East West Bancorp, Inc. (Nasdaq: EWBC), parent company of East
West Bank, one of the nation’s premier regional banks, today
reported financial results for the first quarter of 2010. For the
first quarter of 2010, net income was $24.9 million or $0.13 per
diluted share.
“East West’s first quarter net income of $24.9 million was
driven by our expanded earnings power,” stated Dominic Ng, Chairman
and Chief Executive Officer of East West. “In the first quarter,
the provision for loan losses decreased by 45% and our net interest
margin expanded to 4.02% excluding yield adjustments. Credit
indicators have improved substantially. As of March 31, 2010,
nonperforming assets to total assets was down to 0.89% and
charge-offs for the quarter decreased 51%. Further, the allowance
for loan losses to total loans is a strong 2.93%.”
Ng stated, “I am pleased to report that the full integration of
United Commercial Bank (UCB) was completed on schedule. We
successfully converted all remaining UCB systems last week. The
acquisition of UCB has provided a tremendous opportunity for East
West to increase profitability and expand our market footprint.
During the first quarter of 2010, we successfully grew deposits
$201.7 million, excluding the impact of brokered deposits. We
strategically reduced brokered deposits by $582.6 million in the
first quarter and grew deposits through our expanded retail and
commercial networks. While the economy and many of our competitors
still face challenges, East West is in a strong financial condition
and we are confident that we can continue to produce both near and
long-term gains for our customers and shareholders.”
“Further, I am pleased to welcome two new members to our board,
Iris S. Chan and Paul H. Irving. Iris and Paul both bring to our
board a deep and diverse understanding of the financial services
industry. We look forward to their guidance and influence as we
expand our commercial banking platform, serving markets both
domestically and abroad,” concluded Ng.
First Quarter 2010 Highlights
- First Quarter Earnings
– For the first quarter 2010, net income was $24.9 million,
an increase of $47.4 million over a net loss of $22.5 million
reported in the first quarter of 2009. The increase in net income
was driven by our larger asset size and increased earnings
power.
- Net Interest Income
Improved – Net interest income for the first quarter
increased to $261.7 million, a $182.0 million increase over the
first quarter of 2009. The net interest margin for the first
quarter of 2010 increased to 5.92%, compared to 2.74% in the first
quarter of 2009. Excluding the impact of yield adjustments, the net
interest margin for the first quarter was 4.02%. See reconciliation
of the GAAP financial measure to this non-GAAP financial measure in
the tables attached.
- Credit Quality Stabilized
– Provision for loan losses decreased substantially to $76.4
million for the quarter, a decrease of 45% or $63.6 million from
the prior quarter. Similarly, net charge-offs decreased to $63.9
million for the quarter, a decrease of 51% or $66.7 million from
the prior quarter. Total nonperforming assets at March 31, 2010
remained low at $181.3 million, or 0.89% of total assets, a
decrease of $105.3 million or 37% from March 31, 2009.
- Allowance for Loan Losses
Strengthened – The allowance for loan losses increased to
$250.5 million, a $55.1 million or 28% increase year over year. The
allowance for loan losses to gross non-covered loans was 2.93% at
March 31, 2010, compared to 2.42% at March 31, 2009. The allowance
to nonaccrual loans ratio improved to 143.62% as of March 31, 2010,
compared to 78.81% as of March 31, 2009.
- Deposit Growth – Total
deposits, excluding brokered deposits increased $201.7 million
during the first quarter. During the first quarter, we reduced
brokered deposits by $582.6 million. Core deposits increased $656.9
million during the quarter to $7.7 billion as of March 31, 2010.
The cost of deposits decreased to 0.93% for the first quarter, an
improvement from 1.81% in the first quarter of 2009.
- Capital Strengthened – As
of March 31, 2010, East West’s Tier 1 risk-based capital and total
risk-based capital ratios improved to 18.9% and 20.9%,
significantly higher than the well capitalized requirement of 6%
and 10%. On March 28, 2010, all $335.0 million of our Mandatory
Convertible Cumulative Non-Voting Perpetual Preferred Stock, Series
C (Series C preferred stock) was converted into common stock after
a shareholder vote. The Series C preferred stock was issued in
November 2009, in conjunction with the acquisition of UCB.
Management Guidance
The Company is providing guidance for the second quarter of
2010. Management currently estimates that fully diluted earnings
per share for the second quarter of 2010 will range from $0.13 to
$0.17 per diluted share. This EPS guidance is based on the
following assumptions:
- Flat balance sheet growth
- A stable interest rate
environment and a net interest margin between 4.00% and 4.10%,
excluding the impact of yield adjustments
- Provision for loan losses of
approximately $50 million to $65 million for the quarter
- Reduction in noninterest expense
from first quarter of 2010 of 25% to 27%
- Effective tax rate of
approximately 34%
Balance Sheet Summary
At March 31, 2010 total assets were $20.3 billion compared to
$20.6 billion at December 31, 2009, and $12.6 billion at March 31,
2009. Gross loans at March 31, 2010 totaled $13.8 billion compared
to $14.1 billion at December 31, 2009. Covered loans totaled $5.2
billion as of the end of the first quarter, compared to $5.6
billion at the end of 2009. Average earning assets for the first
quarter of 2010 equaled $17.9 billion, 12% higher than the fourth
quarter of 2009, due to the acquisition of United Commercial Bank
on November 6, 2009.
During the first quarter, we actively reduced brokered deposits
by $582.6 million while we grew deposits from our retail network
and commercial customers by $201.7 million. These combined actions
resulted in total deposits of $14.6 billion as of March 31, 2010,
compared to $15.0 billion at December 31, 2009. The brokered
deposits paid down were largely time deposits and were the primary
driver for the decrease in time deposits of $1.0 billion to $6.9
billion as of March 31, 2010. Core deposits increased $656.9
million during the quarter, increasing to $7.7 billion at March 31,
2010. Average total deposits for the first quarter were $14.6
billion, 19% higher than the fourth quarter of 2009. The average
cost of deposits for the first quarter of 2010 was 0.93%, down from
1.81% in the first quarter of 2009.
As of March 31, 2010, FHLB advances totaled $1.8 billion,
unchanged from December 31, 2009. During the first quarter, East
West prepaid $379.1 million in FHLB advances with an average cost
of 4.26% and paid a prepayment penalty of $9.9 million, which is
included in noninterest expense. East West also accessed $350.0
million in FHLB advances during the first quarter, at a lower
average cost of 0.70%. These actions were taken to better position
the balance sheet and reduce future borrowing costs. The average
cost of funds equaled 1.28%, down from 2.44% in the prior year
period.
First Quarter 2010 Operating Results
Net Interest Income
Net interest income for the first quarter increased to $261.7
million, a $182.0 million or a 228% increase over the first quarter
of 2009. The net interest margin for the first quarter increased to
5.92%, up 318 basis points from 2.74% in the prior year period.
Included in net interest income is $81.3 million of discount
accretion on early payoffs and recoveries on covered loans, which
is offset by a corresponding $43.6 million net reduction in the
FDIC indemnification asset and receivable.
In the first quarter of 2010, East West took several actions to
better position the balance sheet and reduce our sensitivity to
future interest rate risk. East West sold $599.7 million in fixed
rate investment securities to mitigate the impact of future
interest rate increases. As a result of the sale of these
securities, East West recorded a gain of $16.1 million. As
previously discussed, East West also prepaid higher cost FHLB
advances during the first quarter. Additionally, East West unwound
reverse repurchase agreements totaling $150.0 million and recorded
a termination gain of $2.5 million during the first quarter as a
yield adjustment.
The adjustments to net interest income are summarized in the
table below:
Reconciliation of Net Interest Income to Adjusted Net
Interest Income
Quarter Ended March
31,2010
Interest Yield Net interest income and net interest margin $
261,724 5.92 % Less yield adjustment related to: Covered
loan disposition and recoveries 81,343 Reverse repurchase agreement
termination gain 2,536 Total yield adjustments $ 83,879
Net interest income and net
interest margin, excluding yield adjustments
$ 177,845 4.02 %
For the first quarter, the adjusted net interest margin
excluding the yield adjustments shown in the table above increased
to 4.02%, an increase of 128 basis points from 2.74% in the prior
year period.
Noninterest Income
During the first quarter we recorded impairment losses on
investment securities of $4.8 million on pooled trust preferred
securities. These securities are held available for sale and
recorded on the balance sheet at fair value. Any difference in the
book balance and the fair value of the securities is reflected in
the other comprehensive income section of stockholders’ equity. As
of March 31, 2010, the fair value of these securities was written
down to $2.1 million.
During the first quarter, we recorded a $43.6 million decrease
in the FDIC indemnification asset and receivable, primarily related
to early payoffs on covered loans. We also recorded an $8.1 million
adjustment related to the fair value of investments obtained from
the acquisition of UCB. Excluding the impact of the decrease in the
FDIC indemnification asset and receivable of $43.6 million, gains
on sales of investment securities of $16.1 million, the fair value
adjustment on investment securities of $8.1 million, and impairment
charges on investment securities of $4.8 million, noninterest
income for the first quarter totaled $15.7 million, a $5.2 million
or a 50% increase as compared to the first quarter of 2009. The
increase was primarily due to the realization of a full quarter of
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
Noninterest expense totaled $138.9 million for the first quarter
of 2010. The increase in noninterest expense in the first quarter
was primarily due to the recognition of a full quarter of expenses
from UCB, prepayment penalties on prepaid FHLB advances and
integration costs related to the acquisition of UCB that are not
expected to be ongoing expenses in future quarters, as shown in the
table below:
Reconciliation of Noninterest Expense to Recurring
Noninterest Expense
(In thousands)
Quarter EndedMarch 31,
2010
Noninterest Expense: $ 138,910 Prepayment penalty for FHLB advances
9,932 Expenses related to the integration of UCB Compensation and
employee benefits 6,240 Other integration expenses
3,664 Total integration costs related to the
acquisition of UCB that are not expected to be ongoing expenses in
future quarters 9,904 REO expense for UCB covered assets,
reimbursable from the FDIC
11,092
Non interest expense excluding
prepayment penalty on FHLB advances, integration costs related to
the acquisition of UCB, and reimbursable REO expenses
$ 107,982
Compensation and employee benefits increased to $50.8 million, a
$33.7 million increase from the first quarter of 2009 resulting
from the acquisition of UCB. Included in this amount is $6.2
million in compensation and severance expense that is not expected
to be incurred in future quarters. The other integration related
expenses of $3.7 million were largely due to consultant fees, legal
fees and other expenses incurred in the first quarter related to
the UCB integration and are expected to not be incurred in future
quarters. Under the loss share agreement with the FDIC, 80% of
eligible expenses on covered assets are reimbursable from the FDIC.
In the first quarter, we incurred $13.9 million in expenses on
covered REO assets, 80%, or $11.1 million of which we expect to be
reimbursed by the FDIC. Further, as discussed above, East West
prepaid $379.1 million in FHLB advances and paid a prepayment
penalty of $9.9 million. In addition to the expenses noted in the
table above, management expects further operating efficiencies in
future quarters of 2010. Management anticipates that in future
quarters of 2010, noninterest expense will be reduced by 25% to 27%
from the first quarter of 2010 to $102.0 million to $104.0
million.
The effective tax rate for the first quarter was 34.33% compared
to 37.47% in the prior year period. The effective tax rate is
reduced from the statutory tax rate primarily due to the
utilization of tax credits related to affordable housing
investments.
Credit Management
As previously discussed by management, both the provision for
loan losses and the net charge-offs peaked in the third quarter of
2009 and have declined in each subsequent quarter. Management
believes that the provision for loan losses and net charge-offs
will continue to decrease for the remainder of 2010 and range from
$50.0 million to $65.0 million for the second quarter of 2010.
The provision for loan losses was $76.4 million for the first
quarter of 2010, a decrease of $63.6 million or 45% compared to the
previous quarter and a decrease of $1.6 million or 2% from the
first quarter of 2009. Net charge-offs fell to $63.9 million for
the first quarter, a decrease of $66.7 million or 51% from the
previous quarter and an increase of $4.4 million from the first
quarter of 2009.
The levels of nonperforming assets have also continued to
improve. Total nonperforming assets totaled $181.3 million as of
March 31, 2010 or 0.89% of total assets compared to $286.6 million
or 2.28% of total assets at March 31, 2009. Nonperforming assets as
of March 31, 2010 included nonaccrual loans totaling $174.4 million
and REO assets totaling $6.9 million.
The allowance for loan losses increased to $250.5 million or
2.93% of non-covered loans receivable at March 31, 2010, compared
to $195.5 million or 2.42% of outstanding loans at March 31,
2009.
All loans acquired from UCB were recorded at estimated fair
value as of the acquisition date. East West entered into loss
sharing agreements with the FDIC that covers future losses incurred
on nearly all the UCB legacy loans. Under the terms of the
agreement, the FDIC will absorb 80% of losses and share in 80% of
recoveries on the first $2.05 billion and absorb 95% of losses and
share in 95% of recoveries exceeding $2.05 billion. As of March 31,
2010, we believe no allowance is required for the UCB covered
loans.
Capital Strength
Capital Strength (Dollars in millions)
March 31, 2010
Well
CapitalizedRegulatoryRequirement
Total Excess AboveWell
CapitalizedRequirement
Tier 1 leverage capital ratio 10.2 % 5.00 % $ 1,037 Tier 1
risk-based capital ratio 18.9 % 6.00 % 1,391 Total risk-based
capital ratio 20.9 % 10.00 % 1,172 Tangible common equity to
tangible asset 7.61 % N/A N/A Tangible common equity to risk
weighted assets ratio
14.1
%*
4.00
%*
1,083
As there is no stated regulatory
guideline for this ratio, the SCAP guideline of 4.00% tangible
common equity has been used. See reconciliation of the GAAP
financial measure to this non-GAAP financial measure in the tables
attached.
East West has always been committed to maintaining strong
capital levels. As of the end of the first quarter of 2010, our
Tier 1 leverage capital ratio increased to 10.2%, Tier 1 risk-based
capital ratio increased to 18.9% and total risk-based capital ratio
increased to 20.9%. East West exceeds well capitalized requirements
for all regulatory guidelines by over $1 billion.
On March 25, 2010, the Company’s stockholders approved the
conversion of the Series C preferred stock into common stock. The
conversion occurred on March 28, 2010. During the fourth quarter of
2009, we issued $165 million in common stock and $335 million in
Series C preferred stock in conjunction with the acquisition of
UCB.
Dividend Payout
East West Bank’s Board of Directors has declared second quarter
dividends on the common stock and Series A Preferred Stock. The
common stock cash dividend of $0.01 is payable on or about May 24,
2010 to shareholders of record on May 10, 2010. The dividend on the
Series A Preferred Stock of $20.00 per share is payable on May 1,
2010 to shareholders of record on April 15, 2010.
About East West
East West Bancorp is a publicly owned company with $20.3 billion
in assets and is traded on the Nasdaq Global Select Market under
the symbol “EWBC”. The Company’s wholly owned subsidiary, East West
Bank, is one of the largest independent commercial banks
headquartered in California with over 130 locations worldwide,
including the U.S. markets of California, New York, Georgia,
Massachusetts, Texas and Washington. In Greater China, East West’s
presence includes a full service branch in Hong Kong and
representative offices in Beijing, Shanghai, Shenzhen and Taipei.
Through a wholly-owned subsidiary bank, East West’s presence in
Greater China also includes full service branches in Shanghai and
Shantou and representative offices in Beijing and Guangzhou. 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, 2009 (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)
March 31, 2010
December 31, 2009 % Change Assets Cash and cash
equivalents $ 1,180,735 $ 835,141 41 Short-term investments 457,184
510,788 (10 ) Securities purchased under resale agreements 380,000
227,444 67 Investment securities 2,191,527 2,564,081 (15 )
Loans receivable, excluding
covered loans (net of allowance for loan losses of $250,517 and
$238,833)
8,250,808 8,246,685 0 Covered loans 5,220,721
5,598,155 (7 ) Total loans receivable, net 13,471,529
13,844,840 (3 ) Federal Home Loan Bank and Federal Reserve stock
227,409 217,002 5 FDIC indemnification asset 980,950 1,091,814 (10
) Other real estate owned, net 6,907 13,832 (50 ) Other real estate
owned covered, net 78,354 44,273 77 Premiums on deposits acquired,
net 86,351 89,735 (4 ) Goodwill 337,438 337,438 0 Other assets
900,792 782,824 15 Total assets $
20,299,176 $ 20,559,212 (1 ) Liabilities and
Stockholders' Equity Deposits $ 14,606,702 $ 14,987,613 (3 )
Federal Home Loan Bank advances 1,769,452 1,805,387 (2 ) Securities
sold under repurchase agreements 1,032,511 1,026,870 1 Subordinated
debt and trust preferred securities 235,570 235,570 0 Other
borrowings 52,752 67,040 (21 ) Accrued expenses and other
liabilities 296,400 152,073 95 Total
liabilities 17,993,387 18,274,553 (2 ) Stockholders' equity
2,305,789 2,284,659 1 Total liabilities and
stockholders' equity $ 20,299,176 $ 20,559,212 (1 )
Book value per common share $ 13.09 $ 14.47 (10 ) Number of common
shares at period end 147,908 109,963 35
Ending
Balances March 31, 2010 December 31, 2009 %
Change Loans receivable Real estate - single family $ 961,497 $
930,840 3 Real estate - multifamily 1,000,584 1,025,849 (2 ) Real
estate - commercial 3,576,027 3,606,179 (1 ) Real estate - land
328,037 370,394 (11 ) Real estate - construction 415,247 458,292 (9
) Commercial 1,444,717 1,512,709 (4 ) Consumer 830,717
624,784 33 Total loans receivable, excluding
covered loans 8,556,826 8,529,047 0 Covered loans 5,220,721
5,598,155 (7 ) Total loans receivable
13,777,547 14,127,202 (2 ) Unearned fees, premiums and discounts
(55,501 ) (43,529 ) 28 Allowance for loan losses (250,517 )
(238,833 ) 5 Net loans receivable $ 13,471,529 $ 13,844,840
(3 ) Deposits Noninterest-bearing demand $ 2,289,933 $
2,291,259 (0 ) Interest-bearing checking 628,759 667,177 (6 ) Money
market 3,844,378 3,138,866 22 Savings 982,616
991,520 (1 ) Total core deposits 7,745,686 7,088,822 9 Time
deposits 6,861,016 7,898,791 (13 )
Total deposits $ 14,606,702 $ 14,987,613 (3 )
EAST WEST
BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (In thousands, except per share amounts)
(unaudited) Quarter Ended
March 31, 2010 December 31, 2009 March 31,
2009 Interest and dividend income $ 318,703 $ 283,639 $
144,923 Interest expense (56,979 ) (61,770 )
(65,242 ) Net interest income before provision for loan losses
261,724 221,869 79,681 Provision for loan losses (76,421 )
(140,001 ) (78,000 ) Net interest income after
provision for loan losses 185,303 81,868 1,681 Noninterest (loss)
income (8,451 ) 420,838 13,794 Noninterest expense (138,910
) (93,472 ) (51,406 ) Income (loss) before benefit
for income taxes 37,942 409,234 (35,931 ) Provision (benefit) for
income taxes 13,026 149,504
(13,465 ) Net income (loss) $ 24,916 $ 259,730 $ (22,466 )
Preferred stock dividend and amortization of preferred stock
discount (6,138 ) (6,129 ) (8,743 ) Net income
(loss) available to common stockholders $ 18,778 $ 253,601 $
(31,209 ) Net income (loss) per share, basic $ 0.17 $ 2.49 $ (0.50
) Net income (loss) per share, diluted $ 0.13 $ 1.96 $ (0.50 )
Shares used to compute per share net loss: - Basic 109,961 101,924
62,998 - Diluted 146,865 130,346 62,998
Quarter Ended
March 31, 2010 December 31, 2009 March 31,
2009 Noninterest (loss) income: Decrease in FDIC
indemnification asset and FDIC receivable $ (43,572 ) $ (23,338 ) $
- Impairment loss on investment securities (4,799 ) (45,775 ) (200
) Net gain on sale of investment securities 16,111 4,545 3,521
Branch fees 8,758 7,863 4,793 Gain on acquisition of United
Commercial Bank 8,095 471,009 - Letters of credit fees and
commissions 2,740 2,570 1,854 Ancillary loan fees 1,689 1,474 2,229
Other operating income 2,527 2,490
1,597 Total noninterest (loss) income $ (8,451 ) $
420,838 $ 13,794 Noninterest expense: Compensation and
employee benefits $ 50,779 $ 29,983 $ 17,108 Other real estate
owned expense 18,012 2,624 7,031 Occupancy and equipment expense
11,944 10,268 7,391 Deposit insurance premiums and regulatory
assessments 11,581 9,123 3,325 Prepayment penalty for FHLB advances
9,932 2,370 - Amortization of premiums on deposits acquired 3,384
2,609 1,125 Amortization of investments in affordable housing
partnerships 3,037 7,929 1,760 Legal expense 2,907 3,168 1,778 Data
processing 2,482 2,279 1,142 Consulting expense 2,141 6,256 448
Other operating expense 22,711 16,863
10,298 Total noninterest expense $ 138,910 $ 93,472 $
51,406
EAST WEST BANCORP, INC. QUARTERLY ALLOWANCE
FOR LOAN LOSSES RECAP (In thousands) (unaudited)
Quarter Ended 3/31/2010
12/31/2009 9/30/2009 6/30/2009
3/31/2009 LOANS Allowance balance, beginning
of period $ 238,833 $ 230,650 $ 223,700 $ 195,450 $ 178,027
Allowance for unfunded loan commitments and letters of credit (808
) (1,161 ) (1,051 ) 1,442 (1,008 ) Provision for loan losses 76,421
140,000 159,244 151,422 78,000 Impact of desecuritization - - -
9,262 - Net Charge-offs: Real estate - single family 3,426
7,083 8,034 14,058 3,832 Real estate - multifamily 4,860 8,425
7,231 2,256 1,624 Real estate - commercial 8,201 13,305 23,105
12,472 2,790 Real estate - land 26,828 20,390 39,988 33,183 12,523
Real estate - residential construction 11,642 48,919 32,535 30,634
16,347 Real estate - commercial construction 2,029 21,355 23,051
28,602 1,977 Commercial 6,422 5,789 14,956 11,577 18,146 Trade
finance (54 ) 2,569 2,256 774 1,032 Consumer 575
2,821 87 320 1,298
Total net charge-offs (recovery) 63,929
130,656 151,243 133,876
59,569 Allowance balance, end of period $ 250,517 $
238,833 $ 230,650 $ 223,700 $ 195,450
UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT:
Allowance balance, beginning of period $ 8,119 $ 6,958 $ 5,907 $
7,349 $ 6,341 Provision for unfunded loan commitments and letters
of credit 808 1,161 1,051
(1,442 ) 1,008 Allowance balance, end of
period $ 8,927 $ 8,119 $ 6,958 $ 5,907
$ 7,349 GRAND TOTAL, END OF PERIOD $ 259,444 $
246,952 $ 237,608 $ 229,607 $ 202,799
Nonperforming assets to total
assets(1)
0.89 % 0.91 % 1.84 % 1.49 % 2.28 % Allowance for loan losses to
total gross non-covered loans at end of period 2.93 % 2.80 % 2.74 %
2.62 % 2.42 % Allowance for loan losses and unfunded loan
commitments to total gross non-covered loans at end of period 3.03
% 2.90 % 2.82 % 2.69 % 2.51 % Allowance to non-covered nonaccrual
loans at end of period 143.62 % 137.91 % 112.82 % 137.94 % 78.81 %
Nonaccrual loans to total
loans(2)
1.27 % 1.23 % 2.43 % 1.90 % 3.08 % (1) Nonperforming assets
excludes covered loans and REOs. Total assets includes covered
assets. (2) Nonaccrual loans excludes covered loans. Total loans
includes covered loans.
EAST WEST BANCORP, INC
TOTAL NON-PERFORMING ASSETS, EXCLUDING COVERED ASSETS (in
thousands) (unaudited) AS OF MARCH 31,
2010 Total Nonaccrual Loans
90+
DaysDelinquent
Under 90+
DaysDelinquent
Total Nonaccrual Loans
REO Assets
TotalNon-PerformingAssets
Loan Type Real estate - single family $ 13,673 $ - $ 13,673
$ - $ 13,673 Real estate - multifamily 12,444 4,780 17,224 712
17,936 Real estate - commercial 28,484 4,127 32,611 2,979 35,590
Real estate - land 27,077 32,266 59,343 2,007 61,350 Real estate -
residential construction 3,188 782 3,970 379 4,349 Real estate -
commercial construction 15,066 9,652 24,718 830 25,548 Commercial
7,209 13,722 20,931 - 20,931 Trade Finance - 505 505 - 505 Consumer
1,218 234 1,452 - 1,452
Total $ 108,359 $ 66,068
$ 174,427 $ 6,907 $
181,334 AS OF DECEMBER 31, 2009 Total
Nonaccrual Loans
90+
DaysDelinquent
Under 90+
DaysDelinquent
Total Nonaccrual Loans REO Assets
TotalNon-PerformingAssets
Loan Type Real estate - single family $ 3,262 $ - $ 3,262 $
264 $ 3,526 Real estate - multifamily 10,631 - 10,631 2,118 12,749
Real estate - commercial 11,654 18,450 30,104 5,687 35,791 Real
estate - land 27,179 42,666 69,845 4,393 74,238 Real estate -
residential construction 17,179 - 17,179 540 17,719 Real estate -
commercial construction - 17,132 17,132 830 17,962 Commercial 8,002
16,765 24,767 - 24,767 Trade Finance - - - - - Consumer 114
146 260 - 260
Total
$ 78,021 $ 95,159 $
173,180 $ 13,832 $ 187,012
AS OF MARCH 31, 2009 Total Nonaccrual Loans
90+
DaysDelinquent
Under 90+
DaysDelinquent
Total Nonaccrual Loans
REO Assets
TotalNon-PerformingAssets
Loan Type Real estate - single family $ 18,515 $ 634 $
19,149 $ 671 $ 19,820 Real estate - multifamily 9,863 - 9,863 887
10,750 Real estate - commercial 12,465 42,724 55,189 4,240 59,429
Real estate - land 63,052 6,233 69,285 17,934 87,219 Real estate -
residential construction 28,433 14,196 42,629 13,278 55,907 Real
estate - commercial construction 28,604 - 28,604 - 28,604
Commercial 16,798 5,000 21,798 1,236 23,034 Trade Finance 177 - 177
270 447 Consumer 839 482 1,321 118
1,439
Total $ 178,746 $
69,269 $ 248,015 $ 38,634
$ 286,649 EAST WEST BANCORP, INC.
QUARTER TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID (In
thousands) (unaudited)
Quarter Ended March 31, 2010 March 31,
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 $ 1,289,964 $ 3,541 1.11 % $
731,573 $ 2,976 1.65 % Securities purchased under resale agreements
259,319 6,263 9.66 % 50,000 1,250 10.00 %
Investment securities(2)
2,185,875 20,190 3.75 % 2,703,259 29,465 4.42 % Loans receivable
8,933,204 122,028 5.54 % 8,197,173 110,816 5.48 % Loans receivable
- covered 5,050,866 165,916 13.32 % - - - Federal Home Loan Bank
and Federal Reserve Bank stocks 221,705
779 1.41 % 120,040 506
1.69 % Total interest-earning assets 17,940,933
318,717 7.20 % 11,802,045
145,013 4.98 %
Noninterest-earning assets: Cash and due from banks 324,655
122,899 Allowance for loan losses (253,482 ) (186,058 ) Other
assets 2,386,611 759,363 Total assets $
20,398,717 $ 12,498,249
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing liabilities: Checking accounts 636,039 614
0.39 % 361,569 393 0.44 % Money market accounts 3,464,234 7,966
0.93 % 1,487,178 5,694 1.55 % Savings deposits 992,186 1,142 0.47 %
410,232 702 0.69 % Time deposits 7,315,789 23,726 1.32 % 4,815,018
30,284 2.55 % Federal Home Loan Bank advances 2,035,825 9,005 1.79
% 1,285,070 13,877 4.38 % Securities sold under repurchase
agreements 1,028,698 12,541 4.88 % 998,583 11,872 4.76 %
Subordinated debt and trust preferred securities 235,570 1,547 2.63
% 235,570 2,417 4.10 % Other borrowings 54,827
438 3.20 % 2,445 3
0.49 % Total interest-bearing liabilities 15,763,168
56,979 1.47 % 9,595,665
65,242 2.76 %
Noninterest-bearing liabilities: Demand deposits 2,222,104
1,238,551 Other liabilities 119,733 123,085 Stockholders' equity
2,293,712 1,540,948 Total liabilities
and stockholders' equity $ 20,398,717 $ 12,498,249
Interest rate spread 5.73 % 2.22 % Net interest
income and net interest margin $ 261,738 5.92 % $ 79,771 2.74 %
Net interest income and net
interest margin adjusted(3)
$ 177,859 4.02 % (1) Annualized (2) Amounts calculated on a
fully taxable equivalent basis using the current statutory federal
tax rate. (3) Amounts exclude yield adjustment related to covered
loan disposition and recoveries of $81,343 and repurchase agreement
termination gain of $2,536 for March 31, 2010.
EAST WEST
BANCORP, INC. SELECTED FINANCIAL INFORMATION (In
thousands) (unaudited)
Average Balances Quarter Ended March 31, 2010
December 31, 2009 March 31, 2009 Loans receivable
Real estate - single family $ 939,379 $ 908,095 $ 506,753 Real
estate - multifamily 1,071,910 1,037,460 692,885 Real estate -
commercial 3,723,940 3,610,640 3,465,505 Real estate - land 356,908
398,109 582,649 Real estate - construction 465,196 586,883
1,232,235 Commercial 1,644,100 1,446,695 1,179,183 Consumer
731,771 516,951 228,377 Total
loans receivable, excluding covered loans 8,933,204 8,504,833
8,197,173 Covered loans 5,050,866 3,479,519
- Total loans receivable 13,984,070 11,984,352
8,197,173 Investment securities 2,185,875 2,638,943 2,703,259
Earning assets 17,940,933 15,948,521 11,802,045 Total assets
20,398,717 17,563,329 12,498,249 Deposits
Noninterest-bearing demand $ 2,222,104 $ 1,953,781 $ 1,238,551
Interest-bearing checking 636,039 523,519 361,569 Money market
3,464,234 2,671,917 1,487,178 Savings 992,186
775,834 410,232 Total core deposits 7,314,563
5,925,051 3,497,530 Time deposits 7,315,789
6,375,919 4,815,018 Total deposits 14,630,352
12,300,970 8,312,548 Interest-bearing liabilities 15,763,168
13,450,563 9,595,665 Stockholders' equity 2,293,712 1,921,591
1,540,948
Selected Ratios Quarter Ended
March 31, 2010 December 31, 2009 March 31,
2009 For The Period Return on average assets 0.49 % 5.92 %
-0.72 % Return on average common equity 4.71 % 75.27 % -11.69 %
Interest rate spread(2)
5.73 % 5.24 % 2.22 %
Net interest margin(2)
5.92 % 5.52 % 2.74 %
Net interest margin
adjusted(4)
4.02 % 3.67 % 2.74 %
Yield on earning assets(2)
7.20 % 7.06 % 4.98 % Cost of deposits 0.93 % 1.11 % 1.81 % Cost of
funds 1.28 % 1.59 % 2.44 %
Noninterest expense/average
assets(1)
2.40 % 1.83 % 1.55 %
Efficiency ratio(3)
58.45 % 48.42 % 51.80 %
(1) Excludes the amortization of
intangibles, amortization and impairment loss of premiums on
deposits acquired, impairment loss on goodwill, amortization of
investments in affordable housing partnerships and prepayment
penalty for FHLB advances.
(2) December 31 and March 31, 2009
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, investments
in affordable housing partnerships and prepayment penalty for FHLB
advances, divided by the aggregate of net interest income before
provision for loan losses, excluding nonrecurring adjustments and
noninterest income, excluding impairment loss on investment
securities and gain on acquisition and the decrease in FDIC
indemnification asset and FDIC receivable.
(4) Amounts exclude yield
adjustment related to covered loan disposition and recoveries of
$81,343 and repurchase agreement termination gain of $2,536 for
March 31, 2010 and yield adjustment related to covered loan
disposition of $74,439 for December 31, 2009.
EAST WEST BANCORP, INC. GAAP TO NON-GAAP
RECONCILIATION (In thousands) (Unaudited)
The tangible common equity to risk weighted asset and tangible
common equity to tangible asset ratios 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
to tangible asset is more prevalent in the banking industry and
with banking regulators and analysts, we have included the tangible
common equity to risk-weighted assets and tangible common equity to
tangible asset ratios.
As of March 31, 2010
Stockholders' Equity $ 2,305,789 Less: Preferred Equity (369,095 )
Goodwill and other intangible assets (423,788 ) Tangible
common equity $ 1,512,906 Risk-weighted assets $
10,745,792 Tangible Common Equity to risk-weighted assets
14.1 %
As of March 31, 2010 Total
assets $ 20,299,176 Less: Goodwill and other intangible assets
(423,788 ) Tangible assets $ 19,875,388
Tangible common equity to tangible asset ratio 7.61 %
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 March 31, 2010
Noninterest (loss) income $ (8,451 ) Add: Impairment loss on
investment securities 4,799 Net gain on sale of investment
securities (16,111 ) Gain on acquisition of United Commercial Bank
(8,095 ) Decrease in FDIC indemnification asset 43,572
Operating noninterest income (non-GAAP) $ 15,714
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. For the first quarter of 2010, the
quarter to date net interest income and net interest margin
includes a yield adjustment of $81,343 related to covered loan
disposition and recoveries and repurchase agreement termination
gain of $2,536. These amounts are nonrecurring in nature. As such,
the Company believes that presenting the net interest income and
net interest margin excluding these nonrecurring items provides
additional clarity to the users of financial statements regarding
the core net interest income and net interest margin.
Quarter Ended March 31, 2010 Average Volume Interest
Yield Total interest-earning assets $ 17,940,933 $
318,717 7.20 % Net interest income and net interest margin $
261,724 5.92 % Less yield adjustment related to: Covered loan
disposition and recoveries 81,343 Reverse Repurchase agreement
termination gain 2,536 Total yield adjustment $ 83,879
Net interest income and net
interest margin, excluding yield adjustment
$ 177,845 4.02 %
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