EWBC East West Bancorp Inc

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 second quarter of 2007. Fully diluted earnings per share for the second quarter increased 12% to a solid $0.66 from $0.59 in the prior year period. �We are pleased with the operating results of the second quarter. Double-digit organic loan growth, continued credit quality and sustained operating efficiencies were the primary factors for our strong performance in the second quarter of 2007,� stated Dominic Ng, Chairman, President and Chief Executive Officer of East West. �East West has been able to consistently achieve strong core earnings and growth and we are confident that we will continue our outstanding performance.� �In late April we announced the acquisition of Desert Community Bank (�DCB�), a $584 million commercial bank headquartered in Victorville, California. We have received regulatory approval for the acquisition and subject to approval by the DCB shareholders on August 9, the acquisition is expected to close by the end of August. This acquisition will allow us to expand our footprint in the California marketplace,� concluded Ng. Second Quarter Summary Diluted earnings per share of $0.66, up 12% from second quarter 2006 Net income of $40.5 million, up 10% from second quarter 2006 Record net interest income of $98.9 million, up 8% from second quarter 2006 Net interest margin of 3.97% Return on equity of 15.53% Total nonperforming assets were 0.23% of total assets Net loan chargeoffs of $576 thousand for the quarter Financial Summary Second quarter net income was a strong $40.5 million, up 10% from $36.6 million reported in the prior year period. Diluted earnings per share for the second quarter rose to $0.66, up 12% from $0.59 in the prior year period. Return on average equity for the quarter totaled 15.53%, while return on average assets for the quarter totaled 1.52%. Pretax income for the second quarter totaled $66.5 million, an 11% or $6.6 million increase over the same period a year ago. The increase in earnings in the second quarter of 2007 was primarily driven by higher net interest income which totaled $98.9 million, the highest ever in the history of the Company. Management Guidance The Company provided updated guidance for the full year 2007. Based on the performance during the first half of the year and the expectations for the remainder of 2007, management estimates that fully diluted earnings per share for the full year of 2007 will range from $2.61 to $2.63, an increase of $0.26 to $0.28 or 11% to 12% from $2.35 in 2006. Additionally, this is an increase from the previously announced estimate of $2.56 to $2.60 for the full year 2007. This guidance does not include the impact of the acquisition of Desert Community Bank, which is estimated to add approximately $0.01 in 2007. The EPS guidance is based on the following assumptions for the remainder of 2007: Annual organic loan growth of 12% to 15% Stable deposit balances Annual increase in noninterest expense of 8% to 9% Efficiency ratio of approximately 37% Effective tax rate of approximately 39% A stable interest rate environment and a net interest margin between 3.95% and 4.00% $300.0 million in loan securitizations each quarter $1.0 million provision for loan losses each quarter Balance Sheet Summary At June 30, 2007, total assets were $10.8 billion, unchanged from December 31, 2006. Gross loans at June 30, 2007 totaled $8.0 billion compared to $8.3 billion at year-end 2006. Excluding the impact of $326.1 million in on-balance sheet single family and multi-family loan securitizations, organic loan growth was $331.5 million, or 16% annualized during the quarter, and $486.7 million, or 12% annualized year-to-date. Average earning assets for the second quarter of 2007 equaled $10.0 billion, 11% higher than the second quarter of 2006. The yield on average earning assets for the quarter was 7.51%, an increase of 42 basis points from a year ago and an increase of 4 basis points from the previous quarter. The yield on average loans receivable for the quarter was 7.87%, an increase of 42 basis points from the year ago quarter and an increase of 3 basis points from the previous quarter. The yield on average investment securities for the quarter was 5.77%, an increase of 109 basis points from the year ago quarter and an increase of 13 basis points from the previous quarter. Total deposits at June 30, 2007 were $7.1 billion, a 1% decrease over total deposits of $7.2 billion at December 31, 2006. The decrease in deposits is largely a result of the Bank�s efforts to reduce high cost money market and broker deposits. Average total deposits for the second quarter totaled $7.2 billion, or 3% above the figure for the prior year period. Average core deposits for the quarter totaled $3.4 billion, reflecting no change compared to the year ago figure. The average cost of deposits for the second quarter of 2007 was 3.42%, a 56 basis point increase from the year ago quarter and a 5 basis point increase from the previous quarter. The average cost of funds for the second quarter equaled 3.74%, a 57 basis point increase from the prior year and a 4 basis point increase from the prior quarter. Second Quarter Operating Results Net interest income for the second quarter increased to a record $98.9 million, 8% or $7.3 million greater than the second quarter of 2006 and $326 thousand greater on a sequential quarter basis. The net interest margin for the quarter of 3.97% reflected a decrease of 11 basis points from the year ago margin and an increase of 2 basis points from the previous quarter margin. East West did not record a provision for loan losses during the second quarter of 2007. In comparison, East West provided $1.3 million for loan losses during the second quarter of 2006 and did not record a provision for loan losses for the first quarter of 2007. Based on the projected growth of the loan portfolio during the remainder of the year, management anticipates that the provision for loan losses will be $1.0 million for each remaining quarter of 2007. Noninterest income for the second quarter totaled $10.8 million, 33% or $2.7 million higher than the second quarter of 2006 and 14% or $1.7 million less than the first quarter of 2007. The decrease from the prior quarter is primarily the result of a $1.3 million gain on the sale of real estate owned recorded in the first quarter. Core noninterest income, excluding the impact of gain on sales of investment securities, real estate owned and fixed assets, totaled $9.6 million during the quarter, 20% or $1.6 million higher than the prior year figure and reflecting no change compared to the first quarter. The growth in core noninterest income from the prior year stems from increased demand for letters of credit and mortgage servicing fees, which are included in ancillary loan fees. Noninterest expense totaled $43.3 million for the second quarter of 2007, 12% or $4.7 million higher than a year ago. However, noninterest expense increased a modest 2% or $945 thousand from the previous quarter. Management will continue to carefully manage expenditures and anticipates that operating expenses for the full year 2007 will only increase approximately 8% to 9% from 2006. The Company expects that its efficiency ratio for the full year 2007 will be approximately 37%. East West generated an efficiency ratio of 36.91% for the second quarter of 2007, compared to 35.30% a year ago. The effective tax rate for the second quarter was 39.08% compared to 38.82% in the prior year period. Management anticipates an effective tax rate for the full year 2007 to be approximately 39%. Asset Quality Total nonperforming assets as of June 30, 2007 were $24.4 million or 0.23% of total assets, compared to $19.9 million, or 0.18% of total assets at December 31, 2006. Although nonperforming assets has increased compared to the year-end figure, overall, the credit quality of our loan portfolio continues to be healthy and we continue to experience low levels of nonperforming assets. Nonaccrual loans at of June 30, 2007 were $23.7 million or 0.30% of total loans, compared to $17.1 million or 0.21% of total loans, at December 31, 2006. For the second quarter of 2007, East West had net loan chargeoffs of $576 thousand or an annualized 0.03% of average loans. This compares to net loan chargeoffs of $305 thousand, or an annualized 0.02% of average loans for the second quarter of 2006 and net loan chargeoffs of $156 thousand or an annualized 0.01% of average loans for the first quarter of 2007. The allowance for loan losses at June 30, 2007 was $77.3 million or 0.96% of total loans and 325% of nonaccrual loans, compared to $78.2 million or 0.95% of total loans and 457% of nonaccrual loans at December 31, 2006. At June 30, 2007, the allowance for unfunded loan commitments and off-balance sheet credit exposures was $12.4 million, compared to $12.2 million at December 31, 2006. The allowance for unfunded loan commitments and off-balance sheet credit exposures is included in accrued expenses and other liabilities on the balance sheet. Capitalization East West continues to remain well capitalized under all regulatory guidelines. At June 30, 2007, our Tier I risk-based capital ratio was 9.77%, total risk-based capital ratio was 11.21% and Tier I leverage ratio was 8.89%. During the first quarter of 2007, our Board of Directors authorized stock repurchases of up to $80.0 million of the Company�s stock. During the second quarter, we repurchased 400,000 shares at a weighed average cost of $40.29. As of June 30, 2007, East West had $34.2 million of repurchase authorization remaining. Total stockholders� equity as of June 30, 2007 was $1.1 billion, representing a book value of $17.34 per share. About East West East West Bancorp is a publicly owned company with $10.8 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 second largest independent commercial bank headquartered in Los Angeles with 62 branch locations. East West Bank serves the community with 60 branch locations across Southern and Northern California and a branch location in Houston, Texas. East West Bank has two international locations in Greater China, including a full-service branch in Hong Kong and a Beijing Representative Office in China. 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, 2006 (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 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) � June 30, 2007 December 31, 2006 % Change � Assets Cash and cash equivalents $ 190,538 $ 192,559 (1 ) Securities purchased under resale agreements 200,000 100,000 100 Investment securities available-for-sale 1,784,870 1,647,080 8 Loans receivable (net of allowance for loan losses of $77,280 and $78,201) 7,949,179 8,182,172 (3 ) Premiums on deposits acquired, net 17,326 20,383 (15 ) Goodwill 244,263 244,259 0 Other assets � 443,181 � � 437,258 � 1 Total assets $ 10,829,357 � $ 10,823,711 � 0 � Liabilities and Stockholders' Equity Deposits $ 7,147,052 $ 7,235,042 (1 ) Federal funds purchased 159,000 151,000 5 Federal Home Loan Bank advances 1,164,858 1,136,866 2 Securities sold under repurchase agreements 975,000 975,000 0 Notes payable 15,952 11,379 40 Accrued expenses and other liabilities 107,682 111,011 (3 ) Long-term debt � 204,642 � � 184,023 � 11 Total liabilities 9,774,186 9,804,321 (0 ) Stockholders' equity � 1,055,171 � � 1,019,390 � 4 Total liabilities and stockholders' equity $ 10,829,357 � $ 10,823,711 � 0 Book value per share $ 17.34 $ 16.59 5 Number of shares at period end 60,848 61,431 (1 ) � Ending Balances June 30, 2007 December 31, 2006 % Change � Loans receivable Real estate - single family $ 318,669 $ 365,407 (13 ) Real estate - multifamily 959,531 1,584,674 (39 ) Real estate - commercial 3,811,171 3,766,634 1 Real estate - construction 1,358,095 1,154,339 18 Commercial 1,066,751 960,375 11 Trade finance 368,694 271,795 36 Consumer � 147,200 � � 162,008 � (9 ) Total gross loans receivable 8,030,111 8,265,232 (3 ) Unearned fees, premiums and discounts (3,652 ) (4,859 ) (25 ) Allowance for loan losses � (77,280 ) � (78,201 ) (1 ) Net loans receivable $ 7,949,179 $ 8,182,172 (3 ) � Deposits Noninterest-bearing demand $ 1,306,391 $ 1,353,734 (3 ) Interest-bearing checking 381,447 450,201 (15 ) Money market 1,262,001 1,280,651 (1 ) Savings � 346,851 � � 372,546 � (7 ) Total core deposits 3,296,690 3,457,132 (5 ) Time deposits less than $100,000 943,046 1,012,401 (7 ) Time deposits $100,000 or greater � 2,907,316 � � 2,765,509 � 5 Total time deposits � 3,850,362 � � 3,777,910 � 2 Total deposits $ 7,147,052 $ 7,235,042 (1 ) EAST WEST BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (unaudited) � Three Months Ended June 30, % � 2007 � � 2006 � Change � Interest and dividend income $ 187,214 $ 159,248 18 Interest expense � (88,285 ) � (67,604 ) 31 Net interest income before provision for loan losses 98,929 91,644 8 Provision for loan losses � - � � (1,333 ) (100 ) Net interest income after provision for loan losses 98,929 90,311 10 Noninterest income 10,802 8,115 33 Noninterest expense � (43,263 ) � (38,532 ) 12 Income before provision for income taxes 66,468 59,894 11 Provision for income taxes � (25,978 ) � (23,249 ) 12 Net income $ 40,490 $ 36,645 10 Net income per share, basic $ 0.67 $ 0.61 10 Net income per share, diluted $ 0.66 $ 0.59 12 Shares used to compute per share net income: - Basic 60,381 60,270 0 - Diluted 61,346 61,619 0 � � Three Months Ended June 30, % � 2007 � � 2006 � Change Noninterest income: Branch fees $ 3,404 $ 2,890 18 Letters of credit fees and commissions 2,633 2,159 22 Ancillary loan fees 1,487 1,127 32 Net gain on sales of investment securities available-for-sale 918 145 533 Income from secondary market activities 86 189 (54 ) Other operating income � 2,274 � � 1,605 � 42 Total noninterest income $ 10,802 $ 8,115 33 � Noninterest expense: Compensation and employee benefits $ 20,648 $ 15,831 30 Occupancy and equipment expense 6,046 5,339 13 Amortization of premiums on deposits acquired 1,525 1,852 (18 ) Amortization of investments in affordable housing partnerships 1,236 1,461 (15 ) Data processing 1,070 1,028 4 Deposit insurance premiums and regulatory assessments 324 366 (11 ) Other operating expense � 12,414 � � 12,655 � (2 ) Total noninterest expense $ 43,263 $ 38,532 12 � � � EAST WEST BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (unaudited) � Six Months Ended June 30, % � 2007 � � 2006 � Change � Interest and dividend income $ 373,391 $ 296,550 26 Interest expense � (175,859 ) � (121,858 ) 44 Net interest income before provision for loan losses 197,532 174,692 13 Provision for loan losses � - � � (4,666 ) (100 ) Net interest income after provision for loan losses 197,532 170,026 16 Noninterest income 23,297 16,973 37 Noninterest expense � (85,581 ) � (75,323 ) 14 Income before provision for income taxes 135,248 111,676 21 Provision for income taxes � (52,662 ) � (42,980 ) 23 Net income $ 82,586 $ 68,696 20 Net income per share, basic $ 1.36 $ 1.17 16 Net income per share, diluted $ 1.34 $ 1.15 17 Shares used to compute per share net income: - Basic 60,515 58,538 3 - Diluted 61,523 59,956 3 � � Six Months Ended June 30, % � 2007 � � 2006 � Change Noninterest income: Branch fees $ 6,831 $ 5,429 26 Letters of credit fees and commissions 4,986 4,331 15 Ancillary loan fees 2,767 1,906 45 Net gain on sales of investment securities available-for-sale 2,446 1,861 31 Net gain on sale of real estate owned 1,344 88 1,427 Income from secondary market activities 1,024 373 175 Other operating income � 3,899 � � 2,985 � 31 Total noninterest income $ 23,297 $ 16,973 37 � Noninterest expense: Compensation and employee benefits $ 41,430 $ 32,000 29 Occupancy and equipment expense 11,927 10,116 18 Amortization of premiums on deposits acquired 3,057 3,617 (15 ) Amortization of investments in affordable housing partnerships 2,504 2,726 (8 ) Data processing 2,052 1,788 15 Deposit insurance premiums and regulatory assessments 671 682 (2 ) Other operating expense � 23,940 � � 24,394 � (2 ) Total noninterest expense $ 85,581 $ 75,323 14 EAST WEST BANCORP, INC. SELECTED FINANCIAL INFORMATION (In thousands) (unaudited) � Average Balances Three Months Ended June 30, % � 2007 � � 2006 � Change Loans receivable Real estate - single family $ 328,114 $ 518,088 (37 ) Real estate - multifamily 1,175,402 1,642,472 (28 ) Real estate - commercial 3,747,821 3,569,198 5 Real estate - construction 1,310,627 817,983 60 Commercial 1,054,579 760,970 39 Trade finance 328,984 221,756 48 Consumer � 151,859 � � 193,148 � (21 ) Total loans receivable 8,097,386 7,723,615 5 Investment securities available-for-sale 1,634,791 1,112,309 47 Earning assets 10,009,350 9,005,891 11 Total assets 10,653,778 9,583,728 11 � Deposits Noninterest-bearing demand $ 1,265,108 $ 1,282,553 (1 ) Interest-bearing checking 407,669 425,440 (4 ) Money market 1,328,806 1,228,093 8 Savings � 350,208 � � 429,311 � (18 ) Total core deposits 3,351,791 3,365,397 (0 ) Time deposits less than $100,000 975,979 1,155,660 (16 ) Time deposits $100,000 or greater � 2,846,255 � � 2,474,445 � 15 Total time deposits � 3,822,234 � � 3,630,105 � 5 Total deposits 7,174,025 6,995,502 3 Interest-bearing liabilities 8,211,151 7,277,690 13 Stockholders' equity 1,043,012 917,143 14 � EAST WEST BANCORP, INC. SELECTED FINANCIAL INFORMATION (In thousands) (unaudited) � Average Balances Six Months Ended June 30, % � 2007 � � 2006 � Change Loans receivable Real estate - single family $ 353,565 $ 541,449 (35 ) Real estate - multifamily 1,292,813 1,479,441 (13 ) Real estate - commercial 3,741,701 3,469,696 8 Real estate - construction 1,254,617 755,605 66 Commercial 1,026,868 742,297 38 Trade finance 311,659 217,976 43 Consumer � 155,938 � � 196,527 � (21 ) Total loans receivable 8,137,161 7,402,991 10 Investment securities available-for-sale 1,641,974 975,973 68 Earning assets 10,062,554 8,538,937 18 Total assets 10,706,111 9,078,505 18 � Deposits Noninterest-bearing demand $ 1,254,959 $ 1,230,939 2 Interest-bearing checking 411,692 431,926 (5 ) Money market 1,322,191 1,128,207 17 Savings � 357,360 � � 383,574 � (7 ) Total core deposits 3,346,202 3,174,646 5 Time deposits less than $100,000 983,705 1,075,175 (9 ) Time deposits $100,000 or greater � 2,803,930 � � 2,354,358 � 19 Total time deposits � 3,787,635 � � 3,429,533 � 10 Total deposits 7,133,837 6,604,179 8 Interest-bearing liabilities 8,279,895 6,896,886 20 Stockholders' equity 1,032,412 842,414 23 � EAST WEST BANCORP, INC. SELECTED FINANCIAL INFORMATION (In thousands) (unaudited) � Selected Ratios Three Months Ended June 30, % � 2007 � � 2006 � Change For The Period Return on average assets 1.52 % 1.53 % (1 ) Return on average equity 15.53 % 15.98 % (3 ) Interest rate spread (3) 3.20 % 3.36 % (5 ) Net interest margin (3) 3.97 % 4.08 % (3 ) Yield on earning assets (3) 7.51 % 7.09 % 6 Cost of deposits 3.42 % 2.86 % 20 Cost of funds 3.74 % 3.17 % 18 Noninterest expense/average assets (1) 1.52 % 1.47 % 3 Efficiency ratio (1) 36.91 % 35.30 % 5 Net chargeoffs to average loans (2) 0.03 % 0.02 % 50 Gross loan chargeoffs $ 865 $ 355 144 Loan recoveries � (289 ) � (50 ) 478 Net loan chargeoffs $ 576 � $ 305 � 89 � Selected Ratios Six Months Ended June 30, % � 2007 � � 2006 � Change For The Period Return on average assets 1.54 % 1.51 % 2 Return on average equity 16.00 % 16.31 % (2 ) Interest rate spread (3) 3.21 % 3.44 % (7 ) Net interest margin (3) 3.96 % 4.13 % (4 ) Yield on earning assets (3) 7.49 % 7.00 % 7 Cost of deposits 3.39 % 2.71 % 25 Cost of funds 3.72 % 3.02 % 23 Noninterest expense/average assets (1) 1.49 % 1.52 % (2 ) Efficiency ratio (1) 36.24 % 35.99 % 1 Net chargeoffs to average loans (2) 0.02 % 0.01 % 100 Gross loan chargeoffs $ 1,056 $ 356 197 Loan recoveries � (324 ) � (97 ) 234 Net loan chargeoffs $ 732 � $ 259 � 183 � Period End Tier 1 risk-based capital ratio 9.77 % 9.41 % 4 Total risk-based capital ratio 11.21 % 11.34 % (1 ) Tier 1 leverage capital ratio 8.89 % 8.43 % 5 Nonperforming assets to total assets 0.23 % 0.11 % 109 Nonaccrual loans to total loans 0.30 % 0.10 % 200 Allowance for loan losses to total loans 0.96 % 0.96 % 0 Allowance for loan losses and unfunded loan commitments to total loans 1.12 % 1.12 % 0 Allowance for loan losses to nonaccrual loans 325.43 % 986.31 % (67 ) � � (1) Excludes the amortization of intangibles and investments in affordable housing partnerships. � (2) Annualized. � (3) 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. EAST WEST BANCORP, INC. QUARTER TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID (In thousands) (unaudited) � Three Months Ended June 30, 2007 2006 AverageVolume Interest Yield (1) AverageVolume Interest Yield (1) � ASSETS Interest-earning assets: Short-term investments $ 7,151 $ 116 6.51 % $ 8,457 $ 113 5.36 % Securities purchased under resale agreements 195,055 3,943 8.11 % 100,000 1,896 7.60 % Investment securities (2) 1,634,791 23,534 5.77 % 1,112,309 12,972 4.68 % Loans receivable 8,097,386 158,844 7.87 % 7,723,615 143,426 7.45 % Federal Home Loan Bank and Federal Reserve Bank stocks 74,967 � 940 5.03 % 61,510 � 864 5.63 % Total interest-earning assets 10,009,350 � 187,377 7.51 % 9,005,891 � 159,271 7.09 % � Noninterest-earning assets: Cash and due from banks 143,474 129,338 Allowance for loan losses (76,102 ) (75,980 ) Other assets 577,056 � 524,479 � Total assets $ 10,653,778 � $ 9,583,728 � � � LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing liabilities: Checking accounts 407,669 1,617 1.59 % 425,440 1,376 1.30 % Money market accounts 1,328,806 13,982 4.22 % 1,228,093 11,085 3.62 % Savings deposits 350,208 589 0.67 % 429,311 865 0.81 % Time deposits less than $100,000 975,979 9,330 3.83 % 1,155,660 10,523 3.65 % Time deposits $100,000 or greater 2,846,255 35,606 5.02 % 2,474,445 26,090 4.23 % Federal funds purchased 139,755 1,878 5.39 % 97,314 1,208 4.98 % Federal Home Loan Bank advances 982,837 12,514 5.11 % 756,206 8,199 4.35 % Securities sold under repurchase agreements 975,000 9,018 3.71 % 527,198 5,005 3.81 % Long-term debt 204,642 � 3,751 7.35 % 184,023 � 3,253 7.09 % Total interest-bearing liabilities 8,211,151 � 88,285 4.31 % 7,277,690 � 67,604 3.73 % � Noninterest-bearing liabilities: Demand deposits 1,265,108 1,282,553 Other liabilities 134,507 106,342 Stockholders' equity 1,043,012 � 917,143 � Total liabilities and stockholders' equity $ 10,653,778 � $ 9,583,728 � � Interest rate spread 3.20 % 3.36 % � Net interest income and net yield on interest-earning assets (2) $ 99,092 3.97 % $ 91,667 4.08 % � � � (1) Annualized � (2) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate. EAST WEST BANCORP, INC. YEAR TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID (In thousands) (unaudited) � � Six Months Ended June 30, 2007 2006 AverageVolume Interest Yield (1) AverageVolume Interest Yield (1) � ASSETS Interest-earning assets: Short-term investments $ 7,429 $ 216 5.86 % $ 9,659 $ 236 4.93 % Securities purchased under resale agreements 195,313 7,729 7.98 % 89,503 3,243 7.31 % Investment securities (2) 1,641,974 46,478 5.71 % 975,973 22,207 4.59 % Loans receivable 8,137,161 317,007 7.86 % 7,402,991 269,297 7.34 % Federal Home Loan Bank and Federal Reserve Bank stocks 80,677 � 2,168 5.42 % 60,811 � 1,610 5.34 % Total interest-earning assets 10,062,554 � 373,598 7.49 % 8,538,937 � 296,593 7.00 % � Noninterest-earning assets: Cash and due from banks 145,483 135,859 Allowance for loan losses (77,140 ) (73,220 ) Other assets 575,214 � 476,929 � Total assets $ 10,706,111 � $ 9,078,505 � � � LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing liabilities: Checking accounts 411,692 3,339 1.64 % 431,926 2,702 1.26 % Money market accounts 1,322,191 27,557 4.20 % 1,128,207 18,919 3.38 % Savings deposits 357,360 1,213 0.68 % 383,574 1,202 0.63 % Time deposits less than $100,000 983,705 18,881 3.87 % 1,075,175 18,507 3.47 % Time deposits $100,000 or greater 2,803,930 69,096 4.97 % 2,354,358 47,498 4.07 % Federal funds purchased 143,947 3,848 5.39 % 99,651 2,327 4.71 % Federal Home Loan Bank advances 1,087,453 27,380 5.08 % 826,130 16,907 4.13 % Securities sold under repurchase agreements 975,000 17,412 3.60 % 426,657 7,882 3.73 % Long-term debt 194,617 � 7,133 7.39 % 171,208 � 5,914 6.97 % Total interest-bearing liabilities 8,279,895 � 175,859 4.28 % 6,896,886 � 121,858 3.56 % � Noninterest-bearing liabilities: Demand deposits 1,254,959 1,230,939 Other liabilities 138,845 108,266 Stockholders' equity 1,032,412 � 842,414 � Total liabilities and stockholders' equity $ 10,706,111 � $ 9,078,505 � � Interest rate spread 3.21 % 3.44 % � Net interest income and net yield on interest-earning assets (2) $ 197,739 3.96 % $ 174,735 4.13 % � � � (1) Annualized � (2) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.