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 2009.
"East West reported a return to profitability with net earnings for full
year 2009 of $76.6 million. The return to profitability for 2009 follows
a single loss year for 2008 - the only loss year for East West in nearly
30 years," stated Dominic Ng, Chairman and Chief Executive Officer of
East West. "Previous to 2008, East West achieved record earnings every
year for over a decade, with net income of $161.2 million in 2007 and
$143.4 million in 2006. Our core business remains strong and we are back
on track to deliver solid profitability and create long-term value for
our shareholders in 2010 and beyond."
For the fourth quarter 2009, net income was $259.7 million, an increase
of $328.3 million over a loss reported in third quarter. For the full
year 2009, net income was $76.6 million, an increase of $126.3 million
over a loss reported in 2008. Our fourth quarter earnings include a
pre-tax gain of $471.0 million from the FDIC-assisted acquisition of
United Commercial Bank (UCB), offset by a $140.0 million provision for
loan losses and a $45.8 million impairment loss on investment securities.
Ng stated, "Throughout 2009 and from the onset of the economic downturn,
East West successfully executed on all strategic actions. We believe
that for East West, the credit cycle peaked in the third quarter of 2009
and that as we enter the new year, the worst is behind us. Since January
1, 2008, we actively reduced our exposure to land and construction loans
by over $2.2 billion. Our capital position is strong and continues to
grow - during 2009 we raised a total of $607.8 million in new capital
and generated $76.6 million additional capital from net income."
"Further, our swift and decisive actions during this challenging
operating environment to improve our balance sheet have allowed us to
take the exceptional opportunity to acquire the assets and deposit
franchise of UCB, nearly doubling our size to $20.6 billion. The
acquisition of UCB has expedited our return to profitability and serves
as an immediate catalyst to further our growth and profitability in
2010," concluded Ng.
FDIC-Assisted Acquisition of UCB
On November 6, 2009, East West acquired substantially all of the assets
and assumed substantially all of the liabilities of UCB from the Federal
Deposit Insurance Corporation (FDIC) in an FDIC-assisted transaction.
As the market leader in the Asian-American banking sector, East West has
positive brand recognition. UCB customers and the Asian-American
community have responded positively to our acquisition of the banking
operations of UCB. As widely reported in the Asian-American media, our
acquisition of UCB served to stabilize deposits and strengthen customer
confidence in the entire Asian-American banking sector. Additionally,
East West's proven asset resolution process, coupled with our expertise
in the market niche of UCB will result in a higher recovery and lower
potential losses to the FDIC insurance fund. Further, because East West
has an existing presence and expertise in Hong Kong and Greater China,
we are better able to assist the FDIC in managing the overseas
operations of UCB, also reducing any potential exposure to the FDIC
insurance fund.
The integration of United Commercial Bank is progressing smoothly and we
are on target for full integration of all systems in April 2010.
East West entered into loss sharing agreements with the FDIC that covers
future losses incurred on nearly all the UCB legacy loans and all real
estate owned assets that existed at November 6, 2009. Under the terms of
the agreement, the FDIC will absorb 80 percent of losses and share in 80
percent of recoveries on the first $2.05 billion and absorb 95 percent
of losses and share in 95 percent of recoveries exceeding $2.05 billion.
The term for the loss share agreement is ten years for single family
loans. For all other loans, the term is five years for losses and eight
years for recoveries.
East West recorded a FDIC indemnification asset as of November 6, 2009
of $1.1 billion, which represents the present value of the estimated
losses on covered loans to be reimbursed to East West by the FDIC. East
West also recorded a $174.0 million receivable from the FDIC.
The UCB legacy loans guaranteed under loss sharing agreements with the
FDIC will be defined as "covered loans" and the UCB legacy loans and
real estate owned assets guaranteed under loss sharing agreements with
the FDIC will be defined as "covered assets" throughout this press
release. Further, any references to nonaccrual loans and nonperforming
assets will consist of East West legacy loans and assets only as all
covered assets are subject to loss share agreements with the FDIC.
In accordance with U.S. GAAP, all the UCB legacy loans were accounted
for at fair value and recorded at a discount to book value. Accordingly,
any share of losses East West expects to incur have already been written
off and factored into the fair value as of November 6, 2009.
A summary of the net assets received from the FDIC is as follows:
November 6, 2009
(In thousands)
Assets
Cash and cash equivalents $ 599,036
FDIC receivable 173,995
Investment securities 1,561,446
Loans covered by FDIC loss sharing, (gross balance 5,660,432
$7,299,303 and shown net of discount of $1,638,871)
Loans not covered by FDIC loss sharing, (gross balance 236,504
$306,477 and shown net of discount of $69,973)
FDIC indemnification asset 1,143,989
Other assets 486,555
Total assets acquired $ 9,861,957
Liabilities
Deposits $ 6,529,864
Federal Home Loan Bank advances 1,837,593
Securities sold under repurchase agreements 858,244
Other liabilities 344,788
Total liabilities 9,570,489
Net assets acquired $ 291,468
Further information on the acquisition of UCB can be found in the Form
8-K, filed by East West with the SEC on January 22, 2010.
East West recorded an after tax gain of $291.5 million from the
acquisition of UCB on November 6, 2009. Further, the Company recorded
additional net revenue of $51.1 million during the period from November
6, 2009 to December 31, 2009 as a result of early prepayments on covered
loans during the quarter. This additional net revenue is comprised of
$74.4 million discount accretion on early payoffs on covered loans as a
yield adjustment offset by a corresponding $23.3 million net reduction
in the FDIC indemnification asset and FDIC receivable as noninterest
income (loss).
Preliminary Forecast
The Company is providing a forecast for the first quarter of 2010.
Management currently estimates that fully diluted earnings per share for
the first quarter of 2010 will range from $0.04 to $0.08. This EPS
guidance is based on the following assumptions:
-- Net interest margin between 3.80% and 3.90%
-- Provision for loan losses of approximately $70.0 to $80.0 million for
the quarter
-- Noninterest expense flat from the fourth quarter of 2009
Full Year 2009 Highlights
-- Increase in Balance Sheet - Total asset increased to a record $20.6
billion at year-end, an increase of $8.2 billion or 66% year over year.
Total deposits increased to $15.0 billion, an increase of $6.8 billion
or 84% year over year. Year-to-date, East West grew deposits organically
by $744.1 million or 9%, excluding the impact of the UCB
acquisition.Total gross loans receivable increased to $14.1 billion, an
increase of $5.9 billion or 71% year over year. These increases in the
balance sheet are primarily due to the acquisition of UCB.
-- Capital Strengthened -During the full year 2009, we raised a total of
$607.8 million in capital. We issued $107.8 million of common stock in
July 2009 and $165.0 million of common stock and $335.0 million of
mandatory convertible preferred stock in November 2009. As of December
31, 2009, East West's Tier 1 risk-based and total risk-based capital
ratios were 17.9% and 19.9%, respectively, significantly higher than the
well capitalized requirement of 6% and 10%, respectively.
-- Loan to Deposit Ratio -Throughout 2009, East West continued to further
strengthen the balance sheet and decrease the loan to deposit ratio. As
of December 31, 2009, the loan to deposit ratio was 94.3%, compared to
101.3% as of December 31, 2008.
-- Allowance for Loan Losses Strengthened -The allowance for loan loss was
increased to $238.8 million or a 34% increase year over year. The
allowance for loan losses to gross non-covered loans was 2.80% at
December 31, 2009 compared to 2.16% as of December 31, 2008. The
allowance to nonaccrual loans ratio improved to 137.9% as of December
31, 2009, compared to 83.0% as of December 31, 2008.
-- Reduced Exposures to Problem Credits -Total land loans decreased $206.2
million or 36% and total commitments on construction loans decreased
$1.0 billion or 63% year to date. As of December 31, 2009, outstanding
balances on land and construction loans totaled only 5.9% of total gross
loans receivable.
Fourth Quarter Summary
-- Credit Quality Improved - Total nonperforming assets have improved to
$187.0 million, a decrease of $43.2 million or 19% from prior quarter.
Total nonperforming assets to total assets improved to 0.91% as of
December 31, 2009, from 1.84% as of September 30, 2009. The decrease in
nonperforming assets from the prior quarter is largely a result of a
reduction in nonaccrual residential construction loans.
-- Net Interest Margin Improved - Net interest income for the fourth
quarter increased to $219.5 million, a $123.6 million increase over
third quarter of 2009. The net interest margin for the fourth quarter
increased to 5.46%, compared to 3.20% in the prior quarter. Excluding
the impact of the yield adjustment to covered loans of $74.4 million,
net interest income increased to $145.1 million and the net interest
margin increased to 3.61% for the fourth quarter. See reconciliation of
the GAAP financial measure to this non-GAAP financial measure in the
tables attached.
-- Deposits Increased - Total deposits increased to a record $15.0 billion
at year-end 2009. In fourth quarter of 2009, deposits increased $6.3
billion or 73% over prior quarter due primarily to the UCB acquisition.
East West grew deposits organically by $217.5 million for the quarter,
excluding the impact of the UCB acquisition.
Capital
Strength
(Dollars in
millions)
Well Capitalized Total Excess Above
December 31, 2009 Regulatory Well Capitalized
Requirement Requirement
Tier 1 leverage 11.7 % 5.00 % $ 1,150.2
capital ratio
Tier 1
risk-based 17.9 % 6.00 % $ 1,337.9
capital ratio
Total
risk-based 19.9 % 10.00 % $ 1,106.1
capital ratio
Proforma
tangible common
equity to risk 13.2 % 4.00 % $ 1,028.2
weighted assets
ratio
The tangible common equity to risk weighted asset ratio is a non-GAAP
disclosure. The Mandatory Convertible Cumulative Non-Voting Perpetual
Preferred Stock, Series, C issued in November 2009 has been included as a
proforma tangible common equity ratio. The Series C shares will automatically
* convert to common shares if an affirmative shareholder vote is obtained. 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. As of the
end of the fourth quarter, our Tier 1 leverage capital ratio increased
to 11.7%, Tier 1 risk-based capital ratio increased to 17.9% and total
risk-based capital ratio increased to 19.9%. East West exceeds well
capitalized requirements for all regulatory guidelines by over $1
billion. Furthermore, East West's proforma tangible common equity to
risk weighted assets ratio totaled 13.2% as of December 31, 2009.
During the fourth quarter, we issued $165 million in common stock and
$335 million in Mandatory Convertible Cumulative Non-Voting Perpetual
Preferred Stock, Series C (Series C preferred stock). The newly issued
capital, along with the net income for the quarter resulted in an
increase to total shareholders' equity to $2.3 billion at December 31,
2009. The special shareholders' meeting to vote to approve the
conversion of the Series C preferred stock to common stock has been set
for March 18, 2010. The Series C preferred stock converts to common
stock automatically three days after the receipt of an affirmative
shareholder vote. No Series C dividend has been declared by the Board of
Directors. Under the terms of the Series C preferred stock, the May 1
dividend payment or any portion thereof will not be earned or paid
should an affirmative shareholder vote to convert be obtained on the
March 18, 2010 meeting date. Since management fully expects that the
Series C preferred dividend will not be earned or paid, income available
to common shareholders has not been adjusted for purposes of computing
basic and diluted per share amounts.
Further, during the fourth quarter, we received a 50% reduction in the
warrant we issued to the U.S. Treasury in conjunction with the TARP
capital we received in December 2008. As of December 31, 2009, the new
share count of the warrant is 1,517,555. This adjustment to the warrant
was due to the fact that within one year of issuance, we raised new
capital in excess of the TARP capital issued in December 2008.
Management intends to repay the $306.5 million TARP capital in full
later this year.
Credit Management
Total nonperforming assets as of December 31, 2009 totaled $187.0
million or 0.91% of total assets, compared to $230.2 million or 1.84% of
total assets at September 30, 2009. Nonperforming assets as of December
31, 2009 included nonaccrual loans totaling $173.2 million and REO
assets totaling $13.8 million.
The legacy UCB covered loans that were nonaccrual as of December 31,
2009 totaled $675.6 million, net of a $466.3 million discount. All loans
acquired from UCB were recorded at estimated fair value as of the
acquisition date.
Throughout this challenging economic cycle, we have taken strong
measures to reduce our exposure to problem credits - largely comprised
of our construction and land portfolios. The outstanding balances for
the land and construction portfolios totaled $828.7 million as of
December 31, 2009, or 5.9% of total gross loans receivable.
Further, with the addition of $5.6 billion in covered loans from the UCB
acquisition, concentrations within our loan portfolio have been reduced.
Total exposure to commercial real estate loans is 26% of total loans as
of December 31, 2009, down from 43% as of September 30, 2009.
As previously discussed by management, both the provision for loan
losses and the net chargeoffs peaked in the third quarter of 2009. Given
the trends we are seeing in the loan portfolio, it is expected that
provision for loan losses and net chargeoffs will continue to decrease
throughout 2010. Provision for loan losses was $140.0 million for the
fourth quarter of 2009, a decrease 12% from $159.2 million in the third
quarter.
For the fourth quarter of 2009, net charge-offs were $130.7 million, a
decrease of 14% or $20.6 million compared to $151.2 million during the
third quarter of 2009. The net chargeoffs for the quarter were largely
related to construction and land loans.
At December 31, 2009, the allowance for loan losses increased to $238.8
million or 2.80% of non-covered loans receivable, compared to $230.7
million or 2.74% of outstanding loans at September 30, 2009. Based on
management's evaluation and analysis of portfolio credit quality and
prevailing economic conditions, we believe the allowance for loan losses
is adequate for losses inherent in the loan portfolio as of December 31,
2009.
Fourth Quarter 2009 Operating Results
Net interest income for the fourth quarter increased to $219.5 million,
a $123.6 million or 129% increase over third quarter of 2009. The net
interest margin for the fourth quarter increased to 5.46%, up 226 basis
points from 3.20% in the prior quarter. Excluding the impact of the
yield adjustment to covered loans of $74.4 million, net interest income
increased to $145.1 million and the net interest margin increased to
3.61% for the fourth quarter. During the quarter, East West paid down
$200 million in FHLB advances at an average cost of 4.43%. Additionally,
East West sold approximately $1.3 billion in lower yielding investment
securities obtained from UCB, shortly after the acquisition. These
actions improved the net interest margin for the fourth quarter and will
continue to do so in coming quarters.
Currently, we estimate that the net interest margin, without yield
adjustments to covered loans, will be approximately 3.80% to 3.90% for
the first quarter of 2010.
Excluding the impact of the gain on the acquisition of UCB, the decrease
in the FDIC indemnification asset, impairment charges on investment
securities and gains on sales of investment securities, noninterest
income for the fourth quarter totaled $14.4 million, compared to $10.2
million in the third quarter of 2009. The increase was primarily due to
increased fee and other income from the acquisition of UCB. See
reconciliation of the GAAP financial measure to this non-GAAP financial
measure in the tables attached.
Noninterest expense for the fourth quarter totaled $91.1 million,
compared to $46.1 million in the third quarter of 2009. The increase in
the noninterest expense quarter over quarter was due to additional
expenditures from the acquisition of UCB on November 6, 2009. We
anticipate that noninterest expense will decrease starting the second
quarter of 2010, after the systems integration of UCB is completed.
Investment Securities
During the fourth quarter, we recorded other than temporary impairment
on investment securities of $45.8 million related primarily to pooled
trust preferred securities. Year to date, total impairment on the pooled
trust preferred securities totaled $106.6 million and the remaining book
balance of these securities has decreased to $18.1 million. These
securities are available for sale and recorded on the balance sheet at
fair value and any difference in the book balance and the fair value is
reflected in the other comprehensive income section of stockholders'
equity. As of December 31, 2009, the fair value of these securities was
written down to $2.9 million.
Deposit Summary
Total deposits as of December 31, 2009 increased to $15.0 billion, up
$6.3 billion or 72.9% from $8.7 billion at September 30, 2009. Quarter
over quarter, core deposits increased $2.7 billion or 60.1% and time
deposits increased $3.7 billion or 86.3%. The average cost of deposits
for the fourth quarter of 2009 decreased to 1.11%, a 13 basis point
decrease from the third quarter of 2009. East West grew deposits
organically by $217.5 million for the quarter, excluding the impact of
the UCB acquisition.
Dividend Payout
East West Bank's Board of Directors has declared first quarter dividends
on the common stock and Series A Preferred Stock. The common stock cash
dividend of $0.01 is payable on or about February 24, 2010 to
shareholders of record on February 10, 2010. The dividend on the Series
A Preferred Stock of $20.00 per share is payable on February 1, 2010 to
shareholders of record on January 15, 2010.
About East West
East West Bancorp is a publicly owned company with $20.6 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
third largest independent commercial bank headquartered in California
with 135 branches worldwide; including 111 branches in California, eight
branches in New York, five branches in Georgia, three branches in
Massachusetts, two branches in Texas, and two branches in Washington. In
Greater China, East West's presence includes four full-service branches,
including two in Hong Kong, one in Shanghai, and one in Shantou. The
Bank also has representative offices in Beijing, Guangzhou, Shanghai and
Shenzhen, China, and Taipei, Taiwan. 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; 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, September 30, December 31, 2008
2009 2009
Assets
Cash and due from $ 585,024 $ 132,569 $ 144,486
banks
Short-term 262,329 460,665 734,367
investments
Interest-bearing
deposits in other 498,565 320,860 228,441
banks
Securities
purchased under 227,444 75,000 50,000
resale agreements
Investment 2,564,081 2,238,354 2,162,511
securities
Loans receivable,
excluding covered
loans (net of
allowance for loan 8,246,685 8,156,838 8,069,377
losses of $238,833,
$230,650, and
$178,027)
Covered loans 5,598,155 - -
Total loans 13,844,840 8,156,838 8,069,377
receivable, net
Federal Home Loan
Bank and Federal 217,002 123,514 114,317
Reserve stock
FDIC
indemnification 1,091,814 - -
asset
Other real estate 13,832 24,185 38,302
owned, net
Other real estate 44,273 - -
owned covered, net
Premiums on
deposits acquired, 89,735 17,904 21,190
net
Goodwill 337,438 337,438 337,438
Other assets 806,533 598,603 522,387
Total assets $ 20,582,910 $ 12,485,930 $ 12,422,816
Liabilities and
Stockholders' Equity
Deposits $ 14,987,613 8,668,557 $ 8,141,959
Federal Home Loan 1,805,387 923,216 1,353,307
Bank advances
Securities sold
under repurchase 1,026,870 1,019,450 998,430
agreements
Subordinated debt
and trust preferred 235,570 235,570 235,570
securities
Other borrowings 67,040 3,022 28,022
Accrued expenses
and other 175,771 114,333 114,762
liabilities
Total liabilities 18,298,251 10,964,148 10,872,050
Stockholders' 2,284,659 1,521,782 1,550,766
equity
Total liabilities
and stockholders' $ 20,582,910 12,485,930 $ 12,422,816
equity
Book value per $ 14.37 $ 12.58 $ 16.92
common share
Number of common
shares at period 109,963 91,694 63,746
end
Ending Balances
December 31, September 30, December 31, 2008
2009 2009
Loans receivable
Real estate - $ 930,840 $ 912,391 $ 491,315
single family
Real estate - 1,025,849 1,036,932 677,989
multifamily
Real estate - 3,606,179 3,624,469 3,472,000
commercial
Real estate - land 370,394 415,228 576,564
Real estate - 458,292 654,115 1,260,724
construction
Commercial 1,512,709 1,343,496 1,554,219
Consumer 624,784 432,844 216,642
Total loans
receivable, 8,529,047 8,419,475 8,249,453
excluding covered
loans
Unearned fees,
premiums and (43,529 ) (31,987 ) (2,049 )
discounts
Allowance for loan (238,833 ) (230,650 ) (178,027 )
losses
Net loans
receivable, 8,246,685 8,156,838 8,069,377
excluding covered
loans
Covered loans 5,598,155 - -
Net loans $ 13,844,840 $ 8,156,838 $ 8,069,377
receivable
Deposits
Noninterest-bearing $ 2,291,259 $ 1,397,217 $ 1,292,997
demand
Interest-bearing 667,177 347,745 363,285
checking
Money market 3,138,866 2,263,319 1,323,402
Savings 991,520 420,365 420,133
Total core deposits 7,088,822 4,428,646 3,399,817
Time deposits less 3,240,094 1,062,575 1,521,988
than $100,000
Time deposits 4,658,697 3,177,336 3,220,154
$100,000 or greater
Total time deposits 7,898,791 4,239,911 4,742,142
Total deposits $ 14,987,613 $ 8,668,557 $ 8,141,959
EAST WEST BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
Quarter Ended
December 31, 2009 September 30, December 31, 2008
2009
Interest and $ 283,646 $ 147,924 $ 149,907
dividend income
Interest (64,147 ) (52,044 ) (73,053 )
expense
Net interest
income before 219,499 95,880 76,854
provision for
loan losses
Provision for (140,000 ) (159,244 ) (43,000 )
loan losses
Net interest
income (loss) 79,499 (63,364 ) 33,854
after provision
for loan losses
Noninterest 420,820 (11,880 ) (863 )
income (loss)
Noninterest (91,085 ) (46,064 ) (44,199 )
expense
Income (loss)
before
provision 409,234 (121,308 ) (11,208 )
(benefit) for
income taxes
Provision
(benefit) for 149,504 (52,777 ) (13,574 )
income taxes
Net income $ 259,730 $ (68,531 ) $ 2,366
(loss)
Preferred stock
dividend,
inducement, and (6,129 ) (10,620 ) (5,385 )
amortization of
preferred stock
discount (1)
Net income
(loss)
available to $ 253,601 $ (79,151 ) $ (3,019 )
common
stockholders
(1)
Net income
(loss) per $ 2.49 $ (0.91 ) $ (0.05 )
share, basic
Net income
(loss) per $ 1.96 $ (0.91 ) $ (0.05 )
share, diluted
Shares used to
compute per
share net
income (loss):
- Basic 101,924 $ 86,538 62,932
- Diluted 130,346 $ 86,538 62,932
Quarter Ended
December 31, 2009 September 30, December 31, 2008
2009
Noninterest
income (loss):
Gain on
acquisition of $ 471,009 $ - $ -
UCB
Impairment loss
on investment (45,775 ) (24,249 ) (9,653 )
securities
Decrease in
FDIC
indemnification (23,338 ) - -
asset and FDIC
receivable
Branch fees 7,846 4,679 4,247
Net gain on
sale of 4,545 2,177 1,238
investment
securities
Letters of
credit fees and 2,570 1,984 2,267
commissions
Ancillary loan 1,474 1,227 738
fees
Other operating 2,489 2,302 300
income
Total
noninterest $ 420,820 $ (11,880 ) $ (863 )
income (loss)
Noninterest
expense:
Compensation
and employee $ 29,983 $ 15,875 $ 15,658
benefits
Occupancy and
equipment 10,268 6,262 6,627
expense
Deposit
insurance
premiums and 9,123 6,057 2,032
regulatory
assessments
Consulting 6,256 759 610
expense
Legal expense 3,168 1,323 1,687
Other real
estate owned 2,624 767 2,493
expense
Amortization
and impairment
loss of 2,609 1,069 1,125
premiums on
deposits
acquired
Amortization of
investments in
affordable 2,329 1,709 1,751
housing
partnerships
Data processing 2,279 1,079 1,108
Other operating 22,446 11,164 11,108
expense
Total
noninterest $ 91,085 $ 46,064 $ 44,199
expense
The special shareholders' meeting to vote to approve the conversion of the
Mandatory Convertible Cumulative Preferred Stock, Series C (Series C
preferred stock) to common stock has been set for March 18, 2010. The
Series C preferred stock converts to common stock automatically three days
after the receipt of an affirmative shareholder vote. No Series C dividend
(1) has been declared by the Board of Directors. Under the terms of the Series
C preferred stock, the May 1 dividend payment or any portion thereof will
not be earned or paid should an affirmative shareholder vote to convert be
obtained on the March 18, 2010 meeting date. Since management fully expects
that the Series C preferred dividend will not be earned or paid, income
available to common shareholders has not been adjusted for purposes of
computing basis and diluted per share amounts.
EAST WEST BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
Year Ended
December 31, 2009 December 31, 2008 % Change
Interest and dividend $ 722,826 $ 664,858 9
income
Interest expense (239,506 ) (309,694 ) (23 )
Net interest income
before provision for 483,320 355,164 36
loan losses
Provision for loan (528,666 ) (226,000 ) 134
losses
Net interest (loss)
income after provision (45,346 ) 129,164 (135 )
for loan losses
Noninterest income 396,535 (25,062 ) 1,682
(loss)
Noninterest expense (246,467 ) (201,270 ) 22
Income (loss) before
provision (benefit) for 104,722 (97,168 ) 208
income taxes
Provision (benefit) for 22,714 (47,485 ) (148 )
income taxes
Net income (loss)
before extraordinary $ 82,008 $ (49,683 ) 265
items
Extraordinary item, net $ (5,366 ) $ - NA
of tax
Net income (loss) after $ 76,642 $ (49,683 ) 254
extraordinary item
Preferred stock
dividend, inducement,
and amortization of (49,115 ) (9,474 ) 418
preferred stock
discount (1)
Net income (loss)
available to common $ 27,527 $ (59,157 ) 147
stockholders (1)
Net income (loss) per $ 0.35 $ (0.94 ) 137
share, basic
Net income (loss) per $ 0.33 $ (0.94 ) 135
share, diluted
Shares used to compute
per share net loss:
- Basic 78,770 62,673 26
- Diluted 84,553 62,673 35
Year Ended
December 31, 2009 December 31, 2008 % Change
Noninterest income
(loss):
Gain on acquisition of $ 471,009 $ - NA
UCB
Impairment loss on (107,671 ) (73,165 ) 47
investment securities
Decrease in FDIC
indemnification asset (23,338 ) - NA
and FDIC receivable
Branch fees 22,309 16,972 31
Net gain on sale of 11,923 9,005 32
investment securities
Letters of credit fees 8,338 9,739 (14 )
and commissions
Ancillary loan fees 6,286 4,646 35
Other operating income 7,679 7,741 (1 )
Total noninterest $ 396,535 $ (25,062 ) 1,682
income (loss)
Noninterest expense:
Compensation and $ 79,475 $ 82,236 (3 )
employee benefits
Occupancy and equipment 30,218 26,991 12
expense
Deposit insurance
premiums and regulatory 28,073 7,223 289
assessments
Other real estate owned 19,104 6,013 218
expense
Consulting expense 8,135 4,398 85
Legal expense 8,024 5,577 44
Amortization of
investments in 7,450 7,272 2
affordable housing
partnerships
Amortization and
impairment loss of 5,895 7,270 (19 )
premiums on deposits
acquired
Data processing 5,641 4,494 26
Other operating expense 54,452 49,796 9
Total noninterest $ 246,467 $ 201,270 22
expense
The special shareholders' meeting to vote to approve the conversion of the
Mandatory Convertible Cumulative Preferred Stock, Series C (Series C
preferred stock) to common stock has been set for March 18, 2010. The
Series C preferred stock converts to common stock automatically three days
after the receipt of an affirmative shareholder vote. No Series C dividend
(1) has been declared by the Board of Directors. Under the terms of the Series
C preferred stock, the May 1 dividend payment or any portion thereof will
not be earned or paid should an affirmative shareholder vote to convert be
obtained on the March 18, 2010 meeting date. Since management fully expects
that the Series C preferred dividend will not be earned or paid, income
available to common shareholders has not been adjusted for purposes of
computing basis and diluted per share amounts.
EAST WEST BANCORP, INC.
QUARTERLY ALLOWANCE FOR LOAN LOSSES RECAP
(In thousands)
(unaudited)
Quarter Ended
12/31/2009 9/30/2009 6/30/2009 3/31/2009 12/31/2008
LOANS
Allowance
balance, $ 230,650 $ 223,700 $ 195,450 $ 178,027 $ 177,155
beginning of
period
Allowance for
unfunded loan
commitments and (1,161 ) (1,051 ) 1,442 (1,008 ) (625 )
letters of
credit
Provision for 140,000 159,244 151,422 78,000 43,000
loan losses
Impact of - - 9,262 - -
desecuritization
Net Charge-offs:
Real estate - 7,083 8,034 14,058 3,832 1,756
single family
Real estate - 8,425 7,231 2,256 1,624 524
multifamily
Real estate - 13,305 23,105 12,472 2,790 750
commercial
Real estate - 20,390 39,988 33,183 12,523 9,039
land
Real estate -
residential 48,919 32,535 30,634 16,347 17,127
construction
Real estate -
commercial 21,355 23,051 28,602 1,977 -
construction
Commercial 5,789 14,956 11,577 18,146 8,054
Trade finance 2,569 2,256 774 1,032 4,026
Consumer 2,821 87 320 1,298 227
Total net 130,656 151,243 133,876 59,569 41,503
charge-offs
Allowance
balance, end of $ 238,833 $ 230,650 $ 223,700 $ 195,450 $ 178,027
period
UNFUNDED LOAN
COMMITMENTS AND
LETTERS OF
CREDIT:
Allowance
balance, $ 6,958 $ 5,907 $ 7,349 $ 6,341 $ 5,716
beginning of
period
Provision for
unfunded loan
commitments and 1,161 1,051 (1,442 ) 1,008 625
letters of
credit
Allowance
balance, end of $ 8,119 $ 6,958 $ 5,907 $ 7,349 $ 6,341
period
GRAND TOTAL, END $ 246,952 $ 237,608 $ 229,607 $ 202,799 $ 184,368
OF PERIOD
Nonperforming
assets to total 0.91 % 1.84 % 1.49 % 2.28 % 2.04 %
assets
Allowance for
loan losses to
total gross 2.80 % 2.74 % 2.62 % 2.42 % 2.16 %
non-covered
loans at end of
period
Allowance for
loan losses and
unfunded loan
commitments to 2.90 % 2.82 % 2.69 % 2.51 % 2.23 %
total gross
non-covered
loans at end of
period
Allowance to
non-covered 137.91 % 112.82 % 137.94 % 78.81 % 82.95 %
nonaccrual loans
at end of period
Nonaccrual loans 1.23 % 2.43 % 1.90 % 3.08 % 2.60 %
to total loans
EAST WEST BANCORP, INC
TOTAL NON-COVERED NON-PERFORMING ASSETS
(in thousands)
(unaudited)
AS OF
DECEMBER 31,
2009
Total Nonaccrual Loans
90+ Days
90+ Days Under 90+ Total Delinquent Total REO Total
Delinquent Days Nonaccrual Not Non-performing Assets Non-Performing
Delinquent Loans On Loans Assets
Nonaccrual
Loan Type
Real estate
- single $ 3,262 $ - $ 3,262 $ - $ 3,262 $ 264 $ 3,526
family
Real estate
- 10,631 - 10,631 - 10,631 2,118 12,749
multifamily
Real estate 11,654 18,450 30,104 - 30,104 5,687 35,791
- commercial
Real estate 27,179 42,666 69,845 - 69,845 4,393 74,238
- land
Real estate
- 17,179 - 17,179 - 17,179 540 17,719
residential
construction
Real estate
- commercial - 17,132 17,132 - 17,132 830 17,962
construction
Commercial 8,002 16,765 24,767 - 24,767 - 24,767
Trade - - - - - - -
Finance
Consumer 114 146 260 - 260 - 260
Total $ 78,021 $ 95,159 $ 173,180 $ - $ 173,180 $ 13,832 $ 187,012
AS OF
SEPTEMBER
30, 2009
Total Nonaccrual Loans
90+ Days
90+ Days Under 90+ Total Delinquent Total REO Total
Delinquent Days Nonaccrual Not Non-performing Assets Non-Performing
Delinquent Loans On Loans Assets
Nonaccrual
Loan Type
Real estate
- single $ 6,189 $ - $ 6,189 $ - $ 6,189 $ 648 $ 6,837
family
Real estate
- 11,211 652 11,863 - 11,863 1,147 13,010
multifamily
Real estate 17,381 16,040 33,421 - 33,421 2,330 35,751
- commercial
Real estate 23,568 33,610 57,178 - 57,178 4,020 61,198
- land
Real estate
- 55,130 - 55,130 - 55,130 12,238 67,368
residential
construction
Real estate
- commercial 10,784 - 10,784 - 10,784 3,680 14,464
construction
Commercial 11,783 13,227 25,010 - 25,010 122 25,132
Trade 2,110 1,785 3,895 1,556 5,451 - 5,451
Finance
Consumer 293 676 969 - 969 - 969
Total $ 138,449 $ 65,990 $ 204,439 $ 1,556 $ 205,995 $ 24,185 $ 230,180
AS OF JUNE
30, 2009
Total Nonaccrual Loans
90+ Days
90+ Days Under 90+ Total Delinquent Total REO Total
Delinquent Days Nonaccrual Not Non-performing Assets Non-Performing
Delinquent Loans On Loans Assets
Nonaccrual
Loan Type
Real estate
- single $ 5,181 $ - $ 5,181 $ - $ 5,181 $ 4,921 $ 10,102
family
Real estate
- 7,938 - 7,938 - 7,938 281 8,219
multifamily
Real estate 19,786 4,590 24,376 - 24,376 2,887 27,263
- commercial
Real estate 35,660 1,656 37,316 - 37,316 13,307 50,623
- land
Real estate
- 46,176 - 46,176 - 46,176 4,154 50,330
residential
construction
Real estate
- commercial 20,629 - 20,629 - 20,629 - 20,629
construction
Commercial 8,034 8,067 16,101 - 16,101 626 16,727
Trade 3,706 - 3,706 - 3,706 211 3,917
Finance
Consumer 339 412 751 - 751 801 1,552
Total $ 147,449 $ 14,725 $ 162,174 $ - $ 162,174 $ 27,188 $ 189,362
AS OF MARCH
31, 2009
Total Nonaccrual Loans
90+ Days
90+ Days Under 90+ Total Delinquent Total REO Total
Delinquent Days Nonaccrual Not Non-performing Assets Non-Performing
Delinquent Loans On Loans Assets
Nonaccrual
Loan Type
Real estate
- single $ 18,515 $ 634 $ 19,149 $ - $ 19,149 $ 671 $ 19,820
family
Real estate
- 9,863 - 9,863 - 9,863 887 10,750
multifamily
Real estate 12,465 42,724 55,189 - 55,189 4,240 59,429
- commercial
Real estate 63,052 6,233 69,285 - 69,285 17,934 87,219
- land
Real estate
- 28,433 14,196 42,629 - 42,629 13,278 55,907
residential
construction
Real estate
- commercial 28,604 - 28,604 - 28,604 - 28,604
construction
Commercial 16,798 5,000 21,798 - 21,798 1,236 23,034
Trade 177 - 177 - 177 270 447
Finance
Consumer 839 482 1,321 - 1,321 118 1,439
Total $ 178,746 $ 69,269 $ 248,015 $ - $ 248,015 $ 38,634 $ 286,649
AS OF
DECEMBER 31,
2008
Total Nonaccrual Loans
90+ Days
90+ Days Under 90+ Total Delinquent Total REO Total
Delinquent Days Nonaccrual Not Non-performing Assets Non-Performing
Delinquent Loans On Loans Assets
Nonaccrual
Loan Type
Real estate
- single $ 13,519 $ - $ 13,519 $ - $ 13,519 $ 419 $ 13,938
family
Real estate
- 11,845 - 11,845 - 11,845 1,136 12,981
multifamily
Real estate 24,680 - 24,680 - 24,680 4,882 29,562
- commercial
Real estate 66,185 12,892 79,077 - 79,077 10,307 89,384
- land
Real estate
- 27,052 8,766 35,818 - 35,818 21,146 56,964
residential
construction
Real estate
- commercial 30,581 - 30,581 - 30,581 - 30,581
construction
Commercial 6,570 10,604 17,174 - 17,174 142 17,316
Trade 65 - 65 - 65 270 335
Finance
Consumer 1,654 194 1,848 - 1,848 - 1,848
Total $ 182,151 $ 32,456 $ 214,607 $ - $ 214,607 $ 38,302 $ 252,909
EAST WEST BANCORP, INC.
QUARTER TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID
(In thousands)
(unaudited)
Quarter Ended
December 31, 2009 September 30, 2009
Average Average
Volume Interest Yield Volume Interest Yield
(1) (1)
ASSETS
Interest-earning
assets:
Short-term
investments and
interest bearing $ 978,967 $ 1,635 0.66 % $ 897,527 $ 1,856 0.82 %
deposits in other
banks
Securities
purchased under 165,839 3,290 7.76 % 91,033 2,153 9.25 %
resale agreements
Investment
securities
Taxable 2,616,485 27,966 4.24 % 2,304,619 28,311 4.87 %
Tax-exempt (2) 22,458 316 5.63 % 22,727 256 4.51 %
Loans receivable 8,504,833 116,278 5.42 % 8,471,766 114,512 5.36 %
Loans receivable - 3,479,519 133,966 15.27 % - - -
covered (3)
Federal Home Loan
Bank and Federal 180,420 368 0.82 % 123,514 918 2.97 %
Reserve Bank stocks
Total
interest-earning 15,948,521 283,819 7.06 % 11,911,186 148,006 4.93 %
assets
Noninterest-earning
assets:
Cash and due from 266,287 124,708
banks
Allowance for loan (236,858 ) (244,542 )
losses
Other assets 1,585,379 843,925
Total assets $ 17,563,329 $ 12,635,277
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Interest-bearing
liabilities:
Checking accounts 523,519 504 0.38 % 342,922 286 0.33 %
Money market 2,671,917 6,919 1.03 % 2,160,722 6,830 1.25 %
accounts
Savings deposits 775,834 1,353 0.69 % 421,844 608 0.57 %
Time deposits less 2,403,331 9,936 1.64 % 1,090,647 5,572 2.03 %
than $100,000
Time deposits 3,972,588 15,761 1.57 % 3,308,057 13,674 1.64 %
$100,000 or greater
Federal funds 1,158 1 0.34 % 1,385 2 0.57 %
purchased
Federal Home Loan 1,731,525 14,119 3.24 % 1,046,056 11,172 4.24 %
Bank advances
Securities sold
under repurchase 1,086,279 13,709 4.94 % 1,018,321 12,140 4.66 %
agreements
Subordinated debt
and trust preferred 235,570 1,605 2.67 % 235,570 1,760 2.92 %
securities
Other borrowings 48,842 240 1.97 % - - -
Total
interest-bearing 13,450,563 64,147 1.89 % 9,625,524 52,044 2.15 %
liabilities
Noninterest-bearing
liabilities:
Demand deposits 1,953,781 1,335,131
Other liabilities 237,394 130,800
Stockholders' 1,921,591 1,543,822
equity
Total liabilities
and stockholders' $ 17,563,329 $ 12,635,277
equity
Interest rate 5.17 % 2.78 %
spread
Net interest income
and net interest $ 219,672 5.46 % $ 95,962 3.20 %
margin (3)
Net interest income
and net interest
margin, excluding $ 145,233 3.61 %
purchase accounting
discount accretion
(3)
(1) Annualized
(2) Amounts calculated on a fully taxable basis using the current statutory
federal tax rate.
(3) Amounts include yield adjustment of $74,439 from discount accretion on
early prepayments.
EAST WEST BANCORP, INC.
YEAR TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID
(In thousands)
(unaudited)
Year To Date December 31,
2009 2008
Average Average
Volume Interest Yield Volume Interest Yield
ASSETS
Interest-earning
assets:
Short-term
investments and
interest bearing $ 881,282 $ 8,976 1.02 % $ 286,650 $ 7,029 2.45 %
deposits in other
banks
Securities
purchased under 89,883 7,985 8.76 % 70,246 6,811 9.67 %
resale agreements
Investment
securities
Taxable 2,542,124 115,531 4.54 % 2,001,089 98,217 4.89 %
Tax-exempt (1) 27,668 1,223 4.42 % 44,708 3,256 7.28 %
Loans receivable 8,355,825 453,275 5.42 % 8,601,825 545,260 6.32 %
Loans receivable - 877,029 133,966 15.27 % - - -
covered (2)
Federal Home Loan
Bank and Federal 137,001 2,337 1.71 % 115,370 5,175 4.47 %
Reserve Bank stocks
Total
interest-earning 12,910,812 723,293 5.60 % 11,119,888 665,748 5.97 %
assets
Noninterest-earning
assets:
Cash and due from 147,694 137,730
banks
Allowance for loan (216,775 ) (144,154 )
losses
Other assets 997,214 689,323
Total assets $ 13,838,945 $ 11,802,787
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Interest-bearing
liabilities:
Checking accounts 398,619 1,507 0.38 % 404,404 3,226 0.80 %
Money market 2,035,821 25,583 1.26 % 1,099,576 25,805 2.34 %
accounts
Savings deposits 506,706 3,322 0.66 % 452,259 4,148 0.91 %
Time deposits less 1,499,076 32,073 2.14 % 1,164,622 35,061 3.00 %
than $100,000
Time deposits 3,538,046 66,921 1.89 % 3,018,876 109,820 3.63 %
$100,000 or greater
Federal funds 2,379 9 0.37 % 89,309 2,217 2.48 %
purchased
Federal Home Loan 1,333,846 52,310 3.92 % 1,592,125 70,661 4.43 %
Bank advances
Securities sold
under repurchase 1,027,665 49,725 4.77 % 1,000,332 46,062 4.59 %
agreements
Subordinated debt
and trust preferred 235,570 7,816 3.27 % 235,570 12,694 5.37 %
securities
Other borrowings 12,311 240 1.95 % - - -
Total
interest-bearing 10,590,039 239,506 2.26 % 9,057,073 309,694 3.41 %
liabilities
Noninterest-bearing
liabilities:
Demand deposits 1,459,871 1,362,617
Other liabilities 154,138 137,320
Stockholders' 1,634,897 1,245,777
equity
Total liabilities
and stockholders' $ 13,838,945 $ 11,802,787
equity
Interest rate 3.34 % 2.56 %
spread
Net interest income
and net interest $ 483,787 3.75 % $ 356,054 3.19 %
margin (2)
Net interest income
and net interest
margin, excluding $ 409,348 3.17 %
purchase accounting
discount accretion
(2)
(1) Amounts calculated on a fully taxable equivalent basis using the current
statutory federal tax rate.
(2) Amounts include yield adjustment of $74,439 from discount accretion on
early prepayments.
EAST WEST BANCORP, INC.
SELECTED FINANCIAL INFORMATION
(In thousands)
(unaudited)
Average Balances Quarter Ended
December 31, 2009 September 30, December 31, 2008
2009
Loans receivable
Real estate - $ 908,095 $ 888,106 $ 493,415
single family
Real estate - 1,037,460 1,036,080 682,455
multifamily
Real estate - 3,610,640 3,552,897 3,407,697
commercial
Real estate - land 398,109 460,256 579,335
Real estate - 586,883 855,446 1,311,622
construction
Commercial 1,446,695 1,360,223 1,548,231
Consumer 516,951 318,758 210,448
Total loans
receivable, 8,504,833 8,471,766 8,233,203
excluding covered
loans
Covered loans 3,479,519 - -
Total loans 11,984,352 8,471,766 8,233,203
receivable
Investment 2,638,943 2,327,346 2,223,842
securities
Earning assets 15,948,521 11,911,186 11,219,272
Total assets 17,563,329 12,635,277 11,949,168
Deposits
Noninterest-bearing $ 1,953,781 $ 1,335,131 $ 1,311,283
demand
Interest-bearing 523,519 342,922 367,792
checking
Money market 2,671,917 2,160,722 1,153,171
Savings 775,834 421,844 419,757
Total core deposits 5,925,051 4,260,619 3,252,003
Time deposits less 2,403,331 1,090,647 1,599,486
than $100,000
Time deposits 3,972,588 3,308,057 2,855,376
$100,000 or greater
Total time deposits 6,375,919 4,398,704 4,454,862
Total deposits 12,300,970 8,659,323 7,706,865
Interest-bearing 13,450,563 9,625,524 9,143,800
liabilities
Stockholders' equity 1,921,591 1,543,822 1,363,161
Selected Ratios Quarter Ended
December 31, 2009 September 30, December 31, 2008
2009
For The Period
Return on average 5.92 % -2.17 % 0.08 %
assets
Return on average 75.27 % -27.12 % -1.12 %
common equity
Interest rate 5.17 % 2.78 % 2.13 %
spread (2)
Net interest margin 5.46 % 3.20 % 2.72 %
(2)
Yield on earning 7.06 % 4.93 % 5.30 %
assets (2)
Cost of deposits 1.11 % 1.24 % 2.14 %
Cost of funds 1.65 % 1.88 % 2.77 %
Noninterest
expense/average 1.96 % 1.37 % 1.38 %
assets (1)
Efficiency ratio 52.53 % 39.99 % 47.52 %
(3)
Excludes the amortization of intangibles, amortization and impairment loss
(1) of premiums on deposits acquired, impairment loss on goodwill, and
amortization of investments in affordable housing partnerships.
Yields on certain securities have been adjusted upward to a "fully taxable
(2) equivalent" basis in order to reflect the effect of income which is exempt
from federal income taxation at the current statutory tax rate.
Represents noninterest expense, excluding the amortization of intangibles,
amortization and impairment loss of premiums on deposits acquired,
impairment loss on goodwill, and investments in affordable housing
(3) partnerships, divided by the aggregate of net interest income excluding
the yield adjustment, before provision for loan losses and noninterest
income, excluding impairment loss on investment securities, gain on
acquisition and the decrease in FDIC indemnification asset.
EAST WEST BANCORP, INC.
SELECTED FINANCIAL INFORMATION
(In thousands)
(unaudited)
Average Balances Year To Date December 31, %
2009 2008 Change
Loans receivable
Real estate - single family $ 748,713 $ 467,739 60
Real estate - multifamily 898,927 707,621 27
Real estate - commercial 3,536,846 3,483,258 2
Real estate - land 490,546 631,951 (22 )
Real estate - construction 934,729 1,481,248 (37 )
Commercial 1,420,453 1,628,732 (13 )
Consumer 325,611 201,276 62
Total loans receivable, excluding 8,355,825 8,601,825 (3 )
covered loans
Covered loans 877,029 - NA
Total loans receivable 9,232,854 8,601,825 7
Investment securities 2,569,792 2,045,797 26
Earning assets 12,910,812 11,119,888 16
Total assets 13,838,945 11,802,787 17
Deposits
Noninterest-bearing demand $ 1,459,871 $ 1,362,617 7
Interest-bearing checking 398,619 404,404 (1 )
Money market 2,035,821 1,099,576 85
Savings 506,706 452,259 12
Total core deposits 4,401,017 3,318,856 33
Time deposits less than $100,000 1,499,076 1,164,622 29
Time deposits $100,000 or greater 3,538,046 3,018,876 17
Total time deposits 5,037,122 4,183,498 20
Total deposits 9,438,139 7,502,354 26
Interest-bearing liabilities 10,590,039 9,057,073 17
Stockholders' equity 1,634,897 1,245,777 31
Selected Ratios Year To Date December 31, %
2009 2008 Change
For The Period
Return on average assets 0.55 % -0.42 % (231 )
Return on average common equity 2.37 % -5.41 % (144 )
Interest rate spread (2) 3.34 % 2.56 % 30
Net interest margin (2) 3.75 % 3.19 % 17
Yield on earning assets (2) 5.60 % 5.97 % (6 )
Cost of deposits 1.37 % 2.37 % (42 )
Cost of funds 1.99 % 2.96 % (33 )
Noninterest expense/average assets 1.68 % 1.57 % 7
(1)
Efficiency ratio (3) 50.09 % 45.94 % 9
Period End
Tier 1 risk-based capital ratio 17.9 % 13.9 % 29
Total risk-based capital ratio 19.9 % 15.8 % 26
Tier 1 leverage capital ratio 11.7 % 12.4 % (5 )
Excludes the amortization of intangibles, amortization and impairment loss
(1) of premiums on deposits acquired, impairment loss on goodwill, and
amortization of investments in affordable housing partnerships.
Yields on certain securities have been adjusted upward to a "fully taxable
(2) equivalent" basis in order to reflect the effect of income which is exempt
from federal income taxation at the current statutory tax rate.
Represents noninterest expense, excluding the amortization of intangibles,
amortization and impairment loss of premiums on deposits acquired,
impairment loss on goodwill, and investments in affordable housing
(3) partnerships, divided by the aggregate of net interest income excluding
the yield adjustment, before provision for loan losses and noninterest
income, excluding impairment loss on investment securities, gain on
acquisition and the decrease in FDIC indemnification asset.
EAST WEST BANCORP, INC.
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
(Unaudited)
The tangible common equity to risk weighted asset ratio is a non-GAAP
disclosure. The Company uses certain non-GAAP financial measures to provide
supplemental information regarding the Company's performance to provide
additional disclosure. As the use of tangible common equity is more
prevalent in the banking industry and with banking regulators and analysts,
we have included the tangible common equity to risk-weighted assets ratio.
As of
December 31, 2009
Stockholders' Equity $ 2,284,659
Less:
Preferred equity excluding the Mandatory Convertible (379,129 ) *
Preferred Stock
Goodwill and other intangible assets (428,524 )
Tangible common equity $ 1,477,006
Risk-weighted assets $ 11,218,644
Tangible Common Equity to risk-weighted assets 13.2 %
* The Mandatory Convertible Cumulative Non-Voting Perpetual Preferred
Stock, Series, C issued in November 2009 has been included as a proforma
tangible common equity ratio. The Series C shares will automatically
convert to common shares after the shareholder vote on March 18, 2010.
Operating noninterest income is a non-GAAP disclosure. The Company uses
certain non-GAAP financial measures to provide supplemental information
regarding the Company's performance to provide additional disclosure. There
are noninterest income line items that are non-core in nature. Operating
noninterest income excludes such non-core noninterest income line items.
The Company believes that presenting the operating noninterest income
provides more clarity to the users of financial statements regarding the
core noninterest income amounts.
Quarter Ended
December 31, 2009
Noninterest income (loss) $ 420,820
Add:
Impairment loss on investment securities 45,775
Net gain on sale of investment securities (4,545 )
Gain on acquisition of UCB (471,009 )
Decrease in FDIC indemnification asset and FDIC 23,338
receivable
Operating noninterest income (non-GAAP) $ 14,379
EAST WEST BANCORP, INC.
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
(Unaudited)
The Company uses certain non-GAAP financial measures to provide supplemental
information regarding the Company's performance to provide additional
disclosure. The fourth quarter of 2009 and the 2009 year to date net interest
income and net interest margin include a yield adjustment of $74,439 from
discount accretion on covered loans. Although there may be additional yield
adjustments in future quarters, this amount is nonrecurring in nature. As such,
the Company believes that presenting the net interest income and net interest
margin excluding the yield adjustment provides additional clarity to the users
of financial statements regarding the core net interest income and net interest
margin.
Quarter to Date December 31, 2009
Average Volume Interest Yield
Total interest-earning assets $ 15,948,521 $ 283,819 7.06 %
Net interest income and net interest $ 219,499 5.46 %
margin
Less:
Yield adjustment to interest income from 74,439
discount accretion
Net interest income and net interest $ 145,060 3.61 %
margin, excluding yield adjustment
Source: East West Bancorp, Inc.
Contact: East West Bancorp, Inc.
Irene Oh, Chief Financial Officer
(626) 768-6360