East West Bancorp Reports Record Net Income for 2021 of $873 Million and Diluted Earnings Per Share of $6.10, Both Up by 54% From the Prior Year; Increases Dividend by 21%

East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq: EWBC), parent company of East West Bank, today reported its financial results for the full year and fourth quarter of 2021. For the full year 2021, net income was $873.0 million, or $6.10 per diluted share. For the fourth quarter of 2021, net income was $217.8 million, or $1.52 per diluted share.

“East West achieved record earnings in 2021. Our record total revenue of $1.8 billion grew by 13% year-over-year and our record net income of $873 million grew by 54%,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. “We delivered an attractive return on assets of 1.5% and a return on tangible equity1 of 17.2% in 2021. Our outstanding financial performance reflected robust net interest income and fee income growth, industry-leading efficiency, and substantially improved asset quality. Year-over-year, nonperforming assets decreased by 56% and criticized loans declined by 32%.”

“Total loans reached a record $41.7 billion as of December 31, 2021. Loans grew by $4.3 billion or 12% year-over-year, excluding the impact of the Paycheck Protection Program. Total deposits grew to $53.4 billion as of December 31, 2021, an increase of $8.5 billion or 19% year-over-year, driven by strong growth in noninterest-bearing demand deposits. Demand deposits now make up 43% of our deposits, up from 36% a year ago.”

“We wish to thank our team of more than 3,000 associates who work tirelessly to support our customers in their banking needs. Our ability to deliver strong financial performance year in, year out is a direct result of the hard work and dedication of our associates and their commitment to serve our customers with excellence,” continued Ng.

“We are entering 2022 from a position of strength and are pleased to announce a 21% increase in our common stock dividend. We expect to deliver yet another year of outstanding profitability for our shareholders, supported by solid loan and deposit growth, healthy capital levels, and the asset sensitive nature of our balance sheet in a rising interest rate environment,” concluded Ng.

FINANCIAL HIGHLIGHTS

 

Twelve Months Ended

Year-over-Year Change

($ in millions)

December 31, 2021

$

%

Total Loans (incl. PPP)

$

41,694

$

3,302

9

%

Total Loans (excl. PPP)

 

41,160

 

4,336

12

 

Total Deposits

 

53,351

 

8,488

19

 

Total Revenue

$

1,817

$

205

13

%

Net Income

 

873

 

305

54

1

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

BALANCE SHEET

  • Total Assets – Total assets reached $60.9 billion as of December 31, 2021, compared with $61.0 billion as of September 30, 2021. Year-over-year, total assets grew $8.7 billion or 17% from $52.2 billion as of December 31, 2020.



    Fourth quarter 2021 average interest-earning assets of $58.9 billion grew by $704.6 million, or 5% linked quarter annualized, from $58.2 billion in the third quarter of 2021. The quarter-over-quarter growth in average interest-earning assets mainly consisted of a $1.1 billion increase in average available-for-sale (“AFS”) debt securities and a $572.4 million increase in average loans, partially offset by a $986.0 million decrease in average interest-bearing cash and deposits with banks. Excluding Paycheck Protection Program (“PPP”) loans, average loans grew by $1.0 billion, or 10% linked quarter annualized.
  • Record Loans – Total loans reached $41.7 billion as of December 31, 2021, up by $1.2 billion, or 12% annualized, from $40.5 billion as of September 30, 2021. Excluding PPP loans, total loans grew by $1.5 billion, or 15% linked quarter annualized, with growth well diversified throughout our major loan categories of commercial real estate (“CRE”), commercial and industrial (“C&I”), and residential mortgage. Year-over-year, total loans grew 9% from $38.4 billion as of December 31, 2020. Excluding PPP loans, total loans grew $4.3 billion or 12% year-over-year. PPP loans totaled $534.2 million as of December 31, 2021.



    Fourth quarter 2021 average loans of $40.5 billion grew by $572.4 million, or 6% linked quarter annualized. Excluding PPP loans, average loans grew by $1.0 billion, or 10% annualized, from the third quarter of 2021. The strongest growth was from average C&I loans (excluding PPP), which increased 16% linked quarter annualized. Average total CRE loans and average residential mortgage loans both increased 8% linked quarter annualized.
  • Total Deposits – Total deposits were $53.4 billion as of December 31, 2021, essentially unchanged from $53.4 billion as of September 30, 2021, and up $8.5 billion or 19% from $44.9 billion as of December 31, 2020. Noninterest-bearing demand deposits totaled $22.8 billion as of December 31, 2021, down by $330.0 million, or 6% annualized, from $23.2 billion as of September 30, 2021, and up by $6.5 billion, or 40%, from $16.3 billion as of December 31, 2020. Noninterest-bearing demand deposits made up 43% of total deposits as of both December 31, 2021 and September 30, 2021, up from 36% as of December 31, 2020.



    Fourth quarter 2021 average deposits of $54.3 billion grew by $819.6 million, or 6% linked quarter annualized. Growth in the fourth quarter average deposits was led by noninterest-bearing demand deposits, which increased by $850.0 million, or 15% linked quarter annualized. This was followed by 10% annualized growth in money market deposits, partially offset by decreases in time and interest-bearing checking accounts.
  • Strong Capital Levels – As of December 31, 2021, stockholders’ equity was $5.8 billion, or $41.13 per common share, and tangible equity2 per common share was $37.79. Tangible equity per common share increased by 3% quarter-over-quarter and increased by 12% year-over-year. As of December 31, 2021, the tangible equity to tangible assets ratio2 was 8.88%, the common equity tier 1 (“CET1”) capital ratio was 12.8%, and the total risk-based capital ratio was 14.1%.
  • Dividend Increase – The first quarter 2022 common stock dividend was increased by 21%, or seven cents per share. The new quarterly dividend is $0.40 per share, up from $0.33 per share. The new annual dividend is $1.60 per share, compared with $1.32 per share previously.

2

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

OPERATING RESULTS

Full Year Earnings – Full year 2021 net income was $873.0 million, or $6.10 per diluted share, an increase of 54% from $567.8 million, or $3.97 per diluted share, for the full year 2020.

Fourth Quarter Earnings – Fourth quarter 2021 net income was $217.8 million, or $1.52 per diluted share, compared with $225.4 million, or $1.57 per diluted share, for the third quarter of 2021. Quarter-over-quarter, net income decreased by 3% and diluted earnings per share decreased by 3.5%.

Fourth Quarter 2021 Compared to Third Quarter 2021

Net Interest Income and Net Interest Margin

Net interest income (“NII”) totaled $405.7 million, an increase of 10% annualized from $395.7 million. Net interest margin (“NIM”) of 2.73% increased by three basis points from 2.70%.

  • Excluding the impact of PPP loans, adjusted NII3 totaled $396.1 million, an increase of 16% annualized from $380.5 million. PPP loans contributed $9.6 million to NII in the fourth quarter, compared with $15.2 million in the third quarter.
  • Adjusted NII growth reflected higher interest income from growth in loans and AFS debt securities, as well as lower interest expense because of a lower cost of funds.
  • Adjusted NIM3 of 2.70% increased by six basis points from 2.64%. The quarter-over-quarter adjusted NIM expansion was driven by a favorable shift in the asset mix into higher interest earning assets, and a lower cost of deposits.
  • The average loan yield was 3.59%, down two basis points from the third quarter, and the adjusted average loan yield3 of 3.56% was unchanged quarter-over-quarter.
  • The average cost of funds of 0.12% decreased by two basis points from 0.14%. This reflected growth in average demand deposits, and a continued decline in the cost of interest-bearing deposits. The average cost of deposits of 0.10% decreased by two basis points from 0.12%.

Noninterest Income

Noninterest income totaled $71.5 million in the fourth quarter, compared with $73.1 million in the third quarter.

  • Quarter-over-quarter, lending fees increased $3.2 million or 18%, reflecting higher syndication, trade finance and loan commitment fees. Deposit account fees increased $1.5 million or 8%, due to growth in commercial account fees.
  • Interest rate contracts (“IRC”) and other derivative income was $1.9 million in the fourth quarter, compared with $7.2 million in the third quarter. The $5.2 million quarter-over-quarter decrease was due to lower customer-driven IRC revenue and a smaller favorable change in the credit valuation adjustment, compared with the previous quarter.

3

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

Noninterest Expense

Noninterest expense totaled $210.1 million in the fourth quarter, compared with $205.4 million in the third quarter. Fourth quarter noninterest expense consisted of $177.7 million of adjusted noninterest expense4, $31.8 million in amortization of tax credit and other investments, and $0.6 million in amortization of core deposit intangibles.

  • Adjusted noninterest expense of $177.7 million increased by 7% from $166.7 million in the third quarter. The quarter-over-quarter change reflects increased bonus and incentive compensation expense in the fourth quarter, which was primarily related to full year business activity, as well as higher charitable contributions in other operating expense.
  • Amortization of tax credit and other investments totaled $31.8 million, compared with $38.0 million in the third quarter. Quarter-over-quarter variability in the amortization of tax credits and other investments partially reflects the impact of investments that close in a given period.
  • The adjusted efficiency ratio4 was 37.2% in the fourth quarter, compared with 35.6% in the third quarter.

TAX RELATED ITEMS

Full year 2021 income tax expense was $183.4 million and the effective tax rate was 17.4%, compared with income tax expense of $118.0 million and an effective tax rate of 17.2% for the full year 2020. Fourth quarter 2021 income tax expense was $59.3 million and the effective tax rate was 21.4%, compared with income tax expense of $48.0 million and an effective tax rate of 17.5% for the third quarter of 2021.

ASSET QUALITY

Quarter-over-quarter, nonperforming assets (“NPAs”) decreased by 40%, to 0.17% of total assets, and criticized loans were down 18%, to 2.00% of loans held-for-investment (“HFI”). Year-over-year, NPAs decreased by 56% and criticized loans decreased by 32%.

  • The NPA ratio improved by 11 basis points quarter-over-quarter and by 28 basis points year-over-year. As of December 31, 2021, NPAs were $103.5 million, or 0.17% of total assets, compared with $172.6 million, or 0.28% of total assets, as of September 30, 2021, and $234.9 million, or 0.45% of total assets, as of December 31, 2020.
  • The criticized loan ratio improved by 50 basis points quarter-over-quarter and by 117 basis points year-over-year. As of December 31, 2021, criticized loans totaled $833.1 million, or 2.00% of loans HFI, compared with $1.0 billion, or 2.50% of loans HFI, as of September 30, 2021, and $1.2 billion, or 3.17% of loans HFI as of December 31, 2020.
  • The allowance for loan losses (“ALLL”) totaled $541.6 million, or 1.30% of loans HFI, as of December 31, 2021, compared with $560.4 million, or 1.38% of loans HFI, as of September 30, 2021, and $620.0 million, or 1.61% of loans HFI, as of December 31, 2020. The quarter-over-quarter decrease in the ALLL largely reflects an improved macroeconomic forecast, partially offset by higher downside scenario weightings. Consequently, the Company recorded a negative $10.0 million provision for credit losses during the fourth quarter of 2021.
  • Fourth quarter 2021 net charge-offs were $9.8 million, or annualized 0.10% of average loans HFI, down from $13.5 million, or annualized 0.13% of average loans HFI, for the third quarter of 2021. The net charge-off ratio for the full year of 2021 was 0.13%, a decrease from 0.17% for the full year 2020.

4

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

CAPITAL STRENGTH

Capital levels for East West are strong. The following table presents the regulatory capital metrics as of December 31, 2021, September 30, 2021, and December 31, 2020.

EWBC Risk-Based Capital Ratios

 

($ in millions)

 

December 31, 2021 (a)

 

September 30, 2021 (a)

 

December 31, 2020 (a)

CET1 capital ratio

 

 

12.8

%

 

 

12.8

%

 

 

12.7

%

Tier 1 capital ratio

 

 

12.8

%

 

 

12.8

%

 

 

12.7

%

Total capital ratio

 

 

14.1

%

 

 

14.2

%

 

 

14.3

%

Leverage ratio

 

 

9.0

%

 

 

8.8

%

 

 

9.4

%

Risk-Weighted Assets (“RWA”) (b)

 

$

43,594

 

 

$

42,128

 

 

$

38,406

 

(a)

The Company has elected to use the 2020 CECL transition provision in the calculation of its December 31, 2021, September 30, 2021, and December 31, 2020 regulatory capital ratios. The Company’s December 31, 2021 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 first quarter 2022 dividends for the Company’s common stock. The common stock cash dividend of $0.40 per share is payable on February 22, 2022 to stockholders of record on February 7, 2022. This represents a 21% increase, or seven cents per share, to the quarterly common stock dividend, up from $0.33 per share previously. The new annual dividend is $1.60 per share, compared with $1.32 per share previously.

On March 3, 2020, East West’s Board of Directors authorized the repurchase of up to $500 million of East West’s common stock. East West did not repurchase any shares during the fourth quarter of 2021, and has not repurchased any shares since the first quarter of 2020, under this authorization.

Conference Call

East West will host a conference call to discuss fourth quarter and full year 2021 earnings with the public on Thursday, January 27, 2022, at 8:30 a.m. PT/11:30 a.m. ET. The public and investment community are invited to listen as management discusses fourth quarter and full year 2021 results and operating developments.

  • The following dial-in information is provided for participation in the conference call: calls within the U.S. – (877) 506-6399; calls within Canada – (855) 669-9657; international calls – (412) 902-6699.
  • A presentation to accompany the earnings call will be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.
  • A listen-only live broadcast of the call will also be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.
  • A replay of the conference call will be available on January 27, 2022, at 11:30 a.m. PT through February 27, 2022. 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: 7293241.

About East West

East West Bancorp, Inc. is a public company with total assets of $60.9 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, operating over 120 locations in the United States and in China. The Company’s markets in the United States include California, Georgia, 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 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 relate to the Company’s financial condition, results of operations, plans, objectives, future performance and/or business. They 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,” “target,” “trend,” “remains,” “should,” “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 in the documents incorporated by reference. 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 these 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 global 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 global pandemic; 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 System (the “Federal Reserve”), the Federal Deposit Insurance Corporation (“FDIC”), the SEC, the Consumer Financial Protection Bureau (“CFPB”), and the California Department of Financial Protection and Innovation (“DFPI”) – Division of Financial Institutions; the changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing trade dispute between the U.S. and the People’s Republic of China and the monetary policies of the Federal Reserve; changes in the commercial and consumer real estate markets; changes in consumer or commercial spending, and savings and borrowing habits, patterns and behaviors; fluctuations in the Company’s stock price; 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; 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; impact of the benchmark interest rate reform in the U.S. including the transition away from USD London Interbank Offered Rate (“LIBOR”) to alternative reference rates; impact of communications or technology disruption, failure in, or breach of, the Company’s operational or security systems or infrastructure, or those of third parties 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; 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; impact of adverse changes to the Company’s credit ratings from major credit rating agencies; impact of adverse judgments or settlements in litigation; impact on the Company’s operations due to political developments, disease 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; impact of reputational risk from negative publicity, fines and 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; impact of regulatory enforcement actions; changes in accounting standards as may be required by the Financial Accounting Standards Board (“FASB”) or other regulatory agencies and their impact on critical accounting policies and assumptions; the Company’s capital requirements and its ability to generate capital internally or raise capital on favorable terms; impact on the Company’s liquidity due to changes in the Company’s ability to pay dividends and repurchase common stock and 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; 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, 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 available-for-sale (“AFS”) debt securities portfolio; and 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 2020 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

% or Basis Point Change

 

 

December 31,

2021

 

September 30,

2021

 

December 31,

2020

 

Qtr-o-Qtr

 

Yr-o-Yr

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

527,317

 

 

$

594,631

 

 

$

592,117

 

 

(11.3

) %

 

(10.9

)%

 

Interest-bearing cash with banks

 

 

3,385,618

 

 

 

4,258,270

 

 

 

3,425,854

 

 

(20.5

)

 

(1.2

)

 

Cash and cash equivalents

 

 

3,912,935

 

 

 

4,852,901

 

 

 

4,017,971

 

 

(19.4

)

 

(2.6

)

 

Interest-bearing deposits with banks

 

 

736,492

 

 

 

855,162

 

 

 

809,728

 

 

(13.9

)

 

(9.0

)

 

Assets purchased under resale agreements (“resale agreements”)

 

 

2,353,503

 

 

 

2,596,142

 

 

 

1,460,000

 

 

(9.3

)

 

61.2

 

 

Available-for-sale (“AFS”) debt securities (amortized cost of $10,087,179, $9,783,180 and $5,470,523)

 

 

9,965,353

 

 

 

9,713,006

 

 

 

5,544,658

 

 

2.6

 

 

79.7

 

 

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

 

 

77,434

 

 

 

77,200

 

 

 

83,046

 

 

0.3

 

 

(6.8

)

 

Loans held-for-sale (“HFS”)

 

 

635

 

 

 

 

 

 

1,788

 

 

100.0

 

 

(64.5

)

 

Loans held-for-investment (''HFI'') (net of allowance for loan losses of $541,579, $560,404 and $619,983)

 

 

41,152,202

 

 

 

39,921,301

 

 

 

37,770,972

 

 

3.1

 

 

9.0

 

 

Investments in qualified affordable housing partnerships, net

 

 

289,741

 

 

 

297,367

 

 

 

213,555

 

 

(2.6

)

 

35.7

 

 

Investments in tax credit and other investments, net

 

 

338,522

 

 

 

367,428

 

 

 

266,525

 

 

(7.9

)

 

27.0

 

 

Goodwill

 

 

465,697

 

 

 

465,697

 

 

 

465,697

 

 

 

 

 

 

Operating lease right-of-use assets

 

 

98,632

 

 

 

99,785

 

 

 

95,460

 

 

(1.2

)

 

3.3

 

 

Other assets

 

 

1,479,555

 

 

 

1,713,121

 

 

 

1,427,513

 

 

(13.6

)

 

3.6

 

 

Total assets

 

$

60,870,701

 

 

$

60,959,110

 

 

$

52,156,913

 

 

(0.1

) %

 

16.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

53,350,532

 

 

$

53,356,190

 

 

$

44,862,752

 

 

(0.0

) %

 

18.9

%

 

Short-term borrowings

 

 

 

 

 

 

 

 

21,009

 

 

 

 

(100.0

)

 

FHLB advances

 

 

249,331

 

 

 

248,898

 

 

 

652,612

 

 

0.2

 

 

(61.8

)

 

Assets sold under repurchase agreements (“repurchase agreements”)

 

 

300,000

 

 

 

300,000

 

 

 

300,000

 

 

 

 

 

 

Long-term debt and finance lease liabilities

 

 

151,997

 

 

 

151,795

 

 

 

151,739

 

 

0.1

 

 

0.2

 

 

Operating lease liabilities

 

 

105,534

 

 

 

107,107

 

 

 

102,830

 

 

(1.5

)

 

2.6

 

 

Accrued expenses and other liabilities

 

 

876,089

 

 

 

1,104,919

 

 

 

796,796

 

 

(20.7

)

 

10.0

 

 

Total liabilities

 

 

55,033,483

 

 

 

55,268,909

 

 

 

46,887,738

 

 

(0.4

)

 

17.4

 

 

Stockholders’ equity

 

 

5,837,218

 

 

 

5,690,201

 

 

 

5,269,175

 

 

2.6

 

 

10.8

 

 

Total liabilities and stockholders’ equity

 

$

60,870,701

 

 

$

60,959,110

 

 

$

52,156,913

 

 

(0.1

) %

 

16.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

 

$

41.13

 

 

$

40.10

 

 

$

37.22

 

 

2.6

%

 

10.5

%

 

Tangible equity (1) per common share

 

$

37.79

 

 

$

36.75

 

 

$

33.85

 

 

2.8

 

 

11.6

 

 

Number of common shares at period-end

 

 

141,908

 

 

 

141,884

 

 

 

141,565

 

 

0.0

 

 

0.2

 

 

Tangible equity to tangible assets ratio (1)

 

 

8.88

%

 

 

8.62

%

 

 

9.27

%

 

26

 

bps

(39

)

bps

 

(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

 

 

 

 

 

 

 

 

 

December 31, 2021

% Change

 

 

December 31,

2021

 

September 30,

2021

 

December 31,

2020

 

Qtr-o-Qtr

 

Yr-o-Yr

Loans:

 

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (“C&I”) (1)

 

$

14,150,608

 

 

$

13,831,649

 

 

$

13,631,726

 

 

2.3

%

 

3.8

%

Commercial real estate (“CRE”):

 

 

 

 

 

 

 

 

 

 

CRE

 

 

12,155,047

 

 

 

11,818,065

 

 

 

11,174,611

 

 

2.9

 

 

8.8

 

Multifamily residential

 

 

3,675,605

 

 

 

3,340,378

 

 

 

3,033,998

 

 

10.0

 

 

21.1

 

Construction and land

 

 

346,486

 

 

 

376,921

 

 

 

599,692

 

 

(8.1

)

 

(42.2

)

Total CRE

 

 

16,177,138

 

 

 

15,535,364

 

 

 

14,808,301

 

 

4.1

 

 

9.2

 

Consumer:

 

 

 

 

 

 

 

 

 

 

Residential mortgage:

 

 

 

 

 

 

 

 

 

 

Single-family residential

 

 

9,093,702

 

 

 

9,021,801

 

 

 

8,185,953

 

 

0.8

 

 

11.1

 

Home equity lines of credit (“HELOCs”)

 

 

2,144,821

 

 

 

1,963,622

 

 

 

1,601,716

 

 

9.2

 

 

33.9

 

Total residential mortgage

 

 

11,238,523

 

 

 

10,985,423

 

 

 

9,787,669

 

 

2.3

 

 

14.8

 

Other consumer

 

 

127,512

 

 

 

129,269

 

 

 

163,259

 

 

(1.4

)

 

(21.9

)

Total loans HFI (2)

 

 

41,693,781

 

 

 

40,481,705

 

 

 

38,390,955

 

 

3.0

 

 

8.6

 

Loans HFS

 

 

635

 

 

 

 

 

 

1,788

 

 

100.0

 

 

(64.5

)

Total loans (1)(2)

 

 

41,694,416

 

 

 

40,481,705

 

 

 

38,392,743

 

 

3.0

 

 

8.6

 

Allowance for loan losses

 

 

(541,579

)

 

 

(560,404

)

 

 

(619,983

)

 

(3.4

)

 

(12.6

)

Net loans (2)

 

$

41,152,837

 

 

$

39,921,301

 

 

$

37,772,760

 

 

3.1

 

 

8.9

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

22,845,464

 

 

$

23,175,471

 

 

$

16,298,301

 

 

(1.4

) %

 

40.2

%

Interest-bearing checking

 

 

6,524,721

 

 

 

6,530,601

 

 

 

6,142,193

 

 

(0.1

)

 

6.2

 

Money market

 

 

13,130,300

 

 

 

12,555,879

 

 

 

10,740,667

 

 

4.6

 

 

22.2

 

Savings

 

 

2,888,065

 

 

 

2,855,597

 

 

 

2,681,242

 

 

1.1

 

 

7.7

 

Time deposits

 

 

7,961,982

 

 

 

8,238,642

 

 

 

9,000,349

 

 

(3.4

)

 

(11.5

)

Total deposits

 

$

53,350,532

 

 

$

53,356,190

 

 

$

44,862,752

 

 

(0.0

) %

 

18.9

%

 

(1)

Includes $534.2 million, $807.3 million and $1.57 billion of Paycheck Protection Program (“PPP”) loans as of December 31, 2021, September 30, 2021 and December 31, 2020, respectively. Excluding PPP loans, total loans were $41.16 billion, $39.67 billion and $36.82 billion as of December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

(2)

Includes net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts of $(50.7) million, $(54.3) million and $(58.8) million as of December 31, 2021, September 30, 2021 and December 31, 2020, respectively. Net origination fees related to PPP loans were $(5.7) million, $(13.5) million and $(12.7) million as of December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

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

(unaudited)

Table 3

 

 

 

Three Months Ended

 

December 31, 2021

% Change

 

 

December 31,

2021

 

September 30,

2021

 

December 31,

2020

 

Qtr-o-Qtr

 

Yr-o-Yr

Interest and dividend income (1)

 

$

422,708

 

 

$

415,307

 

 

$

381,348

 

1.8

%

 

10.8

%

Interest expense

 

 

17,011

 

 

 

19,601

 

 

 

34,767

 

(13.2

)

 

(51.1

)

Net interest income before provision for credit losses

 

 

405,697

 

 

 

395,706

 

 

 

346,581

 

2.5

 

 

17.1

 

(Reversal of) provision for credit losses

 

 

(10,000

)

 

 

(10,000

)

 

 

24,340

 

 

 

NM

 

Net interest income after provision for credit losses

 

 

415,697

 

 

 

405,706

 

 

 

322,241

 

2.5

 

 

29.0

 

Noninterest income

 

 

71,489

 

 

 

73,109

 

 

 

69,832

 

(2.2

)

 

2.4

 

Noninterest expense

 

 

210,105

 

 

 

205,384

 

 

 

178,651

 

2.3

 

 

17.6

 

Income before income taxes

 

 

277,081

 

 

 

273,431

 

 

 

213,422

 

1.3

 

 

29.8

 

Income tax expense

 

 

59,285

 

 

 

47,982

 

 

 

49,338

 

23.6

 

 

20.2

 

Net income

 

$

217,796

 

 

$

225,449

 

 

$

164,084

 

(3.4

) %

 

32.7

%

Earnings per share (“EPS”)

 

 

 

 

 

 

 

 

 

 

- Basic

 

$

1.53

 

 

$

1.59

 

 

$

1.16

 

(3.4

) %

 

32.4

%

- Diluted

 

$

1.52

 

 

$

1.57

 

 

$

1.15

 

(3.5

)

 

32.0

 

Weighted-average number of shares outstanding

 

 

 

 

 

 

 

 

 

 

- Basic

 

 

141,907

 

 

 

141,880

 

 

 

141,564

 

0.0

%

 

0.2

%

- Diluted

 

 

143,323

 

 

 

143,143

 

 

 

142,529

 

0.1

 

 

0.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

December 31, 2021

% Change

 

 

December 31,

2021

 

September 30,

2021

 

December 31,

2020

 

Qtr-o-Qtr

 

Yr-o-Yr

Noninterest income:

 

 

 

 

 

 

 

 

 

 

Lending fees

 

$

20,739

 

 

$

17,516

 

 

$

18,387

 

18.4

%

 

12.8

%

Deposit account fees

 

 

20,028

 

 

 

18,508

 

 

 

14,256

 

8.2

 

 

40.5

 

Interest rate contracts and other derivative income

 

 

1,932

 

 

 

7,156

 

 

 

12,967

 

(73.0

)

 

(85.1

)

Foreign exchange income

 

 

13,343

 

 

 

13,101

 

 

 

6,679

 

1.8

 

 

99.8

 

Wealth management fees

 

 

5,291

 

 

 

5,598

 

 

 

4,497

 

(5.5

)

 

17.7

 

Net gains on sales of loans

 

 

2,308

 

 

 

3,329

 

 

 

3,058

 

(30.7

)

 

(24.5

)

Gains on sales of AFS debt securities

 

 

390

 

 

 

354

 

 

 

432

 

10.2

 

 

(9.7

)

Other investment income

 

 

2,982

 

 

 

5,349

 

 

 

3,989

 

(44.3

)

 

(25.2

)

Other income

 

 

4,476

 

 

 

2,198

 

 

 

5,567

 

103.6

 

 

(19.6

)

Total noninterest income

 

$

71,489

 

 

$

73,109

 

 

$

69,832

 

(2.2

) %

 

2.4

%

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

$

114,743

 

 

$

105,751

 

 

$

105,400

 

8.5

%

 

8.9

%

Occupancy and equipment expense

 

 

15,846

 

 

 

15,851

 

 

 

16,548

 

(0.0

)

 

(4.2

)

Deposit insurance premiums and regulatory assessments

 

 

4,772

 

 

 

4,641

 

 

 

3,995

 

2.8

 

 

19.4

 

Deposit account expense

 

 

4,307

 

 

 

4,136

 

 

 

3,501

 

4.1

 

 

23.0

 

Data processing

 

 

4,175

 

 

 

3,575

 

 

 

4,707

 

16.8

 

 

(11.3

)

Computer software expense

 

 

7,494

 

 

 

8,426

 

 

 

7,027

 

(11.1

)

 

6.6

 

Consulting expense

 

 

1,539

 

 

 

1,635

 

 

 

1,537

 

(5.9

)

 

0.1

 

Legal expense

 

 

2,175

 

 

 

2,363

 

 

 

1,673

 

(8.0

)

 

30.0

 

Other operating expense

 

 

23,254

 

 

 

20,998

 

 

 

22,000

 

10.7

 

 

5.7

 

Amortization of tax credit and other investments

 

 

31,800

 

 

 

38,008

 

 

 

12,263

 

(16.3

)

 

159.3

 

Total noninterest expense

 

$

210,105

 

 

$

205,384

 

 

$

178,651

 

2.3

%

 

17.6

%

 
NM - Not meaningful.

(1)

Includes $9.6 million, $15.2 million and $14.2 million of interest income related to PPP loans for the three months ended December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

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

(unaudited)

Table 4

 

 

 

Year Ended

 

December 31, 2021

% Change

 

 

December 31,

2021

 

December 31,

2020

 

Yr-o-Yr

Interest and dividend income (1)

 

$

1,618,734

 

 

$

1,595,042

 

1.5

%

Interest expense

 

 

87,163

 

 

 

217,849

 

(60.0

)

Net interest income before provision for credit losses

 

 

1,531,571

 

 

 

1,377,193

 

11.2

 

(Reversal of ) provision for credit losses

 

 

(35,000

)

 

 

210,653

 

NM

 

Net interest income after provision for credit losses

 

 

1,566,571

 

 

 

1,166,540

 

34.3

 

Noninterest income

 

 

285,895

 

 

 

235,547

 

21.4

 

Noninterest expense

 

 

796,089

 

 

 

716,322

 

11.1

 

Income before income taxes

 

 

1,056,377

 

 

 

685,765

 

54.0

 

Income tax expense

 

 

183,396

 

 

 

117,968

 

55.5

 

Net income

 

$

872,981

 

 

$

567,797

 

53.7

%

EPS

 

 

 

 

 

 

- Basic

 

$

6.16

 

 

$

3.99

 

54.3

%

- Diluted

 

$

6.10

 

 

$

3.97

 

53.6

 

Weighted-average number of shares outstanding

 

 

 

 

 

 

- Basic

 

 

141,826

 

 

 

142,336

 

(0.4

)%

- Diluted

 

 

143,140

 

 

 

142,991

 

0.1

 

 

 

 

 

 

 

 

 

 

Year Ended

 

December 31, 2021

% Change

 

 

December 31,

2021

 

December 31,

2020

 

Yr-o-Yr

Noninterest income:

 

 

 

 

 

 

Lending fees

 

$

77,704

 

 

$

74,842

 

3.8

%

Deposit account fees

 

 

71,261

 

 

 

48,148

 

48.0

 

Interest rate contracts and other derivative income

 

 

22,913

 

 

 

31,685

 

(27.7

)

Foreign exchange income

 

 

48,977

 

 

 

22,370

 

118.9

 

Wealth management fees

 

 

25,751

 

 

 

17,494

 

47.2

 

Net gains on sales of loans

 

 

8,909

 

 

 

4,501

 

97.9

 

Gains on sales of AFS debt securities

 

 

1,568

 

 

 

12,299

 

(87.3

)

Other investment income

 

 

16,852

 

 

 

10,641

 

58.4

 

Other income

 

 

11,960

 

 

 

13,567

 

(11.8

)

Total noninterest income

 

$

285,895

 

 

$

235,547

 

21.4

%

Noninterest expense:

 

 

 

 

 

 

Compensation and employee benefits

 

$

433,728

 

 

$

404,071

 

7.3

%

Occupancy and equipment expense

 

 

62,996

 

 

 

66,489

 

(5.3

)

Deposit insurance premiums and regulatory assessments

 

 

17,563

 

 

 

15,128

 

16.1

 

Deposit account expense

 

 

16,152

 

 

 

13,530

 

19.4

 

Data processing

 

 

16,263

 

 

 

16,603

 

(2.0

)

Computer software expense

 

 

30,600

 

 

 

29,033

 

5.4

 

Consulting expense

 

 

6,517

 

 

 

5,391

 

20.9

 

Legal expense

 

 

8,015

 

 

 

7,766

 

3.2

 

Other operating expense

 

 

81,798

 

 

 

79,489

 

2.9

 

Amortization of tax credit and other investments

 

 

122,457

 

 

 

70,082

 

74.7

 

Repurchase agreements’ extinguishment cost

 

 

 

 

 

8,740

 

(100.0

)

Total noninterest expense

 

$

796,089

 

 

$

716,322

 

11.1

%

 
NM - Not meaningful.

(1)

Includes $55.2 million and $43.3 million of interest income related to PPP loans for the years ended December 31, 2021 and 2020, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED AVERAGE BALANCES

($ in thousands)

(unaudited)

Table 5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

December 31, 2021

% Change

 

Year Ended

 

December 31, 2021

% Change

 

 

December 31,

2021

 

September 30,

2021

 

December 31,

2020

 

Qtr-o-Qtr

 

Yr-o-Yr

 

December 31,

2021

 

December 31,

2020

 

Yr-o-Yr

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C&I (1)

 

$

13,592,203

 

$

13,531,338

 

$

13,332,194

 

0.4

%

 

2.0

%

 

$

13,656,720

 

$

13,074,883

 

4.5

%

CRE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CRE

 

 

11,954,535

 

 

11,747,607

 

 

11,067,392

 

1.8

 

 

8.0

 

 

 

11,663,144

 

 

10,828,037

 

7.7

 

Multifamily residential

 

 

3,434,274

 

 

3,248,281

 

 

3,051,472

 

5.7

 

 

12.5

 

 

 

3,213,582

 

 

3,009,365

 

6.8

 

Construction and land

 

 

340,940

 

 

415,812

 

 

588,665

 

(18.0

)

 

(42.1

)

 

 

445,333

 

 

597,118

 

(25.4

)

Total CRE

 

 

15,729,749

 

 

15,411,700

 

 

14,707,529

 

2.1

 

 

7.0

 

 

 

15,322,059

 

 

14,434,520

 

6.1

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Single-family residential

 

 

9,031,677

 

 

8,962,533

 

 

7,990,035

 

0.8

 

 

13.0

 

 

 

8,742,565

 

 

7,613,706

 

14.8

 

HELOCs

 

 

2,052,383

 

 

1,912,629

 

 

1,558,781

 

7.3

 

 

31.7

 

 

 

1,859,073

 

 

1,480,516

 

25.6

 

Total residential mortgage

 

 

11,084,060

 

 

10,875,162

 

 

9,548,816

 

1.9

 

 

16.1

 

 

 

10,601,638

 

 

9,094,222

 

16.6

 

Other consumer

 

 

126,557

 

 

141,951

 

 

137,186

 

(10.8

)

 

(7.7

)

 

 

136,280

 

 

195,392

 

(30.3

)

Total loans (2)

 

$

40,532,569

 

$

39,960,151

 

$

37,725,725

 

1.4

%

 

7.4

%

 

$

39,716,697

 

$

36,799,017

 

7.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets

 

$

58,944,082

 

$

58,239,480

 

$

49,703,349

 

1.2

%

 

18.6

%

 

$

56,256,388

 

$

46,239,709

 

21.7

%

Total assets

 

$

62,183,137

 

$

61,359,533

 

$

52,466,325

 

1.3

%

 

18.5

%

 

$

59,251,091

 

$

48,937,793

 

21.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

24,019,333

 

$

23,169,323

 

$

16,311,010

 

3.7

%

 

47.3

%

 

$

21,271,410

 

$

13,823,152

 

53.9

%

Interest-bearing checking

 

 

6,462,471

 

 

6,646,515

 

 

6,067,849

 

(2.8

)

 

6.5

 

 

 

6,543,817

 

 

5,357,934

 

22.1

 

Money market

 

 

12,920,174

 

 

12,604,827

 

 

10,626,940

 

2.5

 

 

21.6

 

 

 

12,428,025

 

 

9,881,284

 

25.8

 

Savings

 

 

2,841,352

 

 

2,792,702

 

 

2,450,980

 

1.7

 

 

15.9

 

 

 

2,746,933

 

 

2,234,913

 

22.9

 

Time deposits

 

 

8,072,917

 

 

8,283,265

 

 

8,965,337

 

(2.5

)

 

(10.0

)

 

 

8,493,511

 

 

9,465,608

 

(10.3

)

Total deposits

 

$

54,316,247

 

$

53,496,632

 

$

44,422,116

 

1.5

%

 

22.3

%

 

$

51,483,696

 

$

40,762,891

 

26.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

$

31,011,536

 

$

31,039,410

 

$

29,666,559

 

(0.1

)%

 

4.5

%

 

$

31,077,459

 

$

28,798,277

 

7.9

%

Stockholders’ equity

 

$

5,786,237

 

$

5,680,306

 

$

5,243,203

 

1.9

%

 

10.4

%

 

$

5,559,212

 

$

5,082,186

 

9.4

%

 

(1)

Includes average balances of PPP loans of $677.2 million, $1.11 billion and $1.70 billion for the three months ended December 31, 2021, September 30, 2021 and December 31, 2020, respectively, and $1.39 billion and $1.24 billion for the years ended December 31, 2021 and 2020, respectively.

(2)

Includes loans HFS.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 6

 

 

 

Three Months Ended

 

 

December 31, 2021

 

September 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

 

$

6,050,870

 

 

$

3,750

 

0.25

%

 

$

7,036,823

 

 

$

4,521

 

0.25

%

Resale agreements

 

 

2,440,636

 

 

 

9,162

 

1.49

%

 

 

2,382,741

 

 

 

8,957

 

1.49

%

AFS debt securities

 

 

9,842,691

 

 

 

42,367

 

1.71

%

 

 

8,782,682

 

 

 

37,826

 

1.71

%

Loans (2)

 

 

40,532,569

 

 

 

366,936

 

3.59

%

 

 

39,960,151

 

 

 

363,503

 

3.61

%

FHLB and FRB stock

 

 

77,316

 

 

 

493

 

2.53

%

 

 

77,083

 

 

 

500

 

2.57

%

Total interest-earning assets

 

 

58,944,082

 

 

 

422,708

 

2.85

%

 

 

58,239,480

 

 

 

415,307

 

2.83

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

652,126

 

 

 

 

 

 

 

627,640

 

 

 

 

 

Allowance for loan losses

 

 

(558,645

)

 

 

 

 

 

 

(584,827

)

 

 

 

 

Other assets

 

 

3,145,574

 

 

 

 

 

 

 

3,077,240

 

 

 

 

 

Total assets

 

$

62,183,137

 

 

 

 

 

 

$

61,359,533

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Checking deposits

 

$

6,462,471

 

 

$

1,846

 

0.11

%

 

$

6,646,515

 

 

$

3,186

 

0.19

%

Money market deposits

 

 

12,920,174

 

 

 

3,172

 

0.10

%

 

 

12,604,827

 

 

 

3,446

 

0.11

%

Savings deposits

 

 

2,841,352

 

 

 

1,734

 

0.24

%

 

 

2,792,702

 

 

 

1,943

 

0.28

%

Time deposits

 

 

8,072,917

 

 

 

6,617

 

0.33

%

 

 

8,283,265

 

 

 

7,395

 

0.35

%

Federal funds purchased and other short-term borrowings

 

 

730

 

 

 

 

%

 

 

620

 

 

 

 

%

FHLB advances

 

 

249,048

 

 

 

856

 

1.36

%

 

 

248,614

 

 

 

857

 

1.37

%

Repurchase agreements

 

 

313,075

 

 

 

2,018

 

2.56

%

 

 

310,997

 

 

 

2,012

 

2.57

%

Long-term debt and finance lease liabilities

 

 

151,769

 

 

 

768

 

2.01

%

 

 

151,870

 

 

 

762

 

1.99

%

Total interest-bearing liabilities

 

 

31,011,536

 

 

 

17,011

 

0.22

%

 

 

31,039,410

 

 

 

19,601

 

0.25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities and stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

24,019,333

 

 

 

 

 

 

 

23,169,323

 

 

 

 

 

Accrued expenses and other liabilities

 

 

1,366,031

 

 

 

 

 

 

 

1,470,494

 

 

 

 

 

Stockholders’ equity

 

 

5,786,237

 

 

 

 

 

 

 

5,680,306

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

62,183,137

 

 

 

 

 

 

$

61,359,533

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

2.63

%

 

 

 

 

 

2.58

%

Net interest income and net interest margin

 

 

 

$

405,697

 

2.73

%

 

 

 

$

395,706

 

2.70

%

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

 

 

 

$

396,105

 

2.70

%

 

 

 

$

380,494

 

2.64

%

 

(1)

Annualized.

(2)

Includes loans HFS. Average balances of PPP loans were $677.2 million and $1.11 billion for the three months ended December 31, 2021 and September 30, 2021, respectively.

(3)

Net interest income and net interest margin for the three months ended December 31, 2021 and September 30, 2021 have been adjusted for the impact of PPP loans. See reconciliation of GAAP to non-GAAP financial measures in Table 14.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 7

 

 

 

Three Months Ended

 

December 31, 2021

 

December 31, 2020

 

Average

 

 

 

Average

 

Average

 

 

 

Average

 

Balance

 

Interest

 

Yield/Rate(1)

 

Balance

 

Interest

 

Yield/Rate(1)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing cash and deposits with banks

 

$

6,050,870

 

 

$

3,750

 

0.25

%

 

$

5,609,965

 

 

$

4,458

 

0.32

%

Resale agreements

 

 

2,440,636

 

 

 

9,162

 

1.49

%

 

 

1,257,826

 

 

 

4,955

 

1.57

%

AFS debt securities

 

 

9,842,691

 

 

 

42,367

 

1.71

%

 

 

5,029,820

 

 

 

22,914

 

1.81

%

Loans (2)

 

 

40,532,569

 

 

 

366,936

 

3.59

%

 

 

37,725,725

 

 

 

348,578

 

3.68

%

FHLB and FRB stock

 

 

77,316

 

 

 

493

 

2.53

%

 

 

80,013

 

 

 

443

 

2.20

%

Total interest-earning assets

 

 

58,944,082

 

 

 

422,708

 

2.85

%

 

 

49,703,349

 

 

 

381,348

 

3.05

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

652,126

 

 

 

 

 

 

 

580,989

 

 

 

 

 

Allowance for loan losses

 

 

(558,645

)

 

 

 

 

 

 

(618,207

)

 

 

 

 

Other assets

 

 

3,145,574

 

 

 

 

 

 

 

2,800,194

 

 

 

 

 

Total assets

 

$

62,183,137

 

 

 

 

 

 

$

52,466,325

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Checking deposits

 

$

6,462,471

 

 

$

1,846

 

0.11

%

 

$

6,067,849

 

 

$

4,218

 

0.28

%

Money market deposits

 

 

12,920,174

 

 

 

3,172

 

0.10

%

 

 

10,626,940

 

 

 

5,542

 

0.21

%

Savings deposits

 

 

2,841,352

 

 

 

1,734

 

0.24

%

 

 

2,450,980

 

 

 

1,655

 

0.27

%

Time deposits

 

 

8,072,917

 

 

 

6,617

 

0.33

%

 

 

8,965,337

 

 

 

16,727

 

0.74

%

Federal funds purchased and other short-term borrowings

 

 

730

 

 

 

 

%

 

 

47,500

 

 

 

276

 

2.31

%

FHLB advances

 

 

249,048

 

 

 

856

 

1.36

%

 

 

653,748

 

 

 

3,137

 

1.91

%

Repurchase agreements

 

 

313,075

 

 

 

2,018

 

2.56

%

 

 

335,737

 

 

 

2,080

 

2.46

%

Long-term debt and finance lease liabilities

 

 

151,769

 

 

 

768

 

2.01

%

 

 

518,468

 

(3

)

 

1,132

 

0.87

%

Total interest-bearing liabilities

 

 

31,011,536

 

 

 

17,011

 

0.22

%

 

 

29,666,559

 

 

 

34,767

 

0.47

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities and stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

24,019,333

 

 

 

 

 

 

 

16,311,010

 

 

 

 

 

Accrued expenses and other liabilities

 

 

1,366,031

 

 

 

 

 

 

 

1,245,553

 

 

 

 

 

Stockholders’ equity

 

 

5,786,237

 

 

 

 

 

 

 

5,243,203

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

62,183,137

 

 

 

 

 

 

$

52,466,325

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

2.63

%

 

 

 

 

 

2.58

%

Net interest income and net interest margin

 

 

 

$

405,697

 

2.73

%

 

 

 

$

346,581

 

2.77

%

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

 

 

 

$

396,105

 

2.70

%

 

 

 

$

332,701

 

2.76

%

 

(1)

Annualized.

(2)

Includes loans HFS. Average balances of PPP loans were $677.2 million and $1.70 billion for the three months ended December 31, 2021 and 2020, respectively.

(3)

Primarily includes average balances from the Federal Reserve Paycheck Protection Program Liquidity Facility (“PPPLF”), which was repaid in full during the fourth quarter of 2020.

(4)

Net interest income and net interest margin for the three months ended December 31, 2021 and 2020 have been adjusted for the impact of PPP loans. Net interest margin for the three months ended December 31, 2020 has been adjusted for advances from the PPPLF. See reconciliation of GAAP to non-GAAP financial measures in Table 14.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 8

 

 

Year Ended

December 31, 2021

 

December 31, 2020

Average

 

 

 

Average

 

Average

 

 

 

Average

Balance

 

Interest

 

Yield/Rate

 

Balance

 

Interest

 

Yield/Rate

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing cash and deposits with banks

 

$

6,071,896

 

 

$

15,531

 

0.26

%

 

$

4,236,430

 

 

$

25,175

 

0.59

%

Resale agreements (1)

 

 

2,107,157

 

 

 

32,239

 

1.53

%

 

 

1,101,434

 

 

 

21,389

 

1.94

%

AFS debt securities

 

 

8,281,234

 

 

 

143,983

 

1.74

%

 

 

4,023,668

 

 

 

82,553

 

2.05

%

Loans (2)

 

 

39,716,697

 

 

 

1,424,900

 

3.59

%

 

 

36,799,017

 

 

 

1,464,382

 

3.98

%

FHLB and FRB stock

 

 

79,404

 

 

 

2,081

 

2.62

%

 

 

79,160

 

 

 

1,543

 

1.95

%

Total interest-earning assets

 

 

56,256,388

 

 

 

1,618,734

 

2.88

%

 

 

46,239,709

 

 

 

1,595,042

 

3.45

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

615,255

 

 

 

 

 

 

 

528,406

 

 

 

 

 

Allowance for loan losses

 

 

(592,211

)

 

 

 

 

 

 

(577,560

)

 

 

 

 

Other assets

 

 

2,971,659

 

 

 

 

 

 

 

2,747,238

 

 

 

 

 

Total assets

 

$

59,251,091

 

 

 

 

 

 

$

48,937,793

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Checking deposits

 

$

6,543,817

 

 

$

13,023

 

0.20

%

 

$

5,357,934

 

 

$

24,213

 

0.45

%

Money market deposits

 

 

12,428,025

 

 

 

15,041

 

0.12

%

 

 

9,881,284

 

 

 

42,720

 

0.43

%

Savings deposits

 

 

2,746,933

 

 

 

7,496

 

0.27

%

 

 

2,234,913

 

 

 

6,398

 

0.29

%

Time deposits

 

 

8,493,511

 

 

 

33,599

 

0.40

%

 

 

9,465,608

 

 

 

111,411

 

1.18

%

Federal funds purchased and other short-term borrowings

 

 

1,584

 

 

 

42

 

2.65

%

 

 

108,398

 

 

 

1,504

 

1.39

%

FHLB advances

 

 

404,789

 

 

 

6,881

 

1.70

%

 

 

664,370

 

 

 

13,792

 

2.08

%

Repurchase agreements (1)

 

 

306,845

 

 

 

7,999

 

2.61

%

 

 

350,849

 

 

 

11,766

 

3.35

%

Long-term debt and finance lease liabilities

 

 

151,955

 

 

 

3,082

 

2.03

%

 

 

734,921

 

(3

)

 

6,045

 

0.82

%

Total interest-bearing liabilities

 

 

31,077,459

 

 

 

87,163

 

0.28

%

 

 

28,798,277

 

 

 

217,849

 

0.76

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities and stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

21,271,410

 

 

 

 

 

 

 

13,823,152

 

 

 

 

 

Accrued expenses and other liabilities

 

 

1,343,010

 

 

 

 

 

 

 

1,234,178

 

 

 

 

 

Stockholders’ equity

 

 

5,559,212

 

 

 

 

 

 

 

5,082,186

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

59,251,091

 

 

 

 

 

 

$

48,937,793

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

2.60

%

 

 

 

 

 

2.69

%

Net interest income and net interest margin

 

 

 

$

1,531,571

 

2.72

%

 

 

 

$

1,377,193

 

2.98

%

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

 

 

 

$

1,476,373

 

2.69

%

 

 

 

$

1,335,968

 

2.97

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Average balances of resale and repurchase agreements for the year ended December 31, 2020 have been reported net, pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. The weighted-average yields of gross resale and gross repurchase agreements for the year ended December 31, 2020 were 1.94% and 3.25%, respectively.

(2)

Includes loans HFS. Average balances of PPP loans were $1.39 billion and $1.24 billion for the years ended December 31, 2021 and 2020, respectively.

(3)

Primarily includes average balances of PPPLF, which was repaid in full during the fourth quarter of 2020.

(4)

Net interest income and net interest margin for the year ended December 31, 2021 and 2020 have been adjusted for the impact of PPP loans. Net interest margin for the year ended December 31, 2020 has been adjusted for advances from the PPPLF. See reconciliation of GAAP to non-GAAP financial measures in Table 14.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED RATIOS

(unaudited)

Table 9

 

 

 

Three Months Ended (1)

 

December 31, 2021

Basis Point Change

 

 

December 31,

2021

 

September 30,

2021

 

December 31,

2020

 

Qtr-o-Qtr

 

Yr-o-Yr

 

Return on average assets

 

1.39

%

 

1.46

%

 

1.24

%

 

(7

)

bps

15

 

bps

Return on average equity

 

14.93

%

 

15.75

%

 

12.45

%

 

(82

)

 

248

 

 

Return on average tangible equity (2)

 

16.32

%

 

17.25

%

 

13.77

%

 

(93

)

 

255

 

 

Adjusted return on average tangible equity (2)

 

16.32

%

 

17.25

%

 

13.56

%

 

(93

)

 

276

 

 

Interest rate spread

 

2.63

%

 

2.58

%

 

2.58

%

 

5

 

 

5

 

 

Net interest margin

 

2.73

%

 

2.70

%

 

2.77

%

 

3

 

 

(4

)

 

Adjusted net interest margin (2)

 

2.70

%

 

2.64

%

 

2.76

%

 

6

 

 

(6

)

 

Average loan yield

 

3.59

%

 

3.61

%

 

3.68

%

 

(2

)

 

(9

)

 

Adjusted average loan yield (2)

 

3.56

%

 

3.56

%

 

3.69

%

 

 

 

(13

)

 

Yield on average interest-earning assets

 

2.85

%

 

2.83

%

 

3.05

%

 

2

 

 

(20

)

 

Average cost of interest-bearing deposits

 

0.18

%

 

0.21

%

 

0.40

%

 

(3

)

 

(22

)

 

Average cost of deposits

 

0.10

%

 

0.12

%

 

0.25

%

 

(2

)

 

(15

)

 

Average cost of funds

 

0.12

%

 

0.14

%

 

0.30

%

 

(2

)

 

(18

)

 

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

 

1.91

%

 

1.95

%

 

1.90

%

 

(4

)

 

1

 

 

Adjusted noninterest expense/average assets (2)

 

1.13

%

 

1.08

%

 

1.26

%

 

5

 

 

(13

)

 

Efficiency ratio

 

44.03

%

 

43.81

%

 

42.90

%

 

22

 

 

113

 

 

Adjusted efficiency ratio (2)

 

37.24

%

 

35.55

%

 

39.76

%

 

169

 

bps

(252

)

bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

December 31, 2021

Basis Point Change

 

 

 

 

 

 

December 31,

2021

 

December 31,

2020

 

Yr-o-Yr

 

 

 

 

Return on average assets

 

1.47

%

 

1.16

%

 

31

 

bps

 

 

 

 

Return on average equity

 

15.70

%

 

11.17

%

 

453

 

 

 

 

 

 

Return on average tangible equity (2)

 

17.24

%

 

12.42

%

 

482

 

 

 

 

 

 

Adjusted return on average tangible equity (2)

 

17.24

%

 

12.37

%

 

487

 

 

 

 

 

 

Interest rate spread

 

2.60

%

 

2.69

%

 

(9

)

 

 

 

 

 

Net interest margin

 

2.72

%

 

2.98

%

 

(26

)

 

 

 

 

 

Adjusted net interest margin (2)

 

2.69

%

 

2.97

%

 

(28

)

 

 

 

 

 

Average loan yield

 

3.59

%

 

3.98

%

 

(39

)

 

 

 

 

 

Adjusted average loan yield (2)

 

3.57

%

 

4.00

%

 

(43

)

 

 

 

 

 

Yield on average interest-earning assets

 

2.88

%

 

3.45

%

 

(57

)

 

 

 

 

 

Average cost of interest-bearing deposits

 

0.23

%

 

0.69

%

 

(46

)

 

 

 

 

 

Average cost of deposits

 

0.13

%

 

0.45

%

 

(32

)

 

 

 

 

 

Average cost of funds

 

0.17

%

 

0.51

%

 

(34

)

 

 

 

 

 

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

 

1.94

%

 

2.00

%

 

(6

)

 

 

 

 

 

Adjusted noninterest expense/average assets (2)

 

1.13

%

 

1.30

%

 

(17

)

 

 

 

 

 

Efficiency ratio

 

43.80

%

 

44.42

%

 

(62

)

 

 

 

 

 

Adjusted efficiency ratio (2)

 

36.91

%

 

39.30

%

 

(239

)

bps

 

 

 

 

(1)

Annualized except for efficiency ratio.

(2)

See reconciliation of GAAP to non-GAAP financial measures in Tables 12, 13 and 14.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

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

($ in thousands)

(unaudited)

Table 10

 

 

 

 

Three Months Ended December 31, 2021

 

 

 

Commercial

 

Consumer

 

 

 

 

 

C&I

 

Total CRE

 

Total Residential

Mortgage

 

Other Consumer

 

Total

Allowance for loan losses, September 30, 2021

 

 

$

342,142

 

 

$

192,260

 

 

$

21,684

 

 

$

4,318

 

 

$

560,404

 

Provision for (reversal of) credit losses on loans

(a)

 

 

2,397

 

 

 

(9,416

)

 

 

(1,519

)

 

 

(940

)

 

 

(9,478

)

Gross charge-offs

 

 

 

(12,328

)

 

 

(2,872

)

 

 

 

 

 

(1,454

)

 

 

(16,654

)

Gross recoveries

 

 

 

5,605

 

 

 

836

 

 

 

430

 

 

 

 

 

 

6,871

 

Total net (charge-offs) recoveries

 

 

 

(6,723

)

 

 

(2,036

)

 

 

430

 

 

 

(1,454

)

 

 

(9,783

)

Foreign currency translation adjustment

 

 

 

436

 

 

 

 

 

 

 

 

 

 

 

 

436

 

Allowance for loan losses, December 31, 2021

 

 

$

338,252

 

 

$

180,808

 

 

$

20,595

 

 

$

1,924

 

 

$

541,579

 

 

 

 

Three Months Ended September 30, 2021

 

 

 

Commercial

 

Consumer

 

 

 

 

 

C&I

 

Total CRE

 

Total Residential

Mortgage

 

Other Consumer

 

Total

Allowance for loan losses, June 30, 2021

 

 

$

362,528

 

 

$

199,530

 

 

$

19,468

 

 

$

4,198

 

 

$

585,724

 

(Reversal of) provision for credit losses on loans

(a)

 

 

(23,365

)

 

 

8,527

 

 

 

2,972

 

 

 

130

 

 

 

(11,736

)

Gross charge-offs

 

 

 

(1,154

)

 

 

(16,903

)

 

 

(912

)

 

 

(10

)

 

 

(18,979

)

Gross recoveries

 

 

 

4,203

 

 

 

1,106

 

 

 

156

 

 

 

 

 

 

5,465

 

Total net recoveries (charge-offs)

 

 

 

3,049

 

 

 

(15,797

)

 

 

(756

)

 

 

(10

)

 

 

(13,514

)

Foreign currency translation adjustment

 

 

 

(70

)

 

 

 

 

 

 

 

 

 

 

 

(70

)

Allowance for loan losses, September 30, 2021

 

 

$

342,142

 

 

$

192,260

 

 

$

21,684

 

 

$

4,318

 

 

$

560,404

 

 

 

 

Three Months Ended December 31, 2020

 

 

 

Commercial

 

Consumer

 

 

 

 

 

C&I

 

Total CRE

 

Total Residential

Mortgage

 

Other Consumer

 

Total

Allowance for loan losses, September 30, 2020

 

 

$

389,021

 

 

$

201,018

 

 

$

25,895

 

 

$

2,318

 

 

$

618,252

 

Provision for (reversal of) credit losses on loans

(a)

 

 

15,041

 

 

 

12,837

 

 

 

(7,848

)

 

 

(184

)

 

 

19,846

 

Gross charge-offs

 

 

 

(8,759

)

 

 

(12,518

)

 

 

 

 

 

(5

)

 

 

(21,282

)

Gross recoveries

 

 

 

2,033

 

 

 

266

 

 

 

163

 

 

 

1

 

 

 

2,463

 

Total net (charge-offs) recoveries

 

 

 

(6,726

)

 

 

(12,252

)

 

 

163

 

 

 

(4

)

 

 

(18,819

)

Foreign currency translation adjustment

 

 

 

704

 

 

 

 

 

 

 

 

 

 

 

 

704

 

Allowance for loan losses, December 31, 2020

 

 

$

398,040

 

 

$

201,603

 

 

$

18,210

 

 

$

2,130

 

 

$

619,983

 

 

EAST WEST BANCORP, INC. AND SUBSIDIARIES

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

($ in thousands)

(unaudited)

Table 10 (continued)

 

 

 

 

Year Ended December 31, 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)

 

 

(39,715

)

 

 

6,782

 

 

 

2,710

 

 

 

1,286

 

 

 

(28,937

)

Gross charge-offs

 

 

 

(32,490

)

 

 

(31,514

)

 

 

(1,091

)

 

 

(1,497

)

 

 

(66,592

)

Gross recoveries

 

 

 

11,906

 

 

 

3,937

 

 

 

766

 

 

 

5

 

 

 

16,614

 

Total net charge-offs

 

 

 

(20,584

)

 

 

(27,577

)

 

 

(325

)

 

 

(1,492

)

 

 

(49,978

)

Foreign currency translation adjustment

 

 

 

511

 

 

 

 

 

 

 

 

 

 

 

 

511

 

Allowance for loan losses, December 31, 2021

 

 

$

338,252

 

 

$

180,808

 

 

$

20,595

 

 

$

1,924

 

 

$

541,579

 

 

 

 

 

 

Year Ended December 31, 2020

 

 

 

Commercial

 

Consumer

 

 

 

 

 

C&I

 

Total CRE

 

Total Residential

Mortgage

 

Other Consumer

 

Total

Allowance for loan losses, December 31, 2019

 

 

$

238,376

 

 

$

82,739

 

 

$

33,792

 

 

$

3,380

 

 

$

358,287

 

Impact of ASU 2016-13 adoption

 

 

 

74,237

 

 

 

54,168

 

 

 

(5,468

)

 

 

2,221

 

 

 

125,158

 

Allowance for loan losses, January 1, 2020

 

 

$

312,613

 

 

$

136,907

 

 

$

28,324

 

 

$

5,601

 

 

$

483,445

 

Provision for (reversal of) credit losses on loans

(a)

 

 

145,212

 

 

 

67,387

 

 

 

(10,527

)

 

 

(3,381

)

 

 

198,691

 

Gross charge-offs

 

 

 

(66,225

)

 

 

(15,206

)

 

 

(221

)

 

 

(185

)

 

 

(81,837

)

Gross recoveries

 

 

 

5,428

 

 

 

12,515

 

 

 

634

 

 

 

95

 

 

 

18,672

 

Total net (charge-offs) recoveries

 

 

 

(60,797

)

 

 

(2,691

)

 

 

413

 

 

 

(90

)

 

 

(63,165

)

Foreign currency translation adjustment

 

 

 

1,012

 

 

 

 

 

 

 

 

 

 

 

 

1,012

 

Allowance for loan losses, December 31, 2020

 

 

$

398,040

 

 

$

201,603

 

 

$

18,210

 

 

$

2,130

 

 

$

619,983

 

 

 

 

Three Months Ended

 

Year Ended

 

 

 

December 31,

2021

 

September 30,

2021

 

December 31,

2020

 

December 31,

2021

 

December 31,

2020

Unfunded Credit Facilities

 

 

 

 

 

 

 

 

 

 

 

Allowance for unfunded credit commitments, beginning of period (1)

 

 

$

28,036

 

 

$

26,300

 

 

$

29,083

 

$

33,577

 

 

$

11,158

Impact of ASU 2016-13 adoption

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,457

(Reversal of) provision for credit losses on unfunded credit commitments

(b)

 

 

(522

)

 

 

1,736

 

 

 

4,494

 

 

(6,063

)

 

 

11,962

Allowance for unfunded credit commitments, end of period (1)

 

 

$

27,514

 

 

$

28,036

 

 

$

33,577

 

$

27,514

 

 

$

33,577

 

 

 

 

 

 

 

 

 

 

 

 

(Reversal of) provision for credit losses

(a)+(b)

 

$

(10,000

)

 

$

(10,000

)

 

$

24,340

 

$

(35,000

)

 

$

210,653

 

(1)

Included in Accrued expenses and other liabilities on the Consolidated Balance Sheet.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CRITICIZED LOANS, NONPERFORMING ASSETS AND CREDIT QUALITY RATIOS

($ in thousands)

(unaudited)

Table 11

 

Criticized Loans

December 31,

2021

 

September 30,

2021

 

December 31,

2020

Special mention loans

$

384,694

 

 

$

448,497

 

 

$

564,555

 

Classified loans

 

448,362

 

 

 

561,787

 

 

 

652,880

 

Total criticized loans

$

833,056

 

 

$

1,010,284

 

 

$

1,217,435

 

 

 

Nonperforming Assets

December 31,

2021

 

September 30,

2021

 

December 31,

2020

Nonaccrual loans:

 

 

 

 

 

Commercial:

 

 

 

 

 

C&I

$

59,023

 

 

$

97,157

 

 

$

133,939

 

Total CRE

 

9,942

 

 

 

15,359

 

 

 

50,214

 

Consumer:

 

 

 

 

 

Total residential mortgage

 

24,164

 

 

 

18,153

 

 

 

28,510

 

Other consumer

 

52

 

 

 

2,491

 

 

 

2,491

 

Total nonaccrual loans

 

93,181

 

 

 

133,160

 

 

 

215,154

 

Other real estate owned, net

 

363

 

 

 

28,800

 

 

 

15,824

 

Other nonperforming assets

 

9,938

 

 

 

10,681

 

 

 

3,890

 

Total nonperforming assets

$

103,482

 

$

172,641

 

$

234,868

 

 

 

Credit Quality Ratios

December 31,

2021

 

September 30,

2021

 

December 31,

2020

Annualized quarterly net charge-offs to average loans HFI

 

0.10

%

 

 

0.13

%

 

 

0.20

%

Annual net charge-offs to average loans HFI

 

0.13

%

 

 

N/A

 

 

 

0.17

%

Special mention loans to loans HFI

 

0.92

%

 

 

1.11

%

 

 

1.47

%

Classified loans to loans HFI

 

1.08

%

 

 

1.39

%

 

 

1.70

%

Criticized loans to loans HFI

 

2.00

%

 

 

2.50

%

 

 

3.17

%

Nonperforming assets to total assets

 

0.17

%

 

 

0.28

%

 

 

0.45

%

Nonaccrual loans to loans HFI

 

0.22

%

 

 

0.33

%

 

 

0.56

%

Allowance for loan losses to loans HFI

 

1.30

%

 

 

1.38

%

 

 

1.61

%

 

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

($ in thousands)

(unaudited)

Table 12

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, the amortization of core deposit intangibles and the extinguishment cost on repurchase agreements. 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

 

 

 

 

December 31,

2021

 

September 30,

2021

 

December 31,

2020

Net interest income before provision for credit losses

 

(a)

 

$

405,697

 

 

$

395,706

 

 

$

346,581

 

Total noninterest income

 

 

 

 

71,489

 

 

 

73,109

 

 

 

69,832

 

Total revenue

 

(b)

 

$

477,186

 

 

$

468,815

 

 

$

416,413

 

 

 

 

 

 

 

 

 

 

Total noninterest expense

 

(c)

 

$

210,105

 

 

$

205,384

 

 

$

178,651

 

Less: Amortization of tax credit and other investments

 

 

 

 

(31,800

)

 

 

(38,008

)

 

 

(12,263

)

Amortization of core deposit intangibles

 

 

 

 

(602

)

 

 

(705

)

 

 

(823

)

Adjusted noninterest expense

 

(d)

 

$

177,703

 

 

$

166,671

 

 

$

165,565

 

Efficiency ratio

 

(c)/(b)

 

 

44.03

%

 

 

43.81

%

 

 

42.90

%

Adjusted efficiency ratio

 

(d)/(b)

 

 

37.24

%

 

 

35.55

%

 

 

39.76

%

Adjusted pre-tax, pre-provision income

 

(b)-(d) = (e)

 

$

299,483

 

 

$

302,144

 

 

$

250,848

 

Average total assets

 

(f)

 

$

62,183,137

 

 

$

61,359,533

 

 

$

52,466,325

 

Adjusted pre-tax, pre-provision profitability ratio (1)

 

(e)/(f)

 

 

1.91

%

 

 

1.95

%

 

 

1.90

%

Adjusted noninterest expense/average assets (1)

 

(d)/(f)

 

 

1.13

%

 

 

1.08

%

 

 

1.26

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

 

 

 

 

 

December 31,

2021

 

December 31,

2020

 

 

Net interest income before provision for credit losses

 

(g)

 

$

1,531,571

 

 

$

1,377,193

 

 

 

Total noninterest income

 

 

 

 

285,895

 

 

 

235,547

 

 

 

Total revenue

 

(h)

 

 

1,817,466

 

 

 

1,612,740

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense

 

(i)

 

$

796,089

 

 

$

716,322

 

 

 

Less: Amortization of tax credit and other investments

 

 

 

 

(122,457

)

 

 

(70,082

)

 

 

Amortization of core deposit intangibles

 

 

 

 

(2,749

)

 

 

(3,634

)

 

 

Repurchase agreements’ extinguishment cost

 

 

 

 

 

 

 

(8,740

)

 

 

Adjusted noninterest expense

 

(j)

 

$

670,883

 

 

$

633,866

 

 

 

Efficiency ratio

 

(i)/(h)

 

 

43.80

%

 

 

44.42

%

 

 

Adjusted efficiency ratio

 

(j)/(h)

 

 

36.91

%

 

 

39.30

%

 

 

Adjusted pre-tax, pre-provision income

 

(h)-(j) = (k)

 

$

1,146,583

 

 

$

978,874

 

 

 

Average total assets

 

(l)

 

$

59,251,091

 

 

$

48,937,793

 

 

 

Adjusted pre-tax, pre-provision profitability ratio

 

(k)/(l)

 

 

1.94

%

 

 

2.00

%

 

 

Adjusted noninterest expense/average assets

 

(j)/(l)

 

 

1.13

%

 

 

1.30

%

 

 

 

(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.

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

2021

 

September 30,

2021

 

December 31,

2020

Stockholders’ equity

 

(a)

 

$

5,837,218

 

 

$

5,690,201

 

 

$

5,269,175

 

Less: Goodwill

 

 

 

 

(465,697

)

 

 

(465,697

)

 

 

(465,697

)

Other intangible assets (1)

 

 

 

 

(9,334

)

 

 

(9,849

)

 

 

(11,899

)

Tangible equity

 

(b)

 

$

5,362,187

 

 

$

5,214,655

 

 

$

4,791,579

 

 

 

 

 

 

 

 

 

 

Total assets

 

(c)

 

$

60,870,701

 

 

$

60,959,110

 

 

$

52,156,913

 

Less: Goodwill

 

 

 

 

(465,697

)

 

 

(465,697

)

 

 

(465,697

)

Other intangible assets (1)

 

 

 

 

(9,334

)

 

 

(9,849

)

 

 

(11,899

)

Tangible assets

 

(d)

 

$

60,395,670

 

 

$

60,483,564

 

 

$

51,679,317

 

Total stockholders’ equity to total assets ratio

 

(a)/(c)

 

 

9.59

%

 

 

9.33

%

 

 

10.10

%

Tangible equity to tangible assets ratio

 

(b)/(d)

 

 

8.88

%

 

 

8.62

%

 

 

9.27

%

 

 

 

 

 

 

 

 

 

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, recoveries and uncertain tax position 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

 

Year Ended

 

 

 

 

December 31,

2021

 

September 30,

2021

 

December 31,

2020

 

December 31,

2021

 

December 31,

2020

Net income

 

 

 

$

217,796

 

 

$

225,449

 

 

$

164,084

 

 

$

872,981

 

 

$

567,797

 

Add: Amortization of core deposit intangibles

 

 

 

 

602

 

 

 

705

 

 

 

823

 

 

 

2,749

 

 

 

3,634

 

Amortization of mortgage servicing assets

 

 

 

 

415

 

 

 

430

 

 

 

428

 

 

 

1,679

 

 

 

1,920

 

Tax effect of amortization adjustments (2)

 

 

 

 

(293

)

 

 

(322

)

 

 

(355

)

 

 

(1,274

)

 

 

(1,575

)

Tangible net income

 

(e)

 

$

218,520

 

 

$

226,262

 

 

$

164,980

 

 

$

876,135

 

 

$

571,776

 

Adjustments related to DC Solar