EX-99.1 2 ewbc9918k9302022.htm EX-99.1 Document

Exhibit 99.1
ewbclogoa13.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 THIRD QUARTER 2022
OF $295 MILLION AND DILUTED EARNINGS PER SHARE OF $2.08;
RECORD NET INTEREST INCOME OF $552 MILLION


Pasadena, California – October 20, 2022 – 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 2022. Third quarter 2022 net income was $295.3 million, or $2.08 per diluted share; diluted earnings per share grew 58% linked quarter annualized and 32% year-over-year.

“This was another quarter of outstanding results. Net interest income increased to a record $552 million, up 66% linked quarter annualized, and our net interest margin expanded an impressive 45 basis points quarter-over-quarter to 3.68%,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. “Our efficiency improved, expanding all profitability ratios. For the third quarter of 2022, we returned 1.9% on average assets and 20.3% on average equity.”

“Total loans reached a record $47.5 billion as of September 30, 2022, up 8% linked quarter annualized, with growth across all our major loan categories. Asset quality continued to be healthy, with very low charge-offs and criticized loans decreasing 11% from June 30, 2022.”

“All our capital ratios expanded in the third quarter of 2022, driven by the strength of our earnings growth. We ended the quarter with a common equity tier 1 ratio of 12.3% and a tangible common equity ratio1 of 8.35%,” continued Ng.

“With our industry-leading operating margins and strong capital, we are well positioned to navigate the changing economic conditions, and help our customers prosper and maximize personal and business opportunities. We are looking forward to finishing 2022 on a high note and entering 2023 with strength and confidence,” concluded Ng.















1 See reconciliation of GAAP to non-GAAP financial measures in Table 13.
1

FINANCIAL HIGHLIGHTS

Three Months EndedQtr-o-Qtr ChangeYr-o-Yr Change
($ in millions, except per share data)September 30, 2022$%$%
Total Loans$47,457$9262%$6,97517%
Total Deposits53,857(486)(1)5011
Total Revenue$627$7614%$15934%
Adj. Pre-tax Pre-provision Income2
432621713043
Net Income29537147031
Diluted Earnings per Share$2.08$0.2715%$0.5032%


BALANCE SHEET

•Record Assets – Total assets reached $62.6 billion as of September 30, 2022, up $181.8 million, or 0.3% (1% annualized), from $62.4 billion as of June 30, 2022. Year-over-year, total assets grew $1.6 billion, or 3%, from $61.0 billion as of September 30, 2021.

Third quarter 2022 average interest-earning assets of $59.5 billion were up $810.0 million, or 1% (5% annualized), from $58.7 billion in the second quarter of 2022. Quarter-over-quarter, average loan growth of $2.2 billion was partially offset by declines in other, lower yielding interest-earning assets.

•Record Loans – Total loans reached $47.5 billion as of September 30, 2022, an increase of $926.2 million, or 2% (8% annualized), from $46.5 billion as of June 30, 2022. Year-over-year, total loans grew $7.0 billion, or 17%, from $40.5 billion as of September 30, 2021.

Third quarter 2022 average loans of $46.9 billion grew $2.2 billion, or 5% (20% linked quarter annualized), with solid growth spread across all our major loan categories, led by residential mortgage and commercial real estate loans.

•Total Deposits – Total deposits were $53.9 billion as of September 30, 2022, a decrease of $0.5 billion, or 1% (4% annualized), from $54.3 billion as of June 30, 2022. Year-over-year, deposits grew $0.5 billion, or 1%, from $53.4 billion as of September 30, 2021.

Third quarter 2022 average deposits of $54.1 billion decreased $78.3 million, essentially unchanged from the second quarter. Quarter-over-quarter, growth in average time deposits, interest-bearing checking and money market accounts was offset by a decrease in average noninterest-bearing demand deposits. Average noninterest-bearing deposits made up 41% of average total deposits in the third quarter of 2022, compared with 44% in the second quarter of 2022 and 43% in the third quarter of 2021.

•Strong Capital Levels – As of September 30, 2022, stockholders’ equity was $5.7 billion, or $40.17 per common share, and tangible equity3 per common share was $36.80; each increasing 1% (4% annualized) quarter-over-quarter. As of September 30, 2022, the tangible equity to tangible assets ratio was 8.35%, an increase of six basis points quarter-over-quarter. The common equity tier 1 (“CET1”) capital ratio was 12.3%, and the total risk-based capital ratio was 13.6% as of September 30, 2022.














2 See reconciliation of GAAP to non-GAAP financial measures in Table 12.
3 See reconciliation of GAAP to non-GAAP financial measures in Table 13.
2

OPERATING RESULTS

Third Quarter Earnings – Third quarter 2022 net income was $295.3 million, an increase of 14%, or 57% annualized, from $258.3 million for the second quarter of 2022, and an increase of 31% from $225.4 million for the third quarter of 2021. Third quarter 2022 diluted earnings per share were $2.08, an increase of 15%, or 58% annualized, from $1.81 per diluted share for the second quarter 2022, and an increase of 32% from $1.57 per diluted share for the year-ago quarter.

Third Quarter 2022 Compared to Second Quarter 2022

Net Interest Income and Net Interest Margin
Record net interest income (“NII”) totaled $551.8 million, an increase of 17%, or 66% annualized, from $473.0 million. Net interest margin (“NIM”) of 3.68% expanded 45 basis points from 3.23%.
•NII growth and NIM expansion were driven by expanding earning asset yields and loan growth, partially offset by an increase in the cost of funds.
•The average loan yield was 4.75%, up 80 basis points from the second quarter. The average interest-earning asset yield was 4.19%, up 77 basis points from the second quarter. Average loans made up 79% of average interest-earning assets in the third quarter of 2022, compared with 76% in the second quarter of 2022.
•The average cost of funds was 0.55%, up 35 basis points from the second quarter. The average cost of deposits was 0.51%, up 34 basis points, and the average cost of interest-bearing deposits was 0.86%, up 56 basis points from the second quarter.
•The changes in yields and rates reflected rising benchmark interest rates.

Noninterest Income
Noninterest income totaled $75.6 million in the third quarter, a decrease of $2.9 million, or 4%, from $78.4 million in the second quarter.
•Fee income and net gains on sales of loans were $69.0 million, an increase of $4.2 million, or 7% (26% annualized), from $64.8 million in the second quarter. Growth in wealth management fees, deposit account fees and gains on sale of SBA loans was partially offset by decreased foreign exchange income.

Noninterest Expense
Noninterest expense totaled $216.0 million in the third quarter, compared with $196.9 million in the second quarter. Third quarter noninterest expense consisted of $195.6 million of adjusted noninterest expense4, $19.9 million in amortization of tax credit and other investments, and $0.5 million in amortization of core deposit intangibles.
•Adjusted noninterest expense of $195.6 million increased $14.2 million, or 8% annualized, from $181.4 million in the second quarter, driven by higher compensation and employee benefits.
•Amortization of tax credit and other investments totaled $19.9 million in the third quarter, compared with $15.0 million in the second 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 ratio4 was 31.2% in the third quarter, compared with 32.9% in the second quarter.

TAX RELATED ITEMS

Third quarter 2022 income tax expense was $89.0 million compared with income tax expense of $82.7 million for the second quarter of 2022. The year-to-date effective tax rate for the first nine months of 2022 was 22.7%.















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

ASSET QUALITY

The asset quality of our loan portfolio continued to be solid and stable.
•Criticized loans decreased $117.4 million, or 11%, quarter-over-quarter to $905.2 million as of September 30, 2022, down from $1,022.6 million as of June 30, 2022. Special mention loans decreased 20% quarter-over-quarter to $471.0 million, and classified loans were essentially unchanged at $434.2 million.
•The criticized loans ratio decreased 29 basis points quarter-over-quarter to 1.91% of loans held-for-investment (“HFI”) as of September 30, 2022, down from 2.20% as of June 30, 2022. The special mention loans ratio decreased 28 basis points quarter-over-quarter to 0.99%, and the classified loans ratio decreased one basis point to 0.92%.
•As of September 30, 2022, nonperforming assets were $97.0 million, or 0.16% of total assets, compared with $89.9 million, or 0.14% of total assets, as of June 30, 2022.
•Third quarter 2022 net charge-offs were $6.6 million, or annualized 0.06% of average loans HFI, compared with net recoveries of $6.6 million, or annualized 0.06% of average loans HFI, for the second quarter of 2022.
•The allowance for loan losses totaled $582.5 million, or 1.23% of loans HFI, as of September 30, 2022, compared with $563.3 million, or 1.21% of loans HFI, as of June 30, 2022. The quarter-over-quarter build in the allowance coverage largely reflects the current macroeconomic outlook and loan growth during the quarter.

Provision for credit losses was $27.0 million for the third quarter of 2022, compared with $13.5 million for the second quarter of 2022.

CAPITAL STRENGTH

Capital levels for East West are strong. The following table presents the regulatory capital metrics as of September 30, 2022, June 30, 2022 and September 30, 2021.
EWBC Risk-Based Capital Ratios
($ in millions)
September 30, 2022 (a)
June 30, 2022 (a)
September 30, 2021 (a)
CET1 capital ratio12.3%12.0%12.8%
Tier 1 capital ratio12.3%12.0%12.8%
Total capital ratio13.6%13.2%14.2%
Leverage ratio9.6%9.3%8.8%
Risk-Weighted Assets (“RWA”) (b)
$49,254$48,499$42,128
(a)The Company has elected to use the 2020 CECL transition provision in the calculation of its September 30, 2022, June 30, 2022 and September 30, 2021 regulatory capital ratios. The Company’s September 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 fourth quarter 2022 dividends for the Company’s common stock. The common stock cash dividend of $0.40 per share is payable on November 15, 2022, to stockholders of record on November 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 $254 million remains available. East West did not repurchase any shares during the third quarter of 2022.









4

Conference Call
East West will host a conference call to discuss third quarter 2022 earnings with the public on Thursday, October 20, 2022, 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 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 October 20, 2022, at 11:30 a.m. PT/2:30 p.m. ET through November 20, 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: 3874614.












































5

About East West

East West Bancorp, Inc. is a public company with total assets of $62.6 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.

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,” “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, market or supply chain 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 Coronavirus Disease 2019 (“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 Board of Governors of the Federal Reserve System (“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 the U.S. dollar (“USD”) London Interbank Offered Rate (“LIBOR”) 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 Annual Report on Form 10-K for the year ended December 31, 2021 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   
September 30, 2022
% or Basis Point Change
 September 30, 2022June 30, 2022September 30, 2021Qtr-o-QtrYr-o-Yr
Assets   
 Cash and due from banks$554,260$688,936$594,631(19.5)%(6.8)%
Interest-bearing cash with banks1,609,0931,213,1174,258,27032.6 (62.2)
Cash and cash equivalents2,163,3531,902,0534,852,90113.7 (55.4)
 Interest-bearing deposits with banks630,543712,709855,162(11.5)(26.3)
 Assets purchased under resale agreements (“resale agreements”)892,9861,422,7942,596,142(37.2)(65.6)
 
Available-for-sale (“AFS”) debt securities (amortized cost of $6,771,354, $6,891,522 and $9,783,180)
5,906,0906,255,5049,713,006(5.6)(39.2)
Held-to-maturity (“HTM”) debt securities, at amortized cost (fair value of $2,459,135 and $2,656,549 in 2022)
3,012,6673,028,302—(0.5)100.0 
 Loans held-for-sale (“HFS”)14,50028,464—(49.1)100.0 
 
Loans held-for-investment (''HFI'') (net of allowance for loan losses of $582,517, $563,270 and $560,404)
46,859,73845,938,80639,921,3012.0 17.4 
Investments in qualified affordable housing partnerships, tax credit and other investments, net725,254634,304664,79514.3 9.1 
 Goodwill465,697465,697465,697— — 
Operating lease right-of-use assets105,411107,58899,785(2.0)5.6 
 Other assets 1,799,8221,898,0621,790,321(5.2)0.5 
 Total assets $62,576,061$62,394,283$60,959,1100.3 %2.7 %
Liabilities and Stockholders’ Equity   
 Deposits$53,857,362$54,343,354$53,356,190(0.9)%0.9 %
Federal funds purchased200,000——100.0 100.0 
 FHLB advances324,920174,776248,89885.9 30.5 
 Assets sold under repurchase agreements (“repurchase agreements”)611,785611,785300,000— 103.9 
 Long-term debt and finance lease liabilities152,610152,663151,795(0.0)0.5 
Operating lease liabilities 113,477115,387107,107(1.7)5.9 
 Accrued expenses and other liabilities1,655,2391,386,8361,104,91919.4 49.8 
 Total liabilities56,915,39356,784,80155,268,9090.2 3.0 
 Stockholders’ equity5,660,6685,609,4825,690,2010.9 (0.5)
 Total liabilities and stockholders’ equity $62,576,061$62,394,283$60,959,1100.3 %2.7 %
 Book value per common share $40.17$39.81$40.100.9 %0.2 %
 
Tangible equity (1) per common share
$36.80$36.44$36.751.0 0.1 
 Number of common shares at period-end140,918140,917141,8840.0 (0.7)
Tangible equity to tangible assets ratio (1)
8.35 %8.29 %8.62 %6 bps(27)bps
(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
September 30, 2022
% Change
  September 30, 2022June 30, 2022September 30, 2021Qtr-o-QtrYr-o-Yr
Loans:   
Commercial:
Commercial and industrial (“C&I”) (1)
$15,625,072 $15,377,117 $13,831,649 1.6 %13.0 %
Commercial real estate (“CRE”):
 
CRE
13,573,157 13,566,748 11,818,065 — 14.9 
 
Multifamily residential
4,559,302 4,443,704 3,340,378 2.6 36.5 
 
Construction and land
556,894 515,857 376,921 8.0 47.7 
Total CRE
18,689,353 18,526,309 15,535,364 0.9 20.3 
Consumer:
Residential mortgage:
 
Single-family residential
10,855,345 10,234,473 9,021,801 6.1 20.3 
 
Home equity lines of credit (“HELOCs”)2,184,924 2,280,080 1,963,622 (4.2)11.3 
Total residential mortgage
13,040,269 12,514,553 10,985,423 4.2 18.7 
Other consumer
87,561 84,097 129,269 4.1 (32.3)
Total loans HFI (2)
47,442,255 

46,502,076 

40,481,705 2.0 17.2 
Loans HFS
14,500 28,464 — (49.1)100.0 
 
Total loans (2)
47,456,755 46,530,540 40,481,705 2.0 17.2 
Allowance for loan losses(582,517)(563,270)(560,404)3.4 3.9 
 
Net loans (2)
$46,874,238 $45,967,270 $39,921,301 2.0 17.4 
Deposits:
   
 
Noninterest-bearing demand
$21,645,394 $23,028,831 $23,175,471 (6.0)%(6.6)%
 
Interest-bearing checking
6,822,343 7,094,726 6,530,601 (3.8)4.5 
 
Money market
12,113,292 11,814,402 12,555,879 2.5 (3.5)
 
Savings
2,917,770 3,027,819 2,855,597 (3.6)2.2 
 
Time deposits
10,358,563 9,377,576 8,238,642 10.5 25.7 
 
Total deposits
$53,857,362 $54,343,354 $53,356,190 (0.9)%0.9 %
(1)Includes $110.9 million, $153.3 million and $807.3 million of Paycheck Protection Program (“PPP”) loans as of September 30, 2022, June 30, 2022 and September 30, 2021, respectively. Excluding PPP loans, total loans were $47.35 billion, $46.38 billion and $39.67 billion as of September 30, 2022, June 30, 2022 and September 30, 2021, respectively.
(2)Includes $(60.3) million, $(56.2) million and $(54.3) million of net deferred loan fees and net unamortized premiums as of September 30, 2022, June 30, 2022 and September 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
September 30, 2022
% Change
September 30, 2022June 30, 2022September 30, 2021Qtr-o-QtrYr-o-Yr
Interest and dividend income (1)
$628,236 $499,754 $415,307 25.7 %51.3 %
Interest expense
76,427 26,802 19,601 185.2 289.9 
Net interest income before provision for (reversal of) credit losses551,809 472,952 395,706 16.7 39.4 
Provision for (reversal of) credit losses27,000 13,500 (10,000)100.0 
NM
Net interest income after provision for (reversal of) credit losses524,809 459,452 405,706 14.2 29.4 
Noninterest income75,552 78,444 73,109 

(3.7)3.3 
Noninterest expense215,973 196,860 205,384 9.7 5.2 
Income before income taxes
384,388 341,036 273,431 12.7 40.6 
Income tax expense
89,049 82,707 47,982 7.7 85.6 
Net income
$295,339 $258,329 $225,449 14.3 %31.0 %
Earnings per share (“EPS”)
   
- Basic
$2.10 $1.83 $1.59 14.7 %31.9 %
- Diluted
$2.08 $1.81 $1.57 14.6 32.0 
Weighted-average number of shares outstanding
- Basic
140,917 141,429 141,880 (0.4)%(0.7)%
- Diluted
142,011 142,372 143,143 (0.3)(0.8)
 
 
Three Months Ended
September 30, 2022
% Change
 
 
September 30, 2022June 30, 2022September 30, 2021Qtr-o-QtrYr-o-Yr
Noninterest income:
   
 
Lending fees
$20,289 $20,142 $17,516 0.7 %15.8 %
Deposit account fees23,636 22,372 18,508 5.6 27.7 
Interest rate contracts and other derivative income8,761 9,801 7,156 (10.6)22.4 
 
Foreign exchange income
10,083 11,361 13,101 (11.2)(23.0)
 
Wealth management fees
8,903 6,539 5,598 36.2 59.0 
 
Net gains on sales of loans
2,129 917 3,329 132.2 (36.0)
 
Gains on sales of AFS debt securities
— 28 354 (100.0)(100.0)
Other investment (loss) income (580)4,863 5,349 (111.9)(110.8)
Other income
2,331 2,421 2,198 (3.7)6.1 
Total noninterest income$75,552 $78,444 $73,109 (3.7)%3.3 %
Noninterest expense:
   
 
Compensation and employee benefits
$127,580 $113,364 $105,751 12.5 %20.6 %
 
Occupancy and equipment expense
15,920 15,469 15,851 2.9 0.4 
 
Deposit insurance premiums and regulatory assessments
4,875 4,927 4,641 (1.1)5.0 
Deposit account expense6,707 5,671 4,136 18.3 62.2 
Data processing3,725 3,486 3,575 6.9 4.2 
Computer software expense6,889 6,572 8,426 4.8 (18.2)
Consulting expense1,620 2,021 1,635 (19.8)(0.9)
 
Legal expense
689 1,047 2,363 (34.2)(70.8)
 
Other operating expense
28,094 29,324 20,998 (4.2)33.8 
Amortization of tax credit and other investments19,874 14,979 38,008 32.7 (47.7)
Total noninterest expense$215,973 $196,860 $205,384 9.7 %5.2 %
NM - Not meaningful.
(1)Includes $524 thousand, $1.4 million and $15.2 million of interest income related to PPP loans for the three months ended September 30, 2022, June 30, 2022 and September 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
 Nine Months Ended
September 30, 2022
% Change
  September 30, 2022September 30, 2021Yr-o-Yr
Interest and dividend income (1)
$1,560,019 $1,196,026 30.4%
Interest expense
119,645 70,152 70.6
Net interest income before provision for (reversal of) credit losses1,440,374 1,125,874 27.9
Provision for (reversal of) credit losses48,500 (25,000)NM
Net interest income after provision for (reversal of) credit losses1,391,874 1,150,874 20.9
Noninterest income 233,739 214,406 9.0
Noninterest expense602,283 585,984 2.8
Income before income taxes
1,023,330 779,296 31.3
Income tax expense
232,010 124,111 86.9
Net income
$791,320 $655,185 20.8%
EPS
  
- Basic
$5.59 $4.62 21.1%
- Diluted
$5.55 $4.58 21.2
Weighted-average number of shares outstanding
- Basic
141,453 141,799 (0.2)%
- Diluted
142,601 143,051 (0.3)
 
 
Nine Months EndedSeptember 30, 2022
% Change
 
 
September 30, 2022September 30, 2021Yr-o-Yr
Noninterest income:
  
 
Lending fees
$59,869 $56,965 5.1%
 
Deposit account fees
66,323 51,233 29.5
Interest rate contracts and other derivative income29,695 20,981 41.5
 
Foreign exchange income
34,143 35,634 (4.2)
 
Wealth management fees
21,494 20,460 5.1
 
Net gains on sales of loans
5,968 6,601 (9.6)
 
Gains on sales of AFS debt securities1,306 1,178 10.9
Other investment income5,910 13,870 (57.4)
Other income
9,031 7,484 20.7
Total noninterest income$233,739 $214,406 9.0%
Noninterest expense:
  
 
Compensation and employee benefits
$357,213 $318,985 12.0%
 
Occupancy and equipment expense
46,853 47,150 (0.6)
 
Deposit insurance premiums and regulatory assessments
14,519 12,791 13.5
Deposit account expense17,071 11,845 44.1
Data processing
10,876 12,088 (10.0)
Computer software expense
20,755 23,106 (10.2)
Consulting expense
5,474 4,978 10.0
 
Legal expense
2,454 5,840 (58.0)
 
Other operating expense
78,315 58,544 33.8
Amortization of tax credit and other investments48,753 90,657 (46.2)
Total noninterest expense$602,283 $585,984 2.8%
NM - Not meaningful.
(1)Includes $7.0 million and $45.6 million of interest income related to PPP loans for the nine months ended September 30, 2022 and 2021, respectively.
10

EAST WEST BANCORP, INC. AND SUBSIDIARIES
SELECTED AVERAGE BALANCES
($ in thousands)
(unaudited)
Table 5
Three Months Ended
September 30, 2022
% Change
Nine Months Ended
September 30, 2022
% Change
  September 30,
2022		June 30,
2022		September 30,
2021		Qtr-o-QtrYr-o-YrSeptember 30,
2022		September 30,
2021		Yr-o-Yr
Loans:
     
Commercial:
 
C&I (1)
$15,282,661 $14,986,876 $13,531,338 2.0%12.9%$14,850,849 $13,678,462 8.6%
CRE:
 
CRE
13,533,482 13,049,058 11,747,607 3.715.212,958,562 11,564,946 12.1
 
Multifamily residential4,531,351 4,112,411 3,248,281 10.239.54,133,975 3,139,209 31.7
 
Construction and land532,800 475,933 415,812 11.928.1467,731 480,514 (2.7)
Total CRE
18,597,633 17,637,402 15,411,700 5.420.717,560,268 15,184,669 15.6
Consumer:
Residential mortgage:
 
Single-family residential10,676,022 9,624,242 8,962,533 10.919.19,809,549 8,645,135 13.5
 
HELOCs
2,216,355 2,290,378 1,912,629 (3.2)15.92,230,060 1,793,928 24.3
Total residential mortgage12,892,377 11,914,620 10,875,162 8.218.512,039,609 10,439,063 15.3
Other consumer
81,870 87,590 141,951 (6.5)(42.3)97,794 139,557 (29.9)
 
Total loans (2)
$46,854,541 $44,626,488 $39,960,151 5.0%17.3%$44,548,520 $39,441,751 12.9%
Interest-earning assets
$59,478,689 $58,668,677 $58,239,480 1.4%2.1%$58,949,457 $55,350,645 6.5%
Total assets
$63,079,444 $62,232,841 $61,359,533 1.4%2.8%$62,361,618 $58,263,002 7.0%
Deposits:     
Noninterest-bearing demand
$22,423,633 $23,887,452 $23,169,323 (6.1)%(3.2)%$23,244,247 $20,345,370 14.2%
Interest-bearing checking
6,879,632 6,712,890 6,646,515 2.53.56,747,710 6,571,231 2.7
Money market
12,351,571 12,319,930 12,604,827 0.3(2.0)12,526,222 12,262,173 2.2
Savings
2,961,634 2,970,007 2,792,702 (0.3)6.02,954,098 2,715,114 8.8
Time deposits
9,435,063 8,239,571 8,283,265 14.513.98,596,728 8,635,249 (0.4)
Total deposits
$54,051,533 $54,129,850 $53,496,632 (0.1)%1.0%$54,069,005 $50,529,137 7.0%
Interest-bearing liabilities$32,703,323 $30,957,475 $31,039,410 5.6%5.4%$31,631,865 $31,099,675 1.7%
Stockholders’ equity
$5,772,638 $5,682,427 $5,680,306 1.6%1.6%$5,765,637 $5,482,705 5.2%
(1)Average balances of PPP loans were $127.6 million, $223.2 million and $1.11 billion for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively, and $252.8 million and $1.63 billion for the nine months ended September 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
 
 
September 30, 2022June 30, 2022
 
 
Average Average Average Average
 
 
BalanceInterest
Yield/Rate (1)
BalanceInterest
Yield/Rate (1)
Assets
      
Interest-earning assets:
      
 
Interest-bearing cash and deposits with banks
$2,287,010 $9,080 1.58 %$2,797,711 $4,787 0.69 %
 
Resale agreements1,037,292 6,769 2.59 %1,641,723 8,553 2.09 %
 
AFS debt securities6,204,729 38,383 2.45 %6,503,677 33,438 2.06 %
HTM debt securities3,017,063 12,709 1.67 %3,021,239 12,738 1.69 %
 
Loans (2)
46,854,541 560,452 4.75 %44,626,488 439,416 3.95 %
 
FHLB and FRB stock
78,054 843 4.28 %77,839 822 4.24 %
 
Total interest-earning assets
59,478,689 628,236 4.19 %58,668,677 499,754 3.42 %
Noninterest-earning assets:
      
 
Cash and due from banks
615,836 712,884   
 
Allowance for loan losses(566,369)(545,489)  
 
Other assets
3,551,288 3,396,769   
 
Total assets
$63,079,444   $62,232,841   
Liabilities and Stockholders’ Equity     
Interest-bearing liabilities:
      
 
Checking deposits
$6,879,632 $8,493 0.49 %$6,712,890 $3,178 0.19 %
 
Money market deposits
12,351,571 33,101 1.06 %12,319,930 8,892 0.29 %
 
Savings deposits
2,961,634 2,268 0.30 %2,970,007 1,864 0.25 %
 
Time deposits
9,435,063 25,032 1.05 %8,239,571 8,554 0.42 %
 
Federal funds purchased and other short-term borrowings
211,794 1,177 2.20 %64,145 241 1.51 %
 
FHLB advances
86,243 392 1.80 %138,960 559 1.61 %
 
Repurchase agreements624,821 4,421 2.81 %359,778 2,418 2.70 %
 
Long-term debt and finance lease liabilities
152,565 1,543 4.01 %152,194 1,096 2.89 %
 
Total interest-bearing liabilities
32,703,323 76,427 0.93 %30,957,475 26,802 0.35 %
Noninterest-bearing liabilities and stockholders’ equity:
     
 
Demand deposits
22,423,633 23,887,452 
 
Accrued expenses and other liabilities
2,179,850 1,705,487 
 
Stockholders’ equity
5,772,638 5,682,427 
 
Total liabilities and stockholders’ equity
$63,079,444 $62,232,841 
Interest rate spread
 3.26 %3.07 %
Net interest income and net interest margin $551,809 3.68 %$472,952 3.23 %
(1)Annualized.
(2)Includes loans HFS. Average balances of PPP loans were $127.6 million and $223.2 million for the three months ended September 30, 2022 and June 30, 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
September 30, 2022September 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
$2,287,010 $9,080 1.58 %$7,036,823 $4,521 0.25 %
 
Resale agreements1,037,292 6,769 2.59 %2,382,741 8,957 1.49 %
 
AFS debt securities6,204,729 38,383 2.45 %8,782,682 37,826 1.71 %
HTM debt securities3,017,063 12,709 1.67 %— — — %
 
Loans (2)
46,854,541 560,452 4.75 %39,960,151 363,503 3.61 %
 
FHLB and FRB stock
78,054 843 4.28 %77,083 500 2.57 %
 
Total interest-earning assets
59,478,689 628,236 4.19 %58,239,480 415,307 2.83 %
Noninterest-earning assets:
      
 
Cash and due from banks
615,836 627,640   
 
Allowance for loan losses(566,369)(584,827)  
 
Other assets
3,551,288 3,077,240   
 
Total assets
$63,079,444   $61,359,533   
Liabilities and Stockholders’ Equity
     
Interest-bearing liabilities:
      
 
Checking deposits
$6,879,632 $8,493 0.49 %$6,646,515 $3,186 0.19 %
 
Money market deposits
12,351,571 33,101 1.06 %12,604,827 3,446 0.11 %
 
Savings deposits
2,961,634 2,268 0.30 %2,792,702 1,943 0.28 %
 
Time deposits
9,435,063 25,032 1.05 %8,283,265 7,395 0.35 %
 
Federal funds purchased and other short-term borrowings
211,794 1,177 2.20 %620 — — %
 
FHLB advances
86,243 392 1.80 %248,614 857 1.37 %
 
Repurchase agreements624,821 4,421 2.81 %310,997 2,012 2.57 %
 
Long-term debt and finance lease liabilities
152,565 1,543 4.01 %151,870 762 1.99 %
 
Total interest-bearing liabilities
32,703,323 76,427 0.93 %31,039,410 19,601 0.25 %
Noninterest-bearing liabilities and stockholders’ equity:
      
 
Demand deposits
22,423,633 23,169,323 
 
Accrued expenses and other liabilities
2,179,850 1,470,494 
 
Stockholders’ equity
5,772,638 5,680,306 
 
Total liabilities and stockholders’ equity
$63,079,444 $61,359,533 
Interest rate spread
 3.26 %2.58 %
Net interest income and net interest margin
 $551,809 3.68 %$395,706 2.70 %
(1)Annualized.
(2)Includes loans HFS. Average balances of PPP loans were $127.6 million and $1.11 billion for the three months ended September 30, 2022 and September 30, 2021, respectively.

13

EAST WEST BANCORP, INC. AND SUBSIDIARIES
YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 8
 Nine Months Ended
September 30, 2022September 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
$3,175,596 $17,127 0.72 %$6,078,982 $11,781 0.26 %
 
Resale agreements1,588,452 23,705 2.00 %1,994,776 23,077 1.55 %
 
AFS debt securities6,886,268 106,290 2.06 %7,755,029 101,616 1.75 %
HTM debt securities2,672,797 33,645 1.68 %— — — %
 
Loans (2)
44,548,520 1,376,978 4.13 %39,441,751 1,057,964 3.59 %
 
FHLB and FRB stock
77,824 2,274 3.91 %80,107 1,588 2.65 %
 
Total interest-earning assets
58,949,457 1,560,019 3.54 %55,350,645 1,196,026 2.89 %
Noninterest-earning assets:
      
 
Cash and due from banks
656,772 602,830   
 
Allowance for loan losses
(551,818)(603,523)  
 
Other assets
3,307,207 2,913,050   
 
Total assets
$62,361,618 $58,263,002   
Liabilities and Stockholders’ Equity
     
Interest-bearing liabilities:
      
 
Checking deposits
$6,747,711 $13,073 0.26 %$6,571,231 $11,177 0.23 %
 
Money market deposits
12,526,222 45,196 0.48 %12,262,173 11,869 0.13 %
 
Savings deposits
2,954,098 5,836 0.26 %2,715,114 5,762 0.28 %
 
Time deposits
8,596,728 40,266 0.63 %8,635,250 26,982 0.42 %
 
Federal funds purchased and other short-term borrowings
93,370 1,427 2.04 %1,871 42 3.00 %
 
FHLB advances
128,137 1,529 1.60 %457,273 6,025 1.76 %
 
Repurchase agreements433,340 8,855 2.73 %304,745 5,981 2.62 %
 
Long-term debt and finance lease liabilities
152,259 3,463 3.04 %152,018 

2,314 2.04 %
 
Total interest-bearing liabilities
31,631,865 119,645 0.51 %31,099,675 70,152 0.30 %
Noninterest-bearing liabilities and stockholders’ equity:
 
Demand deposits
23,244,247 20,345,370 
 
Accrued expenses and other liabilities
1,719,869 1,335,252 
 
Stockholders’ equity
5,765,637 5,482,705 
 
Total liabilities and stockholders’ equity
$62,361,618 $58,263,002 
Interest rate spread
 3.03 %2.59 %
Net interest income and net interest margin
 $1,440,374 3.27 %$1,125,874 2.72 %
(1)Annualized.
(2)Includes loans HFS. Average balances of PPP loans were $252.8 million and $1.63 billion for the nine months ended September 30, 2022 and 2021, respectively.


14

EAST WEST BANCORP, INC. AND SUBSIDIARIES
SELECTED RATIOS
(unaudited)
Table 9
Three Months Ended (1)
September 30, 2022
Basis Point Change
 
 
September 30,
2022		June 30,
2022		September 30,
2021		Qtr-o-QtrYr-o-Yr
 
Return on average assets
1.86 %1.66 %1.46 %20 bps40 bps
 
Return on average equity
20.30 %18.23 %15.75 %207 455 
Tangible return on average tangible equity (2)
22.16 %19.94 %17.25 %222 491 
 
Interest rate spread
3.26 %3.07 %2.58 %19 68 
 
Net interest margin
3.68 %3.23 %2.70 %45 98 
Average loan yield
4.75 %3.95 %3.61 %80 114 
 
Yield on average interest-earning assets
4.19 %3.42 %2.83 %77 136 
Average cost of interest-bearing deposits
0.86 %0.30 %0.21 %56 65 
 
Average cost of deposits
0.51 %0.17 %0.12 %34 39 
 
Average cost of funds
0.55 %0.20 %0.14 %35 41 
Adjusted pre-tax, pre-provision profitability ratio (3)
2.72 %2.38 %1.95 %34 77 
 
Adjusted noninterest expense/average assets (3)
1.23 %1.17 %1.08 %6 15 
Efficiency ratio
34.43 %35.70 %43.81 %(127)(938)
 
Adjusted efficiency ratio (3)
31.18 %32.90 %35.55 %(172)bps(437)bps
Nine Months Ended (1)
September 30, 2022
Basis Point Change
September 30, 2022September 30, 2021Yr-o-Yr
Return on average assets
1.70 %1.50 %20 bps
Return on average equity
18.35 %15.98 %237 
Tangible return on average tangible equity (2)
20.04 %17.56 %248 
Interest rate spread
3.03 %2.59 %44 
Net interest margin
3.27 %2.72 %55 
Average loan yield
4.13 %3.59 %54 
Yield on average interest-earning assets
3.54 %2.89 %65 
Average cost of interest-bearing deposits
0.45 %0.25 %20 
Average cost of deposits
0.26 %0.15 %11 
Average cost of funds
0.29 %0.18 %11 
Adjusted pre-tax, pre-provision profitability ratio (3)
2.41 %1.94 %47 
Adjusted noninterest expense/average assets (3)
1.18 %1.13 %5 
Efficiency ratio
35.98 %43.72 %(774)
Adjusted efficiency ratio (3)
32.98 %36.80 %(382)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 September 30, 2022
CommercialConsumer
C&ITotal CRETotal Residential MortgageOther ConsumerTotal
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 recoveries7,172 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 


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 September 30, 2021
CommercialConsumer
C&ITotal CRETotal Residential MortgageOther ConsumerTotal
Allowance for loan losses, June 30, 2021
$362,528 $199,530 $19,468 $4,198 $585,724 
(Reversal of) provision for credit losses on loans(a)(23,364)8,527 2,972 130 (11,735)
Gross charge-offs(1,154)(16,903)(912)(10)(18,979)
Gross recoveries4,203 1,106 156 — 5,465 
Total net recoveries (charge-offs) 3,049 (15,797)(756)(10)(13,514)
Foreign currency translation adjustment(71)— — — (71)
Allowance for loan losses, September 30, 2021
$342,142 $192,260 $21,684 $4,318 $560,404 

















16

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, 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)37,867 3,640 10,628 (140)51,995 
Gross charge-offs(18,322)(7,304)(968)(90)(26,684)
Gross recoveries16,688 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 

Nine Months Ended September 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)(42,127)16,198 4,229 2,226 (19,474)
Gross charge-offs(20,162)(28,642)(1,091)(43)(49,938)
Gross recoveries6,301 3,101 336 5 9,743 
Total net charge-offs(13,861)(25,541)(755)(38)(40,195)
Foreign currency translation adjustment90 — — — 90
Allowance for loan losses, September 30, 2021
$342,142 $192,260 $21,684 $4,318 $560,404 

Three Months EndedNine Months Ended
September 30,
2022		June 30,
2022		September 30,
2021		September 30,
2022		September 30,
2021
Unfunded Credit Facilities
Allowance for unfunded credit commitments, beginning of period (1)
$24,304 $23,262 $26,300 $27,514 $33,577 
(Reversal of) provision for credit losses on unfunded credit commitments(b)(274)1,031 1,735 (3,495)(5,526)
Foreign currency translation adjustment11 11 1 22 (15)
Allowance for unfunded credit commitments, end of period (1)
$24,041 $24,304 $28,036 $24,041 $28,036 
Provision for (reversal of) credit losses(a)+(b)$27,000 $13,500 $(10,000)$48,500 $(25,000)
(1)Included in Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheet.
17

EAST WEST BANCORP, INC. AND SUBSIDIARIES
CRITICIZED LOANS, NONPERFORMING ASSETS AND CREDIT QUALITY RATIOS
($ in thousands)
(unaudited)
Table 11
Criticized LoansSeptember 30, 2022June 30, 2022September 30, 2021
Special mention loans$470,964 $590,227 $448,497 
Classified loans434,242 432,414 561,787 
Total criticized loans (1)
$905,206 $1,022,641 $1,010,284 
Nonperforming Assets
September 30, 2022June 30, 2022September 30, 2021
Nonaccrual loans:
Commercial:
C&I$47,988 $40,053 $97,157 
Total CRE11,209 12,742 15,359 
Consumer:
Total residential mortgage23,309 37,129 18,153 
Other consumer37 11 2,491 
Total nonaccrual loans82,543 89,935 133,160 
Other real estate owned, net— — 28,800 
Other nonperforming assets— — 10,681 
Nonperforming loans HFS14,500 — — 
Total nonperforming assets$97,043 $89,935 $172,641 
Credit Quality RatiosSeptember 30, 2022June 30, 2022September 30, 2021
Annualized quarterly net charge-offs (recoveries) to average loans HFI 0.06 %(0.06)%0.13 %
Special mention loans to loans HFI0.99 %1.27 %1.11 %
Classified loans to loans HFI0.92 %0.93 %1.39 %
Criticized loans to loans HFI1.91 %2.20 %2.50 %
Nonperforming assets to total assets0.16 %0.14 %0.28 %
Nonaccrual loans to loans HFI0.17 %0.19 %0.33 %
Allowance for loan losses to loans HFI1.23 %1.21 %1.38 %
(1)Excludes loans HFS.

18

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 total 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
 September 30, 2022June 30, 2022September 30, 2021
Net interest income before provision for (reversal of) credit losses$551,809 $472,952 $395,706 
Total noninterest income75,552 78,444 73,109 
Total revenue(a)$627,361 $551,396 $468,815 
Total noninterest expense(b)$215,973 $196,860 $205,384 
Less: Amortization of tax credit and other investments(19,874)(14,979)(38,008)
Amortization of core deposit intangibles(485)(488)(705)
Adjusted noninterest expense(c)$195,614 $181,393 $166,671 
Efficiency ratio(b)/(a)34.43 %35.70 %43.81 %
Adjusted efficiency ratio(c)/(a)31.18 %32.90 %35.55 %
Adjusted pre-tax, pre-provision income (a)-(c) = (d)$431,747 $370,003 $302,144 
Average total assets(e)$63,079,444 $62,232,841 $61,359,533 
Adjusted pre-tax, pre-provision profitability ratio (1)
(d)/(e)2.72 %2.38 %1.95 %
Adjusted noninterest expense/average assets (1)
(c)/(e)1.23 %1.17 %1.08 %
 Nine Months Ended
 September 30, 2022September 30, 2021
Net interest income before provision for (reversal of) credit losses$1,440,374 $1,125,874 
Total noninterest income233,739 214,406 
Total revenue(f)$1,674,113 $1,340,280 
Total noninterest expense(g)$602,283 $585,984 
Less: Amortization of tax credit and other investments(48,753)(90,657)
Amortization of core deposit intangibles(1,484)(2,147)
Adjusted noninterest expense(h)$552,046 $493,180 
Efficiency ratio(g)/(f)35.98 %43.72 %
Adjusted efficiency ratio(h)/(f)32.98 %36.80 %
Adjusted pre-tax, pre-provision income (f)-(h) = (i)$1,122,067 $847,100 
Average total assets (j)$62,361,618 $58,263,002 
Adjusted pre-tax, pre-provision profitability ratio (1)
(i)/(j)2.41 %1.94 %
Adjusted noninterest expense/average assets (1)
(h)/(j)1.18 %1.13 %
(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.
 September 30, 2022June 30, 2022September 30, 2021
Stockholders’ equity (a)$5,660,668 $5,609,482 $5,690,201 
Less: Goodwill(465,697)(465,697)(465,697)
Other intangible assets (1)
(8,667)(8,537)(9,849)
Tangible equity (b)$5,186,304 $5,135,248 $5,214,655 
Total assets(c)$62,576,061 $62,394,283 $60,959,110 
Less: Goodwill(465,697)(465,697)(465,697)
Other intangible assets (1)
(8,667)(8,537)(9,849)
Tangible assets (d)$62,101,697 $61,920,049 $60,483,564 
Total stockholders’ equity to total assets ratio(a)/(c)9.05 %8.99 %9.33 %
Tangible equity to tangible assets ratio (b)/(d)8.35 %8.29 %8.62 %
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 EndedNine Months Ended
September 30,
2022		June 30,
2022		September 30,
2021		September 30,
2022		September 30,
2021
Net income(e)$295,339 $258,329 $225,449 $791,320 $655,185 
Add: Amortization of core deposit intangibles
485 488 705 1,484 2,147 
          Amortization of mortgage servicing assets
340 364 430 1,096 1,264 
Tax effect of amortization adjustments (2)
(237)(245)(322)(742)(968)
Tangible net income(f)$295,927 $258,936 $226,262 $793,158 $657,628 
Average stockholders’ equity (g)$5,772,638 $5,682,427 $5,680,306 $5,765,637 $5,482,705 
Less: Average goodwill(465,697)(465,697)(465,697)(465,697)(465,697)
          Average other intangible assets (1)
(8,379)(8,827)(10,135)(8,801)(10,847)
Average tangible equity (h)$5,298,562 $5,207,903 $5,204,474 $5,291,139 $5,006,161 
Return on average equity (3)
(e)/(g)20.30 %18.23 %15.75 %18.35 %15.98 %
Tangible return on average tangible equity (3)
(f)/(h)22.16 %19.94 %17.25 %20.04 %17.56 %
(1)Includes core deposit intangibles and mortgage servicing assets.
(2)Applied statutory tax rate of 28.77% for the three and nine months ended September 30, 2022, and the three months ended June 30, 2022. Applied statutory tax rate of 28.37% for the three and nine months ended September 30, 2021.
(3)Annualized.

20