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 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 millions)
December 31, 2009
Well
CapitalizedRegulatoryRequirement
Total Excess AboveWell
CapitalizedRequirement
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 December 31, 2009 December 31, 2008
% Change 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 December 31, 2009 December 31,
2008 % Change 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+
DaysDelinquent
Under
90+DaysDelinquent
TotalNonaccrualLoans
90+ DaysDelinquent
NotOn Nonaccrual
TotalNon-performingLoans
REOAssets
TotalNon-PerformingAssets
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+
DaysDelinquent
Under
90+DaysDelinquent
TotalNonaccrualLoans
90+ DaysDelinquent
NotOn Nonaccrual
TotalNon-performingLoans
REOAssets
TotalNon-PerformingAssets
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+
DaysDelinquent
Under
90+DaysDelinquent
TotalNonaccrualLoans
90+ DaysDelinquent
NotOn Nonaccrual
TotalNon-performingLoans
REOAssets
TotalNon-PerformingAssets
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+
DaysDelinquent
Under
90+DaysDelinquent
TotalNonaccrualLoans
90+ DaysDelinquent
NotOn Nonaccrual
TotalNon-performingLoans
REOAssets
TotalNon-PerformingAssets
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+
DaysDelinquent
Under
90+DaysDelinquent
TotalNonaccrualLoans
90+ DaysDelinquent
NotOn Nonaccrual
TotalNon-performingLoans
REOAssets
TotalNon-PerformingAssets
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 Average
Volume Interest Yield
(1) 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 Average Volume
Interest Yield
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 Quarter Ended December 31,
2009 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 Quarter Ended December 31,
2009 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 quarter 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 %
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