Quarterly Results Summary
|Dollars in millions, except per share||December 31, 2012||September 30, 2012||December 31, 2011|
|Net income available to common shareholders||$||70.19||$||69.40||$||64.49|
|Earnings per share (diluted)||$||0.49||$||0.48||$||0.43|
|Tangible book value per common share||$||13.55||$||13.07||$||12.17|
|Return on average assets||1.28||%||1.30||%||1.20||%|
|Return on average common equity||12.26||%||12.43||%||11.54||%|
|Net interest income, adjusted (1)||$||198.42||$||196.29||$||204.04|
|Net interest margin, adjusted (1)||3.84||%||3.95||%||4.13||%|
|Cost of deposits||0.40||%||0.41||%||0.55||%|
Full Year 2012 Highlights
- Record Earnings – East West increased net income each consecutive quarter of 2012. For the full year 2012, net income totaled a record $281.7 million, a 15% or $36.5 million increase from $245.2 million in 2011. For the full year 2012, earnings per share totaled $1.89, an increase of 18% from $1.60 for full year 2011.
- Strong Loan Growth – Total non-covered loans, excluding loans held for sale, grew to a record $12.0 billion, an increase of 16% or $1.7 billion during the full year 2012. The growth in non-covered loans was fueled by strong growth in commercial and trade finance loans and single-family real estate loans. Total loans receivable including non-covered loans, loans held for sale and loans covered under loss-share agreements grew to a record $15.1 billion, an increase of 4% or $578.6 million during the full year 2012.
- Record Core Deposit Growth – Total deposits grew to a record $18.3 billion, a 5% or $856.4 million increase during the full year 2012. Core deposits grew to a record $12.2 billion, an increase of 18% or $1.9 billion year to date.
- Solid Return of Capital to Shareholders – For the full year 2012, we repurchased 6% or 9.1 million shares of our common stock for a total cost of $199.9 million. Additionally, we increased the common stock dividend rate 100% to $0.40 per year.
- Strong Capital Levels – Capital levels for East West remain high. As of December 31, 2012, East West’s Tier 1 risk-based capital and total risk-based ratios were 14.8% and 16.1%, respectively, over $800 million greater than the well capitalized requirements of 6% and 10%, respectively.
- Nonperforming Assets Down to 0.63% of Total Assets – Nonperforming assets decreased to $141.0 million, or 0.63% of total assets at December 31, 2012, a full year decrease of $34.0 million or 19% from December 31, 2011.
Fourth Quarter 2012 Highlights
- Solid Fourth Quarter Earnings – For the fourth quarter of 2012, net income was $71.9 million or $0.49 per dilutive share. Net income increased by 1% or $790 thousand from the third quarter of 2012 and 9% or $5.7 million from the fourth quarter of 2011. Earnings per dilutive share grew 2% or $0.01 from the third quarter of 2012 and 14% or $0.06 from the fourth quarter of 2011.
- Strong Loan Growth – Quarter to date, non-covered loans, excluding loans held for sale, grew 7% or $803.7 million. This growth was largely due to increases in commercial and trade finance loans, commercial real estate and single-family real estate loans, which grew 13% or $498.5 million, 4% or $124.4 million and 6% or $121.7 million, respectively. Total loans, including non-covered loans, loans held for sale and loans covered under loss-share agreements grew 4% quarter to date or $577.1 million.
- Strong Core Deposit Growth – Core deposit growth continued in the fourth quarter and increased by $817.9 million to a record $12.2 billion or 67% of total deposits. Total deposits increased to a record $18.3 billion, an increase of 4% or $642.9 million from $17.7 billion as of September 30, 2012.
- Improved Asset Quality – Net charge-offs declined in the fourth quarter 2012 to $9.6 million, a 10% or $1.0 million decrease as compared to the third quarter of 2012. The level of nonperforming assets continues to be low, decreasing to 0.63% of total assets as of December 31, 2012, down from 0.66% as of September 30, 2012.
Management GuidanceThe Company is providing guidance for the first quarter and full year of 2013. The new repurchase authorization to buyback up to $200.0 million of the Company’s common stock is factored into this guidance for the first quarter of 2013 and full year 2013. Management currently estimates that fully diluted earnings per share for the full year of 2013 will range from $2.00 to $2.04, an increase of $0.11 to $0.15 or 6% to 8% from $1.89 for the full year of 2012. This EPS guidance for the full year of 2013 is based on a stable balance sheet, total loan growth of 3% (including both noncovered and covered loans), an adjusted net interest margin ranging from 3.65% to 3.75% 1, provision for loan losses of approximately $35 million to $40 million, noninterest expense, adjusted for FDIC reimbursements, of approximately $387 million to $393 million, and an effective tax rate of 35.5%. Management currently estimates that fully diluted earnings per share for the first quarter of 2013 will range from $0.48 to $0.50 per dilutive share. This EPS guidance for the first quarter of 2013 is based on a stable balance sheet, total loan growth of 3%, annualized, an adjusted net interest margin ranging from approximately 3.75% to 3.80% 1, provision for loan losses of approximately $10 million, noninterest expense adjusted for FDIC reimbursements of approximately $98 million to $100 million, and an effective tax rate of 35.5%. Balance Sheet Summary At December 31, 2012, total assets increased to $22.5 billion compared to $21.8 billion at September 30, 2012, and $22.0 billion at December 31, 2011. The increase in total assets during the fourth quarter was primarily attributable to increases in non-covered loans, securities purchased under resale agreements and investment securities. Average earning assets increased during the fourth quarter, up 4% or $776.8 million to $20.6 billion compared to the prior quarter. The increase in average earning assets during the fourth quarter was primarily attributable to increases in average balances for non-covered loans, securities purchased under resale agreements and investment securities.
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