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East West Bancorp Reports Record Net Income For Full Year 2011 Of $245 Million; Increase In Annual Dividend Rate To $0.40 And New $200 Million Common Stock Repurchase Program

Management anticipates that in the first quarter of 2012, noninterest expense will total approximately $100.0 million, net of amounts reimbursable from the FDIC.

The effective tax rate for the fourth quarter was 35.9% as compared to 36.1% in the prior quarter. The effective tax rate is reduced from the statutory tax rate primarily due to the utilization of tax credits related to affordable housing investments.

Full Year 2011 Operating Results

For the full year 2011, adjusted net interest income reached a record $779.4 million, an increase of 3% or $25.5 million from 2010 1. The adjusted net interest margin for 2011 totaled 4.02% compared to 4.25% for 2010 1. Although the low interest rate environment reduced our loan yields in 2011 as compared to 2010, East West took actions throughout the year to reduce deposit and borrowing costs. Our total cost of funds declined by 21 basis points from 1.15% for the full year 2010 to 0.94% for the full year 2011.

Total fees and other operating income for the full year 2011 increased to $79.5 million, a 19% or $12.8 million increase from full year 2010. As compared to 2010, branch fees increased 3% or $1.1 million, letters of credit fees and foreign exchange income increased 54% or $8.2 million, and other operating income increased 35% or $3.7 million. A summary of these fees and other income is detailed below:
Year Ended % Change
($ in thousands) December 31, 2011 December 31, 2010 (Yr/Yr)
Branch fees $ 33,776 $ 32,634 3 %
Letters of credit fees and foreign exchange income 23,140 14,987 54 %
Ancillary loan fees 8,350 8,526 -2 %
Other operating income   14,270   10,568 35 %
Total fees & other operating income $ 79,536 $ 66,715 19 %

Noninterest expense totaled $435.6 million for the full year 2011, a decrease of 9% or $42.3 million as compared to 2010. The decrease in noninterest expense was due to a reduction in credit cycle costs and active expense control. As compared to full year 2010, other real estate owned expenses declined 34% or $21.1 million, compensation expense declined 6% or $10.0 million, deposit insurance premium decreased 19% or $4.7 million, and data processing expense decreased 19% or $2.0 million. These decreases in the full year 2011 as compared to the full year 2010 were partially offset by an increase in amortization of investments in affordable housing partnerships of 73% or $7.3 million due to increased investments.

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