East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq:
EWBC), parent company of East West Bank, the financial bridge
between the United States and Greater China, today reported its
financial results for the third quarter of 2020. For the third
quarter of 2020, net income was $159.5 million or $1.12 per diluted
share. Third quarter 2020 return on average assets was 1.26% and
return on average equity was 12.5%.
“Total deposits grew to a record $41.7 billion as of September
30, 2020, driven by 28% annualized growth in noninterest-bearing
demand deposits,” stated Dominic Ng, Chairman and Chief Executive
Officer of East West. “As of September 30, 2020, demand deposits
reached a record $14.9 billion. We are pleased with the strength
and quality of the deposit growth.”
“During the third quarter, East West’s positive loan growth was
led by residential mortgage and commercial real estate loans. Total
loans reached a record $37.4 billion as of September 30, 2020,”
continued Ng. “We are cautiously optimistic. Although current
economic indicators are weak, business activity is resuming and
trending positive, reflecting the resilience of our customers and
the communities we operate in.”
“We are encouraged that active COVID-19 related payment
deferrals for our customers have declined by close to 50% since
June 30, 2020, and full payment deferrals are down to 2.7% of total
loans as of September 30, 2020. The macroeconomic outlook has
improved and we modestly decreased our allowance for loan losses as
of September 30, 2020. This resulted in a low provision for credit
losses of $10 million in the third quarter of 2020. The reduction
in the provision was the primary driver of the quarter-over-quarter
increase in our net income, which was up by 61% to $159.5
million.”
“East West Bank is operating from a position of strength. We are
prudently growing our balance sheet and capital so that we can
continue to assist our customers with their personal and business
banking needs as they rebuild from the impact of the pandemic. I am
confident that our customers will deftly emerge from these
unprecedented times and be positioned to take advantage of future
opportunities, with East West Bank as a valued partner,” concluded
Ng.
BALANCE SHEET
- Record Total Assets – Total assets of $50.4 billion as
of September 30, 2020 grew by $964 million, or 8% annualized, from
$49.4 billion as of June 30, 2020. Third quarter 2020 average
interest-earning assets of $47.4 billion grew $2.0 billion, or 18%
linked quarter annualized. Growth was primarily from
interest-bearing cash and deposits with banks, which grew $1.5
billion quarter-over-quarter. Interest-bearing cash and deposits
with banks made up 10% of average interest-earning assets in the
third quarter of 2020, up from 8% in the second quarter of
2020.
- Record Loans – Total loans of $37.4 billion as of
September 30, 2020 grew by $208 million, or 2% annualized, from
$37.2 billion as of June 30, 2020. As of September 30, 2020,
Paycheck Protection Program (“PPP”) loans were $1.8 billion,
unchanged from June 30, 2020. Third quarter 2020 average loans of
$37.2 billion increased by $19 million quarter-over-quarter. Growth
in total commercial real estate (“CRE”) and residential mortgage
was offset by decreases in commercial and industrial (“C&I”)
and other consumer loans.
- Record Deposits – Total deposits of $41.7 billion as of
September 30, 2020 increased by $1.0 billion, or 10% annualized,
from $40.7 billion as of June 30, 2020. Noninterest-bearing demand
deposits reached a record $14.9 billion, and made up 36% of total
deposits as of September 30, 2020, up from 34% as of June 30, 2020.
Third quarter 2020 average deposits of $41.2 billion grew $1.3
billion, or 13% linked quarter annualized. Strong growth in demand
and checking accounts, from both commercial and consumer customers,
was partially offset by a reduction in higher-cost time deposits.
Average interest-bearing deposits of $26.9 billion grew $0.5
billion, or 8% linked quarter annualized. Average
noninterest-bearing deposits of $14.3 billion grew $0.8 billion, or
22% linked quarter annualized.
- Capital Levels – Capital levels for East West are
strong. As of September 30, 2020, stockholders’ equity was $5.1
billion, or $36.22 per share. Tangible equity1 per common share was
$32.85 as of September 30, 2020, an increase of 3% from $31.86 as
of June 30, 2020. As of September 30, 2020, the tangible equity to
tangible assets ratio1 was 9.3%, the common equity tier 1 (“CET1”)
capital ratio was 12.8%, and the total risk-based capital ratio was
14.5%. All of the Company’s capital ratios increased
quarter-over-quarter.
OPERATING RESULTS
Third Quarter Earnings – Third quarter 2020 net income
was $159.5 million and diluted earnings per share (“EPS”) were
$1.12, an increase in net income of 61% and in EPS of 60%, compared
to second quarter 2020 net income of $99.4 million and diluted EPS
of $0.70.
Third Quarter 2020 Compared to Second
Quarter 2020
Net Interest Income and Net Interest Margin
Net interest income (“NII”) totaled $324.1 million, a decrease
of 6% from $343.8 million. Net interest margin (“NIM”) of 2.72%
compressed by 32 basis points from 3.04%.
- Adjusted2 NII totaled $317.6 million, a decrease of 2% from
$322.9 million. Adjusted2 NIM of 2.77% contracted by 19 basis
points from 2.96%. Adjusted NII and NIM excluded the impact of PPP
loans and the related PPP Liquidity Facility (“PPPLF”).
- The quarter-over-quarter changes in the NII and the NIM
reflected downward repricing of earning asset yields, a decrease in
PPP loan fee income, and inflow of interest-bearing cash and
deposits with banks, partially offset by a lower cost of
deposits.
- The average loan yield of 3.60% contracted by 38 basis points
from 3.98%, reflecting downward repricing of variable-rate loans to
benchmark interest rates, as well as a lower amount of deferred fee
income accreted on PPP loans. Excluding the impact of PPP loans,
the adjusted2 average loan yield of 3.70% contracted by 20 basis
points quarter-over-quarter.
- Interest and fees earned on PPP loans contributed $7.8 million
to interest income in the third quarter of 2020, and interest
expense paid on the PPPLF was $1.3 million. Third quarter 2020
average balance of PPP loans was $1.8 billion and the average
balance of the PPPLF, classified as long-term debt, was $1.4
billion.
- The yield on average interest-earning assets of 3.07%
contracted by 46 basis points from 3.53%. This primarily reflects
the change in the average loan yield, downward repricing of the
securities portfolio, and inflow of lower-yielding assets in the
earning asset mix.
- The average cost of interest-bearing deposits decreased by 21
basis points to 0.50%, down from 0.71%. The average cost of
deposits decreased by 14 basis points to 0.33%, down from
0.47%.
Noninterest Income
Noninterest income totaled $49.6 million, a 15% decrease from
$58.6 million.
- Gains on sales of available-for-sale (“AFS”) debt securities
were $0.7 million, compared to $9.6 million in the second quarter,
during which the Company sold $131.6 million of municipal
bonds.
- Lending fees of $18.7 million decreased by $3.2 million. Third
quarter lending fees included $3.6 million from an increase in the
valuation of warrants received as part of lending relationships,
which decreased from $8.1 million in the second quarter. Included
in lending fees are letters of credit fees of $10.1 million for the
third quarter, which increased $0.9 million quarter-over-quarter
with increased customer activity.
- Reflecting an increase in customer-driven transactions, deposit
account fees of $12.6 million increased by $1.7 million, and wealth
management fees of $4.6 million increased by $1.5 million.
- Foreign exchange income of $3.3 million decreased by $1.3
million, reflecting downward revaluations of foreign
currency-denominated balance sheet items, partially offset by an
increase in customer-driven transactions.
Noninterest Expense
Noninterest expense totaled $167.7 million, an 11% decrease from
$187.7 million.
- Third quarter noninterest expense consisted of $154.4 million
of adjusted3 noninterest expense, $12.3 million in amortization of
tax credit and other investments, and $0.9 million in amortization
of core deposit intangibles.
- Total noninterest expense decreased by $20.0 million, largely
due to a $12.5 million decrease in amortization of tax credit and
other investments, as well as an $8.7 million decrease in debt
extinguishment costs. During the second quarter, the Company
prepaid $150.0 million of repurchase agreements and incurred $8.7
million in debt extinguishment cost.
- Adjusted noninterest expense of $154.4 million increased by
$1.2 million, or 1%, from $153.3 million. The largest
linked-quarter changes were a $2.8 million increase in compensation
and employee benefits expense, a $1.2 million increase in computer
software expense, and a $2.1 million decrease in other operating
expenses.
- Compensation expense of $99.8 million increased by $2.8
million, or 3%, from $97.0 million. During the second quarter, $7.4
million of compensation expense associated with the origination of
$1.8 billion in PPP loans was deferred. Excluding this item, third
quarter compensation expense decreased by $4.6 million, or 4%,
quarter-over-quarter from $104.3 million in the second
quarter.
- The adjusted3 efficiency ratio was 41.3% in the third quarter,
compared to 38.1% in the second quarter.
TAX RELATED ITEMS
Third quarter 2020 income tax expense was $36.5 million and the
effective tax rate was 19%, compared to income tax expense of $12.9
million and an effective tax rate of 12% for the second quarter of
2020. As of September 30, 2020, the Company expects that the
full-year effective tax rate will be 15%.
The quarter-over-quarter change in the income tax expense and
effective tax rate reflects growth in income before income taxes
and the updated estimate for the full-year effective tax rate.
Third quarter 2020 income before income taxes was $196.1 million, a
75% increase from $112.3 million in the second quarter of 2020. The
third quarter increase in the income before income taxes reset the
run-rate for the full year, increasing the Company’s estimate of
the full-year effective tax rate.
ASSET QUALITY
The allowance for loan losses totaled $618.3 million, or 1.65%
of loans HFI, as of September 30, 2020, compared to $632.1 million,
or 1.70% of loans HFI, as of June 30, 2020.
- Quarter-over-quarter, the ALLL decreased by $13.8 million. This
decrease was primarily driven by an improved macroeconomic forecast
as of September 30, 2020 compared to June 30, 2020, which decreased
the expected lifetime loan losses for the loan portfolio.
- Third quarter 2020 net charge-offs were $24.2 million, or
annualized 0.26% of average loans HFI, compared to $19.2 million,
or annualized 0.21% of average loans HFI in the second quarter of
2020. Charge-offs of loans in the oil and gas industry totaled
$22.1 million during the third quarter of 2020, and were 91% of net
charge-offs.
- Third quarter 2020 provision for credit losses was $10.0
million, compared to $102.4 million for the second quarter of 2020
and $73.9 million for the first quarter of 2020. The
quarter-over-quarter decrease in the provision expense reflects the
quarter-over-quarter net change in the allowance, which required
less provision expense.
- Nonperforming assets were $259.9 million, or 0.52% of total
assets, as of September 30, 2020, compared to nonperforming assets
of $202.2 million, or 0.41% of total assets, as of June 30, 2020.
The quarter-over-quarter increase in nonperforming assets was
largely due to inflows to nonaccrual status of oil and gas related
loans, partially offset by charge-offs. Oil and gas related loans
made up 50% of nonperforming assets as of September 30, 2020.
CAPITAL STRENGTH
Capital levels for East West are strong. The following table
presents the regulatory capital ratios as of September 30, 2020,
June 30, 2020, and September 30, 2019.
EWBC Regulatory Capital Metrics
Basel III
($ in millions)
September 30,
2020 (a)
June 30,
2020 (a)
September 30,
2019
Minimum
Capital
Ratio
Well
Capitalized
Ratio
Minimum
Capital Ratio +
Conservation
Buffer (b)
Risk-Based Capital Ratios:
CET1 capital ratio
12.8
%
12.7
%
12.8
%
4.5
%
6.5
%
7.0
%
Tier 1 capital ratio
12.8
%
12.7
%
12.8
%
6.0
%
8.0
%
8.5
%
Total capital ratio
14.5
%
14.4
%
14.2
%
8.0
%
10.0
%
10.5
%
Leverage ratio
9.8
%
9.7
%
10.3
%
4.0
%
5.0
%
4.0
%
Risk-Weighted Assets (“RWA”) (c)
$
36,922
$
36,199
$
34,424
N/A
N/A
N/A
N/A Not applicable.
(a)
The Company has elected to use the 2020
CECL transition provision in the calculation of its September 30,
2020 and June 30, 2020 regulatory capital ratios. The Company’s
September 30, 2020 regulatory capital ratios and RWA are
preliminary.
(b)
An additional 2.5% capital conservation
buffer above the minimum capital ratios are required in order to
avoid limitations on distributions, including dividend payments and
certain discretionary bonus payments to executive officers.
(c)
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.
DIVIDEND PAYOUT AND CAPITAL ACTIONS
East West’s Board of Directors has declared fourth quarter 2020
dividends for the Company’s common stock. The common stock cash
dividend of $0.275 per share is payable on November 16, 2020 to
shareholders of record on November 2, 2020.
On March 3, 2020, East West’s Board of Directors authorized the
repurchase of up to $500 million of East West’s common stock. East
West did not repurchase any shares during the third quarter of 2020
under this authorization.
Conference Call
East West will host a conference call to discuss third quarter
2020 earnings with the public on Thursday, October 22, 2020 at 8:30
a.m. PT/11:30 a.m. ET. The public and investment community are
invited to listen as management discusses third quarter 2020
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.
- A replay of the conference call will be available on October
22, 2020 at 11:30 a.m. Pacific Time through November 22, 2020. The
replay numbers are: within the U.S. – (877) 344-7529; within Canada
– (855) 669-9658; International calls – (412) 317-0088; and the
replay access code is: 10147892.
About East West
East West Bancorp, Inc. is a publicly owned company with total
assets of $50.4 billion 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 banks
headquartered in California, operating over 125 locations in the
United States and Greater China. U.S. markets include California,
Georgia, Massachusetts, Nevada, New York, Texas and Washington. In
Greater China, East West’s presence includes full service branches
in Hong Kong, Shanghai, Shantou and Shenzhen, and representative
offices in Beijing, Chongqing, Guangzhou, and Xiamen. For more
information on East West, visit the Company’s website at
www.eastwestbank.com.
Forward-Looking Statements
Certain matters set forth herein (including any exhibits hereto)
constitute “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995, including
forward-looking statements relating to our current business plans
and expectations regarding future operating results.
Forward-looking statements may include, but are not limited to, the
use of forward-looking language, such as “likely result in,”
“expects,” “anticipates,” “estimates,” “forecasts,” “projects,”
“intends to,” “assumes,” or may include other similar words or
phrases, such as “believes,” “plans,” “trend,” “objective,”
“continues,” “remains,” or similar expressions, or future or
conditional verbs, such as “will,” “would,” “should,” “could,”
“may,” “might,” “can,” or similar verbs, and the negative thereof.
These forward-looking statements are subject to risks and
uncertainties that could cause actual results, performance or
achievements to differ materially from those projected. These risks
and uncertainties, some of which are beyond our control, include,
but are not limited to, the impact of disease pandemics, such as
the worldwide spread and any resurgence of COVID-19, on the
Company, its operations and its customers, employees and the
markets in which the Company operates and in which its loans are
concentrated; and the measures that international, federal, state
and local governments, agencies, law enforcement and/or health
authorities implement to address it, which may precipitate or
exacerbate one or more of the below-mentioned and/or other risks,
and significantly disrupt or prevent the Company from operating its
business in the ordinary course for an extended period; changes in
governmental policy and regulation, including measures taken in
response to economic, business, political and social conditions,
such as the Small Business Administration’s Payment Protection
Program, the CARES Act and any similar or related rules and
regulations of the Federal Reserve efforts to provide liquidity to
the U.S. financial system, including changes in government interest
rate policies, and to provide credit to private commercial and
municipal borrowers, and other programs designed to address the
effects of the COVID-19 pandemic, as well as the resulting effect
of all such items on the Company’s operations, liquidity and
capital position, and on the financial condition of the Company’s
borrowers and other customers; changes in the U.S. economy,
including an economic slowdown or recession, inflation, deflation,
housing prices, employment levels, rate of growth and general
business conditions; the changes and effects thereof in trade,
monetary and fiscal policies and laws, including the ongoing trade
dispute between the United States (“U.S.”) and the People’s
Republic of China; changes in the commercial and consumer real
estate markets; fluctuations in the Company’s stock price; changes
in income tax laws and regulations; the Company’s ability to
compete effectively against other financial institutions in its
banking markets; success and timing of our business strategies; our
ability to retain key officers and employees; impact on our funding
costs, net interest income and net interest margin from changes in
key variable market interest rates, competition, regulatory
requirements and our product mix; changes in our costs of
operation, compliance and expansion; our ability to adopt and
successfully integrate new technologies into our business in a
strategic manner; impact of benchmark interest rate reform in the
U.S. that resulted in the Secured Overnight Financing Rate selected
as the preferred alternative reference rate to the London Interbank
Offered Rate; impact of a communications or technology disruption,
failure in, or breach of, the Company’s operational or security
systems or infrastructure, or those of third parties with whom the
Company does business, including as a result of cyber attacks; and
other similar matters which could result in, among other things,
confidential and/or proprietary information being disclosed or
misused and materially impact the Company’s ability to provide
services to its clients; 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; impact of adverse changes to the Company’s
credit ratings from major credit rating agencies; impact of adverse
judgments or settlements in litigation; changes in consumer
spending and savings habits; impact on the Company’s international
operations due to political developments, disease pandemics, wars
or other hostilities that may disrupt or increase volatility in
securities or otherwise affect economic conditions; changes in laws
or the regulatory environment including regulatory reform
initiatives and policies of the U.S. Department of Treasury, the
Federal Reserve, the Federal Deposit Insurance Corporation, the
Office of the Comptroller of the Currency, the U.S. Securities and
Exchange Commission, the Consumer Financial Protection Bureau, the
California Department of Business Oversight — Division of Financial
Institutions, and SBA; impact of the Dodd-Frank Act on the
Company’s business, business practices, cost of operations and
executive compensation; heightened regulatory and governmental
oversight and scrutiny of our business practices, including
dealings with consumers; impact of reputational risk from negative
publicity, fines and penalties and other negative consequences from
regulatory violations and legal actions and from the Company’s
interactions with business partners, counterparties, service
providers and other third parties; impact of regulatory enforcement
actions; changes in accounting standards as may be required by the
Financial Accounting Standards Board or other regulatory agencies
and their impact on critical accounting policies and assumptions;
impact of other potential federal tax changes and spending cuts;
the Company’s capital requirements and its ability to generate
capital internally or raise capital on favorable terms; impact on
the Company’s liquidity due to changes in the Company’s ability to
receive dividends from its subsidiaries; any future strategic
acquisitions or divestitures; continuing consolidation in the
financial services industry; changes in the equity and debt
securities markets; fluctuations in foreign currency exchange
rates; a recurrence of significant turbulence or disruption in the
capital or financial markets, which could result in, among other
things, a reduction in the availability of funding or increases in
funding costs, a reduction in investor demand for mortgage loans
and declines in asset values and/or recognition of
other-than-temporary impairment on securities held in our
available-for-sale debt securities portfolio; and impact of natural
or man-made disasters or calamities, such as wildfires and
earthquakes, which are particular to California, or conflicts or
other events that may directly or indirectly result in a negative
impact on the Company’s financial performance. In addition to the
risk factors enumerated above, the economic impact of the COVID-19
pandemic could cause actual outcome to differ, possibly materially,
from the Company’s forward-looking statements due to factors and
future developments that are uncertain, unpredictable and in many
cases beyond the Company’s control. Given the ongoing and dynamic
nature of the circumstances, it is difficult to predict the full
impact of the COVID-19 pandemic on the Company’s business. The
extent to which the COVID-19 pandemic impacts the Company will
depend on future developments that are uncertain and unpredictable,
including the scope, severity and duration of the pandemic and its
impact on the Company’s customers, the actions taken by
governmental authorities in response to the pandemic as well as its
impact on global and regional economies, and the pace of recovery
when the COVID-19 pandemic subsides, among others. 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, 2019 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. 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.
__________________________________
1 See reconciliation of GAAP to non-GAAP financial measures in
Table 14. 2 See reconciliation of GAAP to non-GAAP financial
measures in Table 15. 3 See reconciliation of GAAP to non-GAAP
financial measures in Table 13.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEET
($ and shares in thousands,
except per share data)
(unaudited)
Table 1
September 30, 2020 % or
Basis Point Change
September 30, 2020
June 30, 2020
September 30, 2019
Qtr-o-Qtr
Yr-o-Yr
Assets
Cash and due from banks
$
503,376
$
602,974
$
475,291
(16.5
)%
5.9
%
Interest-bearing cash with banks
4,003,565
3,930,528
2,566,990
1.9
56.0
Cash and cash equivalents
4,506,941
4,533,502
3,042,281
(0.6
)
48.1
Interest-bearing deposits with banks
699,465
531,591
160,423
31.6
336.0
Securities purchased under resale
agreements (“resale agreements”) (1)
1,210,000
1,260,000
860,000
(4.0
)
40.7
Available-for-sale (“AFS”) debt securities
(amortized cost of $4,471,694, $3,823,714 and $3,259,784 as of
September 30, 2020, June 30, 2020, and September 30, 2019,
respectively)
4,539,160
3,884,574
3,284,034
16.9
38.2
Federal Home Loan Bank (“FHLB”) and
Federal Reserve Bank (“FRB”) stock
79,172
78,963
78,334
0.3
1.1
Loans held-for-sale (“HFS”)
4,148
3,875
294
7.0
NM
Loans held-for-investment (''HFI'') (net
of allowance (2) for loan losses of $618,252, $632,071 and
$345,576)
36,818,877
36,597,341
33,679,400
0.6
9.3
Investments in qualified affordable
housing partnerships, net
192,913
201,888
190,000
(4.4
)
1.5
Investments in tax credit and other
investments, net
254,512
251,318
211,603
1.3
20.3
Goodwill
465,697
465,697
465,697
—
—
Operating lease right-of-use assets
96,092
94,898
103,894
1.3
(7.5
)
Other assets
1,504,500
1,503,946
1,198,699
0.0
25.5
Total assets
$
50,371,477
$
49,407,593
$
43,274,659
2.0
%
16.4
%
Liabilities and Stockholders’
Equity
Deposits
$
41,680,555
$
40,672,678
$
36,659,526
2.5
%
13.7
%
Short-term borrowings
59,613
252,851
47,689
(76.4
)
25.0
FHLB advances
657,185
656,759
745,494
0.1
(11.8
)
Securities sold under repurchase
agreements (“repurchase agreements”) (1)
348,063
300,000
50,000
16.0
596.1
Long-term debt and finance lease
liabilities (3)
1,579,317
1,580,442
152,390
(0.1
)
936.4
Operating lease liabilities
103,673
102,708
112,142
0.9
(7.6
)
Accrued expenses and other liabilities
816,965
854,912
624,754
(4.4
)
30.8
Total liabilities
45,245,371
44,420,350
38,391,995
1.9
17.9
Stockholders’ equity (2)
5,126,106
4,987,243
4,882,664
2.8
5.0
Total liabilities and stockholders’
equity
$
50,371,477
$
49,407,593
$
43,274,659
2.0
%
16.4
%
Book value per common share
$
36.22
$
35.25
$
33.54
2.8
%
8.0
%
Tangible equity (4) per common
share
$
32.85
$
31.86
$
30.22
3.1
8.7
Number of common shares at
period-end
141,507
141,486
145,568
0.0
(2.8
)
Tangible equity to tangible assets
ratio (4)
9.32
%
9.21
%
10.28
%
11
bps
(96
)
bps
NM - Not meaningful.
(1)
Resale and repurchase agreements are
reported net when the transactions are eligible for netting under
Accounting Standards Codification (“ASC”) 210-20-45-11, Balance
Sheet Offsetting: Repurchase and Reverse Repurchase Agreements.
There was no netting of repurchase agreements against resale
agreements as of September 30, 2020 and June 30, 2020. $400 million
of gross repurchase agreements were eligible for netting against
gross resale agreements as of September 30, 2019.
(2)
On January 1, 2020, the Company adopted
Accounting Standards Update (“ASU”) 2016-13, Financial Instruments
— Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments using the modified retrospective approach. We
recorded $125.2 million increase to allowance for loan losses and
$98.0 million after-tax decrease to opening retained earnings as of
January 1, 2020.
(3)
Includes $1.43 billion of advances from
the Federal Reserve Paycheck Protection Program Liquidity Facility
(“PPPLF”) as of September 30, 2020 and June 30, 2020.
(4)
See reconciliation of GAAP to non-GAAP
financial measures in Table 14.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
TOTAL LOANS AND DEPOSITS
DETAIL
($ in thousands)
(unaudited)
Table 2
September 30, 2020 %
Change
September 30,
2020
June 30, 2020
September 30,
2019
Qtr-o-Qtr
Yr-o-Yr
Loans:
Commercial:
Commercial and industrial (“C&I”)
(1)
$
13,305,024
$
13,422,691
$
12,301,002
(0.9
)%
8.2
%
Commercial real estate (“CRE”):
CRE
11,037,987
10,902,114
9,749,583
1.2
13.2
Multifamily residential
3,057,274
3,032,385
2,589,203
0.8
18.1
Construction and land
578,407
567,716
719,900
1.9
(19.7
)
Total CRE
14,673,668
14,502,215
13,058,686
1.2
12.4
Consumer:
Residential mortgage:
Single-family residential
7,785,759
7,660,094
6,811,014
1.6
14.3
Home equity lines of credit (“HELOCs”)
1,514,388
1,461,951
1,540,121
3.6
(1.7
)
Total residential mortgage
9,300,147
9,122,045
8,351,135
2.0
11.4
Other consumer
158,290
182,461
314,153
(13.2
)
(49.6
)
Total loans HFI (2)
37,437,129
37,229,412
34,024,976
0.6
10.0
Loans HFS
4,148
3,875
294
7.0
NM
Total loans (2)
37,441,277
37,233,287
34,025,270
0.6
10.0
Allowance for loan losses
(618,252
)
(632,071
)
(345,576
)
(2.2
)
78.9
Net loans (2)
$
36,823,025
$
36,601,216
$
33,679,694
0.6
9.3
Deposits:
Noninterest-bearing demand
$
14,924,917
$
13,940,420
$
10,806,937
7.1
%
38.1
%
Interest-bearing checking
5,731,573
5,280,887
4,837,391
8.5
18.5
Money market
9,553,574
10,002,624
8,400,353
(4.5
)
13.7
Savings
2,401,318
2,186,199
2,094,638
9.8
14.6
Time deposits
9,069,173
9,262,548
10,520,207
(2.1
)
(13.8
)
Total deposits
$
41,680,555
$
40,672,678
$
36,659,526
2.5
%
13.7
%
NM - Not meaningful.
(1)
Includes $1.77 billion and $1.75 billion
of Paycheck Protection Program (“PPP”) loans as of September 30,
2020 and June 30, 2020, respectively.
(2)
Includes net deferred loan fees, unearned
fees, unamortized premiums and unaccreted discounts of $(67.0)
million, $(72.1) million, and $(39.8) million as of September 30,
2020, June 30, 2020, and September 30, 2019, respectively. Net
origination fees related to PPP loans were $(22.6) million and
$(25.4) million as of September 30, 2020 and June 30, 2020,
respectively.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF INCOME
($ and shares in thousands,
except per share data)
(unaudited)
Table 3
Three Months Ended
September 30, 2020 %
Change
September 30, 2020
June 30, 2020
September 30, 2019
Qtr-o-Qtr
Yr-o-Yr
Interest and dividend income (1)
$
365,728
$
398,776
$
476,912
(8.3
)%
(23.3
)%
Interest expense
41,598
55,001
107,105
(24.4
)
(61.2
)
Net interest income before provision for
credit losses
324,130
343,775
369,807
(5.7
)
(12.4
)
Provision for credit losses
10,000
102,443
38,284
(90.2
)
(73.9
)
Net interest income after provision for
credit losses
314,130
241,332
331,523
30.2
(5.2
)
Noninterest income
49,580
58,637
51,474
(15.4
)
(3.7
)
Noninterest expense
167,650
187,696
176,630
(10.7
)
(5.1
)
Income before income taxes
196,060
112,273
206,367
74.6
(5.0
)
Income tax expense
36,523
12,921
34,951
182.7
4.5
Net income
$
159,537
$
99,352
$
171,416
60.6
%
(6.9
)%
Earnings per share (“EPS”)
- Basic
$
1.13
$
0.70
$
1.18
60.6
%
(4.3
)%
- Diluted
$
1.12
$
0.70
$
1.17
60.3
(4.3
)
Weighted-average number of shares
outstanding
- Basic
141,498
141,486
145,559
0.0
%
(2.8
)%
- Diluted
142,043
141,827
146,120
0.2
(2.8
)
Three Months Ended
September 30, 2020 %
Change
September 30, 2020
June 30, 2020
September 30, 2019
Qtr-o-Qtr
Yr-o-Yr
Noninterest income:
Lending fees
$
18,736
$
21,946
$
15,035
(14.6
)%
24.6
%
Deposit account fees
12,573
10,872
9,729
15.6
29.2
Foreign exchange income
3,310
4,562
8,065
(27.4
)
(59.0
)
Wealth management fees
4,553
3,091
4,841
47.3
(5.9
)
Interest rate contracts and other
derivative income
5,538
6,107
8,423
(9.3
)
(34.3
)
Net gains on sales of loans
361
132
2,037
173.5
(82.3
)
Gains on sales of AFS debt securities
698
9,640
58
(92.8
)
NM
Other investment income
316
966
663
(67.3
)
(52.3
)
Other income
3,495
1,321
2,623
164.6
33.2
Total noninterest income
$
49,580
$
58,637
$
51,474
(15.4
)%
(3.7
%)
Noninterest expense:
Compensation and employee benefits
$
99,756
$
96,955
$
97,819
2.9
%
2.0
%
Occupancy and equipment expense
16,648
16,217
17,912
2.7
(7.1
)
Deposit insurance premiums and regulatory
assessments
4,006
3,700
3,550
8.3
12.8
Legal expense
1,366
1,530
1,720
(10.7
)
(20.6
)
Data processing
3,590
4,480
3,328
(19.9
)
7.9
Consulting expense
1,224
1,413
2,559
(13.4
)
(52.2
)
Deposit related expense
3,113
3,353
3,584
(7.2
)
(13.1
)
Computer software expense
8,539
7,301
6,556
17.0
30.2
Other operating expense
17,122
19,248
22,769
(11.0
)
(24.8
)
Amortization of tax credit and other
investments
12,286
24,759
16,833
(50.4
)
(27.0
)
Repurchase agreements’ extinguishment
cost
—
8,740
—
(100.0
)
—
Total noninterest expense
$
167,650
$
187,696
$
176,630
(10.7
)%
(5.1
)%
NM - Not meaningful.
(1)
Includes $7.8 million and $21.3 million of
interest income related to PPP loans for the three months ended
September 30, 2020 and June 30, 2020, respectively.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF INCOME
($ and shares in thousands,
except per share data)
(unaudited)
Table 4
Nine Months Ended
September 30, 2020 %
Change
September 30, 2020
September 30, 2019
Yr-o-Yr
Interest and dividend income (1)
$
1,213,694
$
1,415,067
(14.2
)%
Interest expense
183,082
315,473
(42.0
)
Net interest income before provision for
credit losses
1,030,612
1,099,594
(6.3
)
Provision for credit losses
186,313
80,108
132.6
Net interest income after provision for
credit losses
844,299
1,019,486
(17.2
)
Noninterest income
162,266
146,364
10.9
Noninterest expense
534,222
541,215
(1.3
)
Income before income taxes
472,343
624,635
(24.4
)
Income tax expense
68,630
138,815
(50.6
)
Net income
$
403,713
$
485,820
(16.9
)%
EPS
- Basic
$
2.83
$
3.34
(15.2
)%
- Diluted
$
2.82
$
3.33
(15.2
)
Weighted-average number of shares
outstanding
- Basic
142,595
145,455
(2.0
)%
- Diluted
143,082
146,088
(2.1
)
Nine Months Ended
September 30, 2020 %
Change
September 30, 2020
September 30, 2019
Yr-o-Yr
Noninterest income:
Lending fees
$
56,455
$
46,427
21.6
%
Deposit account fees
33,892
28,804
17.7
Foreign exchange income
15,691
20,366
(23.0
)
Wealth management fees
12,997
12,415
4.7
Interest rate contracts and other
derivative income
18,718
22,037
(15.1
)
Net gains on sales of loans
1,443
2,967
(51.4
)
Gains on sales of AFS debt securities
11,867
3,066
287.1
Other investment income
3,203
2,571
24.6
Other income
8,000
7,711
3.7
Total noninterest income
$
162,266
$
146,364
10.9
%
Noninterest expense:
Compensation and employee benefits
$
298,671
$
300,649
(0.7
)%
Occupancy and equipment expense
49,941
52,592
(5.0
)
Deposit insurance premiums and regulatory
assessments
11,133
9,557
16.5
Legal expense
6,093
6,300
(3.3
)
Data processing
11,896
9,945
19.6
Consulting expense
3,854
6,687
(42.4
)
Deposit related expense
10,029
10,426
(3.8
)
Computer software expense
22,006
18,845
16.8
Other operating expense
57,489
67,737
(15.1
)
Amortization of tax credit and other
investments
54,370
58,477
(7.0
)
Repurchase agreements’ extinguishment
cost
8,740
—
100.0
Total noninterest expense
$
534,222
$
541,215
(1.3
)%
(1)
Includes $29.1 million of interest income
related to PPP loans for the nine months ended September 30,
2020.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
SELECTED AVERAGE
BALANCES
($ in thousands)
(unaudited)
Table 5
Three Months Ended
September 30, 2020 %
Change
Nine Months Ended
September 30, 2020 %
Change
September 30,
2020
June 30, 2020
September 30,
2019
Qtr-o-Qtr
Yr-o-Yr
September 30,
2020
September 30,
2019
Yr-o-Yr
Loans:
Commercial:
C&I (1)
$
13,235,845
$
13,560,719
$
12,203,341
(2.4
)%
8.5
%
$
12,988,486
$
12,018,802
8.1
%
CRE:
CRE
10,942,780
10,812,399
9,685,092
1.2
13.0
10,747,669
9,522,238
12.9
Multifamily residential
3,107,294
2,987,311
2,561,648
4.0
21.3
2,995,227
2,523,962
18.7
Construction and land
564,219
594,965
694,665
(5.2
)
(18.8
)
599,957
652,096
(8.0
)
Total CRE
14,614,293
14,394,675
12,941,405
1.5
12.9
14,342,853
12,698,296
13.0
Consumer:
Residential mortgage:
Single-family residential
7,695,838
7,506,546
6,636,227
2.5
16.0
7,487,347
6,388,939
17.2
HELOCs
1,475,098
1,444,933
1,557,358
2.1
(5.3
)
1,454,237
1,605,279
(9.4
)
Total residential mortgage
9,170,936
8,951,479
8,193,585
2.5
11.9
8,941,584
7,994,218
11.9
Other consumer
139,371
234,900
322,951
(40.7
)
(56.8
)
214,936
312,397
(31.2
)
Total loans (2)
$
37,160,445
$
37,141,773
$
33,661,282
0.1
%
10.4
%
$
36,487,859
$
33,023,713
10.5
%
Interest-earning assets
$
47,428,586
$
45,413,242
$
40,919,386
4.4
%
15.9
%
$
45,076,734
$
39,716,462
13.5
%
Total assets
$
50,247,259
$
48,228,914
$
43,136,273
4.2
%
16.5
%
$
47,753,030
$
41,815,490
14.2
%
Deposits:
Noninterest-bearing demand
$
14,296,475
$
13,534,873
$
10,712,612
5.6
%
33.5
%
$
12,987,813
$
10,342,966
25.6
%
Interest-bearing checking
5,663,873
4,687,178
4,947,511
20.8
14.5
5,119,568
5,145,308
(0.5
)
Money market
9,981,704
9,893,816
8,344,993
0.9
19.6
9,630,918
8,094,933
19.0
Savings
2,259,788
2,149,965
2,154,592
5.1
4.9
2,162,365
2,117,773
2.1
Time deposits
9,008,907
9,634,696
10,337,990
(6.5
)
(12.9
)
9,633,582
9,887,274
(2.6
)
Total deposits
$
41,210,747
$
39,900,528
$
36,497,698
3.3
%
12.9
%
$
39,534,246
$
35,588,254
11.1
%
Interest-bearing liabilities
$
29,552,756
$
28,362,618
$
26,773,253
4.2
%
10.4
%
$
28,506,736
$
26,033,713
9.5
%
Stockholders’ equity
$
5,079,351
$
4,982,446
$
4,838,281
1.9
%
5.0
%
$
5,028,122
$
4,687,746
7.3
%
(1)
Includes average balance of PPP loans of
$1.76 billion and $1.47 billion for the three months ended
September 30, 2020 and June 30, 2020, respectively, and $1.08
billion for the nine months ended September 30, 2020.
(2)
Includes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
QUARTER-TO-DATE AVERAGE
BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 6
Three Months Ended
September 30, 2020
June 30, 2020
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
$
4,904,394
$
5,045
0.41
%
$
3,435,920
$
4,564
0.53
%
Resale agreements (2)
1,225,217
5,295
1.72
%
1,037,473
5,514
2.14
%
AFS debt securities
4,059,456
18,493
1.81
%
3,719,209
21,004
2.27
%
Loans (3)
37,160,445
336,542
3.60
%
37,141,773
367,393
3.98
%
FHLB and FRB stock
79,074
353
1.78
%
78,867
301
1.54
%
Total interest-earning assets
47,428,586
365,728
3.07
%
45,413,242
398,776
3.53
%
Noninterest-earning assets:
Cash and due from banks
522,699
498,908
Allowance for loan losses
(632,216
)
(566,473
)
Other assets
2,928,190
2,883,237
Total assets
$
50,247,259
$
48,228,914
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
5,663,873
$
4,345
0.31
%
$
4,687,178
$
5,404
0.46
%
Money market deposits
9,981,704
6,837
0.27
%
9,893,816
8,093
0.33
%
Savings deposits
2,259,788
1,481
0.26
%
2,149,965
1,445
0.27
%
Time deposits
9,008,907
21,135
0.93
%
9,634,696
31,457
1.31
%
Federal funds purchased and other
short-term borrowings
84,858
407
1.91
%
242,185
265
0.44
%
FHLB advances
656,906
3,146
1.91
%
653,665
3,343
2.06
%
Repurchase agreements (2)
317,097
2,155
2.70
%
418,681
3,540
3.40
%
Long-term debt and finance lease
liabilities
1,579,623
2,092
0.53
%
682,432
1,454
0.86
%
Total interest-bearing
liabilities
29,552,756
41,598
0.56
%
28,362,618
55,001
0.78
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
14,296,475
13,534,873
Accrued expenses and other liabilities
1,318,677
1,348,977
Stockholders’ equity
5,079,351
4,982,446
Total liabilities and stockholders’
equity
$
50,247,259
$
48,228,914
Interest rate spread
2.51
%
2.75
%
Net interest income and net interest
margin
$
324,130
2.72
%
$
343,775
3.04
%
Adjusted net interest income and
adjusted net interest margin (4)
$
317,611
2.77
%
$
322,949
2.96
%
(1)
Annualized.
(2)
There was no netting of repurchase
agreements against resale agreements for the three months ended
September 30, 2020 and June 30, 2020.
(3)
Includes loans HFS.
(4)
Net interest income and net interest
margin have been adjusted for the impacts of PPP loans and advances
from the PPPLF. See reconciliation of GAAP to non-GAAP financial
measures in Table 15.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
QUARTER-TO-DATE AVERAGE
BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 7
Three Months Ended
September 30, 2020
September 30, 2019
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
$
4,904,394
$
5,045
0.41
%
$
3,547,626
$
19,710
2.20
%
Resale agreements (2)
1,225,217
5,295
1.72
%
981,196
6,943
2.81
%
AFS debt securities
4,059,456
18,493
1.81
%
2,651,069
15,945
2.39
%
Loans (3)
37,160,445
336,542
3.60
%
33,661,282
433,658
5.11
%
FHLB and FRB stock
79,074
353
1.78
%
78,213
656
3.33
%
Total interest-earning assets
47,428,586
365,728
3.07
%
40,919,386
476,912
4.62
%
Noninterest-earning assets:
Cash and due from banks
522,699
441,898
Allowance for loan losses
(632,216
)
(328,523
)
Other assets
2,928,190
2,103,512
Total assets
$
50,247,259
$
43,136,273
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
5,663,873
$
4,345
0.31
%
$
4,947,511
$
14,488
1.16
%
Money market deposits
9,981,704
6,837
0.27
%
8,344,993
26,943
1.28
%
Savings deposits
2,259,788
1,481
0.26
%
2,154,592
2,656
0.49
%
Time deposits
9,008,907
21,135
0.93
%
10,337,990
52,733
2.02
%
Federal funds purchased and other
short-term borrowings
84,858
407
1.91
%
40,433
382
3.75
%
FHLB advances
656,906
3,146
1.91
%
745,263
5,021
2.67
%
Repurchase agreements (2)
317,097
2,155
2.70
%
50,000
3,239
25.70
%
Long-term debt and finance lease
liabilities
1,579,623
2,092
0.53
%
152,471
1,643
4.28
%
Total interest-bearing
liabilities
29,552,756
41,598
0.56
%
26,773,253
107,105
1.59
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
14,296,475
10,712,612
Accrued expenses and other liabilities
1,318,677
812,127
Stockholders’ equity
5,079,351
4,838,281
Total liabilities and stockholders’
equity
$
50,247,259
$
43,136,273
Interest rate spread
2.51
%
3.03
%
Net interest income and net interest
margin
$
324,130
2.72
%
$
369,807
3.59
%
Adjusted net interest income and
adjusted net interest margin (4)
$
317,611
2.77
%
$
369,807
3.59
%
(1)
Annualized.
(2)
There was no netting of repurchase
agreements against resale agreements for the three months ended
September 30, 2020. Average balances of resale and repurchase
agreements for the three months ended September 30, 2019 have been
reported net, pursuant to ASC 210-20-45-11, Balance Sheet
Offsetting: Repurchase and Reverse Repurchase Agreements. The
weighted-average yields of gross resale agreements were 1.72% and
2.59% for the three months ended September 30, 2020 and 2019,
respectively. The weighted-average interest rates of gross
repurchase agreements were 2.70% and 4.68% for the three months
ended September 30, 2020 and 2019, respectively.
(3)
Includes loans HFS.
(4)
Net interest income and net interest
margin have been adjusted for the impacts of PPP loans and advances
from the PPPLF. See reconciliation of GAAP to non-GAAP financial
measures in Table 15.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
YEAR-TO-DATE AVERAGE BALANCES,
YIELDS AND RATES
($ in thousands)
(unaudited)
Table 8
Nine Months Ended
September 30, 2020
September 30, 2019
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
$
3,775,242
$
20,717
0.73
%
$
2,996,340
$
51,920
2.32
%
Resale agreements (2)
1,048,923
16,434
2.09
%
1,005,147
22,253
2.96
%
AFS debt securities
3,685,837
59,639
2.16
%
2,614,949
47,378
2.42
%
Loans (3)
36,487,859
1,115,804
4.08
%
33,023,713
1,291,642
5.23
%
FHLB and FRB stock
78,873
1,100
1.86
%
76,313
1,874
3.28
%
Total interest-earning assets
45,076,734
1,213,694
3.60
%
39,716,462
1,415,067
4.76
%
Noninterest-earning assets:
Cash and due from banks
510,750
449,739
Allowance for loan losses
(563,912
)
(321,486
)
Other assets
2,729,458
1,970,775
Total assets
$
47,753,030
$
41,815,490
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
5,119,568
$
19,995
0.52
%
$
5,145,308
$
44,579
1.16
%
Money market deposits
9,630,918
37,178
0.52
%
8,094,933
85,858
1.42
%
Savings deposits
2,162,365
4,743
0.29
%
2,117,773
7,360
0.46
%
Time deposits
9,633,582
94,684
1.31
%
9,887,274
148,992
2.01
%
Federal funds purchased and other
short-term borrowings
128,846
1,228
1.27
%
45,410
1,359
4.00
%
FHLB advances
667,935
10,655
2.13
%
540,535
12,011
2.97
%
Repurchase agreements (2)
355,923
9,686
3.64
%
50,000
10,200
27.27
%
Long-term debt and finance lease
liabilities
807,599
4,913
0.81
%
152,480
5,114
4.48
%
Total interest-bearing
liabilities
28,506,736
183,082
0.86
%
26,033,713
315,473
1.62
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
12,987,813
10,342,966
Accrued expenses and other liabilities
1,230,359
751,065
Stockholders’ equity
5,028,122
4,687,746
Total liabilities and stockholders’
equity
$
47,753,030
$
41,815,490
Interest rate spread
2.74
%
3.14
%
Net interest income and net interest
margin
$
1,030,612
3.05
%
$
1,099,594
3.70
%
Adjusted net interest income and
adjusted net interest margin (4)
$
1,003,267
3.05
%
$
1,099,594
3.70
%
(1)
Annualized
(2)
Average balances of resale and repurchase
agreements have been reported net, pursuant to ASC 210-20-45-11,
Balance Sheet Offsetting: Repurchase and Reverse Repurchase
Agreements. The weighted-average yields of gross resale agreements
were 2.09% and 2.71% for the nine months ended September 30, 2020
and 2019, respectively. The weighted-average interest rates of
gross repurchase agreements were 3.48% and 4.87% for the nine
months ended September 30, 2020 and 2019, respectively.
(3)
Includes loans HFS.
(4)
Net interest income and net interest
margin have been adjusted for the impact of PPP loans and advances
from the PPPLF. See reconciliation of GAAP to non-GAAP financial
measures in Table 15.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
SELECTED RATIOS
(unaudited)
Table 9
Three Months Ended (1)
September 30, 2020
Basis Point Change
September 30,
2020
June 30, 2020
September 30,
2019
Qtr-o-Qtr
Yr-o-Yr
Return on average assets
1.26
%
0.83
%
1.58
%
43
bps
(32)
bps
Return on average equity
12.50
%
8.02
%
14.06
%
448
(156)
Return on average tangible equity (2)
13.88
%
8.96
%
15.75
%
492
(187)
Interest rate spread
2.51
%
2.75
%
3.03
%
(24)
(52)
Net interest margin
2.72
%
3.04
%
3.59
%
(32)
(87)
Adjusted net interest margin (2)
2.77
%
2.96
%
3.59
%
(19)
(82)
Average loan yield
3.60
%
3.98
%
5.11
%
(38)
(151)
Adjusted average loan yield (2)
3.70
%
3.90
%
5.11
%
(20)
(141)
Yield on average interest-earning
assets
3.07
%
3.53
%
4.62
%
(46)
(155)
Average cost of interest-bearing
deposits
0.50
%
0.71
%
1.49
%
(21)
(99)
Average cost of deposits
0.33
%
0.47
%
1.05
%
(14)
(72)
Average cost of funds
0.38
%
0.53
%
1.13
%
(15)
(75)
Adjusted pre-tax, pre-provision
profitability ratio (2)
1.74
%
2.08
%
2.42
%
(34)
(68)
Adjusted noninterest expense/average
assets (2)
1.22
%
1.28
%
1.46
%
(6)
(24)
Efficiency ratio
44.86
%
46.64
%
41.93
%
(178)
293
Adjusted efficiency ratio (2)
41.33
%
38.09
%
37.66
%
324
bps
367
bps
Nine Months Ended (1)
September 30, 2020
Basis Point Change
September 30,
2020
September 30,
2019
Yr-o-Yr
Return on average assets
1.13
%
1.55
%
(42)
bps
Adjusted return on average assets (2)
1.13
%
1.67
%
(54)
Return on average equity
10.73
%
13.86
%
(313)
Adjusted return on average equity (2)
10.73
%
14.85
%
(412)
Return on average tangible equity (2)
11.95
%
15.58
%
(363)
Adjusted return on average tangible equity
(2)
11.95
%
16.70
%
(475)
Interest rate spread
2.74
%
3.14
%
(40)
Net interest margin
3.05
%
3.70
%
(65)
Adjusted net interest margin (2)
3.05
%
3.70
%
(65)
Average loan yield
4.08
%
5.23
%
(115)
Adjusted average loan yield (2)
4.10
%
5.23
%
(113)
Yield on average interest-earning
assets
3.60
%
4.76
%
(116)
Average cost of interest-bearing
deposits
0.79
%
1.52
%
(73)
Average cost of deposits
0.53
%
1.08
%
(55)
Average cost of funds
0.59
%
1.16
%
(57)
Adjusted pre-tax, pre-provision
profitability ratio (2)
2.03
%
2.45
%
(42)
Adjusted noninterest expense/average
assets (2)
1.31
%
1.53
%
(22)
Efficiency ratio
44.78
%
43.44
%
134
Adjusted efficiency ratio (2)
39.26
%
38.47
%
79
bps
(1)
Annualized except for efficiency
ratio.
(2)
See reconciliation of GAAP to non-GAAP
financial measures in Tables 12, 13, 14 and 15. Note that there
were no non-recurring adjustments during 2020.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES
& OFF-BALANCE-SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 10
ASU 2016-13 replaced the incurred loss
methodology used in calculating the allowance for loan losses with
a current expected credit loss model (“CECL”). The Company adopted
ASU 2016-13 using the modified retrospective approach on January 1,
2020. As a result, prior comparative periods have not been adjusted
for the CECL model. In addition, ASU 2016-13 introduces the concept
of Purchased Credit Deteriorated (“PCD”) financial assets, which
replaces purchased credit-impaired (“PCI”) assets. For PCD assets,
the initial allowance for loan losses is added to the purchase
price and is considered to be part of the PCD loan amortized cost
basis, hence, there is no income statement impact on acquisition.
This contrasts with PCI loans where allowance for loan losses only
reflects losses that are incurred by the Company after the
acquisition. The allowance for loan losses is evaluated each
quarter and adjusted as necessary by recognizing or reversing loan
loss expense. There were no PCD loans during the three and nine
months ended September 30, 2020.
Three Months Ended September
30, 2020
Commercial
Consumer
Total
CRE
Residential Mortgage
C&I
CRE
Multi- Family
Residential
Construction and Land
Single- Family
Residential
HELOCs
Other Consumer
Allowance for loan losses, June 30,
2020
$
380,723
$
176,040
$
25,058
$
18,551
$
25,314
$
3,867
$
2,518
$
632,071
Provision for (reversal of) credit losses
on loans
(a)
31,691
(8,301
)
(1,916
)
(8,180
)
(2,692
)
(637
)
(76
)
9,889
Gross charge-offs
(25,111
)
(1,414
)
—
—
—
—
(32
)
(26,557
)
Gross recoveries
1,218
485
665
30
—
43
(92
)
2,349
Total net (charge-offs) recoveries
(23,893
)
(929
)
665
30
—
43
(124
)
(24,208
)
Foreign currency translation
adjustment
500
—
—
—
—
—
—
500
Allowance for loan losses, September
30, 2020
$
389,021
$
166,810
$
23,807
$
10,401
$
22,622
$
3,273
$
2,318
$
618,252
Three Months Ended June 30,
2020
Commercial
Consumer
Total
CRE
Residential Mortgage
C&I
CRE
Multi- Family
Residential
Construction and Land
Single- Family
Residential
HELOCs
Other Consumer
Allowance for loan losses, March 31,
2020
$
362,629
$
132,819
$
16,530
$
11,018
$
26,822
$
3,881
$
3,304
$
557,003
Provision for (reversal of) credit losses
on loans
(a)
37,862
43,315
7,908
7,526
(1,667
)
205
(849
)
94,300
Gross charge-offs
(20,378
)
(320
)
—
—
—
(221
)
(30
)
(20,949
)
Gross recoveries
602
226
620
7
159
2
93
1,709
Total net (charge-offs) recoveries
(19,776
)
(94
)
620
7
159
(219
)
63
(19,240
)
Foreign currency translation
adjustment
8
—
—
—
—
—
—
8
Allowance for loan losses, June 30,
2020
$
380,723
$
176,040
$
25,058
$
18,551
$
25,314
$
3,867
$
2,518
$
632,071
Three Months Ended September
30, 2019
Commercial
Consumer
Total
CRE
Residential Mortgage
C&I
CRE
Multi- Family
Residential
Construction and Land
Single- Family
Residential
HELOCs
Other Consumer
Allowance for loan losses, June 30,
2019
$
205,503
$
39,811
$
19,280
$
22,961
$
32,763
$
6,177
$
4,130
$
330,625
Provision for (reversal of) credit losses
on loans
(a)
37,281
(3,213
)
985
6,189
(2,877
)
(326
)
(160
)
37,879
Gross charge-offs
(25,098
)
(1,021
)
—
—
(11
)
—
(12
)
(26,142
)
Gross recoveries
1,648
1,896
42
21
60
5
7
3,679
Total net (charge-offs) recoveries
(23,450
)
875
42
21
49
5
(5
)
(22,463
)
Foreign currency translation
adjustment
(465
)
—
—
—
—
—
—
(465
)
Allowance for loan losses, September
30, 2019
$
218,869
$
37,473
$
20,307
$
29,171
$
29,935
$
5,856
$
3,965
$
345,576
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES
& OFF-BALANCE-SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 10 (continued)
Nine Months Ended September
30, 2020
Commercial
Consumer
Total
CRE
Residential Mortgage
C&I
CRE
Multi- Family
Residential
Construction and Land
Single- Family
Residential
HELOCs
Other Consumer
Allowance for loan losses, December 31,
2019
$
238,376
$
40,509
$
22,826
$
19,404
$
28,527
$
5,265
$
3,380
$
358,287
Impact of ASU 2016-13 adoption
74,237
72,169
(8,112
)
(9,889
)
(3,670
)
(1,798
)
2,221
125,158
Allowance for loan losses, January 1,
2020
$
312,613
$
112,678
$
14,714
$
9,515
$
24,857
$
3,467
$
5,601
$
483,445
Provision for (reversal of) credit losses
on loans
(a)
130,171
46,449
7,273
828
(2,659
)
(20
)
(3,197
)
178,845
Gross charge-offs
(57,466
)
(2,688
)
—
—
—
(221
)
(88
)
(60,463
)
Gross recoveries
3,395
10,371
1,820
58
424
47
2
16,117
Total net (charge-offs) recoveries
(54,071
)
7,683
1,820
58
424
(174
)
(86
)
(44,346
)
Foreign currency translation
adjustment
308
—
—
—
—
—
—
308
Allowance for loan losses, September
30, 2020
$
389,021
$
166,810
$
23,807
$
10,401
$
22,622
$
3,273
$
2,318
$
618,252
Nine Months Ended September
30, 2019
Commercial
Consumer
Total
CRE
Residential Mortgage
C&I
CRE
Multi- Family
Residential
Construction and Land
Single- Family
Residential
HELOCs
Other Consumer
Allowance for loan losses, December 31.
2018
$
189,117
$
40,666
$
19,885
$
20,290
$
31,340
$
5,774
$
4,250
$
311,322
Provision for (reversal of) credit losses
on loans
(a)
78,685
(6,127
)
46
8,358
(1,528
)
75
(259
)
79,250
Gross charge-offs
(54,087
)
(1,021
)
—
—
(11
)
—
(40
)
(55,159
)
Gross recoveries
5,612
3,955
376
523
134
7
14
10,621
Total net (charge-offs) recoveries
(48,475
)
2,934
376
523
123
7
(26
)
(44,538
)
Foreign currency translation
adjustment
(458
)
—
—
—
—
—
—
(458
)
Allowance for loan losses, September
30, 2019
$
218,869
$
37,473
$
20,307
$
29,171
$
29,935
$
5,856
$
3,965
$
345,576
Three Months Ended
Nine Months Ended
September 30,
2020
June 30, 2020
September 30,
2019
September 30,
2020
September 30,
2019
Unfunded Credit Facilities
Allowance for unfunded credit
commitments, beginning of period (1)
$
28,972
$
20,829
$
13,019
$
11,158
$
12,566
Impact of ASU 2016-13 adoption
—
—
—
10,457
—
Provision for credit losses on unfunded
credit commitments
(b)
111
8,143
405
7,468
858
Allowance for unfunded credit
commitments, end of period (1)
$
29,083
$
28,972
$
13,424
$
29,083
$
13,424
Provision for credit losses
(a) + (b)
$
10,000
$
102,443
$
38,284
$
186,313
$
80,108
(1)
Included in Accrued expense and other
liabilities on the Consolidated Balance Sheet.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CREDIT QUALITY
($ in thousands)
(unaudited)
Table 11
The Company adopted ASU 2016-13 using the
modified retrospective approach on January 1, 2020. As a result,
prior comparative periods have not been adjusted. PCI loans prior
to the adoption of ASU 2016-13 were classified as PCD loans as of
January 1, 2020. Nonaccrual loans as of September 30, 2020 and June
30, 2020 include all loans that are 90 or more days past due,
unless the loan is well-collateralized or guaranteed by government
agencies, and in the process of collection. Nonaccrual loans
presented as of September 30, 2019 include only Non-PCI nonaccrual
loans.
Nonperforming Assets
September 30, 2020
June 30, 2020
September 30, 2019
Total Nonaccrual
loans
Total Nonaccrual
loans
Non-PCI Nonaccrual
Loans
Commercial:
C&I
$
145,986
$
84,823
$
90,830
CRE:
CRE
55,996
56,577
18,942
Multifamily residential
3,728
774
551
Total CRE
59,724
57,351
19,493
Consumer:
Residential mortgage:
Single-family residential
15,894
20,070
9,484
HELOCs
12,395
14,068
9,924
Total residential mortgage
28,289
34,138
19,408
Other consumer
2,495
2,508
2,495
Total nonaccrual loans
236,494
178,820
132,226
Other real estate owned, net
19,504
19,504
1,122
Other nonperforming assets
3,890
3,890
1,167
Total nonperforming assets
$
259,888
$
202,214
$
134,515
Credit Quality Ratios
September 30, 2020
June 30, 2020
September 30, 2019
Nonperforming assets to total assets
0.52
%
0.41
%
0.31
%
Nonaccrual loans to loans HFI
0.63
%
0.48
%
0.39
%
Allowance for loan losses to loans HFI
1.65
%
1.70
%
1.02
%
Allowance for loan losses to nonaccrual
loans
261.42
%
353.47
%
261.35
%
Annualized quarterly net charge-offs to
average loans HFI
0.26
%
0.21
%
0.26
%
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
GAAP TO NON-GAAP
RECONCILIATION
($ and shares in thousands,
except for per share data)
(unaudited)
Table 12
The Company recorded a $7.0 million
pre-tax impairment charge and reversed $30.1 million of certain
previously claimed tax credits related to DC Solar during the first
and second quarters of 2019, respectively. There were no
non-recurring adjustments during 2020. 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 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
September 30, 2020
June 30, 2020
September 30, 2019
Net income
(a)
$
159,537
$
99,352
$
171,416
Diluted weighted-average number of shares
outstanding
142,043
141,827
146,120
Diluted EPS
$
1.12
$
0.70
$
1.17
Average total assets
(b)
$
50,247,259
$
48,228,914
$
43,136,273
Average stockholders’ equity
(c)
$
5,079,351
$
4,982,446
$
4,838,281
Return on average assets (1)
(a)/(b)
1.26
%
0.83
%
1.58
%
Return on average equity (1)
(a)/(c)
12.50
%
8.02
%
14.06
%
Nine Months Ended
September 30, 2020
September 30, 2019
Net income
(d)
$
403,713
$
485,820
Add: Impairment charge related to DC Solar
(2)
—
6,978
Tax effect of adjustments (3)
—
(2,063
)
Add: Reversal of certain previously
claimed tax credits related to DC Solar
—
30,104
Adjusted net income
(e)
$
403,713
$
520,839
Diluted weighted average number of
shares outstanding
143,082
146,088
Diluted EPS
$
2.82
$
3.33
Diluted EPS impact of impairment charge
related to DC Solar, net of tax
—
0.03
Diluted EPS impact of reversal of certain
previously claimed tax credits related to DC Solar
—
0.21
Adjusted diluted EPS
$
2.82
$
3.57
Average total assets
(f)
$
47,753,030
$
41,815,490
Average stockholders’ equity
(g)
$
5,028,122
$
4,687,746
Return on average assets (1)
(d)/(f)
1.13
%
1.55
%
Adjusted return on average assets
(1)
(e)/(f)
1.13
%
1.67
%
Return on average equity (1)
(d)/(g)
10.73
%
13.86
%
Adjusted return on average equity
(1)
(e)/(g)
10.73
%
14.85
%
(1)
Annualized.
(2)
Included in Amortization of tax credit and
other investments on the Consolidated Statement of Income.
(3)
Applied statutory rate of 29.56% for the
nine months ended September 30, 2019.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
GAAP TO NON-GAAP
RECONCILIATION
($ in thousands)
(unaudited)
Table 13
Adjusted efficiency ratio represents
adjusted noninterest expense divided by revenue. Adjusted pre-tax,
pre-provision profitability ratio represents revenue less adjusted
noninterest expense, divided by average total assets. Adjusted
noninterest expense excludes the amortization of tax credit and
other investments, the amortization of core deposit intangibles,
and the extinguishment cost on repurchase agreements. 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
September 30, 2020
June 30, 2020
September 30, 2019
Net interest income before provision for
credit losses
(a)
$
324,130
$
343,775
$
369,807
Total noninterest income
49,580
58,637
51,474
Total revenue
(b)
$
373,710
$
402,412
$
421,281
Total noninterest expense
(c)
$
167,650
$
187,696
$
176,630
Less: Amortization of tax credit and other
investments
(12,286
)
(24,759
)
(16,833
)
Amortization of core deposit
intangibles
(927
)
(931
)
(1,148
)
Repurchase agreements’ extinguishment
cost
—
(8,740
)
—
Adjusted noninterest expense
(d)
$
154,437
$
153,266
$
158,649
Efficiency ratio
(c)/(b)
44.86
%
46.64
%
41.93
%
Adjusted efficiency ratio
(d)/(b)
41.33
%
38.09
%
37.66
%
Adjusted pre-tax, pre-provision
income
(b)-(d) = (e)
$
219,273
$
249,146
$
262,632
Average total assets
(f)
$
50,247,259
$
48,228,914
$
43,136,273
Adjusted pre-tax, pre-provision
profitability ratio (1)
(e)/(f)
1.74
%
2.08
%
2.42
%
Adjusted noninterest expense/average
assets (1)
(d)/(f)
1.22
%
1.28
%
1.46
%
Nine Months Ended
September 30, 2020
September 30, 2019
Net interest income before provision for
credit losses
(g)
$
1,030,612
$
1,099,594
Total noninterest income
162,266
146,364
Total revenue
(h)
1,192,878
1,245,958
Total noninterest expense
(i)
$
534,222
$
541,215
Less: Amortization of tax credit and other
investments
(54,370
)
(58,477
)
Amortization of core deposit
intangibles
(2,811
)
(3,474
)
Repurchase agreements’ extinguishment
cost
(8,740
)
—
Adjusted noninterest expense
(j)
$
468,301
$
479,264
Efficiency ratio
(i)/(h)
44.78
%
43.44
%
Adjusted efficiency ratio
(j)/(h)
39.26
%
38.47
%
Adjusted pre-tax, pre-provision
income
(h)-(j) = (k)
$
724,577
$
766,694
Average total assets
(l)
$
47,753,030
$
41,815,490
Adjusted pre-tax, pre-provision
profitability ratio (1)
(k)/(l)
2.03
%
2.45
%
Adjusted noninterest expense/average
assets (1)
(j)/(l)
1.31
%
1.53
%
(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 equity and tangible equity to
tangible assets ratio are non-GAAP financial measures. Tangible
equity 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.
September 30,
2020
June 30, 2020
September 30,
2019
Stockholders’ equity
(a)
$
5,126,106
$
4,987,243
$
4,882,664
Less: Goodwill
(465,697
)
(465,697
)
(465,697
)
Other intangible assets (1)
(12,369
)
(13,490
)
(17,435
)
Tangible equity
(b)
$
4,648,040
$
4,508,056
$
4,399,532
Total assets
(c)
$
50,371,477
$
49,407,593
$
43,274,659
Less: Goodwill
(465,697
)
(465,697
)
(465,697
)
Other intangible assets (1)
(12,369
)
(13,490
)
(17,435
)
Tangible assets
(d)
$
49,893,411
$
48,928,406
$
42,791,527
Total stockholders’ equity to total
assets ratio
(a)/(c)
10.18
%
10.09
%
11.28
%
Tangible equity to tangible assets
ratio
(b)/(d)
9.32
%
9.21
%
10.28
%
Adjusted return on average tangible equity
represents adjusted tangible net income divided by average tangible
equity. Adjusted tangible net income excludes the after-tax impacts
of the amortization of core deposit intangibles and mortgage
servicing assets, impairment charge and the reversal of certain
previously claimed tax credits related to DC Solar (where
applicable). 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
Nine Months Ended
September 30,
2020
June 30, 2020
September 30,
2019
September 30,
2020
September 30,
2019
Net Income
$
159,537
$
99,352
$
171,416
$
403,713
$
485,820
Add: Amortization of core deposit
intangibles
927
931
1,148
2,811
3,474
Amortization of mortgage servicing
assets
450
458
834
1,492
2,171
Tax effect of adjustments (2)
(390
)
(394
)
(586
)
(1,220
)
(1,669
)
Tangible net income
(e)
$
160,524
$
100,347
$
172,812
$
406,796
$
489,796
Add: Impairment charge related to DC Solar
(3)
—
—
—
—
6,978
Tax effect of adjustment (2)
—
—
—
—
(2,063)
Add: Reversal of certain previously
claimed tax credits related to DC Solar
—
—
—
—
30,104
Adjusted tangible net income
(f)
$
160,524
$
100,347
$
172,812
$
406,796
$
524,815
Average stockholders’ equity
$
5,079,351
$
4,982,446
$
4,838,281
$
5,028,122
$
4,687,746
Less: Average goodwill
(465,697
)
(465,697
)
(465,697
)
(465,697
)
(465,652
)
Average other intangible assets (1)
(13,083
)
(14,247
)
(18,391
)
(14,302
)
(20,198
)
Average tangible equity
(g)
$
4,600,571
$
4,502,502
$
4,354,193
$
4,548,123
$
4,201,896
Return on average tangible equity
(4)
13.88
%
8.96
%
15.75
%
11.95
%
15.58
%
Adjusted return on average tangible
equity (4)
13.88
%
8.96
%
15.75
%
11.95
%
16.70
%
(1)
Includes core deposit intangibles and
mortgage servicing assets.
(2)
Applied statutory rate of 28.35% for the
three and nine months ended September 30, 2020, and the three
months ended June 30, 2020. Applied statutory rate of 29.56% for
the three and nine months ended September 30, 2019.
(3)
Included in Amortization of tax credit and
other investments on the Consolidated Statement of Income.
(4)
Annualized.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
GAAP TO NON-GAAP
RECONCILIATION
($ in thousands)
(unaudited)
Table 15
In April 2020, the Company started
accepting applications under the PPP administered by the Small
Business Administration (“SBA”) under the Coronavirus Aid, Relief,
and Economic Security Act and began to originate loans to qualified
small businesses. These loans are included in the Company’s C&I
portfolio, have an interest rate of one percent, and are 100%
guaranteed by the SBA. As of September 30, 2020, the majority of
the Company’s PPP loans have a contractual term of two years. The
SBA pays the Company fees for processing PPP loans in the following
amounts: (i) five percent for loans of not more than $350,000; (ii)
three percent for loans of more than $350,000 and less than
$2,000,000; and (iii) one percent for loans of at least $2,000,000.
Loan processing fees paid to the Company from the SBA are accounted
for as loan origination fees, where net deferred fees are
recognized on a straight line basis over the estimated life of the
loan as a yield adjustment on the loans. If a loan is paid off or
forgiven by the SBA prior to its projected estimated life, the
remaining unamortized deferred fees will be recognized as interest
income in that period. As of September 30, 2020, the Company has
drawn down $1.43 billion from the PPPLF and pledged the same amount
in PPP loans as collateral.
Adjusted loan yield for the three months
ended September 30, 2020 and June 30, 2020, and nine months ended
September 30, 2020 excludes the impact of PPP loans. Adjusted net
interest margin for the three months ended September 30, 2020 and
June 30, 2020, and nine months ended September 30, 2020 excludes
the impact of PPP loans and advances from the PPPLF. Management
believes that presenting the adjusted average loan yield and
adjusted net interest margin provides comparability to prior
periods and these non-GAAP financial measures provide supplemental
information regarding the Company’s performance.
Three Months Ended
Nine Months Ended
Yield on Average Loans
September 30,
2020
June 30, 2020
September 30,
2019
September 30,
2020
September 30,
2019
Interest income on loans
(a)
$
336,542
$
367,393
$
433,658
$
1,115,804
$
1,291,642
Less: Interest income on PPP loans
(7,778
)
(21,289
)
—
(29,067
)
—
Adjusted interest income on
loans
(b)
$
328,764
$
346,104
$
433,658
$
1,086,737
$
1,291,642
Average loans
(c)
$
37,160,445
$
37,141,773
$
33,661,282
$
36,487,859
$
33,023,713
Less: Average PPP loans
(1,764,411
)
(1,465,013
)
—
(1,078,985
)
—
Adjusted average loans
(d)
$
35,396,034
$
35,676,760
$
33,661,282
$
35,408,874
$
33,023,713
Average loan yield (1)
(a)/(c)
3.60
%
3.98
%
5.11
%
4.08
%
5.23
%
Adjusted average loan yield (1)
(b)/(d)
3.70
%
3.90
%
5.11
%
4.10
%
5.23
%
Net Interest Margin
Net interest income
(e)
$
324,130
$
343,775
$
369,807
$
1,030,612
$
1,099,594
Less: Interest income on PPP loans
(7,778
)
(21,289
)
—
(29,067
)
—
Add: Interest expense on advances from the
PPPLF
1,259
463
—
1,722
—
Adjusted net interest income
(f)
$
317,611
$
322,949
$
369,807
$
1,003,267
$
1,099,594
Average interest-earning assets
(g)
$
47,428,586
$
45,413,242
$
40,919,386
$
45,076,734
$
39,716,462
Less: Average PPP loans
(1,764,411
)
(1,465,013
)
—
(1,078,985
)
—
Adjusted average interest-earning
assets
(h)
$
45,664,175
$
43,948,229
$
40,919,386
$
43,997,749
$
39,716,462
Net interest margin (1)
(e)/(g)
2.72
%
3.04
%
3.59
%
3.05
%
3.70
%
Adjusted net interest margin
(1)
(f)/(h)
2.77
%
2.96
%
3.59
%
3.05
%
3.70
%
(1)
Annualized.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201022005419/en/
FOR INVESTOR INQUIRIES, CONTACT: Irene Oh Chief Financial
Officer T: (626) 768-6360 E: irene.oh@eastwestbank.com
Julianna Balicka Director of Strategy and Corporate Development
T: (626) 768-6985 E: julianna.balicka@eastwestbank.com
East West Bancorp (NASDAQ:EWBC)
Historical Stock Chart
From Mar 2024 to Apr 2024
East West Bancorp (NASDAQ:EWBC)
Historical Stock Chart
From Apr 2023 to Apr 2024
