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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 | |
---|---|---|---|---|---|---|---|---|---|---|
-0.05 | -0.06% | 77.44 | 77.01 | 79.61 | 78.11 | 77.34 | 77.80 | 727,868 | 01:00:00 |
East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq: EWBC), parent company of East West Bank, today reported its financial results for the second quarter of 2022. Second quarter 2022 net income was $258.3 million, or $1.81 per diluted share; diluted earnings per share grew 38% linked quarter annualized and 15% year-over-year.
“East West’s outstanding results for the second quarter demonstrate the strengths of our business model. Total revenue for the second quarter was $551 million, or an increase of 45% linked quarter annualized, driven by strong growth in net interest income and stable fee income. Net interest income increased to a record $473 million, up 55% linked quarter annualized, and our net interest margin increased 36 basis points quarter-over-quarter to 3.23%,” stated Dominic Ng, Chairman and Chief Executive Officer of East West.
“Not only is our balance sheet well-positioned for rising interest rates, it is resilient and diversified. Average total loans increased $2.5 billion to $44.6 billion, with broad-based growth across all our major loan categories. Average noninterest-bearing demand deposits increased 8% linked quarter annualized to $23.9 billion and totaled 44% of average total deposits for the second quarter of 2022,” continued Ng.
“Our strong revenue growth, combined with controlled expense management, drove second quarter 2022 adjusted pre-tax, pre-provision income1 growth of 62% linked quarter annualized. We earned an industry-leading return on assets of 1.66% and a return on equity of 18.2% for the second quarter of 2022,” concluded Ng.
FINANCIAL HIGHLIGHTS
Three Months Ended
Qtr-o-Qtr Change
Yr-o-Yr Change
($ in millions, except per share data)
June 30, 2022
$
% Ann.
$
%
Total Loans
$
46,531
$
3,039
28
%
$
6,457
16
%
Total Deposits
54,343
(595
)
(4
)
1,761
3
Total Revenue
$
551
$
56
45
%
$
106
24
%
Adj. Pre-tax Pre-provision Income1
370
50
62
87
31
Net Income
258
21
35
34
15
Diluted Earnings per Share
$
1.81
$
0.15
38
%
$
0.24
15
%
_________________________
1 See reconciliation of GAAP to non-GAAP financial measures in Table 12.
BALANCE SHEET
____________________
2 See reconciliation of GAAP to non-GAAP financial measures in Table 13.
OPERATING RESULTS
Second Quarter Earnings – Second quarter 2022 net income was $258.3 million, an increase of 9%, or 35% annualized, from $237.7 million for the first quarter of 2022, and an increase of 15% from $224.7 million for the second quarter of 2021. Second quarter 2022 diluted earnings per share were $1.81, an increase of 9%, or 38% annualized, from $1.66 per diluted share for the first quarter 2022, and an increase of 15% from $1.57 per diluted share for the year-ago quarter.
Second Quarter 2022 Compared to First Quarter 2022
Net Interest Income and Net Interest Margin
Record net interest income (“NII”) totaled $473.0 million, an increase of 14%, or 55% annualized, from $415.6 million. Net interest margin (“NIM”) of 3.23% expanded by 36 basis points from 2.87%.
Noninterest Income
Noninterest income totaled $78.4 million in the second quarter, a decrease of $1.3 million, or 2%, from $79.7 million in the first quarter. Fee income and net gains on sales of loans were $64.8 million, essentially unchanged from $65.0 million in the first quarter.
Noninterest Expense
Noninterest expense totaled $196.9 million in the second quarter, compared with $189.5 million in the first quarter. Second quarter noninterest expense consisted of $181.4 million of adjusted noninterest expense3, $15.0 million in amortization of tax credit and other investments, and $0.5 million in amortization of core deposit intangibles.
____________________
3 See reconciliation of GAAP to non-GAAP financial measures in Table 12.
TAX RELATED ITEMS
Second quarter 2022 income tax expense was $82.7 million compared with income tax expense of $60.3 million for the first quarter of 2022. The year-to-date effective tax rate for the first six months of 2022 was 22.4%. The Company expects the full-year 2022 effective tax rate to be approximately 21%, including the impact of tax credit investments expected in the second half of the year.
ASSET QUALITY
The asset quality of the loan portfolio continues to be strong.
CAPITAL STRENGTH
Capital levels for East West are strong. The following table presents the regulatory capital metrics as of June 30, 2022, March 31, 2022, and June 30, 2021.
EWBC Risk-Based Capital Ratios
($ in millions)
June 30, 2022 (a)
March 31, 2022 (a)
June 30, 2021 (a)
CET1 capital ratio
12.0
%
12.6
%
12.8
%
Tier 1 capital ratio
12.0
%
12.6
%
12.8
%
Total capital ratio
13.2
%
13.9
%
14.3
%
Leverage ratio
9.3
%
9.3
%
9.1
%
Risk-Weighted Assets (“RWA”) (b)
$
48,499
$
45,432
$
40,609
(a)
The Company has elected to use the 2020 CECL transition provision in the calculation of its June 30, 2022, March 31, 2022, and June 30, 2021 regulatory capital ratios. The Company’s June 30, 2022 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.
DIVIDEND PAYOUT AND CAPITAL ACTIONS
East West’s Board of Directors has declared third quarter 2022 dividends for the Company’s common stock. The common stock cash dividend of $0.40 per share is payable on August 15, 2022, to stockholders of record on August 1, 2022.
On March 3, 2020, East West’s Board of Directors authorized the repurchase of up to $500 million of East West’s common stock, of which $354 million was available as of March 31, 2022. During the second quarter of 2022, East West repurchased $100 million of common stock, or 1.4 million shares. As of June 30, 2022, $254 million remained available under this authorization.
Conference Call
East West will host a conference call to discuss second quarter 2022 earnings with the public on Thursday, July 21, 2022, 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 2022 results and operating developments.
About East West
East West Bancorp, Inc. is a public company with total assets of $62.4 billion and is traded on the Nasdaq Global Select Market under the symbol “EWBC”. The Company’s wholly-owned subsidiary, East West Bank, is the largest independent bank headquartered in Southern California, operating over 120 locations in the United States and in China. The Company’s markets in the United States include California, Georgia, Illinois, Massachusetts, Nevada, New York, Texas and Washington. In 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) contain forward-looking statements that are intended to be covered by the safe harbor for such statements provided by the Private Securities Litigation Reform Act of 1995. In addition, the Company may make forward-looking statements in other documents that it files with, or furnishes to, the U.S. Securities and Exchange Commission (“SEC”) and management may make forward-looking statements to analysts, investors, media members and others. Forward-looking statements are those that do not relate to historical facts, and that are based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company’s control. These statements may relate to the Company’s financial condition, results of operations, plans, objectives, future performance and/or business and usually can be identified by the use of forward-looking language, such as “anticipates,” “assumes,” “believes,” “can,” “continues,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends to,” “likely,” “may,” “might,” “objective,” “plans,” “potential,” “projects,” “remains,” “should,” “target,” “trend,” “will,” “would,” or similar expressions, and the negative thereof. You should not place undue reliance on these 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. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company.
There are a number of 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, or market disruption, level of inflation, interest rate environment, housing prices, employment levels, rate of growth and general business conditions; the impact of any future federal government shutdown and uncertainty regarding the federal government’s debt limit; changes in local, regional and global business, economic and political conditions and geopolitical events; the economic, financial, reputational and other impacts of the ongoing COVID-19 pandemic including variants thereof and any other pandemic, epidemic or health-related crisis, as well as a deterioration of asset quality and an increase in credit losses due to the COVID-19 pandemic; changes in laws or the regulatory environment including regulatory reform initiatives and policies of the U.S. Department of the Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the SEC, the Consumer Financial Protection Bureau, and the California Department of Financial Protection and Innovation – Division of Financial Institutions; changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing 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; fluctuations in the Company’s stock price; the impact from potential changes to income tax laws and regulations, federal spending and economic stimulus programs; the Company’s ability to compete effectively against financial institutions in its banking markets and other entities, including as a result of emerging technologies; the soundness of other financial institutions; the success and timing of the Company’s business strategies; the Company’s ability to retain key officers and employees; impact on the Company’s funding costs, net interest income and net interest margin from changes in key variable market interest rates, competition, regulatory requirements and the Company’s product mix; changes in the Company’s costs of operation, compliance and expansion; the Company’s ability to adopt and successfully integrate new technologies into its business in a strategic manner; the impact of the benchmark interest rate reform in the U.S. including the transition away from USD London Interbank Offered Rate to alternative reference rates; the impact of communications or technology disruption, failure in, or breach of, the Company’s operational or security systems or infrastructure, or those of third party vendors with which the Company does business, including as a result of cyber-attacks; and other similar matters which could result in, among other things, confidential and/or proprietary information being disclosed or misused, and materially impact the Company’s ability to provide services to its clients; the adequacy of the Company’s risk management framework, disclosure controls and procedures and internal control over financial reporting; future credit quality and performance, including the Company’s expectations regarding future credit losses and allowance levels; the impact of adverse changes to the Company’s credit ratings from major credit rating agencies; impact of adverse judgments or settlements in litigation; the impact on the Company’s operations due to political developments, pandemics, wars, civil unrest, terrorism or other hostilities that may disrupt or increase volatility in securities or otherwise affect business and economic conditions; heightened regulatory and governmental oversight and scrutiny of the Company’s business practices, including dealings with consumers; the impact of reputational risk from negative publicity, fines, penalties and other negative consequences from regulatory violations, legal actions and the Company’s interactions with business partners, counterparties, service providers and other third parties; the impact of regulatory investigations and enforcement actions; changes in accounting standards as may be required by the Financial Accounting Standards Board or other regulatory agencies and their impact on 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 future strategic acquisitions or divestitures; changes in the equity and debt securities markets; fluctuations in foreign currency exchange rates; the impact of increased focus on social, environmental and sustainability matters, which may affect the Company’s operations as well as those of its customers and the economy more broadly; significant turbulence or disruption in the capital or financial markets, which could result in, among other things, reduced investor demand for loans, a reduction in the availability of funding or increases in funding costs, declines in asset values and/or recognition of allowance for credit losses on securities held in the Company’s debt securities and equity securities portfolio; and the impact of climate change, natural or man-made disasters or calamities, such as wildfires, droughts and earthquakes, all of which are particularly common in California, or other events that may directly or indirectly result in a negative impact on the Company’s financial performance.
For a more detailed discussion of some of the factors that might cause such differences, see the Company’s 2021 Annual Report on Form 10-K 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. The Company does not undertake, and specifically disclaims any obligation to update or revise any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
($ and shares in thousands, except per share data)
(unaudited)
Table 1
June 30, 2022
% or Basis Point Change
June 30, 2022
March 31, 2022
June 30, 2021
Qtr-o-Qtr
Yr-o-Yr
Assets
Cash and due from banks
$
688,936
$
571,571
$
626,716
20.5
%
9.9
%
Interest-bearing cash with banks
1,213,117
3,277,129
5,371,089
(63.0
)
(77.4
)
Cash and cash equivalents
1,902,053
3,848,700
5,997,805
(50.6
)
(68.3
)
Interest-bearing deposits with banks
712,709
816,125
830,279
(12.7
)
(14.2
)
Assets purchased under resale agreements (“resale agreements”)
1,422,794
1,956,822
2,299,184
(27.3
)
(38.1
)
Available-for-sale (“AFS”) debt securities (amortized cost of $6,891,522, $7,091,581 and $8,411,142)
6,255,504
6,729,431
8,399,460
(7.0
)
(25.5
)
Held-to-maturity (“HTM”) debt securities, at amortized cost (fair value of $2,656,549 and $2,815,968 in 2022)
3,028,302
2,997,702
—
1.0
100.0
Loans held-for-sale (“HFS”)
28,464
631
1,819
NM
NM
Loans held-for-investment (''HFI'') (net of allowance for loan losses of $563,270, $545,685 and $585,724)
45,938,806
42,944,997
39,485,775
7.0
16.3
Investments in qualified affordable housing partnerships, tax credit and other investments, net
634,304
607,985
651,619
4.3
(2.7
)
Goodwill
465,697
465,697
465,697
—
—
Operating lease right-of-use assets
107,588
102,491
102,609
5.0
4.9
Other assets
1,898,062
1,770,875
1,620,629
7.2
17.1
Total assets
$
62,394,283
$
62,241,456
$
59,854,876
0.2
%
4.2
%
Liabilities and Stockholders’ Equity
Deposits
$
54,343,354
$
54,938,361
$
52,582,575
(1.1
)%
3.3
%
FHLB advances
174,776
74,619
248,464
134.2
(29.7
)
Assets sold under repurchase agreements (“repurchase agreements”)
611,785
300,000
300,000
103.9
103.9
Long-term debt and finance lease liabilities
152,663
152,227
151,997
0.3
0.4
Operating lease liabilities
115,387
109,656
110,105
5.2
4.8
Accrued expenses and other liabilities
1,386,836
963,137
914,187
44.0
51.7
Total liabilities
56,784,801
56,538,000
54,307,328
0.4
4.6
Stockholders’ equity
5,609,482
5,703,456
5,547,548
(1.6
)
1.1
Total liabilities and stockholders’ equity
$
62,394,283
$
62,241,456
$
59,854,876
0.2
%
4.2
%
Book value per common share
$
39.81
$
40.09
$
39.10
(0.7
)%
1.8
%
Tangible equity (1) per common share
$
36.44
$
36.76
$
35.75
(0.9
)
1.9
Number of common shares at period-end
140,917
142,257
141,878
(0.9
)
(0.7
)
Tangible equity to tangible assets ratio (1)
8.29
%
8.47
%
8.54
%
(18
)
bps
(25
)
bps
NM - Not meaningful.
(1)
See reconciliation of GAAP to non-GAAP financial measures in Table 13.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
TOTAL LOANS AND DEPOSITS DETAIL
($ in thousands)
(unaudited)
Table 2
June 30, 2022
% Change
June 30, 2022
March 31, 2022
June 30, 2021
Qtr-o-Qtr
Yr-o-Yr
Loans:
Commercial:
Commercial and industrial (“C&I”) (1)
$
15,377,117
$
14,838,134
$
13,790,461
3.6
%
11.5
%
Commercial real estate (“CRE”):
CRE
13,566,748
12,636,787
11,711,369
7.4
15.8
Multifamily residential
4,443,704
3,894,463
3,219,796
14.1
38.0
Construction and land
515,857
443,836
460,678
16.2
12.0
Total CRE
18,526,309
16,975,086
15,391,843
9.1
20.4
Consumer:
Residential mortgage:
Single-family residential
10,234,473
9,283,429
8,869,370
10.2
15.4
Home equity lines of credit (“HELOCs”)
2,280,080
2,266,634
1,872,166
0.6
21.8
Total residential mortgage
12,514,553
11,550,063
10,741,536
8.4
16.5
Other consumer
84,097
127,399
147,659
(34.0
)
(43.0
)
Total loans HFI (2)
46,502,076
43,490,682
40,071,499
6.9
16.0
Loans HFS
28,464
631
1,819
NM
NM
Total loans (2)
46,530,540
43,491,313
40,073,318
7.0
16.1
Allowance for loan losses
(563,270
)
(545,685
)
(585,724
)
3.2
(3.8
)
Net loans (2)
$
45,967,270
$
42,945,628
$
39,487,594
7.0
16.4
Deposits:
Noninterest-bearing demand
$
23,028,831
$
24,927,768
$
21,816,721
(7.6
)%
5.6
%
Interest-bearing checking
7,094,726
6,774,826
6,762,178
4.7
4.9
Money market
11,814,402
12,108,432
12,853,812
(2.4
)
(8.1
)
Savings
3,027,819
2,897,248
2,719,106
4.5
11.4
Time deposits
9,377,576
8,230,087
8,430,758
13.9
11.2
Total deposits
$
54,343,354
$
54,938,361
$
52,582,575
(1.1
)%
3.3
%
NM - Not meaningful.
(1)
Includes $153.3 million, $318.1 million and $1.43 billion of Paycheck Protection Program (“PPP”) loans as of June 30, 2022, March 31, 2022 and June 30, 2021, respectively. Excluding PPP loans, total loans were $46.38 billion, $43.17 billion and $38.64 billion as of June 30, 2022, March 31, 2022 and June 30, 2021, respectively.
(2)
Includes $(56.2) million, $(42.7) million and $(67.0) million of net deferred loan fees and net unamortized premiums as of June 30, 2022, March 31, 2022 and June 30, 2021, respectively.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
($ and shares in thousands, except per share data)
(unaudited)
Table 3
Three Months Ended
June 30, 2022
% Change
June 30, 2022
March 31, 2022
June 30, 2021
Qtr-o-Qtr
Yr-o-Yr
Interest and dividend income (1)
$
499,754
$
432,029
$
399,333
15.7
%
25.1
%
Interest expense
26,802
16,416
22,860
63.3
17.2
Net interest income before provision for (reversal of) credit losses
472,952
415,613
376,473
13.8
25.6
Provision for (reversal of) credit losses
13,500
8,000
(15,000
)
68.8
(190.0
)
Net interest income after provision for (reversal of) credit losses
459,452
407,613
391,473
12.7
17.4
Noninterest income
78,444
79,743
68,431
(1.6
)
14.6
Noninterest expense
196,860
189,450
189,523
3.9
3.9
Income before income taxes
341,036
297,906
270,381
14.5
26.1
Income tax expense
82,707
60,254
45,639
37.3
81.2
Net income
$
258,329
$
237,652
$
224,742
8.7
%
14.9
%
Earnings per share (“EPS”)
- Basic
$
1.83
$
1.67
$
1.58
9.2
%
15.3
%
- Diluted
$
1.81
$
1.66
$
1.57
9.3
15.5
Weighted-average number of shares outstanding
- Basic
141,429
142,025
141,868
(0.4
)%
(0.3
)%
- Diluted
142,372
143,223
143,040
(0.6
)
(0.5
)
Three Months Ended
June 30, 2022
% Change
June 30, 2022
March 31, 2022
June 30, 2021
Qtr-o-Qtr
Yr-o-Yr
Noninterest income:
Lending fees
$
20,142
$
19,438
$
21,092
3.6
%
(4.5
)%
Deposit account fees
22,372
20,315
17,342
10.1
29.0
Interest rate contracts and other derivative income (loss)
9,801
11,133
(3,172
)
(12.0
)
409.0
Foreign exchange income
11,361
12,699
13,007
(10.5
)
(12.7
)
Wealth management fees
6,539
6,052
7,951
8.0
(17.8
)
Net gains on sales of loans
917
2,922
1,491
(68.6
)
(38.5
)
Gains on sales of AFS debt securities
28
1,278
632
(97.8
)
(95.6
)
Other investment income
4,863
1,627
7,596
198.9
(36.0
)
Other income
2,421
4,279
2,492
(43.4
)
(2.8
)
Total noninterest income
$
78,444
$
79,743
$
68,431
(1.6
)%
14.6
%
Noninterest expense:
Compensation and employee benefits
$
113,364
$
116,269
$
105,426
(2.5
)%
7.5
%
Occupancy and equipment expense
15,469
15,464
15,377
0.0
0.6
Deposit insurance premiums and regulatory assessments
4,927
4,717
4,274
4.5
15.3
Deposit account expense
5,671
4,693
3,817
20.8
48.6
Data processing
3,486
3,665
4,035
(4.9
)
(13.6
)
Computer software expense
6,572
7,294
7,521
(9.9
)
(12.6
)
Consulting expense
2,021
1,833
1,868
10.3
8.2
Legal expense
1,047
718
1,975
45.8
(47.0
)
Other operating expense
29,324
20,897
17,939
40.3
63.5
Amortization of tax credit and other investments
14,979
13,900
27,291
7.8
(45.1
)
Total noninterest expense
$
196,860
$
189,450
$
189,523
3.9
%
3.9
%
(1)
Includes $1.4 million, $5.2 million and $15.4 million of interest income related to PPP loans for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
($ and shares in thousands, except per share data)
(unaudited)
Table 4
Six Months Ended
June 30, 2022
% Change
June 30, 2022
June 30, 2021
Yr-o-Yr
Interest and dividend income (1)
$
931,783
$
780,719
19.3
%
Interest expense
43,218
50,551
(14.5
)
Net interest income before provision for (reversal of) credit losses
888,565
730,168
21.7
Provision for (reversal of) credit losses
21,500
(15,000
)
(243.3
)
Net interest income after provision for (reversal of) credit losses
867,065
745,168
16.4
Noninterest income
158,187
141,297
12.0
Noninterest expense
386,310
380,600
1.5
Income before income taxes
638,942
505,865
26.3
Income tax expense
142,961
76,129
87.8
Net income
$
495,981
$
429,736
15.4
%
EPS
- Basic
$
3.50
$
3.03
15.4
%
- Diluted
$
3.47
$
3.01
15.5
Weighted-average number of shares outstanding
- Basic
141,725
141,758
0.0
%
- Diluted
142,838
142,963
(0.1
)
Six Months Ended
June 30, 2022
% Change
June 30, 2022
June 30, 2021
Yr-o-Yr
Noninterest income:
Lending fees
$
39,580
$
39,449
0.3
%
Deposit account fees
42,687
32,725
30.4
Interest rate contracts and other derivative income
20,934
13,825
51.4
Foreign exchange income
24,060
22,533
6.8
Wealth management fees
12,591
14,862
(15.3
)
Net gains on sales of loans
3,839
3,272
17.3
Gains on sales of AFS debt securities
1,306
824
58.5
Other investment income
6,490
8,521
(23.8
)
Other income
6,700
5,286
26.7
Total noninterest income
$
158,187
$
141,297
12.0
%
Noninterest expense:
Compensation and employee benefits
$
229,633
$
213,234
7.7
%
Occupancy and equipment expense
30,933
31,299
(1.2
)
Deposit insurance premiums and regulatory assessments
9,644
8,150
18.3
Deposit account expense
10,364
7,709
34.4
Data processing
7,151
8,513
(16.0
)
Computer software expense
13,866
14,680
(5.5
)
Consulting expense
3,854
3,343
15.3
Legal expense
1,765
3,477
(49.2
)
Other operating expense
50,221
37,546
33.8
Amortization of tax credit and other investments
28,879
52,649
(45.1
)
Total noninterest expense
$
386,310
$
380,600
1.5
%
(1)
Includes $6.5 million and $30.4 million of interest income related to PPP loans for the six months ended June 30, 2022 and 2021, respectively.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
SELECTED AVERAGE BALANCES
($ in thousands)
(unaudited)
Table 5
Three Months Ended
June 30, 2022
% Change
Six Months Ended
June 30, 2022
% Change
June 30,
2022
March 31,
2022
June 30,
2021
Qtr-o-Qtr
Yr-o-Yr
June 30,
2022
June 30,
2021
Yr-o-Yr
Loans:
Commercial:
C&I (1)
$
14,986,876
$
14,271,902
$
13,811,966
5.0
%
8.5
%
$
14,631,365
$
13,753,244
6.4
%
CRE:
CRE
13,049,058
12,279,365
11,616,916
6.3
12.3
12,666,338
11,472,102
10.4
Multifamily residential
4,112,411
3,749,571
3,125,001
9.7
31.6
3,931,993
3,083,769
27.5
Construction and land
475,933
392,923
477,860
21.1
(0.4
)
434,657
513,401
(15.3
)
Total CRE
17,637,402
16,421,859
15,219,777
7.4
15.9
17,032,988
15,069,272
13.0
Consumer:
Residential mortgage:
Single-family residential
9,624,242
9,111,188
8,650,706
5.6
11.3
9,369,132
8,483,806
10.4
HELOCs
2,290,378
2,183,080
1,800,213
4.9
27.2
2,237,025
1,733,593
29.0
Total residential mortgage
11,914,620
11,294,268
10,450,919
5.5
14.0
11,606,157
10,217,399
13.6
Other consumer
87,590
124,389
139,608
(29.6
)
(37.3
)
105,888
138,340
(23.5
)
Total loans (2)
$
44,626,488
$
42,112,418
$
39,622,270
6.0
%
12.6
%
$
43,376,398
$
39,178,255
10.7
%
Interest-earning assets
$
58,668,677
$
58,692,366
$
54,901,209
0.0
%
6.9
%
$
58,680,456
$
53,882,288
8.9
%
Total assets
$
62,232,841
$
61,758,048
$
57,771,837
0.8
%
7.7
%
$
61,996,756
$
56,689,075
9.4
%
Deposits:
Noninterest-bearing demand
$
23,887,452
$
23,432,746
$
19,717,315
1.9
%
21.1
%
$
23,661,355
$
18,909,991
25.1
%
Interest-bearing checking
6,712,890
6,648,065
6,671,358
1.0
0.6
6,680,657
6,532,965
2.3
Money market
12,319,930
12,913,336
12,596,515
(4.6
)
(2.2
)
12,614,994
12,088,006
4.4
Savings
2,970,007
2,930,309
2,676,865
1.4
11.0
2,950,268
2,675,677
10.3
Time deposits
8,239,571
8,100,890
8,518,936
1.7
(3.3
)
8,170,613
8,814,159
(7.3
)
Total deposits
$
54,129,850
$
54,025,346
$
50,180,989
0.2
%
7.9
%
$
54,077,887
$
49,020,798
10.3
%
Interest-bearing liabilities
$
30,957,475
$
31,218,479
$
31,394,114
(0.8
)%
(1.4
)%
$
31,087,256
$
31,130,307
(0.1
)%
Stockholders’ equity
$
5,682,427
$
5,842,615
$
5,425,952
(2.7
)%
4.7
%
$
5,762,078
$
5,382,267
7.1
%
(1)
Average balances of PPP loans were $223.2 million, $410.6 million and $1.87 billion for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively, and $316.4 million and $1.90 billion for the six months ended June 30, 2022 and 2021, respectively.
(2)
Includes loans HFS.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 6
Three Months Ended
June 30, 2022
March 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
$
2,797,711
$
4,787
0.69
%
$
4,466,012
$
3,260
0.30
%
Resale agreements
1,641,723
8,553
2.09
%
2,097,998
8,383
1.62
%
AFS debt securities
6,503,677
33,438
2.06
%
7,969,795
34,469
1.75
%
HTM debt securities
3,021,239
12,738
1.69
%
1,968,568
8,198
1.69
%
Loans (2)
44,626,488
439,416
3.95
%
42,112,418
377,110
3.63
%
FHLB and FRB stock
77,839
822
4.24
%
77,575
609
3.18
%
Total interest-earning assets
58,668,677
499,754
3.42
%
58,692,366
432,029
2.99
%
Noninterest-earning assets:
Cash and due from banks
712,884
641,882
Allowance for loan losses
(545,489
)
(543,345
)
Other assets
3,396,769
2,967,145
Total assets
$
62,232,841
$
61,758,048
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Checking deposits
$
6,712,890
$
3,178
0.19
%
$
6,648,065
$
1,402
0.09
%
Money market deposits
12,319,930
8,892
0.29
%
12,913,336
3,203
0.10
%
Savings deposits
2,970,007
1,864
0.25
%
2,930,309
1,704
0.24
%
Time deposits
8,239,571
8,554
0.42
%
8,100,890
6,680
0.33
%
Federal funds purchased and other short-term borrowings
64,145
241
1.51
%
1,866
9
1.96
%
FHLB advances
138,960
559
1.61
%
160,018
578
1.46
%
Repurchase agreements
359,778
2,418
2.70
%
311,984
2,016
2.62
%
Long-term debt and finance lease liabilities
152,194
1,096
2.89
%
152,011
824
2.20
%
Total interest-bearing liabilities
30,957,475
26,802
0.35
%
31,218,479
16,416
0.21
%
Noninterest-bearing liabilities and stockholders’ equity:
Demand deposits
23,887,452
23,432,746
Accrued expenses and other liabilities
1,705,487
1,264,208
Stockholders’ equity
5,682,427
5,842,615
Total liabilities and stockholders’ equity
$
62,232,841
$
61,758,048
Interest rate spread
3.07
%
2.78
%
Net interest income and net interest margin
$
472,952
3.23
%
$
415,613
2.87
%
(1)
Annualized.
(2)
Includes loans HFS. Average balances of PPP loans were $223.2 million and $410.6 million for the three months ended June 30, 2022 and March 31, 2022, respectively.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 7
Three Months Ended
June 30, 2022
June 30, 2021
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
$
2,797,711
$
4,787
0.69
%
$
5,072,225
$
3,628
0.29
%
Resale agreements
1,641,723
8,553
2.09
%
2,129,567
8,021
1.51
%
AFS debt securities
6,503,677
33,438
2.06
%
7,997,005
34,690
1.74
%
HTM debt securities
3,021,239
12,738
1.69
%
—
—
—
%
Loans (2)
44,626,488
439,416
3.95
%
39,622,270
352,453
3.57
%
FHLB and FRB stock
77,839
822
4.24
%
80,142
541
2.71
%
Total interest-earning assets
58,668,677
499,754
3.42
%
54,901,209
399,333
2.92
%
Noninterest-earning assets:
Cash and due from banks
712,884
600,053
Allowance for loan losses
(545,489
)
(607,523
)
Other assets
3,396,769
2,878,098
Total assets
$
62,232,841
$
57,771,837
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Checking deposits
$
6,712,890
$
3,178
0.19
%
$
6,671,358
$
3,777
0.23
%
Money market deposits
12,319,930
8,892
0.29
%
12,596,515
3,712
0.12
%
Savings deposits
2,970,007
1,864
0.25
%
2,676,865
2,078
0.31
%
Time deposits
8,239,571
8,554
0.42
%
8,518,936
8,431
0.40
%
Federal funds purchased and other short-term borrowings
64,145
241
1.51
%
336
—
—
%
FHLB advances
138,960
559
1.61
%
474,887
2,099
1.77
%
Repurchase agreements
359,778
2,418
2.70
%
303,118
1,991
2.63
%
Long-term debt and finance lease liabilities
152,194
1,096
2.89
%
152,099
772
2.04
%
Total interest-bearing liabilities
30,957,475
26,802
0.35
%
31,394,114
22,860
0.29
%
Noninterest-bearing liabilities and stockholders’ equity:
Demand deposits
23,887,452
19,717,315
Accrued expenses and other liabilities
1,705,487
1,234,456
Stockholders’ equity
5,682,427
5,425,952
Total liabilities and stockholders’ equity
$
62,232,841
$
57,771,837
Interest rate spread
3.07
%
2.63
%
Net interest income and net interest margin
$
472,952
3.23
%
$
376,473
2.75
%
(1)
Annualized.
(2)
Includes loans HFS. Average balances of PPP loans were $223.2 million and $1.87 billion for the three months ended June 30, 2022 and June 30, 2021, respectively.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 8
Six Months Ended
June 30, 2022
June 30, 2021
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
$
3,627,253
$
8,047
0.45
%
$
5,592,124
$
7,260
0.26
%
Resale agreements
1,868,600
16,936
1.83
%
1,797,578
14,120
1.58
%
AFS debt securities
7,232,686
67,907
1.89
%
7,232,686
63,790
1.78
%
HTM debt securities
2,497,811
20,936
1.69
%
—
—
—
%
Loans (2)
43,376,398
816,526
3.80
%
39,178,255
694,461
3.57
%
FHLB and FRB stock
77,708
1,431
3.71
%
81,645
1,088
2.69
%
Total interest-earning assets
58,680,456
931,783
3.20
%
53,882,288
780,719
2.92
%
Noninterest-earning assets:
Cash and due from banks
677,579
590,219
Allowance for loan losses
(544,423
)
(613,026
)
Other assets
3,183,144
2,829,594
Total assets
$
61,996,756
$
56,689,075
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Checking deposits
$
6,680,657
$
4,580
0.14
%
$
6,532,965
$
7,991
0.25
%
Money market deposits
12,614,994
12,095
0.19
%
12,088,006
8,423
0.14
%
Savings deposits
2,950,268
3,568
0.24
%
2,675,677
3,819
0.29
%
Time deposits
8,170,613
15,234
0.38
%
8,814,159
19,587
0.45
%
Federal funds purchased and other short-term borrowings
33,177
250
1.52
%
2,508
42
3.38
%
FHLB advances
149,431
1,137
1.53
%
563,331
5,168
1.85
%
Repurchase agreements
336,013
4,434
2.66
%
301,567
3,969
2.65
%
Long-term debt and finance lease liabilities
152,103
1,920
2.55
%
152,094
1,552
2.06
%
Total interest-bearing liabilities
31,087,256
43,218
0.28
%
31,130,307
50,551
0.33
%
Noninterest-bearing liabilities and stockholders’ equity:
Demand deposits
23,661,355
18,909,991
Accrued expenses and other liabilities
1,486,067
1,266,510
Stockholders’ equity
5,762,078
5,382,267
Total liabilities and stockholders’ equity
$
61,996,756
$
56,689,075
Interest rate spread
2.92
%
2.59
%
Net interest income and net interest margin
$
888,565
3.05
%
$
730,168
2.73
%
(1)
Annualized.
(2)
Includes loans HFS. Average balances of PPP loans were $316.4 million and $1.90 billion for the six months ended June 30, 2022 and 2021, respectively.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
SELECTED RATIOS
(unaudited)
Table 9
Three Months Ended (1)
June 30, 2022
Basis Point Change
June 30, 2022
March 31, 2022
June 30, 2021
Qtr-o-Qtr
Yr-o-Yr
Return on average assets
1.66
%
1.56
%
1.56
%
10
bps
10
bps
Return on average equity
18.23
%
16.50
%
16.61
%
173
162
Tangible return on average tangible equity (2)
19.94
%
18.00
%
18.28
%
194
166
Interest rate spread
3.07
%
2.78
%
2.63
%
29
44
Net interest margin
3.23
%
2.87
%
2.75
%
36
48
Average loan yield
3.95
%
3.63
%
3.57
%
32
38
Yield on average interest-earning assets
3.42
%
2.99
%
2.92
%
43
50
Average cost of interest-bearing deposits
0.30
%
0.17
%
0.24
%
13
6
Average cost of deposits
0.17
%
0.10
%
0.14
%
7
3
Average cost of funds
0.20
%
0.12
%
0.18
%
8
2
Adjusted pre-tax, pre-provision profitability ratio (3)
2.38
%
2.10
%
1.97
%
28
41
Adjusted noninterest expense/average assets (3)
1.17
%
1.15
%
1.12
%
2
5
Efficiency ratio
35.70
%
38.25
%
42.60
%
(255
)
(690
)
Adjusted efficiency ratio (3)
32.90
%
35.34
%
36.30
%
(244
)
bps
(340
)
bps
Six Months Ended (1)
June 30, 2022
Basis Point Change
June 30, 2022
June 30, 2021
Yr-o-Yr
Return on average assets
1.61
%
1.53
%
8
bps
Return on average equity
17.36
%
16.10
%
126
Tangible return on average tangible equity (2)
18.96
%
17.73
%
123
Interest rate spread
2.92
%
2.59
%
33
Net interest margin
3.05
%
2.73
%
32
Average loan yield
3.80
%
3.57
%
23
Yield on average interest-earning assets
3.20
%
2.92
%
28
Average cost of interest-bearing deposits
0.24
%
0.27
%
(3
)
Average cost of deposits
0.13
%
0.16
%
(3
)
Average cost of funds
0.16
%
0.20
%
(4
)
Adjusted pre-tax, pre-provision profitability ratio (3)
2.25
%
1.94
%
31
Adjusted noninterest expense/average assets (3)
1.16
%
1.16
%
—
Efficiency ratio
36.91
%
43.67
%
(676
)
Adjusted efficiency ratio (3)
34.05
%
37.47
%
(342
)
bps
(1)
Annualized except for efficiency ratio.
(2)
See reconciliation of GAAP to non-GAAP financial measures in Table 13.
(3)
See reconciliation of GAAP to non-GAAP financial measures in Table 12.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 10
Three Months Ended June 30, 2022
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, March 31, 2022
$
339,446
$
182,296
$
21,958
$
1,985
$
545,685
Provision for (reversal of) credit losses on loans
(a)
19,030
(9,181
)
3,122
(502
)
12,469
Gross charge-offs
(240
)
(679
)
(193
)
(34
)
(1,146
)
Gross recoveries
6,514
1,043
173
—
7,730
Total net recoveries (charge-offs)
6,274
364
(20
)
(34
)
6,584
Foreign currency translation adjustment
(1,468
)
—
—
—
(1,468
)
Allowance for loan losses, June 30, 2022
$
363,282
$
173,479
$
25,060
$
1,449
$
563,270
Three Months Ended March 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 credit losses on loans
(a)
9,262
1,658
1,225
107
12,252
Gross charge-offs
(11,188
)
(399
)
—
(46
)
(11,633
)
Gross recoveries
3,002
229
138
—
3,369
Total net (charge-offs) recoveries
(8,186
)
(170
)
138
(46
)
(8,264
)
Foreign currency translation adjustment
118
—
—
—
118
Allowance for loan losses, March 31, 2022
$
339,446
$
182,296
$
21,958
$
1,985
$
545,685
Three Months Ended June 30, 2021
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, March 31, 2021
$
394,084
$
192,895
$
18,509
$
2,018
$
607,506
(Reversal of) provision for credit losses on loans
(a)
(22,605
)
10,747
859
2,209
(8,790
)
Gross charge-offs
(10,572
)
(4,456
)
—
(32
)
(15,060
)
Gross recoveries
1,338
344
100
3
1,785
Total net (charge-offs) recoveries
(9,234
)
(4,112
)
100
(29
)
(13,275
)
Foreign currency translation adjustment
283
—
—
—
283
Allowance for loan losses, June 30, 2021
$
362,528
$
199,530
$
19,468
$
4,198
$
585,724
Six Months Ended June 30, 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)
28,292
(7,523
)
4,347
(395
)
24,721
Gross charge-offs
(11,428
)
(1,078
)
(193
)
(80
)
(12,779
)
Gross recoveries
9,516
1,272
311
—
11,099
Total net (charge-offs) recoveries
(1,912
)
194
118
(80
)
(1,680
)
Foreign currency translation adjustment
(1,350
)
—
—
—
(1,350
)
Allowance for loan losses, June 30, 2022
$
363,282
$
173,479
$
25,060
$
1,449
$
563,270
Six Months Ended June 30, 2021
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, December 31, 2020
$
398,040
$
201,603
$
18,210
$
2,130
$
619,983
(Reversal of) provision for credit losses on loans
(a)
(18,763
)
7,671
1,257
2,096
(7,739
)
Gross charge-offs
(19,008
)
(11,739
)
(179
)
(33
)
(30,959
)
Gross recoveries
2,098
1,995
180
5
4,278
Total net (charge-offs) recoveries
(16,910
)
(9,744
)
1
(28
)
(26,681
)
Foreign currency translation adjustment
161
—
—
—
161
Allowance for loan losses, June 30, 2021
$
362,528
$
199,530
$
19,468
$
4,198
$
585,724
Three Months Ended
Six Months Ended
June 30, 2022
March 31, 2022
June 30, 2021
June 30, 2022
June 30, 2021
Unfunded Credit Facilities
Allowance for unfunded credit commitments, beginning of period (1)
$
23,262
$
27,514
$
32,529
$
27,514
$
33,577
Provision for (reversal of) credit losses on unfunded credit commitments
(b)
1,031
(4,252
)
(6,210
)
(3,221
)
(7,261
)
Foreign currency translation adjustment
11
—
(19
)
11
(16
)
Allowance for unfunded credit commitments, end of period (1)
$
24,304
$
23,262
$
26,300
$
24,304
$
26,300
Provision for (reversal of) credit losses
(a)+(b)
$
13,500
$
8,000
$
(15,000
)
$
21,500
$
(15,000
)
(1)
Included in Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheet.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
CRITICIZED LOANS, NONPERFORMING ASSETS AND CREDIT QUALITY RATIOS
($ in thousands)
(unaudited)
Table 11
Criticized Loans
June 30, 2022
March 31, 2022
June 30, 2021
Special mention loans
$
590,227
$
402,704
$
386,807
Classified loans
432,414
430,633
645,180
Total criticized loans
$
1,022,641
$
833,337
$
1,031,987
Nonperforming Assets
June 30, 2022
March 31, 2022
June 30, 2021
Nonaccrual loans:
Commercial:
C&I
$
40,053
$
51,773
$
83,225
CRE:
Total CRE
12,742
9,827
81,573
Consumer:
Total residential mortgage
37,129
23,197
30,489
Other consumer
11
37
2,503
Total nonaccrual loans
89,935
84,834
197,790
Other real estate owned, net
—
—
14,914
Other nonperforming assets
—
9,548
13,025
Total nonperforming assets
$
89,935
$
94,382
$
225,729
Credit Quality Ratios
June 30, 2022
March 31, 2022
June 30, 2021
Annualized quarterly net (recoveries) charge-offs to average loans HFI
(0.06
)%
0.08
%
0.13
%
Special mention loans to loans HFI
1.27
%
0.93
%
0.97
%
Classified loans to loans HFI
0.93
%
0.99
%
1.61
%
Criticized loans to loans HFI
2.20
%
1.92
%
2.58
%
Nonperforming assets to total assets
0.14
%
0.15
%
0.38
%
Nonaccrual loans to loans HFI
0.19
%
0.20
%
0.49
%
Allowance for loan losses to loans HFI
1.21
%
1.25
%
1.46
%
EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ in thousands)
(unaudited)
Table 12 The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Adjusted efficiency ratio represents adjusted noninterest expense divided by revenue. Adjusted pre-tax, pre-provision profitability ratio represents revenue less adjusted noninterest expense, divided by average total assets. Adjusted noninterest expense excludes the amortization of tax credit and other investments and the amortization of core deposit intangibles. 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
June 30, 2022
March 31, 2022
June 30, 2021
Net interest income before provision for (reversal of) credit losses
$
472,952
$
415,613
$
376,473
Total noninterest income
78,444
79,743
68,431
Total revenue
(a)
$
551,396
$
495,356
$
444,904
Total noninterest expense
(b)
$
196,860
$
189,450
$
189,523
Less:
Amortization of tax credit and other investments
(14,979
)
(13,900
)
(27,291
)
Amortization of core deposit intangibles
(488
)
(511
)
(710
)
Adjusted noninterest expense
(c)
$
181,393
$
175,039
$
161,522
Efficiency ratio
(b)/(a)
35.70
%
38.25
%
42.60
%
Adjusted efficiency ratio
(c)/(a)
32.90
%
35.34
%
36.30
%
Adjusted pre-tax, pre-provision income
(a)-(c) = (d)
$
370,003
$
320,317
$
283,382
Average total assets
(e)
$
62,232,841
$
61,758,048
$
57,771,837
Adjusted pre-tax, pre-provision profitability ratio (1)
(d)/(e)
2.38
%
2.10
%
1.97
%
Adjusted noninterest expense/average assets (1)
(c)/(e)
1.17
%
1.15
%
1.12
%
Six Months Ended
June 30, 2022
June 30, 2021
Net interest income before provision for (reversal of) credit losses
$
888,565
$
730,168
Total noninterest income
158,187
141,297
Total revenue
(f)
1,046,752
871,465
Total noninterest expense
(g)
$
386,310
$
380,600
Less:
Amortization of tax credit and other investments
(28,879
)
(52,649
)
Amortization of core deposit intangibles
(999
)
(1,442
)
Adjusted noninterest expense
(h)
$
356,432
$
326,509
Efficiency ratio
(g)/(f)
36.91
%
43.67
%
Adjusted efficiency ratio
(h)/(f)
34.05
%
37.47
%
Adjusted pre-tax, pre-provision income
(f)-(h) = (i)
$
690,320
$
544,956
Average total assets
(j)
$
61,996,756
$
56,689,075
Adjusted pre-tax, pre-provision profitability ratio (1)
(i)/(j)
2.25
%
1.94
%
Adjusted noninterest expense/average assets (1)
(h)/(j)
1.16
%
1.16
%
(1)
Annualized.
EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ in thousands)
(unaudited)
Table 13
The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Tangible equity and tangible equity to tangible assets ratio are non-GAAP financial measures. Tangible equity and tangible assets represent stockholders’ equity and total assets, respectively, which have been reduced by goodwill and other intangible assets. Given that the use of such measures and ratios is more prevalent in the banking industry, and such measures and ratios are used by banking regulators and analysts, the Company has included them below for discussion.
June 30, 2022
March 31, 2022
June 30, 2021
Stockholders’ equity
(a)
$
5,609,482
$
5,703,456
$
5,547,548
Less:
Goodwill
(465,697
)
(465,697
)
(465,697
)
Other intangible assets (1)
(8,537
)
(9,044
)
(10,309
)
Tangible equity
(b)
$
5,135,248
$
5,228,715
$
5,071,542
Total assets
(c)
$
62,394,283
$
62,241,456
$
59,854,876
Less:
Goodwill
(465,697
)
(465,697
)
(465,697
)
Other intangible assets (1)
(8,537
)
(9,044
)
(10,309
)
Tangible assets
(d)
$
61,920,049
$
61,766,715
$
59,378,870
Total stockholders’ equity to total assets ratio
(a)/(c)
8.99
%
9.16
%
9.27
%
Tangible equity to tangible assets ratio
(b)/(d)
8.29
%
8.47
%
8.54
%
Tangible return on average tangible equity represents tangible net income divided by average tangible equity. Tangible net income excludes the after-tax impacts of the amortization of core deposit intangibles and mortgage servicing 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.
Three Months Ended
Six Months Ended
June 30, 2022
March 31, 2022
June 30, 2021
June 30, 2022
June 30, 2021
Net income
(e)
$
258,329
$
237,652
$
224,742
$
495,981
$
429,736
Add:
Amortization of core deposit intangibles
488
511
710
999
1,442
Amortization of mortgage servicing assets
364
392
420
756
834
Tax effect of amortization adjustments (2)
(245
)
(260
)
(321
)
(505
)
(646
)
Tangible net income
(f)
$
258,936
$
238,295
$
225,551
$
497,231
$
431,366
Average stockholders’ equity
(g)
$
5,682,427
$
5,842,615
$
5,425,952
$
5,762,078
$
5,382,267
Less:
Average goodwill
(465,697
)
(465,697
)
(465,697
)
(465,697
)
(465,697
)
Average other intangible assets (1)
(8,827
)
(9,207
)
(10,827
)
(9,016
)
(11,209
)
Average tangible equity
(h)
$
5,207,903
$
5,367,711
$
4,949,428
$
5,287,365
$
4,905,361
Return on average equity (3)
(e)/(g)
18.23
%
16.50
%
16.61
%
17.36
%
16.10
%
Tangible return on average tangible equity (3)
(f)/(h)
19.94
%
18.00
%
18.28
%
18.96
%
17.73
%
(1)
Includes core deposit intangibles and mortgage servicing assets.
(2)
Applied statutory tax rate of 28.77% for the three and six months ended June 30, 2022 and the three months ended March 31, 2022. Applied statutory tax rate of 28.37% for the three and six months ended June 30, 2021.
(3)
Annualized.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220721005021/en/
FOR INVESTOR INQUIRIES, CONTACT: Irene Oh Chief Financial Officer T: (626) 768-6360 E: irene.oh@eastwestbank.com
Julianna Balicka Director of Investor Relations and Corporate Finance T: (626) 768-6985 E: julianna.balicka@eastwestbank.com
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