East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq:
EWBC), parent company of East West Bank, reported its financial
results for the first quarter of 2024. First quarter 2024 net
income was $285 million, or $2.03 per diluted share. Excluding a
$10 million pre-tax Federal Deposit Insurance Corporation (“FDIC”)
Special Assessment-related charge (the “FDIC charge”)1, adjusted
diluted earnings per share2 for the quarter were $2.08, up 3% from
the fourth quarter of 2023. Total deposits reached a record $58.6
billion as of March 31, 2024. Return on average common equity was
16%, return on average tangible common equity3 was 18%, and book
value per share grew 13% year-over-year.
“This quarter we grew deposits by $2.5 billion to a new record
level and optimized funding to support prudent asset growth,” said
Dominic Ng, Chairman and Chief Executive Officer. “East West grew
adjusted diluted earnings per share 3% and tangible book value per
share3 2% quarter-over-quarter. With continued confidence in our
earnings generation, stable credit quality, and capital strength,
we were pleased to repurchase 1.2 million shares of common stock,”
continued Ng. “Through the strength of our diversified business
model, conservatively managed balance sheet, and industry-leading
profitability, East West remains well-positioned to outperform the
industry in 2024 and beyond.”
FINANCIAL HIGHLIGHTS
Three Months Ended
Quarter-over-Quarter Change
($ in millions, except per share data)
March 31, 2024
December 31, 2023
$
%
Revenue
$644
$655
$(11)
(2)%
Pre-tax, Pre-provision Income4
397
364
33
9
Net Income
285
239
46
19
Diluted Earnings per Share
$2.03
$1.69
$0.34
20%
Adjusted Diluted Earnings per Share2
$2.08
$2.02
$0.06
3%
Book Value per Share
$50.48
$49.64
$0.84
2%
Tangible Book Value per Share3
$47.09
$46.27
$0.82
2%
Return on Average Common Equity
16.40%
14.16%
224 bps
—
Return on Average Tangible Common
Equity3
17.60%
15.26%
234 bps
—
Total Assets
$70,876
$69,613
$1,263
2%
1
In November 2023, the FDIC approved a
final rule to implement a special deposit insurance assessment to
recover estimated losses to the Deposit Insurance Fund arising from
the protection of uninsured depositors following the receiverships
of failed institutions in the spring of 2023. In February 2024, the
FDIC increased the estimated losses by $4.1 billion to $20.4
billion. As losses to the DIF are estimates, the FDIC may
periodically adjust the amount, resulting in longer or shorter
assessment periods, and/or additional special assessments.
2
Adjusted diluted earnings per share is a
non-GAAP financial measure. See reconciliation of GAAP to non-GAAP
measures in Table 12.
3
Return on average tangible common equity
and tangible book value per share are non-GAAP financial measures.
See reconciliation of GAAP to non-GAAP measures in Table 11.
4
Pre-tax, pre-provision income is a
non-GAAP financial measure. See reconciliation of GAAP to non-GAAP
financial measures in Table 10.
BALANCE SHEET
- Assets – Total assets were $70.9 billion as of March 31,
2024, an increase of $1.3 billion from $69.6 billion as of December
31, 2023, primarily reflecting a $2.2 billion increase in AFS debt
securities mainly funded by a $2.5 billion increase in deposits;
partly offset by decreases in cash and cash equivalents, assets
purchased under resale agreements, and other items. Year-over-year,
total assets grew $3.6 billion, or 5%, from $67.2 billion as of
March 31, 2023. First quarter 2024 average interest-earning assets
of $68.1 billion were up $2.6 billion, or 4%, from $65.5 billion in
the fourth quarter of 2023, reflecting increases of $1.4 billion in
average cash and deposits with banks, $0.7 billion in average loans
outstanding, and $0.6 billion in average AFS debt securities
holdings.
- Loans – Total loans were $52.0 billion as of March 31,
2024, a decrease of $0.2 billion from $52.2 billion as of December
31, 2023. Year-over-year, total loans were up $3.1 billion, or 6%,
from $48.9 billion as of March 31, 2023. First quarter 2024 average
loans of $51.9 billion grew $0.7 billion, or 1%, from the fourth
quarter of 2023. The increase was driven by growth across our
single-family residential and C&I loan portfolios.
- Deposits – Total deposits were $58.6 billion as of March
31, 2024, an increase of $2.5 billion, or 4%, from $56.1 billion as
of December 31, 2023, primarily reflecting an increase in customer
deposits related to a successful branch-based CD campaign for the
Lunar New Year. Noninterest-bearing deposits made up 25% of our
total deposits as of March 31, 2024, down from 28% as of December
31, 2023. Year-over-year, total deposits increased $3.8 billion
from $54.7 billion as of March 31, 2023. First quarter 2024 average
deposits of $57.4 billion increased $2.0 billion from the fourth
quarter of 2023, with growth in average time, money market, and
interest-bearing checking deposits offset by declines in other
categories.
- Borrowings – Total borrowings and long-term debt were
$3.6 billion as of March 31, 2024, a decrease of $1.1 billion, or
24%, from $4.7 billion as of December 31, 2023. The decrease was
driven by the payoff of $4.5 billion in Bank Term Funding Program
borrowings and a $117 million decrease in long-term debt and
finance lease liabilities due to the redemption of East West
Capital Trust securities, partially offset by a $3.5 billion
increase in Federal Home Loan Bank advances.
- Capital – As of March 31, 2024, stockholders’ equity was
$7.0 billion, up 1% quarter-over-quarter. The stockholders’ equity
to asset ratio was 9.91% as of March 31, 2024, compared with 9.98%
as of December 31, 2023. Book value per share was $50.48 as of
March 31, 2024, up 2% quarter-over-quarter and 13% year-over-year.
As of March 31, 2024, tangible book value per share5 was $47.09, up
2% quarter-over-quarter and 14% year-over-year. The tangible common
equity ratio5 was 9.31%, compared with 9.37% as of December 31,
2023. All of East West’s regulatory capital ratios are well in
excess of regulatory requirements for well-capitalized
institutions, and well above regional bank averages. The common
equity tier 1 (“CET1”) capital ratio increased to 13.53%, and the
total risk-based capital ratio increased by eight basis points to
14.84%, as of March 31, 2024.
OPERATING RESULTS
First Quarter Earnings – First quarter 2024 net income
was $285 million, and diluted earnings per share (“EPS”) were
$2.03. Excluding $10 million pre-tax for the FDIC charge in the
first quarter of 2024 and a $70 million pre-tax FDIC charge and $3
million of losses on an AFS debt security in the fourth quarter of
2023, adjusted net income6 was $292 million and adjusted diluted
earnings per share were $2.08, up 2% and 3% quarter-over-quarter,
respectively.
5
Tangible book value per share and the
tangible common equity ratio are non-GAAP financial measures. See
reconciliation of GAAP to non-GAAP measures in Table 11.
6
Adjusted net income is a non-GAAP
financial measure. See reconciliation of GAAP to non-GAAP measures
in Table 12.
First Quarter 2024 Compared to Fourth
Quarter 2023
Net Interest Income and Net Interest Margin
Net interest income totaled $565 million in the first quarter, a
decrease of 2% from $575 million in the fourth quarter of 2023. Net
interest margin (“NIM”) was 3.34%, a 14 basis point decline from
the fourth quarter.
- NIM declined primarily due to a higher cost of interest-bearing
deposits and continued deposit mix shift, partly offset by higher
asset yields and balances.
- The average loan yield was 6.71%, up 10 basis points from the
fourth quarter. The average interest-earning asset yield was 6.04%,
up four basis points from the fourth quarter.
- The average cost of funds was 2.97%, up 23 basis points from
the fourth quarter. The average cost of deposits was 2.84%, up 24
basis points from the fourth quarter.
Noninterest Income
Noninterest income totaled $79 million in the first quarter, a
decrease of $1 million, or 1%, from $80 million in the fourth
quarter. Mark-to-market and credit valuation adjustments on
customer and other derivatives was a gain of $1 million in the
first quarter, compared with a loss of $7 million in the fourth
quarter. Other investment income increased $1 million
quarter-over-quarter.
- Fee income7 of $71 million was down $2 million, or 3%, from $73
million in the fourth quarter.
- Deposit fees, lending fees, and wealth management fees each
increased by approximately $1 million quarter-over-quarter.
- The above increases were offset by a $3 million decrease in
customer derivative revenue, reflecting lower customer
activity.
- Foreign exchange income decreased $2 million in the first
quarter, primarily reflecting an unfavorable change in
mark-to-market adjustments on FX positions.
Noninterest Expense
Noninterest expense totaled $247 million in the first quarter, a
decrease of $44 million, or 15% from $290 million in the fourth
quarter, which includes $10 million and $70 million, respectively,
for the FDIC charge. First quarter noninterest expense consisted of
$223 million of adjusted noninterest expense8, and $13 million in
amortization expenses related to tax credit and other
investments.
- Adjusted noninterest expense of $223 million increased nearly
$8 million, or 4%, from $215 million in the fourth quarter. This
was driven primarily by a seasonal first quarter $11 million
increase in compensation and employee benefits, reflecting higher
payroll taxes and an increase in compensation, partly offset by a
$5 million decrease in other operating expense, primarily
reflecting lower legal expense and realized credit card fraud
losses in the first quarter.
- Amortization of tax credit and other investments was $13
million in the first quarter, up $9 million from the fourth
quarter. The increase was due to the sale of a tax credit
investment and the timing of certain renewable energy tax credit
investments that were not placed into service in the fourth
quarter.
- The efficiency ratio was 38.3% in the first quarter, compared
with 44.4% in the fourth quarter and the adjusted efficiency ratio8
was 34.7% in the first quarter, compared with 33.1% in the fourth
quarter.
TAX RELATED ITEMS
First quarter 2024 income tax expense was $87 million, and the
effective tax rate was 23.4%, compared with income tax expense of
$88 million and 27.0% for the fourth quarter of 2023. The lower
effective tax rate in the first quarter was primarily due to the
sale of a tax credit investment in the fourth quarter and the
timing of certain renewable energy tax credit investments that are
expected to be placed into service in 2024.
7
Fee income includes deposit account and
lending fees, foreign exchange income, wealth management fees, and
customer derivative revenue. Refer to Table 3 for additional fee
and noninterest income information.
8
Adjusted noninterest expense and adjusted
efficiency ratio are non-GAAP financial measures. See
reconciliation of GAAP to non-GAAP measures in Table 10.
ASSET QUALITY
As of March 31, 2024, the credit quality of our loan portfolio
remained solid.
- The criticized loans ratio increased 43 basis points
quarter-over-quarter to 2.30% of loans held-for-investment (“HFI”)
as of March 31, 2024, compared with 1.87% as of December 31, 2023.
Criticized loans increased $217 million quarter-over-quarter to
$1.2 billion as of March 31, 2024. The special mention loans ratio
increased 28 basis points quarter-over-quarter to 1.05% of loans
HFI as of March 31, 2024, compared with 0.77% as of December 31,
2023, and the classified loans ratio increased 15 basis points to
1.25%.
- Nonperforming assets increased $51 million to $165 million as
of March 31, 2024, from $114 million as of December 31, 2023. The
nonperforming assets ratio was 0.23% of total assets as of March
31, 2024, compared with 0.16% of total assets as of December 31,
2023. The quarter-over-quarter change reflects increases across
commercial real estate, consumer, and C&I asset types.
- First quarter 2023 net charge-offs were $23 million, or
annualized 0.17% of average loans HFI, compared with $20 million,
or annualized 0.15% of average loans HFI, for the fourth quarter of
2023.
- The allowance for loan losses increased to $670 million, or
1.29% of loans HFI, as of March 31, 2024, compared with $669
million, or 1.28% of loans HFI, as of December 31, 2023.
- First quarter 2024 provision for credit losses was $25 million,
compared with $37 million in the fourth quarter of 2023.
CAPITAL STRENGTH
Capital levels for East West remained strong as of March 31,
2024. The following table presents capital metrics as of March 31,
2024, December 31, 2023 and March 31, 2023.
EWBC Capital
($ in millions)
March 31, 2024 (a)
December 31, 2023 (a)
March 31, 2023 (a)
Risk-Weighted Assets (“RWA”) (b)
$53,448
$53,663
$50,229
Risk-based capital ratios:
CET1 capital ratio
13.53%
13.31%
13.06%
Tier 1 capital ratio
13.53%
13.31%
13.06%
Total capital ratio
14.84%
14.76%
14.50%
Leverage ratio
10.05%
10.21%
10.02%
Tangible common equity ratio (c)
9.31%
9.37%
8.74%
(a)
The Company has elected to use the 2020
Current Expected Credit Losses (CECL) transition provision in the
calculation of its March 31, 2024, December 31, 2023 and March 31,
2023 regulatory capital ratios. The Company’s March 31, 2024
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.
(c)
Tangible common equity ratio is a non-GAAP
financial measure. See reconciliation of GAAP to non-GAAP measures
in Table 11.
DIVIDEND PAYOUT AND CAPITAL ACTIONS
East West’s Board of Directors has declared second quarter 2024
dividends for the Company’s common stock. The common stock cash
dividend of $0.55 per share is payable on May 17, 2024, to
stockholders of record as of May 3, 2024.
East West repurchased 1.2 million shares of common stock during
the first quarter of 2024 for approximately $82 million. $89
million of East West’s share repurchase authorization remains
available.
Conference Call
East West will host a conference call to discuss first quarter
2024 earnings with the public on Tuesday, April 23, 2024, at 2:00
p.m. PT/5:00 p.m. ET. The public and investment community are
invited to listen as management discusses first quarter 2024
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, a listen-only
live broadcast of the call, and information to access a replay one
hour after the call will all be available on the Investor Relations
page of the Company’s website at
www.eastwestbank.com/investors.
About East West
East West provides financial services that help customers reach
further and connect to new opportunities. East West Bancorp, Inc.
is a public company (Nasdaq: “EWBC”) with total assets of $70.9
billion as of March 31, 2024. The Company’s wholly-owned
subsidiary, East West Bank, is the largest independent bank
headquartered in Southern California, and operates 120 locations in
the United States and Asia. The Bank’s markets in the United States
include California, Georgia, Illinois, Massachusetts, Nevada, New
York, Texas, and Washington. For more information on East West,
visit 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. East West
Bancorp, Inc. (referred to herein on an unconsolidated basis as
“East West” and on a consolidated basis as the “Company,” “we,”
“us,” “our” or “EWBC”) may make forward-looking statements in other
documents that it files with, or furnishes to, the United States
(“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
assumptions, beliefs, estimates, expectations 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, residential and commercial property
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 increased
funding costs, declines in asset values and/or recognition of
allowance for credit losses; changes in local, regional and global
business, economic and political conditions and geopolitical
events, such as political unrest, wars and acts of terrorism; the
soundness of other financial institutions and the impacts related
to or resulting from bank failures and other economic and industry
volatility, including potential increased regulatory requirements,
FDIC insurance premiums and assessments, losses in the value of our
investment portfolio, deposit withdrawals, or other adverse
consequences of negative market perceptions of the banking industry
or us; 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 FDIC, the SEC, the Consumer
Financial Protection Bureau (“CFPB”), the California Department of
Financial Protection and Innovation — Division of Financial
Institutions, the People’s Bank of China, China’s National
Administration of Financial Regulation, the Hong Kong Monetary
Authority, the Hong Kong Securities and Futures Commission, and the
Monetary Authority of Singapore; 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
changes to income tax laws and regulations, federal spending and
economic stimulus programs; the impact of any future U.S. federal
government shutdown and uncertainty regarding the U.S. federal
government’s debt limit and credit rating; the Company’s ability to
compete effectively against financial institutions and other
entities, including as a result of emerging technologies; the
success and timing of the Company’s business strategies; the
Company’s ability to retain key officers and employees; the 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 initiatives or technologies into its business in a
strategic manner; 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 proprietary, or personally
identifiable 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 and other proceedings; the
impact of 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 on the Company and its customers; 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, regulatory agreements,
supervisory criticisms, and enforcement actions; changes in
accounting standards as may be required by the Financial Accounting
Standards Board (“FASB”) or other regulatory agencies and their
impact on the Company’s 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 and the introduction of new
or expanded products and services; 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 operations of the Company and its
customers and the economy more broadly; and the impact of climate
change, natural or man-made disasters or calamities, such as
wildfires, droughts, hurricanes, flooding and earthquakes or other
events that may directly or indirectly result in a negative impact
on the financial performance of the Company and its customers.
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, 2023 filed with the SEC on
February 29, 2024 (the “Company’s 2023 Form 10-K”) under the
heading Item 1A. Risk Factors. You should treat forward-looking
statements as speaking only as of the date they are made and based
only on information 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
March 31, 2024
% or Basis Point
Change
March 31, 2024
December 31, 2023
March 31, 2023
Qtr-o-Qtr
Yr-o-Yr
Assets
Cash and cash equivalents
$
4,210,801
$
4,614,984
$
5,934,194
(8.8
)%
(29.0
)%
Interest-bearing deposits with banks
24,593
10,498
10,249
134.3
140.0
Assets purchased under resale agreements
(“resale agreements”)
485,000
785,000
654,288
(38.2
)
(25.9
)
Available-for-sale (“AFS”) debt securities
(amortized cost of $9,131,953, $6,916,491 and $7,072,240)
8,400,468
6,188,337
6,300,868
35.7
33.3
Held-to-maturity (“HTM”) debt securities,
at amortized cost (fair value of $2,414,478, $2,453,971 and
$2,502,674)
2,948,642
2,956,040
2,993,421
(0.3
)
(1.5
)
Loans held-for-sale (“HFS”)
13,280
116
6,861
NM
93.6
Loans held-for-investment (“HFI”) (net of
allowance for loan losses of $670,280, $668,743 and $619,893)
51,322,224
51,542,039
48,298,155
(0.4
)
6.3
Affordable housing partnerships, tax
credit and Community Reinvestment Act investments, net
933,187
905,036
741,354
3.1
25.9
Goodwill
465,697
465,697
465,697
—
—
Operating lease right-of-use assets
87,535
94,024
103,114
(6.9
)
(15.1
)
Other assets
1,984,243
2,051,113
1,736,697
(3.3
)
14.3
Total assets
$
70,875,670
$
69,612,884
$
67,244,898
1.8
%
5.4
%
Liabilities and Stockholders’
Equity
Deposits
$
58,560,624
$
56,092,438
$
54,737,402
4.4
%
7.0
%
Short-term borrowings
19,173
—
—
100.0
100.0
Bank Term Funding Program (“BTFP”)
borrowings
—
4,500,000
4,500,000
(100.0
)
(100.0
)
Federal Home Loan Bank (“FHLB”)
advances
3,500,000
—
—
100.0
100.0
Long-term debt and finance lease
liabilities
36,428
153,011
152,467
(76.2
)
(76.1
)
Operating lease liabilities
95,643
102,353
112,676
(6.6
)
(15.1
)
Accrued expenses and other liabilities
1,640,570
1,814,248
1,433,022
(9.6
)
14.5
Total liabilities
63,852,438
62,662,050
60,935,567
1.9
4.8
Stockholders’ equity
7,023,232
6,950,834
6,309,331
1.0
11.3
Total liabilities and stockholders’
equity
$
70,875,670
$
69,612,884
$
67,244,898
1.8
%
5.4
%
Book value per share
$
50.48
$
49.64
$
44.62
1.7
%
13.1
%
Tangible book value (1) per
share
$
47.09
$
46.27
$
41.28
1.8
14.1
Number of common shares at
period-end
139,121
140,027
141,396
(0.6
)
(1.6
)
Total stockholders’ equity to assets
ratio
9.91
%
9.98
%
9.38
%
(7
)
bps
53
bps
Tangible common equity (“TCE”) ratio
(1)
9.31
%
9.37
%
8.74
%
(6
)
bps
57
bps
NM - Not meaningful.
(1)
Tangible book value and the TCE ratio are
non-GAAP financial measures. See reconciliation of GAAP to non-GAAP
measures in Table 11.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
TOTAL LOANS AND DEPOSITS
DETAIL
($ in thousands)
(unaudited)
Table 2
March 31, 2024
% Change
March 31, 2024
December 31, 2023
March 31, 2023
Qtr-o-Qtr
Yr-o-Yr
Loans:
Commercial:
Commercial and industrial (“C&I”)
$
16,350,191
$
16,581,079
$
15,641,840
(1.4
)
4.5
Commercial real estate (“CRE”):
CRE
14,609,655
14,777,081
14,019,136
(1.1
)
4.2
Multifamily residential
5,010,245
5,023,163
4,682,280
(0.3
)
7.0
Construction and land
673,939
663,868
731,394
1.5
(7.9
)
Total CRE
20,293,839
20,464,112
19,432,810
(0.8
)
4.4
Consumer:
Residential mortgage:
Single-family residential
13,563,738
13,383,060
11,786,998
1.4
15.1
Home equity lines of credit (“HELOCs”)
1,731,233
1,722,204
1,988,881
0.5
(13.0
)
Total residential mortgage
15,294,971
15,105,264
13,775,879
1.3
11.0
Other consumer
53,503
60,327
67,519
(11.3
)
(20.8
)
Total loans HFI (1)
51,992,504
52,210,782
48,918,048
(0.4
)
6.3
Loans HFS
13,280
116
6,861
NM
93.6
Total loans (1)
52,005,784
52,210,898
48,924,909
(0.4
)
6.3
Allowance for loan losses
(670,280
)
(668,743
)
(619,893
)
0.2
8.1
Net loans (1)
$
51,335,504
$
51,542,155
$
48,305,016
(0.4
)%
6.3
%
Deposits:
Noninterest-bearing demand
$
14,798,927
$
15,539,872
$
18,327,320
(4.8
)%
(19.3
)%
Interest-bearing checking
7,570,427
7,558,908
8,742,580
0.2
(13.4
)
Money market
13,585,597
13,108,727
9,293,114
3.6
46.2
Savings
1,834,393
1,841,467
2,280,562
(0.4
)
(19.6
)
Time deposits
20,771,280
18,043,464
16,093,826
15.1
29.1
Total deposits
$
58,560,624
$
56,092,438
$
54,737,402
4.4
%
7.0
%
Deposits by type:
Commercial and business banking
$
32,690,771
$
32,109,643
$
30,041,135
1.8
%
8.8
%
Consumer and private banking
20,543,473
18,861,092
18,021,116
8.9
14.0
Greater China (2)
3,282,218
3,172,222
3,008,457
3.5
9.1
Wholesale
2,044,162
1,949,481
3,666,694
4.9
(44.3
)
Total deposits
$
58,560,624
$
56,092,438
$
54,737,402
4.4
%
7.0
%
NM - Not meaningful.
(1)
Includes $63 million, $71 million and $75
million of net deferred loan fees and net unamortized premiums as
of March 31, 2024, December 31, 2023 and March 31, 2023,
respectively.
(2)
Includes deposits booked at the Bank’s
Hong Kong branch and foreign subsidiary, East West Bank (China)
Limited.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF INCOME
($ and shares in thousands,
except per share data)
(unaudited)
Table 3
Three Months Ended
March 31, 2024
% Change
March 31, 2024
December 31, 2023
March 31, 2023
Qtr-o-Qtr
Yr-o-Yr
Interest and dividend income
$
1,023,617
$
990,378
$
835,506
3.4
%
22.5
%
Interest expense
458,478
415,544
235,645
10.3
94.6
Net interest income before provision for
credit losses
565,139
574,834
599,861
(1.7
)
(5.8
)
Provision for credit losses
25,000
37,000
20,000
(32.4
)
25.0
Net interest income after provision for
credit losses
540,139
537,834
579,861
0.4
(6.9
)
Noninterest income:
Deposit account fees
24,139
22,996
21,703
5.0
%
11.2
%
Lending fees
22,925
22,077
20,586
3.8
11.4
Foreign exchange income
12,278
14,236
12,660
(13.8
)
(3.0
)
Wealth management fees
8,592
7,735
6,304
11.1
36.3
Customer derivative revenue
3,137
6,296
5,046
(50.2
)
(37.8
)
Total fee income
71,071
73,341
66,299
(3.1
)
7.2
Mark-to-market and credit valuation
adjustments
613
(7,241
)
(2,482
)
NM
NM
Net (losses) gains on sales of loans
(41
)
3,675
(22
)
NM
(86.4
)
Net gains (losses) on AFS debt
securities
49
3,138
(10,000
)
(98.4
)
NM
Other investment income
2,815
1,673
1,921
68.3
46.5
Other income
4,481
5,318
4,262
(15.7
)
5.1
Total noninterest income
78,988
79,903
59,978
(1.1
)%
31.7
%
Noninterest expense:
Compensation and employee benefits
141,812
130,794
129,654
8.4
%
9.4
%
Occupancy and equipment expense
15,230
15,735
15,587
(3.2
)
(2.3
)
Deposit insurance premiums and regulatory
assessments
19,649
78,553
7,910
(75.0
)
148.4
Deposit account expense
12,188
11,390
9,609
7.0
26.8
Computer software and data processing
expenses
11,344
11,315
10,707
0.3
5.9
Other operating expense (1)
33,445
38,130
34,870
(12.3
)
(4.1
)
Amortization of tax credit and other
investments
13,207
4,581
10,110
188.3
30.6
Total noninterest expense
246,875
290,498
218,447
(15.0
)%
13.0
%
Income before income taxes
372,252
327,239
421,392
13.8
(11.7
)
Income tax expense
87,177
88,286
98,953
(1.3
)
(11.9
)
Net income
$
285,075
$
238,953
$
322,439
19.3
%
(11.6
)%
Earnings per share (“EPS”)
- Basic
$
2.04
$
1.70
$
2.28
20.3
%
(10.5
)%
- Diluted
$
2.03
$
1.69
$
2.27
20.3
(10.5
)
Weighted-average number of shares
outstanding
- Basic
139,409
140,595
141,112
(0.8
)%
(1.2
)%
- Diluted
140,261
141,409
141,913
(0.8
)
(1.2
)
NM - Not meaningful.
(1)
Includes $4 million of repurchase
agreements’ extinguishment cost for the three months ended March
31, 2023.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
SELECTED AVERAGE
BALANCES
($ in thousands)
(unaudited)
Table 4
Three Months Ended
March 31, 2024
% Change
March 31, 2024
December 31, 2023
March 31, 2023
Qtr-o-Qtr
Yr-o-Yr
Loans:
Commercial:
C&I
$
16,251,622
$
15,948,678
$
15,400,996
1.9
%
5.5
%
CRE:
CRE
14,725,440
14,723,027
13,932,758
0.0
5.7
Multifamily residential
5,033,143
4,939,119
4,600,094
1.9
9.4
Construction and land
655,002
752,783
675,047
(13.0
)
(3.0
)
Total CRE
20,413,585
20,414,929
19,207,899
0.0
6.3
Consumer:
Residential mortgage:
Single-family residential
13,477,057
13,097,056
11,417,477
2.9
18.0
HELOCs
1,725,287
1,732,348
2,050,778
(0.4
)
(15.9
)
Total residential mortgage
15,202,344
14,829,404
13,468,255
2.5
12.9
Other consumer
57,289
59,245
72,687
(3.3
)
(21.2
)
Total loans (1)
$
51,924,840
$
51,252,256
$
48,149,837
1.3
%
7.8
%
Interest-earning assets
$
68,122,045
$
65,505,724
$
61,483,533
4.0
%
10.8
%
Total assets
$
71,678,396
$
69,421,959
$
65,113,604
3.3
%
10.1
%
Deposits:
Noninterest-bearing demand
$
14,954,953
$
15,884,525
$
19,709,980
(5.9
)%
(24.1
)%
Interest-bearing checking
7,695,429
7,608,234
6,493,865
1.1
18.5
Money market
13,636,210
12,824,121
11,260,715
6.3
21.1
Savings
1,809,568
1,873,276
2,436,587
(3.4
)
(25.7
)
Time deposits
19,346,243
17,216,367
15,052,762
12.4
28.5
Total deposits
$
57,442,403
$
55,406,523
$
54,953,909
3.7
%
4.5
%
(1)
Includes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
QUARTER-TO-DATE AVERAGE
BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 5
Three Months Ended
March 31, 2024
December 31, 2023
Average
Average
Average
Average
Balance
Interest
Yield/Rate (1)
Balance
Interest
Yield/Rate (1)
Assets
Interest-earning assets:
Interest-bearing cash and deposits with
banks
$
5,861,517
$
74,382
5.10
%
$
4,445,115
$
56,250
5.02
%
Resale agreements
725,659
6,115
3.39
%
785,000
7,232
3.66
%
Debt securities:
AFS debt securities
6,566,368
62,858
3.85
%
5,985,361
58,926
3.91
%
HTM debt securities
2,950,686
12,534
1.71
%
2,958,294
12,585
1.69
%
Total debt securities
9,517,054
75,392
3.19
%
8,943,655
71,511
3.17
%
Loans:
C&I
16,251,622
325,810
8.06
%
15,948,678
321,026
7.99
%
CRE
20,413,584
324,087
6.39
%
20,414,929
327,194
6.36
%
Residential mortgage
15,202,345
215,674
5.71
%
14,829,404
205,371
5.49
%
Other consumer
57,289
818
5.74
%
59,245
786
5.26
%
Total loans (2)
51,924,840
866,389
6.71
%
51,252,256
854,377
6.61
%
FHLB and FRB stock
92,975
1,339
5.79
%
79,698
1,008
5.02
%
Total interest-earning assets
$
68,122,045
$
1,023,617
6.04
%
$
65,505,724
$
990,378
6.00
%
Noninterest-earning assets:
Cash and due from banks
445,767
489,055
Allowance for loan losses
(679,116
)
(650,724
)
Other assets
3,789,700
4,077,904
Total assets
$
71,678,396
$
69,421,959
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
7,695,429
$
53,821
2.81
%
$
7,608,234
$
52,170
2.72
%
Money market deposits
13,636,210
134,661
3.97
%
12,824,121
123,744
3.83
%
Savings deposits
1,809,568
4,120
0.92
%
1,873,276
3,894
0.82
%
Time deposits
19,346,243
213,597
4.44
%
17,216,367
183,175
4.22
%
Short-term and BTFP borrowings, and
federal funds purchased
3,864,525
42,106
4.38
%
4,500,475
49,570
4.37
%
Assets sold under repurchase agreements
(“repurchase agreements”)
2,549
35
5.52
%
2,876
41
5.66
%
FHLB advances
554,946
7,739
5.61
%
1
—
—
%
Long-term debt and finance lease
liabilities
125,818
2,399
7.67
%
153,010
2,950
7.65
%
Total interest-bearing
liabilities
$
47,035,288
$
458,478
3.92
%
$
44,178,360
$
415,544
3.73
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
14,954,953
15,884,525
Accrued expenses and other liabilities
2,695,597
2,663,222
Stockholders’ equity
6,992,558
6,695,852
Total liabilities and stockholders’
equity
$
71,678,396
$
69,421,959
Interest rate spread
2.12
%
2.27
%
Net interest income and net interest
margin
$
565,139
3.34
%
$
574,834
3.48
%
(1)
Annualized.
(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
March 31, 2024
March 31, 2023
Average
Average
Average
Average
Balance
Interest
Yield/Rate (1)
Balance
Interest
Yield/Rate (1)
Assets
Interest-earning assets:
Interest-bearing cash and deposits with
banks
$
5,861,517
$
74,382
5.10
%
$
3,449,626
$
35,647
4.19
%
Resale agreements
725,659
6,115
3.39
%
688,778
4,503
2.65
%
Debt securities:
AFS debt securities
6,566,368
62,858
3.85
%
6,108,825
53,197
3.53
%
HTM debt securities
2,950,686
12,534
1.71
%
2,995,677
12,734
1.72
%
Total debt securities
9,517,054
75,392
3.19
%
9,104,502
65,931
2.94
%
Loans:
C&I
16,251,622
325,810
8.06
%
15,400,996
275,573
7.26
%
CRE
20,413,584
324,087
6.39
%
19,207,899
282,464
5.96
%
Residential mortgage
15,202,345
215,674
5.71
%
13,468,255
169,494
5.10
%
Other consumer
57,289
818
5.74
%
72,687
855
4.77
%
Total loans (2)
51,924,840
866,389
6.71
%
48,149,837
728,386
6.14
%
FHLB and FRB stock
92,975
1,339
5.79
%
90,790
1,039
4.64
%
Total interest-earning assets
$
68,122,045
$
1,023,617
6.04
%
$
61,483,533
$
835,506
5.51
%
Noninterest-earning assets:
Cash and due from banks
445,767
621,104
Allowance for loan losses
(679,116
)
(602,754
)
Other assets
3,789,700
3,611,721
Total assets
$
71,678,396
$
65,113,604
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
7,695,429
$
53,821
2.81
%
$
6,493,865
$
23,174
1.45
%
Money market deposits
13,636,210
134,661
3.97
%
11,260,715
76,102
2.74
%
Savings deposits
1,809,568
4,120
0.92
%
2,436,587
3,669
0.61
%
Time deposits
19,346,243
213,597
4.44
%
15,052,762
113,849
3.07
%
Short-term and BTFP borrowings
3,864,525
42,106
4.38
%
811,551
8,825
4.41
%
Repurchase agreements
2,549
35
5.52
%
106,785
1,052
4.00
%
FHLB advances
554,946
7,739
5.61
%
500,000
6,430
5.22
%
Long-term debt and finance lease
liabilities
125,818
2,399
7.67
%
152,420
2,544
6.77
%
Total interest-bearing
liabilities
$
47,035,288
$
458,478
3.92
%
$
36,814,685
$
235,645
2.60
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
14,954,953
19,709,980
Accrued expenses and other liabilities
2,695,597
2,405,615
Stockholders’ equity
6,992,558
6,183,324
Total liabilities and stockholders’
equity
$
71,678,396
$
65,113,604
Interest rate spread
2.12
%
2.91
%
Net interest income and net interest
margin
$
565,139
3.34
%
$
599,861
3.96
%
(1)
Annualized.
(2)
Includes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
SELECTED RATIOS
(unaudited)
Table 7
Three Months Ended (1)
March 31, 2024
Basis Point Change
March 31,
2024
December 31,
2023
March 31,
2023
Qtr-o-Qtr
Yr-o-Yr
Return on average assets
1.60
%
1.37
%
2.01
%
23
bps
(41
)
bps
Adjusted return on average assets (2)
1.64
%
1.63
%
2.05
%
1
(41
)
Return on average common equity
16.40
%
14.16
%
21.15
%
224
(475
)
Adjusted return on average common equity
(2)
16.81
%
16.95
%
21.61
%
(14
)
(480
)
Return on average TCE (3)
17.60
%
15.26
%
22.94
%
234
(534
)
Adjusted return on average TCE (3)
18.05
%
18.26
%
23.44
%
(21
)
(539
)
Interest rate spread
2.12
%
2.27
%
2.91
%
(15
)
(79
)
Net interest margin
3.34
%
3.48
%
3.96
%
(14
)
(62
)
Average loan yield
6.71
%
6.61
%
6.14
%
10
57
Yield on average interest-earning
assets
6.04
%
6.00
%
5.51
%
4
53
Average cost of interest-bearing
deposits
3.85
%
3.64
%
2.49
%
21
136
Average cost of deposits
2.84
%
2.60
%
1.60
%
24
124
Average cost of funds
2.97
%
2.74
%
1.69
%
23
128
Adjusted noninterest expense/average
assets (4)
1.25
%
1.23
%
1.27
%
2
(2
)
Efficiency ratio
38.33
%
44.37
%
33.11
%
(604
)
522
Adjusted efficiency ratio (4)
34.68
%
33.07
%
30.46
%
161
bps
422
bps
(1)
Annualized except for efficiency ratio and
adjusted efficiency ratio.
(2)
Adjusted return on average assets and
adjusted return on average common equity are non-GAAP financial
measures. See reconciliation of GAAP to non-GAAP measures in Table
12.
(3)
Return on average TCE and adjusted return
on average TCE are non-GAAP financial measures. See reconciliation
of GAAP to non-GAAP measures in Table 11.
(4)
Adjusted noninterest expense/average
assets and adjusted efficiency ratio are non-GAAP financial
measures. See reconciliation of GAAP to non-GAAP measures in Table
10.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES
& OFF-BALANCE SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 8
Three Months Ended March 31,
2024
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, December 31,
2023
$
392,685
$
215,436
$
58,965
$
1,657
$
668,743
(Reversal of) provision for credit losses
on loans
(a)
(500
)
23,985
801
(131
)
24,155
Gross charge-offs
(20,998
)
(3,628
)
—
(58
)
(24,684
)
Gross recoveries
1,710
344
53
—
2,107
Total net (charge-offs) recoveries
(19,288
)
(3,284
)
53
(58
)
(22,577
)
Foreign currency translation
adjustment
(41
)
—
—
—
(41
)
Allowance for loan losses, March 31,
2024
$
372,856
$
236,137
$
59,819
$
1,468
$
670,280
Three Months Ended December
31, 2023
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, September
30, 2023
$
383,677
$
211,418
$
58,725
$
1,703
$
655,523
Provision for credit losses on loans
(a)
27,732
4,875
233
50
32,890
Gross charge-offs
(20,264
)
(1,213
)
—
(96
)
(21,573
)
Gross recoveries
1,248
356
7
—
1,611
Total net (charge-offs) recoveries
(19,016
)
(857
)
7
(96
)
(19,962
)
Foreign currency translation
adjustment
292
—
—
—
292
Allowance for loan losses, December 31,
2023
$
392,685
$
215,436
$
58,965
$
1,657
$
668,743
Three Months Ended March 31,
2023
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, December 31,
2022
$
371,700
$
182,346
$
40,039
$
1,560
$
595,645
Impact of ASU 2022-02 adoption
5,683
343
2
—
6,028
Allowance for loan losses, January 1,
2023
$
377,383
$
182,689
$
40,041
$
1,560
$
601,673
(Reversal of) provision for credit losses
on loans
(a)
(678
)
6,021
13,022
155
18,520
Gross charge-offs
(1,900
)
(6
)
(91
)
(40
)
(2,037
)
Gross recoveries
1,211
211
6
—
1,428
Total net (charge-offs) recoveries
(689
)
205
(85
)
(40
)
(609
)
Foreign currency translation
adjustment
309
—
—
—
309
Allowance for loan losses, March 31,
2023
$
376,325
$
188,915
$
52,978
$
1,675
$
619,893
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES
& OFF-BALANCE-SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 8 (continued)
Three Months Ended
March 31, 2024
December 31, 2023
March 31, 2023
Unfunded Credit Facilities
Allowance for unfunded credit
commitments, beginning of period (1)
$
37,699
$
33,589
$
26,264
Provision for credit losses on unfunded
credit commitments
(b)
845
4,110
1,480
Foreign currency translation
adjustment
—
—
(3
)
Allowance for unfunded credit
commitments, end of period (1)
$
38,544
$
37,699
$
27,741
Provision for credit losses
(a)+(b)
$
25,000
$
37,000
$
20,000
(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 9
Criticized Loans
March 31, 2024
December 31, 2023
March 31, 2023
Special mention loans
$
543,573
$
404,241
$
461,356
Classified loans
651,485
573,969
452,715
Total criticized loans (1)
$
1,195,058
$
978,210
$
914,071
Nonperforming Assets
March 31, 2024
December 31, 2023
March 31, 2023
Nonaccrual loans:
Commercial:
C&I
$
48,962
$
37,036
$
43,747
Total CRE
51,888
27,918
19,427
Consumer:
Total residential mortgage
47,167
37,788
29,585
Other consumer
162
132
366
Total nonaccrual loans
148,179
102,874
93,125
Other real estate owned, net
16,692
11,141
270
Total nonperforming assets
$
164,871
$
114,015
$
93,395
Credit Quality Ratios
March 31, 2024
December 31, 2023
March 31, 2023
Annualized quarterly net charge-offs to
average loans HFI
0.17
%
0.15
%
0.01
%
Special mention loans to loans HFI
1.05
%
0.77
%
0.94
%
Classified loans to loans HFI
1.25
%
1.10
%
0.93
%
Criticized loans to loans HFI
2.30
%
1.87
%
1.87
%
Nonperforming assets to total assets
0.23
%
0.16
%
0.14
%
Nonaccrual loans to loans HFI
0.29
%
0.20
%
0.19
%
Allowance for loan losses to loans HFI
1.29
%
1.28
%
1.27
%
(1)
Excludes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
GAAP TO NON-GAAP
RECONCILIATION
($ in thousands)
(unaudited)
Table 10 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 adjusted revenue. Adjusted
pre-tax, pre-provision income represents total adjusted revenue
less adjusted noninterest expense. Adjusted revenue excludes the
net gain/loss related to an AFS debt security that was written-off
in the first quarter of 2023 and subsequently sold during the
fourth quarter of 2023. Adjusted noninterest expense excludes the
amortization of tax credit and other investments, the amortization
of core deposit intangibles, the FDIC special assessment charge
(included in Deposit insurance premiums and regulatory assessments
on the Consolidated Statement of Income) and the repurchase
agreements’ extinguishment cost (where applicable). 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
March 31, 2024
December 31, 2023
March 31, 2023
Net interest income before provision for credit losses
(a)
$
565,139
$
574,834
$
599,861
Total noninterest income
78,988
79,903
59,978
Total revenue
(b)
$
644,127
$
654,737
$
659,839
Noninterest income
78,988
79,903
59,978
Less/add:
Net (gains)/losses on AFS debt
securities
—
(3,138
)
10,000
Adjusted noninterest income
(c)
78,988
76,765
69,978
Adjusted revenue
(a)+(c) = (d)
$
644,127
$
651,599
$
669,839
Total noninterest expense
(e)
$
246,875
$
290,498
$
218,447
Less:
Amortization of tax credit and other
investments
(13,207
)
(4,581
)
(10,110
)
Amortization of core deposit
intangibles
—
(441
)
(441
)
FDIC special assessment charge
(10,305
)
(69,986
)
—
Repurchase agreements’ extinguishment
cost
—
—
(3,872
)
Adjusted noninterest expense
(f)
$
223,363
$
215,490
$
204,024
Efficiency ratio
(e)/(b)
38.33
%
44.37
%
33.11
%
Adjusted efficiency ratio
(f)/(d)
34.68
%
33.07
%
30.46
%
Pre-tax, pre-provision income
(b)-(e) = (g)
$
397,252
$
364,239
$
441,392
Adjusted pre-tax, pre-provision income
(d)-(f) = (h)
$
420,764
$
436,109
$
465,815
Average total assets
(i)
$
71,678,396
$
69,421,959
$
65,113,604
Adjusted noninterest expense/average assets (1)
(f)/(i)
1.25
%
1.23
%
1.27
%
(1)
Annualized.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
GAAP TO NON-GAAP
RECONCILIATION
($ in thousands)
(unaudited)
Table 11 The Company uses certain non-GAAP financial
measures to provide supplemental information regarding the
Company’s performance. Tangible book value, tangible book value per
share and TCE ratio are non-GAAP financial measures. Tangible book
value 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.
March 31, 2024
December 31, 2023
March 31, 2023
Stockholders’ equity
(a)
$
7,023,232
$
6,950,834
$
6,309,331
Less:
Goodwill
(465,697
)
(465,697
)
(465,697
)
Other intangible assets (1)
(6,234
)
(6,602
)
(7,201
)
Tangible book value
(b)
$
6,551,301
$
6,478,535
$
5,836,433
Number of common shares at period-end
(c)
139,121
140,027
141,396
Book value per share
(a)/(c)
$
50.48
$
49.64
$
44.62
Tangible book value per share
(b)/(c)
$
47.09
$
46.27
$
41.28
Total assets
(d)
$
70,875,670
$
69,612,884
$
67,244,898
Less:
Goodwill
(465,697
)
(465,697
)
(465,697
)
Other intangible assets (1)
(6,234
)
(6,602
)
(7,201
)
Tangible assets
(e)
$
70,403,739
$
69,140,585
$
66,772,000
Total stockholders’ equity to assets ratio
(a)/(d)
9.91
%
9.98
%
9.38
%
TCE ratio
(b)/(e)
9.31
%
9.37
%
8.74
%
Return on average TCE represents tangible net income divided
by average tangible book value. Adjusted return on average TCE
represents adjusted tangible net income divided by average tangible
book value. Tangible net income excludes the after-tax impacts of
the amortization of core deposit intangibles and mortgage servicing
assets. Adjusted tangible net income excludes the after-tax impacts
of the tangible net income adjustments, the FDIC special assessment
charge (included in Deposit insurance premiums and regulatory
assessments on the Consolidated Statement of Income), and the net
gain/loss related to an AFS debt security that was written-off in
the first quarter of 2023 and subsequently sold during the fourth
quarter of 2023. 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
March 31, 2024
December 31, 2023
March 31, 2023
Net income
(e)
$
285,075
$
238,953
$
322,439
Add:
Amortization of core deposit
intangibles
—
441
441
Amortization of mortgage servicing
assets
308
302
356
Tax effect of amortization adjustments (2)
(91
)
(220
)
(233
)
Tangible net income
(f)
$
285,292
$
239,476
$
323,003
Add:
FDIC special assessment charge
10,305
69,986
—
Less/add:
Net (gains)/losses on AFS debt
securities
—
(3,138
)
10,000
Tax effect of adjustments (2)
(3,046
)
(19,760
)
(2,929
)
Adjusted tangible net income
(g)
$
292,551
$
286,564
$
330,074
Average stockholders’ equity
(h)
$
6,992,558
$
6,695,852
$
6,183,324
Less:
Average goodwill
(465,697
)
(465,697
)
(465,697
)
Average other intangible assets (1)
(6,473
)
(5,434
)
(7,696
)
Average tangible book value
(i)
$
6,520,388
$
6,224,721
$
5,709,931
Return on average common equity (3)
(e)/(h)
16.40
%
14.16
%
21.15
%
Return on average TCE (3)
(f)/(i)
17.60
%
15.26
%
22.94
%
Adjusted return on average TCE (3)
(g)/(i)
18.05
%
18.26
%
23.44
%
(1)
Includes core deposit intangibles and
mortgage servicing assets.
(2)
Applied statutory tax rate of 29.56% for
the three months ended March 31, 2024 and December 31, 2023.
Applied statutory tax rate of 29.29% for the three months ended
March 31, 2023.
(3)
Annualized.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
GAAP TO NON-GAAP
RECONCILIATION
($ and shares in thousands,
except for per share data)
(unaudited)
Table 12 During the first quarter of 2024 and fourth quarter
of 2023, the Company recorded $10 million and $70 million,
respectively, in pre-tax FDIC special assessment charges (included
in Deposit insurance premiums and regulatory assessments on the
Consolidated Statement of Income). During the fourth quarter of
2023, the Company recognized a $3 million pre-tax gain on sale for
an AFS debt security that was previously written-off. During the
first quarter of 2023, the Company recorded a $10 million pre-tax
impairment write-off of an AFS debt security.
Three Months Ended
March 31, 2024
December 31, 2023
March 31, 2023
Net income
(a)
$
285,075
$
238,953
$
322,439
Add:
FDIC special assessment charge
10,305
69,986
—
Less/add:
Net (gains)/losses on AFS debt
securities
—
(3,138
)
10,000
Tax effect of adjustments (1)
(3,046
)
(19,760
)
(2,929
)
Adjusted net income
(b)
$
292,334
$
286,041
$
329,510
Diluted weighted-average number of shares outstanding
140,261
141,409
141,913
Diluted EPS
$
2.03
$
1.69
$
2.27
Add:
FDIC special assessment charge
0.05
0.35
—
Less/add:
Net (gains)/losses on AFS debt
securities
—
(0.02
)
0.05
Adjusted diluted EPS
$
2.08
$
2.02
$
2.32
Average total assets
(c)
$
71,678,396
$
69,421,959
$
65,113,604
Average stockholders’ equity
(d)
$
6,992,558
$
6,695,852
$
6,183,324
Return on average assets (2)
(a)/(c)
1.60
%
1.37
%
2.01
%
Adjusted return on average assets (2)
(b)/(c)
1.64
%
1.63
%
2.05
%
Return on average common equity (2)
(a)/(d)
16.40
%
14.16
%
21.15
%
Adjusted return on average common equity (2)
(b)/(d)
16.81
%
16.95
%
21.61
%
Return on average TCE (2)(3)
17.60
%
15.26
%
22.94
%
Adjusted return on average TCE (2)(3)
18.05
%
18.26
%
23.44
%
(1)
Applied statutory tax rate of 29.56% for
the three months ended March 31, 2024 and December 31, 2023.
Applied statutory tax rate of 29.29% for the three months ended
March 31, 2023.
(2)
Annualized.
(3)
Refer to Table 11 for the calculation of
the return on average TCE and adjusted return on average TCE
ratios.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240423508415/en/
FOR INVESTOR INQUIRIES, CONTACT: Christopher Del
Moral-Niles, CFA Chief Financial Officer T: (626) 768-6860 E:
chris.delmoralniles@eastwestbank.com
Adrienne Atkinson Director of Investor Relations T: (626)
788-7536 E: adrienne.atkinson@eastwestbank.com
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