"From the onset of the economic downturn, our strong capital levels have allowed East West to accelerate the resolution of problem assets compared to peers. During the third quarter, we successfully worked towards our goal of putting our credit issues behind us by the end of 2009," stated Dominic Ng, Chairman, President and Chief Executive Officer of East West. "We actively reduced exposures to problem credits - lowering land and construction loan balances by a substantial $355.6 million or 25% quarter over quarter and selling $206.3 million of loans and real estate owned."

Ng continued, "For the banking industry in general, the economic indicators signal that the next few quarters will still remain challenging due to the weak economy and high levels of unemployment. However, we believe that for East West, credit issues have peaked in the third quarter of 2009. As a direct result of our strategy to accelerate the resolution of problem loans, we have substantially less credit issues and expect that both provision for loan losses and charge-offs will be reduced in future quarters."

"With the proactive measures we have taken to reduce credit exposures and increase capital levels, we are in a position to both grow organically and through any potential acquisitions. The measures we have taken to fortify our balance sheet are further solidified by our strong core profitability of $63.0 million for the quarter and growing net interest margin of 3.20% for the quarter. We are in a position of strength to opportunistically increase market share and to return to profitability in 2010," concluded Ng.

Third Quarter 2009 Highlights

• Reduction in Problem Credits - Land and construction exposures decreased by 25% or $355.6 million in the third quarter. We continued to actively sell problem loans and REO assets and sold a total of $206.3 million during the quarter, which accelerated charge-offs by $60.1 million for the quarter.
• Reduction in Delinquent Loans - For the second consecutive quarter, loans delinquent 30 or more days decreased. As of September 30, 2009, loans 30 to 89 days delinquent fell to 1.01% of total loans. Loan delinquencies fell across all categories - 30 to 59 day delinquent loans decreased 63% or $37.3 million, 60 to 89 day delinquent loans decreased $27.1 million or 30%, and 90+ days delinquent loans decreased $7.4 million or 5.0%, quarter over quarter.
• Allowance for Loan Losses Strengthened - Total allowance for loan losses increased to $230.7 million, representing 2.74% of outstanding loans compared to 2.62% of outstanding loans in the previous quarter. We continued to strengthen the allowance for loan losses, recording provision for loan losses of $159.2 million and total net charge-offs of $151.2 million for the quarter. The allowance for loan losses to nonaccrual loan ratio was 113% as of September 30, 2009.
• Strengthening Net Interest Margin - Net interest income for the third quarter increased to $95.9 million, a 9% or $7.6 million increase over second quarter of 2009 and a 20% or $16.2 million increase over first quarter of 2009. The net interest margin for third quarter increased to 3.20%, up 22 basis points from 2.98% in the prior quarter.
• Strong Core Deposit Growth - Total core deposits reached a record high of $4.4 billion as of September 30, 2009, up 9% or $357.7 million from June 30, 2009. With the strong core deposit growth, we reduced the cost of deposits for the quarter to 1.24%, down 23 basis point from 1.47% in the prior quarter.
• Strong Core Operating Earnings - Core operating earnings, excluding the impact of provision for loan losses, investment securities and REO write-downs and nonrecurring FDIC assessments totaled $63.0 million for the third quarter, a 12% or $7.0 million increase from second quarter and a 28% or $13.7 million increase from first quarter. The strong core operating earnings resulted in an efficiency ratio of 40% for the third quarter of 2009, down from 55% in the second quarter of 2009.
• Capital Strengthened - In July 2009, East West raised $80.3 million in an oversubscribed common stock offering. During the second and third quarters of 2009, East West took actions to further strengthen capital and increased tangible common equity by $249 million. As of September 30, 2009, East West's Tier 1 risk-based capital ratio was 13.08%, significantly higher than the well capitalized requirement of 6.00%.

Credit Quality

During the third quarter, East West continued to execute on its strategy to de-risk the loan portfolio and reduce exposure to problem credits. East West sold $180.6 million in loans and $25.7 million in REO assets, or a total of $206.3 million or 85 loans and properties during the third quarter. These sales of problem loans and REO assets resulted in additional charge-offs of $60.1 million for the third quarter. East West has consistently applied its strategy of accelerating the resolution of problem assets. Although this approach has led to accelerated charge-offs, management believes that these were prudent actions that significantly reduced overall risk.

Excluding the land and construction portfolios which are discussed in more detail below, both delinquent and nonaccrual loans remain low for all other loan categories, as shown in the table below. Both delinquent and nonaccrual loans are only 1% of the total loan balance for income producing commercial real estate loans.

Loan Credit Quality Composition at September 30, 2009

* Delinquent student loans that are fully guaranteed by the U.S. government are excluded from these amounts.

Land and Construction Loan Exposures

The aggressive actions East West has taken to reduce credit risk has accelerated the timing of charge-offs but has resulted in a significant decrease in the exposure to land and construction loans, the loan categories that have shown the most weakness during this prolonged economic recession. Since December 31, 2007, East West has reduced total exposure to land and construction loans by $2.0 billion or 63%. As of September 30, 2009, land and construction loan balances were reduced to $415.2 million and $654.1 million, respectively, down $355.6 million or 25% from June 30, 2009. Management has continued to decrease exposure to land and construction loans through payoffs, pay downs and note sales and anticipates that by the end of the fourth quarter of 2009, the remaining exposures to these loan categories will be further reduced.

Delinquent Loans Trend

Total loan delinquencies as of September 30, 2009 decreased by $71.8 million or 24% from the prior quarter, marking the second consecutive quarter that loan delinquencies have decreased. Loan delinquency fell across all delinquency categories and loan types, but particularly for early stage delinquencies. The decrease in delinquent loans is primarily due to fewer migrations into delinquency categories, the sale of problem loans, and the payoff and resolution of delinquent loans.

Total nonperforming assets as of September 30, 2009 were $230.2 million or 1.84% of total assets, compared to $189.4 million or 1.49% of total assets at June 30, 2009 and $286.6 million or 2.28% of total assets at March 31, 2009. Nonperforming loans increased quarter over quarter largely due to land loans that are current or otherwise under 90 days delinquent that were placed on nonaccrual. We continue to proactively recognize problem credits. All nonaccrual loans are reviewed for potential impairment and shortfalls in collateral are charged-off.

During the third quarter, we recorded $159.2 million provision for loan losses, increasing the allowance for loan losses at September 30, 2009 to $230.7 million or 2.74% of outstanding loans. This compares to $223.7 million or 2.62% of outstanding loans at June 30, 2009. For the third quarter of 2009, East West had net charge-offs of $151.2 million, of which approximately two-thirds related to land and construction loans. Management believes that both provision for loan losses and charge-offs have peaked and that although they may continue to be elevated in the near future, the levels will be lower than third quarter of 2009.

The allowance for loan losses of $230.7 million was 113% of nonaccrual loans and 103% of delinquent loans as of September 30, 2009. As of September 30, 2009, East West's allowance coverage to nonaccrual loans and delinquent loans is higher than peers, reflecting our aggressive stance in removing problem credits from our balance sheet and charging off shortfalls in collateral value. Further, East West's nonaccrual loan and nonperforming asset levels are substantially below peers.

CRE Portfolio Performing Well

East West's income producing commercial real estate loans totaling $3.6 billion continues to perform well. Total delinquent and nonaccrual loans in this category remain low at only 1% of total loans. Total income producing commercial real estate loan charge-offs totaled $23.1 million for the third quarter, largely due to four loans which were sold during the quarter. These loans were construction take-out loans or otherwise projects which never fully leased up and not typical of our income producing commercial real estate portfolio.

CRE Loan Portfolio LTV and Maturity Composition at September 30, 2009

* The LTV distribution is calculated based on the original appraisal value at the origination date divided by the current loan balance.

The vast majority of East West's income producing commercial real estate portfolio is comprised of low loan to value, seasoned loans with full personal guarantees from borrowers. Refinance risk for income producing commercial real estate loans maturing soon remain a strong risk for the industry as real estate values have fallen. For the East West income producing commercial real estate portfolio, this risk is mitigated by the low loan to values. Further, refinance risk is limited as we have single digit maturities each year for the next five years. Of the total $3.6 billion income producing commercial real estate portfolio, 81% have an original LTV of 65% or less, 68% have maturities in 2014 or beyond and 85% are variable rate loans (where borrowers have benefited from lowered debt service on their loans). Overall, we believe that due to these strong credit metrics, our income producing commercial real estate portfolio is resilient.

Loan Origination

We continue to prudently underwrite new loans, originating $334.9 million in new loans for the third quarter of 2009. The decrease in the total loan balance quarter over quarter was due to new loan production being fully offset by the successful resolution of problem loans. Year to date, we have originated a total of $970.1 million in new loans. Overall, new loan originations have steadily increased throughout 2009.

Deposit Growth

Total deposits increased to $8.7 billion as of September 30, 2009, $9.7 million higher compared to June 30, 2009. Total core deposits reached a record high of $4.4 billion as of September 30, 2009, up 9% or $357.7 million from June 30, 2009. We experienced growth in all core deposits - noninterest bearing demand, interest checking, money market and savings. In particular, money market deposits increased to a record $2.3 billion, a $263.9 million or 13% increase from June 30, 2009.

The deposit growth for the quarter was net of a $210.0 million reduction in brokered deposits. We continue to reduce our reliance on brokered deposits as we manage our cost of deposits and funding needs.

The cost of deposits decreased to 1.24% for the third quarter of 2009, a decrease of 23 basis points from 1.47% in the second quarter of 2009. The decrease in the cost of deposits was driven by the substantial increase in core deposits and a decreased reliance on time deposits.

Capital Strength

* The tangible common equity to risk weighted asset ratio is a non-GAAP disclosure. See reconciliation of the GAAP financial measure to this non-GAAP financial measure in the tables attached. As there is no stated regulatory guideline for this ratio, the Supervisory Capital Assessment Program (SCAP) guideline of 4.00% has been used.

East West has always been committed to maintaining strong capital levels and has been well capitalized throughout this economic cycle. During the second and third quarters of 2009, East West took actions to further strengthen capital and increased tangible common equity by $249 million. As of the end of the third quarter, East West significantly exceeded well capitalized requirements under all regulatory guidelines.

Third Quarter 2009 Operating Results

Net interest income for the third quarter totaled $95.9 million, a 9% increase over second quarter of 2009. The net interest margin for the third quarter was 3.20%, a 22 basis point increase from 2.98% in the prior quarter. The net interest margin continues to strengthen due to increases in core deposits, ongoing downward repricing of maturing higher cost time deposits and money market deposits and the ongoing pay-downs of higher cost term FHLB borrowings. During the third quarter, East West paid down $250.0 million in FHLB advances at an average cost of 5.14%. East West expects to pay down another $200.0 million at an average cost of 4.43% in the fourth quarter of 2009.

Currently, we estimate that the net interest margin will be approximately 3.35% to 3.40% for the fourth quarter of 2009.

Excluding the non-cash charge for impairment of investment securities and gains on sales of investment securities, noninterest income for the third quarter totaled $10.2 million, a 7% increased from $9.6 million in the second quarter of 2009. See reconciliation of the GAAP financial measure to this non-GAAP financial measure in the tables attached. In the third quarter of 2009, we recorded $24.2 million write-downs on investment securities for other-than-temporary impairment on bank pooled trust preferred securities. Previously, we recorded other-than-temporary impairment on bank pooled trust preferred securities of $37.4 million in the second quarter of 2009.

Noninterest expense totaled $46.1 million for the third quarter 2009, a decrease of $11.8 million from the second quarter of 2009. The decrease in noninterest expense quarter over quarter was primarily due to the reduction in OREO expense of $7.9 million. The efficiency ratio continued to improve, totaling 40% for the third quarter of 2009.

Dividend Payout

East West Bancorp's Board of Directors has declared fourth quarter dividends on the common stock and remaining Series A Preferred Stock. The common stock cash dividend of $0.01 is payable on or about November 24, 2009 to shareholders of record on November 10, 2009. The dividend on the Series A Preferred Stock of $20.00 per share is payable on November 1, 2009 to shareholders of record on October 15, 2009. We will continue to review the dividend policy quarterly in light of the current economic environment.

About East West

East West Bancorp [NASDAQ: EWBC] is a publicly owned company with $12.5 billion in assets. The Company's wholly owned subsidiary, East West Bank, is FDIC insured and the second largest full service commercial bank headquartered in Southern California with 71 branch locations. East West Bank serves the community with 69 branch locations throughout the counties of Los Angeles, Orange, San Bernardino, Alameda, San Francisco, Santa Clara, San Mateo and one branch location in Houston, Texas. East West Bank has four international locations in Greater China, which include a full service branch in Hong Kong and representative offices in Beijing, Shanghai and Taipei. In addition to serving the mainstream market, East West is also one of the largest financial institutions in the nation serving the Chinese-American community. For more information on East West Bancorp, visit the Company's website at www.eastwestbank.com.

Forward-Looking Statements

This release may contain forward-looking statements, which are included in accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and accordingly, the cautionary statements contained in East West Bancorp's Annual Report on Form 10-K for the year ended Dec. 31, 2008 (See Item I -- Business, and Item 7 -- Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations), and other filings with the Securities and Exchange Commission are incorporated herein by reference. These factors include, but are not limited to: the effect of interest rate and currency exchange fluctuations; competition in the financial services market for both deposits and loans; EWBC's ability to efficiently incorporate acquisitions into its operations; the ability of borrowers to perform as required under the terms of their loans; effect of additional provisions for loan losses; effect of any goodwill impairment, the ability of EWBC and its subsidiaries to increase its customer base; the effect of regulatory and legislative action, including California tax legislation and an announcement by the state's Franchise Tax Board regarding the taxation of Registered Investment Companies; risks inherent in possible acquisitions and FDIC-assisted transactions; and regional and general economic conditions. Actual results and performance in future periods may be materially different from any future results or performance suggested by the forward-looking statements in this release. Such forward-looking statements speak only as of the date of this release. East West expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in the Bank's expectations of results or any change in event.