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Share Name | Share Symbol | Market | Type |
---|---|---|---|
East West Bancorp Inc | NASDAQ:EWBC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.06 | 0.08% | 77.41 | 77.20 | 77.40 | 78.00 | 77.20 | 77.63 | 395,956 | 00:38:04 |
East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq: EWBC), parent company of East West Bank, reported its financial results for the full year and fourth quarter of 2023. Full year 2023 net income was $1.2 billion, or $8.18 per diluted share. Excluding $70 million pre-tax of FDIC Special Assessment-related expense (the “FDIC charge”) and $7 million of net losses on an AFS debt security, adjusted diluted earnings per share1 for the year were $8.56.
Fourth quarter 2023 net income was $239 million, or $1.69 per diluted share. Excluding the FDIC charge and a $3 million gain on the sale of an AFS debt security, adjusted earnings per diluted share were $2.02 for the fourth quarter. Return on average common equity was 18% in 2023, and book value per share grew 17% year-over-year.
“I am pleased to report that 2023 was another year of record revenue and earnings for East West,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. “As I look back I am very proud of our strong performance, marked by an over 20% adjusted return on average tangible common equity and 18% growth in tangible book value per share. East West demonstrated the resilience of our business model and the loyalty of our customers through a tumultuous year.”2
“Thanks to the unwavering dedication of our colleagues to clients and the strength and diversification of our balance sheet, East West has emerged even stronger from the market disruption that characterized 2023. As we start a new year, we are pleased to announce a 15% increase in our common stock dividend. We remain committed to delivering top-tier shareholder returns, supported by prudent balance sheet growth, industry-leading efficiency, and sound risk management.”
FINANCIAL HIGHLIGHTS
Twelve Months Ended December 31,
Year-over-Year Change
($ in millions, except per share data)
2023
2022
$
%
Revenue
$2,608
$2,345
$263
11%
Adjusted Pre-tax, Pre-provision Income3
1,788
1,600
187
12
Net Income
1,161
1,128
33
3
Diluted Earnings per Share
$8.18
$7.92
$0.26
3%
Adjusted Diluted Earnings per Share1
$8.56
$7.92
$0.64
8%
Book Value per Share
$49.64
$42.46
$7.18
17%
Tangible Book Value2 per Share
$46.27
$39.10
$7.17
18%
Return on Average Common Equity
17.91%
19.51%
-160 bps
—
Adjusted Return on Average Tangible Common Equity2
20.25%
21.29%
-104 bps
—
Total Assets
$69,613
$64,112
$5,501
9%
1
Adjusted diluted earnings per share is a non-GAAP financial measure. See reconciliation of GAAP to non-GAAP measures in Table 15.
2
Adjusted return on average tangible common equity and tangible book value are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 14.
3
Adjusted pre-tax, pre-provision income is a non-GAAP financial measure. See reconciliation of GAAP to non-GAAP financial measures in Table 13.
BALANCE SHEET
OPERATING RESULTS
Full Year Earnings - Full year 2023 net income was a record $1.2 billion or $8.18 per diluted share, both up 3% year-over-year. Full year revenue was a record $2.6 billion, an increase of $263 million, or 11% year-over-year, and full year adjusted pre-tax, pre-provision income was a record $1.8 billion, an increase of $187 million, or 12% year-over-year.
Fourth Quarter Earnings – Fourth quarter 2023 net income was $239 million, and diluted earnings per share (“EPS”) were $1.69.
2
Tangible book value and the tangible common equity ratio are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 14.
Fourth Quarter 2023 Compared to Third Quarter 2023
Net Interest Income and Net Interest Margin
Net interest income totaled $575 million in the fourth quarter, an increase of 1% from $571 million in the third quarter. Net interest margin (“NIM”) was 3.48%, unchanged from the third quarter.
Noninterest Income
Noninterest income totaled $80 million in the fourth quarter, an increase of $3 million, or 4%, from $77 million in the third quarter. Net gains on sales of loans were $4 million in the fourth quarter, primarily reflecting the sale of Small Business Administration loans within the quarter. Net gains on AFS debt securities were $3 million, representing a partial recovery against the $10 million pre-tax impairment loss taken in the first quarter of 2023 on a subordinated AFS debt security of a failed bank.
Noninterest Expense
Noninterest expense totaled $290 million in the fourth quarter, an increase of $38 million, or 15% from $252 million in the third quarter, including $70 million for the FDIC charge5. Fourth quarter noninterest expense consisted of $215 million of adjusted noninterest expense6, and $5 million in amortization expenses related to tax credit and other investments and core deposit intangibles.
4
Fee income includes lending, deposit account and wealth management fees, foreign exchange income, and interest rate contracts and other derivative income. Refer to Table 5 for additional fee and noninterest income information.
5
In November 2023, the Federal Deposit Insurance Corporation (“FDIC”) approved a final rule to implement a special deposit insurance assessment to recover losses to the Deposit Insurance Fund arising from the protection of uninsured depositors following the receiverships of failed institutions in the spring of 2023. Under the final rule, the assessment base for the special assessment is equal to an insured depository institution’s estimated uninsured deposits, reported for the quarter ended December 31, 2022, minus the first $5 billion in estimated uninsured deposits. The FDIC will collect the special assessment over eight quarterly assessment periods starting with the first quarter of 2024, at a quarterly rate of 3.36 bps.
6
Adjusted noninterest expense and adjusted efficiency ratio are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 13.
TAX RELATED ITEMS
Full year 2023 income tax expense was $299 million, and the effective tax rate was 20.5%, compared with income tax expense of $284 million and an effective tax rate of 20.1% for the full year of 2022. Fourth quarter 2023 income tax expense was $88 million, and the effective tax rate was 27.0%, compared with income tax expense of $66 million and 18.6% for the third quarter of 2023. The higher effective tax rate in the fourth quarter was mainly due to the sale of a tax credit investment and timing of certain renewable energy tax credit investments that were not placed into service in the fourth quarter.
ASSET QUALITY
As of December 31, 2023, the credit quality of our loan portfolio remained solid.
CAPITAL STRENGTH
Capital levels for East West remained strong. The following table presents capital metrics as of December 31, 2023, September 30, 2023 and December 31, 2022.
EWBC Capital
($ in millions)
December 31, 2023 (a)
September 30, 2023 (a)
December 31, 2022 (a)
Risk-Weighted Assets (“RWA”) (b)
$53,663
$52,951
$50,037
Risk-based capital ratios:
CET1 capital ratio
13.31%
13.30%
12.68%
Tier 1 capital ratio
13.31%
13.30%
12.68%
Total capital ratio
14.76%
14.73%
14.00%
Leverage ratio
10.21%
10.15%
9.80%
Tangible common equity ratio (c)
9.37%
9.03%
8.66%
(a)
The Company has elected to use the 2020 Current Expected Credit Losses (CECL) transition provision in the calculation of its December 31, 2023, September 30, 2023 and December 31, 2022 regulatory capital ratios. The Company’s December 31, 2023 regulatory capital ratios and RWA are preliminary.
(b)
Under regulatory guidelines, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories based on the nature of the obligor, or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar value in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total RWA.
(c)
Tangible common equity ratio is a non-GAAP financial measure. See reconciliation of GAAP to non-GAAP measures in Table 14.
DIVIDEND PAYOUT AND CAPITAL ACTIONS
East West’s Board of Directors has declared first quarter 2024 dividends for the Company’s common stock. The common stock cash dividend of $0.55 per share is payable on February 15, 2024, to stockholders of record on February 2, 2024. This represents a 15% increase, or seven cents per share, to the quarterly common stock dividend, up from $0.48 per share previously. The new annual dividend equivalent is $2.20 per share, compared with $1.92 per share previously.
East West repurchased 1.5 million shares of common stock during the fourth quarter of 2023 for approximately $82 million. $172 million of East West’s share repurchase authorization remains available.
Conference Call
East West will host a conference call to discuss fourth quarter 2023 earnings with the public on Tuesday, January 23, 2024, at 2:00 p.m. PT/5:00 p.m. ET. The public and investment community are invited to listen as management discusses fourth quarter 2023 results and operating developments.
About East West
East West provides financial services that help customers reach further and connect to new opportunities. East West Bancorp, Inc. is a public company (Nasdaq: “EWBC”) with total assets of $69.6 billion as of December 31, 2023. The Company’s wholly-owned subsidiary, East West Bank, is the largest independent bank headquartered in Southern California, and operates over 120 locations in the United States and Asia. The Bank’s markets in the United States include California, Georgia, Illinois, Massachusetts, Nevada, New York, Texas, and Washington. For more information on East West, visit www.eastwestbank.com.
Forward-Looking Statements
Certain matters set forth herein (including any exhibits hereto) contain “forward-looking statements” that are intended to be covered by the safe harbor provisions for such statements provided by the Private Securities Litigation Reform Act of 1995. East West Bancorp, Inc. (referred to herein on an unconsolidated basis as “East West” and on a consolidated basis as the “Company,” “we,” “us,” “our” or “EWBC”) may make forward-looking statements in other documents that it files with, or furnishes to, the United States (“U.S.”) Securities and Exchange Commission (“SEC”) and management may make forward-looking statements to analysts, investors, media members and others. Forward-looking statements are those that do not relate to historical facts and that are based on current assumptions, beliefs, estimates, expectations and projections, many of which, by their nature, are inherently uncertain and beyond the Company’s control. Forward-looking statements may relate to various matters, including the Company’s financial condition, results of operations, plans, objectives, future performance, business or industry, and usually can be identified by the use of forward-looking words, such as “anticipates,” “assumes,” “believes,” “can,” “continues,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “likely,” “may,” “might,” “objective,” “plans,” “potential,” “projects,” “remains,” “should,” “target,” “trend,” “will,” “would,” or similar expressions or variations thereof, and the negative thereof, but these terms are not the exclusive means of identifying such statements. You should not place undue reliance on forward-looking statements, as they are subject to risks and uncertainties, including, but not limited to, those described below. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements the Company may make.
There are various important factors that could cause future results to differ materially from historical performance and any forward-looking statements. Factors that might cause such differences, include, but are not limited to: changes in the global economy, including an economic slowdown, capital or financial market disruption, supply chain disruption, level of inflation, interest rate environment, residential and commercial property prices, employment levels, rate of growth and general business conditions, which could result in, among other things, reduced demand for loans, reduced availability of funding or increased funding costs, declines in asset values and/or recognition of allowance for credit losses; changes in local, regional and global business, economic and political conditions and geopolitical events, such as political unrest, wars and acts of terrorism; the soundness of other financial institutions and the impacts related to or resulting from bank failures and other economic and industry volatility, including potential increased regulatory requirements, Federal Deposit Insurance Corporation (“FDIC”) insurance premiums and assessments, losses in the value of our investment portfolio, deposit withdrawals, or other adverse consequences of negative market perceptions of the banking industry or us; changes in laws or the regulatory environment, including regulatory reform initiatives and policies of the U.S. Department of the Treasury, the Board of Governors of the Federal Reserve System (“Federal Reserve”), the FDIC, the SEC, the Consumer Financial Protection Bureau (“CFPB”), the California Department of Financial Protection and Innovation (“DFPI”) — Division of Financial Institutions, the People’s Bank of China (“PBOC”), China’s National Administration of Financial Regulation (“NAFR”), the Hong Kong Monetary Authority (“HKMA”), the Hong Kong Securities and Futures Commission (“HKSFC”), and the Monetary Authority of Singapore (“MAS”); changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing trade, economic and political disputes between the U.S. and the People’s Republic of China and the monetary policies of the Federal Reserve; changes in the commercial and consumer real estate markets; changes in consumer or commercial spending, savings and borrowing habits, and patterns and behaviors; the impact from changes to income tax laws and regulations, federal spending and economic stimulus programs; the impact of any future U.S. federal government shutdown and uncertainty regarding the U.S. federal government’s debt limit and credit rating; the Company’s ability to compete effectively against financial institutions and other entities, including as a result of emerging technologies; the success and timing of the Company’s business strategies; the Company’s ability to retain key officers and employees; the impact on the Company’s funding costs, net interest income and net interest margin from changes in key variable market interest rates, competition, regulatory requirements and the Company’s product mix; changes in the Company’s costs of operation, compliance and expansion; the Company’s ability to adopt and successfully integrate new initiatives or technologies into its business in a strategic manner; the impact of communications or technology disruption, failure in, or breach of, the Company’s operational or security systems or infrastructure, or those of third party vendors with which the Company does business, including as a result of cyber-attacks, and other similar matters which could result in, among other things, confidential proprietary, or personally identifiable information being disclosed or misused, and materially impact the Company’s ability to provide services to its clients; the adequacy of the Company’s risk management framework, disclosure controls and procedures and internal control over financial reporting; future credit quality and performance, including the Company’s expectations regarding future credit losses and allowance levels; the impact of adverse changes to the Company’s credit ratings from major credit rating agencies; the impact of adverse judgments or settlements in litigation and other proceedings; the impact of political developments, pandemics, wars, civil unrest, terrorism or other hostilities that may disrupt or increase volatility in securities or otherwise affect business and economic conditions on the Company and its customers; heightened regulatory and governmental oversight and scrutiny of the Company’s business practices, including dealings with consumers; the impact of reputational risk from negative publicity, fines, penalties and other negative consequences from regulatory violations, legal actions and the Company’s interactions with business partners, counterparties, service providers and other third parties; the impact of regulatory investigations, regulatory agreements, supervisory criticisms, and enforcement actions; changes in accounting standards as may be required by the Financial Accounting Standards Board (“FASB”) or other regulatory agencies and their impact on the Company’s critical accounting policies and assumptions; the Company’s capital requirements and its ability to generate capital internally or raise capital on favorable terms; the impact on the Company’s liquidity due to changes in the Company’s ability to receive dividends from its subsidiaries; any strategic acquisitions or divestitures; changes in the equity and debt securities markets; fluctuations in the Company’s stock price; fluctuations in foreign currency exchange rates; the impact of increased focus on social, environmental and sustainability matters, which may affect the operations of the Company and its customers and the economy more broadly; and the impact of climate change, natural or man-made disasters or calamities, such as wildfires, droughts, hurricanes, flooding and earthquakes or other events that may directly or indirectly result in a negative impact on the financial performance of the Company and its customers.
For a more detailed discussion of some of the factors that might cause such differences, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 under the heading Item 1A. Risk Factors and the information set forth under Item 1A. Risk Factors in the Company’s Quarterly Reports on Form 10-Q. You should treat forward-looking statements as speaking only as of the date they are made and based only on information then actually known to the Company. The Company does not undertake, and specifically disclaims any obligation to update or revise any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
($ and shares in thousands, except per share data)
(unaudited)
Table 1
December 31, 2023
% or Basis Point Change
December 31, 2023
September 30, 2023
December 31, 2022
Qtr-o-Qtr
Yr-o-Yr
Assets
Cash and cash equivalents
$
4,614,984
$
4,561,178
$
3,481,784
1.2
%
32.5
%
Interest-bearing deposits with banks
10,498
17,213
139,021
(39.0
)
(92.4
)
Assets purchased under resale agreements (“resale agreements”)
785,000
785,000
792,192
—
(0.9
)
Available-for-sale (“AFS”) debt securities (amortized cost of $6,916,491, $6,976,331 and $6,879,225)
6,188,337
6,039,837
6,034,993
2.5
2.5
Held-to-maturity (“HTM”) debt securities, at amortized cost (fair value of $2,453,971, $2,308,048 and $2,455,171)
2,956,040
2,964,235
3,001,868
(0.3
)
(1.5
)
Loans held-for-sale (“HFS”)
116
4,762
25,644
(97.6
)
(99.5
)
Loans held-for-investment (“HFI”) (net of allowance for loan losses of $668,743, $655,523 and $595,645)
51,542,039
50,251,661
47,606,785
2.6
8.3
Investments in qualified affordable housing partnerships, tax credit and other investments, net
905,036
901,559
763,256
0.4
18.6
Goodwill
465,697
465,697
465,697
—
—
Operating lease right-of-use assets
94,024
97,782
103,681
(3.8
)
(9.3
)
Other assets
2,051,113
2,200,534
1,697,229
(6.8
)
20.9
Total assets
$
69,612,884
$
68,289,458
$
64,112,150
1.9
%
8.6
%
Liabilities and Stockholders’ Equity
Deposits
$
56,092,438
$
55,087,031
$
55,967,849
1.8
%
0.2
%
Short-term borrowings
4,500,000
4,500,000
—
—
100.0
Assets sold under repurchase agreements (“repurchase agreements”)
—
—
300,000
—
(100.0
)
Long-term debt and finance lease liabilities
153,011
153,087
152,400
(0.0
)
0.4
Operating lease liabilities
102,353
107,695
111,931
(5.0
)
(8.6
)
Accrued expenses and other liabilities
1,814,248
1,844,939
1,595,358
(1.7
)
13.7
Total liabilities
62,662,050
61,692,752
58,127,538
1.6
7.8
Stockholders’ equity
6,950,834
6,596,706
5,984,612
5.4
16.1
Total liabilities and stockholders’ equity
$
69,612,884
$
68,289,458
$
64,112,150
1.9
%
8.6
%
Book value per share
$
49.64
$
46.62
$
42.46
6.5
%
16.9
%
Tangible book value (1) per share
$
46.27
$
43.29
$
39.10
6.9
18.3
Number of common shares at period-end
140,027
141,486
140,948
(1.0
)
(0.7
)
Total stockholders’ equity to assets ratio
9.98
%
9.66
%
9.33
%
32
bps
65
bps
Tangible common equity (“TCE”) ratio (1)
9.37
%
9.03
%
8.66
%
34
bps
71
bps
(1)
Tangible book value and the TCE ratio are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 14.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
TOTAL LOANS AND DEPOSITS DETAIL
($ in thousands)
(unaudited)
Table 2
December 31, 2023
% Change
December 31, 2023
September 30, 2023
December 31, 2022
Qtr-o-Qtr
Yr-o-Yr
Loans:
Commercial:
Commercial and industrial (“C&I”)
$
16,581,079
$
15,864,042
$
15,711,095
4.5
%
5.5
%
Commercial real estate (“CRE”):
CRE
14,777,081
14,667,378
13,857,870
0.7
6.6
Multifamily residential
5,023,163
4,900,097
4,573,068
2.5
9.8
Construction and land
663,868
798,190
638,420
(16.8
)
4.0
Total CRE
20,464,112
20,365,665
19,069,358
0.5
7.3
Consumer:
Residential mortgage:
Single-family residential
13,383,060
12,836,558
11,223,027
4.3
19.2
Home equity lines of credit (“HELOCs”)
1,722,204
1,776,665
2,122,655
(3.1
)
(18.9
)
Total residential mortgage
15,105,264
14,613,223
13,345,682
3.4
13.2
Other consumer
60,327
64,254
76,295
(6.1
)
(20.9
)
Total loans HFI (1)
52,210,782
50,907,184
48,202,430
2.6
8.3
Loans HFS
116
4,762
25,644
(97.6
)
(99.5
)
Total loans (1)
52,210,898
50,911,946
48,228,074
2.6
8.3
Allowance for loan losses
(668,743
)
(655,523
)
(595,645
)
2.0
12.3
Net loans (1)
$
51,542,155
$
50,256,423
$
47,632,429
2.6
%
8.2
%
Deposits:
Noninterest-bearing demand
$
15,539,872
$
16,169,072
$
21,051,090
(3.9
)%
(26.2
)%
Interest-bearing checking
7,558,908
7,689,289
6,672,165
(1.7
)
13.3
Money market
13,108,727
12,613,827
12,265,024
3.9
6.9
Savings
1,841,467
1,963,766
2,649,037
(6.2
)
(30.5
)
Time deposits
18,043,464
16,651,077
13,330,533
8.4
35.4
Total deposits
$
56,092,438
$
55,087,031
$
55,967,849
1.8
%
0.2
%
(1)
Includes $71.2 million, $72.0 million and $70.4 million of net deferred loan fees and net unamortized premiums as of December 31, 2023, September 30, 2023 and December 31, 2022, respectively.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
($ and shares in thousands, except per share data)
(unaudited)
Table 3
Three Months Ended
December 31, 2023
% Change
December 31, 2023
September 30, 2023
December 31, 2022
Qtr-o-Qtr
Yr-o-Yr
Interest and dividend income
$
990,378
$
961,787
$
761,212
3.0%
30.1%
Interest expense
415,544
390,974
155,705
6.3
166.9
Net interest income before provision for credit losses
574,834
570,813
605,507
0.7
(5.1)
Provision for credit losses
37,000
42,000
25,000
(11.9)
48.0
Net interest income after provision for credit losses
537,834
528,813
580,507
1.7
(7.4)
Noninterest income
79,903
76,752
64,927
4.1
23.1
Noninterest expense
290,498
252,014
257,110
15.3
13.0
Income before income taxes
327,239
353,551
388,324
(7.4)
(15.7)
Income tax expense
88,286
65,813
51,561
34.1
71.2
Net income
$
238,953
$
287,738
$
336,763
(17.0)%
(29.0)%
Earnings per share (“EPS”)
- Basic
$
1.70
$
2.03
$
2.39
(16.4)%
(28.9)%
- Diluted
$
1.69
$
2.02
$
2.37
(16.5)
(28.7)
Weighted-average number of shares outstanding
- Basic
140,595
141,485
140,947
(0.6)%
(0.2)%
- Diluted
141,409
142,122
142,138
(0.5)
(0.5)
Three Months Ended
December 31, 2023
% Change
December 31, 2023
September 30, 2023
December 31, 2022
Qtr-o-Qtr
Yr-o-Yr
Noninterest income:
Lending fees
$
22,077
$
20,312
$
19,339
8.7%
14.2%
Deposit account fees
22,996
22,622
22,112
1.7
4.0
Customer derivative (loss) income
(945
)
11,208
(638
)
NM
(48.1)
Foreign exchange income
14,236
12,334
14,015
15.4
1.6
Wealth management fees
7,735
5,877
6,071
31.6
27.4
Net gains (losses) on sales of loans
3,675
(12
)
443
NM
NM
Net gain on AFS debt security
3,138
—
—
100.0
100.0
Other investment income
1,673
1,751
1,127
(4.5)
48.4
Other income
5,318
2,660
2,458
99.9
116.4
Total noninterest income
$
79,903
$
76,752
$
64,927
4.1%
23.1%
Noninterest expense:
Compensation and employee benefits
$
130,794
$
123,153
$
120,422
6.2%
8.6%
Occupancy and equipment expense
15,735
15,353
15,648
2.5
0.6
Deposit insurance premiums and regulatory assessments
78,553
8,583
4,930
NM
NM
Deposit account expense
11,390
11,585
8,437
(1.7)
35.0
Computer software and data processing expenses
11,315
11,761
11,145
(3.8)
1.5
Other operating expense
38,130
31,885
31,923
19.6
19.4
Amortization of tax credit and other investments
4,581
49,694
64,605
(90.8)
(92.9)
Total noninterest expense
$
290,498
$
252,014
$
257,110
15.3%
13.0%
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, 2023
% Change
December 31, 2023
December 31, 2022
Yr-o-Yr
Interest and dividend income
$
3,693,805
$
2,321,231
59.1%
Interest expense
1,381,551
275,350
401.7
Net interest income before provision for credit losses
2,312,254
2,045,881
13.0
Provision for credit losses
125,000
73,500
70.1
Net interest income after provision for credit losses
2,187,254
1,972,381
10.9
Noninterest income
295,264
298,666
(1.1)
Noninterest expense
1,022,748
859,393
19.0
Income before income taxes
1,459,770
1,411,654
3.4
Income tax expense
298,609
283,571
5.3
Net income
$
1,161,161
$
1,128,083
2.9%
EPS
- Basic
$
8.23
$
7.98
3.0%
- Diluted
$
8.18
$
7.92
3.4
Weighted-average number of shares outstanding
- Basic
141,164
141,326
(0.1)%
- Diluted
141,902
142,492
(0.4)
Year Ended
December 31, 2023
% Change
December 31, 2023
December 31, 2022
Yr-o-Yr
Noninterest income:
Lending fees
$
83,876
$
79,208
5.9%
Deposit account fees
89,606
88,435
1.3
Customer derivative income
20,200
29,057
(30.5)
Foreign exchange income
52,481
48,158
9.0
Wealth management fees
26,805
27,565
(2.8)
Net gains on sales of loans
3,634
6,411
(43.3)
Net (losses) gains on AFS debt securities
(6,862
)
1,306
NM
Other investment income
9,348
7,037
32.8
Other income
16,176
11,489
40.8
Total noninterest income
$
295,264
$
298,666
(1.1)%
Noninterest expense:
Compensation and employee benefits
$
508,538
$
477,635
6.5%
Occupancy and equipment expense
62,763
62,501
0.4
Deposit insurance premiums and regulatory assessments
103,308
19,449
431.2
Deposit account expense
43,143
25,508
69.1
Computer software and data processing expenses
44,475
42,776
4.0
Other operating expense (1)
140,222
118,166
18.7
Amortization of tax credit and other investments
120,299
113,358
6.1
Total noninterest expense
$
1,022,748
$
859,393
19.0%
NM - Not meaningful.(1)
Includes $3.9 million of repurchase agreements’ extinguishment cost for the twelve months ended December 31, 2023.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
FEE AND OTHER NONINTEREST INCOME
($ in thousands)
(unaudited)
Table 5
Three Months Ended
Year Ended
December 31,
2023
September 30,
2023
December 31,
2022
December 31,
2023
December 31,
2022
Customer derivative (loss) income:
Customer derivative revenue
$
6,297
$
5,894
$
3,984
$
23,216
$
14,986
Mark-to-market and credit valuation adjustments (“CVA”)
(7,242
)
5,314
(4,622
)
(3,016
)
14,071
Total customer derivative (loss) income
$
(945
)
$
11,208
$
(638
)
$
20,200
$
29,057
Three Months Ended
Year Ended
December 31,
2023
September 30,
2023
December 31,
2022
December 31,
2023
December 31,
2022
Fee income:
Lending fees
$
22,077
$
20,312
$
19,339
$
83,876
$
79,208
Deposit account fees
22,996
22,622
22,112
89,606
88,435
Foreign exchange income
14,236
12,334
14,015
52,481
48,158
Wealth management fees
7,735
5,877
6,071
26,805
27,565
Customer derivative revenue
6,297
5,894
3,984
23,216
14,986
Total fee income
73,341
67,039
65,521
275,984
258,352
Mark-to-market and CVA
(7,242
)
5,314
(4,622
)
(3,016
)
14,071
Net gains (losses) on sale of loans
3,675
(12
)
443
3,634
6,411
Net gains (losses) on AFS debt securities
3,138
—
—
(6,862
)
1,306
Other investment income
1,673
1,751
1,127
9,348
7,037
Other income
5,318
2,660
2,458
16,176
11,489
Total noninterest income
$
79,903
$
76,752
$
64,927
$
295,264
$
298,666
EAST WEST BANCORP, INC. AND SUBSIDIARIES
SELECTED AVERAGE BALANCES
($ in thousands)
(unaudited)
Table 6
Three Months Ended
December 31, 2023
% Change
Year Ended
December 31, 2023
% Change
December 31, 2023
September 30, 2023
December 31, 2022
Qtr-o-Qtr
Yr-o-Yr
December 31, 2023
December 31, 2022
Yr-o-Yr
Loans:
Commercial:
C&I
$
15,948,678
$
15,400,172
$
15,496,386
3.6%
2.9%
$
15,499,899
$
15,013,560
3.2%
CRE:
CRE
14,723,027
14,453,014
13,699,042
1.9
7.5
14,312,459
13,145,204
8.9
Multifamily residential
4,939,119
4,798,360
4,604,628
2.9
7.3
4,756,885
4,252,605
11.9
Construction and land
752,783
807,906
591,962
(6.8)
27.2
754,928
499,044
51.3
Total CRE
20,414,929
20,059,280
18,895,632
1.8
8.0
19,824,272
17,896,853
10.8
Consumer:
Residential mortgage:
Single-family residential
13,097,056
12,548,593
10,988,102
4.4
19.2
12,274,776
10,106,609
21.5
HELOCs
1,732,348
1,816,900
2,145,416
(4.7)
(19.3)
1,881,008
2,208,725
(14.8)
Total residential mortgage
14,829,404
14,365,493
13,133,518
3.2
12.9
14,155,784
12,315,334
14.9
Other consumer
59,245
63,917
81,596
(7.3)
(27.4)
65,181
93,711
(30.4)
Total loans (1)
$
51,252,256
$
49,888,862
$
47,607,132
2.7%
7.7%
$
49,545,136
$
45,319,458
9.3%
Interest-earning assets
$
65,505,724
$
65,051,461
$
60,376,151
0.7%
8.5%
$
64,039,402
$
59,309,062
8.0%
Total assets
$
69,421,959
$
68,936,786
$
64,252,730
0.7%
8.0%
$
67,757,505
$
62,838,282
7.8%
Deposits:
Noninterest-bearing demand
$
15,884,525
$
16,302,296
$
21,419,290
(2.6)%
(25.8)%
$
17,192,978
$
22,784,258
(24.5)%
Interest-bearing checking
7,608,234
8,080,025
6,543,349
(5.8)
16.3
7,658,414
6,696,200
14.4
Money market
12,824,121
12,180,806
12,197,782
5.3
5.1
11,680,540
12,443,437
(6.1)
Savings
1,873,276
2,013,246
2,747,166
(7.0)
(31.8)
2,128,943
2,901,940
(26.6)
Time deposits
17,216,367
16,621,683
12,076,193
3.6
42.6
16,301,856
9,473,744
72.1
Total deposits
$
55,406,523
$
55,198,056
$
54,983,780
0.4%
0.8%
$
54,962,731
$
54,299,579
1.2%
Interest-bearing liabilities
$
44,178,360
$
43,563,947
$
34,372,853
1.4%
28.5%
$
41,671,388
$
32,322,744
28.9%
Stockholders’ equity
$
6,695,852
$
6,604,798
$
5,834,623
1.4%
14.8%
$
6,482,985
$
5,783,025
12.1%
(1)
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
December 31, 2023
September 30, 2023
Average
Average
Average
Average
Balance
Interest
Yield/Rate (1)
Balance
Interest
Yield/Rate (1)
Assets
Interest-earning assets:
Interest-bearing cash and deposits with banks
$
4,445,115
$
56,250
5.02
%
$
5,392,795
$
67,751
4.98
%
Resale agreements
785,000
7,232
3.66
%
648,587
4,460
2.73
%
AFS debt securities
5,985,361
58,926
3.91
%
6,074,119
57,177
3.73
%
HTM debt securities
2,958,294
12,585
1.69
%
2,967,703
12,601
1.68
%
Loans:
C&I
15,948,678
321,026
7.99
%
15,400,172
306,542
7.90
%
CRE
20,414,929
327,194
6.36
%
20,059,280
317,416
6.28
%
Residential mortgage
14,829,404
205,371
5.49
%
14,365,493
193,913
5.36
%
Other consumer
59,245
786
5.26
%
63,917
848
5.26
%
Total Loans (2)
51,252,256
854,377
6.61
%
49,888,862
818,719
6.51
%
FHLB and FRB stock
79,698
1,008
5.02
%
79,395
1,079
5.39
%
Total interest-earning assets
$
65,505,724
$
990,378
6.00
%
$
65,051,461
$
961,787
5.87
%
Noninterest-earning assets:
Cash and due from banks
489,055
544,939
Allowance for loan losses
(650,724
)
(629,229
)
Other assets
4,077,904
3,969,615
Total assets
$
69,421,959
$
68,936,786
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Checking deposits
$
7,608,234
$
52,170
2.72
%
$
8,080,025
$
54,285
2.67
%
Money market deposits
12,824,121
123,744
3.83
%
12,180,806
113,217
3.69
%
Savings deposits
1,873,276
3,894
0.82
%
2,013,246
4,047
0.80
%
Time deposits
17,216,367
183,175
4.22
%
16,621,683
166,747
3.98
%
Federal funds purchased and other short-term borrowings
4,500,475
49,570
4.37
%
4,501,327
49,575
4.37
%
FHLB advances
1
—
—
%
1
—
—
%
Repurchase agreements
2,876
41
5.66
%
13,897
193
5.51
%
Long-term debt and finance lease liabilities
153,010
2,950
7.65
%
152,962
2,910
7.55
%
Total interest-bearing liabilities
$
44,178,360
$
415,544
3.73
%
$
43,563,947
$
390,974
3.56
%
Noninterest-bearing liabilities and stockholders’ equity:
Demand deposits
15,884,525
16,302,296
Accrued expenses and other liabilities
2,663,222
2,465,745
Stockholders’ equity
6,695,852
6,604,798
Total liabilities and stockholders’ equity
$
69,421,959
$
68,936,786
Interest rate spread
2.27
%
2.31
%
Net interest income and net interest margin
$
574,834
3.48
%
$
570,813
3.48
%
(1)
Annualized.
(2)
Includes loans HFS.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 8
Three Months Ended
December 31, 2023
December 31, 2022
Average
Average
Average
Average
Balance
Interest
Yield/Rate (1)
Balance
Interest
Yield/Rate (1)
Assets
Interest-earning assets:
Interest-bearing cash and deposits with banks
$
4,445,115
$
56,250
5.02
%
$
2,983,726
$
23,986
3.19
%
Resale agreements
785,000
7,232
3.66
%
833,170
6,062
2.89
%
AFS debt securities
5,985,361
58,926
3.91
%
5,869,336
46,224
3.12
%
HTM debt securities
2,958,294
12,585
1.69
%
3,004,412
12,747
1.68
%
Loans:
C&I
15,948,678
321,026
7.99
%
15,496,386
250,451
6.41
%
CRE
20,414,929
327,194
6.36
%
18,895,632
262,327
5.51
%
Residential mortgage
14,829,404
205,371
5.49
%
13,133,518
157,696
4.76
%
Other consumer
59,245
786
5.26
%
81,596
849
4.13
%
Total Loans (2)
51,252,256
854,377
6.61
%
47,607,132
671,323
5.59
%
FHLB and FRB stock
79,698
1,008
5.02
%
78,375
870
4.40
%
Total interest-earning assets
$
65,505,724
$
990,378
6.00
%
$
60,376,151
$
761,212
5.00
%
Noninterest-earning assets:
Cash and due from banks
489,055
640,509
Allowance for loan losses
(650,724
)
(583,271
)
Other assets
4,077,904
3,819,341
Total assets
$
69,421,959
$
64,252,730
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Checking deposits
$
7,608,234
$
52,170
2.72
%
$
6,543,349
$
16,735
1.01
%
Money market deposits
12,824,121
123,744
3.83
%
12,197,782
62,246
2.02
%
Savings deposits
1,873,276
3,894
0.82
%
2,747,166
2,714
0.39
%
Time deposits
17,216,367
183,175
4.22
%
12,076,193
65,772
2.16
%
Federal funds purchased and other short-term borrowings
4,500,475
49,570
4.37
%
47,142
374
3.15
%
FHLB advances
1
—
—
%
40,178
225
2.22
%
Repurchase agreements
2,876
41
5.66
%
568,520
5,507
3.84
%
Long-term debt and finance lease liabilities
153,010
2,950
7.65
%
152,523
2,132
5.55
%
Total interest-bearing liabilities
$
44,178,360
$
415,544
3.73
%
$
34,372,853
$
155,705
1.80
%
Noninterest-bearing liabilities and stockholders’ equity:
Demand deposits
15,884,525
21,419,290
Accrued expenses and other liabilities
2,663,222
2,625,964
Stockholders’ equity
6,695,852
5,834,623
Total liabilities and stockholders’ equity
$
69,421,959
$
64,252,730
Interest rate spread
2.27
%
3.20
%
Net interest income and net interest margin
$
574,834
3.48
%
$
605,507
3.98
%
(1)
Annualized.
(2)
Includes loans HFS.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 9
Year Ended
December 31, 2023
December 31, 2022
Average
Average
Average
Average
Balance
Interest
Yield/Rate
Balance
Interest
Yield/Rate
Assets
Interest-earning assets:
Interest-bearing cash and deposits with banks
$
4,638,630
$
220,643
4.76
%
$
3,127,234
$
41,113
1.31
%
Resale agreements
691,223
20,164
2.92
%
1,398,080
29,767
2.13
%
AFS debt securities
6,105,999
225,592
3.69
%
6,629,945
152,514
2.30
%
HTM debt securities
2,976,237
50,598
1.70
%
2,756,382
46,392
1.68
%
Loans:
C&I
15,499,899
1,190,940
7.68
%
15,013,560
715,778
4.77
%
CRE
19,824,272
1,227,795
6.19
%
17,896,853
791,839
4.42
%
Residential mortgage
14,155,784
750,813
5.30
%
12,315,334
538,255
4.37
%
Other consumer
65,181
3,198
4.91
%
93,711
2,429
2.59
%
Total Loans (1)
49,545,136
3,172,746
6.40
%
45,319,458
2,048,301
4.52
%
FHLB and FRB stock
82,177
4,062
4.94
%
77,963
3,144
4.03
%
Total interest-earning assets
$
64,039,402
$
3,693,805
5.77
%
$
59,309,062
$
2,321,231
3.91
%
Noninterest-earning assets:
Cash and due from banks
555,689
652,673
Allowance for loan losses
(625,785
)
(559,746
)
Other assets
3,788,199
3,436,293
Total assets
$
67,757,505
$
62,838,282
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Checking deposits
$
7,658,414
$
179,200
2.34
%
$
6,696,200
$
29,808
0.45
%
Money market deposits
11,680,540
399,482
3.42
%
12,443,437
107,442
0.86
%
Savings deposits
2,128,943
15,573
0.73
%
2,901,940
8,550
0.29
%
Time deposits
16,301,856
611,295
3.75
%
9,473,744
106,038
1.12
%
Federal funds purchased and other short-term borrowings
3,591,114
157,002
4.37
%
81,719
1,801
2.20
%
FHLB advances
123,288
6,430
5.22
%
105,966
1,754
1.66
%
Repurchase agreements
34,443
1,497
4.35
%
467,413
14,362
3.07
%
Long-term debt and finance lease liabilities
152,790
11,072
7.25
%
152,325
5,595
3.67
%
Total interest-bearing liabilities
$
41,671,388
$
1,381,551
3.32
%
$
32,322,744
$
275,350
0.85
%
Noninterest-bearing liabilities and stockholders’ equity:
Demand deposits
17,192,978
22,784,258
Accrued expenses and other liabilities
2,410,154
1,948,255
Stockholders’ equity
6,482,985
5,783,025
Total liabilities and stockholders’ equity
$
67,757,505
$
62,838,282
Interest rate spread
2.45
%
3.06
%
Net interest income and net interest margin
$
2,312,254
3.61
%
$
2,045,881
3.45
%
(1)
Includes loans HFS.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
SELECTED RATIOS
(unaudited)
Table 10
Three Months Ended (1)
December 31, 2023
Basis Point Change
December 31,
2023
September 30,
2023
December 31,
2022
Qtr-o-Qtr
Yr-o-Yr
Return on average assets
1.37
%
1.66
%
2.08
%
(29
)
bps
(71
)
bps
Adjusted return on average assets (2)
1.63
%
1.66
%
2.08
%
(3
)
(45
)
Return on average common equity
14.16
%
17.28
%
22.90
%
(312
)
(874
)
Adjusted return on average common equity (2)
16.95
%
17.28
%
22.90
%
(33
)
(595
)
Return on average TCE (3)
15.26
%
18.65
%
24.96
%
(339
)
(970
)
Adjusted return on average TCE (3)
18.26
%
18.65
%
24.96
%
(39
)
(670
)
Interest rate spread
2.27
%
2.31
%
3.20
%
(4
)
(93
)
Net interest margin
3.48
%
3.48
%
3.98
%
—
(50
)
Average loan yield
6.61
%
6.51
%
5.59
%
10
102
Yield on average interest-earning assets
6.00
%
5.87
%
5.00
%
13
100
Average cost of interest-bearing deposits
3.64
%
3.45
%
1.74
%
19
190
Average cost of deposits
2.60
%
2.43
%
1.06
%
17
154
Average cost of funds
2.74
%
2.59
%
1.11
%
15
163
Adjusted pre-tax, pre-provision profitability ratio (4)
2.49
%
2.56
%
2.95
%
(7
)
(46
)
Adjusted noninterest expense/average assets (4)
1.23
%
1.16
%
1.19
%
7
4
Efficiency ratio
44.37
%
38.92
%
38.35
%
545
602
Adjusted efficiency ratio (4)
33.07
%
31.18
%
28.66
%
189
bps
441
bps
Year Ended
December 31, 2023
Basis Point Change
December 31,
2023
December 31,
2022
Yr-o-Yr
Return on average assets
1.71
%
1.80
%
(9
)
bps
Adjusted return on average assets (2)
1.79
%
1.80
%
(1
)
Return on average common equity
17.91
%
19.51
%
(160
)
Adjusted return on average common equity (2)
18.75
%
19.51
%
(76
)
Return on average TCE (3)
19.35
%
21.29
%
(194
)
Adjusted return on average TCE (3)
20.25
%
21.29
%
(104
)
Interest rate spread
2.45
%
3.06
%
(61
)
Net interest margin
3.61
%
3.45
%
16
Average loan yield
6.40
%
4.52
%
188
Yield on average interest-earning assets
5.77
%
3.91
%
186
Average cost of interest-bearing deposits
3.19
%
0.80
%
239
Average cost of deposits
2.19
%
0.46
%
173
Average cost of funds
2.35
%
0.50
%
185
Adjusted pre-tax, pre-provision profitability ratio (4)
2.64
%
2.55
%
9
Adjusted noninterest expense/average assets (4)
1.22
%
1.18
%
4
Efficiency ratio
39.22
%
36.65
%
257
Adjusted efficiency ratio (4)
31.63
%
31.74
%
(11
)
bps
(1)
Annualized except for efficiency ratio and adjusted efficiency ratio.
(2)
Adjusted return on average assets and adjusted return on average common equity are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 15.
(3)
Return on average TCE and adjusted return on average TCE are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 14.
(4)
Adjusted pre-tax, pre-provision profitability ratio, adjusted noninterest expense/average assets and adjusted efficiency ratio are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 13.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 11
Three Months Ended December 31, 2023
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, September 30, 2023
$
383,677
$
211,418
$
58,725
$
1,703
$
655,523
Provision for credit losses on loans
(a)
27,732
4,875
233
50
32,890
Gross charge-offs
(20,264
)
(1,213
)
—
(96
)
(21,573
)
Gross recoveries
1,248
356
7
—
1,611
Total net (charge-offs) recoveries
(19,016
)
(857
)
7
(96
)
(19,962
)
Foreign currency translation adjustment
292
—
—
—
292
Allowance for loan losses, December 31, 2023
$
392,685
$
215,436
$
58,965
$
1,657
$
668,743
Three Months Ended September 30, 2023
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, June 30, 2023
$
375,333
$
202,768
$
56,039
$
1,260
$
635,400
Provision for credit losses on loans
(a)
13,006
22,026
2,648
456
38,136
Gross charge-offs
(7,074
)
(13,879
)
(41
)
(13
)
(21,007
)
Gross recoveries
2,279
503
79
—
2,861
Total net (charge-offs) recoveries
(4,795
)
(13,376
)
38
(13
)
(18,146
)
Foreign currency translation adjustment
133
—
—
—
133
Allowance for loan losses, September 30, 2023
$
383,677
$
211,418
$
58,725
$
1,703
$
655,523
Three Months Ended December 31, 2022
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, September 30, 2022
$
371,749
$
178,487
$
30,587
$
1,694
$
582,517
(Reversal of) provision for credit losses on loans
(a)
(263
)
13,790
9,363
(118
)
22,772
Gross charge-offs
(416
)
(10,804
)
—
(16
)
(11,236
)
Gross recoveries
136
873
89
—
1,098
Total net (charge-offs) recoveries
(280
)
(9,931
)
89
(16
)
(10,138
)
Foreign currency translation adjustment
494
—
—
—
494
Allowance for loan losses, December 31, 2022
$
371,700
$
182,346
$
40,039
$
1,560
$
595,645
EAST WEST BANCORP, INC. AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 11 (continued)
Year Ended December 31, 2023
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, December 31, 2022
$
371,700
$
182,346
$
40,039
$
1,560
$
595,645
Impact of ASU 2022-02 adoption
5,683
343
2
—
6,028
Allowance for loan losses, January 1, 2023
$
377,383
$
182,689
$
40,041
$
1,560
$
601,673
Provision for credit losses on loans
(a)
45,319
48,998
18,960
294
113,571
Gross charge-offs
(36,573
)
(17,464
)
(138
)
(197
)
(54,372
)
Gross recoveries
6,803
1,213
102
—
8,118
Total net charge-offs
(29,770
)
(16,251
)
(36
)
(197
)
(46,254
)
Foreign currency translation adjustment
(247
)
—
—
—
(247
)
Allowance for loan losses, December 31, 2023
$
392,685
$
215,436
$
58,965
$
1,657
$
668,743
Year Ended December 31, 2022
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, December 31, 2021
$
338,252
$
180,808
$
20,595
$
1,924
$
541,579
Provision for (reversal of) credit losses on loans
(a)
37,604
17,430
19,991
(258
)
74,767
Gross charge-offs
(18,738
)
(18,108
)
(968
)
(106
)
(37,920
)
Gross recoveries
16,824
2,216
421
—
19,461
Total net charge-offs
(1,914
)
(15,892
)
(547
)
(106
)
(18,459
)
Foreign currency translation adjustment
(2,242
)
—
—
—
(2,242
)
Allowance for loan losses, December 31, 2022
$
371,700
$
182,346
$
40,039
$
1,560
$
595,645
Three Months Ended
Year Ended
December 31,
2023
September 30,
2023
December 31,
2022
December 31,
2023
December 31,
2022
Unfunded Credit Facilities
Allowance for unfunded credit commitments, beginning of period (1)
$
33,589
$
29,728
$
24,041
$
26,264
$
27,514
Provision for (reversal of) credit losses on unfunded credit commitments
(b)
4,110
3,864
2,228
11,429
(1,267
)
Foreign currency translation adjustment
—
(3
)
(5
)
6
17
Allowance for unfunded credit commitments, end of period (1)
$
37,699
$
33,589
$
26,264
$
37,699
$
26,264
Provision for credit losses
(a)+(b)
$
37,000
$
42,000
$
25,000
$
125,000
$
73,500
(1)
Included in Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheet.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
CRITICIZED LOANS, NONPERFORMING ASSETS AND CREDIT QUALITY RATIOS
($ in thousands)
(unaudited)
Table 12
Criticized Loans
December 31, 2023
September 30, 2023
December 31, 2022
Special mention loans
$
404,241
$
483,428
$
468,471
Classified loans
573,969
538,258
427,509
Total criticized loans (1)
$
978,210
$
1,021,686
$
895,980
Nonperforming Assets
December 31, 2023
September 30, 2023
December 31, 2022
Nonaccrual loans:
Commercial:
C&I
$
37,036
$
49,147
$
50,428
Total CRE
27,918
16,431
23,413
Consumer:
Total residential mortgage
37,788
37,986
25,586
Other consumer
132
136
99
Total nonaccrual loans
102,874
103,700
99,526
Other real estate owned, net
11,141
—
270
Total nonperforming assets
$
114,015
$
103,700
$
99,796
Credit Quality Ratios
December 31, 2023
September 30, 2023
December 31, 2022
Annualized quarterly net charge-offs to average loans HFI
0.15
%
0.14
%
0.08
%
Annual net charge-offs to average loans HFI
0.09
%
N/A
0.04
%
Special mention loans to loans HFI
0.77
%
0.95
%
0.97
%
Classified loans to loans HFI
1.10
%
1.06
%
0.89
%
Criticized loans to loans HFI
1.87
%
2.01
%
1.86
%
Nonperforming assets to total assets
0.16
%
0.15
%
0.16
%
Nonaccrual loans to loans HFI
0.20
%
0.20
%
0.21
%
Allowance for loan losses to loans HFI
1.28
%
1.29
%
1.24
%
(1)
Excludes loans HFS.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ in thousands)
(unaudited)
Table 13
The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Adjusted efficiency ratio represents adjusted noninterest expense divided by adjusted revenue. Adjusted pre-tax, pre-provision profitability ratio represents total adjusted revenue less adjusted noninterest expense, divided by average total assets. Adjusted revenue excludes the net gain/loss related to an AFS debt security that was written-off in the first quarter of 2023 and subsequently sold during the fourth quarter of 2023. Adjusted noninterest expense excludes the amortization of tax credit and other investments, the amortization of core deposit intangibles, the FDIC special assessment charge (included in deposit insurance premiums and regulatory assessments) and the repurchase agreements’ extinguishment cost (where applicable). Management believes that the measures and ratios presented below provide clarity to financial statement users regarding the ongoing performance of the Company and allow comparability to prior periods.
Three Months Ended
Year Ended
December 31,
2023
September 30,
2023
December 31,
2022
December 31,
2023
December 31,
2022
Net interest income before provision for credit losses
(a)
$
574,834
$
570,813
$
605,507
$
2,312,254
$
2,045,881
Total noninterest income
79,903
76,752
64,927
295,264
298,666
Total revenue
(b)
$
654,737
$
647,565
$
670,434
$
2,607,518
$
2,344,547
Noninterest income
79,903
76,752
64,927
295,264
298,666
Less/add: Net gain/loss on AFS debt security
(3,138
)
—
—
6,862
—
Adjusted noninterest income
(c)
76,765
76,752
64,927
302,126
298,666
Adjusted revenue
(a)+(c) = (d)
$
651,599
$
647,565
$
670,434
$
2,614,380
$
2,344,547
Total noninterest expense
(e)
$
290,498
$
252,014
$
257,110
$
1,022,748
$
859,393
Less: Amortization of tax credit and other investments
(4,581
)
(49,694
)
(64,605
)
(120,299
)
(113,358
)
Amortization of core deposit intangibles
(441
)
(441
)
(381
)
(1,763
)
(1,865
)
FDIC special assessment charge
(69,986
)
—
—
(69,986
)
—
Repurchase agreements’ extinguishment cost
—
—
—
(3,872
)
—
Adjusted noninterest expense
(f)
$
215,490
$
201,879
$
192,124
$
826,828
$
744,170
Efficiency ratio
(e)/(b)
44.37
%
38.92
%
38.35
%
39.22
%
36.65
%
Adjusted efficiency ratio
(f)/(d)
33.07
%
31.18
%
28.66
%
31.63
%
31.74
%
Adjusted pre-tax, pre-provision income
(d)-(f) = (g)
$
436,109
$
445,686
$
478,310
$
1,787,552
$
1,600,377
Average total assets
(h)
$
69,421,959
$
68,936,786
$
64,252,730
$
67,757,505
$
62,838,282
Adjusted pre-tax, pre-provision profitability ratio
(g)/(h)
2.49
%
(1)
2.56
%
(1)
2.95
%
(1)
2.64
%
2.55
%
Adjusted noninterest expense/average assets
(f)/(h)
1.23
%
(1)
1.16
%
(1)
1.19
%
(1)
1.22
%
1.18
%
(1)
Annualized.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ in thousands)
(unaudited)
Table 14
The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Tangible book value, tangible book value per share and TCE ratio are non-GAAP financial measures. Tangible book value and tangible assets represent stockholders’ equity and total assets, respectively, which have been reduced by goodwill and other intangible assets. Given that the use of such measures and ratios is more prevalent in the banking industry, and such measures and ratios are used by banking regulators and analysts, the Company has included them below for discussion.
December 31, 2023
September 30, 2023
December 31, 2022
Stockholders’ equity
(a)
$
6,950,834
$
6,596,706
$
5,984,612
Less: Goodwill
(465,697
)
(465,697
)
(465,697
)
Other intangible assets (1)
(6,602
)
(5,649
)
(7,998
)
Tangible book value
(b)
$
6,478,535
$
6,125,360
$
5,510,917
Number of common shares at period-end
(c)
140,027
141,486
140,948
Book value per share
(a)/(c)
$
49.64
$
46.62
$
42.46
Tangible book value per share
(b)/(c)
$
46.27
$
43.29
$
39.10
Total assets
(d)
$
69,612,884
$
68,289,458
$
64,112,150
Less: Goodwill
(465,697
)
(465,697
)
(465,697
)
Other intangible assets (1)
(6,602
)
(5,649
)
(7,998
)
Tangible assets
(e)
$
69,140,585
$
67,818,112
$
63,638,455
Total stockholders’ equity to assets ratio
(a)/(d)
9.98
%
9.66
%
9.33
%
TCE ratio
(b)/(e)
9.37
%
9.03
%
8.66
%
Return on average TCE represents tangible net income divided by average tangible book value. Adjusted return on average TCE represents adjusted tangible net income divided by average tangible book value. Tangible net income excludes the after-tax impacts of the amortization of core deposit intangibles and mortgage servicing assets. Adjusted tangible net income excludes the after-tax impacts of the tangible net income adjustments, the FDIC special assessment charge (included in Deposit insurance premiums and regulatory assessments on the Consolidated Statement of Income), and the net gain/loss related to an AFS debt security that was written-off in the first quarter of 2023 and subsequently sold during the fourth quarter of 2023. Given that the use of such measures and ratios is more prevalent in the banking industry, and such measures and ratios are used by banking regulators and analysts, the Company has included them below for discussion.
Three Months Ended
Year Ended
December 31,
2023
September 30,
2023
December 31,
2022
December 31,
2023
December 31,
2022
Net income
(e)
$
238,953
$
287,738
$
336,763
$
1,161,161
$
1,128,083
Add: Amortization of core deposit intangibles
441
441
381
1,763
1,865
Amortization of mortgage servicing assets
302
328
329
1,328
1,425
Tax effect of amortization adjustments (2)
(220
)
(225
)
(209
)
(914
)
(966
)
Tangible net income
(f)
$
239,476
$
288,282
$
337,264
$
1,163,338
$
1,130,407
Add: FDIC special assessment charge
69,986
—
—
69,986
—
Less/add: Net gain/loss on AFS debt security
(3,138
)
—
—
6,862
—
Tax effect of adjustments (2)
(19,760
)
—
—
(22,716
)
—
Adjusted tangible net income
(g)
$
286,564
$
288,282
$
337,264
$
1,217,470
$
1,130,407
Average stockholders’ equity
(h)
$
6,695,852
$
6,604,798
$
5,834,623
$
6,482,985
$
5,783,025
Less: Average goodwill
(465,697
)
(465,697
)
(465,697
)
(465,697
)
(465,697
)
Average other intangible assets (1)
(5,434
)
(6,148
)
(8,378
)
(6,542
)
(8,695
)
Average tangible book value
(i)
$
6,224,721
$
6,132,953
$
5,360,548
$
6,010,746
$
5,308,633
Return on average common equity
(e)/(h)
14.16
%
(3)
17.28
%
(3)
22.90
%
(3)
17.91
%
19.51
%
Return on average TCE
(f)/(i)
15.26
%
(3)
18.65
%
(3)
24.96
%
(3)
19.35
%
21.29
%
Adjusted return on average TCE
(g)/(i)
18.26
%
(3)
18.65
%
(3)
24.96
%
(3)
20.25
%
21.29
%
(1)
Includes core deposit intangibles and mortgage servicing assets.
(2)
Applied statutory tax rate of 29.56% for the three and twelve months ended December 31, 2023, and 29.29% for the three months ended September 30, 2023. Applied statutory tax rate of 29.37% for the three and twelve months ended December 31, 2022.
(3)
Annualized.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ and shares in thousands, except for per share data)
(unaudited)
Table 15
During the fourth quarter of 2023, the Company recorded a $70.0 million pre-tax FDIC special assessment charge (included in Deposit insurance premiums and regulatory assessments on the Consolidated Statement of Income) and recognized a $3.1 million pre-tax gain on sale for an AFS debt security that was previously written-off. During the first quarter of 2023, the Company recorded a $10.0 million pre-tax impairment write-off of an AFS debt security. Management believes that presenting the computations of the adjusted net income, adjusted diluted earnings per common share, adjusted return on average assets and adjusted return on average common equity that adjust for the above discussed non-recurring items provide clarity to financial statement users regarding the ongoing performance of the Company and allows comparability to prior periods.
Three Months Ended
Year Ended
December 31,
2023
September 30,
2023
December 31,
2022
December 31,
2023
December 31,
2022
Net income
(a)
$
238,953
$
287,738
$
336,763
$
1,161,161
$
1,128,083
Add: FDIC special assessment charge
69,986
—
—
69,986
—
Less/add: Net gain/loss on AFS debt security
(3,138
)
—
—
6,862
—
Tax effect of adjustments (1)
(19,760
)
—
—
(22,716
)
—
Adjusted net income
(b)
$
286,041
$
287,738
$
336,763
$
1,215,293
$
1,128,083
Diluted weighted-average number of shares outstanding
141,409
142,122
142,138
141,902
142,492
Diluted EPS
$
1.69
$
2.02
$
2.37
$
8.18
$
7.92
Add: FDIC special assessment charge
0.35
—
—
0.35
—
Less/add: Net gain/loss on AFS debt security
(0.02
)
—
—
0.03
—
Adjusted diluted EPS
$
2.02
$
2.02
$
2.37
$
8.56
$
7.92
Average total assets
(c)
$
69,421,959
$
68,936,786
$
64,252,730
$
67,757,505
$
62,838,282
Average stockholders’ equity
(d)
$
6,695,852
$
6,604,798
$
5,834,623
$
6,482,985
$
5,783,025
Return on average assets
(a)/(c)
1.37
%
(2)
1.66
%
(2)
2.08
%
(2)
1.71
%
1.80
%
Adjusted return on average assets
(b)/(c)
1.63
%
(2)
1.66
%
(2)
2.08
%
(2)
1.79
%
1.80
%
Return on average common equity
(a)/(d)
14.16
%
(2)
17.28
%
(2)
22.90
%
(2)
17.91
%
19.51
%
Adjusted return on average common equity
(b)/(d)
16.95
%
(2)
17.28
%
(2)
22.90
%
(2)
18.75
%
19.51
%
Return on average TCE (3)
15.26
%
18.65
%
24.96
%
19.35
%
21.29
%
Adjusted return on average TCE (3)
18.26
%
18.65
%
24.96
%
20.25
%
21.29
%
(1)
Applied statutory tax rate of 29.56% for the three and the twelve months ended December 31, 2023.
(2)
Annualized.
(3)
Refer to Table 14 for the calculation of the return on average TCE and adjusted return on average TCE ratios.
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FOR INVESTOR INQUIRIES, CONTACT: Christopher Del Moral-Niles, CFA Chief Financial Officer T: (626) 768-6860 E: chris.delmoralniles@eastwestbank.com
Adrienne Atkinson Director of Investor Relations T: (626) 788-7536 E: adrienne.atkinson@eastwestbank.com
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