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East West Bancorp Reports Record Net Income for Full Year 2022 of $1.1 Billion and Record Diluted Earnings Per Share of $7.92; Increases Dividend By 20%

 

East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq: EWBC), parent company of East West Bank, reported its financial results for the full year and fourth quarter of 2022. Full year 2022 net income was a record $1.1 billion, or $7.92 per diluted share, which grew 30% year-over-year. Fourth quarter 2022 net income was $336.8 million, or $2.37 per diluted share, which grew 56% year-over-year. Total loans reached a record $48.2 billion as of December 31, 2022, up 16% year-over-year, and total deposits grew to a record $56.0 billion, up 5% from a year ago.

“2023 marks the 50th anniversary of East West. I am very proud of the milestones and growth that East West has achieved throughout its history. We have distinguished ourselves with a long, well-established track record of strong financial performance,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. “For the fourth quarter of 2022, we earned an industry-leading 2.1% return on average assets and 25.0% return on average tangible equity1.”

“East West Federal Savings Bank was founded in 1973 with a mission to serve the financial needs of Asian immigrants in Los Angeles, who were overlooked by mainstream banks. As our customers grew and prospered, achieving their personal and business ambitions, so did East West. With over $60 billion in total assets and annual earnings over $1 billion, East West has grown to be the largest independent bank headquartered in Southern California. Our customer base and geographic footprint expanded, along with the breadth and technological sophistication of our lending, deposit, and fee-based products and services. Today, we provide a seamless banking experience for clients on both sides of the Pacific, executing on our vision to be the bridge between the East and the West,” continued Ng.

“In celebrating our 50th anniversary, we are honored to be the bank of choice for our customers, and thankful and proud of all our associates for their dedication to our clients and East West. We are positive about 2023 and expect to continue our track record of outstanding profitability, achieved through solid revenue growth and disciplined expense management, while maintaining healthy capital levels. As we start the year, we are pleased to announce a 20% increase in our common stock dividend,” concluded Ng.

FINANCIAL HIGHLIGHTS

 

Twelve Months Ended

 

Year-over-Year Change

($ in millions, except per share data)

December 31, 2022

 

$

%

Total Loans

$

48,228

 

$

6,534

16

%

Total Deposits

 

55,968

 

 

2,617

5

 

Total Revenue

$

2,345

 

$

527

29

%

Adj. Pre-tax, Pre-provision Income2

 

1,600

 

 

454

40

 

Net Income

 

1,128

 

 

255

29

 

Diluted Earnings Per Share

$

7.92

 

$

1.82

30

%

_________________________

1 Return on average tangible equity is a non-GAAP financial measure. See reconciliation of GAAP to non-GAAP measures in Table 13.

2 Adjusted pre-tax, pre-provision income is a non-GAAP financial measure. See reconciliation of GAAP to non-GAAP measures in Table 12.

BALANCE SHEET

  • Record Assets – Total assets reached $64.1 billion as of December 31, 2022, an increase of $1.5 billion or 2.5% from $62.6 billion as of September 30, 2022. Year-over-year, total assets grew $3.2 billion or 5.3% from $60.9 billion as of December 31, 2021.



    Fourth quarter 2022 average interest-earning assets of $60.4 billion were up $897.5 million, or 1.5% (6.0% annualized), from $59.5 billion in the third quarter of 2022. Quarter-over-quarter, average loan growth of $752.6 million and growth in interest-bearing cash and deposits with banks of $696.7 million was partially offset by decreases in debt securities and assets purchased under resale agreements.

  • Record Loans – Total loans reached $48.2 billion as of December 31, 2022, an increase of $771.3 million, or 1.6% (6.4% annualized), from $47.5 billion as of September 30, 2022. Year-over-year, total loans grew $6.5 billion, or 15.7%, from $41.7 billion as of December 31, 2021.



    Fourth quarter 2022 average loans of $47.6 billion grew $752.6 million, or 1.6% (6.4% annualized), from the third quarter. Average loan growth was well-balanced across all our major loan categories of commercial real estate, commercial & industrial, and residential mortgage.

  • Record Deposits – Total deposits were $56.0 billion as of December 31, 2022, an increase of $2.1 billion, or 3.9% (15.5% annualized), from $53.9 billion as of September 30, 2022. Year-over-year, deposits grew $2.6 billion, or 4.9%, from $53.4 billion as of December 31, 2021.



    Fourth quarter 2022 average deposits of $55.0 billion increased $932.2 million, or 1.7% (6.8% annualized) from the third quarter, driven by growth in time deposits, partially offset by declines in other deposit categories. Growth in time deposits in the fourth quarter reflected a successful branch-based CD campaign. Average noninterest-bearing deposits made up 39% of average total deposits in the fourth quarter of 2022, compared with 41% in the third quarter of 2022 and 44% in the fourth quarter of 2021.
  • Strong Capital Levels – As of December 31, 2022, stockholders’ equity was $6.0 billion, or $42.46 per common share, up 5.7% quarter-over-quarter, and tangible equity3 per common share was $39.10, up 6.2% from September 30, 2022. As of December 31, 2022, the stockholders’ equity to assets ratio was 9.33%, an increase of 28 basis points quarter-over-quarter, and the tangible equity to tangible assets ratio3 was 8.66%, an increase of 31 basis points quarter-over-quarter. The common equity tier 1 (“CET1”) capital ratio was 12.7%, and the total risk-based capital ratio was 14.0% as of December 31, 2022; all regulatory capital ratios expanded quarter-over-quarter.

  • Dividend Increase – The first quarter 2023 common stock dividend was increased by 20%, or eight cents per share. The new quarterly dividend is $0.48 per share, up from $0.40 per share. The new annual dividend is $1.92 per share, compared with $1.60 per share previously.

_________________________

3 Tangible equity and the tangible equity to tangible assets ratio are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 13.

OPERATING RESULTS

Full Year Earnings – Full year 2022 net income was $1.1 billion, an increase of 29.2% from $873.0 million for the full year 2021. Full year 2022 diluted earnings per share were $7.92, an increase of 29.8% from $6.10 per diluted share for the full year 2021.

Fourth Quarter Earnings – Fourth quarter 2022 net income was $336.8 million, an increase of 14.0% (55.6% annualized) from $295.3 million for the third quarter of 2022, and an increase of 54.6% from $217.8 million for the fourth quarter of 2021. Fourth quarter 2022 diluted earnings per share were $2.37, an increase of 13.9% (55.2% annualized) from $2.08 per diluted share for the third quarter 2022, and an increase of 55.9% from $1.52 per diluted share for the year-ago quarter.

Fourth Quarter 2022 Compared to Third Quarter 2022

Net Interest Income and Net Interest Margin

Record net interest income (“NII”) totaled $605.5 million, an increase of 9.7% (38.6% annualized) from $551.8 million. Net interest margin (“NIM”) of 3.98% expanded 30 basis points from 3.68%.

  • NII growth and NIM expansion were driven by higher earning asset yields, partially offset by a higher cost of funds.
  • The average loan yield was 5.59%, up 84 basis points from the third quarter. The average interest-earning asset yield was 5.00%, up 81 basis points from the third quarter. Average loans made up 79% of average interest-earning assets in the fourth quarter of 2022, essentially unchanged from the third quarter of 2022.
  • The average cost of funds was 1.11%, up 56 basis points from the third quarter. The average cost of deposits was 1.06%, up 55 basis points, and the average cost of interest-bearing deposits was 1.74%, up 88 basis points from the third quarter.
  • The changes in yields and rates reflected rising benchmark interest rates.

Noninterest Income

Noninterest income totaled $64.9 million in the fourth quarter, a decrease of $10.6 million, or 14.1%, from $75.6 million in the third quarter.

  • Fee income and net gains on sales of loans were $66.0 million, a decrease of $3.1 million, or 4.5% (17.7% annualized), from $69.0 million in the third quarter.
  • Interest rate contracts (“IRC”) and other derivative income was a loss of $0.6 million in the fourth quarter, compared with income of $8.8 million in the third quarter. The quarter-over-quarter decrease of $9.4 million was due to an unfavorable change in the credit valuation adjustment. The mark-to-market on IRC and other derivatives was $(4.6) million in the fourth quarter, compared with $4.8 million in the third quarter. Customer-driven IRC revenue of $4.0 million in the fourth quarter was essentially unchanged from the third quarter.

Noninterest Expense

Noninterest expense totaled $257.1 million in the fourth quarter, compared with $216.0 million in the third quarter. Fourth quarter noninterest expense consisted of $192.1 million of adjusted noninterest expense4, $64.6 million in amortization of tax credit and other investments, and $0.4 million in amortization of core deposit intangibles.

  • Adjusted noninterest expense of $192.1 million decreased $3.5 million, or 1.8% (7.1% annualized), from $195.6 million in the third quarter, largely driven by lower compensation and employee benefits expense.
  • Amortization of tax credit and other investments totaled $64.6 million in the fourth quarter, compared with $19.9 million in the third quarter. Quarter-over-quarter variability in the amortization of tax credits and other investments partially reflects the impact of investments that close in a given period.
  • The adjusted efficiency ratio4 was 28.7% in the fourth quarter, compared with 31.2% in the third quarter.

TAX RELATED ITEMS

Full year 2022 income tax expense was $283.6 million, and the effective tax rate was 20.1%, compared with income tax expense of $183.4 million and an effective tax rate of 17.4% for the full year 2021. Fourth quarter 2022 income tax expense was $51.6 million, and the effective tax rate was 13.3%, compared with income tax expense of $89.0 million and an effective tax rate of 23.2% for the third quarter of 2022.

ASSET QUALITY

The asset quality of our loan portfolio continued to be solid and stable, with decreases in both classified and special mention loans, as well as very low nonperforming asset and net charge-off ratios. Provision for credit losses was $25.0 million for the fourth quarter of 2022, compared with $27.0 million for the third quarter of 2022.

  • Criticized loans decreased $9.2 million, or 1.0%, quarter-over-quarter to $896.0 million as of December 31, 2022, down from $905.2 million as of September 30, 2022. Classified loans decreased 1.6% quarter-over-quarter to $427.5 million, and special mention loans decreased 0.5% to $468.5 million.
  • The criticized loans ratio decreased five basis points quarter-over-quarter to 1.86% of loans held-for-investment (“HFI”) as of December 31, 2022, down from 1.91% as of September 30, 2022. The classified loans ratio decreased three basis points quarter-over-quarter to 0.89%, and the special mention loans ratio decreased two basis points to 0.97%.
  • As of December 31, 2022, nonperforming assets were $99.8 million, or 0.16% of total assets, compared with $97.0 million, or 0.16% of total assets, as of September 30, 2022.
  • Fourth quarter 2022 net charge-offs were $10.1 million, or annualized 0.08% of average loans HFI, compared with net charge-offs of $6.6 million, or annualized 0.06% of average loans HFI, for the third quarter of 2022.
  • The allowance for loan losses totaled $595.6 million, or 1.24% of loans HFI, as of December 31, 2022, compared with $582.5 million, or 1.23% of loans HFI, as of September 30, 2022.

_________________________

4 Adjusted noninterest expense and the adjusted efficiency ratio are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 12.

CAPITAL STRENGTH

Capital levels for East West are strong. The following table presents the regulatory capital metrics as of December 31, 2022, September 30, 2022 and December 31, 2021.

EWBC Risk-Based Capital Ratios

($ in millions)

 

December 31, 2022 (a)

 

September 30, 2022 (a)

 

December 31, 2021 (a)

 

CET1 capital ratio

 

 

12.7

%

 

 

12.3

%

 

 

12.8

%

 

Tier 1 capital ratio

 

 

12.7

%

 

 

12.3

%

 

 

12.8

%

 

Total capital ratio

 

 

14.0

%

 

 

13.6

%

 

 

14.1

%

 

Leverage ratio

 

 

9.8

%

 

 

9.6

%

 

 

9.0

%

 

Risk-Weighted Assets (“RWA”) (b)

 

$

50,087

 

 

$

49,266

 

 

$

43,585

 

 

(a)

The Company has elected to use the 2020 CECL transition provision in the calculation of its December 31, 2022, September 30, 2022, and December 31, 2021 regulatory capital ratios. The Company’s December 31, 2022 regulatory capital ratios and RWA are preliminary.

(b)

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

DIVIDEND PAYOUT AND CAPITAL ACTIONS

East West’s Board of Directors has declared first quarter 2023 dividends for the Company’s common stock. The common stock cash dividend of $0.48 per share is payable on February 21, 2023, to stockholders of record on February 6, 2023. This represents a 20% increase, or eight cents per share, to the quarterly common stock dividend, up from $0.40 per share previously. The new annual dividend is $1.92 per share, compared with $1.60 per share previously.

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

Conference Call

East West will host a conference call to discuss fourth quarter and full year 2022 earnings with the public on Thursday, January 26, 2023, at 8:30 a.m. PT/11:30 a.m. ET. The public and investment community are invited to listen as management discusses fourth quarter and full year 2022 results and operating developments.

  • The following dial-in information is provided for participation in the conference call: calls within the U.S. – (877) 506-6399; calls within Canada – (855) 669-9657; international calls – (412) 902-6699.
  • A presentation to accompany the earnings call will be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.
  • A listen-only live broadcast of the call will also be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.
  • A replay of the conference call will be available on January 26, 2023, at 11:30 a.m. PT/2:30 p.m. ET through February 26, 2023. The replay numbers are: within the U.S. – (877) 344-7529; within Canada – (855) 669-9658; international calls – (412) 317-0088; and the replay access code is: 4372128.

About East West

East West Bancorp, Inc. is a public company with total assets of $64.1 billion and is traded on the Nasdaq Global Select Market under the symbol “EWBC”. The Company’s wholly-owned subsidiary, East West Bank, is the largest independent bank headquartered in Southern California, operating over 120 locations in the United States and in Asia. The Company’s markets in the United States include California, Georgia, Illinois, Massachusetts, Nevada, New York, Texas and Washington. In China, East West’s presence includes full-service branches in Hong Kong, Shanghai, Shantou and Shenzhen, and representative offices in Beijing, Chongqing, Guangzhou, Xiamen. East West also has a representative office in Singapore. For more information on East West, visit the Company’s website at www.eastwestbank.com.

Forward-Looking Statements

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

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

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





EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

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

(unaudited)

Table 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2022

% or Basis Point Change

 

December 31,

2022

September 30,

2022

December 31,

2021

Qtr-o-Qtr

 

Yr-o-Yr

 

Assets

 

 

 

 

 

 

 

Cash and due from banks

$

534,980

 

$

554,260

 

$

527,317

 

(3.5

)%

 

1.5

%

 

Interest-bearing cash with banks

 

2,946,804

 

 

1,609,093

 

 

3,385,618

 

83.1

 

 

(13.0

)

 

Cash and cash equivalents

 

3,481,784

 

 

2,163,353

 

 

3,912,935

 

60.9

 

 

(11.0

)

 

Interest-bearing deposits with banks

 

139,021

 

 

630,543

 

 

736,492

 

(78.0

)

 

(81.1

)

 

Assets purchased under resale agreements (“resale agreements”)

 

792,192

 

 

892,986

 

 

2,353,503

 

(11.3

)

 

(66.3

)

 

Available-for-sale (“AFS”) debt securities (amortized cost of $6,879,225, $6,771,354 and $10,087,179)

 

6,034,993

 

 

5,906,090

 

 

9,965,353

 

2.2

 

 

(39.4

)

 

Held-to-maturity (“HTM”) debt securities, at amortized cost (fair value of $2,455,171 and $2,459,135 in 2022)

 

3,001,868

 

 

3,012,667

 

 

 

(0.4

)

 

100.0

 

 

Loans held-for-sale (“HFS”)

 

25,644

 

 

14,500

 

 

635

 

76.9

 

 

NM

 

 

Loans held-for-investment (''HFI'') (net of allowance for loan losses of $595,645, $582,517 and $541,579)

 

47,606,785

 

 

46,859,738

 

 

41,152,202

 

1.6

 

 

15.7

 

 

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

 

763,256

 

 

725,254

 

 

628,263

 

5.2

 

 

21.5

 

 

Goodwill

 

465,697

 

 

465,697

 

 

465,697

 

 

 

 

 

Operating lease right-of-use assets

 

103,681

 

 

105,411

 

 

98,632

 

(1.6

)

 

5.1

 

 

Other assets

 

1,697,229

 

 

1,799,822

 

 

1,556,989

 

(5.7

)

 

9.0

 

 

Total assets

$

64,112,150

 

$

62,576,061

 

$

60,870,701

 

2.5

%

 

5.3

%

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Deposits

$

55,967,849

 

$

53,857,362

 

$

53,350,532

 

3.9

%

 

4.9

%

 

Federal funds purchased

 

 

 

200,000

 

 

 

(100.0

)

 

 

 

FHLB advances

 

 

 

324,920

 

 

249,331

 

(100.0

)

 

(100.0

)

 

Assets sold under repurchase agreements (“repurchase agreements”)

 

300,000

 

 

611,785

 

 

300,000

 

(51.0

)

 

 

 

Long-term debt and finance lease liabilities

 

152,400

 

 

152,610

 

 

151,997

 

(0.1

)

 

0.3

 

 

Operating lease liabilities

 

111,931

 

 

113,477

 

 

105,534

 

(1.4

)

 

6.1

 

 

Accrued expenses and other liabilities

 

1,595,358

 

 

1,655,239

 

 

876,089

 

(3.6

)

 

82.1

 

 

Total liabilities

 

58,127,538

 

 

56,915,393

 

 

55,033,483

 

2.1

 

 

5.6

 

 

Stockholders’ equity

 

5,984,612

 

 

5,660,668

 

 

5,837,218

 

5.7

 

 

2.5

 

 

Total liabilities and stockholders’ equity

$

64,112,150

 

$

62,576,061

 

$

60,870,701

 

2.5

%

 

5.3

%

 

 

 

 

 

 

 

 

 

Book value per common share

$

42.46

 

$

40.17

 

$

41.13

 

5.7

%

 

3.2

%

 

Tangible equity (1) per common share

$

39.10

 

$

36.80

 

$

37.79

 

6.2

 

 

3.5

 

 

Number of common shares at period-end

 

140,948

 

 

140,918

 

 

141,908

 

0.0

 

 

(0.7

)

 

Total stockholders’ equity to total assets ratio

9.33

%

9.05

%

9.59

%

28

bps

(26

) bps

Tangible equity to tangible assets ratio (1)

 

8.66

%

 

8.35

%

 

8.88

%

31

 

bps

(22

)

bps

 

 

 

 

NM - Not meaningful.

(1)

Tangible equity and the tangible equity to tangible assets ratio are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 13.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

TOTAL LOANS AND DEPOSITS DETAIL

($ in thousands)

(unaudited)

Table 2

 

 

 

 

 

December 31, 2022

% Change

 

December 31,

2022

September 30,

2022

December 31,

2021

Qtr-o-Qtr

Yr-o-Yr

Loans:

 

 

 

 

 

Commercial:

 

 

 

 

 

Commercial and industrial (“C&I”) (1)

$

15,711,095

 

$

15,625,072

 

$

14,150,608

 

0.6

%

11.0

%

Commercial real estate (“CRE”):

 

 

 

 

 

CRE

 

13,857,870

 

 

13,573,157

 

 

12,155,047

 

2.1

 

14.0

 

Multifamily residential

 

4,573,068

 

 

4,559,302

 

 

3,675,605

 

0.3

 

24.4

 

Construction and land

 

638,420

 

 

556,894

 

 

346,486

 

14.6

 

84.3

 

Total CRE

 

19,069,358

 

 

18,689,353

 

 

16,177,138

 

2.0

 

17.9

 

Consumer:

 

 

 

 

 

Residential mortgage:

 

 

 

 

 

Single-family residential

 

11,223,027

 

 

10,855,345

 

 

9,093,702

 

3.4

 

23.4

 

Home equity lines of credit (“HELOCs”)

 

2,122,655

 

 

2,184,924

 

 

2,144,821

 

(2.8

)

(1.0

)

Total residential mortgage

 

13,345,682

 

 

13,040,269

 

 

11,238,523

 

2.3

 

18.7

 

Other consumer

 

76,295

 

 

87,561

 

 

127,512

 

(12.9

)

(40.2

)

Total loans HFI (2)

 

48,202,430

 

 

47,442,255

 

 

41,693,781

 

1.6

 

15.6

 

Loans HFS

 

25,644

 

 

14,500

 

 

635

 

76.9

 

NM

 

Total loans (2)

 

48,228,074

 

 

47,456,755

 

 

41,694,416

 

1.6

 

15.7

 

Allowance for loan losses

 

(595,645

)

 

(582,517

)

 

(541,579

)

2.3

 

10.0

 

Net loans (2)

$

47,632,429

 

$

46,874,238

 

$

41,152,837

 

1.6

 

15.7

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

Noninterest-bearing demand

$

21,051,090

 

$

21,645,394

 

$

22,845,464

 

(2.7

)%

(7.9

)%

Interest-bearing checking

 

6,672,165

 

 

6,822,343

 

 

6,524,721

 

(2.2

)

2.3

 

Money market

 

12,265,024

 

 

12,113,292

 

 

13,130,300

 

1.3

 

(6.6

)

Savings

 

2,649,037

 

 

2,917,770

 

 

2,888,065

 

(9.2

)

(8.3

)

Time deposits

 

13,330,533

 

 

10,358,563

 

 

7,961,982

 

28.7

 

67.4

 

Total deposits

$

55,967,849

 

$

53,857,362

 

$

53,350,532

 

3.9

%

4.9

%

 

NM - Not meaningful.

(1)

Includes $99.0 million, $110.9 million and $534.2 million of Paycheck Protection Program (“PPP”) loans as of December 31, 2022, September 30, 2022 and December 31, 2021, respectively. Excluding PPP loans, total loans were $48.13 billion, $47.35 billion and $41.16 billion as of December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

(2)

Includes $(70.4) million, $(60.3) million and $(50.7) million of net deferred loan fees and net unamortized premiums as of December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

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

(unaudited)

Table 3

 

 

Three Months Ended

December 31, 2022

% Change

 

December 31,

2022

September 30,

2022

December 31,

2021

Qtr-o-Qtr

Yr-o-Yr

Interest and dividend income (1)

$

761,212

 

$

628,236

 

$

422,708

 

21.2

%

80.1

%

Interest expense

 

155,705

 

 

76,427

 

 

17,011

 

103.7

 

815.3

 

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

 

605,507

 

 

551,809

 

 

405,697

 

9.7

 

49.3

 

Provision for (reversal of) credit losses

 

25,000

 

 

27,000

 

 

(10,000

)

(7.4

)

NM

 

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

 

580,507

 

 

524,809

 

 

415,697

 

10.6

 

39.6

 

Noninterest income

 

64,927

 

 

75,552

 

 

71,489

 

(14.1

)

(9.2

)

Noninterest expense

 

257,110

 

 

215,973

 

 

210,105

 

19.0

 

22.4

 

Income before income taxes

 

388,324

 

 

384,388

 

 

277,081

 

1.0

 

40.1

 

Income tax expense

 

51,561

 

 

89,049

 

 

59,285

 

(42.1

)

(13.0

)

Net income

$

336,763

 

$

295,339

 

$

217,796

 

14.0

%

54.6

%

Earnings per share (“EPS”)

 

 

 

 

 

- Basic

$

2.39

 

$

2.10

 

$

1.53

 

14.0

%

55.7

%

- Diluted

$

2.37

 

$

2.08

 

$

1.52

 

13.9

 

55.9

 

Weighted-average number of shares outstanding

 

 

 

 

 

- Basic

 

140,947

 

 

140,917

 

 

141,907

 

0.0

%

(0.7

)%

- Diluted

 

142,138

 

 

142,011

 

 

143,323

 

0.1

 

(0.8

)

 

 

 

 

 

 

 

Three Months Ended

December 31, 2022

% Change

 

December 31,

2022

September 30,

2022

December 31,

2021

Qtr-o-Qtr

Yr-o-Yr

Noninterest income:

 

 

 

 

 

Lending fees

$

19,339

 

$

20,289

 

$

20,739

 

(4.7

)%

(6.8

)%

Deposit account fees

 

22,112

 

 

23,636

 

 

20,028

 

(6.4

)

10.4

 

Interest rate contracts and other derivative (loss) income

 

(638

)

 

8,761

 

 

1,932

 

NM

 

NM

 

Foreign exchange income

 

14,015

 

 

10,083

 

 

13,343

 

39.0

 

5.0

 

Wealth management fees

 

6,071

 

 

8,903

 

 

5,291

 

(31.8

)

14.7

 

Net gains on sales of loans

 

443

 

 

2,129

 

 

2,308

 

(79.2

)

(80.8

)

Gains on sales of AFS debt securities

 

 

 

 

 

390

 

 

(100.0

)

Other investment income (loss)

 

1,127

 

 

(580

)

 

2,982

 

NM

 

(62.2

)

Other income

 

2,458

 

 

2,331

 

 

4,476

 

5.4

 

(45.1

)

Total noninterest income

$

64,927

 

$

75,552

 

$

71,489

 

(14.1

)%

(9.2

)%

Noninterest expense:

 

 

 

 

 

Compensation and employee benefits

$

120,422

 

$

127,580

 

$

114,743

 

(5.6

)%

4.9

%

Occupancy and equipment expense

 

15,648

 

 

15,920

 

 

15,846

 

(1.7

)

(1.2

)

Deposit insurance premiums and regulatory assessments

 

4,930

 

 

4,875

 

 

4,772

 

1.1

 

3.3

 

Deposit account expense

 

8,437

 

 

6,707

 

 

4,307

 

25.8

 

95.9

 

Data processing

 

3,641

 

 

3,725

 

 

4,175

 

(2.3

)

(12.8

)

Computer software expense

 

7,504

 

 

6,889

 

 

7,494

 

8.9

 

0.1

 

Other operating expense

 

31,923

 

 

30,403

 

 

26,968

 

5.0

 

18.4

 

Amortization of tax credit and other investments

 

64,605

 

 

19,874

 

 

31,800

 

225.1

 

103.2

 

Total noninterest expense

$

257,110

 

$

215,973

 

$

210,105

 

19.0

%

22.4

%

 

NM - Not meaningful.

(1)

Includes $293 thousand, $524 thousand and $9.6 million of interest income related to PPP loans for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

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

(unaudited)

Table 4

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

December 31, 2022

% Change

 

December 31,

2022

December 31,

2021

Yr-o-Yr

Interest and dividend income (1)

$

2,321,231

$

1,618,734

 

43.4%

Interest expense

 

275,350

 

87,163

 

215.9

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

 

2,045,881

 

1,531,571

 

33.6

Provision for (reversal of) credit losses

 

73,500

 

(35,000

)

NM

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

 

1,972,381

 

1,566,571

 

25.9

Noninterest income

 

298,666

 

285,895

 

4.5

Noninterest expense

 

859,393

 

796,089

 

8.0

Income before income taxes

 

1,411,654

 

1,056,377

 

33.6

Income tax expense

 

283,571

 

183,396

 

54.6

Net income

$

1,128,083

$

872,981

 

29.2%

EPS

 

 

 

- Basic

$

7.98

$

6.16

 

29.7%

- Diluted

$

7.92

$

6.10

 

29.8

Weighted-average number of shares outstanding

 

 

 

- Basic

 

141,326

 

141,826

 

(0.4)%

- Diluted

 

142,492

 

143,140

 

(0.5)

 

 

 

 

 

Year Ended

December 31, 2022

% Change

 

December 31,

2022

December 31,

2021

Yr-o-Yr

Noninterest income:

 

 

 

Lending fees

$

79,208

$

77,704

 

1.9%

Deposit account fees

 

88,435

 

71,261

 

24.1

Interest rate contracts and other derivative income

 

29,057

 

22,913

 

26.8

Foreign exchange income

 

48,158

 

48,977

 

(1.7)

Wealth management fees

 

27,565

 

25,751

 

7.0

Net gains on sales of loans

 

6,411

 

8,909

 

(28.0)

Gains on sales of AFS debt securities

 

1,306

 

1,568

 

(16.7)

Other investment income

 

7,037

 

16,852

 

(58.2)

Other income

 

11,489

 

11,960

 

(3.9)

Total noninterest income

$

298,666

$

285,895

 

4.5%

Noninterest expense:

 

 

 

Compensation and employee benefits

$

477,635

$

433,728

 

10.1%

Occupancy and equipment expense

 

62,501

 

62,996

 

(0.8)

Deposit insurance premiums and regulatory assessments

 

19,449

 

17,563

 

10.7

Deposit account expense

 

25,508

 

16,152

 

57.9

Data processing

 

14,517

 

16,263

 

(10.7)

Computer software expense

 

28,259

 

30,600

 

(7.7)

Other operating expense

 

118,166

 

96,330

 

22.7

Amortization of tax credit and other investments

 

113,358

 

122,457

 

(7.4)

Total noninterest expense

$

859,393

$

796,089

 

8.0%

 

NM - Not meaningful.

(1)

Includes $7.3 million and $55.2 million of interest income related to PPP loans for the years ended December 31, 2022 and 2021, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED AVERAGE BALANCES

($ in thousands)

(unaudited)

Table 5

 

 

 

 

 

 

 

 

Three Months Ended

December 31, 2022

% Change

Year Ended

December 31, 2022

% Change

 

December 31, 2022

September 30, 2022

December 31, 2021

Qtr-o-Qtr

Yr-o-Yr

December 31, 2022

December 31, 2021

Yr-o-Yr

Loans:

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

C&I (1)

$

15,496,386

$

15,282,661

$

13,592,203

1.4

%

14.0

%

$

15,013,560

$

13,656,720

9.9%

CRE:

 

 

 

 

 

 

 

 

CRE

 

13,699,042

 

13,533,482

 

11,954,535

1.2

 

14.6

 

 

13,145,204

 

11,663,144

12.7

Multifamily residential

 

4,604,628

 

4,531,351

 

3,434,274

1.6

 

34.1

 

 

4,252,605

 

3,213,582

32.3

Construction and land

 

591,962

 

532,800

 

340,940

11.1

 

73.6

 

 

499,044

 

445,333

12.1

Total CRE

 

18,895,632

 

18,597,633

 

15,729,749

1.6

 

20.1

 

 

17,896,853

 

15,322,059

16.8

Consumer:

 

 

 

 

 

 

 

 

Residential mortgage:

 

 

 

 

 

 

 

 

Single-family residential

 

10,988,102

 

10,676,022

 

9,031,677

2.9

 

21.7

 

 

10,106,609

 

8,742,565

15.6

HELOCs

 

2,145,416

 

2,216,355

 

2,052,383

(3.2

)

4.5

 

 

2,208,725

 

1,859,073

18.8

Total residential mortgage

 

13,133,518

 

12,892,377

 

11,084,060

1.9

 

18.5

 

 

12,315,334

 

10,601,638

16.2

Other consumer

 

81,596

 

81,870

 

126,557

(0.3

)

(35.5

)

 

93,711

 

136,280

(31.2)

Total loans (2)

$

47,607,132

$

46,854,541

$

40,532,569

1.6

%

17.5

%

$

45,319,458

$

39,716,697

14.1%

 

 

 

 

 

 

 

 

 

Interest-earning assets

$

60,376,151

$

59,478,689

$

58,944,082

1.5

%

2.4

%

$

59,309,062

$

56,256,388

5.4%

Total assets

$

64,252,730

$

63,079,444

$

62,183,137

1.9

%

3.3

%

$

62,838,282

$

59,251,091

6.1%

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Noninterest-bearing demand

$

21,419,290

$

22,423,633

$

24,019,333

(4.5

)%

(10.8

)%

$

22,784,258

$

21,271,410

7.1%

Interest-bearing checking

 

6,543,349

 

6,879,632

 

6,462,471

(4.9

)

1.3

 

 

6,696,200

 

6,543,817

2.3

Money market

 

12,197,782

 

12,351,571

 

12,920,174

(1.2

)

(5.6

)

 

12,443,437

 

12,428,025

0.1

Savings

 

2,747,166

 

2,961,634

 

2,841,352

(7.2

)

(3.3

)

 

2,901,940

 

2,746,933

5.6

Time deposits

 

12,076,193

 

9,435,063

 

8,072,917

28.0

 

49.6

 

 

9,473,744

 

8,493,511

11.5

Total deposits

$

54,983,780

$

54,051,533

$

54,316,247

1.7

%

1.2

%

$

54,299,579

$

51,483,696

5.5%

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

$

34,372,853

$

32,703,323

$

31,011,536

5.1

%

10.8

%

$

32,322,744

$

31,077,459

4.0%

Stockholders’ equity

$

5,834,623

$

5,772,638

$

5,786,237

1.1

%

0.8

%

$

5,783,025

$

5,559,212

4.0%

 

(1)

Average balances of PPP loans were $104.6 million, $127.6 million and $677.2 million for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively, and $215.4 million and $1.39 billion for the years ended December 31, 2022 and 2021, respectively.

(2)

Includes loans HFS.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 6

 

 

Three Months Ended

 

December 31, 2022

September 30, 2022

 

Average

Balance

 

Interest

 

Average

Yield/Rate(1)

 

Average

Balance

 

Interest

 

Average

Yield/Rate(1)

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

Interest-bearing cash and deposits with banks

$

2,983,726

 

$

23,986

3.19

%

$

2,287,010

 

$

9,080

1.58

%

Resale agreements

 

833,170

 

 

6,062

2.89

%

 

1,037,292

 

 

6,769

2.59

%

AFS debt securities

 

5,869,336

 

 

46,224

3.12

%

 

6,204,729

 

 

38,383

2.45

%

HTM debt securities

 

3,004,412

 

 

12,747

1.68

%

 

3,017,063

 

 

12,709

1.67

%

Loans (2)

 

47,607,132

 

 

671,323

5.59

%

 

46,854,541

 

 

560,452

4.75

%

FHLB and FRB stock

 

78,375

 

 

870

4.40

%

 

78,054

 

 

843

4.28

%

Total interest-earning assets

 

60,376,151

 

 

761,212

5.00

%

 

59,478,689

 

 

628,236

4.19

%

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

Cash and due from banks

 

640,509

 

 

 

 

615,836

 

 

 

Allowance for loan losses

 

(583,271

)

 

 

 

(566,369

)

 

 

Other assets

 

3,819,341

 

 

 

 

3,551,288

 

 

 

Total assets

$

64,252,730

 

 

 

$

63,079,444

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

Checking deposits

$

6,543,349

 

$

16,735

1.01

%

$

6,879,632

 

$

8,493

0.49

%

Money market deposits

 

12,197,782

 

 

62,246

2.02

%

 

12,351,571

 

 

33,101

1.06

%

Savings deposits

 

2,747,166

 

 

2,714

0.39

%

 

2,961,634

 

 

2,268

0.30

%

Time deposits

 

12,076,193

 

 

65,772

2.16

%

 

9,435,063

 

 

25,032

1.05

%

Federal funds purchased and other short-term borrowings

 

47,142

 

 

374

3.15

%

 

211,794

 

 

1,177

2.20

%

FHLB advances

 

40,178

 

 

225

2.22

%

 

86,243

 

 

392

1.80

%

Repurchase agreements

 

568,520

 

 

5,507

3.84

%

 

624,821

 

 

4,421

2.81

%

Long-term debt and finance lease liabilities

 

152,523

 

 

2,132

5.55

%

 

152,565

 

 

1,543

4.01

%

Total interest-bearing liabilities

 

34,372,853

 

 

155,705

1.80

%

 

32,703,323

 

 

76,427

0.93

%

 

 

 

 

 

 

 

Noninterest-bearing liabilities and stockholders’ equity:

 

 

 

 

 

 

Demand deposits

 

21,419,290

 

 

 

 

22,423,633

 

 

 

Accrued expenses and other liabilities

 

2,625,964

 

 

 

 

2,179,850

 

 

 

Stockholders’ equity

 

5,834,623

 

 

 

 

5,772,638

 

 

 

Total liabilities and stockholders’ equity

$

64,252,730

 

 

 

$

63,079,444

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

3.20

%

 

 

3.26

%

Net interest income and net interest margin

 

$

605,507

3.98

%

 

$

551,809

3.68

%

 

 

 

 

 

 

 

(1)

Annualized.

(2)

Includes loans HFS. Average balances of PPP loans were $104.6 million and $127.6 million for the three months ended December 31, 2022 and September 30, 2022, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 7

 

 

Three Months Ended

December 31, 2022

December 31, 2021

Average

Balance

 

Interest

 

Average

Yield/Rate(1)

 

Average

Balance

 

Interest

 

Average

Yield/Rate(1)

 

 

 

 

 

Assets

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

Interest-bearing cash and deposits with banks

$

2,983,726

 

$

23,986

3.19

%

$

6,050,870

 

$

3,750

0.25

%

Resale agreements

 

833,170

 

 

6,062

2.89

%

 

2,440,636

 

 

9,162

1.49

%

AFS debt securities

 

5,869,336

 

 

46,224

3.12

%

 

9,842,691

 

 

42,367

1.71

%

HTM debt securities

 

3,004,412

 

 

12,747

1.68

%

 

 

 

%

Loans (2)

 

47,607,132

 

 

671,323

5.59

%

 

40,532,569

 

 

366,936

3.59

%

FHLB and FRB stock

 

78,375

 

 

870

4.40

%

 

77,316

 

 

493

2.53

%

Total interest-earning assets

 

60,376,151

 

 

761,212

5.00

%

 

58,944,082

 

 

422,708

2.85

%

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

Cash and due from banks

 

640,509

 

 

 

 

652,126

 

 

 

Allowance for loan losses

 

(583,271

)

 

 

 

(558,645

)

 

 

Other assets

 

3,819,341

 

 

 

 

3,145,574

 

 

 

Total assets

$

64,252,730

 

 

 

$

62,183,137

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

Checking deposits

$

6,543,349

 

$

16,735

1.01

%

$

6,462,471

 

$

1,846

0.11

%

Money market deposits

 

12,197,782

 

 

62,246

2.02

%

 

12,920,174

 

 

3,172

0.10

%

Savings deposits

 

2,747,166

 

 

2,714

0.39

%

 

2,841,352

 

 

1,734

0.24

%

Time deposits

 

12,076,193

 

 

65,772

2.16

%

 

8,072,917

 

 

6,617

0.33

%

Federal funds purchased and other short-term borrowings

 

47,142

 

 

374

3.15

%

 

730

 

 

%

FHLB advances

 

40,178

 

 

225

2.22

%

 

249,048

 

 

856

1.36

%

Repurchase agreements

 

568,520

 

 

5,507

3.84

%

 

313,075

 

 

2,018

2.56

%

Long-term debt and finance lease liabilities

 

152,523

 

 

2,132

5.55

%

 

151,769

 

 

768

2.01

%

Total interest-bearing liabilities

 

34,372,853

 

 

155,705

1.80

%

 

31,011,536

 

 

17,011

0.22

%

 

 

 

 

 

 

 

Noninterest-bearing liabilities and stockholders’ equity:

 

 

 

 

 

 

Demand deposits

 

21,419,290

 

 

 

 

24,019,333

 

 

 

Accrued expenses and other liabilities

 

2,625,964

 

 

 

 

1,366,031

 

 

 

Stockholders’ equity

 

5,834,623

 

 

 

 

5,786,237

 

 

 

Total liabilities and stockholders’ equity

$

64,252,730

 

 

 

$

62,183,137

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

3.20

%

 

 

2.63

%

Net interest income and net interest margin

 

$

605,507

3.98

%

 

$

405,697

2.73

%

 

 

 

 

 

 

 

(1)

Annualized.

(2)

Includes loans HFS. Average balances of PPP loans were $104.6 million and $677.2 million for the three months ended December 31, 2022 and December 31, 2021, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 8

 

 

Year Ended

December 31, 2022

December 31, 2021

Average

 

Average

Average

 

Average

Balance

Interest

Yield/Rate

Balance

Interest

Yield/Rate

Assets

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

Interest-bearing cash and deposits with banks

$

3,127,234

 

$

41,113

1.31

%

$

6,071,896

 

$

15,531

0.26

%

Resale agreements

 

1,398,080

 

 

29,767

2.13

%

 

2,107,157

 

 

32,239

1.53

%

AFS debt securities

 

6,629,945

 

 

152,514

2.30

%

 

8,281,234

 

 

143,983

1.74

%

HTM debt securities

 

2,756,382

 

 

46,392

1.68

%

 

 

 

%

Loans (1)

 

45,319,458

 

 

2,048,301

4.52

%

 

39,716,697

 

 

1,424,900

3.59

%

FHLB and FRB stock

 

77,963

 

 

3,144

4.03

%

 

79,404

 

 

2,081

2.62

%

Total interest-earning assets

 

59,309,062

 

 

2,321,231

3.91

%

 

56,256,388

 

 

1,618,734

2.88

%

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

Cash and due from banks

 

652,673

 

 

 

 

615,255

 

 

 

Allowance for loan losses

 

(559,746

)

 

 

 

(592,211

)

 

 

Other assets

 

3,436,293

 

 

 

 

2,971,659

 

 

 

Total assets

$

62,838,282

 

 

 

$

59,251,091

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

Checking deposits

$

6,696,200

 

$

29,808

0.45

%

$

6,543,817

 

$

13,023

0.20

%

Money market deposits

 

12,443,437

 

 

107,442

0.86

%

 

12,428,025

 

 

15,041

0.12

%

Savings deposits

 

2,901,940

 

 

8,550

0.29

%

 

2,746,933

 

 

7,496

0.27

%

Time deposits

 

9,473,744

 

 

106,038

1.12

%

 

8,493,511

 

 

33,599

0.40

%

Federal funds purchased and other short-term borrowings

 

81,719

 

 

1,801

2.20

%

 

1,584

 

 

42

2.65

%

FHLB advances

 

105,966

 

 

1,754

1.66

%

 

404,789

 

 

6,881

1.70

%

Repurchase agreements

 

467,413

 

 

14,362

3.07

%

 

306,845

 

 

7,999

2.61

%

Long-term debt and finance lease liabilities

 

152,325

 

 

5,595

3.67

%

 

151,955

 

 

3,082

2.03

%

Total interest-bearing liabilities

 

32,322,744

 

 

275,350

0.85

%

 

31,077,459

 

 

87,163

0.28

%

 

 

 

 

 

 

 

Noninterest-bearing liabilities and stockholders’ equity:

 

 

 

 

 

 

Demand deposits

 

22,784,258

 

 

 

 

21,271,410

 

 

 

Accrued expenses and other liabilities

 

1,948,255

 

 

 

 

1,343,010

 

 

 

Stockholders’ equity

 

5,783,025

 

 

 

 

5,559,212

 

 

 

Total liabilities and stockholders’ equity

$

62,838,282

 

 

 

$

59,251,091

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

3.06

%

 

 

2.60

%

Net interest income and net interest margin

 

$

2,045,881

3.45

%

 

$

1,531,571

2.72

%

 

 

 

 

 

 

 

(1)

Includes loans HFS. Average balances of PPP loans were $215.4 million and $1.39 billion for the years ended December 31, 2022 and 2021, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED RATIOS

(unaudited)

Table 9

 

 

Three Months Ended (1)

December 31, 2022

Basis Point Change

 

December 31, 2022

September 30, 2022

December 31,

2021

Qtr-o-Qtr

 

Yr-o-Yr

 

Return on average assets

2.08

%

1.86

%

1.39

%

22

bps

69

bps

Return on average equity

22.90

%

20.30

%

14.93

%

260

 

 

797

 

 

Tangible return on average tangible equity (2)

24.96

%

22.16

%

16.32

%

280

 

 

864

 

 

Interest rate spread

3.20

%

3.26

%

2.63

%

(6

)

 

57

 

 

Net interest margin

3.98

%

3.68

%

2.73

%

30

 

 

125

 

 

Average loan yield

5.59

%

4.75

%

3.59

%

84

 

 

200

 

 

Yield on average interest-earning assets

5.00

%

4.19

%

2.85

%

81

 

 

215

 

 

Average cost of interest-bearing deposits

1.74

%

0.86

%

0.18

%

88

 

 

156

 

 

Average cost of deposits

1.06

%

0.51

%

0.10

%

55

 

 

96

 

 

Average cost of funds

1.11

%

0.55

%

0.12

%

56

 

 

99

 

 

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

2.95

%

2.72

%

1.91

%

23

 

 

104

 

 

Adjusted noninterest expense/average assets (3)

1.19

%

1.23

%

1.13

%

(4

)

 

6

 

 

Efficiency ratio

38.35

%

34.43

%

44.03

%

392

 

 

(568

)

 

Adjusted efficiency ratio (3)

28.66

%

31.18

%

37.24

%

(252

)

bps

(858

)

bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

December 31, 2022

Basis Point Change

 

 

 

 

 

December 31, 2022

December 31, 2021

Yr-o-Yr

 

 

 

 

Return on average assets

1.80

%

1.47

%

33

bps

 

 

 

Return on average equity

19.51

%

15.70

%

381

 

 

 

 

 

Tangible return on average tangible equity (2)

21.29

%

17.24

%

405

 

 

 

 

 

Interest rate spread

3.06

%

2.60

%

46

 

 

 

 

 

Net interest margin

3.45

%

2.72

%

73

 

 

 

 

 

Average loan yield

4.52

%

3.59

%

93

 

 

 

 

 

Yield on average interest-earning assets

3.91

%

2.88

%

103

 

 

 

 

 

Average cost of interest-bearing deposits

0.80

%

0.23

%

57

 

 

 

 

 

Average cost of deposits

0.46

%

0.13

%

33

 

 

 

 

 

Average cost of funds

0.50

%

0.17

%

33

 

 

 

 

 

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

2.55

%

1.94

%

61

 

 

 

 

 

Adjusted noninterest expense/average assets (3)

1.18

%

1.13

%

5

 

 

 

 

 

Efficiency ratio

36.65

%

43.80

%

(715

)

 

 

 

 

Adjusted efficiency ratio (3)

31.74

%

36.91

%

(517

)

bps

 

 

 

 

(1)

Annualized except for efficiency ratio.

(2)

Tangible return on average tangible equity is a non-GAAP financial measure. See reconciliation of GAAP to non-GAAP measures in Table 13.

(3)

Adjusted pre-tax, pre-provision profitability ratio, adjusted noninterest expense/average assets and the adjusted efficiency ratio are non-GAAP financial

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

EAST WEST BANCORP, INC. AND SUBSIDIARIES

ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE SHEET CREDIT EXPOSURES

($ in thousands)

(unaudited)

Table 10

 

 

 

 

Three Months Ended December 31, 2022

 

 

 

Commercial

 

Consumer

 

 

 

 

 

C&I

 

Total CRE

 

Total Residential Mortgage

 

Other Consumer

 

Total

Allowance for loan losses, September 30, 2022

 

 

$

371,749

 

 

$

178,487

 

 

$

30,587

 

$

1,694

 

 

$

582,517

 

(Reversal of) provision for credit losses on loans

(a)

 

 

(263

)

 

 

13,790

 

 

 

9,363

 

 

(118

)

 

 

22,772

 

Gross charge-offs

 

 

 

(416

)

 

 

(10,804

)

 

 

 

 

(16

)

 

 

(11,236

)

Gross recoveries

 

 

 

136

 

 

 

873

 

 

 

89

 

 

 

 

 

1,098

 

Total net (charge-offs) recoveries

 

 

 

(280

)

 

 

(9,931

)

 

 

89

 

 

(16

)

 

 

(10,138

)

Foreign currency translation adjustment

 

 

 

494

 

 

 

 

 

 

 

 

 

 

 

494

 

Allowance for loan losses, December 31, 2022

 

 

$

371,700

 

 

$

182,346

 

 

$

40,039

 

$

1,560

 

 

$

595,645

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2022

 

 

 

Commercial

 

Consumer

 

 

 

 

 

C&I

 

Total CRE

 

Total Residential Mortgage

 

Other

Consumer

 

Total

Allowance for loan losses, June 30, 2022

 

 

$

363,282

 

 

$

173,479

 

 

$

25,060

 

 

$

1,449

 

 

$

563,270

 

Provision for credit losses on loans

(a)

 

 

9,575

 

 

 

11,163

 

 

 

6,281

 

 

 

255

 

 

 

27,274

 

Gross charge-offs

 

 

 

(6,894

)

 

 

(6,226

)

 

 

(775

)

 

 

(10

)

 

 

(13,905

)

Gross recoveries

 

 

 

7,172

 

 

 

71

 

 

 

21

 

 

 

 

 

 

7,264

 

Total net recoveries (charge-offs)

 

 

 

278

 

 

 

(6,155

)

 

 

(754

)

 

 

(10

)

 

 

(6,641

)

Foreign currency translation adjustment

 

 

 

(1,386

)

 

 

 

 

 

 

 

 

 

 

 

(1,386

)

Allowance for loan losses, September 30, 2022

 

 

$

371,749

 

 

$

178,487

 

 

$

30,587

 

 

$

1,694

 

 

$

582,517

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2021

 

 

 

Commercial

 

Consumer

 

 

 

 

 

C&I

 

Total CRE

 

Total Residential Mortgage

 

Other

Consumer

 

Total

Allowance for loan losses, September 30, 2021

 

 

$

342,142

 

 

$

192,260

 

 

$

21,684

 

 

$

4,318

 

 

$

560,404

 

Provision for (reversal of) credit losses on loans

(a)

 

 

2,395

 

 

 

(9,416

)

 

 

(1,519

)

 

 

(940

)

 

 

(9,480

)

Gross charge-offs

 

 

 

(12,328

)

 

 

(2,872

)

 

 

 

 

 

(1,454

)

 

 

(16,654

)

Gross recoveries

 

 

 

5,605

 

 

 

836

 

 

 

430

 

 

 

 

 

 

6,871

 

Total net (charge-offs) recoveries

 

 

 

(6,723

)

 

 

(2,036

)

 

 

430

 

 

 

(1,454

)

 

 

(9,783

)

Foreign currency translation adjustment

 

 

 

438

 

 

 

 

 

 

 

 

 

 

 

 

438

 

Allowance for loan losses, December 31, 2021

 

 

$

338,252

 

 

$

180,808

 

 

$

20,595

 

 

$

1,924

 

 

$

541,579

 

 

EAST WEST BANCORP, INC. AND SUBSIDIARIES

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

($ in thousands)

(unaudited)

Table 10 (continued)

 

 

 

 

Year Ended December 31, 2022

 

 

 

Commercial

 

Consumer

 

 

 

 

 

C&I

 

Total CRE

 

Total Residential Mortgage

 

Other Consumer

 

Total

Allowance for loan losses, December 31, 2021

 

 

$

338,252

 

 

$

180,808

 

 

$

20,595

 

 

$

1,924

 

 

$

541,579

 

Provision for (reversal of) credit losses on loans

(a)

 

 

37,604

 

 

 

17,430

 

 

 

19,991

 

 

 

(258

)

 

 

74,767

 

Gross charge-offs

 

 

 

(18,738

)

 

 

(18,108

)

 

 

(968

)

 

 

(106

)

 

 

(37,920

)

Gross recoveries

 

 

 

16,824

 

 

 

2,216

 

 

 

421

 

 

 

 

 

 

19,461

 

Total net charge-offs

 

 

 

(1,914

)

 

 

(15,892

)

 

 

(547

)

 

 

(106

)

 

 

(18,459

)

Foreign currency translation adjustment

 

 

 

(2,242

)

 

 

 

 

 

 

 

 

 

 

 

(2,242

)

Allowance for loan losses, December 31, 2022

 

 

$

371,700

 

 

$

182,346

 

 

$

40,039

 

 

$

1,560

 

 

$

595,645

 

 

 

 

Year Ended December 31, 2021

 

 

 

Commercial

 

Consumer

 

 

 

 

 

C&I

 

Total CRE

 

Total Residential Mortgage

 

Other Consumer

 

Total

Allowance for loan losses, December 31, 2020

 

 

$

398,040

 

 

$

201,603

 

 

$

18,210

 

 

$

2,130

 

 

$

619,983

 

(Reversal of) provision for credit losses on loans

(a)

 

 

(39,732

)

 

 

6,782

 

 

 

2,710

 

 

 

1,286

 

 

 

(28,954

)

Gross charge-offs

 

 

 

(32,490

)

 

 

(31,514

)

 

 

(1,091

)

 

 

(1,497

)

 

 

(66,592

)

Gross recoveries

 

 

 

11,906

 

 

 

3,937

 

 

 

766

 

 

 

5

 

 

 

16,614

 

Total net charge-offs

 

 

 

(20,584

)

 

 

(27,577

)

 

 

(325

)

 

 

(1,492

)

 

 

(49,978

)

Foreign currency translation adjustment

 

 

 

528

 

 

 

 

 

 

 

 

 

 

 

 

528

 

Allowance for loan losses, December 31, 2021

 

 

$

338,252

 

 

$

180,808

 

 

$

20,595

 

 

$

1,924

 

 

$

541,579

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

 

December 31, 2022

 

September 30, 2022

 

December 31, 2021

 

December 31, 2022

 

December 31, 2021

Unfunded Credit Facilities

 

 

 

 

 

 

 

 

 

 

 

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

 

 

$

24,041

 

 

$

24,304

 

 

$

28,036

 

 

$

27,514

 

 

$

33,577

 

Provision for (reversal of) credit losses on unfunded credit commitments

(b)

 

 

2,228

 

 

 

(274

)

 

 

(520

)

 

 

(1,267

)

 

 

(6,046

)

Foreign currency translation adjustment

 

 

 

(5

)

 

 

11

 

 

 

(2

)

 

 

17

 

 

 

(17

)

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

 

 

$

26,264

 

 

$

24,041

 

 

$

27,514

 

 

$

26,264

 

 

$

27,514

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for (reversal of) credit losses

(a)+(b)

 

$

25,000

 

 

$

27,000

 

 

$

(10,000

)

 

$

73,500

 

 

$

(35,000

)

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

 

EAST WEST BANCORP, INC. AND SUBSIDIARIES

 

CRITICIZED LOANS, NONPERFORMING ASSETS AND CREDIT QUALITY RATIOS

 

($ in thousands)

 

(unaudited)

Table 11

 

Criticized Loans

 

December 31, 2022

 

September 30, 2022

 

December 31, 2021

Special mention loans

 

$

468,471

 

 

$

470,964

 

 

$

384,694

 

Classified loans

 

 

427,509

 

 

 

434,242

 

 

 

448,362

 

Total criticized loans (1)

 

$

895,980

 

 

$

905,206

 

 

$

833,056

 

 

 

 

Nonperforming Assets

 

December 31, 2022

 

September 30, 2022

 

December 31, 2021

Nonaccrual loans:

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

C&I

 

$

50,428

 

 

$

47,988

 

 

$

59,023

 

Total CRE

 

 

23,413

 

 

 

11,209

 

 

 

9,942

 

Consumer:

 

 

 

 

 

 

Total residential mortgage

 

 

25,586

 

 

 

23,309

 

 

 

24,164

 

Other consumer

 

 

99

 

 

 

37

 

 

 

52

 

Total nonaccrual loans

 

 

99,526

 

 

 

82,543

 

 

 

93,181

 

Other real estate owned, net

 

 

270

 

 

 

 

 

 

363

 

Other nonperforming assets

 

 

 

 

 

 

 

 

9,938

 

Nonperforming loans HFS

 

 

 

 

 

14,500

 

 

 

 

Total nonperforming assets

 

$

99,796

 

 

$

97,043

 

 

$

103,482

 

 

 

 

Credit Quality Ratios

 

December 31, 2022

 

September 30, 2022

 

December 31, 2021

Annualized quarterly net charge-offs to average loans HFI

 

 

0.08

%

 

 

0.06

%

 

 

0.10

%

Annual net charge-offs to average loans HFI

 

 

0.04

%

 

 

N/A

 

 

 

0.13

%

Special mention loans to loans HFI

 

 

0.97

%

 

 

0.99

%

 

 

0.92

%

Classified loans to loans HFI

 

 

0.89

%

 

 

0.92

%

 

 

1.08

%

Criticized loans to loans HFI

 

 

1.86

%

 

 

1.91

%

 

 

2.00

%

Nonperforming assets to total assets

 

 

0.16

%

 

 

0.16

%

 

 

0.17

%

Nonaccrual loans to loans HFI

 

 

0.21

%

 

 

0.17

%

 

 

0.22

%

Allowance for loan losses to loans HFI

 

 

1.24

%

 

 

1.23

%

 

 

1.30

%

 

(1)

Excludes loans HFS.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

($ in thousands)

(unaudited)

Table 12

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

 

 

 

 

 

Three Months Ended

 

 

 

 

December 31, 2022

 

September 30, 2022

 

December 31, 2021

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

 

 

 

$

605,507

 

 

$

551,809

 

 

$

405,697

 

Total noninterest income

 

 

 

 

64,927

 

 

 

75,552

 

 

 

71,489

 

Total revenue

 

(a)

 

$

670,434

 

 

$

627,361

 

 

$

477,186

 

 

 

 

 

 

 

 

 

 

Total noninterest expense

 

(b)

 

$

257,110

 

 

$

215,973

 

 

$

210,105

 

Less: Amortization of tax credit and other investments

 

 

 

 

(64,605

)

 

 

(19,874

)

 

 

(31,800

)

Amortization of core deposit intangibles

 

 

 

 

(381

)

 

 

(485

)

 

 

(602

)

Adjusted noninterest expense

 

(c)

 

$

192,124

 

 

$

195,614

 

 

$

177,703

 

Efficiency ratio

 

(b)/(a)

 

 

38.35

%

 

 

34.43

%

 

 

44.03

%

Adjusted efficiency ratio

 

(c)/(a)

 

 

28.66

%

 

 

31.18

%

 

 

37.24

%

Adjusted pre-tax, pre-provision income

 

(a)-(c) = (d)

 

$

478,310

 

 

$

431,747

 

 

$

299,483

 

Average total assets

 

(e)

 

$

64,252,730

 

 

$

63,079,444

 

 

$

62,183,137

 

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

 

(d)/(e)

 

 

2.95

%

 

 

2.72

%

 

 

1.91

%

Adjusted noninterest expense/average assets (1)

 

(c)/(e)

 

 

1.19

%

 

 

1.23

%

 

 

1.13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

 

 

 

 

 

December 31, 2022

 

December 31, 2021

 

 

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

 

 

 

$

2,045,881

 

 

$

1,531,571

 

 

 

Total noninterest income

 

 

 

 

298,666

 

 

 

285,895

 

 

 

Total revenue

 

(f)

 

$

2,344,547

 

 

$

1,817,466

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense

 

(g)

 

$

859,393

 

 

$

796,089

 

 

 

Less: Amortization of tax credit and other investments

 

 

 

 

(113,358

)

 

 

(122,457

)

 

 

Amortization of core deposit intangibles

 

 

 

 

(1,865

)

 

 

(2,749

)

 

 

Adjusted noninterest expense

 

(h)

 

$

744,170

 

 

$

670,883

 

 

 

Efficiency ratio

 

(g)/(f)

 

 

36.65

%

 

 

43.80

%

 

 

Adjusted efficiency ratio

 

(h)/(f)

 

 

31.74

%

 

 

36.91

%

 

 

Adjusted pre-tax, pre-provision income

 

(f)-(h) = (i)

 

$

1,600,377

 

 

$

1,146,583

 

 

 

Average total assets

 

(j)

 

$

62,838,282

 

 

$

59,251,091

 

 

 

Adjusted pre-tax, pre-provision profitability ratio

 

(i)/(j)

 

 

2.55

%

 

 

1.94

%

 

 

Adjusted noninterest expense/average assets

 

(h)/(j)

 

 

1.18

%

 

 

1.13

%

 

 

 

(1)

Annualized.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

($ in thousands)

(unaudited)

Table 13

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2022

 

September 30, 2022

 

December 31, 2021

Stockholders’ equity

 

(a)

 

$

5,984,612

 

 

$

5,660,668

 

 

$

5,837,218

 

Less: Goodwill

 

 

 

 

(465,697

)

 

 

(465,697

)

 

 

(465,697

)

Other intangible assets (1)

 

 

 

 

(7,998

)

 

 

(8,667

)

 

 

(9,334

)

Tangible equity

 

(b)

 

$

5,510,917

 

 

$

5,186,304

 

 

$

5,362,187

 

 

 

 

 

 

 

 

 

 

Total assets

 

(c)

 

$

64,112,150

 

 

$

62,576,061

 

 

$

60,870,701

 

Less: Goodwill

 

 

 

 

(465,697

)

 

 

(465,697

)

 

 

(465,697

)

Other intangible assets (1)

 

 

 

 

(7,998

)

 

 

(8,667

)

 

 

(9,334

)

Tangible assets

 

(d)

 

$

63,638,455

 

 

$

62,101,697

 

 

$

60,395,670

 

Total stockholders’ equity to total assets ratio

 

(a)/(c)

 

 

9.33

%

 

 

9.05

%

 

 

9.59

%

Tangible equity to tangible assets ratio

 

(b)/(d)

 

 

8.66

%

 

 

8.35

%

 

 

8.88

%

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

 

 

December 31, 2022

 

September 30, 2022

 

December 31, 2021

 

December 31, 2022

 

December 31, 2021

Net income

 

(e)

 

$

336,763

 

 

$

295,339

 

 

$

217,796

 

 

$

1,128,083

 

 

$

872,981

 

Add: Amortization of core deposit intangibles

 

 

 

 

381

 

 

 

485

 

 

 

602

 

 

 

1,865

 

 

 

2,749

 

Amortization of mortgage servicing assets

 

 

 

 

329

 

 

 

340

 

 

 

415

 

 

 

1,425

 

 

 

1,679

 

Tax effect of amortization adjustments (2)

 

 

 

 

(209

)

 

 

(237

)

 

 

(293

)

 

 

(966

)

 

 

(1,274

)

Tangible net income

 

(f)

 

$

337,264

 

 

$

295,927

 

 

$

218,520

 

 

$

1,130,407

 

 

$

876,135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average stockholders’ equity

 

(g)

 

$

5,834,623

 

 

$

5,772,638

 

 

$

5,786,237

 

 

$

5,783,025

 

 

$

5,559,212

 

Less: Average goodwill

 

 

 

 

(465,697

)

 

 

(465,697

)

 

 

(465,697

)

 

 

(465,697

)

 

 

(465,697

)

Average other intangible assets (1)

 

 

 

 

(8,378

)

 

 

(8,379

)

 

 

(9,611

)

 

 

(8,695

)

 

 

(10,535

)

Average tangible equity

 

(h)

 

$

5,360,548

 

 

$

5,298,562

 

 

$

5,310,929

 

 

$

5,308,633

 

 

$

5,082,980

 

Return on average equity

 

(e)/(g)