PASADENA, Calif.--(BUSINESS WIRE)--
East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq: EWBC),
parent company of East West Bank, the financial bridge between the
United States and Greater China, today reported its financial results
for the first quarter of 2018. For the first quarter of 2018, net income
was $187.0million or $1.28 per diluted share. First quarter 2018
return on average assets was 2.03%, return on average equity was 19.3%
and return on average tangible1 equity was 22.3%.
“We are pleased with the solid balance sheet growth in the first quarter
of 2018. Total loans grew $547 million, or 8% annualized, to a record
$29.6 billion from $29.1 billion as of December 31, 2017,” stated
Dominic Ng, Chairman and Chief Executive Officer of East West. “Total
deposits grew $389 million, or 5% annualized, to a record $32.6 billion
as of March 31, 2018 from $32.2 billion at the end of 2017.”
“During the quarter, East West’s net interest margin expanded by 16
basis points to 3.73%, reflecting the benefits of higher interest rates
on our asset sensitive balance sheet. The yield on average loans
expanded by 17 basis points compared to an increase in the cost of
deposits of six basis points,” continued Ng. “Upward repricing of
variable rate loans drove the increase in yields. Margin expansion was
additionally supported by our attractive deposit mix, 36% of which was
noninterest-bearing demand deposits as of March 31, 2018. During this
period of rising interest rates, our net interest margin has expanded
over the past six consecutive quarters.”
“Net interest margin expansion in the first quarter of 2018 was the
primary driver for the sequential quarter operating revenue growth, in
excess of expense growth. Net interest income increased by 2%, or 9%
annualized, from the fourth quarter of 2017. Noninterest expense
decreased in the first quarter of 2018, compared to the fourth quarter
of 2017; we continue to ensure strong expense discipline whilst making
investments in talent and infrastructure to strengthen East West’s
franchise and enhance our value proposition for our clients,” concluded
Ng.
HIGHLIGHTS OF RESULTS
- First Quarter Earnings – Net income of $187.0 million for the
first quarter of 2018 increased by 120% compared to $84.9 million for
the fourth quarter of 2017; diluted earnings per share (“EPS”) of
$1.28 also increased by 120% linked quarter from $0.58. First quarter
net income included $22.2 million of after tax gain on the sale of
Desert Community Bank (“DCB”) branches, and fourth quarter net income
included $41.7 million of additional income tax expense related to the
enactment of the Tax Cuts and Jobs Act, impacting quarter-over-quarter
comparisons. Excluding these items, adjusted2 net income of
$164.9 million and adjusted2 diluted EPS of $1.13 for the
first quarter of 2018 both increased by 30% from the fourth quarter of
2017.
- Sale of Desert Community Bank Branches – In March 2018, East
West Bank closed the sale of its eight DCB branches, including $613.7
million of deposits, $59.1 million of loans, and other related assets.
In the first quarter of 2018, East West recognized a pre-tax gain on
sale of $31.5 million or $22.2 million after tax. The diluted EPS
impact from the DCB sale was $0.15, net of tax.
- Net Interest Income Growth and Net Interest Margin Expansion –
Net interest income totaled $326.7 million for the first quarter of
2018, an increase of $7.0 million, or 2% linked quarter, primarily due
to the expansion of loan yields and loan growth. First quarter 2018
net interest margin (“NIM”) of 3.73% expanded by 16 basis points
linked quarter.
- Record Loans – Total loans of $29.6 billion as of March 31,
2018 were up $547.5 million or 2%, from $29.1 billion as of December
31, 2017. DCB loans sold did not materially impact linked quarter
growth comparisons, which still would have been 2% had the loans not
been sold. The strongest sequential quarter loan growth came from the
single family mortgage portfolio; quarter-over-quarter, all commercial
lending categories grew. Total loans grew by 12% year-over-year.
- Record Deposits – Total deposits of $32.6 billion as of March
31, 2018 were up $388.6 million or 1%, from $32.2 billion as of
December 31, 2017. Total deposits grew by 7% year-over-year. Deposit
growth in the quarter more than offset the impact of the DCB branch
sale. Adding back the $613.7 million of deposits sold, deposit growth
would have been 3% linked quarter and 9% year-over-year.
Noninterest-bearing demand deposits of $11.8 billion were 36% of total
deposits as of March 31, 2018, an increase from 34% as of December 31,
2017.
- Asset QualityMetrics – The allowance for loan losses
was $297.7 million, or 1.01% of loans held-for-investment (“HFI”), as
of March 31, 2018, compared to $287.1 million, or 0.99% of loans HFI,
as of December 31, 2017. For the first quarter of 2018, annualized net
charge-offs were 0.13% of average loans HFI, compared to annualized
net charge-offs of 0.22% of average loans HFI for the previous
quarter. Non-purchased credit impaired (“Non-PCI”) nonperforming
assets were $131.0 million, or 0.35% of total assets, as of March 31,
2018.
- Capital Levels – Capital levels for East West continue to be
strong. As of March 31, 2018, stockholders’ equity was $4.0 billion,
or $27.46 per share. Tangible equity3 per common share was
$24.07 as of March 31, 2018, an increase of 4% linked quarter and 14%
year-over-year. As of March 31, 2018, the tangible equity to tangible
assets ratio3 was 9.37%, the Common Equity Tier 1 (“CET1”)
capital ratio was 11.9%, and the total risk-based capital ratio was
13.4%.
______________________________
|
1 |
See reconciliation of GAAP to non-GAAP financial measures in Table
13.
|
2 |
See reconciliation of GAAP to non-GAAP financial measures in Table
10.
|
3 |
See reconciliation of GAAP to non-GAAP financial measures in Table
13.
|
|
QUARTERLY RESULTS SUMMARY |
|
|
| Quarter Ended |
($ in millions, except per share data) |
|
| March 31, 2018 |
| December 31, 2017 |
| March 31, 2017 |
Net income
| | |
$
|
187.0
| |
|
$
|
84.9
| |
|
$
|
169.7
| |
Adjusted net income (1) | | |
$
|
164.9
| | |
$
|
126.6
| | |
$
|
128.2
| |
Earnings per share (diluted)
| | |
$
|
1.28
| | |
$
|
0.58
| | |
$
|
1.16
| |
Adjusted earnings per share (diluted) (1) | | |
$
|
1.13
| | |
$
|
0.87
| | |
$
|
0.88
| |
Book value per common share
| | |
$
|
27.46
| | |
$
|
26.58
| | |
$
|
24.68
| |
Tangible equity (1) per common share
| | |
$
|
24.07
| | |
$
|
23.13
| | |
$
|
21.20
| |
Tangible equity to tangible assets ratio (1) |
|
|
9.37
|
%
|
|
9.12
|
%
|
|
8.79
|
%
|
Return on average assets (2) | | |
2.03
|
%
| |
0.90
|
%
| |
1.97
|
%
|
Return on average equity (2) | | |
19.34
|
%
| |
8.73
|
%
| |
19.71
|
%
|
Return on average tangible equity (1)(2) |
|
|
22.30
|
%
|
|
10.17
|
%
|
|
23.21
|
%
|
Adjusted return on average assets (1)(2) | | |
1.79
|
%
| |
1.35
|
%
| |
1.49
|
%
|
Adjusted return on average equity (1)(2) | | |
17.04
|
%
| |
13.02
|
%
| |
14.88
|
%
|
Adjusted return on average tangible equity (1)(2) | | |
19.68
|
%
| |
15.10
|
%
| |
17.57
|
%
|
Adjusted pre-tax, pre-provision profitability ratio (1)(2) |
|
|
2.38
|
%
|
|
2.27
|
%
|
|
2.09
|
%
|
Net interest income
| | |
$
|
326.7
| | |
$
|
319.7
| | |
$
|
272.1
| |
Net interest margin (2) | | |
3.73
|
%
| |
3.57
|
%
| |
3.33
|
%
|
Cost of deposits (2) |
|
|
0.49
|
%
|
|
0.43
|
%
|
|
0.32
|
%
|
Efficiency ratio
| | |
42.2
|
%
| |
48.0
|
%
| |
39.4
|
%
|
Adjusted efficiency ratio (1) | | |
40.6
|
%
| |
41.6
|
%
| |
43.2
|
%
|
|
(1)
|
|
|
See reconciliation of GAAP to non-GAAP financial measures in Tables
10, 11, and 13.
|
(2)
| | |
Annualized.
|
| | |
|
MANAGEMENT OUTLOOK FOR 2018
We reaffirm our outlook for the full year 2018, the components of which
are unchanged relative to a quarter ago. Compared to our full year 2017
results, our outlook for the expected full year 2018 results is as
follows:
- End of Period Loans: increase at a percentage rate of
approximately 10%.
- Net Interest Margin (excluding the impact of ASC 310-30
discount accretion): between 3.65% and 3.75%. Including the
impact of ASC 310-30 discount accretion, we expect our full year 2018
NIM to range between 3.70% and 3.80%.
- Noninterest Expense (excluding tax credit amortization &
deposit premium amortization): increase at a percentage rate in
the high single digits.
- Provision for Credit Losses: in the range of $70 million to $80
million.
- Tax Items: projecting investment in tax-advantaged credits of
$105 million, excluding low income housing tax credits, and associated
tax credit amortization expense of $85 million. Projecting full year
effective tax rate of approximately 16%.
- Interest Rates: our outlook incorporates the current forward
rate curve; as such, it currently assumes two additional fed funds
rate increases in 2018: in June and September.
OPERATING RESULTS SUMMARY
First Quarter 2018 Compared to Fourth Quarter
2017
Net Interest Income
Net interest income totaled $326.7 million, a 2% increase from $319.7
million.
-
Average loans of $29.2 billion grew by $565.4 million, or 8%
annualized, from $28.6 billion.
-
Average deposits of $32.3 billion grew by $41.2 million, or 1%
annualized, from $32.3 billion.
Net Interest Margin
Net interest margin expanded by 16 basis points to 3.73% from 3.57%.
-
The yield on loans expanded by 17 basis points to 4.69% from 4.52%.
-
The yield on earning assets expanded by 23 basis points to 4.25% from
4.02%.
-
The cost of deposits increased by six basis points to 0.49% from 0.43%.
-
The cost of funds increased by eight basis points to 0.56% from 0.48%.
Noninterest Income
Total noninterest income of $74.4 million included a $31.5 million gain
on the sale of DCB branches. Excluding the impact of all gains on sales,
total fees and other operating income of $38.2 million was flat relative
to the fourth quarter of 2017.
The following table presents total fees and other operating income for
the three months ended March 31, 2018, December 31, 2017 and March 31,
2017.
|
|
|
| Quarter Ended |
($ in thousands) | | | March 31, 2018 |
| December 31, 2017 |
| March 31, 2017 |
Branch fees
| | |
$
|
10,430
| | |
$
|
10,287
| | |
$
|
9,924
|
Letters of credit fees and foreign exchange income
| | |
9,602
| | |
9,974
| | |
11,441
|
Ancillary loan fees and other income
| | |
5,581
| | |
6,457
| | |
4,982
|
Wealth management fees
| | |
2,953
| | |
2,797
| | |
4,335
|
Derivative fees and other income
| | |
6,690
| | |
4,737
| | |
2,506
|
Other fees and operating income
| | |
2,921
|
| |
4,144
|
| |
5,405
|
Total fees and other operating income | | | $ | 38,177 |
| | $ | 38,396 |
| | $ | 38,593 |
|
Noninterest Expense
Noninterest expense of $169.1 million included $150.3 million of adjusted4
noninterest expense, $17.4 million in amortization of tax credit and
other investments, and $1.5 million in amortization of core deposit
intangibles.
-
Adjusted noninterest expense of $150.3 million decreased by $1.5
million, or 1%, linked quarter. A seasonal increase in compensation
and employee benefits expense and an increase in computer software
expense was more than offset by a linked quarter decline in consulting
expense and a decrease in other operating expenses. The decrease in
other operating expenses included a $1.9 million gain on the
disposition of other real estate owned in the first quarter of 2018.
-
The adjusted4 efficiency ratio was 40.6% in the first
quarter, compared to 41.6% in the fourth quarter.
_________________________________
|
4 |
See reconciliation of GAAP to non-GAAP financial measures in Table
11.
|
TAX RELATED ITEMS
Tax expense in the first quarter of 2018 was $24.8 million and the
effective tax rate was 12%, compared to a tax expense of $58.3 million
and an effective tax rate of 26% in the first quarter of 2017.
-
The lower effective tax rate in 2018 reflects the new federal
corporate tax rate of 21%, following the enactment of the Tax Cuts and
Jobs Act in December 2017.
-
Tax expense in the first quarter includes the impact of accounting for
stock-based compensation in accordance with Accounting Standards
Update 2016-09, which reduced tax expense by $4.8 million in 2018
compared to a reduction of $4.4 million in 2017.
-
Tax expense in the first quarter of 2018 was further reduced by the
reversal of a liability related to state taxes for prior years. The
reversal reduced tax expense by $3.9 million.
-
For the full year 2018, the Company is projecting an effective tax
rate of approximately 16%.
CREDIT QUALITY
The allowance for loan losses totaled $297.7 million, or 1.01% of loans
HFI, as of March 31, 2018, compared to $287.1 million, or 0.99% of loans
HFI, as of December 31, 2017, and $263.1 million, or 0.99% of loans HFI,
as of March 31, 2017.
-
The provision for credit losses recorded for the current quarter was
$20.2 million, compared to $15.5 million for the fourth quarter of
2017, and $7.1 million for the first quarter of 2017.
-
For the first quarter of 2018, net charge-offs were $9.4 million, or
annualized 0.13% of average loans HFI. This compares to net
charge-offs of $15.7 million, or annualized 0.22% of average loans
HFI, for the fourth quarter of 2017, and net charge-offs of $5.4
million, or annualized 0.08% of average loans HFI, for the first
quarter of 2017.
-
Non-PCI nonperforming assets of $131.0 million as of March 31, 2018,
increased from $115.1 million as of December 31, 2017, and decreased
from $144.8 million as of March 31, 2017. Non-PCI nonperforming assets
were equivalent to 0.35% of total assets at the end of the first
quarter of 2018, compared to 0.31% at the end of the previous quarter
and 0.41% at the end of the prior year quarter.
CAPITAL STRENGTH
Capital levels for East West continue to be strong. As of March 31,
2018, stockholders’ equity was $4.0 billion, or $27.46 per share.
Tangible equity per common share was $24.07 as of March 31, 2018, an
increase of 4% linked quarter and 14% year-over-year. The following
table presents the regulatory capital ratios for the quarters ended
March 31, 2018, December 31, 2017, and March 31, 2017.
|
Regulatory Capital Metrics |
|
| Basel III |
|
|
($ in millions) | | | March 31, 2018 (a) |
| December 31, 2017 |
| March 31, 2017 |
| Minimum Regulatory Requirements |
| Well Capitalized Regulatory Requirements |
| Fully Phased- in Minimum Regulatory Requirements |
| | | | | | | | | | | | |
|
CET1 capital ratio
| | |
11.9
|
%
| |
11.4
|
%
| |
11.1
|
%
| |
4.5
|
%
| |
6.5
|
%
| |
7.0
|
%
|
Tier 1 risk-based capital ratio
| | |
11.9
|
%
| |
11.4
|
%
| |
11.1
|
%
| |
6.0
|
%
| |
8.0
|
%
| |
8.5
|
%
|
Total risk-based capital ratio
| | |
13.4
|
%
| |
12.9
|
%
| |
12.6
|
%
| |
8.0
|
%
| |
10.0
|
%
| |
10.5
|
%
|
Tier 1 leverage capital ratio
| | |
9.6
|
%
| |
9.2
|
%
| |
9.0
|
%
| |
4.0
|
%
| |
5.0
|
%
| |
4.0
|
%
|
Risk-Weighted Assets (“RWA”) (b) | | |
$
|
29,892
| | |
$
|
29,669
| | |
$
|
28,088
| | |
N/A
| |
N/A
| |
N/A
|
|
N/A
|
|
|
Not applicable.
|
(a)
| | |
The Company’s March 31, 2018 regulatory capital ratios and RWA are
preliminary.
|
(b)
| | |
Under regulatory guidelines, on-balance sheet assets and credit
equivalent amounts of derivatives and off-balance sheet items are
assigned to one of several broad risk categories based on the nature
of the obligor, or, if relevant, the guarantor or the nature of any
collateral. The aggregate dollar value in each risk category is then
multiplied by the risk weight associated with that category. The
resulting weighted values from each of the risk categories are
aggregated for determining total RWA.
|
DIVIDEND PAYOUT AND CAPITAL ACTIONS
East West’s Board of Directors has declared second quarter 2018
dividends for the Company’s common stock. The common stock cash dividend
of $0.20 per share is payable on May 15, 2018 to stockholders of record
on May 1, 2018.
Conference Call
East West will host a conference call to discuss first quarter 2018
earnings with the public on Thursday, April 19, 2018 at 8:30 a.m.
PT/11:30 a.m. ET. The public and investment community are invited to
listen as management discusses first quarter 2018 results and operating
developments.
-
The following dial-in information is provided for participation in the
conference call: calls within the U.S. – (877) 506-6399; calls within
Canada – (855) 669-9657; international calls – (412) 902-6699.
-
A presentation to accompany the earnings call will be available on the
Investor Relations page of the Company’s website at www.eastwestbank.com/investors.
-
A listen-only live broadcast of the call will also be available on the
Investor Relations page of the Company’s website at www.eastwestbank.com/investors.
-
A replay of the conference call will be available on April 19, 2018 at
11:30 a.m. Pacific Time through May 19, 2018. The replay numbers are:
within the U.S. – (877) 344-7529; within Canada – (855) 669-9658;
International calls – (412) 317-0088; and the replay access code is:
10118140.
About East West
East West Bancorp, Inc. is a publicly owned company with total assets of
$37.7 billion and is traded on the Nasdaq Global Select Market under the
symbol “EWBC”. The Company’s wholly-owned subsidiary, East West Bank, is
one of the largest independent banks headquartered in California. East
West is a premier bank focused exclusively on the United States and
Greater China markets and operates over 130 locations worldwide,
including in the United States markets of California, Georgia,
Massachusetts, Nevada, New York, Texas and Washington. In Greater China,
East West’s presence includes full service branches in Hong Kong,
Shanghai, Shantou and Shenzhen, and representative offices in Beijing,
Chongqing, Guangzhou, Taipei and Xiamen. For more information on East
West, visit the Company’s website at www.eastwestbank.com.
Forward-Looking Statements
Certain matters set forth herein (including any exhibits hereto)
constitute “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995, including
forward-looking statements relating to the Company’s current business
plans and expectations regarding future operating results.
Forward-looking statements may include, but are not limited to, the use
of forward-looking language, such as “likely result in,” “expects,”
“anticipates,” “estimates,” “forecasts,” “projects,” “intends to,” or
may include other similar words or phrases, such as “believes,” “plans,”
“trend,” “objective,” “continues,” “remains,” or similar expressions, or
future or conditional verbs, such as “will,” “would,” “should,” “could,”
“may,” “might,” “can,” or similar verbs. These forward-looking
statements are subject to risks and uncertainties that could cause
actual results, performance or achievements to differ materially from
those projected. These risks and uncertainties, some of which are beyond
our control, include, but are not limited to, our ability to compete
effectively against other financial institutions in our banking markets;
changes in the commercial and consumer real estate markets; changes in
our costs of operation, compliance and expansion; changes in the U.S.
economy, including inflation, employment levels, rate of growth and
general business conditions; changes in government interest rate
policies; changes in laws or the regulatory environment including
regulatory reform initiatives and policies of the U.S. Department of
Treasury, the Board of Governors of the Federal Reserve Board System,
the Federal Deposit Insurance Corporation, the U.S. Securities and
Exchange Commission, the Consumer Financial Protection Bureau and
California Department of Business Oversight — Division of Financial
Institutions; heightened regulatory and governmental oversight and
scrutiny of the Company’s business practices, including dealings with
consumers; changes in the economy of and monetary policy in the People’s
Republic of China; changes in income tax laws and regulations and the
impact of the Tax Cuts and Jobs Act; impact of other potential federal
tax changes and spending cuts; changes in accounting standards as may be
required by the Financial Accounting Standards Board or other regulatory
agencies and their impact on critical accounting policies and
assumptions; changes in the equity and debt securities markets; future
credit quality and performance, including our expectations regarding
future credit losses and allowance levels; fluctuations of our stock
price; fluctuations in foreign currency exchange rates; success and
timing of our business strategies; our ability to adopt and successfully
integrate new technologies into our business in a strategic manner;
impact of reputational risk from negative publicity, fines and penalties
and other negative consequences from regulatory violations and legal
actions; impact of adverse judgments or settlements in litigation;
impact of regulatory enforcement actions; changes in our ability to
receive dividends from our subsidiaries; impact of political
developments, wars or other hostilities that may disrupt or increase
volatility in securities or otherwise affect economic conditions; impact
of natural or man-made disasters or calamities or conflicts or other
events that may directly or indirectly result in a negative impact on
the Company’s financial performance; continuing consolidation in the
financial services industry; our capital requirements and our ability to
generate capital internally or raise capital on favorable terms; impact
of the Dodd-Frank Wall Street Reform and Consumer Protection Act on our
business, business practices and cost of operations; impact of adverse
changes to our credit ratings from the major credit rating agencies;
impact of failure in, or breach of, our operational or security systems
or infrastructure, or those of third parties with whom we do business,
including as a result of cyber attacks; and other similar matters which
could result in, among other things, confidential and/or proprietary
information being disclosed or misused; adequacy of our risk management
framework, disclosure controls and procedures and internal control over
financial reporting; changes in interest rates on our net interest
income and net interest margin; the effect of changes in the level of
checking or savings account deposits on our funding costs and net
interest margin; a recurrence of significant turbulence or disruption in
the capital or financial markets, which could result in, among other
things, a reduction in the availability of funding or increased funding
costs, reduced investor demand for mortgage loans and declines in asset
values and/or recognition of other-than-temporary impairment on
securities held in our available-for-sale investment securities
portfolio; the Company’s ability to retain key officers and employees;
any future strategic acquisitions or divestitures; and other factors set
forth in the Company’s public reports including its Annual Report on
Form 10-K for the year ended December 31, 2017, and particularly the
discussion of risk factors within that document. If any of these risks
or uncertainties materializes or if any of the assumptions underlying
such forward-looking statements proves to be incorrect, the Company’s
results could differ materially from those expressed in, implied or
projected by such forward-looking statements. The Company assumes no
obligation to update such forward-looking statements.
|
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEET |
($ and shares in thousands, except per share data) |
(unaudited) |
Table 1 |
|
|
|
|
|
|
|
|
|
| March 31, 2018 % Change |
| | | March 31, 2018 |
| December 31, 2017 |
| March 31, 2017 | | Qtr-o-Qtr |
| Yr-o-Yr |
Assets | | | | | | | | | | | |
Cash and due from banks
| | |
$
|
413,017
| | |
$
|
457,181
| | |
$
|
346,005
| | |
(9.7
|
)%
| |
19.4
|
%
|
Interest-bearing cash with banks
| | |
1,901,921
|
| |
1,717,411
|
| |
2,088,638
|
| |
10.7
| | |
(8.9
|
)
|
Cash and cash equivalents
| | |
2,314,938
| | |
2,174,592
| | |
2,434,643
| | |
6.5
| | |
(4.9
|
)
|
Interest-bearing deposits with banks
| | |
478,871
| | |
398,422
| | |
249,849
| | |
20.2
| | |
91.7
| |
Securities purchased under resale agreements (“resale agreements”) (1) | | |
1,050,000
| | |
1,050,000
| | |
1,650,000
| | |
—
| | |
(36.4
|
)
|
Investment securities
| | |
2,811,416
| | |
3,016,752
| | |
3,094,531
| | |
(6.8
|
)
| |
(9.1
|
)
|
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”)
stock
| | |
73,787
| | |
73,521
| | |
73,019
| | |
0.4
| | |
1.1
| |
Loans held-for-sale (“HFS”)
| | |
46,181
| | |
85
| | |
28,931
| | |
NM
| |
59.6
| |
Loans held-for-investment (net of allowance for loan losses of
$297,654, $287,128 and $263,094)
| | |
29,257,594
| | |
28,688,590
| | |
26,198,198
| | |
2.0
| | |
11.7
| |
Investments in qualified affordable housing partnerships, net
| | |
160,574
| | |
162,824
| | |
176,965
| | |
(1.4
|
)
| |
(9.3
|
)
|
Investments in tax credit and other investments, net
| | |
246,183
| | |
224,551
| | |
177,023
| | |
9.6
| | |
39.1
| |
Goodwill | | |
465,547
| | |
469,433
| | |
469,433
| | |
(0.8
|
)
| |
(0.8
|
)
|
Branch assets HFS (2) | | |
—
| | |
91,318
| | |
—
| | |
(100.0
|
)
| |
—
| |
Other assets
| | |
814,013
|
| |
800,161
|
| |
789,534
|
| |
1.7
| | |
3.1
| |
Total assets | | | $ | 37,719,104 |
| | $ | 37,150,249 |
| | $ | 35,342,126 |
| | 1.5 | % | | 6.7 | % |
| | | | | | | | | | |
|
Liabilities and Stockholders’ Equity | | | | | | | | | | | |
Deposits
| | |
$
|
32,608,777
| | |
$
|
31,615,063
| | |
$
|
30,542,975
| | |
3.1
|
%
| |
6.8
|
%
|
Deposits HFS (2) | | |
—
| | |
605,111
| | |
—
| | |
(100.0
|
)
| |
—
| |
Short-term borrowings
| | |
30,277
| | |
—
| | |
42,023
| | |
100.0
| | |
(28.0
|
)
|
FHLB advances
| | |
324,451
| | |
323,891
| | |
322,196
| | |
0.2
| | |
0.7
| |
Securities sold under repurchase agreements (“repurchase
agreements”) (1) | | |
50,000
| | |
50,000
| | |
200,000
| | |
—
| | |
(75.0
|
)
|
Long-term debt
| | |
166,640
| | |
171,577
| | |
181,388
| | |
(2.9
|
)
| |
(8.1
|
)
|
Accrued expenses and other liabilities
| | |
560,204
|
| |
542,656
|
| |
487,590
|
| |
3.2
| | |
14.9
| |
Total liabilities
| | |
33,740,349
| | |
33,308,298
| | |
31,776,172
| | |
1.3
| | |
6.2
| |
Stockholders’ equity
| | |
3,978,755
|
| |
3,841,951
|
| |
3,565,954
|
| |
3.6
| | |
11.6
| |
Total liabilities and stockholders’ equity | | | $ | 37,719,104 |
| | $ | 37,150,249 |
| | $ | 35,342,126 |
| | 1.5 | % | | 6.7 | % |
| | | | | | | | | | |
|
Book value per common share | | | $ | 27.46 | | | $ | 26.58 | | | $ | 24.68 | | | 3.3 | % | | 11.3 | % |
Tangible equity (3) per common share | | | $ | 24.07 | | | $ | 23.13 | | | $ | 21.20 | | | 4.0 | | | 13.5 | |
Tangible equity to tangible assets ratio (3) | | | 9.37 | % | | 9.12 | % | | 8.79 | % | | 2.7 | | | 6.6 | |
Number of common shares at period-end | | | 144,873 | | | 144,543 | | | 144,462 | | | 0.2 | | | 0.3 | |
|
NM Not Meaningful
|
(1)
|
|
Resale and repurchase agreements are reported net pursuant to
Accounting Standards Codification (“ASC”) 210-20-45, Balance
Sheet Offsetting. As of March 31, 2018, December 31, 2017 and
March 31, 2017, $400.0 million, $400.0 million and $250.0 million
out of $450.0 million of gross repurchase agreements were eligible
for netting against gross resale agreements, respectively.
|
(2)
| |
Represents the DCB branch assets and deposits that were classified
as HFS as of December 31, 2017. Branch assets HFS were primarily
comprised of loans.
|
(3)
| |
See reconciliation of GAAP to non-GAAP financial measures in Table
13.
|
|
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
TOTAL LOANS AND DEPOSITS DETAIL |
($ in thousands) |
(unaudited) |
Table 2 |
|
|
|
|
|
|
|
|
|
|
| March 31, 2018 % Change |
| | | March 31, 2018 |
|
| December 31, 2017 | | March 31, 2017 | | Qtr-o-Qtr |
| Yr-o-Yr |
Loans: | | | | | | | | | | | | |
Commercial lending: | | | | | | | | | | | | |
Commercial and industrial (“C&I”)
| | |
$
|
10,818,304
| | | |
$
|
10,697,231
| | |
$
|
9,918,072
| | |
1.1
|
%
| |
9.1
|
%
|
Commercial real estate (“CRE”)
| | |
9,022,746
| | | |
8,936,897
| | |
8,302,098
| | |
1.0
| | |
8.7
| |
Multifamily residential
| | |
1,954,855
| | | |
1,916,176
| | |
1,732,695
| | |
2.0
| | |
12.8
| |
Construction and land
| | |
669,340
| | | |
659,697
| | |
684,792
| | |
1.5
| | |
(2.3
|
)
|
Consumer lending: | | | | | | | | | | | | |
Single-family residential
| | |
4,930,580
| | | |
4,646,289
| | |
3,700,072
| | |
6.1
| | |
33.3
| |
Home equity lines of credit (“HELOCs”)
| | |
1,775,443
| | | |
1,782,924
| | |
1,785,973
| | |
(0.4
|
)
| |
(0.6
|
)
|
Other consumer
| | |
383,980
|
| | |
336,504
|
| |
337,590
|
| |
14.1
| | |
13.7
| |
Total loans held-for-investment (1)(2) | | |
29,555,248
| | | |
28,975,718
| | |
26,461,292
| | |
2.0
| | |
11.7
| |
Loans HFS
| | |
46,181
|
| | |
78,217
|
| (3) |
28,931
|
| |
(41.0
|
)
| |
59.6
| |
Total loans (1)(2) | | |
29,601,429
| | | |
29,053,935
| | |
26,490,223
| | |
1.9
| | |
11.7
| |
Allowance for loan losses
| | |
(297,654
|
)
| | |
(287,128
|
)
| |
(263,094
|
)
| |
3.7
| | |
13.1
| |
Net loans (1)(2) | | | $ | 29,303,775 |
| | | $ | 28,766,807 |
| | $ | 26,227,129 |
| | 1.9 | % | | 11.7 | % |
| | | | | | | | | | | |
|
Deposits: | | | | | | | | | | | | |
Noninterest-bearing demand
| | |
$
|
11,763,936
| | | |
$
|
10,887,306
| | |
$
|
10,658,946
| | |
8.1
|
%
| |
10.4
|
%
|
Interest-bearing checking
| | |
4,428,952
| | | |
4,419,089
| | |
3,803,710
| | |
0.2
| | |
16.4
| |
Money market
| | |
7,913,040
| | | |
8,359,425
| | |
7,990,253
| | |
(5.3
|
)
| |
(1.0
|
)
|
Savings
| | |
2,301,780
|
| | |
2,308,494
|
| |
2,247,902
|
| |
(0.3
|
)
| |
2.4
| |
Total core deposits
| | |
26,407,708
| | | |
25,974,314
| | |
24,700,811
| | |
1.7
| | |
6.9
| |
Time deposits
| | |
6,201,069
| | | |
5,640,749
| | |
5,842,164
| | |
9.9
| | |
6.1
| |
Deposits HFS
| | |
—
|
| | |
605,111
|
| |
—
|
| |
(100.0
|
)
| |
—
| |
Total deposits | | | $ | 32,608,777 |
| | | $ | 32,220,174 |
| | $ | 30,542,975 |
| | 1.2 | % | | 6.8 | % |
|
(1)
|
|
|
Includes $(36.6) million, $(34.0) million and $(4.7) million as of
March 31, 2018, December 31, 2017 and March 31, 2017, respectively,
of net deferred loan fees, unearned fees, unamortized premiums and
unaccreted discounts.
|
(2)
| | |
Includes ASC 310-30 discount of $32.2 million, $35.3 million and
$46.7 million as of March 31, 2018, December 31, 2017 and March 31,
2017, respectively.
|
(3)
| | |
Includes $78.1 million of loans HFS in branch assets HFS.
|
|
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENT OF INCOME |
($ and shares in thousands, except per share data) |
(unaudited) |
Table 3 |
|
|
|
| Quarter Ended |
| March 31, 2018 % Change |
| | | March 31, 2018 |
| December 31, 2017 |
| March 31, 2017 | | Qtr-o-Qtr |
| Yr-o-Yr |
Interest and dividend income
| | |
$
|
371,873
| | |
$
|
359,765
| | |
$
|
302,669
| | |
3.4
|
%
| |
22.9
|
%
|
Interest expense
| | |
45,180
|
| |
40,064
|
| |
30,547
|
| |
12.8
| | |
47.9
| |
Net interest income before provision for credit losses
| | |
326,693
| | |
319,701
| | |
272,122
| | |
2.2
| | |
20.1
| |
Provision for credit losses
| | |
20,218
|
| |
15,517
|
| |
7,068
|
| |
30.3
| | |
186.0
| |
Net interest income after provision for credit losses
| | |
306,475
| | |
304,184
| | |
265,054
| | |
0.8
| | |
15.6
| |
Noninterest income
| | |
74,444
| | |
45,206
| | |
115,828
| | |
64.7
| | |
(35.7
|
)
|
Noninterest expense
| | |
169,135
|
| |
175,263
|
| |
152,878
|
| |
(3.5
|
)
| |
10.6
| |
Income before income taxes
| | |
211,784
| | |
174,127
| | |
228,004
| | |
21.6
| | |
(7.1
|
)
|
Income tax expense
| | |
24,752
|
| |
89,229
|
| |
58,268
|
| |
(72.3
|
)
| |
(57.5
|
)
|
Net income | | | $ | 187,032 |
| | $ | 84,898 |
| | $ | 169,736 |
| | 120.3 | % | | 10.2 | % |
Earnings per share (“EPS”) | | | | | | | | | | | |
- Basic
| | |
$
|
1.29
| | |
$
|
0.59
| | |
$
|
1.18
| | |
120.1
|
%
| |
9.9
|
%
|
- Diluted
| | |
$
|
1.28
| | |
$
|
0.58
| | |
$
|
1.16
| | |
120.4
| | |
10.0
| |
Weighted average number of shares outstanding | | | | | | | | | | | |
- Basic
| | |
144,664
| | |
144,542
| | |
144,249
| | |
0.1
|
%
| |
0.3
|
%
|
- Diluted
| | |
145,939
| | |
146,030
| | |
145,732
| | |
(0.1
|
)
| |
0.1
| |
| | | | | | | | | | |
|
| | | Quarter Ended | | March 31, 2018 % Change |
| | | March 31, 2018 | | December 31, 2017 | | March 31, 2017 | | Qtr-o-Qtr | | Yr-o-Yr |
Noninterest income: | | | | | | | | | | | |
Branch fees
| | |
$
|
10,430
| | |
$
|
10,287
| | |
$
|
9,924
| | |
1.4
|
%
| |
5.1
|
%
|
Letters of credit fees and foreign exchange income
| | |
9,602
| | |
9,974
| | |
11,441
| | |
(3.7
|
)
| |
(16.1
|
)
|
Ancillary loan fees and other income
| | |
5,581
| | |
6,457
| | |
4,982
| | |
(13.6
|
)
| |
12.0
| |
Wealth management fees
| | |
2,953
| | |
2,797
| | |
4,335
| | |
5.6
| | |
(31.9
|
)
|
Derivative fees and other income
| | |
6,690
| | |
4,737
| | |
2,506
| | |
41.2
| | |
167.0
| |
Net gains on sales of loans
| | |
1,582
| | |
2,210
| | |
2,754
| | |
(28.4
|
)
| |
(42.6
|
)
|
Net gains on sales of available-for-sale investment securities
| | |
2,129
| | |
1,304
| | |
2,474
| | |
63.3
| | |
(13.9
|
)
|
Net gains on sales of fixed assets
| | |
1,086
| | |
3,296
| | |
72,007
| | |
(67.1
|
)
| |
(98.5
|
)
|
Net gain on sale of business
| | |
31,470
| | |
—
| | |
—
| | |
100.0
| | |
100.0
| |
Other fees and operating income
| | |
2,921
|
| |
4,144
|
| |
5,405
|
| |
(29.5
|
)
| |
(46.0
|
)
|
Total noninterest income | | | $ | 74,444 |
| | $ | 45,206 |
| | $ | 115,828 |
| | 64.7 | % | | (35.7 | )% |
Noninterest expense: | | | | | | | | | | | |
Compensation and employee benefits
| | |
$
|
95,234
| | |
$
|
90,361
| | |
$
|
84,603
| | |
5.4
|
%
| |
12.6
|
%
|
Occupancy and equipment expense
| | |
16,880
| | |
17,092
| | |
15,640
| | |
(1.2
|
)
| |
7.9
| |
Deposit insurance premiums and regulatory assessments
| | |
6,273
| | |
6,351
| | |
5,929
| | |
(1.2
|
)
| |
5.8
| |
Legal expense
| | |
2,255
| | |
2,514
| | |
3,062
| | |
(10.3
|
)
| |
(26.4
|
)
|
Data processing
| | |
3,401
| | |
3,084
| | |
2,947
| | |
10.3
| | |
15.4
| |
Consulting expense
| | |
2,352
| | |
4,147
| | |
1,919
| | |
(43.3
|
)
| |
22.6
| |
Deposit related expense
| | |
2,679
| | |
2,655
| | |
2,365
| | |
0.9
| | |
13.3
| |
Computer software expense
| | |
5,054
| | |
4,360
| | |
3,968
| | |
15.9
| | |
27.4
| |
Other operating expense
| | |
17,607
| | |
22,808
| | |
18,085
| | |
(22.8
|
)
| |
(2.6
|
)
|
Amortization of tax credit and other investments
| | |
17,400
|
| |
21,891
|
| |
14,360
|
| |
(20.5
|
)
| |
21.2
| |
Total noninterest expense | | | $ | 169,135 |
| | $ | 175,263 |
| | $ | 152,878 |
| | (3.5 | )% | | 10.6 | % |
|
|
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
SELECTED AVERAGE BALANCES |
($ in thousands) |
(unaudited) |
Table 4 |
|
|
|
| Quarter Ended |
| March 31, 2018 % Change |
| | | March 31, 2018 | |
| December 31, 2017 | |
| March 31, 2017 | | Qtr-o-Qtr |
| Yr-o-Yr |
Loans: | | | | | | | | | | | | | |
Commercial lending: | | | | | | | | | | | | | |
C&I
| | |
$
|
10,712,583
| | | |
$
|
10,518,121
| | | |
$
|
9,954,311
| | |
1.8
|
%
| |
7.6
|
%
|
CRE
| | |
9,006,593
| | | |
8,917,681
| | | |
8,144,892
| | |
1.0
| | |
10.6
| |
Multifamily residential
| | |
1,944,516
| | | |
1,909,933
| | | |
1,655,048
| | |
1.8
| | |
17.5
| |
Construction and land
| | |
657,568
| | | |
674,337
| | | |
673,441
| | |
(2.5
|
)
| |
(2.4
|
)
|
Consumer lending: | | | | | | | | | | | | | |
Single-family residential
| | |
4,771,427
| | | |
4,498,180
| | | |
3,553,488
| | |
6.1
| | |
34.3
| |
HELOCs
| | |
1,779,242
| | | |
1,783,762
| | | |
1,768,733
| | |
(0.3
|
)
| |
0.6
| |
Other consumer
| | |
339,977
|
| | |
344,447
|
| | |
337,265
|
| |
(1.3
|
)
| |
0.8
| |
Total loans (1)(2) | | | $ | 29,211,906 |
| | | $ | 28,646,461 |
| | | $ | 26,087,178 |
| | 2.0 | % | | 12.0 | % |
| | | | | | | | | | | | |
|
Investment securities | | | $ | 2,854,335 |
| | | $ | 2,925,817 |
| | | $ | 3,260,004 |
| | (2.4 | )% | | (12.4 | )% |
Interest-earning assets | | | $ | 35,513,663 |
| | | $ | 35,491,424 |
| | | $ | 33,095,396 |
| | 0.1 | % | | 7.3 | % |
Total assets | | | $ | 37,381,386 |
| | | $ | 37,262,618 |
| | | $ | 34,928,031 |
| | 0.3 | % | | 7.0 | % |
| | | | | | | | | | | | |
|
Deposits: | | | | | | | | | | | | | |
Noninterest-bearing demand
| | |
$
|
11,289,512
| | | |
$
|
11,531,181
| | | |
$
|
10,112,174
| | |
(2.1
|
)%
| |
11.6
|
%
|
Interest-bearing checking
| | |
4,559,695
| | | |
4,313,732
| | | |
3,598,809
| | |
5.7
| | |
26.7
| |
Money market
| | |
8,273,160
| | | |
8,198,133
| | | |
7,942,833
| | |
0.9
| | |
4.2
| |
Savings
| | |
2,452,452
|
| | |
2,472,207
|
| | |
2,284,116
|
| |
(0.8
|
)
| |
7.4
| |
Total core deposits
| | |
26,574,819
| | | |
26,515,253
| | | |
23,937,932
| | |
0.2
| | |
11.0
| |
Time deposits
| | |
5,716,638
|
| | |
5,735,014
|
| | |
5,771,387
|
| |
(0.3
|
)
| |
(0.9
|
)
|
Total deposits | | | $ | 32,291,457 |
| (3) | | $ | 32,250,267 |
| (3) | | $ | 29,709,319 |
| | 0.1 | % | | 8.7 | % |
| | | | | | | | |
| | | | |
Interest-bearing liabilities | | | $ | 21,553,595 |
| | | $ | 21,280,348 |
| | | $ | 20,786,169 |
| | 1.3 | % | | 3.7 | % |
Stockholders’ equity | | | $ | 3,922,926 |
| | | $ | 3,856,802 |
| | | $ | 3,493,396 |
| | 1.7 | % | | 12.3 | % |
|
(1)
|
|
|
Includes ASC 310-30 discount of $34.1 million, $37.7 million and
$48.6 million for the quarters ended March 31, 2018, December 31,
2017 and March 31, 2017, respectively.
|
(2)
| | |
Includes loans HFS.
|
(3)
| | |
Includes deposits HFS.
|
|
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES |
($ in thousands) |
(unaudited) |
Table 5 |
|
|
|
| Quarter Ended |
| | | March 31, 2018 |
| December 31, 2017 |
| | | Average |
| |
| Average | | Average |
| |
| Average |
| | | Balance | | Interest | | Yield/Rate(1) | | Balance | | Interest | | Yield/Rate(1) |
Assets | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | |
Interest-bearing cash and deposits with banks
| | |
$
|
2,323,771
| | |
$
|
10,945
| | |
1.91
|
%
| |
$
|
2,743,548
| | |
$
|
11,092
| | |
1.60
|
%
|
Resale agreements (2) | | |
1,050,000
| | |
6,934
| | |
2.68
|
%
| |
1,102,174
| | |
6,873
| | |
2.47
|
%
|
Investment securities
| | |
2,854,335
| | |
15,456
| | |
2.20
|
%
| |
2,925,817
| | |
14,734
| | |
2.00
|
%
|
Loans (3) | | |
29,211,906
| | |
337,904
| | |
4.69
|
%
| |
28,646,461
| | |
326,401
| | |
4.52
|
%
|
FHLB and FRB stock
| | |
73,651
|
| |
634
|
| |
3.49
|
%
| |
73,424
|
| |
665
|
| |
3.59
|
%
|
Total interest-earning assets | | | 35,513,663 |
| | 371,873 |
| | 4.25 | % | | 35,491,424 |
| | 359,765 |
| | 4.02 | % |
| | | | | | | | | | | | |
|
Noninterest-earning assets: | | | | | | | | | | | | | |
Cash and due from banks
| | |
443,357
| | | | | | |
417,798
| | | | | |
Allowance for loan losses
| | |
(285,836
|
)
| | | | | |
(285,490
|
)
| | | | |
Other assets
| | |
1,710,202
|
| | | | | |
1,638,886
|
| | | | |
Total assets | | | $ | 37,381,386 |
| | | | | | $ | 37,262,618 |
| | | | |
| | | | | | | | | | | | |
|
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | |
Checking deposits (4) | | |
$
|
4,559,695
| | |
$
|
6,727
| | |
0.60
|
%
| |
$
|
4,313,732
| | |
$
|
5,767
| | |
0.53
|
%
|
Money market deposits (4) | | |
8,273,160
| | |
15,840
| | |
0.78
|
%
| |
8,198,133
| | |
13,772
| | |
0.67
|
%
|
Savings deposits (4) | | |
2,452,452
| | |
2,021
| | |
0.33
|
%
| |
2,472,207
| | |
1,906
| | |
0.31
|
%
|
Time deposits (4) | | |
5,716,638
| | |
14,548
| | |
1.03
|
%
| |
5,735,014
| | |
13,143
| | |
0.91
|
%
|
Federal funds purchased and other short-term borrowings
| | |
871
| | |
7
| | |
3.26
|
%
| |
16,070
| | |
126
| | |
3.11
|
%
|
FHLB advances
| | |
334,121
| | |
2,260
| | |
2.74
|
%
| |
323,598
| | |
2,013
| | |
2.47
|
%
|
Repurchase agreements (2) | | |
50,000
| | |
2,306
| | |
18.70
|
%
| |
50,000
| | |
1,938
| | |
15.38
|
%
|
Long-term debt
| | |
166,658
|
| |
1,471
|
| |
3.58
|
%
| |
171,594
|
| |
1,399
|
| |
3.23
|
%
|
Total interest-bearing liabilities | | | 21,553,595 |
| | 45,180 |
| | 0.85 | % | | 21,280,348 |
| | 40,064 |
| | 0.75 | % |
| | | | | | | | | | | | |
|
Noninterest-bearing liabilities and stockholders’ equity: | | | | | | | | | | | | | |
Demand deposits (4) | | |
11,289,512
| | | | | | |
11,531,181
| | | | | |
Accrued expenses and other liabilities
| | |
615,353
| | | | | | |
594,287
| | | | | |
Stockholders’ equity
| | |
3,922,926
|
| | | | | |
3,856,802
|
| | | | |
Total liabilities and stockholders’ equity | | | $ | 37,381,386 |
| | | | | | $ | 37,262,618 |
| | | | |
| | | | | | | | | | | | |
|
Interest rate spread | | | | | | | 3.40 | % | | | | | | 3.27 | % |
Net interest income and net interest margin | | | | | $ | 326,693 |
| | 3.73 | % | | | | $ | 319,701 |
| | 3.57 | % |
Adjusted net interest income and adjusted net interest margin (5) | | | | | $ | 321,493 |
| | 3.67 | % | | | | $ | 312,677 |
| | 3.49 | % |
|
(1)
|
|
|
Annualized.
|
(2)
| | |
Average balances of resale and repurchase agreements are reported
net, pursuant to ASC 210-20-45, Balance Sheet Offsetting.
|
(3)
| | |
Includes loans HFS, and ASC 310-30 discount of $34.1 million and
$37.7 million for the quarters ended March 31, 2018 and December 31,
2017, respectively.
|
(4)
| | |
Includes deposits HFS.
|
(5)
| | |
See reconciliation of GAAP to non-GAAP financial measures in Table
12.
|
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES |
($ in thousands) |
(unaudited) |
Table 6 |
|
|
|
| Quarter Ended |
| | | March 31, 2018 |
| March 31, 2017 |
| | | Average | |
| |
| Average | | Average |
| |
| Average |
| | | Balance | | | Interest | | Yield/Rate(1) | | Balance | | Interest | | Yield/Rate(1) |
Assets | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | |
Interest-bearing cash and deposits with banks
| | |
$
|
2,323,771
| | | |
$
|
10,945
| | |
1.91
|
%
| |
$
|
1,676,333
| | |
$
|
5,116
| | |
1.24
|
%
|
Resale agreements (2) | | |
1,050,000
| | | |
6,934
| | |
2.68
|
%
| |
1,997,222
| | |
9,468
| | |
1.92
|
%
|
Investment securities
| | |
2,854,335
| | | |
15,456
| | |
2.20
|
%
| |
3,260,004
| | |
15,247
| | |
1.90
|
%
|
Loans (3) | | |
29,211,906
| | | |
337,904
| | |
4.69
|
%
| |
26,087,178
| | |
272,061
| | |
4.23
|
%
|
FHLB and FRB stock
| | |
73,651
|
| | |
634
|
| |
3.49
|
%
| |
74,659
|
| |
777
|
| |
4.22
|
%
|
Total interest-earning assets | | | 35,513,663 |
| | | 371,873 |
| | 4.25 | % | | 33,095,396 |
| | 302,669 |
| | 3.71 | % |
| | | | | | | | | | | | | |
|
Noninterest-earning assets: | | | | | | | | | | | | | | |
Cash and due from banks
| | |
443,357
| | | | | | | |
388,410
| | | | | |
Allowance for loan losses
| | |
(285,836
|
)
| | | | | | |
(263,957
|
)
| | | | |
Other assets
| | |
1,710,202
|
| | | | | | |
1,708,182
|
| | | | |
Total assets | | | $ | 37,381,386 |
| | | | | | | $ | 34,928,031 |
| | | | |
| | | | | | | | | | | | | |
|
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | |
Checking deposits
| | |
$
|
4,559,695
| | (4) | |
$
|
6,727
| | |
0.60
|
%
| |
$
|
3,598,809
| | |
$
|
3,587
| | |
0.40
|
%
|
Money market deposits
| | |
8,273,160
| | (4) | |
15,840
| | |
0.78
|
%
| |
7,942,833
| | |
8,436
| | |
0.43
|
%
|
Savings deposits
| | |
2,452,452
| | (4) | |
2,021
| | |
0.33
|
%
| |
2,284,116
| | |
1,329
| | |
0.24
|
%
|
Time deposits
| | |
5,716,638
| | (4) | |
14,548
| | |
1.03
|
%
| |
5,771,387
| | |
10,320
| | |
0.73
|
%
|
Federal funds purchased and other short-term borrowings
| | |
871
| | | |
7
| | |
3.26
|
%
| |
55,329
| | |
413
| | |
3.03
|
%
|
FHLB advances
| | |
334,121
| | | |
2,260
| | |
2.74
|
%
| |
600,736
| | |
2,030
| | |
1.37
|
%
|
Repurchase agreements (2) | | |
50,000
| | | |
2,306
| | |
18.70
|
%
| |
346,667
| | |
3,143
| | |
3.68
|
%
|
Long-term debt
| | |
166,658
|
| | |
1,471
|
| |
3.58
|
%
| |
186,292
|
| |
1,289
|
| |
2.81
|
%
|
Total interest-bearing liabilities | | | 21,553,595 |
| | | 45,180 |
| | 0.85 | % | | 20,786,169 |
| | 30,547 |
| | 0.60 | % |
| | | | | | | | | | | | | |
|
Noninterest-bearing liabilities and stockholders’ equity: | | | | | | | | | | | | | | |
Demand deposits
| | |
11,289,512
| | (4) | | | | | |
10,112,174
| | | | | |
Accrued expenses and other liabilities
| | |
615,353
| | | | | | | |
536,292
| | | | | |
Stockholders’ equity
| | |
3,922,926
|
| | | | | | |
3,493,396
|
| | | | |
Total liabilities and stockholders’ equity | | | $ | 37,381,386 |
| | | | | | | $ | 34,928,031 |
| | | | |
| | | | | | | | | | | | | |
|
Interest rate spread | | | | | | | | 3.40 | % | | | | | | 3.11 | % |
Net interest income and net interest margin | | | | | | $ | 326,693 |
| | 3.73 | % | | | | $ | 272,122 |
| | 3.33 | % |
Adjusted net interest income and adjusted net interest margin (5) | | | | | | $ | 321,493 |
| | 3.67 | % | | | | $ | 268,889 |
| | 3.29 | % |
|
(1)
|
|
|
Annualized.
|
(2)
| | |
Average balances of resale and repurchase agreements are reported
net, pursuant to ASC 210-20-45, Balance Sheet Offsetting.
|
(3)
| | |
Includes loans HFS, and ASC 310-30 discount of $34.1 million and
$48.6 million for the quarters ended March 31, 2018 and 2017,
respectively.
|
(4)
| | |
Includes deposits HFS.
|
(5)
| | |
See reconciliation of GAAP to non-GAAP financial measures in Table
12.
|
|
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
SELECTED RATIOS |
(unaudited) |
Table 7 |
|
|
|
| Quarter Ended (1) |
|
| March 31, 2018 Basis Point Change |
| | | March 31, 2018 |
| December 31, 2017 |
| March 31, 2017 | | Qtr-o-Qtr |
| Yr-o-Yr |
Return on average assets
| | |
2.03
|
%
| |
0.90
|
%
| |
1.97
|
%
| |
|
113
|
bps
| |
6
|
bps
|
Adjusted return on average assets (2) | | |
1.79
|
%
| |
1.35
|
%
| |
1.49
|
%
| | |
44
| | |
30
| |
Return on average equity
| | |
19.34
|
%
| |
8.73
|
%
| |
19.71
|
%
| | |
1,061
| | |
(37
|
)
|
Adjusted return on average equity (2) | | |
17.04
|
%
| |
13.02
|
%
| |
14.88
|
%
| | |
402
| | |
216
| |
Return on average tangible equity (2) | | |
22.30
|
%
| |
10.17
|
%
| |
23.21
|
%
| | |
1,213
| | |
(91
|
)
|
Adjusted return on average tangible equity (2) |
|
|
19.68
|
%
|
|
15.10
|
%
|
|
17.57
|
%
|
|
|
458
|
|
|
211
|
|
Interest rate spread
| | |
3.40
|
%
| |
3.27
|
%
| |
3.11
|
%
| | |
13
| | |
29
| |
Net interest margin
| | |
3.73
|
%
| |
3.57
|
%
| |
3.33
|
%
| | |
16
| | |
40
| |
Adjusted net interest margin (2) |
|
|
3.67
|
%
|
|
3.49
|
%
|
|
3.29
|
%
|
|
|
18
|
|
|
38
|
|
Average loan yield
| | |
4.69
|
%
| |
4.52
|
%
| |
4.23
|
%
| | |
17
| | |
46
| |
Adjusted average loan yield (2) | | |
4.61
|
%
| |
4.42
|
%
| |
4.17
|
%
| | |
19
| | |
44
| |
Yield on average interest-earning assets
|
|
|
4.25
|
%
|
|
4.02
|
%
|
|
3.71
|
%
|
|
|
23
|
|
|
54
|
|
Cost of interest-bearing deposits
| | |
0.76
|
%
| |
0.66
|
%
| |
0.49
|
%
| | |
10
| | |
27
| |
Cost of deposits
| | |
0.49
|
%
| |
0.43
|
%
| |
0.32
|
%
| | |
6
| | |
17
| |
Cost of funds
|
|
|
0.56
|
%
|
|
0.48
|
%
|
|
0.40
|
%
|
|
|
8
|
|
|
16
|
|
Adjusted pre-tax, pre-provision profitability ratio (2) | | |
2.38
|
%
| |
2.27
|
%
| |
2.09
|
%
| | |
11
| | |
29
| |
Adjusted noninterest expense/average assets (2) | | |
1.63
|
%
| |
1.62
|
%
| |
1.59
|
%
| | |
1
| | |
4
| |
Efficiency ratio
| | |
42.16
|
%
| |
48.03
|
%
| |
39.41
|
%
| | |
(587
|
)
| |
275
| |
Adjusted efficiency ratio (2) | | |
40.64
|
%
| |
41.59
|
%
| |
43.22
|
%
| | |
(95
|
) bps
| |
(258
|
) bps
|
|
(1)
|
|
|
Annualized except for efficiency ratio.
|
(2)
| | |
See reconciliation of GAAP to non-GAAP financial measures in Tables
10, 11, 12 and 13.
|
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
ALLOWANCE FOR CREDIT LOSSES |
($ in thousands) |
(unaudited) |
Table 8 |
|
|
|
| Quarter Ended |
| | | March 31, 2018 |
| December 31, 2017 |
| March 31, 2017 |
Non-Purchased Credit Impaired (“Non-PCI”) Loans | | | | | | | |
Allowance for non-PCI loans, beginning of period
| | |
$
|
287,070
| | |
$
|
285,858
| | |
$
|
260,402
| |
Provision for loan losses on non-PCI loans
| | |
19,933
| | |
16,945
| | |
8,046
| |
Net charge-offs:
| | | | | | | |
Commercial lending: | | | | | | | |
C&I
| | |
(10,758
|
)
| |
(15,909
|
)
| |
(6,602
|
)
|
CRE
| | |
427
| | |
570
| | |
569
| |
Multifamily residential
| | |
333
| | |
(607
|
)
| |
567
| |
Construction and land
| | |
435
| | |
86
| | |
(124
|
)
|
Consumer lending: | | | | | | | |
Single-family residential
| | |
183
| | |
117
| | |
11
| |
HELOCs
| | |
—
| | |
—
| | |
24
| |
Other consumer
| | |
(16
|
)
| |
10
|
| |
114
|
|
Total net charge-offs
| | |
(9,396
|
)
| |
(15,733
|
)
| |
(5,441
|
)
|
Allowance for non-PCI loans, end of period
| | |
297,607
|
| |
287,070
|
| |
263,007
|
|
Purchased Credit Impaired (“PCI”) Loans | | | | | | | |
Allowance for PCI loans, beginning of period
| | |
58
| | |
68
| | |
118
| |
Reversal of loan losses on PCI loans
| | |
(11
|
)
| |
(10
|
)
| |
(31
|
)
|
Allowance for PCI loans, end of period
| | |
47
|
| |
58
|
| |
87
|
|
Allowance for loan losses | | | 297,654 |
| | 287,128 |
| | 263,094 |
|
Unfunded Credit Facilities | | | | | | | |
Allowance for unfunded credit reserves, beginning of period
| | |
13,318
| | |
14,736
| | |
16,121
| |
Provision for (reversal of) unfunded credit reserves
| | |
296
|
| |
(1,418
|
)
| |
(947
|
)
|
Allowance for unfunded credit reserves, end of period
| | |
13,614
|
| |
13,318
|
| |
15,174
|
|
Allowance for credit losses | | | $ | 311,268 |
| | $ | 300,446 |
| | $ | 278,268 |
|
|
|
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
CREDIT QUALITY |
($ in thousands) |
(unaudited) |
Table 9 |
|
Non-PCI Nonperforming Assets |
|
| March 31, 2018 |
| December 31, 2017 |
| March 31, 2017 |
| | | | | | |
|
Nonaccrual loans: | | | | | | | |
Commercial lending: | | | | | | | |
C&I
| | |
$
|
80,807
| | |
$
|
69,213
| | |
$
|
92,093
| |
CRE
| | |
26,496
| | |
26,986
| | |
33,716
| |
Multifamily residential
| | |
2,050
| | |
1,717
| | |
2,222
| |
Construction and land
| | |
3,973
| | |
3,973
| | |
4,500
| |
Consumer lending: | | | | | | | |
Single-family residential
| | |
7,465
| | |
5,923
| | |
5,643
| |
HELOCs
| | |
6,935
| | |
4,006
| | |
2,980
| |
Other consumer
| | |
2,491
|
| |
2,491
|
| |
1
|
|
Total nonaccrual loans | | | 130,217 | | | 114,309 | | | 141,155 | |
Other real estate owned, net
| | |
734
|
| |
830
|
| |
3,602
|
|
Total nonperforming assets | | | $ | 130,951 |
| | $ | 115,139 |
| | $ | 144,757 |
|
|
|
|
|
|
|
|
|
| | | | | | |
|
Credit Quality Ratios | | | March 31, 2018 | | December 31, 2017 | | March 31, 2017 |
| | | | | | |
|
Non-PCI nonperforming assets to total assets (1) | | |
0.35
|
%
| |
0.31
|
%
| |
0.41
|
%
|
Non-PCI nonaccrual loans to loans held-for-investment (1) | | |
0.44
|
%
| |
0.39
|
%
| |
0.53
|
%
|
Allowance for loan losses to loans held-for-investment (1) | | |
1.01
|
%
| |
0.99
|
%
| |
0.99
|
%
|
Allowance for loan losses to non-PCI nonaccrual loans
| | |
228.58
|
%
| |
251.19
|
%
| |
186.39
|
%
|
Annualized quarterly net charge-offsto average loans
held-for-investment
| | |
0.13
|
%
| |
0.22
|
%
| |
0.08
|
%
|
|
(1)
|
|
|
Total assets and loans held-for-investment include PCI loans of
$452.4 million, $482.3 million and $611.7 million as of March 31,
2018, December 31, 2017 and March 31, 2017, respectively.
|
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
GAAP TO NON-GAAP RECONCILIATION |
($ and shares in thousands, except for per share data) |
(unaudited) |
Table 10 |
During the first quarter of 2017, the Company consummated a sale
and leaseback transaction on a commercial property and recognized
a pre-tax gain on sale of $71.7 million. On December 22, 2017, the
Tax Cuts and Jobs Act was enacted, which resulted in an additional
income tax expense of $41.7 million recognized in the fourth
quarter of 2017. During the first quarter of 2018, the Company
sold its Desert Community Bank (“DCB”) branches and recognized a
pre-tax gain on sale of $31.5 million. Management believes that
presenting the computations of the adjusted net income, adjusted
diluted earnings per common share, adjusted return on average
assets and adjusted return on average equity that exclude the
impact of the Tax Cuts and Jobs Act and after-tax gains on the
sales of the commercial property and DCB branches (where
applicable) provides clarity to financial statement users
regarding the ongoing performance of the Company and allows
comparability to prior periods.
|
|
|
|
| |
| Quarter Ended |
| | | | | March 31, 2018 |
| December 31, 2017 |
| March 31, 2017 |
Net income
| | |
(a)
| |
$
|
187,032
| | |
$
|
84,898
| | |
$
|
169,736
| |
Add: Impact of the Tax Cuts and Jobs Act
| | |
(b)
| |
—
| | |
41,689
| | |
—
| |
Less: Gain on sale of the commercial property, net of tax (1) | | |
(c)
| |
—
| | |
—
| | |
(41,526
|
)
|
Gain on sale of business, net of tax (1) | | |
(d)
| |
(22,167
|
)
| |
—
|
| |
—
|
|
Adjusted net income | | | (e) | | $ | 164,865 |
| | $ | 126,587 |
| | $ | 128,210 |
|
| | | | | | | | |
|
Diluted weighted average number of shares outstanding | | | (f) | | 145,939 |
| | 146,030 |
| | 145,732 |
|
| | | | | | | | |
|
Diluted EPS
| | |
(a)/(f)
| |
$
|
1.28
| | |
$
|
0.58
| | |
$
|
1.16
| |
Diluted EPS impact of the Tax Cuts and Jobs Act
| | |
(b)/(f)
| |
—
| | |
0.29
| | |
—
| |
Diluted EPS impact of gain on sale of the commercial property, net
of tax
| | |
(c)/(f)
| |
—
| | |
—
| | |
(0.28
|
)
|
Diluted EPS impact of gain on sale of business, net of tax
| | |
(d)/(f)
| |
(0.15
|
)
| |
—
|
| |
—
|
|
Adjusted diluted EPS | | | | | $ | 1.13 |
| | $ | 0.87 |
| | $ | 0.88 |
|
| | | | | | | | |
|
Average total assets
| | |
(g)
| |
$
|
37,381,386
|
| |
$
|
37,262,618
|
| |
$
|
34,928,031
|
|
Average stockholders’ equity
| | |
(h)
| |
$
|
3,922,926
|
| |
$
|
3,856,802
|
| |
$
|
3,493,396
|
|
Return on average assets (2) | | | (a)/(g) | | 2.03 | % | | 0.90 | % | | 1.97 | % |
Adjusted return on average assets (2) | | | (e)/(g) | | 1.79 | % | | 1.35 | % | | 1.49 | % |
Return on average equity (2) | | | (a)/(h) | | 19.34 | % | | 8.73 | % | | 19.71 | % |
Adjusted return on average equity (2) | | | (e)/(h) | | 17.04 | % | | 13.02 | % | | 14.88 | % |
|
(1)
|
|
|
Statutory rate of 29.56% was applied for the quarter ended March 31,
2018. Statutory rate of 42.05% was applied for the quarters ended
December 31, 2017 and March 31, 2017.
|
(2)
| | |
Annualized.
|
|
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
GAAP TO NON-GAAP RECONCILIATION |
($ in thousands) |
(unaudited) |
Table 11 |
Adjusted efficiency ratio represents adjusted noninterest expense
divided by adjusted revenue. Adjusted pre-tax, pre-provision
profitability ratio represents the aggregate of adjusted revenue
less adjusted noninterest expense, divided by average total
assets. Adjusted revenue represents the aggregate of net interest
income and adjusted noninterest income, where adjusted noninterest
income excludes the gains on the sales of the commercial property
and DCB branches (where applicable). Adjusted noninterest expense
excludes the amortization of tax credit and other investments, and
the amortization of core deposit intangibles (where applicable).
Management believes that the measures and ratios presented below
provide clarity to financial statement users regarding the ongoing
performance of the Company and allow comparability to prior
periods.
|
|
|
|
| |
| Quarter Ended |
| | | | | March 31, 2018 |
| December 31, 2017 |
| March 31, 2017 |
Net interest income before provision for credit losses
| | |
(a)
| |
$
|
326,693
| | |
$
|
319,701
| | |
$
|
272,122
| |
Total noninterest income
| | | | |
74,444
|
| |
45,206
|
| |
115,828
|
|
Total revenue
| | |
(b)
| |
401,137
|
| |
364,907
|
| |
387,950
|
|
Noninterest income
| | | | |
74,444
| | |
45,206
| | |
115,828
| |
Less: Gain on sale of the commercial property
| | | | |
—
| | |
—
| | |
(71,654
|
)
|
Gain on sale of business
| | | | |
(31,470
|
)
| |
—
|
| |
—
|
|
Adjusted noninterest income
| | |
(c)
| |
$
|
42,974
|
| |
$
|
45,206
|
| |
$
|
44,174
|
|
Adjusted revenue | | | (a)+(c) = (d) | | $ | 369,667 |
| | $ | 364,907 |
| | $ | 316,296 |
|
| | | | | | | | |
|
Total noninterest expense
| | |
(e)
| |
$
|
169,135
| | |
$
|
175,263
| | |
$
|
152,878
| |
Less: Amortization of tax credit and other investments
| | | | |
(17,400
|
)
| |
(21,891
|
)
| |
(14,360
|
)
|
Amortization of core deposit intangibles
| | | | |
(1,485
|
)
| |
(1,621
|
)
| |
(1,817
|
)
|
Adjusted noninterest expense | | | (f) | | $ | 150,250 |
| | $ | 151,751 |
| | $ | 136,701 |
|
Efficiency ratio | | | (e)/(b) | | 42.16 | % | | 48.03 | % | | 39.41 | % |
Adjusted efficiency ratio | | | (f)/(d) | | 40.64 | % | | 41.59 | % | | 43.22 | % |
Adjusted pre-tax, pre-provision income | | | (d)-(f) = (g) | | $ | 219,417 |
| | $ | 213,156 |
| | $ | 179,595 |
|
Average total assets
| | |
(h)
| |
$
|
37,381,386
|
| |
$
|
37,262,618
|
| |
$
|
34,928,031
|
|
Adjusted pre-tax, pre-provision profitability ratio (1) | | | (g)/(h) | | 2.38 | % | | 2.27 | % | | 2.09 | % |
Adjusted noninterest expense (1) /average
assets | | | (f)/(h) | | 1.63 | % | | 1.62 | % | | 1.59 | % |
|
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
GAAP TO NON-GAAP RECONCILIATION |
($ in thousands) |
(unaudited) |
Table 12 |
Management believes that presenting the adjusted average loan
yield and adjusted net interest margin that exclude the ASC 310-30
discount accretion impact provides clarity to financial statement
users regarding the change in loan contractual yields and allows
comparability to prior periods.
|
|
|
|
| |
| Quarter Ended |
Yield on Average Loans |
|
|
| | March 31, 2018 |
| December 31, 2017 |
| March 31, 2017 |
Interest income on loans
| | |
(a)
| |
$
|
337,904
| | |
$
|
326,401
| | |
$
|
272,061
| |
Less: ASC 310-30 discount accretion income
| | | | |
(5,200
|
)
| |
(7,024
|
)
| |
(3,233
|
)
|
Adjusted interest income on loans | | | (b) | | $ | 332,704 |
| | $ | 319,377 |
| | $ | 268,828 |
|
| | | | | | | | |
|
Average loans
| | |
(c)
| |
$
|
29,211,906
| | |
$
|
28,646,461
| | |
$
|
26,087,178
| |
Add: ASC 310-30 discount
| | | | |
34,059
|
| |
37,660
|
| |
48,566
|
|
Adjusted average loans | | | (d) | | $ | 29,245,965 |
| | $ | 28,684,121 |
| | $ | 26,135,744 |
|
| | | | | | | | |
|
Average loan yield (1) | | | (a)/(c) | | 4.69 | % | | 4.52 | % | | 4.23 | % |
Adjusted average loan yield (1) | | | (b)/(d) | | 4.61 | % | | 4.42 | % | | 4.17 | % |
| | | | | | | | |
|
Net Interest Margin |
|
|
| | | | | | |
Net interest income
| | |
(e)
| |
$
|
326,693
| | |
$
|
319,701
| | |
$
|
272,122
| |
Less: ASC 310-30 discount accretion income
| | | | |
(5,200
|
)
| |
(7,024
|
)
| |
(3,233
|
)
|
Adjusted net interest income | | | (f) | | $ | 321,493 |
| | $ | 312,677 |
| | $ | 268,889 |
|
| | | | | | | | |
|
Average interest-earning assets
| | |
(g)
| |
$
|
35,513,663
| | |
$
|
35,491,424
| | |
$
|
33,095,396
| |
Add: ASC 310-30 discount
| | | | |
34,059
|
| |
37,660
|
| |
48,566
|
|
Adjusted average interest-earning assets | | | (h) | | $ | 35,547,722 |
| | $ | 35,529,084 |
| | $ | 33,143,962 |
|
| | | | | | | | |
|
Net interest margin (1) | | | (e)/(g) | | 3.73 | % | | 3.57 | % | | 3.33 | % |
Adjusted net interest margin (1) | | | (f)/(h) | | 3.67 | % | | 3.49 | % | | 3.29 | % |
|
|
EAST WEST BANCORP, INC. AND SUBSIDIARIES |
GAAP TO NON-GAAP RECONCILIATION |
($ in thousands) |
(unaudited) |
Table 13 |
The Company uses certain non-GAAP financial measures to provide
supplemental information regarding the Company’s performance.
Tangible equity and tangible equity to tangible assets ratio are
non-GAAP financial measures. Tangible equity and tangible assets
represent stockholders’ equity and total assets, respectively,
which have been reduced by goodwill and other intangible assets.
Given that the use of such measures and ratios is more prevalent
in the banking industry, and such measures and ratios are used by
banking regulators and analysts, the Company has included them
below for discussion.
|
|
|
| |
| March 31, 2018 |
| December 31, 2017 |
| March 31, 2017 |
Stockholders’ equity
| | |
(a)
| |
$
|
3,978,755
| | |
$
|
3,841,951
| | |
$
|
3,565,954
| |
Less: Goodwill | | | | |
(465,547
|
)
| |
(469,433
|
)
| |
(469,433
|
)
|
Other intangible assets (1) | | | | |
(26,196
|
)
| |
(28,825
|
)
| |
(33,843
|
)
|
Tangible equity | | | (b) | | $ | 3,487,012 |
| | $ | 3,343,693 |
| | $ | 3,062,678 |
|
| | | | | | | | |
|
Total assets
| | |
(c)
| |
$
|
37,719,104
| | |
$
|
37,150,249
| | |
$
|
35,342,126
| |
Less: Goodwill | | | | |
(465,547
|
)
| |
(469,433
|
)
| |
(469,433
|
)
|
Other intangible assets (1) | | | | |
(26,196
|
)
| |
(28,825
|
)
| |
(33,843
|
)
|
Tangible assets | | | (d) | | $ | 37,227,361 |
| | $ | 36,651,991 |
| | $ | 34,838,850 |
|
Total stockholders’ equity to total assets ratio | | | (a)/(c) | | 10.55 | % | | 10.34 | % | | 10.09 | % |
Tangible equity to tangible assets ratio | | | (b)/(d) | | 9.37 | % | | 9.12 | % | | 8.79 | % |
|
|
|
|
|
|
|
|
|
|
| | | | | | | | |
|
Adjusted return on average tangible equity represents adjusted
tangible net income divided by average tangible equity. Adjusted
tangible net income excludes the after-tax effects of the
amortization of core deposit intangibles and mortgage servicing
assets, the impact of the Tax Cuts and Jobs Act, and the after-tax
gains on the sales of the commercial property and DCB branches
(where applicable). Given that the use of such measures and ratios
is more prevalent in the banking industry, and such measures and
ratios are used by banking regulators and analysts, the Company
has included them below for discussion.
|
|
| | | | | Quarter Ended |
| | | | | March 31, 2018 | | December 31, 2017 | | March 31, 2017 |
Net Income
| | | | |
$
|
187,032
| | |
$
|
84,898
| | |
$
|
169,736
| |
Add: Amortization of core deposit intangibles, net of tax (2) | | | | |
1,046
| | |
939
| | |
1,053
| |
Amortization of mortgage servicing assets, net of tax (2) | | | | |
333
|
| |
254
|
| |
266
|
|
Tangible net income | | | (e) | | $ | 188,411 | | | $ | 86,091 | | | $ | 171,055 | |
Add: Impact of the Tax Cuts and Jobs Act
| | | | |
—
| | |
41,689
| | |
—
| |
Less: Gain on sale of the commercial property, net of tax (2) | | | | |
—
| | |
—
| | |
(41,526
|
)
|
Gain on sale of business, net of tax (2) | | | | |
(22,167
|
)
| |
—
|
| |
—
|
|
Adjusted tangible net income | | | (f) | | $ | 166,244 |
| | $ | 127,780 |
| | $ | 129,529 |
|
| | | | | | | | |
|
Average stockholders’ equity
| | | | |
$
|
3,922,926
| | |
$
|
3,856,802
| | |
$
|
3,493,396
| |
Less: Average goodwill
| | | | |
(468,785
|
)
| |
(469,433
|
)
| |
(469,433
|
)
|
Average other intangible assets (1) | | | | |
(28,102
|
)
| |
(29,527
|
)
| |
(34,987
|
)
|
Average tangible equity | | | (g) | | $ | 3,426,039 |
| | $ | 3,357,842 |
| | $ | 2,988,976 |
|
Return on average tangible equity (3) | | | (e)/(g) | | 22.30 | % | | 10.17 | % | | 23.21 | % |
Adjusted return on average tangible equity (3) | | | (f)/(g) | | 19.68 | % | | 15.10 | % | | 17.57 | % |
|
(1)
|
|
|
Includes core deposit intangibles and mortgage servicing assets.
|
(2)
| | |
Statutory rate of 29.56% was applied for the quarter ended March 31,
2018. Statutory rate of 42.05% was applied for the quarters ended
December 31, 2017 and March 31, 2017.
|
(3)
| | |
Annualized.
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180419005510/en/
FOR INVESTOR INQUIRIES, CONTACT:
East West Bancorp, Inc.
Irene
Oh, 626-768-6360
Chief Financial Officer
[email protected]
or
Julianna
Balicka, 626-768-6985
Director of Strategy and Corporate Development
[email protected]
Source: East West Bancorp, Inc.