2011 Quarterly Results Summary
|For the three months ended,|
|Dollars in millions, except per share||December 31,2011||September 30,2011||June 30,2011||March 31,2011|
|Net income available to common shareholders||64.5||60.7||58.8||54.4|
|Earnings per share (diluted)||0.43||0.41||0.39||0.37|
|Return on average assets||1.20||%||1.13||%||1.12||%||1.07||%|
|Return on average common equity||11.54||%||10.99||%||11.06||%||10.50||%|
|Tier 1 risk-based capital ratio||14.8||%||14.6||%||15.2||%||15.9||%|
|Total risk-based capital ratio||16.4||%||16.2||%||17.0||%||17.7||%|
Full Year 2011 Highlights
- Record Earnings – East West increased net income each consecutive quarter of 2011. For the full year 2011, net income totaled a record $245.2 million, a 49% or $80.7 million increase from $164.6 million in 2010.
- Strong Loan Growth – Total noncovered loans grew to a record $10.6 billion, an increase of 18% or $1.6 billion during the full year 2011. The growth in noncovered loans was fueled by strong growth in commercial and trade finance loans and single family loans.
- Record Deposit Growth – Total deposits grew to a record $17.5 billion, a 12% or $1.8 billion increase during the full year 2011. Core deposits grew to a record $10.3 billion, an increase of 16% or $1.4 billion year to date.
- Improved Asset Quality – Charge-offs and provision levels decreased each quarter of 2011. Full year 2011 net charge-offs were $112.1 million, a 45% or $90.5 million decrease as compared to the full year 2010. Nonperforming assets remained low at 0.80% of total assets.
- Strong Capital Levels – Capital levels for East West remain high. As of December 31, 2011, East West’s Tier 1 risk-based capital and total risk-based ratios were 14.8% and 16.4%, respectively, over $800 million greater than the well capitalized requirements of 6% and 10%, respectively.
Fourth Quarter 2011 Highlights
- Strong Fourth Quarter Earnings – For the fourth quarter of 2011, net income was $66.2 million or $0.43 per dilutive share. Net income grew 6% or $3.8 million from the third quarter of 2011 and 17% or $9.9 million from the fourth quarter of 2010. Earnings per dilutive share grew 5% or $0.02 from the third quarter of 2011 and 95% or $0.21 from the fourth quarter of 2010.
- Strong Loan Growth – Quarter to date, total loans receivable increased 2% or $291.1 million to $14.5 billion. This increase was largely due to growth in the noncovered loan portfolio. Specifically, noncovered commercial and trade finance loans grew 4% or $130.3 million to $3.1 billion, and noncovered single family loans grew 18% or $278.7 million to $1.8 billion quarter to date.
- Strong Deposit Growth – Quarter to date, core deposits increased 5% or $482.7 million to a record $10.3 billion and total deposits increased 1% or $144.3 million to $17.5 billion.
- Strong Net Interest Margin – The adjusted net interest margin for the fourth quarter totaled 4.13%, as compared to 3.98% for the third quarter of 2011 and 4.43% for the fourth quarter of 2010. 1
- Cost of Funds Down 10 bps from Q3 2011 and Down 20 bps from Q4 2010 – The cost of funds declined 10 basis points from the third quarter of 2011 and 20 basis points from the fourth quarter of 2010 to 0.83% for the fourth quarter of 2011. Our cost of deposits declined 10 basis points from the third quarter of 2011 and 12 basis points from the fourth quarter of 2010 to 0.55% for the quarter ended December 31, 2011.
- Net Charge-offs Down 10% from Q3 2011, Down 43% from Q4 2010 – Net charge-offs declined to $21.8 million, a decrease of $2.5 million or 10% from the prior quarter and a decrease of $16.5 million or 43% from the fourth quarter of 2010.
- Nonperforming Assets Stable at 0.80% of Total Assets – Nonperforming assets totaled $175.0 million, or 0.80% of total assets at December 31, 2011, a 4% or $6.1 million increase from September 30, 2011 and a 10% or $19.8 million decrease from December 31, 2010. This is the ninth consecutive quarter East West is reporting a nonperforming assets to total assets ratio under 1.00%.
Management GuidanceThe Company is providing initial guidance for the first quarter and full year of 2012. The planned buyback of up to $200.0 million of the Company’s common stock is not factored into this guidance for the first quarter or full year of 2012. Management currently estimates that fully diluted earnings per share for the full year of 2012 will range from $1.72 to $1.76 or an increase of approximately 7% to 10% from 2011. This EPS guidance is based on overall asset growth of 2%, provision for loan losses of approximately $60 million and an adjusted net interest margin of approximately 3.85% 1. Management currently estimates that fully diluted earnings per share for the first quarter of 2012 will range from $0.41 to $0.43 per dilutive share. This EPS guidance is based on the following assumptions:
- Stable balance sheet
- A stable interest rate environment and an adjusted net interest margin of approximately 3.90%
- Provision for loan losses of approximately $15 to $20 million
- Total noninterest expense of approximately $100 million for the quarter, net of amounts to be reimbursed by the FDIC
- Effective tax rate of approximately 36.5%
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