East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq:
EWBC), parent company of East West Bank, reported its financial
results for the full year and fourth quarter of 2023. Full year
2023 net income was $1.2 billion, or $8.18 per diluted share.
Excluding $70 million pre-tax of FDIC Special Assessment-related
expense (the “FDIC charge”) and $7 million of net losses on an AFS
debt security, adjusted diluted earnings per share1 for the year
were $8.56.
Fourth quarter 2023 net income was $239 million, or $1.69 per
diluted share. Excluding the FDIC charge and a $3 million gain on
the sale of an AFS debt security, adjusted earnings per diluted
share were $2.02 for the fourth quarter. Return on average common
equity was 18% in 2023, and book value per share grew 17%
year-over-year.
“I am pleased to report that 2023 was another year of record
revenue and earnings for East West,” stated Dominic Ng, Chairman
and Chief Executive Officer of East West. “As I look back I am very
proud of our strong performance, marked by an over 20% adjusted
return on average tangible common equity and 18% growth in tangible
book value per share. East West demonstrated the resilience of our
business model and the loyalty of our customers through a
tumultuous year.”2
“Thanks to the unwavering dedication of our colleagues to
clients and the strength and diversification of our balance sheet,
East West has emerged even stronger from the market disruption that
characterized 2023. As we start a new year, we are pleased to
announce a 15% increase in our common stock dividend. We remain
committed to delivering top-tier shareholder returns, supported by
prudent balance sheet growth, industry-leading efficiency, and
sound risk management.”
FINANCIAL HIGHLIGHTS
Twelve Months Ended December
31,
Year-over-Year Change
($ in millions, except per share data)
2023
2022
$
%
Revenue
$2,608
$2,345
$263
11%
Adjusted Pre-tax, Pre-provision
Income3
1,788
1,600
187
12
Net Income
1,161
1,128
33
3
Diluted Earnings per Share
$8.18
$7.92
$0.26
3%
Adjusted Diluted Earnings per Share1
$8.56
$7.92
$0.64
8%
Book Value per Share
$49.64
$42.46
$7.18
17%
Tangible Book Value2 per Share
$46.27
$39.10
$7.17
18%
Return on Average Common Equity
17.91%
19.51%
-160 bps
—
Adjusted Return on Average Tangible Common
Equity2
20.25%
21.29%
-104 bps
—
Total Assets
$69,613
$64,112
$5,501
9%
1
Adjusted diluted earnings per share is a
non-GAAP financial measure. See reconciliation of GAAP to non-GAAP
measures in Table 15.
2
Adjusted return on average tangible common
equity and tangible book value are non-GAAP financial measures. See
reconciliation of GAAP to non-GAAP measures in Table 14.
3
Adjusted pre-tax, pre-provision income is
a non-GAAP financial measure. See reconciliation of GAAP to
non-GAAP financial measures in Table 13.
BALANCE SHEET
- Total Assets – Total assets were $69.6 billion as of
December 31, 2023, an increase of $1.3 billion from $68.3 billion
as of September 30, 2023, primarily reflecting loan growth.
Year-over-year, total assets grew $5.5 billion or 9% from $64.1
billion as of December 31, 2022. Fourth quarter 2023 average
interest-earning assets of $65.5 billion were up nearly $0.5
billion, or 1%, from $65.1 billion in the third quarter of 2023,
primarily due to an increase of $1.4 billion in average loans
outstanding, partly offset by a $0.9 billion decrease in
interest-bearing cash and deposits with banks.
- Total Loans – Total loans reached a record $52.2 billion
as of December 31, 2023, an increase of $1.3 billion, or 3%, from
$50.9 billion as of September 30, 2023. Year-over-year, total loans
were up $4.0 billion, or 8%, from $48.2 billion as of December 31,
2022. Fourth quarter 2023 average loans of $51.3 billion grew $1.4
billion, or 3%, from the third quarter of 2023. The increase was
driven by growth across all our major loan portfolios.
- Total Deposits – Total deposits were $56.1 billion as of
December 31, 2023, an increase of $1.0 billion, or 2%, from $55.1
billion as of September 30, 2023, primarily reflecting an increase
in customer deposits. Noninterest-bearing deposits made up 28% of
our total deposits as of December 31, 2023, down from 29% as of
September 30, 2023. Year-over-year, total deposits increased $125
million from $56.0 billion as of December 31, 2022. Fourth quarter
2023 average deposits of $55.4 billion increased $208 million from
the third quarter of 2023, with growth in average money market and
time deposits offset by declines in other deposit categories.
- Strong Capital Levels – As of December 31, 2023,
stockholders’ equity was $7.0 billion, up 5% quarter-over-quarter.
The stockholders’ equity to asset ratio was 9.98% as of December
31, 2023, an increase of 32 basis points quarter-over-quarter. As
of December 31, 2023, tangible book value2 per share was $46.27, up
7% quarter-over-quarter and 18% year-over-year. The tangible common
equity ratio2 was 9.37%, an increase of 34 basis points
quarter-over-quarter. All of East West’s regulatory capital ratios
are well in excess of regulatory requirements for well-capitalized
institutions, as well as above regional and national bank averages.
The common equity tier 1 (“CET1”) capital ratio increased to
13.31%, and the total risk-based capital ratio increased slightly
by 3 basis points to 14.76%, as of December 31, 2023.
OPERATING RESULTS
Full Year Earnings - Full year 2023 net income was a
record $1.2 billion or $8.18 per diluted share, both up 3%
year-over-year. Full year revenue was a record $2.6 billion, an
increase of $263 million, or 11% year-over-year, and full year
adjusted pre-tax, pre-provision income was a record $1.8 billion,
an increase of $187 million, or 12% year-over-year.
Fourth Quarter Earnings – Fourth quarter 2023 net income
was $239 million, and diluted earnings per share (“EPS”) were
$1.69.
2
Tangible book value and the
tangible common equity ratio are non-GAAP financial measures. See
reconciliation of GAAP to non-GAAP measures in Table 14.
Fourth Quarter 2023 Compared to Third
Quarter 2023
Net Interest Income and Net Interest Margin
Net interest income totaled $575 million in the fourth quarter,
an increase of 1% from $571 million in the third quarter. Net
interest margin (“NIM”) was 3.48%, unchanged from the third
quarter.
- NIM benefited from higher loan balances and a more favorable
asset mix, offset by the higher cost of interest-bearing deposits
and changes in the deposit mix in favor of higher-cost customer
deposits.
- The average loan yield was 6.61%, up 10 basis points from the
third quarter. The average interest-earning asset yield was 6.00%,
up 13 basis points from the third quarter.
- The average cost of funds was 2.74%, up 15 basis points from
the third quarter. The average cost of deposits was 2.60%, up 17
basis points from the third quarter.
Noninterest Income
Noninterest income totaled $80 million in the fourth quarter, an
increase of $3 million, or 4%, from $77 million in the third
quarter. Net gains on sales of loans were $4 million in the fourth
quarter, primarily reflecting the sale of Small Business
Administration loans within the quarter. Net gains on AFS debt
securities were $3 million, representing a partial recovery against
the $10 million pre-tax impairment loss taken in the first quarter
of 2023 on a subordinated AFS debt security of a failed bank.
- Fee income4 of $73 million was up $6 million, or 9%, from $67
million in the third quarter.
- Customer derivative income (loss) was a loss of $1 million in
the fourth quarter, compared with income of $11 million in the
third quarter. The quarter-over-quarter decrease of close to $12
million was due to an unfavorable change in mark-to-market
adjustments. The mark-to-market and credit valuation adjustments on
customer and other derivatives was a loss of $7 million in the
fourth quarter, compared with a gain of $5 million in the third
quarter. Customer-driven derivative revenue of $6 million in the
fourth quarter was essentially unchanged from the third
quarter.
- Foreign exchange income, wealth management fees, and lending
fees each increased by $2 million, reflecting higher customer
activity.
Noninterest Expense
Noninterest expense totaled $290 million in the fourth quarter,
an increase of $38 million, or 15% from $252 million in the third
quarter, including $70 million for the FDIC charge5. Fourth quarter
noninterest expense consisted of $215 million of adjusted
noninterest expense6, and $5 million in amortization expenses
related to tax credit and other investments and core deposit
intangibles.
- Adjusted noninterest expense of $215 million increased nearly
$14 million, or 7%, from $202 million in the third quarter. This
was driven primarily by an $8 million increase in compensation and
employee benefits, reflecting higher commissions and incentive
accruals, and a $6 million increase in other operating expense,
primarily reflecting increases in legal expense, realized credit
card fraud losses, and advertising.
- Amortization of tax credit and other investments was $5 million
in the fourth quarter, down from $50 million in the third quarter,
The decrease was due to the sale of a tax credit investment and
timing of certain renewable energy tax credit investments that were
not placed into service in the fourth quarter.
- The efficiency ratio was 44.4% in the fourth quarter, compared
with 38.9% in the third quarter and the adjusted efficiency ratio6
was 33.1% in the fourth quarter, compared with 31.2% in the third
quarter.
4
Fee income includes lending, deposit
account and wealth management fees, foreign exchange income, and
interest rate contracts and other derivative income. Refer to Table
5 for additional fee and noninterest income information.
5
In November 2023, the Federal Deposit
Insurance Corporation (“FDIC”) approved a final rule to implement a
special deposit insurance assessment to recover losses to the
Deposit Insurance Fund arising from the protection of uninsured
depositors following the receiverships of failed institutions in
the spring of 2023. Under the final rule, the assessment base for
the special assessment is equal to an insured depository
institution’s estimated uninsured deposits, reported for the
quarter ended December 31, 2022, minus the first $5 billion in
estimated uninsured deposits. The FDIC will collect the special
assessment over eight quarterly assessment periods starting with
the first quarter of 2024, at a quarterly rate of 3.36 bps.
6
Adjusted noninterest expense and adjusted
efficiency ratio are non-GAAP financial measures. See
reconciliation of GAAP to non-GAAP measures in Table 13.
TAX RELATED ITEMS
Full year 2023 income tax expense was $299 million, and the
effective tax rate was 20.5%, compared with income tax expense of
$284 million and an effective tax rate of 20.1% for the full year
of 2022. Fourth quarter 2023 income tax expense was $88 million,
and the effective tax rate was 27.0%, compared with income tax
expense of $66 million and 18.6% for the third quarter of 2023. The
higher effective tax rate in the fourth quarter was mainly due to
the sale of a tax credit investment and timing of certain renewable
energy tax credit investments that were not placed into service in
the fourth quarter.
ASSET QUALITY
As of December 31, 2023, the credit quality of our loan
portfolio remained solid.
- The criticized loans ratio decreased 14 basis points
quarter-over-quarter to 1.87% of loans held-for-investment (“HFI”)
as of December 31, 2023, compared with 2.01% as of September 30,
2023. Criticized loans decreased $43 million, or 4%,
quarter-over-quarter to $1.0 billion as of December 31, 2023. The
special mention loans ratio decreased 18 basis points
quarter-over-quarter to 0.77% of loans HFI as of December 31, 2023,
compared with 0.95% as of September 30, 2023, and the classified
loans ratio increased four basis points to 1.10%.
- The nonperforming assets ratio was 0.16% of total assets as of
December 31, 2023, compared with 0.15% of total assets as of
September 30, 2023. Nonperforming assets increased $10 million to
$114 million as of December 31, 2023, from $104 million as of
September 30, 2023.
- Fourth quarter 2023 net charge-offs were $20 million, or
annualized 0.15% of average loans HFI, compared with $18 million,
or annualized 0.14% of average loans HFI, for the third quarter of
2023.
- The allowance for loan losses increased to $669 million, or
1.28% of loans HFI, as of December 31, 2023, compared with $656
million, or 1.29% of loans HFI, as of September 30, 2023, primarily
reflective of net loan growth.
- Fourth quarter 2023 provision for credit losses was $37
million, compared with $42 million in the third quarter of
2023.
CAPITAL STRENGTH
Capital levels for East West remained strong. The following
table presents capital metrics as of December 31, 2023, September
30, 2023 and December 31, 2022.
EWBC Capital
($ in millions)
December 31, 2023 (a)
September 30, 2023 (a)
December 31, 2022 (a)
Risk-Weighted Assets (“RWA”) (b)
$53,663
$52,951
$50,037
Risk-based capital ratios:
CET1 capital ratio
13.31%
13.30%
12.68%
Tier 1 capital ratio
13.31%
13.30%
12.68%
Total capital ratio
14.76%
14.73%
14.00%
Leverage ratio
10.21%
10.15%
9.80%
Tangible common equity ratio (c)
9.37%
9.03%
8.66%
(a)
The Company has elected to use the 2020
Current Expected Credit Losses (CECL) transition provision in the
calculation of its December 31, 2023, September 30, 2023 and
December 31, 2022 regulatory capital ratios. The Company’s December
31, 2023 regulatory capital ratios and RWA are preliminary.
(b)
Under regulatory guidelines, on-balance
sheet assets and credit equivalent amounts of derivatives and
off-balance sheet items are assigned to one of several broad risk
categories based on the nature of the obligor, or, if relevant, the
guarantor or the nature of any collateral. The aggregate dollar
value in each risk category is then multiplied by the risk weight
associated with that category. The resulting weighted values from
each of the risk categories are aggregated for determining total
RWA.
(c)
Tangible common equity ratio is a non-GAAP
financial measure. See reconciliation of GAAP to non-GAAP measures
in Table 14.
DIVIDEND PAYOUT AND CAPITAL ACTIONS
East West’s Board of Directors has declared first quarter 2024
dividends for the Company’s common stock. The common stock cash
dividend of $0.55 per share is payable on February 15, 2024, to
stockholders of record on February 2, 2024. This represents a 15%
increase, or seven cents per share, to the quarterly common stock
dividend, up from $0.48 per share previously. The new annual
dividend equivalent is $2.20 per share, compared with $1.92 per
share previously.
East West repurchased 1.5 million shares of common stock during
the fourth quarter of 2023 for approximately $82 million. $172
million of East West’s share repurchase authorization remains
available.
Conference Call
East West will host a conference call to discuss fourth quarter
2023 earnings with the public on Tuesday, January 23, 2024, at 2:00
p.m. PT/5:00 p.m. ET. The public and investment community are
invited to listen as management discusses fourth quarter 2023
results and operating developments.
- The following dial-in information is provided for participation
in the conference call: calls within the U.S. – (877) 506-6399;
calls within Canada – (855) 669-9657; international calls – (412)
902-6699.
- A presentation to accompany the earnings call will be available
on the Investor Relations page of the Company’s website at
www.eastwestbank.com/investors.
- A listen-only live broadcast of the call will also be available
on the Investor Relations page of the Company’s website at
www.eastwestbank.com/investors.
- Information to access a replay of the call will be available
one hour after the call on the Investor Relations site at
www.eastwestbank.com/investors.
About East West
East West provides financial services that help customers reach
further and connect to new opportunities. East West Bancorp, Inc.
is a public company (Nasdaq: “EWBC”) with total assets of $69.6
billion as of December 31, 2023. The Company’s wholly-owned
subsidiary, East West Bank, is the largest independent bank
headquartered in Southern California, and operates over 120
locations in the United States and Asia. The Bank’s markets in the
United States include California, Georgia, Illinois, Massachusetts,
Nevada, New York, Texas, and Washington. For more information on
East West, visit www.eastwestbank.com.
Forward-Looking Statements
Certain matters set forth herein (including any exhibits hereto)
contain “forward-looking statements” that are intended to be
covered by the safe harbor provisions for such statements provided
by the Private Securities Litigation Reform Act of 1995. East West
Bancorp, Inc. (referred to herein on an unconsolidated basis as
“East West” and on a consolidated basis as the “Company,” “we,”
“us,” “our” or “EWBC”) may make forward-looking statements in other
documents that it files with, or furnishes to, the United States
(“U.S.”) Securities and Exchange Commission (“SEC”) and management
may make forward-looking statements to analysts, investors, media
members and others. Forward-looking statements are those that do
not relate to historical facts and that are based on current
assumptions, beliefs, estimates, expectations and projections, many
of which, by their nature, are inherently uncertain and beyond the
Company’s control. Forward-looking statements may relate to various
matters, including the Company’s financial condition, results of
operations, plans, objectives, future performance, business or
industry, and usually can be identified by the use of
forward-looking words, such as “anticipates,” “assumes,”
“believes,” “can,” “continues,” “could,” “estimates,” “expects,”
“forecasts,” “goal,” “intends,” “likely,” “may,” “might,”
“objective,” “plans,” “potential,” “projects,” “remains,” “should,”
“target,” “trend,” “will,” “would,” or similar expressions or
variations thereof, and the negative thereof, but these terms are
not the exclusive means of identifying such statements. You should
not place undue reliance on forward-looking statements, as they are
subject to risks and uncertainties, including, but not limited to,
those described below. When considering these forward-looking
statements, you should keep in mind these risks and uncertainties,
as well as any cautionary statements the Company may make.
There are various important factors that could cause future
results to differ materially from historical performance and any
forward-looking statements. Factors that might cause such
differences, include, but are not limited to: changes in the global
economy, including an economic slowdown, capital or financial
market disruption, supply chain disruption, level of inflation,
interest rate environment, residential and commercial property
prices, employment levels, rate of growth and general business
conditions, which could result in, among other things, reduced
demand for loans, reduced availability of funding or increased
funding costs, declines in asset values and/or recognition of
allowance for credit losses; changes in local, regional and global
business, economic and political conditions and geopolitical
events, such as political unrest, wars and acts of terrorism; the
soundness of other financial institutions and the impacts related
to or resulting from bank failures and other economic and industry
volatility, including potential increased regulatory requirements,
Federal Deposit Insurance Corporation (“FDIC”) insurance premiums
and assessments, losses in the value of our investment portfolio,
deposit withdrawals, or other adverse consequences of negative
market perceptions of the banking industry or us; changes in laws
or the regulatory environment, including regulatory reform
initiatives and policies of the U.S. Department of the Treasury,
the Board of Governors of the Federal Reserve System (“Federal
Reserve”), the FDIC, the SEC, the Consumer Financial Protection
Bureau (“CFPB”), the California Department of Financial Protection
and Innovation (“DFPI”) — Division of Financial Institutions, the
People’s Bank of China (“PBOC”), China’s National Administration of
Financial Regulation (“NAFR”), the Hong Kong Monetary Authority
(“HKMA”), the Hong Kong Securities and Futures Commission
(“HKSFC”), and the Monetary Authority of Singapore (“MAS”); changes
and effects thereof in trade, monetary and fiscal policies and
laws, including the ongoing trade, economic and political disputes
between the U.S. and the People’s Republic of China and the
monetary policies of the Federal Reserve; changes in the commercial
and consumer real estate markets; changes in consumer or commercial
spending, savings and borrowing habits, and patterns and behaviors;
the impact from changes to income tax laws and regulations, federal
spending and economic stimulus programs; the impact of any future
U.S. federal government shutdown and uncertainty regarding the U.S.
federal government’s debt limit and credit rating; the Company’s
ability to compete effectively against financial institutions and
other entities, including as a result of emerging technologies; the
success and timing of the Company’s business strategies; the
Company’s ability to retain key officers and employees; the impact
on the Company’s funding costs, net interest income and net
interest margin from changes in key variable market interest rates,
competition, regulatory requirements and the Company’s product mix;
changes in the Company’s costs of operation, compliance and
expansion; the Company’s ability to adopt and successfully
integrate new initiatives or technologies into its business in a
strategic manner; the impact of communications or technology
disruption, failure in, or breach of, the Company’s operational or
security systems or infrastructure, or those of third party vendors
with which the Company does business, including as a result of
cyber-attacks, and other similar matters which could result in,
among other things, confidential proprietary, or personally
identifiable information being disclosed or misused, and materially
impact the Company’s ability to provide services to its clients;
the adequacy of the Company’s risk management framework, disclosure
controls and procedures and internal control over financial
reporting; future credit quality and performance, including the
Company’s expectations regarding future credit losses and allowance
levels; the impact of adverse changes to the Company’s credit
ratings from major credit rating agencies; the impact of adverse
judgments or settlements in litigation and other proceedings; the
impact of political developments, pandemics, wars, civil unrest,
terrorism or other hostilities that may disrupt or increase
volatility in securities or otherwise affect business and economic
conditions on the Company and its customers; heightened regulatory
and governmental oversight and scrutiny of the Company’s business
practices, including dealings with consumers; the impact of
reputational risk from negative publicity, fines, penalties and
other negative consequences from regulatory violations, legal
actions and the Company’s interactions with business partners,
counterparties, service providers and other third parties; the
impact of regulatory investigations, regulatory agreements,
supervisory criticisms, and enforcement actions; changes in
accounting standards as may be required by the Financial Accounting
Standards Board (“FASB”) or other regulatory agencies and their
impact on the Company’s critical accounting policies and
assumptions; the Company’s capital requirements and its ability to
generate capital internally or raise capital on favorable terms;
the impact on the Company’s liquidity due to changes in the
Company’s ability to receive dividends from its subsidiaries; any
strategic acquisitions or divestitures; changes in the equity and
debt securities markets; fluctuations in the Company’s stock price;
fluctuations in foreign currency exchange rates; the impact of
increased focus on social, environmental and sustainability
matters, which may affect the operations of the Company and its
customers and the economy more broadly; and the impact of climate
change, natural or man-made disasters or calamities, such as
wildfires, droughts, hurricanes, flooding and earthquakes or other
events that may directly or indirectly result in a negative impact
on the financial performance of the Company and its customers.
For a more detailed discussion of some of the factors that might
cause such differences, see the Company’s Annual Report on Form
10-K for the year ended December 31, 2022 under the heading Item
1A. Risk Factors and the information set forth under Item 1A. Risk
Factors in the Company’s Quarterly Reports on Form 10-Q. You should
treat forward-looking statements as speaking only as of the date
they are made and based only on information then actually known to
the Company. The Company does not undertake, and specifically
disclaims any obligation to update or revise any forward-looking
statements to reflect the occurrence of events or circumstances
after the date of such statements except as required by law.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEET
($ and shares in thousands,
except per share data)
(unaudited)
Table 1
December 31, 2023
% or Basis Point
Change
December 31, 2023
September 30, 2023
December 31, 2022
Qtr-o-Qtr
Yr-o-Yr
Assets
Cash and cash equivalents
$
4,614,984
$
4,561,178
$
3,481,784
1.2
%
32.5
%
Interest-bearing deposits with banks
10,498
17,213
139,021
(39.0
)
(92.4
)
Assets purchased under resale agreements
(“resale agreements”)
785,000
785,000
792,192
—
(0.9
)
Available-for-sale (“AFS”) debt securities
(amortized cost of $6,916,491, $6,976,331 and $6,879,225)
6,188,337
6,039,837
6,034,993
2.5
2.5
Held-to-maturity (“HTM”) debt securities,
at amortized cost (fair value of $2,453,971, $2,308,048 and
$2,455,171)
2,956,040
2,964,235
3,001,868
(0.3
)
(1.5
)
Loans held-for-sale (“HFS”)
116
4,762
25,644
(97.6
)
(99.5
)
Loans held-for-investment (“HFI”) (net of
allowance for loan losses of $668,743, $655,523 and $595,645)
51,542,039
50,251,661
47,606,785
2.6
8.3
Investments in qualified affordable
housing partnerships, tax credit and other investments, net
905,036
901,559
763,256
0.4
18.6
Goodwill
465,697
465,697
465,697
—
—
Operating lease right-of-use assets
94,024
97,782
103,681
(3.8
)
(9.3
)
Other assets
2,051,113
2,200,534
1,697,229
(6.8
)
20.9
Total assets
$
69,612,884
$
68,289,458
$
64,112,150
1.9
%
8.6
%
Liabilities and Stockholders’
Equity
Deposits
$
56,092,438
$
55,087,031
$
55,967,849
1.8
%
0.2
%
Short-term borrowings
4,500,000
4,500,000
—
—
100.0
Assets sold under repurchase agreements
(“repurchase agreements”)
—
—
300,000
—
(100.0
)
Long-term debt and finance lease
liabilities
153,011
153,087
152,400
(0.0
)
0.4
Operating lease liabilities
102,353
107,695
111,931
(5.0
)
(8.6
)
Accrued expenses and other liabilities
1,814,248
1,844,939
1,595,358
(1.7
)
13.7
Total liabilities
62,662,050
61,692,752
58,127,538
1.6
7.8
Stockholders’ equity
6,950,834
6,596,706
5,984,612
5.4
16.1
Total liabilities and stockholders’
equity
$
69,612,884
$
68,289,458
$
64,112,150
1.9
%
8.6
%
Book value per share
$
49.64
$
46.62
$
42.46
6.5
%
16.9
%
Tangible book value (1) per
share
$
46.27
$
43.29
$
39.10
6.9
18.3
Number of common shares at
period-end
140,027
141,486
140,948
(1.0
)
(0.7
)
Total stockholders’ equity to assets
ratio
9.98
%
9.66
%
9.33
%
32
bps
65
bps
Tangible common equity (“TCE”) ratio
(1)
9.37
%
9.03
%
8.66
%
34
bps
71
bps
(1)
Tangible book value and the TCE ratio are
non-GAAP financial measures. See reconciliation of GAAP to non-GAAP
measures in Table 14.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
TOTAL LOANS AND DEPOSITS
DETAIL
($ in thousands)
(unaudited)
Table 2
December 31, 2023
% Change
December 31, 2023
September 30, 2023
December 31, 2022
Qtr-o-Qtr
Yr-o-Yr
Loans:
Commercial:
Commercial and industrial (“C&I”)
$
16,581,079
$
15,864,042
$
15,711,095
4.5
%
5.5
%
Commercial real estate (“CRE”):
CRE
14,777,081
14,667,378
13,857,870
0.7
6.6
Multifamily residential
5,023,163
4,900,097
4,573,068
2.5
9.8
Construction and land
663,868
798,190
638,420
(16.8
)
4.0
Total CRE
20,464,112
20,365,665
19,069,358
0.5
7.3
Consumer:
Residential mortgage:
Single-family residential
13,383,060
12,836,558
11,223,027
4.3
19.2
Home equity lines of credit (“HELOCs”)
1,722,204
1,776,665
2,122,655
(3.1
)
(18.9
)
Total residential mortgage
15,105,264
14,613,223
13,345,682
3.4
13.2
Other consumer
60,327
64,254
76,295
(6.1
)
(20.9
)
Total loans HFI (1)
52,210,782
50,907,184
48,202,430
2.6
8.3
Loans HFS
116
4,762
25,644
(97.6
)
(99.5
)
Total loans (1)
52,210,898
50,911,946
48,228,074
2.6
8.3
Allowance for loan losses
(668,743
)
(655,523
)
(595,645
)
2.0
12.3
Net loans (1)
$
51,542,155
$
50,256,423
$
47,632,429
2.6
%
8.2
%
Deposits:
Noninterest-bearing demand
$
15,539,872
$
16,169,072
$
21,051,090
(3.9
)%
(26.2
)%
Interest-bearing checking
7,558,908
7,689,289
6,672,165
(1.7
)
13.3
Money market
13,108,727
12,613,827
12,265,024
3.9
6.9
Savings
1,841,467
1,963,766
2,649,037
(6.2
)
(30.5
)
Time deposits
18,043,464
16,651,077
13,330,533
8.4
35.4
Total deposits
$
56,092,438
$
55,087,031
$
55,967,849
1.8
%
0.2
%
(1)
Includes $71.2 million, $72.0 million and
$70.4 million of net deferred loan fees and net unamortized
premiums as of December 31, 2023, September 30, 2023 and December
31, 2022, respectively.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF INCOME
($ and shares in thousands,
except per share data)
(unaudited)
Table 3
Three Months Ended
December 31, 2023
% Change
December 31, 2023
September 30, 2023
December 31, 2022
Qtr-o-Qtr
Yr-o-Yr
Interest and dividend income
$
990,378
$
961,787
$
761,212
3.0%
30.1%
Interest expense
415,544
390,974
155,705
6.3
166.9
Net interest income before provision for
credit losses
574,834
570,813
605,507
0.7
(5.1)
Provision for credit losses
37,000
42,000
25,000
(11.9)
48.0
Net interest income after provision for
credit losses
537,834
528,813
580,507
1.7
(7.4)
Noninterest income
79,903
76,752
64,927
4.1
23.1
Noninterest expense
290,498
252,014
257,110
15.3
13.0
Income before income taxes
327,239
353,551
388,324
(7.4)
(15.7)
Income tax expense
88,286
65,813
51,561
34.1
71.2
Net income
$
238,953
$
287,738
$
336,763
(17.0)%
(29.0)%
Earnings per share (“EPS”)
- Basic
$
1.70
$
2.03
$
2.39
(16.4)%
(28.9)%
- Diluted
$
1.69
$
2.02
$
2.37
(16.5)
(28.7)
Weighted-average number of shares
outstanding
- Basic
140,595
141,485
140,947
(0.6)%
(0.2)%
- Diluted
141,409
142,122
142,138
(0.5)
(0.5)
Three Months Ended
December 31, 2023
% Change
December 31, 2023
September 30, 2023
December 31, 2022
Qtr-o-Qtr
Yr-o-Yr
Noninterest income:
Lending fees
$
22,077
$
20,312
$
19,339
8.7%
14.2%
Deposit account fees
22,996
22,622
22,112
1.7
4.0
Customer derivative (loss) income
(945
)
11,208
(638
)
NM
(48.1)
Foreign exchange income
14,236
12,334
14,015
15.4
1.6
Wealth management fees
7,735
5,877
6,071
31.6
27.4
Net gains (losses) on sales of loans
3,675
(12
)
443
NM
NM
Net gain on AFS debt security
3,138
—
—
100.0
100.0
Other investment income
1,673
1,751
1,127
(4.5)
48.4
Other income
5,318
2,660
2,458
99.9
116.4
Total noninterest income
$
79,903
$
76,752
$
64,927
4.1%
23.1%
Noninterest expense:
Compensation and employee benefits
$
130,794
$
123,153
$
120,422
6.2%
8.6%
Occupancy and equipment expense
15,735
15,353
15,648
2.5
0.6
Deposit insurance premiums and regulatory
assessments
78,553
8,583
4,930
NM
NM
Deposit account expense
11,390
11,585
8,437
(1.7)
35.0
Computer software and data processing
expenses
11,315
11,761
11,145
(3.8)
1.5
Other operating expense
38,130
31,885
31,923
19.6
19.4
Amortization of tax credit and other
investments
4,581
49,694
64,605
(90.8)
(92.9)
Total noninterest expense
$
290,498
$
252,014
$
257,110
15.3%
13.0%
NM - Not meaningful.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF INCOME
($ and shares in thousands,
except per share data)
(unaudited)
Table 4
Year Ended
December 31, 2023
% Change
December 31, 2023
December 31, 2022
Yr-o-Yr
Interest and dividend income
$
3,693,805
$
2,321,231
59.1%
Interest expense
1,381,551
275,350
401.7
Net interest income before provision for
credit losses
2,312,254
2,045,881
13.0
Provision for credit losses
125,000
73,500
70.1
Net interest income after provision for
credit losses
2,187,254
1,972,381
10.9
Noninterest income
295,264
298,666
(1.1)
Noninterest expense
1,022,748
859,393
19.0
Income before income taxes
1,459,770
1,411,654
3.4
Income tax expense
298,609
283,571
5.3
Net income
$
1,161,161
$
1,128,083
2.9%
EPS
- Basic
$
8.23
$
7.98
3.0%
- Diluted
$
8.18
$
7.92
3.4
Weighted-average number of shares
outstanding
- Basic
141,164
141,326
(0.1)%
- Diluted
141,902
142,492
(0.4)
Year Ended
December 31, 2023
% Change
December 31, 2023
December 31, 2022
Yr-o-Yr
Noninterest income:
Lending fees
$
83,876
$
79,208
5.9%
Deposit account fees
89,606
88,435
1.3
Customer derivative income
20,200
29,057
(30.5)
Foreign exchange income
52,481
48,158
9.0
Wealth management fees
26,805
27,565
(2.8)
Net gains on sales of loans
3,634
6,411
(43.3)
Net (losses) gains on AFS debt
securities
(6,862
)
1,306
NM
Other investment income
9,348
7,037
32.8
Other income
16,176
11,489
40.8
Total noninterest income
$
295,264
$
298,666
(1.1)%
Noninterest expense:
Compensation and employee benefits
$
508,538
$
477,635
6.5%
Occupancy and equipment expense
62,763
62,501
0.4
Deposit insurance premiums and regulatory
assessments
103,308
19,449
431.2
Deposit account expense
43,143
25,508
69.1
Computer software and data processing
expenses
44,475
42,776
4.0
Other operating expense (1)
140,222
118,166
18.7
Amortization of tax credit and other
investments
120,299
113,358
6.1
Total noninterest expense
$
1,022,748
$
859,393
19.0%
NM - Not meaningful.
(1)
Includes $3.9 million of repurchase
agreements’ extinguishment cost for the twelve months ended
December 31, 2023.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
FEE AND OTHER NONINTEREST
INCOME
($ in thousands)
(unaudited)
Table 5
Three Months Ended
Year Ended
December 31,
2023
September 30,
2023
December 31,
2022
December 31,
2023
December 31,
2022
Customer derivative (loss)
income:
Customer derivative revenue
$
6,297
$
5,894
$
3,984
$
23,216
$
14,986
Mark-to-market and credit valuation
adjustments (“CVA”)
(7,242
)
5,314
(4,622
)
(3,016
)
14,071
Total customer derivative (loss)
income
$
(945
)
$
11,208
$
(638
)
$
20,200
$
29,057
Three Months Ended
Year Ended
December 31,
2023
September 30,
2023
December 31,
2022
December 31,
2023
December 31,
2022
Fee income:
Lending fees
$
22,077
$
20,312
$
19,339
$
83,876
$
79,208
Deposit account fees
22,996
22,622
22,112
89,606
88,435
Foreign exchange income
14,236
12,334
14,015
52,481
48,158
Wealth management fees
7,735
5,877
6,071
26,805
27,565
Customer derivative revenue
6,297
5,894
3,984
23,216
14,986
Total fee income
73,341
67,039
65,521
275,984
258,352
Mark-to-market and CVA
(7,242
)
5,314
(4,622
)
(3,016
)
14,071
Net gains (losses) on sale of loans
3,675
(12
)
443
3,634
6,411
Net gains (losses) on AFS debt
securities
3,138
—
—
(6,862
)
1,306
Other investment income
1,673
1,751
1,127
9,348
7,037
Other income
5,318
2,660
2,458
16,176
11,489
Total noninterest income
$
79,903
$
76,752
$
64,927
$
295,264
$
298,666
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
SELECTED AVERAGE
BALANCES
($ in thousands)
(unaudited)
Table 6
Three Months Ended
December 31, 2023
% Change
Year Ended
December 31, 2023
% Change
December 31, 2023
September 30, 2023
December 31, 2022
Qtr-o-Qtr
Yr-o-Yr
December 31, 2023
December 31, 2022
Yr-o-Yr
Loans:
Commercial:
C&I
$
15,948,678
$
15,400,172
$
15,496,386
3.6%
2.9%
$
15,499,899
$
15,013,560
3.2%
CRE:
CRE
14,723,027
14,453,014
13,699,042
1.9
7.5
14,312,459
13,145,204
8.9
Multifamily residential
4,939,119
4,798,360
4,604,628
2.9
7.3
4,756,885
4,252,605
11.9
Construction and land
752,783
807,906
591,962
(6.8)
27.2
754,928
499,044
51.3
Total CRE
20,414,929
20,059,280
18,895,632
1.8
8.0
19,824,272
17,896,853
10.8
Consumer:
Residential mortgage:
Single-family residential
13,097,056
12,548,593
10,988,102
4.4
19.2
12,274,776
10,106,609
21.5
HELOCs
1,732,348
1,816,900
2,145,416
(4.7)
(19.3)
1,881,008
2,208,725
(14.8)
Total residential mortgage
14,829,404
14,365,493
13,133,518
3.2
12.9
14,155,784
12,315,334
14.9
Other consumer
59,245
63,917
81,596
(7.3)
(27.4)
65,181
93,711
(30.4)
Total loans (1)
$
51,252,256
$
49,888,862
$
47,607,132
2.7%
7.7%
$
49,545,136
$
45,319,458
9.3%
Interest-earning assets
$
65,505,724
$
65,051,461
$
60,376,151
0.7%
8.5%
$
64,039,402
$
59,309,062
8.0%
Total assets
$
69,421,959
$
68,936,786
$
64,252,730
0.7%
8.0%
$
67,757,505
$
62,838,282
7.8%
Deposits:
Noninterest-bearing demand
$
15,884,525
$
16,302,296
$
21,419,290
(2.6)%
(25.8)%
$
17,192,978
$
22,784,258
(24.5)%
Interest-bearing checking
7,608,234
8,080,025
6,543,349
(5.8)
16.3
7,658,414
6,696,200
14.4
Money market
12,824,121
12,180,806
12,197,782
5.3
5.1
11,680,540
12,443,437
(6.1)
Savings
1,873,276
2,013,246
2,747,166
(7.0)
(31.8)
2,128,943
2,901,940
(26.6)
Time deposits
17,216,367
16,621,683
12,076,193
3.6
42.6
16,301,856
9,473,744
72.1
Total deposits
$
55,406,523
$
55,198,056
$
54,983,780
0.4%
0.8%
$
54,962,731
$
54,299,579
1.2%
Interest-bearing liabilities
$
44,178,360
$
43,563,947
$
34,372,853
1.4%
28.5%
$
41,671,388
$
32,322,744
28.9%
Stockholders’ equity
$
6,695,852
$
6,604,798
$
5,834,623
1.4%
14.8%
$
6,482,985
$
5,783,025
12.1%
(1)
Includes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
QUARTER-TO-DATE AVERAGE
BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 7
Three Months Ended
December 31, 2023
September 30, 2023
Average
Average
Average
Average
Balance
Interest
Yield/Rate (1)
Balance
Interest
Yield/Rate (1)
Assets
Interest-earning assets:
Interest-bearing cash and deposits with
banks
$
4,445,115
$
56,250
5.02
%
$
5,392,795
$
67,751
4.98
%
Resale agreements
785,000
7,232
3.66
%
648,587
4,460
2.73
%
AFS debt securities
5,985,361
58,926
3.91
%
6,074,119
57,177
3.73
%
HTM debt securities
2,958,294
12,585
1.69
%
2,967,703
12,601
1.68
%
Loans:
C&I
15,948,678
321,026
7.99
%
15,400,172
306,542
7.90
%
CRE
20,414,929
327,194
6.36
%
20,059,280
317,416
6.28
%
Residential mortgage
14,829,404
205,371
5.49
%
14,365,493
193,913
5.36
%
Other consumer
59,245
786
5.26
%
63,917
848
5.26
%
Total Loans (2)
51,252,256
854,377
6.61
%
49,888,862
818,719
6.51
%
FHLB and FRB stock
79,698
1,008
5.02
%
79,395
1,079
5.39
%
Total interest-earning assets
$
65,505,724
$
990,378
6.00
%
$
65,051,461
$
961,787
5.87
%
Noninterest-earning assets:
Cash and due from banks
489,055
544,939
Allowance for loan losses
(650,724
)
(629,229
)
Other assets
4,077,904
3,969,615
Total assets
$
69,421,959
$
68,936,786
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
7,608,234
$
52,170
2.72
%
$
8,080,025
$
54,285
2.67
%
Money market deposits
12,824,121
123,744
3.83
%
12,180,806
113,217
3.69
%
Savings deposits
1,873,276
3,894
0.82
%
2,013,246
4,047
0.80
%
Time deposits
17,216,367
183,175
4.22
%
16,621,683
166,747
3.98
%
Federal funds purchased and other
short-term borrowings
4,500,475
49,570
4.37
%
4,501,327
49,575
4.37
%
FHLB advances
1
—
—
%
1
—
—
%
Repurchase agreements
2,876
41
5.66
%
13,897
193
5.51
%
Long-term debt and finance lease
liabilities
153,010
2,950
7.65
%
152,962
2,910
7.55
%
Total interest-bearing
liabilities
$
44,178,360
$
415,544
3.73
%
$
43,563,947
$
390,974
3.56
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
15,884,525
16,302,296
Accrued expenses and other liabilities
2,663,222
2,465,745
Stockholders’ equity
6,695,852
6,604,798
Total liabilities and stockholders’
equity
$
69,421,959
$
68,936,786
Interest rate spread
2.27
%
2.31
%
Net interest income and net interest
margin
$
574,834
3.48
%
$
570,813
3.48
%
(1)
Annualized.
(2)
Includes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
QUARTER-TO-DATE AVERAGE
BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 8
Three Months Ended
December 31, 2023
December 31, 2022
Average
Average
Average
Average
Balance
Interest
Yield/Rate (1)
Balance
Interest
Yield/Rate (1)
Assets
Interest-earning assets:
Interest-bearing cash and deposits with
banks
$
4,445,115
$
56,250
5.02
%
$
2,983,726
$
23,986
3.19
%
Resale agreements
785,000
7,232
3.66
%
833,170
6,062
2.89
%
AFS debt securities
5,985,361
58,926
3.91
%
5,869,336
46,224
3.12
%
HTM debt securities
2,958,294
12,585
1.69
%
3,004,412
12,747
1.68
%
Loans:
C&I
15,948,678
321,026
7.99
%
15,496,386
250,451
6.41
%
CRE
20,414,929
327,194
6.36
%
18,895,632
262,327
5.51
%
Residential mortgage
14,829,404
205,371
5.49
%
13,133,518
157,696
4.76
%
Other consumer
59,245
786
5.26
%
81,596
849
4.13
%
Total Loans (2)
51,252,256
854,377
6.61
%
47,607,132
671,323
5.59
%
FHLB and FRB stock
79,698
1,008
5.02
%
78,375
870
4.40
%
Total interest-earning assets
$
65,505,724
$
990,378
6.00
%
$
60,376,151
$
761,212
5.00
%
Noninterest-earning assets:
Cash and due from banks
489,055
640,509
Allowance for loan losses
(650,724
)
(583,271
)
Other assets
4,077,904
3,819,341
Total assets
$
69,421,959
$
64,252,730
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
7,608,234
$
52,170
2.72
%
$
6,543,349
$
16,735
1.01
%
Money market deposits
12,824,121
123,744
3.83
%
12,197,782
62,246
2.02
%
Savings deposits
1,873,276
3,894
0.82
%
2,747,166
2,714
0.39
%
Time deposits
17,216,367
183,175
4.22
%
12,076,193
65,772
2.16
%
Federal funds purchased and other
short-term borrowings
4,500,475
49,570
4.37
%
47,142
374
3.15
%
FHLB advances
1
—
—
%
40,178
225
2.22
%
Repurchase agreements
2,876
41
5.66
%
568,520
5,507
3.84
%
Long-term debt and finance lease
liabilities
153,010
2,950
7.65
%
152,523
2,132
5.55
%
Total interest-bearing
liabilities
$
44,178,360
$
415,544
3.73
%
$
34,372,853
$
155,705
1.80
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
15,884,525
21,419,290
Accrued expenses and other liabilities
2,663,222
2,625,964
Stockholders’ equity
6,695,852
5,834,623
Total liabilities and stockholders’
equity
$
69,421,959
$
64,252,730
Interest rate spread
2.27
%
3.20
%
Net interest income and net interest
margin
$
574,834
3.48
%
$
605,507
3.98
%
(1)
Annualized.
(2)
Includes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
YEAR-TO-DATE AVERAGE BALANCES,
YIELDS AND RATES
($ in thousands)
(unaudited)
Table 9
Year Ended
December 31, 2023
December 31, 2022
Average
Average
Average
Average
Balance
Interest
Yield/Rate
Balance
Interest
Yield/Rate
Assets
Interest-earning assets:
Interest-bearing cash and deposits with
banks
$
4,638,630
$
220,643
4.76
%
$
3,127,234
$
41,113
1.31
%
Resale agreements
691,223
20,164
2.92
%
1,398,080
29,767
2.13
%
AFS debt securities
6,105,999
225,592
3.69
%
6,629,945
152,514
2.30
%
HTM debt securities
2,976,237
50,598
1.70
%
2,756,382
46,392
1.68
%
Loans:
C&I
15,499,899
1,190,940
7.68
%
15,013,560
715,778
4.77
%
CRE
19,824,272
1,227,795
6.19
%
17,896,853
791,839
4.42
%
Residential mortgage
14,155,784
750,813
5.30
%
12,315,334
538,255
4.37
%
Other consumer
65,181
3,198
4.91
%
93,711
2,429
2.59
%
Total Loans (1)
49,545,136
3,172,746
6.40
%
45,319,458
2,048,301
4.52
%
FHLB and FRB stock
82,177
4,062
4.94
%
77,963
3,144
4.03
%
Total interest-earning assets
$
64,039,402
$
3,693,805
5.77
%
$
59,309,062
$
2,321,231
3.91
%
Noninterest-earning assets:
Cash and due from banks
555,689
652,673
Allowance for loan losses
(625,785
)
(559,746
)
Other assets
3,788,199
3,436,293
Total assets
$
67,757,505
$
62,838,282
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
7,658,414
$
179,200
2.34
%
$
6,696,200
$
29,808
0.45
%
Money market deposits
11,680,540
399,482
3.42
%
12,443,437
107,442
0.86
%
Savings deposits
2,128,943
15,573
0.73
%
2,901,940
8,550
0.29
%
Time deposits
16,301,856
611,295
3.75
%
9,473,744
106,038
1.12
%
Federal funds purchased and other
short-term borrowings
3,591,114
157,002
4.37
%
81,719
1,801
2.20
%
FHLB advances
123,288
6,430
5.22
%
105,966
1,754
1.66
%
Repurchase agreements
34,443
1,497
4.35
%
467,413
14,362
3.07
%
Long-term debt and finance lease
liabilities
152,790
11,072
7.25
%
152,325
5,595
3.67
%
Total interest-bearing
liabilities
$
41,671,388
$
1,381,551
3.32
%
$
32,322,744
$
275,350
0.85
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
17,192,978
22,784,258
Accrued expenses and other liabilities
2,410,154
1,948,255
Stockholders’ equity
6,482,985
5,783,025
Total liabilities and stockholders’
equity
$
67,757,505
$
62,838,282
Interest rate spread
2.45
%
3.06
%
Net interest income and net interest
margin
$
2,312,254
3.61
%
$
2,045,881
3.45
%
(1)
Includes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
SELECTED RATIOS
(unaudited)
Table 10
Three Months Ended (1)
December 31, 2023
Basis Point Change
December 31,
2023
September 30,
2023
December 31,
2022
Qtr-o-Qtr
Yr-o-Yr
Return on average assets
1.37
%
1.66
%
2.08
%
(29
)
bps
(71
)
bps
Adjusted return on average assets (2)
1.63
%
1.66
%
2.08
%
(3
)
(45
)
Return on average common equity
14.16
%
17.28
%
22.90
%
(312
)
(874
)
Adjusted return on average common equity
(2)
16.95
%
17.28
%
22.90
%
(33
)
(595
)
Return on average TCE (3)
15.26
%
18.65
%
24.96
%
(339
)
(970
)
Adjusted return on average TCE (3)
18.26
%
18.65
%
24.96
%
(39
)
(670
)
Interest rate spread
2.27
%
2.31
%
3.20
%
(4
)
(93
)
Net interest margin
3.48
%
3.48
%
3.98
%
—
(50
)
Average loan yield
6.61
%
6.51
%
5.59
%
10
102
Yield on average interest-earning
assets
6.00
%
5.87
%
5.00
%
13
100
Average cost of interest-bearing
deposits
3.64
%
3.45
%
1.74
%
19
190
Average cost of deposits
2.60
%
2.43
%
1.06
%
17
154
Average cost of funds
2.74
%
2.59
%
1.11
%
15
163
Adjusted pre-tax, pre-provision
profitability ratio (4)
2.49
%
2.56
%
2.95
%
(7
)
(46
)
Adjusted noninterest expense/average
assets (4)
1.23
%
1.16
%
1.19
%
7
4
Efficiency ratio
44.37
%
38.92
%
38.35
%
545
602
Adjusted efficiency ratio (4)
33.07
%
31.18
%
28.66
%
189
bps
441
bps
Year Ended
December 31, 2023
Basis Point Change
December 31,
2023
December 31,
2022
Yr-o-Yr
Return on average assets
1.71
%
1.80
%
(9
)
bps
Adjusted return on average assets (2)
1.79
%
1.80
%
(1
)
Return on average common equity
17.91
%
19.51
%
(160
)
Adjusted return on average common equity
(2)
18.75
%
19.51
%
(76
)
Return on average TCE (3)
19.35
%
21.29
%
(194
)
Adjusted return on average TCE (3)
20.25
%
21.29
%
(104
)
Interest rate spread
2.45
%
3.06
%
(61
)
Net interest margin
3.61
%
3.45
%
16
Average loan yield
6.40
%
4.52
%
188
Yield on average interest-earning
assets
5.77
%
3.91
%
186
Average cost of interest-bearing
deposits
3.19
%
0.80
%
239
Average cost of deposits
2.19
%
0.46
%
173
Average cost of funds
2.35
%
0.50
%
185
Adjusted pre-tax, pre-provision
profitability ratio (4)
2.64
%
2.55
%
9
Adjusted noninterest expense/average
assets (4)
1.22
%
1.18
%
4
Efficiency ratio
39.22
%
36.65
%
257
Adjusted efficiency ratio (4)
31.63
%
31.74
%
(11
)
bps
(1)
Annualized except for efficiency ratio and
adjusted efficiency ratio.
(2)
Adjusted return on average assets and
adjusted return on average common equity are non-GAAP financial
measures. See reconciliation of GAAP to non-GAAP measures in Table
15.
(3)
Return on average TCE and adjusted return
on average TCE are non-GAAP financial measures. See reconciliation
of GAAP to non-GAAP measures in Table 14.
(4)
Adjusted pre-tax, pre-provision
profitability ratio, adjusted noninterest expense/average assets
and adjusted efficiency ratio are non-GAAP financial measures. See
reconciliation of GAAP to non-GAAP measures in Table 13.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES
& OFF-BALANCE SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 11
Three Months Ended December
31, 2023
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, September
30, 2023
$
383,677
$
211,418
$
58,725
$
1,703
$
655,523
Provision for credit losses on loans
(a)
27,732
4,875
233
50
32,890
Gross charge-offs
(20,264
)
(1,213
)
—
(96
)
(21,573
)
Gross recoveries
1,248
356
7
—
1,611
Total net (charge-offs) recoveries
(19,016
)
(857
)
7
(96
)
(19,962
)
Foreign currency translation
adjustment
292
—
—
—
292
Allowance for loan losses, December 31,
2023
$
392,685
$
215,436
$
58,965
$
1,657
$
668,743
Three Months Ended September
30, 2023
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, June 30,
2023
$
375,333
$
202,768
$
56,039
$
1,260
$
635,400
Provision for credit losses on loans
(a)
13,006
22,026
2,648
456
38,136
Gross charge-offs
(7,074
)
(13,879
)
(41
)
(13
)
(21,007
)
Gross recoveries
2,279
503
79
—
2,861
Total net (charge-offs) recoveries
(4,795
)
(13,376
)
38
(13
)
(18,146
)
Foreign currency translation
adjustment
133
—
—
—
133
Allowance for loan losses, September
30, 2023
$
383,677
$
211,418
$
58,725
$
1,703
$
655,523
Three Months Ended December
31, 2022
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, September
30, 2022
$
371,749
$
178,487
$
30,587
$
1,694
$
582,517
(Reversal of) provision for credit losses
on loans
(a)
(263
)
13,790
9,363
(118
)
22,772
Gross charge-offs
(416
)
(10,804
)
—
(16
)
(11,236
)
Gross recoveries
136
873
89
—
1,098
Total net (charge-offs) recoveries
(280
)
(9,931
)
89
(16
)
(10,138
)
Foreign currency translation
adjustment
494
—
—
—
494
Allowance for loan losses, December 31,
2022
$
371,700
$
182,346
$
40,039
$
1,560
$
595,645
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES
& OFF-BALANCE-SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 11 (continued)
Year Ended December 31,
2023
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, December 31,
2022
$
371,700
$
182,346
$
40,039
$
1,560
$
595,645
Impact of ASU 2022-02 adoption
5,683
343
2
—
6,028
Allowance for loan losses, January 1,
2023
$
377,383
$
182,689
$
40,041
$
1,560
$
601,673
Provision for credit losses on loans
(a)
45,319
48,998
18,960
294
113,571
Gross charge-offs
(36,573
)
(17,464
)
(138
)
(197
)
(54,372
)
Gross recoveries
6,803
1,213
102
—
8,118
Total net charge-offs
(29,770
)
(16,251
)
(36
)
(197
)
(46,254
)
Foreign currency translation
adjustment
(247
)
—
—
—
(247
)
Allowance for loan losses, December 31,
2023
$
392,685
$
215,436
$
58,965
$
1,657
$
668,743
Year Ended December 31,
2022
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, December 31,
2021
$
338,252
$
180,808
$
20,595
$
1,924
$
541,579
Provision for (reversal of) credit losses
on loans
(a)
37,604
17,430
19,991
(258
)
74,767
Gross charge-offs
(18,738
)
(18,108
)
(968
)
(106
)
(37,920
)
Gross recoveries
16,824
2,216
421
—
19,461
Total net charge-offs
(1,914
)
(15,892
)
(547
)
(106
)
(18,459
)
Foreign currency translation
adjustment
(2,242
)
—
—
—
(2,242
)
Allowance for loan losses, December 31,
2022
$
371,700
$
182,346
$
40,039
$
1,560
$
595,645
Three Months Ended
Year Ended
December 31,
2023
September 30,
2023
December 31,
2022
December 31,
2023
December 31,
2022
Unfunded Credit Facilities
Allowance for unfunded credit
commitments, beginning of period (1)
$
33,589
$
29,728
$
24,041
$
26,264
$
27,514
Provision for (reversal of) credit losses
on unfunded credit commitments
(b)
4,110
3,864
2,228
11,429
(1,267
)
Foreign currency translation
adjustment
—
(3
)
(5
)
6
17
Allowance for unfunded credit
commitments, end of period (1)
$
37,699
$
33,589
$
26,264
$
37,699
$
26,264
Provision for credit losses
(a)+(b)
$
37,000
$
42,000
$
25,000
$
125,000
$
73,500
(1)
Included in Accrued expenses and other
liabilities on the Condensed Consolidated Balance Sheet.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CRITICIZED LOANS,
NONPERFORMING ASSETS AND CREDIT QUALITY RATIOS
($ in thousands)
(unaudited)
Table 12
Criticized Loans
December 31, 2023
September 30, 2023
December 31, 2022
Special mention loans
$
404,241
$
483,428
$
468,471
Classified loans
573,969
538,258
427,509
Total criticized loans (1)
$
978,210
$
1,021,686
$
895,980
Nonperforming Assets
December 31, 2023
September 30, 2023
December 31, 2022
Nonaccrual loans:
Commercial:
C&I
$
37,036
$
49,147
$
50,428
Total CRE
27,918
16,431
23,413
Consumer:
Total residential mortgage
37,788
37,986
25,586
Other consumer
132
136
99
Total nonaccrual loans
102,874
103,700
99,526
Other real estate owned, net
11,141
—
270
Total nonperforming assets
$
114,015
$
103,700
$
99,796
Credit Quality Ratios
December 31, 2023
September 30, 2023
December 31, 2022
Annualized quarterly net charge-offs to
average loans HFI
0.15
%
0.14
%
0.08
%
Annual net charge-offs to average loans
HFI
0.09
%
N/A
0.04
%
Special mention loans to loans HFI
0.77
%
0.95
%
0.97
%
Classified loans to loans HFI
1.10
%
1.06
%
0.89
%
Criticized loans to loans HFI
1.87
%
2.01
%
1.86
%
Nonperforming assets to total assets
0.16
%
0.15
%
0.16
%
Nonaccrual loans to loans HFI
0.20
%
0.20
%
0.21
%
Allowance for loan losses to loans HFI
1.28
%
1.29
%
1.24
%
(1)
Excludes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
GAAP TO NON-GAAP
RECONCILIATION
($ in thousands)
(unaudited)
Table 13
The Company uses certain non-GAAP
financial measures to provide supplemental information regarding
the Company’s performance. Adjusted efficiency ratio represents
adjusted noninterest expense divided by adjusted revenue. Adjusted
pre-tax, pre-provision profitability ratio represents total
adjusted revenue less adjusted noninterest expense, divided by
average total assets. Adjusted revenue excludes the net gain/loss
related to an AFS debt security that was written-off in the first
quarter of 2023 and subsequently sold during the fourth quarter of
2023. Adjusted noninterest expense excludes the amortization of tax
credit and other investments, the amortization of core deposit
intangibles, the FDIC special assessment charge (included in
deposit insurance premiums and regulatory assessments) and the
repurchase agreements’ extinguishment cost (where applicable).
Management believes that the measures and ratios presented below
provide clarity to financial statement users regarding the ongoing
performance of the Company and allow comparability to prior
periods.
Three Months Ended
Year Ended
December 31,
2023
September 30,
2023
December 31,
2022
December 31,
2023
December 31,
2022
Net interest income before provision for
credit losses
(a)
$
574,834
$
570,813
$
605,507
$
2,312,254
$
2,045,881
Total noninterest income
79,903
76,752
64,927
295,264
298,666
Total revenue
(b)
$
654,737
$
647,565
$
670,434
$
2,607,518
$
2,344,547
Noninterest income
79,903
76,752
64,927
295,264
298,666
Less/add: Net gain/loss on AFS debt
security
(3,138
)
—
—
6,862
—
Adjusted noninterest income
(c)
76,765
76,752
64,927
302,126
298,666
Adjusted revenue
(a)+(c) = (d)
$
651,599
$
647,565
$
670,434
$
2,614,380
$
2,344,547
Total noninterest expense
(e)
$
290,498
$
252,014
$
257,110
$
1,022,748
$
859,393
Less: Amortization of tax credit and other
investments
(4,581
)
(49,694
)
(64,605
)
(120,299
)
(113,358
)
Amortization of core deposit
intangibles
(441
)
(441
)
(381
)
(1,763
)
(1,865
)
FDIC special assessment charge
(69,986
)
—
—
(69,986
)
—
Repurchase agreements’ extinguishment
cost
—
—
—
(3,872
)
—
Adjusted noninterest expense
(f)
$
215,490
$
201,879
$
192,124
$
826,828
$
744,170
Efficiency ratio
(e)/(b)
44.37
%
38.92
%
38.35
%
39.22
%
36.65
%
Adjusted efficiency ratio
(f)/(d)
33.07
%
31.18
%
28.66
%
31.63
%
31.74
%
Adjusted pre-tax, pre-provision
income
(d)-(f) = (g)
$
436,109
$
445,686
$
478,310
$
1,787,552
$
1,600,377
Average total assets
(h)
$
69,421,959
$
68,936,786
$
64,252,730
$
67,757,505
$
62,838,282
Adjusted pre-tax, pre-provision
profitability ratio
(g)/(h)
2.49
%
(1)
2.56
%
(1)
2.95
%
(1)
2.64
%
2.55
%
Adjusted noninterest expense/average
assets
(f)/(h)
1.23
%
(1)
1.16
%
(1)
1.19
%
(1)
1.22
%
1.18
%
(1)
Annualized.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
GAAP TO NON-GAAP
RECONCILIATION
($ in thousands)
(unaudited)
Table 14
The Company uses certain non-GAAP
financial measures to provide supplemental information regarding
the Company’s performance. Tangible book value, tangible book value
per share and TCE ratio are non-GAAP financial measures. Tangible
book value and tangible assets represent stockholders’ equity and
total assets, respectively, which have been reduced by goodwill and
other intangible assets. Given that the use of such measures and
ratios is more prevalent in the banking industry, and such measures
and ratios are used by banking regulators and analysts, the Company
has included them below for discussion.
December 31, 2023
September 30, 2023
December 31, 2022
Stockholders’ equity
(a)
$
6,950,834
$
6,596,706
$
5,984,612
Less: Goodwill
(465,697
)
(465,697
)
(465,697
)
Other intangible assets (1)
(6,602
)
(5,649
)
(7,998
)
Tangible book value
(b)
$
6,478,535
$
6,125,360
$
5,510,917
Number of common shares at
period-end
(c)
140,027
141,486
140,948
Book value per share
(a)/(c)
$
49.64
$
46.62
$
42.46
Tangible book value per share
(b)/(c)
$
46.27
$
43.29
$
39.10
Total assets
(d)
$
69,612,884
$
68,289,458
$
64,112,150
Less: Goodwill
(465,697
)
(465,697
)
(465,697
)
Other intangible assets (1)
(6,602
)
(5,649
)
(7,998
)
Tangible assets
(e)
$
69,140,585
$
67,818,112
$
63,638,455
Total stockholders’ equity to assets
ratio
(a)/(d)
9.98
%
9.66
%
9.33
%
TCE ratio
(b)/(e)
9.37
%
9.03
%
8.66
%
Return on average TCE represents tangible
net income divided by average tangible book value. Adjusted return
on average TCE represents adjusted tangible net income divided by
average tangible book value. Tangible net income excludes the
after-tax impacts of the amortization of core deposit intangibles
and mortgage servicing assets. Adjusted tangible net income
excludes the after-tax impacts of the tangible net income
adjustments, the FDIC special assessment charge (included in
Deposit insurance premiums and regulatory assessments on the
Consolidated Statement of Income), and the net gain/loss related to
an AFS debt security that was written-off in the first quarter of
2023 and subsequently sold during the fourth quarter of 2023. Given
that the use of such measures and ratios is more prevalent in the
banking industry, and such measures and ratios are used by banking
regulators and analysts, the Company has included them below for
discussion.
Three Months Ended
Year Ended
December 31,
2023
September 30,
2023
December 31,
2022
December 31,
2023
December 31,
2022
Net income
(e)
$
238,953
$
287,738
$
336,763
$
1,161,161
$
1,128,083
Add: Amortization of core deposit
intangibles
441
441
381
1,763
1,865
Amortization of mortgage servicing
assets
302
328
329
1,328
1,425
Tax effect of amortization adjustments
(2)
(220
)
(225
)
(209
)
(914
)
(966
)
Tangible net income
(f)
$
239,476
$
288,282
$
337,264
$
1,163,338
$
1,130,407
Add: FDIC special assessment charge
69,986
—
—
69,986
—
Less/add: Net gain/loss on AFS debt
security
(3,138
)
—
—
6,862
—
Tax effect of adjustments (2)
(19,760
)
—
—
(22,716
)
—
Adjusted tangible net income
(g)
$
286,564
$
288,282
$
337,264
$
1,217,470
$
1,130,407
Average stockholders’ equity
(h)
$
6,695,852
$
6,604,798
$
5,834,623
$
6,482,985
$
5,783,025
Less: Average goodwill
(465,697
)
(465,697
)
(465,697
)
(465,697
)
(465,697
)
Average other intangible assets (1)
(5,434
)
(6,148
)
(8,378
)
(6,542
)
(8,695
)
Average tangible book value
(i)
$
6,224,721
$
6,132,953
$
5,360,548
$
6,010,746
$
5,308,633
Return on average common equity
(e)/(h)
14.16
%
(3)
17.28
%
(3)
22.90
%
(3)
17.91
%
19.51
%
Return on average TCE
(f)/(i)
15.26
%
(3)
18.65
%
(3)
24.96
%
(3)
19.35
%
21.29
%
Adjusted return on average TCE
(g)/(i)
18.26
%
(3)
18.65
%
(3)
24.96
%
(3)
20.25
%
21.29
%
(1)
Includes core deposit intangibles and
mortgage servicing assets.
(2)
Applied statutory tax rate of 29.56% for
the three and twelve months ended December 31, 2023, and 29.29% for
the three months ended September 30, 2023. Applied statutory tax
rate of 29.37% for the three and twelve months ended December 31,
2022.
(3)
Annualized.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
GAAP TO NON-GAAP
RECONCILIATION
($ and shares in thousands,
except for per share data)
(unaudited)
Table 15
During the fourth quarter of 2023, the
Company recorded a $70.0 million pre-tax FDIC special assessment
charge (included in Deposit insurance premiums and regulatory
assessments on the Consolidated Statement of Income) and recognized
a $3.1 million pre-tax gain on sale for an AFS debt security that
was previously written-off. During the first quarter of 2023, the
Company recorded a $10.0 million pre-tax impairment write-off of an
AFS debt security. Management believes that presenting the
computations of the adjusted net income, adjusted diluted earnings
per common share, adjusted return on average assets and adjusted
return on average common equity that adjust for the above discussed
non-recurring items provide clarity to financial statement users
regarding the ongoing performance of the Company and allows
comparability to prior periods.
Three Months Ended
Year Ended
December 31,
2023
September 30,
2023
December 31,
2022
December 31,
2023
December 31,
2022
Net income
(a)
$
238,953
$
287,738
$
336,763
$
1,161,161
$
1,128,083
Add: FDIC special assessment charge
69,986
—
—
69,986
—
Less/add: Net gain/loss on AFS debt
security
(3,138
)
—
—
6,862
—
Tax effect of adjustments (1)
(19,760
)
—
—
(22,716
)
—
Adjusted net income
(b)
$
286,041
$
287,738
$
336,763
$
1,215,293
$
1,128,083
Diluted weighted-average number of
shares outstanding
141,409
142,122
142,138
141,902
142,492
Diluted EPS
$
1.69
$
2.02
$
2.37
$
8.18
$
7.92
Add: FDIC special assessment charge
0.35
—
—
0.35
—
Less/add: Net gain/loss on AFS debt
security
(0.02
)
—
—
0.03
—
Adjusted diluted EPS
$
2.02
$
2.02
$
2.37
$
8.56
$
7.92
Average total assets
(c)
$
69,421,959
$
68,936,786
$
64,252,730
$
67,757,505
$
62,838,282
Average stockholders’ equity
(d)
$
6,695,852
$
6,604,798
$
5,834,623
$
6,482,985
$
5,783,025
Return on average assets
(a)/(c)
1.37
%
(2)
1.66
%
(2)
2.08
%
(2)
1.71
%
1.80
%
Adjusted return on average
assets
(b)/(c)
1.63
%
(2)
1.66
%
(2)
2.08
%
(2)
1.79
%
1.80
%
Return on average common equity
(a)/(d)
14.16
%
(2)
17.28
%
(2)
22.90
%
(2)
17.91
%
19.51
%
Adjusted return on average common
equity
(b)/(d)
16.95
%
(2)
17.28
%
(2)
22.90
%
(2)
18.75
%
19.51
%
Return on average TCE (3)
15.26
%
18.65
%
24.96
%
19.35
%
21.29
%
Adjusted return on average TCE
(3)
18.26
%
18.65
%
24.96
%
20.25
%
21.29
%
(1)
Applied statutory tax rate of 29.56% for
the three and the twelve months ended December 31, 2023.
(2)
Annualized.
(3)
Refer to Table 14 for the calculation of
the return on average TCE and adjusted return on average TCE
ratios.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240123713464/en/
FOR INVESTOR INQUIRIES, CONTACT: Christopher Del
Moral-Niles, CFA Chief Financial Officer T: (626) 768-6860 E:
chris.delmoralniles@eastwestbank.com
Adrienne Atkinson Director of Investor Relations T: (626)
788-7536 E: adrienne.atkinson@eastwestbank.com
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