East West Bancorp Reports Net Income for Second Quarter of 2023 of $312 Million and Diluted Earnings Per Share of $2.20, Both Up 21% Year-Over-Year
PASADENA, Calif., July 20, 2023--(BUSINESS WIRE)--East West Bancorp, Inc. ("East West" or the "Company") (Nasdaq: EWBC), parent company of East West Bank, reported its financial results for the second quarter of 2023. Second quarter 2023 net income was $312.0 million, or $2.20 per diluted share, up from $258.3 million, or $1.81 per diluted share in the prior year period. Year-over-year, net income and earnings per share both increased 21%.
"We are pleased with our operating performance for the second quarter, which continues the strong trajectory from the first quarter of 2023. For the second quarter of 2023, both deposits and loans grew 7% linked quarter annualized, to $55.7 billion and $49.8 billion, respectively," stated Dominic Ng, Chairman and Chief Executive Officer of East West. "For the second quarter of 2023, we earned industry-leading returns of 1.85% on average assets and 21.0% on average tangible common equity1. Net interest margin was 3.55%, a healthy margin in the current environment, and asset quality continued to be outstanding with net charge-offs of 0.06% annualized."
"We remain focused on ensuring both the strength and stability of our balance sheet, capital, liquidity and earnings power. Our tangible common equity ratio1 increased to 8.80% and our common equity tier 1 capital ratio increased to 13.17% as of June 30, 2023. We believe that through the strength of our diversified business model and the growth opportunities we see in our markets, we will continue to generate strong returns for shareholders, for the remainder of 2023 and for years to come," concluded Ng.
FINANCIAL HIGHLIGHTS
Quarter Ended | Quarter Ended | Year-over-Year Change | |||||||||||
($ in millions, except per share data) | June 30, 2023 | June 30, 2022 | $ | % | |||||||||
Total Loans | $ | 49,831 | $ | 46,531 | $ | 3,301 | 7 | % | |||||
Total Deposits | 55,659 | 54,343 | 1,315 | 2 | |||||||||
Total Revenue | $ | 645 | $ | 551 | $ | 94 | 17 | % | |||||
Adj. Pre-tax, Pre-provision Income2 | 440 | 370 | 70 | 19 | |||||||||
Net Income | 312 | 258 | 54 | 21 | |||||||||
Diluted Earnings per Share | $ | 2.20 | $ | 1.81 | $ | 0.39 | 21 | % | |||||
Return on Average Assets | 1.85 | % | 1.66 | % | +19 bps | ||||||||
Return on Average Common Equity | 19.43 | % | 18.23 | % | +120 bps | ||||||||
Return on Avg. Tang. Common Equity1 | 21.01 | % | 19.94 | % | +107 bps | ||||||||
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1 | Tangible common equity ratio and return on average tangible common equity are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 13. | |
2 | Adjusted pre-tax, pre-provision income is a non-GAAP financial measure. See reconciliation of GAAP to non-GAAP measures in Table 12. | |
BALANCE SHEET
Total Assets – Total assets reached a record $68.5 billion as of June 30, 2023, an increase of $1.3 billion, or 2%, from $67.2 billion as of March 31, 2023.
Second quarter 2023 average interest-earning assets of $64.1 billion were up $2.6 billion, or 4%, from $61.5 billion in the first quarter of 2023. Quarter-over-quarter, average loans grew $701.9 million and average interest-bearing cash and deposits with banks increased $1.8 billion.
Strong Capital Levels – As of June 30, 2023, stockholders’ equity was $6.5 billion, or $45.67 per share, both up 2% quarter-over-quarter. The stockholders’ equity to asset ratio was 9.43% as of June 30, 2023, an increase of five basis points quarter-over-quarter.
As of June 30, 2023, tangible book value3 per share was $42.33, up 3% quarter-over-quarter. The tangible common equity ratio3 was 8.80%, an increase of six basis points quarter-over-quarter.
All of East West’s regulatory capital ratios are well in excess of regulatory requirements for well-capitalized institutions, as well as above regional and national bank averages. The common equity tier 1 ("CET1") capital ratio increased to 13.17%, and the total risk-based capital ratio increased to 14.60%, as of June 30, 2023.
Total Loans – Total loans reached a record $49.8 billion as of June 30, 2023, an increase of $906.3 million, or 2%, from $48.9 billion as of March 31, 2023. Year-over-year, total loans grew $3.3 billion, or 7%, from $46.5 billion as of June 30, 2022.
Second quarter 2023 average loans of $48.9 billion grew $701.9 million, or 1.5%, from the first quarter of 2023. Growth in average residential mortgage and commercial real estate loans was partially offset by a decrease in average commercial and industrial loans.
Total Deposits – Total deposits were $55.7 billion as of June 30, 2023, an increase of $921.4 million, or 2%, from $54.7 billion as of March 31, 2023. Noninterest-bearing deposits made up 30% of our total deposits as of June 30, 2023, compared with 33% as of March 31, 2023. Year-over-year, deposits increased $1.3 billion, or 2%, from $54.3 billion as of June 30, 2022.
Second quarter 2023 average deposits of $54.3 billion were down $669.0 million, or 1%, from the first quarter of 2023. During the second quarter, growth in average interest-bearing checking and time deposits was offset by declines in other deposit categories, which largely reflected customers seeking higher yields in a rising interest rate environment.
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3 | Tangible book value and the tangible common equity ratio are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 13. | |
OPERATING RESULTS
Second Quarter Earnings – Second quarter 2023 net income was $312.0 million, and diluted earnings per share ("EPS") were $2.20. Second quarter 2023 net income and EPS both decreased 3% from first quarter 2023 net income of $322.4 million and diluted EPS of $2.27. Second quarter 2023 net income and EPS both increased 21% from second quarter 2022 net income of $258.3 million and diluted EPS of $1.81.
Net income and diluted EPS for the six months ended June 30, 2023 were $634.5 million and $4.47, an increase of 28% and 29%, respectively, from the six months ended June 30, 2022.
Second Quarter 2023 Compared to First Quarter 2023
Net Interest Income and Net Interest Margin
Net interest income ("NII") totaled $566.7 million, a decrease of 6% from $599.9 million. Net interest margin ("NIM") of 3.55% declined 41 basis points from 3.96%.
The change in NIM was primarily driven by a higher cost of interest-bearing deposits and changes in the deposit mix in favor of higher-cost deposits, partially offset by higher loan volumes and expanding interest-earning asset yields.
The average loan yield was 6.33%, up 19 basis points from the first quarter. The average interest-earning asset yield was 5.67%, up 16 basis points from the first quarter.
The average cost of funds was 2.31%, up 62 basis points from the first quarter. The average cost of deposits was 2.12%, up 52 basis points from the first quarter.
Noninterest Income
Noninterest income totaled $78.6 million in the second quarter, an increase of $18.7 million, or 31%, from $60.0 million in the first quarter.
Fee income was $69.3 million, up $3.0 million, or 5%, from $66.3 million in the first quarter, reflecting growth across all fee income categories.
Interest rate contracts and other derivative income was $7.4 million in the second quarter, up from $2.6 million in the first quarter. The change reflected both growth in customer-driven revenue and a favorable change in mark-to-market adjustments.
Other investment income was $4.0 million for the second quarter, up $2.1 million from $1.9 million in the first quarter, reflecting higher income from Community Reinvestment Act investments during the second quarter.
Noninterest Expense
Noninterest expense totaled $261.8 million in the second quarter, compared with $218.4 million in the first quarter. Second quarter noninterest expense consisted of $205.4 million of adjusted noninterest expense4, $55.9 million in amortization of tax credit and other investments, and $0.5 million in amortization of core deposit intangibles.
Adjusted noninterest expense of $205.4 million increased $1.4 million, or 1%, from $204.0 million in the first quarter.
Compensation and employee benefits was $124.9 million, a decrease of $4.7 million or 4%, largely due to higher seasonal costs in the first quarter.
Amortization of tax credit and other investments totaled $55.9 million in the second quarter, compared with $10.1 million in the first quarter. Quarter-over-quarter variability in the amortization of tax credits and other investments primarily reflects the impact of investments that close in a given period and are projected to generate tax credits by the end of the year.
The efficiency ratio was 40.6% in the second quarter, compared with 33.1% in the first quarter and the adjusted efficiency ratio4 was 31.8% in the second quarter, compared with 30.5% in the first quarter.
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4 | Adjusted noninterest expense and the adjusted efficiency ratio are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 12. | |
TAX RELATED ITEMS
Second quarter 2023 income tax expense was $45.6 million, and the effective tax rate was 12.7%, compared with 23.5% for the first quarter of 2023. The lower effective tax rate was mainly due to an additional $97 million of tax credits in renewable energy investments that closed during the second quarter. The effective tax rate for the first six months of 2023 was 18.6% compared with 22.4% for the first six months of 2022. We currently estimate that the full year tax rate for 2023 will be approximately 20%.
ASSET QUALITY
The asset quality of our loan portfolio continues to be strong. Second quarter 2023 provision for credit losses was $26.0 million, compared with $20.0 million in the first quarter of 2023.
The allowance for loan losses increased to $635.4 million, or 1.28% of loans held-for-investment ("HFI"), as of June 30, 2023, compared with $619.9 million, or 1.27% of loans HFI, as of March 31, 2023.
Second quarter 2023 net charge-offs were $7.5 million or annualized 0.06% of average loans HFI, compared with $0.6 million or annualized 0.01% of average loans HFI, for the first quarter of 2023.
The criticized loans ratio improved 24 basis points quarter-over-quarter to 1.63% of loans HFI as of June 30, 2023, compared with 1.87% as of March 31, 2023. Criticized loans decreased $102.3 million, or 11%, quarter-over-quarter to $811.8 million as of June 30, 2023, compared with $914.1 million as of March 31, 2023.
The nonperforming assets ratio was 0.17% of total assets as of June 30, 2023, compared with 0.14% of total assets as of March 31, 2023. Nonperforming assets increased $22.1 million, or 24%, quarter-over-quarter to $115.5 million as of June 30, 2023, from $93.4 million as of March 31, 2023.
CAPITAL STRENGTH
Capital levels for East West are strong and all capital ratios expanded quarter-over-quarter and year-over-year. The following table presents the regulatory capital metrics as of June 30, 2023, March 31, 2023 and June 30, 2022.
EWBC Capital | ||||||||||||
($ in millions) | June 30, 2023 (a) | March 31, 2023 (a) | June 30, 2022 (a) | |||||||||
Risk-Weighted Assets ("RWA") (b) | $ | 51,689 | $ | 50,229 | $ | 48,499 | ||||||
Risk-based capital ratios: | ||||||||||||
CET1 capital ratio | 13.17 | % | 13.06 | % | 11.97 | % | ||||||
Tier 1 capital ratio | 13.17 | % | 13.06 | % | 11.97 | % | ||||||
Total capital ratio | 14.60 | % | 14.50 | % | 13.25 | % | ||||||
Leverage ratio | 10.03 | % | 10.02 | % | 9.31 | % | ||||||
Tangible common equity ratio (c) | 8.80 | % | 8.74 | % | 8.29 | % | ||||||
(a) | The Company has elected to use the 2020 Current Expected Credit Losses (CECL) transition provision in the calculation of its June 30, 2023, March 31, 2023 and June 30, 2022 regulatory capital ratios. The Company’s June 30, 2023 regulatory capital ratios and RWA are preliminary. | |
(b) | Under regulatory guidelines, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories based on the nature of the obligor, or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar value in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total RWA. | |
(c) | Tangible common equity ratio is a non-GAAP financial measure. See reconciliation of GAAP to non-GAAP measures in Table 13. |
DIVIDEND PAYOUT AND CAPITAL ACTIONS
East West’s Board of Directors has declared third quarter 2023 dividends for the Company’s common stock. The common stock cash dividend of $0.48 per share is payable on August 15, 2023, to stockholders of record on August 1, 2023.
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 $254 million remains available. East West did not repurchase any shares during the second quarter of 2023.
Conference Call
East West will host a conference call to discuss second quarter 2023 earnings with the public on Thursday, July 20, 2023, 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 2023 results and operating developments.
The following dial-in information is provided for participation in the conference call: calls within the U.S. – (877) 506-6399; calls within Canada – (855) 669-9657; international calls – (412) 902-6699.
A presentation to accompany the earnings call will be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.
A listen-only live broadcast of the call will also be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.
A replay of the conference call will be available on July 20, 2023, at 11:30 a.m. PT/2:30 p.m. ET through August 20, 2023. 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: 5177099.
About East West
East West provides financial services that help customers reach further and connect to new opportunities. East West Bancorp, Inc. is a public company (Nasdaq: "EWBC") with total assets of $68.5 billion. The Company’s wholly-owned subsidiary, East West Bank, is the largest independent bank headquartered in Southern California, and operates over 120 locations in the United States and Asia. The Bank’s markets in the United States include California, Georgia, Illinois, Massachusetts, Nevada, New York, Texas, and Washington. For more information on East West, visit www.eastwestbank.com.
Forward-Looking Statements
Certain matters set forth herein (including any exhibits hereto) contain forward-looking statements that are intended to be covered by the safe harbor 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 assumptions, beliefs, estimates, expectations and projections, many of which, by their nature, are inherently uncertain and beyond the Company’s control. Forward-looking statements may relate to various matters, including the Company’s financial condition, results of operations, plans, objectives, future performance, business or industry, and usually can be identified by the use of forward-looking words, such as "anticipates," "assumes," "believes," "can," "continues," "could," "estimates," "expects," "forecasts," "goal," "intends," "likely," "may," "might," "objective," "plans," "potential," "projects," "remains," "should," "target," "trend," "will," "would," or similar expressions or variations thereof, and the negative thereof, but these terms are not the exclusive means of identifying such statements. You should not place undue reliance on forward-looking statements, as they are subject to risks and uncertainties, including, but not limited to, those described below. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements the Company may make.
There are various important factors that could cause future results to differ materially from historical performance and any forward-looking statements. Factors that might cause such differences, include, but are not limited to: changes in the global economy, including an economic slowdown, capital or financial market disruption, supply chain disruption, level of inflation, interest rate environment, housing prices, employment levels, rate of growth and general business conditions, which could result in, among other things, reduced demand for loans, reduced availability of funding or increased funding costs, declines in asset values and /or recognition of allowance for credit losses; changes in local, regional and global business, economic and political conditions and geopolitical events, such as Russia’s invasion of Ukraine; the soundness of other financial institutions and the impacts related to or resulting from recent bank failures and other economic and industry volatility, including potential increased regulatory requirements, Federal Deposit Insurance Corporation ("FDIC") insurance premiums, losses in the value of our investment portfolio, deposit withdrawals, or other adverse consequences of negative market perceptions of the banking industry or the Company; changes in laws or the regulatory environment, including regulatory reform initiatives and policies of the U.S. Department of the Treasury, the Board of Governors of the Federal Reserve System ("Federal Reserve"), the FDIC, the SEC, the Consumer Financial Protection Bureau ("CFPB"), the California Department of Financial Protection and Innovation — Division of Financial Institutions, the China Banking and Insurance Regulatory Commission, the Hong Kong Monetary Authority, the Hong Kong Securities and Futures Commission, and the Monetary Authority of Singapore; changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing trade, economic and political disputes between the U.S. and the People’s Republic of China and the monetary policies of the Federal Reserve; changes in the commercial and consumer real estate markets; changes in consumer or commercial spending, savings and borrowing habits, and patterns and behaviors; the impact from potential changes to income tax laws and regulations, federal spending and economic stimulus programs; the impact of any future U.S. federal government shutdown and uncertainty regarding the U.S. federal government’s debt limit and credit rating; the Company’s ability to compete effectively against financial institutions and other entities, including as a result of emerging technologies; the success and timing of the Company’s business strategies; the Company’s ability to retain key officers and employees; the impact on the Company’s funding costs, net interest income and net interest margin from changes in key variable market interest rates, competition, regulatory requirements and the Company’s product mix; changes in the Company’s costs of operation, compliance and expansion; the Company’s ability to adopt and successfully integrate new 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 the U.S. dollar ("USD") London Interbank Offered Rate ("LIBOR") 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; the 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 ("FASB") or other regulatory agencies and their impact on the Company’s critical accounting policies and assumptions; the Company’s capital requirements and its ability to generate capital internally or raise capital on favorable terms; the impact on the Company’s liquidity due to changes in the Company’s ability to receive dividends from its subsidiaries; any strategic acquisitions or divestitures; changes in the equity and debt securities markets; fluctuations in the Company’s stock price; fluctuations in foreign currency exchange rates; the impact of increased focus on social, environmental and sustainability matters, which may affect the Company’s operations as well as those of its customers and the economy more broadly; and the impact of climate change, natural or man-made disasters or calamities, such as wildfires, droughts, hurricanes, flooding and earthquakes or other events that may directly or indirectly result in a negative impact on the Company’s financial performance.
For a more detailed discussion of some of the factors that might cause such differences, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 under the heading Item 1A. Risk Factors and the information set forth under Item 1A. Risk Factors in the Company’s Quarterly Reports on Form 10-Q. You should treat forward-looking statements as speaking only as of the date they are made and based only on information then actually known to the Company. The Company does not undertake, and specifically disclaims any obligation to update or revise any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.
EAST WEST BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEET | ||||||||||||||||||||
($ and shares in thousands, except per share data) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Table 1 | ||||||||||||||||||||
June 30, 2023 | ||||||||||||||||||||
June 30, 2023 | March 31, 2023 | June 30, 2022 | Qtr-o-Qtr | Yr-o-Yr | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from banks | $ | 614,053 | $ | 760,317 | $ | 688,936 | (19.2 | )% | (10.9 | )% | ||||||||||
Interest-bearing cash with banks | 5,763,834 | 5,173,877 | 1,213,117 | 11.4 | 375.1 | |||||||||||||||
Cash and cash equivalents | 6,377,887 | 5,934,194 | 1,902,053 | 7.5 | 235.3 | |||||||||||||||
Interest-bearing deposits with banks | 17,169 | 10,249 | 712,709 | 67.5 | (97.6 | ) | ||||||||||||||
Assets purchased under resale agreements ("resale agreements") | 635,000 | 654,288 | 1,422,794 | (2.9 | ) | (55.4 | ) | |||||||||||||
Available-for-sale ("AFS") debt securities (amortized cost of $6,820,569, $7,072,240 and $6,891,522) | 5,987,258 | 6,300,868 | 6,255,504 | (5.0 | ) | (4.3 | ) | |||||||||||||
Held-to-maturity ("HTM") debt securities, at amortized cost (fair value of $2,440,484, $2,502,674 and $2,656,549) | 2,975,933 | 2,993,421 | 3,028,302 | (0.6 | ) | (1.7 | ) | |||||||||||||
Loans held-for-sale ("HFS") | 2,830 | 6,861 | 28,464 | (58.8 | ) | (90.1 | ) | |||||||||||||
Loans held-for-investment ("HFI") (net of allowance for loan losses of $635,400, $619,893 and $563,270) | 49,192,964 | 48,298,155 | 45,938,806 | 1.9 | 7.1 | |||||||||||||||
Investments in qualified affordable housing partnerships, tax credit and other investments, net | 815,471 | 741,354 | 634,304 | 10.0 | 28.6 | |||||||||||||||
Goodwill | 465,697 | 465,697 | 465,697 | — | — | |||||||||||||||
Operating lease right-of-use assets | 100,500 | 103,114 | 107,588 | (2.5 | ) | (6.6 | ) | |||||||||||||
Other assets | 1,961,972 | 1,736,697 | 1,898,062 | 13.0 | 3.4 | |||||||||||||||
Total assets | $ | 68,532,681 | $ | 67,244,898 | $ | 62,394,283 | 1.9 | % | 9.8 | % | ||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||
Deposits | $ | 55,658,786 | $ | 54,737,402 | $ | 54,343,354 | 1.7 | % | 2.4 | % | ||||||||||
Short-term borrowings | 4,500,000 | 4,500,000 | — | — | 100.0 | |||||||||||||||
FHLB advances | — | — | 174,776 | — | (100.0 | ) | ||||||||||||||
Assets sold under repurchase agreements ("repurchase agreements") | — | — | 611,785 | — | (100.0 | ) | ||||||||||||||
Long-term debt and finance lease liabilities | 152,951 | 152,467 | 152,663 | 0.3 | 0.2 | |||||||||||||||
Operating lease liabilities | 110,383 | 112,676 | 115,387 | (2.0 | ) | (4.3 | ) | |||||||||||||
Accrued expenses and other liabilities | 1,648,864 | 1,433,022 | 1,386,836 | 15.1 | 18.9 | |||||||||||||||
Total liabilities | 62,070,984 | 60,935,567 | 56,784,801 | 1.9 | 9.3 | |||||||||||||||
Stockholders’ equity | 6,461,697 | 6,309,331 | 5,609,482 | 2.4 | 15.2 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 68,532,681 | $ | 67,244,898 | $ | 62,394,283 | 1.9 | % | 9.8 | % | ||||||||||
Book value per share | $ | 45.67 | $ | 44.62 | $ | 39.81 | 2.4 | % | 14.7 | % | ||||||||||
Tangible book value (1) per share | $ | 42.33 | $ | 41.28 | $ | 36.44 | 2.6 | 16.2 | ||||||||||||
Number of common shares at period-end | 141,484 | 141,396 | 140,917 | 0.1 | 0.4 | |||||||||||||||
Total stockholders’ equity to assets ratio | 9.43 | % | 9.38 | % | 8.99 | % | 5 | bps | 44 | bps | ||||||||||
Tangible common equity ("TCE") ratio (1) | 8.80 | % | 8.74 | % | 8.29 | % | 6 | bps | 51 | bps | ||||||||||
(1) | Tangible book value and the TCE ratio are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 13. |
EAST WEST BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||
TOTAL LOANS AND DEPOSITS DETAIL | ||||||||||||||||||
($ in thousands) | ||||||||||||||||||
(unaudited) | ||||||||||||||||||
Table 2 | ||||||||||||||||||
June 30, 2023 | ||||||||||||||||||
June 30, 2023 | March 31, 2023 | June 30, 2022 | Qtr-o-Qtr | Yr-o-Yr | ||||||||||||||
Loans: | ||||||||||||||||||
Commercial: | ||||||||||||||||||
Commercial and industrial ("C&I") | $ | 15,670,084 | $ | 15,641,840 | $ | 15,377,117 | 0.2 | % | 1.9 | % | ||||||||
Commercial real estate ("CRE"): | ||||||||||||||||||
CRE | 14,373,385 | 14,019,136 | 13,566,748 | 2.5 | 5.9 | |||||||||||||
Multifamily residential | 4,764,180 | 4,682,280 | 4,443,704 | 1.7 | 7.2 | |||||||||||||
Construction and land | 781,068 | 731,394 | 515,857 | 6.8 | 51.4 | |||||||||||||
Total CRE | 19,918,633 | 19,432,810 | 18,526,309 | 2.5 | 7.5 | |||||||||||||
Consumer: | ||||||||||||||||||
Residential mortgage: | ||||||||||||||||||
Single-family residential | 12,308,613 | 11,786,998 | 10,234,473 | 4.4 | 20.3 | |||||||||||||
Home equity lines of credit ("HELOCs") | 1,862,928 | 1,988,881 | 2,280,080 | (6.3 | ) | (18.3 | ) | |||||||||||
Total residential mortgage | 14,171,541 | 13,775,879 | 12,514,553 | 2.9 | 13.2 | |||||||||||||
Other consumer | 68,106 | 67,519 | 84,097 | 0.9 | (19.0 | ) | ||||||||||||
Total loans HFI (1) | 49,828,364 | 48,918,048 | 46,502,076 | 1.9 | 7.2 | |||||||||||||
Loans HFS | 2,830 | 6,861 | 28,464 | (58.8 | ) | (90.1 | ) | |||||||||||
Total loans (1) | 49,831,194 | 48,924,909 | 46,530,540 | 1.9 | 7.1 | |||||||||||||
Allowance for loan losses | (635,400 | ) | (619,893 | ) | (563,270 | ) | 2.5 | 12.8 | ||||||||||
Net loans (1) | $ | 49,195,794 | $ | 48,305,016 | $ | 45,967,270 | 1.8 | 7.0 | ||||||||||
Deposits: | ||||||||||||||||||
Noninterest-bearing demand | $ | 16,741,099 | $ | 18,327,320 | $ | 23,028,831 | (8.7 | )% | (27.3 | )% | ||||||||
Interest-bearing checking | 8,348,587 | 8,742,580 | 7,094,726 | (4.5 | ) | 17.7 | ||||||||||||
Money market | 11,486,473 | 9,293,114 | 11,814,402 | 23.6 | (2.8 | ) | ||||||||||||
Savings | 2,102,850 | 2,280,562 | 3,027,819 | (7.8 | ) | (30.5 | ) | |||||||||||
Time deposits | 16,979,777 | 16,093,826 | 9,377,576 | 5.5 | 81.1 | |||||||||||||
Total deposits | $ | 55,658,786 | $ | 54,737,402 | $ | 54,343,354 | 1.7 | % | 2.4 | % | ||||||||
(1) | Includes $(74.0) million, $(75.4) million and $(56.2) million of net deferred loan fees and net unamortized premiums as of June 30, 2023, March 31, 2023 and June 30, 2022, respectively. |
EAST WEST BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENT OF INCOME | ||||||||||||||||||
($ and shares in thousands, except per share data) | ||||||||||||||||||
(unaudited) | ||||||||||||||||||
Table 3 | ||||||||||||||||||
Three Months Ended | June 30, 2023 | |||||||||||||||||
June 30, 2023 | March 31, 2023 | June 30, 2022 | Qtr-o-Qtr | Yr-o-Yr | ||||||||||||||
Interest and dividend income | $ | 906,134 | $ | 835,506 | $ | 499,754 | 8.5 | % | 81.3 | % | ||||||||
Interest expense | 339,388 | 235,645 | 26,802 | 44.0 | NM | |||||||||||||
Net interest income before provision for credit losses | 566,746 | 599,861 | 472,952 | (5.5 | ) | 19.8 | ||||||||||||
Provision for credit losses | 26,000 | 20,000 | 13,500 | 30.0 | 92.6 | |||||||||||||
Net interest income after provision for credit losses | 540,746 | 579,861 | 459,452 | (6.7 | ) | 17.7 | ||||||||||||
Noninterest income | 78,631 | 59,978 | 78,444 | 31.1 | 0.2 | |||||||||||||
Noninterest expense | 261,789 | 218,447 | 196,860 | 19.8 | 33.0 | |||||||||||||
Income before income taxes | 357,588 | 421,392 | 341,036 | (15.1 | ) | 4.9 | ||||||||||||
Income tax expense | 45,557 | 98,953 | 82,707 | (54.0 | ) | (44.9 | ) | |||||||||||
Net income | $ | 312,031 | $ | 322,439 | $ | 258,329 | (3.2 | )% | 20.8 | % | ||||||||
Earnings per share ("EPS") | ||||||||||||||||||
- Basic | $ | 2.21 | $ | 2.28 | $ | 1.83 | (3.5 | )% | 20.8 | % | ||||||||
- Diluted | $ | 2.20 | $ | 2.27 | $ | 1.81 | (3.2 | ) | 21.2 | |||||||||
Weighted-average number of shares outstanding | ||||||||||||||||||
- Basic | 141,468 | 141,112 | 141,429 | 0.3 | % | 0.0 | % | |||||||||||
- Diluted | 141,876 | 141,913 | 142,372 | 0.0 | (0.3 | ) | ||||||||||||
Three Months Ended | June 30, 2023 | |||||||||||||||||
June 30, 2023 | March 31, 2023 | June 30, 2022 | Qtr-o-Qtr | Yr-o-Yr | ||||||||||||||
Noninterest income: | ||||||||||||||||||
Lending fees | $ | 20,901 | $ | 20,586 | $ | 20,142 | 1.5 | % | 3.8 | % | ||||||||
Deposit account fees | 22,285 | 21,703 | 22,372 | 2.7 | (0.4 | ) | ||||||||||||
Interest rate contracts and other derivative income | 7,373 | 2,564 | 9,801 | 187.6 | (24.8 | ) | ||||||||||||
Foreign exchange income | 13,251 | 12,660 | 11,361 | 4.7 | 16.6 | |||||||||||||
Wealth management fees | 6,889 | 6,304 | 6,539 | 9.3 | 5.4 | |||||||||||||
Net (losses) gains on sales of loans | (7 | ) | (22 | ) | 917 | NM | NM | |||||||||||
Net realized (losses) gains on AFS debt securities | — | (10,000 | ) | 28 | NM | (100.0 | ) | |||||||||||
Other investment income | 4,003 | 1,921 | 4,863 | 108.4 | (17.7 | ) | ||||||||||||
Other income | 3,936 | 4,262 | 2,421 | (7.6 | ) | 62.6 | ||||||||||||
Total noninterest income | $ | 78,631 | $ | 59,978 | $ | 78,444 | 31.1 | % | 0.2 | % | ||||||||
Noninterest expense: | ||||||||||||||||||
Compensation and employee benefits | $ | 124,937 | $ | 129,654 | $ | 113,364 | (3.6 | )% | 10.2 | % | ||||||||
Occupancy and equipment expense | 16,088 | 15,587 | 15,469 | 3.2 | 4.0 | |||||||||||||
Deposit insurance premiums and regulatory assessments | 8,262 | 7,910 | 4,927 | 4.5 | 67.7 | |||||||||||||
Deposit account expense | 10,559 | 9,609 | 5,671 | 9.9 | 86.2 | |||||||||||||
Data processing | 3,213 | 3,347 | 3,486 | (4.0 | ) | (7.8 | ) | |||||||||||
Computer software expense | 7,479 | 7,360 | 6,572 | 1.6 | 13.8 | |||||||||||||
Other operating expense (1) | 35,337 | 34,870 | 32,392 | 1.3 | 9.1 | |||||||||||||
Amortization of tax credit and other investments | 55,914 | 10,110 | 14,979 | 453.1 | 273.3 | |||||||||||||
Total noninterest expense | $ | 261,789 | $ | 218,447 | $ | 196,860 | 19.8 | % | 33.0 | % | ||||||||
NM - Not meaningful. | ||
(1) | Includes $3.9 million of repurchase agreements’ extinguishment cost for the three months ended March 31, 2023. | |
EAST WEST BANCORP, INC. AND SUBSIDIARIES | ||||||||||
CONDENSED CONSOLIDATED STATEMENT OF INCOME | ||||||||||
($ and shares in thousands, except per share data) | ||||||||||
(unaudited) | ||||||||||
Table 4 | ||||||||||
Six Months Ended | June 30, 2023 | |||||||||
June 30, 2023 | June 30, 2022 | Yr-o-Yr | ||||||||
Interest and dividend income | $ | 1,741,640 | $ | 931,783 | 86.9% | |||||
Interest expense | 575,033 | 43,218 | NM | |||||||
Net interest income before provision for credit losses | 1,166,607 | 888,565 | 31.3 | |||||||
Provision for credit losses | 46,000 | 21,500 | 114.0 | |||||||
Net interest income after provision for credit losses | 1,120,607 | 867,065 | 29.2 | |||||||
Noninterest income | 138,609 | 158,187 | (12.4) | |||||||
Noninterest expense | 480,236 | 386,310 | 24.3 | |||||||
Income before income taxes | 778,980 | 638,942 | 21.9 | |||||||
Income tax expense | 144,510 | 142,961 | 1.1 | |||||||
Net income | $ | 634,470 | $ | 495,981 | 27.9% | |||||
EPS | ||||||||||
- Basic | $ | 4.49 | $ | 3.50 | 28.3% | |||||
- Diluted | $ | 4.47 | $ | 3.47 | 28.8 | |||||
Weighted-average number of shares outstanding | ||||||||||
- Basic | 141,291 | 141,725 | (0.3)% | |||||||
- Diluted | 141,910 | 142,838 | (0.6) | |||||||
Six Months Ended | June 30, 2023 | |||||||||
June 30, 2023 | June 30, 2022 | Yr-o-Yr | ||||||||
Noninterest income: | ||||||||||
Lending fees | $ | 41,487 | $ | 39,580 | 4.8% | |||||
Deposit account fees | 43,988 | 42,687 | 3.0 | |||||||
Interest rate contracts and other derivative income | 9,937 | 20,934 | (52.5) | |||||||
Foreign exchange income | 25,911 | 24,060 | 7.7 | |||||||
Wealth management fees | 13,193 | 12,591 | 4.8 | |||||||
Net (losses) gains on sales of loans | (29 | ) | 3,839 | NM | ||||||
Net realized (losses) gains on AFS debt securities | (10,000 | ) | 1,306 | NM | ||||||
Other investment income | 5,924 | 6,490 | (8.7) | |||||||
Other income | 8,198 | 6,700 | 22.4 | |||||||
Total noninterest income | $ | 138,609 | $ | 158,187 | (12.4)% | |||||
Noninterest expense: | ||||||||||
Compensation and employee benefits | $ | 254,591 | $ | 229,633 | 10.9% | |||||
Occupancy and equipment expense | 31,675 | 30,933 | 2.4 | |||||||
Deposit insurance premiums and regulatory assessments | 16,172 | 9,644 | 67.7 | |||||||
Deposit account expense | 20,168 | 10,364 | 94.6 | |||||||
Data processing | 6,560 | 7,151 | (8.3) | |||||||
Computer software expense | 14,839 | 13,866 | 7.0 | |||||||
Other operating expense (1) | 70,207 | 55,840 | 25.7 | |||||||
Amortization of tax credit and other investments | 66,024 | 28,879 | 128.6 | |||||||
Total noninterest expense | $ | 480,236 | $ | 386,310 | 24.3% | |||||
(1) | Includes $3.9 million of repurchase agreements’ extinguishment cost for the six months ended June 30, 2023. |
EAST WEST BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||
SELECTED AVERAGE BALANCES | |||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Table 5 | |||||||||||||||||||||
Three Months Ended | June 30, 2023 | Six Months Ended | June 30, 2023 | ||||||||||||||||||
June 30, | March 31, | June 30, | Qtr-o-Qtr | Yr-o-Yr | June 30, | June 30, | Yr-o-Yr | ||||||||||||||
Loans: | |||||||||||||||||||||
Commercial: | |||||||||||||||||||||
C&I | $ | 15,244,826 | $ | 15,400,996 | $ | 14,986,876 | (1.0)% | 1.7% | $ | 15,322,480 | $ | 14,631,365 | 4.7% | ||||||||
CRE: | |||||||||||||||||||||
CRE | 14,130,811 | 13,932,758 | 13,049,058 | 1.4 | 8.3 | 14,032,331 | 12,666,338 | 10.8 | |||||||||||||
Multifamily residential | 4,685,786 | 4,600,094 | 4,112,411 | 1.9 | 13.9 | 4,643,177 | 3,931,993 | 18.1 | |||||||||||||
Construction and land | 782,541 | 675,047 | 475,933 | 15.9 | 64.4 | 729,091 | 434,657 | 67.7 | |||||||||||||
Total CRE | 19,599,138 | 19,207,899 | 17,637,402 | 2.0 | 11.1 | 19,404,599 | 17,032,988 | 13.9 | |||||||||||||
Consumer: | |||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||
Single-family residential | 12,014,513 | 11,417,477 | 9,624,242 | 5.2 | 24.8 | 11,717,644 | 9,369,132 | 25.1 | |||||||||||||
HELOCs | 1,928,208 | 2,050,778 | 2,290,378 | (6.0) | (15.8) | 1,989,154 | 2,237,025 | (11.1) | |||||||||||||
Total residential mortgage | 13,942,721 | 13,468,255 | 11,914,620 | 3.5 | 17.0 | 13,706,798 | 11,606,157 | 18.1 | |||||||||||||
Other consumer | 65,035 | 72,687 | 87,590 | (10.5) | (25.8) | 68,840 | 105,888 | (35.0) | |||||||||||||
Total loans (1) | $ | 48,851,720 | $ | 48,149,837 | $ | 44,626,488 | 1.5% | 9.5% | $ | 48,502,717 | $ | 43,376,398 | 11.8% | ||||||||
Interest-earning assets | $ | 64,061,569 | $ | 61,483,533 | $ | 58,668,677 | 4.2% | 9.2% | $ | 62,779,673 | $ | 58,680,456 | 7.0% | ||||||||
Total assets | $ | 67,497,367 | $ | 65,113,604 | $ | 62,232,841 | 3.7% | 8.5% | $ | 66,312,070 | $ | 61,996,756 | 7.0% | ||||||||
Deposits: | |||||||||||||||||||||
Noninterest-bearing demand | $ | 16,926,937 | $ | 19,709,980 | $ | 23,887,452 | (14.1)% | (29.1)% | $ | 18,310,770 | $ | 23,661,355 | (22.6)% | ||||||||
Interest-bearing checking | 8,434,655 | 6,493,865 | 6,712,890 | 29.9 | 25.6 | 7,469,621 | 6,680,657 | 11.8 | |||||||||||||
Money market | 10,433,839 | 11,260,715 | 12,319,930 | (7.3) | (15.3) | 10,844,993 | 12,614,994 | (14.0) | |||||||||||||
Savings | 2,200,124 | 2,436,587 | 2,970,007 | (9.7) | (25.9) | 2,317,702 | 2,950,268 | (21.4) | |||||||||||||
Time deposits | 16,289,320 | 15,052,762 | 8,239,571 | 8.2 | 97.7 | 15,674,457 | 8,170,613 | 91.8 | |||||||||||||
Total deposits | $ | 54,284,875 | $ | 54,953,909 | $ | 54,129,850 | (1.2)% | 0.3% | $ | 54,617,543 | $ | 54,077,887 | 1.0% | ||||||||
Interest-bearing liabilities | $ | 42,026,844 | $ | 36,814,685 | $ | 30,957,475 | 14.2% | 35.8% | $ | 39,435,162 | $ | 31,087,256 | 26.9% | ||||||||
Stockholders’ equity | $ | 6,440,996 | $ | 6,183,324 | $ | 5,682,427 | 4.2% | 13.3% | $ | 6,312,872 | $ | 5,762,078 | 9.6% | ||||||||
(1) | 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, 2023 | March 31, 2023 | |||||||||||||||||||||
Average | Average | Average | Average | |||||||||||||||||||
Balance | Interest | Yield/Rate (1) | Balance | Interest | Yield/Rate (1) | |||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Interest-bearing cash and deposits with banks | $ | 5,247,755 | $ | 60,995 | 4.66 | % | $ | 3,449,626 | $ | 35,647 | 4.19 | % | ||||||||||
Resale agreements | 641,939 | 3,969 | 2.48 | % | 688,778 | 4,503 | 2.65 | % | ||||||||||||||
AFS debt securities | 6,257,397 | 56,292 | 3.61 | % | 6,108,825 | 53,197 | 3.53 | % | ||||||||||||||
HTM debt securities | 2,983,780 | 12,678 | 1.70 | % | 2,995,677 | 12,734 | 1.72 | % | ||||||||||||||
Loans (2) | 48,851,720 | 771,264 | 6.33 | % | 48,149,837 | 728,386 | 6.14 | % | ||||||||||||||
FHLB and FRB stock | 78,978 | 936 | 4.75 | % | 90,790 | 1,039 | 4.64 | % | ||||||||||||||
Total interest-earning assets | $ | 64,061,569 | $ | 906,134 | 5.67 | % | $ | 61,483,533 | $ | 835,506 | 5.51 | % | ||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||
Cash and due from banks | 569,227 | 621,104 | ||||||||||||||||||||
Allowance for loan losses | (619,868 | ) | (602,754 | ) | ||||||||||||||||||
Other assets | 3,486,439 | 3,611,721 | ||||||||||||||||||||
Total assets | $ | 67,497,367 | $ | 65,113,604 | ||||||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Checking deposits | $ | 8,434,655 | $ | 49,571 | 2.36 | % | $ | 6,493,865 | $ | 23,174 | 1.45 | % | ||||||||||
Money market deposits | 10,433,839 | 86,419 | 3.32 | % | 11,260,715 | 76,102 | 2.74 | % | ||||||||||||||
Savings deposits | 2,200,124 | 3,963 | 0.72 | % | 2,436,587 | 3,669 | 0.61 | % | ||||||||||||||
Time deposits | 16,289,320 | 147,524 | 3.63 | % | 15,052,762 | 113,849 | 3.07 | % | ||||||||||||||
Federal funds purchased and other short-term borrowings | 4,500,566 | 49,032 | 4.37 | % | 811,551 | 8,825 | 4.41 | % | ||||||||||||||
FHLB advances | 1 | — | — | % | 500,000 | 6,430 | 5.22 | % | ||||||||||||||
Repurchase agreements | 15,579 | 211 | 5.43 | % | 106,785 | 1,052 | 4.00 | % | ||||||||||||||
Long-term debt and finance lease liabilities | 152,760 | 2,668 | 7.01 | % | 152,420 | 2,544 | 6.77 | % | ||||||||||||||
Total interest-bearing liabilities | $ | 42,026,844 | $ | 339,388 | 3.24 | % | $ | 36,814,685 | $ | 235,645 | 2.60 | % | ||||||||||
Noninterest-bearing liabilities and stockholders’ equity: | ||||||||||||||||||||||
Demand deposits | 16,926,937 | 19,709,980 | ||||||||||||||||||||
Accrued expenses and other liabilities | 2,102,590 | 2,405,615 | ||||||||||||||||||||
Stockholders’ equity | 6,440,996 | 6,183,324 | ||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 67,497,367 | $ | 65,113,604 | ||||||||||||||||||
Interest rate spread | 2.43 | % | 2.91 | % | ||||||||||||||||||
Net interest income and net interest margin | $ | 566,746 | 3.55 | % | $ | 599,861 | 3.96 | % | ||||||||||||||
(1) | Annualized. | |
(2) | Includes loans HFS. |
EAST WEST BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES | ||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||
Table 7 | ||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||
June 30, 2023 | June 30, 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 | $ | 5,247,755 | $ | 60,995 | 4.66 | % | $ | 2,797,711 | $ | 4,787 | 0.69 | % | ||||||||||
Resale agreements | 641,939 | 3,969 | 2.48 | % | 1,641,723 | 8,553 | 2.09 | % | ||||||||||||||
AFS debt securities | 6,257,397 | 56,292 | 3.61 | % | 6,503,677 | 33,438 | 2.06 | % | ||||||||||||||
HTM debt securities | 2,983,780 | 12,678 | 1.70 | % | 3,021,239 | 12,738 | 1.69 | % | ||||||||||||||
Loans (2) | 48,851,720 | 771,264 | 6.33 | % | 44,626,488 | 439,416 | 3.95 | % | ||||||||||||||
FHLB and FRB stock | 78,978 | 936 | 4.75 | % | 77,839 | 822 | 4.24 | % | ||||||||||||||
Total interest-earning assets | $ | 64,061,569 | $ | 906,134 | 5.67 | % | $ | 58,668,677 | $ | 499,754 | 3.42 | % | ||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||
Cash and due from banks | 569,227 | 712,884 | ||||||||||||||||||||
Allowance for loan losses | (619,868 | ) | (545,489 | ) | ||||||||||||||||||
Other assets | 3,486,439 | 3,396,769 | ||||||||||||||||||||
Total assets | $ | 67,497,367 | $ | 62,232,841 | ||||||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Checking deposits | $ | 8,434,655 | $ | 49,571 | 2.36 | % | $ | 6,712,890 | $ | 3,178 | 0.19 | % | ||||||||||
Money market deposits | 10,433,839 | 86,419 | 3.32 | % | 12,319,930 | 8,892 | 0.29 | % | ||||||||||||||
Savings deposits | 2,200,124 | 3,963 | 0.72 | % | 2,970,007 | 1,864 | 0.25 | % | ||||||||||||||
Time deposits | 16,289,320 | 147,524 | 3.63 | % | 8,239,571 | 8,554 | 0.42 | % | ||||||||||||||
Federal funds purchased and other short-term borrowings | 4,500,566 | 49,032 | 4.37 | % | 64,145 | 241 | 1.51 | % | ||||||||||||||
FHLB advances | 1 | — | — | % | 138,960 | 559 | 1.61 | % | ||||||||||||||
Repurchase agreements | 15,579 | 211 | 5.43 | % | 359,778 | 2,418 | 2.70 | % | ||||||||||||||
Long-term debt and finance lease liabilities | 152,760 | 2,668 | 7.01 | % | 152,194 | 1,096 | 2.89 | % | ||||||||||||||
Total interest-bearing liabilities | $ | 42,026,844 | $ | 339,388 | 3.24 | % | $ | 30,957,475 | $ | 26,802 | 0.35 | % | ||||||||||
Noninterest-bearing liabilities and stockholders’ equity: | ||||||||||||||||||||||
Demand deposits | 16,926,937 | 23,887,452 | ||||||||||||||||||||
Accrued expenses and other liabilities | 2,102,590 | 1,705,487 | ||||||||||||||||||||
Stockholders’ equity | 6,440,996 | 5,682,427 | ||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 67,497,367 | $ | 62,232,841 | ||||||||||||||||||
Interest rate spread | 2.43 | % | 3.07 | % | ||||||||||||||||||
Net interest income and net interest margin | $ | 566,746 | 3.55 | % | $ | 472,952 | 3.23 | % | ||||||||||||||
(1) | Annualized. | |
(2) | Includes loans HFS. |
EAST WEST BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||
YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES | ||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||
Table 8 | ||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||
June 30, 2023 | June 30, 2022 | |||||||||||||||||||||
Average | Average | Average | Average | |||||||||||||||||||
Balance | Interest | Yield/Rate(1) | Balance | Interest | Yield/Rate(1) | |||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Interest-bearing cash and deposits with banks | $ | 4,353,658 | $ | 96,642 | 4.48 | % | $ | 3,627,253 | $ | 8,047 | 0.45 | % | ||||||||||
Resale agreements | 665,229 | 8,472 | 2.57 | % | 1,868,600 | 16,936 | 1.83 | % | ||||||||||||||
AFS debt securities | 6,183,522 | 109,489 | 3.57 | % | 7,232,686 | 67,907 | 1.89 | % | ||||||||||||||
HTM debt securities | 2,989,695 | 25,412 | 1.71 | % | 2,497,811 | 20,936 | 1.69 | % | ||||||||||||||
Loans (2) | 48,502,717 | 1,499,650 | 6.24 | % | 43,376,398 | 816,526 | 3.80 | % | ||||||||||||||
FHLB and FRB stock | 84,852 | 1,975 | 4.69 | % | 77,708 | 1,431 | 3.71 | % | ||||||||||||||
Total interest-earning assets | $ | 62,779,673 | $ | 1,741,640 | 5.59 | % | $ | 58,680,456 | $ | 931,783 | 3.20 | % | ||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||
Cash and due from banks | 595,022 | 677,579 | ||||||||||||||||||||
Allowance for loan losses | (611,358 | ) | (544,423 | ) | ||||||||||||||||||
Other assets | 3,548,733 | 3,183,144 | ||||||||||||||||||||
Total assets | $ | 66,312,070 | $ | 61,996,756 | ||||||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Checking deposits | $ | 7,469,621 | $ | 72,745 | 1.96 | % | $ | 6,680,657 | $ | 4,580 | 0.14 | % | ||||||||||
Money market deposits | 10,844,992 | 162,521 | 3.02 | % | 12,614,994 | 12,095 | 0.19 | % | ||||||||||||||
Savings deposits | 2,317,702 | 7,632 | 0.66 | % | 2,950,268 | 3,568 | 0.24 | % | ||||||||||||||
Time deposits | 15,674,457 | 261,373 | 3.36 | % | 8,170,613 | 15,234 | 0.38 | % | ||||||||||||||
Federal funds purchased and other short-term borrowings | 2,666,249 | 57,857 | 4.38 | % | 33,177 | 250 | 1.52 | % | ||||||||||||||
FHLB advances | 248,619 | 6,430 | 5.22 | % | 149,431 | 1,137 | 1.53 | % | ||||||||||||||
Repurchase agreements | 60,931 | 1,263 | 4.18 | % | 336,013 | 4,434 | 2.66 | % | ||||||||||||||
Long-term debt and finance lease liabilities | 152,591 | 5,212 | 6.89 | % | 152,103 | 1,920 | 2.55 | % | ||||||||||||||
Total interest-bearing liabilities | $ | 39,435,162 | $ | 575,033 | 2.94 | % | $ | 31,087,256 | $ | 43,218 | 0.28 | % | ||||||||||
Noninterest-bearing liabilities and stockholders’ equity: | ||||||||||||||||||||||
Demand deposits | 18,310,770 | 23,661,355 | ||||||||||||||||||||
Accrued expenses and other liabilities | 2,253,266 | 1,486,067 | ||||||||||||||||||||
Stockholders’ equity | 6,312,872 | 5,762,078 | ||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 66,312,070 | $ | 61,996,756 | ||||||||||||||||||
Interest rate spread | 2.65 | % | 2.92 | % | ||||||||||||||||||
Net interest income and net interest margin | $ | 1,166,607 | 3.75 | % | $ | 888,565 | 3.05 | % | ||||||||||||||
(1) | Annualized. | |
(2) | Includes loans HFS. |
EAST WEST BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||
SELECTED RATIOS | ||||||||||||||||
(unaudited) | ||||||||||||||||
Table 9 | ||||||||||||||||
Three Months Ended (1) | June 30, 2023 | |||||||||||||||
June 30, 2023 | March 31, 2023 | June 30, 2022 | Qtr-o-Qtr | Yr-o-Yr | ||||||||||||
Return on average assets | 1.85 | % | 2.01 | % | 1.66 | % | (16 | ) | bps | 19 | bps | |||||
Adjusted return on average assets (2) | 1.85 | % | 2.05 | % | 1.66 | % | (20 | ) | 19 | |||||||
Return on average common equity | 19.43 | % | 21.15 | % | 18.23 | % | (172 | ) | 120 | |||||||
Adjusted return on average common equity (2) | 19.43 | % | 21.61 | % | 18.23 | % | (218 | ) | 120 | |||||||
Return on average TCE (3) | 21.01 | % | 22.94 | % | 19.94 | % | (193 | ) | 107 | |||||||
Adjusted return on average TCE (3) | 21.01 | % | 23.44 | % | 19.94 | % | (243 | ) | 107 | |||||||
Interest rate spread | 2.43 | % | 2.91 | % | 3.07 | % | (48 | ) | (64 | ) | ||||||
Net interest margin | 3.55 | % | 3.96 | % | 3.23 | % | (41 | ) | 32 | |||||||
Average loan yield | 6.33 | % | 6.14 | % | 3.95 | % | 19 | 238 | ||||||||
Yield on average interest-earning assets | 5.67 | % | 5.51 | % | 3.42 | % | 16 | 225 | ||||||||
Average cost of interest-bearing deposits | 3.09 | % | 2.49 | % | 0.30 | % | 60 | 279 | ||||||||
Average cost of deposits | 2.12 | % | 1.60 | % | 0.17 | % | 52 | 195 | ||||||||
Average cost of funds | 2.31 | % | 1.69 | % | 0.20 | % | 62 | 211 | ||||||||
Adjusted pre-tax, pre-provision profitability ratio (4) | 2.61 | % | 2.90 | % | 2.38 | % | (29 | ) | 23 | |||||||
Adjusted noninterest expense/average assets (4) | 1.22 | % | 1.27 | % | 1.17 | % | (5 | ) | 5 | |||||||
Efficiency ratio | 40.56 | % | 33.11 | % | 35.70 | % | 745 | 486 | ||||||||
Adjusted efficiency ratio (4) | 31.83 | % | 30.46 | % | 32.90 | % | 137 | bps | (107 | ) | bps | |||||
Six Months Ended (1) | June 30, 2023 | |||||||||||||||
June 30, 2023 | June 30, 2022 | Yr-o-Yr | ||||||||||||||
Return on average assets | 1.93 | % | 1.61 | % | 32 | bps | ||||||||||
Adjusted return on average assets (2) | 1.95 | % | 1.61 | % | 34 | |||||||||||
Return on average common equity | 20.27 | % | 17.36 | % | 291 | |||||||||||
Adjusted return on average common equity (2) | 20.49 | % | 17.36 | % | 313 | |||||||||||
Return on average TCE (3) | 21.95 | % | 18.96 | % | 299 | |||||||||||
Adjusted return on average TCE (3) | 22.19 | % | 18.96 | % | 323 | |||||||||||
Interest rate spread | 2.65 | % | 2.92 | % | (27 | ) | ||||||||||
Net interest margin | 3.75 | % | 3.05 | % | 70 | |||||||||||
Average loan yield | 6.24 | % | 3.80 | % | 244 | |||||||||||
Yield on average interest-earning assets | 5.59 | % | 3.20 | % | 239 | |||||||||||
Average cost of interest-bearing deposits | 2.80 | % | 0.24 | % | 256 | |||||||||||
Average cost of deposits | 1.86 | % | 0.13 | % | 173 | |||||||||||
Average cost of funds | 2.01 | % | 0.16 | % | 185 | |||||||||||
Adjusted pre-tax, pre-provision profitability ratio (4) | 2.75 | % | 2.25 | % | 50 | |||||||||||
Adjusted noninterest expense/average assets (4) | 1.25 | % | 1.16 | % | 9 | |||||||||||
Efficiency ratio | 36.79 | % | 36.91 | % | (12 | ) | ||||||||||
Adjusted efficiency ratio (4) | 31.13 | % | 34.05 | % | (292 | ) | bps | |||||||||
(1) | Annualized except for efficiency ratio. | |
(2) | Adjusted return on average assets and adjusted return on average common equity are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 14. | |
(3) | Return on average TCE and adjusted return on average TCE are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 13. | |
(4) | Adjusted pre-tax, pre-provision profitability ratio, adjusted noninterest expense/average assets and the adjusted efficiency ratio are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP 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, 2023 | |||||||||||||||||||||
Commercial | Consumer | ||||||||||||||||||||
C&I | Total CRE | Total Residential | Other Consumer | Total | |||||||||||||||||
Allowance for loan losses, March 31, 2023 | $ | 376,325 | $ | 188,915 | $ | 52,978 | $ | 1,675 | $ | 619,893 | |||||||||||
Provision for (reversal of) credit losses on loans | (a) | 5,259 | 16,076 | 3,057 | (367 | ) | 24,025 | ||||||||||||||
Gross charge-offs | (7,335 | ) | (2,366 | ) | (6 | ) | (48 | ) | (9,755 | ) | |||||||||||
Gross recoveries | 2,065 | 143 | 10 | — | 2,218 | ||||||||||||||||
Total net (charge-offs) recoveries | (5,270 | ) | (2,223 | ) | 4 | (48 | ) | (7,537 | ) | ||||||||||||
Foreign currency translation adjustment | (981 | ) | — | — | — | (981 | ) | ||||||||||||||
Allowance for loan losses, June 30, 2023 | $ | 375,333 | $ | 202,768 | $ | 56,039 | $ | 1,260 | $ | 635,400 | |||||||||||
Three Months Ended March 31, 2023 | |||||||||||||||||||||
Commercial | Consumer | ||||||||||||||||||||
C&I | Total CRE | Total Residential | Other Consumer | Total | |||||||||||||||||
Allowance for loan losses, December 31, 2022 | $ | 371,700 | $ | 182,346 | $ | 40,039 | $ | 1,560 | $ | 595,645 | |||||||||||
Impact of ASU 2022-02 adoption | 5,683 | 343 | 2 | — | 6,028 | ||||||||||||||||
Allowance for loan losses, January 1, 2023 | $ | 377,383 | $ | 182,689 | $ | 40,041 | $ | 1,560 | $ | 601,673 | |||||||||||
(Reversal of) provision for credit losses on loans | (a) | (678 | ) | 6,021 | 13,022 | 155 | 18,520 | ||||||||||||||
Gross charge-offs | (1,900 | ) | (6 | ) | (91 | ) | (40 | ) | (2,037 | ) | |||||||||||
Gross recoveries | 1,211 | 211 | 6 | — | 1,428 | ||||||||||||||||
Total net (charge-offs) recoveries | (689 | ) | 205 | (85 | ) | (40 | ) | (609 | ) | ||||||||||||
Foreign currency translation adjustment | 309 | — | — | — | 309 | ||||||||||||||||
Allowance for loan losses, March 31, 2023 | $ | 376,325 | $ | 188,915 | $ | 52,978 | $ | 1,675 | $ | 619,893 | |||||||||||
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 | |||||||||||
EAST WEST BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES | |||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Table 10 (continued) | |||||||||||||||||||||
Six Months Ended June 30, 2023 | |||||||||||||||||||||
Commercial | Consumer | ||||||||||||||||||||
C&I | Total CRE | Total Residential | Other Consumer | Total | |||||||||||||||||
Allowance for loan losses, December 31, 2022 | $ | 371,700 | $ | 182,346 | $ | 40,039 | $ | 1,560 | $ | 595,645 | |||||||||||
Impact of ASU 2022-02 adoption | 5,683 | 343 | 2 | — | 6,028 | ||||||||||||||||
Allowance for loan losses, January 1, 2023 | $ | 377,383 | $ | 182,689 | $ | 40,041 | $ | 1,560 | $ | 601,673 | |||||||||||
Provision for (reversal of) credit losses on loans | (a) | 4,581 | 22,097 | 16,079 | (212 | ) | 42,545 | ||||||||||||||
Gross charge-offs | (9,235 | ) | (2,372 | ) | (97 | ) | (88 | ) | (11,792 | ) | |||||||||||
Gross recoveries | 3,276 | 354 | 16 | — | 3,646 | ||||||||||||||||
Total net charge-offs | (5,959 | ) | (2,018 | ) | (81 | ) | (88 | ) | (8,146 | ) | |||||||||||
Foreign currency translation adjustment | (672 | ) | — | — | — | (672 | ) | ||||||||||||||
Allowance for loan losses, June 30, 2023 | $ | 375,333 | $ | 202,768 | $ | 56,039 | $ | 1,260 | $ | 635,400 | |||||||||||
Six Months Ended June 30, 2022 | |||||||||||||||||||||
Commercial | Consumer | ||||||||||||||||||||
C&I | Total CRE | Total Residential | 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 | |||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||||||||
Unfunded Credit Facilities | |||||||||||||||||||||
Allowance for unfunded credit commitments, beginning of period (1) | $ | 27,741 | $ | 26,264 | $ | 23,262 | $ | 26,264 | $ | 27,514 | |||||||||||
Provision for (reversal of) credit losses on unfunded credit commitments | (b) | 1,975 | 1,480 | 1,031 | 3,455 | (3,221 | ) | ||||||||||||||
Foreign currency translation adjustment | 12 | (3 | ) | 11 | 9 | 11 | |||||||||||||||
Allowance for unfunded credit commitments, end of period (1) | $ | 29,728 | $ | 27,741 | $ | 24,304 | $ | 29,728 | $ | 24,304 | |||||||||||
Provision for credit losses | (a)+(b) | $ | 26,000 | $ | 20,000 | $ | 13,500 | $ | 46,000 | $ | 21,500 | ||||||||||
(1) | Included in Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheet. |
EAST WEST BANCORP, INC. AND SUBSIDIARIES | ||||||||||||
CRITICIZED LOANS, NONPERFORMING ASSETS AND CREDIT QUALITY RATIOS | ||||||||||||
($ in thousands) | ||||||||||||
(unaudited) | ||||||||||||
Table 11 | ||||||||||||
Criticized Loans | June 30, 2023 | March 31, 2023 | June 30, 2022 | |||||||||
Special mention loans | $ | 330,741 | $ | 461,356 | $ | 590,227 | ||||||
Classified loans | 481,051 | 452,715 | 432,414 | |||||||||
Total criticized loans (1) | $ | 811,792 | $ | 914,071 | $ | 1,022,641 | ||||||
Nonperforming Assets | June 30, 2023 | March 31, 2023 | June 30, 2022 | |||||||||
Nonaccrual loans: | ||||||||||||
Commercial: | ||||||||||||
C&I | $ | 61,879 | $ | 43,747 | $ | 40,053 | ||||||
Total CRE | 20,598 | 19,427 | 12,742 | |||||||||
Consumer: | ||||||||||||
Total residential mortgage | 33,032 | 29,585 | 37,129 | |||||||||
Other consumer | 24 | 366 | 11 | |||||||||
Total nonaccrual loans | 115,533 | 93,125 | 89,935 | |||||||||
Other real estate owned, net | — | 270 | — | |||||||||
Total nonperforming assets | $ | 115,533 | $ | 93,395 | $ | 89,935 | ||||||
Credit Quality Ratios | June 30, 2023 | March 31, 2023 | June 30, 2022 | |||||||||
Annualized quarterly net charge-offs (recoveries) to average loans HFI | 0.06 | % | 0.01 | % | (0.06 | )% | ||||||
Special mention loans to loans HFI | 0.66 | % | 0.94 | % | 1.27 | % | ||||||
Classified loans to loans HFI | 0.97 | % | 0.93 | % | 0.93 | % | ||||||
Criticized loans to loans HFI | 1.63 | % | 1.87 | % | 2.20 | % | ||||||
Nonperforming assets to total assets | 0.17 | % | 0.14 | % | 0.14 | % | ||||||
Nonaccrual loans to loans HFI | 0.23 | % | 0.19 | % | 0.19 | % | ||||||
Allowance for loan losses to loans HFI | 1.28 | % | 1.27 | % | 1.21 | % | ||||||
(1) | Excludes loans HFS. |
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 adjusted revenue. Adjusted pre-tax, pre-provision profitability ratio represents total adjusted revenue less adjusted noninterest expense, divided by average total assets. Adjusted revenue excludes the write-off of an AFS debt security (where applicable). Adjusted noninterest expense excludes the amortization of tax credit and other investments, the amortization of core deposit intangibles and the repurchase agreements’ extinguishment cost (where applicable). Management believes that the measures and ratios presented below provide clarity to financial statement users regarding the ongoing performance of the Company and allow comparability to prior periods. | ||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||||
Net interest income before provision for credit losses | (a) | $ | 566,746 | $ | 599,861 | $ | 472,952 | $ | 1,166,607 | $ | 888,565 | |||||||||||
Total noninterest income | 78,631 | 59,978 | 78,444 | 138,609 | 158,187 | |||||||||||||||||
Total revenue | (b) | $ | 645,377 | $ | 659,839 | $ | 551,396 | $ | 1,305,216 | $ | 1,046,752 | |||||||||||
Noninterest income | 78,631 | 59,978 | 78,444 | 138,609 | 158,187 | |||||||||||||||||
Add: Write-off of AFS debt security | — | 10,000 | — | 10,000 | — | |||||||||||||||||
Adjusted noninterest income | (c) | 78,631 | 69,978 | 78,444 | 148,609 | 158,187 | ||||||||||||||||
Adjusted revenue | (a)+(c) = (d) | $ | 645,377 | $ | 669,839 | $ | 551,396 | $ | 1,315,216 | $ | 1,046,752 | |||||||||||
Total noninterest expense | (e) | $ | 261,789 | $ | 218,447 | $ | 196,860 | $ | 480,236 | $ | 386,310 | |||||||||||
Less: Amortization of tax credit and other investments | (55,914 | ) | (10,110 | ) | (14,979 | ) | (66,024 | ) | (28,879 | ) | ||||||||||||
Amortization of core deposit intangibles | (440 | ) | (441 | ) | (488 | ) | (881 | ) | (999 | ) | ||||||||||||
Repurchase agreements’ extinguishment cost | — | (3,872 | ) | — | (3,872 | ) | — | |||||||||||||||
Adjusted noninterest expense | (f) | $ | 205,435 | $ | 204,024 | $ | 181,393 | $ | 409,459 | $ | 356,432 | |||||||||||
Efficiency ratio | (e)/(b) | 40.56 | % | 33.11 | % | 35.70 | % | 36.79 | % | 36.91 | % | |||||||||||
Adjusted efficiency ratio | (f)/(d) | 31.83 | % | 30.46 | % | 32.90 | % | 31.13 | % | 34.05 | % | |||||||||||
Adjusted pre-tax, pre-provision income | (d)-(f) = (g) | $ | 439,942 | $ | 465,815 | $ | 370,003 | $ | 905,757 | $ | 690,320 | |||||||||||
Average total assets | (h) | $ | 67,497,367 | $ | 65,113,604 | $ | 62,232,841 | $ | 66,312,070 | $ | 61,996,756 | |||||||||||
Adjusted pre-tax, pre-provision profitability ratio (1) | (g)/(h) | 2.61 | % | 2.90 | % | 2.38 | % | 2.75 | % | 2.25 | % | |||||||||||
Adjusted noninterest expense/average assets (1) | (f)/(h) | 1.22 | % | 1.27 | % | 1.17 | % | 1.25 | % | 1.16 | % | |||||||||||
(1) | Annualized. |
EAST WEST BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||
GAAP TO NON-GAAP RECONCILIATION | ||||||||||||||
($ in thousands) | ||||||||||||||
(unaudited) | ||||||||||||||
Table 13 | ||||||||||||||
The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Tangible book value, tangible book value per share and TCE ratio are non-GAAP financial measures. Tangible book value and tangible assets represent stockholders’ equity and total assets, respectively, which have been reduced by goodwill and other intangible assets. Given that the use of such measures and ratios is more prevalent in the banking industry, and such measures and ratios are used by banking regulators and analysts, the Company has included them below for discussion. | ||||||||||||||
June 30, 2023 | March 31, 2023 | June 30, 2022 | ||||||||||||
Stockholders’ equity | (a) | $ | 6,461,697 | $ | 6,309,331 | $ | 5,609,482 | |||||||
Less: Goodwill | (465,697 | ) | (465,697 | ) | (465,697 | ) | ||||||||
Other intangible assets (1) | (6,418 | ) | (7,201 | ) | (8,537 | ) | ||||||||
Tangible book value | (b) | $ | 5,989,582 | $ | 5,836,433 | $ | 5,135,248 | |||||||
Number of common shares at period-end | (c) | 141,484 | 141,396 | 140,917 | ||||||||||
Book value per share | (a)/(c) | $ | 45.67 | $ | 44.62 | $ | 39.81 | |||||||
Tangible book value per share | (b)/(c) | $ | 42.33 | $ | 41.28 | $ | 36.44 | |||||||
Total assets | (d) | $ | 68,532,681 | $ | 67,244,898 | $ | 62,394,283 | |||||||
Less: Goodwill | (465,697 | ) | (465,697 | ) | (465,697 | ) | ||||||||
Other intangible assets (1) | (6,418 | ) | (7,201 | ) | (8,537 | ) | ||||||||
Tangible assets | (e) | $ | 68,060,566 | $ | 66,772,000 | $ | 61,920,049 | |||||||
Total stockholders’ equity to assets ratio | (a)/(d) | 9.43 | % | 9.38 | % | 8.99 | % | |||||||
TCE ratio | (b)/(e) | 8.80 | % | 8.74 | % | 8.29 | % | |||||||
Return on average TCE represents tangible net income divided by average tangible book value. Adjusted return on average TCE represents adjusted tangible net income divided by average tangible book value. Tangible net income excludes the after-tax impacts of the amortization of core deposit intangibles and mortgage servicing assets. Adjusted tangible net income excludes the after-tax impacts of the tangible net income adjustments and the write-off of an AFS debt security. Given that the use of such measures and ratios is more prevalent in the banking industry, and such measures and ratios are used by banking regulators and analysts, the Company has included them below for discussion. | ||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, 2023 | March 31, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | ||||||||||||||||||
Net income | (e) | $ | 312,031 | $ | 322,439 | $ | 258,329 | $ | 634,470 | $ | 495,981 | |||||||||||
Add: Amortization of core deposit intangibles | 440 | 441 | 488 | 881 | 999 | |||||||||||||||||
Amortization of mortgage servicing assets | 342 | 356 | 364 | 698 | 756 | |||||||||||||||||
Tax effect of amortization adjustments (2) | (230 | ) | (233 | ) | (245 | ) | (463 | ) | (505 | ) | ||||||||||||
Tangible net income | (f) | $ | 312,583 | $ | 323,003 | $ | 258,936 | $ | 635,586 | $ | 497,231 | |||||||||||
Add: Write-off of AFS debt security | — | 10,000 | — | 10,000 | — | |||||||||||||||||
Tax effect of write-off (2) | — | (2,929 | ) | — | (2,929 | ) | — | |||||||||||||||
Adjusted tangible net income | (g) | $ | 312,583 | $ | 330,074 | $ | 258,936 | $ | 642,657 | $ | 497,231 | |||||||||||
Average stockholders’ equity | (h) | $ | 6,440,996 | $ | 6,183,324 | $ | 5,682,427 | $ | 6,312,872 | $ | 5,762,078 | |||||||||||
Less: Average goodwill | (465,697 | ) | (465,697 | ) | (465,697 | ) | (465,697 | ) | (465,697 | ) | ||||||||||||
Average other intangible assets (1) | (6,921 | ) | (7,696 | ) | (8,827 | ) | (7,306 | ) | (9,016 | ) | ||||||||||||
Average tangible book value | (i) | $ | 5,968,378 | $ | 5,709,931 | $ | 5,207,903 | $ | 5,839,869 | $ | 5,287,365 | |||||||||||
Return on average common equity (3) | (e)/(h) | 19.43 | % | 21.15 | % | 18.23 | % | 20.27 | % | 17.36 | % | |||||||||||
Return on average TCE (3) | (f)/(i) | 21.01 | % | 22.94 | % | 19.94 | % | 21.95 | % | 18.96 | % | |||||||||||
Adjusted return on average TCE (3) | (g)/(i) | 21.01 | % | 23.44 | % | 19.94 | % | 22.19 | % | 18.96 | % | |||||||||||
(1) | Includes core deposit intangibles and mortgage servicing assets. | |
(2) | Applied statutory tax rate of 29.29% for the three and six months ended June 30, 2023, and the three months ended March 31, 2023. Applied statutory tax rate of 28.77% for the three and six months ended June 30, 2022. | |
(3) | Annualized. |
EAST WEST BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||
GAAP TO NON-GAAP RECONCILIATION | ||||||||||||||
($ and shares in thousands, except for per share data) | ||||||||||||||
(unaudited) | ||||||||||||||
Table 14 | ||||||||||||||
During the first quarter of 2023, the Company recorded a $10.0 million pre-tax impairment write-off of an AFS debt security. Management believes that presenting the computations of the adjusted net income, adjusted diluted earnings per common share, adjusted return on average assets and adjusted return on average common equity that adjust for the above discussed non-recurring item provide clarity to financial statement users regarding the ongoing performance of the Company and allows comparability to prior periods. | ||||||||||||||
Three Months Ended | ||||||||||||||
June 30, 2023 | March 31, 2023 | June 30, 2022 | ||||||||||||
Net income | (a) | $ | 312,031 | $ | 322,439 | $ | 258,329 | |||||||
Add: Write-off of AFS debt security | — | 10,000 | — | |||||||||||
Tax effect of write-off (1) | — | (2,929 | ) | — | ||||||||||
Adjusted net income | (b) | $ | 312,031 | $ | 329,510 | $ | 258,329 | |||||||
Diluted weighted-average number of shares outstanding | 141,876 | 141,913 | 142,372 | |||||||||||
Diluted EPS | $ | 2.20 | $ | 2.27 | $ | 1.81 | ||||||||
Add: Write-off of AFS debt security | — | 0.05 | — | |||||||||||
Adjusted diluted EPS | $ | 2.20 | $ | 2.32 | $ | 1.81 | ||||||||
Average total assets | (c) | $ | 67,497,367 | $ | 65,113,604 | $ | 62,232,841 | |||||||
Average stockholders’ equity | (d) | $ | 6,440,996 | $ | 6,183,324 | $ | 5,682,427 | |||||||
Return on average assets (2) | (a)/(c) | 1.85 | % | 2.01 | % | 1.66 | % | |||||||
Adjusted return on average assets (2) | (b)/(c) | 1.85 | % | 2.05 | % | 1.66 | % | |||||||
Return on average common equity (2) | (a)/(d) | 19.43 | % | 21.15 | % | 18.23 | % | |||||||
Adjusted return on average common equity (2) | (b)/(d) | 19.43 | % | 21.61 | % | 18.23 | % | |||||||
Six Months Ended | ||||||||||||||
June 30, 2023 | June 30, 2022 | |||||||||||||
Net income | (e) | 634,470 | $ | 495,981 | ||||||||||
Add: Write-off of AFS debt security | 10,000 | — | ||||||||||||
Tax effect of write-off (1) | (2,929 | ) | — | |||||||||||
Adjusted net income | (f) | $ | 641,541 | $ | 495,981 | |||||||||
Diluted weighted-average number of shares outstanding | 141,910 | 142,838 | ||||||||||||
Diluted EPS | $ | 4.47 | $ | 3.47 | ||||||||||
Add: Write-off of AFS debt security | 0.05 | — | ||||||||||||
Adjusted diluted EPS | $ | 4.52 | $ | 3.47 | ||||||||||
Average total assets | (g) | $ | 66,312,070 | $ | 61,996,756 | |||||||||
Average stockholders’ equity | (h) | $ | 6,312,872 | $ | 5,762,078 | |||||||||
Return on average assets (2) | (e)/(g) | 1.93 | % | 1.61 | % | |||||||||
Adjusted return on average assets (2) | (f)/(g) | 1.95 | % | 1.61 | % | |||||||||
Return on average common equity (2) | (e)/(h) | 20.27 | % | 17.36 | % | |||||||||
Adjusted return on average common equity (2) | (f)/(h) | 20.49 | % | 17.36 | % | |||||||||
(1) | Applied statutory tax rate of 29.29% for the three months ended March 31, 2023 and the six months ended June 30, 2023. | |
(2) | Annualized. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230720462409/en/
Contacts
FOR INVESTOR INQUIRIES, CONTACT:
Irene Oh
Chief Financial Officer
T: (626) 768-6360
E: irene.oh@eastwestbank.com
