EX-99.1 2 a09-32180_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

East West Bancorp, Inc.
135 N. Los Robles Ave., 7th  Fl.

Pasadena, CA  91101
Tel. 626.768.6800

Fax 626.817.8838

 

 

 

 

 

FOR FURTHER INFORMATION AT THE COMPANY:

 

Tom Tolda

Chief Financial Officer

(626) 768-6788

 

 

 

EAST WEST BANCORP REPORTS THIRD QUARTER 2009 RESULTS; 25%
REDUCTION IN LAND AND CONSTRUCTION LOANS; LOANS
DELINQUENT 30 TO 89 DAYS DOWN TO 1.01% OF TOTAL LOANS; NET
INTEREST MARGIN INCREASED 22 BASIS POINTS TO 3.20%

 

 

Pasadena, CA – October 21, 2009 – East West Bancorp, Inc. (Nasdaq: EWBC), parent company of East West Bank, today reported financial results for the third quarter of 2009 with a net loss of $68.5 million. The net loss was primarily driven by a $159.2 million provision for loan losses and $24.2 million impairment loss on investment securities.

 

“From the onset of the economic downturn, our strong capital levels have allowed East West to accelerate the resolution of problem assets compared to peers. During the third quarter, we successfully worked towards our goal of putting our credit issues behind us by the end of 2009,” stated Dominic Ng, Chairman, President and Chief Executive Officer of East West. “We actively reduced exposures to problem credits - lowering land and construction loan balances by a substantial $355.6 million or 25% quarter over quarter and selling $206.3 million of loans and real estate owned.”

 

Ng continued, “For the banking industry in general, the economic indicators signal that the next few quarters will still remain challenging due to the weak economy and high levels of unemployment. However, we believe that for East West, credit issues have peaked in the third quarter of 2009.  As a direct result of our strategy to accelerate the resolution of problem loans, we have substantially less credit issues and expect that both provision for loan losses and charge-offs will be reduced in future quarters.”

 

“With the proactive measures we have taken to reduce credit exposures and increase capital levels, we are in a position to both grow organically and through any potential acquisitions. The measures we have taken to fortify our balance sheet are further solidified by our strong core profitability of $63.0 million for the quarter and growing net

 


 

interest margin of 3.20% for the quarter.  We are in a position of strength to opportunistically increase market share and to return to profitability in 2010,” concluded Ng.

 

Third Quarter 2009 Highlights

 

·                Reduction in Problem Credits – Land and construction exposures decreased by 25% or $355.6 million in the third quarter. We continued to actively sell problem loans and REO assets and sold a total of $206.3 million during the quarter, which accelerated charge-offs by $60.1 million for the quarter.

 

·                Reduction in Delinquent Loans - For the second consecutive quarter, loans delinquent 30 or more days decreased. As of September 30, 2009, loans 30 to 89 days delinquent fell to 1.01% of total loans. Loan delinquencies fell across all categories – 30 to 59 day delinquent loans decreased 63% or $37.3 million, 60 to 89 day delinquent loans decreased $27.1 million or 30%, and 90+ days delinquent loans decreased $7.4 million or 5.0%, quarter over quarter.

 

·                Allowance for Loan Losses Strengthened – Total allowance for loan losses increased to $230.7 million, representing 2.74% of outstanding loans compared to 2.62% of outstanding loans in the previous quarter. We continued to strengthen the allowance for loan losses, recording provision for loan losses of $159.2 million and total net charge-offs of $151.2 million for the quarter.  The allowance for loan losses to nonaccrual loan ratio was 113% as of September 30, 2009.

 

·                Strengthening Net Interest Margin – Net interest income for the third quarter increased to $95.9 million, a 9% or $7.6 million increase over second quarter of 2009 and a 20% or $16.2 million increase over first quarter of 2009. The net interest margin for third quarter increased to 3.20%, up 22 basis points from 2.98% in the prior quarter.

 

·                Strong Core Deposit Growth – Total core deposits reached a record high of $4.4 billion as of September 30, 2009, up 9% or $357.7 million from June 30, 2009. With the strong core deposit growth, we reduced the cost of deposits for the quarter to 1.24%, down 23 basis point from 1.47% in the prior quarter.

 

·                Strong Core Operating Earnings  – Core operating earnings, excluding the impact of provision for loan losses, investment securities and REO write-downs and nonrecurring FDIC assessments totaled $63.0 million for the third quarter, a 12% or $7.0 million increase from second quarter and a 28% or $13.7 million increase from first quarter.  The strong core operating earnings resulted in an efficiency ratio of 40% for the third quarter of 2009, down from 55% in the second quarter of 2009.

 

·                Capital Strengthened – In July 2009, East West raised $80.3 million in an oversubscribed common stock offering. During the second and third quarters of 2009, East West took actions to further strengthen capital and increased tangible common equity by $249 million.  As of September 30, 2009, East West’s Tier 1 risk-based

 

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capital ratio was 13.08%, significantly higher than the well capitalized requirement of 6.00%.

 

Credit Quality

 

During the third quarter, East West continued to execute on its strategy to de-risk the loan portfolio and reduce exposure to problem credits. East West sold $180.6 million in loans and $25.7 million in REO assets, or a total of $206.3 million or 85 loans and properties during the third quarter. These sales of problem loans and REO assets resulted in additional charge-offs of $60.1 million for the third quarter. East West has consistently applied its strategy of accelerating the resolution of problem assets. Although this approach has led to accelerated charge-offs, management believes that these were prudent actions that significantly reduced overall risk.

 

Excluding the land and construction portfolios which are discussed in more detail below, both delinquent and nonaccrual loans remain low for all other loan categories, as shown in the table below. Both delinquent and nonaccrual loans are only 1% of the total loan balance for income producing commercial real estate loans.

 

Loan Credit Quality Composition at September 30, 2009

 

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Loan Balance

 

Nonaccrual
Loans

 

Nonaccrual
Loans % of
Loans

 

Total
Delinquent
Loans

 

Delinquent %
of Loans

Real estate - single family

 

$

912.4

 

$

6.2

 

0.7%

 

$

19.8

 

2.2%

Real estate - multifamily

 

1,036.9

 

11.9

 

1.1%

 

24.5

 

2.4%

Real estate - commercial

 

3,624.5

 

33.4

 

0.9%

 

43.5

 

1.2%

Real estate - land

 

415.2

 

57.2

 

13.8%

 

43.2

 

10.4%

Real estate - construction

 

654.1

 

65.8

 

10.1%

 

69.9

 

10.7%

Commercial

 

1,110.4

 

25.0

 

2.3%

 

17.4

 

1.6%

Trade finance

 

233.1

 

3.9

 

1.7%

 

5.5

 

2.4%

Consumer

 

432.9

 

1.0

 

0.2%

 

1.0

*

0.2%

Total gross loans receivable

 

$

8,419.5

 

$

204.4

 

2.4%

 

$

224.8

 

2.7%

* Delinquent student loans that are fully guaranteed by the U.S. government are excluded from these amounts.

 

Land and Construction Loan Exposures

 

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,
2007

 

December 31,
2008

 

June 30,
2009

 

September 30,
2009

 

Land

 

 

$

 681

 

$

 577

 

$

 480

 

$

 415

 

Construction:

 

 

 

 

 

 

 

 

 

 

Funded commitment (balance)

 

 

1,547

 

1,261

 

945

 

654

 

Unfunded commitment

 

 

994

 

372

 

176

 

128

 

Total construction exposure

 

 

$

 2,541

 

$

 1,633

 

$

 1,121

 

$

 782

 

Total land and construction exposure

 

 

$

 3,222

 

$

 2,210

 

$

 1,601

 

$

 1,197

 

 

The aggressive actions East West has taken to reduce credit risk has accelerated the timing of charge-offs but has resulted in a significant decrease in the exposure to land and construction loans, the loan categories that have shown the most weakness during this prolonged economic recession. Since December 31, 2007, East West has reduced total exposure to land and construction loans by $2.0 billion or 63%. As of September 30,

 

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2009, land and construction loan balances were reduced to $415.2 million and $654.1 million, respectively, down $355.6 million or 25% from June 30, 2009. Management has continued to decrease exposure to land and construction loans through payoffs, pay downs and note sales and anticipates that by the end of the fourth quarter of 2009, the remaining exposures to these loan categories will be further reduced.

 

Delinquent Loans Trend

 

(in millions)

 

 

As of the Quarter Ended

 

 

 

 

March 31, 2009

 

June 30, 2009

 

September 30, 2009

 

Loans delinquent 30-59 days

 

 

$

189.9

 

$

59.1

 

$

21.8

 

Loans delinquent 60-89 days

 

 

115.9

 

90.1

 

63.0

 

Loans delinquent 90+ Days

 

 

178.8

 

147.4

 

140.0

 

Total delinquent loans

 

 

$

484.6

 

$

296.6

 

$

224.8

 

Total loans receivable

 

 

$

8,064.3

 

$

8,529.0

 

$

8,419.5

 

Delinquent loans to total loans ratio

 

 

6.01%

 

3.48%

 

2.67%

 

 

Total loan delinquencies as of September 30, 2009 decreased by $71.8 million or 24% from the prior quarter, marking the second consecutive quarter that loan delinquencies have decreased. Loan delinquency fell across all delinquency categories and loan types, but particularly for early stage delinquencies. The decrease in delinquent loans is primarily due to fewer migrations into delinquency categories, the sale of problem loans, and the payoff and resolution of delinquent loans.

 

Total nonperforming assets as of September 30, 2009 were $230.2 million or 1.84% of total assets, compared to $189.4 million or 1.49% of total assets at June 30, 2009 and $286.6 million or 2.28% of total assets at March 31, 2009. Nonperforming loans increased quarter over quarter largely due to land loans that are current or otherwise under 90 days delinquent that were placed on nonaccrual. We continue to proactively recognize problem credits. All nonaccrual loans are reviewed for potential impairment and shortfalls in collateral are charged-off.

 

During the third quarter, we recorded $159.2 million provision for loan losses, increasing the allowance for loan losses at September 30, 2009 to $230.7 million or 2.74% of outstanding loans. This compares to $223.7 million or 2.62% of outstanding loans at June 30, 2009.  For the third quarter of 2009, East West had net charge-offs of $151.2 million, of which approximately two-thirds related to land and construction loans. Management believes that both provision for loan losses and charge-offs have peaked and that although they may continue to be elevated in the near future, the levels will be lower than third quarter of 2009.

 

The allowance for loan losses of $230.7 million was 113% of nonaccrual loans and 103% of delinquent loans as of September 30, 2009. As of September 30, 2009, East West’s allowance coverage to nonaccrual loans and delinquent loans is higher than peers, reflecting our aggressive stance in removing problem credits from our balance sheet and charging off shortfalls in collateral value. Further, East West’s nonaccrual loan and nonperforming asset levels are substantially below peers.

 

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CRE Portfolio Performing Well

 

East West’s income producing commercial real estate loans totaling $3.6 billion continues to perform well. Total delinquent and nonaccrual loans in this category remain low at only 1% of total loans. Total income producing commercial real estate loan charge-offs totaled $23.1 million for the third quarter, largely due to four loans which were sold during the quarter. These loans were construction take-out loans or otherwise projects which never fully leased up and not typical of our income producing commercial real estate portfolio.

 

CRE Loan Portfolio LTV and Maturity Composition at September 30, 2009

 

LTV Distribution *

 

Maturity Year

Less Than 50%

 

35%

 

2009

 

5.5%

 

50%-55%

 

12%

 

2010

 

6.4%

 

55%-60%

 

15%

 

2011

 

6.9%

 

60%-65%

 

19%

 

2012

 

5.8%

 

65%-70%

 

10%

 

2013

 

7.0%

 

70%-75%

 

6%

 

2014

 

16.0%

 

75% and Above

 

3%

 

2015 and Beyond

 

52.4%

 

Total CRE Loans

 

100%

 

Total CRE Loans

 

100.0%

 

Weighted Average LTV

 

54%

 

Weighted Average Maturity

 

2015

 

 

* The LTV distribution is calculated based on the original appraisal value at the origination date divided by the current loan balance.

 

The vast majority of East West’s income producing commercial real estate portfolio is comprised of low loan to value, seasoned loans with full personal guarantees from borrowers. Refinance risk for income producing commercial real estate loans maturing soon remain a strong risk for the industry as real estate values have fallen. For the East West income producing commercial real estate portfolio, this risk is mitigated by the low loan to values. Further, refinance risk is limited as we have single digit maturities each year for the next five years. Of the total $3.6 billion income producing commercial real estate portfolio, 81% have an original LTV of 65% or less, 68% have maturities in 2014 or beyond and 85% are variable rate loans (where borrowers have benefited from lowered debt service on their loans). Overall, we believe that due to these strong credit metrics, our income producing commercial real estate portfolio is resilient.

 

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Loan Origination

 

We continue to prudently underwrite new loans, originating $334.9 million in new loans for the third quarter of 2009. The decrease in the total loan balance quarter over quarter was due to new loan production being fully offset by the successful resolution of problem loans. Year to date, we have originated a total of $970.1 million in new loans. Overall, new loan originations have steadily increased throughout 2009.

 

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Deposit Growth

(In billions)

 

 

December 31,
2008

 

June 30,
2009

 

September 30,
2009

 

Total core deposits

 

$

3.40

 

$

4.07

 

$

4.43

 

Total time deposits

 

4.74

 

4.59

 

4.24

 

Total deposits

 

$

8.14

 

8.66

 

$

8.67

 

Cost of deposits (for the quarter ended)

 

2.14%

 

1.47%

 

1.24%

 

 

Total deposits increased to $8.7 billion as of September 30, 2009, $9.7 million higher compared to June 30, 2009. Total core deposits reached a record high of $4.4 billion as of September 30, 2009, up 9% or $357.7 million from June 30, 2009. We experienced growth in all core deposits - noninterest bearing demand, interest checking, money market and savings. In particular, money market deposits increased to a record $2.3 billion, a $263.9 million or 13% increase from June 30, 2009.

 

The deposit growth for the quarter was net of a $210.0 million reduction in brokered deposits. We continue to reduce our reliance on brokered deposits as we manage our cost of deposits and funding needs.

 

The cost of deposits decreased to 1.24% for the third quarter of 2009, a decrease of 23 basis points from 1.47% in the second quarter of 2009. The decrease in the cost of deposits was driven by the substantial increase in core deposits and a decreased reliance on time deposits.

 

Capital Strength

(Dollars in millions)

 

 

September 30,
2009

 

Well Capitalized
Regulatory
Requirement

 

Total Excess
Above Well
Capitalized

 

Tier 1 leverage capital ratio

 

10.62%

 

5.00%

 

$

691.70

 

Tier 1 risk-based capital ratio

 

13.08%

 

6.00%

 

707.50

 

Total risk-based capital ratio

 

15.13%

 

10.00%

 

512.40

 

Tangible common equity to risk weighted assets ratio

 

7.98%

 

4.00%

*

397.96

 

 

* The tangible common equity to risk weighted asset ratio is a non-GAAP disclosure. See reconciliation of the GAAP financial measure to this non-GAAP financial measure in the tables attached. As there is no stated regulatory guideline for this ratio, the Supervisory Capital Assessment Program (SCAP) guideline of 4.00% has been used.

 

East West has always been committed to maintaining strong capital levels and has been well capitalized throughout this economic cycle. During the second and third quarters of 2009, East West took actions to further strengthen capital and increased tangible common equity by $249 million.  As of the end of the third quarter, East West significantly exceeded well capitalized requirements under all regulatory guidelines.

 

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Third Quarter 2009 Operating Results

 

Net interest income for the third quarter totaled $95.9 million, a 9% increase over second quarter of 2009. The net interest margin for the third quarter was 3.20%, a 22 basis point increase from 2.98% in the prior quarter. The net interest margin continues to strengthen due to increases in core deposits, ongoing downward repricing of maturing higher cost time deposits and money market deposits and the ongoing pay-downs of higher cost term FHLB borrowings. During the third quarter, East West paid down $250.0 million in FHLB advances at an average cost of 5.14%. East West expects to pay down another $200.0 million at an average cost of 4.43% in the fourth quarter of 2009.

 

Currently, we estimate that the net interest margin will be approximately 3.35% to 3.40% for the fourth quarter of 2009.

 

Excluding the non-cash charge for impairment of investment securities and gains on sales of investment securities, noninterest income for the third quarter totaled $10.2 million, a 7% increased from $9.6 million in the second quarter of 2009. See reconciliation of the GAAP financial measure to this non-GAAP financial measure in the tables attached. In the third quarter of 2009, we recorded $24.2 million write-downs on investment securities for other-than-temporary impairment on bank pooled trust preferred securities. Previously, we recorded other-than-temporary impairment on bank pooled trust preferred securities of $37.4 million in the second quarter of 2009.

 

Noninterest expense totaled $46.1 million for the third quarter 2009, a decrease of $11.8 million from the second quarter of 2009. The decrease in noninterest expense quarter over quarter was primarily due to the reduction in OREO expense of $7.9 million. The efficiency ratio continued to improve, totaling 40% for the third quarter of 2009.

 

Dividend Payout

 

East West Bancorp’s Board of Directors has declared fourth quarter dividends on the common stock and remaining Series A Preferred Stock. The common stock cash dividend of $0.01 is payable on or about November 24, 2009 to shareholders of record on November 10, 2009. The dividend on the Series A Preferred Stock of $20.00 per share is payable on November 1, 2009 to shareholders of record on October 15, 2009. We will continue to review the dividend policy quarterly in light of the current economic environment.

 

About East West

 

East West Bancorp [NASDAQ: EWBC] is a publicly owned company with $12.5 billion in assets.  The Company’s wholly owned subsidiary, East West Bank, is FDIC insured and the second largest full service commercial bank headquartered in Southern California with 71 branch locations.  East West Bank serves the community with 69 branch locations throughout the counties of Los Angeles, Orange, San Bernardino, Alameda, San Francisco, Santa Clara, San Mateo and one branch location in Houston, Texas.  East West Bank has four international locations in Greater China, which include a full service branch in Hong Kong and representative offices in Beijing, Shanghai and Taipei.  In

 

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addition to serving the mainstream market, East West is also one of the largest financial institutions in the nation serving the Chinese-American community.  For more information on East West Bancorp, visit the Company’s website at www.eastwestbank.com.

 

Forward-Looking Statements

 

This release may contain forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and accordingly, the cautionary statements contained in East West Bancorp’s Annual Report on Form 10-K for the year ended Dec. 31, 2008 (See Item I -- Business, and Item 7 -- Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations), and other filings with the Securities and Exchange Commission are incorporated herein by reference. These factors include, but are not limited to: the effect of interest rate and currency exchange fluctuations; competition in the financial services market for both deposits and loans; EWBC’s ability to efficiently incorporate acquisitions into its operations; the ability of borrowers to perform as required under the terms of their loans; effect of additional provisions for loan losses; effect of any goodwill impairment, the ability of EWBC and its subsidiaries to increase its customer base; the effect of regulatory and legislative action, including California tax legislation and an announcement by the state’s Franchise Tax Board regarding the taxation of Registered Investment Companies; risks inherent in possible acquisitions and FDIC-assisted transactions; and regional and general economic conditions.  Actual results and performance in future periods may be materially different from any future results or performance suggested by the forward-looking statements in this release. Such forward-looking statements speak only as of the date of this release. East West expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in the Bank’s expectations of results or any change in event.

 

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EAST WEST BANCORP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(unaudited)

 

 

 

September 30, 2009

 

June 30, 2009

 

December 31, 2008

Assets

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$ 

132,569

 

 

$ 

148,913

 

 

$ 

144,486

 

Short-term investments

 

460,665

 

 

424,201

 

 

734,367

 

Interest-bearing deposits in other banks

 

320,860

 

 

554,293

 

 

228,441

 

Securities purchased under resale agreements

 

75,000

 

 

75,000

 

 

50,000

 

Investment securities held-to-maturity, at amortized cost

 

781,331

 

 

794,840

 

 

122,317

 

Investment securities available-for-sale, at fair value

 

1,457,023

 

 

1,381,810

 

 

2,040,194

 

Loans receivable (net of allowance for loan losses of $230,650, $223,700 and $178,027)

 

8,156,838

 

 

8,289,229

 

 

8,069,377

 

Other real estate owned, net

 

24,185

 

 

27,188

 

 

38,302

 

Premiums on deposits acquired, net

 

17,904

 

 

18,973

 

 

21,190

 

Goodwill

 

337,438

 

 

337,438

 

 

337,438

 

Other assets

 

722,117

 

 

667,630

 

 

636,704

 

Total assets

 

$ 

12,485,930

 

 

$ 

12,719,515

 

 

$ 

12,422,816

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

Deposits

 

$ 

8,668,557

 

 

$ 

8,658,818

 

 

$ 

8,141,959

 

Federal funds purchased

 

3,022

 

 

22

 

 

28,022

 

Federal Home Loan Bank advances

 

923,216

 

 

1,173,238

 

 

1,353,307

 

Securities sold under repurchase agreements

 

1,019,450

 

 

1,020,080

 

 

998,430

 

Notes payable

 

7,111

 

 

11,578

 

 

16,506

 

Long-term debt

 

235,570

 

 

235,570

 

 

235,570

 

Accrued expenses and other liabilities

 

107,222

 

 

143,441

 

 

98,256

 

Total liabilities

 

10,964,148

 

 

11,242,747

 

 

10,872,050

 

Stockholders’ equity

 

1,521,782

 

 

1,476,768

 

 

1,550,766

 

Total liabilities and stockholders’ equity

 

$ 

12,485,930

 

 

$ 

12,719,515

 

 

$ 

12,422,816

 

Book value per common share

 

$ 

12.58

 

 

$ 

15.65

 

 

$ 

16.92

 

Number of common shares at period end

 

91,694

 

 

64,032

 

 

63,746

 

 

 

 

 

 

 

 

 

 

 

Ending Balances

 

 

 

 

 

 

 

 

 

 

 

September 30, 2009

 

June 30, 2009

 

December 31, 2008

Loans receivable

 

 

 

 

 

 

 

 

 

Real estate - single family

 

$ 

912,391

 

 

$ 

883,447

 

 

$ 

491,315

 

Real estate - multifamily

 

1,036,932

 

 

1,017,803

 

 

677,989

 

Real estate - commercial

 

3,624,469

 

 

3,510,248

 

 

3,472,000

 

Real estate - land

 

415,228

 

 

479,808

 

 

576,564

 

Real estate - construction

 

654,115

 

 

945,107

 

 

1,260,724

 

Commercial

 

1,110,373

 

 

1,143,526

 

 

1,210,260

 

Trade finance

 

233,123

 

 

269,150

 

 

343,959

 

Consumer

 

432,844

 

 

279,872

 

 

216,642

 

Total gross loans receivable

 

8,419,475

 

 

8,528,961

 

 

8,249,453

 

Unearned fees, premiums and discounts

 

(31,987

)

 

(16,032

)

 

(2,049

)

Allowance for loan losses

 

(230,650

)

 

(223,700

)

 

(178,027

)

Net loans receivable

 

$ 

8,156,838

 

 

$ 

8,289,229

 

 

$ 

8,069,377

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$ 

1,397,217

 

 

$ 

1,326,952

 

 

$ 

1,292,997

 

Interest-bearing checking

 

347,745

 

 

338,696

 

 

363,285

 

Money market

 

2,263,319

 

 

1,999,464

 

 

1,323,402

 

Savings

 

420,365

 

 

405,837

 

 

420,133

 

Total core deposits

 

4,428,646

 

 

4,070,949

 

 

3,399,817

 

Time deposits less than $100,000

 

1,062,575

 

 

1,121,648

 

 

1,521,988

 

Time deposits $100,000 or greater

 

3,177,336

 

 

3,466,221

 

 

3,220,154

 

Total time deposits

 

4,239,911

 

 

4,587,869

 

 

4,742,142

 

Total deposits

 

$ 

8,668,557

 

 

$ 

8,658,818

 

 

$ 

8,141,959

 

 

10

 


 

EAST WEST BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(unaudited)

 

 

 

 

 

Quarter Ended

 

 

 

 

 

September 30, 2009

 

June 30, 2009

 

September 30, 2008

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

$ 

147,924

 

 

$ 

146,333

 

 

$ 

159,862

 

Interest expense

 

(52,044

)

 

(58,073

)

 

(73,347

)

Net interest income before provision for loan losses

 

95,880

 

 

88,260

 

 

86,515

 

Provision for loan losses

 

(159,244

)

 

(151,422

)

 

(43,000

)

Net interest (loss) income after provision for loan losses

 

(63,364

)

 

(63,162

)

 

43,515

 

Noninterest (loss) income

 

(11,880

)

 

(26,199

)

 

(43,550

)

Noninterest expense

 

(46,064

)

 

(57,912

)

 

(48,526

)

Loss before benefit for income taxes

 

(121,308

)

 

(147,273

)

 

(48,561

)

Benefit for income taxes

 

52,777

 

 

60,548

 

 

17,355

 

Loss before extraordinary item

 

$ 

(68,531

)

 

$ 

(86,725

)

 

$ 

(31,206

)

Extraordinary item, net of tax

 

-    

 

 

(5,366

)

 

-    

 

Net loss after extraordinary item

 

$ 

(68,531

)

 

$ 

(92,091

)

 

$ 

(31,206

)

Preferred stock dividend, inducement, and amortization of preferred stock discount

 

(10,620

)

 

(23,623

)

 

(4,089

)

Net loss available to common stockholders

 

$ 

(79,151

)

 

$ 

(115,714

)

 

$ 

(35,295

)

Net loss per share, basic

 

$ 

(0.91

)

 

$ 

(1.83

)

 

$ 

(0.56

)

Net loss per share, diluted

 

$ 

(0.91

)

 

$ 

(1.83

)

 

$ 

(0.56

)

Shares used to compute per share net loss:

 

 

 

 

 

 

 

 

 

- Basic

 

86,538

 

 

63,105

 

 

62,675

 

- Diluted

 

86,538

 

 

63,105

 

 

62,675

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

 

 

 

September 30, 2009

 

June 30, 2009

 

September 30, 2008

Noninterest (loss) income:

 

 

 

 

 

 

 

 

 

Impairment loss on investment securities

 

$ 

(24,249

)

 

$ 

(37,447

)

 

$ 

(53,567

)

Branch fees

 

4,679

 

 

4,991

 

 

4,285

 

Net gain on sale of investment securities

 

2,177

 

 

1,680

 

 

-    

 

Letters of credit fees and commissions

 

1,984

 

 

1,930

 

 

2,319

 

Ancillary loan fees

 

1,227

 

 

1,356

 

 

1,783

 

Net gain on sale of loans

 

8

 

 

3

 

 

144

 

Other operating income

 

2,294

 

 

1,288

 

 

1,486

 

Total noninterest (loss) income

 

$ 

(11,880

)

 

$ 

(26,199

)

 

$ 

(43,550

)

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

$ 

15,875

 

 

$ 

16,509

 

 

$ 

17,520

 

Occupancy and equipment expense

 

6,262

 

 

6,297

 

 

6,817

 

Deposit insurance premiums and regulatory assessments

 

6,057

 

 

9,568

 

 

1,678

 

Amortization of investments in affordable housing partnerships

 

1,709

 

 

1,652

 

 

1,886

 

Legal expense

 

1,323

 

 

1,755

 

 

855

 

Data processing

 

1,079

 

 

1,141

 

 

1,055

 

Amortization and impairment loss of premiums on deposits acquired

 

1,069

 

 

1,092

 

 

1,581

 

Other real estate owned expense

 

767

 

 

8,682

 

 

2,123

 

Consulting expense

 

759

 

 

672

 

 

1,254

 

Other operating expense

 

11,164

 

 

10,544

 

 

13,757

 

Total noninterest expense

 

$ 

46,064

 

 

$ 

57,912

 

 

$ 

48,526

 

 

11


 

EAST WEST BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(unaudited)

 

 

 

Year To Date

 

 

 

 

 

September 30, 2009

 

September 30, 2008

 

% Change

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

$

439,180

 

 

$

514,951

 

 

(15)

 

Interest expense

 

(175,359

)

 

(236,641

)

 

(26)

 

Net interest income before provision for loan losses

 

263,821

 

 

278,310

 

 

(5)

 

Provision for loan losses

 

(388,666

)

 

(183,000

)

 

112

 

Net interest (loss) income after provision for loan losses

 

(124,845

)

 

95,310

 

 

(231)

 

Noninterest loss

 

(24,285

)

 

(24,199

)

 

0

 

Noninterest expense

 

(155,382

)

 

(157,071

)

 

(1)

 

Loss before benefit for income taxes

 

(304,512

)

 

(85,960

)

 

254

 

Benefit for income taxes

 

126,790

 

 

33,911

 

 

274

 

Net loss before extraordinary items

 

$

(177,722

)

 

$

(52,049

)

 

241

 

Extraordinary item, net of tax

 

$

(5,366

)

 

$

-    

 

 

NA

 

Net loss after extraordinary item

 

$

(183,088

)

 

$

(52,049

)

 

252

 

Preferred stock dividend, inducement, and amortization of preferred stock discount

 

(42,986

)

 

(4,089

)

 

951

 

Net loss available to common stockholders

 

$

(226,074

)

 

$

(56,138

)

 

303

 

Net loss per share, basic

 

$

(3.19

)

 

$

(0.90

)

 

254

 

Net loss per share, diluted

 

$

(3.19

)

 

$

(0.90

)

 

254

 

Shares used to compute per share net loss:

 

 

 

 

 

 

 

 

 

- Basic

 

70,967

 

 

62,586

 

 

13

 

- Diluted

 

70,967

 

 

62,586

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

Year To Date

 

 

 

 

 

September 30, 2009

 

September 30, 2008

 

% Change

 

Noninterest loss:

 

 

 

 

 

 

 

 

 

Impairment loss on investment securities

 

$

(61,896

)

 

$

(63,512

)

 

(3)

 

Branch fees

 

14,463

 

 

12,725

 

 

14

 

Net gain on sale of investment securities

 

7,378

 

 

7,767

 

 

(5)

 

Letters of credit fees and commissions

 

5,768

 

 

7,472

 

 

(23)

 

Ancillary loan fees

 

4,812

 

 

3,908

 

 

23

 

Net gain on sale of loans

 

19

 

 

2,272

 

 

(99)

 

Other operating income

 

5,171

 

 

5,169

 

 

0

 

Total noninterest loss

 

$

(24,285

)

 

$

(24,199

)

 

(0)

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

$

49,492

 

 

$

66,578

 

 

(26)

 

Occupancy and equipment expense

 

19,950

 

 

20,364

 

 

(2)

 

Deposit insurance premiums and regulatory assessments

 

18,950

 

 

5,191

 

 

265

 

Other real estate owned expense

 

16,480

 

 

3,520

 

 

368

 

Amortization of investments in affordable housing partnerships

 

5,121

 

 

5,521

 

 

(7)

 

Legal expense

 

4,856

 

 

3,890

 

 

25

 

Data processing

 

3,362

 

 

3,386

 

 

(1)

 

Amortization and impairment loss of premiums on deposits acquired

 

3,286

 

 

6,145

 

 

(47)

 

Consulting expense

 

1,879

 

 

3,788

 

 

(50)

 

Other operating expense

 

32,006

 

 

38,688

 

 

(17)

 

Total noninterest expense

 

$

155,382

 

 

$

157,071

 

 

(1)

 

 

12


 

EAST WEST BANCORP, INC

DELINQUENT LOANS BY LOAN CATEGORIES

(in thousands)

(unaudited)

 

 

 

As of September 30, 2009

 

Loan Type

 

30-59 Days
Delinquent

 

60-89 Days
Delinquent

 

90+ Days
Delinquent

 

Total Delinquent
Loans

 

Real estate - single family

 

$

-    

 

$

13,577

 

$

6,189

 

$

19,766

 

Real estate - multifamily

 

4,811

 

8,506

 

11,211

 

24,528

 

Real estate - commercial

 

9,184

 

16,896

 

17,381

 

43,461

 

Real estate - land

 

1,521

 

18,135

 

23,568

 

43,224

 

Real estate - residential construction

 

-    

 

3,971

 

55,130

 

59,101

 

Real estate - commercial construction

 

-    

 

-    

 

10,784

 

10,784

 

Commercial

 

4,235

 

1,363

 

11,783

 

17,381

 

Trade finance

 

1,785

 

32

 

3,666

 

5,483

 

Consumer (1)

 

277

 

470

 

293

 

1,040

 

Total Delinquent Loans

 

$

21,813

 

$

62,950

 

$

140,005

 

$

224,768

 

 

 

 

 

 

 

 

 

 

 

(1) This figure excludes delinquent student loans that are fully guaranteed by the U.S. government. As of September 30, 2009, $13.8 million of student loans were 30-59 days delinquent and $17.0 milion student loans were 60-89 days delinquent. There were no student loans 90+ days delinquent.

 

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2009

Loan Type

 

30-59 Days
Delinquent

 

60-89 Days
Delinquent

 

90+ Days
Delinquent

 

Total Delinquent
Loans

 

Real estate - single family

 

$

553

 

$

6,775

 

$

5,181

 

$

12,509

 

Real estate - multifamily

 

1,960

 

5,618

 

7,938

 

15,516

 

Real estate - commercial

 

33,416

 

28,341

 

19,786

 

81,543

 

Real estate - land

 

1,570

 

22,190

 

35,660

 

59,420

 

Real estate - residential construction

 

17,331

 

6,789

 

46,176

 

70,296

 

Real estate - commercial construction

 

-    

 

-    

 

20,629

 

20,629

 

Commercial

 

4,021

 

19,480

 

8,034

 

31,535

 

Trade finance

 

-    

 

408

 

3,706

 

4,114

 

Consumer

 

244

 

458

 

339

 

1,041

 

Total Delinquent Loans

 

$

59,095

 

$

90,059

 

$

147,449

 

$

296,603

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2009

Loan Type

 

30-59 Days
Delinquent

 

60-89 Days
Delinquent

 

90+ Days
Delinquent

 

Total Delinquent
Loans

 

Real estate - single family

 

$

31,105

 

$

4,226

 

$

18,515

 

$

53,846

 

Real estate - multifamily

 

17,310

 

2,585

 

9,863

 

29,758

 

Real estate - commercial

 

68,964

 

25,929

 

12,465

 

107,358

 

Real estate - land

 

12,835

 

8,969

 

63,052

 

84,856

 

Real estate - residential construction

 

31,166

 

61,286

 

28,433

 

120,885

 

Real estate - commercial construction

 

19,512

 

4,545

 

28,604

 

52,661

 

Commercial

 

4,317

 

3,751

 

16,798

 

24,866

 

Trade finance

 

4,123

 

4,468

 

177

 

8,768

 

Consumer

 

613

 

110

 

839

 

1,562

 

Total Delinquent Loans

 

$

189,945

 

$

115,869

 

$

178,746

 

$

484,560

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2008

Loan Type

 

30-59 Days
Delinquent

 

60-89 Days
Delinquent

 

90+ Days
Delinquent

 

Total Delinquent
Loans

 

Real estate - single family

 

$

16,708

 

$

6,237

 

$

13,519

 

$

36,464

 

Real estate - multifamily

 

9,372

 

2,382

 

11,845

 

23,599

 

Real estate - commercial

 

21,036

 

18,364

 

24,680

 

64,080

 

Real estate - land

 

9,335

 

19,002

 

66,185

 

94,522

 

Real estate - residential construction

 

13,242

 

9,379

 

27,052

 

49,673

 

Real estate - commercial construction

 

-    

 

-    

 

30,581

 

30,581

 

Commercial

 

3,970

 

13,918

 

6,570

 

24,458

 

Trade finance

 

374

 

-    

 

65

 

439

 

Consumer

 

1,326

 

252

 

1,654

 

3,232

 

Total Delinquent Loans

 

$

75,363

 

$

69,534

 

$

182,151

 

$

327,048

 

 

13


 

EAST WEST BANCORP, INC

TOTAL NON-PERFORMING ASSETS

(in thousands)

(unaudited)

 

 

 

As of September 30, 2009

 

 

 

Total Nonaccrual Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

90+ Days
Delinquent

 

Under 90+ Days
Delinquent

 

Total
Nonaccrual
Loans

 

90+ Days
Delinquent Not
On Nonaccrual

 

Total Non-
performing
Loans

 

REO Assets

 

Total
Non-Performing
Assets

 

Loan Type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate - single family

 

$

6,189

 

$

-    

 

$

6,189

 

$

-    

 

$

6,189

 

$

648

 

$

6,837

 

Real estate - multifamily

 

11,211

 

652

 

11,863

 

-    

 

11,863

 

1,147

 

13,010

 

Real estate - commercial

 

17,381

 

16,040

 

33,421

 

-    

 

33,421

 

2,330

 

35,751

 

Real estate - land

 

23,568

 

33,610

 

57,178

 

-    

 

57,178

 

4,020

 

61,198

 

Real estate - residential construction

 

55,130

 

-    

 

55,130

 

-    

 

55,130

 

12,238

 

67,368

 

Real estate - commercial construction

 

10,784

 

-    

 

10,784

 

-    

 

10,784

 

3,680

 

14,464

 

Commercial

 

11,783

 

13,227

 

25,010

 

-    

 

25,010

 

122

 

25,132

 

Trade Finance

 

2,110

 

1,785

 

3,895

 

1,556

 

5,451

 

-    

 

5,451

 

Consumer

 

293

 

676

 

969

 

-    

 

969

 

-    

 

969

 

  Total

 

$

138,449

 

$

65,990

 

$

204,439

 

$

1,556

 

$

205,995

 

$

24,185

 

$

230,180

 

 

 

 

As of June 30, 2009

 

 

 

Total Nonaccrual Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

90+ Days
Delinquent

 

Under 90+ Days
Delinquent

 

Total
Nonaccrual
Loans

 

90+ Days
Delinquent Not
On Nonaccrual

 

Total Non-
performing
Loans

 

REO Assets

 

Total
Non-Performing
Assets

 

Loan Type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate - single family

 

$

5,181

 

$

-    

 

$

5,181

 

$

-    

 

$

5,181

 

$

4,921

 

$

10,102

 

Real estate - multifamily

 

7,938

 

-    

 

7,938

 

-    

 

7,938

 

281

 

8,219

 

Real estate - commercial

 

19,786

 

4,590

 

24,376

 

-    

 

24,376

 

2,887

 

27,263

 

Real estate - land

 

35,660

 

1,656

 

37,316

 

-    

 

37,316

 

13,307

 

50,623

 

Real estate - residential construction

 

46,176

 

-    

 

46,176

 

-    

 

46,176

 

4,154

 

50,330

 

Real estate - commercial construction

 

20,629

 

-    

 

20,629

 

-    

 

20,629

 

-    

 

20,629

 

Commercial

 

8,034

 

8,067

 

16,101

 

-    

 

16,101

 

626

 

16,727

 

Trade Finance

 

3,706

 

-    

 

3,706

 

-    

 

3,706

 

211

 

3,917

 

Consumer

 

339

 

412

 

751

 

-    

 

751

 

801

 

1,552

 

  Total

 

$

147,449

 

$

14,725

 

$

162,174

 

$

-    

 

$

162,174

 

$

27,188

 

$

189,362

 

 

 

 

As of March 31, 2009

 

 

 

Total Nonaccrual Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

90+ Days
Delinquent

 

Under 90+ Days
Delinquent

 

Total
Nonaccrual
Loans

 

90+ Days
Delinquent Not
On Nonaccrual

 

Total Non-
performing
Loans

 

REO Assets

 

Total
Non-Performing
Assets

 

Loan Type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate - single family

 

$

18,515

 

$

634

 

$

19,149

 

$

-    

 

$

19,149

 

$

671

 

$

19,820

 

Real estate - multifamily

 

9,863

 

-    

 

9,863

 

-    

 

9,863

 

887

 

10,750

 

Real estate - commercial

 

12,465

 

42,724

 

55,189

 

-    

 

55,189

 

4,240

 

59,429

 

Real estate - land

 

63,052

 

6,233

 

69,285

 

-    

 

69,285

 

17,934

 

87,219

 

Real estate - residential construction

 

28,433

 

14,196

 

42,629

 

-    

 

42,629

 

13,278

 

55,907

 

Real estate - commercial construction

 

28,604

 

-    

 

28,604

 

-    

 

28,604

 

-    

 

28,604

 

Commercial

 

16,798

 

5,000

 

21,798

 

-    

 

21,798

 

1,236

 

23,034

 

Trade Finance

 

177

 

-    

 

177

 

-    

 

177

 

270

 

447

 

Consumer

 

839

 

482

 

1,321

 

-    

 

1,321

 

118

 

1,439

 

  Total

 

$

178,746

 

$

69,269

 

$

248,015

 

$

-    

 

$

248,015

 

$

38,634

 

$

286,649

 

 

 

 

As of December 31, 2008

 

 

 

Total Nonaccrual Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

90+ Days
Delinquent

 

Under 90+ Days
Delinquent

 

Total
Nonaccrual
Loans

 

90+ Days Delinquent Not On Nonaccrual

 

Total Non-performing Loans

 

REO Assets

 

Total
Non-Performing Assets

 

Loan Type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate - single family

 

$

13,519

 

$

-    

 

$

13,519

 

$

-    

 

$

13,519

 

$

419

 

$

13,938

 

Real estate - multifamily

 

11,845

 

-    

 

11,845

 

-    

 

11,845

 

1,136

 

12,981

 

Real estate - commercial

 

24,680

 

-    

 

24,680

 

-    

 

24,680

 

4,882

 

29,562

 

Real estate - land

 

66,185

 

12,892

 

79,077

 

-    

 

79,077

 

10,307

 

89,384

 

Real estate - residential construction

 

27,052

 

8,766

 

35,818

 

-    

 

35,818

 

21,146

 

56,964

 

Real estate - commercial construction

 

30,581

 

-    

 

30,581

 

-    

 

30,581

 

-    

 

30,581

 

Commercial

 

6,570

 

10,604

 

17,174

 

-    

 

17,174

 

142

 

17,316

 

Trade Finance

 

65

 

-    

 

65

 

-    

 

65

 

270

 

335

 

Consumer

 

1,654

 

194

 

1,848

 

-    

 

1,848

 

-    

 

1,848

 

  Total

 

$

182,151

 

$

32,456

 

$

214,607

 

$

-    

 

$

214,607

 

$

38,302

 

$

252,909

 

 

14


 

EAST WEST BANCORP, INC.

QUARTERLY ALLOWANCE FOR LOAN LOSSES RECAP

(In thousands)

(unaudited)

 

 

 

Quarter Ended

 

 

9/30/2009

 

6/30/2009

 

3/31/2009

LOANS

 

 

 

 

 

 

Allowance balance, beginning of period

 

$ 

223,700

 

$ 

195,450

 

$ 

178,027

 

 

 

 

 

 

 

Allowance for unfunded loan commitments and letters of credit

 

(1,051)

 

1,442

 

(1,008)

Provision for loan losses

 

159,244

 

151,422

 

78,000

Impact of desecuritization

 

-    

 

9,262

 

-    

 

 

 

 

 

 

 

Net Charge-offs:

 

 

 

 

 

 

  Real estate - single family

 

8,034

 

14,058

 

3,832

  Real estate - multifamily

 

7,231

 

2,256

 

1,624

  Real estate - commercial

 

23,105

 

12,472

 

2,790

  Real estate - land

 

39,988

 

33,183

 

12,523

  Real estate - residential construction

 

32,535

 

30,634

 

16,347

  Real estate - commercial construction

 

23,051

 

28,602

 

1,977

  Commercial

 

14,956

 

11,577

 

18,146

  Trade finance

 

2,256

 

774

 

1,032

  Consumer

 

87

 

320

 

1,298

    Total net charge-offs

 

151,243

 

133,876

 

59,569

Allowance balance, end of period

 

$ 

230,650

 

$ 

223,700

 

$ 

195,450

 

 

 

 

 

 

 

UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT:

 

 

 

 

 

 

Allowance balance, beginning of period

 

$ 

5,907

 

$ 

7,349

 

$ 

6,341

Provision for unfunded loan commitments and letters of credit

 

1,051

 

(1,442)

 

1,008

Allowance balance, end of period

 

$ 

6,958

 

$ 

5,907

 

$ 

7,349

GRAND TOTAL, END OF PERIOD

 

$ 

237,608

 

$ 

229,607

 

$ 

202,799

 

 

 

 

 

 

 

Nonperforming assets to total assets

 

1.84%

 

1.49%

 

2.28%

Allowance for loan losses to total gross loans at end of period

 

2.74%

 

2.62%

 

2.42%

Allowance for loan losses and unfunded loan commitments to total gross loans at end of period

 

2.82%

 

2.69%

 

2.51%

Allowance to nonaccrual loans at end of period

 

112.82%

 

137.94%

 

78.81%

Nonaccrual loans to total loans

 

2.43%

 

1.90%

 

3.08%

 

15


 

EAST WEST BANCORP, INC.

QUARTER TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID

(In thousands)

(unaudited)

 

 

 

Quarter Ended

 

 

September 30, 2009

 

June 30, 2009

 

 

Average

 

 

 

 

 

Average

 

 

 

 

 

 

Volume

 

Interest

 

Yield (1)

 

Volume

 

Interest

 

Yield (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Short-term investments

 

$ 

387,753

 

$ 

402

 

0.41%

 

$ 

340,142

 

$ 

613

 

0.72%

Interest bearing deposits in other banks

 

509,774

 

1,454

 

1.12%

 

536,244

 

1,896

 

1.42%

Securities purchased under resale agreements

 

91,033

 

2,153

 

9.25%

 

51,374

 

1,292

 

9.95%

Investment securities held-to-maturity

 

 

 

 

 

 

 

 

 

 

 

 

  Taxable

 

761,615

 

11,886

 

6.24%

 

769,432

 

11,883

 

6.18%

  Tax-exempt (2)

 

22,727

 

256

 

4.51%

 

22,777

 

374

 

6.57%

Investment securities available-for-sale

 

1,543,004

 

16,425

 

4.22%

 

1,820,789

 

18,183

 

4.01%

Loans receivable

 

8,471,766

 

114,512

 

5.36%

 

8,244,850

 

111,669

 

5.43%

Federal Home Loan Bank and Federal Reserve

 

 

 

 

 

 

 

 

 

 

 

 

  Bank stocks

 

123,514

 

918

 

2.97%

 

123,514

 

545

 

1.76%

  Total interest-earning assets

 

11,911,186

 

148,006

 

4.93%

 

11,909,122

 

146,455

 

4.93%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

  Cash and due from banks

 

124,708

 

 

 

 

 

113,853

 

 

 

 

  Allowance for loan losses

 

(244,542)

 

 

 

 

 

(198,802)

 

 

 

 

  Other assets

 

843,925

 

 

 

 

 

794,849

 

 

 

 

    Total assets

 

$ 

12,635,277

 

 

 

 

 

$ 

12,619,022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Checking accounts

 

342,922

 

286

 

0.33%

 

356,756

 

324

 

0.36%

Money market accounts

 

2,160,722

 

6,830

 

1.25%

 

1,822,470

 

6,140

 

1.35%

Savings deposits

 

421,844

 

608

 

0.57%

 

415,828

 

659

 

0.64%

Time deposits less than $100,000

 

1,090,647

 

5,572

 

2.03%

 

1,162,205

 

6,947

 

2.40%

Time deposits $100,000 or greater

 

3,308,057

 

13,674

 

1.64%

 

3,386,730

 

16,820

 

1.99%

Federal funds purchased

 

1,385

 

2

 

0.57%

 

4,849

 

3

 

0.24%

Federal Home Loan Bank advances

 

1,046,056

 

11,172

 

4.24%

 

1,273,640

 

13,142

 

4.14%

Securities sold under repurchase agreements

 

1,018,321

 

12,140

 

4.66%

 

1,006,614

 

12,004

 

4.72%

Long-term debt

 

235,570

 

1,760

 

2.92%

 

235,570

 

2,034

 

3.42%

  Total interest-bearing liabilities

 

9,625,524

 

52,044

 

2.15%

 

9,664,662

 

58,073

 

2.41%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 Demand deposits

 

1,335,131

 

 

 

 

 

1,300,676

 

 

 

 

 Other liabilities

 

130,800

 

 

 

 

 

123,431

 

 

 

 

Stockholders’ equity

 

1,543,822

 

 

 

 

 

1,530,253

 

 

 

 

    Total liabilities and stockholders’ equity

 

$ 

12,635,277

 

 

 

 

 

$ 

12,619,022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

2.78%

 

 

 

 

 

2.52%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income and net yield on interest-earning assets (2)

 

 

 

$ 

95,962

 

3.20%

 

 

 

$ 

88,382

 

2.98%

 

 

(1) Annualized

(2) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.

 

16


 

EAST WEST BANCORP, INC.

YEAR TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID

(In thousands)

(unaudited)

 

 

 

Year To Date September 30,

 

 

2009

 

2008

 

 

Average

 

 

 

 

 

Average

 

 

 

 

 

 

Volume

 

Interest

 

Yield (1)

 

Volume

 

Interest

 

Yield (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Short-term investments

 

$ 

405,387

 

$ 

2,663

 

0.88%

 

$ 

181,675

 

$ 

3,093

 

2.27%

Interest bearing deposits in other banks

 

430,382

 

4,678

 

1.45%

 

495

 

14

 

3.77%

Securities purchased under resale agreements

 

64,286

 

4,695

 

9.63%

 

76,898

 

5,533

 

9.58%

Investment securities held-to-maturity

 

 

 

 

 

 

 

 

 

 

 

 

  Taxable

 

646,936

 

30,464

 

6.28%

 

-

 

-    

 

-    

  Tax-exempt (2)

 

20,737

 

907

 

5.83%

 

-

 

-    

 

-    

Investment securities available-for-sale (3)

 

1,878,815

 

57,101

 

4.06%

 

1,986,124

 

76,814

 

5.15%

Loans receivable

 

8,305,602

 

336,997

 

5.42%

 

8,725,596

 

425,113

 

6.49%

Federal Home Loan Bank and Federal Reserve Bank stocks

 

122,369

 

1,969

 

2.15%

 

115,839

 

5,275

 

6.07%

  Total interest-earning assets

 

11,874,514

 

439,474

 

4.95%

 

11,086,627

 

515,842

 

6.20%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 Cash and due from banks

 

120,493

 

 

 

 

 

136,708

 

 

 

 

 Allowance for loan losses

 

(210,015)

 

 

 

 

 

(132,548)

 

 

 

 

 Other assets

 

799,008

 

 

 

 

 

664,711

 

 

 

 

    Total assets

 

$ 

12,584,000

 

 

 

 

 

$ 

11,755,498

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Checking accounts

 

351,933

 

1,003

 

0.38%

 

416,636

 

2,707

 

0.87%

Money market accounts

 

1,826,626

 

18,664

 

1.37%

 

1,081,520

 

20,246

 

2.49%

Savings deposits

 

416,011

 

1,969

 

0.63%

 

463,172

 

3,341

 

0.96%

Time deposits less than $100,000

 

1,194,374

 

22,137

 

2.48%

 

1,018,609

 

24,333

 

3.18%

Time deposits $100,000 or greater

 

3,391,653

 

51,160

 

2.02%

 

3,073,775

 

85,919

 

3.72%

Federal funds purchased

 

2,889

 

8

 

0.37%

 

115,370

 

2,176

 

2.51%

Federal Home Loan Bank advances

 

1,200,713

 

38,191

 

4.25%

 

1,622,429

 

54,363

 

4.46%

Securities sold under repurchase agreements

 

1,007,912

 

36,016

 

4.71%

 

1,000,750

 

33,881

 

4.51%

Long-term debt

 

235,570

 

6,211

 

3.48%

 

235,570

 

9,675

 

5.47%

  Total interest-bearing liabilities

 

9,627,681

 

175,359

 

2.44%

 

9,027,831

 

236,641

 

3.49%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 Demand deposits

 

1,292,852

 

 

 

 

 

1,379,975

 

 

 

 

 Other liabilities

 

125,183

 

 

 

 

 

141,275

 

 

 

 

Stockholders’ equity

 

1,538,284

 

 

 

 

 

1,206,417

 

 

 

 

  Total liabilities and stockholders’ equity

 

$ 

12,584,000

 

 

 

 

 

$ 

11,755,498

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

2.51%

 

 

 

 

 

2.71%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income and net yield on interest-earning assets (2)

 

 

 

$ 

264,115

 

2.97%

 

 

 

$ 

279,201

 

3.35%

 

 

(1) Annualized

(2) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.

(3) Year to date September 30, 2008, ammounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate

 

17


 

EAST WEST BANCORP, INC.

SELECTED FINANCIAL INFORMATION

(In thousands)

(unaudited)

 

Average Balances

 

Quarter Ended

 

%

 

 

 

September 30, 2009

 

June 30, 2009

 

September 30, 2008

 

Change

 

Loans receivable

 

 

 

 

 

 

 

 

 

Real estate - single family

 

$ 

888,106

 

$ 

686,073

 

$ 

474,983

 

87

 

Real estate - multifamily

 

1,036,080

 

823,890

 

718,633

 

44

 

Real estate - commercial

 

3,552,897

 

3,516,257

 

3,411,068

 

4

 

Real estate - land

 

460,256

 

523,799

 

628,100

 

(27)

 

Real estate - construction

 

855,446

 

1,072,319

 

1,464,801

 

(42)

 

Commercial

 

1,111,414

 

1,112,869

 

1,144,602

 

(3)

 

Trade finance

 

248,809

 

274,388

 

411,310

 

(40)

 

Consumer

 

318,758

 

235,255

 

198,020

 

61

 

  Total loans receivable

 

8,471,766

 

8,244,850

 

8,451,517

 

0

 

Investment securities held-to-maturity

 

784,342

 

792,209

 

-

 

NA

 

Investment securities available-for-sale

 

1,543,004

 

1,820,789

 

2,126,894

 

(27)

 

Earning assets

 

11,911,186

 

11,909,122

 

11,083,415

 

7

 

Total assets

 

12,635,277

 

12,619,022

 

11,709,144

 

8

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$ 

1,335,131

 

$ 

1,300,676

 

$ 

1,375,103

 

(3)

 

Interest-bearing checking

 

342,922

 

356,756

 

399,866

 

(14)

 

Money market

 

2,160,722

 

1,822,470

 

1,046,721

 

106

 

Savings

 

421,844

 

415,828

 

449,687

 

(6)

 

  Total core deposits

 

4,260,619

 

3,895,730

 

3,271,377

 

30

 

Time deposits less than $100,000

 

1,090,647

 

1,162,205

 

1,151,876

 

(5)

 

Time deposits $100,000 or greater

 

3,308,057

 

3,386,730

 

3,045,325

 

9

 

  Total time deposits

 

4,398,704

 

4,548,935

 

4,197,201

 

5

 

Total deposits

 

8,659,323

 

8,444,665

 

7,468,578

 

16

 

Interest-bearing liabilities

 

9,625,524

 

9,664,662

 

8,958,723

 

7

 

Stockholders’ equity

 

1,543,822

 

1,530,253

 

1,240,509

 

24

 

 

 

 

 

 

 

 

 

 

 

Selected Ratios

 

Quarter Ended

 

%

 

 

 

September 30, 2009

 

June 30, 2009

 

September 30, 2008

 

Change

 

For The Period

 

 

 

 

 

 

 

 

 

Return on average assets

 

-2.17%

 

-2.92%

 

-1.07%

 

103

 

Return on average common equity

 

-27.12%

 

-43.81%

 

-13.49%

 

101

 

Interest rate spread (3)

 

2.78%

 

2.52%

 

2.48%

 

12

 

Net interest margin (3)

 

3.20%

 

2.98%

 

3.10%

 

3

 

Yield on earning assets (3)

 

4.93%

 

4.93%

 

5.73%

 

(14)

 

Cost of deposits

 

1.24%

 

1.47%

 

2.17%

 

(43)

 

Cost of funds

 

1.88%

 

2.12%

 

2.82%

 

(33)

 

Noninterest expense/average assets (1)

 

1.37%

 

1.75%

 

1.53%

 

(10)

 

Efficiency ratio (4)

 

39.99%

 

55.12%

 

46.40%

 

(14)

 

Net chargeoffs to average loans (2)

 

7.14%

 

6.50%

 

1.88%

 

280

 

  Gross loan chargeoffs

 

$ 

153,883

 

$ 

137,411

 

$ 

44,355

 

247

 

  Loan recoveries

 

$ 

(2,640)

 

$ 

(3,535)

 

$ 

(4,660)

 

(43)

 

   Net loan chargeoffs

 

$ 

151,243

 

$ 

133,876

 

$ 

39,695

 

281

 

 

(1)

Excludes the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, impairment loss on goodwill, and amortization of investments in affordable housing partnerships.

(2)

Annualized.

(3)

Yields on certain securities have been adjusted upward to a “fully taxable equivalent” basis in order to reflect the effect of income which is exempt from federal income taxation at the current statutory tax rate.

(4)

Represents noninterest expense, excluding the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, impairment loss on goodwill, and investments in affordable housing partnerships, divided by the aggregate of net interest income before provision for loan losses and noninterest income, excluding impairment loss on investment securities.

 

18


 

EAST WEST BANCORP, INC.

SELECTED FINANCIAL INFORMATION

(In thousands)

(unaudited)

 

Average Balances

 

Year To Date September 30,

 

%

 

 

 

2009

 

2008

 

Change

 

Loans receivable

 

 

 

 

 

 

 

Real estate - single family

 

$ 

695,034

 

$ 

459,112

 

51

 

Real estate - multifamily

 

852,216

 

716,076

 

19

 

Real estate - commercial

 

3,511,979

 

3,508,629

 

0

 

Real estate - land

 

521,696

 

649,618

 

(20)

 

Real estate - construction

 

1,051,940

 

1,538,202

 

(32)

 

Commercial

 

1,134,238

 

1,223,128

 

(7)

 

Trade finance

 

277,371

 

441,586

 

(37)

 

Consumer

 

261,128

 

189,245

 

38

 

  Total loans receivable

 

8,305,602

 

8,725,596

 

(5)

 

Investment securities held-to-maturity

 

667,673

 

-

 

NA

 

Investment securities available-for-sale

 

1,878,815

 

1,986,124

 

(5)

 

Earning assets

 

11,874,514

 

11,086,627

 

7

 

Total assets

 

12,584,000

 

11,755,498

 

7

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$ 

1,292,852

 

$ 

1,379,975

 

(6)

 

Interest-bearing checking

 

351,933

 

416,636

 

(16)

 

Money market

 

1,826,626

 

1,081,520

 

69

 

Savings

 

416,011

 

463,172

 

(10)

 

  Total core deposits

 

3,887,422

 

3,341,303

 

16

 

Time deposits less than $100,000

 

1,194,374

 

1,018,609

 

17

 

Time deposits $100,000 or greater

 

3,391,653

 

3,073,775

 

10

 

  Total time deposits

 

4,586,027

 

4,092,384

 

12

 

Total deposits

 

8,473,449

 

7,433,687

 

14

 

Interest-bearing liabilities

 

9,627,681

 

9,027,831

 

7

 

Stockholders’ equity

 

1,538,284

 

1,206,417

 

28

 

 

 

 

 

 

 

 

 

Selected Ratios

 

Year To Date September 30,

 

%

 

 

 

2009

 

2008

 

Change

 

For The Period

 

 

 

 

 

 

 

Return on average assets

 

-1.94%

 

-0.59%

 

229

 

Return on average common equity

 

-27.46%

 

-6.83%

 

302

 

Interest rate spread (3)

 

2.51%

 

2.71%

 

(7)

 

Net interest margin (3)

 

2.97%

 

3.35%

 

(11)

 

Yield on earning assets (3)

 

4.95%

 

6.20%

 

(20)

 

Cost of deposits

 

1.50%

 

2.45%

 

(39)

 

Cost of funds

 

2.15%

 

3.03%

 

(29)

 

Noninterest expense/average assets (1)

 

1.56%

 

1.64%

 

(5)

 

Efficiency ratio (4)

 

48.67%

 

45.51%

 

7

 

Net chargeoffs to average loans (2)

 

5.53%

 

1.53%

 

262

 

  Gross loan chargeoffs

 

$ 

351,435

 

$ 

105,147

 

234

 

  Loan recoveries

 

$ 

(6,746)

 

$ 

(5,226)

 

29

 

   Net loan chargeoffs

 

$ 

344,689

 

$ 

99,921

 

245

 

 

 

 

 

 

 

 

 

Period End

 

 

 

 

 

 

 

Tier 1 risk-based capital ratio

 

13.08%

 

11.12%

 

18

 

Total risk-based capital ratio

 

15.13%

 

13.12%

 

15

 

Tier 1 leverage capital ratio

 

10.62%

 

9.84%

 

8

 

 

(1)

Excludes the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, impairment loss on goodwill, and amortization of investments in affordable housing partnerships.

(2)

Annualized.

(3)

Yields on certain securities have been adjusted upward to a “fully taxable equivalent” basis in order to reflect the effect of income which is exempt from federal income taxation at the current statutory tax rate.

(4)

Represents noninterest expense, excluding the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, impairment loss on goodwill, and investments in affordable housing partnerships, divided by the aggregate of net interest income before provision for loan losses and noninterest income, excluding impairment loss on investment securities.

 

19


 

EAST WEST BANCORP, INC.

GAAP TO NON-GAAP RECONCILIATION

(In thousands)

(Unaudited)

 

 

 

Quarter Ended

 

 

 

September 30, 2009

 

June 30, 2009

 

 

 

 

 

 

 

Loss before benefit for income taxes

 

$ 

(121,308)

 

$ 

(147,273)

 

Add:

 

 

 

 

 

Provision for loan losses

 

159,244

 

151,422

 

Impairment loss on investment securities

 

24,249

 

37,447

 

FDIC special assessment

 

-   

 

5,700

 

Other real estate owned expense

 

767

 

8,682

 

Operating earnings (non-GAAP)

 

$ 

62,952

 

$ 

55,978

 

 

 

 

 

 

 

Noninterest (loss) income

 

$ 

(11,880)

 

$ 

(26,199)

 

Add:

 

 

 

 

 

Impairment loss on investment securities

 

24,249

 

37,447

 

Net gain on sale of investment securities

 

(2,177)

 

(1,680)

 

Operating noninterest income (non-GAAP)

 

$ 

10,192

 

$ 

9,568

 

 

 

 

 

 

 

 

 

As of

 

 

 

 

 

September 30, 2009

 

 

 

Stockholders’ Equity

 

$ 

1,521,782

 

 

 

Less:

 

 

 

 

 

Preferred equity

 

(367,922)

 

 

 

Goodwill and other intangible assets

 

(356,256)

 

 

 

Tangible common equity       <A>

 

$ 

797,604

 

 

 

 

 

 

 

 

 

Risk-weighted assets *       <B>

 

$ 

9,991,031

 

 

 

 

 

 

 

 

 

Tangible Common Equity to risk-weighted assets   <A> / <B> (non-GAAP)

 

7.98%

 

 

 

 

* In accordance with applicable bank regulatory guidelines, the company calculates risk-weighted assets by assigning assets, credit equivalent amounts and off-balance sheet items to one of several broad risk categories.  The aggregate dollar amount of each risk category is then multiplied by the risk weight associated with the category.  The resulting weighted values from each of the risk categories are added together for determining risk-weighted assets.

 

20