Exhibit 99.1
 | East West Bancorp, Inc. 135 N. Los Robles Ave., 7th Fl. Pasadena, CA 91101 Tel. 626.768.6000 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 FIRST QUARTER 2014 OF $76.7 MILLION, UP 6% FROM PRIOR YEAR AND EARNINGS PER SHARE OF $0.54, UP 8% FROM PRIOR YEAR
Pasadena, CA – April 16, 2014 – 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 first quarter of 2014. For the first quarter of 2014, net income was $76.7 million or $0.54 per diluted share. First quarter earnings included integration and merger expenses of $10.6 million pretax, or $0.04 per diluted share associated with the acquisition of MetroCorp Bancshares, Inc. (“MetroCorp”) which was completed on January 17, 2014. 1
“East West has started off 2014 with healthy growth and solid profitability. For the first quarter, East West recorded earnings of $76.7 million or $0.54 per share, a $0.04 or 8% increase in earnings per share from the prior year period,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. “This growth in profitability and earnings per share has been achieved while we also generated strong return on asset and return on equity ratios. For the first quarter 2014, East West achieved a return on average assets of 1.18%, and a return on average equity of 12.05%, both higher than many peers in the banking industry.”
Ng continued, “Quarter to date, total loans increased by 10% or $1.8 billion to a record $19.9 billion and total deposits increased 12% or $2.4 billion to a record $22.8 billion. This balance sheet increase during the first quarter of 2014 was largely driven by our acquisition of MetroCorp, which expands East West’s presence in the Houston and Dallas markets and strengthens our footprint in California. With the acquisition of MetroCorp, we have opportunities to grow in attractive markets and to provide our new customers with our full bridge banking capabilities between the U.S. and China. The integration process is progressing smoothly and the full conversion of all MetroCorp systems is scheduled for completion later this year in June.”
“The strong financial performance for the first quarter was driven by solid loan growth, a 13% increase in the adjusted net interest income from the prior year period, and an increase in the adjusted net interest margin from the prior quarter to 3.45%. This revenue growth was achieved while also maintaining strong credit quality and expense control, with an efficiency ratio of 43.36% for the first quarter,” continued Ng.
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“As the financial bridge between the East and the West, we see increasing business opportunities both in the U.S. and in Greater China. We are building lines of business, making investments in people and infrastructure and strengthening our balance sheet so that we are well positioned to capitalize on these growth opportunities to increase shareholder return for 2014 and for many years to come,” concluded Ng.
Quarterly Results Summary
| (Dollars in millions, except per share) | Quarter Ended | |||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||
| Net income | $ | 76.74 | $ | 75.78 | $ | 72.09 | ||||||
| Net income available to common shareholders | $ | 76.74 | $ | 75.78 | $ | 70.38 | ||||||
| Earnings per share (diluted) | $ | 0.54 | $ | 0.55 | $ | 0.50 | ||||||
| Tangible book value per common share | $ | 14.72 | $ | 14.37 | $ | 13.66 | ||||||
| Return on average assets | 1.18 | % | 1.21 | % | 1.30 | % | ||||||
| Return on average common equity | 12.05 | % | 12.65 | % | 12.45 | % | ||||||
Net interest income, adjusted (1) | $ | 208.97 | $ | 198.24 | $ | 184.62 | ||||||
Net interest margin, adjusted (1) | 3.45 | % | 3.41 | % | 3.62 | % | ||||||
| Cost of deposits | 0.30 | % | 0.31 | % | 0.37 | % | ||||||
Efficiency ratio (1) | 43.36 | % | 47.69 | % | 43.28 | % | ||||||
First Quarter 2014 Highlights
● | Strong First Quarter Earnings – For the first quarter of 2014, net income was $76.7 million or $0.54 per diluted share. Net income increased 1% or $959 thousand from the fourth quarter of 2013 and 6% or $4.7 million from the first quarter of 2013. Earnings per diluted share decreased 2% or $0.01 from the fourth quarter of 2013 and increased 8% or $0.04 from the first quarter of 2013. Excluding the impact of MetroCorp related integration and merger expenses in the first quarter 2014, earnings per diluted share was $0.58 or an increase of 5% or $0.03 as compared to fourth quarter 2013. 1 |
● | Strong Loan Growth – Quarter to date, total loans receivable (including both covered and non-covered loans) increased 10% or $1.8 billion to a record $19.9 billion as of March 31, 2014. Of this increase, $1.1 billion was due to the addition of loans from MetroCorp and $727.7 million stemmed from growth in the East West portfolio, largely driven by growth in commercial and industrial loans. |
● | Strong Deposit Growth – Total deposits increased $2.4 billion to a record $22.8 billion as of March 31, 2014. Of this increase, $1.3 billion was due to the addition of deposits from MetroCorp and $1.1 billion stemmed from organic growth. During the first quarter, core deposits increased by 13% or $1.9 billion to a record $16.4 billion. As of March 31, 2014, noninterest-bearing demand deposits totaled a record $6.6 billion or 29% of total deposits. |
● | Strong Capital Levels – Capital levels for East West remain high. As of March 31, 2014, East West’s Tier 1 risk-based capital and total risk-based ratios were 11.2% and 13.0%, respectively, over $550 million greater than the well capitalized requirements of 6% and 10%, respectively. |
● | Cost of Deposits Down 1 bp from Q4 2013 and Down 7 bps from Q1 2013 – The cost of deposits was 0.30% for the first quarter of 2014, down one basis point from 0.31% in the fourth quarter of 2013 and down seven basis points from 0.37% in the first quarter of 2013. |
● | Nonperforming Assets of 0.59% of Total Assets – Nonperforming assets to total assets ratio remained well below 1%, as of March 31, 2014. Included in nonperforming assets as of March 31, 2014 are $26.5 million of nonperforming assets from MetroCorp. |
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Management Guidance
The Company is providing guidance for the second quarter and full year of 2014. Management currently estimates that fully diluted earnings per share for the full year of 2014 will range from $2.27 to $2.31, an increase of $0.17 to $0.21 or 8% to 10% from $2.10 for the full year of 2013. This EPS guidance for the remainder of 2014 is based on an adjusted net interest margin ranging from 3.30% to 3.40%1, total loan growth of approximately $400 million per quarter, provision for loan losses of approximately $5.0 million to $7.5 million per quarter, noninterest expense of approximately $110.0 million to $115.0 million per quarter, and an effective tax rate of 32%. Management currently estimates that fully diluted earnings per share for the second quarter of 2014 will range from $0.56 to $0.58, based on the assumptions stated above.
Balance Sheet Summary
At March 31, 2014, total assets increased to $27.4 billion, up 11% or $2.7 billion from $24.7 billion at December 31, 2013, and up 19% or $4.3 billion from $23.1 billion at March 31, 2013. Correspondingly, average earning assets also increased during the first quarter, up 6% or $1.5 billion to $24.5 billion compared to the prior quarter. The increases in both total assets and in average earning assets from December 31, 2013 to March 31, 2014 was attributable to the MetroCorp acquisition and to an overall increase in the non-covered loan portfolio.
Total loans receivable increased 10% or $1.8 billion to $19.9 billion at March 31, 2014, compared to $18.1 billion at December 31, 2013, and $15.4 billion at March 31, 2013. This increase in loans receivable both from the prior quarter and the prior year period was due to the loans acquired from MetroCorp and to new loan originations, which was partially offset by a decrease in the covered loan portfolio. As of the acquisition close on January 17, 2014, total loans obtained from MetroCorp equaled $1.2 billion.
Covered Loans
Covered loans, net of discount, totaled $2.0 billion as of March 31, 2014, a decrease of 7% or $160.3 million from December 31, 2013. The decrease in the covered loan portfolio was primarily due to payoffs and paydown activity.
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 first quarter of 2014, we recorded a net decrease in the FDIC indemnification asset and receivable included in noninterest (loss)/income of ($53.6) 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 ($53.6) million for the first quarter of 2014 is an expense of $6.8 million for this liability due to the continuing strong credit performance of the covered portfolios.
Deposits and Other Liabilities
At March 31, 2014, total deposits reached a record $22.8 billion, an increase of $2.4 billion from December 31, 2013. Through the MetroCorp acquisition the Company acquired $803.1 million of core deposits and $519.9 million of time deposits. In the first quarter 2014, we continued to execute our strategy to grow low-cost, commercial deposits. Excluding MetroCorp deposits acquired, core deposits increased 7% or $1.0 billion from December 31, 2013 and increased 21% or $2.7 billion from March 31, 2013, totaling a record $16.4 billion as of March 31, 2014. The growth in core deposits was largely due to a strong increase in noninterest-bearing demand deposits.
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At March 31, 2014, long-term debt increased to $240.7 million, up from $226.9 million as of December 31, 2013. The increase in long-term debt during the quarter was largely due to trust preferred junior subordinated debt acquired from MetroCorp, which was retained by the Company as it carries a favorable rate and qualifies as tier II capital.
First Quarter 2014 Operating Results
Net Interest Income
Net interest income, adjusted for the net impact of covered loan activity, totaled $209.0 million for the first quarter of 2014, an increase from both $198.2 million for the fourth quarter of 2013 and $184.6 million for the first quarter of 2013. The core net interest margin, considering the net impact of $49.0 million to the FDIC indemnification asset due to covered loan activity and amortization of the FDIC indemnification asset, totaled 3.45% for the first quarter of 2014. This compares to a core net interest margin of 3.41% and 3.62%, considering the net impact of $66.8 million and $24.7 million to the FDIC indemnification asset due to covered loan activity and amortization of the FDIC indemnification asset, for the fourth quarter of 2013 and first quarter of 2013, respectively.1
The four basis point increase in the core net interest margin and the 5% or $10.7 million increase in adjusted net interest income compared to the fourth quarter of 2013 was largely due to the increase in our loan portfolio balances, increases in yields in earning assets and a small reduction in the cost of funds. Quarter over quarter, the cost of funds decreased two basis points to 0.49% and the cost of deposits decreased one basis point to 0.30% for the first quarter of 2014.
Noninterest (Loss)/Income & Expense
The Company reported total noninterest (loss)/income for the first quarter of 2014 of ($14.9) million, compared to a noninterest loss of ($36.6) million in the fourth quarter of 2013 and noninterest loss of ($2.1) million in the first quarter of 2013. The reduction in the noninterest loss in the current quarter compared to the prior quarter was largely due to a decrease in the net reduction of the FDIC indemnification asset and FDIC receivable.
Branch fees, letter of credit and foreign exchange income, ancillary loan fees and other operating income totaled $28.9 million in the first quarter of 2014, a decrease of 13% or $4.5 million from $33.4 million in the fourth quarter of 2013 and an increase of 20% or $4.9 million from $24.0 million in the first quarter of 2013. In addition, included in noninterest (loss)/income for the first quarter of 2014 were net gains of $6.2 million primarily related to the sale of $132.3 million of government guaranteed student loans and $26.6 million of SBA loans and net gains of $3.4 million primarily related to the sale of $276.5 million in investment securities. A summary of fees and other operating income for the first quarter of 2014, compared to the fourth quarter of 2013 and first quarter of 2013 is detailed below:
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| Quarter Ended | % Change | |||||||||||||||
| ($ in thousands) | March 31, 2014 | December 31, 2013 | March 31, 2013 | (Yr/Yr) | ||||||||||||
| Branch fees | $ | 9,446 | $ | 8,140 | $ | 7,654 | 23 | % | ||||||||
| Letters of credit fees and foreign exchange income | 6,856 | 9,746 | 7,398 | -7 | % | |||||||||||
| Ancillary loan fees | 2,472 | 2,557 | 2,052 | 20 | % | |||||||||||
| Other operating income | 10,150 | 12,964 | 6,901 | 47 | % | |||||||||||
| Total fees & other operating income | $ | 28,924 | $ | 33,407 | $ | 24,005 | 20 | % | ||||||||
Noninterest expense totaled $124.4 million for the first quarter of 2014, an increase of $43 thousand from the fourth quarter of 2013 and an increase of 29% or $28.1 million from the first quarter of 2013.
Noninterest expense, excluding the impact of reimbursable amounts from the FDIC on covered assets, and integration and merger related expenses, totaled $111.8 million for the first quarter of 2014.1 A summary of noninterest expense for the first quarter of 2014, compared to the fourth quarter of 2013 and first quarter of 2013 is detailed below:
| ($ in thousands) | Quarter Ended | |||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||
| Total noninterest expense | $ | 124,427 | $ | 124,384 | $ | 96,355 | ||||||
Amounts to be reimbursed by the FDIC on covered assets (80% of actual expense amount)* | 2,015 | 1,331 | (61 | ) | ||||||||
| Integration and merger related expenses | 10,576 | — | — | |||||||||
Noninterest expense excluding reimbursable amounts and integration and merger related expenses | $ | 111,836 | $ | 123,053 | $ | 96,416 | ||||||
| * | 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 first quarter, excluding the impact of reimbursable amounts from the FDIC on covered assets and integration and merger related expenses, resulting from the MetroCorp acquisition, decreased 9% or $11.2 million from the prior quarter to $111.8 million. Integration and merger related expenses totaling $10.6 million for the first quarter of 2014 were largely comprised of compensation and employee benefits, data processing expenses, and occupancy and equipment expenses.
The decrease in noninterest expense, quarter over quarter, was primarily due to a decrease in legal expense of $9.0 million, and a decrease in the amortization of investments in affordable housing partnerships and other investments of $7.3 million, partially offset by an increase in compensation and employee benefits of $12.6 million. In the fourth quarter of 2013, the Company had a higher level of legal expenses resulting from the resolution of litigation. The decrease in the amortization of investments in affordable housing partnerships and other investments as compared to the fourth quarter of 2013 was primarily due to investments made in the fourth quarter of 2013, where the associated tax credit was largely for the 2013 tax year, and as a result the amortization expense on those investments increased during the fourth quarter of 2013.
Credit Quality
Non-covered Loans
The Company recorded provision for loan losses for non-covered loans of $8.0 million for the first quarter of 2014. This compares to a provision for loan losses of $6.3 million for the fourth quarter of 2013 and a reversal of provision for loan losses of $762 thousand for the first quarter of 2013. The increase in the provision for loan losses for non-covered loans compared to the prior quarter is primarily due to the organic growth in the loan portfolio, as the acquired loans were recorded at fair value at acquisition close. During the first quarter 2014, there were net charge-offs on non-covered loans of $4.1 million, an increase from net recoveries of $1.3 million in the fourth quarter of 2013 and net charge-offs of $540 thousand in the first quarter of 2013.
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Nonaccrual loans, excluding covered loans, totaled $132.5 million or 0.67% of total loans at March 31, 2014, an increase from 0.62% of total loans at December 31, 2013 and a decrease from 0.83% of total loans at March 31, 2013. The nonperforming assets to total assets ratio remained low at 0.59% as of March 31, 2014, compared to 0.53% as of December 31, 2013, and 0.69% as of March 31, 2013. The increase in nonaccrual loans and nonperforming assets as compared to December 31, 2013 was largely due to the impact of nonperfoming assets acquired from MetroCorp.
The allowance for non-covered loan losses was $245.6 million or 1.42% of non-covered loans receivable at March 31, 2014. This compares to an allowance for non-covered loan losses of $241.9 million or 1.54% of non-covered loans at December 31, 2013 and $228.8 million or 1.85% of non-covered loans at March 31, 2013.
The Company recorded a provision for unfunded commitments and letters of credit of $215 thousand for the first quarter 2014. The allowance for unfunded commitments and letters of credit was $11.5 million as of March 31, 2014. This compares to an allowance for unfunded commitments and letters of credit of $11.3 million and $8.7 million for the fourth quarter of 2013 and first quarter of 2013, respectively.
Covered Loans
During the first quarter the Company recorded a reversal of provision for loan losses on covered loans of $1.0 million. 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. For all recoveries the Company also shares 80% of the amount recovered with the FDIC.
Capital Strength
| (Dollars in millions) | ||||||||||||
Well Capitalized Regulatory | Total Excess Above Well Capitalized | |||||||||||
| March 31, 2014 | Requirement | Requirement | ||||||||||
| Tier 1 leverage capital ratio | 8.5 | % | 5.00 | % | $ | 912 | ||||||
| Tier 1 risk-based capital ratio | 11.2 | % | 6.00 | % | 1,024 | |||||||
| Total risk-based capital ratio | 13.0 | % | 10.00 | % | 595 | |||||||
| Tangible equity to tangible assets ratio | 7.9 | % | N/A | N/A | ||||||||
| Tangible equity to risk weighted assets ratio | 10.7 | % | N/A | N/A | ||||||||
Our capital ratios remain very strong. As of March 31, 2014, our Tier 1 leverage capital ratio totaled 8.5%, our Tier 1 risk-based capital ratio totaled 11.2% and our total risk-based capital ratio totaled 13.0%.
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.
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Dividend Payout and Capital Actions
East West’s Board of Directors has declared second quarter dividends for the common stock. The common stock cash dividend of $0.18 is payable on or about May 19, 2014 to shareholders of record on May 2, 2014.
Conference Call
East West will host a conference call to discuss first quarter 2014 earnings with the public on Thursday, April 17, 2014 at 8:30 a.m. PDT/11:30 a.m. EDT. The public and investment community are invited to listen as management discusses first 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 $27.4 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 banks headquartered in California. East West is a premier bank focused exclusively on the United States and Greater China markets and operates over 130 locations worldwide, including in the United States markets of California, Georgia, Nevada, New York, Massachusetts, Texas and Washington. In Greater China, East West’s presence includes a full service branch in Hong Kong and representative offices in Beijing, Chongqing, Shenzhen, Taipei and Xiamen. 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.
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, 2013, and particularly the discussion of risk factors within that document. Additional risks and uncertainties relating to the MetroCorp acquisition include, but are not limited to: the ability to successfully integrate the two institutions and achieve expected synergies and operating efficiencies on the expected timeframe. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, East West’s results could differ materially from those expressed in, implied or projected by such forward-looking statements. East West assumes no obligation to update such forward-looking statements.
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) | ||||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||
| Assets | ||||||||||||
| Cash and cash equivalents | $ | 1,884,855 | $ | 895,820 | $ | 1,736,865 | ||||||
| Short-term investments | 323,266 | 257,473 | 379,029 | |||||||||
| Securities purchased under resale agreements | 1,200,000 | 1,300,000 | 1,400,000 | |||||||||
| Investment securities | 2,474,744 | 2,733,797 | 2,588,993 | |||||||||
| Loans receivable, excluding covered loans (net of allowance for loan | ||||||||||||
| losses of $245,618, $241,930 and $228,796) | 17,630,797 | 15,617,685 | 12,346,538 | |||||||||
| Covered loans (net of allowance for loan losses of $6,518, $7,745 | ||||||||||||
| and $10,110) | 2,028,806 | 2,187,898 | 2,752,269 | |||||||||
| Total loans receivable, net | 19,659,603 | 17,805,583 | 15,098,807 | |||||||||
| Federal Home Loan Bank and Federal Reserve Bank stock | 102,480 | 110,663 | 144,831 | |||||||||
| FDIC indemnification asset | 27,552 | 74,708 | 276,834 | |||||||||
| Other real estate owned, net | 28,421 | 18,900 | 32,324 | |||||||||
| Other real estate owned covered, net | 30,610 | 21,373 | 28,567 | |||||||||
| Premiums on deposits acquired, net | 53,013 | 46,920 | 53,875 | |||||||||
| Goodwill | 458,467 | 337,438 | 337,438 | |||||||||
| Other assets | 1,158,015 | 1,127,393 | 1,024,392 | |||||||||
| Total assets | $ | 27,401,026 | $ | 24,730,068 | $ | 23,101,955 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||||
| Deposits | $ | 22,828,057 | $ | 20,412,918 | $ | 18,935,702 | ||||||
| Federal Home Loan Bank advances | 315,620 | 315,092 | 313,494 | |||||||||
| Securities sold under repurchase agreements | 1,005,316 | 995,000 | 995,000 | |||||||||
| Long-term debt | 240,675 | 226,868 | 137,178 | |||||||||
| Accrued expenses and other liabilities | 387,138 | 415,965 | 377,462 | |||||||||
| Total liabilities | 24,776,806 | 22,365,843 | 20,758,836 | |||||||||
| Stockholders' equity | 2,624,220 | 2,364,225 | 2,343,119 | |||||||||
| Total liabilities and stockholders' equity | $ | 27,401,026 | $ | 24,730,068 | $ | 23,101,955 | ||||||
| Book value per common share | $ | 18.30 | $ | 17.18 | $ | 16.55 | ||||||
| Tangible book value per common share | $ | 14.72 | $ | 14.37 | $ | 13.66 | ||||||
| Number of common shares at period end | 143,368 | 137,631 | 136,578 | |||||||||
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| EAST WEST BANCORP, INC. | ||||||||||||
| TOTAL LOANS AND DEPOSIT DETAIL | ||||||||||||
| (In thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| AS OF MARCH 31, 2014 | ||||||||||||
Non-covered (1) | Covered (1) | Total loans receivable | ||||||||||
| Loans receivable | ||||||||||||
| Real estate - single family | $ | 3,238,298 | $ | 258,629 | $ | 3,496,927 | ||||||
| Real estate - multifamily | 1,111,188 | 347,127 | 1,458,315 | |||||||||
| Real estate - commercial | 5,118,377 | 912,977 | 6,032,757 | |||||||||
| Real estate - land and construction | 401,543 | 80,710 | 482,253 | |||||||||
| Commercial | 6,201,083 | 370,870 | 6,570,550 | |||||||||
| Consumer | 1,237,922 | 65,011 | 1,302,933 | |||||||||
| Total loans receivable, excluding loans held for sale | 17,308,411 | 2,035,324 | 19,343,735 | |||||||||
| Loans held for sale | 577,353 | — | 577,353 | |||||||||
| Total loans receivable | 17,885,764 | 2,035,324 | 19,921,088 | |||||||||
| Unearned fees, premiums and discounts | (9,349 | ) | — | (9,349 | ) | |||||||
| Allowance for loan losses | (245,618 | ) | (6,518 | ) | (252,136 | ) | ||||||
| Net loans receivable | $ | 17,630,797 | $ | 2,028,806 | $ | 19,659,603 | ||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||
| Loans receivable | ||||||||||||
| Real estate - single family | $ | 3,238,298 | $ | 3,192,875 | $ | 2,334,913 | ||||||
| Real estate - multifamily | 1,111,188 | 992,434 | 919,220 | |||||||||
| Real estate - commercial | 5,118,377 | 4,301,030 | 3,754,434 | |||||||||
| Real estate - land and construction | 401,543 | 284,047 | 241,878 | |||||||||
| Commercial | 6,201,083 | 5,360,193 | 4,280,789 | |||||||||
| Consumer | 1,237,922 | 1,547,738 | 843,794 | |||||||||
| Total non-covered loans receivable, excluding loans held for sale | 17,308,411 | 15,678,317 | 12,375,028 | |||||||||
| Loans held for sale | 577,353 | 204,970 | 226,635 | |||||||||
| Covered loans, net of discount | 2,035,324 | 2,195,643 | 2,762,379 | |||||||||
| Total loans receivable | 19,921,088 | 18,078,930 | 15,364,042 | |||||||||
| Unearned fees, premiums and discounts | (9,349 | ) | (23,672 | ) | (26,329 | ) | ||||||
| Allowance for loan losses on non-covered loans | (245,618 | ) | (241,930 | ) | (228,796 | ) | ||||||
| Allowance for loan losses on covered loans | (6,518 | ) | (7,745 | ) | (10,110 | ) | ||||||
| Net loans receivable | $ | 19,659,603 | $ | 17,805,583 | $ | 15,098,807 | ||||||
| Deposits | ||||||||||||
| Noninterest-bearing demand | $ | 6,636,874 | $ | 5,821,899 | $ | 4,838,523 | ||||||
| Interest-bearing checking | 2,028,134 | 1,749,479 | 1,443,546 | |||||||||
| Money market | 5,853,467 | 5,383,759 | 5,184,111 | |||||||||
| Savings | 1,926,289 | 1,633,433 | 1,434,896 | |||||||||
| Total core deposits | 16,444,764 | 14,588,570 | 12,901,076 | |||||||||
| Time deposits | 6,383,293 | 5,824,348 | 6,034,626 | |||||||||
| Total deposits | $ | 22,828,057 | $ | 20,412,918 | $ | 18,935,702 | ||||||
(1) Loans net of ASC 310-30 discount.
9
| EAST WEST BANCORP, INC. | ||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
| (In thousands, except per share amounts) | ||||||||||||
| (unaudited) | ||||||||||||
| Quarter Ended | ||||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||
| Interest and dividend income | $ | 286,173 | $ | 293,203 | $ | 238,423 | ||||||
| Interest expense | (28,207 | ) | (28,195 | ) | (29,132 | ) | ||||||
| Net interest income before provision for loan losses | 257,966 | 265,008 | 209,291 | |||||||||
| (Provision for) reversal of loan losses, excluding covered loans | (7,954 | ) | (6,286 | ) | 762 | |||||||
| Reversal of (provision for) loan losses on covered loans | 1,021 | 820 | (5,089 | ) | ||||||||
| Net interest income after provision for loan losses | 251,033 | 259,542 | 204,964 | |||||||||
| Noninterest loss | (14,916 | ) | (36,594 | ) | (2,099 | ) | ||||||
| Noninterest expense | (124,427 | ) | (124,384 | ) | (96,355 | ) | ||||||
| Income before provision for income taxes | 111,690 | 98,564 | 106,510 | |||||||||
| Provision for income taxes | 34,949 | 22,782 | 34,419 | |||||||||
| Net income | 76,741 | 75,782 | 72,091 | |||||||||
| Preferred stock dividend | — | — | (1,714 | ) | ||||||||
| Net income available to common stockholders | $ | 76,741 | $ | 75,782 | $ | 70,377 | ||||||
| Net income per share, basic | $ | 0.54 | $ | 0.55 | $ | 0.51 | ||||||
| Net income per share, diluted | $ | 0.54 | $ | 0.55 | $ | 0.50 | ||||||
| Shares used to compute per share net income: | ||||||||||||
| - Basic | 141,962 | 137,157 | 137,648 | |||||||||
| - Diluted | 142,632 | 137,688 | 143,519 | |||||||||
| Quarter Ended | ||||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||
| Noninterest loss: | ||||||||||||
| Branch fees | $ | 9,446 | $ | 8,140 | $ | 7,654 | ||||||
| Decrease in FDIC indemnification asset and FDIC receivable | (53,634 | ) | (74,325 | ) | (31,899 | ) | ||||||
| Net gain on sales of loans | 6,196 | 4,065 | 94 | |||||||||
| Letters of credit fees and foreign exchange income | 6,856 | 9,746 | 7,398 | |||||||||
| Net gain on sales of investment securities | 3,418 | 83 | 5,577 | |||||||||
| Net gain on sale of fixed assets | 180 | 176 | 124 | |||||||||
| Ancillary loan fees | 2,472 | 2,557 | 2,052 | |||||||||
| Other operating income | 10,150 | 12,964 | 6,901 | |||||||||
| Total noninterest loss | $ | (14,916 | ) | $ | (36,594 | ) | $ | (2,099 | ) | |||
| Noninterest expense: | ||||||||||||
| Compensation and employee benefits | $ | 59,277 | $ | 46,667 | $ | 45,731 | ||||||
| Occupancy and equipment expense | 15,851 | 14,430 | 13,808 | |||||||||
| Loan related expenses | 2,575 | 2,611 | 3,584 | |||||||||
| Other real estate owned expense (gain on sale) | 1,334 | 887 | (984 | ) | ||||||||
| Deposit insurance premiums and regulatory assessments | 5,702 | 4,702 | 3,782 | |||||||||
| Legal expense | 3,799 | 12,806 | 4,444 | |||||||||
| Amortization of premiums on deposits acquired | 2,500 | 2,234 | 2,409 | |||||||||
| Data processing | 8,200 | 2,299 | 2,437 | |||||||||
| Consulting expense | 1,049 | 3,725 | 454 | |||||||||
| Amortization of investments in affordable housing partnerships and other investments | 5,964 | 13,228 | 4,283 | |||||||||
| Other operating expense | 18,176 | 20,795 | 16,407 | |||||||||
| Total noninterest expense | $ | 124,427 | $ | 124,384 | $ | 96,355 | ||||||
10
| EAST WEST BANCORP, INC. | ||||||||||||
| SELECTED FINANCIAL INFORMATION | ||||||||||||
| (In thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Average Balances | Quarter Ended | |||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||
| Loans receivable | ||||||||||||
| Real estate - single family | $ | 3,230,976 | $ | 3,141,472 | $ | 2,255,091 | ||||||
| Real estate - multifamily | 1,056,092 | 989,789 | 895,202 | |||||||||
| Real estate - commercial | 4,958,490 | 4,183,311 | 3,663,328 | |||||||||
| Real estate - land and construction | 367,661 | 259,497 | 245,928 | |||||||||
| Commercial | 5,771,525 | 5,014,530 | 4,206,571 | |||||||||
| Consumer | 1,853,060 | 1,691,334 | 961,813 | |||||||||
| Total loans receivable, excluding covered loans | 17,237,804 | 15,279,933 | 12,227,933 | |||||||||
| Covered loans | 2,095,390 | 2,262,218 | 2,844,992 | |||||||||
| Total loans receivable | 19,333,194 | 17,542,151 | 15,072,925 | |||||||||
| Investment securities | 2,582,819 | 2,937,089 | 2,632,823 | |||||||||
| Earning assets | 24,541,104 | 23,082,437 | 20,695,793 | |||||||||
| Total assets | 26,330,186 | 24,762,814 | 22,576,638 | |||||||||
| Deposits | ||||||||||||
| Noninterest-bearing demand | $ | 6,121,649 | $ | 5,922,881 | $ | 4,479,746 | ||||||
| Interest-bearing checking | 1,838,201 | 1,656,002 | 1,285,270 | |||||||||
| Money market | 5,614,120 | 5,417,034 | 5,118,495 | |||||||||
| Savings | 1,734,364 | 1,651,067 | 1,423,090 | |||||||||
| Total core deposits | 15,308,334 | 14,646,984 | 12,306,601 | |||||||||
| Time deposits | 6,263,607 | 5,870,512 | 6,068,759 | |||||||||
| Total deposits | 21,571,941 | 20,517,496 | 18,375,360 | |||||||||
| Interest-bearing liabilities | 17,155,357 | 16,116,152 | 15,341,224 | |||||||||
| Stockholders' equity | 2,582,724 | 2,376,013 | 2,376,260 | |||||||||
| Selected Ratios | Quarter Ended | |||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||
| For The Period | ||||||||||||
| Return on average assets | 1.18 | % | 1.21 | % | 1.30 | % | ||||||
| Return on average common equity | 12.05 | % | 12.65 | % | 12.45 | % | ||||||
| Interest rate spread | 4.06 | % | 4.35 | % | 3.90 | % | ||||||
| Net interest margin | 4.26 | % | 4.55 | % | 4.10 | % | ||||||
| Yield on earning assets | 4.73 | % | 5.04 | % | 4.67 | % | ||||||
| Cost of deposits | 0.30 | % | 0.31 | % | 0.37 | % | ||||||
| Cost of funds | 0.49 | % | 0.51 | % | 0.60 | % | ||||||
Noninterest expense/average assets (1) | 1.62 | % | 1.75 | % | 1.61 | % | ||||||
Efficiency ratio (2) | 43.36 | % | 47.69 | % | 43.28 | % | ||||||
| (1) | Excludes the amortization of intangibles, amortization of premiums on deposits acquired, amortization of investments in affordable housing partnerships and other investments, and integration and merger related expenses. |
| (2) | Represents noninterest expense, excluding the amortization of intangibles, amortization of premiums on deposits acquired, amortization of investments in affordable housing partnerships and other investments, and integration and merger related expenses, divided by the aggregate of net interest income before provision for loan losses and noninterest income, excluding items that are non-recurring in nature. |
11
| EAST WEST BANCORP, INC. | ||||||||||||||||||||||||
| QUARTER TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID | ||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||
| March 31, 2014 | March 31, 2013 | |||||||||||||||||||||||
| Average | Average | |||||||||||||||||||||||
| Volume | Interest | Yield (1) | Volume | Interest | Yield (1) | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Due from banks and short-term investments | $ | 1,170,313 | $ | 5,602 | 1.94 | % | $ | 1,206,840 | $ | 4,276 | 1.44 | % | ||||||||||||
| Securities purchased under resale agreements | 1,341,668 | 4,853 | 1.47 | % | 1,628,611 | 5,529 | 1.38 | % | ||||||||||||||||
| Investment securities available-for-sale | 2,582,819 | 12,276 | 1.93 | % | 2,632,823 | 10,210 | 1.57 | % | ||||||||||||||||
| Loans receivable | 17,237,804 | 180,909 | 4.26 | % | 12,227,933 | 130,968 | 4.34 | % | ||||||||||||||||
| Loans receivable - covered | 2,095,390 | 80,662 | 15.61 | % | 2,844,992 | 86,191 | 12.29 | % | ||||||||||||||||
| Federal Home Loan Bank and Federal Reserve Bank stock | 113,110 | 1,871 | 6.71 | % | 154,594 | 1,249 | 3.28 | % | ||||||||||||||||
| Total interest-earning assets | 24,541,104 | 286,173 | 4.73 | % | 20,695,793 | 238,423 | 4.67 | % | ||||||||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||||
| Cash and cash equivalents | 311,267 | 352,010 | ||||||||||||||||||||||
| Allowance for loan losses | (255,759 | ) | (236,287 | ) | ||||||||||||||||||||
| Other assets | 1,733,574 | 1,765,122 | ||||||||||||||||||||||
| Total assets | $ | 26,330,186 | $ | 22,576,638 | ||||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Checking accounts | $ | 1,838,201 | $ | 981 | 0.22 | % | $ | 1,285,270 | $ | 891 | 0.28 | % | ||||||||||||
| Money market accounts | 5,614,120 | 3,700 | 0.27 | % | 5,118,495 | 4,086 | 0.32 | % | ||||||||||||||||
| Savings deposits | 1,734,364 | 708 | 0.17 | % | 1,423,090 | 793 | 0.23 | % | ||||||||||||||||
| Time deposits | 6,263,607 | 10,493 | 0.68 | % | 6,068,759 | 11,084 | 0.74 | % | ||||||||||||||||
| Federal funds purchased and other borrowings | 93 | — | — | 279 | — | — | ||||||||||||||||||
| Federal Home Loan Bank advances | 451,884 | 1,045 | 0.94 | % | 313,153 | 1,039 | 1.35 | % | ||||||||||||||||
| Securities sold under repurchase agreements | 1,009,062 | 10,078 | 4.05 | % | 995,000 | 10,529 | 4.29 | % | ||||||||||||||||
| Long-term debt | 244,026 | 1,202 | 2.00 | % | 137,178 | 710 | 2.10 | % | ||||||||||||||||
| Total interest-bearing liabilities | 17,155,357 | 28,207 | 0.67 | % | 15,341,224 | 29,132 | 0.77 | % | ||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 6,121,649 | 4,479,746 | ||||||||||||||||||||||
| Other liabilities | 470,456 | 379,408 | ||||||||||||||||||||||
| Stockholders' equity | 2,582,724 | 2,376,260 | ||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 26,330,186 | $ | 22,576,638 | ||||||||||||||||||||
| Interest rate spread | 4.06 | % | 3.90 | % | ||||||||||||||||||||
| Net interest income and net interest margin | $ | 257,966 | 4.26 | % | $ | 209,291 | 4.10 | % | ||||||||||||||||
Net interest income and net interest margin, adjusted (2) | $ | 208,965 | 3.45 | % | $ | 184,619 | 3.62 | % | ||||||||||||||||
| (1) | Annualized. |
| (2) | Amounts considering the net impact of covered loan activity and amortization of the FDIC indemnification asset of $49.0 million and $24.7 million for the three months ended March 31, 2014 and 2013, respectively. |
12
| EAST WEST BANCORP, INC. | ||||||||||||
| QUARTERLY ALLOWANCE FOR LOAN LOSSES RECAP | ||||||||||||
| (In thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Quarter Ended | ||||||||||||
| 3/31/2014 | 12/31/2013 | 3/31/2013 | ||||||||||
| NON-COVERED LOANS | ||||||||||||
| Allowance for non-covered loans, beginning of period | $ | 241,930 | $ | 234,236 | $ | 229,382 | ||||||
| Provision allocation for unfunded loan commitments and letters of credit | (215 | ) | 140 | 716 | ||||||||
| Provision for (reversal of) loan losses, excluding covered loans | 7,954 | 6,286 | (762 | ) | ||||||||
| Net Charge-offs/(Recoveries): | ||||||||||||
| Real estate - single family | (22 | ) | (5 | ) | (389 | ) | ||||||
| Real estate - multifamily | 168 | 802 | (68 | ) | ||||||||
| Real estate - commercial | (204 | ) | 735 | 561 | ||||||||
| Real estate - land and construction | (305 | ) | (2,893 | ) | 155 | |||||||
| Commercial | 4,414 | (1,072 | ) | 730 | ||||||||
| Consumer | — | 1,165 | (449 | ) | ||||||||
| Total net charge-offs (recoveries) | 4,051 | (1,268 | ) | 540 | ||||||||
| Allowance for non-covered loans, end of period | $ | 245,618 | $ | 241,930 | $ | 228,796 | ||||||
| COVERED LOANS | ||||||||||||
Allowance for covered loans not accounted under ASC 310-30, beginning of period (1) | $ | 5,476 | $ | 6,328 | $ | 5,153 | ||||||
| (Reversal of) provision for loan losses on covered loans not accounted under ASC 310-30 | (954 | ) | (752 | ) | 3,097 | |||||||
| Net Charge-offs: | ||||||||||||
| Commercial | 206 | 100 | 132 | |||||||||
| Total net charge-offs | 206 | 100 | 132 | |||||||||
Allowance for covered loans not accounted under ASC 310-30, end of period (1) | $ | 4,316 | $ | 5,476 | $ | 8,118 | ||||||
Allowance for covered loans accounted under ASC 310-30, beginning of period (2) | $ | 2,269 | $ | 2,337 | $ | — | ||||||
| (Reversal of) provision for loan losses on covered loans accounted under ASC 310-30 | (67 | ) | (68 | ) | 1,992 | |||||||
Allowance for covered loans accounted under ASC 310-30, end of period (2) | $ | 2,202 | $ | 2,269 | $ | 1,992 | ||||||
| Total allowance for covered loans, end of period | $ | 6,518 | $ | 7,745 | $ | 10,110 | ||||||
| UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT | ||||||||||||
| Allowance balance, beginning of period | $ | 11,282 | $ | 11,469 | $ | 9,437 | ||||||
| Provision for (reversal of) unfunded loan commitments and letters of credit | 215 | (140 | ) | (716 | ) | |||||||
| Total charge-offs | — | (47 | ) | — | ||||||||
| Allowance balance, end of period | $ | 11,497 | $ | 11,282 | $ | 8,721 | ||||||
| GRAND TOTAL, END OF PERIOD | $ | 263,633 | $ | 260,957 | $ | 247,627 | ||||||
| (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. |
13
| EAST WEST BANCORP, INC. | ||||||||||||
| QUARTERLY CREDIT QUALITY ANALYSIS | ||||||||||||
| (In thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Non-Performing Assets, Excluding Covered Assets | ||||||||||||
| 3/31/2014 | 12/31/2013 | 3/31/2013 | ||||||||||
| Nonaccrual Loan Type | ||||||||||||
| Real estate - single family | $ | 14,068 | $ | 11,218 | $ | 9,594 | ||||||
| Real estate - multifamily | 22,690 | 27,633 | 14,554 | |||||||||
| Real estate - commercial | 47,756 | 36,473 | 19,251 | |||||||||
| Real estate - land and construction | 17,926 | 10,376 | 31,670 | |||||||||
| Commercial | 27,075 | 22,832 | 50,749 | |||||||||
| Consumer | 3,011 | 3,119 | 1,345 | |||||||||
| Total non-covered nonaccrual loans | $ | 132,526 | $ | 111,651 | $ | 127,163 | ||||||
| Other real estate owned, net | 28,421 | 18,900 | 32,324 | |||||||||
| Total non-performing assets, excluding covered assets | $ | 160,947 | $ | 130,551 | $ | 159,487 | ||||||
Nonperforming assets to total assets (1) | 0.59 | % | 0.53 | % | 0.69 | % | ||||||
Allowance for loan losses on non-covered loans to total gross non-covered loans held for investment at end of period | 1.42 | % | 1.54 | % | 1.85 | % | ||||||
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 | 1.49 | % | 1.62 | % | 1.92 | % | ||||||
| Allowance on non-covered loans to non-covered nonaccrual loans at end of period | 185.34 | % | 216.68 | % | 179.92 | % | ||||||
Nonaccrual loans to total loans (2) | 0.67 | % | 0.62 | % | 0.83 | % | ||||||
Net charge-offs (recoveries) on non-covered loans to average total non-covered loans (3) | 0.10 | % | -0.03 | % | 0.02 | % | ||||||
(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. |
14
| 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 | ||||
| March 31, 2014 | ||||
| Stockholders' equity | $ | 2,624,220 | ||
| Less: | ||||
| Goodwill and other intangible assets | (513,451 | ) | ||
| Tangible equity | $ | 2,110,769 | ||
| Risk-weighted assets | 19,688,047 | |||
| Tangible equity to risk-weighted assets ratio | 10.7 | % | ||
| As of | ||||
| March 31, 2014 | ||||
| Total assets | $ | 27,401,026 | ||
| Less: | ||||
| Goodwill and other intangible assets | (513,451 | ) | ||
| Tangible assets | $ | 26,887,575 | ||
| Tangible equity to tangible assets ratio | 7.9 | % | ||
15
| EAST WEST BANCORP, INC. |
| GAAP TO NON-GAAP RECONCILIATION |
| (In thousands) |
| (unaudited) |
Net income per diluted share excluding integration and merger related expenses 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 integration and merger expenses are non-core in nature. The Company believes that presenting net income per diluted share excluding integration and merger related expenses provides more clarity to the users of financial statements and assists in the comparison with prior periods.
| Quarter Ended | ||||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||
| Net income per diluted share | $ | 0.54 | $ | 0.55 | $ | 0.50 | ||||||
| Integration and merger related expenses, net of tax | $ | 6,134 | $ | — | $ | — | ||||||
| Shares used to compute diluted earnings per share | 142,632 | 137,688 | 143,519 | |||||||||
| Integration and merger related expenses per diluted share | $ | 0.04 | $ | — | $ | — | ||||||
| Net income per diluted share excluding integration and merger related expenses | $ | 0.58 | $ | 0.55 | $ | 0.50 | ||||||
16
| EAST WEST BANCORP, INC. |
| GAAP TO NON-GAAP RECONCILIATION |
| (In thousands) |
| (unaudited) |
Noninterest expense excluding reimbursable amounts and integration and merger related expenses 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. The Company believes that presenting noninterest expense excluding reimbursable amounts and integration and merger related expenses provides more clarity to the users of financial statements regarding the core noninterest expense amounts.
| Quarter Ended | ||||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||
| Total noninterest expense | $ | 124,427 | $ | 124,384 | $ | 96,355 | ||||||
| Amounts to be reimbursed by the FDIC on covered assets (80% of actual expense amount) (1) | 2,015 | 1,331 | (61 | ) | ||||||||
| Integration and merger related expenses | 10,576 | — | — | |||||||||
| Noninterest expense excluding reimbursable amounts and integration and merger related expenses | $ | 111,836 | $ | 123,053 | $ | 96,416 | ||||||
| (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. |
17
| 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 efficiency ratio represents noninterest expense, excluding the amortization of intangibles, amortization of premiums on deposits acquired, amortization of investments in affordable housing partnerships and other investments, and integration and merger related expenses, divided by the aggregate of net interest income before provision for loan losses and noninterest income (loss), excluding items that are non-recurring in nature. As such, the Company believes that presenting the efficiency ratio provides additional clarity to the users of financial statements regarding the comparability to prior periods and the ongoing performance of the Company.
| Quarter Ended | ||||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||
| Total noninterest expense | $ | 124,427 | $ | 124,384 | $ | 96,355 | ||||||
| Less: | ||||||||||||
| Integration and merger related expenses | (10,576 | ) | — | — | ||||||||
| Amortization of premiums on deposits acquired | (2,500 | ) | (2,234 | ) | (2,409 | ) | ||||||
| Amortization of investments in affordable housing partnerships and other investments | (5,964 | ) | (13,228 | ) | (4,283 | ) | ||||||
| Noninterest expense, as adjusted | $ | 105,387 | $ | 108,922 | $ | 89,663 | ||||||
| Net interest income before provision for loan losses | $ | 257,966 | $ | 265,008 | $ | 209,291 | ||||||
| Noninterest loss | (14,916 | ) | (36,594 | ) | (2,099 | ) | ||||||
| Net interest income and noninterest loss | $ | 243,050 | $ | 228,414 | $ | 207,192 | ||||||
| Efficiency Ratio | 43.36 | % | 47.69 | % | 43.28 | % | ||||||
18
| 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 considering 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 March 31, 2014 | ||||||||||||
| Average Volume | Interest | Yield (1) | ||||||||||
| Loans receivable - covered | $ | 2,095,390 | $ | 80,662 | 15.61 | % | ||||||
| Less net impact of covered loan activity and amortization of | ||||||||||||
| the FDIC indemnification asset | (49,001 | ) | ||||||||||
| Covered loans considering net impact of covered loan activity and | ||||||||||||
| amortization of the FDIC indemnification asset | $ | 31,661 | 6.13 | % | ||||||||
| Quarter Ended March 31, 2013 | ||||||||||||
| Average Volume | Interest | Yield (1) | ||||||||||
| Loans receivable - covered | $ | 2,844,992 | $ | 86,191 | 12.29 | % | ||||||
| Less net impact of covered loan activity and amortization of | ||||||||||||
| the FDIC indemnification asset | (24,672 | ) | ||||||||||
| Covered loans considering net impact of covered loan activity and | ||||||||||||
| amortization of the FDIC indemnification asset | $ | 61,519 | 8.77 | % | ||||||||
(1) Annualized.
19
| 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 considering 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 March 31, 2014 | ||||||||||||
| Average Volume | Interest | Yield (1) | ||||||||||
| Total interest-earning assets | $ | 24,541,104 | $ | 286,173 | 4.73 | % | ||||||
| Net interest income and net interest margin | 257,966 | 4.26 | % | |||||||||
| Less net impact of covered loan activity and amortization of | ||||||||||||
| the FDIC indemnification asset | (49,001 | ) | ||||||||||
| Adjusted net interest income and net interest margin, considering the | ||||||||||||
| net impact of covered loan activity and amortization of the FDIC indemnification asset | $ | 208,965 | 3.45 | % | ||||||||
| Quarter Ended December 31, 2013 | ||||||||||||
| Average Volume | Interest | Yield (1) | ||||||||||
| Total interest-earning assets | $ | 23,082,437 | $ | 293,203 | 5.04 | % | ||||||
| Net interest income and net interest margin | 265,008 | 4.55 | % | |||||||||
| Less net impact of covered loan activity and amortization of | ||||||||||||
| the FDIC indemnification asset | (66,769 | ) | ||||||||||
| Adjusted net interest income and net interest margin, considering the | ||||||||||||
| net impact of covered loan activity and amortization of the FDIC indemnification asset | $ | 198,239 | 3.41 | % | ||||||||
| 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 activity and amortization of | ||||||||||||
| the FDIC indemnification asset | (24,672 | ) | ||||||||||
| Adjusted net interest income and net interest margin, considering the | ||||||||||||
| net impact of covered loan activity and amortization of the FDIC indemnification asset | $ | 184,619 | 3.62 | % | ||||||||
(1) Annualized.
20