PASADENA, Calif.--(BUSINESS WIRE)--East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq: EWBC), parent company of East West Bank, the financial bridge between the United States and Greater China, today reported its financial results for the first quarter of 2020. For the first quarter of 2020, net income was $144.8 million or $1.00 per diluted share. First quarter 2020 return on average assets was 1.30% and return on average equity was 11.6%.
“In these unprecedented times, East West Bank has a clear focus – to support our customers and communities by being a source of strength and stability. We have taken actions to ensure the safety and well-being of our customers and associates, especially those on the front-line, by modifying working arrangements and protocols. Despite the many challenges and the volatile economic and market conditions resulting from the worldwide efforts to combat COVID-19, all of our 3,200 associates at East West stand ready and able to help our commercial and consumer customers,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. "I want to thank all of our associates for their dedication and perseverance through this difficult time.”
“East West’s sustained history of strong profitability and earnings has well positioned us for the current economic conditions. Our balance sheet is strong, our loans and deposits are diversified, and most importantly, our capital is strong. East West has some of the highest capital ratios among regional and national banks. Further, we strengthened the allowance for credit losses to 1.55% during the first quarter, to reflect the recent economic and market impact from COVID-19.”
“Total loans grew $1.1 billion, or 13% annualized, to a record $35.9 billion as of March 31, 2020 from $34.8 billion as of December 31, 2019. Total deposits grew $1.4 billion, or 15% annualized, to a record $38.7 billion as of March 31, 2020 from $37.3 billion as of December 31, 2019,” continued Ng. “Despite the stay-at-home orders issued in March, business at East West was strong in the first quarter.”
“As we start the second quarter of 2020, we are encouraged by the expansive monetary and fiscal support from the government. We are committed to the ongoing support of our customers and their businesses by participating in the new government-sponsored programs. We funded over $1.5 billion of loans for over 4,500 businesses through the federal government’s Paycheck Protection Program,” concluded Ng.
SUMMARY OF THE QUARTER
-
First Quarter Earnings – First quarter 2020 net income was $144.8 million and diluted earnings per share (“EPS”) were $1.00, compared to fourth quarter 2019 net income of $188.2 million and diluted EPS of $1.29.
-
Net Interest Income and Net Interest Margin – First quarter 2020 net interest income (“NII”) was $362.7 million, a decrease of $5.5 million or 1% from fourth quarter 2019 NII of $368.2 million.
First quarter 2020 net interest margin (“NIM”) was 3.44%, a three basis point decrease from 3.47% in the fourth quarter of 2019. Against a backdrop of materially lower interest rates during the first quarter, declines in earning asset yields were largely offset by decreases in the cost of funds.
-
Record Loans – Total loans of $35.9 billion as of March 31, 2020 increased by $1.1 billion, or 13% annualized, from $34.8 billion as of December 31, 2019.
First quarter 2020 average loans of $35.2 billion grew $744.0 million, or 9% linked quarter annualized. Average loan growth in the first quarter was led by commercial real estate, followed by residential mortgage, partially offset by a decrease in commercial loans.
-
Record Deposits – Total deposits of $38.7 billion as of March 31, 2020 increased by $1.4 billion, or 15% annualized, from $37.3 billion as of December 31, 2019.
First quarter 2020 average deposits of $37.5 billion grew $64.5 million, or 1% linked quarter annualized. Average deposit growth in the first quarter was led by money market accounts, followed by noninterest-bearing demand and time deposits, partially offset by decreases in interest-bearing checking and savings accounts.
-
Asset Quality Metrics – The allowance for credit losses (“ACL”) totaled $557.0 million, or 1.55% of loans held-for-investment (“HFI”), as of March 31, 2020, compared to $358.3 million, or 1.03% of loans HFI, as of December 31, 2019. Quarter-over-quarter, the ACL increased by $198.7 million. The increase in the ACL included the $125.2 million impact from the adoption of the new current expected credit loss model (“CECL”) accounting standard on January 1, 2020, and a $73.9 million provision for credit losses for the first quarter of 2020, which reflects the deteriorating macroeconomic conditions and outlook as a result of the COVID-19 pandemic.
Our other asset quality metrics for the first quarter 2020 remained strong. First quarter 2020 net charge-offs were $0.9 million, or annualized 0.01% of average loans HFI, compared to fourth quarter 2019 net charge-offs of $8.3 million, or annualized 0.10% of average loans HFI. Nonperforming assets were $150.9 million, or 0.33% of total assets, as of March 31, 2020, compared to $121.5 million, or 0.27% of total assets, as of December 31, 2019.
- Capital Levels – Capital levels for East West are strong. As of March 31, 2020, stockholders’ equity was $4.9 billion, or $34.67 per share. Tangible equity1 per common share was $31.27 as of March 31, 2020, an increase from 31.15 as of December 31, 2019. As of March 31, 2020, the tangible equity to tangible assets ratio1 was 9.7%, the common equity tier 1 (“CET1”) capital ratio was 12.4%, and the total capital ratio was 14.0%. During the first quarter of 2020, the Company repurchased $145.9 million of common stock, or 4.5 million shares.
__________________________________
1 See reconciliation of GAAP to non-GAAP financial measures in Table 12.
OPERATING RESULTS
First Quarter 2020 Compared to Fourth Quarter 2019
Net Interest Income and Net Interest Margin
Net interest income totaled $362.7 million, a decrease of 1% from $368.2 million. Net interest margin of 3.44% decreased by three basis points from 3.47%. Against a backdrop of materially lower interest rates during the first quarter, declines in earning asset yields were largely offset by decreases in the cost of funds.
- Average interest-earning assets of $42.4 billion grew $248.4 million, or 2% linked quarter annualized. Average loan growth of $744 million, or 9% linked quarter annualized, was partially offset by decreases in available-for-sale debt securities, and in interest-bearing cash and deposits with banks.
- Average interest-bearing deposits of $26.4 billion decreased $76.9 million, or (1)% linked quarter annualized. Average noninterest-bearing deposits of $11.1 billion grew $141.3 million, or 5% linked quarter annualized.
- The average loan yield contracted by 20 basis points to 4.71%, down from 4.91%, reflecting materially lower interest rates during the first quarter, including 150 basis points of cuts to the fed funds rate in March 2020. The yield on average interest-earning assets contracted by 14 basis points to 4.26%, down from 4.40%.
- The average cost of interest-bearing deposits decreased by 17 basis points to 1.17%, down from 1.34%. The average cost of deposits decreased by 12 basis points to 0.82%, down from 0.94%.
Noninterest Income
Noninterest income totaled $54.0 million, a 14% decrease from $63.0 million.
- The largest linked-quarter change in noninterest income was a $10.8 million decrease in interest rate contracts (“IRC”) and other derivative income, which was $7.1 million in the first quarter of 2020. This decrease was largely related to a negative credit valuation adjustment, as customer-driven IRC fee income was stable quarter-over-quarter.
- In other fee income categories, quarter-over-quarter, foreign exchange income of $7.8 million increased by $1.8 million; wealth management fees of $5.4 million increased by $1.1 million, and lending fees of $15.8 million decreased by $1.5 million.
Noninterest Expense
Noninterest expense totaled $178.9 million, a 7% decrease from $193.4 million.
- First quarter noninterest expense consisted of $160.6 million of adjusted2 noninterest expense, $17.3 million in amortization of tax credit and other investments, and $1.0 million in amortization of core deposit intangibles.
- Adjusted noninterest expense of $160.6 million decreased by $4.7 million, or 3%, from $165.3 million. The largest linked-quarter change was a $3.4 million decrease in other operating expense, followed by a $1.9 million decrease in consulting expense and a $1.5 million decrease in computer software expense. Quarter-over-quarter, legal expense increased by $1.1 million, and compensation and employee benefits increased by $0.9 million.
- The adjusted2 efficiency ratio was 38.5% in the first quarter, compared to 38.3% in the fourth quarter.
__________________________________
2 See reconciliation of GAAP to non-GAAP financial measures in Table 11.
TAX RELATED ITEMS
First quarter 2020 income tax expense was $19.2 million and the effective tax rate was 12%, compared to income tax expense of $31.1 million and an effective tax rate of 14% for the fourth quarter of 2019.
ASSET QUALITY
The allowance for credit losses totaled $557.0 million, or 1.55% of loans HFI, as of March 31, 2020, compared to $358.3 million, or 1.03% of loans HFI, as of December 31, 2019. Quarter-over-quarter, the ACL increased by $198.7 million.
- The increase in the ACL included the impact of the adoption of the new CECL accounting standard, which resulted in an increase to the ACL of $125.2 million on January 1, 2020.
- First quarter 2020 provision for credit losses was $73.9 million, compared to $18.6 million for the fourth quarter of 2019, and $22.6 million for the first quarter of 2019. First quarter 2020 provision for credit losses was primarily driven by the deteriorating macroeconomic conditions and outlook as a result of the COVID-19 pandemic, which increased the ACL. As of March 31, 2020, the impact of the pandemic crisis was not yet evident in other asset quality metrics, which remained strong.
- First quarter 2020 net charge-offs were $0.9 million, or annualized 0.01% of average loans HFI, compared to annualized 0.10% of average loans HFI for the fourth quarter of 2019, and annualized 0.18% of average loans HFI for the first quarter of 2019.
-
Nonperforming assets were $150.9 million, or 0.33% of total assets, as of March 31, 2020, compared to non-purchased credit impaired nonperforming assets of $121.5 million, or 0.27% of total assets, as of December 31, 2019, and $138.0 million, or 0.33% of total assets, as of March 31, 2019.
CAPITAL STRENGTH
Capital levels for East West are strong. The following table presents the regulatory capital ratios as of March 31, 2020, December 31, 2019, and March 31, 2019.
EWBC Regulatory Capital Metrics |
|
Basel III |
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($ in millions) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
Minimum
|
|
Well
|
|
Minimum
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Risk-Based Capital Ratios: | |||||||||||||||||||||||
CET1 capital ratio |
|
12.4 |
% |
|
12.9 |
% |
|
12.4 |
% |
|
4.5 |
% |
|
6.5 |
% |
|
7.0 |
% |
|||||
Tier 1 capital ratio |
|
12.4 |
% |
|
12.9 |
% |
|
12.4 |
% |
|
6.0 |
% |
|
8.0 |
% |
|
8.5 |
% |
|||||
Total capital ratio |
|
14.0 |
% |
|
14.4 |
% |
|
13.9 |
% |
|
8.0 |
% |
|
10.0 |
% |
|
10.5 |
% |
|||||
Leverage ratio |
|
10.2 |
% |
|
10.3 |
% |
|
10.2 |
% |
|
4.0 |
% |
|
5.0 |
% |
|
4.0 |
% |
|||||
Risk-Weighted Assets (“RWA”) (c) |
|
$ |
36,548 |
|
|
$ |
35,136 |
|
|
$ |
33,162 |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A Not applicable.
(a) |
The March 31, 2020 regulatory capital ratios and RWA are preliminary and reflect the Company’s election to adopt the 2020 CECL optional transition provision to delay the estimated impact of CECL on its regulatory capital over a five-year transition period ending December 31, 2024. |
|
(b) |
An additional 2.5% capital conservation buffer above the minimum capital ratios is required in order to avoid limitations on distributions, including dividend payments and certain discretionary bonus payments to executive officers. |
|
(c) |
Under regulatory guidelines, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories based on the nature of the obligor, or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar value in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total RWA. |
DIVIDEND PAYOUT AND CAPITAL ACTIONS
East West’s Board of Directors has declared second quarter 2020 dividends for the Company’s common stock. The common stock cash dividend of $0.275 per share is payable on May 15, 2020 to shareholders of record on May 4, 2020.
On March 3, 2020, East West’s Board of Directors authorized the repurchase of up to $500 million of East West’s common stock. During the first quarter of 2020, the Company repurchased $145.9 million of common stock, or 4.5 million shares, under this authorization.
Conference Call
East West will host a conference call to discuss first quarter 2020 earnings with the public on Thursday, April 23, 2020 at 8:30 a.m. PT/11:30 a.m. ET. The public and investment community are invited to listen as management discusses first quarter 2020 results and operating developments.
- The following dial-in information is provided for participation in the conference call: calls within the U.S. – (877) 506-6399; calls within Canada – (855) 669-9657; international calls – (412) 902-6699.
- A presentation to accompany the earnings call will be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.
- A listen-only live broadcast of the call will also be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.
- A replay of the conference call will be available on April 23, 2020 at 11:30 a.m. Pacific Time through May 23, 2020. The replay numbers are: within the U.S. – (877) 344-7529; within Canada – (855) 669-9658; International calls – (412) 317-0088; and the replay access code is: 10140713.
About East West
East West Bancorp, Inc. is a publicly owned company with total assets of $45.9 billion and is traded on the Nasdaq Global Select Market under the symbol “EWBC.” The Company’s wholly-owned subsidiary, East West Bank, is one of the largest independent banks headquartered in California. East West is a premier bank focused exclusively on the United States and Greater China markets and operates over 125 locations worldwide, including in the United States markets of California, Georgia, Massachusetts, Nevada, New York, Texas and Washington. In Greater China, East West’s presence includes full service branches in Hong Kong, Shanghai, Shantou and Shenzhen, and representative offices in Beijing, Chongqing, Guangzhou, and Xiamen. For more information on East West, visit the Company’s website at www.eastwestbank.com.
Forward-Looking Statements
Certain matters set forth herein (including any exhibits hereto) constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to our current business plans and expectations regarding future operating results. Forward-looking statements may include, but are not limited to, the use of forward-looking language, such as “likely result in,” “expects,” “anticipates,” “estimates,” “forecasts,” “projects,” “intends to,” “assumes,” or may include other similar words or phrases, such as “believes,” “plans,” “trend,” “objective,” “continues,” “remains,” or similar expressions, or future or conditional verbs, such as “will,” “would,” “should,” “could,” “may,” “might,” “can,” or similar verbs, and the negative thereof. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties, some of which are beyond our control, include, but are not limited to, the changes and effects thereof in trade, monetary and fiscal policies and laws, including the impact of disease pandemics, such as the novel strain of coronavirus disease (COVID-19), on us, our operations and our customers and employees; changes in the U.S. economy, including an economic slowdown or recession, inflation, deflation, employment levels, rate of growth and general business conditions; fluctuations in our stock price; government intervention in the financial system, including changes in government interest rate policies; changes in income tax laws and regulations; the ongoing trade dispute between the United States (“U.S.”) and the People’s Republic of China; our ability to compete effectively against other financial institutions in our banking markets; success and timing of our business strategies; our ability to retain key officers and employees; impact on our funding costs, net interest income and net interest margin due to changes in key variable market interest rates, competition, regulatory requirements and our product mix; changes in our costs of operation, compliance and expansion; our ability to adopt and successfully integrate new technologies into our business in a strategic manner; impact of benchmark interest rate reform in the U.S. that resulted in the Secured Overnight Financing Rate selected as the preferred alternative reference rate to the London Interbank Offered Rate; impact of failure in, or breach of, our operational or security systems or infrastructure, or those of third parties with whom we do business, including as a result of cyber attacks; and other similar matters which could result in, among other things, confidential and/or proprietary information being disclosed or misused; adequacy of our risk management framework, disclosure controls and procedures and internal control over financial reporting; future credit quality and performance, including our expectations regarding future credit losses and allowance levels; impact of adverse changes to our credit ratings from major credit rating agencies; impact of adverse judgments or settlements in litigation; changes in the commercial and consumer real estate markets; changes in consumer spending and savings habits; impact on our international operations due to political developments, disease pandemics, wars or other hostilities that may disrupt or increase volatility in securities or otherwise affect economic conditions; changes in laws or the regulatory environment including regulatory reform initiatives and policies of the U.S. Department of Treasury, the Board of Governors of the Federal Reserve Board System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the U.S. Securities and Exchange Commission, the Consumer Financial Protection Bureau and the California Department of Business Oversight — Division of Financial Institutions; impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on our business, business practices, cost of operations and executive compensation; heightened regulatory and governmental oversight and scrutiny of our business practices, including dealings with consumers; impact of reputational risk from negative publicity, fines and penalties and other negative consequences from regulatory violations and legal actions and from our interactions with business partners, counterparties, service providers and other third parties; impact of regulatory enforcement actions; changes in accounting standards as may be required by the Financial Accounting Standards Board or other regulatory agencies and their impact on critical accounting policies and assumptions; impact of other potential federal tax changes and spending cuts; our capital requirements and our ability to generate capital internally or raise capital on favorable terms; impact on our liquidity due to changes in our ability to receive dividends from our subsidiaries; any future strategic acquisitions or divestitures; continuing consolidation in the financial services industry; changes in the equity and debt securities markets; fluctuations in foreign currency exchange rates; a recurrence of significant turbulence or disruption in the capital or financial markets, which could result in, among other things, a reduction in the availability of funding or increases in funding costs, a reduction in investor demand for mortgage loans and declines in asset values and/or recognition of other-than-temporary impairment on securities held in our available-for-sale investment securities portfolio; impact of natural or man-made disasters or calamities, such as wildfires or conflicts or other events that may directly or indirectly result in a negative impact on our financial performance; and other factors set forth in our public reports including our Annual Report on Form 10-K for the year ended December 31, 2019, and particularly the discussion of risk factors within that document. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, our results could differ materially from those expressed in, implied or projected by such forward-looking statements. We assume no obligation to update or revise such forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED BALANCE SHEET |
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($ and shares in thousands, except per share data) |
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(unaudited) |
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Table 1 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
March 31, 2020
|
|||||||||||
|
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
Qtr-o-Qtr |
|
Yr-o-Yr |
|
||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and due from banks |
|
$ |
427,415 |
|
|
$ |
536,221 |
|
|
$ |
462,254 |
|
|
(20.3 |
)% |
|
(7.5 |
)% |
|
Interest-bearing cash with banks |
|
2,652,627 |
|
|
2,724,928 |
|
|
3,323,071 |
|
|
(2.7 |
) |
|
(20.2 |
) |
|
|||
Cash and cash equivalents |
|
3,080,042 |
|
|
3,261,149 |
|
|
3,785,325 |
|
|
(5.6 |
) |
|
(18.6 |
) |
|
|||
Interest-bearing deposits with banks |
|
293,509 |
|
|
196,161 |
|
|
134,000 |
|
|
49.6 |
|
|
119.0 |
|
|
|||
Securities purchased under resale agreements (“resale agreements”) (1) |
|
860,000 |
|
|
860,000 |
|
|
1,035,000 |
|
|
— |
|
|
(16.9 |
) |
|
|||
Available-for-sale (“AFS”) debt securities (amortized cost of $3,660,413 in 2020) |
|
3,695,943 |
|
|
3,317,214 |
|
|
2,640,158 |
|
|
11.4 |
|
|
40.0 |
|
|
|||
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock |
|
78,745 |
|
|
78,580 |
|
|
74,736 |
|
|
0.2 |
|
|
5.4 |
|
|
|||
Loans held-for-sale (“HFS”) |
|
1,594 |
|
|
434 |
|
|
— |
|
|
267.3 |
|
|
100.0 |
|
|
|||
Loans held-for-investment (''HFI'') (net of allowance for credit losses of $557,003 (2), $358,287 and $317,894) |
|
35,336,390 |
|
|
34,420,252 |
|
|
32,545,392 |
|
|
2.7 |
|
|
8.6 |
|
|
|||
Investments in qualified affordable housing partnerships, net |
|
198,653 |
|
|
207,037 |
|
|
197,470 |
|
|
(4.0 |
) |
|
0.6 |
|
|
|||
Investments in tax credit and other investments, net |
|
268,330 |
|
|
254,140 |
|
|
217,445 |
|
|
5.6 |
|
|
23.4 |
|
|
|||
Goodwill |
|
465,697 |
|
|
465,697 |
|
|
465,697 |
|
|
— |
|
|
— |
|
|
|||
Operating lease right-of-use assets |
|
101,381 |
|
|
99,973 |
|
|
104,289 |
|
|
1.4 |
|
|
(2.8 |
) |
|
|||
Other assets |
|
1,568,261 |
|
|
1,035,459 |
|
|
891,921 |
|
|
51.5 |
|
|
75.8 |
|
|
|||
Total assets |
|
$ |
45,948,545 |
|
|
$ |
44,196,096 |
|
|
$ |
42,091,433 |
|
|
4.0 |
% |
|
9.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Deposits |
|
$ |
38,686,958 |
|
|
$ |
37,324,259 |
|
|
$ |
36,273,972 |
|
|
3.7 |
% |
|
6.7 |
% |
|
Short-term borrowings |
|
66,924 |
|
|
28,669 |
|
|
39,550 |
|
|
133.4 |
|
|
69.2 |
|
|
|||
FHLB advances |
|
646,336 |
|
|
745,915 |
|
|
344,657 |
|
|
(13.3 |
) |
|
87.5 |
|
|
|||
Securities sold under repurchase agreements (“repurchase agreements”) (1) |
|
450,000 |
|
|
200,000 |
|
|
50,000 |
|
|
125.0 |
|
|
NM |
|
||||
Long-term debt and finance lease liabilities |
|
152,162 |
|
|
152,270 |
|
|
152,433 |
|
|
(0.1 |
) |
|
(0.2 |
) |
|
|||
Operating lease liabilities |
|
109,356 |
|
|
108,083 |
|
|
112,843 |
|
|
1.2 |
|
|
(3.1 |
) |
|
|||
Accrued expenses and other liabilities |
|
933,824 |
|
|
619,283 |
|
|
526,048 |
|
|
50.8 |
|
|
77.5 |
|
|
|||
Total liabilities |
|
41,045,560 |
|
|
39,178,479 |
|
|
37,499,503 |
|
|
4.8 |
|
|
9.5 |
|
|
|||
Stockholders’ equity (2) |
|
4,902,985 |
|
|
5,017,617 |
|
|
4,591,930 |
|
|
(2.3 |
) |
|
6.8 |
|
|
|||
Total liabilities and stockholders’ equity |
|
$ |
45,948,545 |
|
|
$ |
44,196,096 |
|
|
$ |
42,091,433 |
|
|
4.0 |
% |
|
9.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Book value per common share |
|
$ |
34.67 |
|
|
$ |
34.46 |
|
|
$ |
31.56 |
|
|
0.6 |
% |
|
9.8 |
% |
|
Tangible equity (3) per common share |
|
$ |
31.27 |
|
|
$ |
31.15 |
|
|
$ |
28.21 |
|
|
0.4 |
|
|
10.8 |
|
|
Number of common shares at period-end |
|
141,435 |
|
|
145,625 |
|
|
145,501 |
|
|
(2.9 |
) |
|
(2.8 |
) |
|
|||
Tangible equity to tangible assets ratio (3) |
|
9.73 |
% |
|
10.38 |
% |
|
9.87 |
% |
|
(65 |
) |
bps |
(14 |
) |
bps |
|||
|
|
|
|
|
|
NM - Not meaningful.
- Resale and repurchase agreements have been reported net, pursuant to Accounting Standards Codification (“ASC”) 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. Out of $450.0 million of gross repurchase agreements, $0 million, $250.0 million and $400.0 million were netted against gross resale agreements as of March 31, 2020, December 31, 2019 and March 31, 2019, respectively.
- On January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments using the modified retrospective approach. The March 31, 2020 Allowance for credit loss reflects an increase of $125.2 million as a result of adopting ASU 2016-13. We recorded an after-tax decrease to opening retained earnings of $98.0 million as of January 1, 2020.
- See reconciliation of GAAP to non-GAAP financial measures in Table 12.
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
||||||||||||||||||
TOTAL LOANS AND DEPOSITS DETAIL |
||||||||||||||||||
($ in thousands) |
||||||||||||||||||
(unaudited) |
||||||||||||||||||
Table 2 |
||||||||||||||||||
|
||||||||||||||||||
|
|
|
|
|
|
|
|
March 31, 2020
|
||||||||||
|
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
Qtr-o-Qtr |
|
Yr-o-Yr |
||||||||
Loans: |
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial: |
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial (“C&I”) |
|
$ |
12,590,764 |
|
|
$ |
12,150,931 |
|
|
$ |
12,040,806 |
|
|
3.6 |
% |
|
4.6 |
% |
Commercial real estate (“CRE”): |
|
|
|
|
|
|
|
|
|
|
||||||||
CRE |
|
10,682,242 |
|
|
10,278,448 |
|
|
9,439,375 |
|
|
3.9 |
|
|
13.2 |
|
|||
Multifamily residential |
|
2,902,601 |
|
|
2,856,374 |
|
|
2,467,553 |
|
|
1.6 |
|
|
17.6 |
|
|||
Construction and land |
|
606,209 |
|
|
628,499 |
|
|
647,380 |
|
|
(3.5 |
) |
|
(6.4 |
) |
|||
Total CRE |
|
14,191,052 |
|
|
13,763,321 |
|
|
12,554,308 |
|
|
3.1 |
|
|
13.0 |
|
|||
Consumer: |
|
|
|
|
|
|
|
|
|
|
||||||||
Residential mortgage: |
|
|
|
|
|
|
|
|
|
|
||||||||
Single-family residential |
|
7,403,723 |
|
|
7,108,590 |
|
|
6,309,331 |
|
|
4.2 |
|
|
17.3 |
|
|||
Home equity lines of credit (“HELOCs”) |
|
1,452,862 |
|
|
1,472,783 |
|
|
1,626,222 |
|
|
(1.4 |
) |
|
(10.7 |
) |
|||
Total residential mortgage |
|
8,856,585 |
|
|
8,581,373 |
|
|
7,935,553 |
|
|
3.2 |
|
|
11.6 |
|
|||
Other consumer |
|
254,992 |
|
|
282,914 |
|
|
332,619 |
|
|
(9.9 |
) |
|
(23.3 |
) |
|||
Total loans HFI (1) |
|
35,893,393 |
|
|
34,778,539 |
|
|
32,863,286 |
|
|
3.2 |
|
|
9.2 |
|
|||
Loans HFS |
|
1,594 |
|
|
434 |
|
|
— |
|
|
267.3 |
|
|
100.0 |
|
|||
Total loans (1) |
|
35,894,987 |
|
|
34,778,973 |
|
|
32,863,286 |
|
|
3.2 |
|
|
9.2 |
|
|||
Allowance for credit losses |
|
(557,003 |
) |
|
(358,287 |
) |
|
(317,894 |
) |
|
55.5 |
|
|
75.2 |
|
|||
Net loans (1) |
|
$ |
35,337,984 |
|
|
$ |
34,420,686 |
|
|
$ |
32,545,392 |
|
|
2.7 |
% |
|
8.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Deposits: |
|
|
|
|
|
|
|
|
|
|
||||||||
Noninterest-bearing demand |
|
$ |
11,833,397 |
|
|
$ |
11,080,036 |
|
|
$ |
10,011,533 |
|
|
6.8 |
% |
|
18.2 |
% |
Interest-bearing checking |
|
5,467,508 |
|
|
5,200,755 |
|
|
6,123,681 |
|
|
5.1 |
|
|
(10.7 |
) |
|||
Money market |
|
9,302,246 |
|
|
8,711,964 |
|
|
8,243,003 |
|
|
6.8 |
|
|
12.9 |
|
|||
Savings |
|
2,117,274 |
|
|
2,117,196 |
|
|
2,049,086 |
|
|
0.0 |
|
|
3.3 |
|
|||
Time deposits |
|
9,966,533 |
|
|
10,214,308 |
|
|
9,846,669 |
|
|
(2.4 |
) |
|
1.2 |
|
|||
Total deposits |
|
$ |
38,686,958 |
|
|
$ |
37,324,259 |
|
|
$ |
36,273,972 |
|
|
3.7 |
% |
|
6.7 |
% |
|
- On January 1, 2020, the Company adopted ASU 2016-13. Total loans include net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts of $(50.3) million, $(43.2) million and $(46.0) million as of March 31, 2020, December 31, 2019 and March 31, 2019, respectively.
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
|||||||||||||||
CONDENSED CONSOLIDATED STATEMENT OF INCOME |
|||||||||||||||
($ and shares in thousands, except per share data) |
|||||||||||||||
(unaudited) |
|||||||||||||||
Table 3 |
|||||||||||||||
|
|||||||||||||||
|
|
Three Months Ended |
|
March 31, 2020
|
|||||||||||
|
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
Qtr-o-Qtr |
|
Yr-o-Yr |
|||||
Interest and dividend income |
|
$ |
449,190 |
|
$ |
467,233 |
|
$ |
463,311 |
|
(3.9 |
)% |
|
(3.0 |
)% |
Interest expense |
|
86,483 |
|
99,014 |
|
100,850 |
|
(12.7 |
) |
|
(14.2 |
) |
|||
Net interest income before provision for credit losses |
|
362,707 |
|
368,219 |
|
362,461 |
|
(1.5 |
) |
|
0.1 |
|
|||
Provision for credit losses |
|
73,870 |
|
18,577 |
|
22,579 |
|
297.6 |
|
|
227.2 |
|
|||
Net interest income after provision for credit losses |
|
288,837 |
|
349,642 |
|
339,882 |
|
(17.4 |
) |
|
(15.0 |
) |
|||
Noninterest income |
|
54,049 |
|
63,013 |
|
42,131 |
|
(14.2 |
) |
|
28.3 |
|
|||
Noninterest expense |
|
178,876 |
|
193,373 |
|
186,922 |
|
(7.5 |
) |
|
(4.3 |
) |
|||
Income before income taxes |
|
164,010 |
|
219,282 |
|
195,091 |
|
(25.2 |
) |
|
(15.9 |
) |
|||
Income tax expense |
|
19,186 |
|
31,067 |
|
31,067 |
|
(38.2 |
) |
|
(38.2 |
) |
|||
Net income |
|
$ |
144,824 |
|
$ |
188,215 |
|
$ |
164,024 |
|
(23.1 |
)% |
|
(11.7 |
)% |
Earnings per share (“EPS”) |
|
|
|
|
|
|
|
|
|
|
|||||
- Basic |
|
$ |
1.00 |
|
$ |
1.29 |
|
$ |
1.13 |
|
(22.6 |
)% |
|
(11.4 |
)% |
- Diluted |
|
$ |
1.00 |
|
$ |
1.29 |
|
$ |
1.12 |
|
(22.5 |
) |
|
(11.3 |
) |
Weighted-average number of shares outstanding |
|
|
|
|
|
|
|
|
|
|
|||||
- Basic |
|
144,814 |
|
145,624 |
|
145,256 |
|
(0.6 |
)% |
|
(0.3 |
)% |
|||
- Diluted |
|
145,285 |
|
146,318 |
|
145,921 |
|
(0.7 |
) |
|
(0.4 |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Three Months Ended |
|
March 31, 2020
|
|||||||||||
|
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
Qtr-o-Qtr |
|
Yr-o-Yr |
|||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|||||
Lending fees |
|
$ |
15,773 |
|
$ |
17,244 |
|
$ |
14,969 |
|
(8.5 |
)% |
|
5.4 |
% |
Deposit account fees |
|
10,447 |
|
9,843 |
|
9,468 |
|
6.1 |
|
|
10.3 |
|
|||
Foreign exchange income |
|
7,819 |
|
6,032 |
|
5,015 |
|
29.6 |
|
|
55.9 |
|
|||
Wealth management fees |
|
5,357 |
|
4,215 |
|
3,812 |
|
27.1 |
|
|
40.5 |
|
|||
Interest rate contracts and other derivative income |
|
7,073 |
|
17,828 |
|
3,216 |
|
(60.3 |
) |
|
119.9 |
|
|||
Net gains on sales of loans |
|
950 |
|
1,068 |
|
915 |
|
(11.0 |
) |
|
3.8 |
|
|||
Net gains on sales of AFS debt securities |
|
1,529 |
|
864 |
|
1,561 |
|
77.0 |
|
|
(2.0 |
) |
|||
Other investment income |
|
1,921 |
|
2,678 |
|
1,202 |
|
(28.3 |
) |
|
59.8 |
|
|||
Other income |
|
3,180 |
|
3,241 |
|
1,973 |
|
(1.9 |
) |
|
61.2 |
|
|||
Total noninterest income |
|
$ |
54,049 |
|
$ |
63,013 |
|
$ |
42,131 |
|
(14.2 |
)% |
|
28.3 |
% |
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|||||
Compensation and employee benefits |
|
$ |
101,960 |
|
$ |
101,051 |
|
$ |
102,299 |
|
0.9 |
% |
|
(0.3 |
)% |
Occupancy and equipment expense |
|
17,076 |
|
17,138 |
|
17,318 |
|
(0.4 |
) |
|
(1.4 |
) |
|||
Deposit insurance premiums and regulatory assessments |
|
3,427 |
|
3,371 |
|
3,088 |
|
1.7 |
|
|
11.0 |
|
|||
Legal expense |
|
3,197 |
|
2,141 |
|
2,225 |
|
49.3 |
|
|
43.7 |
|
|||
Data processing |
|
3,826 |
|
3,588 |
|
3,157 |
|
6.6 |
|
|
21.2 |
|
|||
Consulting expense |
|
1,217 |
|
3,159 |
|
2,059 |
|
(61.5 |
) |
|
(40.9 |
) |
|||
Deposit related expense |
|
3,563 |
|
3,749 |
|
3,504 |
|
(5.0 |
) |
|
1.7 |
|
|||
Computer software expense |
|
6,166 |
|
7,626 |
|
6,078 |
|
(19.1 |
) |
|
1.4 |
|
|||
Other operating expense |
|
21,119 |
|
24,512 |
|
22,289 |
|
(13.8 |
) |
|
(5.2 |
) |
|||
Amortization of tax credit and other investments |
|
17,325 |
|
27,038 |
|
24,905 |
|
(35.9 |
) |
|
(30.4 |
) |
|||
Total noninterest expense |
|
$ |
178,876 |
|
$ |
193,373 |
|
$ |
186,922 |
|
(7.5 |
)% |
|
(4.3 |
)% |
|
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
|||||||||||||||
SELECTED AVERAGE BALANCES |
|||||||||||||||
($ in thousands) |
|||||||||||||||
(unaudited) |
|||||||||||||||
Table 4 |
|||||||||||||||
|
|||||||||||||||
|
|
Three Months Ended |
|
March 31, 2020
|
|||||||||||
|
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
Qtr-o-Qtr |
|
Yr-o-Yr |
|||||
Loans: |
|
|
|
|
|
|
|
|
|
|
|||||
Commercial: |
|
|
|
|
|
|
|
|
|
|
|||||
C&I |
|
$ |
12,166,178 |
|
$ |
12,237,081 |
|
$ |
11,845,860 |
|
(0.6 |
)% |
|
2.7 |
% |
CRE: |
|
|
|
|
|
|
|
|
|
|
|||||
CRE |
|
10,485,683 |
|
10,006,424 |
|
9,377,170 |
|
4.8 |
|
|
11.8 |
|
|||
Multifamily residential |
|
2,889,844 |
|
2,771,555 |
|
2,498,775 |
|
4.3 |
|
|
15.7 |
|
|||
Construction and land |
|
641,079 |
|
668,147 |
|
584,445 |
|
(4.1 |
) |
|
9.7 |
|
|||
Total CRE |
|
14,016,606 |
|
13,446,126 |
|
12,460,390 |
|
4.2 |
|
|
12.5 |
|
|||
Consumer: |
|
|
|
|
|
|
|
|
|
|
|||||
Residential mortgage: |
|
|
|
|
|
|
|
|
|
|
|||||
Single-family residential |
|
7,257,367 |
|
6,934,361 |
|
6,151,550 |
|
4.7 |
|
|
18.0 |
|
|||
HELOCs |
|
1,442,450 |
|
1,506,346 |
|
1,652,211 |
|
(4.2 |
) |
|
(12.7 |
) |
|||
Total residential mortgage |
|
8,699,817 |
|
8,440,707 |
|
7,803,761 |
|
3.1 |
|
|
11.5 |
|
|||
Other consumer |
|
271,367 |
|
286,096 |
|
304,774 |
|
(5.1 |
) |
|
(11.0 |
) |
|||
Total loans (1) |
|
$ |
35,153,968 |
|
$ |
34,410,010 |
|
$ |
32,414,785 |
|
2.2 |
% |
|
8.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest-earning assets |
|
$ |
42,362,531 |
|
$ |
42,114,123 |
|
$ |
38,745,004 |
|
0.6 |
% |
|
9.3 |
% |
Total assets |
|
$ |
44,755,509 |
|
$ |
44,471,242 |
|
$ |
40,738,404 |
|
0.6 |
% |
|
9.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||||
Deposits: |
|
|
|
|
|
|
|
|
|
|
|||||
Noninterest-bearing demand |
|
$ |
11,117,710 |
|
$ |
10,976,368 |
|
$ |
10,071,370 |
|
1.3 |
% |
|
10.4 |
% |
Interest-bearing checking |
|
5,001,672 |
|
5,540,300 |
|
5,270,855 |
|
(9.7 |
) |
|
(5.1 |
) |
|||
Money market |
|
9,013,381 |
|
8,592,058 |
|
8,080,848 |
|
4.9 |
|
|
11.5 |
|
|||
Savings |
|
2,076,270 |
|
2,118,911 |
|
2,091,406 |
|
(2.0 |
) |
|
(0.7 |
) |
|||
Time deposits |
|
10,264,007 |
|
10,180,922 |
|
9,408,897 |
|
0.8 |
|
|
9.1 |
|
|||
Total deposits |
|
$ |
37,473,040 |
|
$ |
37,408,559 |
|
$ |
34,923,376 |
|
0.2 |
% |
|
7.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest-bearing liabilities |
|
$ |
27,593,341 |
|
$ |
27,522,469 |
|
$ |
25,452,835 |
|
0.3 |
% |
|
8.4 |
% |
Stockholders’ equity |
|
$ |
5,022,005 |
|
$ |
4,977,759 |
|
$ |
4,537,301 |
|
0.9 |
% |
|
10.7 |
% |
|
-
Includes loans HFS.
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
||||||||||||||||||||||
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES |
||||||||||||||||||||||
($ in thousands) |
||||||||||||||||||||||
(unaudited) |
||||||||||||||||||||||
Table 5 |
||||||||||||||||||||||
|
||||||||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||||||
|
|
March 31, 2020 |
|
December 31, 2019 |
||||||||||||||||||
|
|
Average |
|
|
|
Average |
|
Average |
|
|
|
Average |
||||||||||
|
|
Balance |
|
Interest |
|
Yield/Rate (1) |
|
Balance |
|
Interest |
|
Yield/Rate (1) |
||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest-bearing cash and deposits with banks |
|
$ |
2,973,006 |
|
|
$ |
11,168 |
|
|
1.51 |
% |
|
$ |
3,213,016 |
|
|
$ |
14,657 |
|
|
1.81 |
% |
Resale agreements (2) |
|
882,142 |
|
|
5,565 |
|
|
2.54 |
% |
|
863,261 |
|
|
5,749 |
|
|
2.64 |
% |
||||
AFS debt securities |
|
3,274,740 |
|
|
20,142 |
|
|
2.47 |
% |
|
3,549,376 |
|
|
20,460 |
|
|
2.29 |
% |
||||
Loans (3) |
|
35,153,968 |
|
|
411,869 |
|
|
4.71 |
% |
|
34,410,010 |
|
|
425,773 |
|
|
4.91 |
% |
||||
FHLB and FRB stock |
|
78,675 |
|
|
446 |
|
|
2.28 |
% |
|
78,460 |
|
|
594 |
|
|
3.00 |
% |
||||
Total interest-earning assets |
|
42,362,531 |
|
|
449,190 |
|
|
4.26 |
% |
|
42,114,123 |
|
|
467,233 |
|
|
4.40 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Noninterest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and due from banks |
|
510,512 |
|
|
|
|
|
|
534,326 |
|
|
|
|
|
||||||||
Allowance for credit losses |
|
(492,297 |
) |
|
|
|
|
|
(355,759 |
) |
|
|
|
|
||||||||
Other assets |
|
2,374,763 |
|
|
|
|
|
|
2,178,552 |
|
|
|
|
|
||||||||
Total assets |
|
$ |
44,755,509 |
|
|
|
|
|
|
$ |
44,471,242 |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Checking deposits |
|
$ |
5,001,672 |
|
|
$ |
10,246 |
|
|
0.82 |
% |
|
$ |
5,540,300 |
|
|
$ |
13,589 |
|
|
0.97 |
% |
Money market deposits |
|
9,013,381 |
|
|
22,248 |
|
|
0.99 |
% |
|
8,592,058 |
|
|
25,223 |
|
|
1.16 |
% |
||||
Savings deposits |
|
2,076,270 |
|
|
1,817 |
|
|
0.35 |
% |
|
2,118,911 |
|
|
2,266 |
|
|
0.42 |
% |
||||
Time deposits |
|
10,264,007 |
|
|
42,092 |
|
|
1.65 |
% |
|
10,180,922 |
|
|
47,935 |
|
|
1.87 |
% |
||||
Federal funds purchased and other short-term borrowings |
|
59,978 |
|
|
556 |
|
|
3.73 |
% |
|
43,313 |
|
|
404 |
|
|
3.70 |
% |
||||
FHLB advances |
|
693,357 |
|
|
4,166 |
|
|
2.42 |
% |
|
745,732 |
|
|
4,686 |
|
|
2.49 |
% |
||||
Repurchase agreements (2) |
|
332,417 |
|
|
3,991 |
|
|
4.83 |
% |
|
148,892 |
|
|
3,382 |
|
|
9.01 |
% |
||||
Long-term debt and finance lease liabilities |
|
152,259 |
|
|
1,367 |
|
|
3.61 |
% |
|
152,341 |
|
|
1,529 |
|
|
3.98 |
% |
||||
Total interest-bearing liabilities |
|
27,593,341 |
|
|
86,483 |
|
|
1.26 |
% |
|
27,522,469 |
|
|
99,014 |
|
|
1.43 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Noninterest-bearing liabilities and stockholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Demand deposits |
|
11,117,710 |
|
|
|
|
|
|
10,976,368 |
|
|
|
|
|
||||||||
Accrued expenses and other liabilities |
|
1,022,453 |
|
|
|
|
|
|
994,646 |
|
|
|
|
|
||||||||
Stockholders’ equity |
|
5,022,005 |
|
|
|
|
|
|
4,977,759 |
|
|
|
|
|
||||||||
Total liabilities and stockholders’ equity |
|
$ |
44,755,509 |
|
|
|
|
|
|
$ |
44,471,242 |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest rate spread |
|
|
|
|
|
3.00 |
% |
|
|
|
|
|
2.97 |
% |
||||||||
Net interest income and net interest margin |
|
|
|
$ |
362,707 |
|
|
3.44 |
% |
|
|
|
$ |
368,219 |
|
|
3.47 |
% |
||||
|
- Annualized.
- Average balances of resale and repurchase agreements have been reported net, pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. The weighted-average yields of gross resale agreements were 2.54% and 2.49% for the three months ended March 31, 2020 and December 31, 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 4.10% and 4.35% for the three months ended March 31, 2020 and December 31, 2019, respectively.
- 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 |
||||||||||||||||||
|
March 31, 2020 |
|
March 31, 2019 |
|||||||||||||||||
|
Average |
|
|
|
Average |
|
Average |
|
|
|
Average |
|||||||||
|
Balance |
|
Interest |
|
Yield/Rate (1) |
|
Balance |
|
Interest |
|
Yield/Rate (1) |
|||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest-bearing cash and deposits with banks |
|
$ |
2,973,006 |
|
|
$ |
11,168 |
|
1.51 |
% |
|
$ |
2,578,686 |
|
|
$ |
15,470 |
|
2.43 |
% |
Resale agreements (2) |
|
882,142 |
|
|
5,565 |
|
2.54 |
% |
|
1,035,000 |
|
|
7,846 |
|
3.07 |
% |
||||
AFS debt securities |
|
3,274,740 |
|
|
20,142 |
|
2.47 |
% |
|
2,642,299 |
|
|
15,748 |
|
2.42 |
% |
||||
Loans (3) |
|
35,153,968 |
|
|
411,869 |
|
4.71 |
% |
|
32,414,785 |
|
|
423,534 |
|
5.30 |
% |
||||
FHLB and FRB stock |
|
78,675 |
|
|
446 |
|
2.28 |
% |
|
74,234 |
|
|
713 |
|
3.90 |
% |
||||
Total interest-earning assets |
|
42,362,531 |
|
|
449,190 |
|
4.26 |
% |
|
38,745,004 |
|
|
463,311 |
|
4.85 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Noninterest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and due from banks |
|
510,512 |
|
|
|
|
|
|
468,159 |
|
|
|
|
|
||||||
Allowance for credit losses |
|
(492,297 |
) |
|
|
|
|
|
(314,446 |
) |
|
|
|
|
||||||
Other assets |
|
2,374,763 |
|
|
|
|
|
|
1,839,687 |
|
|
|
|
|
||||||
Total assets |
|
$ |
44,755,509 |
|
|
|
|
|
|
$ |
40,738,404 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Checking deposits |
|
$ |
5,001,672 |
|
|
$ |
10,246 |
|
0.82 |
% |
|
$ |
5,270,855 |
|
|
$ |
14,255 |
|
1.10 |
% |
Money market deposits |
|
9,013,381 |
|
|
22,248 |
|
0.99 |
% |
|
8,080,848 |
|
|
30,234 |
|
1.52 |
% |
||||
Savings deposits |
|
2,076,270 |
|
|
1,817 |
|
0.35 |
% |
|
2,091,406 |
|
|
2,227 |
|
0.43 |
% |
||||
Time deposits |
|
10,264,007 |
|
|
42,092 |
|
1.65 |
% |
|
9,408,897 |
|
|
45,289 |
|
1.95 |
% |
||||
Federal funds purchased and other short-term borrowings |
|
59,978 |
|
|
556 |
|
3.73 |
% |
|
60,442 |
|
|
616 |
|
4.13 |
% |
||||
FHLB advances |
|
693,357 |
|
|
4,166 |
|
2.42 |
% |
|
338,027 |
|
|
2,979 |
|
3.57 |
% |
||||
Repurchase agreements (2) |
|
332,417 |
|
|
3,991 |
|
4.83 |
% |
|
50,000 |
|
|
3,492 |
|
28.32 |
% |
||||
Long-term debt and finance lease liabilities |
|
152,259 |
|
|
1,367 |
|
3.61 |
% |
|
152,360 |
|
|
1,758 |
|
4.68 |
% |
||||
Total interest-bearing liabilities |
|
27,593,341 |
|
|
86,483 |
|
1.26 |
% |
|
25,452,835 |
|
|
100,850 |
|
1.61 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Noninterest-bearing liabilities and stockholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Demand deposits |
|
11,117,710 |
|
|
|
|
|
|
10,071,370 |
|
|
|
|
|
||||||
Accrued expenses and other liabilities |
|
1,022,453 |
|
|
|
|
|
|
676,898 |
|
|
|
|
|
||||||
Stockholders’ equity |
|
5,022,005 |
|
|
|
|
|
|
4,537,301 |
|
|
|
|
|
||||||
Total liabilities and stockholders’ equity |
|
$ |
44,755,509 |
|
|
|
|
|
|
$ |
40,738,404 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate spread |
|
|
|
|
|
3.00 |
% |
|
|
|
|
|
3.24 |
% |
||||||
Net interest income and net interest margin |
|
|
|
$ |
362,707 |
|
3.44 |
% |
|
|
|
$ |
362,461 |
|
3.79 |
% |
||||
|
- Annualized.
- Average balances of resale and repurchase agreements have been reported net, pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. The weighted-average yields of gross resale agreements were 2.54% and 2.80% for the three months ended March 31, 2020 and 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 4.10% and 5.01% for the three months ended March 31, 2020 and 2019, respectively.
- Includes loans HFS. See reconciliation of GAAP to non-GAAP financial measures in Table 15.
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
||||||||||||||||
SELECTED RATIOS |
||||||||||||||||
(unaudited) |
||||||||||||||||
Table 7 |
||||||||||||||||
|
||||||||||||||||
|
|
Three Months Ended (1) |
|
March 31, 2020 Basis Point Change |
||||||||||||
|
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
Qtr-o-Qtr |
|
Yr-o-Yr |
|
|||||
Return on average assets |
|
1.30 |
% |
|
1.68 |
% |
|
1.63 |
% |
|
(38 |
) |
bps |
(33 |
) |
bps |
Adjusted return on average assets (2) |
|
1.30 |
% |
|
1.67 |
% |
|
1.68 |
% |
|
(37 |
) |
|
(38 |
) |
|
Return on average equity |
|
11.60 |
% |
|
15.00 |
% |
|
14.66 |
% |
|
(340 |
) |
|
(306 |
) |
|
Adjusted return on average equity (2) |
|
11.60 |
% |
|
14.91 |
% |
|
15.10 |
% |
|
(331 |
) |
|
(350 |
) |
|
Return on average tangible equity (2) |
|
12.93 |
% |
|
16.71 |
% |
|
16.53 |
% |
|
(378 |
) |
|
(360 |
) |
|
Adjusted return on average tangible equity (2) |
|
12.93 |
% |
|
16.61 |
% |
|
17.02 |
% |
|
(368 |
) |
|
(409 |
) |
|
Interest rate spread |
|
3.00 |
% |
|
2.97 |
% |
|
3.24 |
% |
|
3 |
|
|
(24 |
) |
|
Net interest margin |
|
3.44 |
% |
|
3.47 |
% |
|
3.79 |
% |
|
(3 |
) |
|
(35 |
) |
|
Average loan yield |
|
4.71 |
% |
|
4.91 |
% |
|
5.30 |
% |
|
(20 |
) |
|
(59 |
) |
|
Yield on average interest-earning assets |
|
4.26 |
% |
|
4.40 |
% |
|
4.85 |
% |
|
(14 |
) |
|
(59 |
) |
|
Average cost of interest-bearing deposits |
|
1.17 |
% |
|
1.34 |
% |
|
1.50 |
% |
|
(17 |
) |
|
(33 |
) |
|
Average cost of deposits |
|
0.82 |
% |
|
0.94 |
% |
|
1.07 |
% |
|
(12 |
) |
|
(25 |
) |
|
Average cost of funds |
|
0.90 |
% |
|
1.02 |
% |
|
1.15 |
% |
|
(12 |
) |
|
(25 |
) |
|
Adjusted pre-tax, pre-provision profitability ratio (2) |
|
2.30 |
% |
|
2.37 |
% |
|
2.43 |
% |
|
(7 |
) |
|
(13 |
) |
|
Adjusted noninterest expense/average assets (2) |
|
1.44 |
% |
|
1.47 |
% |
|
1.60 |
% |
|
(3 |
) |
|
(16 |
) |
|
Efficiency ratio |
|
42.92 |
% |
|
44.84 |
% |
|
46.20 |
% |
|
(192 |
) |
|
(328 |
) |
|
Adjusted efficiency ratio (2) |
|
38.54 |
% |
|
38.33 |
% |
|
39.75 |
% |
|
21 |
|
bps |
(121 |
) |
bps |
|
- Annualized except for efficiency ratio.
-
See reconciliation of GAAP to non-GAAP financial measures in Tables 10, 11 and 12.
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
|||||||||||||||||||||||||||||||||
ALLOWANCE FOR CREDIT LOSSES & OFF-BALANCE SHEET CREDIT EXPOSURES |
|||||||||||||||||||||||||||||||||
($ in thousands) |
|||||||||||||||||||||||||||||||||
(unaudited) |
|||||||||||||||||||||||||||||||||
Table 8 |
|||||||||||||||||||||||||||||||||
ASU 2016-13 replaced the incurred loss methodology used in calculating the allowance for credit losses with a current expected credit loss model (“CECL”). The Company adopted ASU 2016-13 using the modified retrospective approach on January 1, 2020. As a result, prior comparative periods have not been adjusted. In addition, ASU 2016-13 introduces the concept of Purchased Credit Deteriorated (“PCD”) financial assets, which replaces purchased credit-impaired (“PCI”) assets. For PCD assets, the initial allowance for credit losses is added to the purchase price and is considered to be part of the PCD loan amortized cost basis, hence, there is no income statement impact on acquisition. This contrasts with PCI loans where allowance for credit losses only reflects losses that are incurred by the Company after the acquisition. The allowance for credit losses on loans, including PCD loans, is evaluated each quarter and adjusted as necessary by recognizing a credit loss expense or a reversal of credit loss expense. There were no PCD loans during the quarter ended March 31, 2020.
|
|||||||||||||||||||||||||||||||||
|
|
|
Three Months Ended March 31, 2020 |
||||||||||||||||||||||||||||||
|
|
|
Commercial |
|
Consumer |
|
Total |
||||||||||||||||||||||||||
|
|
|
|
|
CRE |
|
Residential Mortgage |
|
|
|
|||||||||||||||||||||||
|
|
|
C&I |
|
CRE |
|
Multi-
Residential |
|
Construction
|
|
Single-
|
|
HELOCs |
|
Other Consumer |
|
|||||||||||||||||
Allowance for credit losses, December 31, 2019 |
|
|
$ |
238,376 |
|
|
$ |
40,509 |
|
|
$ |
22,826 |
|
|
$ |
19,404 |
|
|
$ |
28,527 |
|
|
$ |
5,265 |
|
|
$ |
3,380 |
|
|
$ |
358,287 |
|
Impact of ASU 2016-13 adoption |
|
|
74,237 |
|
|
72,169 |
|
|
(8,112 |
) |
|
(9,889 |
) |
|
(3,670 |
) |
|
(1,798 |
) |
|
2,221 |
|
|
125,158 |
|
||||||||
Allowance for credit losses, January 1, 2020 |
|
|
$ |
312,613 |
|
|
$ |
112,678 |
|
|
$ |
14,714 |
|
|
$ |
9,515 |
|
|
$ |
24,857 |
|
|
$ |
3,467 |
|
|
$ |
5,601 |
|
|
$ |
483,445 |
|
Provision for credit losses |
(a) |
|
60,618 |
|
|
11,435 |
|
|
1,281 |
|
|
1,482 |
|
|
1,700 |
|
|
412 |
|
|
(2,272 |
) |
|
74,656 |
|
||||||||
Gross charge-offs |
|
|
(11,977 |
) |
|
(954 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(26 |
) |
|
(12,957 |
) |
||||||||
Gross recoveries |
|
|
1,575 |
|
|
9,660 |
|
|
535 |
|
|
21 |
|
|
265 |
|
|
2 |
|
|
1 |
|
|
12,059 |
|
||||||||
Total net charge-offs |
|
|
(10,402 |
) |
|
8,706 |
|
|
535 |
|
|
21 |
|
|
265 |
|
|
2 |
|
|
(25 |
) |
|
(898 |
) |
||||||||
Foreign currency translation adjustments
|
|
|
(200 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(200 |
) |
||||||||
Allowance for credit losses, March 31, 2020 |
|
|
$ |
362,629 |
|
|
$ |
132,819 |
|
|
$ |
16,530 |
|
|
$ |
11,018 |
|
|
$ |
26,822 |
|
|
$ |
3,881 |
|
|
$ |
3,304 |
|
|
$ |
557,003 |
|
|
|
|
|
|
Three Months Ended |
||||||||||
|
|
|
December 31, 2019 |
|
March 31, 2019 |
|||||||||
Non-PCI Loans
|
|
|
|
|
|
|
|
|
||||||
Allowance for credit losses, beginning of period |
|
|
|
|
|
$ |
345,576 |
|
|
$ |
311,300 |
|
||
Provision for credit losses |
|
(a) |
|
|
|
20,843 |
|
|
20,648 |
|
||||
Net (charge-offs) recoveries: |
|
|
|
|
|
|
|
|
||||||
Commercial: |
|
|
|
|
|
|
|
|
||||||
C&I |
|
|
|
|
|
(11,009 |
) |
|
(14,993 |
) |
||||
CRE: |
|
|
|
|
|
|
|
|
||||||
CRE |
|
|
|
|
|
1,254 |
|
|
222 |
|
||||
Multifamily residential |
|
|
|
|
|
1,480 |
|
|
281 |
|
||||
Construction and land |
|
|
|
|
|
13 |
|
|
63 |
|
||||
Total CRE |
|
|
|
|
|
2,747 |
|
|
566 |
|
||||
Consumer: |
|
|
|
|
|
|
|
|
||||||
Residential mortgage: |
|
|
|
|
|
|
|
|
||||||
Single-family residential |
|
|
|
|
|
2 |
|
|
2 |
|
||||
HELOCs |
|
|
|
|
|
— |
|
|
2 |
|
||||
Total residential mortgage |
|
|
|
|
|
2 |
|
|
4 |
|
||||
Other consumer |
|
|
|
|
|
(5 |
) |
|
(14 |
) |
||||
Total net charge-offs |
|
|
|
|
|
(8,265 |
) |
|
(14,437 |
) |
||||
Foreign currency translation adjustments |
|
|
|
|
|
133 |
|
|
369 |
|
||||
Allowance for credit losses, end of period |
|
|
|
|
|
$ |
358,287 |
|
|
$ |
317,880 |
|
||
PCI Loans |
|
|
|
|
|
|
|
|
||||||
Allowance for PCI loans, beginning of period |
|
|
|
|
|
— |
|
|
22 |
|
||||
Reversal of loan losses on PCI loans |
|
(a) |
|
|
|
— |
|
|
(8 |
) |
||||
Allowance for PCI loans, end of period |
|
|
|
|
|
— |
|
|
14 |
|
||||
Allowance for credit losses |
|
|
|
|
|
$ |
358,287 |
|
|
$ |
317,894 |
|
||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
Three Months Ended |
||||||||||
|
|
|
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
||||||
Unfunded Credit Facilities |
|
|
|
|
|
|
|
|
||||||
Allowance for unfunded credit commitments, beginning of period |
|
|
|
$ |
11,158 |
|
|
$ |
13,424 |
|
|
$ |
12,566 |
|
Impact of ASU 2016-13 adoption
|
|
|
|
10,457 |
|
|
— |
|
|
— |
|
|||
(Reversal of) provision for credit losses |
|
(b) |
|
(786 |
) |
|
(2,266 |
) |
|
1,939 |
|
|||
Allowance for unfunded credit commitments, end of period (1) |
|
|
|
$ |
20,829 |
|
|
$ |
11,158 |
|
|
$ |
14,505 |
|
|
|
|
|
|
|
|
|
|
||||||
Total provision for credit losses |
|
(a) + (b) |
|
$ |
73,870 |
|
|
$ |
18,577 |
|
|
$ |
22,579 |
|
|
-
Included in Accrued expense and other liabilities on the Consolidated Balance Sheet.
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
||||||||||||
CREDIT QUALITY |
||||||||||||
($ in thousands) |
||||||||||||
(unaudited) |
||||||||||||
Table 9 |
||||||||||||
The Company adopted ASU 2016-13 using the modified retrospective approach on January 1, 2020. As a result, prior comparative periods have not been adjusted. PCI loans prior to the adoption of ASU 2016-13 are classified as PCD loans as of January 1, 2020. Nonaccrual loans as of March 31, 2020 include all loans that are 90 or more days past due, unless the loan is well-collateralized or guaranteed by government agencies, and in the process of collection. Nonaccrual loans presented as of December 31, 2019 and March 31, 2019 include only Non-PCI nonaccrual loans. |
||||||||||||
|
||||||||||||
Nonperforming Assets |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
||||||
|
|
Total
|
|
Non-PCI
|
|
Non-PCI
|
||||||
Commercial: |
|
|
|
|
|
|
||||||
C&I |
|
$ |
89,079 |
|
|
$ |
74,835 |
|
|
$ |
86,466 |
|
CRE: |
|
|
|
|
|
|
||||||
CRE |
|
6,298 |
|
|
16,441 |
|
|
25,209 |
|
|||
Multifamily residential |
|
803 |
|
|
819 |
|
|
1,620 |
|
|||
Total CRE |
|
7,101 |
|
|
17,260 |
|
|
26,829 |
|
|||
Consumer: |
|
|
|
|
|
|
||||||
Residential mortgage: |
|
|
|
|
|
|
||||||
Single-family residential |
|
17,536 |
|
|
14,865 |
|
|
10,467 |
|
|||
HELOCs |
|
10,446 |
|
|
10,742 |
|
|
10,473 |
|
|||
Total residential mortgage |
|
27,982 |
|
|
25,607 |
|
|
20,940 |
|
|||
Other consumer |
|
2,506 |
|
|
2,517 |
|
|
2,506 |
|
|||
Total nonaccrual loans |
|
126,668 |
|
|
120,219 |
|
|
136,741 |
|
|||
Other real estate owned, net |
|
19,504 |
|
|
125 |
|
|
133 |
|
|||
Other nonperforming assets |
|
4,758 |
|
|
1,167 |
|
|
1,167 |
|
|||
Total nonperforming assets |
|
$ |
150,930 |
|
|
$ |
121,511 |
|
|
$ |
138,041 |
|
|
||||||||||||
|
||||||||||||
Credit Quality Ratios |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
||||||
Nonperforming assets to total assets |
|
0.33 |
% |
|
0.27 |
% |
|
0.33 |
% |
|||
Nonaccrual loans to loans HFI |
|
0.35 |
% |
|
0.35 |
% |
|
0.42 |
% |
|||
Allowance for credit losses to loans HFI |
|
1.55 |
% |
|
1.03 |
% |
|
0.97 |
% |
|||
Allowance for credit losses to nonaccrual loans |
|
439.73 |
% |
|
298.03 |
% |
|
232.48 |
% |
|||
Annualized quarterly net charge-offs to average loans HFI |
|
0.01 |
% |
|
0.10 |
% |
|
0.18 |
% |
|||
|
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
||||||||||||||
GAAP TO NON-GAAP RECONCILIATION |
||||||||||||||
($ and shares in thousands, except for per share data) |
||||||||||||||
(unaudited) |
||||||||||||||
Table 10 |
||||||||||||||
During the first and fourth quarters of 2019, the Company recorded a $7.0 million pre-tax impairment charge and $1.6 million pre-tax impairment recovery related to the DC Solar tax credit investments (“DC Solar”), respectively. 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 equity that adjust for the above discussed non-recurring items provides clarity to financial statement users regarding the ongoing performance of the Company and allows comparability to prior periods. |
||||||||||||||
|
||||||||||||||
|
|
|
|
Three Months Ended |
||||||||||
|
|
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|||||||
Net income |
|
(a) |
|
$ |
144,824 |
|
|
$ |
188,215 |
|
|
$ |
164,024 |
|
Add: Impairment charge related to DC Solar (1) |
|
|
|
— |
|
|
— |
|
|
6,978 |
|
|||
Less: Impairment recovery related to DC Solar (1) |
|
|
|
— |
|
|
(1,583 |
) |
|
— |
|
|||
Tax effect of adjustment (2) |
|
|
|
— |
|
|
468 |
|
|
(2,063 |
) |
|||
Adjusted net income |
|
(b) |
|
$ |
144,824 |
|
|
$ |
187,100 |
|
|
$ |
168,939 |
|
|
|
|
|
|
|
|
|
|
||||||
Diluted weighted-average number of shares outstanding |
|
|
|
145,285 |
|
|
146,318 |
|
|
145,921 |
|
|||
Diluted EPS |
|
|
|
$ |
1.00 |
|
|
$ |
1.29 |
|
|
$ |
1.12 |
|
Diluted EPS impact of impairment charge related to DC Solar, net of tax |
|
|
|
— |
|
|
— |
|
|
0.04 |
|
|||
Diluted EPS impact of impairment recovery related to DC Solar, net of tax |
|
|
|
— |
|
|
(0.01 |
) |
|
— |
|
|||
Adjusted diluted EPS |
|
|
|
$ |
1.00 |
|
|
$ |
1.28 |
|
|
$ |
1.16 |
|
|
|
|
|
|
|
|
|
|
||||||
Average total assets |
|
(c) |
|
$ |
44,755,509 |
|
|
$ |
44,471,242 |
|
|
$ |
40,738,404 |
|
Average stockholders’ equity |
|
(d) |
|
$ |
5,022,005 |
|
|
$ |
4,977,759 |
|
|
$ |
4,537,301 |
|
Return on average assets (3) |
|
(a)/(c) |
|
1.30 |
% |
|
1.68 |
% |
|
1.63 |
% |
|||
Adjusted return on average assets (3) |
|
(b)/(c) |
|
1.30 |
% |
|
1.67 |
% |
|
1.68 |
% |
|||
Return on average equity (3) |
|
(a)/(d) |
|
11.60 |
% |
|
15.00 |
% |
|
14.66 |
% |
|||
Adjusted return on average equity (3) |
|
(b)/(d) |
|
11.60 |
% |
|
14.91 |
% |
|
15.10 |
% |
|||
|
- Included in Amortization of tax credit and other investments on the Consolidated Statement of Income.
- Applied statutory rates of 28.35% for the three months ended March 31, 2020, and 29.56% for each of the three months ended December 31, 2019 and March 31, 2019.
-
Annualized.
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
||||||||||||||
GAAP TO NON-GAAP RECONCILIATION |
||||||||||||||
($ in thousands) |
||||||||||||||
(unaudited) |
||||||||||||||
Table 11 |
||||||||||||||
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 |
||||||||||
|
|
|
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
||||||
Net interest income before provision for credit losses |
|
(a) |
|
$ |
362,707 |
|
|
$ |
368,219 |
|
|
$ |
362,461 |
|
Total noninterest income |
|
|
|
54,049 |
|
|
63,013 |
|
|
42,131 |
|
|||
Total revenue |
|
(b) |
|
$ |
416,756 |
|
|
$ |
431,232 |
|
|
$ |
404,592 |
|
|
|
|
|
|
|
|
|
|
||||||
Total noninterest expense |
|
(c) |
|
$ |
178,876 |
|
|
$ |
193,373 |
|
|
$ |
186,922 |
|
Less: Amortization of tax credit and other investments |
|
|
|
(17,325 |
) |
|
(27,038 |
) |
|
(24,905 |
) |
|||
Amortization of core deposit intangibles |
|
|
|
(953 |
) |
|
(1,044 |
) |
|
(1,174 |
) |
|||
Adjusted noninterest expense |
|
(d) |
|
$ |
160,598 |
|
|
$ |
165,291 |
|
|
$ |
160,843 |
|
Efficiency ratio |
|
(c)/(b) |
|
42.92 |
% |
|
44.84 |
% |
|
46.20 |
% |
|||
Adjusted efficiency ratio |
|
(d)/(b) |
|
38.54 |
% |
|
38.33 |
% |
|
39.75 |
% |
|||
Adjusted pre-tax, pre-provision income |
|
(b)-(d) = (e) |
|
$ |
256,158 |
|
|
$ |
265,941 |
|
|
$ |
243,749 |
|
Average total assets |
|
(f) |
|
$ |
44,755,509 |
|
|
$ |
44,471,242 |
|
|
$ |
40,738,404 |
|
Adjusted pre-tax, pre-provision profitability ratio (1) |
|
(e)/(f) |
|
2.30 |
% |
|
2.37 |
% |
|
2.43 |
% |
|||
Adjusted noninterest expense (1)/average assets |
|
(d)/(f) |
|
1.44 |
% |
|
1.47 |
% |
|
1.60 |
% |
|||
|
- Annualized.
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. 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. |
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
||||||
Stockholders’ equity |
|
(a) |
|
$ |
4,902,985 |
|
|
$ |
5,017,617 |
|
|
$ |
4,591,930 |
|
Less: Goodwill |
|
|
|
(465,697 |
) |
|
(465,697 |
) |
|
(465,697 |
) |
|||
Other intangible assets (1) |
|
|
|
(14,769 |
) |
|
(16,079 |
) |
|
(21,109 |
) |
|||
Tangible equity |
|
(b) |
|
$ |
4,422,519 |
|
|
$ |
4,535,841 |
|
|
$ |
4,105,124 |
|
|
|
|
|
|
|
|
|
|
||||||
Total assets |
|
(c) |
|
$ |
45,948,545 |
|
|
$ |
44,196,096 |
|
|
$ |
42,091,433 |
|
Less: Goodwill |
|
|
|
(465,697 |
) |
|
(465,697 |
) |
|
(465,697 |
) |
|||
Other intangible assets (1) |
|
|
|
(14,769 |
) |
|
(16,079 |
) |
|
(21,109 |
) |
|||
Tangible assets |
|
(d) |
|
$ |
45,468,079 |
|
|
$ |
43,714,320 |
|
|
$ |
41,604,627 |
|
Total stockholders’ equity to total assets ratio |
|
(a)/(c) |
|
10.67 |
% |
|
11.35 |
% |
|
10.91 |
% |
|||
Tangible equity to tangible assets ratio |
|
(b)/(d) |
|
9.73 |
% |
|
10.38 |
% |
|
9.87 |
% |
|||
|
|
|
|
|
|
|
|
|
Adjusted return on average tangible equity represents adjusted tangible net income divided by average tangible equity. Adjusted tangible net income excludes the after-tax impacts of the amortization of core deposit intangibles and mortgage servicing assets, impairment charge/(recovery) and the reversal of certain previously claimed tax credits related to DC Solar (where applicable). 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 |
||||||||||
|
|
|
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
||||||
Net Income |
|
|
|
$ |
144,824 |
|
|
$ |
188,215 |
|
|
$ |
164,024 |
|
Add: Amortization of core deposit intangibles |
|
|
|
953 |
|
|
1,044 |
|
|
1,174 |
|
|||
Amortization of mortgage servicing assets |
|
|
|
584 |
|
|
567 |
|
|
324 |
|
|||
Tax effect of adjustments (2) |
|
|
|
(436 |
) |
|
(476 |
) |
|
(443 |
) |
|||
Tangible net income |
|
(e) |
|
$ |
145,925 |
|
|
$ |
189,350 |
|
|
$ |
165,079 |
|
Add: Impairment charge related to DC Solar (3) |
|
|
|
— |
|
|
— |
|
|
6,978 |
|
|||
Less: Impairment recovery related to DC Solar (3) |
|
|
|
— |
|
|
(1,583 |
) |
|
— |
|
|||
Tax effect of adjustment (2) |
|
|
|
— |
|
|
468 |
|
|
(2,063 |
) |
|||
Adjusted tangible net income |
|
(f) |
|
$ |
145,925 |
|
|
$ |
188,235 |
|
|
$ |
169,994 |
|
|
|
|
|
|
|
|
|
|
||||||
Average stockholders’ equity |
|
|
|
$ |
5,022,005 |
|
|
$ |
4,977,759 |
|
|
$ |
4,537,301 |
|
Less: Average goodwill |
|
|
|
(465,697 |
) |
|
(465,697 |
) |
|
(465,559 |
) |
|||
Average other intangible assets (1) |
|
|
|
(15,588 |
) |
|
(16,793 |
) |
|
(21,860 |
) |
|||
Average tangible equity |
|
(g) |
|
$ |
4,540,720 |
|
|
$ |
4,495,269 |
|
|
$ |
4,049,882 |
|
Return on average tangible equity (4) |
|
(e)/(g) |
|
12.93 |
% |
|
16.71 |
% |
|
16.53 |
% |
|||
Adjusted return on average tangible equity (4) |
|
(f)/(g) |
|
12.93 |
% |
|
16.61 |
% |
|
17.02 |
% |
|||
|
|
|
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- Includes core deposit intangibles and mortgage servicing assets.
- Applied statutory rates of 28.35% for the three months ended March 31, 2020, and 29.56% for each of the three months ended December 31, 2019 and March 31, 2019.
- Included in Amortization of tax credit and other investments on the Consolidated Statement of Income.
- Annualized.