Commercial | 4,343,461 | 3,229,699 | ||||||
| Consumer | 1,094,551 | 821,714 | ||||||
| Total loans receivable, excluding covered loans | 12,666,017 | 10,711,442 | ||||||
| Covered loans | 2,742,595 | 3,712,894 | ||||||
| Total loans receivable | 15,408,612 | 14,424,336 | ||||||
| Investment securities | 2,607,723 | 2,725,123 | ||||||
| Earning assets | 20,994,246 | 19,515,978 | ||||||
| Total assets | 22,786,806 | 21,608,923 | ||||||
| Deposits | ||||||||
| Noninterest-bearing demand | $ | 4,682,398 | $ | 3,635,300 | ||||
| Interest-bearing checking | 1,363,333 | 970,526 | ||||||
| Money market | 5,103,698 | 4,748,698 | ||||||
| Savings | 1,461,470 | 1,207,994 | ||||||
| Total core deposits | 12,610,899 | 10,562,518 | ||||||
| Time deposits | 6,030,904 | 6,659,958 | ||||||
| Total deposits | 18,641,803 | 17,222,476 | ||||||
| Interest-bearing liabilities | 15,405,152 | 15,217,611 | ||||||
| Stockholders' equity | 2,353,659 | 2,305,829 | ||||||
| Selected Ratios | Year To Date | |||||||
| June 30, 2013 | June 30, 2012 | |||||||
| For The Period | ||||||||
| Return on average assets | 1.29 | % | 1.29 | % | ||||
| Return on average common equity | 12.52 | % | 12.23 | % | ||||
| Interest rate spread | 4.00 | % | 4.46 | % | ||||
| Net interest margin | 4.20 | % | 4.66 | % | ||||
| Yield on earning assets | 4.74 | % | 5.36 | % | ||||
| Cost of deposits | 0.35 | % | 0.46 | % | ||||
| Cost of funds | 0.57 | % | 0.73 | % | ||||
Noninterest expense/average assets (1) | 1.56 | % | 1.84 | % | ||||
Efficiency ratio (2) | 41.81 | % | 42.86 | % | ||||
| (1) | Excludes the amortization of intangibles, amortization of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalties for FHLB advances. |
| (2) | Represents noninterest expense, excluding the amortization of intangibles, amortization of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalties for FHLB advances, divided by the aggregate of net interest income before provision for loan losses and noninterest income, excluding items that are non-recurring in nature. |
14
| EAST WEST BANCORP, INC. | ||||||||||||||||||||||||
| QUARTER TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID | ||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||
| June 30, 2013 | June 30, 2012 | |||||||||||||||||||||||
| Average | Average | |||||||||||||||||||||||
| Volume | Interest | Yield (1) | Volume | Interest | Yield (1) | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Due from banks and short-term investments | $ | 1,247,457 | $ | 4,292 | 1.38 | % | $ | 1,504,325 | $ | 5,774 | 1.54 | % | ||||||||||||
| Securities purchased under resale agreements | 1,578,846 | 5,435 | 1.38 | % | 1,026,923 | 4,758 | 1.86 | % | ||||||||||||||||
| Investment securities available-for-sale | 2,582,899 | 9,594 | 1.49 | % | 2,487,725 | 16,913 | 2.73 | % | ||||||||||||||||
| Loans receivable | 13,099,286 | 141,904 | 4.35 | % | 10,742,672 | 125,526 | 4.70 | % | ||||||||||||||||
| Loans receivable - covered | 2,641,324 | 92,386 | 14.03 | % | 3,572,300 | 112,510 | 12.67 | % | ||||||||||||||||
| Federal Home Loan Bank and Federal Reserve Bank stock | 139,608 | 1,742 | 5.00 | % | 174,965 | 881 | 2.02 | % | ||||||||||||||||
| Total interest-earning assets | 21,289,420 | 255,353 | 4.81 | % | 19,508,910 | 266,362 | 5.49 | % | ||||||||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||||
| Cash and cash equivalents | 265,915 | 234,918 | ||||||||||||||||||||||
| Allowance for loan losses | (238,702 | ) | (226,112 | ) | ||||||||||||||||||||
| Other assets | 1,678,031 | 2,009,678 | ||||||||||||||||||||||
| Total assets | $ | 22,994,664 | $ | 21,527,394 | ||||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Checking accounts | $ | 1,440,538 | $ | 876 | 0.24 | % | $ | 978,085 | $ | 725 | 0.30 | % | ||||||||||||
| Money market accounts | 5,089,063 | 3,625 | 0.29 | % | 4,831,665 | 4,243 | 0.35 | % | ||||||||||||||||
| Savings deposits | 1,499,428 | 762 | 0.20 | % | 1,232,663 | 647 | 0.21 | % | ||||||||||||||||
| Time deposits | 5,993,464 | 10,475 | 0.70 | % | 6,474,566 | 13,562 | 0.84 | % | ||||||||||||||||
| Federal funds purchased and other borrowings | 29 | — | — | 9 | — | — | ||||||||||||||||||
| Federal Home Loan Bank advances | 313,677 | 1,047 | 1.34 | % | 393,982 | 1,353 | 1.38 | % | ||||||||||||||||
| Securities sold under repurchase agreements | 995,000 | 10,217 | 4.12 | % | 995,000 | 11,591 | 4.69 | % | ||||||||||||||||
| Long-term debt | 137,178 | 707 | 2.07 | % | 212,178 | 1,084 | 2.05 | % | ||||||||||||||||
| Total interest-bearing liabilities | 15,468,377 | 27,709 | 0.72 | % | 15,118,148 | 33,205 | 0.88 | % | ||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 4,882,823 | 3,724,399 | ||||||||||||||||||||||
| Other liabilities | 312,158 | 378,905 | ||||||||||||||||||||||
| Stockholders' equity | 2,331,306 | 2,305,942 | ||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 22,994,664 | $ | 21,527,394 | ||||||||||||||||||||
| Interest rate spread | 4.09 | % | 4.61 | % | ||||||||||||||||||||
| Net interest income and net interest margin | $ | 227,644 | 4.29 | % | $ | 233,157 | 4.81 | % | ||||||||||||||||
Net interest income and net interest margin, adjusted (2) | $ | 192,170 | 3.62 | % | $ | 194,653 | 4.01 | % | ||||||||||||||||
| (1) | Annualized. |
| (2) | Amounts exclude the net impact of covered loan dispositions and amortization of the FDIC indemnification asset of $35.5 million and $38.5 million for the three months ended June 30, 2013 and 2012, respectively. |
15
| EAST WEST BANCORP, INC. | ||||||||||||||||||||||||
| YEAR TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID | ||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||
| Year To Date | ||||||||||||||||||||||||
| June 30, 2013 | June 30, 2012 | |||||||||||||||||||||||
| Average | Average | |||||||||||||||||||||||
| Volume | Interest | Yield (1) | Volume | Interest | Yield (1) | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Due from banks and short-term investments | $ | 1,227,261 | $ | 8,568 | 1.41 | % | $ | 1,276,498 | $ | 12,306 | 1.94 | % | ||||||||||||
| Securities purchased under resale agreements | 1,603,591 | 10,964 | 1.38 | % | 910,857 | 9,072 | 2.00 | % | ||||||||||||||||
| Investment securities available-for-sale | 2,607,723 | 19,804 | 1.53 | % | 2,725,123 | 38,145 | 2.81 | % | ||||||||||||||||
| Loans receivable | 12,666,017 | 272,872 | 4.34 | % | 10,711,442 | 251,201 | 4.72 | % | ||||||||||||||||
| Loans receivable - covered | 2,742,595 | 178,577 | 13.13 | % | 3,712,894 | 207,874 | 11.26 | % | ||||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stock | 147,059 | 2,991 | 4.10 | % | 179,164 | 1,814 | 2.04 | % | ||||||||||||||||
| Total interest-earning assets | 20,994,246 | 493,776 | 4.74 | % | 19,515,978 | 520,412 | 5.36 | % | ||||||||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||||
| Cash and cash equivalents | 308,725 | 252,896 | ||||||||||||||||||||||
| Allowance for loan losses | (237,501 | ) | (224,646 | ) | ||||||||||||||||||||
| Other assets | 1,721,336 | 2,064,695 | ||||||||||||||||||||||
| Total assets | $ | 22,786,806 | $ | 21,608,923 | ||||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Checking accounts | $ | 1,363,333 | $ | 1,765 | 0.26 | % | $ | 970,526 | $ | 1,413 | 0.29 | % | ||||||||||||
| Money market accounts | 5,103,698 | 7,711 | 0.30 | % | 4,748,698 | 8,244 | 0.35 | % | ||||||||||||||||
| Savings deposits | 1,461,470 | 1,556 | 0.21 | % | 1,207,994 | 1,229 | 0.20 | % | ||||||||||||||||
| Time deposits | 6,030,904 | 21,560 | 0.72 | % | 6,659,958 | 28,455 | 0.86 | % | ||||||||||||||||
| Federal funds purchased and other borrowings | 153 | — | — | 4,470 | 2 | 0.11 | % | |||||||||||||||||
| Federal Home Loan Bank advances | 313,416 | 2,086 | 1.34 | % | 412,879 | 3,495 | 1.70 | % | ||||||||||||||||
| Securities sold under repurchase agreements | 995,000 | 20,746 | 4.20 | % | 1,000,908 | 23,313 | 4.68 | % | ||||||||||||||||
| Long-term debt | 137,178 | 1,417 | 2.08 | % | 212,178 | 2,186 | 2.07 | % | ||||||||||||||||
| Total interest-bearing liabilities | 15,405,152 | 56,841 | 0.74 | % | 15,217,611 | 68,337 | 0.90 | % | ||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 4,682,398 | 3,635,300 | ||||||||||||||||||||||
| Other liabilities | 345,597 | 450,183 | ||||||||||||||||||||||
| Stockholders' equity | 2,353,659 | 2,305,829 | ||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 22,786,806 | $ | 21,608,923 | ||||||||||||||||||||
| Interest rate spread | 4.00 | % | 4.46 | % | ||||||||||||||||||||
| Net interest income and net interest margin | $ | 436,935 | 4.20 | % | $ | 452,075 | 4.66 | % | ||||||||||||||||
Net interest income and net interest margin, adjusted (2) | $ | 376,790 | 3.62 | % | $ | 398,862 | 4.11 | % | ||||||||||||||||
| (1) | Annualized. |
| (2) | Amounts exclude the net impact of covered loan dispositions and amortization of the FDIC indemnification asset of $60.1 million and $53.2 million for the six months ended June 30, 2013 and 2012, respectively. |
16
| EAST WEST BANCORP, INC. | ||||||||||||
| QUARTERLY ALLOWANCE FOR LOAN LOSSES RECAP | ||||||||||||
| (In thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Quarter Ended | ||||||||||||
| 6/30/2013 | 3/31/2013 | 6/30/2012 | ||||||||||
| NON-COVERED LOANS | ||||||||||||
| Allowance for non-covered loans, beginning of period | $ | 228,796 | $ | 229,382 | $ | 214,253 | ||||||
| Allowance for unfunded loan commitments and letters of credit | 432 | 716 | 274 | |||||||||
| Provision for (reversal of) loan losses, excluding covered loans | 8,277 | (762 | ) | 16,595 | ||||||||
| Net Charge-offs/(Recoveries): | ||||||||||||
| Real estate - single family | (177 | ) | (389 | ) | 273 | |||||||
| Real estate - multifamily | 424 | (68 | ) | 1,021 | ||||||||
| Real estate - commercial | (585 | ) | 561 | 2,179 | ||||||||
| Real estate - land and construction | 287 | 155 | 665 | |||||||||
| Commercial | 3,211 | 730 | 6,624 | |||||||||
| Consumer | 865 | (449 | ) | 906 | ||||||||
| Total net charge-offs | 4,025 | 540 | 11,668 | |||||||||
| Allowance for non-covered loans, end of period | $ | 233,480 | $ | 228,796 | $ | 219,454 | ||||||
| COVERED LOANS | ||||||||||||
Allowance for covered loans not accounted under ASC 310-30, beginning of period (1) | $ | 8,118 | $ | 5,153 | $ | 8,268 | ||||||
| Provision for (reversal of) loan losses on covered loans not accounted under ASC 310-30 | 186 | 3,097 | (1,095 | ) | ||||||||
| Net Charge-offs: | ||||||||||||
| Real estate - commercial | 22 | — | — | |||||||||
| Real estate - land and construction | 358 | — | — | |||||||||
| Commercial | 823 | 132 | — | |||||||||
| Consumer | 1 | — | — | |||||||||
| Total net charge-offs | 1,204 | 132 | — | |||||||||
Allowance for covered loans not accounted under ASC 310-30, end of period (1) | $ | 7,100 | $ | 8,118 | $ | 7,173 | ||||||
Allowance for covered loans accounted under ASC 310-30, beginning of period (2) | $ | 1,992 | $ | — | $ | — | ||||||
| Provision for loan losses on covered loans accounted under ASC 310-30 | 537 | 1,992 | — | |||||||||
Allowance for covered loans accounted under ASC 310-30, end of period of period (2) | $ | 2,529 | $ | 1,992 | $ | — | ||||||
| Total allowance for covered loans, end of period | $ | 9,629 | $ | 10,110 | $ | 7,173 | ||||||
| UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT: | ||||||||||||
| Allowance balance, beginning of period | $ | 8,721 | $ | 9,437 | $ | 12,778 | ||||||
| (Reversal of) provision for unfunded loan commitments and letters of credit | (432 | ) | (716 | ) | (274 | ) | ||||||
| Allowance balance, end of period | $ | 8,289 | $ | 8,721 | $ | 12,504 | ||||||
| GRAND TOTAL, END OF PERIOD | $ | 251,398 | $ | 247,627 | $ | 239,131 | ||||||
| (1) | This allowance is related to drawdowns on commitments that were in existence as of the acquisition dates of WFIB and UCB and, therefore, are covered under the shared-loss agreements with the FDIC but are not accounted for under ASC 310-30. Allowance on these subsequent drawdowns is accounted for as part of the allowance for loan losses. |
| (2) | This allowance is related to loans covered under the shared-loss agreements with the FDIC, accounted under ASC 310-30. |
17
| EAST WEST BANCORP, INC. | ||||||||||||
| QUARTERLY CREDIT QUALITY ANALYSIS | ||||||||||||
| (In thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Non-Performing Assets, Excluding Covered Assets | ||||||||||||
| 6/30/2013 | 3/31/2013 | 6/30/2012 | ||||||||||
| Nonaccrual Loan Type | ||||||||||||
| Real estate - single family | $ | 7,210 | $ | 9,594 | $ | 7,755 | ||||||
| Real estate - multifamily | 30,226 | 14,554 | 20,407 | |||||||||
| Real estate - commercial | 17,271 | 19,251 | 24,843 | |||||||||
| Real estate - land and construction | 11,201 | 31,670 | 33,059 | |||||||||
| Commercial | 45,327 | 50,749 | 23,072 | |||||||||
| Consumer | 796 | 1,345 | 3,298 | |||||||||
| Total non-covered nonaccrual loans | $ | 112,031 | $ | 127,163 | $ | 112,434 | ||||||
| Other real estate owned, net | 21,433 | 32,324 | 43,222 | |||||||||
| Total non-performing assets, excluding covered assets | $ | 133,464 | $ | 159,487 | $ | 155,656 | ||||||
Nonperforming assets to total assets (1) | 0.57 | % | 0.69 | % | 0.72 | % | ||||||
| Allowance for loan losses on non-covered loans to total gross non-covered loans held for investment at end of period | 1.73 | % | 1.85 | % | 2.03 | % | ||||||
| Allowance for loan losses on non-covered loans and unfunded loan commitments to total gross non-covered loans held for investment at end of period | 1.79 | % | 1.92 | % | 2.15 | % | ||||||
| Allowance on non-covered loans to non-covered nonaccrual loans at end of period | 208.41 | % | 179.92 | % | 195.18 | % | ||||||
Nonaccrual loans to total loans (2) | 0.69 | % | 0.83 | % | 0.78 | % | ||||||
Net-chargeoffs on non-covered loans to average total non-covered loans (3) | 0.12 | % | 0.02 | % | 0.44 | % | ||||||
| (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) | Annualized. |
18
EAST WEST BANCORP, INC.
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
(unaudited)
The tangible common equity to risk weighted assets and tangible common equity to tangible assets ratios are non-GAAP disclosures. 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 assets ratio 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 assets ratios.
| As of | ||||
| June 30, 2013 | ||||
| Stockholders' equity | $ | 2,257,951 | ||
| Less: | ||||
| Goodwill and other intangible assets | (391,965 | ) | ||
| Tangible equity | $ | 1,865,986 | ||
| Risk-weighted assets | 15,457,156 | |||
| Tangible equity to risk-weighted assets ratio | 12.1 | % | ||
| As of | ||||
| June 30, 2013 | ||||
| Total assets | $ | 23,308,406 | ||
| Less: | ||||
| Goodwill and other intangible assets | (391,965 | ) | ||
| Tangible assets | $ | 22,916,441 | ||
| Tangible equity to tangible assets ratio | 8.1 | % | ||
19
EAST WEST BANCORP, INC.
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 operating noninterest expense provides more clarity to the users of financial statements regarding the core noninterest expense amounts.
| Quarter Ended | |||||||||||||
| June 30, 2013 | March 31, 2013 | June 30, 2012 | |||||||||||
| Total noninterest expense | $ | 94,420 | $ | 96,355 | $ | 101,608 | |||||||
Amounts to be reimbursed by the FDIC on covered assets (80% of actual expense amount) (1) | 2,910 | (61 | ) | 2,683 | |||||||||
| Prepayment penalties for FHLB advances | - | - | 2,336 | ||||||||||
| Noninterest expense excluding reimbursable amounts and prepayment penalties for FHLB advances | $ | 91,510 | $ | 96,416 | $ | 96,589 | |||||||
| (1) | Pursuant to the shared-loss agreements, the FDIC reimburses the Company 80% of eligible losses with respect to covered assets. The FDIC also shares in 80% of the recoveries or gains with respect to covered assets. During the three months ended March 31, 2013, the Company had a net $61 thousand payable to the FDIC, mainly due to a net gain on sale of OREOs. |
| Year to Date | |||||||||||||
| June 30, 2013 | June 30, 2012 | ||||||||||||
| Total noninterest expense | $ | 190,775 | $ | 216,371 | |||||||||
| Amounts to be reimbursed by the FDIC on covered assets (80% of actual expense amount) | 2,849 | 14,805 | |||||||||||
| Prepayment penalties for FHLB advances | - | 3,657 | |||||||||||
| Noninterest expense excluding reimbursable amounts and prepayment penalties for FHLB advances | $ | 187,926 | $ | 197,909 | |||||||||
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 income on covered loans includes amounts that are non-core in nature. As such, the Company believes that presenting the net interest income on covered loans excluding such non-core items provides additional clarity to the users of financial statements regarding the covered loan yield, comparability to prior periods and the ongoing performance of the Company.
| Quarter Ended June 30, 2013 | ||||||||||||
| Average Volume | Interest | Yield (1) | ||||||||||
| Loans receivable - covered | $ | 2,641,324 | $ | 92,386 | 14.03 | % | ||||||
| Less net impact of covered loan dispositions and amortization of | ||||||||||||
| the FDIC indemnification asset | (35,474 | ) | ||||||||||
| Covered loans excluding net impact of covered loan dispositions and | ||||||||||||
| amortization of the FDIC indemnification asset | $ | 56,912 | 8.64 | % | ||||||||
| Quarter Ended June 30, 2012 | ||||||||||||
| Average Volume | Interest | Yield (1) | ||||||||||
| Loans receivable - covered | $ | 3,572,300 | $ | 112,510 | 12.67 | % | ||||||
| Less net impact of covered loan dispositions and amortization of | ||||||||||||
| the FDIC indemnification asset | (38,504 | ) | ||||||||||
| Covered loans excluding net impact of covered loan dispositions and | ||||||||||||
| amortization of the FDIC indemnification asset | $ | 74,006 | 8.33 | % | ||||||||
(1) Annualized.
21
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 income on covered loans includes amounts that are non-core in nature. As such, the Company believes that presenting the net interest income on covered loans excluding such non-core items provides additional clarity to the users of financial statements regarding the covered loan yield, comparability to prior periods and the ongoing performance of the Company.
| Year to Date June 30, 2013 | ||||||||||||
| Average Volume | Interest | Yield (1) | ||||||||||
| Loans receivable - covered | $ | 2,742,595 | $ | 178,577 | 13.13 | % | ||||||
| Less net impact of covered loan dispositions and amortization of | ||||||||||||
| the FDIC indemnification asset | (60,145 | ) | ||||||||||
| Covered loans excluding net impact of covered loan dispositions and | ||||||||||||
| amortization of the FDIC indemnification asset | $ | 118,432 | 8.71 | % | ||||||||
| Year to Date June 30, 2012 | ||||||||||||
| Average Volume | Interest | Yield (1) | ||||||||||
| Loans receivable - covered | $ | 3,712,894 | $ | 207,874 | 11.26 | % | ||||||
| Less net impact of covered loan dispositions and amortization of | ||||||||||||
| the FDIC indemnification asset | (53,213 | ) | ||||||||||
| Covered loans excluding net impact of covered loan dispositions and | ||||||||||||
| amortization of the FDIC indemnification asset | $ | 154,661 | 8.38 | % | ||||||||
(1) Annualized.
22
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 June 30, 2013 | ||||||||||||
| Average Volume | Interest | Yield (1) | ||||||||||
| Total interest-earning assets | $ | 21,289,420 | $ | 255,353 | 4.81 | % | ||||||
| Net interest income and net interest margin | 227,644 | 4.29 | % | |||||||||
| Less net impact of covered loan dispositions and amortization of | ||||||||||||
| the FDIC indemnification asset | (35,474 | ) | ||||||||||
| Net interest income and net interest margin, excluding | ||||||||||||
| net impact of covered loan dispositions and amortization of the FDIC indemnification asset | $ | 192,170 | 3.62 | % | ||||||||
| Quarter Ended March 31, 2013 | ||||||||||||
| Average Volume | Interest | Yield (1) | ||||||||||
| Total interest-earning assets | $ | 20,695,793 | $ | 238,423 | 4.67 | % | ||||||
| Net interest income and net interest margin | 209,291 | 4.10 | % | |||||||||
| Less net impact of covered loan dispositions and amortization of | ||||||||||||
| the FDIC indemnification asset | (24,672 | ) | ||||||||||
| Net interest income and net interest margin, excluding | ||||||||||||
| net impact of covered loan dispositions and amortization of the FDIC indemnification asset | $ | 184,619 | 3.62 | % | ||||||||
| Quarter Ended June 30, 2012 | ||||||||||||
| Average Volume | Interest | Yield (1) | ||||||||||
| Total interest-earning assets | $ | 19,508,910 | $ | 266,362 | 5.49 | % | ||||||
| Net interest income and net interest margin | 233,157 | 4.81 | % | |||||||||
| Less net impact of covered loan dispositions and amortization of | ||||||||||||
| the FDIC indemnification asset | (38,504 | ) | ||||||||||
| Net interest income and net interest margin, excluding | ||||||||||||
| net impact of covered loan dispositions and amortization of the FDIC indemnification asset | $ | 194,653 | 4.01 | % | ||||||||
(1) Annualized.
23
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.
| Year to Date June 30, 2013 | ||||||||||||
| Average Volume | Interest | Yield (1) | ||||||||||
| Total interest-earning assets | $ | 20,994,246 | $ | 493,776 | 4.74 | % | ||||||
| Net interest income and net interest margin | 436,935 | 4.20 | % | |||||||||
| Less net impact of covered loan dispositions and amortization of | ||||||||||||
| the FDIC indemnification asset | (60,145 | ) | ||||||||||
| Net interest income and net interest margin, excluding | ||||||||||||
| net impact of covered loan dispositions and amortization of the FDIC indemnification asset | $ | 376,790 | 3.62 | % | ||||||||
| Year to Date June 30, 2012 | ||||||||||||
| Average Volume | Interest | Yield (1) | ||||||||||
| Total interest-earning assets | $ | 19,515,978 | $ | 520,412 | 5.36 | % | ||||||
| Net interest income and net interest margin | 452,075 | 4.66 | % | |||||||||
| Less net impact of covered loan dispositions and amortization of | ||||||||||||
| the FDIC indemnification asset | (53,213 | ) | ||||||||||
| Net interest income and net interest margin, excluding | ||||||||||||
| net impact of covered loan dispositions and amortization of the FDIC indemnification asset | $ | 398,862 | 4.11 | % | ||||||||
(1) Annualized.
24