East West Bancorp Reports Net Income for 2019 of $674 Million and Diluted Earnings Per Share of $4.61; Record Revenue of $1.7 Billion

Nachrichtenquelle: Business Wire (engl.)
23.01.2020, 14:00  |  116   |   |   

East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq: EWBC), parent company of East West Bank, the financial bridge between the United States and Greater China, today reported its financial results for the full year and fourth quarter of 2019. For the full year 2019, net income was $674.0 million or $4.61 per diluted share. For the fourth quarter of 2019, net income was $188.2 million or $1.29 per diluted share.

“2019 ended a transformational decade for East West, during which we more than doubled our asset size to $44.2 billion and grew both our commercial loans and our noninterest-bearing deposits nearly five-fold. Today, our loan portfolio is well-balanced between commercial, commercial real estate and residential mortgage loans, and our deposits are also well-balanced between commercial and consumer accounts,” stated Dominic Ng, Chairman and Chief Executive Officer of East West.

“Over the course of the decade, we expanded the breadth of our banking products and services in cash management, foreign exchange and interest rate risk hedging advisory, wealth management, and commercial lending solutions. As a result, we strengthened the resilience of our balance sheet, and achieved substantial earnings growth, increasing our diluted earnings per share by 458% to $4.61 in 2019, up from $0.83 in 2010.”

“In 2019, total loans grew $2.4 billion, or 7% year-over-year, to a record $34.8 billion as of December 31, 2019. Total deposits grew $1.9 billion, or 5% year-over-year, to a record $37.3 billion,” continued Ng. “Full year 2019 revenue of $1.7 billion grew by 5% year-over-year, a result of a strong contribution from fee income and record net interest income of $1.5 billion. Loan growth drove net interest income growth, overcoming net interest margin compression from three cuts to the fed funds rate.”

“Overall, we earned a return on average assets of 1.59% in 2019 and a return on average equity of 14.2%. Our growth and profitability reflect the strength of our diverse business model, which we are confident is a strong foundation for continued solid financial performance in the decade ahead,” concluded Ng.

HIGHLIGHTS OF RESULTS

  • Full Year Earnings – Full year 2019 net income was $674.0 million and diluted earnings per share (“EPS”) were $4.61, both down by 4% compared to full year 2018 net income of $703.7 million and diluted EPS of $4.81. Full year 2019 adjusted1 net income was $707.9 million and adjusted1 diluted EPS were $4.84, both up 4% compared to full year 2018 adjusted1 net income of $681.5 million and adjusted1 diluted EPS of $4.66.
  • Fourth Quarter Earnings – Fourth quarter 2019 net income was $188.2million and diluted EPS were $1.29, both up by 10% from third quarter 2019 net income of $171.4 million and diluted EPS of $1.17. Fourth quarter 2019 net income and diluted EPS were both up by 9% from fourth quarter 2018 net income of $173.0 million and diluted EPS of $1.18. Fourth quarter 2019 adjusted1 net income was $187.1 million and adjusted1 diluted EPS were $1.28, up by 9% quarter-over-quarter and up by 8% year-over-year.
  • Net Interest Income and Net Interest Margin – Full year 2019 net interest income (“NII”) of $1.5 billion increased by $81.3 million or 6% year-over-year. Full year 2019 net interest margin (“NIM”) of 3.64% contracted by 14 basis points year-over-year from 3.78% for the full year 2018.

    Fourth quarter 2019 NII was $368.2 million, a quarterly decrease of $1.6 million or 0.4% from third quarter 2019. Fourth quarter 2019 NIM was 3.47%, a 12 basis point contraction from 3.59% in the previous quarter. Quarter-over-quarter, the average loan yield contracted by 20 basis points, and the average cost of deposits decreased by 11 basis points.
  • Record Loans – Total loans of $34.8 billion as of December 31, 2019 increased by $2.4 billion, or 7%, from $32.4 billion as of December 31, 2018; and increased by $753.7 million, or 9% annualized, from $34.0 billion as of September 30, 2019.

    Full year 2019 average loans of $33.4 billion grew $3.1 billion, or 10% year-over-year. Average loan growth in 2019 was equally distributed across commercial real estate, residential mortgage and commercial loans. Fourth quarter 2019 average loans of $34.4 billion grew $748.7 million, or 9% linked quarter annualized. Average loan growth in the fourth quarter was led by commercial real estate, followed by residential mortgage.
  • Record Deposits – Total deposits of $37.3 billion as of December 31, 2019 increased by $1.9 billion, or 5%, from $35.4 billion as of December 31, 2018; and increased by $664.7 million, or 7% annualized, from $36.7 billion as of September 30, 2019.

    Full year 2019 average deposits of $36.0 billion grew $2.8 billion, or 8% year-over-year. Average deposit growth in 2019 primarily came from growth in time deposits and interest-bearing checking, partially offset by a decrease in noninterest-bearing demand accounts. Fourth quarter 2019 average deposits of $37.4 billion grew $910.9 million, or 10% linked quarter annualized. Average deposit growth in the fourth quarter was led by interest-bearing checking, noninterest-bearing demand and money market accounts, partially offset by a decrease in time deposits.
  • Asset Quality Metrics – The allowance for loan losses was $358.3 million, or 1.03% of loans held-for-investment (“HFI”) as of December 31, 2019; the comparable ratios were 1.02% as of September 30, 2019, and 0.96% as of December 31, 2018. Non-purchased credit impaired (“Non-PCI”) nonperforming assets were $121.5 million, or 0.27% of total assets as of December 31, 2019; the comparable ratios were 0.31% as of September 30, 2019, and 0.23% as of December 31, 2018.

    Full year 2019 net charge-offs were $52.8 million, or 0.16% of average loans HFI; the provision for credit losses was $98.7 million. Fourth quarter 2019 net charge-offs were $8.3 million, or annualized 0.10% of average loans HFI; the provision for credit losses was $18.6 million.
  • Capital Levels – Capital levels for East West are strong. As of December 31, 2019, stockholders’ equity was $5.0 billion, or $34.46 per share. Tangible equity2 per common share was $31.15 as of December 31, 2019, an increase of 3% linked quarter and 15% year-over-year.

    As of December 31, 2019, the tangible equity to tangible assets ratio2 was 10.4%, the common equity tier 1 (“CET1”) capital ratio was 12.9%, and the total risk-based capital ratio was 14.4%.

1 See reconciliation of GAAP to non-GAAP financial measures in Table 13.
2 See reconciliation of GAAP to non-GAAP financial measures in Table 16.

OPERATING RESULTS SUMMARY

Fourth Quarter 2019 Compared to Third Quarter 2019

Net Interest Income and Net Interest Margin

Net interest income totaled $368.2 million, a decrease of 0.4% from $369.8 million. Net interest margin of 3.47% contracted by 12 basis points from 3.59%.

  • Average loans of $34.4 billion grew $748.7 million, or 9% linked quarter annualized.
  • Average interest-earning assets of $42.1 billion grew $1.2 billion, or 12% linked quarter annualized. In addition to loan growth, average available-for-sale investment securities increased by $840.9 million, partially offset by decreases from interest-bearing cash and deposits with banks as well as from resale agreements.
  • Average deposits of $37.4 billion grew $910.9 million, or 10% linked quarter annualized.
  • The average yield on loans contracted by 20 basis points to 4.91% from 5.11%, reflecting a 25-basis point reduction in the fed funds rate and a decline in LIBOR rates during the current quarter. The yield on average interest-earning assets contracted by 22 basis points to 4.40% from 4.62%.
  • The average cost of deposits decreased by 11 basis points to 0.94% from 1.05%, and the average cost of interest-bearing deposits decreased by 15 basis points to 1.34% from 1.49%.

Noninterest Income

Noninterest income totaled $63.0 million, a 22% increase from $51.5 million.

  • The largest linked-quarter change in noninterest income was a $9.4 million increase in interest rate contracts and other derivative income to $17.8 million, which reflected a combination of strong customer demand for interest rate hedging products and a favorable quarter-over-quarter change in the credit valuation adjustment.
  • Quarter-over-quarter, lending fees of $17.2 million increased by $2.2 million, other investment income of $2.7 million increased by $2.0 million; foreign exchange income of $6.0 million decreased by $2.0 million.

Noninterest Expense

Noninterest expense totaled $193.4 million, a 9% increase from $176.6 million.

  • Fourth quarter noninterest expense consisted of $165.3 million of adjusted3 noninterest expense, $27.0 million in amortization of tax credit and other investments, and $1.0 million in amortization of core deposit intangibles.
  • Adjusted noninterest expense of $165.3 million increased by $6.6 million, or 4%, from $158.6 million. The largest linked-quarter change was a $3.2 million increase in compensation and employee benefits expense to $101.1 million. Quarter-over-quarter, other operating expense of $24.5 million increased by $1.7 million, and computer software expense of $7.6 million increased by $1.1 million.
  • The adjusted3 efficiency ratio was 38.3% in the fourth quarter, compared to 37.7% in the third quarter.

TAX RELATED ITEMS

Full year 2019 income tax expense was $169.9 million and the effective tax rate was 20%. Included in the full year 2019 income tax expense was a $30.1 million reversal of certain previously claimed tax credits. Adjusted, income tax expense4 was $139.8 million and the effective tax rate4 was 17% for the full year 2019. This compares to income tax expense of $115.0 million and an effective tax rate of 14% for the full year 2018.

  • Fourth quarter 2019 income tax expense was $31.1 million and the effective tax rate was 14%, compared to income tax expense of $35.0 million and an effective tax rate of 17% for the third quarter of 2019.

CREDIT QUALITY

The allowance for loan losses totaled $358.3 million, or 1.03% of loans HFI, as of December 31, 2019, compared to $345.6 million, or 1.02% of loans HFI, as of September 30, 2019, and $311.3 million, or 0.96% of loans HFI, as of December 31, 2018.

  • Non-PCI nonperforming assets were $121.5 million, or 0.27% of total assets, as of December 31, 2019, compared to $134.5 million, or 0.31% of total assets, as of September 30, 2019, and $93.0 million, or 0.23% of total assets, as of December 31, 2018.
  • Full year 2019 net charge-offs were $52.8 million, or 0.16% of average loans HFI, compared to 0.13% of average loans HFI for the full year 2018. Fourth quarter 2019 net charge-offs were $8.3 million, or annualized 0.10% of average loans HFI, compared to annualized 0.26% of average loans HFI for the third quarter of 2019, and annualized 0.20% of average loans HFI for the fourth quarter of 2018.
  • Full year 2019 provision for credit losses was $98.7 million, compared to $64.3 million for the full year 2018. Fourth quarter 2019 provision for credit losses was $18.6 million, compared to $38.3 million for the third quarter of 2019, and $18.0 million for the fourth quarter of 2018.

3 See reconciliation of GAAP to non-GAAP financial measures in Table 14.
4 See reconciliation of GAAP to non-GAAP financial measures in Table 12.

CAPITAL STRENGTH

Capital levels for East West are strong. The following table presents the regulatory capital ratios as of December 31, 2019, September 30, 2019, and December 31, 2018.

EWBC Regulatory Capital Metrics

 

Basel III

 

 



($ in millions)

 

December 31,
2019 (a)

 

September 30,
2019

 

December 31,
2018

 

Minimum
Capital
Ratio

 

Well
Capitalized
Ratio

 

Minimum
Capital Ratio +
Conservation Buffer (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

CET1 capital ratio

 

 

12.9

%

 

 

12.8

%

 

 

12.2

%

 

4.5

%

 

6.5

%

 

7.0

%

Tier 1 risk-based capital ratio

 

 

12.9

%

 

 

12.8

%

 

 

12.2

%

 

6.0

%

 

8.0

%

 

8.5

%

Total risk-based capital ratio

 

 

14.4

%

 

 

14.2

%

 

 

13.7

%

 

8.0

%

 

10.0

%

 

10.5

%

Tier 1 leverage capital ratio

 

 

10.3

%

 

 

10.3

%

 

 

9.9

%

 

4.0

%

 

5.0

%

 

4.0

%

Risk-Weighted Assets (“RWA”) (c)

 

$

 

35,136

 

 

$

 

34,424

 

 

$

 

32,497

 

 

N/A

 

N/A

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N/A Not applicable.

  1. The Company’s December 31, 2019 regulatory capital ratios and RWA are preliminary.
  2. An additional 2.5% capital conservation buffer above the minimum capital ratios is required in order to avoid limitations on distributions, including dividend payments and certain discretionary bonus payments to executive officers.
  3. Under regulatory guidelines, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories based on the nature of the obligor, or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar value in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total RWA.

DIVIDEND PAYOUT AND CAPITAL ACTIONS

East West’s Board of Directors has declared first quarter 2020 dividends for the Company’s common stock. The common stock cash dividend of $0.275 per share is payable on February 14, 2020 to shareholders of record on February 3, 2020.

Conference Call

East West will host a conference call to discuss fourth quarter and full year 2019 earnings with the public on Thursday, January 23, 2020 at 8:30 a.m. PT/11:30 a.m. ET. The public and investment community are invited to listen as management discusses fourth quarter and full year 2019 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 January 23, 2020 at 11:30 a.m. Pacific Time through February 23, 2020. The replay numbers are: within the U.S. – (877) 344-7529; within Canada – (855) 669-9658; International calls – (412) 317-0088; and the replay access code is: 10137935.

About East West

East West Bancorp, Inc. is a publicly owned company with total assets of $44.2 billion and is traded on the Nasdaq Global Select Market under the symbol “EWBC”. The Company’s wholly-owned subsidiary, East West Bank, is one of the largest independent banks headquartered in California. East West is a premier bank focused exclusively on the United States and Greater China markets and operates over 125 locations worldwide, including in the United States markets of California, Georgia, Massachusetts, Nevada, New York, Texas and Washington. In Greater China, East West’s presence includes full service branches in Hong Kong, Shanghai, Shantou and Shenzhen, and representative offices in Beijing, Chongqing, Guangzhou, and Xiamen. For more information on East West, visit the Company’s website at www.eastwestbank.com.

Forward-Looking Statements

Certain matters set forth herein (including any exhibits hereto) constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to our current business plans and expectations regarding future operating results. Forward-looking statements may include, but are not limited to, the use of forward-looking language, such as “likely result in,” “expects,” “anticipates,” “estimates,” “forecasts,” “projects,” “intends to,” “assumes,” or may include other similar words or phrases, such as “believes,” “plans,” “trend,” “objective,” “continues,” “remains,” or similar expressions, or future or conditional verbs, such as “will,” “would,” “should,” “could,” “may,” “might,” “can,” or similar verbs, and the negative thereof. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties, some of which are beyond our control, include, but are not limited to, the changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing trade dispute between the U.S. and the People’s Republic of China; our ability to compete effectively against other financial institutions in our banking markets; success and timing of our business strategies; our ability to retain key officers and employees; impact on our funding costs, net interest income and net interest margin due to changes in key variable market interest rates, competition, regulatory requirements and our product mix; changes in our costs of operation, compliance and expansion; our ability to adopt and successfully integrate new technologies into our business in a strategic manner; impact of benchmark interest rate reform in the United States (“U.S.”) that resulted in the Secured Overnight Financing Rate (“SOFR”) selected as the preferred alternative reference rate to the London Interbank Offered Rate; impact of failure in, or breach of, our operational or security systems or infrastructure, or those of third parties with whom we do 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; adequacy of our risk management framework, disclosure controls and procedures and internal control over financial reporting; future credit quality and performance, including our expectations regarding future credit losses and allowance levels; impact of adverse changes to our credit ratings from major credit rating agencies; impact of adverse judgments or settlements in litigation; changes in the commercial and consumer real estate markets; changes in consumer spending and savings habits; changes in the U.S. economy, including inflation, deflation, employment levels, rate of growth and general business conditions; government intervention in the financial system, including changes in government interest rate policies; impact of political developments, wars or other hostilities that may disrupt or increase volatility in securities or otherwise affect economic conditions; changes in laws or the regulatory environment including regulatory reform initiatives and policies of the U.S. Department of Treasury, the Board of Governors of the Federal Reserve Board System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the U.S. Securities and Exchange Commission, the Consumer Financial Protection Bureau and the California Department of Business Oversight — Division of Financial Institutions; impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on our business, business practices, cost of operations and executive compensation; heightened regulatory and governmental oversight and scrutiny of our business practices, including dealings with consumers; impact of reputational risk from negative publicity, fines and penalties and other negative consequences from regulatory violations and legal actions and from our interactions with business partners, counterparties, service providers and other third parties; impact of regulatory enforcement actions; changes in accounting standards as may be required by the Financial Accounting Standards Board or other regulatory agencies and their impact on critical accounting policies and assumptions; changes in income tax laws and regulations; impact of other potential federal tax changes and spending cuts; our capital requirements and our ability to generate capital internally or raise capital on favorable terms; changes in our ability to receive dividends from our subsidiaries; any future strategic acquisitions or divestitures; continuing consolidation in the financial services industry; changes in the equity and debt securities markets; fluctuations in our stock price; fluctuations in foreign currency exchange rates; a recurrence of significant turbulence or disruption in the capital or financial markets, which could result in, among other things, a reduction in the availability of funding or increases in funding costs, a reduction in investor demand for mortgage loans and declines in asset values and/or recognition of other-than-temporary impairment on securities held in our available-for-sale investment securities portfolio; impact of natural or man-made disasters or calamities or conflicts or other events that may directly or indirectly result in a negative impact on our financial performance; and other factors set forth in our public reports including its Annual Report on Form 10-K for the year ended December 31, 2018, and particularly the discussion of risk factors within that document. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, our results could differ materially from those expressed in, implied or projected by such forward-looking statements. We assume no obligation to update or revise such forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

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

(unaudited)

Table 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019
% or Basis Point Change

 

 

 

December 31, 2019

 

September 30, 2019

 

December 31, 2018

 

Qtr-o-Qtr

 

Yr-o-Yr

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

536,221

 

 

$

475,291

 

 

$

516,291

 

 

12.8

%

 

3.9

%

 

 

Interest-bearing cash with banks

 

 

2,724,928

 

 

 

2,566,990

 

 

 

2,485,086

 

 

6.2

 

 

9.7

 

 

 

Cash and cash equivalents

 

 

3,261,149

 

 

 

3,042,281

 

 

 

3,001,377

 

 

7.2

 

 

8.7

 

 

 

Interest-bearing deposits with banks

 

 

196,161

 

 

 

160,423

 

 

 

371,000

 

 

22.3

 

 

(47.1

)

 

 

Securities purchased under resale agreements (“resale agreements”) (1)

 

 

860,000

 

 

 

860,000

 

 

 

1,035,000

 

 

 

 

(16.9

)

 

 

Available-for-sale (“AFS”) investment securities

 

 

3,317,214

 

 

 

3,284,034

 

 

 

2,741,847

 

 

1.0

 

 

21.0

 

 

 

Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock

 

 

78,580

 

 

 

78,334

 

 

 

74,069

 

 

0.3

 

 

6.1

 

 

 

Loans held-for-sale (“HFS”)

 

 

434

 

 

 

294

 

 

 

275

 

 

47.6

 

 

57.8

 

 

 

Loans held-for-investment (''HFI'') (net of allowance for loan losses of $358,287, $345,576 and $311,322)

 

 

34,420,252

 

 

 

33,679,400

 

 

 

32,073,867

 

 

2.2

 

 

7.3

 

 

 

Investments in qualified affordable housing partnerships, net

 

 

207,037

 

 

 

190,000

 

 

 

184,873

 

 

9.0

 

 

12.0

 

 

 

Investments in tax credit and other investments, net

 

 

254,140

 

 

 

211,603

 

 

 

231,635

 

 

20.1

 

 

9.7

 

 

 

Goodwill

 

 

465,697

 

 

 

465,697

 

 

 

465,547

 

 

 

 

0.0

 

 

 

Operating lease right-of-use assets

 

 

99,973

 

 

 

103,894

 

 

 

 

(3.8

)

 

100.0

 

 

 

Other assets

 

 

1,035,459

 

 

 

1,198,699

 

 

 

862,866

 

 

(13.6

)

 

20.0

 

 

 

Total assets

 

$

44,196,096

 

 

$

43,274,659

 

 

$

41,042,356

 

 

2.1

%

 

7.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

37,324,259

 

 

$

36,659,526

 

 

$

35,439,628

 

 

1.8

%

 

5.3

%

 

 

Short-term borrowings

 

 

28,669

 

 

 

47,689

 

 

 

57,638

 

 

(39.9

)

 

(50.3

)

 

 

FHLB advances

 

 

745,915

 

 

 

745,494

 

 

 

326,172

 

 

0.1

 

 

128.7

 

 

 

Securities sold under repurchase agreements (“repurchase agreements”) (1)

 

 

200,000

 

 

 

50,000

 

 

 

50,000

 

 

300.0

 

 

300.0

 

 

 

Long-term debt and finance lease liabilities

 

 

152,270

 

 

 

152,390

 

 

 

146,835

 

 

(0.1

)

 

3.7

 

 

 

Operating lease liabilities

 

 

108,083

 

 

 

112,142

 

 

 

 

(3.6

)

 

100.0

 

 

 

Accrued expenses and other liabilities

 

 

619,283

 

 

 

624,754

 

 

 

598,109

 

 

(0.9

)

 

3.5

 

 

 

Total liabilities

 

 

39,178,479

 

 

 

38,391,995

 

 

 

36,618,382

 

 

2.0

 

 

7.0

 

 

 

Stockholders’ equity

 

 

5,017,617

 

 

 

4,882,664

 

 

 

4,423,974

 

 

2.8

 

 

13.4

 

 

 

Total liabilities and stockholders’ equity

 

$

44,196,096

 

 

$

43,274,659

 

 

$

41,042,356

 

 

2.1

%

 

7.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

 

$

34.46

 

 

$

33.54

 

 

$

30.52

 

 

2.7

%

 

12.9

%

 

 

Tangible equity (2) per common share

 

$

31.15

 

 

$

30.22

 

 

$

27.15

 

 

3.1

 

 

14.7

 

 

 

Number of common shares at period-end

 

 

145,625

 

 

 

145,568

 

 

 

144,961

 

 

0.0

 

 

0.5

 

 

 

Tangible equity to tangible assets ratio (2)

 

 

10.38

%

 

 

10.28

%

 

 

9.71

%

 

10

 

bps

67

 

bps

 

 

 

 

 

 

 

  1. Resale and repurchase agreements have been reported net, pursuant to Accounting Standards Codification (“ASC”) 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. Out of $450.0 million of gross repurchase agreements, $250.0 million, $400.0 million, and $400.0 million were eligible for netting against gross resale agreements as of December 31, 2019, September 30, 2019 and December 31, 2018, respectively.
  2. See reconciliation of GAAP to non-GAAP financial measures in Table 16.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

TOTAL LOANS AND DEPOSITS DETAIL

($ in thousands)

(unaudited)

Table 2

 

 

 

 

 

 

 

 

 

 

December 31, 2019
% Change

 

 

 

December 31, 2019

 

September 30, 2019

 

December 31, 2018

 

Qtr-o-Qtr

 

Yr-o-Yr

Loans:

 

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (“C&I”)

 

$

12,150,931

 

 

$

12,301,002

 

 

$

12,056,970

 

 

(1.2

)%

 

0.8

%

Commercial real estate (“CRE”):

 

 

CRE

 

 

10,278,448

 

 

 

9,749,583

 

 

 

9,260,199

 

 

5.4

 

 

11.0

 

 

Multifamily residential

 

 

2,856,374

 

 

 

2,589,203

 

 

 

2,470,668

 

 

10.3

 

 

15.6

 

 

Construction and land

 

 

628,499

 

 

 

719,900

 

 

 

538,794

 

 

(12.7

)

 

16.6

 

Total CRE

13,763,321

13,058,686

12,269,661

5.4

12.2

 

Consumer:

 

 

 

 

 

 

 

 

 

 

Residential mortgage:  

 

Single-family residential

 

 

7,108,590

 

 

 

6,811,014

 

 

 

6,036,454

 

 

4.4

 

 

17.8

 

 

Home equity lines of credit (“HELOCs”)

 

 

1,472,783

 

 

 

1,540,121

 

 

 

1,690,834

 

 

(4.4

)

 

(12.9

)

Total residential mortgage

8,581,373

8,351,135

7,727,288

2.8

11.1

 

 

Other consumer

 

 

282,914

 

 

 

314,153

 

 

 

331,270

 

 

(9.9

)

 

(14.6

)

Total loans HFI (1)(2)

 

 

34,778,539

 

 

 

34,024,976

 

 

 

32,385,189

 

 

2.2

 

 

7.4

 

Loans HFS

 

 

434

 

 

 

294

 

 

 

275

 

 

47.6

 

 

57.8

 

 

Total loans (1)(2)

34,778,973

34,025,270

32,385,464

2.2

7.4

Allowance for loan losses

 

 

(358,287

)

 

 

(345,576

)

 

 

(311,322

)

 

3.7

 

 

15.1

 

 

Net loans (1)(2)

 

$

34,420,686

 

 

$

33,679,694

 

 

$

32,074,142

 

 

2.2

%

 

7.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

11,080,036

 

 

$

10,806,937

 

 

$

11,377,009

 

 

2.5

%

 

(2.6

)%

 

Interest-bearing checking

 

 

5,200,755

 

 

 

4,837,391

 

 

 

4,584,447

 

 

7.5

 

 

13.4

 

 

Money market

 

 

8,711,964

 

 

 

8,400,353

 

 

 

8,262,677

 

 

3.7

 

 

5.4

 

 

Savings

 

 

2,117,196

 

 

 

2,094,638

 

 

 

2,146,429

 

 

1.1

 

 

(1.4

)

 

Time deposits

 

 

10,214,308

 

 

 

10,520,207

 

 

 

9,069,066

 

 

(2.9

)

 

12.6

 

 

Total deposits

 

$

37,324,259

 

 

$

36,659,526

 

 

$

35,439,628

 

 

1.8

%

 

5.3

%

 

  1. Includes $(43.2) million, $(39.8) million and $(48.9) million as of December 31, 2019, September 30, 2019 and December 31, 2018, respectively, of net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts.
  2. Includes ASC 310-30 discount of $14.3 million, $16.7 million and $22.2 million as of December 31, 2019, September 30, 2019 and December 31, 2018, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

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

(unaudited)

Table 3

 

 

 

 

 

Three Months Ended

 

December 31, 2019
% Change

 

 

 

December 31, 2019

 

September 30, 2019

 

December 31, 2018

 

Qtr-o-Qtr

 

Yr-o-Yr

Interest and dividend income

 

$

467,233

 

 

$

476,912

 

 

$

457,334

 

 

(2.0

)%

 

2.2

%

Interest expense

 

 

99,014

 

 

 

107,105

 

 

 

87,918

 

 

(7.6

)

 

12.6

 

Net interest income before provision for credit losses

 

 

368,219

 

 

 

369,807

 

 

 

369,416

 

 

(0.4

)

 

(0.3

)

Provision for credit losses

 

 

18,577

 

 

 

38,284

 

 

 

17,959

 

 

(51.5

)

 

3.4

 

Net interest income after provision for credit losses

 

 

349,642

 

 

 

331,523

 

 

 

351,457

 

 

5.5

 

 

(0.5

)

Noninterest income

 

 

63,013

 

 

 

51,474

 

 

 

41,695

 

 

22.4

 

 

51.1

 

Noninterest expense

 

 

193,373

 

 

 

176,630

 

 

 

188,097

 

 

9.5

 

 

2.8

 

Income before income taxes

 

 

219,282

 

 

 

206,367

 

 

 

205,055

 

 

6.3

 

 

6.9

 

Income tax expense

 

 

31,067

 

 

 

34,951

 

 

 

32,037

 

 

(11.1

)

 

(3.0

)

Net income

 

$

188,215

 

 

$

171,416

 

 

$

173,018

 

 

9.8

%

 

8.8

%

Earnings per share (“EPS”)

 

 

 

 

 

 

 

 

 

 

- Basic

 

$

1.29

 

 

$

1.18

 

 

$

1.19

 

 

9.8

%

 

8.3

%

- Diluted

 

$

1.29

 

 

$

1.17

 

 

$

1.18

 

 

9.7

 

 

8.6

 

Weighted average number of shares outstanding

 

 

 

 

 

 

 

 

 

 

- Basic

 

 

145,624

 

 

 

145,559

 

 

 

144,960

 

 

0.0

%

 

0.5

%

- Diluted

 

 

146,318

 

 

 

146,120

 

 

 

146,133

 

 

0.1

 

 

0.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

December 31, 2019
% Change

 

 

 

December 31, 2019

 

September 30, 2019

 

December 31, 2018

 

Qtr-o-Qtr

 

Yr-o-Yr

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

Lending fees

 

$

17,244

 

 

$

15,035

 

 

$

15,168

 

 

14.7

%

 

13.7

%

 

Deposit account fees

 

 

9,843

 

 

 

9,729

 

 

 

9,346

 

 

1.2

 

 

5.3

 

 

Foreign exchange income

 

 

6,032

 

 

 

8,065

 

 

 

7,191

 

 

(25.2

)

 

(16.1

)

 

Wealth management fees

 

 

4,215

 

 

 

4,841

 

 

 

2,796

 

 

(12.9

)

 

50.8

 

 

Interest rate contracts and other derivative income

 

 

17,828

 

 

 

8,423

 

 

 

1,125

 

 

111.7

 

 

NM

 

Net gains on sales of loans

 

 

1,068

 

 

 

2,037

 

 

 

1,509

 

 

(47.6

)

 

(29.2

)

 

Net gains on sales of AFS investment securities

 

 

864

 

 

 

58

 

 

 

161

 

 

NM

 

NM

 

Net gains on sales of fixed assets

 

 

66

 

 

 

48

 

 

 

1,081

 

 

37.5

 

 

(93.9

)

 

Other investment income

 

 

2,678

 

 

 

663

 

 

 

801

 

 

303.9

 

 

234.3

 

 

Other income

 

 

3,175

 

 

 

2,575

 

 

 

2,517

 

 

23.3

 

 

26.1

 

Total noninterest income

 

$

63,013

 

 

$

51,474

 

 

$

41,695

 

 

22.4

%

 

51.1

%

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

$

101,051

 

 

$

97,819

 

 

$

93,790

 

 

3.3

%

 

7.7

%

 

Occupancy and equipment expense

 

 

17,138

 

 

 

17,912

 

 

 

18,017

 

 

(4.3

)

 

(4.9

)

 

Deposit insurance premiums and regulatory assessments

 

 

3,371

 

 

 

3,550

 

 

 

3,093

 

 

(5.0

)

 

9.0

 

 

Legal expense

 

 

2,141

 

 

 

1,720

 

 

 

2,145

 

 

24.5

 

 

(0.2

)

 

Data processing

 

 

3,588

 

 

 

3,328

 

 

 

3,160

 

 

7.8

 

 

13.5

 

 

Consulting expense

 

 

3,159

 

 

 

2,559

 

 

 

1,424

 

 

23.4

 

 

121.8

 

 

Deposit related expense

 

 

3,749

 

 

 

3,584

 

 

 

3,043

 

 

4.6

 

 

23.2

 

 

Computer software expense

 

 

7,626

 

 

 

6,556

 

 

 

6,205

 

 

16.3

 

 

22.9

 

 

Other operating expense

 

 

24,512

 

 

 

22,769

 

 

 

26,262

 

 

7.7

 

 

(6.7

)

 

Amortization of tax credit and other investments

 

 

27,038

 

 

 

16,833

 

 

 

30,958

 

 

60.6

 

 

(12.7

)

Total noninterest expense

 

$

193,373

 

 

$

176,630

 

 

$

188,097

 

 

9.5

%

 

2.8

%

 

NM - Not meaningful.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

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

(unaudited)

Table 4

 

 

 

 

Year Ended

 

December 31, 2019
% Change

 

 

 

December 31, 2019

 

December 31, 2018

 

Yr-o-Yr

Interest and dividend income

 

$

1,882,300

 

 

$

1,651,703

 

 

14.0

%

Interest expense

 

 

414,487

 

 

 

265,195

 

 

56.3

 

Net interest income before provision for credit losses

 

 

1,467,813

 

 

 

1,386,508

 

 

5.9

 

Provision for credit losses

 

 

98,685

 

 

 

64,255

 

 

53.6

 

Net interest income after provision for credit losses

 

 

1,369,128

 

 

 

1,322,253

 

 

3.5

 

Noninterest income

 

 

209,377

 

 

 

210,909

 

 

(0.7

)

Noninterest expense

 

 

734,588

 

 

 

714,466

 

 

2.8

 

Income before income taxes

 

 

843,917

 

 

 

818,696

 

 

3.1

 

Income tax expense

 

 

169,882

 

 

 

114,995

 

 

47.7

 

Net income

 

$

674,035

 

 

$

703,701

 

 

(4.2

)%

EPS

 

 

 

 

 

 

- Basic

 

$

4.63

 

 

$

4.86

 

 

(4.6

)%

- Diluted

 

$

4.61

 

 

$

4.81

 

 

(4.2

)

Weighted average number of shares outstanding

 

 

 

 

 

 

- Basic

 

 

145,497

 

 

 

144,862

 

 

0.4

%

- Diluted

 

 

146,179

 

 

 

146,169

 

 

0.0

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

December 31, 2019
% Change

 

 

 

December 31, 2019

 

December 31, 2018

 

Yr-o-Yr

Noninterest income:

 

 

 

 

 

 

 

Lending fees

 

$

63,670

 

 

$

59,758

 

 

6.5

%

 

Deposit account fees

 

 

38,648

 

 

 

39,176

 

 

(1.3

)

 

Foreign exchange income

 

 

26,398

 

 

 

21,259

 

 

24.2

 

 

Wealth management fees

 

 

16,668

 

 

 

13,785

 

 

20.9

 

 

Interest rate contracts and other derivative income

 

 

39,865

 

 

 

18,980

 

 

110.0

 

 

Net gains on sales of loans

 

 

4,035

 

 

 

6,590

 

 

(38.8

)

 

Net gains on sales of AFS investment securities

 

 

3,930

 

 

 

2,535

 

 

55.0

 

 

Net gains on sales of fixed assets

 

 

114

 

 

 

6,683

 

 

(98.3

)

 

Net gain on sale of business

 

 

 

 

31,470

 

 

(100.0

)

 

Other investment income

 

 

5,249

 

 

 

1,207

 

 

334.9

 

 

Other income

 

 

10,800

 

 

 

9,466

 

 

14.1

 

Total noninterest income

 

$

209,377

 

 

$

210,909

 

 

(0.7

)%

Noninterest expense:

 

 

 

 

 

 

 

Compensation and employee benefits

 

$

401,700

 

 

$

379,622

 

 

5.8

%

 

Occupancy and equipment expense

 

 

69,730

 

 

 

68,896

 

 

1.2

 

 

Deposit insurance premiums and regulatory assessments

 

 

12,928

 

 

 

21,211

 

 

(39.1

)

 

Legal expense

 

 

8,441

 

 

 

8,781

 

 

(3.9

)

 

Data processing

 

 

13,533

 

 

 

13,177

 

 

2.7

 

 

Consulting expense

 

 

9,846

 

 

 

11,579

 

 

(15.0

)

 

Deposit related expense

 

 

14,175

 

 

 

11,244

 

 

26.1

 

 

Computer software expense

 

 

26,471

 

 

 

22,286

 

 

18.8

 

 

Other operating expense

 

 

92,249

 

 

 

88,042

 

 

4.8

 

 

Amortization of tax credit and other investments

 

 

85,515

 

 

 

89,628

 

 

(4.6

)

Total noninterest expense

 

$

734,588

 

 

$

714,466

 

 

2.8

%

 

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED AVERAGE BALANCES

($ in thousands)

(unaudited)

Table 5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

December 31, 2019
% Change

 

Year Ended

 

December 31, 2019
% Change

 

 

 

December 31,
2019

 

September 30,
2019

 

December 31,
2018

 

Qtr-o-Qtr

 

Yr-o-Yr

 

December 31,
2019

 

December 31,
2018

 

Yr-o-Yr

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C&I

 

$

12,237,081

 

 

$

12,203,341

 

 

$

11,554,737

 

 

0.3

%

 

5.9

%

 

$

12,073,820

 

 

$

11,037,992

 

 

9.4

%

CRE:  

 

CRE

 

 

10,006,424

 

 

 

9,685,092

 

 

 

9,179,181

 

 

3.3

 

 

9.0

 

 

 

9,642,301

 

 

 

8,955,920

 

 

7.7

 

 

Multifamily residential

 

 

2,771,555

 

 

 

2,561,648

 

 

 

2,347,321

 

 

8.2

 

 

18.1

 

 

 

2,588,347

 

 

 

2,215,121

 

 

16.8

 

 

Construction and land

 

 

668,147

 

 

 

694,665

 

 

 

582,311

 

 

(3.8

)

 

14.7

 

 

 

656,142

 

 

 

632,303

 

 

3.8

 

Total CRE

13,446,126

12,941,405

12,108,813

3.9

11.0

12,886,790

11,803,344

9.2

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage:  

 

Single-family residential

 

 

6,934,361

 

 

 

6,636,227

 

 

 

5,854,551

 

 

4.5

 

 

18.4

 

 

 

6,526,415

 

 

 

5,309,689

 

 

22.9

 

 

HELOCs

 

 

1,506,346

 

 

 

1,557,358

 

 

 

1,709,022

 

 

(3.3

)

 

(11.9

)

 

 

1,580,343

 

 

 

1,754,071

 

 

(9.9

)

Total residential mortgage

8,440,707

8,193,585

7,563,573

3.0

11.6

8,106,758

7,063,760

14.8

 

 

Other consumer

 

 

286,096

 

 

 

322,951

 

 

 

307,752

 

 

(11.4

)

 

(7.0

)

 

 

305,768

 

 

 

324,918

 

 

(5.9

)

 

Total loans (1)(2)

 

$

34,410,010

 

 

$

33,661,282

 

 

$

31,534,875

 

 

2.2

%

 

9.1

%

 

$

33,373,136

 

 

$

30,230,014

 

 

10.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets

 

$

42,114,123

 

 

$

40,919,386

 

 

$

38,688,647

 

 

2.9

%

 

8.9

%

 

$

40,320,804

 

 

$

36,707,142

 

 

9.8

%

Total assets

 

$

44,471,242

 

 

$

43,136,273

 

 

$

40,525,188

 

 

3.1

%

 

9.7

%

 

$

42,484,885

 

 

$

38,542,569

 

 

10.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

10,976,368

 

 

$

10,712,612

 

 

$

11,447,345

 

 

2.5

%

 

(4.1

)%

 

$

10,502,618

 

 

$

11,089,537

 

 

(5.3

)%

 

Interest-bearing checking

 

 

5,540,300

 

 

 

4,947,511

 

 

 

4,449,541

 

 

12.0

 

 

24.5

 

 

 

5,244,867

 

 

 

4,477,793

 

 

17.1

 

 

Money market

 

 

8,592,058

 

 

 

8,344,993

 

 

 

8,180,426

 

 

3.0

 

 

5.0

 

 

 

8,220,236

 

 

 

7,985,526

 

 

2.9

 

 

Savings

 

 

2,118,911

 

 

 

2,154,592

 

 

 

2,124,697

 

 

(1.7

)

 

(0.3

)

 

 

2,118,060

 

 

 

2,245,644

 

 

(5.7

)

 

Time deposits

 

 

10,180,922

 

 

 

10,337,990

 

 

 

8,783,068

 

 

(1.5

)

 

15.9

 

 

 

9,961,289

 

 

 

7,431,749

 

 

34.0

 

 

Total deposits

 

$

37,408,559

 

 

$

36,497,698

 

 

$

34,985,077

 

 

2.5

%

 

6.9

%

 

$

36,047,070

 

 

$

33,230,249

 

 

8.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

$

27,522,469

 

 

$

26,773,253

 

 

$

24,122,509

 

 

2.8

%

 

14.1

%

 

$

26,408,961

 

 

$

22,709,554

 

 

16.3

%

Stockholders’ equity

 

$

4,977,759

 

 

$

4,838,281

 

 

$

4,335,110

 

 

2.9

%

 

14.8

%

 

$

4,760,845

 

 

$

4,130,822

 

 

15.3

%

 

  1. Includes ASC 310-30 discount of $16.0 million, $18.2 million and $23.8 million for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively, and $18.9 million and $28.4 million for the years ended December 31, 2019 and 2018, respectively.
  2. Includes loans HFS.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 6

 

 

 

 

Three Months Ended

 

 

 

December 31, 2019

 

September 30, 2019

 

 

 

Average

 

 

 

Average

 

Average

 

 

 

Average

 

 

 

Balance

 

Interest

 

Yield/Rate (1)

 

Balance

 

Interest

 

Yield/Rate (1)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing cash and deposits with banks

 

$

3,270,431

 

 

$

14,925

 

 

1.81

%

 

$

3,547,626

 

 

$

19,772

 

 

2.21

%

 

Resale agreements (2)

 

 

863,261

 

 

 

5,749

 

 

2.64

%

 

 

981,196

 

 

 

6,881

 

 

2.78

%

 

AFS investment securities

 

 

3,491,961

 

 

 

20,192

 

 

2.29

%

 

 

2,651,069

 

 

 

15,945

 

 

2.39

%

 

Loans (3)

 

 

34,410,010

 

 

 

425,773

 

 

4.91

%

 

 

33,661,282

 

 

 

433,658

 

 

5.11

%

 

FHLB and FRB stock

 

 

78,460

 

 

 

594

 

 

3.00

%

 

 

78,213

 

 

 

656

 

 

3.33

%

 

Total interest-earning assets

 

 

42,114,123

 

 

 

467,233

 

 

4.40

%

 

 

40,919,386

 

 

 

476,912

 

 

4.62

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

534,326

 

 

 

 

 

 

 

441,898

 

 

 

 

 

 

Allowance for loan losses

 

 

(355,759

)

 

 

 

 

 

 

(328,523

)

 

 

 

 

 

Other assets

 

 

2,178,552

 

 

 

 

 

 

 

2,103,512

 

 

 

 

 

 

Total assets

 

$

44,471,242

 

 

 

 

 

 

$

43,136,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking deposits

 

$

5,540,300

 

 

$

13,589

 

 

0.97

%

 

$

4,947,511

 

 

$

14,488

 

 

1.16

%

 

Money market deposits

 

 

8,592,058

 

 

 

25,223

 

 

1.16

%

 

 

8,344,993

 

 

 

26,943

 

 

1.28

%

 

Savings deposits

 

 

2,118,911

 

 

 

2,266

 

 

0.42

%

 

 

2,154,592

 

 

 

2,656

 

 

0.49

%

 

Time deposits

 

 

10,180,922

 

 

 

47,935

 

 

1.87

%

 

 

10,337,990

 

 

 

52,733

 

 

2.02

%

 

Federal funds purchased and other short-term borrowings

 

 

43,313

 

 

 

404

 

 

3.70

%

 

 

40,433

 

 

 

382

 

 

3.75

%

 

FHLB advances

 

 

745,732

 

 

 

4,686

 

 

2.49

%

 

 

745,263

 

 

 

5,021

 

 

2.67

%

 

Repurchase agreements (2)

 

 

148,892

 

 

 

3,382

 

 

9.01

%

 

 

50,000

 

 

 

3,239

 

 

25.70

%

 

Long-term debt and finance lease liabilities

 

 

152,341

 

 

 

1,529

 

 

3.98

%

 

 

152,471

 

 

 

1,643

 

 

4.28

%

 

Total interest-bearing liabilities

 

 

27,522,469

 

 

 

99,014

 

 

1.43

%

 

 

26,773,253

 

 

 

107,105

 

 

1.59

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities and stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

10,976,368

 

 

 

 

 

 

 

10,712,612

 

 

 

 

 

 

Accrued expenses and other liabilities

 

 

994,646

 

 

 

 

 

 

 

812,127

 

 

 

 

 

 

Stockholders’ equity

 

 

4,977,759

 

 

 

 

 

 

 

4,838,281

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

44,471,242

 

 

 

 

 

 

$

43,136,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

2.97

%

 

 

 

 

 

3.03

%

Net interest income and net interest margin

 

 

 

$

368,219

 

 

3.47

%

 

 

 

$

369,807

 

 

3.59

%

Adjusted net interest income and adjusted net interest margin (4)

 

 

 

$

362,166

 

 

3.41

%

 

 

 

$

367,286

 

 

3.56

%

 

  1. Annualized.
  2. Average balances of resale and repurchase agreements have been reported net, pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. The weighted-average yields of gross resale agreements were 2.49% and 2.57% for the three months ended December 31, 2019 and September 30, 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 4.35% and 4.68% for the three months ended December 31, 2019 and September 30, 2019, respectively.
  3. Includes loans HFS. ASC 310-30 discount was $16.0 million and $18.2 million for the three months ended December 31, 2019 and September 30, 2019, respectively.
  4. See reconciliation of GAAP to non-GAAP financial measures in Table 15.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 7

 

 

 

Three Months Ended

 

December 31, 2019

 

December 31, 2018

 

Average

 

 

 

Average

 

Average

 

 

 

Average

 

Balance

 

Interest

 

Yield/Rate (1)

 

Balance

 

Interest

 

Yield/Rate (1)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing cash and deposits with banks

 

$

3,270,431

 

 

$

14,925

 

 

1.81

%

 

$

3,373,608

 

 

$

19,476

 

 

2.29

%

 

Resale agreements (2)

 

 

863,261

 

 

 

5,749

 

 

2.64

%

 

 

1,035,000

 

 

 

7,819

 

 

3.00

%

 

AFS investment securities

 

 

3,491,961

 

 

 

20,192

 

 

2.29

%

 

 

2,671,257

 

 

 

14,531

 

 

2.16

%

 

Loans (3)

 

 

34,410,010

 

 

 

425,773

 

 

4.91

%

 

 

31,534,875

 

 

 

414,517

 

 

5.22

%

 

FHLB and FRB stock

 

 

78,460

 

 

 

594

 

 

3.00

%

 

 

73,907

 

 

 

991

 

 

5.32

%

 

Total interest-earning assets

 

 

42,114,123

 

 

 

467,233

 

 

4.40

%

 

 

38,688,647

 

 

 

457,334

 

 

4.69

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

534,326

 

 

 

 

 

 

 

482,767

 

 

 

 

 

 

Allowance for loan losses

 

 

(355,759

)

 

 

 

 

 

 

(314,019

)

 

 

 

 

 

Other assets

 

 

2,178,552

 

 

 

 

 

 

 

1,667,793

 

 

 

 

 

 

Total assets

 

$

44,471,242

 

 

 

 

 

 

$

40,525,188

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking deposits

 

$

5,540,300

 

 

$

13,589

 

 

0.97

%

 

$

4,449,541

 

 

$

9,963

 

 

0.89

%

 

Money market deposits

 

 

8,592,058

 

 

 

25,223

 

 

1.16

%

 

 

8,180,426

 

 

 

27,640

 

 

1.34

%

 

Savings deposits

 

 

2,118,911

 

 

 

2,266

 

 

0.42

%

 

 

2,124,697

 

 

 

2,257

 

 

0.42

%

 

Time deposits

 

 

10,180,922

 

 

 

47,935

 

 

1.87

%

 

 

8,783,068

 

 

 

39,459

 

 

1.78

%

 

Federal funds purchased and other short-term borrowings

 

 

43,313

 

 

 

404

 

 

3.70

%

 

 

57,198

 

 

 

624

 

 

4.33

%

 

FHLB advances

 

 

745,732

 

 

 

4,686

 

 

2.49

%

 

 

325,826

 

 

 

2,903

 

 

3.53

%

 

Repurchase agreements (2)

 

 

148,892

 

 

 

3,382

 

 

9.01

%

 

 

50,000

 

 

 

3,396

 

 

26.95

%

 

Long-term debt and finance lease liabilities

 

 

152,341

 

 

 

1,529

 

 

3.98

%

 

 

151,753

 

 

 

1,676

 

 

4.38

%

 

Total interest-bearing liabilities

 

 

27,522,469

 

 

 

99,014

 

 

1.43

%

 

 

24,122,509

 

 

 

87,918

 

 

1.45

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities and stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

10,976,368

 

 

 

 

 

 

 

11,447,345

 

 

 

 

 

 

Accrued expenses and other liabilities

 

 

994,646

 

 

 

 

 

 

 

620,224

 

 

 

 

 

 

Stockholders’ equity

 

 

4,977,759

 

 

 

 

 

 

 

4,335,110

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

44,471,242

 

 

 

 

 

 

$

40,525,188

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

2.97

%

 

 

 

 

 

3.24

%

Net interest income and net interest margin

 

 

 

$

368,219

 

 

3.47

%

 

 

 

$

369,416

 

 

3.79

%

Adjusted net interest income and adjusted net interest margin (4)

 

 

 

$

362,166

 

 

3.41

%

 

 

 

$

363,606

 

 

3.73

%

 

 

  1. Annualized.
  2. Average balances of resale and repurchase agreements have been reported net, pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. The weighted-average yields of gross resale agreements were 2.49% and 2.72% for the three months ended December 31, 2019 and 2018, respectively. The weighted-average interest rates of gross repurchase agreements were 4.35% and 4.77% for the three months ended December 31, 2019 and 2018, respectively.
  3. Includes loans HFS. ASC 310-30 discount was $16.0 million and $23.8 million for the three months ended December 31, 2019 and 2018, respectively.
  4. See reconciliation of GAAP to non-GAAP financial measures in Table 15.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 8

 

 

Year Ended

December 31, 2019

 

December 31, 2018

Average

 

 

 

Average

 

Average

 

 

 

Average

Balance

 

Interest

 

Yield/Rate

 

Balance

 

Interest

 

Yield/Rate

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing cash and deposits with banks

 

$

3,065,426

 

 

$

67,028

 

 

2.19

%

 

$

2,645,544

 

 

$

55,704

 

 

2.11

%

 

Resale agreements (1)

 

 

969,384

 

 

 

27,819

 

 

2.87

%

 

 

1,020,822

 

 

 

29,328

 

 

2.87

%

 

AFS investment securities

 

 

2,836,004

 

 

 

67,570

 

 

2.38

%

 

 

2,737,071

 

 

 

60,011

 

 

2.19

%

 

Loans (2)

 

 

33,373,136

 

 

 

1,717,415

 

 

5.15

%

 

 

30,230,014

 

 

 

1,503,514

 

 

4.97

%

 

FHLB and FRB stock

 

 

76,854

 

 

 

2,468

 

 

3.21

%

 

 

73,691

 

 

 

3,146

 

 

4.27

%

 

Total interest-earning assets

 

 

40,320,804

 

 

 

1,882,300

 

 

4.67

%

 

 

36,707,142

 

 

 

1,651,703

 

 

4.50

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

471,060

 

 

 

 

 

 

 

445,768

 

 

 

 

 

 

Allowance for loan losses

 

 

(330,125

)

 

 

 

 

 

 

(298,600

)

 

 

 

 

 

Other assets

 

 

2,023,146

 

 

 

 

 

 

 

1,688,259

 

 

 

 

 

 

Total assets

 

$

42,484,885

 

 

 

 

 

 

$

38,542,569

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking deposits

 

$

5,244,867

 

 

$

58,168

 

 

1.11

%

 

$

4,477,793

 

 

$

34,657

 

 

0.77

%

 

Money market deposits

 

 

8,220,236

 

 

 

111,081

 

 

1.35

%

 

 

7,985,526

 

 

 

83,696

 

 

1.05

%

 

Savings deposits

 

 

2,118,060

 

 

 

9,626

 

 

0.45

%

 

 

2,245,644

 

 

 

8,621

 

 

0.38

%

 

Time deposits

 

 

9,961,289

 

 

 

196,927

 

 

1.98

%

 

 

7,431,749

 

 

 

107,778

 

 

1.45

%

 

Federal funds purchased and other short-term borrowings

 

 

44,881

 

 

 

1,763

 

 

3.93

%

 

 

32,222

 

 

 

1,398

 

 

4.34

%

 

FHLB advances

 

 

592,257

 

 

 

16,697

 

 

2.82

%

 

 

327,435

 

 

 

10,447

 

 

3.19

%

 

Repurchase agreements (1)

 

 

74,926

 

 

 

13,582

 

 

18.13

%

 

 

50,000

 

 

 

12,110

 

 

24.22

%

 

Long-term debt and finance lease liabilities

 

 

152,445

 

 

 

6,643

 

 

4.36

%

 

 

159,185

 

 

 

6,488

 

 

4.08

%

 

Total interest-bearing liabilities

 

 

26,408,961

 

 

 

414,487

 

 

1.57

%

 

 

22,709,554

 

 

 

265,195

 

 

1.17

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities and stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

10,502,618

 

 

 

 

 

 

 

11,089,537

 

 

 

 

 

 

Accrued expenses and other liabilities

 

 

812,461

 

 

 

 

 

 

 

612,656

 

 

 

 

 

 

Stockholders’ equity

 

 

4,760,845

 

 

 

 

 

 

 

4,130,822

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

42,484,885

 

 

 

 

 

 

$

38,542,569

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

3.10

%

 

 

 

 

 

3.33

%

Net interest income and net interest margin

 

 

 

$

1,467,813

 

 

3.64

%

 

 

 

$

1,386,508

 

 

3.78

%

Adjusted net interest income and adjusted net interest margin (3)

 

 

 

$

1,455,342

 

 

3.61

%

 

 

 

$

1,366,336

 

 

3.72

%

 

  1. Average balances of resale and repurchase agreements have been reported net, pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. The weighted-average yields of gross resale agreements were 2.65% and 2.63% for the years ended December 31, 2019 and 2018, respectively. The weighted-average interest rates of gross repurchase agreements were 4.74% and 4.46% for the years ended December 31, 2019 and 2018, respectively.
  2. Includes loans HFS. ASC 310-30 discount was $18.9 million and $28.4 million for the years ended December 31, 2019 and 2018, respectively.
  3. See reconciliation of GAAP to non-GAAP financial measures in Table 15.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED RATIOS

(unaudited)

Table 9

 

 

 

Three Months Ended (1)

 

December 31, 2019
Basis Point Change

 

 

 

December 31,
2019

 

September 30,
2019

 

December 31,
2018

 

Qtr-o-Qtr

 

Yr-o-Yr

 

 

Return on average assets

 

1.68

%

 

1.58

%

 

1.69

%

 

10

 

bps

(1

)

bps

 

Adjusted return on average assets (2)

 

1.67

%

 

1.58

%

 

1.69

%

 

9

 

 

(2

)

 

 

Return on average equity

 

15.00

%

 

14.06

%

 

15.83

%

 

94

 

 

(83

)

 

 

Adjusted return on average equity (2)

 

14.91

%

 

14.06

%

 

15.83

%

 

85

 

 

(92

)

 

 

Return on average tangible equity (2)

 

16.71

%

 

15.75

%

 

17.97

%

 

96

 

 

(126

)

 

 

Adjusted return on average tangible equity (2)

 

16.61

%

 

15.75

%

 

17.97

%

 

86

 

 

(136

)

 

 

Interest rate spread

 

2.97

%

 

3.03

%

 

3.24

%

 

(6

)

 

(27

)

 

 

Net interest margin

 

3.47

%

 

3.59

%

 

3.79

%

 

(12

)

 

(32

)

 

 

Adjusted net interest margin (2)

 

3.41

%

 

3.56

%

 

3.73

%

 

(15

)

 

(32

)

 

 

Average loan yield

 

4.91

%

 

5.11

%

 

5.22

%

 

(20

)

 

(31

)

 

 

Adjusted average loan yield (2)

 

4.84

%

 

5.08

%

 

5.14

%

 

(24

)

 

(30

)

 

 

Yield on average interest-earning assets

 

4.40

%

 

4.62

%

 

4.69

%

 

(22

)

 

(29

)

 

 

Average cost of interest-bearing deposits

 

1.34

%

 

1.49

%

 

1.34

%

 

(15

)

 

 

 

 

Average cost of deposits

 

0.94

%

 

1.05

%

 

0.90

%

 

(11

)

 

4

 

 

 

Average cost of funds

 

1.02

%

 

1.13

%

 

0.98

%

 

(11

)

 

4

 

 

 

Adjusted pre-tax, pre-provision profitability ratio (2)

 

2.37

%

 

2.42

%

 

2.50

%

 

(5

)

 

(13

)

 

 

Adjusted noninterest expense/average assets (2)

 

1.47

%

 

1.46

%

 

1.53

%

 

1

 

 

(6

)

 

 

Efficiency ratio

 

44.84

%

 

41.93

%

 

45.75

%

 

291

 

 

(91

)

 

 

Adjusted efficiency ratio (2)

 

38.33

%

 

37.66

%

 

37.92

%

 

67

 

bps

41

 

bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

December 31, 2019
Basis Point Change

 

 

 

 

 

 

 

December 31,
2019

 

December 31,
2018

 

Yr-o-Yr

 

 

 

 

 

Return on average assets

 

1.59

%

 

1.83

%

 

(24

)

bps

 

 

 

 

 

Adjusted return on average assets (2)

 

1.67

%

 

1.77

%

 

(10

)

 

 

 

 

 

 

Return on average equity

 

14.16

%

 

17.04

%

 

(288

)

 

 

 

 

 

 

Adjusted return on average equity (2)

 

14.87

%

 

16.50

%

 

(163

)

 

 

 

 

 

 

Return on average tangible equity (2)

 

15.88

%

 

19.48

%

 

(360

)

 

 

 

 

 

 

Adjusted return on average tangible equity (2)

 

16.68

%

 

18.87

%

 

(219

)

 

 

 

 

 

 

Interest rate spread

 

3.10

%

 

3.33

%

 

(23

)

 

 

 

 

 

 

Net interest margin

 

3.64

%

 

3.78

%

 

(14

)

 

 

 

 

 

 

Adjusted net interest margin (2)

 

3.61

%

 

3.72

%

 

(11

)

 

 

 

 

 

 

Average loan yield

 

5.15

%

 

4.97

%

 

18

 

 

 

 

 

 

 

Adjusted average loan yield (2)

 

5.11

%

 

4.90

%

 

21

 

 

 

 

 

 

 

Yield on average interest-earning assets

 

4.67

%

 

4.50

%

 

17

 

 

 

 

 

 

 

Average cost of interest-bearing deposits

 

1.47

%

 

1.06

%

 

41

 

 

 

 

 

 

 

Average cost of deposits

 

1.04

%

 

0.71

%

 

33

 

 

 

 

 

 

 

Average cost of funds

 

1.12

%

 

0.78

%

 

34

 

 

 

 

 

 

 

Adjusted pre-tax, pre-provision profitability ratio (2)

 

2.43

%

 

2.46

%

 

(3

)

 

 

 

 

 

 

Adjusted noninterest expense/average assets (2)

 

1.52

%

 

1.61

%

 

(9

)

 

 

 

 

 

 

Efficiency ratio

 

43.80

%

 

44.73

%

 

(93

)

 

 

 

 

 

 

Adjusted efficiency ratio (2)

 

38.43

%

 

39.55

%

 

(112

)

bps

 

 

 

 

 

 

  1. Annualized except for efficiency ratio.
  2. See reconciliation of GAAP to non-GAAP financial measures in Tables 13, 14, 15 and 16.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

ALLOWANCE FOR CREDIT LOSSES

($ in thousands)

(unaudited)

Table 10

 

 

Three Months Ended

 

Year Ended

December 31,
2019

 

September 30,
2019

 

December 31,
2018

 

December 31,
2019

 

December 31,
2018

Non-Purchased Credit Impaired (“Non-PCI”) Loans

 

 

 

 

 

 

 

 

 

 

 

Allowance for non-PCI loans, beginning of period

 

$

345,576

 

 

$

330,620

 

 

$

 

310,010

 

 

$

311,300

 

 

$

287,070

 

 

Provision for loan losses on non-PCI loans

 

 

20,843

 

 

 

37,884

 

 

 

17,321

 

 

 

100,115

 

 

 

65,043

 

 

Net (charge-offs) recoveries:

 

 

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

C&I

 

 

(11,009

)

 

 

(23,450

)

 

 

(21,227

)

 

 

(59,484

)

 

 

(48,827

)

CRE:  

 

CRE

 

 

1,254

 

 

 

875

 

 

 

4,763

 

 

 

4,188

 

 

 

5,194

 

 

Multifamily residential

 

 

1,480

 

 

 

42

 

 

 

286

 

 

 

1,856

 

 

 

1,757

 

 

Construction and land

 

 

13

 

 

 

21

 

 

 

24

 

 

 

536

 

 

 

740

 

Total CRE

2,747

938

5,073

6,580

7,691

 

 

Consumer:

 

 

 

 

 

 

 

 

 

 

Residential mortgage:  

 

Single-family residential

 

 

2

 

 

 

49

 

 

 

106

 

 

 

125

 

 

 

1,213

 

 

HELOCs

 

 

 

 

5

 

 

 

38

 

 

 

7

 

 

 

38

 

Total residential mortgage

2

54

144

132

1,251

 

 

Other consumer

 

 

(5

)

 

 

(5

)

 

 

(2

)

 

 

(31

)

 

 

(185

)

 

Total net charge-offs

 

 

(8,265

)

 

 

(22,463

)

 

 

(16,012

)

 

 

(52,803

)

 

 

(40,070

)

 

Foreign currency translation adjustments

 

 

133

 

 

 

(465

)

 

 

(19

)

 

 

(325

)

 

 

(743

)

 

Allowance for non-PCI loans, end of period

 

 

358,287

 

 

 

345,576

 

 

 

311,300

 

 

 

358,287

 

 

 

311,300

 

Purchased Credit Impaired (“PCI”) Loans

 

 

 

 

 

 

 

 

 

 

 

Allowance for PCI loans, beginning of period

 

 

 

 

5

 

 

 

31

 

 

 

22

 

 

 

58

 

 

Reversal of loan losses on PCI loans