East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq:
EWBC), parent company of East West Bank, reported its financial
results for the third quarter of 2023. Third quarter 2023 net
income was $288 million, or $2.02 per diluted share. Total loans
reached a record $50.9 billion as of September 30, 2023. Return on
average assets was 1.66%, return on average common equity was
17.28%, and return on average tangible common equity1 was
18.65%.
“East West has continued to grow and support its customers.
During the third quarter, we drove record quarterly revenue and net
interest income, adding to record net income in the first half of
this year,” said Dominic Ng, Chairman and Chief Executive Officer
of East West. “We took a prudent approach to growth, adding a
billion dollars in both loans and customer deposits. This growth
and our industry-leading efficiency underscore the durable and
diversified nature of our business model,” continued Ng.
“Our balance sheet positions us well to help our customers
thrive. East West Bank is on track for another year of record
earnings for 2023, and we look forward to entering 2024 with
strength. Given our confidence in earnings generation, stable
credit quality, and capital strength, East West’s board of
directors has approved a restart of our share repurchase program in
the fourth quarter,” Ng concluded.
FINANCIAL HIGHLIGHTS
Quarter Ended
Quarter Ended
Year-over-Year Change
($ in millions, except per share data)
September 30, 2023
September 30, 2022
$
%
Revenue
$648
$627
$20
3%
Pre-tax, Pre-provision Income2
446
432
14
3
Net Income
288
295
(8)
(3)
Diluted Earnings per Share
$2.02
$2.08
$(0.06)
(3%)
Return on Average Assets
1.66%
1.86%
-20 bps
Return on Average Common Equity
17.28%
20.30%
-302 bps
Return on Average Tangible Common
Equity1
18.65%
22.16%
-351 bps
Total Loans
$50,912
$47,457
$3,455
7%
Total Deposits
55,087
53,857
1,230
2
1
Tangible common equity and return
on average tangible common equity are non-GAAP financial measures.
See reconciliation of GAAP to non-GAAP measures in Table 13.
2
Pre-tax, pre-provision income is
a non-GAAP financial measure. See reconciliation of GAAP to
non-GAAP financial measures in Table 12.
BALANCE SHEET
- Total Assets – Total assets were $68.3 billion as of
September 30, 2023, a decrease of $0.2 billion from $68.5 billion
as of June 30, 2023, reflecting increasing balance sheet
efficiency. Third quarter 2023 average interest-earning assets of
$65.1 billion were up $1.0 billion, or 2%, from $64.1 billion in
the second quarter of 2023, primarily due to an increase of $1.0
billion in average loans outstanding.
- Total Loans – Total loans reached a record $50.9 billion
as of September 30, 2023, an increase of $1.1 billion, or 2%, from
$49.8 billion as of June 30, 2023. Year-over-year, total loans were
up $3.5 billion, or 7%, from $47.5 billion as of September 30,
2022. Third quarter 2023 average loans of $49.9 billion grew $1.0
billion, or 2%, from the second quarter of 2023. The increase was
driven by growth across all our major loan portfolios.
- Total Deposits – Total deposits were $55.1 billion as of
September 30, 2023, a decrease of $0.6 billion, or 1%, from $55.7
billion as of June 30, 2023, reflecting a $1.6 billion reduction in
wholesale deposits, partially offset by an increase of $1 billion
in customer deposits. Noninterest-bearing deposits made up 29% of
our total deposits as of September 30, 2023, down from 30% as of
June 30, 2023. Year-over-year, total deposits increased $1.2
billion, or 2%, from $53.9 billion as of September 30, 2022. Third
quarter 2023 average deposits of $55.2 billion increased $0.9
billion, or 2%, from the second quarter of 2023. During the third
quarter, growth in average money market and time deposits was
offset by declines in other deposit categories, which largely
reflected our commercial and consumer customers reallocating
balances to products with higher yields.
- Strong Capital Levels – As of September 30, 2023,
stockholders’ equity was $6.6 billion, or $46.62 per share, both up
2% quarter-over-quarter. The stockholders’ equity to asset ratio
was 9.66% as of September 30, 2023, an increase of 23 basis points
quarter-over-quarter. As of September 30, 2023, tangible book
value3 per share was $43.29, up 2% quarter-over-quarter and 18%
year-over-year. The tangible common equity ratio3 was 9.03%, an
increase of 23 basis points quarter-over-quarter. All of East
West’s regulatory capital ratios are well in excess of regulatory
requirements for well-capitalized institutions, as well as above
regional and national bank averages. The common equity tier 1
(“CET1”) capital ratio increased to 13.30%, and the total
risk-based capital ratio increased to 14.74%, as of September 30,
2023.
OPERATING RESULTS
Third Quarter Earnings – Third quarter 2023 net income
was $288 million, and diluted earnings per share (“EPS”) were
$2.02. While third quarter 2023 net income and EPS both decreased
from the second quarter of 2023, revenue and pre-tax pre-provision
income both improved.
Net income and diluted EPS for the nine months ended September
30, 2023 were $922 million and $6.49, which both increased 17% from
the nine months ended September 30, 2022.
3
Tangible book value and the tangible
common equity ratio are non-GAAP financial measures. See
reconciliation of GAAP to non-GAAP measures in Table 13.
Third Quarter 2023 Compared to Second
Quarter 2023
Net Interest Income and Net Interest Margin
Net interest income (“NII”) totaled $571 million in the third
quarter, an increase of 1% from $567 million in the second quarter.
Net interest margin (“NIM”) of 3.48% declined seven basis points
from 3.55% in the second quarter.
- The change in NIM was primarily driven by a higher cost of
interest-bearing deposits and changes in the deposit mix in favor
of higher-cost customer deposits, partially offset by lower
wholesale deposit levels and higher loan volumes and yields.
- The average loan yield was 6.51%, up 18 basis points from the
second quarter. The average interest-earning asset yield was 5.87%,
up 20 basis points from the second quarter.
- The average cost of funds was 2.59%, up 28 basis points from
the second quarter. The average cost of deposits was 2.43%, up 31
basis points from the second quarter.
Noninterest Income
Noninterest income totaled $77 million in the third quarter, a
decrease of $2 million, or 2%, from $79 million in the second
quarter.
- Fee income4 of $67 million was down $2 million, or 3%, from $69
million in the second quarter.
- Interest rate contracts and other derivative income of $11
million was up from $7 million in the second quarter. The change
primarily reflected a favorable change in mark-to-market
adjustments.
- Other investment income of $2 million was down $2 million from
$4 million in the second quarter, reflecting higher recognition of
equity valuation marks for Community Reinvestment Act investments
during the second quarter.
Noninterest Expense
Noninterest expense totaled $252 million in the third quarter, a
decrease of 4% from $262 million in the second quarter. Third
quarter noninterest expense consisted of $202 million of adjusted
noninterest expense5, and $50 million in amortization expenses
related to tax credit and other investments and core deposit
intangibles.
- Adjusted noninterest expense of $202 million decreased over $3
million, or 2%, from $205 million in the second quarter. This was
driven by decreases in consulting expense, compensation and
employee benefits, loan related expenses, and occupancy
expense.
- The efficiency ratio was 38.9% in the third quarter, compared
with 40.6% in the second quarter and the adjusted efficiency ratio5
was 31.2% in the third quarter, compared with 31.8% in the second
quarter.
TAX RELATED ITEMS
Third quarter 2023 income tax expense was $66 million, and the
effective tax rate was 18.6%, compared with 12.7% for the second
quarter of 2023. The lower effective tax rate in the second quarter
was mainly due to a larger amount of tax credits in renewable
energy investments that closed during the second quarter. The
effective tax rate for the first nine months of 2023 was 18.6%
compared with 22.7% for the first nine months of 2022. We currently
estimate that the full year tax rate for 2023 will be between 19% -
20%.
4
Fee income includes lending, deposit
account and wealth management fees, foreign exchange income, and
interest rate contracts and other derivative income.
5
Adjusted noninterest expense and adjusted
efficiency ratio are non-GAAP financial measures. See
reconciliation of GAAP to non-GAAP measures in Table 12.
ASSET QUALITY
As of September 30, 2023, the credit quality of our loan
portfolio remained solid.
- The nonperforming assets ratio improved to 0.15% of total
assets as of September 30, 2023, down from 0.17% of total assets as
of June 30, 2023. Nonperforming assets decreased $12 million, or
10%, quarter-over-quarter to $104 million as of September 30, 2023,
from $116 million as of June 30, 2023.
- Third quarter 2023 net charge-offs were $18 million, or
annualized 0.14% of average loans held-for-investment (“HFI”),
compared with $8 million, or annualized 0.06% of average loans HFI,
for the second quarter of 2023.
- The criticized loans ratio increased 38 basis points
quarter-over-quarter to 2.01% of loans HFI as of September 30,
2023, compared with 1.63% as of June 30, 2023. Criticized loans
increased $210 million, or 26%, quarter-over-quarter to $1.0
billion as of September 30, 2023, compared with $812 million as of
June 30, 2023. The special mention loans ratio increased 29 basis
points quarter-over quarter to 0.95% of loans HFI as of September
30, 2023, compared with 0.66% as of June 30, 2023, and the
classified loans ratio increased nine basis points to 1.06%.
- The allowance for loan losses increased to $656 million, or
1.29% of loans HFI, as of September 30, 2023, compared with $635
million, or 1.28% of loans HFI, as of June 30, 2023.
- Third quarter 2023 provision for credit losses was $42 million,
compared with $26 million in the second quarter of 2023.
CAPITAL STRENGTH
Capital levels for East West remained strong as of September 30,
2023. All capital ratios expanded quarter-over-quarter and
year-over-year. The following table presents the regulatory capital
metrics as of September 30, 2023, June 30, 2023 and September 30,
2022.
EWBC Capital
($ in millions)
September 30, 2023 (a)
June 30, 2023 (a)
September 30, 2022 (a)
Risk-Weighted Assets (“RWA”) (b)
$52,944
$51,696
$49,266
Risk-based capital ratios:
CET1 capital ratio
13.30%
13.17%
12.27%
Tier 1 capital ratio
13.30%
13.17%
12.27%
Total capital ratio
14.74%
14.60%
13.57%
Leverage ratio
10.15%
10.03%
9.55%
Tangible common equity ratio (c)
9.03%
8.80%
8.35%
(a)
The Company has elected to use the 2020 Current Expected Credit
Losses (CECL) transition provision in the calculation of its
September 30, 2023, June 30, 2023 and September 30,
2022 regulatory capital ratios. The Company’s September 30,
2023 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.
(c)
Tangible common equity ratio is a non-GAAP financial measure.
See reconciliation of GAAP to non-GAAP measures in Table 13.
DIVIDEND PAYOUT AND CAPITAL ACTIONS
East West’s Board of Directors has declared fourth quarter 2023
dividends for the Company’s common stock. The common stock cash
dividend of $0.48 per share is payable on November 15, 2023, to
stockholders of record on November 1, 2023.
On March 3, 2020, East West’s Board of Directors authorized the
repurchase of up to $500 million of East West’s common stock, of
which $254 million remains available. East West did not repurchase
any shares during the third quarter of 2023. The Company intends to
resume share repurchases in the fourth quarter of 2023.
Conference Call
East West will host a conference call to discuss third quarter
2023 earnings with the public on Thursday, October 19, 2023, at
8:30 a.m. PT/11:30 a.m. ET. The public and investment community are
invited to listen as management discusses third quarter 2023
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 October
19, 2023, at 11:30 a.m. PT/2:30 p.m. ET through November 19, 2023.
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: 8920769.
About East West
East West provides financial services that help customers reach
further and connect to new opportunities. East West Bancorp, Inc.
is a public company (Nasdaq: “EWBC”) with total assets of $68.3
billion as of September 30, 2023. The Company’s wholly-owned
subsidiary, East West Bank, is the largest independent bank
headquartered in Southern California, and operates over 120
locations in the United States and Asia. The Bank’s markets in the
United States include California, Georgia, Illinois, Massachusetts,
Nevada, New York, Texas, and Washington. For more information on
East West, visit www.eastwestbank.com.
Forward-Looking Statements
Certain matters set forth herein (including any exhibits hereto)
contain forward-looking statements that are intended to be covered
by the safe harbor provisions for such statements provided by the
Private Securities Litigation Reform Act of 1995. In addition, the
Company may make forward-looking statements in other documents that
it files with, or furnishes to, the U.S. Securities and Exchange
Commission (“SEC”) and management may make forward-looking
statements to analysts, investors, media members and others.
Forward-looking statements are those that do not relate to
historical facts and that are based on current assumptions,
beliefs, estimates, expectations and projections, many of which, by
their nature, are inherently uncertain and beyond the Company’s
control. Forward-looking statements may relate to various matters,
including the Company’s financial condition, results of operations,
plans, objectives, future performance, business or industry, and
usually can be identified by the use of forward-looking words, such
as “anticipates,” “assumes,” “believes,” “can,” “continues,”
“could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,”
“likely,” “may,” “might,” “objective,” “plans,” “potential,”
“projects,” “remains,” “should,” “target,” “trend,” “will,”
“would,” or similar expressions or variations thereof, and the
negative thereof, but these terms are not the exclusive means of
identifying such statements. You should not place undue reliance on
forward-looking statements, as they are subject to risks and
uncertainties, including, but not limited to, those described
below. When considering these forward-looking statements, you
should keep in mind these risks and uncertainties, as well as any
cautionary statements the Company may make.
There are various important factors that could cause future
results to differ materially from historical performance and any
forward-looking statements. Factors that might cause such
differences, include, but are not limited to: changes in the global
economy, including an economic slowdown, capital or financial
market disruption, supply chain disruption, level of inflation,
interest rate environment, housing prices, employment levels, rate
of growth and general business conditions, which could result in,
among other things, reduced demand for loans, reduced availability
of funding or increased funding costs, declines in asset values
and/or recognition of allowance for credit losses; changes in
local, regional and global business, economic and political
conditions and geopolitical events, such as Russia’s invasion of
Ukraine; the soundness of other financial institutions and the
impacts related to or resulting from recent bank failures and other
economic and industry volatility, including potential increased
regulatory requirements, Federal Deposit Insurance Corporation
(“FDIC”) insurance premiums and assessments, losses in the value of
our investment portfolio, deposit withdrawals, or other adverse
consequences of negative market perceptions of the banking industry
or the Company; changes in laws or the regulatory environment,
including regulatory reform initiatives and policies of the U.S.
Department of the Treasury, the Board of Governors of the Federal
Reserve System (“Federal Reserve”), the FDIC, the SEC, the Consumer
Financial Protection Bureau (“CFPB”), the California Department of
Financial Protection and Innovation — Division of Financial
Institutions, China’s National Administration of Financial
Regulation, the Hong Kong Monetary Authority, the Hong Kong
Securities and Futures Commission, and the Monetary Authority of
Singapore; changes and effects thereof in trade, monetary and
fiscal policies and laws, including the ongoing trade, economic and
political disputes between the U.S. and the People’s Republic of
China and the monetary policies of the Federal Reserve; changes in
the commercial and consumer real estate markets; changes in
consumer or commercial spending, savings and borrowing habits, and
patterns and behaviors; the impact from potential changes to income
tax laws and regulations, federal spending and economic stimulus
programs; the impact of any future U.S. federal government shutdown
and uncertainty regarding the U.S. federal government’s debt limit
and credit rating; the Company’s ability to compete effectively
against financial institutions and other entities, including as a
result of emerging technologies; the success and timing of the
Company’s business strategies; the Company’s ability to retain key
officers and employees; the impact on the Company’s funding costs,
net interest income and net interest margin from changes in key
variable market interest rates, competition, regulatory
requirements and the Company’s product mix; changes in the
Company’s costs of operation, compliance and expansion; the
Company’s ability to adopt and successfully integrate new
technologies into its business in a strategic manner; the impact of
communications or technology disruption, failure in, or breach of,
the Company’s operational or security systems or infrastructure, or
those of third party vendors with which the Company does 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, and materially
impact the Company’s ability to provide services to its clients;
the adequacy of the Company’s risk management framework, disclosure
controls and procedures and internal control over financial
reporting; future credit quality and performance, including the
Company’s expectations regarding future credit losses and allowance
levels; the impact of adverse changes to the Company’s credit
ratings from major credit rating agencies; the impact of adverse
judgments or settlements in litigation; the impact on the Company’s
operations due to political developments, pandemics, wars, civil
unrest, terrorism or other hostilities that may disrupt or increase
volatility in securities or otherwise affect business and economic
conditions; heightened regulatory and governmental oversight and
scrutiny of the Company’s business practices, including dealings
with consumers; the impact of reputational risk from negative
publicity, fines, penalties and other negative consequences from
regulatory violations, legal actions and the Company’s interactions
with business partners, counterparties, service providers and other
third parties; the impact of regulatory investigations and
enforcement actions; changes in accounting standards as may be
required by the Financial Accounting Standards Board (“FASB”) or
other regulatory agencies and their impact on the Company’s
critical accounting policies and assumptions; the Company’s capital
requirements and its ability to generate capital internally or
raise capital on favorable terms; the impact on the Company’s
liquidity due to changes in the Company’s ability to receive
dividends from its subsidiaries; any strategic acquisitions or
divestitures; changes in the equity and debt securities markets;
fluctuations in the Company’s stock price; fluctuations in foreign
currency exchange rates; the impact of increased focus on social,
environmental and sustainability matters, which may affect the
Company’s operations as well as those of its customers and the
economy more broadly; and the impact of climate change, natural or
man-made disasters or calamities, such as wildfires, droughts,
hurricanes, flooding and earthquakes or other events that may
directly or indirectly result in a negative impact on the Company’s
financial performance.
For a more detailed discussion of some of the factors that might
cause such differences, see the Company’s Annual Report on Form
10-K for the year ended December 31, 2022 under the heading Item
1A. Risk Factors and the information set forth under Item 1A. Risk
Factors in the Company’s Quarterly Reports on Form 10-Q. You should
treat forward-looking statements as speaking only as of the date
they are made and based only on information then actually known to
the Company. The Company does not undertake, and specifically
disclaims any obligation to update or revise any forward-looking
statements to reflect the occurrence of events or circumstances
after the date of such statements except as required by law.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEET
($ and shares in thousands,
except per share data)
(unaudited)
Table 1
September 30, 2023 % or
Basis Point Change
September 30, 2023
June 30, 2023
September 30, 2022
Qtr-o-Qtr
Yr-o-Yr
Assets
Cash and due from banks
$
495,976
$
614,053
$
554,260
(19.2
)%
(10.5
)%
Interest-bearing cash with banks
4,065,202
5,763,834
1,609,093
(29.5
)
152.6
Cash and cash equivalents
4,561,178
6,377,887
2,163,353
(28.5
)
110.8
Interest-bearing deposits with banks
17,213
17,169
630,543
0.3
(97.3
)
Assets purchased under resale agreements
(“resale agreements”)
785,000
635,000
892,986
23.6
(12.1
)
Available-for-sale (“AFS”) debt securities
(amortized cost of $6,976,331, $6,820,569 and $6,771,354)
6,039,837
5,987,258
5,906,090
0.9
2.3
Held-to-maturity (“HTM”) debt securities,
at amortized cost (fair value of $2,308,048, $2,440,484 and
$2,459,135)
2,964,235
2,975,933
3,012,667
(0.4
)
(1.6
)
Loans held-for-sale (“HFS”)
4,762
2,830
14,500
68.3
(67.2
)
Loans held-for-investment (“HFI”) (net of
allowance for loan losses of $655,523, $635,400 and $582,517)
50,251,661
49,192,964
46,859,738
2.2
7.2
Investments in qualified affordable
housing partnerships, tax credit and other investments, net
901,559
815,471
725,254
10.6
24.3
Goodwill
465,697
465,697
465,697
—
—
Operating lease right-of-use assets
97,782
100,500
105,411
(2.7
)
(7.2
)
Other assets
2,200,534
1,961,972
1,799,822
12.2
22.3
Total assets
$
68,289,458
$
68,532,681
$
62,576,061
(0.4
)%
9.1
%
Liabilities and Stockholders’
Equity
Deposits
$
55,087,031
$
55,658,786
$
53,857,362
(1.0
)%
2.3
%
Short-term borrowings
4,500,000
4,500,000
—
—
100.0
Federal funds purchased
—
—
200,000
—
(100.0
)
FHLB advances
—
—
324,920
—
(100.0
)
Assets sold under repurchase agreements
(“repurchase agreements”)
—
—
611,785
—
(100.0
)
Long-term debt and finance lease
liabilities
153,087
152,951
152,610
0.1
0.3
Operating lease liabilities
107,695
110,383
113,477
(2.4
)
(5.1
)
Accrued expenses and other liabilities
1,844,939
1,648,864
1,655,239
11.9
11.5
Total liabilities
61,692,752
62,070,984
56,915,393
(0.6
)
8.4
Stockholders’ equity
6,596,706
6,461,697
5,660,668
2.1
16.5
Total liabilities and stockholders’
equity
$
68,289,458
$
68,532,681
$
62,576,061
(0.4
)%
9.1
%
Book value per share
$
46.62
$
45.67
$
40.17
2.1
%
16.1
%
Tangible book value (1) per
share
$
43.29
$
42.33
$
36.80
2.3
17.6
Number of common shares at
period-end
141,486
141,484
140,918
0.0
0.4
Total stockholders’ equity to assets
ratio
9.66
%
9.43
%
9.05
%
23
bps
61
bps
Tangible common equity (“TCE”) ratio
(1)
9.03
%
8.80
%
8.35
%
23
bps
68
bps
(1)
Tangible book value and the TCE ratio are
non-GAAP financial measures. See reconciliation of GAAP to non-GAAP
measures in Table 13.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
TOTAL LOANS AND DEPOSITS
DETAIL
($ in thousands)
(unaudited)
Table 2
September 30, 2023 %
Change
September 30, 2023
June 30, 2023
September 30, 2022
Qtr-o-Qtr
Yr-o-Yr
Loans:
Commercial:
Commercial and industrial (“C&I”)
$
15,864,042
$
15,670,084
$
15,625,072
1.2
%
1.5
%
Commercial real estate (“CRE”):
CRE
14,667,378
14,373,385
13,573,157
2.0
8.1
Multifamily residential
4,900,097
4,764,180
4,559,302
2.9
7.5
Construction and land
798,190
781,068
556,894
2.2
43.3
Total CRE
20,365,665
19,918,633
18,689,353
2.2
9.0
Consumer:
Residential mortgage:
Single-family residential
12,836,558
12,308,613
10,855,345
4.3
18.3
Home equity lines of credit (“HELOCs”)
1,776,665
1,862,928
2,184,924
(4.6
)
(18.7
)
Total residential mortgage
14,613,223
14,171,541
13,040,269
3.1
12.1
Other consumer
64,254
68,106
87,561
(5.7
)
(26.6
)
Total loans HFI (1)
50,907,184
49,828,364
47,442,255
2.2
7.3
Loans HFS
4,762
2,830
14,500
68.3
(67.2
)
Total loans (1)
50,911,946
49,831,194
47,456,755
2.2
7.3
Allowance for loan losses
(655,523
)
(635,400
)
(582,517
)
3.2
12.5
Net loans (1)
$
50,256,423
$
49,195,794
$
46,874,238
2.2
7.2
Deposits:
Noninterest-bearing demand
$
16,169,072
$
16,741,099
$
21,645,394
(3.4
)%
(25.3
)%
Interest-bearing checking
7,689,289
8,348,587
6,822,343
(7.9
)
12.7
Money market
12,613,827
11,486,473
12,113,292
9.8
4.1
Savings
1,963,766
2,102,850
2,917,770
(6.6
)
(32.7
)
Time deposits
16,651,077
16,979,777
10,358,563
(1.9
)
60.7
Total deposits
$
55,087,031
$
55,658,786
$
53,857,362
(1.0
)%
2.3
%
(1)
Includes $(72.0) million, $(74.0) million
and $(60.3) million of net deferred loan fees and net unamortized
premiums as of September 30, 2023, June 30, 2023 and September 30,
2022, respectively.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF INCOME
($ and shares in thousands,
except per share data)
(unaudited)
Table 3
Three Months Ended
September 30, 2023 %
Change
September 30, 2023
June 30, 2023
September 30, 2022
Qtr-o-Qtr
Yr-o-Yr
Interest and dividend income
$
961,787
$
906,134
$
628,236
6.1%
53.1%
Interest expense
390,974
339,388
76,427
15.2
411.6
Net interest income before provision for
credit losses
570,813
566,746
551,809
0.7
3.4
Provision for credit losses
42,000
26,000
27,000
61.5
55.6
Net interest income after provision for
credit losses
528,813
540,746
524,809
(2.2)
0.8
Noninterest income
76,752
78,631
75,552
(2.4)
1.6
Noninterest expense
252,014
261,789
215,973
(3.7)
16.7
Income before income taxes
353,551
357,588
384,388
(1.1)
(8.0)
Income tax expense
65,813
45,557
89,049
44.5
(26.1)
Net income
$
287,738
$
312,031
$
295,339
(7.8)%
(2.6)%
Earnings per share (“EPS”)
- Basic
$
2.03
$
2.21
$
2.10
(7.8)%
(3.0)%
- Diluted
$
2.02
$
2.20
$
2.08
(7.9)
(2.6)
Weighted-average number of shares
outstanding
- Basic
141,485
141,468
140,917
0.0%
0.4%
- Diluted
142,122
141,876
142,011
0.2
0.1
Three Months Ended
September 30, 2023 %
Change
September 30, 2023
June 30, 2023
September 30, 2022
Qtr-o-Qtr
Yr-o-Yr
Noninterest income:
Lending fees
$
20,312
$
20,901
$
20,289
(2.8)%
0.1%
Deposit account fees
22,622
22,285
23,636
1.5
(4.3)
Interest rate contracts and other
derivative income
11,208
7,373
8,761
52.0
27.9
Foreign exchange income
12,334
13,251
10,083
(6.9)
22.3
Wealth management fees
5,877
6,889
8,903
(14.7)
(34.0)
Net (losses) gains on sales of loans
(12
)
(7
)
2,129
71.4
NM
Other investment income (losses)
1,751
4,003
(580
)
(56.3)
NM
Other income
2,660
3,936
2,331
(32.4)
14.1
Total noninterest income
$
76,752
$
78,631
$
75,552
(2.4)%
1.6%
Noninterest expense:
Compensation and employee benefits
$
123,153
$
124,937
$
127,580
(1.4)%
(3.5)%
Occupancy and equipment expense
15,353
16,088
15,920
(4.6)
(3.6)
Deposit insurance premiums and regulatory
assessments
8,583
8,262
4,875
3.9
76.1
Deposit account expense
11,585
10,559
6,707
9.7
72.7
Data processing
3,645
3,213
3,725
13.4
(2.1)
Computer software expense
8,116
7,479
6,889
8.5
17.8
Other operating expense
31,885
35,337
30,403
(9.8)
4.9
Amortization of tax credit and other
investments
49,694
55,914
19,874
(11.1)
150.0
Total noninterest expense
$
252,014
$
261,789
$
215,973
(3.7)%
16.7%
NM - Not meaningful.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF INCOME
($ and shares in thousands,
except per share data)
(unaudited)
Table 4
Nine Months Ended
September 30, 2023 %
Change
September 30, 2023
September 30, 2022
Yr-o-Yr
Interest and dividend income
$
2,703,427
$
1,560,019
73.3%
Interest expense
966,007
119,645
NM
Net interest income before provision for
credit losses
1,737,420
1,440,374
20.6
Provision for credit losses
88,000
48,500
81.4
Net interest income after provision for
credit losses
1,649,420
1,391,874
18.5
Noninterest income
215,361
233,739
(7.9)
Noninterest expense
732,250
602,283
21.6
Income before income taxes
1,132,531
1,023,330
10.7
Income tax expense
210,323
232,010
(9.3)
Net income
$
922,208
$
791,320
16.5%
EPS
- Basic
$
6.52
$
5.59
16.6%
- Diluted
$
6.49
$
5.55
17.0
Weighted-average number of shares
outstanding
- Basic
141,356
141,453
(0.1)%
- Diluted
142,044
142,601
(0.4)
Nine Months Ended
September 30, 2023 %
Change
September 30, 2023
September 30, 2022
Yr-o-Yr
Noninterest income:
Lending fees
$
61,799
$
59,869
3.2%
Deposit account fees
66,610
66,323
0.4
Interest rate contracts and other
derivative income
21,145
29,695
(28.8)
Foreign exchange income
38,245
34,143
12.0
Wealth management fees
19,070
21,494
(11.3)
Net (losses) gains on sales of loans
(41
)
5,968
NM
Net (losses) gains on AFS debt
securities
(10,000
)
1,306
NM
Other investment income
7,675
5,910
29.9
Other income
10,858
9,031
20.2
Total noninterest income
$
215,361
$
233,739
(7.9)%
Noninterest expense:
Compensation and employee benefits
$
377,744
$
357,213
5.7%
Occupancy and equipment expense
47,028
46,853
0.4
Deposit insurance premiums and regulatory
assessments
24,755
14,519
70.5
Deposit account expense
31,753
17,071
86.0
Data processing
10,205
10,876
(6.2)
Computer software expense
22,955
20,755
10.6
Other operating expense (1)
102,092
86,243
18.4
Amortization of tax credit and other
investments
115,718
48,753
137.4
Total noninterest expense
$
732,250
$
602,283
21.6%
NM - Not meaningful. (1)
Includes $3.9 million of repurchase
agreements’ extinguishment cost for the nine months ended September
30, 2023.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
SELECTED AVERAGE
BALANCES
($ in thousands)
(unaudited)
Table 5
Three Months Ended
September 30, 2023 %
Change
Nine Months Ended
September 30, 2023 %
Change
September 30, 2023
June 30, 2023
September 30, 2022
Qtr-o-Qtr
Yr-o-Yr
September 30, 2023
September 30, 2022
Yr-o-Yr
Loans:
Commercial:
C&I
$
15,400,172
$
15,244,826
$
15,282,661
1.0%
0.8%
$
15,348,662
$
14,850,849
3.4%
CRE:
CRE
14,453,014
14,130,811
13,533,482
2.3
6.8
14,174,100
12,958,562
9.4
Multifamily residential
4,798,360
4,685,786
4,531,351
2.4
5.9
4,695,473
4,133,975
13.6
Construction and land
807,906
782,541
532,800
3.2
51.6
755,651
467,731
61.6
Total CRE
20,059,280
19,599,138
18,597,633
2.3
7.9
19,625,224
17,560,268
11.8
Consumer:
Residential mortgage:
Single-family residential
12,548,593
12,014,513
10,676,022
4.4
17.5
11,997,671
9,809,549
22.3
HELOCs
1,816,900
1,928,208
2,216,355
(5.8)
(18.0)
1,931,105
2,230,060
(13.4)
Total residential mortgage
14,365,493
13,942,721
12,892,377
3.0
11.4
13,928,776
12,039,609
15.7
Other consumer
63,917
65,035
81,870
(1.7)
(21.9)
67,181
97,794
(31.3)
Total loans (1)
$
49,888,862
$
48,851,720
$
46,854,541
2.1%
6.5%
$
48,969,843
$
44,548,520
9.9%
Interest-earning assets
$
65,051,461
$
64,061,569
$
59,478,689
1.5%
9.4%
$
63,545,257
$
58,949,457
7.8%
Total assets
$
68,936,786
$
67,497,367
$
63,079,444
2.1%
9.3%
$
67,196,590
$
62,361,618
7.8%
Deposits:
Noninterest-bearing demand
$
16,302,296
$
16,926,937
$
22,423,633
(3.7)%
(27.3)%
$
17,633,922
$
23,244,247
(24.1)%
Interest-bearing checking
8,080,025
8,434,655
6,879,632
(4.2)
17.4
7,675,325
6,747,711
13.7
Money market
12,180,806
10,433,839
12,351,571
16.7
(1.4)
11,295,157
12,526,222
(9.8)
Savings
2,013,246
2,200,124
2,961,634
(8.5)
(32.0)
2,215,102
2,954,098
(25.0)
Time deposits
16,621,683
16,289,320
9,435,063
2.0
76.2
15,993,669
8,596,728
86.0
Total deposits
$
55,198,056
$
54,284,875
$
54,051,533
1.7%
2.1%
$
54,813,175
$
54,069,006
1.4%
Interest-bearing liabilities
$
43,563,947
$
42,026,844
$
32,703,323
3.7%
33.2%
$
40,826,548
$
31,631,865
29.1%
Stockholders’ equity
$
6,604,798
$
6,440,996
$
5,772,638
2.5%
14.4%
$
6,411,250
$
5,765,637
11.2%
(1)
Includes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
QUARTER-TO-DATE AVERAGE
BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 6
Three Months Ended
September 30, 2023
June 30, 2023
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
$
5,392,795
$
67,751
4.98
%
$
5,247,755
$
60,995
4.66
%
Resale agreements
648,587
4,460
2.73
%
641,939
3,969
2.48
%
AFS debt securities
6,074,119
57,177
3.73
%
6,257,397
56,292
3.61
%
HTM debt securities
2,967,703
12,601
1.68
%
2,983,780
12,678
1.70
%
Loans (2)
49,888,862
818,719
6.51
%
48,851,720
771,264
6.33
%
FHLB and FRB stock
79,395
1,079
5.39
%
78,978
936
4.75
%
Total interest-earning assets
$
65,051,461
$
961,787
5.87
%
$
64,061,569
$
906,134
5.67
%
Noninterest-earning assets:
Cash and due from banks
544,939
569,227
Allowance for loan losses
(629,229
)
(619,868
)
Other assets
3,969,615
3,486,439
Total assets
$
68,936,786
$
67,497,367
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
8,080,025
$
54,285
2.67
%
$
8,434,655
$
49,571
2.36
%
Money market deposits
12,180,806
113,217
3.69
%
10,433,839
86,419
3.32
%
Savings deposits
2,013,246
4,047
0.80
%
2,200,124
3,963
0.72
%
Time deposits
16,621,683
166,747
3.98
%
16,289,320
147,524
3.63
%
Federal funds purchased and other
short-term borrowings
4,501,327
49,575
4.37
%
4,500,566
49,032
4.37
%
FHLB advances
1
—
—
%
1
—
—
%
Repurchase agreements
13,897
193
5.51
%
15,579
211
5.43
%
Long-term debt and finance lease
liabilities
152,962
2,910
7.55
%
152,760
2,668
7.01
%
Total interest-bearing
liabilities
$
43,563,947
$
390,974
3.56
%
$
42,026,844
$
339,388
3.24
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
16,302,296
16,926,937
Accrued expenses and other liabilities
2,465,745
2,102,590
Stockholders’ equity
6,604,798
6,440,996
Total liabilities and stockholders’
equity
$
68,936,786
$
67,497,367
Interest rate spread
2.31
%
2.43
%
Net interest income and net interest
margin
$
570,813
3.48
%
$
566,746
3.55
%
(1)
Annualized.
(2)
Includes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
QUARTER-TO-DATE AVERAGE
BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 7
Three Months Ended
September 30, 2023
September 30, 2022
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
$
5,392,795
$
67,751
4.98
%
$
2,287,010
$
9,080
1.58
%
Resale agreements
648,587
4,460
2.73
%
1,037,292
6,769
2.59
%
AFS debt securities
6,074,119
57,177
3.73
%
6,204,729
38,383
2.45
%
HTM debt securities
2,967,703
12,601
1.68
%
3,017,063
12,709
1.67
%
Loans (2)
49,888,862
818,719
6.51
%
46,854,541
560,452
4.75
%
FHLB and FRB stock
79,395
1,079
5.39
%
78,054
843
4.28
%
Total interest-earning assets
$
65,051,461
$
961,787
5.87
%
$
59,478,689
$
628,236
4.19
%
Noninterest-earning assets:
Cash and due from banks
544,939
615,836
Allowance for loan losses
(629,229
)
(566,369
)
Other assets
3,969,615
3,551,288
Total assets
$
68,936,786
$
63,079,444
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
8,080,025
$
54,285
2.67
%
$
6,879,632
$
8,493
0.49
%
Money market deposits
12,180,806
113,217
3.69
%
12,351,571
33,101
1.06
%
Savings deposits
2,013,246
4,047
0.80
%
2,961,634
2,268
0.30
%
Time deposits
16,621,683
166,747
3.98
%
9,435,063
25,032
1.05
%
Federal funds purchased and other
short-term borrowings
4,501,327
49,575
4.37
%
211,794
1,177
2.20
%
FHLB advances
1
—
—
%
86,243
392
1.80
%
Repurchase agreements
13,897
193
5.51
%
624,821
4,421
2.81
%
Long-term debt and finance lease
liabilities
152,962
2,910
7.55
%
152,565
1,543
4.01
%
Total interest-bearing
liabilities
$
43,563,947
$
390,974
3.56
%
$
32,703,323
$
76,427
0.93
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
16,302,296
22,423,633
Accrued expenses and other liabilities
2,465,745
2,179,850
Stockholders’ equity
6,604,798
5,772,638
Total liabilities and stockholders’
equity
$
68,936,786
$
63,079,444
Interest rate spread
2.31
%
3.26
%
Net interest income and net interest
margin
$
570,813
3.48
%
$
551,809
3.68
%
(1)
Annualized.
(2)
Includes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
YEAR-TO-DATE AVERAGE BALANCES,
YIELDS AND RATES
($ in thousands)
(unaudited)
Table 8
Nine Months Ended
September 30, 2023
September 30, 2022
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
$
4,703,843
$
164,393
4.67
%
$
3,175,596
$
17,127
0.72
%
Resale agreements
659,621
12,932
2.62
%
1,588,452
23,705
2.00
%
AFS debt securities
6,146,653
166,666
3.63
%
6,886,268
106,290
2.06
%
HTM debt securities
2,982,284
38,013
1.70
%
2,672,797
33,645
1.68
%
Loans (2)
48,969,843
2,318,369
6.33
%
44,548,520
1,376,978
4.13
%
FHLB and FRB stock
83,013
3,054
4.92
%
77,824
2,274
3.91
%
Total interest-earning assets
$
63,545,257
$
2,703,427
5.69
%
$
58,949,457
$
1,560,019
3.54
%
Noninterest-earning assets:
Cash and due from banks
578,144
656,772
Allowance for loan losses
(617,381
)
(551,818
)
Other assets
3,690,570
3,307,207
Total assets
$
67,196,590
$
62,361,618
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
7,675,325
$
127,030
2.21
%
$
6,747,711
$
13,073
0.26
%
Money market deposits
11,295,157
275,738
3.26
%
12,526,222
45,196
0.48
%
Savings deposits
2,215,102
11,679
0.70
%
2,954,098
5,836
0.26
%
Time deposits
15,993,669
428,120
3.58
%
8,596,728
40,266
0.63
%
Federal funds purchased and other
short-term borrowings
3,284,663
107,432
4.37
%
93,370
1,427
2.04
%
FHLB advances
164,836
6,430
5.22
%
128,137
1,529
1.60
%
Repurchase agreements
45,080
1,456
4.32
%
433,340
8,855
2.73
%
Long-term debt and finance lease
liabilities
152,716
8,122
7.11
%
152,259
3,463
3.04
%
Total interest-bearing
liabilities
$
40,826,548
$
966,007
3.16
%
$
31,631,865
$
119,645
0.51
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
17,633,922
23,244,247
Accrued expenses and other liabilities
2,324,870
1,719,869
Stockholders’ equity
6,411,250
5,765,637
Total liabilities and stockholders’
equity
$
67,196,590
$
62,361,618
Interest rate spread
2.53
%
3.03
%
Net interest income and net interest
margin
$
1,737,420
3.66
%
$
1,440,374
3.27
%
(1)
Annualized.
(2)
Includes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
SELECTED RATIOS
(unaudited)
Table 9
Three Months Ended (1)
September 30, 2023
Basis Point Change
September 30, 2023
June 30, 2023
September 30, 2022
Qtr-o-Qtr
Yr-o-Yr
Return on average assets
1.66
%
1.85
%
1.86
%
(19
)
bps
(20
)
bps
Adjusted return on average assets (2)
1.66
%
1.85
%
1.86
%
(19
)
(20
)
Return on average common equity
17.28
%
19.43
%
20.30
%
(215
)
(302
)
Adjusted return on average common equity
(2)
17.28
%
19.43
%
20.30
%
(215
)
(302
)
Return on average TCE (3)
18.65
%
21.01
%
22.16
%
(236
)
(351
)
Adjusted return on average TCE (3)
18.65
%
21.01
%
22.16
%
(236
)
(351
)
Interest rate spread
2.31
%
2.43
%
3.26
%
(12
)
(95
)
Net interest margin
3.48
%
3.55
%
3.68
%
(7
)
(20
)
Average loan yield
6.51
%
6.33
%
4.75
%
18
176
Yield on average interest-earning
assets
5.87
%
5.67
%
4.19
%
20
168
Average cost of interest-bearing
deposits
3.45
%
3.09
%
0.86
%
36
259
Average cost of deposits
2.43
%
2.12
%
0.51
%
31
192
Average cost of funds
2.59
%
2.31
%
0.55
%
28
204
Pre-tax, pre-provision profitability ratio
(4)
2.56
%
2.61
%
2.72
%
(5
)
(16
)
Adjusted noninterest expense/average
assets (4)
1.16
%
1.22
%
1.23
%
(6
)
(7
)
Efficiency ratio
38.92
%
40.56
%
34.43
%
(164
)
449
Adjusted efficiency ratio (4)
31.18
%
31.83
%
31.18
%
(65
)
bps
—
bps
Nine Months Ended (1)
September 30, 2023
Basis Point Change
September 30, 2023
September 30, 2022
Yr-o-Yr
Return on average assets
1.83
%
1.70
%
13
bps
Adjusted return on average assets (2)
1.85
%
1.70
%
15
Return on average common equity
19.23
%
18.35
%
88
Adjusted return on average common equity
(2)
19.38
%
18.35
%
103
Return on average TCE (3)
20.80
%
20.04
%
76
Adjusted return on average TCE (3)
20.96
%
20.04
%
92
Interest rate spread
2.53
%
3.03
%
(50
)
Net interest margin
3.66
%
3.27
%
39
Average loan yield
6.33
%
4.13
%
220
Yield on average interest-earning
assets
5.69
%
3.54
%
215
Average cost of interest-bearing
deposits
3.03
%
0.45
%
258
Average cost of deposits
2.06
%
0.26
%
180
Average cost of funds
2.21
%
0.29
%
192
Pre-tax, pre-provision profitability ratio
(4)
2.69
%
2.41
%
28
Adjusted noninterest expense/average
assets (4)
1.22
%
1.18
%
4
Efficiency ratio
37.50
%
35.98
%
152
Adjusted efficiency ratio (4)
31.15
%
32.98
%
(183
)
bps
(1)
Annualized except for efficiency
ratio and adjusted efficiency ratio.
(2)
Adjusted return on average assets
and adjusted return on average common equity are non-GAAP financial
measures. See reconciliation of GAAP to non-GAAP measures in Table
14.
(3)
Return on average TCE and
adjusted return on average TCE are non-GAAP financial measures. See
reconciliation of GAAP to non-GAAP measures in Table 13.
(4)
Pre-tax, pre-provision
profitability ratio, adjusted noninterest expense/average assets
and adjusted efficiency ratio are non-GAAP financial measures. See
reconciliation of GAAP to non-GAAP measures in Table 12.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES
& OFF-BALANCE SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 10
Three Months Ended September
30, 2023
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, June 30,
2023
$
375,333
$
202,768
$
56,039
$
1,260
$
635,400
Provision for credit losses on loans
(a)
13,006
22,026
2,648
456
38,136
Gross charge-offs
(7,074
)
(13,879
)
(41
)
(13
)
(21,007
)
Gross recoveries
2,279
503
79
—
2,861
Total net (charge-offs) recoveries
(4,795
)
(13,376
)
38
(13
)
(18,146
)
Foreign currency translation
adjustment
133
—
—
—
133
Allowance for loan losses, September
30, 2023
$
383,677
$
211,418
$
58,725
$
1,703
$
655,523
Three Months Ended June 30,
2023
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, March 31,
2023
$
376,325
$
188,915
$
52,978
$
1,675
$
619,893
Provision for (reversal of) credit losses
on loans
(a)
5,259
16,076
3,057
(367
)
24,025
Gross charge-offs
(7,335
)
(2,366
)
(6
)
(48
)
(9,755
)
Gross recoveries
2,065
143
10
—
2,218
Total net (charge-offs) recoveries
(5,270
)
(2,223
)
4
(48
)
(7,537
)
Foreign currency translation
adjustment
(981
)
—
—
—
(981
)
Allowance for loan losses, June 30,
2023
$
375,333
$
202,768
$
56,039
$
1,260
$
635,400
Three Months Ended September
30, 2022
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, June 30,
2022
$
363,282
$
173,479
$
25,060
$
1,449
$
563,270
Provision for credit losses on loans
(a)
9,575
11,163
6,281
255
27,274
Gross charge-offs
(6,894
)
(6,226
)
(775
)
(10
)
(13,905
)
Gross recoveries
7,172
71
21
—
7,264
Total net recoveries (charge-offs)
278
(6,155
)
(754
)
(10
)
(6,641
)
Foreign currency translation
adjustment
(1,386
)
—
—
—
(1,386
)
Allowance for loan losses, September
30, 2022
$
371,749
$
178,487
$
30,587
$
1,694
$
582,517
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES
& OFF-BALANCE-SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 10 (continued)
Nine Months Ended September
30, 2023
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, December 31,
2022
$
371,700
$
182,346
$
40,039
$
1,560
$
595,645
Impact of ASU 2022-02 adoption
5,683
343
2
—
6,028
Allowance for loan losses, January 1,
2023
$
377,383
$
182,689
$
40,041
$
1,560
$
601,673
Provision for credit losses on loans
(a)
17,587
44,123
18,727
244
80,681
Gross charge-offs
(16,309
)
(16,251
)
(138
)
(101
)
(32,799
)
Gross recoveries
5,555
857
95
—
6,507
Total net charge-offs
(10,754
)
(15,394
)
(43
)
(101
)
(26,292
)
Foreign currency translation
adjustment
(539
)
—
—
—
(539
)
Allowance for loan losses, September
30, 2023
$
383,677
$
211,418
$
58,725
$
1,703
$
655,523
Nine Months Ended September
30, 2022
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, December 31,
2021
$
338,252
$
180,808
$
20,595
$
1,924
$
541,579
Provision for (reversal of) credit losses
on loans
(a)
37,867
3,640
10,628
(140
)
51,995
Gross charge-offs
(18,322
)
(7,304
)
(968
)
(90
)
(26,684
)
Gross recoveries
16,688
1,343
332
—
18,363
Total net charge-offs
(1,634
)
(5,961
)
(636
)
(90
)
(8,321
)
Foreign currency translation
adjustment
(2,736
)
—
—
—
(2,736
)
Allowance for loan losses, September
30, 2022
$
371,749
$
178,487
$
30,587
$
1,694
$
582,517
Three Months Ended
Nine Months Ended
September 30,
2023
June 30, 2023
September 30,
2022
September 30,
2023
September 30,
2022
Unfunded Credit Facilities
Allowance for unfunded credit
commitments, beginning of period (1)
$
29,728
$
27,741
$
24,304
$
26,264
$
27,514
Provision for (reversal of) credit losses
on unfunded credit commitments
(b)
3,864
1,975
(274
)
7,319
(3,495
)
Foreign currency translation
adjustment
(3
)
12
11
6
22
Allowance for unfunded credit
commitments, end of period (1)
$
33,589
$
29,728
$
24,041
$
33,589
$
24,041
Provision for credit losses
(a)+(b)
$
42,000
$
26,000
$
27,000
$
88,000
$
48,500
(1)
Included in Accrued expenses and other
liabilities on the Condensed Consolidated Balance Sheet.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CRITICIZED LOANS,
NONPERFORMING ASSETS AND CREDIT QUALITY RATIOS
($ in thousands)
(unaudited)
Table 11
Criticized Loans
September 30, 2023
June 30, 2023
September 30, 2022
Special mention loans
$
483,428
$
330,741
$
470,964
Classified loans
538,258
481,051
434,242
Total criticized loans (1)
$
1,021,686
$
811,792
$
905,206
Nonperforming Assets
September 30, 2023
June 30, 2023
September 30, 2022
Nonaccrual loans:
Commercial:
C&I
$
49,147
$
61,879
$
47,988
Total CRE
16,431
20,598
11,209
Consumer:
Total residential mortgage
37,986
33,032
23,309
Other consumer
136
24
37
Total nonaccrual loans
103,700
115,533
82,543
Nonperforming loans HFS
—
—
14,500
Total nonperforming assets
$
103,700
$
115,533
$
97,043
Credit Quality Ratios
September 30, 2023
June 30, 2023
September 30, 2022
Annualized quarterly net charge-offs to
average loans HFI
0.14
%
0.06
%
0.06
%
Special mention loans to loans HFI
0.95
%
0.66
%
0.99
%
Classified loans to loans HFI
1.06
%
0.97
%
0.92
%
Criticized loans to loans HFI
2.01
%
1.63
%
1.91
%
Nonperforming assets to total assets
0.15
%
0.17
%
0.16
%
Nonaccrual loans to loans HFI
0.20
%
0.23
%
0.17
%
Allowance for loan losses to loans HFI
1.29
%
1.28
%
1.23
%
(1)
Excludes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
GAAP TO NON-GAAP
RECONCILIATION
($ in thousands)
(unaudited)
Table 12
The Company uses certain non-GAAP
financial measures to provide supplemental information regarding
the Company’s performance. Adjusted efficiency ratio represents
adjusted noninterest expense divided by adjusted revenue. Pre-tax,
pre-provision profitability ratio represents total adjusted revenue
less adjusted noninterest expense, divided by average total assets.
Adjusted revenue excludes the write-off of an AFS debt security
(where applicable). Adjusted noninterest expense excludes the
amortization of tax credit and other investments, the amortization
of core deposit intangibles and the repurchase agreements’
extinguishment cost (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.
Three Months Ended
Nine Months Ended
September 30, 2023
June 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Net interest income before provision for
credit losses
(a)
$
570,813
$
566,746
$
551,809
$
1,737,420
$
1,440,374
Total noninterest income
76,752
78,631
75,552
215,361
233,739
Total revenue
(b)
$
647,565
$
645,377
$
627,361
$
1,952,781
$
1,674,113
Noninterest income
76,752
78,631
75,552
215,361
233,739
Add: Write-off of AFS debt security
—
—
—
10,000
—
Adjusted noninterest income
(c)
76,752
78,631
75,552
225,361
233,739
Adjusted revenue
(a)+(c) = (d)
$
647,565
$
645,377
$
627,361
$
1,962,781
$
1,674,113
Total noninterest expense
(e)
$
252,014
$
261,789
$
215,973
$
732,250
$
602,283
Less: Amortization of tax credit and other
investments
(49,694
)
(55,914
)
(19,874
)
(115,718
)
(48,753
)
Amortization of core deposit
intangibles
(441
)
(440
)
(485
)
(1,322
)
(1,484
)
Repurchase agreements’ extinguishment
cost
—
—
—
(3,872
)
—
Adjusted noninterest expense
(f)
$
201,879
$
205,435
$
195,614
$
611,338
$
552,046
Efficiency ratio
(e)/(b)
38.92
%
40.56
%
34.43
%
37.50
%
35.98
%
Adjusted efficiency ratio
(f)/(d)
31.18
%
31.83
%
31.18
%
31.15
%
32.98
%
Pre-tax, pre-provision income
(d)-(f) = (g)
$
445,686
$
439,942
$
431,747
$
1,351,443
$
1,122,067
Average total assets
(h)
$
68,936,786
$
67,497,367
$
63,079,444
$
67,196,590
$
62,361,618
Pre-tax, pre-provision profitability
ratio (1)
(g)/(h)
2.56
%
2.61
%
2.72
%
2.69
%
2.41
%
Adjusted noninterest expense/average
assets (1)
(f)/(h)
1.16
%
1.22
%
1.23
%
1.22
%
1.18
%
(1)
Annualized.
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 book value, tangible book value
per share and TCE ratio are non-GAAP financial measures. Tangible
book value 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.
September 30, 2023
June 30, 2023
September 30, 2022
Stockholders’ equity
(a)
$
6,596,706
$
6,461,697
$
5,660,668
Less: Goodwill
(465,697
)
(465,697
)
(465,697
)
Other intangible assets (1)
(5,649
)
(6,418
)
(8,667
)
Tangible book value
(b)
$
6,125,360
$
5,989,582
$
5,186,304
Number of common shares at
period-end
(c)
141,486
141,484
140,918
Book value per share
(a)/(c)
$
46.62
$
45.67
$
40.17
Tangible book value per share
(b)/(c)
$
43.29
$
42.33
$
36.80
Total assets
(d)
$
68,289,458
$
68,532,681
$
62,576,061
Less: Goodwill
(465,697
)
(465,697
)
(465,697
)
Other intangible assets (1)
(5,649
)
(6,418
)
(8,667
)
Tangible assets
(e)
$
67,818,112
$
68,060,566
$
62,101,697
Total stockholders’ equity to assets
ratio
(a)/(d)
9.66
%
9.43
%
9.05
%
TCE ratio
(b)/(e)
9.03
%
8.80
%
8.35
%
Return on average TCE represents tangible
net income divided by average tangible book value. Adjusted return
on average TCE represents adjusted tangible net income divided by
average tangible book value. Tangible net income excludes the
after-tax impacts of the amortization of core deposit intangibles
and mortgage servicing assets. Adjusted tangible net income
excludes the after-tax impacts of the tangible net income
adjustments and the write-off of an AFS debt security. 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.
Three Months Ended
Nine Months Ended
September 30, 2023
June 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Net income
(e)
$
287,738
$
312,031
$
295,339
$
922,208
$
791,320
Add: Amortization of core deposit
intangibles
441
440
485
1,322
1,484
Amortization of mortgage servicing
assets
328
342
340
1,026
1,096
Tax effect of amortization adjustments
(2)
(225
)
(230
)
(237
)
(688
)
(742
)
Tangible net income
(f)
$
288,282
$
312,583
$
295,927
$
923,868
$
793,158
Add: Write-off of AFS debt security
—
—
—
10,000
—
Tax effect of write-off (2)
—
—
—
(2,929
)
—
Adjusted tangible net income
(g)
$
288,282
$
312,583
$
295,927
$
930,939
$
793,158
Average stockholders’ equity
(h)
$
6,604,798
$
6,440,996
$
5,772,638
$
6,411,250
$
5,765,637
Less: Average goodwill
(465,697
)
(465,697
)
(465,697
)
(465,697
)
(465,697
)
Average other intangible assets (1)
(6,148
)
(6,921
)
(8,379
)
(6,916
)
(8,801
)
Average tangible book value
(i)
$
6,132,953
$
5,968,378
$
5,298,562
$
5,938,637
$
5,291,139
Return on average common equity
(3)
(e)/(h)
17.28
%
19.43
%
20.30
%
19.23
%
18.35
%
Return on average TCE (3)
(f)/(i)
18.65
%
21.01
%
22.16
%
20.80
%
20.04
%
Adjusted return on average TCE
(3)
(g)/(i)
18.65
%
21.01
%
22.16
%
20.96
%
20.04
%
(1)
Includes core deposit intangibles and
mortgage servicing assets.
(2)
Applied statutory tax rate of 29.29% for
the three and nine months ended September 30, 2023, and the three
months ended June 30, 2023. Applied statutory tax rate of 28.77%
for the three and nine months ended September 30, 2022.
(3)
Annualized.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
GAAP TO NON-GAAP
RECONCILIATION
($ and shares in thousands,
except for per share data)
(unaudited)
Table 14
During the first quarter of 2023, the
Company recorded a $10.0 million pre-tax impairment write-off of an
AFS debt security. 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 common equity that adjust for the above discussed
non-recurring item provide clarity to financial statement users
regarding the ongoing performance of the Company and allows
comparability to prior periods.
Three Months Ended
Nine Months Ended
September 30, 2023
June 30, 2023
September 30, 2022
September 30, 2023
September 30,
2022
Net income
(a)
$
287,738
$
312,031
$
295,339
$
922,208
$
791,320
Add: Write-off of AFS debt security
—
—
—
10,000
—
Tax effect of write-off (1)
—
—
—
(2,929
)
—
Adjusted net income
(b)
$
287,738
$
312,031
$
295,339
$
929,279
$
791,320
Diluted weighted-average number of
shares outstanding
142,122
141,876
142,011
142,044
142,601
Diluted EPS
$
2.02
$
2.20
$
2.08
$
6.49
$
5.55
Add: Write-off of AFS debt security
—
—
—
0.05
—
Adjusted diluted EPS
$
2.02
$
2.20
$
2.08
$
6.54
$
5.55
Average total assets
(c)
$
68,936,786
$
67,497,367
$
63,079,444
$
67,196,590
$
62,361,618
Average stockholders’ equity
(d)
$
6,604,798
$
6,440,996
$
5,772,638
$
6,411,250
$
5,765,637
Return on average assets (2)
(a)/(c)
1.66
%
1.85
%
1.86
%
1.83
%
1.70
%
Adjusted return on average assets
(2)
(b)/(c)
1.66
%
1.85
%
1.86
%
1.85
%
1.70
%
Return on average common equity
(2)
(a)/(d)
17.28
%
19.43
%
20.30
%
19.23
%
18.35
%
Adjusted return on average common
equity (2)
(b)/(d)
17.28
%
19.43
%
20.30
%
19.38
%
18.35
%
(1)
Applied statutory tax rate of 29.29% for
the three and the nine months ended September 30, 2023, and the
three months ended June 30, 2023. Applied statutory tax rate of
28.77% for the three and nine months ended September 30, 2022.
(2)
Annualized.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231019869383/en/
Christopher Del Moral-Niles, CFA Chief Financial Officer T:
(626) 768-6860 E: chris.delmoralniles@eastwestbank.com
Adrienne Atkinson Director of Investor Relations T: (626)
788-7536 E: adrienne.atkinson@eastwestbank.com
East West Bancorp (NASDAQ:EWBC)
Historical Stock Chart
Von Apr 2024 bis Mai 2024
East West Bancorp (NASDAQ:EWBC)
Historical Stock Chart
Von Mai 2023 bis Mai 2024