Corporate Information

Press Release

East West Bancorp Reports Record Net Income for Full Year 2017 of $505.6 Million and Diluted Earnings Per Share of $3.47, Both up by 17% from the Prior Year

Company Release - 1/25/2018 8:30 AM ET

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 fourth quarter and full year of 2017. For the fourth quarter of 2017, net income was $84.9 million or $0.58 per diluted share. For the full year 2017, net income was $505.6 million or $3.47 per diluted share.

“Our full year 2017 record earnings increased by 17% year-over-year, reflecting strong revenue growth augmented by contained expenses and credit costs. In 2017, total loans grew $3.5 billion or 14% year-over-year to a record $29.1 billion from $25.5 billion as of December 31, 2016,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. “Total deposits grew $2.3 billion or 8% year-over-year to a record $32.2 billion as of December 31, 2017 from $29.9 billion at the end of the previous year.”

“During the year, East West’s net interest margin expanded by 18 basis points, reflecting our loan growth, attractive deposit mix, and the benefits of higher interest rates on our asset sensitive balance sheet,” continued Ng. “This has been a key component of our profitability; in 2017, we earned a return on average assets of 1.41% and a return on average equity of 13.7%. I would like to thank our 3,000 associates for their dedication and diligence in delivering another year of strong earnings for our shareholders.”

“At East West, we focus on creating sustainable, expandable and profitable customer relationships. Our consistent financial results year after year reflect the value of this customer focus and our business model as the financial bridge between the East and the West. We are committed to investing in technology and human capital to drive our business forward, continuously strengthening our infrastructure to ensure prudent risk management and operational excellence,” concluded Ng.

HIGHLIGHTS OF RESULTS

  • Full Year and Fourth Quarter Earnings – Full year 2017 net income of $505.6 million grew by 17% year-over-year from $431.7 million; full year 2017 diluted earnings per share (“EPS”) of $3.47 grew by 17% from $2.97 in the previous year. Fourth quarter 2017 net income of $84.9 million and diluted EPS of $0.58 were reduced by $41.7 million1, or $0.291 per share, due to the enactment of the Tax Cuts and Jobs Act. This reduction in earnings was primarily attributable to the remeasurement of the net deferred tax asset as a result of the reduced corporate tax rate. Fourth quarter 2017 adjusted1 net income of $126.6 million and adjusted1 diluted EPS of $0.87 increased by 14% year-over-year, and decreased by 3% linked quarter.
  • Net Interest Income Growth and Net Interest Margin Expansion – Net interest income totaled $319.7 million for the fourth quarter of 2017, an increase of $16.5 million or 5% linked quarter. Accounting Standard Codification (“ASC”) 310-30 discount accretion income was $7.0 million for the fourth quarter of 2017, compared to $4.5 million for the third quarter of 2017. Excluding discount accretion income, fourth quarter 2017 adjusted2 net interest income of $312.7 million increased by $14.1 million or 5% sequentially, due to loan growth and the expansion of loan yields. Fourth quarter 2017 net interest margin (“NIM”) of 3.57% expanded by five basis points linked quarter; adjusted2 NIM of 3.49% expanded by three basis points linked quarter.
  • Record Loans – Total loans of $29.1 billion as of December 31, 2017 were up $528.4 million or 2%, from $28.5 billion as of September 30, 2017. Total loans grew by $3.5 billion or 14% year-over-year. Quarter-over-quarter, all major loan categories grew; the strongest sequential quarter loan growth came from the single-family residential mortgage portfolio.
  • Record Deposits – Total deposits of $32.2 billion as of December 31, 2017 were up $908.5 million or 3%, from $31.3 billion as of September 30, 2017. Total deposits grew by $2.3 billion or 8% year-over-year. The strongest sequential quarter deposit growth came from interest-bearing checking and money market deposits. Noninterest-bearing demand deposits of $10.9 billion made up 34% of deposits as of December 31, 2017.
  • Pending Sale of Desert Community Bank Branches – In November 2017, East West Bank announced the sale of its eight Desert Community Bank (“DCB”) branches and related assets and liabilities. As of December 31, 2017, branch assets held-for-sale (“HFS”) were $91.3 million, of which loans HFS were $78.1 million and deposits HFS were $605.1 million. Loans HFS were primarily commercial real estate and commercial and industrial loans. Deposits HFS were primarily composed of noninterest-bearing demand accounts and savings deposits. All regulatory approvals necessary for this transaction have been received, and the sale is expected to close in the first quarter of 2018.
  • Asset Quality Metrics – The allowance for loan losses was $287.1 million, or 0.99% of loans held-for-investment (“HFI”), as of December 31, 2017, compared to $285.9 million, or 1.00% of loans HFI, as of September 30, 2017. For the fourth quarter of 2017, annualized net charge-offs were 0.22% of average loans HFI, compared to annualized net charge-offs of 0.06% of average loans HFI for the previous quarter. Full year 2017 net charge-offs were 0.08% of average loans HFI. Non-purchased credit impaired (“Non-PCI”) nonperforming assets decreased to $115.1 million, or 0.31% of total assets, as of December 31, 2017, from $117.0 million, or 0.32% of total assets, as of September 30, 2017.
  • Capital Levels – Capital levels for East West continue to be strong. As of December 31, 2017, stockholders’ equity was $3.8 billion, or $26.58 per share. Tangible equity3 per common share was $23.13 as of December 31, 2017, an increase of 2% linked quarter and 14% year-over-year. As of December 31, 2017, the tangible equity to tangible assets ratio3 was 9.12%, the Common Equity Tier 1 (“CET1”) capital ratio was 11.4%, and the total risk-based capital ratio was 12.9%.
 

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

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

3 See reconciliation of GAAP to non-GAAP financial measures in Table 16.

 

QUARTERLY RESULTS SUMMARY

Quarter Ended
($ in millions, except per share data) December 31, 2017   September 30, 2017   December 31, 2016
 
Net income $ 84.9 $ 132.7 $ 110.7
Earnings per share (diluted) $ 0.58 $ 0.91 $ 0.76
Adjusted earnings per share (diluted) (1) $ 0.87 $ 0.89 $ 0.76
Book value per common share $ 26.58 $ 26.17 $ 23.78
Tangible equity (1) per common share $ 23.13 $ 22.71 $ 20.27
Tangible equity to tangible assets ratio (1)   9.12 %   9.17 %   8.52 %
Return on average assets (2) 0.90 % 1.46 % 1.27 %
Return on average equity (2) 8.73 % 14.01 % 12.87 %
Return on average tangible equity (1)(2)   10.17 %   16.33 %   15.26 %
Adjusted return on average assets (1)(2) 1.35 % 1.44 % 1.27 %
Adjusted return on average equity (1)(2) 13.02 % 13.78 % 12.87 %
Adjusted return on average tangible equity (1)(2) 15.10 % 16.06 % 15.26 %
Adjusted pre-tax, pre-provision profitability ratio (1)(2)   2.27 %   2.32 %   2.10 %
Net interest income $ 319.7 $ 303.2 $ 272.7
Adjusted net interest income (1) $ 312.7 $ 298.6 $ 261.1
Net interest margin (2) 3.57 % 3.52 % 3.31 %
Adjusted net interest margin (1)(2) 3.49 % 3.46 % 3.17 %
Cost of deposits (2)   0.43 %   0.40 %   0.31 %
Efficiency ratio 48.1 % 46.6 % 46.6 %
Adjusted efficiency ratio (1) 41.6 % 39.8 % 43.2 %
                   
(1) See reconciliation of GAAP to non-GAAP financial measures in Tables 13, 14, 15 and 16.
(2) Annualized.
 

MANAGEMENT OUTLOOK FOR 2018

Our current outlook for the expected full year 2018 results, compared to our full year 2017 results, is as follows:

  • End of Period Loans: increase at a percentage rate of approximately 10%.
  • Net Interest Margin (excluding the impact of ASC 310-30 discount accretion): between 3.65% and 3.75%.
  • Noninterest Expense (excluding tax credit amortization & deposit premium amortization): increase at a percentage rate in the high single digits.
  • Provision for Credit Losses: in the range of $70 million to $80 million.
  • Tax Items: projecting investment in tax-advantaged credits of $105 million, excluding low income housing tax credits, and associated tax credit amortization expense of $85 million. Projecting full year effective tax rate of approximately 16%.
  • Interest Rates: our outlook incorporates the current forward rate curve; as such, it currently assumes three fed funds rate increases in the year 2018: in March, June and September.

OPERATING RESULTS SUMMARY

Fourth Quarter 2017 Compared to Third Quarter 2017

Net Interest Income

Net interest income totaled $319.7 million, a 5% increase from $303.2 million.

  • Adjusted net interest income, excluding ASC 310-30 discount accretion income, grew to $312.7 million, a 5% increase from $298.6 million.
  • Average loans of $28.6 billion grew by $1.1 billion or 16% annualized from $27.5 billion.
  • Average deposits of $32.3 billion grew by $1.2 billion or 15% annualized from $31.1 billion.
  • Average noninterest-bearing demand deposits of $11.5 billion grew by $875.3 million or 33% annualized from $10.7 billion.

Net Interest Margin

Net interest margin expanded by five basis points to 3.57% from 3.52%.

  • Excluding the impact of ASC 310-30 discount accretion income, adjusted NIM expanded by three basis points to 3.49% from 3.46%.
  • The yield on loans expanded by 10 basis points to 4.52% from 4.42%; the adjusted4 loan yield expanded by seven basis points to 4.42% from 4.35%.
  • The cost of deposits increased by three basis points to 0.43% from 0.40%.

Noninterest Income

Total noninterest income of $45.4 million was down by $4.3 million sequentially. Excluding the impact of all gains on sales, total fees and other operating income of $38.5 million was down by $2.3 million, or 6%, from $40.9 million for the third quarter of 2017. This decline was primarily from decreases in derivative fees and other income, as well as in wealth management fees, due to lower customer transaction volumes.

The following table presents total fees and other operating income for the three months ended December 31, 2017, September 30, 2017 and December 31, 2016.

     
  Quarter Ended
($ in thousands) December 31, 2017   September 30, 2017   December 31, 2016
Branch fees $ 10,691 $ 10,803 $ 10,195
Letters of credit fees and foreign exchange income 9,570 10,154 14,356
Ancillary loan fees and other income 6,457 5,987 5,355
Wealth management fees 2,950 3,615 3,378
Derivative fees and other income 4,737 6,663 7,003
Other fees and operating income 4,144   3,652   7,237
Total fees and other operating income $ 38,549   $ 40,874   $ 47,524
                       
 

Noninterest Expense

Noninterest expense of $175.4 million includes $151.9 million of adjusted5 noninterest expense, $21.9 million amortization of tax credit and other investments, and $1.6 million amortization of core deposit intangibles.

  • Adjusted noninterest expense of $151.9 million increased by $13.0 million, or 9% linked quarter. This growth was driven by a $10.8 million increase in compensation and employee benefits, largely reflecting increased hiring along with increases in bonus accrual and restricted stock compensation.
  • The adjusted5 efficiency ratio was 41.6% in the fourth quarter, compared to 39.8% in the third quarter, due to the growth in expenses.

TAX RELATED ITEMS

The Company’s full year 2017 effective tax rate was 31%, resulting in tax expense of $229.5 million, compared to an effective tax rate of 25% and tax expense of $140.5 million for the full year 2016. The effective tax rates for the full year and the fourth quarter of 2017 were elevated because of nonrecurring items related to the enactment of the Tax Cuts and Jobs Act, which lowered the federal corporate tax rate to 21% from 35%.

  • These nonrecurring items included a $33.1 million remeasurement of the net deferred tax asset and a $7.9 million remeasurement of investments in qualified affordable housing partnerships, recorded in the fourth quarter of 2017. These adjustments are management’s best estimate based on the information available as of this earnings release and are subject to change as final tax calculations are completed in conjunction with the filing of the Form 10-K.
  • Tax expense in the fourth quarter of 2017 was $89.2 million, compared to $42.6 million in the third quarter of 2017. The total impact of the Tax Cuts and Jobs Act was an increase in tax expense of $41.7 million, or $0.29 per share, in the fourth quarter of 2017. Excluding this impact, the adjusted6 tax expense for the fourth quarter of 2017 was $47.5 million and the adjusted6 effective tax rate was 27%. Adjusted6 tax expense for the full year 2017 was $187.8 million and the adjusted6 effective tax rate was 26%.
  • For the full year 2018, the Company is projecting an effective tax rate of approximately 16%.

CREDIT QUALITY

The allowance for loan losses totaled $287.1 million, or 0.99% of loans HFI, as of December 31, 2017, compared to $285.9 million, or 1.00% of loans HFI, as of September 30, 2017, and $260.5 million, or 1.02% of loans HFI, as of December 31, 2016.

  • The provision for credit losses recorded for the current quarter was $15.5 million, compared to $13.0 million for the third quarter of 2017, and $10.5 million for the fourth quarter of 2016.
  • For the fourth quarter of 2017, net charge-offs were $15.7 million or 0.22% of average loans HFI, annualized. This compares to net charge-offs of $3.8 million or 0.06% of average loans HFI, annualized, for the third quarter of 2017, and net charge-offs of $8.0 million or 0.13% of average loans HFI, annualized, for the fourth quarter of 2016. For the full year 2017, net charge-offs of $22.5 million were 0.08% of average loans HFI, compared to $36.2 million, or 0.15% of average loans HFI, for the full year 2016.
  • Non-PCI nonperforming assets of $115.1 million as of December 31, 2017, decreased by $1.9 million, or 2% linked quarter, from $117.0 million as of September 30, 2017, and decreased by $14.4 million, or 11% year-over-year, from $129.6 million as of December 31, 2016. Non-PCI nonperforming assets were equivalent to 0.31% of total assets at the end of 2017, compared to 0.32% at the end of the previous quarter and 0.37% at the end of 2016.
 

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

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

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

 

CAPITAL STRENGTH

Capital levels for East West continue to be strong. As of December 31, 2017, stockholders’ equity was $3.8 billion, or $26.58 per share. Tangible equity per common share was $23.13 as of December 31, 2017, an increase of 2% linked quarter and 14% year-over-year. The following table presents the regulatory capital ratios for the quarters ended December 31, 2017, September 30, 2017, and December 31, 2016.

               
Regulatory Capital Metrics   Basel III    

($ in millions)

December 31,
2017 (a)
 

September 30,
2017

 

December 31,
2016

 

Minimum
Regulatory
Requirements

 

Well
Capitalized
Regulatory
Requirements

Fully Phased-
in Minimum
Regulatory
Requirements

 
CET1 capital ratio 11.4 % 11.4 % 10.9 % 4.5 % 6.5 % 7.0 %
Tier 1 risk-based capital ratio 11.4 % 11.4 % 10.9 % 6.0 % 8.0 % 8.5 %
Total risk-based capital ratio 12.9 % 12.9 % 12.4 % 8.0 % 10.0 % 10.5 %
Tier 1 leverage capital ratio 9.2 % 9.4 % 8.7 % 4.0 % 5.0 % 4.0 %
Risk-Weighted Assets (“RWA”) (b) $ 29,669 $ 29,178 $ 27,358 N/A N/A N/A
                                           

N/A Not applicable.

(a)

  The Company’s December 31, 2017 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 2018 dividends for the Company’s common stock. The common stock cash dividend of $0.20 per share is payable on February 15, 2018 to shareholders of record on February 5, 2018.

Conference Call

East West will host a conference call to discuss fourth quarter and full year 2017 earnings with the public on Thursday, January 25, 2018 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 2017 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 25, 2018 at 11:30 a.m. Pacific Time through February 25, 2018. 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: 10115137.

About East West

East West Bancorp, Inc. is a publicly owned company with total assets of $37.2 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 130 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, Taipei 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 the Company’s 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,” 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. 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, our ability to compete effectively against other financial institutions in our banking markets; changes in the commercial and consumer real estate markets; changes in our costs of operation, compliance and expansion; changes in the U.S. economy, including inflation, employment levels, rate of growth and general business conditions; changes in government interest rate policies; 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 U.S. Securities and Exchange Commission, the Consumer Financial Protection Bureau and California Department of Business Oversight — Division of Financial Institutions; heightened regulatory and governmental oversight and scrutiny of the Company’s business practices, including dealings with consumers; changes in the economy of and monetary policy in the People’s Republic of China; changes in income tax laws and regulations including, but not limited to, under the Tax Cuts and Jobs Act; 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; changes in the equity and debt securities markets; future credit quality and performance, including our expectations regarding future credit losses and allowance levels; fluctuations of our stock price; fluctuations in foreign currency exchange rates; success and timing of our business strategies; our ability to adopt and successfully integrate new technologies into our business in a strategic manner; impact of reputational risk from negative publicity, fines and penalties and other negative consequences from regulatory violations and legal actions; impact of potential federal tax changes and spending cuts; impact of adverse judgments or settlements in litigation or of regulatory enforcement actions; changes in our ability to receive dividends from our subsidiaries; impact of political developments, wars or other hostilities that may disrupt or increase volatility in securities or otherwise affect economic conditions; impact of natural or man-made disasters or calamities or conflicts or other events that may directly or indirectly result in a negative impact on the Company’s financial performance; continuing consolidation in the financial services industry; our capital requirements and our ability to generate capital internally or raise capital on favorable terms; impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on our business, business practices and cost of operations; impact of adverse changes to our credit ratings from the major credit rating agencies; 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; the effect of the current low interest rate environment or changes in interest rates on our net interest income and net interest margin; the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin; 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 increased funding costs, reduced 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; and other factors set forth in the Company’s public reports including its Annual Report on Form 10-K for the year ended December 31, 2016, 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, the Company’s results could differ materially from those expressed in, implied or projected by such forward-looking statements. The Company assumes no obligation to update such forward-looking statements.

 
EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
($ and shares in thousands, except per share data)
(unaudited)
Table 1
                       
  December 31, 2017
% Change
December 31, 2017 September 30, 2017 December 31, 2016 Qtr-o-Qtr Yr-o-Yr
Assets
Cash and due from banks $ 457,181 $ 364,328 $ 460,559 25.5 % (0.7 )%
Interest-bearing cash with banks 1,717,411   1,372,421   1,417,944   25.1 21.1
Cash and cash equivalents 2,174,592 1,736,749 1,878,503 25.2 15.8
Interest-bearing deposits with banks 398,422 404,946 323,148 (1.6 ) 23.3
Securities purchased under resale agreements (“resale agreements”) (1) 1,050,000 1,250,000 2,000,000 (16.0 ) (47.5 )
Investment securities 3,016,752 2,956,776 3,479,766 2.0 (13.3 )
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock 73,521 73,322 72,775 0.3 1.0
Loans held-for-sale (“HFS”) 85 178 23,076 (52.2 ) (99.6 )
Loans held-for-investment (net of allowance for loan losses of $287,128, $285,926 and $260,520) 28,688,590 28,239,431 25,242,619 1.6 13.7
Investments in qualified affordable housing partnerships, net 162,824 178,344 183,917 (8.7 ) (11.5 )
Investments in tax credit and other investments, net 224,551 203,758 173,280 10.2 29.6
Goodwill 469,433 469,433 469,433
Branch assets HFS (2) 91,318 100.0 100.0
Other assets 800,161   795,029   942,323   0.6 (15.1 )
Total assets $ 37,150,249   $ 36,307,966   $ 34,788,840   2.3 % 6.8 %
 
Liabilities and Stockholders’ Equity
Deposits $ 31,615,063 $ 31,311,662 $ 29,890,983 1.0 % 5.8 %
Deposits HFS (2) 605,111 100.0 100.0
Short-term borrowings 24,813 60,050 (100.0 ) (100.0 )
FHLB advances 323,891 323,323 321,643 0.2 0.7
Securities sold under repurchase agreements (“repurchase agreements”) (1) 50,000 50,000 350,000 (85.7 )
Long-term debt 171,577 176,513 186,327 (2.8 ) (7.9 )
Accrued expenses and other liabilities 542,656   639,759   552,096   (15.2 ) (1.7 )
Total liabilities 33,308,298 32,526,070 31,361,099 2.4 6.2
Stockholders’ equity 3,841,951   3,781,896   3,427,741   1.6 12.1
Total liabilities and stockholders’ equity $ 37,150,249   $ 36,307,966   $ 34,788,840   2.3 % 6.8 %
 
Book value per common share $ 26.58 $ 26.17 $ 23.78 1.6 % 11.8 %
Tangible equity (3) per common share $ 23.13 $ 22.71 $ 20.27 1.9 14.1
Tangible equity to tangible assets ratio (3) 9.12 % 9.17 % 8.52 % (0.5 ) 7.0
Number of common shares at period-end 144,543 144,511 144,167

0.0

0.3
 
(1)    

Resale and repurchase agreements are reported net pursuant to Accounting Standards Codification (“ASC”) 210-20-45, Balance Sheet Offsetting. As of December 31, 2017, September 30, 2017, and December 31, 2016, $400.0 million, $400.0 million and $100.0 million out of $450.0 million of gross repurchase agreements were eligible for netting against resale agreements, respectively.

(2) Represents the DCB branch assets and deposits that were classified as HFS as of December 31, 2017. Branch assets HFS primarily comprised $78.1 million in loans.
(3) See reconciliation of GAAP to non-GAAP financial measures in Table 16.
 
 
 
EAST WEST BANCORP, INC. AND SUBSIDIARIES
TOTAL LOANS AND DEPOSITS DETAIL
($ in thousands)
(unaudited)
Table 2
                       
  December 31, 2017
% Change
December 31, 2017 September 30, 2017 December 31, 2016 Qtr-o-Qtr Yr-o-Yr
Loans:
Commercial lending:
Commercial and industrial (“C&I”) $ 10,697,231 $ 10,645,156 $ 9,640,563 0.5 % 11.0 %
Commercial real estate (“CRE”) 8,936,897 8,843,776 8,016,109 1.1 11.5
Multifamily residential 1,916,176 1,876,956 1,585,939 2.1 20.8
Construction and land 659,697 683,404 674,754 (3.5 ) (2.2 )
Consumer lending:
Single-family residential 4,646,289 4,356,009 3,509,779 6.7 32.4
Home equity lines of credit (“HELOCs”) 1,782,924 1,767,419 1,760,776 0.9 1.3
Other consumer 336,504   352,637   315,219   (4.6 ) 6.8
Total loans held-for-investment (1)(2) 28,975,718 28,525,357 25,503,139 1.6 13.6
Loans HFS (3) 78,217 178 23,076

NM

239.0
Total loans (1)(2) 29,053,935 28,525,535 25,526,215 1.9 13.8
Allowance for loan losses (287,128 ) (285,926 ) (260,520 ) 0.4 10.2
Net loans (1)(2) $ 28,766,807   $ 28,239,609   $ 25,265,695   1.9 % 13.9 %
 
Deposits:
Noninterest-bearing demand $ 10,887,306 $ 10,992,674 $ 10,183,946 (1.0 )% 6.9 %
Interest-bearing checking 4,419,089 4,108,859 3,674,417 7.6 20.3
Money market 8,359,425 7,939,031 8,174,854 5.3 2.3
Savings 2,308,494   2,476,557   2,242,497   (6.8 ) 2.9
Total core deposits 25,974,314 25,517,121 24,275,714 1.8 7.0
Time deposits 5,640,749 5,794,541 5,615,269 (2.7 ) 0.5
Deposits HFS 605,111       100.0 100.0
Total deposits $ 32,220,174   $ 31,311,662   $ 29,890,983   2.9 % 7.8 %
 

NM Not Meaningful

(1)     Includes $(34.0) million, $(29.2) million and $1.2 million as of December 31, 2017, September 30, 2017 and December 31, 2016, respectively, of net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts.
(2) Includes ASC 310-30 discount of $35.3 million, $39.1 million and $49.4 million as of December 31, 2017, September 30, 2017 and December 31, 2016, respectively.
(3) Includes $78.1 million of loans HFS in branch assets HFS.
 
 
 
EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
($ and shares in thousands, except per share data)
(unaudited)
Table 3
                     
Quarter Ended December 31, 2017
% Change
December 31, 2017 September 30, 2017 December 31, 2016 Qtr-o-Qtr Yr-o-Yr
Interest and dividend income $ 359,765 $ 339,910 $ 302,127 5.8 % 19.1 %
Interest expense 40,064   36,755   29,425   9.0 36.2
Net interest income before provision for credit losses 319,701 303,155 272,702 5.5 17.2
Provision for credit losses 15,517   12,996   10,461   19.4 48.3
Net interest income after provision for credit losses 304,184 290,159 262,241 4.8 16.0
Noninterest income 45,359 49,624 48,800 (8.6 ) (7.1 )
Noninterest expense 175,416   164,499   149,904   6.6 17.0
Income before income taxes 174,127 175,284 161,137 (0.7 ) 8.1
Income tax expense 89,229   42,624   50,403   109.3 77.0
Net income $ 84,898   $ 132,660   $ 110,734   (36.0

)%

(23.3

)%

Earnings per share (“EPS”)
- Basic $

0.59

$

0.92

$

0.77

(36.0

)%

(23.5

)%

- Diluted $ 0.58 $ 0.91