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East West Bancorp Reports Net Income For Full Year 2012 Of $281.7 Million, Up 15% From Prior Year, And Earnings Per Share Of $1.89, Up 18% From Prior Year

Stocks in this article: EWBC

The Company is focused on active capital management and is committed to maintaining strong capital levels that exceed regulatory requirements while also supporting balance sheet growth and providing a strong return to our shareholders. In light of this commitment to our shareholders, our excellent capital levels and strong financial performance, East West’s Board of Directors has approved an increase in our quarterly common stock cash dividend to $0.15 per share from $0.10 per share. Further, East West’s Board of Directors has authorized a new stock repurchase program to buy back up to $200.0 million of the Company’s common stock. In 2012, the Company increased the common stock dividend to $0.10 from $0.05 and repurchased a total of 9.1 million shares of common stock at a total cost of $199.9 million.

Dividend Payout

East West’s Board of Directors has declared first quarter dividends on the common stock and Series A Preferred Stock. The common stock cash dividend of $0.15 is payable on or about February 22, 2013 to shareholders of record on February 8, 2013. This represents an increase of $0.05 per share, or a 50% increase from the prior quarterly dividend of $0.10 per share. The dividend on the Series A Preferred Stock of $20.00 per share is payable on February 1, 2013 to shareholders of record on January 15, 2013.

Conference Call

East West will host a conference call to discuss fourth quarter 2012 earnings with the public on Thursday, January 24, 2013 at 8:30 a.m. PDT/11:30 a.m. EDT. The public and investment community are invited to listen as management discusses fourth quarter results and operating developments. The following dial-in information is provided for participation in the conference call: Calls within the US – (877) 317-6789; Calls within Canada – (866) 605-3852; International calls – (412) 317-6789. A listen-only live broadcast of the call also will be available on the investor relations page of the Company's website at www.eastwestbank.com.

About East West

East West Bancorp is a publicly owned company with $22.5 billion in assets and is traded on the Nasdaq Global Select Market under the symbol “EWBC”. The Company’s wholly owned subsidiary, East West Bank, is one of the largest independent banks headquartered in California. East West is a premier bank focused exclusively on the United States and Greater China markets and operates over 120 locations worldwide, including in the United States markets of California, New York, Georgia, Massachusetts, Texas and Washington. In Greater China, East West’s presence includes a full service branch in Hong Kong and representative offices in Beijing, Shenzhen and Taipei. Through a wholly-owned subsidiary bank, East West’s presence in Greater China also includes full service branches in Shanghai and Shantou and a representative office in Guangzhou. For more information on East West Bancorp, visit the Company's website at www.eastwestbank.com.

Forward-Looking Statements

Certain matters set forth herein (including any exhibits hereto) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company’s current business plans and expectations regarding future operating results. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties include, but are not limited to, local, regional, national and international economic, political or industry conditions and events and the impact they may have on us and our customers; our ability to attract deposits and other sources of liquidity; continued deterioration in values of real estate in California and other states where our bank makes loans, both residential and commercial; our ability to manage the loan portfolios acquired from FDIC-assisted acquisitions within the limits of the loss protection provided by the FDIC; changes in the financial performance and/or condition of our borrowers; changes in the level of nonperforming assets, reserve requirements, and charge-offs; the effect of changes in laws, regulations, and accounting standards, and related costs of these changes; inflation, interest rate, securities market and monetary fluctuations; changes in the competitive environment among financial and bank holding companies and other financial service providers; changes in our organization, management; the adequacy of our enterprise risk management framework; the ability to manage our growth and the effect of acquisitions we may make and the integration of acquired businesses and branching efforts; our success at managing the risks involved in the foregoing items and other factors set forth in the Company’s public reports including its Annual Report on Form 10-K for the year ended December 31, 2011, and particularly the discussion of risk factors within that document.

1 See reconciliation of the GAAP financial measure to the non-GAAP financial measure in the tables attached.

EAST WEST BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(unaudited)
           
December 31, 2012 September 30, 2012 December 31, 2011
Assets
Cash and cash equivalents $ 1,323,106 $ 1,836,372 $ 1,431,185
Short-term investments 366,378 347,001 61,834
Securities purchased under resale agreements 1,450,000 1,100,000 786,434
Investment securities 2,607,029 2,237,848 3,072,578

Loans receivable, excluding covered loans (net of allowance for loan losses of $229,382, $223,637 and $209,876)

11,884,507 11,074,255 10,340,391
Covered loans, net   2,935,595     3,178,585     3,923,142  
Total loans receivable, net 14,820,102 14,252,840 14,263,533
Federal Home Loan Bank and Federal Reserve Bank stock 155,278 165,825 184,409
FDIC indemnification asset 316,313 368,473 511,135
Other real estate owned, net 32,911 40,007 29,350
Other real estate owned covered, net 26,808 27,613 63,624
Premiums on deposits acquired, net 56,285 58,746 67,190
Goodwill 337,438 337,438 337,438
Other assets   1,044,462     1,041,002     1,159,957  
Total assets $ 22,536,110   $ 21,813,165   $ 21,968,667  
 
Liabilities and Stockholders' Equity
Deposits $ 18,309,354 $ 17,666,427 $ 17,453,002
Federal Home Loan Bank advances 312,975 363,119 455,251
Securities sold under repurchase agreements 995,000 995,000 1,020,208
Long-term debt 137,178 137,178 212,178
Other borrowings 20,000
Accrued expenses and other liabilities   379,481     333,232     516,285  
Total liabilities 20,153,988 19,494,956 19,656,924
Stockholders' equity   2,382,122     2,318,209     2,311,743  
Total liabilities and stockholders' equity $ 22,536,110   $ 21,813,165   $ 21,968,667  
Book value per common share $ 16.39 $ 15.93 $ 14.92
Tangible book value per common share $ 13.55 $ 13.07 $ 12.17
Number of common shares at period end 140,294 140,301 149,328
 
Ending Balances
December 31, 2012 September 30, 2012 December 31, 2011
Loans receivable
Real estate - single family $ 2,187,323 $ 2,065,622 $ 1,796,635
Real estate - multifamily 900,708 911,781 933,168
Real estate - commercial 3,644,035 3,519,601 3,487,866
Real estate - land and construction 250,660 250,872 344,500
Commercial 4,231,265 3,732,785 3,142,472
Consumer   744,882     674,547     583,785  
Total non-covered loans receivable, excluding loans held for sale 11,958,873 11,155,208 10,288,426
Loans held for sale 174,317 157,869 278,603
Covered loans, net   2,935,595     3,178,585     3,923,142  
Total loans receivable 15,068,785 14,491,662 14,490,171
Unearned fees, premiums and discounts (19,301 ) (15,185 ) (16,762 )
Allowance for loan losses on non-covered loans   (229,382 )   (223,637 )   (209,876 )
Net loans receivable $ 14,820,102 $ 14,252,840 $ 14,263,533
 
Deposits
Noninterest-bearing demand $ 4,535,877 $ 4,118,502 $ 3,492,795
Interest-bearing checking 1,230,372 1,167,477 971,179
Money market 5,000,309 4,785,447 4,678,409
Savings   1,421,182     1,298,431     1,164,618  
Total core deposits 12,187,740 11,369,857 10,307,001
Time deposits   6,121,614     6,296,570     7,146,001  
Total deposits $ 18,309,354 $ 17,666,427 $ 17,453,002
 
EAST WEST BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
           
Quarter Ended
December 31, 2012 September 30, 2012 December 31, 2011
 
Interest and dividend income $ 276,521 $ 254,162 $ 268,904
Interest expense   (31,577 )   (32,254 )   (39,830 )
Net interest income before provision for loan losses 244,944 221,908 229,074
Provision for loan losses, excluding covered loans (13,773 ) (13,321 ) (19,787 )
Reversal of (provision) for loan losses on covered loans   689     (5,179 )   (213 )
Net interest income after provision for loan losses 231,860 203,408 209,074
Noninterest (loss) income (18,454 ) 2,751 937
Noninterest expense   (105,206 )   (100,956 )   (106,672 )
Income before provision for income taxes 108,200 105,203 103,339
Provision for income taxes   36,300     34,093     37,133  
Net income 71,900 71,110 66,206
Preferred stock dividend   (1,715 )   (1,714 )   (1,714 )
Net income available to common stockholders $ 70,185 $ 69,396 $ 64,492
Net income per share, basic $ 0.50 $ 0.49 $ 0.44
Net income per share, diluted $ 0.49 $ 0.48 $ 0.43
Shares used to compute per share net income:
- Basic 138,802 139,621 147,332
- Diluted 144,564 145,358 153,761
 
 
Quarter Ended
December 31, 2012 September 30, 2012 December 31, 2011
Noninterest (loss) income:
Branch fees $ 8,322 $ 8,347 $ 8,072
Decrease in FDIC indemnification asset and FDIC receivable (49,731 ) (26,757 ) (20,441 )
Net gain on sales of loans 145 5,346 1,432
Letters of credit fees and foreign exchange income 7,932 7,166 5,504
Net gain on sales of investment securities 110 93 2,880
Net gain on sale of fixed assets 4,162 40 38
Impairment loss on investment securities (169 )
Ancillary loan fees 2,818 1,817 2,228
Other operating income   7,788     6,699     1,393  
Total noninterest (loss) income: $ (18,454 ) $ 2,751 $ 937
 
Noninterest expense:
Compensation and employee benefits $ 41,593 $ 40,509 $ 41,068
Occupancy and equipment expense 14,738 14,162 12,729
Loan related expenses 2,320 4,011 6,788
Other real estate owned expense 4,315 2,683 10,697
Deposit insurance premiums and regulatory assessments 3,354 3,461 4,077
Prepayment penalties for FHLB advances and other borrowings 3,161 42
Legal expense 5,905 8,213 4,407
Amortization of premiums on deposits acquired 2,461 2,734 2,924
Data processing 2,257 2,313 2,068
Consulting expense 2,257 2,692 1,053
Amortization of investments in affordable housing partnerships 5,789 3,378 2,914
Other operating expense   17,056     16,758     17,947  
Total noninterest expense $ 105,206 $ 100,956 $ 106,672
 
EAST WEST BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
       
Year To Date
December 31, 2012 December 31, 2011
 
Interest and dividend income $ 1,051,095 $ 1,080,448
Interest expense   (132,168 )   (177,422 )
Net interest income before provision for loan losses 918,927 903,026
Provision for loan losses, excluding covered loans (60,168 ) (92,584 )
Provision for loan losses on covered loans   (5,016 )   (2,422 )
Net interest income after provision for loan losses 853,743 808,020
Noninterest (loss) income (5,618 ) 10,924
Noninterest expense   (422,533 )   (435,610 )
Income before provision for income taxes 425,592 383,334
Provision for income taxes   143,942     138,100  
Net income 281,650 245,234
Preferred stock dividend   (6,857 )   (6,857 )
Net income available to common stockholders $ 274,793 $ 238,377
Net income per share, basic $ 1.92 $ 1.62
Net income per share, diluted $ 1.89 $ 1.60
Shares used to compute per share net income:
- Basic 141,457 147,093
- Diluted 147,175 153,467
 
 
Year To Date
December 31, 2012 December 31, 2011
Noninterest (loss) income:
Branch fees $ 33,604 $ 33,776
Decrease in FDIC indemnification asset and FDIC receivable (122,251 ) (100,141 )
Net gain on sales of loans 17,045 20,185
Letters of credit fees and foreign exchange income 26,270 23,140
Net gain on sales of investment securities 757 9,703
Net gain on sale of fixed assets 4,275 2,274
Impairment loss on investment securities (99 ) (633 )
Ancillary loan fees 8,831 8,350
Other operating income   25,950     14,270  
Total noninterest (loss) income $ (5,618 ) $ 10,924
 
Noninterest expense:
Compensation and employee benefits $ 171,374 $ 160,093
Occupancy and equipment expense 55,475 50,082
Loan related expenses 14,987 19,379
Other real estate owned expense 22,349 40,435
Deposit insurance premiums and regulatory assessments 14,130 20,531
Prepayment penalties for FHLB advances and other borrowings 6,860 12,281
Legal expense 25,441 21,327
Amortization of premiums on deposits acquired 10,906 12,327
Data processing 9,231 8,598
Consulting expense 7,984 7,151
Amortization of investments in affordable housing partnerships 18,058 17,324
Other operating expense   65,738     66,082  
Total noninterest expense $ 422,533 $ 435,610
 
EAST WEST BANCORP, INC.
SELECTED FINANCIAL INFORMATION
(In thousands)
(unaudited)
           
Average Balances Quarter Ended
December 31, 2012 September 30, 2012 December 31, 2011
Loans receivable
Real estate - single family $ 2,115,989 $ 2,039,136 $ 1,655,379
Real estate - multifamily 904,682 902,367 937,841
Real estate - commercial 3,561,495 3,506,638 3,475,800
Real estate - land and construction 250,573 284,294 370,577
Commercial 3,847,207 3,574,563 3,073,612
Consumer   866,041     812,321     777,201  
Total loans receivable, excluding covered loans 11,545,987 11,119,319 10,290,410
Covered loans   3,063,333     3,299,459     4,048,407  
Total loans receivable 14,609,320 14,418,778 14,338,817
Investment securities 2,372,972 2,084,165 3,166,140
Earning assets 20,551,226 19,774,467 19,616,560
Total assets 22,413,289 21,686,220 21,837,593
 
Deposits
Noninterest-bearing demand $ 4,383,919 $ 3,949,807 $ 3,448,119
Interest-bearing checking 1,204,855 1,090,227 953,668
Money market 5,075,389 4,957,938 4,514,598
Savings   1,360,805     1,290,159     1,126,647  
Total core deposits 12,024,968 11,288,131 10,043,032
Time deposits   6,199,249     6,226,133     7,233,069  
Total deposits 18,224,217 17,514,264 17,276,101
Interest-bearing liabilities 15,329,374 15,094,664 15,556,295
Stockholders' equity 2,359,764 2,304,804 2,300,991
 
 
Selected Ratios Quarter Ended
December 31, 2012 September 30, 2012 December 31, 2011
For The Period
Return on average assets 1.28 % 1.30 % 1.20 %
Return on average common equity 12.26 % 12.43 % 11.54 %
Interest rate spread 4.53 % 4.26 % 4.42 %
Net interest margin 4.74 % 4.46 % 4.63 %
Yield on earning assets 5.35 % 5.11 % 5.44 %
Cost of deposits 0.40 % 0.41 % 0.55 %
Cost of funds 0.64 % 0.67 % 0.83 %
Noninterest expense/average assets (1) 1.66 % 1.74 % 1.83 %
Efficiency ratio (2) 41.41 % 42.20 % 43.81 %
 

(1)

 

Excludes the amortization of intangibles, amortization of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalties for FHLB advances and other borrowings.

(2)

 

Represents noninterest expense, excluding the amortization of intangibles, amortization of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalties for FHLB advances and other borrowings, divided by the aggregate of net interest income before provision for loan losses and noninterest income, excluding items that are non-recurring in nature.
 
EAST WEST BANCORP, INC.
QUARTER TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID
(In thousands)
(unaudited)
           
Quarter Ended
December 31, 2012 December 31, 2011
Average Average
Volume Interest Yield (1) Volume Interest Yield (1)
 
ASSETS
Interest-earning assets:
Due from banks and short-term investments $ 1,684,692 $ 4,799 1.13 % $ 918,784 $ 7,469 3.23 %
Securities purchased under resale agreements 1,723,913 5,790 1.34 % 1,005,363 4,773 1.88 %
Investment securities available-for-sale 2,372,972 9,659 1.62 % 3,166,140 22,856 2.86 %
Loans receivable 11,545,987 135,281 4.66 % 10,290,410 123,478 4.76 %
Loans receivable - covered 3,063,333 118,979 15.45 % 4,048,407 109,498 10.73 %
Federal Home Loan Bank and Federal Reserve Bank stock   160,329     2,013 4.99 %   187,456     830 1.76 %
Total interest-earning assets   20,551,226     276,521 5.35 %   19,616,560     268,904 5.44 %
 
Noninterest-earning assets:
Cash and cash equivalents 284,929 276,416
Allowance for loan losses (234,573 ) (222,642 )
Other assets   1,811,707     2,167,259  
Total assets $ 22,413,289   $ 21,837,593  
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Checking accounts 1,204,855 912 0.30 % 953,668 726 0.30 %
Money market accounts 5,075,389 4,303 0.34 % 4,514,598 3,989 0.35 %
Savings deposits 1,360,805 802 0.23 % 1,126,647 567 0.20 %
Time deposits 6,199,249 12,335 0.79 % 7,233,069 18,500 1.01 %
Federal funds purchased and other borrowings 2,455 2 0.21 % 20,469 74 1.43 %
Federal Home Loan Bank advances 354,443 1,285 1.44 % 465,408 2,715 2.31 %
Securities sold under repurchase agreements 995,000 11,189 4.47 % 1,028,323 12,210 4.71 %
Long-term debt   137,178     749 2.17 %   214,113     1,049 1.94 %
Total interest-bearing liabilities   15,329,374     31,577 0.82 %   15,556,295     39,830 1.02 %
 
Noninterest-bearing liabilities:
Demand deposits 4,383,919 3,448,119
Other liabilities 340,232 532,188
Stockholders' equity   2,359,764     2,300,991  
Total liabilities and stockholders' equity $ 22,413,289   $ 21,837,593  
 
Interest rate spread 4.53 % 4.42 %
 
Net interest income and net interest margin $ 244,944 4.74 % $ 229,074 4.63 %
 
Net interest income and net interest margin, adjusted (2) $ 198,424 3.84 % $ 204,036 4.13 %
 

(1)

 

Annualized.

(2)

 

Amounts exclude the net impact of covered loan dispositions and amortization of the FDIC indemnification asset of $46.5 million and $25.0 million for the three months ended December 31, 2012 and 2011, respectively.
 
EAST WEST BANCORP, INC.
SELECTED FINANCIAL INFORMATION
(In thousands)
(unaudited)
       
Average Balances Year To Date
December 31, 2012 December 31, 2011
Loans receivable
Real estate - single family $ 2,006,644 $ 1,359,223
Real estate - multifamily 913,078 948,750
Real estate - commercial 3,502,394 3,424,414
Real estate - land and construction 299,527 437,843
Commercial 3,471,607 2,613,692
Consumer   830,495     884,184  
Total loans receivable, excluding covered loans 11,023,745 9,668,106
Covered loans   3,445,693     4,369,320  
Total loans receivable 14,469,438 14,037,426
Investment securities 2,475,489 3,116,671
Earning assets 19,841,180 19,393,404
Total assets 21,830,543 21,573,121
 
Deposits
Noninterest-bearing demand $ 3,902,534 $ 3,087,777
Interest-bearing checking 1,059,517 854,079
Money market 4,883,413 4,429,567
Savings   1,267,059     1,045,546  
Total core deposits 11,112,523 9,416,969
Time deposits   6,435,102     7,423,695  
Total deposits 17,547,625 16,840,664
Interest-bearing liabilities 15,214,933 15,727,853
Stockholders' equity 2,319,128 2,233,962
 
 
Selected Ratios Year To Date
December 31, 2012 December 31, 2011
For The Period
Return on average assets 1.29 % 1.14 %
Return on average common equity 12.29 % 11.08 %
Interest rate spread 4.43 % 4.44 %
Net interest margin 4.63 % 4.66 %
Yield on earning assets 5.30 % 5.57 %
Cost of deposits 0.43 % 0.64 %
Cost of funds 0.69 % 0.94 %
Noninterest expense/average assets (1) 1.77 % 1.82 %
Efficiency ratio (2) 42.34 % 43.04 %
 

(1)

 

Excludes the amortization of intangibles, amortization of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalties for FHLB advances and other borrowings.

(2)

 

Represents noninterest expense, excluding the amortization of intangibles, amortization of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalties for FHLB advances and other borrowings, divided by the aggregate of net interest income before provision for loan losses and noninterest income, excluding items that are non-recurring in nature.
 
EAST WEST BANCORP, INC.
YEAR TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID
(In thousands)
(unaudited)
                 
Year To Date
December 31, 2012 December 31, 2011
Average Average
Volume Interest Yield Volume Interest Yield
 
ASSETS
Interest-earning assets:
Due from banks and short-term investments $ 1,457,153 $ 22,316 1.53 % $ 1,018,490 $ 22,575 2.22 %
Securities purchased under resale agreements 1,267,284 20,392 1.61 % 1,023,043 19,216 1.88 %
Investment securities available-for-sale 2,475,489 58,184 2.35 % 3,116,671 89,469 2.87 %
Loans receivable 11,023,745 515,378 4.68 % 9,668,106 478,724 4.95 %
Loans receivable - covered 3,445,693 430,152 12.48 % 4,369,320 467,074 10.69 %
Federal Home Loan Bank and Federal Reserve Bank stock   171,816     4,673 2.72 %   197,774     3,390 1.71 %
Total interest-earning assets   19,841,180     1,051,095 5.30 %   19,393,404     1,080,448 5.57 %
 
Noninterest-earning assets:
Cash and cash equivalents 255,975 271,393
Allowance for loan losses (228,355 ) (228,160 )
Other assets   1,961,743     2,136,484  
Total assets $ 21,830,543   $ 21,573,121  
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Checking accounts 1,059,517 3,163 0.30 % 854,079 3,009 0.35 %
Money market accounts 4,883,413 16,984 0.35 % 4,429,567 20,610 0.47 %
Savings deposits 1,267,059 2,795 0.22 % 1,045,546 2,988 0.29 %
Time deposits 6,435,102 52,953 0.82 % 7,423,695 80,503 1.08 %
Federal funds purchased and other borrowings 2,975 4 0.14 % 16,684 458 2.75 %
Federal Home Loan Bank advances 385,644 6,248 1.62 % 679,630 15,461 2.27 %
Securities sold under repurchase agreements 997,938 46,166 4.63 % 1,051,844 48,561 4.62 %
Long-term debt   183,285     3,855 2.10 %   226,808     5,832 2.57 %
Total interest-bearing liabilities   15,214,933     132,168 0.87 %   15,727,853     177,422 1.13 %
 
Noninterest-bearing liabilities:
Demand deposits 3,902,534 3,087,777
Other liabilities 393,948 523,529
Stockholders' equity   2,319,128     2,233,962  
Total liabilities and stockholders' equity $ 21,830,543   $ 21,573,121  
 
Interest rate spread 4.43 % 4.44 %
 
Net interest income and net interest margin $ 918,927 4.63 % $ 903,026 4.66 %
 
Net interest income and net interest margin, adjusted (1) $ 793,571 4.00 % $ 779,388 4.02 %
 

(1)

 

Amounts exclude the net impact of covered loan dispositions and amortization of the FDIC indemnification asset of $125.4 million and $123.6 million for the twelve months ended December 31, 2012 and 2011, respectively.
 
QUARTERLY ALLOWANCE FOR LOAN LOSSES RECAP
(In thousands)
(unaudited)
    Quarter Ended
  12/31/2012       9/30/2012       6/30/2012       3/31/2012       12/31/2011  
NON-COVERED LOANS
Allowance for non-covered loans, beginning of period $ 223,637 $ 219,454 $ 214,253 $ 209,876 $ 211,738
Allowance for unfunded loan commitments and letters of credit 1,565 1,502 274 (1,778 ) 197
Provision for loan losses, excluding covered loans 13,773 13,321 16,595 16,479 19,787
 
Net Charge-offs/(Recoveries):
Real estate - single family 166 1,595 273 1,295 1
Real estate - multifamily (160 ) 1,101 1,021 795 3,787
Real estate - commercial (23 ) 785 2,179 4,342 5,443
Real estate - land and construction 4,244 1,796 665 3,590 12,923
Commercial 5,124 4,878 6,624 222 (426 )
Consumer   242     485     906     80     118  
Total net charge-offs   9,593     10,640     11,668     10,324     21,846  
Allowance for non-covered loans, end of period $ 229,382   $ 223,637   $ 219,454   $ 214,253   $ 209,876  
 
COVERED LOANS
Allowance for covered loans, beginning of period (1) $ 5,877 $ 7,173 $ 8,268 $ 6,647 $ 6,434
(Reversal of) provision for loan losses, covered loans (689 ) 5,179 (1,095 ) 1,621 213
 
Net Charge-offs:
Real estate - land and construction 26 1,509
Commercial 8 4,966
Consumer   1                  
Total net charge-offs   35     6,475              
Allowance for covered loans, end of period (1) $ 5,153   $ 5,877   $ 7,173   $ 8,268   $ 6,647  
 
UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT:
Allowance balance, beginning of period $ 11,002 $ 12,504 $ 12,778 $ 11,000 $ 11,197
(Reversal of) provision for unfunded loan commitments and letters of credit   (1,565 )   (1,502 )   (274 )   1,778     (197 )
Allowance balance, end of period $ 9,437   $ 11,002   $ 12,504   $ 12,778   $ 11,000  
GRAND TOTAL, END OF PERIOD $ 243,972   $ 240,516   $ 239,131   $ 235,299   $ 227,523  
 
Nonperforming assets to total assets (2) 0.63 % 0.66 % 0.72 % 0.77 % 0.80 %
Allowance for loan losses on non-covered loans to total gross non-covered loans held for investment at end of period 1.92 % 2.00 % 2.03 % 2.04 % 2.04 %
Allowance for loan losses on non-covered loans and unfunded loan commitments to total gross non-covered loans held for investment at end of period 2.00 % 2.10 % 2.15 % 2.16 % 2.15 %
Allowance on non-covered loans to non-covered nonaccrual loans at end of period 212.18 % 214.85 % 195.18 % 177.36 % 144.11 %
Nonaccrual loans to total loans (3) 0.72 % 0.72 % 0.78 % 0.83 % 1.00 %
 

(1)

 

This allowance is related to drawdowns on commitments that were in existence as of the acquisition dates of WFIB and UCB and, therefore, are covered under the shared-loss agreements with the FDIC. Allowance on these subsequent drawdowns is accounted for as part of the allowance for loan losses.

(2)

 

Nonperforming assets excludes covered loans and covered REOs. Total assets includes covered assets.

(3)

 

Nonaccrual loans excludes covered loans. Total loans includes covered loans.
 
EAST WEST BANCORP, INC.
TOTAL NON-PERFORMING ASSETS, EXCLUDING COVERED ASSETS
(In thousands)
(unaudited)
AS OF DECEMBER 31, 2012            
Total Nonaccrual Loans
90+ Days Delinquent

Under 90+ Days Delinquent

Total Nonaccrual Loans

REO Assets Total

Non-Performing Assets

Loan Type
Real estate - single family $ 9,809 $ 1,301 $ 11,110 $ 4,590 $ 15,700
Real estate - multifamily 11,052 6,788 17,840 - 17,840
Real estate - commercial 8,354 9,485 17,839 16,489 34,328
Real estate - land and construction 31,023 637 31,660 11,795 43,455
Commercial 16,743 8,497 25,240 37 25,277
Consumer   3,921   499   4,420   -   4,420
Total $ 80,902 $ 27,207 $ 108,109 $ 32,911 $ 141,020
 
AS OF SEPTEMBER 30, 2012
Total Nonaccrual Loans
90+ Days Delinquent Under 90+ Days Delinquent Total Nonaccrual Loans REO Assets Total

Non-Performing Assets

Loan Type
Real estate - single family $ 7,742 $ 1,010 $ 8,752 $ 3,993 $ 12,745
Real estate - multifamily 11,594 11,440 23,034 106 23,140
Real estate - commercial 17,229 3,478 20,707 22,939 43,646
Real estate - land and construction 29,065 652 29,717 12,600 42,317
Commercial 13,902 4,241 18,143 37 18,180
Consumer   3,739   -   3,739   332   4,071
Total $ 83,271 $ 20,821 $ 104,092 $ 40,007 $ 144,099
 
AS OF DECEMBER 31, 2011
Total Nonaccrual Loans
90+ Days Delinquent Under 90+ Days Delinquent Total Nonaccrual Loans REO Assets Total

Non-Performing Assets

Loan Type
Real estate - single family $ 5,055 $ - $ 5,055 $ 5,882 $ 10,937
Real estate - multifamily 11,306 6,889 18,195 609 18,804
Real estate - commercial 38,046 6,885 44,931 8,014 52,945
Real estate - land and construction 36,090 27,618 63,708 14,285 77,993
Commercial 6,843 4,394 11,237 74 11,311
Consumer   2,506   -   2,506   486   2,992
Total $ 99,846 $ 45,786 $ 145,632 $ 29,350 $ 174,982
 
EAST WEST BANCORP, INC.
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
(unaudited)
 
The tangible common equity to risk weighted assets and tangible common equity to tangible assets ratios are non-GAAP disclosures. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. As the use of tangible common equity to tangible assets ratio is more prevalent in the banking industry and with banking regulators and analysts, we have included the tangible common equity to risk-weighted assets and tangible common equity to tangible assets ratios.
 
As of
December 31, 2012
Stockholders' equity $ 2,382,122
Less:
Preferred equity (83,027 )
Goodwill and other intangible assets   (397,749 )
Tangible common equity $ 1,901,346  
 
Risk-weighted assets   14,284,290  
 
Tangible common equity to risk-weighted assets ratio   13.3 %
 
As of
December 31, 2012
Total assets $ 22,536,110
Less:
Goodwill and other intangible assets   (397,749 )
Tangible assets $ 22,138,361  
 
Tangible common equity to tangible assets ratio 8.6 %
 
EAST WEST BANCORP, INC.
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
(unaudited)
           
Operating noninterest expense is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. These are noninterest expense line items that are non-core in nature. Operating noninterest expense excludes such non-core noninterest expense line items. The Company believes that presenting operating noninterest expense provides more clarity to the users of financial statements regarding the core noninterest expense amounts.
 
Quarter Ended
December 31, 2012 September 30, 2012 December 31, 2011
Total noninterest expense: $ 105,206 $ 100,956 $ 106,672
Amounts to be reimbursed by the FDIC on covered assets (80% of actual expense amount) 3,920 3,005 8,551
Prepayment penalties for FHLB advances and other borrowings   3,161   42   -
Noninterest expense excluding reimbursable amounts and prepayment penalties for FHLB advances and other borrowings $ 98,125 $ 97,909 $ 98,121
 
 
Year Ended
December 31, 2012 December 31, 2011
Total noninterest expense: $ 422,533 $ 435,610
Amounts to be reimbursed by the FDIC on covered assets (80% of actual expense amount) 21,730 35,147
Prepayment penalties for FHLB advances and other borrowings   6,860   12,281
Noninterest expense excluding reimbursable amounts and prepayment penalties for FHLB advances and other borrowings $ 393,943 $ 388,182
 
EAST WEST BANCORP, INC.
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
(unaudited)
           
The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. The net interest income on covered loans includes amounts that are non-core in nature. As such, the Company believes that presenting the net interest income on covered loans excluding such non-core items provides additional clarity to the users of financial statements regarding the covered loan yield, comparability to prior periods and the ongoing performance of the Company.
 
Quarter Ended December 31, 2012
Average Volume Interest Yield (1)
Loans receivable - covered $ 3,063,333 $ 118,979 15.45 %

Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset

(46,520 )

Covered loans excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset

$ 72,459   9.41 %
 
Quarter Ended December 31, 2011
Average Volume Interest Yield (1)
Loans receivable - covered $ 4,048,407 $ 109,498 10.73 %

Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset

(25,038 )

Covered loans excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset

$ 84,460   8.28 %
 
(1) Annualized.
 
EAST WEST BANCORP, INC.
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
(unaudited)
       
The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. The net interest income on covered loans includes amounts that are non-core in nature. As such, the Company believes that presenting the net interest income on covered loans excluding such non-core items provides additional clarity to the users of financial statements regarding the covered loan yield, comparability to prior periods and the ongoing performance of the Company.
 
Year Ended December 31, 2012
Average Volume Interest Yield
Loans receivable - covered $ 3,445,693 $ 430,152 12.48 %

Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset

(125,356 )

Covered loans excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset

$ 304,796   8.85 %
 
Year Ended December 31, 2011
Average Volume Interest Yield
Loans receivable - covered $ 4,369,320 $ 467,074 10.69 %

Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset

(123,638 )

Covered loans excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset

$ 343,436   7.86 %
 
EAST WEST BANCORP, INC.
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
(unaudited)
           
The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. The net interest margin includes amounts that are non-core in nature. As such, the Company believes that presenting the net interest income and net interest margin excluding such non-core items provides additional clarity to the users of financial statements regarding the core net interest income and net interest margin, comparability to prior periods and the ongoing performance of the Company.
 
Quarter Ended December 31, 2012
Average Volume Interest Yield (1)
Total interest-earning assets $ 20,551,226 $ 276,521 5.35 %
Net interest income and net interest margin 244,944 4.74 %

Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset

(46,520 )

Net interest income and net interest margin, excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset

$ 198,424   3.84 %
 
Quarter Ended September 30, 2012
Average Volume Interest Yield (1)
Total interest-earning assets $ 19,774,467 $ 254,162 5.11 %
Net interest income and net interest margin 221,908 4.46 %

Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset

(25,623 )

Net interest income and net interest margin, excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset

$ 196,285   3.95 %
 
Quarter Ended December 31, 2011
Average Volume Interest Yield (1)
Total interest-earning assets $ 19,616,560 $ 268,904 5.44 %
Net interest income and net interest margin 229,074 4.63 %

Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset

  (25,038 )

Net interest income and net interest margin, excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset

$ 204,036   4.13 %
 
 
(1) Annualized.
 
EAST WEST BANCORP, INC.
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
(unaudited)
           
The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. The net interest margin includes amounts that are non-core in nature. As such, the Company believes that presenting the net interest income and net interest margin excluding such non-core items provides additional clarity to the users of financial statements regarding the core net interest income and net interest margin, comparability to prior periods and the ongoing performance of the Company.
 
Year to Date December 31, 2012
Average Volume Interest Yield
Total interest-earning assets $ 19,841,180 $ 1,051,095 5.30 %
Net interest income and net interest margin 918,927 4.63 %

Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset

(125,356 )

Net interest income and net interest margin, excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset

$ 793,571   4.00 %
 
Year to Date December 31, 2011
Average Volume Interest Yield
Total interest-earning assets $ 19,393,404 $ 1,080,448 5.57 %
Net interest income and net interest margin 903,026 4.66 %

Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset

(123,638 )

Net interest income and net interest margin, excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset

$ 779,388   4.02 %
 

 





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