East West Bancorp, Inc. (Nasdaq: EWBC), parent company of East West
Bank, one of the nation’s premier community
banks, today reported financial results for the fourth quarter and full
year 2007. Diluted earnings per share for the full year grew to a record
$2.60, an increase of 11% from $2.35 in 2006. Net income for 2007 was a
record $161.2 million, or a 12% increase from $143.4 million in 2006.
For the fourth quarter 2007, net income was $37.2 million, or $0.59 per
diluted share, compared with $39.1 million or $0.63 per diluted share
for fourth quarter 2006.
"2007 marks the eleventh consecutive year of
record earnings for East West. Earnings per share grew 11% in 2007, one
of the highest EPS growth rates among our peer banks,”
stated Dominic Ng, Chairman, President and Chief Executive Officer of
East West. "While we are pleased with our
overall performance for 2007, our fourth quarter results reflect that we
are not immune to the challenging economic environment facing the entire
financial industry.
"East West has historically been and remains
an institution focused on delivering strong core profitability,
maintaining strong capital levels and returning strong value to our
shareholders. I believe that our experienced management team will
effectively lead us through this current downturn to future successes.
Despite the current environment, we delivered sound financial results
and we believe we will continue to do so in 2008,”
concluded Ng.
Full Year 2007 Summary
Record diluted earnings per share of $2.60, up 11% from 2006
Record net income of $161.2 million, up 12% from 2006
Record net interest income of $408.0 million, up 11% from 2006
Net interest margin of 3.94%, down 4 basis points from 2006
Return on equity of 14.89%, down 6% from 2006
Provision for loan losses of $12.0 million, up $5.8 million from 2006
Total nonperforming assets were 0.57% of total assets
Total net chargeoffs of $6.8 million or 0.08%, up from a net recovery
of $484 thousand or 0.01% for 2006
Gross loans grew to a record $8.8 billion, up $580 million or 7% from
2006
Total deposits increased to $7.3 billion, up $44 million or 1% from
2006
Fourth Quarter Summary
Diluted earnings per share of $0.59, down 6% from fourth quarter 2006
Net income of $37.2 million, down 5% from fourth quarter 2006
Record net interest income of $106.6 million, up 9% from fourth
quarter 2006
Net interest margin of 3.91%, up 10 basis points from fourth quarter
2006
Return on equity of 12.68%, down 19% from fourth quarter 2006
Provision for loan losses of $9.0 million, up $11.0 million from
fourth quarter 2006
Total net chargeoffs of $5.2 million or 0.24%, up from a net recovery
of $875 thousand or 0.04% for the fourth quarter of 2006
Financial Summary
Fourth quarter net income totaled $37.2 million, a decrease of 5% from
$39.1 million reported in the prior year period. Diluted earnings per
share for the fourth quarter totaled $0.59, down 6% from $0.63 in the
prior year period. Return on average equity for the quarter totaled
12.68%, while return on average assets for the quarter totaled 1.27%.
Pretax income for the fourth quarter totaled $59.3 million, a 7% or $4.7
million decrease over the year ago figure. Despite an increase in
provision expense during the fourth quarter of 2007 of $11.0 million
compared to the prior year period, the Company posted solid earnings due
to its strong, core profitability.
For the full year 2007, net income increased 12% to $161.2 million.
Diluted earnings per share for the full year increased 11% to $2.60 from
$2.35 in 2006. Return on average equity for the year equaled 14.89%,
while return on average assets for the year equaled 1.45%. The effective
tax rate for the full year 2007 was 38.55%, compared to 38.67% for 2006.
Pretax income for the full year 2007 totaled $262.3 million, a 12% or
$28.5 million increase over the year ago figure.
Management Guidance
The Company is providing initial guidance for the full year 2008. Given
the uncertainty surrounding the economic environment, the Company has
moderated its expectations for 2008. Management currently estimates that
fully diluted earnings per share for the full year of 2008 will range
from $2.05 to $2.10, or a decrease of approximately 20% from 2007. This
EPS guidance is based on reduced expectations on loan and deposit growth
during 2008 and also factors net interest margin compression resulting
from the recent actions by the Federal Reserve to lower interest rates.
The 2008 EPS guidance is based on the following assumptions:
Annual loan growth of approximately 3%
Annual deposit growth of approximately 5%
Annual increase in noninterest expense of approximately 18%
Efficiency ratio of approximately 45%
An effective tax rate between 38% and 40%
Another 25 basis point decrease in the targeted Federal Funds rate, in
addition to the recent 75 basis point decrease, resulting in a net
interest margin between 3.60% and 3.70%
Provision for loan losses of $24.0 million for the full year 2008
Balance Sheet Summary
At December 31, 2007, total assets were $11.9 billion, a 10% increase
above total assets of $10.8 billion at December 31, 2006. Gross loans at
December 31, 2006 totaled $8.8 billion, up 7% from year-end 2006.
Organic loan growth for the year was $1.3 billion, or 16%, excluding the
impact of $1.2 billion in loan securitizations and the Desert Community
Bank acquisition. For the fourth quarter of 2007, organic loan growth
was 19% annualized, excluding the impact of $112.9 million in
residential loan securitizations.
Average earning assets for the fourth quarter of 2007 equaled $10.9
billion, 7% higher than the fourth quarter of 2006. The growth in
average earning assets was driven by a 5% or $376.9 million increase in
average loans to $8.7 billion and an 18% or $293.7 million increase in
investment securities. The yield on average earning assets for the
quarter was 7.37%, an increase of 8 basis points from the year ago
quarter and a decrease of 17 basis points from the previous quarter. The
yield on average loans receivable for the quarter was 7.59%, a decrease
of 14 basis points from the year ago quarter and a decrease of 27 basis
points from the previous quarter.
Total deposits at December 31, 2007 were $7.3 billion, a 1% increase
over total deposits of $7.2 billion at December 31, 2006. Core deposits
at December 31, 2007 totaled $3.5 billion, reflecting no change from
year-end 2006. At December 31, 2007, the Bank had $96.4 million in
broker deposits, down $185.5 million from $281.9 million at December 31,
2006.
Average total deposits for the fourth quarter increased to $7.4
billion, or 6% above the figure for the prior year period, while average
core deposits totaled $3.6 billion, or 12% greater than the year ago
figure. The average cost of deposits for the fourth quarter of 2007 was
3.15%, a 12 basis point decrease from the year ago quarter and a 20
basis point decrease from the previous quarter. The average cost of
funds for the fourth quarter equaled 3.63%, a 3 basis point decrease
from the prior year and a 15 basis point decrease from the prior quarter.
Fourth Quarter Operating Results
Net interest income for the fourth quarter increased to a record $106.6
million, 9% or $9.2 million greater than the fourth quarter of 2006 and
3% or $2.8 million greater than the third quarter of 2007. The net
interest margin for the quarter of 3.91% reflected an increase of 10
basis points from the year ago margin and a decrease of 4 basis points
from the previous quarter margin.
East West provided $9.0 million for loan losses in the fourth quarter of
2007. In comparison, East West recaptured $2.0 million through loan
losses during the fourth quarter of 2006 and provided $3.0 million in
the third quarter of 2007. The increased provision in the fourth quarter
was a result of factors including net loan charge-offs, nonaccrual
loans, loan classifications and growth in the portfolio.
Noninterest income for the fourth quarter totaled $14.0 million, 51% or
$4.7 million higher than the fourth quarter of 2006 and reflecting no
change from the third quarter of 2007. Core noninterest income,
excluding the impact of gain on sales of investment securities and other
assets, totaled $11.3 million during the quarter, 21% or $2.0 million
higher than the prior year figure and 13% or $1.3 million higher than
the previous quarter. The increase in core noninterest income was
primarily a result of increased branch fees, which grew to $4.4 million
for the fourth quarter, up 47% from the prior year period and up 15%
from the third quarter of 2007.
Noninterest expense totaled $52.3 million for the fourth quarter of
2007, 17% or $7.7 million higher than a year ago and 11% or $5.1 million
higher than the previous quarter. The increases in noninterest expense
from both prior year and prior quarter were largely due to higher
compensation and occupancy costs associated with recent acquisitions,
along with the organic expansion of the Bank.
East West generated a 40.49% efficiency ratio for the fourth quarter of
2007, compared to 39.05% a year ago. The effective tax rate for the
fourth quarter was 37.20% compared to 38.92% in the prior year period.
Full Year 2007 Operating Results
For the full year 2007, net interest income climbed to $408.0 million,
11% or $40.5 million greater than prior year. The net interest margin
for 2007 was 3.94%, a 4 basis point decrease from the year ago margin of
3.98%. Management anticipates that net interest margin pressures will
continue in 2008 and estimates a net interest margin of 3.60% to 3.70%
for 2008. This net interest margin estimate includes the expectation
that the Federal Reserve will lower the targeted Federal Funds rate
another 25 basis points, in addition to the recent 75 basis point
decrease.
East West provided $12.0 million for loan losses during 2007, compared
to $6.2 million during 2006. Management anticipates total provision for
loan losses for 2008 will be $24.0 million for the full year 2008. The
estimate for the 2008 provision expense reflects Management’s
current outlook that economic pressures will continue to mount and
result in an increase in future problem assets.
Total noninterest income for 2007 was $51.3 million, an increase of
$16.9 million over 2006. For the year, core noninterest income,
excluding the impact of gain on sales of investment securities and other
assets, totaled $40.4 million, or a 27% increase from $31.7 million
earned in 2006. The increase in core noninterest income was primarily a
result of increased branch fees, which grew to $15.1 million for 2007,
up 34% from 2006. Management anticipates core noninterest income for the
full year 2008 to remain at comparable levels to 2007.
Noninterest expense totaled $185.0 million for the full year 2007, 14%
or $23.1 million higher than 2006. This increase from 2006 was largely
due to higher compensation and occupancy costs from our recent
acquisitions, and the overall growth of the Bank. Management currently
estimates that 2008 noninterest expense will increase approximately 18%
from 2007. Management current believes that that noninterest expense
will grow at a higher rate than 2007, as the Company may incur
additional expenditures resulting from the overall economic uncertainty.
Additionally, the Company will continue to invest in its infrastructure
in 2008 to drive long-term growth.
East West generated an efficiency ratio of 37.71% for the full year
2007, compared to 37.16% for the year of 2006. Management expects the
efficiency ratio for the full year 2008 to be approximately 45%.
For the full year 2007, the effective tax rate was 38.55% compared with
38.67% in the prior year. Management anticipates an effective tax rate
for the full year 2008 to be approximately 38% to 40%.
Asset Quality
At December 31, 2007, total nonperforming assets were $67.5 million or
0.57%, compared to $19.9 million or 0.18% of total assets at December
31, 2006. Nonaccrual loans at December 31, 2007 were $63.9 million or
0.72% of total loans, compared to $17.1 million or 0.21% of total loans,
at December 31, 2006. Nonperforming assets as of December 31, 2007
included other real estate owned totaling $1.5 million and loans
modified or restructured totaling $2.1 million.
Net loan charge-offs were $6.8 million, or 0.08% of average loans for
the full year 2007. This compares to a net recovery of $484 thousand or
0.01% of average loans for the full year 2006. For the fourth quarter of
2007, net loan charge-offs were $5.2 million, or an annualized 0.24% of
average loans. This compares to a net recovery of $875 thousand or an
annualized 0.04% of average loans for the fourth quarter of 2006 and a
net charge-off of $853 thousand or an annualized 0.04% of average loans
for the third quarter of 2007.
The increase in net loan charge-offs for the fourth quarter of 2007
primarily resulted from charge-offs related to residential construction
and commercial loans. Management currently believes that the overall
level of asset quality remains sound and that net chargeoffs for 2008
will be at manageable levels. Management also believes that net
chargeoffs in 2008 should remain below the Company’s
long-term benchmark of 0.35%.
As of December 31, 2007, loans delinquent 30 to 59 days totaled $41.4
million, down from $118.3 million at September 30, 2007. Loans
delinquent 60 to 90 days totaled $21.2 million, compared to $18.2
million at September 30, 2007. Nonperforming loans delinquent 90 or more
days totaled $63.9 million, compared to $42.8 million at September 30,
2007.
The allowance for loan losses at December 31, 2007 was $88.4 million or
1.00% of total loans, an increase from $78.2 million or 0.95% of total
loans at December 31, 2006. The allowance for loan losses was 138% of
nonaccrual loan at December 31, 2007. The Bank’s
methodology for calculating the allowance for loan losses includes
factors such as historical loss trends, asset classification,
delinquency, credit concentrations and overall economic conditions. At
December 31, 2007, the allowance for unfunded loan commitments and
off-balance sheet credit exposures totaled $11.4 million, compared to
$12.2 million at December 31, 2006. The allowance for loan losses and
unfunded loan commitments to total loans was 1.13% at December 31, 2007,
compared to 1.09% as of December 31, 2006.
Capitalization
East West continues to remain well capitalized under all regulatory
guidelines. At December 31, 2007, our Tier I risk-based capital ratio
was 8.95%, total risk-based capital ratio was 10.53% and Tier I leverage
ratio was 8.73%. Total stockholders’ equity
as of December 31, 2007 was $1.2 billion, representing a book value of
$18.56 per share.
About East West
East West Bancorp is a publicly owned company with $11.9 billion in
assets and is traded on the
Nasdaq Global Select Market under the symbol "EWBC”.
The Company’s wholly owned subsidiary, East
West Bank, is the second largest independent commercial bank
headquartered in Southern California with 72 branch locations. East West
Bank serves the community with 70 branch locations across Southern and
Northern California and a branch location in Houston, Texas. East West
Bank has three international locations in Greater China, including a
full-service branch in Hong Kong and representative offices in Beijing
and Shanghai. For more information on East West Bancorp, visit the
Company’s website at www.eastwestbank.com.
Forward-Looking Statements This release may contain forward-looking statements, which are
included in accordance with the "safe harbor”
provisions of the Private Securities Litigation Reform Act of 1995 and
accordingly, the cautionary statements contained in East West Bancorp’s
Annual Report on Form 10-K for the year ended Dec. 31, 2006 (See Item I
-- Business, and Item 7 -- Management’s
Discussion and Analysis of Consolidated Financial Condition and Results
of Operations), and other filings with the Securities and Exchange
Commission are incorporated herein by reference. These factors include,
but are not limited to: the effect of interest rate and currency
exchange fluctuations; competition in the financial services market for
both deposits and loans; EWBC’s ability to
efficiently incorporate acquisitions into its operations; the ability of
EWBC and its subsidiaries to increase its customer base; the effect of
regulatory and legislative action, including California tax legislation
and an announcement by the state’s Franchise
Tax Board regarding the taxation of Registered Investment Companies; and
regional and general economic conditions. Actual results and
performance in future periods may be materially different from any
future results or performance suggested by the forward-looking
statements in this release. Such forward-looking statements speak only
as of the date of this release. East West expressly disclaims any
obligation to update or revise any forward-looking statements found
herein to reflect any changes in the Bank’s
expectations of results or any change in event. EAST WEST BANCORP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) (unaudited)
December 31, 2007 December 31, 2006 % Change
Assets
Cash and cash equivalents
$
160,347
$
192,559
(17
)
Securities purchased under resale agreements
150,000
100,000
50
Investment securities available-for-sale
1,887,136
1,647,080
15
Loans receivable (net of allowance for loan losses
of $88,407 and $78,201)
8,750,921
8,182,172
7
Premiums on deposits acquired, net
28,459
20,383
40
Goodwill
335,366
244,259
37
Other assets
539,983
437,258
23
Total assets
$
11,852,212
$
10,823,711
10
Liabilities and Stockholders' Equity
Deposits
$
7,278,914
$
7,235,042
1
Federal funds purchased
222,275
151,000
47
Federal Home Loan Bank advances
1,808,419
1,136,866
59
Securities sold under repurchase agreements
1,001,955
975,000
3
Notes payable
16,242
11,379
43
Accrued expenses and other liabilities
117,014
111,011
5
Long-term debt
235,570
184,023
28
Total liabilities
10,680,389
9,804,321
9
Stockholders' equity
1,171,823
1,019,390
15
Total liabilities and stockholders' equity
$
11,852,212
$
10,823,711
10
Book value per share
$
18.56
$
16.59
12
Number of shares at period end
63,137
61,431
3
Ending Balances
December 31, 2007 December 31, 2006 % Change
Loans receivable
Real estate - single family
$
433,337
$
365,407
19
Real estate - multifamily
690,941
1,584,674
(56
)
Real estate - commercial
4,183,473
3,766,634
11
Real estate - construction
1,547,082
1,154,339
34
Commercial
1,314,068
960,375
37
Trade finance
491,690
271,795
81
Consumer
184,518
162,008
14
Total gross loans receivable
8,845,109
8,265,232
7
Unearned fees, premiums and discounts
(5,781
)
(4,859
)
19
Allowance for loan losses
(88,407
)
(78,201
)
13
Net loans receivable
$
8,750,921
$
8,182,172
7
Deposits
Noninterest-bearing demand
$
1,431,730
$
1,353,734
6
Interest-bearing checking
472,943
450,201
5
Money market
1,090,949
1,280,651
(15
)
Savings
477,779
372,546
28
Total core deposits
3,473,401
3,457,132
0
Time deposits less than $100,000
926,459
1,012,401
(8
)
Time deposits $100,000 or greater
2,879,054
2,765,509
4
Total time deposits
3,805,513
3,777,910
1
Total deposits
$
7,278,914
$
7,235,042
1
EAST WEST BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (unaudited)
Quarter Ended December 31,
%
2007
2006
Change
Interest and dividend income
$
201,448
$
186,188
8
Interest expense
(94,840
)
$
(88,815
)
7
Net interest income before provision for loan losses
106,608
97,373
9
(Provision) recapture for loan losses
(9,000
)
2,000
(550
)
Net interest income after provision for loan losses
97,608
99,373
(2
)
Noninterest income
13,978
9,282
51
Noninterest expense
(52,279
)
(44,624
)
17
Income before provision for income taxes
59,307
64,031
(7
)
Provision for income taxes
(22,062
)
(24,920
)
(11
)
Net income
$
37,245
$
39,111
(5
)
Net income per share, basic
$
0.60
$
0.64
(6
)
Net income per share, diluted
$
0.59
$
0.63
(6
)
Shares used to compute per share net income:
- Basic
62,437
60,806
3
- Diluted
63,157
61,926
2
Quarter Ended December 31, %
2007
2006
Change
Noninterest income:
Branch fees
$
4,404
$
2,999
47
Net gain on sales of investment securities available-for-sale
2,615
-
NA
Letters of credit fees and commissions
2,564
2,277
13
Ancillary loan fees
1,609
1,050
53
Income from secondary market activities
275
202
36
Net gain on disposal of fixed assets
92
-
NA
Other operating income
2,419
2,754
(12
)
Total noninterest income
$
13,978
$
9,282
51
Noninterest expense:
Compensation and employee benefits
$
22,415
$
19,994
12
Occupancy and equipment expense
6,999
5,624
24
Amortization of premiums on deposits acquired
2,022
1,810
12
Amortization of investments in affordable
housing partnerships
1,437
1,160
24
Data processing
1,415
966
46
Deposit insurance premiums and regulatory assessments
378
339
12
Other operating expense
17,613
14,731
20
Total noninterest expense
$
52,279
$
44,624
17
EAST WEST BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (unaudited)
Year Ended December 31, %
2007
2006
Change
Interest and dividend income
$
773,607
$
660,050
17
Interest expense
(365,613
)
(292,568
)
25
Net interest income before provision for loan losses
407,994
367,482
11
Provision for loan losses
(12,000
)
(6,166
)
95
Net interest income after provision for loan losses
395,994
361,316
10
Noninterest income
51,268
34,358
49
Noninterest expense
(185,003
)
(161,893
)
14
Income before provision for income taxes
262,259
233,781
12
Provision for income taxes
(101,092
)
(90,412
)
12
Net income
$
161,167
$
143,369
12
Net income per share, basic
$
2.63
$
2.40
10
Net income per share, diluted
$
2.60
$
2.35
11
Shares used to compute per share net income:
- Basic
61,180
59,605
3
- Diluted
62,093
60,909
2
Year Ended December 31, %
2007
2006
Change
Noninterest income:
Branch fees
$
15,071
$
11,265
34
Letters of credit fees and commissions
10,252
8,673
18
Net gain on sales of investment securities available-for-sale
7,833
2,537
209
Ancillary loan fees
5,773
3,885
49
Net gain on disposal of fixed assets
1,665
-
NA
Income from secondary market activities
1,571
698
125
Net gain on sale of real estate owned
1,344
88
1,427
Other operating income
7,759
7,212
8
Total noninterest income
$
51,268
$
34,358
49
Noninterest expense:
Compensation and employee benefits
$
85,926
$
70,583
22
Occupancy and equipment expense
25,582
21,350
20
Amortization of premiums on deposits acquired
6,846
7,118
(4
)
Amortization of investments in affordable housing partnerships
4,958
5,441
(9
)
Data processing
4,818
3,644
32
Deposit insurance premiums and regulatory assessments
1,399
1,360
3
Other operating expense
55,474
52,397
6
Total noninterest expense
$
185,003
$
161,893
14
EAST WEST BANCORP, INC. SELECTED FINANCIAL INFORMATION (In thousands) (unaudited)
Average Balances Quarter Ended December 31, %
2007
2006 Change
Loans receivable
Real estate - single family
$
384,271
$
484,321
(21
)
Real estate - multifamily
753,235
1,624,925
(54
)
Real estate - commercial
4,127,958
3,794,487
9
Real estate - construction
1,533,574
1,082,083
42
Commercial
1,258,398
908,835
38
Trade finance
467,632
266,973
75
Consumer
180,195
166,763
8
Total loans receivable
8,705,263
8,328,387
5
Investment securities available-for-sale
1,893,193
1,599,531
18
Earning assets
10,872,066
10,131,418
7
Total assets
11,699,951
10,752,852
9
Deposits
Noninterest-bearing demand
$
1,398,794
$
1,275,374
10
Interest-bearing checking
436,946
$
400,868
9
Money market
1,280,265
$
1,172,167
9
Savings
508,540
$
377,956
35
Total core deposits
3,624,545
3,226,365
12
Time deposits less than $100,000
928,462
1,063,442
(13
)
Time deposits $100,000 or greater
2,879,172
2,701,241
7
Total time deposits
3,807,634
3,764,683
1
Total deposits
7,432,179
6,991,048
6
Interest-bearing liabilities
8,971,407
8,357,201
7
Stockholders' equity
1,174,883
995,048
18
EAST WEST BANCORP, INC. SELECTED FINANCIAL INFORMATION (In thousands) (unaudited)
Average Balances Year Ended December 31, %
2007
2006 Change
Loans receivable
Real estate - single family
$
349,230
$
534,517
(35
)
Real estate - multifamily
1,083,245
1,560,177
(31
)
Real estate - commercial
3,894,397
3,619,017
8
Real estate - construction
1,371,983
882,523
55
Commercial
1,115,882
805,252
39
Trade finance
376,934
241,051
56
Consumer
163,318
186,042
(12
)
Total loans receivable
8,354,989
7,828,579
7
Investment securities available-for-sale
1,727,961
1,235,633
40
Earning assets
10,368,051
9,243,937
12
Total assets
11,079,770
9,814,076
13
Deposits
Noninterest-bearing demand
$
1,312,709
$
1,249,935
5
Interest-bearing checking
412,550
414,074
(0
)
Money market
1,302,898
1,165,938
12
Savings
412,272
388,291
6
Total core deposits
3,440,429
3,218,238
7
Time deposits less than $100,000
956,203
1,081,768
(12
)
Time deposits $100,000 or greater
2,862,017
2,481,870
15
Total time deposits
3,818,220
3,563,638
7
Total deposits
7,258,649
6,781,876
7
Interest-bearing liabilities
8,540,086
7,541,705
13
Stockholders' equity
1,082,561
908,617
19
EAST WEST BANCORP, INC. SELECTED FINANCIAL INFORMATION (In thousands) (unaudited)
Selected Ratios Quarter Ended December 31, %
2007
2006
Change
For The Period
Return on average assets
1.27
%
1.45
%
(12
)
Return on average equity
12.68
%
15.72
%
(19
)
Interest rate spread (3)
3.18
%
3.07
%
4
Net interest margin (3)
3.91
%
3.81
%
2
Yield on earning assets (3)
7.37
%
7.29
%
1
Cost of deposits
3.15
%
3.27
%
(3
)
Cost of funds
3.63
%
3.66
%
(1
)
Noninterest expense/average assets (1)
1.67
%
1.55
%
8
Efficiency ratio (1)
40.49
%
39.05
%
4
Net chargeoffs (recoveries) to average loans (2)
0.24
%
-0.04
%
(666
)
Gross loan chargeoffs
$
5,241
$
7
74,771
Loan recoveries
$
(66
)
$
(882
)
(93
)
Net loan chargeoffs (recoveries)
$
5,175
$
(875
)
(691
)
Selected Ratios Year Ended December 31, %
2007
2006
Change
For The Period
Return on average assets
1.45
%
1.46
%
(1
)
Return on average equity
14.89
%
15.78
%
(6
)
Interest rate spread (3)
3.19
%
3.26
%
(2
)
Net interest margin (3)
3.94
%
3.98
%
(1
)
Yield on earning assets (3)
7.47
%
7.14
%
5
Cost of deposits
3.32
%
2.95
%
12
Cost of funds
3.71
%
3.33
%
12
Noninterest expense/average assets (1)
1.56
%
1.52
%
3
Efficiency ratio (1)
37.71
%
37.16
%
1
Net chargeoffs (recoveries) to average loans
0.08
%
-0.01
%
(1,409
)
Gross loan chargeoffs
$
7,206
$
515
1,299
Loan recoveries
$
(445
)
$
(999
)
(55
)
Net loan chargeoffs (recoveries)
$
6,761
$
(484
)
(1,497
)
Period End
Tier 1 risk-based capital ratio
8.95
%
9.56
%
(6
)
Total risk-based capital ratio
10.53
%
11.23
%
(6
)
Tier 1 leverage capital ratio
8.73
%
8.28
%
5
Nonperforming assets to total assets
0.57
%
0.18
%
216
Nonaccrual loans to total loans
0.72
%
0.21
%
244
Allowance for loan losses to total loans
1.00
%
0.95
%
5
Allowance for loan losses and unfunded loan commitments to total
loans
1.13
%
1.09
%
4
Allowance for loan losses to nonaccrual loans
138.39
%
457.29
%
(70
)
(1) Excludes the amortization of intangibles and investments in
affordable housing partnerships.
(2) Annualized.
(3) Yields on certain securities have been adjusted upward to a
"fully taxable equivalent" basis in order to reflect the effect of
income which is exempt from federal income taxation at the current
statutory tax rate.
EAST WEST BANCORP, INC. QUARTER TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID
(In thousands)
(unaudited)
Three Months Ended December 31,
2007
2006 Average Average Volume
Interest
Yield (1)
Volume
Interest
Yield (1)
ASSETS Interest-earning assets:
Short-term investments
$
28,878
$
340
4.67
%
$
8,642
$
111
5.10
%
Securities purchased under resale agreements
150,000
3,322
8.79
%
100,000
1,916
7.60
%
Investment securities
Taxable
1,824,393
28,742
6.25
%
1,594,883
20,520
5.10
%
Tax-exempt (2)
68,800
1,506
8.76
%
4,648
86
7.40
%
Loans receivable
8,705,263
166,644
7.59
%
8,328,387
162,201
7.73
%
Federal Home Loan Bank and Federal Reserve
Bank stocks
94,732
1,306
5.47
%
94,858
1,377
5.76
%
Total interest-earning assets
10,872,066
201,860
7.37
%
10,131,418
186,211
7.29
%
Noninterest-earning assets:
Cash and due from banks
177,071
146,847
Allowance for loan losses
(85,944
)
(79,542
)
Other assets
736,758
554,129
Total assets
$
11,699,951
$
10,752,852
LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing liabilities:
Checking accounts
436,946
1,692
1.54
%
400,868
1,598
1.58
%
Money market accounts
1,280,265
12,142
3.76
%
1,172,167
11,972
4.05
%
Savings deposits
508,540
1,989
1.55
%
377,956
678
0.71
%
Time deposits less than $100,000
928,462
8,595
3.67
%
1,063,442
10,709
4.00
%
Time deposits $100,000 or greater
2,879,172
34,640
4.77
%
2,701,241
32,584
4.79
%
Federal funds purchased
213,121
2,568
4.78
%
133,181
1,808
5.39
%
Federal Home Loan Bank advances
1,486,975
18,155
4.84
%
1,403,093
17,836
5.04
%
Securities sold under resale agreements
1,002,356
10,691
4.23
%
921,230
8,177
3.52
%
Long-term debt
235,570
4,368
7.36
%
184,023
3,453
7.44
%
Total interest-bearing liabilities
8,971,407
94,840
4.19
%
8,357,201
88,815
4.22
%
Noninterest-bearing liabilities:
Demand deposits
1,398,794
1,275,374
Other liabilities
154,867
125,229
Stockholders' equity
1,174,883
995,048
Total liabilities and stockholders' equity
$
11,699,951
$
10,752,852
Interest rate spread
3.18
%
3.07
%
Net interest income and net yield
on interest-earning assets (2)
$
107,020
3.91
%
$
97,396
3.81
%
(1) Annualized
(2) Amounts calculated on a fully taxable equivalent basis using the
current statutory federal tax rate.
EAST WEST BANCORP, INC. YEAR TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID
(In thousands)
(unaudited)
Twelve Months Ended December 31,
2007
2006 Average Average Volume Interest
Yield
Volume
Interest
Yield
ASSETS Interest-earning assets:
Short-term investments
$
18,576
$
904
4.87
%
$
10,531
$
443
4.21
%
Securities purchased under resale agreements
182,055
15,064
8.27
%
94,795
7,076
7.46
%
Investment securities
Taxable
1,693,236
100,218
5.92
%
1,230,283
60,366
4.91
%
Tax-exempt (1)
34,725
2,923
8.42
%
5,350
332
6.21
%
Loans receivable
8,354,989
650,717
7.79
%
7,828,579
587,831
7.51
%
Federal Home Loan Bank and Federal Reserve
Bank stocks
84,470
4,581
5.42
%
74,399
4,093
5.50
%
Total interest-earning assets
10,368,051
774,407
7.47
%
9,243,937
660,141
7.14
%
Noninterest-earning assets:
Cash and due from banks
156,081
134,182
Allowance for loan losses
(80,161
)
(75,969
)
Other assets
635,799
511,926
Total assets
$
11,079,770
$
9,814,076
LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing liabilities:
Checking accounts
412,550
6,646
1.61
%
414,074
5,693
1.37
%
Money market accounts
1,302,898
53,021
4.07
%
1,165,938
43,233
3.71
%
Savings deposits
412,272
4,400
1.07
%
388,291
2,626
0.68
%
Time deposits less than $100,000
956,203
37,164
3.89
%
1,081,768
40,519
3.75
%
Time deposits $100,000 or greater
2,862,017
139,804
4.88
%
2,481,870
108,194
4.36
%
Federal funds purchased
173,103
8,899
5.14
%
110,116
5,597
5.08
%
Federal Home Loan Bank advances
1,230,940
61,710
5.01
%
1,088,887
50,824
4.67
%
Securities sold under repurchase agreements
978,739
38,366
3.92
%
633,093
23,083
3.65
%
Long-term debt
211,364
15,603
7.38
%
177,668
12,799
7.20
%
Total interest-bearing liabilities
8,540,086
365,613
4.28
%
7,541,705
292,568
3.88
%
Noninterest-bearing liabilities:
Demand deposits
1,312,709
1,249,935
Other liabilities
144,414
113,819
Stockholders' equity
1,082,561
908,617
Total liabilities and stockholders' equity
$
11,079,770
$
9,814,076
Interest rate spread
3.19
%
3.26
%
Net interest income and net yield
on interest-earning assets (1)
$
408,794
3.94
%
$
367,573
3.98
%
(1) Amounts calculated on a fully taxable equivalent basis using the
current statutory federal tax rate.
