Attached files
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| 8-K - EAST WEST BANCORP 8-K 7-20-2011 - EAST WEST BANCORP INC | form8k.htm |
Exhibit 99.1
East West Bancorp, Inc.
135 N. Los Robles Ave., 7th Fl.
Pasadena, CA 91101
Tel. 626.768.6800
Fax 626.817.8838
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FOR FURTHER INFORMATION AT THE COMPANY:
Irene Oh
Chief Financial Officer
(626) 768-6360
EAST WEST BANCORP REPORTS 86% INCREASE IN EARNINGS PER
SHARE FROM PRIOR YEAR TO $0.39 AND NET INCOME OF $60.5 MILLION
FOR SECOND QUARTER 2011
Pasadena, CA – July 20, 2011 – East West Bancorp, Inc. (Nasdaq: EWBC), parent company of East West Bank, the financial bridge between the U.S. and Asia, today reported financial results for the second quarter of 2011. For the second quarter of 2011, net income was $60.5 million or $0.39 per dilutive share. East West increased second quarter net income $24.2 million or 67% and increased earnings per dilutive share $0.18 or 86% from the prior year period.
“East West is pleased to report solid second quarter earnings of $60.5 million or $0.39 per share,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. “Net income increased by $24.2 million, or 67% from the prior year period and $4.5 million or 8% from the first quarter of 2011. Fueled by our strong deposit growth, total assets reached nearly $22 billion, a 10% increase from the prior year, and a 3% increase from the prior quarter. Average earning assets grew to $19.4 billion, an increase of 11% from the prior year period and an increase of 4% from the first quarter of 2011. This increase in average earning assets was driven by solid second quarter loan growth of $300.2 million or 2% to $14.0 billion at June 30, 2011.”
“East West’s solid financial performance for the second quarter resulted in improvement in almost every key financial ratio. In comparison to the first quarter of 2011, earning assets expanded 4%, the adjusted net interest margin expanded to 4.03%, fee income increased and credit quality improved. The nonperforming assets to total assets ratio is down to 0.83% and net charge-offs decreased 8% from the first quarter.”
Ng concluded, “Although the operating environment for banks remains challenging, East West continues to grow market share, increase revenue, and improve profitability. Our second quarter performance demonstrated that we are on track with all of our strategic initiatives and are well positioned to grow our franchise and provide superior and sustainable return to our shareholders.”
2011 Quarterly Results Summary
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For the three months ended,
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Dollars in millions, except per share
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June 30, 2011
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March 31, 2011
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June 30, 2010
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Net income
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$ | 60.5 | $ | 56.1 | $ | 36.3 | ||||||
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Net income available to common shareholders
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58.8 | 54.4 | 30.2 | |||||||||
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Earnings per share (diluted)
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0.39 | 0.37 | 0.21 | |||||||||
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Return on average assets
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1.12 | % | 1.07 | % | 0.73 | % | ||||||
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Return on average common equity
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11.06 | % | 10.50 | % | 6.26 | % | ||||||
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Tier 1 risk-based capital ratio
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15.2 | % | 15.9 | % | 18.9 | % | ||||||
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Total risk-based capital ratio
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16.9 | % | 17.7 | % | 20.8 | % | ||||||
Second Quarter 2011 Highlights
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·
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Strong Second Quarter Earnings – For the second quarter 2011, net income was $60.5 million or $0.39 per share. Earnings per share grew $0.02 or 5% from the first quarter of 2011 and $0.18 or 86% from the second quarter of 2010.
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·
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Strong C&I Loan Growth of 23% Quarter to Date – Quarter to date, non-covered commercial and trade finance loans grew $500.7 million or 23% to $2.7 billion.
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·
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Record Deposit Growth – Total deposits grew to a record $17.1 billion, a $699.2 million or 4% increase from March 31, 2011. Core deposits grew to a record $9.4 billion as of June 30, 2011, an increase of $247.7 million or 3% from March 31, 2011.
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·
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Stable Net Interest Margin of 4.03% – The adjusted net interest margin for the second quarter totaled 4.03%, an improvement of 9 basis points from the first quarter of 2011, and an improvement of 8 basis points from the second quarter of 2010. 1
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·
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Net Charge-offs Down 8% from Q1 2011, Down 43% from Q2 2010 – Net charge-offs declined to $31.6 million, a decrease of $2.6 million or 8% from the prior quarter and a decrease of $23.6 million or 43% from the second quarter of 2010.
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·
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Nonperforming Assets Down 4% to 0.83% of Total Assets – Nonperforming assets decreased $7.1 million or 4% during the second quarter of 2011 to $181.2 million, or 0.83% of total assets. This is the seventh consecutive quarter East West reported a nonperforming assets to total assets ratio under 1.00%.
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2
Management Guidance
The Company is providing updated guidance for the full year of 2011. Management currently estimates that fully diluted earnings per share for the full year of 2011 will range from $1.52 to $1.54 per dilutive share or an increase of approximately 83% to 86% from 2010. Also, this updated guidance for the full year 2011 is an increase of approximately 3% from our previously released guidance. This updated EPS guidance for the remainder of 2011 is based on the following assumptions:
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Stable balance sheet
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A stable interest rate environment and an adjusted net interest margin of approximately 4.00%
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·
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Provision for loan losses of approximately $45 million for the remainder of the year
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Total noninterest expense of approximately $97 million to $100 million each quarter, net of amounts to be reimbursed by the FDIC
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·
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Effective tax rate of approximately 37%
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Balance Sheet Summary
Total assets increased 3% to $21.9 billion at June 30, 2011 compared to $21.1 billion at March 31, 2011. Average earning assets increased 4% to $19.4 billion for the quarter ended June 30, 2011, compared to $18.7 billion for the quarter ended March 31, 2011. The increase in total assets and average earning assets was primarily due to strong total loan growth of $300.2 million or 2% from March 31, 2011 to $14.0 billion at June 30, 2011 and an increase in investment securities of $275.1 million or 9% from March 31, 2011 to $3.2 billion at June 30, 2011.
Loans receivable totaled $14.0 billion at June 30, 2011 as compared to $13.7 billion at March 31, 2011. During the second quarter, non-covered loan balances increased 6% or $543.4 million, to $9.7 billion at June 30, 2011. The increase in non-covered loans was primarily driven by significant growth in commercial and trade finance loans of $500.7 million or 23%. Approximately $243.4 million or 49% of this increase in commercial and trade finance loans was a result of cross-border trade finance business in Hong Kong and China. Over 80% of these cross-border trade finance loans are fully secured by cash and/or standby letters of credit issued by major financial institutions. The other approximately 51% of the commercial and trade finance loan growth is attributed to our expanded lending platform in the U.S. Additionally, during the second quarter, non-covered single family loan balances grew $84.9 million or 7% and non-covered commercial real estate loan balances grew $69.0 million or 2% from March 31, 2011.
The growth in non-covered commercial and trade finance, commercial real estate and single-family loans was partially offset by decreases in non-covered land, construction, and consumer loans during the second quarter of 2011. Land and construction loans declined by $54.7 million or 12% to $420.1 million at June 30, 2011, or only 3% of total loans receivable. The consumer portfolio declined approximately $81.6 million or 12% during the quarter primarily as a result of the transfer of certain government guaranteed student loans to loans held for sale to reflect management’s intent to sell these loans at a future date. As of June 30, 2011, we classified $326.8 million of loans as held for sale, primarily comprised of government guaranteed student loans. Further, during the quarter, we sold $212.5 million of government guaranteed student loans at a gain of approximately $5.9 million.
3
Covered Loans
Covered loans totaled $4.4 billion as of June 30, 2011, a decrease of $243.2 million during the second quarter. The decrease in the covered loan portfolio was mainly due to paydowns, payoffs and charge-off activity.
The covered loan portfolio is comprised of loans acquired from the FDIC-assisted acquisitions of United Commercial Bank (UCB) and Washington First International Bank (WFIB) which are covered under loss share agreements with the FDIC. During the fourth quarter of 2010 we concluded that the credit quality is better than originally estimated and we lowered the credit discount on the UCB covered loan portfolio resulting in an increase in interest income over the life of the loans. Correspondingly, with the lowered credit discount, the expected reimbursement from the FDIC under the loss sharing agreement also decreased, resulting in amortization on the FDIC indemnification asset over the life of the indemnification asset, which is recorded as a charge to noninterest income. The net decrease in the FDIC indemnification asset resulting from loan disposition activity, recoveries and amortization of the indemnification asset totaled $32.4 million in the second quarter of 2011.
In total, the net decrease in the FDIC indemnification asset and receivable recorded in noninterest income (loss) was $(18.8) million for the second quarter of 2011. The net decrease of $32.4 million discussed above was partially offset by an increase in the FDIC receivable of $13.6 million due to reimbursable expense claims. During the second quarter we incurred $17.0 million in expenses on covered loans and other real estate owned, 80% or $13.6 million of which is reimbursable from the FDIC.
Deposits and Borrowings
The increase in loans and investments was fueled by record deposit growth. During the quarter, total deposits grew $699.2 or 4% from March 31, 2011 to a record $17.1 billion. Core deposits increased to a record $9.4 billion at June 30, 2011, or an increase of $247.7 million or 3% from the first quarter and time deposits increased to $7.8 billion at June 30, 2011, or an increase of $451.4 million or 6% from the first quarter. Noninterest-bearing demand deposits increased by $199.9 million or 7% for the second quarter of 2011.
As of June 30, 2011, FHLB advances totaled $533.0 million, a decrease of 33% or $260.7 million from March 31, 2011 due to the prepayment of FHLB advances during the second quarter. The FHLB advances prepaid during the second quarter carried an average effective cost of 1.6%. A prepayment penalty of $4.4 million was incurred during the second quarter which is included in noninterest expense. Additionally, during the second quarter, $10.3 million of 10.9% junior subordinated debt securities were called at par. These actions were taken to better position the balance sheet, reducing borrowing costs and improving the net interest margin in the coming quarters.
4
Second Quarter 2011 Operating Results
Net Interest Income
The core net interest margin, excluding the net impact to interest income of $32.4 million resulting from covered loan activity and amortization of the indemnification asset, increased 9 basis points from the first quarter of 2011 to 4.03% for the second quarter. 2 The improvement in the net interest margin from the previous quarter is primarily related to an increase in yield on both investment securities and covered loans, and a stable yield on noncovered loans. Due to our strong deposit growth during the quarter, excess liquidity was deployed into investments, including short-term investments and repurchase agreements, which contributed to the improvement of our net interest margin.
Although our net interest margin remains strong, the extended low interest rate environment continues to be a challenge for East West and the rest of the banking industry. East West continues to look for opportunities to minimize our cost of funds and maximize our yield through redeployment of excess liquidity into higher interest-earning assets, while also ensuring prudent interest rate risk management. Further, in the second quarter of 2011, East West prepaid $260.7 million of FHLB advances at an average effective cost of 1.6%. As a result of these actions, we expect our adjusted net interest margin to remain stable and be approximately 4.00% for the remainder of 2011.
Noninterest Income
The Company reported total noninterest income for the second quarter of 2011 of $12.5 million, compared to noninterest income of $11.0 million in the first quarter of 2011 and noninterest income of $35.7 million in the second quarter of 2010. Noninterest income in the second quarter of 2010 included a $19.5 million gain on the acquisition of WFIB.
Total fees and other operating income increased to $22.1 million for the second quarter of 2011, an increase from both the first quarter of 2011 and second quarter of 2010 as detailed below:
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Quarter Ended
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Quarter Ended
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Quarter Ended
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% Change
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($ in thousands)
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June 30, 2011
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March 31, 2011
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June 30, 2010
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(Yr/Yr)
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Branch fees
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$ | 9,078 | $ | 7,754 | $ | 8,219 | 10 | % | ||||||||
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Letters of credit fees and commissions
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3,390 | 3,044 | 2,865 | 18 | % | |||||||||||
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Ancillary loan fees
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2,055 | 1,991 | 2,369 | -13 | % | |||||||||||
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Other operating income
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7,597 | 6,197 | 2,875 | 164 | % | |||||||||||
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Total fees & other operating income
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$ | 22,120 | $ | 18,986 | $ | 16,328 | 35 | % | ||||||||
In comparison to the first quarter, total fees and other operating income increased 17% or $3.1 million during the second quarter, primarily due to an increase in branch fees, letter of credit fees and commissions, and foreign exchange income. Also included in noninterest income for the second quarter of 2011 were gains on sales of student loans of $5.9 million, a net gain on sales of investment securities of $1.1 million, and gains on the sales of two bank premises of $2.2 million.
5
Noninterest Expense
Noninterest expense totaled $117.6 million for the second quarter of 2011, compared to $106.8 million for the first quarter of 2011, and $125.3 million for the second quarter of 2010. The increase in noninterest expense from the first quarter of 2011 was primarily related to an increase in compensation expense, as well as an increase in credit cycle costs including legal expenses, loan related expenses and other real estate owned expenses. Compared to the prior quarter, compensation expense increased $2.6 million, other real estate owned expense increased $3.9 million, legal expenses increased by $2.7 million, and loan related expenses increased $1.2 million. In addition, included within noninterest expense for the second quarter of 2011 are prepayment penalties on FHLB advances of $4.4 million.
The increase in compensation expense for the second quarter of 2011 as compared to the first quarter of 2011 is primarily related to our continued investments in our commercial lending platform. The increase in the credit cycle costs as compared to the prior quarter is primarily related to expenses incurred on covered assets. In the second quarter, we incurred $17.0 million in expenses on covered loans and other real estate owned for which we expect that 80% or $13.6 million will be reimbursed by the FDIC. Of the $13.6 million of expenses reimbursable by the FDIC, $11.6 million is related to net writedowns and expenses on other real estate owned and $2.0 million is related to legal and other loan related expenses. Noninterest expense excluding amounts to be reimbursed by the FDIC and the prepayment penalty on FHLB advances totaled $99.6 million for the second quarter of 2011. 1
A summary of the noninterest expenses for the second quarter 2011, compared to the first quarter 2011, is detailed below:
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Quarter Ended
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Quarter Ended
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June 30, 2011
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March 31, 2011
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Total noninterest expense:
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$ | 117,597 | $ | 106,789 | ||||
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Amounts to be reimbursed on covered assets (80% of actual expense amount)
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13,574 | 9,483 | ||||||
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Prepayment penalties for FHLB advances
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4,433 | 4,022 | ||||||
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Noninterest expense excluding reimbursement amounts and prepayment penalties for FHLB advances.
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$ | 99,590 | $ | 93,284 | ||||
Management anticipates that in the third quarter of 2011, noninterest expense will be approximately $97 million to $100 million, net of amounts reimbursable from the FDIC.
The effective tax rate for the second quarter was 36.8% compared to 35.2% in the prior quarter. The effective tax rate is reduced from the statutory tax rate primarily due to the utilization of tax credits related to affordable housing investments.
Credit Quality
All asset quality metrics improved during the second quarter of 2011. Nonperforming assets, excluding covered assets, decreased by $7.1 million or 4% from the prior quarter to $181.2 million or only 0.83% of total assets at June 30, 2011. The decrease in nonperforming assets was due to an $8.0 million or 5% decrease in nonaccrual loans during the second quarter of 2011. In addition, for the seventh consecutive quarter, net charge-offs declined. Total net charge-offs decreased to $31.6 million for the second quarter of 2011, a decrease of 8% from the previous quarter and a decrease of 43% compared to the prior year quarter.
6
East West continues to maintain a strong allowance for non-covered loan losses at $213.8 million or 2.29% of non-covered loans receivable at June 30, 2011. This compares to an allowance for non-covered loan losses of $220.4 million or 2.50% of non-covered loans at March 31, 2011 and $249.5 million or 3.0% of outstanding loans at June 30, 2010. The provision for loan losses was $26.5 million for the second quarter of 2011, unchanged from the prior quarter, and a decrease of 52% as compared to the second quarter of 2010. Our allowance for loan losses and provision for loan losses has declined for several quarters as a result of credit quality improvement, partially offset by increases in the allowance for loan losses on commercial and trade finance loans, commensurate with the increases in these portfolios.
Management expects that the provision for loan losses will decrease in future quarters and total approximately $45 million for the remainder of 2011.
Capital Strength
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(Dollars in millions)
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June 30, 2011
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Well Capitalized Regulatory
Requirement
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Total Excess Above Well Capitalized
Requirement
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Tier 1 leverage capital ratio
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9.3 | % | 5.00 | % | $ | 902 | ||||||
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Tier 1 risk-based capital ratio
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15.2 | % | 6.00 | % | 1,188 | |||||||
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Total risk-based capital ratio
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16.9 | % | 10.00 | % | 895 | |||||||
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Tangible common equity to tangible assets
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8.1 | % | N/A | N/A | ||||||||
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Tangible common equity to risk weighted assets ratio
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13.4 | % | 4.00 | % * | 1,212 | |||||||
*As there is no stated regulatory guideline for this ratio, the SCAP (Supervisory Capital Assessment Program) guideline of 4.00% tangible common equity has been used.
Our capital ratios remain very strong. As of the end of the second quarter of 2011, our Tier 1 leverage capital ratio totaled 9.3%, our Tier 1 risk-based capital ratio totaled 15.2% and our total risk-based capital ratio totaled 16.9%. East West exceeds well capitalized requirements for all regulatory guidelines by over $800 million. During the second quarter East West called $10.3 million of 10.9% junior subordinated debt securities at par. The Company remains focused on active capital management and remains committed to maintaining strong capital levels that exceed regulatory requirements, while also supporting balance sheet growth, and providing a strong return to our shareholders.
Dividend Payout
East West’s Board of Directors has declared third quarter dividends on the common stock and Series A Preferred Stock. The common stock cash dividend of $0.05 is payable on or about August 24, 2011 to shareholders of record on August 10, 2011. The dividend on the Series A Preferred Stock of $20.00 per share is payable on August 1, 2011 to shareholders of record on July 15, 2011.
7
Conference Call
East West will host a conference call to discuss second quarter 2011 earnings with the public on Thursday, July 21, 2011 at 8:30 a.m. PDT/ 11:30 a.m. EDT. The public and investment community are invited to listen as management discusses second quarter results and operating developments. The following dial-in information is provided for participation in the conference call: Local call within the US – (877) 317-6789; Call within Canada – (866) 605-3852; International call – (412) 317-6789. A listen-only live broadcast of the call also will be available on the investor relations page of the Company's website at www.eastwestbank.com.
About East West
East West Bancorp is a publicly owned company with $21.9 billion in assets and is traded on the Nasdaq Global Select Market under the symbol “EWBC”. The Company’s wholly owned subsidiary, East West Bank, is one of the largest independent commercial banks headquartered in California with over 130 locations worldwide, including the U.S. markets of California, New York, Georgia, Massachusetts, Texas and Washington. In Greater China, East West’s presence includes a full service branch in Hong Kong and representative offices in Beijing, Shenzhen and Taipei. Through a wholly-owned subsidiary bank, East West’s presence in Greater China also includes full service branches in Shanghai and Shantou and a representative office in Guangzhou. For more information on East West Bancorp, visit the Company's website at www.eastwestbank.com.
Forward-Looking Statements
This release may contain forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and accordingly, the cautionary statements contained in East West Bancorp’s Annual Report on Form 10-K for the year ended Dec. 31, 2010 (See Item I -- Business, and Item 7 -- Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations), and other filings with the Securities and Exchange Commission are incorporated herein by reference. These factors include, but are not limited to: the effect of interest rate and currency exchange fluctuations; competition in the financial services market for both deposits and loans; EWBC’s ability to efficiently incorporate acquisitions into its operations; the ability of borrowers to perform as required under the terms of their loans; effect of additional provisions for loan losses; effect of any goodwill impairment, the ability of EWBC and its subsidiaries to increase its customer base; the effect of regulatory and legislative action, including California tax legislation and an announcement by the state’s Franchise Tax Board regarding the taxation of Registered Investment Companies; and regional and general economic conditions. Actual results and performance in future periods may be materially different from any future results or performance suggested by the forward-looking statements in this release. Such forward-looking statements speak only as of the date of this release. East West expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in the Bank’s expectations of results or any change in event.
1 See reconciliation of the GAAP financial measure to the non-GAAP financial measure in the tables attached.
8
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EAST WEST BANCORP, INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(In thousands, except per share amounts)
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(unaudited)
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June 30, 2011
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March 31, 2011
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June 30, 2010
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Assets
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Cash and cash equivalents
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$ | 1,598,498 | $ | 1,492,922 | $ | 1,394,851 | ||||||
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Short-term investments
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85,479 | 140,585 | 238,261 | |||||||||
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Securities purchased under resale agreements
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812,281 | 768,369 | 230,000 | |||||||||
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Investment securities
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3,206,108 | 2,930,976 | 2,077,011 | |||||||||
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Loans receivable, excluding covered loans (net of allowance for loan losses of $213,825, $220,402 and $249,462)
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9,428,015 | 8,870,177 | 8,177,966 | |||||||||
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Covered loans, net
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4,356,595 | 4,599,757 | 5,275,492 | |||||||||
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Total loans receivable, net
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13,784,610 | 13,469,934 | 13,453,458 | |||||||||
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Federal Home Loan Bank and Federal Reserve stock
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197,187 | 203,760 | 223,395 | |||||||||
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FDIC indemnification asset
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637,535 | 717,260 | 947,011 | |||||||||
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Other real estate owned, net
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16,464 | 15,580 | 16,562 | |||||||||
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Other real estate owned covered, net
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123,050 | 142,416 | 113,999 | |||||||||
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Premiums on deposits acquired, net
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73,182 | 76,332 | 86,106 | |||||||||
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Goodwill
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337,438 | 337,438 | 337,438 | |||||||||
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Other assets
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1,000,876 | 851,454 | 849,229 | |||||||||
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Total assets
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$ | 21,872,708 | $ | 21,147,026 | $ | 19,967,321 | ||||||
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Liabilities and Stockholders' Equity
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Deposits
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$ | 17,135,753 | $ | 16,436,598 | $ | 14,918,694 | ||||||
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Federal Home Loan Bank advances
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532,951 | 793,643 | 1,022,011 | |||||||||
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Securities sold under repurchase agreements
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1,052,615 | 1,081,019 | 1,051,192 | |||||||||
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Long-term debt
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225,261 | 235,570 | 235,570 | |||||||||
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Other borrowings
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29,924 | 11,090 | 35,504 | |||||||||
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Accrued expenses and other liabilities
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666,872 | 431,189 | 365,386 | |||||||||
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Total liabilities
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19,643,376 | 18,989,109 | 17,628,357 | |||||||||
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Stockholders' equity
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2,229,332 | 2,157,917 | 2,338,964 | |||||||||
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Total liabilities and stockholders' equity
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$ | 21,872,708 | $ | 21,147,026 | $ | 19,967,321 | ||||||
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Book value per common share
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$ | 14.43 | $ | 13.96 | $ | 13.31 | ||||||
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Number of common shares at period end
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148,751 | 148,638 | 147,939 | |||||||||
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Ending Balances
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June 30, 2011
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March 31, 2011
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June 30, 2010
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Loans receivable
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Real estate - single family
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$ | 1,286,235 | $ | 1,201,311 | $ | 1,032,915 | ||||||
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Real estate - multifamily
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950,981 | 949,034 | 985,194 | |||||||||
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Real estate - commercial
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3,408,560 | 3,339,592 | 3,499,721 | |||||||||
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Real estate - land
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203,380 | 220,135 | 285,864 | |||||||||
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Real estate - construction
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216,689 | 254,614 | 351,169 | |||||||||
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Commercial
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2,684,472 | 2,183,819 | 1,528,863 | |||||||||
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Consumer
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588,940 | 670,529 | 631,258 | |||||||||
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Total loans receivable held for investment, excluding covered loans
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9,339,257 | 8,819,034 | 8,314,984 | |||||||||
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Loans held for sale
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326,841 | 303,673 | 159,158 | |||||||||
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Covered loans, net
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4,356,595 | 4,599,757 | 5,275,492 | |||||||||
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Total loans receivable
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14,022,693 | 13,722,464 | 13,749,634 | |||||||||
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Unearned fees, premiums and discounts
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(24,258 | ) | (32,128 | ) | (46,714 | ) | ||||||
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Allowance for loan losses on non-covered loans
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(213,825 | ) | (220,402 | ) | (249,462 | ) | ||||||
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Net loans receivable
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$ | 13,784,610 | $ | 13,469,934 | $ | 13,453,458 | ||||||
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Deposits
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Noninterest-bearing demand
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$ | 3,151,660 | $ | 2,951,793 | $ | 2,396,087 | ||||||
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Interest-bearing checking
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792,330 | 808,070 | 685,572 | |||||||||
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Money market
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4,311,583 | 4,362,484 | 4,162,129 | |||||||||
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Savings
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1,099,065 | 984,552 | 946,043 | |||||||||
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Total core deposits
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9,354,638 | 9,106,899 | 8,189,831 | |||||||||
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Time deposits
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7,781,115 | 7,329,699 | 6,728,863 | |||||||||
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Total deposits
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$ | 17,135,753 | $ | 16,436,598 | $ | 14,918,694 | ||||||
9
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EAST WEST BANCORP, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
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(In thousands, except per share amounts)
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(unaudited)
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| June 30, 2011 | March 31, 2011 | June 30, 2010 | ||||||||||
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Interest and dividend income
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$ | 274,468 | $ | 254,335 | $ | 253,533 | ||||||
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Interest expense
|
(47,132 | ) | (45,501 | ) | (49,910 | ) | ||||||
|
Net interest income before provision for loan losses
|
227,336 | 208,834 | 203,623 | |||||||||
|
Provision for loan losses
|
(26,500 | ) | (26,506 | ) | (55,256 | ) | ||||||
|
Net interest income after provision for loan losses
|
200,836 | 182,328 | 148,367 | |||||||||
|
Noninterest income
|
12,491 | 11,041 | 35,685 | |||||||||
|
Noninterest expense
|
(117,597 | ) | (106,789 | ) | (125,318 | ) | ||||||
|
Income before provision for income taxes
|
95,730 | 86,580 | 58,734 | |||||||||
|
Provision for income taxes
|
35,205 | 30,509 | 22,386 | |||||||||
|
Net income
|
60,525 | 56,071 | 36,348 | |||||||||
|
Preferred stock dividend and amortization of preferred stock discount
|
(1,714 | ) | (1,715 | ) | (6,147 | ) | ||||||
|
Net income available to common stockholders
|
$ | 58,811 | $ | 54,356 | $ | 30,201 | ||||||
|
Net income per share, basic
|
$ | 0.40 | $ | 0.37 | $ | 0.21 | ||||||
|
Net income per share, diluted
|
$ | 0.39 | $ | 0.37 | $ | 0.21 | ||||||
|
Shares used to compute per share net income:
|
||||||||||||
|
- Basic
|
147,011 | 146,837 | 146,372 | |||||||||
|
- Diluted
|
153,347 | 153,334 | 147,131 | |||||||||
| Quarter Ended | ||||||||||||
| June 30, 2011 | March 31, 2011 | June 30, 2010 | ||||||||||
|
Noninterest income:
|
||||||||||||
|
Branch fees
|
$ | 9,078 | $ | 7,754 | $ | 8,219 | ||||||
|
Decrease in FDIC indemnification asset and FDIC receivable
|
(18,806 | ) | (17,443 | ) | (9,424 | ) | ||||||
|
Net gain on sales of loans
|
5,891 | 7,410 | 8,073 | |||||||||
|
Letters of credit fees and commissions
|
3,390 | 3,044 | 2,865 | |||||||||
|
Net gain on sales of investments
|
1,117 | 2,515 | 5,847 | |||||||||
|
Net gain on sale of fixed assets
|
2,169 | 37 | 27 | |||||||||
|
Impairment loss on investment securities
|
- | (464 | ) | (4,642 | ) | |||||||
|
Ancillary loan fees
|
2,055 | 1,991 | 2,369 | |||||||||
|
Gain on acquisition
|
- | - | 19,476 | |||||||||
|
Other operating income
|
7,597 | 6,197 | 2,875 | |||||||||
|
Total noninterest income
|
$ | 12,491 | $ | 11,041 | $ | 35,685 | ||||||
|
Noninterest expense:
|
||||||||||||
|
Compensation and employee benefits
|
$ | 40,870 | $ | 38,270 | $ | 41,579 | ||||||
|
Occupancy and equipment expense
|
12,175 | 12,598 | 13,115 | |||||||||
|
Loan related expenses
|
4,284 | 3,099 | 5,254 | |||||||||
|
Other real estate owned expense
|
14,585 | 10,664 | 20,983 | |||||||||
|
Deposit insurance premiums and regulatory assessments
|
6,833 | 7,191 | 4,528 | |||||||||
|
Prepayment penalties for FHLB advances
|
4,433 | 4,022 | 3,900 | |||||||||
|
Legal expense
|
6,791 | 4,101 | 6,183 | |||||||||
|
Amortization of premiums on deposits acquired
|
3,151 | 3,185 | 3,310 | |||||||||
|
Data processing
|
2,100 | 2,603 | 3,046 | |||||||||
|
Consulting expense
|
2,378 | 1,626 | 1,919 | |||||||||
|
Amortization of investments in affordable housing partnerships
|
4,598 | 4,525 | 2,638 | |||||||||
|
Other operating expense
|
15,399 | 14,905 | 18,863 | |||||||||
|
Total noninterest expense
|
$ | 117,597 | $ | 106,789 | $ | 125,318 | ||||||
10
|
EAST WEST BANCORP, INC.
|
||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
||||||||
| (In thousands, except per share amounts) | ||||||||
|
(unaudited)
|
||||||||
|
Year To Date
|
||||||||
|
June 30, 2011
|
June 30, 2010
|
|||||||
|
Interest and dividend income
|
$ | 528,803 | $ | 572,236 | ||||
|
Interest expense
|
(92,633 | ) | (106,889 | ) | ||||
|
Net interest income before provision for loan losses
|
436,170 | 465,347 | ||||||
|
Provision for loan losses
|
(53,006 | ) | (131,677 | ) | ||||
|
Net interest income after provision for loan losses
|
383,164 | 333,670 | ||||||
|
Noninterest income
|
23,532 | 27,234 | ||||||
|
Noninterest expense
|
(224,386 | ) | (264,228 | ) | ||||
|
Income before provision for income taxes
|
182,310 | 96,676 | ||||||
|
Provision for income taxes
|
65,714 | 35,412 | ||||||
|
Net income
|
116,596 | 61,264 | ||||||
|
Preferred stock dividend and amortization of preferred stock discount
|
(3,429 | ) | (12,285 | ) | ||||
|
Net income available to common stockholders
|
$ | 113,167 | $ | 48,979 | ||||
|
Net income per share, basic
|
$ | 0.77 | $ | 0.40 | ||||
|
Net income per share, diluted
|
$ | 0.76 | $ | 0.34 | ||||
|
Shares used to compute per share net income:
|
||||||||
|
- Basic
|
146,937 | 123,445 | ||||||
|
- Diluted
|
153,349 | 142,143 | ||||||
|
Year To Date
|
||||||||
|
June 30, 2011
|
June 30, 2010
|
|||||||
|
Noninterest income:
|
||||||||
|
Branch fees
|
$ | 16,832 | $ | 16,977 | ||||
|
Decrease in FDIC indemnification asset and FDIC receivable
|
(36,249 | ) | (52,996 | ) | ||||
|
Net gain on sales of loans
|
13,301 | 8,073 | ||||||
|
Letters of credit fees and commissions
|
6,434 | 5,605 | ||||||
|
Net gain on sales of investments
|
3,632 | 21,958 | ||||||
|
Net gain on sale of fixed assets
|
2,206 | 52 | ||||||
|
Impairment loss on investment securities
|
(464 | ) | (9,441 | ) | ||||
|
Ancillary loan fees
|
4,046 | 4,058 | ||||||
|
Gain on acquisition
|
- | 27,571 | ||||||
|
Other operating income
|
13,794 | 5,377 | ||||||
|
Total noninterest income
|
$ | 23,532 | $ | 27,234 | ||||
| Noninterest expense: | ||||||||
|
Compensation and employee benefits
|
$ | 79,140 | $ | 92,358 | ||||
|
Occupancy and equipment expense
|
24,773 | 25,059 | ||||||
|
Loan related expenses
|
7,383 | 8,251 | ||||||
|
Other real estate owned expense
|
25,249 | 38,995 | ||||||
|
Deposit insurance premiums and regulatory assessments
|
14,024 | 16,109 | ||||||
|
Prepayment penalties for FHLB advances
|
8,455 | 13,832 | ||||||
|
Legal expense
|
10,892 | 9,090 | ||||||
|
Amortization of premiums on deposits acquired
|
6,336 | 6,694 | ||||||
|
Data processing
|
4,703 | 5,528 | ||||||
|
Consulting expense
|
4,004 | 4,060 | ||||||
|
Amortization of investments in affordable housing partnerships
|
9,123 | 5,675 | ||||||
|
Other operating expense
|
30,304 | 38,577 | ||||||
|
Total noninterest expense
|
$ | 224,386 | $ | 264,228 | ||||
11
|
EAST WEST BANCORP, INC.
|
||||||||||||
|
SELECTED FINANCIAL INFORMATION
|
||||||||||||
|
(In thousands)
|
||||||||||||
|
(unaudited)
|
||||||||||||
|
Average Balances
|
Quarter Ended
|
|||||||||||
|
June 30, 2011
|
March 31, 2011
|
June 30, 2010
|
||||||||||
|
Loans receivable
|
||||||||||||
|
Real estate - single family
|
$ | 1,231,774 | $ | 1,161,336 | $ | 989,744 | ||||||
|
Real estate - multifamily
|
950,687 | 961,770 | 998,090 | |||||||||
|
Real estate - commercial
|
3,393,361 | 3,379,191 | 3,530,045 | |||||||||
|
Real estate - land
|
217,819 | 229,901 | 317,291 | |||||||||
|
Real estate - construction
|
239,518 | 278,668 | 383,846 | |||||||||
|
Commercial
|
2,450,510 | 2,056,781 | 1,492,560 | |||||||||
|
Consumer
|
935,081 | 1,055,534 | 845,104 | |||||||||
|
Total loans receivable, excluding covered loans
|
9,418,750 | 9,123,181 | 8,556,680 | |||||||||
|
Covered loans
|
4,487,610 | 4,695,964 | 5,137,863 | |||||||||
|
Total loans receivable
|
13,906,360 | 13,819,145 | 13,694,543 | |||||||||
|
Investment securities
|
3,220,795 | 2,818,703 | 2,202,676 | |||||||||
|
Earning assets
|
19,402,968 | 18,741,052 | 17,525,796 | |||||||||
|
Total assets
|
21,574,103 | 20,894,782 | 19,886,269 | |||||||||
|
Deposits
|
||||||||||||
|
Noninterest-bearing demand
|
$ | 2,935,704 | $ | 2,708,842 | $ | 2,300,228 | ||||||
|
Interest-bearing checking
|
793,349 | 771,626 | 663,936 | |||||||||
|
Money market
|
4,374,404 | 4,386,100 | 3,968,293 | |||||||||
|
Savings
|
1,034,486 | 971,313 | 961,374 | |||||||||
|
Total core deposits
|
9,137,943 | 8,837,881 | 7,893,831 | |||||||||
|
Time deposits
|
7,653,112 | 7,139,530 | 6,714,972 | |||||||||
|
Total deposits
|
16,791,055 | 15,977,411 | 14,608,803 | |||||||||
|
Interest-bearing liabilities
|
15,913,856 | 15,609,601 | 14,874,635 | |||||||||
|
Stockholders' equity
|
2,210,603 | 2,153,460 | 2,310,623 | |||||||||
|
Selected Ratios
|
Quarter Ended
|
|||||||||||
|
June 30, 2011
|
March 31, 2011
|
June 30, 2010
|
||||||||||
|
For The Period
|
||||||||||||
|
Return on average assets
|
1.12 | % | 1.07 | % | 0.73 | % | ||||||
|
Return on average common equity
|
11.06 | % | 10.50 | % | 6.26 | % | ||||||
|
Interest rate spread
|
4.48 | % | 4.32 | % | 4.45 | % | ||||||
|
Net interest margin
|
4.70 | % | 4.52 | % | 4.66 | % | ||||||
|
Yield on earning assets
|
5.67 | % | 5.50 | % | 5.80 | % | ||||||
|
Cost of deposits
|
0.70 | % | 0.66 | % | 0.80 | % | ||||||
|
Cost of funds
|
1.00 | % | 1.01 | % | 1.17 | % | ||||||
|
Noninterest expense/average assets (1)
|
1.95 | % | 1.82 | % | 2.32 | % | ||||||
|
Efficiency ratio (2)
|
43.95 | % | 43.14 | % | 51.44 | % | ||||||
(1) Excludes the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired,amortization of investments in affordable housing partnerships and prepayment penalties for FHLB advances.
(2) Represents noninterest expense, excluding the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalties for FHLB advances, divided by the aggregate of net interest income before provision for loan losses and noninterest income, excluding items that are non-recurring in nature.
12
|
EAST WEST BANCORP, INC.
|
||||||||||||||||||||||||
|
QUARTER TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID
|
||||||||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||
|
(unaudited)
|
||||||||||||||||||||||||
|
Quarter Ended
|
||||||||||||||||||||||||
|
June 30, 2011
|
June 30, 2010
|
|||||||||||||||||||||||
|
Average
|
Average
|
|||||||||||||||||||||||
|
Volume
|
Interest
|
Yield (1)
|
Volume
|
Interest
|
Yield (1)
|
|||||||||||||||||||
|
ASSETS
|
||||||||||||||||||||||||
|
Interest-earning assets:
|
||||||||||||||||||||||||
|
Short-term investments
|
$ | 1,006,402 | $ | 4,500 | 1.79 | % | $ | 948,361 | $ | 1,502 | 0.64 | % | ||||||||||||
|
Securities purchased under resale agreements
|
1,068,975 | 5,109 | 1.92 | % | 455,743 | 2,630 | 2.31 | % | ||||||||||||||||
|
Investment securities available-for-sale
|
3,220,795 | 23,253 | 2.90 | % | 2,202,676 | 14,741 | 2.68 | % | ||||||||||||||||
|
Loans receivable
|
9,418,750 | 119,739 | 5.10 | % | 8,556,680 | 116,916 | 5.48 | % | ||||||||||||||||
|
Loans receivable - covered
|
4,487,610 | 121,034 | 10.82 | % | 5,137,863 | 116,867 | 9.12 | % | ||||||||||||||||
|
Federal Home Loan Bank and Federal Reserve Bank stock
|
200,437 | 833 | 1.67 | % | 224,473 | 877 | 1.57 | % | ||||||||||||||||
|
Total interest-earning assets
|
19,402,969 | 274,468 | 5.67 | % | 17,525,796 | 253,533 | 5.80 | % | ||||||||||||||||
|
Noninterest-earning assets:
|
||||||||||||||||||||||||
|
Cash and cash equivalents
|
270,259 | 603,907 | ||||||||||||||||||||||
|
Allowance for loan losses
|
(228,587 | ) | (255,904 | ) | ||||||||||||||||||||
|
Other assets
|
2,129,462 | 2,012,470 | ||||||||||||||||||||||
|
Total assets
|
$ | 21,574,103 | $ | 19,886,269 | ||||||||||||||||||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||
|
Interest-bearing liabilities:
|
||||||||||||||||||||||||
|
Checking accounts
|
$ | 793,349 | $ | 699 | 0.35 | % | $ | 663,936 | $ | 527 | 0.32 | % | ||||||||||||
|
Money market accounts
|
4,374,404 | 5,848 | 0.54 | % | 3,968,293 | 8,336 | 0.84 | % | ||||||||||||||||
|
Savings deposits
|
1,034,486 | 933 | 0.36 | % | 961,374 | 1,274 | 0.53 | % | ||||||||||||||||
|
Time deposits
|
7,653,112 | 21,650 | 1.13 | % | 6,714,972 | 18,995 | 1.13 | % | ||||||||||||||||
|
Federal Home Loan Bank advances
|
738,094 | 3,955 | 2.15 | % | 1,238,400 | 6,175 | 2.00 | % | ||||||||||||||||
|
Securities sold under repurchase agreements
|
1,064,096 | 12,116 | 4.57 | % | 1,042,305 | 12,045 | 4.64 | % | ||||||||||||||||
|
Long-term debt
|
235,343 | 1,788 | 3.05 | % | 235,570 | 1,591 | 2.71 | % | ||||||||||||||||
|
Other borrowings
|
20,972 | 143 | 2.73 | % | 49,785 | 967 | 7.79 | % | ||||||||||||||||
|
Total interest-bearing liabilities
|
15,913,856 | 47,132 | 1.19 | % | 14,874,635 | 49,910 | 1.35 | % | ||||||||||||||||
|
Noninterest-bearing liabilities:
|
||||||||||||||||||||||||
|
Demand deposits
|
2,935,704 | 2,300,228 | ||||||||||||||||||||||
|
Other liabilities
|
513,940 | 400,783 | ||||||||||||||||||||||
|
Stockholders' equity
|
2,210,603 | 2,310,623 | ||||||||||||||||||||||
|
Total liabilities and stockholders' equity
|
$ | 21,574,103 | $ | 19,886,269 | ||||||||||||||||||||
|
Interest rate spread
|
4.48 | % | 4.45 | % | ||||||||||||||||||||
|
Net interest income and net interest margin
|
$ | 227,336 | 4.70 | % | $ | 203,623 | 4.66 | % | ||||||||||||||||
|
Net interest income and net interest margin, adjusted (2)
|
$ | 194,955 | 4.03 | % | $ | 172,460 | 3.95 | % | ||||||||||||||||
(1) Annualized.
(2) Amounts exclude the net impact of covered loan dispositions of $32.4 million and $31.2 million for the three months ended June 30, 2011 and 2010, respectively.
13
|
EAST WEST BANCORP, INC.
|
||||||||
|
SELECTED FINANCIAL INFORMATION
|
||||||||
|
(In thousands)
|
||||||||
|
(unaudited)
|
||||||||
|
Average Balances
|
Year To Date
|
|||||||
|
June 30, 2011
|
June 30, 2010
|
|||||||
|
Loans receivable
|
||||||||
|
Real estate - single family
|
$ | 1,196,749 | $ | 961,800 | ||||
|
Real estate - multifamily
|
956,198 | 1,034,830 | ||||||
|
Real estate - commercial
|
3,386,315 | 3,563,975 | ||||||
|
Real estate - land
|
223,827 | 336,990 | ||||||
|
Real estate - construction
|
258,985 | 416,378 | ||||||
|
Commercial
|
2,254,733 | 1,479,533 | ||||||
|
Consumer
|
994,975 | 788,708 | ||||||
|
Total loans receivable, excluding covered loans
|
9,271,782 | 8,582,214 | ||||||
|
Covered loans
|
4,591,211 | 5,256,293 | ||||||
|
Total loans receivable
|
13,862,993 | 13,838,507 | ||||||
|
Investment securities
|
3,020,860 | 2,194,322 | ||||||
|
Earning assets
|
19,067,921 | 17,733,912 | ||||||
|
Total assets
|
21,232,913 | 20,161,042 | ||||||
|
Deposits
|
||||||||
|
Noninterest-bearing demand
|
$ | 2,828,933 | $ | 2,260,847 | ||||
|
Interest-bearing checking
|
782,547 | 651,655 | ||||||
|
Money market
|
4,374,322 | 3,716,606 | ||||||
|
Savings
|
1,003,074 | 976,695 | ||||||
|
Total core deposits
|
8,988,876 | 7,605,803 | ||||||
|
Time deposits
|
7,397,717 | 7,013,720 | ||||||
|
Total deposits
|
16,386,593 | 14,619,523 | ||||||
|
Interest-bearing liabilities
|
15,756,651 | 15,339,588 | ||||||
|
Stockholders' equity
|
2,178,624 | 2,302,208 | ||||||
|
Selected Ratios
|
Year To Date
|
|||||||
|
June 30, 2011
|
June 30, 2010
|
|||||||
|
For The Period
|
||||||||
|
Return on average assets
|
1.10 | % | 0.61 | % | ||||
|
Return on average common equity
|
10.80 | % | 5.55 | % | ||||
|
Interest rate spread
|
4.40 | % | 5.10 | % | ||||
|
Net interest margin
|
4.61 | % | 5.29 | % | ||||
|
Yield on earning assets
|
5.59 | % | 6.51 | % | ||||
|
Cost of deposits
|
0.68 | % | 0.86 | % | ||||
|
Cost of funds
|
1.01 | % | 1.22 | % | ||||
|
Noninterest expense/average assets (1)
|
1.89 | % | 2.36 | % | ||||
|
Efficiency ratio (2)
|
43.57 | % | 50.17 | % | ||||
|
(1)
|
Excludes the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalties for FHLB advances.
|
|
|
(2)
|
Represents noninterest expense, excluding the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalties for FHLB advances, divided by the aggregate of net interest income before provision for loan losses and noninterest income, excluding items that are non-recurring in nature.
|
14
|
EAST WEST BANCORP, INC.
|
||||||||||||||||||||||||
|
YEAR TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID
|
||||||||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||
|
(unaudited)
|
||||||||||||||||||||||||
|
Year To Date
|
||||||||||||||||||||||||
|
June 30, 2011
|
June 30, 2010
|
|||||||||||||||||||||||
|
Average
|
Average
|
|||||||||||||||||||||||
|
Volume
|
Interest
|
Yield (1)
|
Volume
|
Interest
|
Yield (1)
|
|||||||||||||||||||
|
ASSETS
|
||||||||||||||||||||||||
|
Interest-earning assets:
|
||||||||||||||||||||||||
|
Short-term investments
|
$ | 995,055 | $ | 7,240 | 1.47 | % | $ | 1,119,912 | $ | 5,043 | 0.91 | % | ||||||||||||
|
Securities purchased under resale agreements
|
984,020 | 9,379 | 1.92 | % | 358,074 | 8,893 | 5.01 | % | ||||||||||||||||
|
Investment securities available-for-sale
|
3,020,860 | 42,110 | 2.81 | % | 2,194,322 | 34,931 | 3.21 | % | ||||||||||||||||
|
Loans receivable
|
9,271,782 | 234,650 | 5.10 | % | 8,582,214 | 238,944 | 5.61 | % | ||||||||||||||||
|
Loans receivable - covered
|
4,591,211 | 233,649 | 10.26 | % | 5,256,293 | 282,783 | 10.85 | % | ||||||||||||||||
|
Federal Home Loan Bank and Federal Reserve Bank stock
|
204,992 | 1,775 | 1.75 | % | 223,097 | 1,656 | 1.50 | % | ||||||||||||||||
|
Total interest-earning assets
|
19,067,920 | 528,803 | 5.59 | % | 17,733,912 | 572,250 | 6.51 | % | ||||||||||||||||
|
Noninterest-earning assets:
|
||||||||||||||||||||||||
|
Cash and cash equivalents
|
277,214 | 485,965 | ||||||||||||||||||||||
|
Allowance for loan losses
|
(232,371 | ) | (254,700 | ) | ||||||||||||||||||||
|
Other assets
|
2,120,150 | 2,195,865 | ||||||||||||||||||||||
|
Total assets
|
$ | 21,232,913 | $ | 20,161,042 | ||||||||||||||||||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||
|
Interest-bearing liabilities:
|
||||||||||||||||||||||||
|
Checking accounts
|
$ | 782,547 | $ | 1,347 | 0.35 | % | $ | 651,655 | $ | 1,141 | 0.35 | % | ||||||||||||
|
Money market accounts
|
4,374,322 | 11,823 | 0.55 | % | 3,716,606 | 16,302 | 0.88 | % | ||||||||||||||||
|
Savings deposits
|
1,003,074 | 1,665 | 0.33 | % | 976,695 | 2,416 | 0.50 | % | ||||||||||||||||
|
Time deposits
|
7,397,717 | 40,277 | 1.10 | % | 7,013,720 | 42,721 | 1.23 | % | ||||||||||||||||
|
Federal Home Loan Bank advances
|
875,290 | 9,733 | 2.24 | % | 1,634,910 | 15,180 | 1.87 | % | ||||||||||||||||
|
Securities sold under repurchase agreements
|
1,072,124 | 24,133 | 4.54 | % | 1,035,539 | 24,586 | 4.79 | % | ||||||||||||||||
|
Long-term debt
|
235,456 | 3,359 | 2.88 | % | 235,570 | 3,138 | 2.69 | % | ||||||||||||||||
|
Other borrowings
|
16,122 | 296 | 3.70 | % | 74,893 | 1,405 | 3.78 | % | ||||||||||||||||
|
Total interest-bearing liabilities
|
15,756,652 | 92,633 | 1.19 | % | 15,339,588 | 106,889 | 1.41 | % | ||||||||||||||||
|
Noninterest-bearing liabilities:
|
||||||||||||||||||||||||
|
Demand deposits
|
2,828,933 | 2,260,847 | ||||||||||||||||||||||
|
Other liabilities
|
468,704 | 258,399 | ||||||||||||||||||||||
|
Stockholders' equity
|
2,178,624 | 2,302,208 | ||||||||||||||||||||||
|
Total liabilities and stockholders' equity
|
$ | 21,232,913 | $ | 20,161,042 | ||||||||||||||||||||
|
Interest rate spread
|
4.40 | % | 5.10 | % | ||||||||||||||||||||
|
Net interest income and net interest margin
|
$ | 436,170 | 4.61 | % | $ | 465,361 | 5.29 | % | ||||||||||||||||
|
Net interest income and net interest margin, adjusted (2)
|
$ | 376,864 | 3.99 | % | $ | 371,250 | 4.22 | % | ||||||||||||||||
(1) Annualized.
(2) Amounts exclude the net impact of covered loan dispositions of $59.3 million and $91.6 million for the six months ended June 30, 2011 and 2010, respectively, and repurchase agreement termination gain of $2.5 million for the six months ended June 30, 2010
15
|
QUARTERLY ALLOWANCE FOR LOAN LOSSES RECAP
|
||||||||||||
|
(In thousands)
|
||||||||||||
|
(unaudited)
|
||||||||||||
|
Quarter Ended
|
||||||||||||
|
6/30/2011
|
3/31/2011
|
6/30/2010
|
||||||||||
|
LOANS
|
||||||||||||
|
Allowance balance, beginning of period
|
$ | 226,161 | $ | 234,633 | $ | 250,517 | ||||||
|
Allowance for unfunded loan commitments and letters of credit
|
(487 | ) | (758 | ) | (1,115 | ) | ||||||
|
Provision for loan losses
|
26,500 | 26,506 | 55,256 | |||||||||
|
Net Charge-offs:
|
||||||||||||
|
Real estate - single family
|
1,120 | 928 | 3,257 | |||||||||
|
Real estate - multifamily
|
1,081 | 2,178 | 7,552 | |||||||||
|
Real estate - commercial
|
2,164 | 4,603 | 11,836 | |||||||||
|
Real estate - land
|
1,941 | 8,931 | 9,765 | |||||||||
|
Real estate - construction
|
16,202 | 7,893 | 11,634 | |||||||||
|
Commercial
|
8,844 | 8,660 | 10,475 | |||||||||
|
Consumer
|
266 | 1,027 | 677 | |||||||||
|
Total net charge-offs
|
31,618 | 34,220 | 55,196 | |||||||||
|
Allowance balance, end of period (3)
|
$ | 220,556 | $ | 226,161 | $ | 249,462 | ||||||
|
UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT:
|
||||||||||||
|
Allowance balance, beginning of period
|
$ | 10,710 | $ | 9,952 | $ | 8,927 | ||||||
|
Provision for unfunded loan commitments and letters of credit
|
487 | 758 | 1,115 | |||||||||
|
Allowance balance, end of period
|
$ | 11,197 | $ | 10,710 | $ | 10,042 | ||||||
|
GRAND TOTAL, END OF PERIOD
|
$ | 231,753 | $ | 236,871 | $ | 259,504 | ||||||
|
Nonperforming assets to total assets (1)
|
0.83 | % | 0.89 | % | 0.98 | % | ||||||
|
Allowance for loan losses on non-covered loans to total gross non-covered loans held for investment at end of period
|
2.29 | % | 2.50 | % | 3.00 | % | ||||||
|
Allowance for loan losses on non-covered loans and unfunded loan commitments to total gross non-covered loans held for investment at end of period
|
2.41 | % | 2.62 | % | 3.12 | % | ||||||
|
Allowance on non-covered loans to non-covered nonaccrual loans at end of period
|
129.80 | % | 127.59 | % | 139.31 | % | ||||||
|
Nonaccrual loans to total loans (2)
|
1.17 | % | 1.26 | % | 1.30 | % | ||||||
|
(1)
|
Nonperforming assets excludes covered loans and covered REOs. Total assets includes covered assets.
|
|
(2)
|
Nonaccrual loans excludes covered loans. Total loans includes covered loans.
|
|
(3)
|
Included in the allowance is $6.7 million and $5.8 million related to covered loans as of June 30, 2011 and March 31, 2011, respectively. This allowance is related to drawdowns on commitments that were in existence as of the acquisition dates and therefore, are covered under the loss share agreements with the FDIC. Allowance on these subsequent drawdowns is accounted for as part of our general allowance.
|
16
|
EAST WEST BANCORP, INC.
|
||||||||||||||||||||
|
TOTAL NON-PERFORMING ASSETS, EXCLUDING COVERED ASSETS
|
||||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||
|
(unaudited)
|
||||||||||||||||||||
|
AS OF JUNE 30, 2011
|
||||||||||||||||||||
|
Total Nonaccrual Loans
|
||||||||||||||||||||
|
90+ Days Delinquent
|
Under 90+ Days Delinquent
|
Total Nonaccrual Loans
|
REO Assets
|
Total Non-Performing Assets
|
||||||||||||||||
|
Loan Type
|
||||||||||||||||||||
|
Real estate - single family
|
$ | 13,326 | $ | - | $ | 13,326 | $ | 1,384 | $ | 14,710 | ||||||||||
|
Real estate - multifamily
|
11,174 | 3,708 | 14,882 | 833 | 15,715 | |||||||||||||||
|
Real estate - commercial
|
38,677 | 3,432 | 42,109 | 4,789 | 46,898 | |||||||||||||||
|
Real estate - land
|
19,368 | 4,782 | 24,150 | 8,160 | 32,310 | |||||||||||||||
|
Real estate - construction
|
28,789 | 16,231 | 45,020 | 847 | 45,867 | |||||||||||||||
|
Commercial
|
19,078 | 5,091 | 24,169 | 358 | 24,527 | |||||||||||||||
|
Consumer
|
1,077 | - | 1,077 | 93 | 1,170 | |||||||||||||||
|
Total
|
$ | 131,489 | $ | 33,244 | $ | 164,733 | $ | 16,464 | $ | 181,197 | ||||||||||
|
AS OF MARCH 31, 2011
|
||||||||||||||||||||
|
Total Nonaccrual Loans
|
||||||||||||||||||||
|
90+ Days Delinquent
|
Under 90+ Days Delinquent
|
Total Nonaccrual Loans
|
REO Assets
|
Total Non-Performing Assets
|
||||||||||||||||
|
Loan Type
|
||||||||||||||||||||
|
Real estate - single family
|
$ | 10,585 | $ | - | $ | 10,585 | $ | 441 | $ | 11,026 | ||||||||||
|
Real estate - multifamily
|
9,101 | 4,320 | 13,421 | 184 | 13,605 | |||||||||||||||
|
Real estate - commercial
|
41,494 | 5,027 | 46,521 | 3,966 | 50,487 | |||||||||||||||
|
Real estate - land
|
11,053 | 10,064 | 21,117 | 9,856 | 30,973 | |||||||||||||||
|
Real estate - construction
|
24,993 | 21,390 | 46,383 | 867 | 47,250 | |||||||||||||||
|
Commercial
|
18,003 | 14,954 | 32,957 | 180 | 33,137 | |||||||||||||||
|
Consumer
|
1,755 | - | 1,755 | 86 | 1,841 | |||||||||||||||
|
Total
|
$ | 116,984 | $ | 55,755 | $ | 172,739 | $ | 15,580 | $ | 188,319 | ||||||||||
|
AS OF JUNE 30, 2010
|
||||||||||||||||||||
|
Total Nonaccrual Loans
|
||||||||||||||||||||
|
90+ Days Delinquent
|
Under 90+ Days Delinquent
|
Total Nonaccrual Loans
|
REO Assets
|
Total Non-Performing Assets
|
||||||||||||||||
|
Loan Type
|
||||||||||||||||||||
|
Real estate - single family
|
$ | 14,835 | $ | - | $ | 14,835 | $ | 395 | $ | 15,230 | ||||||||||
|
Real estate - multifamily
|
13,180 | 5,521 | 18,701 | 3,131 | 21,832 | |||||||||||||||
|
Real estate - commercial
|
15,778 | 2,569 | 18,347 | 7,047 | 25,394 | |||||||||||||||
|
Real estate - land
|
43,775 | 5,292 | 49,067 | 2,541 | 51,608 | |||||||||||||||
|
Real estate - construction
|
24,451 | 23,819 | 48,270 | 3,102 | 51,372 | |||||||||||||||
|
Commercial
|
19,310 | 8,994 | 28,304 | - | 28,304 | |||||||||||||||
|
Consumer
|
1,436 | 104 | 1,540 | 346 | 1,886 | |||||||||||||||
|
Total
|
$ | 132,765 | $ | 46,299 | $ | 179,064 | $ | 16,562 | $ | 195,626 | ||||||||||
17
|
EAST WEST BANCORP, INC.
|
|
GAAP TO NON-GAAP RECONCILIATION
|
|
(In thousands)
|
|
(unaudited)
|
The tangible common equity to risk weighted assets and tangible common equity to tangible assets ratios is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. As the use of tangible common equity to tangible assets is more prevalent in the banking industry and with banking regulators and analysts, we have included the tangible common equity to risk-weighted assets and tangible common equity to tangible assets ratios.
|
As of
|
||||
|
June 30, 2011
|
||||
|
Stockholders' Equity
|
$ | 2,229,332 | ||
|
Less:
|
||||
|
Preferred Equity
|
(83,027 | ) | ||
|
Goodwill and other intangible assets
|
(419,133 | ) | ||
|
Tangible common equity
|
$ | 1,727,172 | ||
|
Risk-weighted assets
|
12,880,756 | |||
|
Tangible Common Equity to risk-weighted assets
|
13.4 | % | ||
|
As of
|
||||
|
June 30, 2011
|
||||
|
Total assets
|
$ | 21,872,708 | ||
|
Less:
|
||||
|
Goodwill and other intangible assets
|
(419,133 | ) | ||
|
Tangible assets
|
$ | 21,453,575 | ||
|
Tangible common equity to tangible asset ratio
|
8.1 | % | ||
Operating noninterest income is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. There are noninterest income line items that are non-core in nature. Operating noninterest income excludes such non-core noninterest income line items. The Company believes that presenting the operating noninterest income provides more clarity to the users of financial statements regarding the core noninterest income amounts.
|
Quarter Ended
|
||||
|
June 30, 2011
|
||||
|
Noninterest income
|
$ | 12,491 | ||
|
Less:
|
||||
|
Net gain on sales of investments
|
(1,117 | ) | ||
|
Net gain on sales of loans
|
(5,891 | ) | ||
|
Net gain on sale of fixed assets
|
(2,169 | ) | ||
|
Decrease in FDIC indemnification asset and FDIC receivable
|
18,806 | |||
|
Operating noninterest income (non-GAAP)
|
$ | 22,120 | ||
|
Quarter Ended
|
||||
|
June 30, 2010
|
||||
|
Noninterest income
|
$ | 35,685 | ||
|
Add:
|
||||
|
Impairment loss on investment securities
|
4,642 | |||
|
Less:
|
||||
|
Net gain on sales of investments
|
(5,847 | ) | ||
|
Net gain on sales of loans
|
(8,073 | ) | ||
|
Gain on acquisition
|
(19,476 | ) | ||
|
Net gain on sale of fixed assets
|
(27 | ) | ||
|
Decrease in FDIC indemnification asset and FDIC receivable
|
9,424 | |||
|
Operating noninterest income (non-GAAP)
|
$ | 16,328 | ||
18
|
EAST WEST BANCORP, INC.
|
|
GAAP TO NON-GAAP RECONCILIATION
|
|
(In thousands)
|
|
(unaudited)
|
Operating noninterest expense is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. These are noninterest expense line items that are non-core in nature. Operating noninterest expense excludes such non-core noninterest expense line items. The Company believes that presenting the operating noninterest expense provides more clarity to the users of financial statements regarding the core noninterest expense amounts.
|
Quarter Ended
|
||||
|
June 30, 2011
|
||||
|
Total noninterest expense:
|
$ | 117,597 | ||
|
Amounts to be reimbursed on covered assets (80% of actual expense amount)
|
13,574 | |||
|
Prepayment penalties for FHLB advances
|
4,433 | |||
|
Noninterest expense excluding reimbursement amounts and prepayment penalties for FHLB advances
|
$ | 99,590 | ||
|
Quarter Ended
|
||||
|
March 31, 2011
|
||||
|
Total noninterest expense:
|
$ | 106,789 | ||
|
Amounts to be reimbursed on covered assets (80% of actual expense amount)
|
9,483 | |||
|
Prepayment penalties for FHLB advances
|
4,022 | |||
|
Noninterest expense excluding reimbursement amounts and prepayment penalties for FHLB advances
|
$ | 93,284 | ||
19
|
EAST WEST BANCORP, INC.
|
|
GAAP TO NON-GAAP RECONCILIATION
|
|
(In thousands)
|
|
(unaudited)
|
The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. The net interest margin includes amounts that are non-core in nature. As such, the Company believes that presenting the net interest income and net interest margin excluding such non-core items provides additional clarity to the users of financial statements regarding the core net interest income and net interest margin, comparability to prior periods and the ongoing performance of the Company.
|
Quarter Ended June 30, 2011
|
||||||||||||
|
Average Volume
|
Interest
|
Yield (1)
|
||||||||||
|
Total interest-earning assets
|
$ | 19,402,969 | $ | 274,468 | 5.67 | % | ||||||
|
Net interest income and net interest margin
|
$ | 227,336 | 4.70 | % | ||||||||
|
Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset
|
(32,381 | ) | ||||||||||
|
Net interest income and net interest margin, excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset
|
$ | 194,955 | 4.03 | % | ||||||||
|
Quarter Ended March 31, 2011
|
||||||||||||
|
Average Volume
|
Interest
|
Yield (1)
|
||||||||||
|
Total interest-earning assets
|
$ | 18,741,052 | $ | 254,335 | 5.50 | % | ||||||
|
Net interest income and net interest margin
|
$ | 208,834 | 4.52 | % | ||||||||
|
Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset
|
(26,926 | ) | ||||||||||
|
Net interest income and net interest margin, excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset
|
$ | 181,908 | 3.94 | % | ||||||||
|
Quarter Ended June 30, 2010
|
||||||||||||
|
Average Volume
|
Interest
|
Yield (1)
|
||||||||||
|
Total interest-earning assets
|
$ | 17,525,796 | $ | 253,533 | 5.80 | % | ||||||
|
Net interest income and net interest margin
|
$ | 203,623 | 4.66 | % | ||||||||
|
Less net impact of covered loan dispositions
|
(31,163 | ) | ||||||||||
|
Net interest income and net interest margin, excluding net impact of covered loan dispositions
|
$ | 172,460 | 3.95 | % | ||||||||
|
(1)
|
Annualized.
|
20