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East West Bancorp Reports Net Income for Second Quarter 2022 of $258 Million and Diluted Earnings Per Share of $1.81; Record Net Interest Income of $473 Million

East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq: EWBC), parent company of East West Bank, today reported its financial results for the second quarter of 2022. Second quarter 2022 net income was $258.3 million, or $1.81 per diluted share; diluted earnings per share grew 38% linked quarter annualized and 15% year-over-year.

“East West’s outstanding results for the second quarter demonstrate the strengths of our business model. Total revenue for the second quarter was $551 million, or an increase of 45% linked quarter annualized, driven by strong growth in net interest income and stable fee income. Net interest income increased to a record $473 million, up 55% linked quarter annualized, and our net interest margin increased 36 basis points quarter-over-quarter to 3.23%,” stated Dominic Ng, Chairman and Chief Executive Officer of East West.

“Not only is our balance sheet well-positioned for rising interest rates, it is resilient and diversified. Average total loans increased $2.5 billion to $44.6 billion, with broad-based growth across all our major loan categories. Average noninterest-bearing demand deposits increased 8% linked quarter annualized to $23.9 billion and totaled 44% of average total deposits for the second quarter of 2022,” continued Ng.

“Our strong revenue growth, combined with controlled expense management, drove second quarter 2022 adjusted pre-tax, pre-provision income1 growth of 62% linked quarter annualized. We earned an industry-leading return on assets of 1.66% and a return on equity of 18.2% for the second quarter of 2022,” concluded Ng.

FINANCIAL HIGHLIGHTS

 

Three Months Ended

 

Qtr-o-Qtr Change

 

Yr-o-Yr Change

($ in millions, except per share data)

June 30, 2022

 

$

% Ann.

 

$

%

Total Loans

$

46,531

 

$

3,039

 

28

%

 

$

6,457

16

%

Total Deposits

 

54,343

 

 

 

(595

)

(4

)

 

 

1,761

 

3

 

Total Revenue

$

551

 

 

$

56

 

45

%

 

$

106

 

24

%

Adj. Pre-tax Pre-provision Income1

 

370

 

 

 

50

 

62

 

 

 

87

 

31

 

Net Income

 

258

 

 

 

21

 

35

 

 

 

34

 

15

 

Diluted Earnings per Share

$

1.81

 

$

0.15

 

38

%

$

0.24

 

15

%

_________________________

1 See reconciliation of GAAP to non-GAAP financial measures in Table 12.

BALANCE SHEET

  • Record Assets – Total assets reached $62.4 billion as of June 30, 2022, up $152.8 million, or 1% annualized, from $62.2 billion as of March 31, 2022. Year-over-year, total assets grew $2.5 billion, or 4%, from $59.9 billion as of June 30, 2021.



    Second quarter 2022 average interest-earning assets of $58.7 billion were essentially unchanged from $58.7 billion in the first quarter of 2022. Quarter-over-quarter, average loan growth of $2.5 billion was offset by declines in average interest-bearing cash and deposits with banks ($1.7 billion), average resale agreements ($0.5 billion), and average debt securities ($0.4 billion).

  • Record Loans – Total loans reached $46.5 billion as of June 30, 2022, up $3.0 billion, or 28% annualized, from $43.5 billion as of March 31, 2022. Year-over-year, total loans grew $6.5 billion, or 16%, from $40.1 billion as of June 30, 2021.



    Second quarter 2022 average loans of $44.6 billion grew $2.5 billion, or 24% linked quarter annualized, with solid growth spread across all our major loan categories of commercial real estate (“CRE”), commercial & industrial (“C&I”), and residential mortgage. Average CRE loans grew $1.2 billion, or 30% linked quarter annualized; average C&I loans grew $715.0 million, or 20% linked quarter annualized; and average residential mortgage loans grew $620.4 million, or 22% linked quarter annualized.

  • Total Deposits – Total deposits were $54.3 billion as of June 30, 2022, a decrease of $0.6 billion, or 4% annualized, from $54.9 billion as of March 31, 2022. Year-over-year, deposits grew $1.8 billion, or 3%, from $52.6 billion as of June 30, 2021.



    Second quarter 2022 average deposits of $54.1 billion grew $104.5 million, or 1% linked quarter annualized. Quarter-over-quarter, average noninterest-bearing demand deposits of $23.9 billion grew $454.7 million, or 8% linked quarter annualized. Average noninterest-bearing deposits made up 44% of average total deposits in the second quarter of 2022, compared with 43% in the first quarter of 2022 and 39% in the second quarter of 2021. In the second quarter of 2022, average time deposits grew $138.7 million, or 7% linked quarter annualized, and average money market accounts decreased $593.4 million, or 18% linked quarter annualized.

  • Strong Capital Levels – As of June 30, 2022, stockholders’ equity was $5.6 billion, or $39.81 per common share, and tangible equity2 per common share was $36.44. As of June 30, 2022, the tangible equity to tangible assets ratio2 was 8.29%, the common equity tier 1 (“CET1”) capital ratio was 12.0%, and the total risk-based capital ratio was 13.2%. Quarter-over-quarter, stockholders’ equity declined by 2%, or $94.0 million, primarily reflecting a negative change in accumulated other comprehensive income (“AOCI”) of $205.7 million, share repurchases of $100.0 million, and $57.4 million in common dividends declared, partially offset by $258.3 million in net income. The negative change in AOCI was primarily due to increased unrealized losses in available-for-sale debt securities. During the second quarter of 2022, the Company repurchased 1.4 million shares of common stock.

____________________

2 See reconciliation of GAAP to non-GAAP financial measures in Table 13.

OPERATING RESULTS

Second Quarter Earnings – Second quarter 2022 net income was $258.3 million, an increase of 9%, or 35% annualized, from $237.7 million for the first quarter of 2022, and an increase of 15% from $224.7 million for the second quarter of 2021. Second quarter 2022 diluted earnings per share were $1.81, an increase of 9%, or 38% annualized, from $1.66 per diluted share for the first quarter 2022, and an increase of 15% from $1.57 per diluted share for the year-ago quarter.

Second Quarter 2022 Compared to First Quarter 2022

Net Interest Income and Net Interest Margin

Record net interest income (“NII”) totaled $473.0 million, an increase of 14%, or 55% annualized, from $415.6 million. Net interest margin (“NIM”) of 3.23% expanded by 36 basis points from 2.87%.

  • NII growth and NIM expansion were driven by strong loan growth and expanding earning asset yields. Average loan growth during the second quarter drove a favorable shift in the asset mix into higher interest earning assets. Average loans made up 76% of average interest-earning assets in the second quarter of 2022, compared with 72% in the first quarter of 2022.
  • The average loan yield was 3.95%, up 32 basis points from the first quarter. The average interest-earning asset yield was 3.42%, up 43 basis points from the first quarter.
  • The average cost of funds was 0.20%, up eight basis points from the first quarter. The average cost of deposits was 0.17%, up seven basis points, and the average cost of interest-bearing deposits was 0.30%, up 13 basis points from the first quarter.
  • The changes in yields and rates reflected rising benchmark interest rates during the year.

Noninterest Income

Noninterest income totaled $78.4 million in the second quarter, a decrease of $1.3 million, or 2%, from $79.7 million in the first quarter. Fee income and net gains on sales of loans were $64.8 million, essentially unchanged from $65.0 million in the first quarter.

Noninterest Expense

Noninterest expense totaled $196.9 million in the second quarter, compared with $189.5 million in the first quarter. Second quarter noninterest expense consisted of $181.4 million of adjusted noninterest expense3, $15.0 million in amortization of tax credit and other investments, and $0.5 million in amortization of core deposit intangibles.

  • Adjusted noninterest expense of $181.4 million increased 4%, or 15% annualized, from $175.0 million in the first quarter.
  • Amortization of tax credit and other investments totaled $15.0 million in the second quarter, compared with $13.9 million in the first quarter. Quarter-over-quarter variability in the amortization of tax credits and other investments partially reflects the impact of investments that close in a given period.
  • The adjusted efficiency ratio3 was 32.9% in the second quarter, compared with 35.3% in the first quarter.

____________________

3 See reconciliation of GAAP to non-GAAP financial measures in Table 12.

TAX RELATED ITEMS

Second quarter 2022 income tax expense was $82.7 million compared with income tax expense of $60.3 million for the first quarter of 2022. The year-to-date effective tax rate for the first six months of 2022 was 22.4%. The Company expects the full-year 2022 effective tax rate to be approximately 21%, including the impact of tax credit investments expected in the second half of the year.

ASSET QUALITY

The asset quality of the loan portfolio continues to be strong.

  • The nonperforming asset (“NPA”) ratio improved by one basis point quarter-over-quarter and NPAs decreased by 5%. As of June 30, 2022, NPAs were $89.9 million, or 0.14% of total assets, compared with $94.4 million, or 0.15% of total assets, as of March 31, 2022.
  • The classified loan ratio improved by six basis points quarter-over-quarter and classified loans were essentially unchanged. As of June 30, 2022, classified loans were $432.4 million, or 0.93% of loans held-for-investment (“HFI”), compared with $430.6 million, or 0.99% of loans HFI as of March 31, 2022. Special mention loans were $590.2 million, or 1.27% of loans HFI, as of June 30, 2022, compared with $402.7 million, or 0.93% of loans HFI, as of March 31, 2022.
  • Second quarter 2022 net recoveries were $6.6 million, or annualized 0.06% of average loans HFI, compared with net charge-offs of $8.3 million, or annualized 0.08% of average loans HFI, for the first quarter of 2022. The second quarter gross recoveries of $7.7 million were largely driven by C&I loan recoveries.
  • The allowance for loan losses (“ALLL”) totaled $563.3 million, or 1.21% of loans HFI, as of June 30, 2022, compared with $545.7 million, or 1.25% of loans HFI, as of March 31, 2022. The quarter-over-quarter change in the ALLL and the ALLL coverage ratio largely reflects the mix of the loan portfolio as of June 30, 2022, as well as loan growth during the second quarter.
  • The provision for credit losses was $13.5 million for the second quarter of 2022, compared with $8.0 million for the first quarter of 2022.

CAPITAL STRENGTH

Capital levels for East West are strong. The following table presents the regulatory capital metrics as of June 30, 2022, March 31, 2022, and June 30, 2021.

EWBC Risk-Based Capital Ratios

($ in millions)

 

June 30, 2022 (a)

 

March 31, 2022 (a)

 

June 30, 2021 (a)

CET1 capital ratio

 

 

12.0

%

 

 

12.6

%

 

 

12.8

%

Tier 1 capital ratio

 

 

12.0

%

 

 

12.6

%

 

 

12.8

%

Total capital ratio

 

 

13.2

%

 

 

13.9

%

 

 

14.3

%

Leverage ratio

 

 

9.3

%

 

 

9.3

%

 

 

9.1

%

Risk-Weighted Assets (“RWA”) (b)

 

$

48,499

 

 

$

45,432

 

 

$

40,609

 

(a)

 

The Company has elected to use the 2020 CECL transition provision in the calculation of its June 30, 2022, March 31, 2022, and June 30, 2021 regulatory capital ratios. The Company’s June 30, 2022 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.

DIVIDEND PAYOUT AND CAPITAL ACTIONS

East West’s Board of Directors has declared third quarter 2022 dividends for the Company’s common stock. The common stock cash dividend of $0.40 per share is payable on August 15, 2022, to stockholders of record on August 1, 2022.

On March 3, 2020, East West’s Board of Directors authorized the repurchase of up to $500 million of East West’s common stock, of which $354 million was available as of March 31, 2022. During the second quarter of 2022, East West repurchased $100 million of common stock, or 1.4 million shares. As of June 30, 2022, $254 million remained available under this authorization.

Conference Call

East West will host a conference call to discuss second quarter 2022 earnings with the public on Thursday, July 21, 2022, at 8:30 a.m. PT/11:30 a.m. ET. The public and investment community are invited to listen as management discusses second quarter 2022 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 July 21, 2022, at 11:30 a.m. PT/2:30 p.m. ET through August 21, 2022. 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: 3689081.

About East West

East West Bancorp, Inc. is a public company with total assets of $62.4 billion and is traded on the Nasdaq Global Select Market under the symbol “EWBC”. The Company’s wholly-owned subsidiary, East West Bank, is the largest independent bank headquartered in Southern California, operating over 120 locations in the United States and in China. The Company’s markets in the United States include California, Georgia, Illinois, Massachusetts, Nevada, New York, Texas and Washington. In 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) contain forward-looking statements that are intended to be covered by the safe harbor for such statements provided by the Private Securities Litigation Reform Act of 1995. In addition, the Company may make forward-looking statements in other documents that it files with, or furnishes to, the 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 expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company’s control. These statements may relate to the Company’s financial condition, results of operations, plans, objectives, future performance and/or business and usually can be identified by the use of forward-looking language, such as “anticipates,” “assumes,” “believes,” “can,” “continues,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends to,” “likely,” “may,” “might,” “objective,” “plans,” “potential,” “projects,” “remains,” “should,” “target,” “trend,” “will,” “would,” or similar expressions, and the negative thereof. You should not place undue reliance on these 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. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company.

There are a number of 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, or market disruption, level of inflation, interest rate environment, housing prices, employment levels, rate of growth and general business conditions; the impact of any future federal government shutdown and uncertainty regarding the federal government’s debt limit; changes in local, regional and global business, economic and political conditions and geopolitical events; the economic, financial, reputational and other impacts of the ongoing COVID-19 pandemic including variants thereof and any other pandemic, epidemic or health-related crisis, as well as a deterioration of asset quality and an increase in credit losses due to the COVID-19 pandemic; changes in laws or the regulatory environment including regulatory reform initiatives and policies of the U.S. Department of the Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the SEC, the Consumer Financial Protection Bureau, and the California Department of Financial Protection and Innovation – Division of Financial Institutions; changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing 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; fluctuations in the Company’s stock price; the impact from potential changes to income tax laws and regulations, federal spending and economic stimulus programs; the Company’s ability to compete effectively against financial institutions in its banking markets and other entities, including as a result of emerging technologies; the soundness of other financial institutions; the success and timing of the Company’s business strategies; the Company’s ability to retain key officers and employees; 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 technologies into its business in a strategic manner; the impact of the benchmark interest rate reform in the U.S. including the transition away from USD London Interbank Offered Rate to alternative reference rates; 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 and/or proprietary 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; impact of adverse judgments or settlements in litigation; the impact on the Company’s operations due to 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; 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 and 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; 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 future strategic acquisitions or divestitures; changes in the equity and debt securities markets; fluctuations in foreign currency exchange rates; the impact of increased focus on social, environmental and sustainability matters, which may affect the Company’s operations as well as those of its customers and the economy more broadly; significant turbulence or disruption in the capital or financial markets, which could result in, among other things, reduced investor demand for loans, a reduction in the availability of funding or increases in funding costs, declines in asset values and/or recognition of allowance for credit losses on securities held in the Company’s debt securities and equity securities portfolio; and the impact of climate change, natural or man-made disasters or calamities, such as wildfires, droughts and earthquakes, all of which are particularly common in California, or other events that may directly or indirectly result in a negative impact on the Company’s financial performance.

For a more detailed discussion of some of the factors that might cause such differences, see the Company’s 2021 Annual Report on Form 10-K 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.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

($ and shares in thousands, except per share data)

(unaudited)

Table 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2022

% or Basis Point Change

 

June 30, 2022

March 31, 2022

June 30, 2021

Qtr-o-Qtr

 

Yr-o-Yr

 

Assets

 

 

 

 

 

 

 

Cash and due from banks

$

688,936

 

$

571,571

 

$

626,716

 

20.5

%

 

9.9

%

 

Interest-bearing cash with banks

 

1,213,117

 

 

3,277,129

 

 

5,371,089

 

(63.0

)

 

(77.4

)

 

Cash and cash equivalents

 

1,902,053

 

 

3,848,700

 

 

5,997,805

 

(50.6

)

 

(68.3

)

 

Interest-bearing deposits with banks

 

712,709

 

 

816,125

 

 

830,279

 

(12.7

)

 

(14.2

)

 

Assets purchased under resale agreements (“resale agreements”)

 

1,422,794

 

 

1,956,822

 

 

2,299,184

 

(27.3

)

 

(38.1

)

 

Available-for-sale (“AFS”) debt securities (amortized cost of $6,891,522, $7,091,581 and $8,411,142)

 

6,255,504

 

 

6,729,431

 

 

8,399,460

 

(7.0

)

 

(25.5

)

 

Held-to-maturity (“HTM”) debt securities, at amortized cost (fair value of $2,656,549 and $2,815,968 in 2022)

 

3,028,302

 

 

2,997,702

 

 

 

1.0

 

 

100.0

 

 

Loans held-for-sale (“HFS”)

 

28,464

 

 

631

 

 

1,819

 

NM

 

 

NM

 

 

Loans held-for-investment (''HFI'') (net of allowance for loan losses of $563,270, $545,685 and $585,724)

 

45,938,806

 

 

42,944,997

 

 

39,485,775

 

7.0

 

 

16.3

 

 

Investments in qualified affordable housing partnerships, tax credit and other investments, net

 

634,304

 

 

607,985

 

 

651,619

 

4.3

 

 

(2.7

)

 

Goodwill

 

465,697

 

 

465,697

 

 

465,697

 

 

 

 

 

Operating lease right-of-use assets

 

107,588

 

 

102,491

 

 

102,609

 

5.0

 

 

4.9

 

 

Other assets

 

1,898,062

 

 

1,770,875

 

 

1,620,629

 

7.2

 

 

17.1

 

 

Total assets

$

62,394,283

 

$

62,241,456

 

$

59,854,876

 

0.2

%

 

4.2

%

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Deposits

$

54,343,354

 

$

54,938,361

 

$

52,582,575

 

(1.1

)%

 

3.3

%

 

FHLB advances

 

174,776

 

 

74,619

 

 

248,464

 

134.2

 

 

(29.7

)

 

Assets sold under repurchase agreements (“repurchase agreements”)

 

611,785

 

 

300,000

 

 

300,000

 

103.9

 

 

103.9

 

 

Long-term debt and finance lease liabilities

 

152,663

 

 

152,227

 

 

151,997

 

0.3

 

 

0.4

 

 

Operating lease liabilities

 

115,387

 

 

109,656

 

 

110,105

 

5.2

 

 

4.8

 

 

Accrued expenses and other liabilities

 

1,386,836

 

 

963,137

 

 

914,187

 

44.0

 

 

51.7

 

 

Total liabilities

 

56,784,801

 

 

56,538,000

 

 

54,307,328

 

0.4

 

 

4.6

 

 

Stockholders’ equity

 

5,609,482

 

 

5,703,456

 

 

5,547,548

 

(1.6

)

 

1.1

 

 

Total liabilities and stockholders’ equity

$

62,394,283

 

$

62,241,456

 

$

59,854,876

 

0.2

%

 

4.2

%

 

 

 

 

 

 

 

 

 

Book value per common share

$

39.81

 

$

40.09

 

$

39.10

 

(0.7

)%

 

1.8

%

 

Tangible equity (1) per common share

$

36.44

 

$

36.76

 

$

35.75

 

(0.9

)

 

1.9

 

 

Number of common shares at period-end

 

140,917

 

 

142,257

 

 

141,878

 

(0.9

)

 

(0.7

)

 

Tangible equity to tangible assets ratio (1)

 

8.29

%

 

8.47

%

 

8.54

%

(18

)

bps

(25

)

bps

 

NM - Not meaningful.

(1)

 

See reconciliation of GAAP to non-GAAP financial measures in Table 13.

 

EAST WEST BANCORP, INC. AND SUBSIDIARIES

TOTAL LOANS AND DEPOSITS DETAIL

($ in thousands)

(unaudited)

Table 2

 

 

 

 

 

June 30, 2022

% Change

 

June 30, 2022

March 31, 2022

June 30, 2021

Qtr-o-Qtr

Yr-o-Yr

Loans:

 

 

 

 

 

Commercial:

 

 

 

 

 

Commercial and industrial (“C&I”) (1)

$

15,377,117

 

$

14,838,134

 

$

13,790,461

 

3.6

%

11.5

%

Commercial real estate (“CRE”):

 

 

 

 

 

CRE

 

13,566,748

 

 

12,636,787

 

 

11,711,369

 

7.4

 

15.8

 

Multifamily residential

 

4,443,704

 

 

3,894,463

 

 

3,219,796

 

14.1

 

38.0

 

Construction and land

 

515,857

 

 

443,836

 

 

460,678

 

16.2

 

12.0

 

Total CRE

 

18,526,309

 

 

16,975,086

 

 

15,391,843

 

9.1

 

20.4

 

Consumer:

 

 

 

 

 

Residential mortgage:

 

 

 

 

 

Single-family residential

 

10,234,473

 

 

9,283,429

 

 

8,869,370

 

10.2

 

15.4

 

Home equity lines of credit (“HELOCs”)

 

2,280,080

 

 

2,266,634

 

 

1,872,166

 

0.6

 

21.8

 

Total residential mortgage

 

12,514,553

 

 

11,550,063

 

 

10,741,536

 

8.4

 

16.5

 

Other consumer

 

84,097

 

 

127,399

 

 

147,659

 

(34.0

)

(43.0

)

Total loans HFI (2)

 

46,502,076

 

 

43,490,682

 

 

40,071,499

 

6.9

 

16.0

 

Loans HFS

 

28,464

 

 

631

 

 

1,819

 

NM

 

NM

 

Total loans (2)

 

46,530,540

 

 

43,491,313

 

 

40,073,318

 

7.0

 

16.1

 

Allowance for loan losses

 

(563,270

)

 

(545,685

)

 

(585,724

)

3.2

 

(3.8

)

Net loans (2)

$

45,967,270

 

$

42,945,628

 

$

39,487,594

 

7.0

 

16.4

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

Noninterest-bearing demand

$

23,028,831

 

$

24,927,768

 

$

21,816,721

 

(7.6

)%

5.6

%

Interest-bearing checking

 

7,094,726

 

 

6,774,826

 

 

6,762,178

 

4.7

 

4.9

 

Money market

 

11,814,402

 

 

12,108,432

 

 

12,853,812

 

(2.4

)

(8.1

)

Savings

 

3,027,819

 

 

2,897,248

 

 

2,719,106

 

4.5

 

11.4

 

Time deposits

 

9,377,576

 

 

8,230,087

 

 

8,430,758

 

13.9

 

11.2

 

Total deposits

$

54,343,354

 

$

54,938,361

 

$

52,582,575

 

(1.1

)%

3.3

%

 

NM - Not meaningful.

(1)

 

Includes $153.3 million, $318.1 million and $1.43 billion of Paycheck Protection Program (“PPP”) loans as of June 30, 2022, March 31, 2022 and June 30, 2021, respectively. Excluding PPP loans, total loans were $46.38 billion, $43.17 billion and $38.64 billion as of June 30, 2022, March 31, 2022 and June 30, 2021, respectively.

(2)

 

Includes $(56.2) million, $(42.7) million and $(67.0) million of net deferred loan fees and net unamortized premiums as of June 30, 2022, March 31, 2022 and June 30, 2021, 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

June 30, 2022

% Change

 

June 30, 2022

March 31, 2022

June 30, 2021

Qtr-o-Qtr

Yr-o-Yr

Interest and dividend income (1)

$

499,754

$

432,029

$

399,333

 

15.7

%

25.1

%

Interest expense

 

26,802

 

 

16,416

 

 

22,860

 

63.3

 

17.2

 

Net interest income before provision for (reversal of) credit losses

 

472,952

 

 

415,613

 

 

376,473

 

13.8

 

25.6

 

Provision for (reversal of) credit losses

 

13,500

 

 

8,000

 

 

(15,000

)

68.8

 

(190.0

)

Net interest income after provision for (reversal of) credit losses

 

459,452

 

 

407,613

 

 

391,473

 

12.7

 

17.4

 

Noninterest income

 

78,444

 

 

79,743

 

 

68,431

 

(1.6

)

14.6

 

Noninterest expense

 

196,860

 

 

189,450

 

 

189,523

 

3.9

 

3.9

 

Income before income taxes

 

341,036

 

 

297,906

 

 

270,381

 

14.5

 

26.1

 

Income tax expense

 

82,707

 

 

60,254

 

 

45,639

 

37.3

 

81.2

 

Net income

$

258,329

 

$

237,652

 

$

224,742

 

8.7

%

14.9

%

Earnings per share (“EPS”)

 

 

 

 

 

- Basic

$

1.83

 

$

1.67

 

$

1.58

 

9.2

%

15.3

%

- Diluted

$

1.81

 

$

1.66

 

$

1.57

 

9.3

 

15.5

 

Weighted-average number of shares outstanding

 

 

 

 

 

- Basic

 

141,429

 

 

142,025

 

 

141,868

 

(0.4

)%

(0.3

)%

- Diluted

 

142,372

 

 

143,223

 

 

143,040

 

(0.6

)

(0.5

)

 

 

 

 

 

 

 

Three Months Ended

June 30, 2022

% Change

 

June 30, 2022

March 31, 2022

June 30, 2021

Qtr-o-Qtr

Yr-o-Yr

Noninterest income:

 

 

 

 

 

Lending fees

$

20,142

 

$

19,438

 

$

21,092

 

3.6

%

(4.5

)%

Deposit account fees

 

22,372

 

 

20,315

 

 

17,342

 

10.1

 

29.0

 

Interest rate contracts and other derivative income (loss)

 

9,801

 

 

11,133

 

 

(3,172

)

(12.0

)

409.0

Foreign exchange income

 

11,361

 

 

12,699

 

 

13,007

 

(10.5

)

(12.7

)

Wealth management fees

 

6,539

 

 

6,052

 

 

7,951

 

8.0

 

(17.8

)

Net gains on sales of loans

 

917

 

 

2,922

 

 

1,491

 

(68.6

)

(38.5

)

Gains on sales of AFS debt securities

 

28

 

 

1,278

 

 

632

 

(97.8

)

(95.6

)

Other investment income

 

4,863

 

 

1,627

 

 

7,596

 

198.9

 

(36.0

)

Other income

 

2,421

 

 

4,279

 

 

2,492

 

(43.4

)

(2.8

)

Total noninterest income

$

78,444

 

$

79,743

 

$

68,431

 

(1.6

)%

14.6

%

Noninterest expense:

 

 

 

 

 

Compensation and employee benefits

$

113,364

 

$

116,269

 

$

105,426

 

(2.5

)%

7.5

%

Occupancy and equipment expense

 

15,469

 

 

15,464

 

 

15,377

 

0.0

 

0.6

 

Deposit insurance premiums and regulatory assessments

 

4,927

 

 

4,717

 

 

4,274

 

4.5

 

15.3

 

Deposit account expense

 

5,671

 

 

4,693

 

 

3,817

 

20.8

 

48.6

 

Data processing

 

3,486

 

 

3,665

 

 

4,035

 

(4.9

)

(13.6

)

Computer software expense

 

6,572

 

 

7,294

 

 

7,521

 

(9.9

)

(12.6

)

Consulting expense

 

2,021

 

 

1,833

 

 

1,868

 

10.3

 

8.2

 

Legal expense

 

1,047

 

 

718

 

 

1,975

 

45.8

 

(47.0

)

Other operating expense

 

29,324

 

 

20,897

 

 

17,939

 

40.3

 

63.5

 

Amortization of tax credit and other investments

 

14,979

 

 

13,900

 

 

27,291

 

7.8

 

(45.1

)

Total noninterest expense

$

196,860

 

$

189,450

 

$

189,523

 

3.9

%

3.9

%

 

(1)

 

Includes $1.4 million, $5.2 million and $15.4 million of interest income related to PPP loans for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively.

 

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

($ and shares in thousands, except per share data)

(unaudited)

Table 4

 

 

Six Months Ended

June 30, 2022

% Change

 

June 30, 2022

June 30, 2021

Yr-o-Yr

Interest and dividend income (1)

$

931,783

$

780,719

19.3

%

Interest expense

 

43,218

 

 

50,551

 

(14.5

)

Net interest income before provision for (reversal of) credit losses

 

888,565

 

 

730,168

 

21.7

 

Provision for (reversal of) credit losses

 

21,500

 

 

(15,000

)

(243.3

)

Net interest income after provision for (reversal of) credit losses

 

867,065

 

 

745,168

 

16.4

 

Noninterest income

 

158,187

 

 

141,297

 

12.0

 

Noninterest expense

 

386,310

 

 

380,600

 

1.5

 

Income before income taxes

 

638,942

 

 

505,865

 

26.3

 

Income tax expense

 

142,961

 

 

76,129

 

87.8

 

Net income

$

495,981

 

$

429,736

 

15.4

%

EPS

 

 

 

- Basic

$

3.50

 

$

3.03

 

15.4

%

- Diluted

$

3.47

 

$

3.01

 

15.5

 

Weighted-average number of shares outstanding

 

 

 

- Basic

 

141,725

 

 

141,758

 

0.0

%

- Diluted

 

142,838

 

 

142,963

 

(0.1

)

 

 

 

 

 

Six Months Ended

June 30, 2022

% Change

 

June 30, 2022

June 30, 2021

Yr-o-Yr

Noninterest income:

 

 

 

Lending fees

$

39,580

 

$

39,449

 

0.3

%

Deposit account fees

 

42,687

 

 

32,725

 

30.4

 

Interest rate contracts and other derivative income

 

20,934

 

 

13,825

 

51.4

 

Foreign exchange income

 

24,060

 

 

22,533

 

6.8

 

Wealth management fees

 

12,591

 

 

14,862

 

(15.3

)

Net gains on sales of loans

 

3,839

 

 

3,272

 

17.3

 

Gains on sales of AFS debt securities

 

1,306

 

 

824

 

58.5

 

Other investment income

 

6,490

 

 

8,521

 

(23.8

)

Other income

 

6,700

 

 

5,286

 

26.7

 

Total noninterest income

$

158,187

 

$

141,297

 

12.0

%

Noninterest expense:

 

 

 

Compensation and employee benefits

$

229,633

 

$

213,234

 

7.7

%

Occupancy and equipment expense

 

30,933

 

 

31,299

 

(1.2

)

Deposit insurance premiums and regulatory assessments

 

9,644

 

 

8,150

 

18.3

 

Deposit account expense

 

10,364

 

 

7,709

 

34.4

 

Data processing

 

7,151

 

 

8,513

 

(16.0

)

Computer software expense

 

13,866

 

 

14,680

 

(5.5

)

Consulting expense

 

3,854

 

 

3,343

 

15.3

 

Legal expense

 

1,765

 

 

3,477

 

(49.2

)

Other operating expense

 

50,221

 

 

37,546

 

33.8

 

Amortization of tax credit and other investments

 

28,879

 

 

52,649

 

(45.1

)

Total noninterest expense

$

386,310

 

$

380,600

 

1.5

%

 

(1)

 

Includes $6.5 million and $30.4 million of interest income related to PPP loans for the six months ended June 30, 2022 and 2021, respectively.

 

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED AVERAGE BALANCES

($ in thousands)

(unaudited)

Table 5

 

 

 

 

 

Three Months Ended

June 30, 2022

% Change

Six Months Ended

June 30, 2022

% Change

 

June 30,

2022

March 31,

2022

June 30,

2021

Qtr-o-Qtr

Yr-o-Yr

June 30,

2022

June 30,

2021

Yr-o-Yr

Loans:

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

C&I (1)

$

14,986,876

$

14,271,902

$

13,811,966

5.0

%

8.5

%

$

14,631,365

$

13,753,244

6.4

%

CRE:

 

 

 

 

 

 

 

 

CRE

 

13,049,058

 

 

12,279,365

 

 

11,616,916

 

6.3

 

12.3

 

 

12,666,338

 

 

11,472,102

 

10.4

 

Multifamily residential

 

4,112,411

 

 

3,749,571

 

 

3,125,001

 

9.7

 

31.6

 

 

3,931,993

 

 

3,083,769

 

27.5

 

Construction and land

 

475,933

 

 

392,923

 

 

477,860

 

21.1

 

(0.4

)

 

434,657

 

 

513,401

 

(15.3

)

Total CRE

 

17,637,402

 

 

16,421,859

 

 

15,219,777

 

7.4

 

15.9

 

 

17,032,988

 

 

15,069,272

 

13.0

 

Consumer:

 

 

 

 

 

 

 

 

Residential mortgage:

 

 

 

 

 

 

 

 

Single-family residential

 

9,624,242

 

 

9,111,188

 

 

8,650,706

 

5.6

 

11.3

 

 

9,369,132

 

 

8,483,806

 

10.4

 

HELOCs

 

2,290,378

 

 

2,183,080

 

 

1,800,213

 

4.9

 

27.2

 

 

2,237,025

 

 

1,733,593

 

29.0

 

Total residential mortgage

 

11,914,620

 

 

11,294,268

 

 

10,450,919

 

5.5

 

14.0

 

 

11,606,157

 

 

10,217,399

 

13.6

 

Other consumer

 

87,590

 

 

124,389

 

 

139,608

 

(29.6

)

(37.3

)

 

105,888

 

 

138,340

 

(23.5

)

Total loans (2)

$

44,626,488

 

$

42,112,418

 

$

39,622,270

 

6.0

%

12.6

%

$

43,376,398

 

$

39,178,255

 

10.7

%

 

 

 

 

 

 

 

 

 

Interest-earning assets

$

58,668,677

 

$

58,692,366

 

$

54,901,209

 

0.0

%

6.9

%

$

58,680,456

 

$

53,882,288

 

8.9

%

Total assets

$

62,232,841

 

$

61,758,048

 

$

57,771,837

 

0.8

%

7.7

%

$

61,996,756

 

$

56,689,075

 

9.4

%

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Noninterest-bearing demand

$

23,887,452

 

$

23,432,746

 

$

19,717,315

 

1.9

%

21.1

%

$

23,661,355

 

$

18,909,991

 

25.1

%

Interest-bearing checking

 

6,712,890

 

 

6,648,065

 

 

6,671,358

 

1.0

 

0.6

 

 

6,680,657

 

 

6,532,965

 

2.3

 

Money market

 

12,319,930

 

 

12,913,336

 

 

12,596,515

 

(4.6

)

(2.2

)

 

12,614,994

 

 

12,088,006

 

4.4

 

Savings

 

2,970,007

 

 

2,930,309

 

 

2,676,865

 

1.4

 

11.0

 

 

2,950,268

 

 

2,675,677

 

10.3

 

Time deposits

 

8,239,571

 

 

8,100,890

 

 

8,518,936

 

1.7

 

(3.3

)

 

8,170,613

 

 

8,814,159

 

(7.3

)

Total deposits

$

54,129,850

 

$

54,025,346

 

$

50,180,989

 

0.2

%

7.9

%

$

54,077,887

 

$

49,020,798

 

10.3

%

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

$

30,957,475

 

$

31,218,479

 

$

31,394,114

 

(0.8

)%

(1.4

)%

$

31,087,256

 

$

31,130,307

 

(0.1

)%

Stockholders’ equity

$

5,682,427

 

$

5,842,615

 

$

5,425,952

 

(2.7

)%

4.7

%

$

5,762,078

 

$

5,382,267

 

7.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

Average balances of PPP loans were $223.2 million, $410.6 million and $1.87 billion for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively, and $316.4 million and $1.90 billion for the six months ended June 30, 2022 and 2021, respectively.

(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

 

June 30, 2022

March 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

$

2,797,711

$

4,787

0.69

%

$

4,466,012

$

3,260

0.30

%

Resale agreements

 

1,641,723

 

 

8,553

 

2.09

%

 

2,097,998

 

 

8,383

 

1.62

%

AFS debt securities

 

6,503,677

 

 

33,438

 

2.06

%

 

7,969,795

 

 

34,469

 

1.75

%

HTM debt securities

 

3,021,239

 

 

12,738

 

1.69

%

 

1,968,568

 

 

8,198

 

1.69

%

Loans (2)

 

44,626,488

 

 

439,416

 

3.95

%

 

42,112,418

 

 

377,110

 

3.63

%

FHLB and FRB stock

 

77,839

 

 

822

 

4.24

%

 

77,575

 

 

609

 

3.18

%

Total interest-earning assets

 

58,668,677

 

 

499,754

 

3.42

%

 

58,692,366

 

 

432,029

 

2.99

%

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

Cash and due from banks

 

712,884

 

 

 

 

641,882

 

 

 

Allowance for loan losses

 

(545,489

)

 

 

 

(543,345

)

 

 

Other assets

 

3,396,769

 

 

 

 

2,967,145

 

 

 

Total assets

$

62,232,841

 

 

 

$

61,758,048

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

Checking deposits

$

6,712,890

 

$

3,178

 

0.19

%

$

6,648,065

 

$

1,402

 

0.09

%

Money market deposits

 

12,319,930

 

 

8,892

 

0.29

%

 

12,913,336

 

 

3,203

 

0.10

%

Savings deposits

 

2,970,007

 

 

1,864

 

0.25

%

 

2,930,309

 

 

1,704

 

0.24

%

Time deposits

 

8,239,571

 

 

8,554

 

0.42

%

 

8,100,890

 

 

6,680

 

0.33

%

Federal funds purchased and other short-term borrowings

 

64,145

 

 

241

 

1.51

%

 

1,866

 

 

9

 

1.96

%

FHLB advances

 

138,960

 

 

559

 

1.61

%

 

160,018

 

 

578

 

1.46

%

Repurchase agreements

 

359,778

 

 

2,418

 

2.70

%

 

311,984

 

 

2,016

 

2.62

%

Long-term debt and finance lease liabilities

 

152,194

 

 

1,096

 

2.89

%

 

152,011

 

 

824

 

2.20

%

Total interest-bearing liabilities

 

30,957,475

 

 

26,802

 

0.35

%

 

31,218,479

 

 

16,416

 

0.21

%

 

 

 

 

 

 

 

Noninterest-bearing liabilities and stockholders’ equity:

 

 

 

 

 

 

Demand deposits

 

23,887,452

 

 

 

 

23,432,746

 

 

 

Accrued expenses and other liabilities

 

1,705,487

 

 

 

 

1,264,208

 

 

 

Stockholders’ equity

 

5,682,427

 

 

 

 

5,842,615

 

 

 

Total liabilities and stockholders’ equity

$

62,232,841

 

 

 

$

61,758,048

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

3.07

%

 

 

2.78

%

Net interest income and net interest margin

 

$

472,952

 

3.23

%

 

$

415,613

 

2.87

%

 

(1)

 

Annualized.

(2)

 

Includes loans HFS. Average balances of PPP loans were $223.2 million and $410.6 million for the three months ended June 30, 2022 and March 31, 2022, respectively.

 

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 7

 

 

Three Months Ended

June 30, 2022

June 30, 2021

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

$

2,797,711

$

4,787

0.69

%

$

5,072,225

$

3,628

0.29

%

Resale agreements

 

1,641,723

 

 

8,553

 

2.09

%

 

2,129,567

 

 

8,021

 

1.51

%

AFS debt securities

 

6,503,677

 

 

33,438

 

2.06

%

 

7,997,005

 

 

34,690

 

1.74

%

HTM debt securities

 

3,021,239

 

 

12,738

 

1.69

%

 

 

 

 

%

Loans (2)

 

44,626,488

 

 

439,416

 

3.95

%

 

39,622,270

 

 

352,453

 

3.57

%

FHLB and FRB stock

 

77,839

 

 

822

 

4.24

%

 

80,142

 

 

541

 

2.71

%

Total interest-earning assets

 

58,668,677

 

 

499,754

 

3.42

%

 

54,901,209

 

 

399,333

 

2.92

%

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

Cash and due from banks

 

712,884

 

 

 

 

600,053

 

 

 

Allowance for loan losses

 

(545,489

)

 

 

 

(607,523

)

 

 

Other assets

 

3,396,769

 

 

 

 

2,878,098

 

 

 

Total assets

$

62,232,841

 

 

 

$

57,771,837

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

Checking deposits

$

6,712,890

 

$

3,178

 

0.19

%

$

6,671,358

 

$

3,777

 

0.23

%

Money market deposits

 

12,319,930

 

 

8,892

 

0.29

%

 

12,596,515

 

 

3,712

 

0.12

%

Savings deposits

 

2,970,007

 

 

1,864

 

0.25

%

 

2,676,865

 

 

2,078

 

0.31

%

Time deposits

 

8,239,571

 

 

8,554

 

0.42

%

 

8,518,936

 

 

8,431

 

0.40

%

Federal funds purchased and other short-term borrowings

 

64,145

 

 

241

 

1.51

%

 

336

 

 

 

%

FHLB advances

 

138,960

 

 

559

 

1.61

%

 

474,887

 

 

2,099

 

1.77

%

Repurchase agreements

 

359,778

 

 

2,418

 

2.70

%

 

303,118

 

 

1,991

 

2.63

%

Long-term debt and finance lease liabilities

 

152,194

 

 

1,096

 

2.89

%

 

152,099

 

 

772

 

2.04

%

Total interest-bearing liabilities

 

30,957,475

 

 

26,802

 

0.35

%

 

31,394,114

 

 

22,860

 

0.29

%

 

 

 

 

 

 

 

Noninterest-bearing liabilities and stockholders’ equity:

 

 

 

 

 

 

Demand deposits

 

23,887,452

 

 

 

 

19,717,315

 

 

 

Accrued expenses and other liabilities

 

1,705,487

 

 

 

 

1,234,456

 

 

 

Stockholders’ equity

 

5,682,427

 

 

 

 

5,425,952

 

 

 

Total liabilities and stockholders’ equity

$

62,232,841

 

 

 

$

57,771,837

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

3.07

%

 

 

2.63

%

Net interest income and net interest margin

 

$

472,952

 

3.23

%

 

$

376,473

 

2.75

%

 

(1)

 

Annualized.

(2)

 

Includes loans HFS. Average balances of PPP loans were $223.2 million and $1.87 billion for the three months ended June 30, 2022 and June 30, 2021, respectively.

 

EAST WEST BANCORP, INC. AND SUBSIDIARIES

YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 8

 

 

Six Months Ended

June 30, 2022

June 30, 2021

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

$

3,627,253

$

8,047

0.45

%

$

5,592,124

$

7,260

0.26

%

Resale agreements

 

1,868,600

 

 

16,936

 

1.83

%

 

1,797,578

 

 

14,120

 

1.58

%

AFS debt securities

 

7,232,686

 

 

67,907

 

1.89

%

 

7,232,686

 

 

63,790

 

1.78

%

HTM debt securities

 

2,497,811

 

 

20,936

 

1.69

%

 

 

 

 

%

Loans (2)

 

43,376,398

 

 

816,526

 

3.80

%

 

39,178,255

 

 

694,461

 

3.57

%

FHLB and FRB stock

 

77,708

 

 

1,431

 

3.71

%

 

81,645

 

 

1,088

 

2.69

%

Total interest-earning assets

 

58,680,456

 

 

931,783

 

3.20

%

 

53,882,288

 

 

780,719

 

2.92

%

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

Cash and due from banks

 

677,579

 

 

 

 

590,219

 

 

 

Allowance for loan losses

 

(544,423

)

 

 

 

(613,026

)

 

 

Other assets

 

3,183,144

 

 

 

 

2,829,594

 

 

 

Total assets

$

61,996,756

 

 

 

$

56,689,075

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

Checking deposits

$

6,680,657

 

$

4,580

 

0.14

%

$

6,532,965

 

$

7,991

 

0.25

%

Money market deposits

 

12,614,994

 

 

12,095

 

0.19

%

 

12,088,006

 

 

8,423

 

0.14

%

Savings deposits

 

2,950,268

 

 

3,568

 

0.24

%

 

2,675,677

 

 

3,819

 

0.29

%

Time deposits

 

8,170,613

 

 

15,234

 

0.38

%

 

8,814,159

 

 

19,587

 

0.45

%

Federal funds purchased and other short-term borrowings

 

33,177

 

 

250

 

1.52

%

 

2,508

 

 

42

 

3.38

%

FHLB advances

 

149,431

 

 

1,137

 

1.53

%

 

563,331

 

 

5,168

 

1.85

%

Repurchase agreements

 

336,013

 

 

4,434

 

2.66

%

 

301,567

 

 

3,969

 

2.65

%

Long-term debt and finance lease liabilities

 

152,103

 

 

1,920

 

2.55

%

 

152,094

 

 

1,552

 

2.06

%

Total interest-bearing liabilities

 

31,087,256

 

 

43,218

 

0.28

%

 

31,130,307

 

 

50,551

 

0.33

%

 

 

 

 

 

 

 

Noninterest-bearing liabilities and stockholders’ equity:

 

 

 

 

 

 

Demand deposits

 

23,661,355

 

 

 

 

18,909,991

 

 

 

Accrued expenses and other liabilities

 

1,486,067

 

 

 

 

1,266,510

 

 

 

Stockholders’ equity

 

5,762,078

 

 

 

 

5,382,267

 

 

 

Total liabilities and stockholders’ equity

$

61,996,756

 

 

 

$

56,689,075

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

2.92

%

 

 

2.59

%

Net interest income and net interest margin

 

$

888,565

 

3.05

%

 

$

730,168

 

2.73

%

 

(1)

 

Annualized.

(2)

 

Includes loans HFS. Average balances of PPP loans were $316.4 million and $1.90 billion for the six months ended June 30, 2022 and 2021, respectively.

 

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED RATIOS

(unaudited)

Table 9

 

 

 

Three Months Ended (1)

 

June 30, 2022

Basis Point Change

 

 

 

June 30, 2022

 

March 31, 2022

 

June 30, 2021

 

Qtr-o-Qtr

 

Yr-o-Yr

 

 

Return on average assets

 

1.66

%

 

1.56

%

 

1.56

%

 

10

 

bps

10

 

bps

 

Return on average equity

 

18.23

%

 

16.50

%

 

16.61

%

 

173

 

 

162

 

 

 

Tangible return on average tangible equity (2)

 

19.94

%

 

18.00

%

 

18.28

%

 

194

 

 

166

 

 

 

Interest rate spread

 

3.07

%

 

2.78

%

 

2.63

%

 

29

 

 

44

 

 

 

Net interest margin

 

3.23

%

 

2.87

%

 

2.75

%

 

36

 

 

48

 

 

 

Average loan yield

 

3.95

%

 

3.63

%

 

3.57

%

 

32

 

 

38

 

 

 

Yield on average interest-earning assets

 

3.42

%

 

2.99

%

 

2.92

%

 

43

 

 

50

 

 

 

Average cost of interest-bearing deposits

 

0.30

%

 

0.17

%

 

0.24

%

 

13

 

 

6

 

 

 

Average cost of deposits

 

0.17

%

 

0.10

%

 

0.14

%

 

7

 

 

3

 

 

 

Average cost of funds

 

0.20

%

 

0.12

%

 

0.18

%

 

8

 

 

2

 

 

 

Adjusted pre-tax, pre-provision profitability ratio (3)

 

2.38

%

 

2.10

%

 

1.97

%

 

28

 

 

41

 

 

 

Adjusted noninterest expense/average assets (3)

 

1.17

%

 

1.15

%

 

1.12

%

 

2

 

 

5

 

 

 

Efficiency ratio

 

35.70

%

 

38.25

%

 

42.60

%

 

(255

)

 

(690

)

 

 

Adjusted efficiency ratio (3)

 

32.90

%

 

35.34

%

 

36.30

%

 

(244

)

bps

(340

)

bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended (1)

 

June 30, 2022

Basis Point Change

 

 

 

 

 

 

 

June 30, 2022

 

June 30, 2021

 

Yr-o-Yr

 

 

 

 

 

Return on average assets

 

1.61

%

 

1.53

%

 

8

 

bps

 

 

 

 

 

Return on average equity

 

17.36

%

 

16.10

%

 

126

 

 

 

 

 

 

 

Tangible return on average tangible equity (2)

 

18.96

%

 

17.73

%

 

123

 

 

 

 

 

 

 

Interest rate spread

 

2.92

%

 

2.59

%

 

33

 

 

 

 

 

 

 

Net interest margin

 

3.05

%

 

2.73

%

 

32

 

 

 

 

 

 

 

Average loan yield

 

3.80

%

 

3.57

%

 

23

 

 

 

 

 

 

 

Yield on average interest-earning assets

 

3.20

%

 

2.92

%

 

28

 

 

 

 

 

 

 

Average cost of interest-bearing deposits

 

0.24

%

 

0.27

%

 

(3

)

 

 

 

 

 

 

Average cost of deposits

 

0.13

%

 

0.16

%

 

(3

)

 

 

 

 

 

 

Average cost of funds

 

0.16

%

 

0.20

%

 

(4

)

 

 

 

 

 

 

Adjusted pre-tax, pre-provision profitability ratio (3)

 

2.25

%

 

1.94

%

 

31

 

 

 

 

 

 

 

Adjusted noninterest expense/average assets (3)

 

1.16

%

 

1.16

%

 

 

 

 

 

 

 

 

Efficiency ratio

 

36.91

%

 

43.67

%

 

(676

)

 

 

 

 

 

 

Adjusted efficiency ratio (3)

 

34.05

%

 

37.47

%

 

(342

)

bps

 

 

 

 

 

(1)

 

Annualized except for efficiency ratio.

(2)

 

See reconciliation of GAAP to non-GAAP financial measures in Table 13.

(3)

 

See reconciliation of GAAP to non-GAAP financial measures in Table 12.

 

EAST WEST BANCORP, INC. AND SUBSIDIARIES

ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES

($ in thousands)

(unaudited)

Table 10

 

 

 

 

Three Months Ended June 30, 2022

 

 

 

Commercial

 

Consumer

 

 

 

 

 

C&I

 

Total CRE

 

Total Residential

Mortgage

 

Other Consumer

 

Total

Allowance for loan losses, March 31, 2022

 

 

$

339,446

 

 

$

182,296

 

 

$

21,958

 

 

$

1,985

 

 

$

545,685

 

Provision for (reversal of) credit losses on loans

(a)

 

 

19,030

 

 

 

(9,181

)

 

 

3,122

 

 

 

(502

)

 

 

12,469

 

Gross charge-offs

 

 

 

(240

)

 

 

(679

)

 

 

(193

)

 

 

(34

)

 

 

(1,146

)

Gross recoveries

 

 

 

6,514

 

 

 

1,043

 

 

 

173

 

 

 

 

 

 

7,730

 

Total net recoveries (charge-offs)

 

 

 

6,274

 

 

 

364

 

 

 

(20

)

 

 

(34

)

 

 

6,584

 

Foreign currency translation adjustment

 

 

 

(1,468

)

 

 

 

 

 

 

 

 

 

 

 

(1,468

)

Allowance for loan losses, June 30, 2022

 

 

$

363,282

 

 

$

173,479

 

 

$

25,060

 

 

$

1,449

 

 

$

563,270

 

 

 

 

 

Three Months Ended March 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 credit losses on loans

(a)

 

 

9,262

 

 

 

1,658

 

 

 

1,225

 

 

 

107

 

 

 

12,252

 

Gross charge-offs

 

 

 

(11,188

)

 

 

(399

)

 

 

 

 

 

(46

)

 

 

(11,633

)

Gross recoveries

 

 

 

3,002

 

 

 

229

 

 

 

138

 

 

 

 

 

 

3,369

 

Total net (charge-offs) recoveries

 

 

 

(8,186

)

 

 

(170

)

 

 

138

 

 

 

(46

)

 

 

(8,264

)

Foreign currency translation adjustment

 

 

 

118

 

 

 

 

 

 

 

 

 

 

 

 

118

 

Allowance for loan losses, March 31, 2022

 

 

$

339,446

 

 

$

182,296

 

 

$

21,958

 

 

$

1,985

 

 

$

545,685

 

 

 

 

 

Three Months Ended June 30, 2021

 

 

 

Commercial

 

Consumer

 

 

 

 

 

C&I

 

Total CRE

 

Total Residential

Mortgage

 

Other Consumer

 

Total

Allowance for loan losses, March 31, 2021

 

 

$

394,084

 

 

$

192,895

 

 

$

18,509

 

$

2,018

 

 

$

607,506

 

(Reversal of) provision for credit losses on loans

(a)

 

 

(22,605

)

 

 

10,747

 

 

 

859

 

 

 

2,209

 

 

 

(8,790

)

Gross charge-offs

 

 

 

(10,572

)

 

 

(4,456

)

 

 

 

 

 

(32

)

 

 

(15,060

)

Gross recoveries

 

 

 

1,338

 

 

 

344

 

 

 

100

 

 

 

3

 

 

 

1,785

 

Total net (charge-offs) recoveries

 

 

 

(9,234

)

 

 

(4,112

)

 

 

100

 

 

 

(29

)

 

 

(13,275

)

Foreign currency translation adjustment

 

 

 

283

 

 

 

 

 

 

 

 

 

 

 

 

283

 

Allowance for loan losses, June 30, 2021

 

 

$

362,528

 

 

$

199,530

 

 

$

19,468

 

 

$

4,198

 

 

$

585,724

 

 

 

 

 

Six Months Ended June 30, 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)

 

 

28,292

 

 

 

(7,523

)

 

 

4,347

 

 

 

(395

)

 

 

24,721

 

Gross charge-offs

 

 

 

(11,428

)

 

 

(1,078

)

 

 

(193

)

 

 

(80

)

 

 

(12,779

)

Gross recoveries

 

 

 

9,516

 

 

 

1,272

 

 

 

311

 

 

 

 

 

 

11,099

 

Total net (charge-offs) recoveries

 

 

 

(1,912

)

 

 

194

 

 

 

118

 

 

 

(80

)

 

 

(1,680

)

Foreign currency translation adjustment

 

 

 

(1,350

)

 

 

 

 

 

 

 

 

 

 

 

(1,350

)

Allowance for loan losses, June 30, 2022

 

 

$

363,282

 

 

$

173,479

 

 

$

25,060

 

 

$

1,449

 

 

$

563,270

 

 

 

 

 

Six Months Ended June 30, 2021

 

 

 

Commercial

 

Consumer

 

 

 

 

 

C&I

 

Total CRE

 

Total Residential

Mortgage

 

Other Consumer

 

Total

Allowance for loan losses, December 31, 2020

 

 

$

398,040

 

 

$

201,603

 

 

$

18,210

 

 

$

2,130

 

 

$

619,983

 

(Reversal of) provision for credit losses on loans

(a)

 

 

(18,763

)

 

 

7,671

 

 

 

1,257

 

 

 

2,096

 

 

 

(7,739

)

Gross charge-offs

 

 

 

(19,008

)

 

 

(11,739

)

 

 

(179

)

 

 

(33

)

 

 

(30,959

)

Gross recoveries

 

 

 

2,098

 

 

 

1,995

 

 

 

180

 

 

 

5

 

 

 

4,278

 

Total net (charge-offs) recoveries

 

 

 

(16,910

)

 

 

(9,744

)

 

 

1

 

 

 

(28

)

 

 

(26,681

)

Foreign currency translation adjustment

 

 

 

161

 

 

 

 

 

 

 

 

 

 

 

 

161

 

Allowance for loan losses, June 30, 2021

 

 

$

362,528

 

 

$

199,530

 

 

$

19,468

 

 

$

4,198

 

 

$

585,724

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30, 2022

 

March 31, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

Unfunded Credit Facilities

 

 

 

 

 

 

 

 

 

 

 

Allowance for unfunded credit commitments, beginning of period (1)

 

 

$

23,262

 

$

27,514

 

 

$

32,529

 

 

$

27,514

 

 

$

33,577

 

Provision for (reversal of) credit losses on unfunded credit commitments

(b)

 

 

1,031

 

 

 

(4,252

)

 

 

(6,210

)

 

 

(3,221

)

 

 

(7,261

)

Foreign currency translation adjustment

 

 

 

11

 

 

 

 

 

 

(19

)

 

 

11

 

 

 

(16

)

Allowance for unfunded credit commitments, end of period (1)

 

 

$

24,304

 

 

$

23,262

 

 

$

26,300

 

 

$

24,304

 

 

$

26,300

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for (reversal of) credit losses

(a)+(b)

 

$

13,500

 

 

$

8,000

 

 

$

(15,000

)

 

$

21,500

 

 

$

(15,000

)

 

 

 

 

 

 

 

 

 

 

 

 

(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 11

 

Criticized Loans

June 30, 2022

March 31, 2022

June 30, 2021

Special mention loans

$

590,227

$

402,704

$

386,807

Classified loans

 

432,414

 

 

430,633

 

 

645,180

 

Total criticized loans

$

1,022,641

 

$

833,337

 

$

1,031,987

 

 

 

 

Nonperforming Assets

June 30, 2022

March 31, 2022

June 30, 2021

Nonaccrual loans:

 

 

 

Commercial:

 

 

 

C&I

$

40,053

 

$

51,773

 

$

83,225

 

CRE:

 

 

 

Total CRE

 

12,742

 

 

9,827

 

 

81,573

 

Consumer:

 

 

 

Total residential mortgage

 

37,129

 

 

23,197

 

 

30,489

 

Other consumer

 

11

 

 

37

 

 

2,503

 

Total nonaccrual loans

 

89,935

 

 

84,834

 

 

197,790

 

Other real estate owned, net

 

 

 

 

 

14,914

 

Other nonperforming assets

 

 

 

9,548

 

 

13,025

 

Total nonperforming assets

$

89,935

 

$

94,382

 

$

225,729

 

 

 

 

Credit Quality Ratios

June 30, 2022

March 31, 2022

June 30, 2021

Annualized quarterly net (recoveries) charge-offs to average loans HFI

 

(0.06

)%

 

0.08

%

 

0.13

%

Special mention loans to loans HFI

 

1.27

%

 

0.93

%

 

0.97

%

Classified loans to loans HFI

 

0.93

%

 

0.99

%

 

1.61

%

Criticized loans to loans HFI

 

2.20

%

 

1.92

%

 

2.58

%

Nonperforming assets to total assets

 

0.14

%

 

0.15

%

 

0.38

%

Nonaccrual loans to loans HFI

 

0.19

%

 

0.20

%

 

0.49

%

Allowance for loan losses to loans HFI

 

1.21

%

 

1.25

%

 

1.46

%

 

 

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

($ in thousands)

(unaudited)

Table 12
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 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 and the amortization of core deposit intangibles. 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

 

 

 

 

June 30, 2022

 

March 31, 2022

 

June 30, 2021

Net interest income before provision for (reversal of) credit losses

 

 

 

$

472,952

 

 

$

415,613

 

 

$

376,473

 

Total noninterest income

 

 

 

 

78,444

 

 

 

79,743

 

 

 

68,431

 

Total revenue

 

(a)

 

$

551,396

 

 

$

495,356

 

 

$

444,904

 

 

 

 

 

 

 

 

 

 

Total noninterest expense

 

(b)

 

$

196,860

 

 

$

189,450

 

 

$

189,523

 

Less:

Amortization of tax credit and other investments

 

 

 

 

(14,979

)

 

 

(13,900

)

 

 

(27,291

)

Amortization of core deposit intangibles

 

 

 

 

(488

)

 

 

(511

)

 

 

(710

)

Adjusted noninterest expense

 

(c)

 

$

181,393

 

 

$

175,039

 

 

$

161,522

 

Efficiency ratio

 

(b)/(a)

 

 

35.70

%

 

 

38.25

%

 

 

42.60

%

Adjusted efficiency ratio

 

(c)/(a)

 

 

32.90

%

 

 

35.34

%

 

 

36.30

%

Adjusted pre-tax, pre-provision income

 

(a)-(c) = (d)

 

$

370,003

 

 

$

320,317

 

 

$

283,382

 

Average total assets

 

(e)

 

$

62,232,841

 

 

$

61,758,048

 

 

$

57,771,837

 

Adjusted pre-tax, pre-provision profitability ratio (1)

 

(d)/(e)

 

 

2.38

%

 

 

2.10

%

 

 

1.97

%

Adjusted noninterest expense/average assets (1)

 

(c)/(e)

 

 

1.17

%

 

 

1.15

%

 

 

1.12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended