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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
  
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported)
July 20, 2017

EAST WEST BANCORP, INC.
(Exact name of registrant as specified in its charter)



Delaware
 
000-24939
 
95-4703316
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
135 N Los Robles Ave., 7th Floor, Pasadena, California 91101
(Address of principal executive offices) (Zip code)
 
(626) 768-6000
(Registrant’s telephone number, including area code)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
¨
Emerging growth company.
 
 
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.






1






East West Bancorp, Inc.
Current Report of Form 8-K


Item 2.02. Results of Operations and Financial Condition
 
On July 20, 2017, East West Bancorp, Inc. (the “Company”) announced, via press release, its financial results for the quarter ended June 30, 2017 (the “Press Release”). The Press Release is available on the Company’s website. The Press Release is “furnished” as Exhibit 99.1 to this Current Report on Form 8-K pursuant to General Instruction B.2 of Form 8-K and is not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities under that Section. This exhibit shall not be incorporated by reference into any filings the Company has made or may make under the Securities Act of 1933 (the “Securities Act”) or Exchange Act, except as otherwise expressly stated in such filing.

Item 7.01. Regulation FD Disclosure

On July 20, 2017, the Company will hold a conference call to discuss its financial results for the quarter ended June 30, 2017, including the Press Release and other matters relating to the Company. The Company has also made available on its website presentation materials containing certain historical and forward-looking information relating to the Company (the "Presentation Materials"). The Presentation Materials are furnished as Exhibit 99.2 and are incorporated by reference in this Item 7.01. All information in Exhibit 99.2 is presented as of the particular date or dates referenced therein, and the Company does not undertake any obligation to, and disclaims any duty to, update any of the information provided. The information provided in Item 7.01 of this report, including Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, nor shall the information or Exhibit 99.2 be deemed incorporated by reference in any filings under the Securities Act.

Item 9.01. Financial Statements and Exhibits
 
(d) Exhibits
 
99.1           Press Release, dated July 20, 2017.
99.2           Presentation Materials, dated July 20, 2017.

 



2






SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 

 
 
EAST WEST BANCORP, INC.
 
 
Date: July 20, 2017
By:
/s/ Irene H. Oh
 
 
 
Irene H. Oh
 
 
Executive Vice President and Chief Financial Officer


3






EXHIBIT INDEX
 
Exhibit
Number
 
Description
99.1
 
Press Release, dated July 20, 2017.
99.2
 
Presentation Materials, dated July 20, 2017.




4



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


 
Exhibit 99.1
 
 
389529778_ewbclogoa05.jpg
East West Bancorp, Inc.
135 N. Los Robles Ave., 7th Fl.
Pasadena, CA 91101
Tel: 626.768.6000
NEWS RELEASE
 
 
 
 
 
 
FOR INVESTOR INQUIRIES, CONTACT:

Irene Oh
Julianna Balicka
 
Chief Financial Officer
Director of Strategy and Corporate Development
 
T: (626) 768-6360
T: (626) 768-6985
 
E: irene.oh@eastwestbank.com
E: julianna.balicka@eastwestbank.com
 

EAST WEST BANCORP REPORTS NET INCOME FOR SECOND QUARTER 2017
OF $118.3 MILLION AND DILUTED EARNINGS PER SHARE OF $0.81


Pasadena, California - July 20, 2017 - East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq: EWBC), parent company of East West Bank, the financial bridge between the United States and Greater China, today reported its financial results for the second quarter of 2017. For the second quarter of 2017, net income was $118.3 million or $0.81 per diluted share. Second quarter 2017 return on average assets was 1.36%, return on average equity was 13.05% and tangible return on average tangible equity1 was 15.30%.

“Second quarter results continued East West’s positive momentum from the first quarter. In the second quarter of 2017, total loans grew $732 million or 11% annualized to a record $27.2 billion from $26.5 billion as of March 31, 2017. Total deposits grew $611 million or 8% annualized to a record $31.2 billion as of June 30, 2017 from $30.5 billion at the end of the previous quarter,” stated Dominic Ng, Chairman and Chief Executive Officer of East West.

“East West’s balance sheet growth during the quarter, augmented by the positive impact of rising short-term interest rates on our loan portfolio, resulted in net interest income growth of 7% and net interest margin expansion of 16 basis points linked quarter,” continued Ng. “For the second quarter of 2017, the yield on our loan portfolio expanded by 17 basis points from the prior quarter, compared to a modest increase in the cost of deposits of four basis points.”

“In addition, our strong operating performance was supported by stable asset quality. Quarter over quarter, nonperforming assets declined by 8%, to 0.37% of total assets. The allowance for loan losses to loans held-for-investment increased to 1.02%, in part due to annualized net recoveries of four basis points for the quarter. In summary, second quarter results were consistent with East West’s track record of delivering long-term shareholder value through attractive growth and profitability,” concluded Ng.















 
 
 
 
1 See reconciliation of GAAP to non-GAAP financial measures in Table 15.

1



HIGHLIGHTS OF RESULTS

Strong Earnings - Net income of $118.3 million for the second quarter of 2017 increased by 15% compared to $103.3 million for the second quarter of 2016, and diluted earnings per share (“EPS”) of $0.81 increased by 14% year-over-year from $0.71. Net income and diluted EPS for the second quarter of 2017 both decreased by 30% compared to net income of $169.7 million and EPS of $1.16 for the first quarter of 2017; first quarter results were positively impacted by the sale of a commercial property and a lower tax expense due to a change in the accounting for stock-based compensation. Second quarter 2017 adjusted2 pre-tax, pre-provision (“PTPP”) income of $198.0 million increased by 10% compared to $179.6 million in the first quarter. Year-over-year, adjusted PTPP income increased by 20% compared to $165.0 million in the second quarter of 2016.
 
Net Interest Income Growth and Net Interest Margin Expansion - Net interest income totaled $290.1 million for the second quarter of 2017, an increase of $18.0 million or 7% linked quarter. Accounting Standard Codification (“ASC”) 310-30 discount accretion income was $6.3 million this quarter, compared to $3.2 million in the prior quarter. Excluding this discount accretion income, second quarter 2017 adjusted3 net interest income of $283.8 million increased by $14.9 million or 6% sequentially, due to growth in the loan portfolio and the positive impact of recent short-term interest rate increases. Second quarter 2017 net interest margin (“NIM”) of 3.49% expanded by 16 basis points linked quarter; the adjusted3 NIM of 3.41% expanded by 12 basis points linked quarter.

Record Loans - Total loans of $27.2 billion as of June 30, 2017 were up $732 million or 11% annualized from $26.5 billion as of March 31, 2017. Total loans grew by 12% year-over-year. The sequential quarter loan growth was driven by strong performance in single-family residential mortgages, as well as continued growth in our commercial loans and a more modest net increase in our commercial real estate and multifamily portfolios.

Record Deposits - Total deposits of $31.2 billion as of June 30, 2017 were up $611 million or 8% annualized from $30.5 billion as of March 31, 2017. Total deposits grew by 10% year-over-year. The sequential quarter growth in deposits was primarily due to increases in interest-bearing checking, time, money market and savings deposits. Noninterest-bearing demand deposits decreased by $199 million to $10.5 billion as of June 30, 2017, comprising 34% of total deposits, down modestly from 35% as of March 31, 2017.

Steady Asset Quality -The allowance for loan losses increased to $276.3 million, or 1.02% of loans held-for-investment (“HFI”) as of June 30, 2017, compared to $263.1 million, or 0.99% of loans HFI as of March 31, 2017. In the second quarter of 2017, annualized net recoveries were 0.04% of average loans HFI, compared to annualized net charge-offs of 0.08% in the previous quarter. Non-purchased credit impaired (“Non-PCI”) nonperforming assets decreased to $133.0 million, or 0.37% of total assets, as of June 30, 2017, compared to $144.8 million, or 0.41% of total assets, as of March 31, 2017.

Capital Ratios - Capital levels for East West continue to be solid. Tangible equity per common share as of June 30, 2017 was $21.93, an increase of 3% linked quarter and 13% year-over-year. As of June 30, 2017, the tangible equity to tangible assets ratio4 was 8.95%, the Common Equity Tier 1 (“CET1”) capital ratio was 11.3%, and the total risk-based capital ratio was 12.8%.











 
 
 
 
2 See reconciliation of GAAP to non-GAAP financial measures in Table 13.
3 See reconciliation of GAAP to non-GAAP financial measures in Table 14.
4 See reconciliation of GAAP to non-GAAP financial measures in Table 15.

2



QUARTERLY RESULTS SUMMARY
 
 
 
Three Months Ended
($ in millions, except per share data)
 
June 30, 2017
 
March 31, 2017
 
June 30, 2016
 
 
 
 
 
 
 
Net income
 
$
118.3

 
$
169.7

 
$
103.3

Earnings per share (diluted)
 
$
0.81

 
$
1.16

 
$
0.71

Adjusted earnings per share (diluted) (1)
 
$
0.81

 
$
0.88

 
$
0.71

Tangible equity (1) per common share
 
$
21.93

 
$
21.20

 
$
19.36

Tangible equity (1) to tangible assets
 
8.95
%
 
8.79
%
 
8.60
%
Return on average assets (2)
 
1.36
%
 
1.97
%
 
1.27
%
Return on average equity (2)
 
13.05
%
 
19.71
%
 
12.71
%
Tangible return on average tangible equity (1)(2)
 
15.30
%
 
23.21
%
 
15.28
%
Adjusted return on average assets (1)(2)
 
1.36
%
 
1.49
%
 
1.27
%
Adjusted return on average equity (1)(2)
 
13.05
%
 
14.88
%
 
12.71
%
Adjusted tangible return on average tangible equity (1)(2)
 
15.30
%
 
17.57
%
 
15.28
%
Adjusted pre-tax, pre-provision profitability ratio (1)(2)
 
2.27
%
 
2.09
%
 
2.04
%
Net interest income
 
$
290.1

 
$
272.1

 
$
253.6

Adjusted net interest income (1)
 
$
283.8

 
$
268.9

 
$
240.3

Net interest margin (2)
 
3.49
%
 
3.33
%
 
3.31
%
Adjusted net interest margin (1)(2)
 
3.41
%
 
3.29
%
 
3.13
%
Cost of deposits (2)
 
0.36
%
 
0.32
%
 
0.29
%
Adjusted efficiency ratio (1)
 
41.3
%
 
43.3
%
 
44.6
%
 
(1)
See reconciliation of the GAAP to non-GAAP financial measures in Tables 12, 13, 14 and 15.
(2)
Annualized.

MANAGEMENT OUTLOOK FOR 2017

Our current outlook for the expected full year 2017 results, compared to our full year 2016 results, is as follows:

End of Period Loans: increase at a percentage rate in the low double digits. This is unchanged from our previous outlook.
Net Interest Margin (excluding the impact of ASC 310-30 discount accretion income): between 3.35% and 3.45%. This is unchanged from our previous outlook.
Noninterest Expense (excluding tax credit amortization & core deposit intangible amortization): increase at a percentage rate in the low single digits. This is unchanged from our previous outlook.
Provision for Credit Losses: in the range of $40 million to $50 million. This is unchanged from our previous outlook.
Tax Items: projecting investment in renewable energy and historical tax credits of $115 million, and related tax credit amortization of $95 million. This, along with other tax items, is expected to result in a full year 2017 effective tax rate of 26%. This compares to our previous outlook of $95 million of tax credit investments, $75 million of related tax credit amortization, and an effective tax rate in the range of 26% to 29%.
Interest Rates: our outlook incorporates the current forward rate curve; as such, it assumes one more Fed Funds rate increase in December 2017. Our previous outlook incorporated Fed Funds rate increases in June and November.


3



OPERATING RESULTS SUMMARY

Second Quarter 2017 Compared to First Quarter 2017

Net Interest Income
Net interest income totaled $290.1 million, a 7% increase from $272.1 million.
Adjusted net interest income, excluding ASC 310-30 discount accretion income, increased by $14.9 million or 6% to $283.8 million; ASC 310-30 discount accretion increased by $3.0 million to $6.3 million.
Average loans of $26.7 billion grew by $612 million or 9% annualized from $26.1 billion.
Average deposits of $30.2 billion grew by $490 million or 7% annualized from $29.7 billion.
Average noninterest-bearing demand deposits comprised 34% of total deposits, similar to the prior quarter.
The average loan-to-deposits ratio was 88%, similar to the prior quarter.

Net Interest Margin
Net interest margin expanded by 16 basis points to 3.49% from 3.33%.
Excluding the impact of ASC 310-30 discount accretion income, adjusted NIM expanded by 12 basis points to 3.41% from 3.29%.
The yield on average loans expanded by 17 basis points to 4.40% from 4.23%; the adjusted5 loan yield expanded by 13 basis points to 4.30% from 4.17%.
The cost of deposits increased by four basis points to 0.36% from 0.32%.
The sequential quarter NIM expansion reflects loan growth and the positive impact of rising short-term interest rates.

Noninterest Income
Total noninterest income of $47.4 million was up by $3.0 million sequentially, or 7%, from adjusted6 noninterest income of $44.4 million, which excludes the gain on sale of the commercial property during the first quarter. Total fees and other operating income of $42.1 million increased by $3.3 million or 9% from $38.8 million in the first quarter. The increase in fee income was broad-based across most of our fee income businesses.

The following table presents total fees and other operating income for the quarters ended June 30, 2017, March 31, 2017 and June 30, 2016.

 
 
 
 
 
 
 
($ in thousands)
 
Three Months Ended
 
June 30, 2017
 
March 31, 2017
 
June 30, 2016
 
 
 
 
 
 
 
Branch fees
 
$
10,700

 
$
10,296

 
$
10,353

Letters of credit fees and foreign exchange income
 
11,986

 
11,069

 
10,943

Ancillary loan fees and other income
 
5,907

 
4,982

 
4,285

Wealth management fees
 
3,537

 
4,530

 
2,778

Derivative fees and other income
 
3,765

 
2,506

 
1,444

Other fees and operating income
 
6,197

 
5,405

 
6,502

Total fees and other operating income
 
$
42,092

 
$
38,788

 
$
36,305

 
 
 
 
 
 
 












 
 
 
 
5 See reconciliation of GAAP to non-GAAP financial measures in Table 14.
6 See reconciliation of GAAP to non-GAAP financial measures in Table 13.

4



Noninterest Expense & Effective Tax Rate
Noninterest expense totaled $169.1 million, comprising $139.5 million of adjusted7 noninterest expense, $27.9 million of tax credit amortization and $1.8 million of core deposit intangible amortization.
Adjusted noninterest expense of $139.5 million increased by $2.6 million or 2% linked quarter. The adjusted7 efficiency ratio of 41.3% improved by 192 basis points from 43.3%.
Compensation expense of $80.7 million decreased by 5% from a seasonally higher $84.6 million in the first quarter of 2017.
The Company’s effective tax rate was 25.0%, compared to an effective tax rate of 25.6% in the prior quarter.
During the second quarter, the Company closed an additional renewable energy tax credit investment, which contributed $8.7 million to the tax credit amortization expense for the quarter and reduced the effective tax rate to 25.0%. For the remainder of the year, the tax credit amortization expense is projected to be approximately $50 million, and the full year 2017 effective tax rate is projected to be 26%.


CREDIT QUALITY

The allowance for loan losses totaled $276.3 million or 1.02% of loans HFI as of June 30, 2017, compared to $263.1 million or 0.99% of loans HFI, and $266.8 million or 1.10% of loans HFI as of March 31, 2017 and June 30, 2016, respectively.
The Company recorded a provision for credit losses of $10.7 million in the current quarter, compared to $7.1 million in the first quarter of 2017, and $6.1 million in the second quarter of 2016.
In the second quarter of 2017, annualized net recoveries were $2.6 million or 0.04% of average loans HFI, compared to annualized net charge-offs of $5.4 million or 0.08% of average loans HFI in the first quarter of 2017, and annualized net charge-offs of $0.6 million or 0.01% of average loans HFI in the second quarter of 2016. The net recoveries in the second quarter of 2017 were in all loan categories, with the largest impact from commercial loan net recoveries of $1.7 million.
Non-PCI nonperforming assets decreased by $11.8 million, or 8% linked quarter, to $133.0 million, or 0.37% of total assets, as of June 30, 2017, compared to 0.41% as of March 31, 2017 and 0.54% as of June 30, 2016.


CAPITAL STRENGTH

Capital levels for East West continue to be solid. Tangible equity per common share as of June 30, 2017 was $21.93, an increase of 3% linked quarter and 13% year-over-year. The following table presents the regulatory capital ratios for the quarters ended June 30, 2017, March 31, 2017 and June 30, 2016.


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Regulatory Capital Metrics
 
Basel III

 
($ in millions)
 
June 30,
2017
(a)
 
March 31, 2017
 
June 30,
2016
 
Minimum
Regulatory
Requirements
 
Well Capitalized Regulatory Requirements
 
Fully Phased-
in Minimum
Regulatory
Requirements
 
 
 
 
 
 
 
 
 
 
 
 
 
CET1 capital ratio
 
11.3
%
 
11.1
%
 
10.7
%
 
4.5
%
 
6.5
%
 
7.0
%
Tier 1 risk-based capital ratio
 
11.3
%
 
11.1
%
 
10.7
%
 
6.0
%
 
8.0
%
 
8.5
%
Total risk-based capital ratio
 
12.8
%
 
12.6
%
 
12.4
%
 
8.0
%
 
10.0
%
 
10.5
%
Tier 1 leverage capital ratio
 
9.3
%
 
9.0
%
 
8.7
%
 
4.0
%
 
5.0
%
 
4.0
%
Risk-Weighted Assets (“RWA”) (b)
 
$
28,453

 
$
28,088

 
$
26,160

 
N/A

 
N/A

 
N/A

 
 
 
 
 
 
 

 
 

 
 

 
 
 
 
N/A Not applicable.
(a)
The Company’s June 30, 2017 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.







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

5




DIVIDEND PAYOUT AND CAPITAL ACTIONS

East West’s Board of Directors has declared third quarter 2017 dividends for the Company’s common stock. The common stock cash dividend of $0.20 per share is payable on August 15, 2017 to shareholders of record on August 1, 2017.


Conference Call

East West will host a conference call to discuss second quarter 2017 earnings with the public on Thursday, July 20, 2017 at 8:30 a.m. PT/11:30 a.m. ET. The public and investment community are invited to listen as management discusses second quarter 2017 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 July 20, 2017 at 11:30 a.m. Pacific Time through August 20, 2017. 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: 10109143.


About East West

East West Bancorp, Inc. is a publicly owned company with total assets of $35.9 billion and is traded on the Nasdaq Global Select Market under the symbol “EWBC”. The Company’s wholly owned subsidiary, East West Bank, is one of the largest independent banks headquartered in California. East West is a premier bank focused exclusively on the United States and Greater China markets and operates over 130 locations worldwide, including in the United States markets of California, Georgia, Massachusetts, Nevada, New York, Texas and Washington. In Greater China, East West’s presence includes full service branches in Hong Kong, Shanghai, Shantou and Shenzhen, and representative offices in Beijing, Chongqing, Guangzhou, Taipei and Xiamen. For more information on East West, visit the Company’s website at www.eastwestbank.com.


6



Forward-Looking Statements
Certain matters set forth herein (including any exhibits hereto) constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company’s current business plans and expectations regarding future operating results. Forward-looking statements may include, but are not limited to, the use of forward-looking language, such as “likely result in,” “expects,” “anticipates,” “estimates,” “forecasts,” “projects,” “intends to,” or may include other similar words or phrases, such as “believes,” “plans,” “trend,” “objective,” “continues,” “remains,” or similar expressions, or future or conditional verbs, such as “will,” “would,” “should,” “could,” “may,” “might,” “can,” or similar verbs. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties, some of which are beyond our control, include, but are not limited to, our ability to compete effectively against other financial institutions in our banking markets; changes in the commercial and consumer real estate markets; changes in our costs of operation, compliance and expansion; changes in the U.S. economy, including inflation, employment levels, rate of growth and general business conditions; changes in government interest rate policies; changes in laws or the regulatory environment including regulatory reform initiatives and policies of the U.S. Department of Treasury, the Board of Governors of the Federal Reserve Board System, the Federal Deposit Insurance Corporation, the U.S. Securities and Exchange Commission, the Consumer Financial Protection Bureau and California Department of Business Oversight - Division of Financial Institutions; heightened regulatory and governmental oversight and scrutiny of the Company’s business practices, including dealings with retail customers; changes in the economy of and monetary policy in the People’s Republic of China; changes in income tax laws and regulations; 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; changes in the equity and debt securities markets; future credit quality and performance, including our expectations regarding future credit losses and allowance levels; fluctuations of our stock price; fluctuations in foreign currency exchange rates; success and timing of our business strategies; our ability to adopt and successfully integrate new technologies into our business in a strategic manner; impact of reputational risk from negative publicity, fines and penalties and other negative consequences from regulatory violations and legal actions; impact of potential federal tax increases and spending cuts; impact of adverse judgments or settlements in litigation or of regulatory enforcement actions; changes in our ability to receive dividends from our subsidiaries; impact of political developments, wars or other hostilities that may disrupt or increase volatility in securities or otherwise affect economic conditions; impact of natural or man-made disasters or calamities or conflicts; continuing consolidation in the financial services industry; our capital requirements and our ability to generate capital internally or raise capital on favorable terms; impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on our business, business practices and cost of operations; impact of adverse changes to our credit ratings from the major credit rating agencies; impact of failure in, or breach of, our operational or security systems or infrastructure, or those of third parties with whom we do 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; adequacy of our risk management framework, disclosure controls and procedures and internal control over financial reporting; the effect of the current low interest rate environment or changes in interest rates on our net interest income and net interest margin; the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin; a recurrence of significant turbulence or disruption in the capital or financial markets, which could result in, among other things, a reduction in the availability of funding or increased funding costs, reduced investor demand for mortgage loans and declines in asset values and/ or recognition of other-than-temporary impairment on securities held in our available-for-sale investment securities portfolio; and other factors set forth in the Company’s public reports including its Annual Report on Form 10-K for the year ended December 31, 2016, and particularly the discussion of risk factors within that document. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, the Company’s results could differ materially from those expressed in, implied or projected by such forward-looking statements. The Company assumes no obligation to update such forward-looking statements.


7



EAST WEST BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($ and shares in thousands, except per share data)
(unaudited)
Table 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2017
% Change
 
 
 
June 30, 2017
 
March 31, 2017
 
June 30, 2016
 
Qtr-o-Qtr
 
Yr-o-Yr
Assets
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
 
$
429,121

 
$
346,005

 
$
362,220

 
24.0%
 
18.5%
 
Interest-bearing cash with banks
 
2,323,355

 
2,088,638

 
1,230,576

 
11.2
 
88.8
 
Cash and cash equivalents
 
2,752,476

 
2,434,643

 
1,592,796

 
13.1
 
72.8
 
Interest-bearing deposits with banks
 
296,679

 
249,849

 
229,979

 
18.7
 
29.0
 
Securities purchased under resale agreements (“resale agreements”) (1)
 
1,300,000

 
1,650,000

 
1,850,000

 
(21.2)
 
(29.7)
 
Investment securities
 
2,943,856

 
3,094,531

 
3,399,540

 
(4.9)
 
(13.4)
 
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock
 
73,173

 
73,019

 
73,374

 
0.2
 
(0.3)
 
Loans held-for-sale
 
11,649

 
28,931

 
51,290

 
(59.7)
 
(77.3)
 
Loans held-for-investment (net of allowance for loan losses of $276,316, $263,094 and $266,768)
 
26,934,350

 
26,198,198

 
23,969,599

 
2.8
 
12.4
 
Investments in qualified affordable housing partnerships, net
 
169,103

 
176,965

 
179,657

 
(4.4)
 
(5.9)
 
Investments in tax credit and other investments, net
 
189,405

 
177,023

 
178,185

 
7.0
 
6.3
 
Goodwill
 
469,433

 
469,433

 
469,433

 
 
 
Other assets
 
777,493

 
789,534

 
958,359

 
(1.5)
 
(18.9)
 
Total assets
 
$
35,917,617

 
$
35,342,126

 
$
32,952,212

 
1.6%
 
9.0%
 
 
 
 
 
 
 
 
 

 

Liabilities and Stockholders’ Equity
 
 

 
 

 
 

 

 

 
Customer deposits
 
$
31,154,287

 
$
30,542,975

 
$
28,217,243

 
2.0%
 
10.4%
 
Short-term borrowings
 
24,426

 
42,023

 
29,499

 
(41.9)
 
(17.2)
 
FHLB advances
 
322,756

 
322,196

 
320,526

 
0.2
 
0.7
 
Securities sold under repurchase agreements (“repurchase agreements”) (1)
 
50,000

 
200,000

 
200,000

 
(75.0)
 
(75.0)
 
Long-term debt
 
176,450

 
181,388

 
196,204

 
(2.7)
 
(10.1)
 
Accrued expenses and other liabilities
 
519,437

 
487,590

 
691,830

 
6.5
 
(24.9)
 
Total liabilities
 
32,247,356

 
31,776,172

 
29,655,302

 
1.5
 
8.7
 
Stockholders’ equity
 
3,670,261

 
3,565,954

 
3,296,910

 
2.9
 
11.3
 
Total liabilities and stockholders’ equity
 
$
35,917,617

 
$
35,342,126

 
$
32,952,212

 
1.6%
 
9.0%
 
 
 
 
 
 
 
 
 

 

 
Book value per common share
 
$
25.40

 
$
24.68

 
$
22.88

 
2.9%
 
11.0%
 
Tangible equity (2) per common share
 
$
21.93

 
$
21.20

 
$
19.36

 
3.4
 
13.3
 
Tangible equity to tangible assets ratio (2)
 
8.95
%
 
8.79
%
 
8.60
%
 
1.8
 
4.1
 
Number of common shares at period-end
 
144,486

 
144,462

 
144,102

 
 
0.3
 
 
 
 
 
 
(1)
Resale and repurchase agreements are reported net pursuant to Accounting Standards Codification (“ASC”) 210-20-45, Balance Sheet Offsetting. As of June 30, 2017, March 31, 2017, and June 30, 2016, $400.0 million, $250.0 million and $250.0 million out of $450.0 million of gross repurchase agreements were eligible for netting against resale agreements, respectively.
(2)
See reconciliation of the GAAP to non-GAAP financial measures in Table 15.

8



EAST WEST BANCORP, INC.
TOTAL LOANS AND DEPOSITS DETAIL
($ in thousands)
(unaudited)
Table 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2017
% Change
 
 
 
June 30, 2017
 
March 31, 2017
 
June 30, 2016
 
Qtr-o-Qtr
 
Yr-o-Yr
Loans:
 
 
 
 
 
 
 
 
 
 
 
Real estate - commercial
 
$
8,465,030

 
$
8,302,098

 
$
7,806,903

 
2.0%
 
8.4%
 
Real estate - land and construction
 
660,819

 
684,792

 
659,686

 
(3.5)
 
0.2
 
Commercial
 
10,187,349

 
9,918,072

 
9,148,803

 
2.7
 
11.4
 
Real estate - single-family
 
4,001,488

 
3,700,072

 
3,208,724

 
8.1
 
24.7
 
Real estate - multifamily
 
1,772,741

 
1,732,695

 
1,347,850

 
2.3
 
31.5
 
Consumer
 
2,123,239

 
2,123,563

 
2,064,401

 
 
2.9
 
Total loans held-for-investment (1)(2)
 
27,210,666

 
26,461,292

 
24,236,367

 
2.8
 
12.3
Loans held-for-sale
 
11,649

 
28,931

 
51,290

 
(59.7)
 
(77.3)
 
Total loans (1)(2), including loans held-for-sale
 
27,222,315

 
26,490,223

 
24,287,657

 
2.8
 
12.1
Allowance for loan losses
 
(276,316
)
 
(263,094
)
 
(266,768
)
 
5.0
 
3.6
 
Net loans (1)(2)
 
$
26,945,999

 
$
26,227,129

 
$
24,020,889

 
2.7%
 
12.2%
 
 
 
 
 
 
 
 
 
 
 

Customer deposits:
 
 

 
 

 
 

 
 
 

 
Noninterest-bearing demand
 
$
10,460,230

 
$
10,658,946

 
$
9,487,180

 
(1.9)%
 
10.3%
 
Interest-bearing checking
 
4,059,046

 
3,803,710

 
3,515,065

 
6.7
 
15.5
 
Money market
 
8,193,086

 
7,990,253

 
7,410,574

 
2.5
 
10.6
 
Savings
 
2,368,611

 
2,247,902

 
2,072,065

 
5.4
 
14.3
 
Total core deposits
 
25,080,973

 
24,700,811

 
22,484,884

 
1.5
 
11.5
 
Time deposits
 
6,073,314

 
5,842,164

 
5,732,359

 
4.0
 
5.9
 
Total deposits
 
$
31,154,287

 
$
30,542,975


$
28,217,243

 
2.0%
 
10.4%
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Includes $(9.6) million, $(4.7) million and $151 thousand as of June 30, 2017, March 31, 2017 and June 30, 2016, respectively, of net deferred loan fees, unamortized premiums and unaccreted discounts.
(2)
Includes ASC 310-30 discount of $42.9 million, $46.7 million and $61.7 million as of June 30, 2017, March 31, 2017 and June 30, 2016, respectively.

















9



EAST WEST BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
($ and shares in thousands, except per share data)
(unaudited)
Table 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
June 30, 2017
% Change
 
 
 
June 30, 2017
 
March 31, 2017
 
June 30, 2016
 
Qtr-o-Qtr
 
Yr-o-Yr
Interest and dividend income
 
$
322,775

 
$
302,669

 
$
278,865

 
6.6%
 
15.7%
Interest expense
 
32,684

 
30,547

 
25,281

 
7.0
 
29.3
Net interest income before provision for credit losses
 
290,091

 
272,122

 
253,584

 
6.6
 
14.4
Provision for credit losses
 
10,685

 
7,068

 
6,053

 
51.2
 
76.5
Net interest income after provision for credit losses
 
279,406

 
265,054

 
247,531

 
5.4
 
12.9
Noninterest income
 
47,400

 
116,023

 
44,264

 
(59.1)
 
7.1
Noninterest expense
 
169,121

 
153,073

 
148,879

 
10.5
 
13.6
Income before income taxes
 
157,685

 
228,004

 
142,916

 
(30.8)
 
10.3
Income tax expense
 
39,355

 
58,268

 
39,632

 
(32.5)
 
(0.7)
Net income
 
$
118,330

 
$
169,736

 
$
103,284

 
(30.3)%
 
14.6%
Earnings per share (“EPS”)
 
 

 
 

 
 

 

 

- Basic
 
$
0.82

 
$
1.18

 
$
0.72

 
(30.5)%
 
13.9%
- Diluted
 
$
0.81

 
$
1.16

 
$
0.71

 
(30.2)
 
14.1
Weighted average number of shares outstanding
 
 
 
 
 
 
 

 

- Basic
 
144,485

 
144,249

 
144,101

 
0.2%
 
0.3%
- Diluted
 
145,740

 
145,732

 
145,078

 
 
0.5
 
 
 
 
 
 
 
 
 

 

 
 
 
Three Months Ended
 
June 30, 2017
% Change
 
 
 
June 30, 2017
 
March 31, 2017
 
June 30, 2016
 
Qtr-o-Qtr
 
Yr-o-Yr
Noninterest income:
 
 

 
 

 
 

 

 

 
Branch fees
 
$
10,700

 
$
10,296

 
$
10,353

 
3.9%
 
3.4%
 
Letters of credit fees and foreign exchange income
 
11,986

 
11,069

 
10,943

 
8.3
 
9.5
 
Ancillary loan fees and other income
 
5,907

 
4,982

 
4,285

 
18.6
 
37.9
 
Wealth management fees
 
3,537

 
4,530

 
2,778

 
(21.9)
 
27.3
 
Derivative fees and other income
 
3,765

 
2,506

 
1,444

 
50.2
 
160.7
 
Net gains on sales of loans
 
1,546

 
2,754

 
2,882

 
(43.9)
 
(46.4)
 
Net gains on sales of available-for-sale investment securities
 
2,720

 
2,474

 
2,836

 
9.9
 
(4.1)
 
Net gains on sales of fixed assets
 
1,042

 
72,007

 
2,241

 
(98.6)
 
(53.5)
 
Other fees and operating income
 
6,197

 
5,405

 
6,502

 
14.7
 
(4.7)
Total noninterest income
 
$
47,400

 
$
116,023

 
$
44,264

 
(59.1)%
 
7.1%
Noninterest expense:
 
 

 
 

 
 

 

 

 
Compensation and employee benefits
 
$
80,744

 
$
84,603

 
$
73,287

 
(4.6)%
 
10.2%
 
Occupancy and equipment expense
 
15,554

 
15,640

 
15,748

 
(0.5)
 
(1.2)
 
Deposit insurance premiums and regulatory assessments
 
5,779

 
5,929

 
5,473

 
(2.5)
 
5.6
 
Legal expense
 
2,552

 
3,062

 
4,346

 
(16.7)
 
(41.3)
 
Data processing
 
3,058

 
2,947

 
3,295

 
3.8
 
(7.2)
 
Consulting expense
 
4,769

 
1,919

 
5,981

 
148.5
 
(20.3)
 
Deposit related expense
 
2,505

 
2,365

 
2,273

 
5.9
 
10.2
 
Computer software expense
 
5,462

 
3,968

 
3,194

 
37.7
 
71.0
 
Other operating expense
 
19,064

 
16,463

 
19,226

 
15.8
 
(0.8)
 
Amortization of tax credit and other investments
 
27,872

 
14,360

 
14,006

 
94.1
 
99.0
 
Amortization of core deposit intangibles
 
1,762

 
1,817

 
2,050

 
(3.0)
 
(14.0)
Total noninterest expense
 
$
169,121

 
$
153,073

 
$
148,879

 
10.5%
 
13.6%
 
 
 
 
 
 
 
 
 
 
 
 


10



EAST WEST BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
($ and shares in thousands, except per share data)
(unaudited)
Table 4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended
 
June 30, 2017
% Change
 
 
 
June 30, 2017
 
June 30, 2016
 
Yr-o-Yr
Interest and dividend income
 
$
625,444

 
$
555,037

 
12.7%
Interest expense
 
63,231

 
49,249

 
28.4
Net interest income before provision for credit losses
 
562,213

 
505,788

 
11.2
Provision for credit losses
 
17,753

 
7,493

 
136.9
Net interest income after provision for credit losses
 
544,460

 
498,295

 
9.3
Noninterest income
 
163,423

 
84,777

 
92.8
Noninterest expense
 
322,194

 
295,485

 
9.0
Income before income taxes
 
385,689

 
287,587

 
34.1
Income tax expense
 
97,623

 
76,787

 
27.1
Net income
 
$
288,066

 
$
210,800

 
36.7%
EPS
 
 

 
 

 

- Basic
 
$
2.00

 
$
1.46

 
37.0%
- Diluted
 
$
1.98

 
$
1.45

 
36.6
Weighted average number of shares outstanding
 
 
 
 
 

- Basic
 
144,368

 
144,029

 
0.2%
- Diluted
 
145,774

 
144,973

 
0.6
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended
 
June 30, 2017
% Change
 
 
 
June 30, 2017
 
June 30, 2016
 
Yr-o-Yr
Noninterest income:
 
 

 
 

 
 
 
Branch fees
 
$
20,996

 
$
20,575

 
2.0%
 
Letters of credit fees and foreign exchange income
 
23,055

 
20,496

 
12.5
 
Ancillary loan fees and other income
 
10,889

 
7,862

 
38.5
 
Wealth management fees
 
8,067

 
5,829

 
38.4
 
Derivative fees and other income
 
6,271

 
3,987

 
57.3
 
Net gains on sales of loans
 
4,300

 
4,809

 
(10.6)
 
Net gains on sales of available-for-sale investment securities
 
5,194

 
6,678

 
(22.2)
 
Net gains on sales of fixed assets
 
73,049

 
2,430

 
NM
 
Other fees and operating income
 
11,602

 
12,111

 
(4.2)
Total noninterest income
 
$
163,423


$
84,777

 
92.8%
Noninterest expense:
 
 

 
 

 

 
Compensation and employee benefits
 
$
165,347

 
$
145,124

 
13.9%
 
Occupancy and equipment expense
 
31,194

 
30,163

 
3.4
 
Deposit insurance premiums and regulatory assessments
 
11,708

 
10,891

 
7.5
 
Legal expense
 
5,614

 
7,353

 
(23.7)
 
Data processing
 
6,005

 
5,983

 
0.4
 
Consulting expense
 
6,688

 
14,433

 
(53.7)
 
Deposit related expense
 
4,870

 
4,593

 
6.0
 
Computer software expense
 
9,430

 
5,936

 
58.9
 
Other operating expense
 
35,527

 
38,694

 
(8.2)
 
Amortization of tax credit and other investments
 
42,232

 
28,161

 
50.0
 
Amortization of core deposit intangibles
 
3,579

 
4,154

 
(13.8)
Total noninterest expense
 
$
322,194

 
$
295,485

 
9.0%
 
 
 
 
 
 
 
 
NM Not Meaningful

11



EAST WEST BANCORP, INC.
SELECTED FINANCIAL INFORMATION
($ in thousands)
(unaudited)
Table 5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Balances
 
Three Months Ended
 
June 30, 2017
% Change
 
 
 
June 30, 2017
 
March 31, 2017
 
June 30, 2016
 
Qtr-o-Qtr
 
Yr-o-Yr
Loans:
 
 
 
 
 
 
 
 
 
 
 
Real estate - commercial
 
$
8,351,403

 
$
8,144,892

 
$
7,837,172

 
2.5%
 
6.6%
 
Real estate - land and construction
 
655,588

 
673,441

 
639,865

 
(2.7)
 
2.5
 
Commercial
 
9,975,216

 
9,954,311

 
8,877,155

 
0.2
 
12.4
 
Real estate - single-family
 
3,816,572

 
3,553,488

 
3,069,573

 
7.4
 
24.3
 
Real estate - multifamily
 
1,764,720

 
1,655,048

 
1,370,356

 
6.6
 
28.8
 
Consumer
 
2,135,288

 
2,105,998

 
2,094,746

 
1.4
 
1.9
 
Total loans (1)
 
$
26,698,787

 
$
26,087,178

 
$
23,888,867

 
2.3%
 
11.8%
 
 
 
 
 
 
 
 
 
 
 
 
Investment securities
 
$
2,962,201

 
$
3,260,004

 
$
3,328,548

 
(9.1)%
 
(11.0)%
Interest-earning assets
 
$
33,295,012

 
$
33,095,396

 
$
30,783,445

 
0.6%
 
8.2%
Total assets
 
$
34,994,935

 
$
34,928,031

 
$
32,591,398

 
0.2%
 
7.4%
 
 
 
 
 
 
 
 
 
 
 
Customer deposits:
 
 

 
 

 
 

 
 
 
 
 
Noninterest-bearing demand
 
$
10,195,755

 
$
10,112,174

 
$
9,135,008

 
0.8%
 
11.6%
 
Interest-bearing checking
 
3,872,347

 
3,598,809

 
3,423,831

 
7.6
 
13.1
 
Money market
 
7,964,286

 
7,942,833

 
7,582,827

 
0.3
 
5.0
 
Savings
 
2,295,299

 
2,284,116

 
2,035,209

 
0.5
 
12.8
 
Total core deposits
 
24,327,687

 
23,937,932

 
22,176,875

 
1.6
 
9.7
 
Time deposits
 
5,871,236

 
5,771,387

 
5,899,503

 
1.7
 
(0.5)
 
Total deposits
 
$
30,198,923

 
$
29,709,319

 
$
28,076,378

 
1.6%
 
7.6%
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
$
20,662,124

 
$
20,786,169

 
$
19,686,794

 
(0.6)%
 
5.0%
Stockholders’ equity
 
$
3,637,695

 
$
3,493,396

 
$
3,267,936

 
4.1%
 
11.3%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Ratios (2)
 
Three Months Ended
 
June 30, 2017
Basis Point Change
 
 
 
June 30, 2017
 
March 31, 2017
 
June 30, 2016
 
Qtr-o-Qtr
 
Yr-o-Yr
 
Return on average assets
 
1.36
%
 
1.97
%
 
1.27
%
 
(61) bps
 
9 bps
 
Adjusted return on average assets (3)
 
1.36
%
 
1.49
%
 
1.27
%
 
(13)
 
9
 
Return on average equity
 
13.05
%
 
19.71
%
 
12.71
%
 
(666)
 
34
 
Adjusted return on average equity (3)
 
13.05
%
 
14.88
%
 
12.71
%
 
(183)
 
34
 
Tangible return on average tangible equity (3)
 
15.30
%
 
23.21
%
 
15.28
%
 
(791)
 
2
 
Adjusted tangible return on average tangible equity (3)
 
15.30
%
 
17.57
%
 
15.28
%
 
(227)
 
2
 
Interest rate spread
 
3.26
%
 
3.11
%
 
3.12
%
 
15
 
14
 
Net interest margin
 
3.49
%
 
3.33
%
 
3.31
%
 
16
 
18
 
Adjusted net interest margin (3)
 
3.41
%
 
3.29
%
 
3.13
%
 
12
 
28
 
Average loan yield
 
4.40
%
 
4.23
%
 
4.28
%
 
17
 
12
 
Adjusted average loan yield (3)
 
4.30
%
 
4.17
%
 
4.05
%
 
13
 
25
 
Yield on average interest-earning assets
 
3.89
%
 
3.71
%
 
3.64
%
 
18
 
25
 
Cost of interest-bearing deposits
 
0.54
%
 
0.49
%
 
0.43
%
 
5
 
11
 
Cost of deposits
 
0.36
%
 
0.32
%
 
0.29
%
 
4
 
7
 
Cost of funds
 
0.42
%
 
0.40
%
 
0.35
%
 
2
 
7
 
Adjusted pre-tax, pre-provision profitability ratio (3)
 
2.27
%
 
2.09
%
 
2.04
%
 
18
 
23
 
Adjusted noninterest expense/average assets (3)
 
1.60
%
 
1.59
%
 
1.64
%
 
1
 
(4)
 
Adjusted efficiency ratio (3)
 
41.33
%
 
43.25
%
 
44.59
%
 
(192) bps
 
(326) bps
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Includes average balances of ASC 310-30 discount of $45.4 million, $48.6 million and $66.0 million for the three months ended June 30, 2017, March 31, 2017 and June 30, 2016, respectively.
(2)
Annualized except for efficiency ratio.
(3)
See reconciliation of the GAAP to non-GAAP financial measures in Tables 12, 13, 14 and 15.

12



EAST WEST BANCORP, INC.
SELECTED FINANCIAL INFORMATION
($ in thousands)
(unaudited)
Table 6
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Balances
 
Six Months Ended
 
June 30, 2017
% Change
 
 
 
June 30, 2017
 
June 30, 2016
 
Yr-o-Yr
Loans:
 
 
 
 
 
 
 
Real estate - commercial
 
$
8,248,718

 
$
7,771,866

 
6.1%
 
Real estate - land and construction
 
664,465

 
643,210

 
3.3
 
Commercial
 
9,968,745

 
8,868,480

 
12.4
 
Real estate - single-family
 
3,690,782

 
3,062,732

 
20.5
 
Real estate - multifamily
 
1,710,111

 
1,446,504

 
18.2
 
Consumer
 
2,120,724

 
2,061,278

 
2.9
 
Total loans (1)
 
$
26,403,545

 
$
23,854,070

 
10.7%
 
 
 
 
 
 
 
 
Investment securities
 
$
3,110,280

 
$
3,296,674

 
(5.7)%
Interest-earning assets
 
$
33,204,629

 
$
30,690,954

 
8.2%
Total assets
 
$
34,961,668

 
$
32,539,060

 
7.4%
 
 
 
 
 
 
 
Customer deposits:
 
 

 
 

 
 
 
Noninterest-bearing demand
 
$
10,154,195

 
$
8,952,380

 
13.4%
 
Interest-bearing checking
 
3,736,334

 
3,391,665

 
10.2
 
Money market
 
7,953,618

 
7,504,312

 
6.0
 
Savings
 
2,289,739

 
1,998,311

 
14.6
 
Total core deposits
 
24,133,886

 
21,846,668

 
10.5
 
Time deposits
 
5,821,587

 
6,100,827

 
(4.6)
 
Total deposits
 
$
29,955,473

 
$
27,947,495

 
7.2%
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
$
20,723,804

 
$
19,826,553

 
4.5%
Stockholders’ equity
 
$
3,565,944

 
$
3,224,652

 
10.6%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Ratios (2)
 
Six Months Ended
 
June 30, 2017
Basis Point Change
 
 
 
June 30, 2017
 
June 30, 2016
 
Yr-o-Yr
 
Return on average assets
 
1.66
%
 
1.30
%
 
36 bps
 
Adjusted return on average assets (3)
 
1.42
%
 
1.30
%
 
12
 
Return on average equity
 
16.29
%
 
13.15
%
 
314
 
Adjusted return on average equity (3)
 
13.94
%
 
13.15
%
 
79
 
Tangible return on average tangible equity (3)
 
19.14
%
 
15.87
%
 
327
 
Adjusted tangible return on average tangible equity (3)
 
16.40
%
 
15.87
%
 
53
 
Interest rate spread
 
3.18
%
 
3.14
%
 
4
 
Net interest margin
 
3.41
%
 
3.31
%
 
10
 
Adjusted net interest margin (3)
 
3.35
%
 
3.13
%
 
22
 
Average loan yield
 
4.32
%
 
4.28
%
 
4
 
Adjusted average loan yield (3)
 
4.24
%
 
4.04
%
 
20
 
Yield on average interest-earning assets
 
3.80
%
 
3.64
%
 
16
 
Cost of interest-bearing deposits
 
0.52
%
 
0.42
%
 
10
 
Cost of deposits
 
0.34
%
 
0.29
%
 
5
 
Cost of funds
 
0.41
%
 
0.34
%
 
7
 
Adjusted pre-tax, pre-provision profitability ratio (3)
 
2.18
%
 
2.02
%
 
16
 
Adjusted noninterest expense/average assets (3)
 
1.59
%
 
1.63
%
 
(4)
 
Adjusted efficiency ratio (3)
 
42.26
%
 
44.56
%
 
(230) bps
 
 
 
 
 
 
 
 
(1)
Includes average balances of ASC 310-30 discount of $47.0 million and $71.3 million for the six months ended June 30, 2017 and June 30, 2016, respectively.
(2)
Annualized except for efficiency ratio.
(3)
See reconciliation of the GAAP to non-GAAP financial measures in Tables 12, 13, 14 and 15.

13



EAST WEST BANCORP, INC.
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
June 30, 2017
 
March 31, 2017
 
 
 
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
 
$
2,191,730

 
$
7,552

 
1.38
%
 
$
1,676,333