East West Bancorp Reports Net Income for Third Quarter 2022 of $295 Million and Diluted Earnings Per Share of $2.08; Record Net Interest Income of $552 Million

East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq: EWBC), parent company of East West Bank, reported its financial results for the third quarter of 2022. Third quarter 2022 net income was $295.3 million, or $2.08 per diluted share; diluted earnings per share grew 58% linked quarter annualized and 32% year-over-year.

“This was another quarter of outstanding results. Net interest income increased to a record $552 million, up 66% linked quarter annualized, and our net interest margin expanded an impressive 45 basis points quarter-over-quarter to 3.68%,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. “Our efficiency improved, expanding all profitability ratios. For the third quarter of 2022, we returned 1.9% on average assets and 20.3% on average equity.”

“Total loans reached a record $47.5 billion as of September 30, 2022, up 8% linked quarter annualized, with growth across all our major loan categories. Asset quality continued to be healthy, with very low charge-offs and criticized loans decreasing 11% from June 30, 2022.”

“All our capital ratios expanded in the third quarter of 2022, driven by the strength of our earnings growth. We ended the quarter with a common equity tier 1 ratio of 12.3% and a tangible common equity ratio1 of 8.35%,” continued Ng.

“With our industry-leading operating margins and strong capital, we are well positioned to navigate the changing economic conditions, and help our customers prosper and maximize personal and business opportunities. We are looking forward to finishing 2022 on a high note and entering 2023 with strength and confidence,” concluded Ng.

FINANCIAL HIGHLIGHTS

Three Months Ended

Qtr-o-Qtr Change

Yr-o-Yr Change

($ in millions, except per share data)

September 30, 2022

Total Loans

47,457

926

6,975

Total Deposits

53,857

(486

)

501

Total Revenue

627

159

Adj. Pre-tax Pre-provision Income2

432

130

Net Income

295

Diluted Earnings per Share

2.08

0.27

0.50

____________________

See reconciliation of GAAP to non-GAAP financial measures in Table 13.

See reconciliation of GAAP to non-GAAP financial measures in Table 12.

BALANCE SHEET

Record Assets – Total assets reached $62.6 billion as of September 30, 2022, up $181.8 million, or 0.3% (1% annualized), from $62.4 billion as of June 30, 2022. Year-over-year, total assets grew $1.6 billion, or 3%, from $61.0 billion as of September 30, 2021. Third quarter 2022 average interest-earning assets of $59.5 billion were up $810.0 million, or 1% (5% annualized), from $58.7 billion in the second quarter of 2022. Quarter-over-quarter, average loan growth of $2.2 billion was partially offset by declines in other, lower yielding interest-earning assets.

Record Loans – Total loans reached $47.5 billion as of September 30, 2022, an increase of $926.2 million, or 2% (8% annualized), from $46.5 billion as of June 30, 2022. Year-over-year, total loans grew $7.0 billion, or 17%, from $40.5 billion as of September 30, 2021. Third quarter 2022 average loans of $46.9 billion grew $2.2 billion, or 5% (20% linked quarter annualized), with solid growth spread across all our major loan categories, led by residential mortgage and commercial real estate loans.

Total Deposits – Total deposits were $53.9 billion as of September 30, 2022, a decrease of $0.5 billion, or 1% (4% annualized), from $54.3 billion as of June 30, 2022. Year-over-year, deposits grew $0.5 billion, or 1%, from $53.4 billion as of September 30, 2021. Third quarter 2022 average deposits of $54.1 billion decreased $78.3 million, essentially unchanged from the second quarter. Quarter-over-quarter, growth in average time deposits, interest-bearing checking and money market accounts was offset by a decrease in average noninterest-bearing demand deposits. Average noninterest-bearing deposits made up 41% of average total deposits in the third quarter of 2022, compared with 44% in the second quarter of 2022 and 43% in the third quarter of 2021.

Strong Capital Levels – As of September 30, 2022, stockholders’ equity was $5.7 billion, or $40.17 per common share, and tangible equity3 per common share was $36.80; each increasing 1% (4% annualized) quarter-over-quarter. As of September 30, 2022, the tangible equity to tangible assets ratio was 8.35%, an increase of six basis points quarter-over-quarter. The common equity tier 1 (“CET1”) capital ratio was 12.3%, and the total risk-based capital ratio was 13.6% as of September 30, 2022.

____________________

See reconciliation of GAAP to non-GAAP financial measures in Table 13.

OPERATING RESULTS

Third Quarter Earnings – Third quarter 2022 net income was $295.3 million, an increase of 14%, or 57% annualized, from $258.3 million for the second quarter of 2022, and an increase of 31% from $225.4 million for the third quarter of 2021. Third quarter 2022 diluted earnings per share were $2.08, an increase of 15%, or 58% annualized, from $1.81 per diluted share for the second quarter 2022, and an increase of 32% from $1.57 per diluted share for the year-ago quarter.

Third Quarter 2022 Compared to Second Quarter 2022

Net Interest Income and Net Interest Margin

Record net interest income (“NII”) totaled $551.8 million, an increase of 17%, or 66% annualized, from $473.0 million. Net interest margin (“NIM”) of 3.68% expanded 45 basis points from 3.23%.

NII growth and NIM expansion were driven by expanding earning asset yields and loan growth, partially offset by an increase in the cost of funds.
The average loan yield was 4.75%, up 80 basis points from the second quarter. The average interest-earning asset yield was 4.19%, up 77 basis points from the second quarter. Average loans made up 79% of average interest-earning assets in the third quarter of 2022, compared with 76% in the second quarter of 2022.
The average cost of funds was 0.55%, up 35 basis points from the second quarter. The average cost of deposits was 0.51%, up 34 basis points, and the average cost of interest-bearing deposits was 0.86%, up 56 basis points from the second quarter.
The changes in yields and rates reflected rising benchmark interest rates.

Noninterest Income

Noninterest income totaled $75.6 million in the third quarter, a decrease of $2.9 million, or 4%, from $78.4 million in the second quarter.

Fee income and net gains on sales of loans were $69.0 million, an increase of $4.2 million, or 7% (26% annualized), from $64.8 million in the second quarter. Growth in wealth management fees, deposit account fees and gains on sale of SBA loans was partially offset by decreased foreign exchange income.

Noninterest Expense

Noninterest expense totaled $216.0 million in the third quarter, compared with $196.9 million in the second quarter. Third quarter noninterest expense consisted of $195.6 million of adjusted noninterest expense4, $19.9 million in amortization of tax credit and other investments, and $0.5 million in amortization of core deposit intangibles.

Adjusted noninterest expense of $195.6 million increased $14.2 million, or 8%, from $181.4 million in the second quarter, driven by higher compensation and employee benefits.
Amortization of tax credit and other investments totaled $19.9 million in the third quarter, compared with $15.0 million in the second quarter. Quarter-over-quarter variability in the amortization of tax credits and other investments partially reflects the impact of investments that close in a given period.
The adjusted efficiency ratio4 was 31.2% in the third quarter, compared with 32.9% in the second quarter.

____________________

See reconciliation of GAAP to non-GAAP financial measures in Table 12.

TAX RELATED ITEMS

Third quarter 2022 income tax expense was $89.0 million compared with income tax expense of $82.7 million for the second quarter of 2022. The year-to-date effective tax rate for the first nine months of 2022 was 22.7%.

ASSET QUALITY

The asset quality of our loan portfolio continued to be solid and stable.

Criticized loans decreased $117.4 million, or 11%, quarter-over-quarter to $905.2 million as of September 30, 2022, down from $1,022.6 million as of June 30, 2022. Special mention loans decreased 20% quarter-over-quarter to $471.0 million, and classified loans were essentially unchanged at $434.2 million.
The criticized loans ratio decreased 29 basis points quarter-over-quarter to 1.91% of loans held-for-investment (“HFI”) as of September 30, 2022, down from 2.20% as of June 30, 2022. The special mention loans ratio decreased 28 basis points quarter-over-quarter to 0.99%, and the classified loans ratio decreased one basis point to 0.92%.
As of September 30, 2022, nonperforming assets were $97.0 million, or 0.16% of total assets, compared with $89.9 million, or 0.14% of total assets, as of June 30, 2022.
Third quarter 2022 net charge-offs were $6.6 million, or annualized 0.06% of average loans HFI, compared with net recoveries of $6.6 million, or annualized 0.06% of average loans HFI, for the second quarter of 2022.
The allowance for loan losses totaled $582.5 million, or 1.23% of loans HFI, as of September 30, 2022, compared with $563.3 million, or 1.21% of loans HFI, as of June 30, 2022. The quarter-over-quarter build in the allowance coverage largely reflects the current macroeconomic outlook and loan growth during the quarter.

Provision for credit losses was $27.0 million for the third quarter of 2022, compared with $13.5 million for the second quarter of 2022.

CAPITAL STRENGTH

Capital levels for East West are strong. The following table presents the regulatory capital metrics as of September 30, 2022, June 30, 2022 and September 30, 2021.

EWBC Risk-Based Capital Ratios

($ in millions)

September 30, 2022 (a)

June 30, 2022 (a)

September 30, 2021 (a)

CET1 capital ratio

12.3

12.0

12.8

Tier 1 capital ratio

12.3

12.0

12.8

Total capital ratio

13.6

13.2

14.2

Leverage ratio

9.6

9.3

8.8

Risk-Weighted Assets (“RWA”) (b)

49,254

48,499

42,128

(a)

The Company has elected to use the 2020 CECL transition provision in the calculation of its September 30, 2022, June 30, 2022 and September 30, 2021 regulatory capital ratios. The Company’s September 30, 2022 regulatory capital ratios and RWA are preliminary.

(b)

Under regulatory guidelines, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories based on the nature of the obligor, or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar value in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total RWA.

DIVIDEND PAYOUT AND CAPITAL ACTIONS

East West’s Board of Directors has declared fourth quarter 2022 dividends for the Company’s common stock. The common stock cash dividend of $0.40 per share is payable on November 15, 2022, to stockholders of record on November 1, 2022.

On March 3, 2020, East West’s Board of Directors authorized the repurchase of up to $500 million of East West’s common stock, of which $254 million remains available. East West did not repurchase any shares during the third quarter of 2022.

Conference Call

East West will host a conference call to discuss third quarter 2022 earnings with the public on Thursday, October 20, 2022, at 8:30 a.m. PT/11:30 a.m. ET. The public and investment community are invited to listen as management discusses third quarter 2022 results and operating developments.

The following dial-in information is provided for participation in the conference call: calls within the U.S. – (877) 506-6399; calls within Canada – (855) 669-9657; international calls – (412) 902-6699.
A presentation to accompany the earnings call will be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.
A listen-only live broadcast of the call will also be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.
A replay of the conference call will be available on October 20, 2022, at 11:30 a.m. PT/2:30 p.m. ET through November 20, 2022. The replay numbers are: within the U.S. – (877) 344-7529; within Canada – (855) 669-9658; international calls – (412) 317-0088; and the replay access code is: 3874614.

About East West

East West Bancorp, Inc. is a public company with total assets of $62.6 billion and is traded on the Nasdaq Global Select Market under the symbol “EWBC”. The Company’s wholly-owned subsidiary, East West Bank, is the largest independent bank headquartered in Southern California, operating over 120 locations in the United States and in China. The Company’s markets in the United States include California, Georgia, Illinois, Massachusetts, Nevada, New York, Texas and Washington. In China, East West’s presence includes full-service branches in Hong Kong, Shanghai, Shantou and Shenzhen, and representative offices in Beijing, Chongqing, Guangzhou, and Xiamen. For more information on East West, visit the Company’s website at www.eastwestbank.com.

Forward-Looking Statements

Certain matters set forth herein (including any exhibits hereto) contain forward-looking statements that are intended to be covered by the safe harbor for such statements provided by the Private Securities Litigation Reform Act of 1995. In addition, the Company may make forward-looking statements in other documents that it files with, or furnishes to, the U.S. Securities and Exchange Commission (“SEC”) and management may make forward-looking statements to analysts, investors, media members and others. Forward-looking statements are those that do not relate to historical facts, and that are based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company’s control. These statements may relate to the Company’s financial condition, results of operations, plans, objectives, future performance and/or business and usually can be identified by the use of forward-looking language, such as “anticipates,” “assumes,” “believes,” “can,” “continues,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “likely,” “may,” “might,” “objective,” “plans,” “potential,” “projects,” “remains,” “should,” “target,” “trend,” “will,” “would,” or similar expressions, and the negative thereof. You should not place undue reliance on these statements, as they are subject to risks and uncertainties, including, but not limited to, those described below. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements the Company may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company.

There are a number of important factors that could cause future results to differ materially from historical performance and any forward-looking statements. Factors that might cause such differences, include, but are not limited to: changes in the global economy, including an economic slowdown, market or supply chain disruption, level of inflation, interest rate environment, housing prices, employment levels, rate of growth and general business conditions; the impact of any future federal government shutdown and uncertainty regarding the federal government’s debt limit; changes in local, regional and global business, economic and political conditions and geopolitical events; the economic, financial, reputational and other impacts of the ongoing Coronavirus Disease 2019 (“COVID-19”) pandemic, including variants thereof, and any other pandemic, epidemic or health-related crisis, as well as a deterioration of asset quality and an increase in credit losses due to the COVID-19 pandemic; changes in laws or the regulatory environment including regulatory reform initiatives and policies of the U.S. Department of the Treasury, the Board of Governors of the Federal Reserve System (“Federal Reserve”), the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the SEC, the Consumer Financial Protection Bureau, and the California Department of Financial Protection and Innovation – Division of Financial Institutions; changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing economic and political disputes between the U.S. and the People’s Republic of China and the monetary policies of the Federal Reserve; changes in the commercial and consumer real estate markets; changes in consumer or commercial spending, savings and borrowing habits, and patterns and behaviors; fluctuations in the Company’s stock price; the impact from potential changes to income tax laws and regulations, federal spending and economic stimulus programs; the Company’s ability to compete effectively against financial institutions in its banking markets and other entities, including as a result of emerging technologies; the soundness of other financial institutions; the success and timing of the Company’s business strategies; the Company’s ability to retain key officers and employees; impact on the Company’s funding costs, net interest income and net interest margin from changes in key variable market interest rates, competition, regulatory requirements and the Company’s product mix; changes in the Company’s costs of operation, compliance and expansion; the Company’s ability to adopt and successfully integrate new technologies into its business in a strategic manner; the impact of the benchmark interest rate reform in the U.S. including the transition away from the U.S. dollar (“USD”) London Interbank Offered Rate (“LIBOR”) to alternative reference rates; the impact of communications or technology disruption, failure in, or breach of, the Company’s operational or security systems or infrastructure, or those of third party vendors with which the Company does business, including as a result of cyber-attacks; and other similar matters which could result in, among other things, confidential and/or proprietary information being disclosed or misused, and materially impact the Company’s ability to provide services to its clients; the adequacy of the Company’s risk management framework, disclosure controls and procedures and internal control over financial reporting; future credit quality and performance, including the Company’s expectations regarding future credit losses and allowance levels; the impact of adverse changes to the Company’s credit ratings from major credit rating agencies; impact of adverse judgments or settlements in litigation; the impact on the Company’s operations due to political developments, pandemics, wars, civil unrest, terrorism or other hostilities that may disrupt or increase volatility in securities or otherwise affect business and economic conditions; heightened regulatory and governmental oversight and scrutiny of the Company’s business practices, including dealings with consumers; the impact of reputational risk from negative publicity, fines, penalties and other negative consequences from regulatory violations, legal actions and the Company’s interactions with business partners, counterparties, service providers and other third parties; the impact of regulatory investigations and enforcement actions; changes in accounting standards as may be required by the Financial Accounting Standards Board or other regulatory agencies and their impact on critical accounting policies and assumptions; the Company’s capital requirements and its ability to generate capital internally or raise capital on favorable terms; the impact on the Company’s liquidity due to changes in the Company’s ability to receive dividends from its subsidiaries; any future strategic acquisitions or divestitures; changes in the equity and debt securities markets; fluctuations in foreign currency exchange rates; the impact of increased focus on social, environmental and sustainability matters, which may affect the Company’s operations as well as those of its customers and the economy more broadly; significant turbulence or disruption in the capital or financial markets, which could result in, among other things, reduced investor demand for loans, a reduction in the availability of funding or increases in funding costs, declines in asset values and/or recognition of allowance for credit losses on securities held in the Company’s debt securities and equity securities portfolio; and the impact of climate change, natural or man-made disasters or calamities, such as wildfires, droughts and earthquakes, all of which are particularly common in California, or other events that may directly or indirectly result in a negative impact on the Company’s financial performance.

For a more detailed discussion of some of the factors that might cause such differences, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 under the heading Item 1A. Risk Factors and the information set forth under Item 1A. Risk Factors in the Company’s Quarterly Reports on Form 10-Q. The Company does not undertake, and specifically disclaims any obligation to update or revise any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

($ and shares in thousands, except per share data)

(unaudited)

Table 1

September 30, 2022 % or Basis Point Change

September 30, 2022

June 30, 2022

September 30, 2021

Qtr-o-Qtr

Yr-o-Yr

Assets

Cash and due from banks

554,260

688,936

594,631

(19.5

(6.8

Interest-bearing cash with banks

1,609,093

1,213,117

4,258,270

32.6

(62.2

)

Cash and cash equivalents

2,163,353

1,902,053

4,852,901

13.7

(55.4

)

Interest-bearing deposits with banks

630,543

712,709

855,162

(11.5

)

(26.3

)

Assets purchased under resale agreements (“resale agreements”)

892,986

1,422,794

2,596,142

(37.2

)

(65.6

)

Available-for-sale (“AFS”) debt securities (amortized cost of $6,771,354, $6,891,522 and $9,783,180)

5,906,090

6,255,504

9,713,006

(5.6

)

(39.2

)

Held-to-maturity (“HTM”) debt securities, at amortized cost (fair value of $2,459,135 and $2,656,549 in 2022)

3,012,667

3,028,302

—

(0.5

)

100.0

Loans held-for-sale (“HFS”)

14,500

28,464

—

(49.1

)

100.0

Loans held-for-investment (''HFI'') (net of allowance for loan losses of $582,517, $563,270 and $560,404)

46,859,738

45,938,806

39,921,301

2.0

17.4

Investments in qualified affordable housing partnerships, tax credit and other investments, net

725,254

634,304

664,795

14.3

9.1

Goodwill

465,697

—

Operating lease right-of-use assets

105,411

107,588

99,785

(2.0

)

5.6

Other assets

1,799,822

1,898,062

1,790,321

(5.2

)

0.5

Total assets

62,576,061

62,394,283

60,959,110

0.3

2.7

Liabilities and Stockholders’ Equity

Deposits

53,857,362

54,343,354

53,356,190

(0.9

0.9

Federal funds purchased

200,000

—

100.0

FHLB advances

324,920

174,776

248,898

85.9

30.5

Assets sold under repurchase agreements (“repurchase agreements”)

611,785

300,000

—

103.9

Long-term debt and finance lease liabilities

152,610

152,663

151,795

(0.0

)

0.5

Operating lease liabilities

113,477

115,387

107,107

(1.7

)

5.9

Accrued expenses and other liabilities

1,655,239

1,386,836

1,104,919

19.4

49.8

Total liabilities

56,915,393

56,784,801

55,268,909

0.2

3.0

Stockholders’ equity

5,660,668

5,609,482

5,690,201

0.9

(0.5

)

Total liabilities and stockholders’ equity

62,576,061

62,394,283

60,959,110

0.3

2.7

Book value per common share

40.17

39.81

40.10

0.9

0.2

Tangible equity (1) per common share

36.80

36.44

36.75

1.0

0.1

Number of common shares at period-end

140,918

140,917

141,884

0.0

(0.7

)

Tangible equity to tangible assets ratio (1)

8.35

8.29

8.62

bps

(27

) bps

(1)

See reconciliation of GAAP to non-GAAP financial measures in Table 13.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

TOTAL LOANS AND DEPOSITS DETAIL

($ in thousands)

(unaudited)

Table 2

September 30, 2022 % Change

September 30, 2022

June 30, 2022

September 30, 2021

Qtr-o-Qtr

Yr-o-Yr

Loans:

Commercial:

Commercial and industrial (“C&I”) (1)

15,625,072

15,377,117

13,831,649

1.6

13.0

Commercial real estate (“CRE”):

CRE

13,573,157

13,566,748

11,818,065

—

14.9

Multifamily residential

4,559,302

4,443,704

3,340,378

2.6

36.5

Construction and land

556,894

515,857

376,921

8.0

47.7

Total CRE

18,689,353

18,526,309

15,535,364

0.9

20.3

Consumer:

Residential mortgage:

Single-family residential

10,855,345

10,234,473

9,021,801

6.1

20.3

Home equity lines of credit (“HELOCs”)

2,184,924

2,280,080

1,963,622

(4.2

)

11.3

Total residential mortgage

13,040,269

12,514,553

10,985,423

4.2

18.7

Other consumer

87,561

84,097

129,269

4.1

(32.3

)

Total loans HFI (2)

47,442,255

46,502,076

40,481,705

2.0

17.2

Loans HFS

14,500

28,464

—

(49.1

)

100.0

Total loans (2)

47,456,755

46,530,540

40,481,705

2.0

17.2

Allowance for loan losses

(582,517

)

(563,270

)

(560,404

)

3.4

3.9

Net loans (2)

46,874,238

45,967,270

39,921,301

2.0

17.4

Deposits:

Noninterest-bearing demand

21,645,394

23,028,831

23,175,471

(6.0

(6.6

Interest-bearing checking

6,822,343

7,094,726

6,530,601

(3.8

)

4.5

Money market

12,113,292

11,814,402

12,555,879

2.5

(3.5

)

Savings

2,917,770

3,027,819

2,855,597

(3.6

)

2.2

Time deposits

10,358,563

9,377,576

8,238,642

10.5

25.7

Total deposits

53,857,362

54,343,354

53,356,190

(0.9

0.9

(1)

Includes $110.9 million, $153.3 million and $807.3 million of Paycheck Protection Program (“PPP”) loans as of September 30, 2022, June 30, 2022 and September 30, 2021, respectively. Excluding PPP loans, total loans were $47.35 billion, $46.38 billion and $39.67 billion as of September 30, 2022, June 30, 2022 and September 30, 2021, respectively.

(2)

Includes $(60.3) million, $(56.2) million and $(54.3) million of net deferred loan fees and net unamortized premiums as of September 30, 2022, June 30, 2022 and September 30, 2021, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

($ and shares in thousands, except per share data)

(unaudited)

Table 3

Three Months Ended

September 30, 2022 % Change

September 30, 2022

June 30, 2022

September 30, 2021

Qtr-o-Qtr

Yr-o-Yr

Interest and dividend income (1)

628,236

499,754

415,307

25.7

51.3

Interest expense

76,427

26,802

19,601

185.2

289.9

Net interest income before provision for (reversal of) credit losses

551,809

472,952

395,706

16.7

39.4

Provision for (reversal of) credit losses

27,000

13,500

(10,000

)

100.0

Net interest income after provision for (reversal of) credit losses

524,809

459,452

405,706

14.2

29.4

Noninterest income

75,552

78,444

73,109

(3.7

)

3.3

Noninterest expense

215,973

196,860

205,384

9.7

5.2

Income before income taxes

384,388

341,036

273,431

12.7

40.6

Income tax expense

89,049

82,707

47,982

7.7

85.6

Net income

295,339

258,329

225,449

14.3

31.0

Earnings per share (“EPS”)

- Basic

2.10

1.83

1.59

14.7

31.9

- Diluted

2.08

1.81

1.57

14.6

32.0

Weighted-average number of shares outstanding

- Basic

140,917

141,429

141,880

(0.4

(0.7

- Diluted

142,011

142,372

143,143

(0.3

)

(0.8

)

Three Months Ended

September 30, 2022 % Change

September 30, 2022

June 30, 2022

September 30, 2021

Qtr-o-Qtr

Yr-o-Yr

Noninterest income:

Lending fees

20,289

20,142

17,516

0.7

15.8

Deposit account fees

23,636

22,372

18,508

5.6

27.7

Interest rate contracts and other derivative income

8,761

9,801

7,156

(10.6

)

22.4

Foreign exchange income

10,083

11,361

13,101

(11.2

)

(23.0

)

Wealth management fees

8,903

6,539

5,598

36.2

59.0

Net gains on sales of loans

2,129

917

3,329

132.2

(36.0

)

Gains on sales of AFS debt securities

—

354

(100.0

)

(100.0

)

Other investment (loss) income

(580

)

4,863

5,349

(111.9

)

(110.8

)

Other income

2,331

2,421

2,198

(3.7

)

6.1

Total noninterest income

75,552

78,444

73,109

(3.7

3.3

Noninterest expense:

Compensation and employee benefits

127,580

113,364

105,751

12.5

20.6

Occupancy and equipment expense

15,920

15,469

15,851

2.9

0.4

Deposit insurance premiums and regulatory assessments

4,875

4,927

4,641

(1.1

)

5.0

Deposit account expense

6,707

5,671

4,136

18.3

62.2

Data processing

3,725

3,486

3,575

6.9

4.2

Computer software expense

6,889

6,572

8,426

4.8

(18.2

)

Consulting expense

1,620

2,021

1,635

(19.8

)

(0.9

)

Legal expense

689

1,047

2,363

(34.2

)

(70.8

)

Other operating expense

28,094

29,324

20,998

(4.2

)

33.8

Amortization of tax credit and other investments

19,874

14,979

38,008

32.7

(47.7

)

Total noninterest expense

215,973

196,860

205,384

9.7

5.2

NM - Not meaningful.

(1)

Includes $524 thousand, $1.4 million and $15.2 million of interest income related to PPP loans for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

($ and shares in thousands, except per share data)

(unaudited)

Table 4

Nine Months Ended

September 30, 2022 % Change

September 30, 2022

September 30, 2021

Yr-o-Yr

Interest and dividend income (1)

1,560,019

1,196,026

30.4

Interest expense

119,645

70,152

70.6

Net interest income before provision for (reversal of) credit losses

1,440,374

1,125,874

27.9

Provision for (reversal of) credit losses

48,500

(25,000

)

Net interest income after provision for (reversal of) credit losses

1,391,874

1,150,874

20.9

Noninterest income

233,739

214,406

9.0

Noninterest expense

602,283

585,984

2.8

Income before income taxes

1,023,330

779,296

31.3

Income tax expense

232,010

124,111

86.9

Net income

791,320

655,185

20.8

EPS

- Basic

5.59

4.62

21.1

- Diluted

5.55

4.58

21.2

Weighted-average number of shares outstanding

- Basic

141,453

141,799

(0.2

- Diluted

142,601

143,051

(0.3

)

Nine Months Ended

September 30, 2022 % Change

September 30, 2022

September 30, 2021

Yr-o-Yr

Noninterest income:

Lending fees

59,869

56,965

5.1

Deposit account fees

66,323

51,233

29.5

Interest rate contracts and other derivative income

29,695

20,981

41.5

Foreign exchange income

34,143

35,634

(4.2

)

Wealth management fees

21,494

20,460

5.1

Net gains on sales of loans

5,968

6,601

(9.6

)

Gains on sales of AFS debt securities

1,306

1,178

10.9

Other investment income

5,910

13,870

(57.4

)

Other income

9,031

7,484

20.7

Total noninterest income

233,739

214,406

9.0

Noninterest expense:

Compensation and employee benefits

357,213

318,985

12.0

Occupancy and equipment expense

46,853

47,150

(0.6

)

Deposit insurance premiums and regulatory assessments

14,519

12,791

13.5

Deposit account expense

17,071

11,845

44.1

Data processing

10,876

12,088

(10.0

)

Computer software expense

20,755

23,106

(10.2

)

Consulting expense

5,474

4,978

10.0

Legal expense

2,454

5,840

(58.0

)

Other operating expense

78,315

58,544

33.8

Amortization of tax credit and other investments

48,753

90,657

(46.2

)

Total noninterest expense

602,283

585,984

2.8

NM - Not meaningful.

(1)

Includes $7.0 million and $45.6 million of interest income related to PPP loans for the nine months ended September 30, 2022 and 2021, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED AVERAGE BALANCES

($ in thousands)

(unaudited)

Table 5

Three Months Ended

September 30, 2022 % Change

Nine Months Ended

September 30, 2022 % Change

September 30, 2022

June 30, 2022

September 30, 2021

Qtr-o-Qtr

Yr-o-Yr

September 30, 2022

September 30, 2021

Yr-o-Yr

Loans:

Commercial:

C&I (1)

15,282,661

14,986,876

13,531,338

2.0

12.9

14,850,849

13,678,462

8.6

CRE:

CRE

13,533,482

13,049,058

11,747,607

3.7

15.2

12,958,562

11,564,946

12.1

Multifamily residential

4,531,351

4,112,411

3,248,281

10.2

39.5

4,133,975

3,139,209

31.7

Construction and land

532,800

475,933

415,812

11.9

28.1

467,731

480,514

(2.7

)

Total CRE

18,597,633

17,637,402

15,411,700

5.4

20.7

17,560,268

15,184,669

15.6

Consumer:

Residential mortgage:

Single-family residential

10,676,022

9,624,242

8,962,533

10.9

19.1

9,809,549

8,645,135

13.5

HELOCs

2,216,355

2,290,378

1,912,629

(3.2

)

15.9

2,230,060

1,793,928

24.3

Total residential mortgage

12,892,377

11,914,620

10,875,162

8.2

18.5

12,039,609

10,439,063

15.3

Other consumer

81,870

87,590

141,951

(6.5

)

(42.3

)

97,794

139,557

(29.9

)

Total loans (2)

46,854,541

44,626,488

39,960,151

5.0

17.3

44,548,520

39,441,751

12.9

Interest-earning assets

59,478,689

58,668,677

58,239,480

1.4

2.1

58,949,457

55,350,645

6.5

Total assets

63,079,444

62,232,841

61,359,533

1.4

2.8

62,361,618

58,263,002

7.0

Deposits:

Noninterest-bearing demand

22,423,633

23,887,452

23,169,323

(6.1

(3.2

23,244,247

20,345,370

14.2

Interest-bearing checking

6,879,632

6,712,890

6,646,515

2.5

3.5

6,747,710

6,571,231

2.7

Money market

12,351,571

12,319,930

12,604,827

0.3

(2.0

)

12,526,222

12,262,173

2.2

Savings

2,961,634

2,970,007

2,792,702

(0.3

)

6.0

2,954,098

2,715,114

8.8

Time deposits

9,435,063

8,239,571

8,283,265

14.5

13.9

8,596,728

8,635,249

(0.4

)

Total deposits

54,051,533

54,129,850

53,496,632

(0.1

1.0

54,069,005

50,529,137

7.0

Interest-bearing liabilities

32,703,323

30,957,475

31,039,410

5.6

5.4

31,631,865

31,099,675

1.7

Stockholders’ equity

5,772,638

5,682,427

5,680,306

1.6

5,765,637

5,482,705

5.2

(1)

Average balances of PPP loans were $127.6 million, $223.2 million and $1.11 billion for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively, and $252.8 million and $1.63 billion for the nine months ended September 30, 2022 and 2021, respectively.

(2)

Includes loans HFS.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 6

Three Months Ended

September 30, 2022

June 30, 2022

Average

Balance

Interest

Yield/Rate (1)

Balance

Interest

Yield/Rate (1)

Assets

Interest-earning assets:

Interest-bearing cash and deposits with banks

2,287,010

9,080

1.58

2,797,711

4,787

0.69

Resale agreements

1,037,292

6,769

2.59

1,641,723

8,553

2.09

AFS debt securities

6,204,729

38,383

2.45

6,503,677

33,438

2.06

HTM debt securities

3,017,063

12,709

1.67

3,021,239

12,738

1.69

Loans (2)

46,854,541

560,452

4.75

44,626,488

439,416

3.95

FHLB and FRB stock

78,054

843

4.28

77,839

822

4.24

Total interest-earning assets

59,478,689

628,236

4.19

58,668,677

499,754

3.42

Noninterest-earning assets:

Cash and due from banks

615,836

712,884

Allowance for loan losses

(566,369

)

(545,489

)

Other assets

3,551,288

3,396,769

Total assets

63,079,444

62,232,841

Liabilities and Stockholders’ Equity

Interest-bearing liabilities:

Checking deposits

6,879,632

8,493

0.49

6,712,890

3,178

0.19

Money market deposits

12,351,571

33,101

1.06

12,319,930

8,892

0.29

Savings deposits

2,961,634

2,268

0.30

2,970,007

1,864

0.25

Time deposits

9,435,063

25,032

1.05

8,239,571

8,554

0.42

Federal funds purchased and other short-term borrowings

211,794

1,177

2.20

64,145

241

1.51

FHLB advances

86,243

392

1.80

138,960

559

1.61

Repurchase agreements

624,821

4,421

2.81

359,778

2,418

2.70

Long-term debt and finance lease liabilities

152,565

1,543

4.01

152,194

1,096

2.89

Total interest-bearing liabilities

32,703,323

76,427

0.93

30,957,475

26,802

0.35

Noninterest-bearing liabilities and stockholders’ equity:

Demand deposits

22,423,633

23,887,452

Accrued expenses and other liabilities

2,179,850

1,705,487

Stockholders’ equity

5,772,638

5,682,427

Total liabilities and stockholders’ equity

63,079,444

62,232,841

Interest rate spread

3.26

3.07

Net interest income and net interest margin

551,809

3.68

472,952

3.23

(1)

Annualized.

(2)

Includes loans HFS. Average balances of PPP loans were $127.6 million and $223.2 million for the three months ended September 30, 2022 and June 30, 2022, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 7

Three Months Ended

September 30, 2022

September 30, 2021

Average

Balance

Interest

Yield/Rate (1)

Balance

Interest

Yield/Rate (1)

Assets

Interest-earning assets:

Interest-bearing cash and deposits with banks

2,287,010

9,080

1.58

7,036,823

4,521

0.25

Resale agreements

1,037,292

6,769

2.59

2,382,741

8,957

1.49

AFS debt securities

6,204,729

38,383

2.45

8,782,682

37,826

1.71

HTM debt securities

3,017,063

12,709

1.67

—

Loans (2)

46,854,541

560,452

4.75

39,960,151

363,503

3.61

FHLB and FRB stock

78,054

843

4.28

77,083

500

2.57

Total interest-earning assets

59,478,689

628,236

4.19

58,239,480

415,307

2.83

Noninterest-earning assets:

Cash and due from banks

615,836

627,640

Allowance for loan losses

(566,369

)

(584,827

)

Other assets

3,551,288

3,077,240

Total assets

63,079,444

61,359,533

Liabilities and Stockholders’ Equity

Interest-bearing liabilities:

Checking deposits

6,879,632

8,493

0.49

6,646,515

3,186

0.19

Money market deposits

12,351,571

33,101

1.06

12,604,827

3,446

0.11

Savings deposits

2,961,634

2,268

0.30

2,792,702

1,943

0.28

Time deposits

9,435,063

25,032

1.05

8,283,265

7,395

0.35

Federal funds purchased and other short-term borrowings

211,794

1,177

2.20

620

—

FHLB advances

86,243

392

1.80

248,614

857

1.37

Repurchase agreements

624,821

4,421

2.81

310,997

2,012

2.57

Long-term debt and finance lease liabilities

152,565

1,543

4.01

151,870

762

1.99

Total interest-bearing liabilities

32,703,323

76,427

0.93

31,039,410

19,601

0.25

Noninterest-bearing liabilities and stockholders’ equity:

Demand deposits

22,423,633

23,169,323

Accrued expenses and other liabilities

2,179,850

1,470,494

Stockholders’ equity

5,772,638

5,680,306

Total liabilities and stockholders’ equity

63,079,444

61,359,533

Interest rate spread

3.26

2.58

Net interest income and net interest margin

551,809

3.68

395,706

2.70

(1)

Annualized.

(2)

Includes loans HFS. Average balances of PPP loans were $127.6 million and $1.11 billion for the three months ended September 30, 2022 and September 30, 2021, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 8

Nine Months Ended

September 30, 2022

September 30, 2021

Average

Balance

Interest

Yield/Rate (1)

Balance

Interest

Yield/Rate (1)

Assets

Interest-earning assets:

Interest-bearing cash and deposits with banks

3,175,596

17,127

0.72

6,078,982

11,781

0.26

Resale agreements

1,588,452

23,705

2.00

1,994,776

23,077

1.55

AFS debt securities

6,886,268

106,290

2.06

7,755,029

101,616

1.75

HTM debt securities

2,672,797

33,645

1.68

—

Loans (2)

44,548,520

1,376,978

4.13

39,441,751

1,057,964

3.59

FHLB and FRB stock

77,824

2,274

3.91

80,107

1,588

2.65

Total interest-earning assets

58,949,457

1,560,019

3.54

55,350,645

1,196,026

2.89

Noninterest-earning assets:

Cash and due from banks

656,772

602,830

Allowance for loan losses

(551,818

)

(603,523

)

Other assets

3,307,207

2,913,050

Total assets

62,361,618

58,263,002

Liabilities and Stockholders’ Equity

Interest-bearing liabilities:

Checking deposits

6,747,711

13,073

0.26

6,571,231

11,177

0.23

Money market deposits

12,526,222

45,196

0.48

12,262,173

11,869

0.13

Savings deposits

2,954,098

5,836

0.26

2,715,114

5,762

0.28

Time deposits

8,596,728

40,266

0.63

8,635,250

26,982

0.42

Federal funds purchased and other short-term borrowings

93,370

1,427

2.04

1,871

3.00

FHLB advances

128,137

1,529

1.60

457,273

6,025

1.76

Repurchase agreements

433,340

8,855

2.73

304,745

5,981

2.62

Long-term debt and finance lease liabilities

152,259

3,463

3.04

152,018

2,314

2.04

Total interest-bearing liabilities

31,631,865

119,645

0.51

31,099,675

70,152

0.30

Noninterest-bearing liabilities and stockholders’ equity:

Demand deposits

23,244,247

20,345,370

Accrued expenses and other liabilities

1,719,869

1,335,252

Stockholders’ equity

5,765,637

5,482,705

Total liabilities and stockholders’ equity

62,361,618

58,263,002

Interest rate spread

3.03

2.59

Net interest income and net interest margin

1,440,374

3.27

1,125,874

2.72

(1)

Annualized.

(2)

Includes loans HFS. Average balances of PPP loans were $252.8 million and $1.63 billion for the nine months ended September 30, 2022 and 2021, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED RATIOS

(unaudited)

Table 9

Three Months Ended (1)

September 30, 2022 Basis Point Change

September 30, 2022

June 30, 2022

September 30, 2021

Qtr-o-Qtr

Yr-o-Yr

Return on average assets

1.86

1.66

1.46

bps

Return on average equity

20.30

18.23

15.75

207

455

Tangible return on average tangible equity (2)

22.16

19.94

17.25

222

491

Interest rate spread

3.26

3.07

2.58

Net interest margin

3.68

3.23

2.70

Average loan yield

4.75

3.95

3.61

114

Yield on average interest-earning assets

4.19

3.42

2.83

136

Average cost of interest-bearing deposits

0.86

0.30

0.21

Average cost of deposits

0.51

0.17

0.12

Average cost of funds

0.55

0.20

0.14

Adjusted pre-tax, pre-provision profitability ratio (3)

2.72

2.38

1.95

Adjusted noninterest expense/average assets (3)

1.23

1.17

1.08

Efficiency ratio

34.43

35.70

43.81

(127

)

(938

)

Adjusted efficiency ratio (3)

31.18

32.90

35.55

(172

) bps

(437

) bps

Nine Months Ended (1)

September 30, 2022 Basis Point Change

September 30, 2022

September 30, 2021

Yr-o-Yr

Return on average assets

1.70

1.50

bps

Return on average equity

18.35

15.98

237

Tangible return on average tangible equity (2)

20.04

17.56

248

Interest rate spread

3.03

2.59

Net interest margin

3.27

2.72

Average loan yield

4.13

3.59

Yield on average interest-earning assets

3.54

2.89

Average cost of interest-bearing deposits

0.45

0.25

Average cost of deposits

0.26

0.15

Average cost of funds

0.29

0.18

Adjusted pre-tax, pre-provision profitability ratio (3)

2.41

1.94

Adjusted noninterest expense/average assets (3)

1.18

1.13

Efficiency ratio

35.98

43.72

(774

)

Adjusted efficiency ratio (3)

32.98

36.80

(382

) bps

(1)

Annualized except for efficiency ratio.

(2)

See reconciliation of GAAP to non-GAAP financial measures in Table 13.

(3)

See reconciliation of GAAP to non-GAAP financial measures in Table 12.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE SHEET CREDIT EXPOSURES

($ in thousands)

(unaudited)

Table 10

Three Months Ended September 30, 2022

Commercial

Consumer

C&I

Total CRE

Total Residential Mortgage

Other Consumer

Total

Allowance for loan losses, June 30, 2022

363,282

173,479

25,060

1,449

563,270

Provision for credit losses on loans

(a)

9,575

11,163

6,281

255

27,274

Gross charge-offs

(6,894

)

(6,226

)

(775

)

(10

)

(13,905

)

Gross recoveries

7,172

—

7,264

Total net recoveries (charge-offs)

278

(6,155

)

(754

)

(10

)

(6,641

)

Foreign currency translation adjustment

(1,386

)

—

(1,386

)

Allowance for loan losses, September 30, 2022

371,749

178,487

30,587

1,694

582,517

Three Months Ended June 30, 2022

Commercial

Consumer

C&I

Total CRE

Total Residential Mortgage

Other Consumer

Total

Allowance for loan losses, March 31, 2022

339,446

182,296

21,958

1,985

545,685

Provision for (reversal of) credit losses on loans

(a)

19,030

(9,181

)

3,122

(502

)

12,469

Gross charge-offs

(240

)

(679

)

(193

)

(34

)

(1,146

)

Gross recoveries

6,514

1,043

173

—

7,730

Total net recoveries (charge-offs)

6,274

364

(20

)

(34

)

6,584

Foreign currency translation adjustment

(1,468

)

—

(1,468

)

Allowance for loan losses, June 30, 2022

363,282

173,479

25,060

1,449

563,270

Three Months Ended September 30, 2021

Commercial

Consumer

C&I

Total CRE

Total Residential Mortgage

Other Consumer

Total

Allowance for loan losses, June 30, 2021

362,528

199,530

19,468

4,198

585,724

(Reversal of) provision for credit losses on loans

(a)

(23,364

)

8,527

2,972

130

(11,735

)

Gross charge-offs

(1,154

)

(16,903

)

(912

)

(10

)

(18,979

)

Gross recoveries

4,203

1,106

156

—

5,465

Total net recoveries (charge-offs)

3,049

(15,797

)

(756

)

(10

)

(13,514

)

Foreign currency translation adjustment

(71

)

—

(71

)

Allowance for loan losses, September 30, 2021

342,142

192,260

21,684

4,318

560,404

EAST WEST BANCORP, INC. AND SUBSIDIARIES

ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES

($ in thousands)

(unaudited)

Table 10 (continued)

Nine Months Ended September 30, 2022

Commercial

Consumer

C&I

Total CRE

Total Residential Mortgage

Other Consumer

Total

Allowance for loan losses, December 31, 2021

338,252

180,808

20,595

1,924

541,579

Provision for (reversal of) credit losses on loans

(a)

37,867

3,640

10,628

(140

)

51,995

Gross charge-offs

(18,322

)

(7,304

)

(968

)

(90

)

(26,684

)

Gross recoveries

16,688

1,343

332

—

18,363

Total net charge-offs

(1,634

)

(5,961

)

(636

)

(90

)

(8,321

)

Foreign currency translation adjustment

(2,736

)

—

(2,736

)

Allowance for loan losses, September 30, 2022

371,749

178,487

30,587

1,694

582,517

Nine Months Ended September 30, 2021

Commercial

Consumer

C&I

Total CRE

Total Residential Mortgage

Other Consumer

Total

Allowance for loan losses, December 31, 2020

398,040

201,603

18,210

2,130

619,983

(Reversal of) provision for credit losses on loans

(a)

(42,127

)

16,198

4,229

2,226

(19,474

)

Gross charge-offs

(20,162

)

(28,642

)

(1,091

)

(43

)

(49,938

)

Gross recoveries

6,301

3,101

336

9,743

Total net charge-offs

(13,861

)

(25,541

)

(755

)

(38

)

(40,195

)

Foreign currency translation adjustment

—

Allowance for loan losses, September 30, 2021

342,142

192,260

21,684

4,318

560,404

Three Months Ended

Nine Months Ended

September 30, 2022

June 30, 2022

September 30, 2021

September 30, 2022

September 30, 2021

Unfunded Credit Facilities

Allowance for unfunded credit commitments, beginning of period (1)

24,304

23,262

26,300

27,514

33,577

(Reversal of) provision for credit losses on unfunded credit commitments

(b)

(274

)

1,031

1,735

(3,495

)

(5,526

)

Foreign currency translation adjustment

(15

)

Allowance for unfunded credit commitments, end of period (1)

24,041

24,304

28,036

24,041

28,036

Provision for (reversal of) credit losses

(a)+(b)

27,000

13,500

(10,000

)

48,500

(25,000

)

(1)

Included in Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheet.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CRITICIZED LOANS, NONPERFORMING ASSETS AND CREDIT QUALITY RATIOS

($ in thousands)

(unaudited)

Table 11

Criticized Loans

September 30, 2022

June 30, 2022

September 30, 2021

Special mention loans

470,964

590,227

448,497

Classified loans

434,242

432,414

561,787

Total criticized loans (1)

905,206

1,022,641

1,010,284

Nonperforming Assets

September 30, 2022

June 30, 2022

September 30, 2021

Nonaccrual loans:

Commercial:

C&I

47,988

40,053

97,157

Total CRE

11,209

12,742

15,359

Consumer:

Total residential mortgage

23,309

37,129

18,153

Other consumer

2,491

Total nonaccrual loans

82,543

89,935

133,160

Other real estate owned, net

—

28,800

Other nonperforming assets

—

10,681

Nonperforming loans HFS

14,500

—

Total nonperforming assets

97,043

89,935

172,641

Credit Quality Ratios

September 30, 2022

June 30, 2022

September 30, 2021

Annualized quarterly net charge-offs (recoveries) to average loans HFI

0.06

(0.06

0.13

Special mention loans to loans HFI

0.99

1.27

1.11

Classified loans to loans HFI

0.92

0.93

1.39

Criticized loans to loans HFI

1.91

2.20

2.50

Nonperforming assets to total assets

0.16

0.14

0.28

Nonaccrual loans to loans HFI

0.17

0.19

0.33

Allowance for loan losses to loans HFI

1.23

1.21

1.38

(1)

Excludes loans HFS.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

($ in thousands)

(unaudited)

Table 12

The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Adjusted efficiency ratio represents adjusted noninterest expense divided by revenue. Adjusted pre-tax, pre-provision profitability ratio represents total revenue less adjusted noninterest expense, divided by average total assets. Adjusted noninterest expense excludes the amortization of tax credit and other investments and the amortization of core deposit intangibles. Management believes that the measures and ratios presented below provide clarity to financial statement users regarding the ongoing performance of the Company and allow comparability to prior periods.

Three Months Ended

September 30, 2022

June 30, 2022

September 30, 2021

Net interest income before provision for (reversal of) credit losses

551,809

472,952

395,706

Total noninterest income

75,552

78,444

73,109

Total revenue

(a)

627,361

551,396

468,815

Total noninterest expense

(b)

215,973

196,860

205,384

Less: Amortization of tax credit and other investments

(19,874

)

(14,979

)

(38,008

)

Amortization of core deposit intangibles

(485

)

(488

)

(705

)

Adjusted noninterest expense

(c)

195,614

181,393

166,671

Efficiency ratio

(b)/(a)

34.43

35.70

43.81

Adjusted efficiency ratio

(c)/(a)

31.18

32.90

35.55

Adjusted pre-tax, pre-provision income

(a)-(c) = (d)

431,747

370,003

302,144

Average total assets

(e)

63,079,444

62,232,841

61,359,533

Adjusted pre-tax, pre-provision profitability ratio (1)

(d)/(e)

2.72

2.38

1.95

Adjusted noninterest expense/average assets (1)

(c)/(e)

1.23

1.17

1.08

Nine Months Ended

September 30, 2022

September 30, 2021

Net interest income before provision for (reversal of) credit losses

1,440,374

1,125,874

Total noninterest income

233,739

214,406

Total revenue

(f)

1,674,113

1,340,280

Total noninterest expense

(g)

602,283

585,984

Less: Amortization of tax credit and other investments

(48,753

)

(90,657

)

Amortization of core deposit intangibles

(1,484

)

(2,147

)

Adjusted noninterest expense

(h)

552,046

493,180

Efficiency ratio

(g)/(f)

35.98

43.72

Adjusted efficiency ratio

(h)/(f)

32.98

36.80

Adjusted pre-tax, pre-provision income

(f)-(h) = (i)

1,122,067

847,100

Average total assets

(j)

62,361,618

58,263,002

Adjusted pre-tax, pre-provision profitability ratio (1)

(i)/(j)

2.41

1.94

Adjusted noninterest expense/average assets (1)

(h)/(j)

1.18

1.13

(1)

Annualized.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

($ in thousands)

(unaudited)

Table 13

The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Tangible equity and tangible equity to tangible assets ratio are non-GAAP financial measures. Tangible equity and tangible assets represent stockholders’ equity and total assets, respectively, which have been reduced by goodwill and other intangible assets. Given that the use of such measures and ratios is more prevalent in the banking industry, and such measures and ratios are used by banking regulators and analysts, the Company has included them below for discussion.

September 30, 2022

June 30, 2022

September 30, 2021

Stockholders’ equity

(a)

5,660,668

5,609,482

5,690,201

Less: Goodwill

(465,697

)

(465,697

)

(465,697

)

Other intangible assets (1)

(8,667

)

(8,537

)

(9,849

)

Tangible equity

(b)

5,186,304

5,135,248

5,214,655

Total assets

(c)

62,576,061

62,394,283

60,959,110

Less: Goodwill

(465,697

)

(465,697

)

(465,697

)

Other intangible assets (1)

(8,667

)

(8,537

)

(9,849

)

Tangible assets

(d)

62,101,697

61,920,049

60,483,564

Total stockholders’ equity to total assets ratio

(a)/(c)

9.05

8.99

9.33

Tangible equity to tangible assets ratio

(b)/(d)

8.35

8.29

8.62

Tangible return on average tangible equity represents tangible net income divided by average tangible equity. Tangible net income excludes the after-tax impacts of the amortization of core deposit intangibles and mortgage servicing assets. Given that the use of such measures and ratios is more prevalent in the banking industry, and such measures and ratios are used by banking regulators and analysts, the Company has included them below for discussion.

Three Months Ended

Nine Months Ended

September 30, 2022

June 30, 2022

September 30, 2021

September 30, 2022

September 30, 2021

Net income

(e)

295,339

258,329

225,449

791,320

655,185

Add: Amortization of core deposit intangibles

485

488

705

1,484

2,147

Amortization of mortgage servicing assets

340

364

430

1,096

1,264

Tax effect of amortization adjustments (2)

(237

)

(245

)

(322

)

(742

)

(968

)

Tangible net income

(f)

295,927

258,936

226,262

793,158

657,628

Average stockholders’ equity

(g)

5,772,638

5,682,427

5,680,306

5,765,637

5,482,705

Less: Average goodwill

(465,697

)

(465,697

)

(465,697

)

(465,697

)

(465,697

)

Average other intangible assets (1)

(8,379

)

(8,827

)

(10,135

)

(8,801

)

(10,847

)

Average tangible equity

(h)

5,298,562

5,207,903

5,204,474

5,291,139

5,006,161

Return on average equity (3)

(e)/(g)

20.30

18.23

15.75

18.35

15.98

Tangible return on average tangible equity (3)

(f)/(h)

22.16

19.94

17.25

20.04

17.56

(1)

Includes core deposit intangibles and mortgage servicing assets.

(2)

Applied statutory tax rate of 28.77% for the three and nine months ended September 30, 2022, and the three months ended June 30, 2022. Applied statutory tax rate of 28.37% for the three and nine months ended September 30, 2021.

(3)

Annualized.

View source version on businesswire.com: https://www.businesswire.com/news/home/20221020005010/en/

FOR INVESTOR INQUIRIES, CONTACT: Irene Oh Chief Financial Officer T: (626) 768-6360 E: irene.oh@eastwestbank.com

Julianna Balicka Director of Investor Relations and Corporate Finance T: (626) 768-6985 E: julianna.balicka@eastwestbank.com

East West Bancorp (NASDAQ:EWBC)
Historical Stock Chart
From Nov 2024 to Dec 2024

Click Here for more East West Bancorp Charts.

East West Bancorp (NASDAQ:EWBC)
Historical Stock Chart
From Dec 2023 to Dec 2024

Market Data

News

Trading Tools

Markets

Discover

Hot Features

Follow Feed

Options Flow

Monitor

EWBC East West Bancorp Inc

East West Bancorp Inc News

Your Recent History

Company

Business

Popular

Get The App

Trending Now

Toplists

Market Data

News

Trading Tools

Markets

Discover

Hot Features

Follow Feed

Options Flow

Monitor

EWBC East West Bancorp Inc

East West Bancorp Inc News

Your Recent History

Company

Business

Popular

Get The App

Go Ad-Free