East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq:
EWBC), parent company of East West Bank, reported its financial
results for the full year and fourth quarter of 2022. Full year
2022 net income was a record $1.1 billion, or $7.92 per diluted
share, which grew 30% year-over-year. Fourth quarter 2022 net
income was $336.8 million, or $2.37 per diluted share, which grew
56% year-over-year. Total loans reached a record $48.2 billion as
of December 31, 2022, up 16% year-over-year, and total deposits
grew to a record $56.0 billion, up 5% from a year ago.
“2023 marks the 50th anniversary of East West. I am very proud
of the milestones and growth that East West has achieved throughout
its history. We have distinguished ourselves with a long,
well-established track record of strong financial performance,”
stated Dominic Ng, Chairman and Chief Executive Officer of East
West. “For the fourth quarter of 2022, we earned an
industry-leading 2.1% return on average assets and 25.0% return on
average tangible equity1.”
“East West Federal Savings Bank was founded in 1973 with a
mission to serve the financial needs of Asian immigrants in Los
Angeles, who were overlooked by mainstream banks. As our customers
grew and prospered, achieving their personal and business
ambitions, so did East West. With over $60 billion in total assets
and annual earnings over $1 billion, East West has grown to be the
largest independent bank headquartered in Southern California. Our
customer base and geographic footprint expanded, along with the
breadth and technological sophistication of our lending, deposit,
and fee-based products and services. Today, we provide a seamless
banking experience for clients on both sides of the Pacific,
executing on our vision to be the bridge between the East and the
West,” continued Ng.
“In celebrating our 50th anniversary, we are honored to be the
bank of choice for our customers, and thankful and proud of all our
associates for their dedication to our clients and East West. We
are positive about 2023 and expect to continue our track record of
outstanding profitability, achieved through solid revenue growth
and disciplined expense management, while maintaining healthy
capital levels. As we start the year, we are pleased to announce a
20% increase in our common stock dividend,” concluded Ng.
FINANCIAL
HIGHLIGHTS
Twelve Months Ended
Year-over-Year Change
($ in millions, except per share data)
December 31, 2022
$
%
Total Loans
$
48,228
$
6,534
16
%
Total Deposits
55,968
2,617
5
Total Revenue
$
2,345
$
527
29
%
Adj. Pre-tax, Pre-provision Income2
1,600
454
40
Net Income
1,128
255
29
Diluted Earnings Per Share
$
7.92
$
1.82
30
%
_________________________
1 Return on average tangible equity is a non-GAAP financial
measure. See reconciliation of GAAP to non-GAAP measures in Table
13. 2 Adjusted pre-tax, pre-provision income is a non-GAAP
financial measure. See reconciliation of GAAP to non-GAAP measures
in Table 12.
BALANCE SHEET
- Record Assets – Total assets reached $64.1 billion as of
December 31, 2022, an increase of $1.5 billion or 2.5% from $62.6
billion as of September 30, 2022. Year-over-year, total assets grew
$3.2 billion or 5.3% from $60.9 billion as of December 31, 2021.
Fourth quarter 2022 average interest-earning assets of $60.4
billion were up $897.5 million, or 1.5% (6.0% annualized), from
$59.5 billion in the third quarter of 2022. Quarter-over-quarter,
average loan growth of $752.6 million and growth in
interest-bearing cash and deposits with banks of $696.7 million was
partially offset by decreases in debt securities and assets
purchased under resale agreements.
- Record Loans – Total loans reached $48.2 billion as of
December 31, 2022, an increase of $771.3 million, or 1.6% (6.4%
annualized), from $47.5 billion as of September 30, 2022.
Year-over-year, total loans grew $6.5 billion, or 15.7%, from $41.7
billion as of December 31, 2021. Fourth quarter 2022 average loans
of $47.6 billion grew $752.6 million, or 1.6% (6.4% annualized),
from the third quarter. Average loan growth was well-balanced
across all our major loan categories of commercial real estate,
commercial & industrial, and residential mortgage.
- Record Deposits – Total deposits were $56.0 billion as
of December 31, 2022, an increase of $2.1 billion, or 3.9% (15.5%
annualized), from $53.9 billion as of September 30, 2022.
Year-over-year, deposits grew $2.6 billion, or 4.9%, from $53.4
billion as of December 31, 2021. Fourth quarter 2022 average
deposits of $55.0 billion increased $932.2 million, or 1.7% (6.8%
annualized) from the third quarter, driven by growth in time
deposits, partially offset by declines in other deposit categories.
Growth in time deposits in the fourth quarter reflected a
successful branch-based CD campaign. Average noninterest-bearing
deposits made up 39% of average total deposits in the fourth
quarter of 2022, compared with 41% in the third quarter of 2022 and
44% in the fourth quarter of 2021.
- Strong Capital Levels – As of December 31, 2022,
stockholders’ equity was $6.0 billion, or $42.46 per common share,
up 5.7% quarter-over-quarter, and tangible equity3 per common share
was $39.10, up 6.2% from September 30, 2022. As of December 31,
2022, the stockholders’ equity to assets ratio was 9.33%, an
increase of 28 basis points quarter-over-quarter, and the tangible
equity to tangible assets ratio3 was 8.66%, an increase of 31 basis
points quarter-over-quarter. The common equity tier 1 (“CET1”)
capital ratio was 12.7%, and the total risk-based capital ratio was
14.0% as of December 31, 2022; all regulatory capital ratios
expanded quarter-over-quarter.
- Dividend Increase – The first quarter 2023 common stock
dividend was increased by 20%, or eight cents per share. The new
quarterly dividend is $0.48 per share, up from $0.40 per share. The
new annual dividend is $1.92 per share, compared with $1.60 per
share previously.
_________________________
3 Tangible equity and the tangible equity to tangible assets
ratio are non-GAAP financial measures. See reconciliation of GAAP
to non-GAAP measures in Table 13.
OPERATING RESULTS
Full Year Earnings – Full year 2022 net income was $1.1
billion, an increase of 29.2% from $873.0 million for the full year
2021. Full year 2022 diluted earnings per share were $7.92, an
increase of 29.8% from $6.10 per diluted share for the full year
2021.
Fourth Quarter Earnings – Fourth quarter 2022 net income
was $336.8 million, an increase of 14.0% (55.6% annualized) from
$295.3 million for the third quarter of 2022, and an increase of
54.6% from $217.8 million for the fourth quarter of 2021. Fourth
quarter 2022 diluted earnings per share were $2.37, an increase of
13.9% (55.2% annualized) from $2.08 per diluted share for the third
quarter 2022, and an increase of 55.9% from $1.52 per diluted share
for the year-ago quarter.
Fourth Quarter 2022 Compared to Third
Quarter 2022
Net Interest Income and Net Interest Margin
Record net interest income (“NII”) totaled $605.5 million, an
increase of 9.7% (38.6% annualized) from $551.8 million. Net
interest margin (“NIM”) of 3.98% expanded 30 basis points from
3.68%.
- NII growth and NIM expansion were driven by higher earning
asset yields, partially offset by a higher cost of funds.
- The average loan yield was 5.59%, up 84 basis points from the
third quarter. The average interest-earning asset yield was 5.00%,
up 81 basis points from the third quarter. Average loans made up
79% of average interest-earning assets in the fourth quarter of
2022, essentially unchanged from the third quarter of 2022.
- The average cost of funds was 1.11%, up 56 basis points from
the third quarter. The average cost of deposits was 1.06%, up 55
basis points, and the average cost of interest-bearing deposits was
1.74%, up 88 basis points from the third quarter.
- The changes in yields and rates reflected rising benchmark
interest rates.
Noninterest Income
Noninterest income totaled $64.9 million in the fourth quarter,
a decrease of $10.6 million, or 14.1%, from $75.6 million in the
third quarter.
- Fee income and net gains on sales of loans were $66.0 million,
a decrease of $3.1 million, or 4.5% (17.7% annualized), from $69.0
million in the third quarter.
- Interest rate contracts (“IRC”) and other derivative income was
a loss of $0.6 million in the fourth quarter, compared with income
of $8.8 million in the third quarter. The quarter-over-quarter
decrease of $9.4 million was due to an unfavorable change in the
credit valuation adjustment. The mark-to-market on IRC and other
derivatives was $(4.6) million in the fourth quarter, compared with
$4.8 million in the third quarter. Customer-driven IRC revenue of
$4.0 million in the fourth quarter was essentially unchanged from
the third quarter.
Noninterest Expense
Noninterest expense totaled $257.1 million in the fourth
quarter, compared with $216.0 million in the third quarter. Fourth
quarter noninterest expense consisted of $192.1 million of adjusted
noninterest expense4, $64.6 million in amortization of tax credit
and other investments, and $0.4 million in amortization of core
deposit intangibles.
- Adjusted noninterest expense of $192.1 million decreased $3.5
million, or 1.8% (7.1% annualized), from $195.6 million in the
third quarter, largely driven by lower compensation and employee
benefits expense.
- Amortization of tax credit and other investments totaled $64.6
million in the fourth quarter, compared with $19.9 million in the
third 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 28.7% in the fourth quarter,
compared with 31.2% in the third quarter.
TAX RELATED ITEMS
Full year 2022 income tax expense was $283.6 million, and the
effective tax rate was 20.1%, compared with income tax expense of
$183.4 million and an effective tax rate of 17.4% for the full year
2021. Fourth quarter 2022 income tax expense was $51.6 million, and
the effective tax rate was 13.3%, compared with income tax expense
of $89.0 million and an effective tax rate of 23.2% for the third
quarter of 2022.
ASSET QUALITY
The asset quality of our loan portfolio continued to be solid
and stable, with decreases in both classified and special mention
loans, as well as very low nonperforming asset and net charge-off
ratios. Provision for credit losses was $25.0 million for the
fourth quarter of 2022, compared with $27.0 million for the third
quarter of 2022.
- Criticized loans decreased $9.2 million, or 1.0%,
quarter-over-quarter to $896.0 million as of December 31, 2022,
down from $905.2 million as of September 30, 2022. Classified loans
decreased 1.6% quarter-over-quarter to $427.5 million, and special
mention loans decreased 0.5% to $468.5 million.
- The criticized loans ratio decreased five basis points
quarter-over-quarter to 1.86% of loans held-for-investment (“HFI”)
as of December 31, 2022, down from 1.91% as of September 30, 2022.
The classified loans ratio decreased three basis points
quarter-over-quarter to 0.89%, and the special mention loans ratio
decreased two basis points to 0.97%.
- As of December 31, 2022, nonperforming assets were $99.8
million, or 0.16% of total assets, compared with $97.0 million, or
0.16% of total assets, as of September 30, 2022.
- Fourth quarter 2022 net charge-offs were $10.1 million, or
annualized 0.08% of average loans HFI, compared with net
charge-offs of $6.6 million, or annualized 0.06% of average loans
HFI, for the third quarter of 2022.
- The allowance for loan losses totaled $595.6 million, or 1.24%
of loans HFI, as of December 31, 2022, compared with $582.5
million, or 1.23% of loans HFI, as of September 30, 2022.
_________________________
4 Adjusted noninterest expense and the adjusted efficiency ratio
are non-GAAP financial measures. See reconciliation of GAAP to
non-GAAP measures in Table 12.
CAPITAL STRENGTH
Capital levels for East West are strong. The following table
presents the regulatory capital metrics as of December 31, 2022,
September 30, 2022 and December 31, 2021.
EWBC Risk-Based Capital Ratios
($ in millions)
December 31, 2022 (a)
September 30, 2022 (a)
December 31, 2021 (a)
CET1 capital ratio
12.7
%
12.3
%
12.8
%
Tier 1 capital ratio
12.7
%
12.3
%
12.8
%
Total capital ratio
14.0
%
13.6
%
14.1
%
Leverage ratio
9.8
%
9.6
%
9.0
%
Risk-Weighted Assets (“RWA”) (b)
$
50,087
$
49,266
$
43,585
(a)
The Company has elected to use the 2020
CECL transition provision in the calculation of its December 31,
2022, September 30, 2022, and December 31, 2021 regulatory capital
ratios. The Company’s December 31, 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 first quarter 2023
dividends for the Company’s common stock. The common stock cash
dividend of $0.48 per share is payable on February 21, 2023, to
stockholders of record on February 6, 2023. This represents a 20%
increase, or eight cents per share, to the quarterly common stock
dividend, up from $0.40 per share previously. The new annual
dividend is $1.92 per share, compared with $1.60 per share
previously.
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 fourth quarter of 2022.
Conference Call
East West will host a conference call to discuss fourth quarter
and full year 2022 earnings with the public on Thursday, January
26, 2023, at 8:30 a.m. PT/11:30 a.m. ET. The public and investment
community are invited to listen as management discusses fourth
quarter and full year 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 January
26, 2023, at 11:30 a.m. PT/2:30 p.m. ET through February 26, 2023.
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: 4372128.
About East West
East West Bancorp, Inc. is a public company with total assets of
$64.1 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 Asia. 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,
Xiamen. East West also has a representative office in Singapore.
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,
beliefs, estimates, assumptions and projections, many of which, by
their nature, are inherently uncertain and beyond the Company’s
control. Forward-looking statements may relate to various matters,
including the Company’s financial condition, results of operations,
plans, objectives, future performance, business or industry, and
usually can be identified by the use of forward-looking words, 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 or variations thereof, and the
negative thereof, but these terms are not the exclusive means of
identifying such statements. You should not place undue reliance on
forward-looking 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.
There are various 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, capital or financial
market disruption, supply chain disruption, level of inflation,
interest rate environment, housing prices, employment levels, rate
of growth and general business conditions, which could result in,
among other things, reduced demand for loans, reduced 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 portfolio; changes in local, regional and
global business, economic and political conditions and geopolitical
events, such as the military conflict between Russia and Ukraine;
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; 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
trade, 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; the impact from
potential changes to income tax laws and regulations, federal
spending and economic stimulus programs; the impact of any future
federal government shutdown and uncertainty regarding the federal
government’s debt limit; the Company’s ability to compete
effectively against financial institutions 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; the 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 strategic acquisitions
or divestitures; changes in the equity and debt securities markets;
fluctuations in the Company’s stock price; 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; 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. You should
treat forward-looking statements as speaking only as of the date
they are made and then actually known to the Company. 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
December 31, 2022
% or Basis Point
Change
December 31, 2022
September 30, 2022
December 31, 2021
Qtr-o-Qtr
Yr-o-Yr
Assets
Cash and due from banks
$
534,980
$
554,260
$
527,317
(3.5
)%
1.5
%
Interest-bearing cash with banks
2,946,804
1,609,093
3,385,618
83.1
(13.0
)
Cash and cash equivalents
3,481,784
2,163,353
3,912,935
60.9
(11.0
)
Interest-bearing deposits with banks
139,021
630,543
736,492
(78.0
)
(81.1
)
Assets purchased under resale agreements
(“resale agreements”)
792,192
892,986
2,353,503
(11.3
)
(66.3
)
Available-for-sale (“AFS”) debt securities
(amortized cost of $6,879,225, $6,771,354 and $10,087,179)
6,034,993
5,906,090
9,965,353
2.2
(39.4
)
Held-to-maturity (“HTM”) debt securities,
at amortized cost (fair value of $2,455,171 and $2,459,135 in
2022)
3,001,868
3,012,667
—
(0.4
)
100.0
Loans held-for-sale (“HFS”)
25,644
14,500
635
76.9
NM
Loans held-for-investment (''HFI'') (net
of allowance for loan losses of $595,645, $582,517 and
$541,579)
47,606,785
46,859,738
41,152,202
1.6
15.7
Investments in qualified affordable
housing partnerships, tax credit and other investments, net
763,256
725,254
628,263
5.2
21.5
Goodwill
465,697
465,697
465,697
—
—
Operating lease right-of-use assets
103,681
105,411
98,632
(1.6
)
5.1
Other assets
1,697,229
1,799,822
1,556,989
(5.7
)
9.0
Total assets
$
64,112,150
$
62,576,061
$
60,870,701
2.5
%
5.3
%
Liabilities and Stockholders’
Equity
Deposits
$
55,967,849
$
53,857,362
$
53,350,532
3.9
%
4.9
%
Federal funds purchased
—
200,000
—
(100.0
)
—
FHLB advances
—
324,920
249,331
(100.0
)
(100.0
)
Assets sold under repurchase agreements
(“repurchase agreements”)
300,000
611,785
300,000
(51.0
)
—
Long-term debt and finance lease
liabilities
152,400
152,610
151,997
(0.1
)
0.3
Operating lease liabilities
111,931
113,477
105,534
(1.4
)
6.1
Accrued expenses and other liabilities
1,595,358
1,655,239
876,089
(3.6
)
82.1
Total liabilities
58,127,538
56,915,393
55,033,483
2.1
5.6
Stockholders’ equity
5,984,612
5,660,668
5,837,218
5.7
2.5
Total liabilities and stockholders’
equity
$
64,112,150
$
62,576,061
$
60,870,701
2.5
%
5.3
%
Book value per common share
$
42.46
$
40.17
$
41.13
5.7
%
3.2
%
Tangible equity (1) per common
share
$
39.10
$
36.80
$
37.79
6.2
3.5
Number of common shares at
period-end
140,948
140,918
141,908
0.0
(0.7
)
Total stockholders’ equity
to total assets ratio
9.33
%
9.05
%
9.59
%
28
bps
(26
) bps
Tangible equity to tangible assets
ratio (1)
8.66
%
8.35
%
8.88
%
31
bps
(22
)
bps
NM - Not meaningful.
(1)
Tangible equity and the tangible equity to
tangible assets ratio are non-GAAP financial measures. See
reconciliation of GAAP to non-GAAP measures in Table 13.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
TOTAL LOANS AND DEPOSITS
DETAIL
($ in thousands)
(unaudited)
Table 2
December 31, 2022
% Change
December 31, 2022
September 30, 2022
December 31, 2021
Qtr-o-Qtr
Yr-o-Yr
Loans:
Commercial:
Commercial and industrial (“C&I”)
(1)
$
15,711,095
$
15,625,072
$
14,150,608
0.6
%
11.0
%
Commercial real estate (“CRE”):
CRE
13,857,870
13,573,157
12,155,047
2.1
14.0
Multifamily residential
4,573,068
4,559,302
3,675,605
0.3
24.4
Construction and land
638,420
556,894
346,486
14.6
84.3
Total CRE
19,069,358
18,689,353
16,177,138
2.0
17.9
Consumer:
Residential mortgage:
Single-family residential
11,223,027
10,855,345
9,093,702
3.4
23.4
Home equity lines of credit (“HELOCs”)
2,122,655
2,184,924
2,144,821
(2.8
)
(1.0
)
Total residential mortgage
13,345,682
13,040,269
11,238,523
2.3
18.7
Other consumer
76,295
87,561
127,512
(12.9
)
(40.2
)
Total loans HFI (2)
48,202,430
47,442,255
41,693,781
1.6
15.6
Loans HFS
25,644
14,500
635
76.9
NM
Total loans (2)
48,228,074
47,456,755
41,694,416
1.6
15.7
Allowance for loan losses
(595,645
)
(582,517
)
(541,579
)
2.3
10.0
Net loans (2)
$
47,632,429
$
46,874,238
$
41,152,837
1.6
15.7
Deposits:
Noninterest-bearing demand
$
21,051,090
$
21,645,394
$
22,845,464
(2.7
)%
(7.9
)%
Interest-bearing checking
6,672,165
6,822,343
6,524,721
(2.2
)
2.3
Money market
12,265,024
12,113,292
13,130,300
1.3
(6.6
)
Savings
2,649,037
2,917,770
2,888,065
(9.2
)
(8.3
)
Time deposits
13,330,533
10,358,563
7,961,982
28.7
67.4
Total deposits
$
55,967,849
$
53,857,362
$
53,350,532
3.9
%
4.9
%
NM - Not meaningful.
(1)
Includes $99.0 million, $110.9 million and
$534.2 million of Paycheck Protection Program (“PPP”) loans as of
December 31, 2022, September 30, 2022 and December 31, 2021,
respectively. Excluding PPP loans, total loans were $48.13 billion,
$47.35 billion and $41.16 billion as of December 31, 2022,
September 30, 2022 and December 31, 2021, respectively.
(2)
Includes $(70.4) million, $(60.3) million
and $(50.7) million of net deferred loan fees and net unamortized
premiums as of December 31, 2022, September 30, 2022 and December
31, 2021, respectively.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF INCOME
($ and shares in thousands,
except per share data)
(unaudited)
Table 3
Three Months Ended
December 31, 2022
% Change
December 31, 2022
September 30, 2022
December 31, 2021
Qtr-o-Qtr
Yr-o-Yr
Interest and dividend income (1)
$
761,212
$
628,236
$
422,708
21.2
%
80.1
%
Interest expense
155,705
76,427
17,011
103.7
815.3
Net interest income before provision for
(reversal of) credit losses
605,507
551,809
405,697
9.7
49.3
Provision for (reversal of) credit
losses
25,000
27,000
(10,000
)
(7.4
)
NM
Net interest income after provision for
(reversal of) credit losses
580,507
524,809
415,697
10.6
39.6
Noninterest income
64,927
75,552
71,489
(14.1
)
(9.2
)
Noninterest expense
257,110
215,973
210,105
19.0
22.4
Income before income taxes
388,324
384,388
277,081
1.0
40.1
Income tax expense
51,561
89,049
59,285
(42.1
)
(13.0
)
Net income
$
336,763
$
295,339
$
217,796
14.0
%
54.6
%
Earnings per share (“EPS”)
- Basic
$
2.39
$
2.10
$
1.53
14.0
%
55.7
%
- Diluted
$
2.37
$
2.08
$
1.52
13.9
55.9
Weighted-average number of shares
outstanding
- Basic
140,947
140,917
141,907
0.0
%
(0.7
)%
- Diluted
142,138
142,011
143,323
0.1
(0.8
)
Three Months Ended
December 31, 2022
% Change
December 31, 2022
September 30, 2022
December 31, 2021
Qtr-o-Qtr
Yr-o-Yr
Noninterest income:
Lending fees
$
19,339
$
20,289
$
20,739
(4.7
)%
(6.8
)%
Deposit account fees
22,112
23,636
20,028
(6.4
)
10.4
Interest rate contracts and other
derivative (loss) income
(638
)
8,761
1,932
NM
NM
Foreign exchange income
14,015
10,083
13,343
39.0
5.0
Wealth management fees
6,071
8,903
5,291
(31.8
)
14.7
Net gains on sales of loans
443
2,129
2,308
(79.2
)
(80.8
)
Gains on sales of AFS debt securities
—
—
390
—
(100.0
)
Other investment income (loss)
1,127
(580
)
2,982
NM
(62.2
)
Other income
2,458
2,331
4,476
5.4
(45.1
)
Total noninterest income
$
64,927
$
75,552
$
71,489
(14.1
)%
(9.2
)%
Noninterest expense:
Compensation and employee benefits
$
120,422
$
127,580
$
114,743
(5.6
)%
4.9
%
Occupancy and equipment expense
15,648
15,920
15,846
(1.7
)
(1.2
)
Deposit insurance premiums and regulatory
assessments
4,930
4,875
4,772
1.1
3.3
Deposit account expense
8,437
6,707
4,307
25.8
95.9
Data processing
3,641
3,725
4,175
(2.3
)
(12.8
)
Computer software expense
7,504
6,889
7,494
8.9
0.1
Other operating expense
31,923
30,403
26,968
5.0
18.4
Amortization of tax credit and other
investments
64,605
19,874
31,800
225.1
103.2
Total noninterest expense
$
257,110
$
215,973
$
210,105
19.0
%
22.4
%
NM - Not meaningful.
(1)
Includes $293 thousand, $524 thousand and
$9.6 million of interest income related to PPP loans for the three
months ended December 31, 2022, September 30, 2022 and December 31,
2021, respectively.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF INCOME
($ and shares in thousands,
except per share data)
(unaudited)
Table 4
Year Ended
December 31, 2022
% Change
December 31, 2022
December 31, 2021
Yr-o-Yr
Interest and dividend income (1)
$
2,321,231
$
1,618,734
43.4%
Interest expense
275,350
87,163
215.9
Net interest income before provision for
(reversal of) credit losses
2,045,881
1,531,571
33.6
Provision for (reversal of) credit
losses
73,500
(35,000
)
NM
Net interest income after provision for
(reversal of) credit losses
1,972,381
1,566,571
25.9
Noninterest income
298,666
285,895
4.5
Noninterest expense
859,393
796,089
8.0
Income before income taxes
1,411,654
1,056,377
33.6
Income tax expense
283,571
183,396
54.6
Net income
$
1,128,083
$
872,981
29.2%
EPS
- Basic
$
7.98
$
6.16
29.7%
- Diluted
$
7.92
$
6.10
29.8
Weighted-average number of shares
outstanding
- Basic
141,326
141,826
(0.4)%
- Diluted
142,492
143,140
(0.5)
Year Ended
December 31, 2022 %
Change
December 31, 2022
December 31, 2021
Yr-o-Yr
Noninterest income:
Lending fees
$
79,208
$
77,704
1.9%
Deposit account fees
88,435
71,261
24.1
Interest rate contracts and other
derivative income
29,057
22,913
26.8
Foreign exchange income
48,158
48,977
(1.7)
Wealth management fees
27,565
25,751
7.0
Net gains on sales of loans
6,411
8,909
(28.0)
Gains on sales of AFS debt securities
1,306
1,568
(16.7)
Other investment income
7,037
16,852
(58.2)
Other income
11,489
11,960
(3.9)
Total noninterest income
$
298,666
$
285,895
4.5%
Noninterest expense:
Compensation and employee benefits
$
477,635
$
433,728
10.1%
Occupancy and equipment expense
62,501
62,996
(0.8)
Deposit insurance premiums and regulatory
assessments
19,449
17,563
10.7
Deposit account expense
25,508
16,152
57.9
Data processing
14,517
16,263
(10.7)
Computer software expense
28,259
30,600
(7.7)
Other operating expense
118,166
96,330
22.7
Amortization of tax credit and other
investments
113,358
122,457
(7.4)
Total noninterest expense
$
859,393
$
796,089
8.0%
NM - Not meaningful.
(1)
Includes $7.3 million and $55.2 million of
interest income related to PPP loans for the years ended December
31, 2022 and 2021, respectively.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
SELECTED AVERAGE
BALANCES
($ in thousands)
(unaudited)
Table 5
Three Months Ended
December 31, 2022
% Change
Year Ended
December 31, 2022
% Change
December 31,
2022
September 30,
2022
December 31,
2021
Qtr-o-Qtr
Yr-o-Yr
December 31,
2022
December 31,
2021
Yr-o-Yr
Loans:
Commercial:
C&I (1)
$
15,496,386
$
15,282,661
$
13,592,203
1.4
%
14.0
%
$
15,013,560
$
13,656,720
9.9%
CRE:
CRE
13,699,042
13,533,482
11,954,535
1.2
14.6
13,145,204
11,663,144
12.7
Multifamily residential
4,604,628
4,531,351
3,434,274
1.6
34.1
4,252,605
3,213,582
32.3
Construction and land
591,962
532,800
340,940
11.1
73.6
499,044
445,333
12.1
Total CRE
18,895,632
18,597,633
15,729,749
1.6
20.1
17,896,853
15,322,059
16.8
Consumer:
Residential mortgage:
Single-family residential
10,988,102
10,676,022
9,031,677
2.9
21.7
10,106,609
8,742,565
15.6
HELOCs
2,145,416
2,216,355
2,052,383
(3.2
)
4.5
2,208,725
1,859,073
18.8
Total residential mortgage
13,133,518
12,892,377
11,084,060
1.9
18.5
12,315,334
10,601,638
16.2
Other consumer
81,596
81,870
126,557
(0.3
)
(35.5
)
93,711
136,280
(31.2)
Total loans (2)
$
47,607,132
$
46,854,541
$
40,532,569
1.6
%
17.5
%
$
45,319,458
$
39,716,697
14.1%
Interest-earning assets
$
60,376,151
$
59,478,689
$
58,944,082
1.5
%
2.4
%
$
59,309,062
$
56,256,388
5.4%
Total assets
$
64,252,730
$
63,079,444
$
62,183,137
1.9
%
3.3
%
$
62,838,282
$
59,251,091
6.1%
Deposits:
Noninterest-bearing demand
$
21,419,290
$
22,423,633
$
24,019,333
(4.5
)%
(10.8
)%
$
22,784,258
$
21,271,410
7.1%
Interest-bearing checking
6,543,349
6,879,632
6,462,471
(4.9
)
1.3
6,696,200
6,543,817
2.3
Money market
12,197,782
12,351,571
12,920,174
(1.2
)
(5.6
)
12,443,437
12,428,025
0.1
Savings
2,747,166
2,961,634
2,841,352
(7.2
)
(3.3
)
2,901,940
2,746,933
5.6
Time deposits
12,076,193
9,435,063
8,072,917
28.0
49.6
9,473,744
8,493,511
11.5
Total deposits
$
54,983,780
$
54,051,533
$
54,316,247
1.7
%
1.2
%
$
54,299,579
$
51,483,696
5.5%
Interest-bearing liabilities
$
34,372,853
$
32,703,323
$
31,011,536
5.1
%
10.8
%
$
32,322,744
$
31,077,459
4.0%
Stockholders’ equity
$
5,834,623
$
5,772,638
$
5,786,237
1.1
%
0.8
%
$
5,783,025
$
5,559,212
4.0%
(1)
Average balances of PPP loans were $104.6
million, $127.6 million and $677.2 million for the three months
ended December 31, 2022, September 30, 2022 and December 31, 2021,
respectively, and $215.4 million and $1.39 billion for the years
ended December 31, 2022 and 2021, respectively.
(2)
Includes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
QUARTER-TO-DATE AVERAGE
BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 6
Three Months Ended
December 31, 2022
September 30, 2022
Average Balance
Interest
Average
Yield/Rate(1)
Average Balance
Interest
Average
Yield/Rate(1)
Assets
Interest-earning assets:
Interest-bearing cash and deposits with
banks
$
2,983,726
$
23,986
3.19
%
$
2,287,010
$
9,080
1.58
%
Resale agreements
833,170
6,062
2.89
%
1,037,292
6,769
2.59
%
AFS debt securities
5,869,336
46,224
3.12
%
6,204,729
38,383
2.45
%
HTM debt securities
3,004,412
12,747
1.68
%
3,017,063
12,709
1.67
%
Loans (2)
47,607,132
671,323
5.59
%
46,854,541
560,452
4.75
%
FHLB and FRB stock
78,375
870
4.40
%
78,054
843
4.28
%
Total interest-earning assets
60,376,151
761,212
5.00
%
59,478,689
628,236
4.19
%
Noninterest-earning assets:
Cash and due from banks
640,509
615,836
Allowance for loan losses
(583,271
)
(566,369
)
Other assets
3,819,341
3,551,288
Total assets
$
64,252,730
$
63,079,444
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
6,543,349
$
16,735
1.01
%
$
6,879,632
$
8,493
0.49
%
Money market deposits
12,197,782
62,246
2.02
%
12,351,571
33,101
1.06
%
Savings deposits
2,747,166
2,714
0.39
%
2,961,634
2,268
0.30
%
Time deposits
12,076,193
65,772
2.16
%
9,435,063
25,032
1.05
%
Federal funds purchased and other
short-term borrowings
47,142
374
3.15
%
211,794
1,177
2.20
%
FHLB advances
40,178
225
2.22
%
86,243
392
1.80
%
Repurchase agreements
568,520
5,507
3.84
%
624,821
4,421
2.81
%
Long-term debt and finance lease
liabilities
152,523
2,132
5.55
%
152,565
1,543
4.01
%
Total interest-bearing
liabilities
34,372,853
155,705
1.80
%
32,703,323
76,427
0.93
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
21,419,290
22,423,633
Accrued expenses and other liabilities
2,625,964
2,179,850
Stockholders’ equity
5,834,623
5,772,638
Total liabilities and stockholders’
equity
$
64,252,730
$
63,079,444
Interest rate spread
3.20
%
3.26
%
Net interest income and net interest
margin
$
605,507
3.98
%
$
551,809
3.68
%
(1)
Annualized.
(2)
Includes loans HFS. Average balances of
PPP loans were $104.6 million and $127.6 million for the three
months ended December 31, 2022 and September 30, 2022,
respectively.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
QUARTER-TO-DATE AVERAGE
BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 7
Three Months Ended
December 31, 2022
December 31, 2021
Average Balance
Interest
Average
Yield/Rate(1)
Average Balance
Interest
Average
Yield/Rate(1)
Assets
Interest-earning assets:
Interest-bearing cash and deposits with
banks
$
2,983,726
$
23,986
3.19
%
$
6,050,870
$
3,750
0.25
%
Resale agreements
833,170
6,062
2.89
%
2,440,636
9,162
1.49
%
AFS debt securities
5,869,336
46,224
3.12
%
9,842,691
42,367
1.71
%
HTM debt securities
3,004,412
12,747
1.68
%
—
—
—
%
Loans (2)
47,607,132
671,323
5.59
%
40,532,569
366,936
3.59
%
FHLB and FRB stock
78,375
870
4.40
%
77,316
493
2.53
%
Total interest-earning assets
60,376,151
761,212
5.00
%
58,944,082
422,708
2.85
%
Noninterest-earning assets:
Cash and due from banks
640,509
652,126
Allowance for loan losses
(583,271
)
(558,645
)
Other assets
3,819,341
3,145,574
Total assets
$
64,252,730
$
62,183,137
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
6,543,349
$
16,735
1.01
%
$
6,462,471
$
1,846
0.11
%
Money market deposits
12,197,782
62,246
2.02
%
12,920,174
3,172
0.10
%
Savings deposits
2,747,166
2,714
0.39
%
2,841,352
1,734
0.24
%
Time deposits
12,076,193
65,772
2.16
%
8,072,917
6,617
0.33
%
Federal funds purchased and other
short-term borrowings
47,142
374
3.15
%
730
—
—
%
FHLB advances
40,178
225
2.22
%
249,048
856
1.36
%
Repurchase agreements
568,520
5,507
3.84
%
313,075
2,018
2.56
%
Long-term debt and finance lease
liabilities
152,523
2,132
5.55
%
151,769
768
2.01
%
Total interest-bearing
liabilities
34,372,853
155,705
1.80
%
31,011,536
17,011
0.22
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
21,419,290
24,019,333
Accrued expenses and other liabilities
2,625,964
1,366,031
Stockholders’ equity
5,834,623
5,786,237
Total liabilities and stockholders’
equity
$
64,252,730
$
62,183,137
Interest rate spread
3.20
%
2.63
%
Net interest income and net interest
margin
$
605,507
3.98
%
$
405,697
2.73
%
(1)
Annualized.
(2)
Includes loans HFS. Average balances of
PPP loans were $104.6 million and $677.2 million for the three
months ended December 31, 2022 and December 31, 2021,
respectively.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
YEAR-TO-DATE AVERAGE BALANCES,
YIELDS AND RATES
($ in thousands)
(unaudited)
Table 8
Year Ended
December 31, 2022
December 31, 2021
Average
Average
Average
Average
Balance
Interest
Yield/Rate
Balance
Interest
Yield/Rate
Assets
Interest-earning assets:
Interest-bearing cash and deposits with
banks
$
3,127,234
$
41,113
1.31
%
$
6,071,896
$
15,531
0.26
%
Resale agreements
1,398,080
29,767
2.13
%
2,107,157
32,239
1.53
%
AFS debt securities
6,629,945
152,514
2.30
%
8,281,234
143,983
1.74
%
HTM debt securities
2,756,382
46,392
1.68
%
—
—
—
%
Loans (1)
45,319,458
2,048,301
4.52
%
39,716,697
1,424,900
3.59
%
FHLB and FRB stock
77,963
3,144
4.03
%
79,404
2,081
2.62
%
Total interest-earning assets
59,309,062
2,321,231
3.91
%
56,256,388
1,618,734
2.88
%
Noninterest-earning assets:
Cash and due from banks
652,673
615,255
Allowance for loan losses
(559,746
)
(592,211
)
Other assets
3,436,293
2,971,659
Total assets
$
62,838,282
$
59,251,091
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
6,696,200
$
29,808
0.45
%
$
6,543,817
$
13,023
0.20
%
Money market deposits
12,443,437
107,442
0.86
%
12,428,025
15,041
0.12
%
Savings deposits
2,901,940
8,550
0.29
%
2,746,933
7,496
0.27
%
Time deposits
9,473,744
106,038
1.12
%
8,493,511
33,599
0.40
%
Federal funds purchased and other
short-term borrowings
81,719
1,801
2.20
%
1,584
42
2.65
%
FHLB advances
105,966
1,754
1.66
%
404,789
6,881
1.70
%
Repurchase agreements
467,413
14,362
3.07
%
306,845
7,999
2.61
%
Long-term debt and finance lease
liabilities
152,325
5,595
3.67
%
151,955
3,082
2.03
%
Total interest-bearing
liabilities
32,322,744
275,350
0.85
%
31,077,459
87,163
0.28
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
22,784,258
21,271,410
Accrued expenses and other liabilities
1,948,255
1,343,010
Stockholders’ equity
5,783,025
5,559,212
Total liabilities and stockholders’
equity
$
62,838,282
$
59,251,091
Interest rate spread
3.06
%
2.60
%
Net interest income and net interest
margin
$
2,045,881
3.45
%
$
1,531,571
2.72
%
(1)
Includes loans HFS. Average balances of
PPP loans were $215.4 million and $1.39 billion for the years ended
December 31, 2022 and 2021, respectively.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
SELECTED RATIOS
(unaudited)
Table 9
Three Months Ended (1)
December 31, 2022
Basis Point Change
December 31,
2022
September 30,
2022
December 31,
2021
Qtr-o-Qtr
Yr-o-Yr
Return on average assets
2.08
%
1.86
%
1.39
%
22
bps
69
bps
Return on average equity
22.90
%
20.30
%
14.93
%
260
797
Tangible return on average tangible equity
(2)
24.96
%
22.16
%
16.32
%
280
864
Interest rate spread
3.20
%
3.26
%
2.63
%
(6
)
57
Net interest margin
3.98
%
3.68
%
2.73
%
30
125
Average loan yield
5.59
%
4.75
%
3.59
%
84
200
Yield on average interest-earning
assets
5.00
%
4.19
%
2.85
%
81
215
Average cost of interest-bearing
deposits
1.74
%
0.86
%
0.18
%
88
156
Average cost of deposits
1.06
%
0.51
%
0.10
%
55
96
Average cost of funds
1.11
%
0.55
%
0.12
%
56
99
Adjusted pre-tax, pre-provision
profitability ratio (3)
2.95
%
2.72
%
1.91
%
23
104
Adjusted noninterest expense/average
assets (3)
1.19
%
1.23
%
1.13
%
(4
)
6
Efficiency ratio
38.35
%
34.43
%
44.03
%
392
(568
)
Adjusted efficiency ratio (3)
28.66
%
31.18
%
37.24
%
(252
)
bps
(858
)
bps
Year Ended
December 31, 2022
Basis Point Change
December 31, 2022
December 31, 2021
Yr-o-Yr
Return on average assets
1.80
%
1.47
%
33
bps
Return on average equity
19.51
%
15.70
%
381
Tangible return on average tangible equity
(2)
21.29
%
17.24
%
405
Interest rate spread
3.06
%
2.60
%
46
Net interest margin
3.45
%
2.72
%
73
Average loan yield
4.52
%
3.59
%
93
Yield on average interest-earning
assets
3.91
%
2.88
%
103
Average cost of interest-bearing
deposits
0.80
%
0.23
%
57
Average cost of deposits
0.46
%
0.13
%
33
Average cost of funds
0.50
%
0.17
%
33
Adjusted pre-tax, pre-provision
profitability ratio (3)
2.55
%
1.94
%
61
Adjusted noninterest expense/average
assets (3)
1.18
%
1.13
%
5
Efficiency ratio
36.65
%
43.80
%
(715
)
Adjusted efficiency ratio (3)
31.74
%
36.91
%
(517
)
bps
(1)
Annualized except for efficiency
ratio.
(2)
Tangible return on average tangible equity
is a non-GAAP financial measure. See reconciliation of GAAP to
non-GAAP measures in Table 13.
(3)
Adjusted pre-tax, pre-provision
profitability ratio, adjusted noninterest expense/average assets
and the adjusted efficiency ratio are non-GAAP financial
measures. See reconciliation of GAAP to
non-GAAP 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 December
31, 2022
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, September
30, 2022
$
371,749
$
178,487
$
30,587
$
1,694
$
582,517
(Reversal of) provision for credit losses
on loans
(a)
(263
)
13,790
9,363
(118
)
22,772
Gross charge-offs
(416
)
(10,804
)
—
(16
)
(11,236
)
Gross recoveries
136
873
89
—
1,098
Total net (charge-offs) recoveries
(280
)
(9,931
)
89
(16
)
(10,138
)
Foreign currency translation
adjustment
494
—
—
—
494
Allowance for loan losses, December 31,
2022
$
371,700
$
182,346
$
40,039
$
1,560
$
595,645
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
71
21
—
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 December
31, 2021
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, September
30, 2021
$
342,142
$
192,260
$
21,684
$
4,318
$
560,404
Provision for (reversal of) credit losses
on loans
(a)
2,395
(9,416
)
(1,519
)
(940
)
(9,480
)
Gross charge-offs
(12,328
)
(2,872
)
—
(1,454
)
(16,654
)
Gross recoveries
5,605
836
430
—
6,871
Total net (charge-offs) recoveries
(6,723
)
(2,036
)
430
(1,454
)
(9,783
)
Foreign currency translation
adjustment
438
—
—
—
438
Allowance for loan losses, December 31,
2021
$
338,252
$
180,808
$
20,595
$
1,924
$
541,579
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES
& OFF-BALANCE-SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 10 (continued)
Year Ended December 31,
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)
37,604
17,430
19,991
(258
)
74,767
Gross charge-offs
(18,738
)
(18,108
)
(968
)
(106
)
(37,920
)
Gross recoveries
16,824
2,216
421
—
19,461
Total net charge-offs
(1,914
)
(15,892
)
(547
)
(106
)
(18,459
)
Foreign currency translation
adjustment
(2,242
)
—
—
—
(2,242
)
Allowance for loan losses, December 31,
2022
$
371,700
$
182,346
$
40,039
$
1,560
$
595,645
Year Ended December 31,
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)
(39,732
)
6,782
2,710
1,286
(28,954
)
Gross charge-offs
(32,490
)
(31,514
)
(1,091
)
(1,497
)
(66,592
)
Gross recoveries
11,906
3,937
766
5
16,614
Total net charge-offs
(20,584
)
(27,577
)
(325
)
(1,492
)
(49,978
)
Foreign currency translation
adjustment
528
—
—
—
528
Allowance for loan losses, December 31,
2021
$
338,252
$
180,808
$
20,595
$
1,924
$
541,579
Three Months Ended
Year Ended
December 31,
2022
September 30,
2022
December 31,
2021
December 31,
2022
December 31,
2021
Unfunded Credit Facilities
Allowance for unfunded credit
commitments, beginning of period (1)
$
24,041
$
24,304
$
28,036
$
27,514
$
33,577
Provision for (reversal of) credit losses
on unfunded credit commitments
(b)
2,228
(274
)
(520
)
(1,267
)
(6,046
)
Foreign currency translation
adjustment
(5
)
11
(2
)
17
(17
)
Allowance for unfunded credit
commitments, end of period (1)
$
26,264
$
24,041
$
27,514
$
26,264
$
27,514
Provision for (reversal of) credit
losses
(a)+(b)
$
25,000
$
27,000
$
(10,000
)
$
73,500
$
(35,000
)
(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
December 31, 2022
September 30, 2022
December 31, 2021
Special mention loans
$
468,471
$
470,964
$
384,694
Classified loans
427,509
434,242
448,362
Total criticized loans (1)
$
895,980
$
905,206
$
833,056
Nonperforming Assets
December 31, 2022
September 30, 2022
December 31, 2021
Nonaccrual loans:
Commercial:
C&I
$
50,428
$
47,988
$
59,023
Total CRE
23,413
11,209
9,942
Consumer:
Total residential mortgage
25,586
23,309
24,164
Other consumer
99
37
52
Total nonaccrual loans
99,526
82,543
93,181
Other real estate owned, net
270
—
363
Other nonperforming assets
—
—
9,938
Nonperforming loans HFS
—
14,500
—
Total nonperforming assets
$
99,796
$
97,043
$
103,482
Credit Quality Ratios
December 31, 2022
September 30, 2022
December 31, 2021
Annualized quarterly net charge-offs to
average loans HFI
0.08
%
0.06
%
0.10
%
Annual net charge-offs to average loans
HFI
0.04
%
N/A
0.13
%
Special mention loans to loans HFI
0.97
%
0.99
%
0.92
%
Classified loans to loans HFI
0.89
%
0.92
%
1.08
%
Criticized loans to loans HFI
1.86
%
1.91
%
2.00
%
Nonperforming assets to total assets
0.16
%
0.16
%
0.17
%
Nonaccrual loans to loans HFI
0.21
%
0.17
%
0.22
%
Allowance for loan losses to loans HFI
1.24
%
1.23
%
1.30
%
(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
December 31, 2022
September 30, 2022
December 31, 2021
Net interest income before provision for
(reversal of) credit losses
$
605,507
$
551,809
$
405,697
Total noninterest income
64,927
75,552
71,489
Total revenue
(a)
$
670,434
$
627,361
$
477,186
Total noninterest expense
(b)
$
257,110
$
215,973
$
210,105
Less: Amortization of tax credit and other
investments
(64,605
)
(19,874
)
(31,800
)
Amortization of core deposit
intangibles
(381
)
(485
)
(602
)
Adjusted noninterest expense
(c)
$
192,124
$
195,614
$
177,703
Efficiency ratio
(b)/(a)
38.35
%
34.43
%
44.03
%
Adjusted efficiency ratio
(c)/(a)
28.66
%
31.18
%
37.24
%
Adjusted pre-tax, pre-provision
income
(a)-(c) = (d)
$
478,310
$
431,747
$
299,483
Average total assets
(e)
$
64,252,730
$
63,079,444
$
62,183,137
Adjusted pre-tax, pre-provision
profitability ratio (1)
(d)/(e)
2.95
%
2.72
%
1.91
%
Adjusted noninterest expense/average
assets (1)
(c)/(e)
1.19
%
1.23
%
1.13
%
Year Ended
December 31, 2022
December 31, 2021
Net interest income before provision for
(reversal of) credit losses
$
2,045,881
$
1,531,571
Total noninterest income
298,666
285,895
Total revenue
(f)
$
2,344,547
$
1,817,466
Total noninterest expense
(g)
$
859,393
$
796,089
Less: Amortization of tax credit and other
investments
(113,358
)
(122,457
)
Amortization of core deposit
intangibles
(1,865
)
(2,749
)
Adjusted noninterest expense
(h)
$
744,170
$
670,883
Efficiency ratio
(g)/(f)
36.65
%
43.80
%
Adjusted efficiency ratio
(h)/(f)
31.74
%
36.91
%
Adjusted pre-tax, pre-provision
income
(f)-(h) = (i)
$
1,600,377
$
1,146,583
Average total assets
(j)
$
62,838,282
$
59,251,091
Adjusted pre-tax, pre-provision
profitability ratio
(i)/(j)
2.55
%
1.94
%
Adjusted noninterest expense/average
assets
(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.
December 31, 2022
September 30, 2022
December 31, 2021
Stockholders’ equity
(a)
$
5,984,612
$
5,660,668
$
5,837,218
Less: Goodwill
(465,697
)
(465,697
)
(465,697
)
Other intangible assets (1)
(7,998
)
(8,667
)
(9,334
)
Tangible equity
(b)
$
5,510,917
$
5,186,304
$
5,362,187
Total assets
(c)
$
64,112,150
$
62,576,061
$
60,870,701
Less: Goodwill
(465,697
)
(465,697
)
(465,697
)
Other intangible assets (1)
(7,998
)
(8,667
)
(9,334
)
Tangible assets
(d)
$
63,638,455
$
62,101,697
$
60,395,670
Total stockholders’ equity to total
assets ratio
(a)/(c)
9.33
%
9.05
%
9.59
%
Tangible equity to tangible assets
ratio
(b)/(d)
8.66
%
8.35
%
8.88
%
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
Year Ended
December 31,
2022
September 30,
2022
December 31,
2021
December 31,
2022
December 31,
2021
Net income
(e)
$
336,763
$
295,339
$
217,796
$
1,128,083
$
872,981
Add: Amortization of core deposit
intangibles
381
485
602
1,865
2,749
Amortization of mortgage servicing
assets
329
340
415
1,425
1,679
Tax effect of amortization adjustments
(2)
(209
)
(237
)
(293
)
(966
)
(1,274
)
Tangible net income
(f)
$
337,264
$
295,927
$
218,520
$
1,130,407
$
876,135
Average stockholders’ equity
(g)
$
5,834,623
$
5,772,638
$
5,786,237
$
5,783,025
$
5,559,212
Less: Average goodwill
(465,697
)
(465,697
)
(465,697
)
(465,697
)
(465,697
)
Average other intangible assets (1)
(8,378
)
(8,379
)
(9,611
)
(8,695
)
(10,535
)
Average tangible equity
(h)
$
5,360,548
$
5,298,562
$
5,310,929
$
5,308,633
$
5,082,980
Return on average equity
(e)/(g)
22.90
%
(3
)
20.30
%
(3
)
14.93
%
(3
)
19.51
%
15.70
%
Tangible return on average tangible
equity
(f)/(h)
24.96
%
(3
)
22.16
%
(3
)
16.32
%
(3
)
21.29
%
17.24
%
(1)
Includes core deposit intangibles and
mortgage servicing assets.
(2)
Applied statutory tax rate of 29.37% for
the three and twelve months ended December 31, 2022. Applied
statutory tax rate of 28.77% for the three months ended September
30, 2022, and for the three and twelve months ended December 31,
2021.
(3)
Annualized.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230126005011/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
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