EX-99.1 2 ewbc9918k6302022.htm EX-99.1 Document

Exhibit 99.1
ewbclogoa13a.jpg
East West Bancorp, Inc.
135 N. Los Robles Ave., 7th Fl.
Pasadena, CA 91101
Tel. 626.768.6000
NEWS RELEASE
FOR INVESTOR INQUIRIES, CONTACT:
Irene Oh
Julianna Balicka
Chief Financial Officer
Director of Investor Relations and Corporate Finance
T: (626) 768-6360
T: (626) 768-6985
E: irene.oh@eastwestbank.comE: julianna.balicka@eastwestbank.com


EAST WEST BANCORP REPORTS NET INCOME FOR SECOND QUARTER 2022
OF $258 MILLION AND DILUTED EARNINGS PER SHARE OF $1.81;
RECORD NET INTEREST INCOME OF $473 MILLION


Pasadena, California – July 21, 2022 – East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq: EWBC), parent company of East West Bank, today reported its financial results for the second quarter of 2022. Second quarter 2022 net income was $258.3 million, or $1.81 per diluted share; diluted earnings per share grew 38% linked quarter annualized and 15% year-over-year.

“East West’s outstanding results for the second quarter demonstrate the strengths of our business model. Total revenue for the second quarter was $551 million, or an increase of 45% linked quarter annualized, driven by strong growth in net interest income and stable fee income. Net interest income increased to a record $473 million, up 55% linked quarter annualized, and our net interest margin increased 36 basis points quarter-over-quarter to 3.23%,” stated Dominic Ng, Chairman and Chief Executive Officer of East West.

“Not only is our balance sheet well-positioned for rising interest rates, it is resilient and diversified. Average total loans increased $2.5 billion to $44.6 billion, with broad-based growth across all our major loan categories. Average noninterest-bearing demand deposits increased 8% linked quarter annualized to $23.9 billion and totaled 44% of average total deposits for the second quarter of 2022,” continued Ng.

“Our strong revenue growth, combined with controlled expense management, drove second quarter 2022 adjusted pre-tax, pre-provision income1 growth of 62% linked quarter annualized. We earned an industry-leading return on assets of 1.66% and a return on equity of 18.2% for the second quarter of 2022,” concluded Ng.


FINANCIAL HIGHLIGHTS

Three Months EndedQtr-o-Qtr ChangeYr-o-Yr Change
($ in millions, except per share data)June 30, 2022$% Ann.$%
Total Loans$46,531$3,03928%$6,45716%
Total Deposits54,343(595)(4)1,7613
Total Revenue$551$5645%$10624%
Adj. Pre-tax Pre-provision Income1
37050628731
Net Income25821353415
Diluted Earnings per Share$1.81$0.1538%$0.2415%



1 See reconciliation of GAAP to non-GAAP financial measures in Table 12.
1

BALANCE SHEET

•Record Assets – Total assets reached $62.4 billion as of June 30, 2022, up $152.8 million, or 1% annualized, from $62.2 billion as of March 31, 2022. Year-over-year, total assets grew $2.5 billion, or 4%, from $59.9 billion as of June 30, 2021.

Second quarter 2022 average interest-earning assets of $58.7 billion were essentially unchanged from $58.7 billion in the first quarter of 2022. Quarter-over-quarter, average loan growth of $2.5 billion was offset by declines in average interest-bearing cash and deposits with banks ($1.7 billion), average resale agreements ($0.5 billion), and average debt securities ($0.4 billion).

•Record Loans – Total loans reached $46.5 billion as of June 30, 2022, up $3.0 billion, or 28% annualized, from $43.5 billion as of March 31, 2022. Year-over-year, total loans grew $6.5 billion, or 16%, from $40.1 billion as of June 30, 2021.

Second quarter 2022 average loans of $44.6 billion grew $2.5 billion, or 24% linked quarter annualized, with solid growth spread across all our major loan categories of commercial real estate (“CRE”), commercial & industrial (“C&I”), and residential mortgage. Average CRE loans grew $1.2 billion, or 30% linked quarter annualized; average C&I loans grew $715.0 million, or 20% linked quarter annualized; and average residential mortgage loans grew $620.4 million, or 22% linked quarter annualized.

•Total Deposits – Total deposits were $54.3 billion as of June 30, 2022, a decrease of $0.6 billion, or 4% annualized, from $54.9 billion as of March 31, 2022. Year-over-year, deposits grew $1.8 billion, or 3%, from $52.6 billion as of June 30, 2021.

Second quarter 2022 average deposits of $54.1 billion grew $104.5 million, or 1% linked quarter annualized. Quarter-over-quarter, average noninterest-bearing demand deposits of $23.9 billion grew $454.7 million, or 8% linked quarter annualized. Average noninterest-bearing deposits made up 44% of average total deposits in the second quarter of 2022, compared with 43% in the first quarter of 2022 and 39% in the second quarter of 2021. In the second quarter of 2022, average time deposits grew $138.7 million, or 7% linked quarter annualized, and average money market accounts decreased $593.4 million, or 18% linked quarter annualized.

•Strong Capital Levels – As of June 30, 2022, stockholders’ equity was $5.6 billion, or $39.81 per common share, and tangible equity2 per common share was $36.44. As of June 30, 2022, the tangible equity to tangible assets ratio2 was 8.29%, the common equity tier 1 (“CET1”) capital ratio was 12.0%, and the total risk-based capital ratio was 13.2%. Quarter-over-quarter, stockholders’ equity declined by 2%, or $94.0 million, primarily reflecting a negative change in accumulated other comprehensive income (“AOCI”) of $205.7 million, share repurchases of $100.0 million, and $57.4 million in common dividends declared, partially offset by $258.3 million in net income. The negative change in AOCI was primarily due to increased unrealized losses in available-for-sale debt securities. During the second quarter of 2022, the Company repurchased 1.4 million shares of common stock.



























2 See reconciliation of GAAP to non-GAAP financial measures in Table 13.
2

OPERATING RESULTS

Second Quarter Earnings – Second quarter 2022 net income was $258.3 million, an increase of 9%, or 35% annualized, from $237.7 million for the first quarter of 2022, and an increase of 15% from $224.7 million for the second quarter of 2021. Second quarter 2022 diluted earnings per share were $1.81, an increase of 9%, or 38% annualized, from $1.66 per diluted share for the first quarter 2022, and an increase of 15% from $1.57 per diluted share for the year-ago quarter.

Second Quarter 2022 Compared to First Quarter 2022

Net Interest Income and Net Interest Margin
Record net interest income (“NII”) totaled $473.0 million, an increase of 14%, or 55% annualized, from $415.6 million. Net interest margin (“NIM”) of 3.23% expanded by 36 basis points from 2.87%.
•NII growth and NIM expansion were driven by strong loan growth and expanding earning asset yields. Average loan growth during the second quarter drove a favorable shift in the asset mix into higher interest earning assets. Average loans made up 76% of average interest-earning assets in the second quarter of 2022, compared with 72% in the first quarter of 2022.
•The average loan yield was 3.95%, up 32 basis points from the first quarter. The average interest-earning asset yield was 3.42%, up 43 basis points from the first quarter.
•The average cost of funds was 0.20%, up eight basis points from the first quarter. The average cost of deposits was 0.17%, up seven basis points, and the average cost of interest-bearing deposits was 0.30%, up 13 basis points from the first quarter.
•The changes in yields and rates reflected rising benchmark interest rates during the year.

Noninterest Income
Noninterest income totaled $78.4 million in the second quarter, a decrease of $1.3 million, or 2%, from $79.7 million in the first quarter. Fee income and net gains on sales of loans were $64.8 million, essentially unchanged from $65.0 million in the first quarter.

Noninterest Expense
Noninterest expense totaled $196.9 million in the second quarter, compared with $189.5 million in the first quarter. Second quarter noninterest expense consisted of $181.4 million of adjusted noninterest expense3, $15.0 million in amortization of tax credit and other investments, and $0.5 million in amortization of core deposit intangibles.
•Adjusted noninterest expense of $181.4 million increased 4%, or 15% annualized, from $175.0 million in the first quarter.
•Amortization of tax credit and other investments totaled $15.0 million in the second quarter, compared with $13.9 million in the first quarter. Quarter-over-quarter variability in the amortization of tax credits and other investments partially reflects the impact of investments that close in a given period.
•The adjusted efficiency ratio3 was 32.9% in the second quarter, compared with 35.3% in the first quarter.

TAX RELATED ITEMS

Second quarter 2022 income tax expense was $82.7 million compared with income tax expense of $60.3 million for the first quarter of 2022. The year-to-date effective tax rate for the first six months of 2022 was 22.4%. The Company expects the full-year 2022 effective tax rate to be approximately 21%, including the impact of tax credit investments expected in the second half of the year.














3 See reconciliation of GAAP to non-GAAP financial measures in Table 12.
3

ASSET QUALITY

The asset quality of the loan portfolio continues to be strong.
•The nonperforming asset (“NPA”) ratio improved by one basis point quarter-over-quarter and NPAs decreased by 5%. As of June 30, 2022, NPAs were $89.9 million, or 0.14% of total assets, compared with $94.4 million, or 0.15% of total assets, as of March 31, 2022.
•The classified loan ratio improved by six basis points quarter-over-quarter and classified loans were essentially unchanged. As of June 30, 2022, classified loans were $432.4 million, or 0.93% of loans held-for-investment (“HFI”), compared with $430.6 million, or 0.99% of loans HFI as of March 31, 2022. Special mention loans were $590.2 million, or 1.27% of loans HFI, as of June 30, 2022, compared with $402.7 million, or 0.93% of loans HFI, as of March 31, 2022.
•Second quarter 2022 net recoveries were $6.6 million, or annualized 0.06% of average loans HFI, compared with net charge-offs of $8.3 million, or annualized 0.08% of average loans HFI, for the first quarter of 2022. The second quarter gross recoveries of $7.7 million were largely driven by C&I loan recoveries.
•The allowance for loan losses (“ALLL”) totaled $563.3 million, or 1.21% of loans HFI, as of June 30, 2022, compared with $545.7 million, or 1.25% of loans HFI, as of March 31, 2022. The quarter-over-quarter change in the ALLL and the ALLL coverage ratio largely reflects the mix of the loan portfolio as of June 30, 2022, as well as loan growth during the second quarter.
•The provision for credit losses was $13.5 million for the second quarter of 2022, compared with $8.0 million for the first quarter of 2022.

CAPITAL STRENGTH

Capital levels for East West are strong. The following table presents the regulatory capital metrics as of June 30, 2022, March 31, 2022, and June 30, 2021.
EWBC Risk-Based Capital Ratios
($ in millions)
June 30, 2022 (a)
March 31, 2022 (a)
June 30, 2021 (a)
CET1 capital ratio12.0%12.6%12.8%
Tier 1 capital ratio12.0%12.6%12.8%
Total capital ratio13.2%13.9%14.3%
Leverage ratio9.3%9.3%9.1%
Risk-Weighted Assets (“RWA”) (b)
$48,499$45,432$40,609
(a)The Company has elected to use the 2020 CECL transition provision in the calculation of its June 30, 2022, March 31, 2022 and June 30, 2021 regulatory capital ratios. The Company’s June 30, 2022 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 third quarter 2022 dividends for the Company’s common stock. The common stock cash dividend of $0.40 per share is payable on August 15, 2022, to stockholders of record on August 1, 2022.

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 $354 million was available as of March 31, 2022. During the second quarter of 2022, East West repurchased $100 million of common stock, or 1.4 million shares. As of June 30, 2022, $254 million remained available under this authorization.

4

Conference Call
East West will host a conference call to discuss second quarter 2022 earnings with the public on Thursday, July 21, 2022, at 8:30 a.m. PT/11:30 a.m. ET. The public and investment community are invited to listen as management discusses second quarter 2022 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 July 21, 2022, at 11:30 a.m. PT/2:30 p.m. ET through August 21, 2022. 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: 3689081.

About East West

East West Bancorp, Inc. is a public company with total assets of $62.4 billion and is traded on the Nasdaq Global Select Market under the symbol “EWBC”. The Company’s wholly-owned subsidiary, East West Bank, is the largest independent bank headquartered in Southern California, operating over 120 locations in the United States and in China. The Company’s markets in the United States include California, Georgia, Illinois, Massachusetts, Nevada, New York, Texas and Washington. In China, East West’s presence includes full-service branches in Hong Kong, Shanghai, Shantou and Shenzhen, and representative offices in Beijing, Chongqing, Guangzhou, and Xiamen. For more information on East West, visit the Company’s website at www.eastwestbank.com.

5

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 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 expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company’s control. These statements may relate to the Company’s financial condition, results of operations, plans, objectives, future performance and/or business and usually can be identified by the use of forward-looking language, such as “anticipates,” “assumes,” “believes,” “can,” “continues,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends to,” “likely,” “may,” “might,” “objective,” “plans,” “potential,” “projects,” “remains,” “should,” “target,” “trend,” “will,” “would,” or similar expressions, and the negative thereof. You should not place undue reliance on these 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. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company.

There are a number of 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, or market disruption, level of inflation, interest rate environment, housing prices, employment levels, rate of growth and general business conditions; the impact of any future federal government shutdown and uncertainty regarding the federal government’s debt limit; changes in local, regional and global business, economic and political conditions and geopolitical events; the economic, financial, reputational and other impacts of the ongoing COVID-19 pandemic, including variants, thereof and any other pandemic, epidemic or health-related crisis, as well as a deterioration of asset quality and an increase in credit losses due to the COVID-19 pandemic; changes in laws or the regulatory environment, including regulatory reform initiatives and policies of the U.S. Department of the Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the SEC, the Consumer Financial Protection Bureau, and the California Department of Financial Protection and Innovation - Division of Financial Institutions; changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing 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; fluctuations in the Company’s stock price; the impact from potential changes to income tax laws and regulations, federal spending and economic stimulus programs; the Company’s ability to compete effectively against financial institutions in its banking markets and other entities, including as a result of emerging technologies; the soundness of other financial institutions; the success and timing of the Company’s business strategies; the Company’s ability to retain key officers and employees; 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 the benchmark interest rate reform in the U.S. including the transition away from USD London Interbank Offered Rate to alternative reference rates; 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; 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 or other regulatory agencies and their impact on 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 future strategic acquisitions or divestitures; changes in the equity and debt securities markets; 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; significant turbulence or disruption in the capital or financial markets, which could result in, among other things, reduced investor demand for loans, a reduction in the availability of funding or increases in funding costs, declines in asset values and/or recognition of allowance for credit losses on securities held in the Company’s debt securities and equity securities portfolio; and the impact of climate change, natural or man-made disasters or calamities, such as wildfires, droughts and earthquakes, all of which are particularly common in California, 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 2021 Annual Report on Form 10-K 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. 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.
6

EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
($ and shares in thousands, except per share data)
(unaudited)
Table 1   
June 30, 2022
% or Basis Point Change
 June 30, 2022March 31, 2022June 30, 2021Qtr-o-QtrYr-o-Yr
Assets   
 Cash and due from banks$688,936$571,571$626,71620.5 %9.9 %
Interest-bearing cash with banks1,213,1173,277,1295,371,089(63.0)(77.4)
Cash and cash equivalents1,902,0533,848,7005,997,805(50.6)(68.3)
 Interest-bearing deposits with banks712,709816,125830,279(12.7)(14.2)
 Assets purchased under resale agreements (“resale agreements”)1,422,7941,956,8222,299,184(27.3)(38.1)
 
Available-for-sale (“AFS”) debt securities (amortized cost of $6,891,522, $7,091,581 and $8,411,142)
6,255,5046,729,4318,399,460(7.0)(25.5)
Held-to-maturity (“HTM”) debt securities, at amortized cost (fair value of $2,656,549 and $2,815,968 in 2022)
3,028,3022,997,702—1.0 100.0 
 Loans held-for-sale (“HFS”)28,4646311,819
NM
NM
 
Loans held-for-investment (''HFI'') (net of allowance for loan losses of $563,270, $545,685 and $585,724)
45,938,80642,944,99739,485,7757.0 16.3 
Investments in qualified affordable housing partnerships, tax credit and other investments, net634,304607,985651,6194.3 (2.7)
 Goodwill465,697465,697465,697— — 
Operating lease right-of-use assets107,588102,491102,6095.0 4.9 
 Other assets 1,898,0621,770,8751,620,6297.2 17.1 
 Total assets $62,394,283$62,241,456$59,854,8760.2 %4.2 %
Liabilities and Stockholders’ Equity   
 Deposits$54,343,354$54,938,361$52,582,575(1.1)%3.3 %
 FHLB advances174,77674,619248,464134.2 (29.7)
 Assets sold under repurchase agreements (“repurchase agreements”)611,785300,000300,000103.9 103.9 
 Long-term debt and finance lease liabilities152,663152,227151,9970.3 0.4 
Operating lease liabilities 115,387109,656110,1055.2 4.8 
 Accrued expenses and other liabilities1,386,836963,137914,18744.0 51.7 
 Total liabilities56,784,80156,538,00054,307,3280.4 4.6 
 Stockholders’ equity5,609,4825,703,4565,547,548(1.6)1.1 
 Total liabilities and stockholders’ equity $62,394,283$62,241,456$59,854,8760.2 %4.2 %
 Book value per common share $39.81$40.09$39.10(0.7)%1.8 %
 
Tangible equity (1) per common share
$36.44$36.76$35.75(0.9)1.9 
 Number of common shares at period-end140,917142,257141,878(0.9)(0.7)
Tangible equity to tangible assets ratio (1)
8.29 %8.47 %8.54 %(18)bps(25)bps
NM - Not meaningful.
(1)See reconciliation of GAAP to non-GAAP financial measures in Table 13.
7

EAST WEST BANCORP, INC. AND SUBSIDIARIES
TOTAL LOANS AND DEPOSITS DETAIL
($ in thousands)
(unaudited)
Table 2
June 30, 2022
% Change
  June 30, 2022March 31, 2022June 30, 2021Qtr-o-QtrYr-o-Yr
Loans:   
Commercial:
Commercial and industrial (“C&I”) (1)
$15,377,117 $14,838,134 $13,790,461 3.6 %11.5 %
Commercial real estate (“CRE”):
 
CRE
13,566,748 12,636,787 11,711,369 7.4 15.8 
 
Multifamily residential
4,443,704 3,894,463 3,219,796 14.1 38.0 
 
Construction and land
515,857 443,836 460,678 16.2 12.0 
Total CRE
18,526,309 16,975,086 15,391,843 9.1 20.4 
Consumer:
Residential mortgage:
 
Single-family residential
10,234,473 9,283,429 8,869,370 10.2 15.4 
 
Home equity lines of credit (“HELOCs”)2,280,080 2,266,634 1,872,166 0.6 21.8 
Total residential mortgage
12,514,553 11,550,063 10,741,536 8.4 16.5 
Other consumer
84,097 127,399 147,659 (34.0)(43.0)
Total loans HFI (2)
46,502,076 

43,490,682 

40,071,499 6.9 16.0 
Loans HFS
28,464 631 1,819 
NM
NM
 
Total loans (2)
46,530,540 43,491,313 40,073,318 7.0 16.1 
Allowance for loan losses(563,270)(545,685)(585,724)3.2 (3.8)
 
Net loans (2)
$45,967,270 $42,945,628 $39,487,594 7.0 16.4 
Deposits:
   
 
Noninterest-bearing demand
$23,028,831 $24,927,768 $21,816,721 (7.6)%5.6 %
 
Interest-bearing checking
7,094,726 6,774,826 6,762,178 4.7 4.9 
 
Money market
11,814,402 12,108,432 12,853,812 (2.4)(8.1)
 
Savings
3,027,819 2,897,248 2,719,106 4.5 11.4 
 
Time deposits
9,377,576 8,230,087 8,430,758 13.9 11.2 
 
Total deposits
$54,343,354 $54,938,361 $52,582,575 (1.1)%3.3 %
NM - Not meaningful.
(1)Includes $153.3 million, $318.1 million and $1.43 billion of Paycheck Protection Program (“PPP”) loans as of June 30, 2022, March 31, 2022 and June 30, 2021, respectively. Excluding PPP loans, total loans were $46.38 billion, $43.17 billion and $38.64 billion as of June 30, 2022, March 31, 2022 and June 30, 2021, respectively.
(2)Includes $(56.2) million, $(42.7) million and $(67.0) million of net deferred loan fees and net unamortized premiums as of June 30, 2022, March 31, 2022 and June 30, 2021, respectively.

8

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
June 30, 2022
% Change
June 30, 2022March 31, 2022June 30, 2021Qtr-o-QtrYr-o-Yr
Interest and dividend income (1)
$499,754 $432,029 $399,333 15.7 %25.1 %
Interest expense
26,802 16,416 22,860 63.3 17.2 
Net interest income before provision for (reversal of) credit losses472,952 415,613 376,473 13.8 25.6 
Provision for (reversal of) credit losses13,500 8,000 (15,000)68.8 (190.0)
Net interest income after provision for (reversal of) credit losses459,452 407,613 391,473 12.7 17.4 
Noninterest income78,444 79,743 68,431 

(1.6)14.6 
Noninterest expense196,860 189,450 189,523 3.9 3.9 
Income before income taxes
341,036 297,906 270,381 14.5 26.1 
Income tax expense
82,707 60,254 45,639 37.3 81.2 
Net income
$258,329 $237,652 $224,742 8.7 %14.9 %
Earnings per share (“EPS”)
   
- Basic
$1.83 $1.67 $1.58 9.2 %15.3 %
- Diluted
$1.81 $1.66 $1.57 9.3 15.5 
Weighted-average number of shares outstanding
- Basic
141,429 142,025 141,868 (0.4)%(0.3)%
- Diluted
142,372 143,223 143,040 (0.6)(0.5)
 
 
Three Months Ended
June 30, 2022
% Change
 
 
June 30, 2022March 31, 2022June 30, 2021Qtr-o-QtrYr-o-Yr
Noninterest income:
   
 
Lending fees
$20,142 $19,438 $21,092 3.6 %(4.5)%
Deposit account fees22,372 20,315 17,342 10.1 29.0 
Interest rate contracts and other derivative income (loss)9,801 11,133 (3,172)(12.0)409.0 
 
Foreign exchange income
11,361 12,699 13,007 (10.5)(12.7)
 
Wealth management fees
6,539 6,052 7,951 8.0 (17.8)
 
Net gains on sales of loans
917 2,922 1,491 (68.6)(38.5)
 
Gains on sales of AFS debt securities
28 1,278 632 (97.8)(95.6)
Other investment income 4,863 1,627 7,596 198.9 (36.0)
Other income
2,421 4,279 2,492 (43.4)(2.8)
Total noninterest income$78,444 $79,743 $68,431 (1.6)%14.6 %
Noninterest expense:
   
 
Compensation and employee benefits
$113,364 $116,269 $105,426 (2.5)%7.5 %
 
Occupancy and equipment expense
15,469 15,464 15,377 0.0 0.6 
 
Deposit insurance premiums and regulatory assessments
4,927 4,717 4,274 4.5 15.3 
Deposit account expense5,671 4,693 3,817 20.8 48.6 
Data processing3,486 3,665 4,035 (4.9)(13.6)
Computer software expense6,572 7,294 7,521 (9.9)(12.6)
Consulting expense2,021 1,833 1,868 10.3 8.2 
 
Legal expense
1,047 718 1,975 45.8 (47.0)
 
Other operating expense
29,324 20,897 17,939 40.3 63.5 
Amortization of tax credit and other investments14,979 13,900 27,291 7.8 (45.1)
Total noninterest expense$196,860 $189,450 $189,523 3.9 %3.9 %
(1)Includes $1.4 million, $5.2 million and $15.4 million of interest income related to PPP loans for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively.

9

EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
($ and shares in thousands, except per share data)
(unaudited)
Table 4
 Six Months Ended
June 30, 2022
% Change
  June 30, 2022June 30, 2021Yr-o-Yr
Interest and dividend income (1)
$931,783 $780,719 19.3%
Interest expense
43,218 50,551 (14.5)
Net interest income before provision for (reversal of) credit losses888,565 730,168 21.7
Provision for (reversal of) credit losses21,500 (15,000)(243.3)
Net interest income after provision for (reversal of) credit losses867,065 745,168 16.4
Noninterest income 158,187 141,297 12.0
Noninterest expense386,310 380,600 1.5
Income before income taxes
638,942 505,865 26.3
Income tax expense
142,961 76,129 87.8
Net income
$495,981 $429,736 15.4%
EPS
  
- Basic
$3.50 $3.03 15.4%
- Diluted
$3.47 $3.01 15.5
Weighted-average number of shares outstanding
- Basic
141,725 141,758 0.0%
- Diluted
142,838 142,963 (0.1)
 
 
Six Months EndedJune 30, 2022
% Change
 
 
June 30, 2022June 30, 2021Yr-o-Yr
Noninterest income:
  
 
Lending fees
$39,580 $39,449 0.3%
 
Deposit account fees
42,687 32,725 30.4
Interest rate contracts and other derivative income20,934 13,825 51.4
 
Foreign exchange income
24,060 22,533 6.8
 
Wealth management fees
12,591 14,862 (15.3)
 
Net gains on sales of loans
3,839 3,272 17.3
 
Gains on sales of AFS debt securities1,306 824 58.5
Other investment income6,490 8,521 (23.8)
Other income
6,700 5,286 26.7
Total noninterest income$158,187 $141,297 12.0%
Noninterest expense:
  
 
Compensation and employee benefits
$229,633 $213,234 7.7%
 
Occupancy and equipment expense
30,933 31,299 (1.2)
 
Deposit insurance premiums and regulatory assessments
9,644 8,150 18.3
Deposit account expense10,364 7,709 34.4
Data processing
7,151 8,513 (16.0)
Computer software expense
13,866 14,680 (5.5)
Consulting expense
3,854 3,343 15.3
 
Legal expense
1,765 3,477 (49.2)
 
Other operating expense
50,221 37,546 33.8
Amortization of tax credit and other investments28,879 52,649 (45.1)
Total noninterest expense$386,310 $380,600 1.5%
(1)Includes $6.5 million and $30.4 million of interest income related to PPP loans for the six months ended June 30, 2022 and 2021, respectively.
10

EAST WEST BANCORP, INC. AND SUBSIDIARIES
SELECTED AVERAGE BALANCES
($ in thousands)
(unaudited)
Table 5
Three Months Ended
June 30, 2022
% Change
Six Months Ended
June 30, 2022
% Change
  June 30, 2022March 31, 2022June 30, 2021Qtr-o-QtrYr-o-YrJune 30,
2022		June 30,
2021		Yr-o-Yr
Loans:
     
Commercial:
 
C&I (1)
$14,986,876 $14,271,902 $13,811,966 5.0%8.5%$14,631,365 $13,753,244 6.4%
CRE:
 
CRE
13,049,058 12,279,365 11,616,916 6.312.312,666,338 11,472,102 10.4
 
Multifamily residential4,112,411 3,749,571 3,125,001 9.731.63,931,993 3,083,769 27.5
 
Construction and land475,933 392,923 477,860 21.1(0.4)434,657 513,401 (15.3)
Total CRE
17,637,402 16,421,859 15,219,777 7.415.917,032,988 15,069,272 13.0
Consumer:
Residential mortgage:
 
Single-family residential9,624,242 9,111,188 8,650,706 5.611.39,369,132 8,483,806 10.4
 
HELOCs
2,290,378 2,183,080 1,800,213 4.927.22,237,025 1,733,593 29.0
Total residential mortgage11,914,620 11,294,268 10,450,919 5.514.011,606,157 10,217,399 13.6
Other consumer
87,590 124,389 139,608 (29.6)(37.3)105,888 138,340 (23.5)
 
Total loans (2)
$44,626,488 $42,112,418 $39,622,270 6.0%12.6%$43,376,398 $39,178,255 10.7%
Interest-earning assets
$58,668,677 $58,692,366 $54,901,209 0.0%6.9%$58,680,456 $53,882,288 8.9%
Total assets
$62,232,841 $61,758,048 $57,771,837 0.8%7.7%$61,996,756 $56,689,075 9.4%
Deposits:     
Noninterest-bearing demand
$23,887,452 $23,432,746 $19,717,315 1.9%21.1%$23,661,355 $18,909,991 25.1%
Interest-bearing checking
6,712,890 6,648,065 6,671,358 1.00.66,680,657 6,532,965 2.3
Money market
12,319,930 12,913,336 12,596,515 (4.6)(2.2)12,614,994 12,088,006 4.4
Savings
2,970,007 2,930,309 2,676,865 1.411.02,950,268 2,675,677 10.3
Time deposits
8,239,571 8,100,890 8,518,936 1.7(3.3)8,170,613 8,814,159 (7.3)
Total deposits
$54,129,850 $54,025,346 $50,180,989 0.2%7.9%$54,077,887 $49,020,798 10.3%
Interest-bearing liabilities$30,957,475 $31,218,479 $31,394,114 (0.8)%(1.4)%$31,087,256 $31,130,307 (0.1)%
Stockholders’ equity
$5,682,427 $5,842,615 $5,425,952 (2.7)%4.7%$5,762,078 $5,382,267 7.1%
(1)Average balances of PPP loans were $223.2 million, $410.6 million and $1.87 billion for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively, and $316.4 million and $1.90 billion for the six months ended June 30, 2022 and 2021, respectively.
(2)Includes loans HFS.

11

EAST WEST BANCORP, INC. AND SUBSIDIARIES
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 6
 
 
Three Months Ended
 
 
June 30, 2022March 31, 2022
 
 
Average Average Average Average
 
 
BalanceInterest
Yield/Rate (1)
BalanceInterest
Yield/Rate (1)
Assets
      
Interest-earning assets:
      
 
Interest-bearing cash and deposits with banks
$2,797,711 $4,787 0.69 %$4,466,012 $3,260 0.30 %
 
Resale agreements1,641,723 8,553 2.09 %2,097,998 8,383 1.62 %
 
AFS debt securities6,503,677 33,438 2.06 %7,969,795 34,469 1.75 %
HTM debt securities3,021,239 12,738 1.69 %1,968,568 8,198 1.69 %
 
Loans (2)
44,626,488 439,416 3.95 %42,112,418 377,110 3.63 %
 
FHLB and FRB stock
77,839 822 4.24 %77,575 609 3.18 %
 
Total interest-earning assets
58,668,677 499,754 3.42 %58,692,366 432,029 2.99 %
Noninterest-earning assets:
      
 
Cash and due from banks
712,884 641,882   
 
Allowance for loan losses(545,489)(543,345)  
 
Other assets
3,396,769 2,967,145   
 
Total assets
$62,232,841   $61,758,048   
Liabilities and Stockholders’ Equity
     
Interest-bearing liabilities:
      
 
Checking deposits
$6,712,890 $3,178 0.19 %$6,648,065 $1,402 0.09 %
 
Money market deposits
12,319,930 8,892 0.29 %12,913,336 3,203 0.10 %
 
Savings deposits
2,970,007 1,864 0.25 %2,930,309 1,704 0.24 %
 
Time deposits
8,239,571 8,554 0.42 %8,100,890 6,680 0.33 %
 
Federal funds purchased and other short-term borrowings
64,145 241 1.51 %1,866 9 1.96 %
 
FHLB advances
138,960 559 1.61 %160,018 578 1.46 %
 
Repurchase agreements359,778 2,418 2.70 %311,984 2,016 2.62 %
 
Long-term debt and finance lease liabilities
152,194 1,096 2.89 %152,011 824 2.20 %
 
Total interest-bearing liabilities
30,957,475 26,802 0.35 %31,218,479 16,416 0.21 %
Noninterest-bearing liabilities and stockholders’ equity:
     
 
Demand deposits
23,887,452 23,432,746 
 
Accrued expenses and other liabilities
1,705,487 1,264,208 
 
Stockholders’ equity
5,682,427 5,842,615 
 
Total liabilities and stockholders’ equity
$62,232,841 $61,758,048 
Interest rate spread
 3.07 %2.78 %
Net interest income and net interest margin
$472,952 3.23 %$415,613 2.87 %
(1)Annualized.
(2)Includes loans HFS. Average balances of PPP loans were $223.2 million and $410.6 million for the three months ended June 30, 2022 and March 31, 2022, respectively.

12

EAST WEST BANCORP, INC. AND SUBSIDIARIES
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 7
 Three Months Ended
June 30, 2022June 30, 2021
Average Average Average Average
BalanceInterest
Yield/Rate (1)
BalanceInterest
Yield/Rate (1)
Assets
      
Interest-earning assets:
      
 
Interest-bearing cash and deposits with banks
$2,797,711 $4,787 0.69 %$5,072,225 $3,628 0.29 %
 
Resale agreements1,641,723 8,553 2.09 %2,129,567 8,021 1.51 %
 
AFS debt securities6,503,677 33,438 2.06 %7,997,005 34,690 1.74 %
HTM debt securities3,021,239 12,738 1.69 %— — — %
 
Loans (2)
44,626,488 439,416 3.95 %39,622,270 352,453 3.57 %
 
FHLB and FRB stock
77,839 822 4.24 %80,142 541 2.71 %
 
Total interest-earning assets
58,668,677 499,754 3.42 %54,901,209 399,333 2.92 %
Noninterest-earning assets:
      
 
Cash and due from banks
712,884 600,053   
 
Allowance for loan losses(545,489)(607,523)  
 
Other assets
3,396,769 2,878,098   
 
Total assets
$62,232,841   $57,771,837   
Liabilities and Stockholders’ Equity
     
Interest-bearing liabilities:
      
 
Checking deposits
$6,712,890 $3,178 0.19 %$6,671,358 $3,777 0.23 %
 
Money market deposits
12,319,930 8,892 0.29 %12,596,515 3,712 0.12 %
 
Savings deposits
2,970,007 1,864 0.25 %2,676,865 2,078 0.31 %
 
Time deposits
8,239,571 8,554 0.42 %8,518,936 8,431 0.40 %
 
Federal funds purchased and other short-term borrowings
64,145 241 1.51 %336 — — %
 
FHLB advances
138,960 559 1.61 %474,887 2,099 1.77 %
 
Repurchase agreements359,778 2,418 2.70 %303,118 1,991 2.63 %
 
Long-term debt and finance lease liabilities
152,194 1,096 2.89 %152,099 772 2.04 %
 
Total interest-bearing liabilities
30,957,475 26,802 0.35 %31,394,114 22,860 0.29 %
Noninterest-bearing liabilities and stockholders’ equity:
      
 
Demand deposits
23,887,452 19,717,315 
 
Accrued expenses and other liabilities
1,705,487 1,234,456 
 
Stockholders’ equity
5,682,427 5,425,952 
 
Total liabilities and stockholders’ equity
$62,232,841 $57,771,837 
Interest rate spread
 3.07 %2.63 %
Net interest income and net interest margin
 $472,952 3.23 %$376,473 2.75 %
(1)Annualized.
(2)Includes loans HFS. Average balances of PPP loans were $223.2 million and $1.87 billion for the three months ended June 30, 2022 and June 30, 2021, respectively.

13

EAST WEST BANCORP, INC. AND SUBSIDIARIES
YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 8
 Six Months Ended
June 30, 2022June 30, 2021
Average Average Average Average
BalanceInterest
Yield/Rate (1)
BalanceInterest
Yield/Rate (1)
Assets
      
Interest-earning assets:
      
 
Interest-bearing cash and deposits with banks
$3,627,253 $8,047 0.45 %$5,592,124 $7,260 0.26 %
 
Resale agreements1,868,600 16,936 1.83 %1,797,578 14,120 1.58 %
 
AFS debt securities7,232,686 67,907 1.89 %7,232,686 63,790 1.78 %
HTM debt securities2,497,811 20,936 1.69 %— — — %
 
Loans (2)
43,376,398 816,526 3.80 %39,178,255 694,461 3.57 %
 
FHLB and FRB stock
77,708 1,431 3.71 %81,645 1,088 2.69 %
 
Total interest-earning assets
58,680,456 931,783 3.20 %53,882,288 780,719 2.92 %
Noninterest-earning assets:
      
 
Cash and due from banks
677,579 590,219   
 
Allowance for loan losses
(544,423)(613,026)  
 
Other assets
3,183,144 2,829,594   
 
Total assets
$61,996,756 $56,689,075   
Liabilities and Stockholders’ Equity
     
Interest-bearing liabilities:
      
 
Checking deposits
$6,680,657 $4,580 0.14 %$6,532,965 $7,991 0.25 %
 
Money market deposits
12,614,994 12,095 0.19 %12,088,006 8,423 0.14 %
 
Savings deposits
2,950,268 3,568 0.24 %2,675,677 3,819 0.29 %
 
Time deposits
8,170,613 15,234 0.38 %8,814,159 19,587 0.45 %
 
Federal funds purchased and other short-term borrowings
33,177 250 1.52 %2,508 42 3.38 %
 
FHLB advances
149,431 1,137 1.53 %563,331 5,168 1.85 %
 
Repurchase agreements336,013 4,434 2.66 %301,567 3,969 2.65 %
 
Long-term debt and finance lease liabilities
152,103 1,920 2.55 %152,094 

1,552 2.06 %
 
Total interest-bearing liabilities
31,087,256 43,218 0.28 %31,130,307 50,551 0.33 %
Noninterest-bearing liabilities and stockholders’ equity:
 
Demand deposits
23,661,355 18,909,991 
 
Accrued expenses and other liabilities
1,486,067 1,266,510 
 
Stockholders’ equity
5,762,078 5,382,267 
 
Total liabilities and stockholders’ equity
$61,996,756 $56,689,075 
Interest rate spread
 2.92 %2.59 %
Net interest income and net interest margin
 $888,565 3.05 %$730,168 2.73 %
(1)Annualized.
(2)Includes loans HFS. Average balances of PPP loans were $316.4 million and $1.90 billion for the six months ended June 30, 2022 and 2021, respectively.


14

EAST WEST BANCORP, INC. AND SUBSIDIARIES
SELECTED RATIOS
(unaudited)
Table 9
Three Months Ended (1)
June 30, 2022
Basis Point Change
 
 
June 30, 2022March 31, 2022June 30, 2021Qtr-o-QtrYr-o-Yr
 
Return on average assets
1.66 %1.56 %1.56 %10 bps10 bps
 
Return on average equity
18.23 %16.50 %16.61 %173 162 
Tangible return on average tangible equity (2)
19.94 %18.00 %18.28 %194 166 
 
Interest rate spread
3.07 %2.78 %2.63 %29 44 
 
Net interest margin
3.23 %2.87 %2.75 %36 48 
Average loan yield
3.95 %3.63 %3.57 %32 38 
 
Yield on average interest-earning assets
3.42 %2.99 %2.92 %43 50 
Average cost of interest-bearing deposits
0.30 %0.17 %0.24 %13 6 
 
Average cost of deposits
0.17 %0.10 %0.14 %7 3 
 
Average cost of funds
0.20 %0.12 %0.18 %8 2 
Adjusted pre-tax, pre-provision profitability ratio (3)
2.38 %2.10 %1.97 %28 41 
 
Adjusted noninterest expense/average assets (3)
1.17 %1.15 %1.12 %2 5 
Efficiency ratio
35.70 %38.25 %42.60 %(255)(690)
 
Adjusted efficiency ratio (3)
32.90 %35.34 %36.30 %(244)bps(340)bps
Six Months Ended (1)
June 30, 2022
Basis Point Change
June 30, 2022June 30, 2021Yr-o-Yr
Return on average assets
1.61 %1.53 %8 bps
Return on average equity
17.36 %16.10 %126 
Tangible return on average tangible equity (2)
18.96 %17.73 %123 
Interest rate spread
2.92 %2.59 %33 
Net interest margin
3.05 %2.73 %32 
Average loan yield
3.80 %3.57 %23 
Yield on average interest-earning assets
3.20 %2.92 %28 
Average cost of interest-bearing deposits
0.24 %0.27 %(3)
Average cost of deposits
0.13 %0.16 %(3)
Average cost of funds
0.16 %0.20 %(4)
Adjusted pre-tax, pre-provision profitability ratio (3)
2.25 %1.94 %31 
Adjusted noninterest expense/average assets (3)
1.16 %1.16 %— 
Efficiency ratio
36.91 %43.67 %(676)
Adjusted efficiency ratio (3)
34.05 %37.47 %(342)bps
(1)Annualized except for efficiency ratio.
(2)See reconciliation of GAAP to non-GAAP financial measures in Table 13.
(3)See reconciliation of GAAP to non-GAAP financial measures in Table 12.

15

EAST WEST BANCORP, INC. AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 10
Three Months Ended June 30, 2022
CommercialConsumer
C&ITotal CRETotal Residential MortgageOther ConsumerTotal
Allowance for loan losses, March 31, 2022
$339,446 $182,296 $21,958 $1,985 $545,685 
Provision for (reversal of) credit losses on loans(a)19,030 (9,181)3,122 (502)12,469 
Gross charge-offs(240)(679)(193)(34)(1,146)
Gross recoveries6,514 1,043 173 — 7,730 
Total net recoveries (charge-offs) 6,274 364 (20)(34)6,584 
Foreign currency translation adjustment(1,468)— — — (1,468)
Allowance for loan losses, June 30, 2022
$363,282 $173,479 $25,060 $1,449 $563,270 


Three Months Ended March 31, 2022
CommercialConsumer
C&ITotal CRETotal Residential MortgageOther ConsumerTotal
Allowance for loan losses, December 31, 2021
$338,252 $180,808 $20,595 $1,924 $541,579 
Provision for credit losses on loans(a)9,262 1,658 1,225 107 12,252 
Gross charge-offs(11,188)(399)— (46)(11,633)
Gross recoveries3,002 229 138 — 3,369 
Total net (charge-offs) recoveries(8,186)(170)138 (46)(8,264)
Foreign currency translation adjustment118 — — — 118 
Allowance for loan losses, March 31, 2022
$339,446 $182,296 $21,958 $1,985 $545,685 


Three Months Ended June 30, 2021
CommercialConsumer
C&ITotal CRETotal Residential MortgageOther ConsumerTotal
Allowance for loan losses, March 31, 2021
$394,084 $192,895 $18,509 $2,018 $607,506 
(Reversal of) provision for credit losses on loans(a)(22,605)10,747 859 2,209 (8,790)
Gross charge-offs(10,572)(4,456)— (32)(15,060)
Gross recoveries1,338 344 100 3 1,785 
Total net (charge-offs) recoveries(9,234)(4,112)100 (29)(13,275)
Foreign currency translation adjustment283 — — — 283 
Allowance for loan losses, June 30, 2021
$362,528 $199,530 $19,468 $4,198 $585,724 

















16

EAST WEST BANCORP, INC. AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 10 (continued)
Six Months Ended June 30, 2022
CommercialConsumer
C&ITotal CRETotal Residential MortgageOther ConsumerTotal
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)28,292 (7,523)4,347 (395)24,721 
Gross charge-offs(11,428)(1,078)(193)(80)(12,779)
Gross recoveries9,516 1,272 311 — 11,099 
Total net (charge-offs) recoveries(1,912)194 118 (80)(1,680)
Foreign currency translation adjustment(1,350)— — — (1,350)
Allowance for loan losses, June 30, 2022
$363,282 $173,479 $25,060 $1,449 $563,270 

Six Months Ended June 30, 2021
CommercialConsumer
C&ITotal CRETotal Residential MortgageOther ConsumerTotal
Allowance for loan losses, December 31, 2020
$398,040 $201,603 $18,210 $2,130 $619,983 
(Reversal of) provision for credit losses on loans(a)(18,763)7,671 1,257 2,096 (7,739)
Gross charge-offs(19,008)(11,739)(179)(33)(30,959)
Gross recoveries2,098 1,995 180 5 4,278 
Total net (charge-offs) recoveries(16,910)(9,744)1 (28)(26,681)
Foreign currency translation adjustment161 — — — 161
Allowance for loan losses, June 30, 2021
$362,528 $199,530 $19,468 $4,198 $585,724 

Three Months EndedSix Months Ended
June 30, 2022March 31, 2022June 30, 2021June 30, 2022June 30, 2021
Unfunded Credit Facilities
Allowance for unfunded credit commitments, beginning of period (1)
$23,262 $27,514 $32,529 $27,514 $33,577 
Provision for (reversal of) credit losses on unfunded credit commitments(b)1,031 (4,252)(6,210)(3,221)(7,261)
Foreign currency translation adjustment11 — (19)11 (16)
Allowance for unfunded credit commitments, end of period (1)
$24,304 $23,262 $26,300 $24,304 $26,300 
Provision for (reversal of) credit losses(a)+(b)$13,500 $8,000 $(15,000)$21,500 $(15,000)
(1)Included in Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheet.
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EAST WEST BANCORP, INC. AND SUBSIDIARIES
CRITICIZED LOANS, NONPERFORMING ASSETS AND CREDIT QUALITY RATIOS
($ in thousands)
(unaudited)
Table 11
Criticized LoansJune 30, 2022March 31, 2022June 30, 2021
Special mention loans$590,227 $402,704 $386,807 
Classified loans432,414 430,633 645,180 
Total criticized loans$1,022,641 $833,337 $1,031,987 
Nonperforming Assets
June 30, 2022March 31, 2022June 30, 2021
Nonaccrual loans:
Commercial:
C&I$40,053 $51,773 $83,225 
CRE:
Total CRE12,742 9,827 81,573 
Consumer:
Total residential mortgage37,129 23,197 30,489 
Other consumer11 37 2,503 
Total nonaccrual loans89,935 84,834 197,790 
Other real estate owned, net— — 14,914 
Other nonperforming assets— 9,548 13,025 
Total nonperforming assets$89,935 $94,382 $225,729 
Credit Quality RatiosJune 30, 2022March 31, 2022June 30, 2021
Annualized quarterly net (recoveries) charge-offs to average loans HFI (0.06)%0.08 %0.13 %
Special mention loans to loans HFI1.27 %0.93 %0.97 %
Classified loans to loans HFI0.93 %0.99 %1.61 %
Criticized loans to loans HFI2.20 %1.92 %2.58 %
Nonperforming assets to total assets0.14 %0.15 %0.38 %
Nonaccrual loans to loans HFI0.19 %0.20 %0.49 %
Allowance for loan losses to loans HFI1.21 %1.25 %1.46 %


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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 revenue. Adjusted pre-tax, pre-provision profitability ratio represents revenue less adjusted noninterest expense, divided by average total assets. Adjusted noninterest expense excludes the amortization of tax credit and other investments and the amortization of core deposit intangibles. 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
 June 30, 2022March 31, 2022June 30, 2021
Net interest income before provision for (reversal of) credit losses$472,952 $415,613 $376,473 
Total noninterest income78,444 79,743 68,431 
Total revenue(a)$551,396 $495,356 $444,904 
Total noninterest expense(b)$196,860 $189,450 $189,523 
Less: Amortization of tax credit and other investments(14,979)(13,900)(27,291)
Amortization of core deposit intangibles(488)(511)(710)
Adjusted noninterest expense(c)$181,393 $175,039 $161,522 
Efficiency ratio(b)/(a)35.70 %38.25 %42.60 %
Adjusted efficiency ratio(c)/(a)32.90 %35.34 %36.30 %
Adjusted pre-tax, pre-provision income (a)-(c) = (d)$370,003 $320,317 $283,382 
Average total assets(e)$62,232,841 $61,758,048 $57,771,837 
Adjusted pre-tax, pre-provision profitability ratio (1)
(d)/(e)2.38 %2.10 %1.97 %
Adjusted noninterest expense/average assets (1)
(c)/(e)1.17 %1.15 %1.12 %
 Six Months Ended
 June 30, 2022June 30, 2021
Net interest income before provision for (reversal of) credit losses$888,565 $730,168 
Total noninterest income158,187 141,297 
Total revenue(f)1,046,752 871,465 
Total noninterest expense(g)$386,310 $380,600 
Less: Amortization of tax credit and other investments(28,879)(52,649)
Amortization of core deposit intangibles(999)(1,442)
Adjusted noninterest expense(h)$356,432 $326,509 
Efficiency ratio(g)/(f)36.91 %43.67 %
Adjusted efficiency ratio(h)/(f)34.05 %37.47 %
Adjusted pre-tax, pre-provision income (f)-(h) = (i)$690,320 $544,956 
Average total assets (j)$61,996,756 $56,689,075 
Adjusted pre-tax, pre-provision profitability ratio (1)
(i)/(j)2.25 %1.94 %
Adjusted noninterest expense/average assets (1)
(h)/(j)1.16 %1.16 %
(1)Annualized.

19

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.
 June 30, 2022March 31, 2022June 30, 2021
Stockholders’ equity (a)$5,609,482 $5,703,456 $5,547,548 
Less: Goodwill(465,697)(465,697)(465,697)
Other intangible assets (1)
(8,537)(9,044)(10,309)
Tangible equity (b)$5,135,248 $5,228,715 $5,071,542 
Total assets(c)$62,394,283 $62,241,456 $59,854,876 
Less: Goodwill(465,697)(465,697)(465,697)
Other intangible assets (1)
(8,537)(9,044)(10,309)
Tangible assets (d)$61,920,049 $61,766,715 $59,378,870 
Total stockholders’ equity to total assets ratio(a)/(c)8.99 %9.16 %9.27 %
Tangible equity to tangible assets ratio (b)/(d)8.29 %8.47 %8.54 %

Tangible return on average tangible equity represents tangible net income divided by average tangible equity. Tangible net income excludes the after-tax impacts of the amortization of core deposit intangibles and mortgage servicing 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.
Three Months EndedSix Months Ended
June 30, 2022March 31, 2022June 30, 2021June 30, 2022June 30, 2021
Net income(e)$258,329 $237,652 $224,742 $495,981 $429,736 
Add: Amortization of core deposit intangibles
488 511 710 999 1,442 
          Amortization of mortgage servicing assets
364 392 420 756 834 
Tax effect of amortization adjustments (2)
(245)(260)(321)(505)(646)
Tangible net income(f)$258,936 $238,295 $225,551 $497,231 $431,366 
Average stockholders’ equity (g)$5,682,427 $5,842,615 $5,425,952 $5,762,078 $5,382,267 
Less: Average goodwill(465,697)(465,697)(465,697)(465,697)(465,697)
          Average other intangible assets (1)
(8,827)(9,207)(10,827)(9,016)(11,209)
Average tangible equity (h)$5,207,903 $5,367,711 $4,949,428 $5,287,365 $4,905,361 
Return on average equity (3)
(e)/(g)18.23 %16.50 %16.61 %17.36 %16.10 %
Tangible return on average tangible equity (3)
(f)/(h)19.94 %18.00 %18.28 %18.96 %17.73 %
(1)Includes core deposit intangibles and mortgage servicing assets.
(2)Applied statutory tax rate of 28.77% for the three and six months ended June 30, 2022 and the three months ended March 31, 2022. Applied statutory tax rate of 28.37% for the three and six months ended June 30, 2021.
(3)Annualized.

20