East West Bancorp, Inc. (Nasdaq: EWBC), parent company of East
West Bank, the financial bridge between the U.S. and Asia, today
reported financial results for the second quarter of 2011. For the
second quarter of 2011, net income was $60.5 million or $0.39 per
dilutive share. East West increased second quarter net income $24.2
million or 67% and increased earnings per dilutive share $0.18 or
86% from the prior year period.
“East West is pleased to report solid second quarter earnings of
$60.5 million or $0.39 per share,” stated Dominic Ng, Chairman and
Chief Executive Officer of East West. “Net income increased by
$24.2 million, or 67% from the prior year period and $4.5 million
or 8% from the first quarter of 2011. Fueled by our strong deposit
growth, total assets reached nearly $22 billion, a 10% increase
from the prior year, and a 3% increase from the prior quarter.
Average earning assets grew to $19.4 billion, an increase of 11%
from the prior year period and an increase of 4% from the first
quarter of 2011. This increase in average earning assets was driven
by solid second quarter loan growth of $300.2 million or 2% to
$14.0 billion at June 30, 2011.”
“East West’s solid financial performance for the second quarter
resulted in improvement in almost every key financial ratio. In
comparison to the first quarter of 2011, earning assets expanded
4%, the adjusted net interest margin expanded to 4.03%, fee income
increased and credit quality improved. The nonperforming assets to
total assets ratio is down to 0.83% and net charge-offs decreased
8% from the first quarter.”
Ng concluded, “Although the operating environment for banks
remains challenging, East West continues to grow market share,
increase revenue, and improve profitability. Our second quarter
performance demonstrated that we are on track with all of our
strategic initiatives and are well positioned to grow our franchise
and provide superior and sustainable return to our
shareholders.”
2011 Quarterly Results Summary
For the three months ended, Dollars in
millions, except per share June 30, 2011 March 31,
2011 June 30, 2010 Net income $ 60.5 $ 56.1 $ 36.3
Net income available to common shareholders 58.8 54.4 30.2 Earnings
per share (diluted) 0.39 0.37 0.21 Return on average assets
1.12 % 1.07 % 0.73 % Return on average common equity 11.06 % 10.50
% 6.26 % Tier 1 risk-based capital ratio 15.2 % 15.9 % 18.9
% Total risk-based capital ratio 16.9 % 17.7 % 20.8 %
Second Quarter 2011 Highlights
- Strong Second Quarter Earnings
– For the second quarter 2011, net income was $60.5 million
or $0.39 per share. Earnings per share grew $0.02 or 5% from the
first quarter of 2011 and $0.18 or 86% from the second quarter of
2010.
- Strong C&I Loan Growth of 23%
Quarter to Date – Quarter to date, non-covered commercial and
trade finance loans grew $500.7 million or 23% to $2.7
billion.
- Record Deposit Growth – Total
deposits grew to a record $17.1 billion, a $699.2 million or 4%
increase from March 31, 2011. Core deposits grew to a record $9.4
billion as of June 30, 2011, an increase of $247.7 million or 3%
from March 31, 2011.
- Stable Net Interest Margin of
4.03% – The adjusted net interest margin for the second quarter
totaled 4.03%, an improvement of 9 basis points from the first
quarter of 2011, and an improvement of 8 basis points from the
second quarter of 2010. 1
- Net Charge-offs Down 8% from Q1
2011, Down 43% from Q2 2010 – Net charge-offs declined to $31.6
million, a decrease of $2.6 million or 8% from the prior quarter
and a decrease of $23.6 million or 43% from the second quarter of
2010.
- Nonperforming Assets Down 4% to
0.83% of Total Assets – Nonperforming assets decreased
$7.1 million or 4% during the second quarter of 2011 to $181.2
million, or 0.83% of total assets. This is the seventh consecutive
quarter East West reported a nonperforming assets to total assets
ratio under 1.00%.
Management Guidance
The Company is providing updated guidance for the full year of
2011. Management currently estimates that fully diluted earnings
per share for the full year of 2011 will range from $1.52 to $1.54
per dilutive share or an increase of approximately 83% to 86% from
2010. Also, this updated guidance for the full year 2011 is an
increase of approximately 3% from our previously released guidance.
This updated EPS guidance for the remainder of 2011 is based on the
following assumptions:
- Stable balance sheet
- A stable interest rate environment and
an adjusted net interest margin of approximately 4.00%
- Provision for loan losses of
approximately $45 million for the remainder of the year
- Total noninterest expense of
approximately $97 million to $100 million each quarter, net of
amounts to be reimbursed by the FDIC
- Effective tax rate of approximately
37%
Balance Sheet Summary
Total assets increased 3% to $21.9 billion at June 30, 2011
compared to $21.1 billion at March 31, 2011. Average earning assets
increased 4% to $19.4 billion for the quarter ended June 30, 2011,
compared to $18.7 billion for the quarter ended March 31, 2011. The
increase in total assets and average earning assets was primarily
due to strong total loan growth of $300.2 million or 2% from March
31, 2011 to $14.0 billion at June 30, 2011 and an increase in
investment securities of $275.1 million or 9% from March 31, 2011
to $3.2 billion at June 30, 2011.
Loans receivable totaled $14.0 billion at June 30, 2011 as
compared to $13.7 billion at March 31, 2011. During the second
quarter, non-covered loan balances increased 6% or $543.4 million,
to $9.7 billion at June 30, 2011. The increase in non-covered loans
was primarily driven by significant growth in commercial and trade
finance loans of $500.7 million or 23%. Approximately $243.4
million or 49% of this increase in commercial and trade finance
loans was a result of cross-border trade finance business in Hong
Kong and China. Over 80% of these cross-border trade finance loans
are fully secured by cash and/or standby letters of credit issued
by major financial institutions. The other approximately 51% of the
commercial and trade finance loan growth is attributed to our
expanded lending platform in the U.S. Additionally, during the
second quarter, non-covered single family loan balances grew $84.9
million or 7% and non-covered commercial real estate loan balances
grew $69.0 million or 2% from March 31, 2011.
The growth in non-covered commercial and trade finance,
commercial real estate and single-family loans was partially offset
by decreases in non-covered land, construction, and consumer loans
during the second quarter of 2011. Land and construction loans
declined by $54.7 million or 12% to $420.1 million at June 30,
2011, or only 3% of total loans receivable. The consumer portfolio
declined approximately $81.6 million or 12% during the quarter
primarily as a result of the transfer of certain government
guaranteed student loans to loans held for sale to reflect
management’s intent to sell these loans at a future date. As of
June 30, 2011, we classified $326.8 million of loans as held for
sale, primarily comprised of government guaranteed student loans.
Further, during the quarter, we sold $212.5 million of government
guaranteed student loans at a gain of approximately $5.9
million.
Covered Loans
Covered loans totaled $4.4 billion as of June 30, 2011, a
decrease of $243.2 million during the second quarter. The decrease
in the covered loan portfolio was mainly due to paydowns, payoffs
and charge-off activity.
The covered loan portfolio is comprised of loans acquired from
the FDIC-assisted acquisitions of United Commercial Bank (UCB) and
Washington First International Bank (WFIB) which are covered under
loss share agreements with the FDIC. During the fourth quarter of
2010 we concluded that the credit quality is better than originally
estimated and we lowered the credit discount on the UCB covered
loan portfolio resulting in an increase in interest income over the
life of the loans. Correspondingly, with the lowered credit
discount, the expected reimbursement from the FDIC under the loss
sharing agreement also decreased, resulting in amortization on the
FDIC indemnification asset over the life of the indemnification
asset, which is recorded as a charge to noninterest income. The net
decrease in the FDIC indemnification asset resulting from loan
disposition activity, recoveries and amortization of the
indemnification asset totaled $32.4 million in the second quarter
of 2011.
In total, the net decrease in the FDIC indemnification asset and
receivable recorded in noninterest income (loss) was $(18.8)
million for the second quarter of 2011. The net decrease of $32.4
million discussed above was partially offset by an increase in the
FDIC receivable of $13.6 million due to reimbursable expense
claims. During the second quarter we incurred $17.0 million in
expenses on covered loans and other real estate owned, 80% or $13.6
million of which is reimbursable from the FDIC.
Deposits and Borrowings
The increase in loans and investments was fueled by record
deposit growth. During the quarter, total deposits grew $699.2 or
4% from March 31, 2011 to a record $17.1 billion. Core deposits
increased to a record $9.4 billion at June 30, 2011, or an increase
of $247.7 million or 3% from the first quarter and time deposits
increased to $7.8 billion at June 30, 2011, or an increase of
$451.4 million or 6% from the first quarter. Noninterest-bearing
demand deposits increased by $199.9 million or 7% for the second
quarter of 2011.
As of June 30, 2011, FHLB advances totaled $533.0 million, a
decrease of 33% or $260.7 million from March 31, 2011 due to the
prepayment of FHLB advances during the second quarter. The FHLB
advances prepaid during the second quarter carried an average
effective cost of 1.6%. A prepayment penalty of $4.4 million was
incurred during the second quarter which is included in noninterest
expense. Additionally, during the second quarter, $10.3 million of
10.9% junior subordinated debt securities were called at par. These
actions were taken to better position the balance sheet, reducing
borrowing costs and improving the net interest margin in the coming
quarters.
Second Quarter 2011 Operating Results
Net Interest Income
The core net interest margin, excluding the net impact to
interest income of $32.4 million resulting from covered loan
activity and amortization of the indemnification asset, increased 9
basis points from the first quarter of 2011 to 4.03% for the second
quarter. 1 The improvement in the net interest margin from the
previous quarter is primarily related to an increase in yield on
both investment securities and covered loans, and a stable yield on
noncovered loans. Due to our strong deposit growth during the
quarter, excess liquidity was deployed into investment securities,
which contributed to the improvement of our net interest
margin.
Although our net interest margin remains strong, the extended
low interest rate environment continues to be a challenge for East
West and the rest of the banking industry. East West continues to
look for opportunities to minimize our cost of funds and maximize
our yield through redeployment of excess liquidity into higher
interest-earning assets, while also ensuring prudent interest rate
risk management. Further, in the second quarter of 2011, East West
prepaid $260.7 million of FHLB advances at an average effective
cost of 1.6%. As a result of these actions, we expect our adjusted
net interest margin to remain stable and be approximately 4.00% for
the remainder of 2011.
Noninterest Income
The Company reported total noninterest income for the second
quarter of 2011 of $12.5 million, compared to noninterest income of
$11.0 million in the first quarter of 2011 and noninterest income
of $35.7 million in the second quarter of 2010. Noninterest income
in the second quarter of 2010 included a $19.5 million gain on the
acquisition of WFIB.
Total fees and other operating income increased to $22.1 million
for the second quarter of 2011, an increase from both the first
quarter of 2011 and second quarter of 2010 as detailed below:
Quarter Ended Quarter
Ended Quarter Ended % Change
($ in thousands)
June 30, 2011 March 31,
2011 June 30, 2010 (Yr/Yr) Branch
fees $ 9,078 $ 7,754 $ 8,219 10 % Letters of credit fees and
commissions 3,390 3,044 2,865 18 % Ancillary loan fees 2,055 1,991
2,369
(13)
% Other operating income 7,597 6,197 2,875 164
% Total fees & other operating income $ 22,120 $ 18,986 $
16,328 35 %
In comparison to the first quarter, total fees and other
operating income increased 17% or $3.1 million during the second
quarter, primarily due to an increase in branch fees, letter of
credit fees and commissions, and foreign exchange income. Also
included in noninterest income for the second quarter of 2011 were
gains on sales of student loans of $5.9 million, a net gain on
sales of investment securities of $1.1 million, and gains on the
sales of two bank premises of $2.2 million.
Noninterest Expense
Noninterest expense totaled $117.6 million for the second
quarter of 2011, compared to $106.8 million for the first quarter
of 2011, and $125.3 million for the second quarter of 2010. The
increase in noninterest expense from the first quarter of 2011 was
primarily related to an increase in compensation expense, as well
as an increase in credit cycle costs including legal expenses, loan
related expenses and other real estate owned expenses. Compared to
the prior quarter, compensation expense increased $2.6 million,
other real estate owned expense increased $3.9 million, legal
expenses increased by $2.7 million, and loan related expenses
increased $1.2 million. In addition, included within noninterest
expense for the second quarter of 2011 are prepayment penalties on
FHLB advances of $4.4 million.
The increase in compensation expense for the second quarter of
2011 as compared to the first quarter of 2011 is primarily related
to our continued investments in our commercial lending platform.
The increase in the credit cycle costs as compared to the prior
quarter is primarily related to expenses incurred on covered
assets. In the second quarter, we incurred $17.0 million in
expenses on covered loans and other real estate owned for which we
expect that 80% or $13.6 million will be reimbursed by the FDIC. Of
the $13.6 million of expenses reimbursable by the FDIC, $11.6
million is related to net writedowns and expenses on other real
estate owned and $2.0 million is related to legal and other loan
related expenses. Noninterest expense excluding amounts to be
reimbursed by the FDIC and the prepayment penalty on FHLB advances
totaled $99.6 million for the second quarter of 2011. 1
A summary of the noninterest expenses for the second quarter
2011, compared to the first quarter 2011, is detailed below:
Quarter Ended
Quarter Ended ($ in thousands)
June 30, 2011
March 31, 2011 Total noninterest expense: $
117,597 $ 106,789 Amounts to be reimbursed on covered assets (80%
of actual expense amount) 13,574 9,483 Prepayment penalties for
FHLB Advances 4,433 4,022 Noninterest
expense excluding reimbursement amounts and prepayment penalty on
FHLB Advances $ 99,590 $ 93,284
Management anticipates that in the third quarter of 2011,
noninterest expense will be approximately $97 million to $100
million, net of amounts reimbursable from the FDIC.
The effective tax rate for the second quarter was 36.8% compared
to 35.2% in the prior quarter. 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 Quality
All asset quality metrics improved during the second quarter of
2011. Nonperforming assets, excluding covered assets, decreased by
$7.1 million or 4% from the prior quarter to $181.2 million or only
0.83% of total assets at June 30, 2011. The decrease in
nonperforming assets was due to an $8.0 million or 5% decrease in
nonaccrual loans during the second quarter of 2011. In addition,
for the seventh consecutive quarter, net charge-offs declined.
Total net charge-offs decreased to $31.6 million for the second
quarter of 2011, a decrease of 8% from the previous quarter and a
decrease of 43% compared to the prior year quarter.
East West continues to maintain a strong allowance for
non-covered loan losses at $213.8 million or 2.29% of non-covered
loans receivable at June 30, 2011. This compares to an allowance
for non-covered loan losses of $220.4 million or 2.50% of
non-covered loans at March 31, 2011 and $249.5 million or 3.0% of
outstanding loans at June 30, 2010. The provision for loan losses
was $26.5 million for the second quarter of 2011, unchanged from
the prior quarter, and a decrease of 52% as compared to the second
quarter of 2010. Our allowance for loan losses and provision for
loan losses has declined for several quarters as a result of credit
quality improvement, partially offset by increases in the allowance
for loan losses on commercial and trade finance loans, commensurate
with the increases in these portfolios.
Management expects that the provision for loan losses will
decrease in future quarters and total approximately $45 million for
the remainder of 2011.
Capital Strength
(Dollars in millions)
June 30, 2011
Well Capitalized
Regulatory
Requirement
Total Excess Above
Well Capitalized
Requirement
Tier 1 leverage capital ratio 9.3 % 5.00 % $ 902 Tier 1
risk-based capital ratio 15.2 % 6.00 % 1,188 Total risk-based
capital ratio 16.9 % 10.00 % 895
Tangible common equity to tangible assets
ratio
8.1 % N/A N/A Tangible common equity to risk weighted assets ratio
13.4 %
4.00
% *
1,212
_____________________________________________
*As there is no stated regulatory guideline for this ratio, the
SCAP (Supervisory Capital Assessment Program) guideline of 4.00%
tangible common equity has been used.
Our capital ratios remain very strong. As of the end of the
second quarter of 2011, our Tier 1 leverage capital ratio totaled
9.3%, our Tier 1 risk-based capital ratio totaled 15.2% and our
total risk-based capital ratio totaled 16.9%. East West exceeds
well capitalized requirements for all regulatory guidelines by over
$800 million. During the second quarter East West called $10.3
million of 10.9% junior subordinated debt securities at par. The
Company remains focused on active capital management and remains
committed to maintaining strong capital levels that exceed
regulatory requirements, while also supporting balance sheet
growth, and providing a strong return to our shareholders.
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 $0.05 is payable on or about August
24, 2011 to shareholders of record on August 10, 2011. The dividend
on the Series A Preferred Stock of $20.00 per share is payable on
August 1, 2011 to shareholders of record on July 15, 2011.
Conference Call
East West will host a conference call to discuss second quarter
2011 earnings with the public on Thursday, July 21, 2011 at 8:30
a.m. PDT/ 11:30 a.m. EDT. The public and investment community are
invited to listen as management discusses second quarter results
and operating developments. The following dial-in information is
provided for participation in the conference call: Local call
within the US – (877) 317-6789; Call within Canada – (866)
605-3852; International call – (412) 317-6789. A listen-only live
broadcast of the call also will be available on the investor
relations page of the Company's website at
www.eastwestbank.com.
About East West
East West Bancorp is a publicly owned company with $21.9 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, 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 a
representative office in 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, 2010 (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.
1 See reconciliation of the GAAP financial measure to the
non-GAAP financial measure in the tables attached.
EAST WEST BANCORP,
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands, except per share amounts) (unaudited)
June 30, 2011 March 31, 2011 June 30, 2010
Assets Cash and cash equivalents $ 1,598,498 $ 1,492,922 $
1,394,851 Short-term investments 85,479 140,585 238,261 Securities
purchased under resale agreements 812,281 768,369 230,000
Investment securities 3,206,108 2,930,976 2,077,011 Loans
receivable, excluding covered loans (net of allowance for loan
losses of $213,825, $220,402 and $249,462) 9,428,015 8,870,177
8,177,966 Covered loans, net 4,356,595
4,599,757 5,275,492 Total loans receivable,
net 13,784,610 13,469,934 13,453,458 Federal Home Loan Bank and
Federal Reserve stock 197,187 203,760 223,395 FDIC indemnification
asset 637,535 717,260 947,011 Other real estate owned, net 16,464
15,580 16,562 Other real estate owned covered, net 123,050 142,416
113,999 Premiums on deposits acquired, net 73,182 76,332 86,106
Goodwill 337,438 337,438 337,438 Other assets 1,000,876
851,454 849,229 Total assets $
21,872,708 $ 21,147,026 $ 19,967,321
Liabilities and Stockholders' Equity Deposits 17,135,753 $
16,436,598 $ 14,918,694 Federal Home Loan Bank advances 532,951
793,643 1,022,011 Securities sold under repurchase agreements
1,052,615 1,081,019 1,051,192 Long-term debt 225,261 235,570
235,570 Other borrowings 29,924 11,090 35,504 Accrued expenses and
other liabilities 666,872 431,189
365,386 Total liabilities 19,643,376 18,989,109
17,628,357 Stockholders' equity 2,229,332
2,157,917 2,338,964 Total liabilities and
stockholders' equity $ 21,872,708 $ 21,147,026 $
19,967,321 Book value per common share $ 14.43 $ 13.96 $
13.31 Number of common shares at period end 148,751 148,638 147,939
Ending Balances June 30, 2011 March 31,
2011 June 30, 2010 Loans receivable Real estate - single
family $ 1,286,235 $ 1,201,311 $ 1,032,915 Real estate -
multifamily 950,981 949,034 985,194 Real estate - commercial
3,408,560 3,339,592 3,499,721 Real estate - land 203,380 220,135
285,864 Real estate - construction 216,689 254,614 351,169
Commercial 2,684,472 2,183,819 1,528,863 Consumer 588,940
670,529 631,258 Total loans
receivable held for investment, excluding covered loans 9,339,257
8,819,034 8,314,984 Loans held for sale 326,841 303,673 159,158
Covered loans, net 4,356,595 4,599,757
5,275,492 Total loans receivable 14,022,693
13,722,464 13,749,634 Unearned fees, premiums and discounts (24,258
) (32,128 ) (46,714 ) Allowance for loan losses on non-covered
loans (213,825 ) (220,402 ) (249,462 ) Net
loans receivable $ 13,784,610 $ 13,469,934 $ 13,453,458
Deposits Noninterest-bearing demand $ 3,151,660 $ 2,951,793 $
2,396,087 Interest-bearing checking 792,330 808,070 685,572 Money
market 4,311,583 4,362,484 4,162,129 Savings 1,099,065
984,552 946,043 Total core
deposits 9,354,638 9,106,899 8,189,831 Time deposits
7,781,115 7,329,699 6,728,863
Total deposits $ 17,135,753 $ 16,436,598 $ 14,918,694
EAST WEST BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In
thousands, except per share amounts) (unaudited)
Quarter Ended June 30, 2011 March 31,
2011 June 30, 2010 Interest and dividend income $
274,468 $ 254,335 $ 253,533 Interest expense (47,132 )
(45,501 ) (49,910 ) Net interest income before
provision for loan losses 227,336 208,834 203,623 Provision for
loan losses (26,500 ) (26,506 ) (55,256 ) Net
interest income after provision for loan losses 200,836 182,328
148,367 Noninterest income 12,491 11,041 35,685 Noninterest expense
(117,597 ) (106,789 ) (125,318 ) Income before
provision for income taxes 95,730 86,580 58,734 Provision for
income taxes 35,205 30,509
22,386 Net income 60,525 56,071 36,348 Preferred stock
dividend and amortization of preferred stock discount (1,714
) (1,715 ) (6,147 ) Net income available to common
stockholders $ 58,811 $ 54,356 $ 30,201 Net income per share, basic
$ 0.40 $ 0.37 $ 0.21 Net income per share, diluted $ 0.39 $ 0.37 $
0.21 Shares used to compute per share net income: - Basic 147,011
146,837 146,372 - Diluted 153,347 153,334 147,131
Quarter Ended June 30, 2011 March 31,
2011 June 30, 2010 Noninterest income: Branch fees $
9,078 $ 7,754 $ 8,219 Decrease in FDIC indemnification asset and
FDIC receivable (18,806 ) (17,443 ) (9,424 ) Net gain on sales of
loans 5,891 7,410 8,073 Letters of credit fees and commissions
3,390 3,044 2,865 Net gain on sales of investments 1,117 2,515
5,847 Net gain on sale of fixed assets 2,169 37 27 Impairment loss
on investment securities - (464 ) (4,642 ) Ancillary loan fees
2,055 1,991 2,369 Gain on acquisition - - 19,476 Other operating
income 7,597 6,197 2,875
Total noninterest income $ 12,491 $ 11,041 $ 35,685
Noninterest expense: Compensation and employee benefits $ 40,870 $
38,270 $ 41,579 Occupancy and equipment expense 12,175 12,598
13,115 Loan related expenses 4,284 3,099 5,254 Other real estate
owned expense 14,585 10,664 20,983 Deposit insurance premiums and
regulatory assessments 6,833 7,191 4,528 Prepayment penalties for
FHLB advances 4,433 4,022 3,900 Legal expense 6,791 4,101 6,183
Amortization of premiums on deposits acquired 3,151 3,185 3,310
Data processing 2,100 2,603 3,046 Consulting expense 2,378 1,626
1,919 Amortization of investments in affordable housing
partnerships 4,598 4,525 2,638 Other operating expense
15,399 14,905 18,863 Total
noninterest expense $ 117,597 $ 106,789 $ 125,318
EAST WEST BANCORP, INC. CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per
share amounts) (unaudited) Year To Date
June 30, 2011 June 30, 2010 Interest
and dividend income $ 528,803 $ 572,236 Interest expense
(92,633 ) (106,889 ) Net interest income before provision
for loan losses 436,170 465,347 Provision for loan losses
(53,006 ) (131,677 ) Net interest income after provision for
loan losses 383,164 333,670 Noninterest income 23,532 27,234
Noninterest expense (224,386 ) (264,228 ) Income
before provision for income taxes 182,310 96,676 Provision for
income taxes 65,714 35,412 Net income
116,596 61,264 Preferred stock dividend and amortization of
preferred stock discount (3,429 ) (12,285 ) Net
income available to common stockholders $ 113,167 $ 48,979 Net
income per share, basic $ 0.77 $ 0.40 Net income per share, diluted
$ 0.76 $ 0.34 Shares used to compute per share net income: - Basic
146,937 123,445 - Diluted 153,349 142,143
Year To
Date June 30, 2011 June 30, 2010
Noninterest income: Branch fees $ 16,832 $ 16,977 Decrease in FDIC
indemnification asset and FDIC receivable (36,249 ) (52,996 ) Net
gain on sales of loans 13,301 8,073 Letters of credit fees and
commissions 6,434 5,605 Net gain on sales of investments 3,632
21,958 Net gain on sale of fixed assets 2,206 52 Impairment loss on
investment securities (464 ) (9,441 ) Ancillary loan fees 4,046
4,058 Gain on acquisition - 27,571 Other operating income
13,794 5,377 Total noninterest income $ 23,532
$ 27,234 Noninterest expense: Compensation and employee
benefits $ 79,140 $ 92,358 Occupancy and equipment expense 24,773
25,059 Loan related expenses 7,383 8,251 Other real estate owned
expense 25,249 38,995 Deposit insurance premiums and regulatory
assessments 14,024 16,109 Prepayment penalties for FHLB advances
8,455 13,832 Legal expense 10,892 9,090 Amortization of premiums on
deposits acquired 6,336 6,694 Data processing 4,703 5,528
Consulting expense 4,004 4,060 Amortization of investments in
affordable housing partnerships 9,123 5,675 Other operating expense
30,304 38,577 Total noninterest expense
$ 224,386 $ 264,228
EAST WEST BANCORP, INC. SELECTED FINANCIAL
INFORMATION (In thousands) (unaudited)
Average Balances Quarter Ended June 30,
2011 March 31, 2011 June 30, 2010 Loans
receivable Real estate - single family $ 1,231,774 $ 1,161,336 $
989,744 Real estate - multifamily 950,687 961,770 998,090 Real
estate - commercial 3,393,361 3,379,191 3,530,045 Real estate -
land 217,819 229,901 317,291 Real estate - construction 239,518
278,668 383,846 Commercial 2,450,510 2,056,781 1,492,560 Consumer
935,081 1,055,534 845,104
Total loans receivable, excluding covered loans 9,418,750 9,123,181
8,556,680 Covered loans 4,487,610 4,695,964
5,137,863 Total loans receivable 13,906,360
13,819,145 13,694,543 Investment securities 3,220,795 2,818,703
2,202,676 Earning assets 19,402,968 18,741,052 17,525,796 Total
assets 21,574,103 20,894,782 19,886,269 Deposits
Noninterest-bearing demand $ 2,935,704 $ 2,708,842 $ 2,300,228
Interest-bearing checking 793,349 771,626 663,936 Money market
4,374,404 4,386,100 3,968,293 Savings 1,034,486
971,313 961,374 Total core deposits
9,137,943 8,837,881 7,893,831 Time deposits 7,653,112
7,139,530 6,714,972 Total deposits
16,791,055 15,977,411 14,608,803 Interest-bearing liabilities
15,913,856 15,609,601 14,874,635 Stockholders' equity 2,210,603
2,153,460 2,310,623
Selected Ratios Quarter
Ended June 30, 2011 March 31, 2011 June
30, 2010 For The Period Return on average assets 1.12 % 1.07 %
0.73 % Return on average common equity 11.06 % 10.50 % 6.26 %
Interest rate spread 4.48 % 4.32 % 4.45 % Net interest margin 4.70
% 4.52 % 4.66 % Yield on earning assets 5.67 % 5.50 % 5.80 % Cost
of deposits 0.70 % 0.66 % 0.80 % Cost of funds 1.00 % 1.01 % 1.17 %
Noninterest expense/average assets (1) 1.95 % 1.82 % 2.32 %
Efficiency ratio (2) 43.95 % 43.14 % 51.44 % (1)
Excludes the amortization of intangibles, amortization and
impairment loss of premiums on deposits acquired, amortization of
investments in affordable housing partnerships and prepayment
penalties for FHLB advances. (2) Represents noninterest expense,
excluding the amortization of intangibles, amortization and
impairment loss of premiums on deposits acquired, amortization of
investments in affordable housing partnerships and prepayment
penalties for FHLB advances, divided by the aggregate of net
interest income before provision for loan losses and noninterest
income, excluding items that are non-recurring in nature.
EAST WEST BANCORP, INC. QUARTER TO
DATE AVERAGE BALANCES, YIELDS AND RATES PAID (In thousands)
(unaudited)
Quarter Ended June 30, 2011
June 30, 2010 Average Average
Volume Interest Yield
(1) Volume Interest
Yield (1)
ASSETS
Interest-earning assets: Short-term investments $ 1,006,402
$ 4,500 1.79 % $ 948,361 1,502 0.64 % Securities purchased under
resale agreements 1,068,975 5,109 1.92 % 455,743 2,630 2.31 %
Investment securities available-for-sale 3,220,795 23,253 2.90 %
2,202,676 14,741 2.68 % Loans receivable 9,418,750 119,739 5.10 %
8,556,680 116,916 5.48 % Loans receivable - covered 4,487,610
121,034 10.82 % 5,137,863 116,867 9.12 % Federal Home Loan Bank and
Federal Reserve Bank stock 200,437
833 1.67 % 224,473
877 1.57 % Total
interest-earning assets 19,402,969
274,468 5.67 % 17,525,796
253,533 5.80 %
Noninterest-earning assets: Cash and cash equivalents
270,259 603,907 Allowance for loan losses (228,587 ) (255,904 )
Other assets 2,129,462 2,012,470 Total
assets $ 21,574,103 $ 19,886,269
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing liabilities: Checking accounts 793,349 699
0.35 % 663,936 527 0.32 % Money market accounts 4,374,404 5,848
0.54 % 3,968,293 8,336 0.84 % Savings deposits 1,034,486 933 0.36 %
961,374 1,274 0.53 % Time deposits 7,653,112 21,650 1.13 %
6,714,972 18,995 1.13 % Federal Home Loan Bank advances 738,094
3,955 2.15 % 1,238,400 6,175 2.00 % Securities sold under
repurchase agreements 1,064,096 12,116 4.57 % 1,042,305 12,045 4.64
% Long-term debt 235,343 1,788 3.05 % 235,570 1,591 2.71 % Other
borrowings 20,972 143
2.73 % 49,785
967 7.79 % Total interest-bearing liabilities
15,913,856 47,132
1.19 % 14,874,635
49,910 1.35 %
Noninterest-bearing
liabilities: Demand deposits 2,935,704 2,300,228 Other
liabilities 513,940 400,783 Stockholders' equity 2,210,603
2,310,623 Total liabilities and stockholders'
equity $ 21,574,103 $ 19,886,269 Interest rate
spread 4.48 % 4.45 % Net interest income and net interest
margin $ 227,336 4.70 % $ 203,623 4.66 % Net interest income
and net interest margin, adjusted (2) $ 194,955 4.03 % $ 172,460
3.95 % (1) Annualized. (2) Amounts exclude the net impact of
covered loan dispositions of $32.4 million and $31.2 million for
the three months ended June 30, 2011 and 2010, respectively.
EAST WEST BANCORP, INC.
SELECTED FINANCIAL INFORMATION (In thousands)
(unaudited) Average Balances Year To
Date June 30, 2011 June 30, 2010 Loans
receivable Real estate - single family $ 1,196,749 $ 961,800 Real
estate - multifamily 956,198 1,034,830 Real estate - commercial
3,386,315 3,563,975 Real estate - land 223,827 336,990 Real estate
- construction 258,985 416,378 Commercial 2,254,733 1,479,533
Consumer 994,975 788,708 Total loans
receivable, excluding covered loans 9,271,782 8,582,214 Covered
loans 4,591,211 5,256,293 Total loans
receivable 13,862,993 13,838,507 Investment securities 3,020,860
2,194,322 Earning assets 19,067,921 17,733,912 Total assets
21,232,913 20,161,042 Deposits Noninterest-bearing demand $
2,828,933 $ 2,260,847 Interest-bearing checking 782,547 651,655
Money market 4,374,322 3,716,606 Savings 1,003,074
976,695 Total core deposits 8,988,876 7,605,803 Time
deposits 7,397,717 7,013,720 Total
deposits 16,386,593 14,619,523 Interest-bearing liabilities
15,756,651 15,339,588 Stockholders' equity 2,178,624 2,302,208
Selected Ratios Year To Date
June 30, 2011 June 30, 2010 For The Period Return on
average assets 1.10 % 0.61 % Return on average common equity 10.80
% 5.55 % Interest rate spread 4.40 % 5.10 % Net interest margin
4.61 % 5.29 % Yield on earning assets 5.59 % 6.51 % Cost of
deposits 0.68 % 0.86 % Cost of funds 1.01 % 1.22 % Noninterest
expense/average assets (1) 1.89 % 2.36 % Efficiency ratio (2) 43.57
% 50.17 % (1) Excludes the amortization of
intangibles, amortization and impairment loss of premiums on
deposits acquired, amortization of investments in affordable
housing partnerships and prepayment penalties for FHLB advances.
(2) Represents noninterest expense, excluding the amortization of
intangibles, amortization and impairment loss of premiums on
deposits acquired, amortization of investments in affordable
housing partnerships and prepayment penalties for FHLB advances,
divided by the aggregate of net interest income before provision
for loan losses and noninterest income, excluding items that are
non-recurring in nature.
EAST WEST BANCORP,
INC. YEAR TO DATE AVERAGE BALANCES, YIELDS AND RATES
PAID (In thousands) (unaudited)
Year To Date
June 30, 2011 June 30, 2010
Average Average Volume
Interest Yield (1)
Volume Interest Yield
(1)
ASSETS
Interest-earning assets: Short-term investments $ 995,055 $
7,240 1.47 % $ 1,119,912 $ 5,043 0.91 % Securities purchased under
resale agreements 984,020 9,379 1.92 % 358,074 8,893 5.01 %
Investment securities available-for-sale 3,020,860 42,110 2.81 %
2,194,322 34,931 3.21 % Loans receivable 9,271,782 234,650 5.10 %
8,582,214 238,944 5.61 % Loans receivable - covered 4,591,211
233,649 10.26 % 5,256,293 282,783 10.85 % Federal Home Loan Bank
and Federal Reserve Bank stock 204,992
1,775 1.75 % 223,097
1,656 1.50 % Total
interest-earning assets 19,067,920
528,803 5.59 % 17,733,912
572,250 6.51 %
Noninterest-earning assets: Cash and cash equivalents
277,214 485,965 Allowance for loan losses (232,371 ) (254,700 )
Other assets 2,120,150 2,195,865 Total
assets $ 21,232,913 $ 20,161,042
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing liabilities: Checking accounts 782,547
1,347 0.35 % 651,655 1,141 0.35 % Money market accounts 4,374,322
11,823 0.55 % 3,716,606 16,302 0.88 % Savings deposits 1,003,074
1,665 0.33 % 976,695 2,416 0.50 % Time deposits 7,397,717 40,277
1.10 % 7,013,720 42,721 1.23 % Federal Home Loan Bank advances
875,290 9,733 2.24 % 1,634,910 15,180 1.87 % Securities sold under
repurchase agreements 1,072,124 24,133 4.54 % 1,035,539 24,586 4.79
% Long-term debt 235,456 3,359 2.88 % 235,570 3,138 2.69 % Other
borrowings 16,122 296
3.70 % 74,893
1,405 3.78 %
Total interest-bearing liabilities
15,756,652 92,633
1.19 % 15,339,588
106,889 1.41 %
Noninterest-bearing
liabilities: Demand deposits 2,828,933 2,260,847 Other
liabilities 468,704 258,399 Stockholders' equity 2,178,624
2,302,208 Total liabilities and stockholders'
equity $ 21,232,913 $ 20,161,042 Interest rate
spread 4.40 % 5.10 % Net interest income and net interest
margin $ 436,170 4.61 % $ 465,361 5.29 % Net interest income
and net interest margin, adjusted (2) $ 376,864 3.99 % $ 371,250
4.22 % (1) Annualized. (2) Amounts exclude the net impact of
covered loan dispositions of $59.3 million and $91.6 million for
the six months ended June 30, 2011 and 2010, respectively, and
repurchase agreement termination gain of $2.5 million for the six
months ended June 30, 2010.
EAST WEST BANCORP, INC. QUARTERLY ALLOWANCE
FOR LOAN LOSSES RECAP (In thousands) (unaudited)
Quarter Ended 6/30/2011
3/31/2011 6/30/2010 LOANS
Allowance balance, beginning of period $ 226,161 $ 234,633 $
250,517 Allowance for unfunded loan commitments and letters of
credit (487 ) (758 ) (1,115 ) Provision for loan losses 26,500
26,506 55,256 Net Charge-offs: Real estate - single family
1,120 928 3,257 Real estate - multifamily 1,081 2,178 7,552 Real
estate - commercial 2,164 4,603 11,836 Real estate - land 1,941
8,931 9,765 Real estate - construction 16,202 7,893 11,634
Commercial 8,844 8,660 10,475 Consumer 266
1,027 677 Total
net charge-offs 31,618 34,220
55,196 Allowance balance, end of
period (3) $ 220,556 $ 226,161
$ 249,462
UNFUNDED LOAN COMMITMENTS AND
LETTERS OF CREDIT: Allowance balance, beginning of period $
10,710 $ 9,952 $ 8,927 Provision for unfunded loan commitments and
letters of credit 487 758
1,115 Allowance balance, end of period
$ 11,197 $ 10,710 $
10,042 GRAND TOTAL, END OF PERIOD $ 231,753
$ 236,871 $ 259,504
Nonperforming assets to total assets (1)
0.83
%
0.89 % 0.98 % Allowance for loan losses on non-covered loans to
total gross non-covered loans held for investment at end of period
2.29
%
2.50 %
3.00
%
Allowance for loan losses on non-covered loans and unfunded loan
commitments to total gross non-covered loans held for investment at
end of period
2.41
%
2.62 %
3.12
%
Allowance on non-covered loans to non-covered nonaccrual
loans at end of period
129.80
%
127.59 % 139.31 % Nonaccrual loans to total loans (2) 1.17 % 1.26 %
1.30 % (1) Nonperforming assets excludes covered loans and covered
REOs. Total assets includes covered assets. (2) Nonaccrual loans
excludes covered loans. Total loans includes covered loans. (3)
Included in the allowance is $6.7 million and $5.8 million related
to covered loans as of June 30, 2011 and March 31, 2011,
respectively.
This allowance is related to drawdowns on
commitments that were in existence as of the acquisition dates and
therefore, are covered under the loss share agreements with the
FDIC. Allowance on these subsequent drawdowns is accounted for as
part of our general allowance.
EAST WEST BANCORP, INC. TOTAL
NON-PERFORMING ASSETS, EXCLUDING COVERED ASSETS (In
thousands) (unaudited) AS OF JUNE 30, 2011
Total Nonaccrual Loans
90+ Days
Delinquent
Under 90+
Days
Delinquent
Total
Nonaccrual
Loans
REO Assets
Total
Non-Performing
Assets
Loan Type Real estate - single family $ 13,326 $ - $ 13,326
$ 1,384 $ 14,710 Real estate - multifamily 11,174 3,708 14,882 833
15,715 Real estate - commercial 38,677 3,432 42,109 4,789 46,898
Real estate - land 19,368 4,782 24,150 8,160 32,310 Real estate -
construction 28,789 16,231 45,020 847 45,867 Commercial 19,078
5,091 24,169 358 24,527 Consumer 1,077 - 1,077
93 1,170
Total $ 131,489
$ 33,244 $ 164,733 $
16,464 $ 181,197 AS OF MARCH 31,
2011 Total Nonaccrual Loans
90+ Days
Delinquent
Under 90+
Days
Delinquent
Total
Nonaccrual
Loans
REO Assets
Total
Non-Performing
Assets
Loan Type Real estate - single family $ 10,585 $ - $ 10,585
$ 441 $ 11,026 Real estate - multifamily 9,101 4,320 13,421 184
13,605 Real estate - commercial 41,494 5,027 46,521 3,966 50,487
Real estate - land 11,053 10,064 21,117 9,856 30,973 Real estate -
construction 24,993 21,390 46,383 867 47,250 Commercial 18,003
14,954 32,957 180 33,137 Consumer 1,755 -
1,755 86 1,841
Total $ 116,984
$ 55,755 $ 172,739 $
15,580 $ 188,319 AS OF JUNE 30,
2010 Total Nonaccrual Loans
90+ Days
Delinquent
Under 90+
Days
Delinquent
Total
Nonaccrual
Loans
REO Assets
Total
Non-Performing
Assets
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 -
construction 24,451 23,819 48,270 3,102 51,372 Commercial 19,310
8,994 28,304 - 28,304 Consumer 1,436 104 1,540
346 1,886
Total $ 132,765
$ 46,299 $ 179,064 $
16,562 $ 195,626 EAST WEST
BANCORP, INC. GAAP TO NON-GAAP RECONCILIATION (In
thousands) (unaudited) The tangible common equity
to risk weighted assets and tangible common equity to tangible
assets 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 assets
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 assets ratios.
As of June 30, 2011
Stockholders' Equity $ 2,229,332 Less: Preferred Equity (83,027 )
Goodwill and other intangible assets (419,133 ) Tangible
common equity $ 1,727,172 Risk-weighted assets
12,880,756 Tangible Common Equity to risk-weighted
assets 13.4 %
As of June 30, 2011 Total
assets $ 21,872,708 Less: Goodwill and other intangible assets
(419,133 ) Tangible assets $ 21,453,575
Tangible common equity to tangible asset ratio 8.1 %
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, 2011
Noninterest income $ 12,491 Less: Net gain on sales of investments
(1,117 ) Net gain on sales of loans (5,891 ) Net gain on sale of
fixed assets (2,169 ) Decrease in FDIC indemnification asset and
FDIC receivable 18,806 Operating noninterest income
(non-GAAP) $ 22,120
Quarter Ended
June 30, 2010 Noninterest income $ 35,685 Add: Impairment
loss on investment securities 4,642 Less: Net gain on sales of
investments (5,847 ) Net gain on sales of loans (8,073 ) Gain on
acquisition (19,476 ) Net gain on sale of fixed assets (27 )
Decrease in FDIC indemnification asset and FDIC receivable
9,424 Operating noninterest income (non-GAAP) $ 16,328
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. These 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, 2011 Total
noninterest expense: $ 117,597 Amounts to be reimbursed on covered
assets (80% of actual expense amount) 13,574 Prepayment penalties
for FHLB advances 4,433 Noninterest expense excluding
reimbursement amounts and prepayment penalties for FHLB advances $
99,590
Quarter Ended March 31, 2011 Total
noninterest expense: $ 106,789 Amounts to be reimbursed on covered
assets (80% of actual expense amount) 9,483 Prepayment penalties
for FHLB advances 4,022 Noninterest expense excluding
reimbursement amounts and prepayment penalties for FHLB advances $
93,284
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 net interest margin includes amounts that are
non-core in nature. As such, the Company believes that presenting
the net interest income and net interest margin excluding such
non-core items provides additional clarity to the users of
financial statements regarding the core net interest income and net
interest margin, comparability to prior periods and the ongoing
performance of the Company.
Quarter Ended June 30,
2011 Average Volume Interest Yield
(1) Total interest-earning assets $ 19,402,969 $ 274,468 5.67 % Net
interest income and net interest margin $ 227,336 4.70 % Less net
impact of covered loan dispositions and amortization of the FDIC
indemnification asset (32,381 )
Net interest income and net interest
margin, excluding
net impact of covered loan dispositions
and amortization of the FDIC indemnification asset
$ 194,955 4.03 %
Quarter Ended March 31,
2011 Average Volume Interest Yield
(1) Total interest-earning assets $ 18,741,052 $ 254,335 5.50 % Net
interest income and net interest margin $ 208,834 4.52 % Less net
impact of covered loan dispositions and amortization of the FDIC
indemnification asset (26,926 ) Net interest income and net
interest margin, excluding net impact of covered loan
dispositions and amortization of the FDIC indemnification asset $
181,908 3.94 %
Quarter Ended June 30,
2010 Average Volume Interest Yield
(1) Total interest-earning assets $ 17,525,796 $ 253,533 5.80 % Net
interest income and net interest margin $ 203,623 4.66 % Less net
impact of covered loan dispositions (31,163 ) Net interest income
and net interest margin, excluding net impact of covered
loan dispositions $ 172,460 3.95 % (1) Annualized.
East West Bancorp (NASDAQ:EWBC)
Historical Stock Chart
From May 2024 to Jun 2024
East West Bancorp (NASDAQ:EWBC)
Historical Stock Chart
From Jun 2023 to Jun 2024
