PASADENA, Calif.--(BUSINESS WIRE)--
East West Bancorp, Inc. (Nasdaq: EWBC), parent company of East West
Bank, one of the nation's premier community banks, today reported
financial results for the fourth quarter and full year 2008. For the
fourth quarter 2008, net income was $2.4 million, an increase of $33.6
million over a loss reported in third quarter. Our fourth quarter
earnings include a provision for loan loss of $43.0 million and
impairment write-down of securities of $9.7 million.
"2008 was a year of continuous uncertainty for the financial markets and
the U.S. economy. Throughout this year of unprecedented challenges for
the financial service industry, we had one objective - safeguarding our
customer assets and shareholder interests," stated Dominic Ng, Chairman,
President and Chief Executive Officer of East West. "We were early to
raise capital in April and again in December, which increased our
risk-based capital ratio to 15.83% or over $600 million above the 'well
capitalized' threshold at year-end. Throughout the year we have steadily
increased our overall liquidity by $2.2 billion or 196%. We aggressively
managed down problem loans, reducing total commitments on construction
and land loans by $1.0 billion, a 31% decrease. At the same time, we
increased the allowance for loan losses to $178.0 million, or 2.16% of
total loans."
Ng continued, "Our decisive actions in 2008 to significantly increase
capital, liquidity, and reserve levels while minimizing credit exposures
have better positioned us during this challenging economic environment.
We are entering 2009 with a solid balance sheet and the confidence to
prudently extend credit by attracting new customers and expanding
existing customer relationships. In the fourth quarter of 2008 we
originated $327 million in new loans, primarily real estate, commercial
business loans to small and mid-sized businesses and single family
mortgages."
"Currently our expectations for the full year of 2009 include loan
balance growth of 11%, deposit balance growth of 5% and a net interest
margin of approximately 3.20%. The entire East West team is poised and
ready for the new challenges and opportunities 2009 will bring,"
concluded Ng.
Full Year 2008 Highlights
-- Capital Strengthened -During the full year 2008, we raised a total of
$506.5 million in capital. We issued $200.0 million of convertible
preferred stock in April and issued $306.5 million of preferred stock in
December as a participant in the Treasury's Capital Purchase Program.
-- Liquidity Strengthened -Totalborrowing capacity and cash as of December
31, 2008 increased to $3.3 billion, or 27% of total assets and 41% of
total deposits. As of December, 31, 2008, cash and unused borrowing
facilities increased $522.6 million or 19% from September 30, 2008 and
$2.2 billion or 196% from December 31, 2007.
-- Loan to Deposit Ratio -In early 2008 East West announced its plan to
further strengthen the balance sheet and decrease the loan to deposit
ratio. During the course of the fourth quarter and the full year, the
loan to deposit ratio decreased substantially to 101% as of December 31,
2008, from 110% as of September 30, 2008 and 122% at December 31, 2007.
-- Loan Portfolio Strengthened -Starting in early 2008, we performed
intensive reviews of our entire loan portfolio and reduced our exposures
significantly for problem loans. We increased our allowance for loan
losses by $89.6 million or 101% during the year. Year to date, total
commitments on construction and land loans decreased by $1.0 billion.
Total land loans decreased $104.7 million or 15% and total commitments
on construction loans decreased $907.8 million or 36%.
-- Reduction in Operating Expenses -Throughout 2008 we continued to reduce
operating expenses despite rising credit cycle costs. Noninterest
expense was $44.2 million for the quarter, a decrease of $4.3 million or
9% from third quarter 2008, a decrease of $11.5 million or 21% from
second quarter 2008 and a decrease of $8.7 million from first quarter
2008.
Fourth Quarter Summary
-- Credit Quality -Total loan delinquencies have remained relatively
stable, increasing $11.3 million or 4% from September 30, 2008 and
decreasing $41.7 million or 11% from June 30, 2008. Total nonperforming
assets to total assets increased to 2.12% up from 1.71% at September 30,
2008. The increase in nonperforming assets from the prior quarter is a
result of increases in nonaccrual loans and real estate owned assets,
primarily in land and residential construction.
-- Allowance for Loan Losses Strengthened -Total allowance for loan losses
increased to $178.0 million, or 2.16% of outstanding loans. We continued
to increase the reserve for loan losses, recording provision for loan
losses of $43 million and total net loan charge-offs of $41.5 million
for the quarter.
-- Deposits Increased - Total deposits increased to a record $8.1 billion
at year-end. In fourth quarter, we increased deposits $605.6 million or
8% over prior quarter, reflecting strong increases in time and money
market deposits.
Capital Strength
(In thousands, except per share amounts)
12/31/2008 9/30/2008 12/31/2007
Summary
Total Leverage Capital 1,432,662 1,137,419 991,695
Total Risk-Based Capital 1,637,635 1,340,899 1,166,487
Leverage Capital Ratio 12.36 % 9.84 % 8.73 %
Tier 1 Capital Ratio 13.85 % 11.12 % 8.95 %
Total Risk-Based Capital Ratio 15.83 % 13.12 % 10.53 %
Well Capitalized Figures
Total Well Capitalized Leverage 579,424 578,024 568,170
Requirement (5%)
Total Excess Above Well Capitalized 853,238 559,394 423,525
Leverage Requirement
Total Well Capitalized Tier-1 Capital 620,605 613,441 664,564
Requirement (6%)
Total Excess Above Well Capitalized Tier 812,058 523,978 327,131
1 Capital Requirement
Total Well Capitalized Risk-Based Capital 1,034,341 1,022,401 1,107,607
Requirement (10%)
Total Excess Above Well Capitalized 603,294 318,498 58,881
Risk-Based Capital Requirement
During the fourth quarter we issued $306.5 million in preferred stock
through the Treasury's Capital Purchase Program which resulted in total
shareholders' equity of $1.6 billion at December 31, 2008. Total assets
as of December 31, 2008 increased to a record $12.4 billion, an increase
of $701.9 million or 6% from September 30, 2008.
East West has always been committed to maintaining strong capital levels
and has been very well capitalized throughout this economic cycle. As of
the end of the fourth quarter, our leverage capital ratio increased to
12.36%, tier 1 capital increased to 13.85% and total risk-based capital
increased to 15.83%. East West significantly exceeds well capitalized
minimums under all regulatory guidelines.
Managing Through the Credit Cycle
Total nonperforming assets as of December 31, 2008 totaled $263.9
million or 2.12% of total assets, compared to $200.6 million or 1.71% of
total assets at September 30, 2008. The increase in nonperforming assets
was primarily due to increases in nonaccrual loans and real estate
owned. Nonperforming assets as of December 31, 2008 included nonaccrual
loans totaling $214.6 million, other real estate owned totaling $38.3
million and loans modified or restructured totaling $11.0 million.
Total nonaccrual loans as of December 31, 2008 were $214.6 million,
compared to $177.3 million at September 30, 2008. Included in nonaccrual
loans as of December 31, 2008 are loans totaling $32.5 million which
were not 90 days past due as of December 31, 2008, but that we
classified as nonaccrual due to concerns surrounding collateral and
future collectability.
The residential construction and land portfolios continue to be impacted
by the real estate downturn. Over the course of the year, we have
actively reduced land and construction loans and have decreased total
commitments for these assets by $1.0 billion. During the quarter, the
Company sold eighteen real estate owned (REO) assets with a carrying
value of $16.1 million and sold fourteen nonperforming loans with a
carrying value of $32.8 million. This follows third quarter's activity
where we sold $18.4 million of REO assets and $68.0 million in
nonperforming loans. The loans and REO assets sold were predominantly
land and residential construction loans.
The $43.0 million provision for loan losses taken during the fourth
quarter of 2008 was flat compared to third quarter and was a decrease
from $85.0 million in the second quarter and $55.0 million in the first
quarter. At December 31, 2008, the allowance for loan losses increased
to $178.0 million or 2.16% of outstanding loans, compared to $177.2
million or 2.14% of outstanding loans at September 30, 2008. The
Company's methodology for calculating the allowance for loan losses
includes factors such as historical loss trends, asset classification,
collateral deficiency, delinquency, credit concentrations and overall
economic conditions. Based on management's evaluation and analysis of
portfolio credit quality and prevailing economic conditions, we believe
these reserves are adequate for losses inherent in the loan portfolio as
of December 31, 2008.
For the fourth quarter of 2008, East West had net charge-offs of $41.5
million, compared to $39.7 million during the third quarter of 2008. The
net charge-offs for the fourth quarter were comprised of $42.3 million
in gross charge-offs and $801 thousand in recoveries. Of the total net
charge-offs of $41.5 million for the fourth quarter, 63% or $26.2
million were from land and residential construction loans.
Fourth Quarter 2008 Operating Results
(In thousands, except per share amounts)
Quarter Ended December 31, 2008
Total Amount Per Share Amount
Interest and dividend income $ 149,907 $ 2.38
Interest expense (73,053 ) (1.16 )
Net interest income before provision for loan 76,854 1.22
losses
Noninterest income before impairment writedown 8,790 0.14
on investment securities
Noninterest expense (44,199 ) (0.70 )
Income before provision for loan losses and 41,445 0.66
impairment writedown on investment securities
Provision for loan losses (43,000 ) (0.68 )
Impairment writedown on investment securities (9,653 ) (0.15 )
Loss before benefit for income taxes (11,208 ) (0.17 )
Benefit for income taxes 13,574 0.22
Net income 2,366 0.05
Preferred stock dividend and amortization of (5,385 ) (0.10 )
preferred stock discount
Net (loss) available to common stockholders $ (3,019 ) $ (0.05 )
Net interest income for the fourth quarter totaled $76.9 million. The
net interest margin for the quarter totaled 2.72%, compared to 3.10% in
the prior quarter. The decrease in the net interest margin is largely
due to the impact from the 175 basis point decrease in the fed funds
rate during the quarter to a target rate of 0 to 0.25%.
Excluding the non-cash charge for impairment of investment securities,
noninterest income for the fourth quarter totaled $8.8 million, down
from $10.0 million in the third quarter of 2008 and $14.0 million from
the prior year period. This decrease in the fourth quarter as compared
to the prior quarter and prior year was primarily due to lower gains on
sales of investment securities and loans and impairment of mortgage
servicing rights and other assets in the fourth quarter of 2008.
During the fourth quarter of 2008, we continued to carefully control all
expenditures and reduce noninterest expense. Noninterest expense totaled
$44.2 million for the fourth quarter 2008, a decrease of $4.3 million or
9% from the third quarter and decrease of $11.5 million or 21% from
second quarter. The decline in noninterest expense reflects lower
compensation and employee benefits due to reduced staffing levels and
total compensation related costs. The efficiency ratio was 47.5% for the
fourth quarter, compared to 46.4% in third quarter of 2008.
The tax benefit during the quarter was $13.6 million, $2.4 million
greater than the net loss before income taxes. This was largely a result
of a $5.7 million tax benefit in the fourth quarter resulting from other
than temporary impairment charges on Fannie Mae and Freddie Mac
preferred stock in the third quarter. This benefit was due to the change
in law in October 2008 allowing banks to recognize other than temporary
impairment charges in Fannie Mae and Freddie Mac preferred stock as
ordinary losses.
Investment Securities
During the fourth quarter, we recorded other than temporary impairment
on investment securities of $9.7 million related to four pooled trust
preferred securities. Year to date, total impairment on the pooled trust
preferred securities totaled $17.8 million. The fair values of these
securities continue to be negatively impacted by the illiquidity in the
market for these securities. The Company has the ability and intent to
hold these securities until all principal and interest is fully
recovered.
Deposit Summary
Total deposits as of December 31, 2008 increased to $8.1 billion, up
$605.6 million or 8% from $7.5 billion at September 30, 2008. Quarter
over quarter, core deposits increased $191.3 million or 6% and time
deposits increased $414.3 million or 10%. With the instability in the
overall banking environment, we promoted fully insured deposit programs
to our customers during the third and fourth quarters. These efforts
resulted in time deposits growing at a higher pace than core deposits
during the fourth quarter of 2008. The average cost of deposits for the
fourth quarter of 2008 was 2.14%, a 3 basis point decrease from the
third quarter of 2008.
Dividend Payout
East West Bank's Board of Directors has declared first quarter dividends
on the common and non-cumulative perpetual convertible preferred stock,
series A. While the Bank's capital position is very strong, the Board
reduced the common stock dividend to $0.02 per share for the first
quarter of 2009 in light of the challenging financial market conditions
and what it believes is a responsibility to preserve capital. The common
stock cash dividend of $0.02 per share is payable on or about February
24, 2009 to shareholders of record on February 10, 2009. The dividend on
the non-cumulative perpetual convertible preferred stock, series A of
$20.00 per depository share is payable on February 1, 2009 to
shareholders of record on January 15, 2009.
About East West
East West Bancorp is a publicly owned company with $12.4 billion in
assets and is traded on the Nasdaq Global Select Market under the symbol
"EWBC". The Company's wholly owned subsidiary, East West Bank, is the
second largest independent commercial bank headquartered in Southern
California with 71 branch locations. East West Bank serves the community
with 69 branch locations across Southern and Northern California and a
branch location in Houston, Texas. East West Bank has three
international locations in Greater China, including a full-service
branch in Hong Kong and representative offices in Beijing and Shanghai.
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, 2007 (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; 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.
EAST WEST BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(unaudited)
December 31, 2008 December 31, 2007 % Change
Assets
Cash and cash equivalents $ 878,853 $ 160,347 448
Short-term investments 228,441 - NA
Securities purchased under 50,000 150,000 (67)
resale agreements
Investment securities
held-to-maturity, at amortized 122,317 - NA
cost
Investment securities
available-for-sale, at fair 2,040,194 1,887,136 8
value
Loans receivable (net of
allowance for loan losses of 8,069,377 8,750,921 (8)
$178,027 and $88,407)
Other real estate owned, net 38,302 1,500 2,453
Premiums on deposits acquired, 21,190 28,459 (26)
net
Goodwill 337,438 335,366 1
Other assets 638,075 538,483 18
Total assets $ 12,424,187 $ 11,852,212 5
Liabilities and Stockholders'
Equity
Deposits $ 8,141,959 $ 7,278,914 12
Federal funds purchased 28,022 222,275 (87)
Federal Home Loan Bank advances 1,353,307 1,808,419 (25)
Securities sold under repurchase 998,430 1,001,955 (0)
agreements
Notes payable 16,506 16,242 2
Long-term debt 235,570 235,570 0
Accrued expenses and other 98,502 117,014 (16)
liabilities
Total liabilities 10,872,296 10,680,389 2
Stockholders' equity 1,551,891 1,171,823 32
Total liabilities and $ 12,424,187 $ 11,852,212 5
stockholders' equity
Book value per common share $ 16.94 $ 18.56 (9)
Number of common shares at 63,746 63,137 1
period end
Ending Balances
December 31, 2008 December 31, 2007 % Change
Loans receivable
Real estate - single family $ 491,315 $ 433,337 13
Real estate - multifamily 677,989 690,941 (2)
Real estate - commercial 3,472,000 3,502,213 (1)
Real estate - land 576,564 681,260 (15)
Real estate - construction 1,260,724 1,547,082 (19)
Commercial 1,210,260 1,314,068 (8)
Trade finance 343,959 491,690 (30)
Consumer 216,642 184,518 17
Total gross loans receivable 8,249,453 8,845,109 (7)
Unearned fees, premiums and (2,049 ) (5,781 ) (65)
discounts
Allowance for loan losses (178,027 ) (88,407 ) 101
Net loans receivable $ 8,069,377 $ 8,750,921 (8)
Deposits
Noninterest-bearing demand $ 1,292,997 $ 1,431,730 (10)
Interest-bearing checking 363,285 472,943 (23)
Money market 1,323,402 1,090,949 21
Savings 420,133 477,779 (12)
Total core deposits 3,399,817 3,473,401 (2)
Time deposits less than $100,000 1,521,988 926,459 64
Time deposits $100,000 or 3,220,154 2,879,054 12
greater
Total time deposits 4,742,142 3,805,513 25
Total deposits $ 8,141,959 $ 7,278,914 12
EAST WEST BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
Quarter Ended December 31, %
2008 2007 Change
Interest and dividend income $ 149,907 $ 201,448 (26)
Interest expense (73,053 ) (94,840 ) (23)
Net interest income before provision for 76,854 106,608 (28)
loan losses
Provision for loan losses (43,000 ) (9,000 ) 378
Net interest income after provision for loan 33,854 97,608 (65)
losses
Noninterest (loss) income (863 ) 13,978 (106)
Noninterest expense (44,199 ) (52,279 ) (15)
(Loss) income before benefit (provision) for (11,208 ) 59,307 (119)
income taxes
Benefit (provision) for income taxes 13,574 (22,062 ) (162)
Net income $ 2,366 $ 37,245 (94)
Preferred stock dividend and amortization of (5,385 ) - NA
preferred stock discount
Net (loss) income available to common $ (3,019 ) $ 37,245 (108)
stockholders
Net (loss) income per share, basic $ (0.05 ) $ 0.60 (108)
Net (loss) income per share, diluted $ (0.05 ) $ 0.59 (108)
Shares used to compute per share net (loss)
income:
- Basic 62,932 62,437 1
- Diluted 62,932 63,157 (0)
Quarter Ended December 31, %
2008 2007 Change
Noninterest income:
Impairment writedown on investment $ (9,653 ) $ - NA
securities
Branch fees 4,247 4,404 (4)
Letters of credit fees and commissions 2,267 2,564 (12)
Net gain on sale of investment securities 1,238 2,615 (53)
available-for-sale
Ancillary loan fees 738 1,609 (54)
Other operating income 300 2,786 (89)
Total noninterest (loss) income $ (863 ) $ 13,978 (106)
Noninterest expense:
Compensation and employee benefits 15,658 22,415 (30)
Occupancy and equipment expense 6,627 6,999 (5)
Other real estate owned expense 2,493 10 24,830
Deposit insurance premiums and regulatory 2,032 378 438
assessments
Amortization of investments in affordable 1,751 1,437 22
housing partnerships
Legal expense 1,687 1,940 (13)
Amortization and impairment writedowns of 1,125 2,022 (44)
premiums on deposits acquired
Data processing 1,108 1,415 (22)
Consulting expense 610 987 (38)
Other operating expense 11,108 14,676 (24)
Total noninterest expense $ 44,199 $ 52,279 (15)
EAST WEST BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
Year Ended December 31, %
2008 2007 Change
Interest and dividend income $ 664,858 $ 773,607 (14)
Interest expense (309,694 ) (365,613 ) (15)
Net interest income before provision for 355,164 407,994 (13)
loan losses
Provision for loan losses (226,000 ) (12,000 ) 1,783
Net interest income after provision for loan 129,164 395,994 (67)
losses
Noninterest (loss) income (25,062 ) 49,520 (151)
Noninterest expense (201,270 ) (183,255 ) 10
(Loss) income before benefit (provision) for (97,168 ) 262,259 (137)
income taxes
Benefit (provision) for income taxes 47,485 (101,092 ) (147)
Net (loss) income $ (49,683 ) $ 161,167 (131)
Preferred stock dividend and amortization of (9,474 ) -
preferred stock discount
Net (loss) income available to common $ (59,157 ) $ 161,167
stockholders
Net (loss) income per share, basic $ (0.94 ) $ 2.63 (136)
Net (loss) income per share, diluted $ (0.94 ) $ 2.60 (136)
Shares used to compute per share net (loss)
income:
- Basic 62,673 61,180 2
- Diluted 62,673 62,093 1
Year Ended December 31, %
2008 2007 Change
Noninterest income:
Impairment writedown on investment $ (73,165 ) $ (405 ) 17,965
securities
Branch fees 16,972 15,071 13
Letters of credit fees and commissions 9,739 10,252 (5)
Net gain on sale of investment securities 9,005 7,833 15
available-for-sale
Ancillary loan fees 4,646 5,773 (20)
Other operating income 7,741 10,996 (30)
Total noninterest (loss) income $ (25,062 ) $ 49,520 (151)
Noninterest expense:
Compensation and employee benefits 82,236 85,926 (4)
Occupancy and equipment expense 26,991 25,582 6
Amortization of investments in affordable 7,272 4,958 47
housing partnerships
Amortization and impairment writedowns of 7,270 6,846 6
premiums on deposits acquired
Deposit insurance premiums and regulatory 7,223 1,399 416
assessments
Other real estate owned expense (income) 6,013 (1,237 ) (586)
Legal expense 5,577 3,198 74
Data processing 4,494 4,818 (7)
Consulting expense 4,398 3,324 32
Other operating expense 49,796 48,441 3
Total noninterest expense $ 201,270 $ 183,255 10
EAST WEST BANCORP, INC.
SELECTED FINANCIAL INFORMATION
(In thousands)
(unaudited)
Average Balances Quarter Ended December 31, %
2008 2007 Change
Loans receivable
Real estate - single family $ 493,415 $ 384,271 28
Real estate - multifamily 682,455 753,235 (9)
Real estate - commercial 3,407,697 3,459,272 (1)
Real estate - land 579,335 668,686 (13)
Real estate - construction 1,311,622 1,533,574 (14)
Commercial 1,179,123 1,258,398 (6)
Trade finance 369,108 467,632 (21)
Consumer 210,448 180,195 17
Total loans receivable 8,233,203 8,705,263 (5)
Investment securities held-to-maturity 39,508 - NA
Investment securities available-for-sale 2,184,334 1,893,193 15
Earning assets 11,219,272 10,872,066 3
Total assets 11,949,168 11,699,951 2
Deposits
Noninterest-bearing demand $ 1,311,283 $ 1,398,794 (6)
Interest-bearing checking 367,792 436,946 (16)
Money market 1,153,171 1,280,265 (10)
Savings 419,757 508,540 (17)
Total core deposits 3,252,003 3,624,545 (10)
Time deposits less than $100,000 1,599,486 928,462 72
Time deposits $100,000 or greater 2,855,376 2,879,172 (1)
Total time deposits 4,454,862 3,807,634 17
Total deposits 7,706,865 7,432,179 4
Interest-bearing liabilities 9,143,800 8,971,407 2
Stockholders' equity 1,363,161 1,174,883 16
EAST WEST BANCORP, INC.
SELECTED FINANCIAL INFORMATION
(In thousands)
(unaudited)
Average Balances Year Ended December 31, %
2008 2007 Change
Loans receivable
Real estate - single family $ 467,739 $ 349,230 34
Real estate - multifamily 707,621 1,083,245 (35)
Real estate - commercial 3,483,258 3,336,119 4
Real estate - land 631,951 558,278 13
Real estate - construction 1,481,248 1,371,983 8
Commercial 1,205,365 1,115,882 8
Trade finance 423,367 376,934 12
Consumer 201,276 163,318 23
Total loans receivable 8,601,825 8,354,989 3
Investment securities held-to-maturity 9,931 - NA
Investment securities available-for-sale 2,035,866 1,727,961 18
Earning assets 11,119,888 10,368,051 7
Total assets 11,802,787 11,079,770 7
Deposits
Noninterest-bearing demand $ 1,362,617 $ 1,312,709 4
Interest-bearing checking 404,404 412,550 (2)
Money market 1,099,576 1,302,898 (16)
Savings 452,259 412,272 10
Total core deposits 3,318,856 3,440,429 (4)
Time deposits less than $100,000 1,164,622 956,203 22
Time deposits $100,000 or greater 3,018,876 2,862,017 5
Total time deposits 4,183,498 3,818,220 10
Total deposits 7,502,354 7,258,649 3
Interest-bearing liabilities 9,057,073 8,540,086 6
Stockholders' equity 1,245,777 1,082,561 15
EAST WEST BANCORP, INC.
SELECTED FINANCIAL INFORMATION
(In thousands)
(unaudited)
Selected Ratios Quarter Ended December 31, %
2008 2007 Change
For The Period
Return on average assets 0.08 % 1.27 % (94)
Return on average common equity -1.12 % 12.68 % (109)
Interest rate spread (3) 2.13 % 3.18 % (33)
Net interest margin (3) 2.72 % 3.91 % (30)
Yield on earning assets (3) 5.30 % 7.37 % (28)
Cost of deposits 2.14 % 3.15 % (32)
Cost of funds 2.77 % 3.63 % (24)
Noninterest expense/average assets (1) 1.38 % 1.67 % (17)
Efficiency ratio (1) 47.52 % 40.49 % 17
Net chargeoffs to average loans (2) 2.02 % 0.24 % 748
Gross loan chargeoffs $ 42,304 $ 5,241 707
Loan recoveries $ (801 ) $ (66 ) 1,114
Net loan chargeoffs $ 41,503 $ 5,175 702
Selected Ratios Year Ended December 31, %
2008 2007 Change
For The Period
Return on average assets -0.42 % 1.45 % (129)
Return on average common equity -5.41 % 14.89 % (136)
Interest rate spread (3) 2.56 % 3.19 % (20)
Net interest margin (3) 3.19 % 3.94 % (19)
Yield on earning assets (3) 5.97 % 7.47 % (20)
Cost of deposits 2.37 % 3.32 % (29)
Cost of funds 2.96 % 3.71 % (20)
Noninterest expense/average assets (1) 1.57 % 1.55 % 1
Efficiency ratio (1) 45.94 % 37.44 % 23
Net chargeoffs to average loans (2) 1.64 % 0.08 % 1,932
Gross loan chargeoffs $ 147,451 $ 7,206 1,946
Loan recoveries $ (6,027 ) $ (445 ) 1,254
Net loan chargeoffs $ 141,424 $ 6,761 1,992
Period End
Tier 1 risk-based capital ratio 13.85 % 8.95 % 55
Total risk-based capital ratio 15.83 % 10.53 % 50
Tier 1 leverage capital ratio 12.36 % 8.73 % 42
(1) Excludes the amortization of intangibles, amortization and impairment
writedowns of premiums on deposits acquired, impairment writedown on
goodwill and investment securities, and amortization of investments in
affordable housing partnerships.
(2) Annualized.
(3) Yields on certain securities have been adjusted upward to a "fully
taxable equivalent" basis in order to reflect the effect of income which
is exempt from federal income taxation at the current statutory tax rate.
EAST WEST BANCORP, INC.
QUARTER TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID
(In thousands)
(unaudited)
Quarter Ended December 31,
2008 2007
Average Average
Volume Interest Yield Volume Interest Yield
(1) (1)
ASSETS
Interest-earning
assets:
Short-term $ 598,254 $ 3,922 2.60% $ 28,878 $ 340 4.67%
investments (2)
Securities
purchased under 50,000 1,278 10.14% 150,000 3,322 8.79%
resale agreements
(term)
Investment
securities 39,508 697 7.00% - - -
held-to-maturity
Investment
securities 2,184,334 23,962 4.35% 1,893,193 30,248 6.34%
available-for-sale
(3)
Loans receivable 8,233,203 120,148 5.79% 8,705,263 166,644 7.59%
Federal Home Loan
Bank and Federal 113,973 (100 ) -0.35% 94,732 1,306 5.47%
Reserve Bank stocks
(4)
Total
interest-earning 11,219,272 149,907 5.30% 10,872,066 201,860 7.37%
assets
Noninterest-earning
assets:
Cash and due from 140,773 177,071
banks
Allowance for loan (178,721 ) (85,944 )
losses
Other assets 767,844 736,758
Total assets $ 11,949,168 $ 11,699,951
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Interest-bearing
liabilities:
Checking accounts 367,792 519 0.56% 436,946 1,692 1.54%
Money market 1,153,171 5,559 1.91% 1,280,265 12,142 3.76%
accounts
Savings deposits 419,757 807 0.76% 508,540 1,989 1.55%
Time deposits less 1,599,486 10,728 2.66% 928,462 8,595 3.67%
than $100,000
Time deposits 2,855,376 23,901 3.32% 2,879,172 34,640 4.77%
$100,000 or greater
Federal funds 11,690 41 1.39% 213,121 2,568 4.78%
purchased
Federal Home Loan 1,501,870 16,298 4.31% 1,486,975 18,155 4.84%
Bank advances
Securities sold
under repurchase 999,088 12,181 4.84% 1,002,356 10,691 4.23%
agreements
Long-term debt 235,570 3,019 5.08% 235,570 4,368 7.36%
Total
interest-bearing 9,143,800 73,053 3.17% 8,971,407 94,840 4.19%
liabilities
Noninterest-bearing
liabilities:
Demand deposits 1,311,283 1,398,794
Other liabilities 130,924 154,867
Stockholders' 1,363,161 1,174,883
equity
Total liabilities
and stockholders' $ 11,949,168 $ 11,699,951
equity
Interest rate 2.13% 3.18%
spread
Net interest income
and net yield on $ 76,854 2.72% $ 107,020 3.91%
interest-earning
assets (3)
(1) Annualized
(2) Includes short-term securities purchased under resale agreements.
(3) Amounts calculated on a fully taxable equivalent basis using the current statutory
federal tax rate.
(4) On January 8, 2009, the FHLB announced the suspension of the fourth quarter 2008's
dividend payment.
EAST WEST BANCORP, INC.
YEAR TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID
(In thousands)
(unaudited)
Year Ended December 31,
2008 2007
Average Average
Volume Interest Yield Volume Interest Yield
(1) (1)
ASSETS
Interest-earning
assets:
Short-term $ 303,344 $ 7,468 2.46% $ 18,576 $ 904 4.87%
investments (2)
Securities
purchased under 53,552 6,372 11.87% 182,055 15,064 8.27%
resale agreements
(term)
Investment
securities 9,931 697 7.00% - - -
held-to-maturity
Investment
securities 2,035,866 100,776 4.94% 1,727,961 103,141 5.97%
available-for-sale
(3)
Loans receivable 8,601,825 545,260 6.32% 8,354,989 650,717 7.79%
Federal Home Loan
Bank and Federal 115,370 5,175 4.47% 84,470 4,581 5.42%
Reserve Bank stocks
(4)
Total
interest-earning 11,119,888 665,748 5.97% 10,368,051 774,407 7.47%
assets
Noninterest-earning
assets:
Cash and due from 137,730 156,081
banks
Allowance for loan (144,154 ) (80,161 )
losses
Other assets 689,323 635,799
Total assets $ 11,802,787 $ 11,079,770
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Interest-bearing
liabilities:
Checking accounts 404,404 3,226 0.80% 412,550 6,646 1.61%
Money market 1,099,576 25,805 2.34% 1,302,898 53,021 4.07%
accounts
Savings deposits 452,259 4,148 0.91% 412,272 4,400 1.07%
Time deposits less 1,164,622 35,061 3.00% 956,203 37,164 3.89%
than $100,000
Time deposits 3,018,876 109,820 3.63% 2,862,017 139,804 4.88%
$100,000 or greater
Federal funds 89,309 2,217 2.48% 173,103 8,899 5.14%
purchased
Federal Home Loan 1,592,125 70,661 4.43% 1,230,940 61,710 5.01%
Bank advances
Securities sold
under repurchase 1,000,332 46,062 4.59% 978,739 38,366 3.92%
agreements
Long-term debt 235,570 12,694 5.37% 211,364 15,603 7.38%
Total
interest-bearing 9,057,073 309,694 3.41% 8,540,086 365,613 4.28%
liabilities
Noninterest-bearing
liabilities:
Demand deposits 1,362,617 1,312,709
Other liabilities 137,320 144,414
Stockholders' 1,245,777 1,082,561
equity
Total liabilities
and stockholders' $ 11,802,787 $ 11,079,770
equity
Interest rate 2.56% 3.19%
spread
Net interest income
and net yield on $ 356,054 3.19% $ 408,794 3.94%
interest-earning
assets (3)
(1) Annualized
(2) Includes short-term securities purchased under resale agreements.
(3) Amounts calculated on a fully taxable equivalent basis using the current statutory
federal tax rate.
(4) On January 8, 2009, the FHLB announced the suspension of the fourth quarter 2008's
dividend payment.
EAST WEST BANCORP, INC.
QUARTERLY ALLOWANCE FOR LOAN LOSSES RECAP
(In thousands)
(unaudited)
Quarter Ended
December 31, 2008 September 30, June 30, 2008 March 31, 2008
2008
LOANS
Allowance
balance, $ 177,155 $ 168,413 $ 117,120 $ 88,407
beginning of
period
Allowance for
unfunded loan
commitments (625 ) 5,437 1,136 (904 )
and letters
of credit
Provision for 43,000 43,000 85,000 55,000
loan losses
Net
Charge-offs:
Real estate - 1,756 1,022 632 75
single family
Real estate - 524 1,006 436 -
multifamily
Real estate - 750 663 (3 ) -
commercial
Real estate - 9,039 19,128 16,337 5,078
land
Real estate -
residential 17,127 13,557 15,726 8,565
construction
Real estate -
commercial - - - -
construction
Commercial 8,054 3,474 640 11,636
Trade finance 4,026 750 922 -
Consumer 227 95 153 29
Total net 41,503 39,695 34,843 25,383
charge-offs
Allowance
balance, end $ 178,027 $ 177,155 $ 168,413 $ 117,120
of period
UNFUNDED LOAN
COMMITMENTS
AND LETTERS
OF CREDIT:
Allowance
balance, $ 5,716 $ 11,153 $ 12,289 $ 11,385
beginning of
period
Provision for
unfunded loan
commitments 625 (5,437 ) (1,136 ) 904
and letters
of credit
Allowance
balance, end $ 6,341 $ 5,716 $ 11,153 $ 12,289
of period
GRAND TOTAL, $ 184,368 $ 182,871 $ 179,566 $ 129,409
END OF PERIOD
Nonperforming
assets to 2.12 % 1.71 % 1.64 % 0.63 %
total assets
Allowance for
loan losses
to total 2.16 % 2.14 % 1.95 % 1.32 %
gross loans
at end of
period
Allowance for
loan losses
and unfunded
loan
commitments 2.23 % 2.21 % 2.07 % 1.46 %
to total
gross loans
at end of
period
Allowance to
nonaccrual 82.95 % 99.92 % 98.59 % 202.41 %
loans at end
of period
Nonaccrual
loans to 2.60 % 2.14 % 1.97 % 0.65 %
total loans
EAST WEST BANCORP, INC
TOTAL NON-PERFORMING ASSETS AS OF DECEMBER 31, 2008
(in thousands)
(unaudited)
Total Nonaccrual Loans
Under 90+ Total Modified or Total
90+ Days Days Nonaccrual Restructured REO
Delinquent Delinquent Loans Loans Assets Non-Performing
Assets
Loan Type
Real estate
- single $ 13,519 $ - $ 13,519 $ 1,201 $ 419 $ 15,139
family
Real estate
- 11,845 - 11,845 3,519 1,136 16,500
multifamily
Real estate 24,680 - 24,680 2,406 4,882 31,968
- commercial
Real estate 66,185 12,892 79,077 - 10,307 89,384
- land
Real estate
- 27,052 8,766 35,818 - 21,146 56,964
residential
construction
Real estate
- commercial 30,581 - 30,581 - - 30,581
construction
Commercial 6,570 10,604 17,174 3,866 142 21,182
Trade 65 - 65 - 270 335
Finance
Consumer 1,654 194 1,848 - - 1,848
Total $ 182,151 $ 32,456 $ 214,607 $ 10,992 $ 38,302 $ 263,901
EAST WEST BANCORP, INC
TOTAL NON-PERFORMING ASSETS AS OF SEPTEMBER 30, 2008
(in thousands)
(unaudited)
Total Nonaccrual Loans
Under 90+ Total Modified or Total
90+ Days Days Nonaccrual Restructured REO
Delinquent Delinquent Loans Loans Assets Non-Performing
Assets
Loan Type
Real estate
- single $ 5,486 $ - $ 5,486 $ 1,405 $ 2,715 $ 9,606
family
Real estate
- 9,758 - 9,758 - 502 10,260
multifamily
Real estate 14,353 4,511 18,864 1,763 1,043 21,670
- commercial
Real estate 52,926 11,882 64,808 - 4,370 69,178
- land
Real estate
- 44,526 9,783 54,309 - 8,461 62,770
residential
construction
Real estate
- commercial 13,073 - 13,073 - - 13,073
construction
Commercial 8,972 973 9,945 2,496 424 12,865
Trade - - - - - -
Finance
Consumer 866 194 1,060 - 92 1,152
Total $ 149,960 $ 27,343 $ 177,303 $ 5,664 $ 17,607 $ 200,574
EAST WEST BANCORP, INC
TOTAL NON-PERFORMING ASSETS AS OF JUNE 30, 2008
(in thousands)
(unaudited)
Total Nonaccrual Loans
Under 90+ Total Modified or Total
90+ Days Days Nonaccrual Restructured REO
Delinquent Delinquent Loans Loans Assets Non-Performing
Assets
Loan Type
Real estate
- single $ 7,247 $ - $ 7,247 $ - $ 1,635 $ 8,882
family
Real estate
- 7,010 - 7,010 - 4,658 11,668
multifamily
Real estate 18,326 - 18,326 1,699 - 20,025
- commercial
Real estate 46,773 24,829 71,602 - 1,000 72,602
- land
Real estate
- 38,035 15,572 53,607 - 10,105 63,712
residential
construction
Real estate
- commercial 4,283 - 4,283 - - 4,283
construction
Commercial 7,722 - 7,722 2,993 - 10,715
Trade 621 - 621 - - 621
Finance
Consumer 476 - 476 - 92 568
Total $ 130,493 $ 40,401 $ 170,894 $ 4,692 $ 17,490 $ 193,076
EAST WEST BANCORP, INC
DELINQUENT LOANS BY LOAN CATEGORIES AS OF DECEMBER 31, 2008
(in thousands)
(unaudited)
Loan Type 30-59 Days 60-89 Days 90+ Days Delinquent Total Delinquent
Delinquent Delinquent Loans
Real estate - $ 16,708 $ 6,237 $ 13,519 $ 36,464
single family
Real estate - 9,372 2,382 11,845 23,599
multifamily
Real estate - 21,036 18,364 24,680 64,080
commercial
Real estate - 9,335 19,002 66,185 94,522
land
Real estate -
residential 13,242 9,379 27,052 49,673
construction
Real estate -
commercial - - 30,581 30,581
construction
Commercial 3,970 13,918 6,570 24,458
Trade finance 374 - 65 439
Consumer 1,326 252 1,654 3,232
Total Delinquent $ 75,363 $ 69,534 $ 182,151 $ 327,048
Loans
EAST WEST BANCORP, INC
DELINQUENT LOANS BY LOAN CATEGORIES AS OF SEPTEMBER 30, 2008
(in thousands)
(unaudited)
Loan Type 30-59 Days 60-89 Days 90+ Days Delinquent Total Delinquent
Delinquent Delinquent Loans
Real estate - $ 8,282 $ 5,536 $ 5,486 $ 19,304
single family
Real estate - 9,415 2,939 9,758 22,112
multifamily
Real estate - 21,434 8,608 14,353 44,395
commercial
Real estate - 5,216 2,154 52,926 60,296
land
Real estate -
residential 37,947 14,143 44,526 96,616
construction
Real estate -
commercial 14,839 18,450 13,073 46,362
construction
Commercial 12,726 798 8,972 22,496
Trade finance - - - -
Consumer 1,818 1,459 866 4,143
Total Delinquent $ 111,677 $ 54,087 $ 149,960 $ 315,724
Loans
EAST WEST BANCORP, INC
DELINQUENT LOANS BY LOAN CATEGORIES AS OF JUNE 30, 2008
(in thousands)
(unaudited)
Loan Type 30-59 Days 60-89 Days 90+ Days Delinquent Total Delinquent
Delinquent Delinquent Loans
Real estate - $ 11,242 $ 2,063 $ 7,247 $ 20,552
single family
Real estate - 6,112 1,042 7,010 14,164
multifamily
Real estate - 23,110 6,274 18,326 47,710
commercial
Real estate - 25,825 11,207 46,773 83,805
land
Real estate -
residential 69,997 23,526 38,035 131,558
construction
Real estate -
commercial 13,073 18,042 4,283 35,398
construction
Commercial 11,993 3,434 7,722 23,149
Trade finance 10,030 488 621 11,139
Consumer 476 274 476 1,226
Total Delinquent $ 171,858 $ 66,350 $ 130,493 $ 368,701
Loans
Source: East West Bancorp, Inc.
Contact: East West Bancorp, Inc.
Tom Tolda, Chief Financial Officer, 626-768-6788