East West Bancorp Reports Net Income for Second Quarter 2020 of $99.4 Million and Diluted Earnings Per Share Of $0.70

Nachrichtenquelle: Business Wire (engl.)
23.07.2020, 14:00  |  114   |   |   

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 second quarter of 2020. For the second quarter of 2020, net income was $99.4 million or $0.70 per diluted share. Second quarter 2020 return on average assets was 0.83% and return on average equity was 8.02%.

“East West is steadfast in its commitment to support our existing and new customers and the communities we operate in. Despite the challenges presented by adapting to the COVID-19 pandemic, total loans grew $1.3 billion, or 15% annualized, to a record $37.2 billion as of June 30, 2020 from $35.9 billion as of March 31, 2020,” stated Dominic Ng, Chairman and Chief Executive Officer of East West.

“During the second quarter, East West funded $1.8 billion of Paycheck Protection Program loans for over 7,200 customers. In addition, residential mortgage loans grew by 12% annualized and total commercial real estate loans grew by 9% annualized. This well-balanced loan growth demonstrates the strength of East West’s business model and our ability to generate responsible and attractive growth, even under difficult economic conditions.”

“Total deposits grew $2.0 billion, or 21% annualized, to a record $40.7 billion as of June 30, 2020 from $38.7 billion as of March 31, 2020,” continued Ng. “Second quarter 2020 deposit growth was driven by strong growth in noninterest-bearing demand and in low-cost money market deposits. Further, we proactively reduced higher-cost deposit balances. Overall, the average cost of deposits declined by 35 basis points quarter-over-quarter.”

“East West’s adjusted1 pre-tax, pre-provision profitability ratio remained strong at over 2% for the second quarter of 2020, despite the very low interest rate environment. During the quarter, we further strengthened our allowance for loan losses coverage to 1.70% of our loan portfolio, to reflect a more adverse macroeconomic outlook,” added Ng.

“We added to our already substantial levels of liquidity by participating in the Paycheck Protection Program Liquidity Facility, bolstering our balance sheet capacity to serve our customers. Quarter-over-quarter, our capital increased and our high capital ratios position us in a place of strength,” concluded Ng. “I wish to thank all of our associates for all of their hard work, dedication and adaptability in serving our customers in these unprecedented and challenging times.”

SUMMARY OF THE QUARTER

  • Second Quarter Earnings – Second quarter 2020 net income was $99.4 million and diluted earnings per share (“EPS”) were $0.70, compared to first quarter 2020 net income of $144.8 million and diluted EPS of $1.00.
  • Record Loans – Total loans of $37.2 billion as of June 30, 2020 increased by $1.3 billion, or 15% annualized, from $35.9 billion as of March 31, 2020. As of June 30, 2020, Paycheck Protection Program (“PPP”) loans were $1.7 billion.

    Second quarter 2020 average loans of $37.1 billion grew $2.0 billion, or 23% linked quarter annualized. Loan growth during the quarter came from each of East West’s major loan portfolios, with the strongest growth from commercial and industrial (“C&I”), driven by PPP loan growth. Commercial real estate and residential mortgage loans contributed to the growth during the quarter as well.
  • Record Deposits – Total deposits of $40.7 billion as of June 30, 2020 increased by $2.0 billion, or 21% annualized, from $38.7 billion as of March 31, 2020.

    Second quarter 2020 average deposits of $39.9 billion grew $2.4 billion, or 26% linked quarter annualized, primarily driven by growth in noninterest-bearing demand accounts. Average non-interest bearing deposits increased to 34% of total deposits in the second quarter, up from 30% in the first quarter of 2020. Deposit growth in the second quarter was attributable to strong growth from consumer and small business commercial customers, as well as to PPP funds held in deposit accounts, partially offset by the intentional run-off of higher-cost balances.
  • Balance Sheet Management – During the second quarter of 2020, the Company participated in the PPP Liquidity Facility (“PPPLF”), adding $1.4 billion to low-cost funding at a rate of 35 basis points. Also during the second quarter, East West prepaid $150.0 million of repurchase agreements and incurred a debt extinguishment cost of $8.7 million.
  • Net Interest Income and Net Interest Margin – Second quarter 2020 net interest income (“NII”) was $343.8 million, a decrease of $18.9 million or 5% from first quarter 2020 NII of $362.7 million. Second quarter 2020 net interest margin (“NIM”) was 3.04%, a 40 basis point compression from 3.44% in the first quarter of 2020. The changes in the NII and in the NIM reflect the quarter-over-quarter drop in the average Prime and LIBOR interest rates.
  • Noninterest Expense and Efficiency Ratio – Second quarter 2020 noninterest expense totaled $187.7 million, including $153.3 million of adjusted2 noninterest expense. Adjusted noninterest expense of $153.3 million decreased by $7.3 million, or 5%, from $160.6 million in the first quarter of 2020. Correspondingly, the adjusted2 efficiency ratio was 38.1% in the second quarter, compared to 38.5% in the first quarter.
  • Asset Quality Metrics – The allowance for loan losses (“ALLL”) totaled $632.1 million, or 1.70% of loans held-for-investment (“HFI”), as of June 30, 2020, compared to $557.0 million, or 1.55% of loans HFI, as of March 31, 2020.

    Second quarter 2020 provision for credit losses was $102.4 million, compared to $ 73.9 million for the first quarter of 2020. Second quarter 2020 net charge-offs were $19.2 million, or annualized 0.21% of average loans HFI, compared to annualized 0.01% of average loans HFI in the first quarter of 2020. Nonperforming assets were $202.2 million, or 0.41% of total assets, as of June 30, 2020, compared to 0.33% of total assets as of March 31, 2020.
  • Capital Levels – Capital levels for East West are strong. As of June 30, 2020, stockholders’ equity was $5.0 billion, or $35.25 per share. Tangible equity3 per common share was $31.86 as of June 30, 2020, an increase of 2% from $31.27 as of March 31, 2020. As of June 30, 2020, the tangible equity to tangible assets ratio3 was 9.2%, the common equity tier 1 (“CET1”) capital ratio was 12.7%, and the total risk-based capital ratio was 14.4%.

OPERATING RESULTS

Second Quarter 2020 Compared to First Quarter 2020

Net Interest Income and Net Interest Margin

Net interest income totaled $343.8 million, a decrease of 5% from $362.7 million. Net interest margin of 3.04% decreased by 40 basis points from 3.44%.

  • Interest and fees earned on PPP loans contributed $21.3 million to interest income, and interest expense paid on the related PPPLF was $0.5 million.
  • Average interest-earning assets of $45.4 billion grew $3.1 billion, or 29% linked quarter annualized. Average loan growth of $2.0 billion, or 23% linked quarter annualized, was mainly due to growth from PPP loans. The average balance of PPP loans was $1.5 billion in the second quarter of 2020.
  • Average interest-bearing deposits were essentially flat at $26.4 billion. Average noninterest-bearing deposits of $13.5 billion grew $2.4 billion, or 87% linked quarter annualized. The average balance of the PPPLF, classified as long-term debt, was $530.3 million.
  • The average loan yield contracted by 73 basis points to 3.98%, down from 4.71%, reflecting materially lower interest rates during the second quarter.
  • The yield on average interest-earning assets contracted by 73 basis points to 3.53%, down from 4.26%.
  • The average cost of interest-bearing deposits decreased by 46 basis points to 0.71%, down from 1.17%. The average cost of deposits decreased by 35 basis points to 0.47%, down from 0.82%.

Noninterest Income

Noninterest income totaled $58.6 million, an 8% increase from $54.0 million.

  • Gains on sales of available-for-sale debt securities were $9.6 million, driven by $131.6 million in sales of municipal bonds during the second quarter.
  • Lending fees of $21.9 million increased by $6.2 million, primarily reflecting an increase in the valuation of warrants received as part of lending relationships.
  • The largest linked-quarter decreases in noninterest income were a $3.3 million decrease in foreign exchange income and a $2.3 million decrease in wealth management fees, both reflecting a decrease in customer-driven transactions during the second quarter.

Noninterest Expense

Noninterest expense totaled $187.7 million, a 5% increase from $178.9 million.

  • Second quarter noninterest expense consisted of $153.3 million of adjusted noninterest expense, $24.8 million in amortization of tax credit and other investments, $8.7 million of debt extinguishment cost, and $0.9 million in amortization of core deposit intangibles.
  • During the second quarter, the Company prepaid $150.0 million of repurchase agreements and incurred a debt extinguishment cost of $8.7 million.
  • Adjusted noninterest expense of $153.3 million decreased by $7.3 million, or 5%, from $160.6 million. The largest linked-quarter change was a $5.0 million decrease in compensation and employee benefits expense, followed by a $1.9 million decrease in other operating expenses and a $1.7 million decrease in legal expense.
  • The adjusted efficiency ratio was 38.1% in the second quarter, compared to 38.5% in the first quarter.

TAX RELATED ITEMS

Second quarter 2020 income tax expense was $12.9 million and the effective tax rate was 12%, compared to income tax expense of $19.2 million and an effective tax rate of 12% for the first quarter of 2020.

ASSET QUALITY

The allowance for loan losses totaled $632.1 million, or 1.70% of loans HFI, as of June 30, 2020, compared to $557.0 million, or 1.55% of loans HFI, as of March 31, 2020.

  • Second quarter 2020 provision for credit losses was $102.4 million, compared to $73.9 million for the first quarter of 2020, and $19.2 million for the second quarter of 2019. Second quarter 2020 provision for credit losses was primarily driven by a more adverse macroeconomic forecast as of June 30, 2020, relative to March 31, 2020, as well as loan risk rating downgrades.
  • Second quarter 2020 net charge-offs were $19.2 million, or annualized 0.21% of average loans HFI, compared to first quarter 2020 net charge-offs of $0.9 million, or annualized 0.01% of average loans HFI, and net charge-offs of $7.6 million, or annualized 0.09% of average loans HFI, for the second quarter of 2019. Second quarter 2020 net charge-offs were largely from loans in the oil and gas industry.
  • Nonperforming assets were $202.2 million, or 0.41% of total assets, as of June 30, 2020, compared to nonperforming assets of $150.9 million, or 0.33% of total assets, as of March 31, 2020, and $119.3 million, or 0.28% of total assets, as of June 30, 2019. The increase in nonperforming assets was largely due to inflows to nonaccrual status of oil and gas and commercial real estate loans, partially offset by pay-offs and charge-offs of C&I loans.

CAPITAL STRENGTH

Capital levels for East West are strong. The following table presents the regulatory capital ratios as of June 30, 2020, March 31, 2020, and June 30, 2019.

EWBC Regulatory Capital Metrics

 

Basel III

 

 



($ in millions)

 

June 30,
2020 (a)

 

March 31,
2020(a)

 

June 30,
2019

 

Minimum
Capital
Ratio

 

Well
Capitalized
Ratio

 

Minimum
Capital Ratio +
Conservation
Buffer (b)

Risk-Based Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

CET1 capital ratio

 

12.7

%

 

12.4

%

 

12.5

%

 

4.5

%

 

6.5

%

 

7.0

%

Tier 1 capital ratio

 

12.7

%

 

12.4

%

 

12.5

%

 

6.0

%

 

8.0

%

 

8.5

%

Total capital ratio

 

14.4

%

 

13.9

%

 

13.9

%

 

8.0

%

 

10.0

%

 

10.5

%

Leverage ratio

 

9.7

%

 

10.2

%

 

10.4

%

 

4.0

%

 

5.0

%

 

4.0

%

Risk-Weighted Assets (“RWA”) (c)

 

$

36,199

 

 

$

36,548

 

 

$

34,154

 

 

N/A

 

N/A

 

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N/A Not applicable.

(a)

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

(b)

An additional 2.5% capital conservation buffer above the minimum capital ratios are required in order to avoid limitations on distributions, including dividend payments and certain discretionary bonus payments to executive officers.

(c)

Under regulatory guidelines, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories based on the nature of the obligor, or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar value in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total RWA.

DIVIDEND PAYOUT AND CAPITAL ACTIONS

East West’s Board of Directors has declared third quarter 2020 dividends for the Company’s common stock. The common stock cash dividend of $0.275 per share is payable on August 17, 2020 to shareholders of record on August 4, 2020.

On March 3, 2020, East West’s Board of Directors authorized the repurchase of up to $500 million of East West’s common stock. East West did not repurchase any shares during the second quarter of 2020 under this authorization.

Conference Call

East West will host a conference call to discuss second quarter 2020 earnings with the public on Thursday, July 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 second quarter 2020 results and operating developments.

  • The following dial-in information is provided for participation in the conference call: calls within the U.S. – (877) 506-6399; calls within Canada – (855) 669-9657; international calls – (412) 902-6699.
  • A presentation to accompany the earnings call will be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.
  • A listen-only live broadcast of the call will also be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.
  • A replay of the conference call will be available on July 23, 2020 at 11:30 a.m. Pacific Time through August 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: 10145315.

About East West

East West Bancorp, Inc. is a publicly owned company with total assets of $49.4 billion and is traded on the Nasdaq Global Select Market under the symbol “EWBC”. The Company’s wholly-owned subsidiary, East West Bank, is one of the largest independent banks headquartered in California, operating over 125 locations in the United States and Greater China. U.S. markets include California, Georgia, Massachusetts, Nevada, New York, Texas and Washington. In Greater China, East West’s presence includes full service branches in Hong Kong, Shanghai, Shantou and Shenzhen, and representative offices in Beijing, Chongqing, Guangzhou, and Xiamen. For more information on East West, visit the Company’s website at www.eastwestbank.com.

Forward-Looking Statements

Certain matters set forth herein (including any exhibits hereto) constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to our current business plans and expectations regarding future operating results. Forward-looking statements may include, but are not limited to, the use of forward-looking language, such as “likely result in,” “expects,” “anticipates,” “estimates,” “forecasts,” “projects,” “intends to,” “assumes,” or may include other similar words or phrases, such as “believes,” “plans,” “trend,” “objective,” “continues,” “remains,” or similar expressions, or future or conditional verbs, such as “will,” “would,” “should,” “could,” “may,” “might,” “can,” or similar verbs, and the negative thereof. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties, some of which are beyond our control, include, but are not limited to, the impact of disease pandemics, such as the worldwide spread of COVID-19, on us, our operations and our customers and employees; and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may precipitate or exacerbate one or more of the below-mentioned and/or other risks, and significantly disrupt or prevent us from operating its business in the ordinary course for an extended period; changes in governmental policy and regulation, including measures taken in response to economic, business, political and social conditions, such as the Small Business Administration’s Payment Protection Program, the Board of Governors of the Federal Reserve Board System’s (the “Federal Reserve”) efforts to provide liquidity to the U.S. financial system, including changes in government interest rate policies, and to provide credit to private commercial and municipal borrowers, and other program designed to address the effects of the COVID-19 pandemic, as well as the resulting effect of all such items on our operations, liquidity and capital position, and on the financial condition of our borrowers and other customers; changes in the U.S. economy, including an economic slowdowns or recession, inflation, deflation, employment levels, rate of growth and general business conditions; the changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing trade dispute between the United States (“U.S.”) and the People’s Republic of China; fluctuations in our stock price; changes in income tax laws and regulations; 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 from changes in key variable market interest rates, competition, regulatory requirements and our product mix; changes in our costs of operation, compliance and expansion; our ability to adopt and successfully integrate new technologies into our business in a strategic manner; impact of benchmark interest rate reform in the U.S. that resulted in the Secured Overnight Financing Rate selected as the preferred alternative reference rate to the London Interbank Offered Rate; impact of 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; impact on our international operations due to political developments, disease pandemics, wars or other hostilities that may disrupt or increase volatility in securities or otherwise affect economic conditions; changes in laws or the regulatory environment including regulatory reform initiatives and policies of the U.S. Department of Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the U.S. Securities and Exchange Commission, the Consumer Financial Protection Bureau 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; 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; impact on our liquidity due to 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 foreign currency exchange rates; a recurrence of significant turbulence or disruption in the capital or financial markets, which could result in, among other things, a reduction in the availability of funding or increases in funding costs, a reduction in investor demand for mortgage loans and declines in asset values and/or recognition of other-than-temporary impairment on securities held in our available-for-sale debt securities portfolio; impact of natural or man-made disasters or calamities, such as wildfires 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 our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Reports on Form 10-Q, and particularly the discussion of risk factors within those documents. In addition to the risk factors enumerated above, the economic impact of the COVID-19 pandemic could cause actual outcome to differ, possibly materially, from our forward-looking statement due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on our business. The extent to which the COVID-19 pandemic impacts us will depend on future developments that are uncertain and unpredictable, including the scope, severity and duration of the pandemic and its impact on our customers, the actions taken by governmental authorities in response to the pandemic as well as its impact on global and regional economies, and the pace of recovery when the COVID-19 pandemic subsides, among others. 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.

1 See reconciliation of GAAP to non-GAAP financial measures in Table 14.

2 See reconciliation of GAAP to non-GAAP financial measures in Table 14.

3 See reconciliation of GAAP to non-GAAP financial measures in Table 15.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

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

(unaudited)

Table 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2020
% or Basis Point Change

 

 

June 30, 2020

 

March 31, 2020

 

June 30, 2019

 

Qtr-o-Qtr

 

Yr-o-Yr

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

602,974

 

 

$

427,415

 

 

$

425,949

 

 

41.1

%

 

41.6

%

 

Interest-bearing cash with banks

 

3,930,528

 

 

2,652,627

 

 

3,195,665

 

 

48.2

 

 

23.0

 

 

Cash and cash equivalents

 

4,533,502

 

 

3,080,042

 

 

3,621,614

 

 

47.2

 

 

25.2

 

 

Interest-bearing deposits with banks

 

531,591

 

 

293,509

 

 

150,273

 

 

81.1

 

 

253.8

 

 

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

 

1,260,000

 

 

860,000

 

 

1,010,000

 

 

46.5

 

 

24.8

 

 

Available-for-sale (“AFS”) debt securities (amortized cost of $3,823,714 and $3,660,413 as of June 30, 2020 and March 31, 2020, respectively)

 

3,884,574

 

 

3,695,943

 

 

2,592,913

 

 

5.1

 

 

49.8

 

 

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

 

78,963

 

 

78,745

 

 

78,093

 

 

0.3

 

 

1.1

 

 

Loans held-for-sale (“HFS”)

 

3,875

 

 

1,594

 

 

3,879

 

 

143.1

 

 

(0.1)

 

 

Loans held-for-investment (''HFI'') (net of allowance for loan losses of $632,071, $557,003 (2) and $330,625)

 

36,597,341

 

 

35,336,390

 

 

33,399,752

 

 

3.6

 

 

9.6

 

 

Investments in qualified affordable housing partnerships, net

 

201,888

 

 

198,653

 

 

198,466

 

 

1.6

 

 

1.7

 

 

Investments in tax credit and other investments, net

 

251,318

 

 

268,330

 

 

210,387

 

 

(6.3)

 

 

19.5

 

 

Goodwill

 

465,697

 

 

465,697

 

 

465,697

 

 

 

 

 

 

Operating lease right-of-use assets

 

94,898

 

 

101,381

 

 

109,032

 

 

(6.4)

 

 

(13.0)

 

 

Other assets

 

1,503,946

 

 

1,568,261

 

 

1,052,252

 

 

(4.1)

 

 

42.9

 

 

Total assets

 

$

49,407,593

 

 

$

45,948,545

 

 

$

42,892,358

 

 

7.5

%

 

15.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

40,672,678

 

 

$

38,686,958

 

 

$

36,477,542

 

 

5.1

%

 

11.5

%

 

Short-term borrowings

 

52,851

 

 

66,924

 

 

19,972

 

 

(21.0)

 

 

164.6

 

 

Federal funds purchased

 

200,000

 

 

 

 

 

 

100.0

 

 

100.0

 

 

FHLB advances

 

656,759

 

 

646,336

 

 

745,074

 

 

1.6

 

 

(11.9)

 

 

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

 

300,000

 

 

450,000

 

 

50,000

 

 

(33.3)

 

 

500.0

 

Long-term debt and finance lease liabilities (3)

 

1,580,442

 

 

152,162

 

 

152,506

 

 

938.7

 

 

936.3

 

 

Operating lease liabilities

 

102,708

 

 

109,356

 

 

117,448

 

 

(6.1)

 

 

(12.6)

 

 

Accrued expenses and other liabilities

 

854,912

 

 

933,824

 

 

595,223

 

 

(8.5)

 

 

43.6

 

 

Total liabilities

 

44,420,350

 

 

41,045,560

 

 

38,157,765

 

 

8.2

 

 

16.4

 

 

Stockholders’ equity (2)

 

4,987,243

 

 

4,902,985

 

 

4,734,593

 

 

1.7

 

 

5.3

 

 

Total liabilities and stockholders’ equity

 

$

49,407,593

 

 

$

45,948,545

 

 

$

42,892,358

 

 

7.5

%

 

15.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

 

$

35.25

 

 

$

34.67

 

 

$

32.53

 

 

1.7

%

 

8.4

%

 

Tangible equity (4) per common share

 

$

31.86

 

 

$

31.27

 

 

$

29.20

 

 

1.9

 

 

9.1

 

 

Number of common shares at period-end

 

141,486

 

 

141,435

 

 

145,547

 

 

0.0

 

 

(2.8)

 

 

Tangible equity to tangible assets ratio (4)

 

9.21

%

 

9.73

%

 

10.02

%

 

(52)

 

bps

(81)

 

bps

 

 

 

 

 

 

(1)

Resale and repurchase agreements are reported net when the transactions are eligible for netting under Accounting Standards Codification (“ASC”) 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. There was no netting of repurchase agreements against resale agreements as of June 30, 2020 and March 31, 2020. $400 million of gross repurchase agreements were eligible for netting against gross resale agreements as of June 30, 2019.

(2)

On January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments using the modified retrospective approach. The March 31, 2020 Allowance for loan loss reflects an increase of $125.2 million as a result of adopting ASU 2016-13. We recorded an after-tax decrease to opening retained earnings of $98.0 million as of January 1, 2020.

(3)

Includes $1.43 billion of advances from the Paycheck Protection Program Liquidity Facility (“PPPLF”).

(4)

See reconciliation of GAAP to non-GAAP financial measures in Table 15.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

TOTAL LOANS AND DEPOSITS DETAIL

($ in thousands)

(unaudited)

Table 2

 

 

 

 

 

 

 

 

 

June 30, 2020
% Change

 

 

June 30, 2020

 

March 31, 2020

 

June 30, 2019

 

Qtr-o-Qtr

 

Yr-o-Yr

Loans:

 

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (“C&I”) (1)

 

$

13,422,691

 

 

$

12,590,764

 

 

$

12,402,967

 

 

6.6

%

 

8.2

%

Commercial real estate (“CRE”):

 

 

 

 

 

 

 

 

 

 

CRE

 

10,902,114

 

 

10,682,242

 

 

9,663,624

 

 

2.1

 

 

12.8

 

Multifamily residential

 

3,032,385

 

 

2,902,601

 

 

2,577,154

 

 

4.5

 

 

17.7

 

Construction and land

 

567,716

 

 

606,209

 

 

674,798

 

 

(6.3)

 

 

(15.9)

 

Total CRE

 

14,502,215

 

 

14,191,052

 

 

12,915,576

 

 

2.2

 

 

12.3

 

Consumer:

 

 

 

 

 

 

 

 

 

 

Residential mortgage:

 

 

 

 

 

 

 

 

 

 

Single-family residential

 

7,660,094

 

 

7,403,723

 

 

6,494,882

 

 

3.5

 

 

17.9

 

Home equity lines of credit (“HELOCs”)

 

1,461,951

 

 

1,452,862

 

 

1,575,150

 

 

0.6

 

 

(7.2)

 

Total residential mortgage

 

9,122,045

 

 

8,856,585

 

 

8,070,032

 

 

3.0

 

 

13.0

 

Other consumer

 

182,461

 

 

254,992

 

 

341,802

 

 

(28.4)

 

 

(46.6)

 

Total loans HFI (2)

 

37,229,412

 

 

35,893,393

 

 

33,730,377

 

 

3.7

 

 

10.4

 

Loans HFS

 

3,875

 

 

1,594

 

 

3,879

 

 

143.1

 

 

(0.1)

 

Total loans (2)

 

37,233,287

 

 

35,894,987

 

 

33,734,256

 

 

3.7

 

 

10.4

 

Allowance for loan losses

 

(632,071)

 

 

(557,003)

 

 

(330,625)

 

 

13.5

 

 

91.2

 

Net loans (2)

 

$

36,601,216

 

 

$

35,337,984

 

 

$

33,403,631

 

 

3.6

%

 

9.6

%

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

13,940,420

 

 

$

11,833,397

 

 

$

10,599,088

 

 

17.8

%

 

31.5

%

Interest-bearing checking

 

5,280,887

 

 

5,467,508

 

 

5,083,675

 

 

(3.4)

 

 

3.9

 

Money market

 

10,002,624

 

 

9,302,246

 

 

8,009,325

 

 

7.5

 

 

24.9

 

Savings

 

2,186,199

 

 

2,117,274

 

 

2,188,738

 

 

3.3

 

 

(0.1)

 

Time deposits

 

9,262,548

 

 

9,966,533

 

 

10,596,716

 

 

(7.1)

 

 

(12.6)

 

Total deposits

 

$

40,672,678

 

 

$

38,686,958

 

 

$

36,477,542

 

 

5.1

%

 

11.5

%

 

(1)

Includes $1.75 billion of Paycheck Protection Program (“PPP”) loans as of June 30, 2020.

(2)

Includes net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts of $(72.1) million, $(50.3) million, and $(43.8) million as of June 30, 2020, March 31, 2020 and June 30, 2019, respectively. Net origination fees related to PPP loans were $(25.4) million as of June 30, 2020.

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, 2020
% Change

 

 

June 30, 2020

 

March 31, 2020

 

June 30, 2019

 

Qtr-o-Qtr

 

Yr-o-Yr

Interest and dividend income (1)

 

$

398,776

 

 

$

449,190

 

 

$

474,844

 

 

(11.2)

%

 

(16.0)

%

Interest expense

 

55,001

 

 

86,483

 

 

107,518

 

 

(36.4)

 

 

(48.8)

 

Net interest income before provision for credit losses

 

343,775

 

 

362,707

 

 

367,326

 

 

(5.2)

 

 

(6.4)

 

Provision for credit losses

 

102,443

 

 

73,870

 

 

19,245

 

 

38.7

 

 

432.3

 

Net interest income after provision for credit losses

 

241,332

 

 

288,837

 

 

348,081

 

 

(16.4)

 

 

(30.7)

 

Noninterest income

 

58,637

 

 

54,049

 

 

52,759

 

 

8.5

 

 

11.1

 

Noninterest expense

 

187,696

 

 

178,876

 

 

177,663

 

 

4.9

 

 

5.6

 

Income before income taxes

 

112,273

 

 

164,010

 

 

223,177

 

 

(31.5)

 

 

(49.7)

 

Income tax expense

 

12,921

 

 

19,186

 

 

72,797

 

 

(32.7)

 

 

(82.3)

 

Net income

 

$

99,352

 

 

$

144,824

 

 

$

150,380

 

 

(31.4)

%

 

(33.9)

%

Earnings per share (“EPS”)

 

 

 

 

 

 

 

 

 

 

- Basic

 

$

0.70

 

 

$

1.00

 

 

$

1.03

 

 

(29.8)

%

 

(32.0)

%

- Diluted

 

$

0.70

 

 

$

1.00

 

 

$

1.03

 

 

(29.7)

 

 

(32.0)

 

Weighted-average number of shares outstanding

 

 

 

 

 

 

 

 

 

 

- Basic

 

141,486

 

 

144,814

 

 

145,546

 

 

(2.3)

%

 

(2.8)

%

- Diluted

 

141,827

 

 

145,285

 

 

146,052

 

 

(2.4)

 

 

(2.9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

June 30, 2020
% Change

 

 

June 30, 2020

 

March 31, 2020

 

June 30, 2019

 

Qtr-o-Qtr

 

Yr-o-Yr

Noninterest income:

 

 

 

 

 

 

 

 

 

 

Lending fees

 

$

21,946

 

 

$

15,773

 

 

$

16,423

 

 

39.1

%

 

33.6

%

Deposit account fees

 

10,872

 

 

10,447

 

 

9,607

 

 

4.1

 

 

13.2

 

Foreign exchange income

 

4,562

 

 

7,819

 

 

7,286

 

 

(41.7)

 

 

(37.4)

 

Wealth management fees

 

3,091

 

 

5,353

 

 

3,800

 

 

(42.3)

 

 

(18.7)

 

Interest rate contracts and other derivative income

 

6,107

 

 

7,073

 

 

10,398

 

 

(13.7)

 

 

(41.3)

 

Net gains on sales of loans

 

132

 

 

950

 

 

15

 

 

(86.1)

 

 

780.0

 

Gains on sales of AFS debt securities

 

9,640

 

 

1,529

 

 

1,447

 

 

530.5

 

 

566.2

 

Other investment income

 

966

 

 

1,921

 

 

706

 

 

(49.7)

 

 

36.8

 

Other income

 

1,321

 

 

3,184

 

 

3,077

 

 

(58.5)

 

 

(57.1)

 

Total noninterest income

 

$

58,637

 

 

$

54,049

 

 

$

52,759

 

 

8.5

%

 

11.1

%

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

$

96,955

 

 

$

101,960

 

 

$

100,531

 

 

(4.9)

%

 

(3.6

%)

Occupancy and equipment expense

 

16,217

 

 

17,076

 

 

17,362

 

 

(5.0)

 

 

(6.6)

 

Deposit insurance premiums and regulatory assessments

 

3,700

 

 

3,427

 

 

2,919

 

 

8.0

 

 

26.8

 

Legal expense

 

1,530

 

 

3,197

 

 

2,355

 

 

(52.1)

 

 

(35.0)

 

Data processing

 

4,480

 

 

3,826

 

 

3,460

 

 

17.1

 

 

29.5

 

Consulting expense

 

1,413

 

 

1,217

 

 

2,069

 

 

16.1

 

 

(31.7)

 

Deposit related expense

 

3,353

 

 

3,563

 

 

3,338

 

 

(5.9)

 

 

0.4

 

Computer software expense

 

7,301

 

 

6,166

 

 

6,211

 

 

18.4

 

 

17.5

 

Other operating expense

 

19,248

 

 

21,119

 

 

22,679

 

 

(8.9)

 

 

(15.1)

 

Amortization of tax credit and other investments

 

24,759

 

 

17,325

 

 

16,739

 

 

42.9

 

 

47.9

 

Repurchase agreements’ extinguishment cost

 

8,740

 

 

 

 

 

 

100.0

 

 

100.0

 

Total noninterest expense

 

$

187,696

 

 

$

178,876

 

 

$

177,663

 

 

4.9

%

 

5.6

%

 

(1)

Includes $21.3 million of interest income related to PPP loans for the three months ended June 30, 2020.

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, 2020
% Change

 

 

June 30, 2020

 

June 30, 2019

 

Yr-o-Yr

Interest and dividend income (1)

 

$

847,966

 

 

$

938,155

 

 

(9.6)

%

Interest expense

 

141,484

 

 

208,368

 

 

(32.1)

 

Net interest income before provision for credit losses

 

706,482

 

 

729,787

 

 

(3.2)

 

Provision for credit losses

 

176,313

 

 

41,824

 

 

321.6

 

Net interest income after provision for credit losses

 

530,169

 

 

687,963

 

 

(22.9)

 

Noninterest income

 

112,686

 

 

94,890

 

 

18.8

 

Noninterest expense

 

366,572

 

 

364,585

 

 

0.5

 

Income before income taxes

 

276,283

 

 

418,268

 

 

(33.9)

 

Income tax expense

 

32,107

 

 

103,864

 

 

(69.1)

 

Net income

 

$

244,176

 

 

$

314,404

 

 

(22.3)

%

EPS

 

 

 

 

 

 

- Basic

 

$

1.71

 

 

$

2.16

 

 

(21.1)

%

- Diluted

 

$

1.70

 

 

$

2.15

 

 

(21.0)

 

Weighted-average number of shares outstanding

 

 

 

 

 

 

- Basic

 

143,150

 

 

145,402

 

 

(1.5)

%

- Diluted

 

143,560

 

 

146,016

 

 

(1.7)

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

June 30, 2020
% Change

 

 

June 30, 2020

 

June 30, 2019

 

Yr-o-Yr

Noninterest income:

 

 

 

 

 

 

Lending fees

 

$

37,719

 

 

$

31,392

 

 

20.2

%

Deposit account fees

 

21,319

 

 

19,075

 

 

11.8

 

Foreign exchange income

 

12,381

 

 

12,301

 

 

0.7

 

Wealth management fees

 

8,444

 

 

7,574

 

 

11.5

 

Interest rate contracts and other derivative income

 

13,180

 

 

13,614

 

 

(3.2)

 

Net gains on sales of loans

 

1,082

 

 

930

 

 

16.3

 

Gains on sales of AFS debt securities

 

11,169

 

 

3,008

 

 

271.3

 

Other investment income

 

2,887

 

 

1,908

 

 

51.3

 

Other income

 

4,505

 

 

5,088

 

 

(11.5)

 

Total noninterest income

 

$

112,686

 

 

$

94,890

 

 

18.8

%

Noninterest expense:

 

 

 

 

 

 

Compensation and employee benefits

 

$

198,915

 

 

$

202,830

 

 

(1.9)

%

Occupancy and equipment expense

 

33,293

 

 

34,680

 

 

(4.0)

 

Deposit insurance premiums and regulatory assessments

 

7,127

 

 

6,007

 

 

18.6

 

Legal expense

 

4,727

 

 

4,580

 

 

3.2

 

Data processing

 

8,306

 

 

6,617

 

 

25.5

 

Consulting expense

 

2,630

 

 

4,128

 

 

(36.3)

 

Deposit related expense

 

6,916

 

 

6,842

 

 

1.1

 

Computer software expense

 

13,467

 

 

12,289

 

 

9.6

 

Other operating expense

 

40,367

 

 

44,968

 

 

(10.2)

 

Amortization of tax credit and other investments

 

42,084

 

 

41,644

 

 

1.1

 

Repurchase agreements’ extinguishment cost

 

8,740

 

 

 

 

100.0

 

Total noninterest expense

 

$

366,572

 

 

$

364,585

 

 

0.5

%

 

(1)

Includes $21.3 million of interest income related to PPP loans for the six months ended June 30, 2020.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED AVERAGE BALANCES

($ in thousands)

(unaudited)

Table 5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

June 30, 2020
% Change

 

Six Months Ended

 

June 30, 2020
% Change

 

 

June 30, 2020

 

March 31, 2020

 

June 30, 2019

 

Qtr-o-Qtr

 

Yr-o-Yr

 

June 30, 2020

 

June 30, 2019

 

Yr-o-Yr

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C&I (1)

 

$

13,560,719

 

 

$

12,166,178

 

 

$

12,003,277

 

 

11.5

%

 

13.0

%

 

$

12,863,449

 

 

$

11,925,003

 

 

7.9

%

CRE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CRE

 

10,812,399

 

 

10,485,683

 

 

9,501,566

 

 

3.1

 

 

13.8

 

 

10,649,041

 

 

9,439,946

 

 

12.8

 

Multifamily residential

 

2,987,311

 

 

2,889,844

 

 

2,510,271

 

 

3.4

 

 

19.0

 

 

2,938,577

 

 

2,504,320

 

 

17.3

 

Construction and land

 

594,965

 

 

641,079

 

 

675,967

 

 

(7.2)

 

 

(12.0)

 

 

618,022

 

 

630,459

 

 

(2.0)

 

Total CRE

 

14,394,675

 

 

14,016,606

 

 

12,687,804

 

 

2.7

 

 

13.5

 

 

14,205,640

 

 

12,574,725

 

 

13.0

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Single-family residential

 

7,506,546

 

 

7,257,367

 

 

6,373,715

 

 

3.4

 

 

17.8

 

 

7,381,956

 

 

6,263,246

 

 

17.9

 

HELOCs

 

1,444,933

 

 

1,442,450

 

 

1,607,311

 

 

0.2

 

 

(10.1)

 

 

1,443,692

 

 

1,629,637

 

 

(11.4)

 

Total residential mortgage

 

8,951,479

 

 

8,699,817

 

 

7,981,026

 

 

2.9

 

 

12.2

 

 

8,825,648

 

 

7,892,883

 

 

11.8

 

Other consumer

 

234,900

 

 

271,367

 

 

309,267

 

 

(13.4)

 

 

(24.0)

 

 

253,134

 

 

307,033

 

 

(17.6)

 

Total loans (2)

 

$

37,141,773

 

 

$

35,153,968

 

 

$

32,981,374

 

 

5.7

%

 

12.6

%

 

$

36,147,871

 

 

$

32,699,644

 

 

10.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets

 

$

45,413,242

 

 

$

42,362,531

 

 

$

39,461,101

 

 

7.2

%

 

15.1

%

 

$

43,887,886

 

 

$

39,105,030

 

 

12.2

%

Total assets

 

$

48,228,914

 

 

$

44,755,509

 

 

$

41,545,441

 

 

7.8

%

 

16.1

%

 

$

46,492,211

 

 

$

41,144,152

 

 

13.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

13,534,873

 

 

$

11,117,710

 

 

$

10,237,868

 

 

21.7

%

 

32.2

%

 

$

12,326,291

 

 

$

10,155,079

 

 

21.4

%

Interest-bearing checking

 

4,687,178

 

 

5,001,672

 

 

5,221,110

 

 

(6.3)

 

 

(10.2)

 

 

4,844,425

 

 

5,245,845

 

 

(7.7)

 

Money market

 

9,893,816

 

 

9,013,381

 

 

7,856,055

 

 

9.8

 

 

25.9

 

 

9,453,599

 

 

7,967,831

 

 

18.6

 

Savings

 

2,149,965

 

 

2,076,270

 

 

2,106,626

 

 

3.5

 

 

2.1

 

 

2,113,118

 

 

2,099,058

 

 

0.7

 

Time deposits

 

9,634,696

 

 

10,264,007

 

 

9,904,726

 

 

(6.1)

 

 

(2.7)

 

 

9,949,351

 

 

9,658,181

 

 

3.0

 

Total deposits

 

$

39,900,528

 

 

$

37,473,040

 

 

$

35,326,385

 

 

6.5

%

 

12.9

%

 

$

38,686,784

 

 

$

35,125,994

 

 

10.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

$

28,362,618

 

 

$

27,593,341

 

 

$

25,860,541

 

 

2.8

%

 

9.7

%

 

$

27,977,979

 

 

$

25,657,814

 

 

9.0

%

Stockholders’ equity

 

$

4,982,446

 

 

$

5,022,005

 

 

$

4,684,348

 

 

(0.8)

%

 

6.4

%

 

$

5,002,226

 

 

$

4,611,231

 

 

8.5

%

 

(1)

Includes average balance of PPP loans of $1.47 billion and $732.5 million for the three and six months ended June 30, 2020, respectively.

(2)

Includes loans HFS.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 6

 

 

 

Three Months Ended

 

 

June 30, 2020

 

March 31, 2020

 

 

Average

 

 

 

Average

 

Average

 

 

 

Average

 

 

Balance

 

Interest

 

Yield/Rate (1)

 

Balance

 

Interest

 

Yield/Rate (1)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing cash and deposits with banks

 

$

3,435,920

 

 

$

4,564

 

 

0.53

%

 

$

2,973,006

 

 

$

11,108

 

 

1.50

%

Resale agreements (2)

 

1,037,473

 

 

5,514

 

 

2.14

%

 

882,142

 

 

5,625

 

 

2.56

%

AFS debt securities

 

3,719,209

 

 

21,004

 

 

2.27

%

 

3,274,740

 

 

20,142

 

 

2.47

%

Loans (3)

 

37,141,773

 

 

367,393

 

 

3.98

%

 

35,153,968

 

 

411,869

 

 

4.71

%

FHLB and FRB stock

 

78,867

 

 

301

 

 

1.54

%

 

78,675

 

 

446

 

 

2.28

%

Total interest-earning assets

 

45,413,242

 

 

398,776

 

 

3.53

%

 

42,362,531

 

 

449,190

 

 

4.26

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

498,908

 

 

 

 

 

 

510,512

 

 

 

 

 

Allowance for loan losses

 

(566,473)

 

 

 

 

 

 

(492,297)

 

 

 

 

 

Other assets

 

2,883,237

 

 

 

 

 

 

2,374,763

 

 

 

 

 

Total assets

 

$

48,228,914

 

 

 

 

 

 

$

44,755,509

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Checking deposits

 

$

4,687,178

 

 

$

5,404

 

 

0.46

%

 

$

5,001,672

 

 

$

10,246

 

 

0.82

%

Money market deposits

 

9,893,816

 

 

8,093

 

 

0.33

%

 

9,013,381

 

 

22,248

 

 

0.99

%

Savings deposits

 

2,149,965

 

 

1,445

 

 

0.27

%

 

2,076,270

 

 

1,817

 

 

0.35

%

Time deposits

 

9,634,696

 

 

31,457

 

 

1.31

%

 

10,264,007

 

 

42,092

 

 

1.65

%

Federal funds purchased and other short-term borrowings

 

242,185

 

 

265

 

 

0.44

%

 

59,978

 

 

556

 

 

3.73

%

FHLB advances

 

653,665

 

 

3,343

 

 

2.06

%

 

693,357

 

 

4,166

 

 

2.42

%

Repurchase agreements (2)

 

418,681

 

 

3,540

 

 

3.40

%

 

332,417

 

 

3,991

 

 

4.83

%

Long-term debt and finance lease liabilities

 

682,432

 

 

1,454

 

 

0.86

%

 

152,259

 

 

1,367

 

 

3.61

%

Total interest-bearing liabilities

 

28,362,618

 

 

55,001

 

 

0.78

%

 

27,593,341

 

 

86,483

 

 

1.26

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities and stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

13,534,873

 

 

 

 

 

 

11,117,710

 

 

 

 

 

Accrued expenses and other liabilities

 

1,348,977

 

 

 

 

 

 

1,022,453

 

 

 

 

 

Stockholders’ equity

 

4,982,446

 

 

 

 

 

 

5,022,005

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

48,228,914

 

 

 

 

 

 

$

44,755,509

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

2.75

%

 

 

 

 

 

3.00

%

Net interest income and net interest margin

 

 

 

$

343,775

 

 

3.04

%

 

 

 

$

362,707

 

 

3.44

%

 

(1)

Annualized.

(2)

There was no netting of repurchase agreements against resale agreements for the three months ended June 30, 2020. Average balances of resale and repurchase agreements for the three months ended March 31, 2020 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 2.14% and 2.50% for the three months ended June 30, 2020 and March 31, 2020, respectively. The weighted-average interest rates of gross repurchase agreements were 3.40% and 4.10% for the three months ended June 30, 2020 and March 31, 2020, respectively.

(3)

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, 2020

 

June 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

 

$

3,435,920

 

 

$

4,564

 

 

0.53

%

 

$

2,852,060

 

 

$

16,800

 

 

2.37

%

Resale agreements (2)

 

1,037,473

 

 

5,514

 

 

2.14

%

 

999,835

 

 

7,404

 

 

2.98

%

AFS debt securities

 

3,719,209

 

 

21,004

 

 

2.27

%

 

2,551,383

 

 

15,685

 

 

2.47

%

Loans (3)

 

37,141,773

 

 

367,393

 

 

3.98

%

 

32,981,374

 

 

434,450

 

 

5.28

%

FHLB and FRB stock

 

78,867

 

 

301

 

 

1.54

%

 

76,449

 

 

505

 

 

2.65

%

Total interest-earning assets

 

45,413,242

 

 

398,776

 

 

3.53

%

 

39,461,101

 

 

474,844

 

 

4.83

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

498,908

 

 

 

 

 

 

439,449

 

 

 

 

 

Allowance for loan losses

 

(566,473)

 

 

 

 

 

 

(321,335)

 

 

 

 

 

Other assets

 

2,883,237

 

 

 

 

 

 

1,966,226

 

 

 

 

 

Total assets

 

$

48,228,914

 

 

 

 

 

 

$

41,545,441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Checking deposits

 

$

4,687,178

 

 

$

5,404

 

 

0.46

%

 

$

5,221,110

 

 

$

15,836

 

 

1.22

%

Money market deposits

 

9,893,816

 

 

8,093

 

 

0.33

%

 

7,856,055

 

 

28,681

 

 

1.46

%

Savings deposits

 

2,149,965

 

 

1,445

 

 

0.27

%

 

2,106,626

 

 

2,477

 

 

0.47

%

Time deposits

 

9,634,696

 

 

31,457

 

 

1.31

%

 

9,904,726

 

 

50,970

 

 

2.06

%

Federal funds purchased and other short-term borrowings

 

242,185

 

 

265

 

 

0.44

%

 

35,575

 

 

361

 

 

4.07

%

FHLB advances

 

653,665

 

 

3,343

 

 

2.06

%

 

533,841

 

 

4,011

 

 

3.01

%

Repurchase agreements (2)

 

418,681

 

 

3,540

 

 

3.40

%

 

50,000

 

 

3,469

 

 

27.83

%

Long-term debt and finance lease liabilities

 

682,432

 

 

1,454

 

 

0.86

%

 

152,608

 

 

1,713

 

 

4.50

%

Total interest-bearing liabilities

 

28,362,618

 

 

55,001

 

 

0.78

%

 

25,860,541

 

 

107,518

 

 

1.67

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities and stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

13,534,873

 

 

 

 

 

 

10,237,868

 

 

 

 

 

Accrued expenses and other liabilities

 

1,348,977

 

 

 

 

 

 

762,684

 

 

 

 

 

Stockholders’ equity

 

4,982,446

 

 

 

 

 

 

4,684,348

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

48,228,914

 

 

 

 

 

 

$

41,545,441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

2.75

%

 

 

 

 

 

3.16

%

Net interest income and net interest margin

 

 

 

$

343,775

 

 

3.04

%

 

 

 

$

367,326

 

 

3.73

%

 

(1)

Annualized.

(2)

There was no netting of repurchase agreements against resale agreements for the three months ended June 30, 2020. Average balances of resale and repurchase agreements for the three months ended June 30, 2019 have been reported net, pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. The weighted-average yields of gross resale agreements were 2.14% and 2.71% for the three months ended June 30, 2020 and 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 3.40% and 4.93% for the three months ended June 30, 2020 and 2019, respectively.

(3)

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, 2020

 

June 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

 

$

3,204,463

 

 

$

15,672

 

 

0.98

%

 

$

2,716,128

 

 

$

32,210

 

 

2.38

%

Resale agreements (2)

 

959,807

 

 

11,139

 

 

2.33

%

 

1,017,320

 

 

15,310

 

 

3.03

%

AFS investment securities

 

3,496,974

 

 

41,146

 

 

2.37

%

 

2,596,590

 

 

31,433

 

 

2.44

%

Loans (3)

 

36,147,871

 

 

779,262

 

 

4.34

%

 

32,699,644

 

 

857,984

 

 

5.29

%

FHLB and FRB stock

 

78,771

 

 

747

 

 

1.91

%

 

75,348

 

 

1,218

 

 

3.26

%

Total interest-earning assets

 

43,887,886

 

 

847,966

 

 

3.89

%

 

39,105,030

 

 

938,155

 

 

4.84

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

504,710

 

 

 

 

 

 

453,725

 

 

 

 

 

Allowance for loan losses

 

(529,385)

 

 

 

 

 

 

(317,909)

 

 

 

 

 

Other assets

 

2,629,000

 

 

 

 

 

 

1,903,306

 

 

 

 

 

Total assets

 

$

46,492,211

 

 

 

 

 

 

$

41,144,152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Checking deposits

 

$

4,844,425

 

 

$

15,650

 

 

0.65

%

 

$

5,245,845

 

 

$

30,091

 

 

1.16

%

Money market deposits

 

9,453,599

 

 

30,341

 

 

0.65

%

 

7,967,831

 

 

58,915

 

 

1.49

%

Savings deposits

 

2,113,118

 

 

3,262

 

 

0.31

%

 

2,099,058

 

 

4,704

 

 

0.45

%

Time deposits

 

9,949,351

 

 

73,549

 

 

1.49

%

 

9,658,181

 

 

96,259

 

 

2.01

%

Federal funds purchased and other short-term borrowings

 

151,081

 

 

821

 

 

1.09

%

 

47,939

 

 

977

 

 

4.11

%

FHLB advances

 

673,511

 

 

7,509

 

 

2.24

%

 

436,475

 

 

6,990

 

 

3.23

%

Repurchase agreements (2)

 

375,549

 

 

7,531

 

 

4.03

%

 

50,000

 

 

6,961

 

 

28.07

%

Long-term debt and finance lease liabilities

 

417,345

 

 

2,821

 

 

1.36

%

 

152,485

 

 

3,471

 

 

4.59

%

Total interest-bearing liabilities

 

27,977,979

 

 

141,484

 

 

1.02

%

 

25,657,814

 

 

208,368

 

 

1.64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities and stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

12,326,291

 

 

 

 

 

 

10,155,079

 

 

 

 

 

Accrued expenses and other liabilities

 

1,185,715

 

 

 

 

 

 

720,028

 

 

 

 

 

Stockholders’ equity

 

5,002,226

 

 

 

 

 

 

4,611,231

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

46,492,211

 

 

 

 

 

 

$

41,144,152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

2.87

%

 

 

 

 

 

3.20

%

Net interest income and net interest margin

 

 

 

$

706,482

 

 

3.24

%

 

 

 

$

729,787

 

 

3.76

%

 

(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 2.32% and 2.77% for the six months ended June 30, 2020 and 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 3.76% and 4.97% for the six months ended June 30, 2020 and 2019, respectively.

(3)

Includes loans HFS.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED RATIOS

(unaudited)

Table 9

 

 

 

Three Months Ended (1)

 

June 30, 2020
Basis Point Change

 

 

June 30, 2020

 

March 31, 2020

 

June 30, 2019

 

Qtr-o-Qtr

 

Yr-o-Yr

 

Return on average assets

 

0.83

%

 

1.30

%

 

1.45

%

 

(47)

 

bps

(62)

 

bps

Adjusted return on average assets (2)

 

0.83

%

 

1.30

%

 

1.74

%

 

(47)

 

 

(91)

 

 

Return on average equity

 

8.02

%

 

11.60

%

 

12.88

%

 

(358)

 

 

(486)

 

 

Adjusted return on average equity (2)

 

8.02

%

 

11.60

%

 

15.45

%

 

(358)

 

 

(743)

 

 

Return on average tangible equity (2)

 

8.96

%

 

12.93

%

 

14.51

%

 

(397)

 

 

(555)

 

 

Adjusted return on average tangible equity (2)

 

8.96

%

 

12.93

%

 

17.39

%

 

(397)

 

 

(843)

 

 

Interest rate spread

 

2.75

%

 

3.00

%

 

3.16

%

 

(25)

 

 

(41)

 

 

Net interest margin

 

3.04

%

 

3.44

%

 

3.73

%

 

(40)

 

 

(69)

 

 

Average loan yield

 

3.98

%

 

4.71

%

 

5.28

%

 

(73)

 

 

(130)

 

 

Yield on average interest-earning assets

 

3.53

%

 

4.26

%

 

4.83

%

 

(73)

 

 

(130)

 

 

Average cost of interest-bearing deposits

 

0.71

%

 

1.17

%

 

1.57

%

 

(46)

 

 

(86)

 

 

Average cost of deposits

 

0.47

%

 

0.82

%

 

1.11

%

 

(35)

 

 

(64)

 

 

Average cost of funds

 

0.53

%

 

0.90

%

 

1.19

%

 

(37)

 

 

(66)

 

 

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

 

2.08

%

 

2.30

%

 

2.51

%

 

(22)

 

 

(43)

 

 

Adjusted noninterest expense/average assets (2)

 

1.28

%

 

1.44

%

 

1.54

%

 

(16)

 

 

(26)

 

 

Efficiency ratio

 

46.64

%

 

42.92

%

 

42.29

%

 

372

 

 

435

 

 

Adjusted efficiency ratio (2)

 

38.09

%

 

38.54

%

 

38.03

%

 

(45)

 

bps

6

 

bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended (1)

 

June 30, 2020
Basis Point Change

 

 

 

 

 

 

June 30, 2020

 

June 30, 2019

 

Yr-o-Yr

 

 

 

 

Return on average assets

 

1.06

%

 

1.54

%

 

(48)

 

bps

 

 

 

Adjusted return on average assets (2)

 

1.06

%

 

1.71

%

 

(65)

 

 

 

 

 

 

Return on average equity

 

9.82

%

 

13.75

%

 

(393)

 

 

 

 

 

 

Adjusted return on average equity (2)

 

9.82

%

 

15.28

%

 

(546)

 

 

 

 

 

 

Return on average tangible equity (2)

 

10.95

%

 

15.50

%

 

(455)

 

 

 

 

 

 

Adjusted return on average tangible equity (2)

 

10.95

%

 

17.21

%

 

(626)

 

 

 

 

 

 

Interest rate spread

 

2.87

%

 

3.20

%

 

(33)

 

 

 

 

 

 

Net interest margin

 

3.24

%

 

3.76

%

 

(52)

 

 

 

 

 

 

Average loan yield

 

4.34

%

 

5.29

%

 

(95)

 

 

 

 

 

 

Yield on average interest-earning assets

 

3.89

%

 

4.84

%

 

(95)

 

 

 

 

 

 

Average cost of interest-bearing deposits

 

0.94

%

 

1.53

%

 

(59)

 

 

 

 

 

 

Average cost of deposits

 

0.64

%

 

1.09

%

 

(45)

 

 

 

 

 

 

Average cost of funds

 

0.71

%

 

1.17

%

 

(46)

 

 

 

 

 

 

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

 

2.19

%

 

2.47

%

 

(28)

 

 

 

 

 

 

Adjusted noninterest expense/average assets (2)

 

1.36

%

 

1.57

%

 

(21)

 

 

 

 

 

 

Efficiency ratio

 

44.75

%

 

44.21

%

 

54

 

 

 

 

 

 

Adjusted efficiency ratio (2)

 

38.31

%

 

38.88

%

 

(57)

 

bps

 

 

 

 

(1)

Annualized except for efficiency ratio.

(2)

See reconciliation of GAAP to non-GAAP financial measures in Tables 13, 14 and 15.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

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

($ in thousands)

(unaudited)

Table 10

ASU 2016-13 replaced the incurred loss methodology used in calculating the allowance for loan losses with a current expected credit loss model (“CECL”). The Company adopted ASU 2016-13 using the modified retrospective approach on January 1, 2020. As a result, prior comparative periods have not been adjusted for the CECL model. In addition, ASU 2016-13 introduces the concept of Purchased Credit Deteriorated (“PCD”) financial assets, which replaces purchased credit-impaired (“PCI”) assets. For PCD assets, the initial allowance for loan losses is added to the purchase price and is considered to be part of the PCD loan amortized cost basis, hence, there is no income statement impact on acquisition. This contrasts with PCI loans where allowance for loan losses only reflects losses that are incurred by the Company after the acquisition. The allowance for loan losses is evaluated each quarter and adjusted as necessary by recognizing a loan loss expense or a reversal of loan loss expense. There were no PCD loans during the three and six months ended June 30, 2020.

 

 

 

Three Months Ended June 30, 2020

 

 

 

Commercial

 

Consumer

 

Total

 

 

 

 

 

CRE

 

Residential Mortgage

 

 

 

 

 

 

C&I

 

CRE

 

Multi-Family
Residential

 

Construction
and Land

 

Single-
Family
Residential

 

HELOCs

 

Other
Consumer

 

Allowance for loan losses, March 31, 2020

 

 

$

362,629

 

 

$

132,819

 

 

$

16,530

 

 

$

11,018

 

 

$

26,822

 

 

$

3,881

 

 

$

3,304

 

 

$

557,003

 

Provision for (reversal of) credit losses on loans

(a)

 

37,862

 

 

43,315

 

 

7,908

 

 

7,526

 

 

(1,667)

 

 

205

 

 

(849)

 

 

94,300

 

Gross charge-offs

 

 

(20,378)

 

 

(320)

 

 

 

 

 

 

 

 

(221)

 

 

(30)

 

 

(20,949)

 

Gross recoveries

 

 

602

 

 

226

 

 

620

 

 

7

 

 

159

 

 

2

 

 

93

 

 

1,709

 

Total net (charge-offs) recoveries

 

 

(19,776)

 

 

(94)

 

 

620

 

 

7

 

 

159

 

 

(219)

 

 

63

 

 

(19,240)

 

Foreign currency translation adjustment

 

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

Allowance for loan losses, June 30, 2020

 

 

$

380,723

 

 

$

176,040

 

 

$

25,058

 

 

$

18,551

 

 

$

25,314

 

 

$

3,867

 

 

$

2,518

 

 

$

632,071

 

 

 

 

 

Three Months Ended March 31, 2020

 

 

 

Commercial

 

Consumer

 

Total

 

 

 

 

 

CRE

 

Residential Mortgage

 

 

 

 

 

 

C&I

 

CRE

 

Multi-Family
Residential

 

Construction
and Land

 

Single-
Family
Residential

 

HELOCs

 

Other
Consumer

 

Allowance for loan losses, December 31, 2019

 

 

$

238,376

 

 

$

40,509

 

 

$

22,826

 

 

$

19,404

 

 

$

28,527

 

 

$

5,265

 

 

$

3,380

 

 

$

358,287

 

Impact of ASU 2016-13 adoption

 

 

74,237

 

 

72,169

 

 

(8,112)

 

 

(9,889)

 

 

(3,670)

 

 

(1,798)

 

 

2,221

 

 

125,158

 

Allowance for loan losses, January 1, 2020

 

 

$

312,613

 

 

$

112,678

 

 

$

14,714

 

 

$

9,515

 

 

$

24,857

 

 

$

3,467

 

 

$

5,601

 

 

$

483,445

 

Provision for (reversal of) credit losses on loans

(a)

 

60,618

 

 

11,435

 

 

1,281

 

 

1,482

 

 

1,700

 

 

412

 

 

(2,272)

 

 

74,656

 

Gross charge-offs

 

 

(11,977)

 

 

(954)

 

 

 

 

 

 

 

 

 

 

(26)

 

 

(12,957)

 

Gross recoveries

 

 

1,575

 

 

9,660

 

 

535

 

 

21

 

 

265

 

 

2

 

 

1

 

 

12,059

 

Total net (charge-offs) recoveries

 

 

(10,402)

 

 

8,706

 

 

535

 

 

21

 

 

265

 

 

2

 

 

(25)

 

 

(898)

 

Foreign currency translation adjustment

 

 

(200)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(200)

 

Allowance for loan losses, March 31, 2020

 

 

$

362,629

 

 

$

132,819

 

 

$

16,530

 

 

$

11,018

 

 

$

26,822

 

 

$

3,881

 

 

$

3,304

 

 

$

557,003

 

 

 

 

 

Three Months Ended June 30, 2019

 

 

 

Commercial

 

Consumer

 

Total

 

 

 

 

 

CRE

 

Residential Mortgage

 

 

 

 

 

 

C&I

 

CRE

 

Multi-Family Residential

 

Construction and Land

 

Single- Family Residential

 

HELOCs

 

Other Consumer

 

Allowance for loan losses, March 31, 2019

 

 

$

189,757

 

 

$

39,224

 

 

$

19,169

 

 

$

22,349

 

 

$

35,759

 

 

$

7,401

 

 

$

4,235

 

 

$

317,894

 

Provision for (reversal of) credit losses on loans

(a)

 

26,140

 

 

(1,250)

 

 

58

 

 

173

 

 

(3,068)

 

 

(1,224)

 

 

(98)

 

 

20,731

 

Gross charge-offs

 

 

(11,745)

 

 

 

 

 

 

 

 

 

 

 

 

(14)

 

 

(11,759)

 

Gross recoveries

 

 

1,713

 

 

1,837

 

 

53

 

 

439

 

 

72

 

 

 

 

7

 

 

4,121

 

Total net (charge-offs) recoveries

 

 

(10,032)

 

 

1,837

 

 

53

 

 

439

 

 

72

 

 

 

 

(7)

 

 

(7,638)

 

Foreign currency translation adjustment

 

 

(362)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(362)

 

Allowance for loan losses, June 30, 2019

 

 

$

205,503

 

 

$

39,811

 

 

$

19,280

 

 

$

22,961

 

 

$

32,763

 

 

$

6,177

 

 

$

4,130

 

 

$

330,625

 

 

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, 2020

 

 

 

Commercial

 

Consumer

 

Total

 

 

 

 

 

CRE

 

Residential Mortgage

 

 

 

 

 

 

C&I

 

CRE

 

Multi-Family Residential

 

Construction and Land

 

Single- Family Residential

 

HELOCs

 

Other Consumer

 

Allowance for loan losses, December 31, 2019

 

 

$

238,376

 

 

$

40,509

 

 

$

22,826

 

 

$

19,404

 

 

$

28,527

 

 

$

5,265

 

 

$

3,380

 

 

$

358,287

 

Impact of ASU 2016-13 adoption

 

 

74,237

 

 

72,169

 

 

(8,112)

 

 

(9,889)