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 |
FOR FURTHER INFORMATION AT THE COMPANY:
Irene Oh
Chief Financial Officer
(626) 768-6360
EAST WEST BANCORP REPORTS PROFITABILITY FOR FULL YEAR 2009
Pasadena, CA – January 26, 2010 – East West Bancorp, Inc. (NASDAQ: EWBC), parent company of East West Bank, one of the nation’s premier community banks, today reported financial results for the fourth quarter and full year 2009.
“East West reported a return to profitability with net earnings for full year 2009 of $76.6 million. The return to profitability for 2009 follows a single loss year for 2008 – the only loss year for East West in nearly 30 years,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. “Previous to 2008, East West achieved record earnings every year for over a decade, with net income of $161.2 million in 2007 and $143.4 million in 2006. Our core business remains strong and we are back on track to deliver solid profitability and create long-term value for our shareholders in 2010 and beyond.”
For the fourth quarter 2009, net income was $259.7 million, an increase of $328.3 million over a loss reported in third quarter. For the full year 2009, net income was $76.6 million, an increase of $126.3 million over a loss reported in 2008. Our fourth quarter earnings include a pre-tax gain of $471.0 million from the FDIC-assisted acquisition of United Commercial Bank (UCB), offset by a $140.0 million provision for loan losses and a $45.8 million impairment loss on investment securities.
Ng stated, “Throughout 2009 and from the onset of the economic downturn, East West successfully executed on all strategic actions. We believe that for East West, the credit cycle peaked in the third quarter of 2009 and that as we enter the new year, the worst is behind us. Since January 1, 2008, we actively reduced our exposure to land and construction loans by over $2.2 billion. Our capital position is strong and continues to grow – during 2009 we raised a total of $607.8 million in new capital and generated $76.6 million additional capital from net income.”
“Further, our swift and decisive actions during this challenging operating environment to improve our balance sheet have allowed us to take the exceptional opportunity to acquire the assets and deposit franchise of UCB, nearly doubling our size to $20.6 billion. The acquisition of UCB has expedited our return to profitability and serves as an immediate catalyst to further our growth and profitability in 2010,” concluded Ng.
FDIC-Assisted Acquisition of UCB
On November 6, 2009, East West acquired substantially all of the assets and assumed substantially all of the liabilities of UCB from the Federal Deposit Insurance Corporation (FDIC) in an FDIC-assisted transaction.
As the market leader in the Asian-American banking sector, East West has positive brand recognition. UCB customers and the Asian-American community have responded positively to our acquisition of the banking operations of UCB. As widely reported in the Asian-American media, our acquisition of UCB served to stabilize deposits and strengthen customer confidence in the entire Asian-American banking sector. Additionally, East West’s proven asset resolution process, coupled with our expertise in the market niche of UCB will result in a higher recovery and lower potential losses to the FDIC insurance fund. Further, because East West has an existing presence and expertise in Hong Kong and Greater China, we are better able to assist the FDIC in managing the overseas operations of UCB, also reducing any potential exposure to the FDIC insurance fund.
The integration of United Commercial Bank is progressing smoothly and we are on target for full integration of all systems in April 2010.
East West entered into loss sharing agreements with the FDIC that covers future losses incurred on nearly all the UCB legacy loans and all real estate owned assets that existed at November 6, 2009. Under the terms of the agreement, the FDIC will absorb 80 percent of losses and share in 80 percent of recoveries on the first $2.05 billion and absorb 95 percent of losses and share in 95 percent of recoveries exceeding $2.05 billion. The term for the loss share agreement is ten years for single family loans. For all other loans, the term is five years for losses and eight years for recoveries.
East West recorded a FDIC indemnification asset as of November 6, 2009 of $1.1 billion, which represents the present value of the estimated losses on covered loans to be reimbursed to East West by the FDIC. East West also recorded a $174.0 million receivable from the FDIC.
The UCB legacy loans guaranteed under loss sharing agreements with the FDIC will be defined as “covered loans” and the UCB legacy loans and real estate owned assets guaranteed under loss sharing agreements with the FDIC will be defined as “covered assets” throughout this press release. Further, any references to nonaccrual loans and nonperforming assets will consist of East West legacy loans and assets only as all covered assets are subject to loss share agreements with the FDIC.
In accordance with U.S. GAAP, all the UCB legacy loans were accounted for at fair value and recorded at a discount to book value. Accordingly, any share of losses East West expects to incur have already been written off and factored into the fair value as of November 6, 2009.
A summary of the net assets received from the FDIC is as follows:
November 6, 2009 | |||
(In thousands) | |||
Assets | |||
Cash and cash equivalents | $ | 599,036 | |
FDIC receivable | 173,995 | ||
Investment securities | 1,561,446 | ||
Loans covered by FDIC loss sharing, (gross balance $7,299,303 and shown net of discount of $1,638,871) | 5,660,432 | ||
Loans not covered by FDIC loss sharing, (gross balance $306,477 and shown net of discount of $69,973) | 236,504 | ||
FDIC indemnification asset | 1,143,989 | ||
Other assets | 486,555 | ||
Total assets acquired | $ | 9,861,957 | |
Liabilities | |||
Deposits | $ | 6,529,864 | |
Federal Home Loan Bank advances | 1,837,593 | ||
Securities sold under repurchase agreements | 858,244 | ||
Other liabilities | 344,788 | ||
Total liabilities | 9,570,489 | ||
Net assets acquired | $ | 291,468 | |
Further information on the acquisition of UCB can be found in the Form 8-K, filed by East West with the SEC on January 22, 2010.
East West recorded an after tax gain of $291.5 million from the acquisition of UCB on November 6, 2009. Further, the Company recorded additional net revenue of $51.1 million during the period from November 6, 2009 to December 31, 2009 as a result of early prepayments on covered loans during the quarter. This additional net revenue is comprised of $74.4 million discount accretion on early payoffs on covered loans as a yield adjustment offset by a corresponding $23.3 million net reduction in the FDIC indemnification asset and FDIC receivable as noninterest income (loss).
Preliminary Forecast
The Company is providing a forecast for the first quarter of 2010. Management currently estimates that fully diluted earnings per share for the first quarter of 2010 will range from $0.04 to $0.08. This EPS guidance is based on the following assumptions:
• | Net interest margin between 3.80% and 3.90% |
• | Provision for loan losses of approximately $70.0 million to $80.0 million for the quarter |
• | Noninterest expense flat from the fourth quarter of 2009 |
Full Year 2009 Highlights
• | Increase in Balance Sheet – Total asset increased to a record $20.6 billion at year-end, an increase of $8.2 billion or 66% year over year. Total deposits increased to $15.0 billion, an increase of $6.8 billion or 84% year over year. Year-to-date, East West grew deposits organically by $744.1 |
million or 9%, excluding the impact of the UCB acquisition. Total gross loans receivable increased to $14.1 billion, an increase of $5.9 billion or 71% year over year. These increases in the balance sheet are primarily due to the acquisition of UCB. |
• | Capital Strengthened –During the full year 2009, we raised a total of $607.8 million in capital. We issued $107.8 million of common stock in July 2009 and $165.0 million of common stock and $335.0 million of mandatory convertible preferred stock in November 2009. As of December 31, 2009, East West’s Tier 1 risk-based and total risk-based capital ratios were 17.9% and 19.9%, respectively, significantly higher than the well capitalized requirement of 6% and 10%, respectively. |
• | Loan to Deposit Ratio – Throughout 2009, East West continued to further strengthen the balance sheet and decrease the loan to deposit ratio. As of December 31, 2009, the loan to deposit ratio was 94.3%, compared to 101.3% as of December 31, 2008. |
• | Allowance for Loan Losses Strengthened –The allowance for loan loss was increased to $238.8 million or a 34% increase year over year. The allowance for loan losses to gross non-covered loans was 2.80% at December 31, 2009 compared to 2.16% as of December 31, 2008. The allowance to nonaccrual loans ratio improved to 137.9% as of December 31, 2009, compared to 83.0% as of December 31, 2008. |
• | Reduced Exposures to Problem Credits – Total land loans decreased $206.2 million or 36% and total commitments on construction loans decreased $1.0 billion or 63% year to date. As of December 31, 2009, outstanding balances on land and construction loans totaled only 5.9% of total gross loans receivable. |
Fourth Quarter Summary
• | Credit Quality Improved – Total nonperforming assets have improved to $187.0 million, a decrease of $43.2 million or 19% from prior quarter. Total nonperforming assets to total assets improved to 0.91% as of December 31, 2009, from 1.84% as of September 30, 2009. The decrease in nonperforming assets from the prior quarter is largely a result of a reduction in nonaccrual residential construction loans. |
• | Net Interest Margin Improved – Net interest income for the fourth quarter increased to $219.5 million, a $123.6 million increase over third quarter of 2009. The net interest margin for the fourth quarter increased to 5.46%, compared to 3.20% in the prior quarter. Excluding the impact of the yield adjustment to covered loans of $74.4 million, net interest income increased to $145.1 million and the net interest margin increased to 3.61% for the fourth quarter. See reconciliation of the GAAP financial measure to this non-GAAP financial measure in the tables attached. |
• | Deposits Increased – Total deposits increased to a record $15.0 billion at year-end 2009. In fourth quarter of 2009, deposits increased $6.3 billion or 73% over prior quarter due primarily to the UCB acquisition. East West grew deposits organically by $217.5 million for the quarter, excluding the impact of the UCB acquisition. |
Capital Strength
(Dollars in milions) | December 31, 2009 | Well Capitalized Regulatory Requirement | Total Excess Above Well Capitalized Requirement | ||||||
Tier 1 leverage capital ratio | 11.7 | % | 5.00 | % | $ | 1,150.2 | |||
Tier 1 risk-based capital ratio | 17.9 | % | 6.00 | % | $ | 1,337.9 | |||
Total risk-based capital ratio | 19.9 | % | 10.00 | % | $ | 1,106.1 | |||
Proforma tangible common equity to risk weighted assets ratio | 13.2 | % | 4.00 | % | $ | 1,028.2 |
* | The tangible common equity to risk weighted asset ratio is a non-GAAP disclosure. The Mandatory Convertible Cumulative Non-Voting Perpetual Preferred Stock, Series, C issued in November 2009 has been included as a proforma tangible common equity ratio. The Series C shares will automatically convert to common shares if an affirmative shareholder vote is obtained. See reconciliation of the GAAP financial measure to this non-GAAP financial measure in the tables attached. As there is no stated regulatory guideline for this ratio, the Supervisory Capital Assessment Program (SCAP) guideline of 4.00% has been used. |
East West has always been committed to maintaining strong capital levels and has been well capitalized throughout this economic cycle. As of the end of the fourth quarter, our Tier 1 leverage capital ratio increased to 11.7%, Tier 1 risk-based capital ratio increased to 17.9% and total risk-based capital ratio increased to 19.9%. East West exceeds well capitalized requirements for all regulatory guidelines by over $1 billion. Furthermore, East West’s proforma tangible common equity to risk weighted assets ratio totaled 13.2% as of December 31, 2009.
During the fourth quarter, we issued $165 million in common stock and $335 million in Mandatory Convertible Cumulative Non-Voting Perpetual Preferred Stock, Series C (Series C preferred stock). The newly issued capital, along with the net income for the quarter resulted in an increase to total shareholders’ equity to $2.3 billion at December 31, 2009. The special shareholders’ meeting to vote to approve the conversion of the Series C preferred stock to common stock has been set for March 18, 2010. The Series C preferred stock converts to common stock automatically three days after the receipt of an affirmative shareholder vote. No Series C dividend has been declared by the Board of Directors. Under the terms of the Series C preferred stock, the May 1 dividend payment or any portion thereof will not be earned or paid should an affirmative shareholder vote to convert be obtained on the March 18, 2010 meeting date. Since management fully expects that the Series C preferred dividend will not be earned or paid, income available to common shareholders has not been adjusted for purposes of computing basic and diluted per share amounts.
Further, during the fourth quarter, we received a 50% reduction in the warrant we issued to the U.S. Treasury in conjunction with the TARP capital we received in December 2008. As of December 31, 2009, the new share count of the warrant is 1,517,555. This adjustment to the warrant was due to the fact that within one year of issuance, we raised new capital in excess of the TARP capital issued in December 2008. Management intends to repay the $306.5 million TARP capital in full later this year.
Credit Management
Total nonperforming assets as of December 31, 2009 totaled $187.0 million or 0.91% of total assets, compared to $230.2 million or 1.84% of total assets at September 30, 2009. Nonperforming assets as of December 31, 2009 included nonaccrual loans totaling $173.2 million and REO assets totaling $13.8 million.
The legacy UCB covered loans that were nonaccrual as of December 31, 2009 totaled $675.6 million, net of a $466.3 million discount. All loans acquired from UCB were recorded at estimated fair value as of the acquisition date.
Throughout this challenging economic cycle, we have taken strong measures to reduce our exposure to problem credits – largely comprised of our construction and land portfolios. The outstanding balances for the land and construction portfolios totaled $828.7 million as of December 31, 2009, or 5.9% of total gross loans receivable.
Further, with the addition of $5.6 billion in covered loans from the UCB acquisition, concentrations within our loan portfolio have been reduced. Total exposure to commercial real estate loans is 26% of total loans as of December 31, 2009, down from 43% as of September 30, 2009.
As previously discussed by management, both the provision for loan losses and the net chargeoffs peaked in the third quarter of 2009. Given the trends we are seeing in the loan portfolio, it is expected that provision for loan losses and net chargeoffs will continue to decrease throughout 2010. Provision for loan losses was $140.0 million for the fourth quarter of 2009, a decrease 12% from $159.2 million in the third quarter.
For the fourth quarter of 2009, net charge-offs were $130.7 million, a decrease of 14% or $20.6 million compared to $151.2 million during the third quarter of 2009. The net chargeoffs for the quarter were largely related to construction and land loans.
At December 31, 2009, the allowance for loan losses increased to $238.8 million or 2.80% of non-covered loans receivable, compared to $230.7 million or 2.74% of outstanding loans at September 30, 2009. Based on management's evaluation and analysis of portfolio credit quality and prevailing economic conditions, we believe the allowance for loan losses is adequate for losses inherent in the loan portfolio as of December 31, 2009.
Fourth Quarter 2009 Operating Results
Net interest income for the fourth quarter increased to $219.5 million, a $123.6 million or 129% increase over third quarter of 2009. The net interest margin for the fourth quarter increased to 5.46%, up 226 basis points from 3.20% in the prior quarter. Excluding the impact of the yield adjustment to covered loans of $74.4 million, net interest income increased to $145.1 million and the net interest margin increased to 3.61% for the fourth quarter. During the quarter, East West paid down $200 million in FHLB advances at an average cost of 4.43%. Additionally, East West sold approximately $1.3 billion in lower yielding investment securities obtained from UCB, shortly after the acquisition. These actions improved the net interest margin for the fourth quarter and will continue to do so in coming quarters.
Currently, we estimate that the net interest margin, without yield adjustments to covered loans, will be approximately 3.80% to 3.90% for the first quarter of 2010.
Excluding the impact of the gain on the acquisition of UCB, the decrease in the FDIC indemnification asset, impairment charges on investment securities and gains on sales of investment securities, noninterest income for the fourth quarter totaled $14.4 million, compared to $10.2 million in the third quarter of 2009. The increase was primarily due to increased fee and other income from the acquisition of UCB. See reconciliation of the GAAP financial measure to this non-GAAP financial measure in the tables attached.
Noninterest expense for the fourth quarter totaled $91.1 million, compared to $46.1 million in the third quarter of 2009. The increase in the noninterest expense quarter over quarter was due to additional expenditures from the acquisition of UCB on November 6, 2009. We anticipate that noninterest expense will decrease starting the second quarter of 2010, after the systems integration of UCB is completed.
Investment Securities
During the fourth quarter, we recorded other than temporary impairment on investment securities of $45.8 million related primarily to pooled trust preferred securities. Year to date, total impairment on the pooled trust preferred securities totaled $106.6 million and the remaining book balance of these securities has decreased to $18.1 million. These securities are available for sale and recorded on the balance sheet at fair value and any difference in the book balance and the fair value is reflected in the other comprehensive income section of stockholders’ equity. As of December 31, 2009, the fair value of these securities was written down to $2.9 million.
Deposit Summary
Total deposits as of December 31, 2009 increased to $15.0 billion, up $6.3 billion or 72.9% from $8.7 billion at September 30, 2009. Quarter over quarter, core deposits increased $2.7 billion or 60.1% and time deposits increased $3.7 billion or 86.3%. The average cost of deposits for the fourth quarter of 2009 decreased to 1.11%, a 13 basis point decrease from the third quarter of 2009. East West grew deposits organically by $217.5 million for the quarter, excluding the impact of the UCB acquisition.
Dividend Payout
East West Bank’s Board of Directors has declared first quarter dividends on the common stock and Series A Preferred Stock. The common stock cash dividend of $0.01 is payable on or about February 24, 2010 to shareholders of record on February 10, 2010. The dividend on the Series A Preferred Stock of $20.00 per share is payable on February 1, 2010 to shareholders of record on January 15, 2010.
About East West
East West Bancorp is a publicly owned company with $20.6 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 the third largest independent commercial bank headquartered in California with 135 branches worldwide; including 111 branches in California, eight branches in New York, five branches in Georgia, three branches in Massachusetts, two branches in Texas, and two branches in Washington. In Greater China, East West's presence includes four full-service branches, including two in Hong Kong, one in Shanghai, and one in Shantou. The Bank also has representative offices in Beijing, Guangzhou, Shanghai and Shenzhen, China, and Taipei, Taiwan. For more information on East West Bancorp, visit the Company’s website at www.eastwestbank.com.
Forward-Looking Statements
This release may contain forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and accordingly, the cautionary statements contained in East West Bancorp’s Annual Report on Form 10-K for the year ended Dec. 31, 2008 (See Item I — Business, and Item 7 — Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations), and other filings with the Securities and Exchange Commission are incorporated herein by reference. These factors include, but are not limited to: the effect of interest rate and currency exchange fluctuations; competition in the financial services market for both deposits and loans; EWBC’s ability to efficiently incorporate acquisitions into its operations; the ability of borrowers to perform as required under the terms of their loans; effect of additional provisions for loan losses; effect of any goodwill impairment, the ability of EWBC and its subsidiaries to increase its customer base; the effect of regulatory and legislative action, including California tax legislation and an announcement by the state’s Franchise Tax Board regarding the taxation of Registered Investment Companies; and regional and general economic conditions. Actual results and performance in future periods may be materially different from any future results or performance suggested by the forward-looking statements in this release. Such forward-looking statements speak only as of the date of this release. East West expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in the Bank’s expectations of results or any change in event.
EAST WEST BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(unaudited)
December 31, 2009 | September 30, 2009 | December 31, 2008 | ||||||||||
Assets | ||||||||||||
Cash and due from banks | $ | 585,024 | $ | 132,569 | $ | 144,486 | ||||||
Short-term investments | 262,329 | 460,665 | 734,367 | |||||||||
Interest-bearing deposits in other banks | 498,565 | 320,860 | 228,441 | |||||||||
Securities purchased under resale agreements | 227,444 | 75,000 | 50,000 | |||||||||
Investment securities | 2,564,081 | 2,238,354 | 2,162,511 | |||||||||
Loans receivable, excluding covered loans (net of allowance for loan losses of $238,833, $230,650, and $178,027) | 8,246,685 | 8,156,838 | 8,069,377 | |||||||||
Covered loans | 5,598,155 | — | — | |||||||||
Total loans receivable, net | 13,844,840 | 8,156,838 | 8,069,377 | |||||||||
Federal Home Loan Bank and Federal Reserve stock | 217,002 | 123,514 | 114,317 | |||||||||
FDIC indemnification asset | 1,091,814 | — | — | |||||||||
Other real estate owned, net | 13,832 | 24,185 | 38,302 | |||||||||
Other real estate owned covered, net | 44,273 | — | — | |||||||||
Premiums on deposits acquired, net | 89,735 | 17,904 | 21,190 | |||||||||
Goodwill | 337,438 | 337,438 | 337,438 | |||||||||
Other assets | 806,533 | 598,603 | 522,387 | |||||||||
Total assets | $ | 20,582,910 | $ | 12,485,930 | $ | 12,422,816 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||||
Deposits | $ | 14,987,613 | 8,668,557 | $ | 8,141,959 | |||||||
Federal Home Loan Bank advances | 1,805,387 | 923,216 | 1,353,307 | |||||||||
Securities sold under repurchase agreements | 1,026,870 | 1,019,450 | 998,430 | |||||||||
Subordinated debt and trust preferred securities | 235,570 | 235,570 | 235,570 | |||||||||
Other borrowings | 67,040 | 3,022 | 28,022 | |||||||||
Accrued expenses and other liabilities | 175,771 | 114,333 | 114,762 | |||||||||
Total liabilities | 18,298,251 | 10,964,148 | 10,872,050 | |||||||||
Stockholders’ equity | 2,284,659 | 1,521,782 | 1,550,766 | |||||||||
Total liabilities and stockholders’ equity | $ | 20,582,910 | 12,485,930 | $ | 12,422,816 | |||||||
Book value per common share | $ | 14.37 | $ | 12.58 | $ | 16.92 | ||||||
Number of common shares at period end | 109,963 | 91,694 | 63,746 | |||||||||
Ending Balances | ||||||||||||
December 31, 2009 | September 30, 2009 | December 31, 2008 | ||||||||||
Loans receivable | ||||||||||||
Real estate - single family | $ | 930,840 | $ | 912,391 | $ | 491,315 | ||||||
Real estate - multifamily | 1,025,849 | 1,036,932 | 677,989 | |||||||||
Real estate - commercial | 3,606,179 | 3,624,469 | 3,472,000 | |||||||||
Real estate - land | 370,394 | 415,228 | 576,564 | |||||||||
Real estate - construction | 458,292 | 654,115 | 1,260,724 | |||||||||
Commercial | 1,512,709 | 1,343,496 | 1,554,219 | |||||||||
Consumer | 624,784 | 432,844 | 216,642 | |||||||||
Total loans receivable, excluding covered loans | 8,529,047 | 8,419,475 | 8,249,453 | |||||||||
Unearned fees, premiums and discounts | (43,529 | ) | (31,987 | ) | (2,049 | ) | ||||||
Allowance for loan losses | (238,833 | ) | (230,650 | ) | (178,027 | ) | ||||||
Net loans receivable, excluding covered loans | 8,246,685 | 8,156,838 | 8,069,377 | |||||||||
Covered loans | 5,598,155 | — | — | |||||||||
Net loans receivable | $ | 13,844,840 | $ | 8,156,838 | $ | 8,069,377 | ||||||
Deposits | ||||||||||||
Noninterest-bearing demand | $ | 2,291,259 | $ | 1,397,217 | $ | 1,292,997 | ||||||
Interest-bearing checking | 667,177 | 347,745 | 363,285 | |||||||||
Money market | 3,138,866 | 2,263,319 | 1,323,402 | |||||||||
Savings | 991,520 | 420,365 | 420,133 | |||||||||
Total core deposits | 7,088,822 | 4,428,646 | 3,399,817 | |||||||||
Time deposits less than $100,000 | 3,240,094 | 1,062,575 | 1,521,988 | |||||||||
Time deposits $100,000 or greater | 4,658,697 | 3,177,336 | 3,220,154 | |||||||||
Total time deposits | 7,898,791 | 4,239,911 | 4,742,142 | |||||||||
Total deposits | $ | 14,987,613 | $ | 8,668,557 | $ | 8,141,959 |
EAST WEST BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
Quarter Ended | ||||||||||||
December 31, 2009 | September 30, 2009 | December 31, 2008 | ||||||||||
Interest and dividend income | $ | 283,646 | $ | 147,924 | $ | 149,907 | ||||||
Interest expense | (64,147 | ) | (52,044 | ) | (73,053 | ) | ||||||
Net interest income before provision for loan losses | 219,499 | 95,880 | 76,854 | |||||||||
Provision for loan losses | (140,000 | ) | (159,244 | ) | (43,000 | ) | ||||||
Net interest income (loss) after provision for loan losses | 79,499 | (63,364 | ) | 33,854 | ||||||||
Noninterest income (loss) | 420,820 | (11,880 | ) | (863 | ) | |||||||
Noninterest expense | (91,085 | ) | (46,064 | ) | (44,199 | ) | ||||||
Income (loss) before provision (benefit) for income taxes | 409,234 | (121,308 | ) | (11,208 | ) | |||||||
Provision (benefit) for income taxes | 149,504 | (52,777 | ) | (13,574 | ) | |||||||
Net income (loss) | $ | 259,730 | $ | (68,531 | ) | $ | 2,366 | |||||
Preferred stock dividend, inducement, and amortization of preferred stock discount (1) | (6,129 | ) | (10,620 | ) | (5,385 | ) | ||||||
Net income (loss) available to common stockholders (1) | $ | 253,601 | $ | (79,151 | ) | $ | (3,019 | ) | ||||
Net income (loss) per share, basic | $ | 2.49 | $ | (0.91 | ) | $ | (0.05 | ) | ||||
Net income (loss) per share, diluted | $ | 1.96 | $ | (0.91 | ) | $ | (0.05 | ) | ||||
Shares used to compute per share net income (loss): | ||||||||||||
- Basic | 101,924 | $ | 86,538 | 62,932 | ||||||||
- Diluted | 130,346 | $ | 86,538 | 62,932 | ||||||||
Quarter Ended | ||||||||||||
December 31, 2009 | September 30, 2009 | December 31, 2008 | ||||||||||
Noninterest income (loss): | ||||||||||||
Gain on acquisition of UCB | $ | 471,009 | $ | — | $ | — | ||||||
Impairment loss on investment securities | (45,775 | ) | (24,249 | ) | (9,653 | ) | ||||||
Decrease in FDIC indemnification asset and FDIC receivable | (23,338 | ) | — | — | ||||||||
Branch fees | 7,846 | 4,679 | 4,247 | |||||||||
Net gain on sale of investment securities | 4,545 | 2,177 | 1,238 | |||||||||
Letters of credit fees and commissions | 2,570 | 1,984 | 2,267 | |||||||||
Ancillary loan fees | 1,474 | 1,227 | 738 | |||||||||
Other operating income | 2,489 | 2,302 | 300 | |||||||||
Total noninterest income (loss) | $ | 420,820 | $ | (11,880 | ) | $ | (863 | ) | ||||
Noninterest expense: | ||||||||||||
Compensation and employee benefits | $ | 29,983 | $ | 15,875 | $ | 15,658 | ||||||
Occupancy and equipment expense | 10,268 | 6,262 | 6,627 | |||||||||
Deposit insurance premiums and regulatory assessments | 9,123 | 6,057 | 2,032 | |||||||||
Consulting expense | 6,256 | 759 | 610 | |||||||||
Legal expense | 3,168 | 1,323 | 1,687 | |||||||||
Other real estate owned expense | 2,624 | 767 | 2,493 | |||||||||
Amortization and impairment loss of premiums on deposits acquired | 2,609 | 1,069 | 1,125 | |||||||||
Amortization of investments in affordable housing partnerships | 2,329 | 1,709 | 1,751 | |||||||||
Data processing | 2,279 | 1,079 | 1,108 | |||||||||
Other operating expense | 22,446 | 11,164 | 11,108 | |||||||||
Total noninterest expense | $ | 91,085 | $ | 46,064 | $ | 44,199 |
(1) | The special shareholders’ meeting to vote to approve the conversion of the Mandatory Convertible Cumulative Preferred Stock, Series C (Series C preferred stock) to common stock has been set for March 18, 2010. The Series C preferred stock converts to common stock automatically three days after the receipt of an affirmative shareholder vote. No Series C dividend has been declared by the Board of Directors. Under the terms of the Series C preferred stock, the May 1 dividend payment or any portion thereof will not be earned or paid should an affirmative shareholder vote to convert be obtained on the March 18, 2010 meeting date. Since management fully expects that the Series C preferred dividend will not be earned or paid, income available to common shareholders has not been adjusted for purposes of computing basis and diluted per share amounts. |
EAST WEST BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
Year Ended | % Change | ||||||||||
December 31, 2009 | December 31, 2008 | ||||||||||
Interest and dividend income | $ | 722,826 | $ | 664,858 | 9 | ||||||
Interest expense | (239,506 | ) | (309,694 | ) | (23 | ) | |||||
Net interest income before provision for loan losses | 483,320 | 355,164 | 36 | ||||||||
Provision for loan losses | (528,666 | ) | (226,000 | ) | 134 | ||||||
Net interest (loss) income after provision for loan losses | (45,346 | ) | 129,164 | (135 | ) | ||||||
Noninterest income (loss) | 396,535 | (25,062 | ) | 1,682 | |||||||
Noninterest expense | (246,467 | ) | (201,270 | ) | 22 | ||||||
Income (loss) before provision (benefit) for income taxes | 104,722 | (97,168 | ) | 208 | |||||||
Provision (benefit) for income taxes | 22,714 | (47,485 | ) | (148 | ) | ||||||
Net income (loss) before extraordinary items | $ | 82,008 | $ | (49,683 | ) | 265 | |||||
Extraordinary item, net of tax | $ | (5,366 | ) | $ | — | NA | |||||
Net income (loss) after extraordinary item | $ | 76,642 | $ | (49,683 | ) | 254 | |||||
Preferred stock dividend, inducement, and amortization of preferred stock discount (1) | (49,115 | ) | (9,474 | ) | 418 | ||||||
Net income (loss) available to common stockholders (1) | $ | 27,527 | $ | (59,157 | ) | 147 | |||||
Net income (loss) per share, basic | $ | 0.35 | $ | (0.94 | ) | 137 | |||||
Net income (loss) per share, diluted | $ | 0.33 | $ | (0.94 | ) | 135 | |||||
Shares used to compute per share net loss: | |||||||||||
- Basic | 78,770 | 62,673 | 26 | ||||||||
- Diluted | 84,553 | 62,673 | 35 | ||||||||
Year Ended | % Change | ||||||||||
December 31, 2009 | December 31, 2008 | ||||||||||
Noninterest income (loss): | |||||||||||
Gain on acquisition of UCB | $ | 471,009 | $ | — | NA | ||||||
Impairment loss on investment securities | (107,671 | ) | (73,165 | ) | 47 | ||||||
Decrease in FDIC indemnification asset and FDIC receivable | (23,338 | ) | — | NA | |||||||
Branch fees | 22,309 | 16,972 | 31 | ||||||||
Net gain on sale of investment securities | 11,923 | 9,005 | 32 | ||||||||
Letters of credit fees and commissions | 8,338 | 9,739 | (14 | ) | |||||||
Ancillary loan fees | 6,286 | 4,646 | 35 | ||||||||
Other operating income | 7,679 | 7,741 | (1 | ) | |||||||
Total noninterest income (loss) | $ | 396,535 | $ | (25,062 | ) | 1,682 | |||||
Noninterest expense: | |||||||||||
Compensation and employee benefits | $ | 79,475 | $ | 82,236 | (3 | ) | |||||
Occupancy and equipment expense | 30,218 | 26,991 | 12 | ||||||||
Deposit insurance premiums and regulatory assessments | 28,073 | 7,223 | 289 | ||||||||
Other real estate owned expense | 19,104 | 6,013 | 218 | ||||||||
Consulting expense | 8,135 | 4,398 | 85 | ||||||||
Legal expense | 8,024 | 5,577 | 44 | ||||||||
Amortization of investments in affordable housing partnerships | 7,450 | 7,272 | 2 | ||||||||
Amortization and impairment loss of premiums on deposits acquired | 5,895 | 7,270 | (19 | ) | |||||||
Data processing | 5,641 | 4,494 | 26 | ||||||||
Other operating expense | 54,452 | 49,796 | 9 | ||||||||
Total noninterest expense | $ | 246,467 | $ | 201,270 | 22 |
(1) | The special shareholders’ meeting to vote to approve the conversion of the Mandatory Convertible Cumulative Preferred Stock, Series C (Series C preferred stock) to common stock has been set for March 18, 2010. The Series C preferred stock converts to common stock automatically three days after the receipt of an affirmative shareholder vote. No Series C dividend has been declared by the Board of Directors. Under the terms of the Series C preferred stock, the May 1 dividend payment or any portion thereof will not be earned or paid should an affirmative shareholder vote to convert be obtained on the March 18, 2010 meeting date. Since management fully expects that the Series C preferred dividend will not be earned or paid, income available to common shareholders has not been adjusted for purposes of computing basis and diluted per share amounts. |
EAST WEST BANCORP, INC.
QUARTERLY ALLOWANCE FOR LOAN LOSSES RECAP
(In thousands)
(unaudited)
Quarter Ended | ||||||||||||||||||||
12/31/2009 | 9/30/2009 | 6/30/2009 | 3/31/2009 | 12/31/2008 | ||||||||||||||||
LOANS | ||||||||||||||||||||
Allowance balance, beginning of period | $ | 230,650 | $ | 223,700 | $ | 195,450 | $ | 178,027 | $ | 177,155 | ||||||||||
Allowance for unfunded loan commitments and letters of credit | (1,161 | ) | (1,051 | ) | 1,442 | (1,008 | ) | (625 | ) | |||||||||||
Provision for loan losses | 140,000 | 159,244 | 151,422 | 78,000 | 43,000 | |||||||||||||||
Impact of desecuritization | — | — | 9,262 | — | — | |||||||||||||||
Net Charge-offs: | ||||||||||||||||||||
Real estate - single family | 7,083 | 8,034 | 14,058 | 3,832 | 1,756 | |||||||||||||||
Real estate - multifamily | 8,425 | 7,231 | 2,256 | 1,624 | 524 | |||||||||||||||
Real estate - commercial | 13,305 | 23,105 | 12,472 | 2,790 | 750 | |||||||||||||||
Real estate - land | 20,390 | 39,988 | 33,183 | 12,523 | 9,039 | |||||||||||||||
Real estate - residential construction | 48,919 | 32,535 | 30,634 | 16,347 | 17,127 | |||||||||||||||
Real estate - commercial construction | 21,355 | 23,051 | 28,602 | 1,977 | — | |||||||||||||||
Commercial | 5,789 | 14,956 | 11,577 | 18,146 | 8,054 | |||||||||||||||
Trade finance | 2,569 | 2,256 | 774 | 1,032 | 4,026 | |||||||||||||||
Consumer | 2,821 | 87 | 320 | 1,298 | 227 | |||||||||||||||
Total net charge-offs | 130,656 | 151,243 | 133,876 | 59,569 | 41,503 | |||||||||||||||
Allowance balance, end of period | $ | 238,833 | $ | 230,650 | $ | 223,700 | $ | 195,450 | $ | 178,027 | ||||||||||
UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT: |
| |||||||||||||||||||
Allowance balance, beginning of period | $ | 6,958 | $ | 5,907 | $ | 7,349 | $ | 6,341 | $ | 5,716 | ||||||||||
Provision for unfunded loan commitments and letters of credit | 1,161 | 1,051 | (1,442 | ) | 1,008 | 625 | ||||||||||||||
Allowance balance, end of period | $ | 8,119 | $ | 6,958 | $ | 5,907 | $ | 7,349 | $ | 6,341 | ||||||||||
GRAND TOTAL, END OF PERIOD | $ | 246,952 | $ | 237,608 | $ | 229,607 | $ | 202,799 | $ | 184,368 | ||||||||||
Nonperforming assets to total assets | 0.91 | % | 1.84 | % | 1.49 | % | 2.28 | % | 2.04 | % | ||||||||||
Allowance for loan losses to total gross non-covered loans at end of period | 2.80 | % | 2.74 | % | 2.62 | % | 2.42 | % | 2.16 | % | ||||||||||
Allowance for loan losses and unfunded loan commitments to total gross non-covered loans at end of period | 2.90 | % | 2.82 | % | 2.69 | % | 2.51 | % | 2.23 | % | ||||||||||
Allowance to non-covered nonaccrual loans at end of period | 137.91 | % | 112.82 | % | 137.94 | % | 78.81 | % | 82.95 | % | ||||||||||
Nonaccrual loans to total loans | 1.23 | % | 2.43 | % | 1.90 | % | 3.08 | % | 2.60 | % |
EAST WEST BANCORP, INC
TOTAL NON-COVERED NON-PERFORMING ASSETS
(in thousands)
(unaudited)
AS OF DECEMBER 31, 2009 | |||||||||||||||||||||
Total Nonaccrual Loans | |||||||||||||||||||||
90+ Days Delinquent | Under 90+ Days Delinquent | Total Nonaccrual Loans | 90+ Days Delinquent Not On Nonaccrual | Total Non- performing Loans | REO Assets | Total Non-Performing Assets | |||||||||||||||
Loan Type | |||||||||||||||||||||
Real estate - single family | $ | 3,262 | $ | — | $ | 3,262 | $ | — | $ | 3,262 | $ | 264 | $ | 3,526 | |||||||
Real estate - multifamily | 10,631 | — | 10,631 | — | 10,631 | 2,118 | 12,749 | ||||||||||||||
Real estate - commercial | 11,654 | 18,450 | 30,104 | — | 30,104 | 5,687 | 35,791 | ||||||||||||||
Real estate - land | 27,179 | 42,666 | 69,845 | — | 69,845 | 4,393 | 74,238 | ||||||||||||||
Real estate - residential construction | 17,179 | — | 17,179 | — | 17,179 | 540 | 17,719 | ||||||||||||||
Real estate - commercial construction | — | 17,132 | 17,132 | — | 17,132 | 830 | 17,962 | ||||||||||||||
Commercial | 8,002 | 16,765 | 24,767 | — | 24,767 | — | 24,767 | ||||||||||||||
Trade Finance | — | — | — | — | — | — | — | ||||||||||||||
Consumer | 114 | 146 | 260 | — | 260 | — | 260 | ||||||||||||||
Total | $ | 78,021 | $ | 95,159 | $ | 173,180 | $ | — | $ | 173,180 | $ | 13,832 | $ | 187,012 | |||||||
AS OF SEPTEMBER 30, 2009 | |||||||||||||||||||||
Total Nonaccrual Loans | |||||||||||||||||||||
90+ Days Delinquent | Under 90+ Days Delinquent | Total Nonaccrual Loans | 90+ Days Delinquent Not On Nonaccrual | Total Non- performing Loans | REO Assets | Total Non-Performing Assets | |||||||||||||||
Loan Type | |||||||||||||||||||||
Real estate - single family | $ | 6,189 | $ | — | $ | 6,189 | $ | — | $ | 6,189 | $ | 648 | $ | 6,837 | |||||||
Real estate - multifamily | 11,211 | 652 | 11,863 | — | 11,863 | 1,147 | 13,010 | ||||||||||||||
Real estate - commercial | 17,381 | 16,040 | 33,421 | — | 33,421 | 2,330 | 35,751 | ||||||||||||||
Real estate - land | 23,568 | 33,610 | 57,178 | — | 57,178 | 4,020 | 61,198 | ||||||||||||||
Real estate - residential construction | 55,130 | — | 55,130 | — | 55,130 | 12,238 | 67,368 | ||||||||||||||
Real estate - commercial construction | 10,784 | — | 10,784 | — | 10,784 | 3,680 | 14,464 | ||||||||||||||
Commercial | 11,783 | 13,227 | 25,010 | — | 25,010 | 122 | 25,132 | ||||||||||||||
Trade Finance | 2,110 | 1,785 | 3,895 | 1,556 | 5,451 | — | 5,451 | ||||||||||||||
Consumer | 293 | 676 | 969 | — | 969 | — | 969 | ||||||||||||||
Total | $ | 138,449 | $ | 65,990 | $ | 204,439 | $ | 1,556 | $ | 205,995 | $ | 24,185 | $ | 230,180 | |||||||
AS OF JUNE 30, 2009 | |||||||||||||||||||||
Total Nonaccrual Loans | |||||||||||||||||||||
90+ Days Delinquent | Under 90+ Days Delinquent | Total Nonaccrual Loans | 90+ Days Delinquent Not On Nonaccrual | Total Non- performing Loans | REO Assets | Total Non-Performing Assets | |||||||||||||||
Loan Type | |||||||||||||||||||||
Real estate - single family | $ | 5,181 | $ | — | $ | 5,181 | $ | — | $ | 5,181 | $ | 4,921 | $ | 10,102 | |||||||
Real estate - multifamily | 7,938 | — | 7,938 | — | 7,938 | 281 | 8,219 | ||||||||||||||
Real estate - commercial | 19,786 | 4,590 | 24,376 | — | 24,376 | 2,887 | 27,263 | ||||||||||||||
Real estate - land | 35,660 | 1,656 | 37,316 | — | 37,316 | 13,307 | 50,623 | ||||||||||||||
Real estate - residential construction | 46,176 | — | 46,176 | — | 46,176 | 4,154 | 50,330 | ||||||||||||||
Real estate - commercial construction | 20,629 | — | 20,629 | — | 20,629 | — | 20,629 | ||||||||||||||
Commercial | 8,034 | 8,067 | 16,101 | — | 16,101 | 626 | 16,727 | ||||||||||||||
Trade Finance | 3,706 | — | 3,706 | — | 3,706 | 211 | 3,917 | ||||||||||||||
Consumer | 339 | 412 | 751 | — | 751 | 801 | 1,552 | ||||||||||||||
Total | $ | 147,449 | $ | 14,725 | $ | 162,174 | $ | — | $ | 162,174 | $ | 27,188 | $ | 189,362 | |||||||
AS OF MARCH 31, 2009 | |||||||||||||||||||||
Total Nonaccrual Loans | |||||||||||||||||||||
90+ Days Delinquent | Under 90+ Days Delinquent | Total Nonaccrual Loans | 90+ Days Delinquent Not On Nonaccrual | Total Non- performing Loans | REO Assets | Total Non-Performing Assets | |||||||||||||||
Loan Type | |||||||||||||||||||||
Real estate - single family | $ | 18,515 | $ | 634 | $ | 19,149 | $ | — | $ | 19,149 | $ | 671 | $ | 19,820 | |||||||
Real estate - multifamily | 9,863 | — | 9,863 | — | 9,863 | 887 | 10,750 | ||||||||||||||
Real estate - commercial | 12,465 | 42,724 | 55,189 | — | 55,189 | 4,240 | 59,429 | ||||||||||||||
Real estate - land | 63,052 | 6,233 | 69,285 | — | 69,285 | 17,934 | 87,219 | ||||||||||||||
Real estate - residential construction | 28,433 | 14,196 | 42,629 | — | 42,629 | 13,278 | 55,907 | ||||||||||||||
Real estate - commercial construction | 28,604 | — | 28,604 | — | 28,604 | — | 28,604 | ||||||||||||||
Commercial | 16,798 | 5,000 | 21,798 | — | 21,798 | 1,236 | 23,034 | ||||||||||||||
Trade Finance | 177 | — | 177 | — | 177 | 270 | 447 | ||||||||||||||
Consumer | 839 | 482 | 1,321 | — | 1,321 | 118 | 1,439 | ||||||||||||||
Total | $ | 178,746 | $ | 69,269 | $ | 248,015 | $ | — | $ | 248,015 | $ | 38,634 | $ | 286,649 | |||||||
AS OF DECEMBER 31, 2008 | |||||||||||||||||||||
Total Nonaccrual Loans | |||||||||||||||||||||
90+ Days Delinquent | Under 90+ Days Delinquent | Total Nonaccrual Loans | 90+ Days Delinquent Not On Nonaccrual | Total Non- performing Loans | REO Assets | Total Non-Performing Assets | |||||||||||||||
Loan Type | |||||||||||||||||||||
Real estate - single family | $ | 13,519 | $ | — | $ | 13,519 | $ | — | $ | 13,519 | $ | 419 | $ | 13,938 | |||||||
Real estate - multifamily | 11,845 | — | 11,845 | — | 11,845 | 1,136 | 12,981 | ||||||||||||||
Real estate - commercial | 24,680 | — | 24,680 | — | 24,680 | 4,882 | 29,562 | ||||||||||||||
Real estate - land | 66,185 | 12,892 | 79,077 | — | 79,077 | 10,307 | 89,384 | ||||||||||||||
Real estate - residential construction | 27,052 | 8,766 | 35,818 | — | 35,818 | 21,146 | 56,964 | ||||||||||||||
Real estate - commercial construction | 30,581 | — | 30,581 | — | 30,581 | — | 30,581 | ||||||||||||||
Commercial | 6,570 | 10,604 | 17,174 | — | 17,174 | 142 | 17,316 | ||||||||||||||
Trade Finance | 65 | — | 65 | — | 65 | 270 | 335 | ||||||||||||||
Consumer | 1,654 | 194 | 1,848 | — | 1,848 | — | 1,848 | ||||||||||||||
Total | $ | 182,151 | $ | 32,456 | $ | 214,607 | $ | — | $ | 214,607 | $ | 38,302 | $ | 252,909 |
EAST WEST BANCORP, INC.
QUARTER TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID
(In thousands)
(unaudited)
Quarter Ended | ||||||||||||||||||||
December 31, 2009 | September 30, 2009 | |||||||||||||||||||
Average Volume | Interest | Yield (1) | Average Volume | Interest | Yield (1) | |||||||||||||||
ASSETS | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Short-term investments and interest bearing deposits in other banks | $ | 978,967 | $ | 1,635 | 0.66 | % | $ | 897,527 | $ | 1,856 | 0.82 | % | ||||||||
Securities purchased under resale agreements | 165,839 | 3,290 | 7.76 | % | 91,033 | 2,153 | 9.25 | % | ||||||||||||
Investment securities | ||||||||||||||||||||
Taxable | 2,616,485 | 27,966 | 4.24 | % | 2,304,619 | 28,311 | 4.87 | % | ||||||||||||
Tax-exempt (2) | 22,458 | 316 | 5.63 | % | 22,727 | 256 | 4.51 | % | ||||||||||||
Loans receivable | 8,504,833 | 116,278 | 5.42 | % | 8,471,766 | 114,512 | 5.36 | % | ||||||||||||
Loans receivable - covered (3) | 3,479,519 | 133,966 | 15.27 | % | — | — | — | |||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stocks | 180,420 | 368 | 0.82 | % | 123,514 | 918 | 2.97 | % | ||||||||||||
Total interest-earning assets | 15,948,521 | 283,819 | 7.06 | % | 11,911,186 | 148,006 | 4.93 | % | ||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||
Cash and due from banks | 266,287 | 124,708 | ||||||||||||||||||
Allowance for loan losses | (236,858 | ) | (244,542 | ) | ||||||||||||||||
Other assets | 1,585,379 | 843,925 | ||||||||||||||||||
Total assets | $ | 17,563,329 | $ | 12,635,277 | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Checking accounts | 523,519 | 504 | 0.38 | % | 342,922 | 286 | 0.33 | % | ||||||||||||
Money market accounts | 2,671,917 | 6,919 | 1.03 | % | 2,160,722 | 6,830 | 1.25 | % | ||||||||||||
Savings deposits | 775,834 | 1,353 | 0.69 | % | 421,844 | 608 | 0.57 | % | ||||||||||||
Time deposits less than $100,000 | 2,403,331 | 9,936 | 1.64 | % | 1,090,647 | 5,572 | 2.03 | % | ||||||||||||
Time deposits $100,000 or greater | 3,972,588 | 15,761 | 1.57 | % | 3,308,057 | 13,674 | 1.64 | % | ||||||||||||
Federal funds purchased | 1,158 | 1 | 0.34 | % | 1,385 | 2 | 0.57 | % | ||||||||||||
Federal Home Loan Bank advances | 1,731,525 | 14,119 | 3.24 | % | 1,046,056 | 11,172 | 4.24 | % | ||||||||||||
Securities sold under repurchase agreements | 1,086,279 | 13,709 | 4.94 | % | 1,018,321 | 12,140 | 4.66 | % | ||||||||||||
Subordinated debt and trust preferred securities | 235,570 | 1,605 | 2.67 | % | 235,570 | 1,760 | 2.92 | % | ||||||||||||
Other borrowings | 48,842 | 240 | 1.97 | % | — | — | — | |||||||||||||
Total interest-bearing liabilities | 13,450,563 | 64,147 | 1.89 | % | 9,625,524 | 52,044 | 2.15 | % | ||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||
Demand deposits | 1,953,781 | 1,335,131 | ||||||||||||||||||
Other liabilities | 237,394 | 130,800 | ||||||||||||||||||
Stockholders’ equity | 1,921,591 | 1,543,822 | ||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 17,563,329 | $ | 12,635,277 | ||||||||||||||||
Interest rate spread | 5.17 | % | 2.78 | % | ||||||||||||||||
Net interest income and net interest margin (3) | $ | 219,672 | 5.46 | % | $ | 95,962 | 3.20 | % | ||||||||||||
Net interest income and net interest margin, excluding purchase accounting discount accretion (3) | $ | 145,233 | 3.61 | % | ||||||||||||||||
(1) | Annualized |
(2) | Amounts calculated on a fully taxable basis using the current statutory federal tax rate. |
(3) | Amounts include yield adjustment of $74,439 from discount accretion on early prepayments. |
EAST WEST BANCORP, INC.
YEAR TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID
(In thousands)
(unaudited)
Year To Date December 31, | ||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||
Average Volume | Interest | Yield | Average Volume | Interest | Yield | |||||||||||||||
ASSETS | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Short-term investments and interest bearing deposits in other banks | $ | 881,282 | $ | 8,976 | 1.02 | % | $ | 286,650 | $ | 7,029 | 2.45 | % | ||||||||
Securities purchased under resale agreements | 89,883 | 7,985 | 8.76 | % | 70,246 | 6,811 | 9.67 | % | ||||||||||||
Investment securities | ||||||||||||||||||||
Taxable | 2,542,124 | 115,531 | 4.54 | % | 2,001,089 | 98,217 | 4.89 | % | ||||||||||||
Tax-exempt (1) | 27,668 | 1,223 | 4.42 | % | 44,708 | 3,256 | 7.28 | % | ||||||||||||
Loans receivable | 8,355,825 | 453,275 | 5.42 | % | 8,601,825 | 545,260 | 6.32 | % | ||||||||||||
Loans receivable - covered (2) | 877,029 | 133,966 | 15.27 | % | — | — | — | |||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stocks | 137,001 | 2,337 | 1.71 | % | 115,370 | 5,175 | 4.47 | % | ||||||||||||
Total interest-earning assets | 12,910,812 | 723,293 | 5.60 | % | 11,119,888 | 665,748 | 5.97 | % | ||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||
Cash and due from banks | 147,694 | 137,730 | ||||||||||||||||||
Allowance for loan losses | (216,775 | ) | (144,154 | ) | ||||||||||||||||
Other assets | 997,214 | 689,323 | ||||||||||||||||||
Total assets | $ | 13,838,945 | $ | 11,802,787 | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Checking accounts | 398,619 | 1,507 | 0.38 | % | 404,404 | 3,226 | 0.80 | % | ||||||||||||
Money market accounts | 2,035,821 | 25,583 | 1.26 | % | 1,099,576 | 25,805 | 2.34 | % | ||||||||||||
Savings deposits | 506,706 | 3,322 | 0.66 | % | 452,259 | 4,148 | 0.91 | % | ||||||||||||
Time deposits less than $100,000 | 1,499,076 | 32,073 | 2.14 | % | 1,164,622 | 35,061 | 3.00 | % | ||||||||||||
Time deposits $100,000 or greater | 3,538,046 | 66,921 | 1.89 | % | 3,018,876 | 109,820 | 3.63 | % | ||||||||||||
Federal funds purchased | 2,379 | 9 | 0.37 | % | 89,309 | 2,217 | 2.48 | % | ||||||||||||
Federal Home Loan Bank advances | 1,333,846 | 52,310 | 3.92 | % | 1,592,125 | 70,661 | 4.43 | % | ||||||||||||
Securities sold under repurchase agreements | 1,027,665 | 49,725 | 4.77 | % | 1,000,332 | 46,062 | 4.59 | % | ||||||||||||
Subordinated debt and trust preferred securities | 235,570 | 7,816 | 3.27 | % | 235,570 | 12,694 | 5.37 | % | ||||||||||||
Other borrowings | 12,311 | 240 | 1.95 | % | — | — | — | |||||||||||||
Total interest-bearing liabilities | 10,590,039 | 239,506 | 2.26 | % | 9,057,073 | 309,694 | 3.41 | % | ||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||
Demand deposits | 1,459,871 | 1,362,617 | ||||||||||||||||||
Other liabilities | 154,138 | 137,320 | ||||||||||||||||||
Stockholders’ equity | 1,634,897 | 1,245,777 | ||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 13,838,945 | $ | 11,802,787 | ||||||||||||||||
Interest rate spread | 3.34 | % | 2.56 | % | ||||||||||||||||
Net interest income and net interest margin (2) | $ | 483,787 | 3.75 | % | $ | 356,054 | 3.19 | % | ||||||||||||
Net interest income and net interest margin, excluding purchase accounting discount accretion (2) | $ | 409,348 | 3.17 | % | ||||||||||||||||
(1) | Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate. |
(2) | Amounts include yield adjustment of $74,439 from discount accretion on early prepayments. |
EAST WEST BANCORP, INC.
SELECTED FINANCIAL INFORMATION
(In thousands)
(unaudited)
Average Balances | ||||||||||||
December 31, 2009 | Quarter Ended September 30, 2009 | December 31, 2008 | ||||||||||
Loans receivable | ||||||||||||
Real estate - single family | $ | 908,095 | $ | 888,106 | $ | 493,415 | ||||||
Real estate - multifamily | 1,037,460 | 1,036,080 | 682,455 | |||||||||
Real estate - commercial | 3,610,640 | 3,552,897 | 3,407,697 | |||||||||
Real estate - land | 398,109 | 460,256 | 579,335 | |||||||||
Real estate - construction | 586,883 | 855,446 | 1,311,622 | |||||||||
Commercial | 1,446,695 | 1,360,223 | 1,548,231 | |||||||||
Consumer | 516,951 | 318,758 | 210,448 | |||||||||
Total loans receivable, excluding covered loans | 8,504,833 | 8,471,766 | 8,233,203 | |||||||||
Covered loans | 3,479,519 | — | — | |||||||||
Total loans receivable | 11,984,352 | 8,471,766 | 8,233,203 | |||||||||
Investment securities | 2,638,943 | 2,327,346 | 2,223,842 | |||||||||
Earning assets | 15,948,521 | 11,911,186 | 11,219,272 | |||||||||
Total assets | 17,563,329 | 12,635,277 | 11,949,168 | |||||||||
Deposits | ||||||||||||
Noninterest-bearing demand | $ | 1,953,781 | $ | 1,335,131 | $ | 1,311,283 | ||||||
Interest-bearing checking | 523,519 | 342,922 | 367,792 | |||||||||
Money market | 2,671,917 | 2,160,722 | 1,153,171 | |||||||||
Savings | 775,834 | 421,844 | 419,757 | |||||||||
Total core deposits | 5,925,051 | 4,260,619 | 3,252,003 | |||||||||
Time deposits less than $100,000 | 2,403,331 | 1,090,647 | 1,599,486 | |||||||||
Time deposits $100,000 or greater | 3,972,588 | 3,308,057 | 2,855,376 | |||||||||
Total time deposits | 6,375,919 | 4,398,704 | 4,454,862 | |||||||||
Total deposits | 12,300,970 | 8,659,323 | 7,706,865 | |||||||||
Interest-bearing liabilities | 13,450,563 | 9,625,524 | 9,143,800 | |||||||||
Stockholders’ equity | 1,921,591 | 1,543,822 | 1,363,161 | |||||||||
Selected Ratios | ||||||||||||
December 31, 2009 | Quarter Ended September 30, 2009 | December 31, 2008 | ||||||||||
For The Period | ||||||||||||
Return on average assets | 5.92 | % | -2.17 | % | 0.08 | % | ||||||
Return on average common equity | 75.27 | % | -27.12 | % | -1.12 | % | ||||||
Interest rate spread (2) | 5.17 | % | 2.78 | % | 2.13 | % | ||||||
Net interest margin (2) | 5.46 | % | 3.20 | % | 2.72 | % | ||||||
Yield on earning assets (2) | 7.06 | % | 4.93 | % | 5.30 | % | ||||||
Cost of deposits | 1.11 | % | 1.24 | % | 2.14 | % | ||||||
Cost of funds | 1.65 | % | 1.88 | % | 2.77 | % | ||||||
Noninterest expense/average assets (1) | 1.96 | % | 1.37 | % | 1.38 | % | ||||||
Efficiency ratio (3) | 52.53 | % | 39.99 | % | 47.52 | % |
(1) | Excludes the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, impairment loss on goodwill, and amortization of investments in affordable housing partnerships. |
(2) | Yields on certain securities have been adjusted upward to a “fully taxable equivalent” basis in order to reflect the effect of income which is exempt from federal income taxation at the current statutory tax rate. |
(3) | Represents noninterest expense, excluding the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, impairment loss on goodwill, and investments in affordable housing partnerships, divided by the aggregate of net interest income excluding the yield adjustment, before provision for loan losses and noninterest income, excluding impairment loss on investment securities, gain on acquisition and the decrease in FDIC indemnification asset. |
EAST WEST BANCORP, INC.
SELECTED FINANCIAL INFORMATION
(In thousands)
(unaudited)
Average Balances | |||||||||||
Year To Date December 31, | % | ||||||||||
2009 | 2008 | Change | |||||||||
Loans receivable | |||||||||||
Real estate - single family | $ | 748,713 | $ | 467,739 | 60 | ||||||
Real estate - multifamily | 898,927 | 707,621 | 27 | ||||||||
Real estate - commercial | 3,536,846 | 3,483,258 | 2 | ||||||||
Real estate - land | 490,546 | 631,951 | (22 | ) | |||||||
Real estate - construction | 934,729 | 1,481,248 | (37 | ) | |||||||
Commercial | 1,420,453 | 1,628,732 | (13 | ) | |||||||
Consumer | 325,611 | 201,276 | 62 | ||||||||
Total loans receivable, excluding covered loans | 8,355,825 | 8,601,825 | (3 | ) | |||||||
Covered loans | 877,029 | — | NA | ||||||||
Total loans receivable | 9,232,854 | 8,601,825 | 7 | ||||||||
Investment securities | 2,569,792 | 2,045,797 | 26 | ||||||||
Earning assets | 12,910,812 | 11,119,888 | 16 | ||||||||
Total assets | 13,838,945 | 11,802,787 | 17 | ||||||||
Deposits | |||||||||||
Noninterest-bearing demand | $ | 1,459,871 | $ | 1,362,617 | 7 | ||||||
Interest-bearing checking | 398,619 | 404,404 | (1 | ) | |||||||
Money market | 2,035,821 | 1,099,576 | 85 | ||||||||
Savings | 506,706 | 452,259 | 12 | ||||||||
Total core deposits | 4,401,017 | 3,318,856 | 33 | ||||||||
Time deposits less than $100,000 | 1,499,076 | 1,164,622 | 29 | ||||||||
Time deposits $100,000 or greater | 3,538,046 | 3,018,876 | 17 | ||||||||
Total time deposits | 5,037,122 | 4,183,498 | 20 | ||||||||
Total deposits | 9,438,139 | 7,502,354 | 26 | ||||||||
Interest-bearing liabilities | 10,590,039 | 9,057,073 | 17 | ||||||||
Stockholders’ equity | 1,634,897 | 1,245,777 | 31 | ||||||||
Selected Ratios | |||||||||||
Year To Date December 31, | % | ||||||||||
2009 | 2008 | Change | |||||||||
For The Period | |||||||||||
Return on average assets | 0.55 | % | -0.42 | % | (231 | ) | |||||
Return on average common equity | 2.37 | % | -5.41 | % | (144 | ) | |||||
Interest rate spread (2) | 3.34 | % | 2.56 | % | 30 | ||||||
Net interest margin (2) | 3.75 | % | 3.19 | % | 17 | ||||||
Yield on earning assets (2) | 5.60 | % | 5.97 | % | (6 | ) | |||||
Cost of deposits | 1.37 | % | 2.37 | % | (42 | ) | |||||
Cost of funds | 1.99 | % | 2.96 | % | (33 | ) | |||||
Noninterest expense/average assets (1) | 1.68 | % | 1.57 | % | 7 | ||||||
Efficiency ratio (3) | 50.09 | % | 45.94 | % | 9 | ||||||
Period End | |||||||||||
Tier 1 risk-based capital ratio | 17.9 | % | 13.9 | % | 29 | ||||||
Total risk-based capital ratio | 19.9 | % | 15.8 | % | 26 | ||||||
Tier 1 leverage capital ratio | 11.7 | % | 12.4 | % | (5 | ) |
(1) | Excludes the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, impairment loss on goodwill, and amortization of investments in affordable housing partnerships. |
(2) | Yields on certain securities have been adjusted upward to a “fully taxable equivalent” basis in order to reflect the effect of income which is exempt from federal income taxation at the current statutory tax rate. |
(3) | Represents noninterest expense, excluding the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, impairment loss on goodwill, and investments in affordable housing partnerships, divided by the aggregate of net interest income excluding the yield adjustment, before provision for loan losses and noninterest income, excluding impairment loss on investment securities, gain on acquisition and the decrease in FDIC indemnification asset. |
EAST WEST BANCORP, INC.
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
(Unaudited)
The tangible common equity to risk weighted asset ratio is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance to provide additional disclosure. As the use of tangible common equity is more prevalent in the banking industry and with banking regulators and analysts, we have included the tangible common equity to risk-weighted assets ratio.
As of December 31, 2009 | ||||
Stockholders’ Equity | $ | 2,284,659 | ||
Less: | ||||
Preferred equity excluding the Mandatory Convertible Preferred Stock | (379,129 | ) * | ||
Goodwill and other intangible assets | (428,524 | ) | ||
Tangible common equity | $ | 1,477,006 | ||
Risk-weighted assets | $ | 11,218,644 | ||
Tangible Common Equity to risk-weighted assets | 13.2 | % | ||
* | The Mandatory Convertible Cumulative Non-Voting Perpetual Preferred Stock, Series, C issued in November 2009 has been included as a proforma tangible common equity ratio. The Series C shares will automatically convert to common shares after the shareholder vote on March 18, 2010. |
Operating noninterest income is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance to provide additional disclosure. There are noninterest income line items that are non-core in nature. Operating noninterest income excludes such non-core noninterest income line items. The Company believes that presenting the operating noninterest income provides more clarity to the users of financial statements regarding the core noninterest income amounts.
Quarter Ended December 31, 2009 | ||||
Noninterest income (loss) | $ | 420,820 | ||
Add: | ||||
Impairment loss on investment securities | 45,775 | |||
Net gain on sale of investment securities | (4,545 | ) | ||
Gain on acquisition of UCB | (471,009 | ) | ||
Decrease in FDIC indemnification asset and FDIC receivable | 23,338 | |||
Operating noninterest income (non-GAAP) | $ | 14,379 | ||
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 fourth quater of 2009 and the 2009 year to date net interest income and net interest margin include a yield adjustment of $74,439 from discount accretion on covered loans. Although there may be additional yield adjustments in future quarters, this amount is nonrecurring in nature. As such, the Company believes that presenting the net interest income and net interest margin excluding the yield adjustment provides additional clarity to the users of financial statements regarding the core net interest income and net interest margin.
Quarter to Date December 31, 2009 | |||||||||
Average Volume | Interest | Yield | |||||||
Total interest-earning assets | $ | 15,948,521 | $ | 283,819 | 7.06 | % | |||
Net interest income and net interest margin | $ | 219,499 | 5.46 | % | |||||
Less: | |||||||||
Yield adjustment to interest income from discount accretion | 74,439 | ||||||||
Net interest income and net interest margin, excluding yield adjustment | $ | 145,060 | 3.61 | % | |||||