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 second quarter of 2010. For the
second quarter of 2010, net income was $36.3 million or $0.21 per
diluted share.
“For the second quarter, East West increased net income 46% from
$24.9 million in the previous quarter to $36.3 million. This
continued profitability was driven by our improving asset quality,
our ability to integrate the United Commercial Bank acquisition
quickly and efficiently and the strong performance of our
franchise,” stated Dominic Ng, Chairman and Chief Executive Officer
of East West. “I am pleased to report that our credit indicators
continue to trend in a positive direction. Quarter over quarter,
our provision for loan losses decreased by $21.2 million or 28% and
net charge-offs decreased $8.7 million or 14%. Further, our
nonperforming assets to total assets ratio has remained below 1%
for three consecutive quarters.”
Ng stated, “During the quarter, we acquired Washington First
International Bank through an FDIC-assisted transaction and
strengthened our operations in the greater Seattle area. This
strategically attractive acquisition increased our market share in
the Seattle region in a cost-effective, immediately accretive
way.”
“For the remainder of 2010, East West will focus on growing our
revenue and profitability and reinvesting in our business while
remaining disciplined on expenses. For the past three consecutive
quarters we have increased our profitability and expect to continue
to do so for the remainder of 2010,” concluded Ng.
Second Quarter 2010 Highlights
- Second Quarter Earnings
– For the second quarter 2010, net income was $36.3 million,
an increase of $11.4 million over net income of $24.9 million
reported in the first quarter of 2010 and an increase of $128.4
million over a net loss of $92.1 million reported in the second
quarter of 2009.
- Acquisition of Washington
First International Bank – East West acquired the banking
operations of Seattle-based Washington First International Bank
(WFIB) in a purchase and assumption agreement with the Federal
Deposit Insurance Corporation (FDIC) on June 11, 2010. East West
acquired total assets of $492.6 million, including $313.9 million
of loans (net of purchase accounting adjustments) and assumed
$395.9 million in deposits.
- Net Charge-offs Down 14% from
Q1 2010, Down 59% from Q2 2009 – Net charge-offs declined to
$55.2 million, a decrease of $8.7 million or 14% from the prior
quarter and a decrease of $78.7 million or 59% from the second
quarter of 2009.
- Nonperforming Assets to Total
Assets Below 1% – Nonperforming assets remain low at
$195.6 million, or 0.98% of total assets, a decline of 51 basis
points from June 30, 2009.
- Strong Core Deposit Growth
– Core deposits grew to a record $8.2 billion as of June 30,
2010, an increase of $444.1 million or 6% from March 31, 2010. At
June 30, 2010 core deposits from WFIB totaled $84.2 million.
Excluding the impact of the WFIB acquisition, East West grew core
deposits by $359.9 million or 5% from March 31, 2010.
- Strong Net Interest
Margin – The net interest margin for the quarter totaled 4.66%.
Excluding discount accretion on covered loan dispositions and
recoveries, the net interest margin totaled 3.98% for the quarter,
compared to 2.98% in the second quarter of 2009. (See
reconciliation of the GAAP financial measure to this non-GAAP
financial measure in the tables attached.)
- Strong Capital Levels –
As of June 30, 2010, East West’s Tier 1 risk-based capital and
total risk-based capital ratios were 18.9% and 20.8%, respectively,
significantly higher than the well capitalized requirements of 6%
and 10%, respectively.
Management Guidance
The Company is providing guidance for the third quarter of 2010.
Management currently estimates that fully diluted earnings per
share for the third quarter of 2010 will range from $0.19 to $0.22
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 3.98% and 4.02%,
excluding the impact of discount accretion on covered loan
dispositions and recoveries
- Provision for loan losses of
approximately $35 million to $40 million for the quarter
- Noninterest expense of
approximately $105 million, net of FDIC reimbursable items
- Effective tax rate of
approximately 37%
FDIC-Assisted Acquisition of Washington First International
Bank
On June 11, 2010, East West acquired the banking operations of
Seattle-based WFIB in a purchase and assumption agreement with the
FDIC. East West acquired total assets of $492.6 million and assumed
$395.9 million in deposits, net of purchase accounting adjustments.
This strategically attractive transaction expands East West’s
footprint in the greater Seattle area, enhancing our ability to
increase operating efficiencies and grow our customer base in this
region.
In connection with the acquisition, East West entered into a
loss-sharing agreement with the FDIC that covers approximately
$420.0 million in loans and real estate owned. Pursuant to the
terms of the loss-sharing arrangement, the FDIC is obligated to
reimburse the Bank for 80% of all eligible losses on covered
assets. As a result of this transaction, East West recorded a
pre-tax gain of $19.5 million.
The integration of WFIB is progressing smoothly and we are on
target for full integration of all systems by the end of October
2010.
All WFIB legacy loans were accounted for at fair value at the
date of acquisition and recorded at a discount to book value. As
such, losses that East West expects to incur have already been
written off and considered in the fair value of loans acquired as
of June 11, 2010.
A summary of the net assets received from the FDIC is as
follows:
June 11, 2010
(in thousands) Assets Cash and cash equivalents 67,186
Investment securities 37,532 Core deposit intangible 3,065 Loans
covered by FDIC loss sharing (gross balance $395,156 and shown net
of discount of $84,174) 310,982 Loans not covered by FDIC loss
sharing 2,869 FDIC indemnification asset 41,131 Other real estate
owned covered, net 23,443
Other assets
6,380
Total assets acquired
492,588 Liabilities Deposits 395,910 FHLB Advances 65,348
Securities sold under repurchase agreements 1,937
Other liabilities
9,917
Total liabilities assumed
473,112 Net assets acquired 19,476
Balance Sheet Summary
At June 30, 2010 total assets were $20.0 billion compared to
$20.3 billion at March 31, 2010, and $12.7 billion at June 30,
2009. The decrease in total assets quarter over quarter was driven
by prepayments on FHLB advances of $740.0 million, sales of
consumer student loans of $227.3 million and sales of fixed rate
investment securities of $208.7 million.
Gross loans at June 30, 2010 totaled $13.7 billion, compared to
$13.8 billion at March 31, 2010. Noncovered loan balances decreased
$82.7 million during the quarter to $8.5 billion as of June 30,
2010. During the quarter, growth in commercial loans of $84.1
million and single family loans of $71.7 million was offset by
decreases in consumer loans resulting from the sale of student
loans and paydowns on commercial real estate, construction and land
loans.
Covered loans totaled $5.3 billion at June 30, 2010, as compared
to $5.2 billion at March 31, 2010. The increase in covered loans
was a result of the addition of $311.0 million in loans from the
acquisition of WFIB, partially offset by a reduction in loan
balances from United Commercial Bank.
Deposit balances totaled $14.9 billion at June 30, 2010,
compared to $14.6 billion at March 31, 2010. During the quarter
East West assumed $395.9 million in deposits from the acquisition
of WFIB, reduced brokered deposits by $174.5 million and increased
deposits organically by $90.6 million. Total core deposits
increased to a record $8.2 billion as of June 30, 2010, or an
increase of $444.1 million or 6% from March 31, 2010. The average
cost of deposits decreased to 0.80% for the second quarter, an
improvement of 13 basis points from the first quarter of 2010 and
an improvement of 67 basis points from the second quarter of
2009.
During the second quarter of 2010, East West continued to
execute on its strategy to lower borrowing costs, prepaying $740.0
million in FHLB advances with an average cost of 1.72% during the
quarter. As of June 30, 2010, FHLB advances totaled $1.0 billion, a
decline of $747.4 million or 42% from March 31, 2010. As a result
of the prepayments, East West incurred a prepayment penalty of $3.9
million, net of purchase accounting adjustments recorded, which is
included in noninterest expense. The average cost of funds
decreased to 1.17% for the second quarter of 2010, down 11 basis
points from the first quarter of 2010 and down 95 basis points from
the second quarter of 2009.
Second Quarter 2010 Operating Results
Net Interest Income
Despite a prolonged and challenging low interest rate
environment, net interest income has remained stable. As previously
discussed, East West has grown low-cost core deposits, reducing the
cost of deposits to 0.80% for the second quarter of 2010, down from
0.93% in the first quarter of 2010. Further, East West prepaid
higher-cost FHLB advances, improving the cost of funds.
Included in net interest income is discount accretion on early
payoffs and recoveries on covered loans of $29.8 million in the
second quarter of 2010, compared to $81.3 million in the first
quarter of 2010. Excluding the impact of discount accretion, the
net interest margin was 3.98% for the second quarter of 2010,
compared to 4.02% in the prior quarter and an increase from 2.98%
in the second quarter of 2009.
The adjustments to net interest income are summarized in the
table below:
Reconciliation of Net Interest Income to Adjusted Net
Interest Income
Quarter
Ended
June 30, 2010
March 31, 2010 Interest
Yield Interest Yield Net
interest income and net interest margin $ 203,623 4.66 % $ 261,724
5.92 % Less yield adjustment related to:
Covered loan disposition and recoveries 29,755 81,343 Repurchase
agreement termination gain - 2,536 Total yield
adjustment 29,755 $ 83,879
Net interest income and net
interest margin, excluding yield adjustment
$ 173,868 3.98 % $ 177,845 4.02 %
Noninterest Income
Noninterest income for the second quarter totaled $35.7 million,
compared to a loss of $8.5 million in the first quarter of 2010 and
a loss of $26.2 million in the second quarter of 2009. The loss in
the first quarter of 2010 was primarily due to a $43.6 million
decrease in the FDIC indemnification asset and receivable compared
to a $9.4 million decrease in the second quarter of 2010. The
decreases in the FDIC indemnification asset and receivable in both
the first and second quarters are primarily due to early payoffs on
covered loans, resulting in a net reduction in the FDIC
indemnification asset and receivable. The loss in the second
quarter of 2009 was primarily due to impairment losses on
investment securities of $37.4 million compared to $4.6 million of
impairment losses in the second quarter of 2010.
As previously mentioned, during the second quarter we sold
$227.3 million in student loans and $208.7 million in fixed rate
investment securities at gains of $8.1 million and $5.8 million,
respectively. Noninterest income for the second quarter also
included a gain of $19.5 million as a result of the acquisition of
WFIB.
During the second quarter we recorded impairment losses on
investment securities totaling $4.6 million, of which $2.4 million
was recorded on pooled trust preferred securities and $2.2 million
was recorded on agency preferred stock. As of June 30, 2010, the
agency preferred stock was written down to zero.
As compared to the second quarter of 2009, branch fees increased
by $3.2 million or 65%, letters of credit fees and commissions
increased $935 thousand or 48%, and ancillary loan fees increased
$1.0 million or 75%, primarily due to the acquisition of UCB.
Excluding the impact of the decrease in the FDIC indemnification
asset and receivable, gains on sales of investment securities and
loans, gain on acquisition, and impairment charges on investment
securities, noninterest income for the second quarter totaled $16.4
million, a $6.8 million or a 71% increase as compared to the second
quarter of 2009. See reconciliation of the GAAP financial measure
to this non-GAAP financial measure in the tables attached. A
summary of these second quarter 2010 noninterest income items is
detailed below:
Quarter Ended June 30,
2010 Noninterest income $ 35,685 Add: Impairment loss on
investment securities 4,642 Net gain on sale of investment
securities (5,847 ) Net gain on sale of loans (8,073 ) Gain on
acquisition (19,476 )
Decrease in FDIC indemnification
asset and FDIC Receivable
9,424 Operating noninterest income $ 16,355
Noninterest Expense
Noninterest expense totaled $125.3 million for the second
quarter of 2010 compared to $138.9 million for the first quarter of
2010. Second quarter noninterest expense includes $28.7 million of
expenses that are either not expected to be ongoing expenses in
future quarters or are reimbursable from the FDIC, as detailed in
the table below:
Quarter Ended (In
thousands)
June 30, 2010 Noninterest Expense: $ 125,318
Prepayment penalty for FHLB advances 3,900 Expenses related to the
integration of UCB 3,602 Expenses for UCB covered assets,
reimbursable from the FDIC: OREO expenses 15,258 Loan related
expenses 4,062 Legal expenses 1,877 Total reimbursable
expenses on covered assets 21,197
Noninterest expense excluding
prepayment penalty on FHLB advances, integration costs related to
the acquisition of UCB, and reimbursable expenses
$ 96,619
Included in noninterest expense are integration expenses of $3.6
million, of which $1.5 million is related to severance costs. In
addition, under the loss share agreement with the FDIC, 80% of
eligible expenses on covered assets are reimbursable from the FDIC.
In the second quarter, we incurred $26.5 million in expenses on
covered loans and REO assets, 80%, or $21.2 million of which we
expect to be reimbursed by the FDIC. As discussed above, East West
also prepaid $740.0 million in FHLB advances and paid a prepayment
penalty of $3.9 million. Management anticipates that in the third
quarter of 2010, noninterest expense will total approximately $105
million, net of FDIC reimbursable items.
The effective tax rate for the second quarter was 38.1% compared
to 41.1% 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
Credit indicators have continued to be strong. Nonperforming
assets have remained low at $195.6 million as of June 30, 2010.
Nonperforming assets, excluding covered assets, to total assets was
0.98% at June 30, 2010, compared to 1.49% of total assets at June
30, 2009. Nonperforming assets, excluding covered assets, as of
June 30, 2010 included nonaccrual loans totaling $179.1 million and
REO assets totaling $16.6 million.
The provision for loan losses was $55.3 million for the second
quarter of 2010, a decrease of $21.2 million or 28% compared to the
previous quarter and a decrease of $96.2 million or 64% from the
second quarter of 2009. Total net charge-offs fell to $55.2 million
for the second quarter, a decrease of $8.7 million or 14% from the
previous quarter and a decrease of $78.7 million or 59% from the
second quarter of 2009. Management expects that the provision for
loan losses and net charge-offs will continue to decrease for the
second half of 2010 and range from $35 million to $40 million for
the third quarter of 2010.
Credit metrics on our seasoned commercial real estate portfolio
have remained strong. Nonperforming commercial real estate loans
were 0.52% of total commercial real estate loans as of June 30,
2010 and net charge-offs on commercial real estate loans were 1.34%
of total average commercial real estate loans (annualized) for the
second quarter. Further, land and construction loan balances are
down to only 5% of total gross loans receivable.
Notwithstanding the improvements noted above, we have maintained
a strong allowance for loan losses at $249.5 million or 2.94% of
non-covered loans receivable at June 30, 2010, to cover inherent
losses in the portfolio, as compared to allowance for loan losses
of $250.5 million or 2.93% at March 31, 2010 and $223.7 million or
2.62% of outstanding loans at June 30, 2009.
All loans acquired from UCB and WFIB were recorded at estimated
fair value as of the acquisition dates. East West entered into loss
sharing agreements with the FDIC that covers future losses incurred
on nearly all the UCB and WFIB legacy loans. As of June 30, 2010,
we believe no allowance is required for these covered loans.
Capital Strength
Capital
Strength (Dollars in millions)
June 30, 2010
Well
CapitalizedRegulatoryRequirement
Total Excess AboveWell
CapitalizedRequirement
Tier 1 leverage capital ratio 10.5 % 5.00 % $ 1,077 Tier 1
risk-based capital ratio 18.9 % 6.00 % 1,397 Total risk-based
capital ratio 20.8 % 10.00 % 1,175 Tangible common equity to
tangible asset 7.90 % N/A N/A Tangible common equity to risk
weighted assets ratio 14.2 % 4.00 % * 1,110 As there is no
stated regulatory guideline for this ratio, the SCAP guideline of
4.00% tangible common equity has been used.
East West remains committed to maintaining strong capital levels
that exceed regulatory requirements. As of the end of the second
quarter of 2010, our Tier 1 leverage capital ratio increased to
10.5%, Tier 1 risk-based capital ratio totaled 18.9% and the total
risk-based capital ratio totaled 20.8%. East West exceeds well
capitalized requirements for all regulatory guidelines by over $1.0
billion.
Dividend Payout
East West’s Board of Directors has declared third quarter
dividends on the common stock and Series A Preferred Stock. The
common stock cash dividend of $0.01 is payable on or about August
24, 2010 to shareholders of record on August 10, 2010. The dividend
on the Series A Preferred Stock of $20.00 per share is payable on
August 1, 2010 to shareholders of record on July 15, 2010.
About East West
East West Bancorp is a publicly owned company with $20.0 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) June 30, 2010 December 31,
2009 Assets Cash and cash equivalents $ 1,185,944 $ 835,141
Short-term investments 447,168 510,788 Securities purchased under
resale agreements 230,000 227,444 Investment securities 2,077,011
2,564,081
Loans receivable, excluding
covered loans (net of allowance for loan losses of $249,462 and
$238,833)
8,177,966 8,246,685 Covered loans 5,275,492
5,598,155 Total loans receivable, net 13,453,458 13,844,840
Federal Home Loan Bank and Federal Reserve stock 223,395 217,002
FDIC indemnification asset 947,011 1,091,814 Other real estate
owned, net 16,562 13,832 Other real estate owned covered, net
113,999 44,273 Premiums on deposits acquired, net 86,106 89,735
Goodwill 337,438 337,438 Other assets 849,229
782,824 Total assets $ 19,967,321 $ 20,559,212
Liabilities and Stockholders' Equity Deposits $ 14,918,694 $
14,987,613 Federal Home Loan Bank advances 1,022,011 1,805,387
Securities sold under repurchase agreements 1,051,192 1,026,870
Subordinated debt and trust preferred securities 235,570 235,570
Other borrowings 35,504 67,040 Accrued expenses and other
liabilities 365,386 152,073 Total
liabilities 17,628,357 18,274,553 Stockholders' equity
2,338,964 2,284,659 Total liabilities and
stockholders' equity $ 19,967,321 $ 20,559,212 Book
value per common share $ 13.31 $ 14.47 Number of common shares at
period end 147,939 109,963
Ending Balances June
30, 2010 December 31, 2009 Loans receivable Real estate
- single family $ 1,033,155 $ 930,840 Real estate - multifamily
985,194 1,025,849 Real estate - commercial 3,500,273 3,606,179 Real
estate - land 297,364 370,394 Real estate - construction 354,547
458,292 Commercial 1,528,863 1,512,709 Consumer 774,746
624,784 Total loans receivable, excluding
covered loans 8,474,142 8,529,047 Covered loans 5,275,492
5,598,155 Total loans receivable 13,749,634
14,127,202 Unearned fees, premiums and discounts (46,714 ) (43,529
) Allowance for loan losses (249,462 ) (238,833 ) Net
loans receivable $ 13,453,458 $ 13,844,840 Deposits
Noninterest-bearing demand $ 2,396,087 $ 2,291,259 Interest-bearing
checking 685,572 667,177 Money market 4,162,128 3,138,866 Savings
946,043 991,520 Total core deposits
8,189,830 7,088,822 Time deposits 6,728,864
7,898,791 Total deposits $ 14,918,694 $ 14,987,613
EAST WEST BANCORP, INC. CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (In thousands, except per share
amounts) (unaudited) Quarter Ended
June 30, 2010 March 31, 2010 June 30, 2009
Interest and dividend income $ 253,533 $ 318,703 $ 146,333
Interest expense (49,910 ) (56,979 ) (58,073 )
Net interest income before provision for loan losses 203,623
261,724 88,260 Provision for loan losses (55,256 )
(76,421 ) (151,422 ) Net interest income after provision for
loan losses 148,367 185,303 (63,162 ) Noninterest income (loss)
35,685 (8,451 ) (26,199 ) Noninterest expense (125,318 )
(138,910 ) (57,912 ) Income (loss) before benefit for
income taxes 58,734 37,942 (147,273 ) Provision (benefit) for
income taxes 22,386 13,026
(60,548 ) Net income (loss) before extraordinary item 36,348 24,916
(86,725 ) Extraordinary item, net of tax - -
(5,366 ) Net income (loss) after extraordinary item $
36,348 $ 24,916 $ (92,091 ) Preferred stock dividend, inducement,
and amortization of preferred stock discount (6,147 )
(6,138 ) (23,623 ) Net income (loss) available to common
stockholders $ 30,201 $ 18,778 $ (115,714 ) Net income (loss) per
share, basic $ 0.21 $ 0.17 $ (1.83 ) Net income (loss) per share,
diluted $ 0.21 $ 0.13 $ (1.83 ) Shares used to compute per share
net loss: - Basic 146,372 109,961 63,105 - Diluted 147,131 146,865
63,105
Quarter Ended June 30, 2010
March 31, 2010 June 30, 2009 Noninterest income
(loss): Decrease in FDIC indemnification asset and FDIC receivable
$ (9,424 ) $ (43,572 ) $ - Impairment loss on investment securities
(4,642 ) (4,799 ) (37,447 ) Net gain on sale of investment
securities 5,847 16,111 1,680 Gain on acquisition 19,476 8,095 -
Branch fees 8,219 8,758 4,991 Net gain on sale of loans 8,073 3
Letters of credit fees and commissions 2,865 2,740 1,930 Ancillary
loan fees 2,369 1,689 1,356 Other operating income 2,902
2,527 1,288 Total noninterest
income (loss) $ 35,685 $ (8,451 ) $ (26,199 ) Noninterest
expense: Compensation and employee benefits $ 41,579 $ 50,779 $
16,509 Other real estate owned expense 20,983 18,012 8,682
Occupancy and equipment expense 13,115 11,944 6,297 Legal expense
6,183 2,907 1,755 Prepayment penalty for FHLB advances 3,900 9,932
- Deposit insurance premiums and regulatory assessments 4,528
11,581 9,568 Amortization of premiums on deposits acquired 3,310
3,384 1,092 Data processing 3,046 2,482 1,141 Amortization of
investments in affordable housing partnerships 2,638 3,037 1,652
Consulting expense 1,919 2,141 672 Loan related expenses 5,254
2,997 1,642 Other operating expense 18,863
19,714 8,902 Total noninterest expense $
125,318 $ 138,910 $ 57,912
EAST WEST
BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (In thousands, except per share amounts)
(unaudited) Year To Date June 30, 2010
June 30, 2009 Interest and dividend income $ 572,236
$ 291,256 Interest expense (106,889 ) (123,315 ) Net
interest income before provision for loan losses 465,347 167,941
Provision for loan losses (131,677 ) (229,422 ) Net
interest income after provision for loan losses 333,670 (61,481 )
Noninterest income (loss) 27,234 (12,405 ) Noninterest expense
(264,228 ) (109,318 ) Income (loss) before benefit
for income taxes 96,676 (183,204 ) Provision (benefit) for income
taxes 35,412 (74,013 ) Net loss before
extraordinary item 61,264 (109,191 ) Extraordinary item, net of tax
- (5,366 ) Net income (loss) after
extraordinary item $ 61,264 $ (114,557 ) Preferred stock dividend,
inducement, and amortization of preferred stock discount
(12,285 ) (32,366 ) Net income (loss) available to common
stockholders $ 48,979 $ (146,923 ) Net income (loss) per share,
basic $ 0.40 $ (2.33 ) Net income (loss) per share, diluted $ 0.34
$ (2.33 ) Shares used to compute per share net loss: - Basic
123,445 63,052 - Diluted 142,143 63,052
Year To
Date June 30, 2010 June 30, 2009 Noninterest
income (loss): Decrease in FDIC indemnification asset and FDIC
receivable $ (52,996 ) $ - Impairment loss on investment securities
(9,441 ) (37,647 ) Net gain on sale of investment securities 21,958
5,201 Gain on acquisition 27,571 - Branch fees 16,977 9,784 Net
gain on sale of loans 8,073 11 Letters of credit fees and
commissions 5,605 3,784 Ancillary loan fees 4,058 3,585 Other
operating income 5,429 2,877 Total
noninterest income (loss) $ 27,234 $ (12,405 ) Noninterest
expense: Compensation and employee benefits $ 92,358 $ 33,617 Other
real estate owned expense 38,995 15,713 Occupancy and equipment
expense 25,059 13,688 Deposit insurance premiums and regulatory
assessments 16,109 12,893 Prepayment penalty for FHLB advances
13,832 - Legal expense 9,090 3,533 Amortization of premiums on
deposits acquired 6,694 2,217 Amortization of investments in
affordable housing partnerships 5,675 3,412 Data processing 5,528
2,283 Consulting expense 4,060 1,120 Loan related expenses 8,251
3,077 Other operating expense 38,577 17,765
Total noninterest expense $ 264,228 $ 109,318
EAST WEST BANCORP, INC. QUARTERLY ALLOWANCE FOR
LOAN LOSSES RECAP (In thousands) (unaudited)
Quarter Ended 6/30/2010
3/31/2010 12/31/2009
9/30/2009 6/30/2009 LOANS
Allowance balance, beginning of period $ 250,517 $ 238,833 $
230,650 $ 223,700 $ 195,450 Allowance for unfunded loan commitments
and letters of credit (1,115 ) (808 ) (1,161 ) (1,051 ) 1,442
Provision for loan losses 55,256 76,421 140,000 159,244 151,422
Impact of desecuritization - - - - 9,262 Net Charge-offs:
Real estate - single family 3,257 3,426 7,083 8,034 14,058 Real
estate - multifamily 7,552 4,860 8,425 7,231 2,256 Real estate -
commercial 11,836 8,201 13,305 23,105 12,472 Real estate - land
9,765 26,828 20,390 39,988 33,183 Real estate - residential
construction 3,086 11,642 48,919 32,535 30,634 Real estate -
commercial construction 8,548 2,029 21,355 23,051 28,602 Commercial
10,563 6,422 5,789 14,956 11,577 Trade finance (88 ) (54 ) 2,569
2,256 774 Consumer 677 575
2,821 87
320 Total net charge-offs
(recovery) 55,196 63,929
130,656 151,243
133,876 Allowance balance, end
of period $ 249,462 $ 250,517
$ 238,833 $ 230,650
$ 223,700
UNFUNDED LOAN COMMITMENTS AND
LETTERS OF CREDIT: Allowance balance, beginning of period $
8,927 $ 8,119 $ 6,958 $ 5,907 $ 7,349 Provision for unfunded loan
commitments and letters of credit 1,115
808 1,161
1,051 (1,442 ) Allowance
balance, end of period $ 10,042 $ 8,927
$ 8,119 $ 6,958
$ 5,907 GRAND TOTAL, END OF PERIOD $ 259,504
$ 259,444 $ 246,952
$ 237,608 $ 229,607
Nonperforming assets to total assets (1) 0.98 % 0.89 % 0.91
% 1.84 % 1.49 % Allowance for loan losses to total gross
non-covered loans at end of period 2.94 % 2.93 % 2.80 % 2.74 % 2.62
% Allowance for loan losses and unfunded loan commitments to total
gross non-covered loans at end of period 3.06 % 3.03 % 2.90 % 2.82
% 2.69 % Allowance to non-covered nonaccrual loans at end of period
139.31 % 143.62 % 137.91 % 112.82 % 137.94 % Nonaccrual loans to
total loans (2) 1.30 % 1.27 % 1.23 % 2.43 % 1.90 % (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 JUNE 30, 2010 Total
Nonaccrual Loans
90+
DaysDelinquent
Under 90+
DaysDelinquent
TotalNonaccrualLoans
REO Assets
TotalNon-PerformingAssets
Loan Type Real estate - single family $ 14,835 $ - $ 14,835
$ 395 $ 15,230 Real estate - multifamily 13,180 5,521 18,701 3,131
21,832 Real estate - commercial 15,778 2,569 18,347 7,047 25,394
Real estate - land 43,775 5,292 49,067 2,541 51,608 Real estate -
residential construction 1,454 23,370 24,824 2,272 27,096 Real
estate - commercial construction 22,997 449 23,446 830 24,276
Commercial 19,310 8,994 28,304 - 28,304 Trade Finance - - - - -
Consumer 1,436 104 1,540 346
1,886
Total $ 132,765 $ 46,299
$ 179,064 $ 16,562 $
195,626 AS OF MARCH 31, 2010 Total
Nonaccrual Loans
90+
DaysDelinquent
Under 90+
DaysDelinquent
TotalNonaccrualLoans
REO Assets
Total
Non-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
TotalNonaccrualLoans
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 JUNE
30, 2009 Total Nonaccrual Loans
90+
DaysDelinquent
Under 90+
DaysDelinquent
TotalNonaccrualLoans
REO Assets
TotalNon-PerformingAssets
Loan Type Real estate - single family $ 5,181 $ - $ 5,181 $
4,921 $ 10,102 Real estate - multifamily 7,938 - 7,938 281 8,219
Real estate - commercial 19,786 4,590 24,376 2,887 27,263 Real
estate - land 35,660 1,656 37,316 13,307 50,623 Real estate -
residential construction 46,176 - 46,176 4,154 50,330 Real estate -
commercial construction 20,629 - 20,629 - 20,629 Commercial 8,034
8,067 16,101 626 16,727 Trade Finance 3,706 - 3,706 211 3,917
Consumer 339 412 751 801 1,552
Total $ 147,449 $ 14,725
$ 162,174 $ 27,188 $
189,362
EAST WEST
BANCORP, INC. QUARTER TO DATE AVERAGE BALANCES, YIELDS AND
RATES PAID (In thousands) (unaudited)
Quarter
Ended June 30, 2010 June 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 $ 948,361 $ 1,502 0.64 % $ 876,386
$ 2,509 1.15 % Securities purchased under resale agreements 455,743
2,630 2.28 % 51,374 1,292 9.95 % Investment securities (2)
2,202,676 14,741 2.68 % 2,612,998 30,440 4.67 % Loans receivable
8,556,680 116,916 5.48 % 8,244,850 111,669 5.43 % Loans receivable
- covered 5,137,863 116,867 9.12 % - - - Federal Home Loan Bank and
Federal Reserve Bank stocks 224,473
877 1.56 % 123,514
545 1.76 % Total
interest-earning assets 17,525,796
253,533 5.80 % 11,909,122
146,455 4.93 %
Noninterest-earning assets: Cash and due from banks 603,907
113,853 Allowance for loan losses (255,904 ) (198,802 ) Other
assets 2,012,470 794,849 Total assets $
19,886,269 $ 12,619,022
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing liabilities: Checking accounts 663,936 527
0.32 % 356,756 324 0.36 % Money market accounts 3,968,293 8,336
0.84 % 1,822,470 6,140 1.35 % Savings deposits 961,374 1,274 0.53 %
415,828 659 0.64 % Time deposits 6,714,972 18,995 1.13 % 4,548,935
23,767 2.10 % Federal Home Loan Bank advances 1,238,400 6,175 2.00
% 1,273,640 13,142 4.14 % Securities sold under repurchase
agreements 1,042,305 12,045 4.57 % 1,006,614 12,004 4.72 %
Subordinated debt and trust preferred securities 235,570 1,591 2.67
% 235,570 2,034 3.42 % Other borrowings 49,785
967 7.68 % 4,849
3 0.24 % Total
interest-bearing liabilities 14,874,635
49,910 1.35 % 9,664,662
58,073 2.41 %
Noninterest-bearing liabilities: Demand deposits 2,300,228
1,300,676 Other liabilities 400,783 123,431 Stockholders' equity
2,310,623 1,530,253
Total liabilities and
stockholders' equity
$ 19,886,269 $ 12,619,022 Interest rate spread
4.45 % 2.52 % Net interest income and net interest margin $
203,623 4.66 % $ 88,382 2.98 % Net interest income and net
interest margin adjusted (3) $ 173,868 3.98 % (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
$29,755 for the three months ended June 30, 2010.
EAST WEST BANCORP, INC. YEAR TO DATE
AVERAGE BALANCES, YIELDS AND RATES PAID (In thousands)
(unaudited)
Year To Date June 30, 2010
June 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 $ 1,119,912 $ 5,043 0.91 % $
804,379 $ 5,485 1.38 % Securities purchased under resale agreements
358,074 8,893 4.94 % 50,691 2,542 9.97 % Investment securities (2)
2,194,322 34,931 3.21 % 2,658,478 59,905 4.54 % Loans receivable
8,582,214 238,944 5.61 % 8,221,143 222,485 5.46 % Loans receivable
- covered 5,256,293 282,783 10.85 % - - - Federal Home Loan Bank
and Federal Reserve Bank stocks 223,097
1,656 1.48 % 121,786
1,051 1.73 % Total
interest-earning assets 17,733,912
572,250 6.51 % 11,856,477
291,468 4.96 %
Noninterest-earning assets: Cash and due from banks 485,965
118,351 Allowance for loan losses (254,700 ) (192,465 ) Other
assets 2,195,865 775,633
Total assets
$ 20,161,042 $ 12,557,996
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing liabilities: Checking accounts 651,655
1,141 0.35 % 358,492 717 0.40 % Money market accounts 3,716,606
16,302 0.88 % 1,655,476 11,834 1.44 % Savings deposits 976,695
2,416 0.50 % 413,046 1,361 0.66 % Time deposits 7,013,720 42,721
1.23 % 4,681,241 54,051 2.33 % Federal Home Loan Bank advances
1,634,910 15,180 1.87 % 1,279,323 27,019 4.26 % Securities sold
under repurchase agreements 1,035,539 24,586 4.72 % 1,002,621
23,876 4.74 % Subordinated debt and trust preferred securities
235,570 3,138 2.65 % 235,570 4,451 3.76 % Other borrowings
74,893 1,405 3.73 %
3,653 6
0.33 % Total interest-bearing liabilities 15,339,588
106,889 1.41 %
9,629,422 123,315
2.58 %
Noninterest-bearing liabilities: Demand
deposits 2,260,847 1,270,716 Other liabilities 258,399 122,326
Stockholders' equity 2,302,208 1,535,532
Total liabilities and stockholders' equity $ 20,161,042
$ 12,557,996 Interest rate spread 5.10 % 2.38
% Net interest income and net interest margin $ 465,361 5.29
% $ 168,153 2.86 % Net interest income and net interest
margin adjusted (3) $ 351,728 4.00 % (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
$111,097 and repurchase agreement termination gain of $2,536 for
the six months ended June 30, 2010.
EAST WEST BANCORP, INC.
SELECTED FINANCIAL INFORMATION (In thousands)
(unaudited) Average Balances Quarter
Ended June 30, 2010 March 31, 2010 June 30,
2009 Loans receivable Real estate - single family $ 989,744 $
931,318 $ 686,073 Real estate - multifamily 998,090 1,071,910
823,890 Real estate - commercial 3,530,045 3,601,112 3,516,257 Real
estate - land 317,291 356,908 523,799 Real estate - construction
383,846 449,272 1,072,319 Commercial 1,492,560 1,472,451 1,387,257
Consumer 845,104 731,771 235,255
Total loans receivable, excluding covered loans 8,556,680
8,614,742 8,244,850 Covered loans 5,137,863
5,369,328 - Total loans receivable 13,694,543
13,984,070 8,244,850 Investment securities 2,202,676 2,185,875
2,612,998 Earning assets 17,525,796 17,940,933 11,909,122 Total
assets 19,886,269 20,398,717 12,619,022 Deposits
Noninterest-bearing demand $ 2,300,228 $ 2,222,104 $ 1,300,676
Interest-bearing checking 663,936 636,039 356,756 Money market
3,968,293 3,464,234 1,822,470 Savings 961,374
992,186 415,828 Total core deposits 7,893,831
7,314,563 3,895,730 Time deposits 6,714,972
7,315,789 4,548,935 Total deposits 14,608,803
14,630,352 8,444,665 Interest-bearing liabilities 14,874,635
15,763,168 9,664,662 Stockholders' equity 2,310,623 2,293,712
1,530,253
Selected Ratios Quarter Ended
June 30, 2010 March 31, 2010 June 30, 2009 For
The Period Return on average assets 0.73 % 0.49 % -2.92 % Return on
average common equity 6.26 % 4.71 % -43.81 % Interest rate spread
(2) 4.45 % 5.73 % 2.52 % Net interest margin (2) 4.66 % 5.92 % 2.98
% Net interest margin adjusted (4) 3.98 % 4.02 % 2.98 % Yield on
earning assets (2) 5.80 % 7.20 % 4.93 % Cost of deposits 0.80 %
0.93 % 1.47 % Cost of funds 1.17 % 1.28 % 2.12 % Noninterest
expense/average assets (1) 2.32 % 2.40 % 1.75 % Efficiency ratio
(3) 56.56 % 58.45 % 55.12 % (1) Excludes the amortization of
intangibles, amortization and impairment loss of premiums on
deposits acquired, amortization of investments in affordable
housing partnerships and prepayment penalty for FHLB advances. (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, 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
$29,755 for the quarter ended June 30, 2010. and yield adjustment
related to covered loan disposition of $74,439 for the quarter
ended December 31, 2009.
EAST WEST BANCORP, INC. SELECTED
FINANCIAL INFORMATION (In thousands) (unaudited)
Average Balances Year To Date June 30,
2010 June 30, 2009 Loans receivable Real estate - single
family $ 961,800 $ 596,913 Real estate - multifamily 1,034,830
758,744 Real estate - commercial 3,563,975 3,491,166 Real estate -
land 336,990 552,917 Real estate - construction 416,378 1,151,836
Commercial 1,479,533 1,437,732 Consumer 788,708
231,835 Total loans receivable, excluding covered
loans 8,582,214 8,221,143 Covered loans 5,256,293
- Total loans receivable 13,838,507 8,221,143
Investment securities 2,194,322 2,658,478 Earning assets 17,733,912
11,856,477 Total assets 20,161,042 12,557,996 Deposits
Noninterest-bearing demand $ 2,260,847 $ 1,270,716 Interest-bearing
checking 651,655 358,492 Money market 3,716,606 1,655,476 Savings
976,695 413,046 Total core deposits
7,605,803 3,697,730 Time deposits 7,013,720
4,681,241 Total deposits 14,619,523 8,378,971
Interest-bearing liabilities 15,339,588 9,629,422 Stockholders'
equity 2,302,208 1,535,532
Selected Ratios
Year To Date June 30, 2010 June 30, 2009 For
The Period Return on average assets 0.61 % -1.82 % Return on
average common equity 5.55 % -27.66 % Interest rate spread (2) 5.10
% 2.38 % Net interest margin (2) 5.29 % 2.86 % Net interest margin
adjusted (4) 4.00 % 2.86 % Yield on earning assets (2) 6.51 % 4.96
% Cost of deposits 0.86 % 1.64 % Cost of funds 1.22 % 2.28 %
Noninterest expense/average assets (1) 2.36 % 1.65 % Efficiency
ratio (3) 57.52 % 53.51 % (1) Excludes the amortization of
intangibles, amortization and impairment loss of premiums on
deposits acquired, amortization of investments in affordable
housing partnerships and prepayment penalty for FHLB advances. (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, 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 $111,097 and repurchase
agreement termination gain of $2,536 for the six months ended June
30, 2010.
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 June 30, 2010
Stockholders' Equity $ 2,338,964 Less: Preferred Equity (369,695 )
Goodwill and other intangible assets (424,746 ) Tangible
common equity $ 1,544,523 Risk-weighted assets
10,863,240 Tangible Common Equity to risk-weighted
assets 14.2 %
As of June 30, 2010 Total
assets $ 19,967,321 Less: Goodwill and other intangible assets
(424,746 ) Tangible assets $ 19,542,575
Tangible common equity to tangible asset ratio 7.90 %
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
June 30, 2010 Noninterest income $ 35,685 Add: Impairment
loss on investment securities 4,642 Net gain on sale of investment
securities (5,847 ) Net gain on sale of loans (8,073 ) Gain on
acquisition (19,476 )
Decrease in FDIC indemnification
asset and FDIC receivable
9,424 Operating noninterest income (non-GAAP) $
16,355
Quarter Ended
June 30, 2009 Noninterest income $ (26,199 ) Add: Impairment
loss on investment securities 37,447 Net gain on sale of investment
securities (1,680 ) Net gain on sale of loans (3 ) Gain on
acquisition -
Decrease in FDIC indemnification
asset and FDIC receivable
- Operating noninterest income (non-GAAP) $ 9,565
EAST
WEST BANCORP, INC. GAAP TO NON-GAAP RECONCILIATION
(In thousands) (Unaudited)
Operating noninterest expense 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 expense line items that are non-core in nature.
Operating noninterest expense excludes such non-core noninterest
expense line items. The Company believes that presenting the
operating noninterest expense provides more clarity to the users of
financial statements regarding the core noninterest expense
amounts.
Quarter Ended June 30, 2010 Noninterest
Expense: $ 125,318 Prepayment penalty for FHLB advances 3,900
Expenses related to the integration of UCB 3,602 Expenses
for UCB covered assets, reimbursable from the FDIC: OREO Expenses
15,258 Loan related expenses 4,062 Legal expenses 1,877
Total reimbursable expenses on covered assets 21,197
Noninterest expense excluding
prepayment penalty on FHLB advances, integration costs related to
the acquisition of UCB, and reimbursable expenses
$ 96,619
Quarter Ended March 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
9,904 REO expense for UCB covered assets, reimbursable from the
FDIC 11,092
Noninterest expense excluding
prepayment penalty on FHLB advances, integration costs related to
the acquisition of UCB, and reimbursable REO expenses
$ 107,982
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
second quarter of 2010, the quarter to date net interest income and
net interest margin includes a yield adjustment of $29,755 related
to covered loan disposition, the year to date net interest income
and net interest margin includes a yield adjustment of $111,097
related to covered loan disposition and recoveries and repurchase
agreement termination gain of $2,536. For the first quarter of 2010
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 June 30, 2010 Average Volume Interest
Yield Total interest-earning assets $ 17,525,796 $ 253,533 5.80 %
Net interest income and net interest margin $ 203,623 4.66 % Less
yield adjustment related to: Covered loan disposition and
recoveries 29,755
Net interest income and net
interest margin, excluding yield adjustment
$ 173,868 3.98 %
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 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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