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East West Bancorp (EWBC)

Filed: 22 Jul 21, 9:51am

Exhibit 99.1
ewbclogoa13a.jpg
East West Bancorp, Inc.
135 N. Los Robles Ave., 7th Fl.
Pasadena, CA 91101
Tel. 626.768.6000
NEWS RELEASE
FOR INVESTOR INQUIRIES, CONTACT:
Irene OhJulianna Balicka
Chief Financial OfficerDirector of Investor Relations and Corporate Finance
T: (626) 768-6360T: (626) 768-6985
E: irene.oh@eastwestbank.comE: julianna.balicka@eastwestbank.com


EAST WEST BANCORP REPORTS NET INCOME FOR SECOND QUARTER 2021
OF $225 MILLION AND DILUTED EARNINGS PER SHARE OF $1.57


Pasadena, California – July 22, 2021 – East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq: EWBC), parent company of East West Bank, today reported its financial results for the second quarter of 2021. Net income for the second quarter of 2021 was $224.7 million, or $1.57 per diluted share. Second quarter 2021 return on average assets was 1.56% and return on average equity was 16.6%.

“East West had a very strong quarter of robust growth, expanding profitability and improving asset quality,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. “As of June 30, 2021, our total loans reached a record $40.1 billion and our total deposits reached a record $52.6 billion.”

“Excluding the impact of the Paycheck Protection Program, loans grew by 12% annualized in the second quarter, with solid growth across our residential mortgage, commercial, and commercial real estate loan portfolios. Total deposits grew by 25% annualized, and noninterest-bearing demand deposits reached 41% of total deposits as of June 30, 2021. Our diversified growth reflects the strength of our business model, our commercial and consumer customer mix, and our geographic footprint in dynamic metropolitan areas of the United States.”

“Quarter-over-quarter, our revenue grew by 17% annualized and operating expenses decreased, driving adjusted pre-tax, pre-provision income growth of 33% annualized and expanding profitability,” continued Ng. “Our solid financial performance for the second quarter resulted in adjusted pre-tax, pre-provision profitability1 of 2.0% and a return on average tangible equity2 of 18.3%.”

“Asset quality continues to be healthy. Criticized loans fell by 15% quarter-over-quarter; net charge-offs were 0.13% of average loans, annualized, and the nonperforming assets ratio declined by seven basis points to 0.38% of total assets. Accordingly, we recorded a negative $15.0 million provision for credit losses in the second quarter.”

“We are pleased with our results this quarter and are positive about our outlook for the rest of the year,” concluded Ng. “The hard work and outstanding execution by all our associates builds a strong foundation for East West’s continued growth and success in the years to come. We are well poised to help our communities and customers thrive as the economy expands.”







1 See reconciliation of GAAP to non-GAAP financial measures in Table 12.
2 See reconciliation of GAAP to non-GAAP financial measures in Table 13.
1


BALANCE SHEET

Record Assets Total assets reached $59.9 billion as of June 30, 2021, up by $3.0 billion, or 21% annualized, from $56.9 billion as of March 31, 2021.

Second quarter 2021 average interest-earning assets of $54.9 billion grew by $2.0 billion, or 16% linked quarter annualized. The growth in average interest-earning assets consisted of a $1.5 billion increase in average available-for-sale (“AFS”) debt securities, an $893.0 million increase in average loans, and a $667.7 million increase in average assets purchased under resale agreements (“resale agreements”), partially offset by a $1.0 billion decrease in average interest-bearing cash and deposits with banks. The increase in average AFS debt securities and resale agreements largely reflected activity during the first quarter of 2021; on an end-of-period basis, AFS debt securities increased by $610.2 million and resale agreements increased by $139.1 million between June 30, 2021, and March 31, 2021.

Record Loans – Total loans reached $40.1 billion as of June 30, 2021, up by $484.6 million, or 5% annualized, from $39.6 billion as of March 31, 2021. Excluding Paycheck Protection Program (“PPP”) loans of $1.4 billion as of June 30, 2021, total loans grew by $1.1 billion, or 12% linked quarter annualized. During the second quarter of 2021, $695.5 million of PPP loans outstanding were forgiven by the Small Business Administration. The Company funded 5,523 new PPP loans totaling $896.5 million in the first half of 2021.

Second quarter 2021 average loans of $39.6 billion grew by $893.0 million, or 9% linked quarter annualized. Excluding PPP loans, average loans grew by $953.6 million, or 10% annualized, from the first quarter of 2021. The strong loan growth during the quarter was broad-based, with the strongest growth from average residential mortgage loans, which increased by 19% linked quarter annualized. Average total CRE loans grew by 8% linked quarter annualized, and average C&I loans, excluding PPP, grew by 6% linked quarter annualized.

Record Deposits – Total deposits reached $52.6 billion as of June 30, 2021, up by $3.0 billion, or 25% annualized, from $49.5 billion as of March 31, 2021. Noninterest-bearing demand deposits reached a record $21.8 billion as of June 30, 2021, up by $2.9 billion, or 61% annualized, from $18.9 billion as of March 31, 2021. Noninterest-bearing demand deposits made up 41% of total deposits as of June 30, 2021, up from 38% as of March 31, 2021, or 34% as of June 30, 2020.

Second quarter 2021 average deposits of $50.2 billion grew by $2.3 billion, or 20% linked quarter annualized. Growth in the second quarter was led by noninterest-bearing demand deposits, which increased by 36% linked quarter annualized. Time deposits decreased quarter-over-quarter, reflecting run-off of higher rate certificates of deposit.

Capital Levels – Capital levels for East West are strong. As of June 30, 2021, stockholders’ equity was $5.5 billion, or $39.10 per common share, and tangible equity3 per common share was $35.75. As of June 30, 2021, the tangible equity to tangible assets ratio3 was 8.54%, the common equity tier 1 (“CET1”) capital ratio was 12.8%, and the total risk-based capital ratio was 14.3%.
























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


OPERATING RESULTS

Second Quarter Earnings – Second quarter 2021 net income was $224.7 million, or $1.57 per diluted share, an increase of 10% from $205.0 million, or $1.44 per diluted share, for the first quarter of 2021.


Second Quarter 2021 Compared to First Quarter 2021

Net Interest Income and Net Interest Margin
Net interest income (“NII”) totaled $376.5 million, an increase of 26% annualized from $353.7 million. Net interest margin (“NIM”) of 2.75% increased by four basis points from 2.71%.
Excluding the impact of PPP loans, adjusted NII4 totaled $361.1 million, an increase of 27% annualized from $338.7 million. Adjusted NIM4 of 2.73% expanded by three basis points from 2.70%. PPP loans contributed $15.4 million to NII in the second quarter, compared with $15.0 million in the first quarter.
NII growth reflected higher interest income, due to average loan, AFS debt securities and resale agreement volume growth, and decreased interest expense, due to a lower cost of deposits, a reduction of time deposit balances and pay off of FHLB advances. During the second quarter, $400.0 million of FHLB advances with an average rate of 2.25% matured.
The yield on average earning assets of 2.92% was relatively stable quarter-over-quarter, contracting by one basis point from 2.93%. The average loan yield of 3.57% was likewise relatively stable, contracting by one basis point from 3.58%. Quarter-over-quarter, yields on AFS debt securities and resale agreements were lower, but the overall mix of earning assets was higher yielding due to a reduction of average interest-bearing cash and deposits with banks.
The average cost of deposits of 0.14% decreased by four basis points from 0.18%. The average cost of interest-bearing deposits of 0.24% decreased by six basis points from 0.30%. The decrease in the cost of deposits primarily reflects continued downward repricing of time deposits to market rates, and a reduction in rates paid on money market accounts.

Noninterest Income
Noninterest income totaled $68.4 million in the second quarter, down from $72.9 million in the first quarter. Quarter-over-quarter growth in foreign exchange income, lending fees, deposit account fees, and wealth management fees drove a 15% increase in customer-driven fee income. However, the growth in customer-driven fee income was offset by an unfavorable change in the credit valuation adjustment of interest rate contracts and other derivatives.
Included in interest rate contracts and other derivative income are fair value changes primarily due to the quarter-over-quarter change in the credit valuation adjustment. These fair value changes amounted to a $5.4 million loss in the second quarter, reflecting a quarter-over-quarter decline in long-term benchmark interest rates. In the first quarter, the comparable amount was a $14.1 million gain, reflecting an increase in long-term benchmark interest rates during the period.
Other investment income totaled $7.6 million in the second quarter, up from $0.9 million in the first quarter, reflecting increased valuations of Community Reinvestment Act-related investments.




















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


Noninterest Expense
Noninterest expense totaled $189.5 million. Second quarter noninterest expense consisted of $161.5 million of adjusted noninterest expense5, $27.3 million in amortization of tax credit and other investments, and $0.7 million in amortization of core deposit intangibles.
Adjusted noninterest expense of $161.5 million decreased by 2% from $165.0 million in the first quarter. Compensation and employee benefits expense decreased from a seasonally higher first quarter.
Amortization of tax credit and other investments totaled $27.3 million, an increase from $25.4 million in the first quarter. Second quarter amortization of tax credit and other investments included $0.9 million of recoveries related to DC Solar tax credit investments. These recoveries amounted to $0.6 million after tax.
The adjusted efficiency ratio5 was 36.3% in the second quarter, an improvement from 38.7% in the first quarter.


TAX RELATED ITEMS

Second quarter 2021 income tax expense was $45.6 million and the effective tax rate was 17%. Year-to-date for the first six months of 2021, the effective tax rate was 15%. For the full year, the Company expects the effective tax rate to be approximately 15%.


ASSET QUALITY

Quarter-over-quarter, criticized loans fell by $184.9 million, or 15%, with decreases of 23% in special mention and 9% in classified loans. The allowance for loan losses (“ALLL”) totaled $585.7 million, or 1.46% of loans held-for-investment (“HFI”), as of June 30, 2021, compared with $607.5 million, or 1.53% of loans HFI, as of March 31, 2021.
1
Quarter-over-quarter, the ALLL decreased by $21.8 million, and the ALLL coverage ratio of loans HFI decreased by seven basis points. The change in the ALLL reflects an improved macroeconomic forecast, improved loan risk ratings, and lower expected losses over the expected life of the loans.
As a result of the improvements noted above, during the second quarter of 2021, the Company recorded a negative $15.0 million provision for credit losses.
Second quarter 2021 net charge-offs were $13.3 million, or annualized 0.13% of average loans HFI, down by $131 thousand, or one basis point, from $13.4 million, or annualized 0.14% of average loans HFI, for the first quarter of 2021.
As of June 30, 2021, criticized loans totaled $1,032.0 million, or 2.58% of loans HFI, an improvement of 49 basis points from $1,216.9 million, or 3.07% of loans HFI, as of March 31, 2021. Special mention loans decreased by 23% to $386.8 million as of June 30, 2021, down from $504.2 million as of March 31, 2021. Classified loans decreased by 9% to $645.2 million as of June 30, 2021, down from $712.7 million as of March 31, 2021.
Nonperforming assets were $225.7 million, or 0.38% of total assets, as of June 30, 2021, compared with $258.1 million, or 0.45% of total assets, as of March 31, 2021.

















5 See reconciliation of GAAP to non-GAAP financial measures in Table 12.
4


CAPITAL STRENGTH

Capital levels for East West are strong. The following table presents the regulatory capital ratios as of June 30, 2021, March 31, 2021, and June 30, 2020.
EWBC Regulatory Capital MetricsBasel III
($ in millions)
June 30,
2021 (a)
March 31,
2021 (a)
June 30,
2020 (a)
Minimum
Capital
Ratio
Well
Capitalized
Ratio
Minimum
Capital Ratio +
Conservation Buffer (b)
Risk-Based Capital Ratios:
CET1 capital ratio12.8 %12.7 %12.7 %4.5 %6.5 %7.0 %
Tier 1 capital ratio12.8 %12.7 %12.7 %6.0 %8.0 %8.5 %
Total capital ratio14.3 %14.3 %14.4 %8.0 %10.0 %10.5 %
Leverage ratio9.1 %9.1 %9.7 %4.0 %5.0 %4.0 %
Risk-Weighted Assets (“RWA”) (c)
$40,609 $39,572 $36,199 N/AN/AN/A
N/A Not applicable.
(a)The Company has elected to use the 2020 CECL transition provision in the calculation of its June 30, 2021, March 31, 2021 and June 30, 2020 regulatory capital ratios. The Company’s June 30, 2021 regulatory capital ratios and RWA are preliminary.
(b)An additional 2.5% capital conservation buffer above the minimum capital ratios are required in order to avoid limitations on distributions, including dividend payments and certain discretionary bonus payments to executive officers.
(c)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 third quarter 2021 dividends for the Company’s common stock. The common stock cash dividend of $0.33 per share is payable on August 16, 2021, to stockholders of record on August 2, 2021.

On March 3, 2020, East West’s Board of Directors authorized the repurchase of up to $500 million of East West’s common stock. East West did not repurchase any shares during the second quarter of 2021, and has not repurchased any shares since the first quarter of 2020, under this authorization.


Conference Call

East West will host a conference call to discuss second quarter 2021 earnings with the public on Thursday, July 22, 2021 at 8:30 a.m. PT/11:30 a.m. ET. The public and investment community are invited to listen as management discusses second quarter 2021 results and operating developments.
The following dial-in information is provided for participation in the conference call: calls within the U.S. – (877) 506-6399; calls within Canada – (855) 669-9657; international calls – (412) 902-6699.
A presentation to accompany the earnings call will be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.
A listen-only live broadcast of the call will also be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.
A replay of the conference call will be available on July 22, 2021 at 11:30 a.m. PT through August 22, 2021. 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: 10157563.







5


About East West

East West Bancorp, Inc. is a public company with total assets of $59.9 billion and is traded on the Nasdaq Global Select Market under the symbol “EWBC”. The Company’s wholly owned subsidiary, East West Bank, is one of the largest independent banks headquartered in California, operating over 120 locations in the United States and in China. The Company’s markets in the United States include California, Georgia, 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, and Xiamen. 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 (the “SEC”) and management may make forward-looking statements to analysts, investors, media members and others. Forward-looking statements are statements that are not historical facts, and are based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company’s control, such as the future impacts of the COVID-19 pandemic. These statements relate to the Company’s financial condition, results of operations, plans, objectives, future performance and/or business. They usually can be identified by the use of forward-looking language, such as “likely result in,” “expects,” “anticipates,” “estimates,” “forecasts,” “projects,” “intends to,” “assumes,” “believes,” “plans,” “trend,” “objective,” “continues,” “remains,” “will,” “would,” “should,” “could,” “may,” “might,” “can,” or similar expressions, and the negative thereof. You should not place undue reliance on these statements, as they are subject to risks and uncertainties, including, but not limited to, those described in the documents incorporated by reference. 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. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company.

There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such differences, some of which are beyond the Company’s control, include, but are not limited to: changes in the U.S. economy, including an economic slowdown, inflation, deflation, housing prices, employment levels, rate of growth and general business conditions; changes in local, regional and global business, economic and political conditions and geopolitical events; the impacts of the ongoing COVID-19 pandemic 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 Treasury, the 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, and the SBA; the changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing trade dispute between the U.S. and the People’s Republic of China; changes in the commercial and consumer real estate markets; changes in consumer spending and savings habits; fluctuations in the Company’s stock price; changes in income tax laws and regulations; the Company’s ability to compete effectively against financial institutions in its banking markets and other entities, including as a result of emerging technologies; the soundness of other financial institutions; 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; impact of the benchmark interest rate reform in the U.S. including the transition away from USD LIBOR to alternative reference rates; impact of a communications or technology disruption, failure in, or breach of, the Company’s operational or security systems or infrastructure, or those of third parties with whom 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; 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; impact of adverse changes to the Company’s credit ratings from major credit rating agencies; impact of adverse judgments or settlements in litigation; impact on the Company’s international operations due to political developments, disease pandemics, wars or other hostilities that may disrupt or increase volatility in securities or otherwise affect economic conditions; heightened regulatory and governmental oversight and scrutiny of the Company’s business practices, including dealings with consumers; impact of reputational risk from negative publicity, fines and penalties and other negative consequences from regulatory violations and legal actions and from the Company’s interactions with business partners, counterparties, service providers and other third parties; impact of regulatory 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; impact of other potential federal tax changes and spending cuts; the Company’s capital requirements and its ability to generate capital internally or raise capital on favorable terms; impact on the Company’s liquidity due to changes in the Company’s ability to pay dividends and repurchase common stock and to receive dividends from its subsidiaries; any future strategic acquisitions or divestitures; changes in the equity and debt securities markets; fluctuations in foreign currency exchange rates; impact of climate change, social and sustainability concerns; significant turbulence or disruption in the capital or financial markets, which could result in, among other things, a reduction in the availability of funding or increases in funding costs, a reduction in investor demand for mortgage loans and declines in asset values and/or recognition of allowance for credit losses on securities held in the Company’s AFS debt securities portfolio; and impact of natural or man-made disasters or calamities, such as wildfires and earthquakes, which are particular to California, or conflicts, terrorism 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 2020 Form 10-K 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. 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.
6


EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
($ and shares in thousands, except per share data)
(unaudited)
Table 1   
June 30, 2021
% or Basis Point Change
 June 30, 2021March 31, 2021June 30, 2020Qtr-o-QtrYr-o-Yr
Assets   
 Cash and due from banks$626,716$582,270$602,9747.6 %3.9 %
Interest-bearing cash with banks5,371,0894,036,8633,930,52833.1 36.7 
Cash and cash equivalents5,997,8054,619,1334,533,50229.8 32.3 
 Interest-bearing deposits with banks830,279741,923531,59111.9 56.2 
 Assets purchased under resale agreements (“resale agreements”)2,299,1842,160,0381,260,0006.4 82.5 
 Available-for-sale (“AFS”) debt securities (amortized cost of $8,411,142, $7,904,546 and $3,823,714)8,399,4607,789,2133,884,5747.8 116.2 
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock76,93183,25078,963(7.6)(2.6)
 Loans held-for-sale (“HFS”)1,8193,875100.0 (53.1)
 Loans held-for-investment (''HFI'') (net of allowance for loan losses of $585,724, $607,506 and $632,071)39,485,77538,981,24236,597,3411.3 7.9 
 Investments in qualified affordable housing partnerships, net287,432284,862201,8880.9 42.4 
Investments in tax credit and other investments, net364,187361,438251,3180.8 44.9 
 Goodwill465,697465,697465,697— — 
Operating lease right-of-use assets102,60994,48394,8988.6 8.1 
 Other assets1,543,6981,292,8671,503,94619.4 2.6 
 Total assets$59,854,876$56,874,146$49,407,5935.2 %21.1 %
Liabilities and Stockholders’ Equity   
 Deposits$52,582,575$49,547,136$40,672,6786.1 %29.3 %
Short-term borrowings252,851— (100.0)
 FHLB advances248,464653,035656,759(62.0)(62.2)
 Assets sold under repurchase agreements (“repurchase agreements”)300,000300,000300,000— — 
 Long-term debt and finance lease liabilities151,997152,1951,580,442(1)(0.1)(90.4)
Operating lease liabilities110,105101,828102,7088.1 7.2 
 Accrued expenses and other liabilities914,187834,925854,9129.5 6.9 
 Total liabilities54,307,32851,589,11944,420,3505.3 22.3 
 Stockholders’ equity5,547,5485,285,0274,987,2435.0 11.2 
 Total liabilities and stockholders’ equity$59,854,876$56,874,146$49,407,5935.2 %21.1 %
 Book value per common share$39.10$37.26$35.254.9 %10.9 %
 
Tangible equity (2) per common share
$35.75$33.90$31.865.5 12.2 
 Number of common shares at period-end141,878141,843141,4860.0 0.3 
Tangible equity to tangible assets ratio (2)
8.54 %8.53 %9.21 %1 bp(67)bps
(1)Includes $1.43 billion of advances from the Federal Reserve Paycheck Protection Program Liquidity Facility (“PPPLF”) as of June 30, 2020.
(2)See reconciliation of GAAP to non-GAAP financial measures in Table 13.
7


EAST WEST BANCORP, INC. AND SUBSIDIARIES
TOTAL LOANS AND DEPOSITS DETAIL
($ in thousands)
(unaudited)
Table 2
June 30, 2021
% Change
  June 30, 2021March 31, 2021June 30, 2020Qtr-o-QtrYr-o-Yr
Loans:   
Commercial:
Commercial and industrial (“C&I”) (1)
$13,790,461 $14,081,110 $13,422,691 (2.1)%2.7 %
Commercial real estate (“CRE”):
 CRE11,711,369 11,563,034 10,902,114 1.3 7.4 
 Multifamily residential3,219,796 3,066,515 3,032,385 5.0 6.2 
 Construction and land460,678 459,254 567,716 0.3 (18.9)
Total CRE15,391,843 15,088,803 14,502,215 2.0 6.1 
Consumer:
Residential mortgage:
 Single-family residential8,869,370 8,524,287 7,660,094 4.0 15.8 
 Home equity lines of credit (“HELOCs”)1,872,166 1,749,172 1,461,951 7.0 28.1 
Total residential mortgage10,741,536 10,273,459 9,122,045 4.6 17.8 
Other consumer147,659 145,376 182,461 1.6 (19.1)
Total loans HFI (2)
40,071,499 

39,588,748 

37,229,412 1.2 7.6 
Loans HFS1,819 — 3,875 100.0 (53.1)
 
Total loans (2)
40,073,318 39,588,748 37,233,287 1.2 7.6 
Allowance for loan losses(585,724)(607,506)(632,071)(3.6)(7.3)
 
Net loans (2)
$39,487,594 $38,981,242 $36,601,216 1.3 7.9 
Deposits:   
 Noninterest-bearing demand$21,816,721 $18,919,298 $13,940,420 15.3 %56.5 %
 Interest-bearing checking6,762,178 7,005,693 5,280,887 (3.5)28.1 
 Money market12,853,812 12,218,957 10,002,624 5.2 28.5 
 Savings2,719,106 2,604,355 2,186,199 4.4 24.4 
 Time deposits8,430,758 8,798,833 9,262,548 (4.2)(9.0)
 Total deposits$52,582,575 $49,547,136 $40,672,678 6.1 %29.3 %
(1)Includes $1.43 billion, $2.07 billion and $1.75 billion of Paycheck Protection Program (“PPP”) loans as of June 30, 2021, March 31, 2021 and June 30, 2020, respectively.
(2)Includes net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts of $(67.0) million, $(76.9) million and $(72.1) million as of June 30, 2021, March 31, 2021 and June 30, 2020, respectively. Net origination fees related to PPP loans were $(25.9) million, $(34.3) million and $(25.4) million as of June 30, 2021, March 31, 2021 and June 30, 2020, respectively.



8


EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
($ and shares in thousands, except per share data)
(unaudited)
Table 3
Three Months EndedJune 30, 2021
% Change
June 30, 2021March 31, 2021June 30, 2020Qtr-o-QtrYr-o-Yr
Interest and dividend income (1)
$399,333 $381,386 $398,776 4.7 %0.1 %
Interest expense22,860 27,691 55,001 (17.4)(58.4)
Net interest income before provision for credit losses376,473 353,695 343,775 6.4 9.5 
(Reversal of) provision for credit losses(15,000)— 102,443 (100.0)NM
Net interest income after provision for credit losses391,473 353,695 241,332 10.7 62.2 
Noninterest income68,431 72,866 55,707 (2)(6.1)22.8 
Noninterest expense189,523 191,077 184,766 (2)(0.8)2.6 
Income before income taxes270,381 235,484 112,273 14.8 140.8 
Income tax expense45,639 30,490 12,921 49.7 253.2 
Net income$224,742 $204,994 $99,352 9.6 %126.2 %
Earnings per share (“EPS”)   
- Basic$1.58 $1.45 $0.70 9.5 %125.6 %
- Diluted$1.57 $1.44 $0.70 9.5 124.3 
Weighted-average number of shares outstanding
- Basic141,868 141,646 141,486 0.2 %0.3 %
- Diluted143,040 142,844 141,827 0.1 0.9 
  Three Months EndedJune 30, 2021
% Change
  June 30, 2021March 31, 2021June 30, 2020Qtr-o-QtrYr-o-Yr
Noninterest income:   
 Lending fees$21,092 $18,357 $21,946 14.9 %(3.9)%
Deposit account fees17,342 15,383 10,872 12.7 59.5 
Interest rate contracts and other derivative (loss) income(3,172)16,997 6,107 NMNM
 Foreign exchange income13,007 9,526 4,562 36.5 185.1 
 Wealth management fees7,951 6,911 3,091 15.0 157.2 
 Net gains on sales of loans1,491 1,781 132 (16.3)NM
 Gains on sales of AFS debt securities632 192 9,640 229.2 (93.4)
Other investment income (expense)7,596 925 (1,964)(2)721.2 NM
Other income2,492 2,794 1,321 (10.8)88.6 
Total noninterest income$68,431 $72,866 $55,707 (2)(6.1)%22.8 %
Noninterest expense:   
 Compensation and employee benefits$105,426 $107,808 $96,955 (2.2)%8.7 %
 Occupancy and equipment expense15,377 15,922 16,217 (3.4)(5.2)
 Deposit insurance premiums and regulatory assessments4,274 3,876 3,700 10.3 15.5 
Deposit account expense3,817 3,892 3,353 (1.9)13.8 
Data processing4,035 4,478 4,480 (9.9)(9.9)
Computer software expense7,521 7,159 7,301 5.1 3.0 
Consulting expense1,868 1,475 1,413 26.6 32.2 
 Legal expense1,975 1,502 1,530 31.5 29.1 
 Other operating expense17,939 19,607 19,248 (8.5)(6.8)
Amortization of tax credit and other investments27,291 25,358 21,829 (2)7.6 25.0 
Repurchase agreements’ extinguishment cost— — 8,740 — (100.0)
Total noninterest expense$189,523 $191,077 $184,766 (2)(0.8)%2.6 %
NM - Not meaningful.
(1)Includes $15.4 million, $15.0 million and $21.3 million of interest income related to PPP loans for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively.
(2)Starting fourth quarter of 2020, the Company has reclassified certain income/losses from equity method investments from Amortization of tax credit and other investments to Other investment income, with no effect on net income. June 30, 2020 comparative amounts have been revised to conform with the current presentation.
9


EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
($ and shares in thousands, except per share data)
(unaudited)
Table 4
 Six Months EndedJune 30, 2021
% Change
  June 30, 2021June 30, 2020Yr-o-Yr
Interest and dividend income (1)
$780,719 $847,966 (7.9)%
Interest expense50,551 141,484 (64.3)
Net interest income before provision for credit losses730,168 706,482 3.4
(Reversal of ) provision for credit losses(15,000)176,313 NM
Net interest income after provision for credit losses745,168 530,169 40.6
Noninterest income141,297 111,213 (2)27.1
Noninterest expense380,600 365,099 (2)4.2
Income before income taxes505,865 276,283 83.1
Income tax expense76,129 32,107 137.1
Net income$429,736 $244,176 76.0%
EPS  
- Basic$3.03 $1.71 77.7%
- Diluted$3.01 $1.70 76.7
Weighted-average number of shares outstanding
- Basic141,758 143,150 (1.0)%
- Diluted142,963 143,560 (0.4)
  Six Months EndedJune 30, 2021
% Change
  June 30, 2021June 30, 2020Yr-o-Yr
Noninterest income:  
 Lending fees$39,449 $37,719 4.6%
 Deposit account fees32,725 21,319 53.5
Interest rate contracts and other derivative income13,825 13,180 4.9
 Foreign exchange income22,533 12,381 82.0
 Wealth management fees14,862 8,444 76.0
 Net gains on sales of loans3,272 1,082 202.4
 Gains on sales of AFS debt securities824 11,169 (92.6)
Other investment income8,521 1,414 (2)502.6
Other income5,286 4,505 17.3
Total noninterest income$141,297 $111,213 (2)27.1%
Noninterest expense:  
 Compensation and employee benefits$213,234 $198,915 7.2%
 Occupancy and equipment expense31,299 33,293 (6.0)
 Deposit insurance premiums and regulatory assessments8,150 7,127 14.4
Deposit account expense7,709 6,916 11.5
Data processing8,513 8,306 2.5
Computer software expense14,680 13,467 9.0
Consulting expense3,343 2,630 27.1
 Legal expense3,477 4,727 (26.4)
 Other operating expense37,546 40,367 (7.0)
Amortization of tax credit and other investments52,649 40,611 (2)29.6
Repurchase agreements’ extinguishment cost— 8,740 (100.0)
Total noninterest expense$380,600 $365,099 (2)4.2%
NM - Not meaningful.
(1)Includes $30.4 million and $21.3 million of interest income related to PPP loans for the six months ended June 30, 2021 and 2020, respectively.
(2)Starting fourth quarter of 2020, the Company has reclassified certain income/losses from equity method investments from Amortization of tax credit and other investments to Other investment income, with no effect on net income. June 30, 2020 comparative amounts have been revised to conform with the current presentation.
10


EAST WEST BANCORP, INC. AND SUBSIDIARIES
SELECTED AVERAGE BALANCES
($ in thousands)
(unaudited)
Table 5
Three Months EndedJune 30, 2021
% Change
Six Months EndedJune 30, 2021
% Change
  June 30, 2021March 31, 2021June 30, 2020Qtr-o-QtrYr-o-YrJune 30, 2021June 30, 2020Yr-o-Yr
Loans:     
Commercial:
 
C&I (1)
$13,811,966 $13,693,869 $13,560,719 0.9%1.9%$13,753,244 $12,863,449 6.9%
CRE:
 CRE11,616,916 11,325,679 10,812,399 2.67.411,472,102 10,649,041 7.7
 Multifamily residential3,125,001 3,042,079 2,987,311 2.74.63,083,769 2,938,577 4.9
 Construction and land477,860 549,337 594,965 (13.0)(19.7)513,401 618,022 (16.9)
Total CRE15,219,777 14,917,095 14,394,675 2.05.715,069,272 14,205,640 6.1
Consumer:
Residential mortgage:
 Single-family residential8,650,706 8,315,052 7,506,546 4.015.28,483,806 7,381,956 14.9
 HELOCs1,800,213 1,666,233 1,444,933 8.024.61,733,593 1,443,692 20.1
Total residential mortgage10,450,919 9,981,285 8,951,479 4.716.810,217,399 8,825,648 15.8
Other consumer139,608 137,058 234,900 1.9(40.6)138,340 253,134 (45.3)
 
Total loans (2)
$39,622,270 $38,729,307 $37,141,773 2.3%6.7%$39,178,255 $36,147,871 8.4%
Interest-earning assets$54,901,209 $52,852,045 $45,413,242 3.9%20.9%$53,882,288 $43,887,886 22.8%
Total assets$57,771,837 $55,594,283 $48,228,914 3.9%19.8%$56,689,075 $46,492,211 21.9%
Deposits:     
Noninterest-bearing demand$19,717,315 $18,093,696 $13,534,873 9.0%45.7%$18,909,991 $12,326,291 53.4%
Interest-bearing checking6,671,358 6,393,034 4,687,178 4.442.36,532,965 4,844,425 34.9
Money market12,596,515 11,573,847 9,893,816 8.827.312,088,006 9,453,599 27.9
Savings2,676,865 2,674,476 2,149,965 0.124.52,675,677 2,113,118 26.6
Time deposits8,518,936 9,112,662 9,634,696 (6.5)(11.6)8,814,159 9,949,351 (11.4)
Total deposits$50,180,989 $47,847,715 $39,900,528 4.9%25.8%$49,020,798 $38,686,784 26.7%
Interest-bearing liabilities$31,394,114 $30,863,568 $28,362,618 1.7%10.7%$31,130,307 $27,977,979 11.3%
Stockholders’ equity$5,425,952 $5,338,098 $4,982,446 1.6%8.9%$5,382,267 $5,002,226 7.6%
(1)Includes average balances of PPP loans of $1.87 billion, $1.93 billion and $1.47 billion for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively, and $1.90 billion and $732.5 million for the six months ended June 30, 2021 and 2020, respectively.
(2)Includes loans HFS.

11


EAST WEST BANCORP, INC. AND SUBSIDIARIES
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 6
  Three Months Ended
  June 30, 2021March 31, 2021
  Average AverageAverage Average
  BalanceInterest
Yield/Rate (1)
BalanceInterest
Yield/Rate (1)
Assets      
Interest-earning assets:      
 Interest-bearing cash and deposits with banks$5,072,225 $3,628 0.29 %$6,117,799 $3,632 0.24 %
 Resale agreements2,129,567 8,021 1.51 %1,461,900 6,099 1.69 %
 AFS debt securities7,997,005 34,690 1.74 %6,459,875 29,100 1.83 %
 
Loans (2)
39,622,270 352,453 3.57 %38,729,307 342,008 3.58 %
 FHLB and FRB stock80,142 541 2.71 %83,164 547 2.67 %
 Total interest-earning assets54,901,209 399,333 2.92 %52,852,045 381,386 2.93 %
Noninterest-earning assets:      
 Cash and due from banks600,053 580,277   
 Allowance for loan losses(607,523)(618,589)  
 Other assets2,878,098 2,780,550   
 Total assets$57,771,837   $55,594,283   
Liabilities and Stockholders’ Equity     
Interest-bearing liabilities:      
 Checking deposits$6,671,358 $3,777 0.23 %$6,393,034 $4,214 0.27 %
 Money market deposits12,596,515 3,712 0.12 %11,573,847 4,711 0.17 %
 Savings deposits2,676,865 2,078 0.31 %2,674,476 1,741 0.26 %
 Time deposits8,518,936 8,431 0.40 %9,112,662 11,156 0.50 %
 Federal funds purchased and other short-term borrowings336 — — %4,703 42 3.62 %
 FHLB advances474,887 2,099 1.77 %652,758 3,069 1.91 %
 Repurchase agreements303,118 1,991 2.63 %300,000 1,978 2.67 %
 Long-term debt and finance lease liabilities152,099 772 2.04 %152,088 780 2.08 %
 Total interest-bearing liabilities31,394,114 22,860 0.29 %30,863,568 27,691 0.36 %
Noninterest-bearing liabilities and stockholders’ equity:     
 Demand deposits19,717,315 18,093,696 
 Accrued expenses and other liabilities1,234,456 1,298,921 
 Stockholders’ equity5,425,952 5,338,098 
 Total liabilities and stockholders’ equity$57,771,837 $55,594,283 
Interest rate spread 2.63 %2.57 %
Net interest income and net interest margin $376,473 2.75 %$353,695 2.71 %
Adjusted net interest income and adjusted net interest margin (3)
$361,096 2.73 %$338,678 2.70 %
(1)Annualized.
(2)Includes loans HFS.
(3)Net interest income and net interest margin for the three months ended June 30, 2021 and March 31, 2021 have been adjusted for the impact of PPP loans. See reconciliation of GAAP to non-GAAP financial measures in Table 14.
12


EAST WEST BANCORP, INC. AND SUBSIDIARIES
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 7
 Three Months Ended
June 30, 2021June 30, 2020
Average AverageAverage Average
BalanceInterest
Yield/Rate (1)
BalanceInterest
Yield/Rate (1)
Assets      
Interest-earning assets:      
 Interest-bearing cash and deposits with banks$5,072,225 $3,628 0.29 %$3,435,920 $4,564 0.53 %
 Resale agreements2,129,567 8,021 1.51 %1,037,473 5,514 2.14 %
 AFS debt securities7,997,005 34,690 1.74 %3,719,209 21,004 2.27 %
 
Loans (2)
39,622,270 352,453 3.57 %37,141,773 367,393 3.98 %
 FHLB and FRB stock80,142 541 2.71 %78,867 301 1.54 %
 Total interest-earning assets54,901,209 399,333 2.92 %45,413,242 398,776 3.53 %
Noninterest-earning assets:      
 Cash and due from banks600,053 498,908   
 Allowance for loan losses(607,523)(566,473)  
 Other assets2,878,098 2,883,237   
 Total assets$57,771,837   $48,228,914   
Liabilities and Stockholders’ Equity     
Interest-bearing liabilities:      
 Checking deposits$6,671,358 $3,777 0.23 %$4,687,178 $5,404 0.46 %
 Money market deposits12,596,515 3,712 0.12 %9,893,816 8,093 0.33 %
 Savings deposits2,676,865 2,078 0.31 %2,149,965 1,445 0.27 %
 Time deposits8,518,936 8,431 0.40 %9,634,696 31,457 1.31 %
 Federal funds purchased and other short-term borrowings336 — — %242,185 265 0.44 %
 FHLB advances474,887 2,099 1.77 %653,665 3,343 2.06 %
 Repurchase agreements303,118 1,991 2.63 %418,681 3,540 3.40 %
 Long-term debt and finance lease liabilities152,099 772 2.04 %682,432 (3)1,454 0.86 %
 Total interest-bearing liabilities31,394,114 22,860 0.29 %28,362,618 55,001 0.78 %
Noninterest-bearing liabilities and stockholders’ equity:      
 Demand deposits19,717,315 13,534,873 
 Accrued expenses and other liabilities1,234,456 1,348,977 
 Stockholders’ equity5,425,952 4,982,446 
 Total liabilities and stockholders’ equity$57,771,837 $48,228,914 
Interest rate spread 2.63 %2.75 %
Net interest income and net interest margin $376,473 2.75 %$343,775 3.04 %
Adjusted net interest income and adjusted net interest margin (4)
$361,096 2.73 %$322,949 2.96 %
(1)Annualized.
(2)Includes loans HFS.
(3)Primarily includes average balances of PPPLF, which was repaid in full during the fourth quarter of 2020.
(4)Net interest income and net interest margin for the three months ended June 30, 2021 and June 30, 2020 have been adjusted for the impact of PPP loans. Net interest margin for the three months ended June 30, 2020 has been adjusted for advances from the PPPLF. See reconciliation of GAAP to non-GAAP financial measures in Table 14.


13


EAST WEST BANCORP, INC. AND SUBSIDIARIES
YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 8
 Six Months Ended
June 30, 2021June 30, 2020
Average AverageAverage Average
BalanceInterest
Yield/Rate (1)
BalanceInterest
Yield/Rate (1)
Assets      
Interest-earning assets:      
 Interest-bearing cash and deposits with banks$5,592,124 $7,260 0.26 %$3,204,463 $15,672 0.98 %
 
Resale agreements (2)
1,797,578 14,120 1.58 %959,807 11,139 2.33 %
 AFS debt securities7,232,686 63,790 1.78 %3,496,974 41,146 2.37 %
 
Loans (3)
39,178,255 694,461 3.57 %36,147,871 779,262 4.34 %
 FHLB and FRB stock81,645 1,088 2.69 %78,771 747 1.91 %
 Total interest-earning assets53,882,288 780,719 2.92 %43,887,886 847,966 3.89 %
Noninterest-earning assets:      
 Cash and due from banks590,219 504,710   
 Allowance for loan losses(613,026)(529,385)  
 Other assets2,829,594 2,629,000   
 Total assets$56,689,075 $46,492,211   
Liabilities and Stockholders’ Equity     
Interest-bearing liabilities:      
 Checking deposits$6,532,965 $7,991 0.25 %$4,844,425 $15,650 0.65 %
 Money market deposits12,088,006 8,423 0.14 %9,453,599 30,341 0.65 %
 Savings deposits2,675,677 3,819 0.29 %2,113,118 3,262 0.31 %
 Time deposits8,814,159 19,587 0.45 %9,949,351 73,549 1.49 %
 Federal funds purchased and other short-term borrowings2,508 42 3.38 %151,081 821 1.09 %
 FHLB advances563,331 5,168 1.85 %673,511 7,509 2.24 %
 
Repurchase agreements (2)
301,567 3,969 2.65 %375,549 7,531 4.03 %
 Long-term debt and finance lease liabilities152,094 1,552 2.06 %417,345 (4)2,821 1.36 %
 Total interest-bearing liabilities31,130,307 50,551 0.33 %27,977,979 141,484 1.02 %
Noninterest-bearing liabilities and stockholders’ equity:
 Demand deposits18,909,991 12,326,291 
 Accrued expenses and other liabilities1,266,510 1,185,715 
 Stockholders’ equity5,382,267 5,002,226 
 Total liabilities and stockholders’ equity$56,689,075 $46,492,211 
Interest rate spread 2.59 %2.87 %
Net interest income and net interest margin $730,168 2.73 %$706,482 3.24 %
Adjusted net interest income and adjusted net interest margin (5)
$699,774 2.71 %$685,656 3.20 %
(1)Annualized.
(2)Average balances of resale and repurchase agreements for the six months ended June 30, 2020 have been reported net, pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. The weighted-average yields of gross resale and gross repurchase agreements for the six months ended June 30, 2020 were 2.32% and 3.76%, respectively.
(3)Includes loans HFS.
(4)Primarily includes average balances of PPPLF, which was repaid in full during the fourth quarter of 2020.
(5)Net interest income and net interest margin for the six months ended June 30, 2021 and June 30, 2020 have been adjusted for the impact of PPP loans. Net interest margin for the six months ended June 30, 2020 has been adjusted for advances from the PPPLF. See reconciliation of GAAP to non-GAAP financial measures in Table 14.


14


EAST WEST BANCORP, INC. AND SUBSIDIARIES
SELECTED RATIOS
(unaudited)
Table 9
Three Months Ended (1)
June 30, 2021
Basis Point Change
  June 30, 2021March 31, 2021June 30, 2020Qtr-o-QtrYr-o-Yr
 Return on average assets1.56 %1.50 %0.83 %bps73 bps
 Return on average equity16.61 %15.57 %8.02 %104 859 
Return on average tangible equity (2)
18.28 %17.17 %8.96 %111 932 
 Interest rate spread2.63 %2.57 %2.75 %(12)
 Net interest margin2.75 %2.71 %3.04 %(29)
Adjusted net interest margin (2)
2.73 %2.70 %2.96 %(23)
Average loan yield3.57 %3.58 %3.98 %(1)(41)
Adjusted average loan yield (2)
3.58 %3.60 %3.90 %(2)(32)
 Yield on average interest-earning assets2.92 %2.93 %3.53 %(1)(61)
Average cost of interest-bearing deposits0.24 %0.30 %0.71 %(6)(47)
 Average cost of deposits0.14 %0.18 %0.47 %(4)(33)
 Average cost of funds0.18 %0.23 %0.53 %(5)(35)
Adjusted pre-tax, pre-provision profitability ratio (2)
1.97 %1.91 %2.05 %(8)
 
Adjusted noninterest expense/average assets (2)
1.12 %1.20 %1.28 %(8)(16)
Efficiency ratio42.60 %44.79 %46.25 %(219)(365)
 
Adjusted efficiency ratio (2)
36.30 %38.68 %38.37 %(238)bps(207)bps
Six Months Ended (1)
June 30, 2021
Basis Point Change
June 30, 2021June 30, 2020Yr-o-Yr
Return on average assets1.53 %1.06 %47 bps
Return on average equity16.10 %9.82 %628 
Return on average tangible equity (2)
17.73 %10.95 %678 
Interest rate spread2.59 %2.87 %(28)
Net interest margin2.73 %3.24 %(51)
Adjusted net interest margin (2)
2.71 %3.20 %(49)
Average loan yield3.57 %4.34 %(77)
Adjusted average loan yield (2)
3.59 %4.30 %(71)
Yield on average interest-earning assets2.92 %3.89 %(97)
Average cost of interest-bearing deposits0.27 %0.94 %(67)
Average cost of deposits0.16 %0.64 %(48)
Average cost of funds0.20 %0.71 %(51)
Adjusted pre-tax, pre-provision profitability ratio (2)
1.94 %2.18 %(24)
Adjusted noninterest expense/average assets (2)
1.16 %1.36 %(20)
Efficiency ratio43.67 %44.65 %(98)
Adjusted efficiency ratio (2)
37.47 %38.38 %(91)bps
(1)Annualized except for efficiency ratio.
(2)See reconciliation of GAAP to non-GAAP financial measures in Tables 12, 13 and 14.
15


EAST WEST BANCORP, INC. AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 10
Three Months Ended June 30, 2021
CommercialConsumerTotal
C&ITotal CRETotal Residential MortgageOther ConsumerTotal
Allowance for loan losses, March 31, 2021$394,084 $192,895 $18,509 $2,018 $607,506 
 (Reversal of) provision for credit losses on loans(a)(22,586)10,747 859 2,209 (8,771)
Gross charge-offs(10,572)(4,456)— (32)(15,060)
Gross recoveries1,338 344 100 1,785 
Total net (charge-offs) recoveries(9,234)(4,112)100 (29)(13,275)
Foreign currency translation adjustment264 — — — 264 
Allowance for loan losses, June 30, 2021$362,528 $199,530 $19,468 $4,198 $585,724 


Three Months Ended March 31, 2021
CommercialConsumerTotal
C&ITotal CRETotal Residential MortgageOther ConsumerTotal
Allowance for loan losses, December 31, 2020$398,040 $201,603 $18,210 $2,130 $619,983 
Provision for (reversal of) credit losses on loans(a)3,839 (3,076)398 (113)1,048 
Gross charge-offs(8,436)(7,283)(179)(1)(15,899)
Gross recoveries760 1,651 80 2,493 
Total net (charge-offs) recoveries(7,676)(5,632)(99)(13,406)
Foreign currency translation adjustment(119)— — — (119)
Allowance for loan losses, March 31, 2021$394,084 $192,895 $18,509 $2,018 $607,506 



Three Months Ended June 30, 2020
CommercialConsumerTotal
C&ITotal CRETotal Residential MortgageOther ConsumerTotal
Allowance for loan losses, March 31, 2020$362,629 $160,367 $30,703 $3,304 $557,003 
Provision for (reversal of) credit losses on loans(a)37,862 58,749 (1,462)(849)94,300 
Gross charge-offs(20,378)(320)(221)(30)(20,949)
Gross recoveries602 853 161 93 1,709 
Total net (charge-offs) recoveries(19,776)533 (60)63 (19,240)
Foreign currency translation adjustment— — — 
Allowance for loan losses, June 30, 2020$380,723 $219,649 $29,181 $2,518 $632,071 











16


EAST WEST BANCORP, INC. AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 10 (continued)
Six Months Ended June 30, 2021
CommercialConsumerTotal
C&ITotal CRETotal Residential MortgageOther ConsumerTotal
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)(18,747)7,671 1,257 2,096 (7,723)
Gross charge-offs(19,008)(11,739)(179)(33)(30,959)
Gross recoveries2,098 1,995 180 4,278 
Total net (charge-offs) recoveries(16,910)(9,744)(28)(26,681)
Foreign currency translation adjustment145 — — — 145 
Allowance for loan losses, June 30, 2021$362,528 $199,530 $19,468 $4,198 $585,724 

Six Months Ended June 30, 2020
CommercialConsumerTotal
C&ITotal CRETotal Residential MortgageOther ConsumerTotal
Allowance for loan losses, December 31, 2019$238,376 $82,739 $33,792 $3,380 $358,287 
Impact of ASU 2016-13 adoption74,237 54,168 (5,468)2,221 125,158 
Allowance for loan losses, January 1, 2020$312,613 $136,907 $28,324 $5,601 $483,445 
Provision for (reversal of) credit losses on loans(a)98,480 72,947 650 (3,121)168,956 
Gross charge-offs(32,355)(1,274)(221)(56)(33,906)
Gross recoveries2,177 11,069 428 94 13,768 
Total net (charge-offs) recoveries(30,178)9,795 207 38 (20,138)
Foreign currency translation adjustment(192)— — — (192)
Allowance for loan losses, June 30, 2020$380,723 $219,649 $29,181 $2,518 $632,071 

Three Months EndedSix Months Ended
June 30, 2021March 31, 2021June 30, 2020June 30, 2021June 30, 2020
Unfunded Credit Facilities
Allowance for unfunded credit commitments, beginning of period (1)
$32,529 $33,577 $20,829 $33,577 $11,158 
Impact of ASU 2016-13 adoption— — — — 10,457 
(Reversal of) provision for credit losses on unfunded credit commitments(b)(6,229)(1,048)8,143 (7,277)7,357 
Allowance for unfunded credit commitments, end of period (1)
$26,300 $32,529 $28,972 $26,300 $28,972 
Provision for credit losses(a)+(b)$(15,000)$ $102,443 $(15,000)$176,313 
(1)Included in Accrued expense and other liabilities on the Consolidated Balance Sheet.



17


EAST WEST BANCORP, INC. AND SUBSIDIARIES
CRITICIZED LOANS, NONPERFORMING ASSETS AND CREDIT QUALITY RATIOS
($ in thousands)
(unaudited)
Table 11
Criticized LoansJune 30, 2021March 31, 2021June 30, 2020
Special mention loans386,807 504,226 575,870 
Classified loans645,180 712,693 683,744 
Total criticized loans$1,031,987 $1,216,919 $1,259,614 
Nonperforming Assets
June 30, 2021March 31, 2021June 30, 2020
Nonaccrual loans:
Commercial:
C&I$83,225 $125,536 $84,823 
Total CRE81,573 74,727 57,351 
Consumer:
Total residential mortgage30,489 29,173 34,138 
Other consumer2,503 2,526 2,508 
Total nonaccrual loans197,790 231,962 178,820 
Other real estate owned, net14,914 15,824 19,504 
Other nonperforming assets13,025 10,360 3,890 
Total nonperforming assets$225,729 $258,146 $202,214 
Credit Quality RatiosJune 30, 2021March 31, 2021June 30, 2020
Annualized quarterly net charge-offs to average loans HFI0.13 %0.14 %0.21 %
Special mention loans to loans HFI0.97 %1.27 %1.55 %
Classified loans to loans HFI1.61 %1.80 %1.84 %
Criticized loans to loans HFI2.58 %3.07 %3.38 %
Nonperforming assets to total assets0.38 %0.45 %0.41 %
Nonaccrual loans to loans HFI0.49 %0.59 %0.48 %
Allowance for loan losses to loans HFI1.46 %1.53 %1.70 %


18


EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ in thousands)
(unaudited)
Table 12
Adjusted efficiency ratio represents adjusted noninterest expense divided by revenue. Adjusted pre-tax, pre-provision profitability ratio represents revenue less adjusted noninterest expense, divided by average total assets. Adjusted noninterest expense excludes the amortization of tax credit and other investments, the amortization of core deposit intangibles and the extinguishment cost on repurchase agreement. 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
 June 30, 2021March 31, 2021June 30, 2020
Net interest income before provision for credit losses(a)$376,473 $353,695 $343,775 
Total noninterest income (1)
68,431 72,866 55,707 
Total revenue(b)$444,904 $426,561 $399,482 
Total noninterest expense (1)
(c)$189,523 $191,077 $184,766 
Less: Amortization of tax credit and other investments (1)
(27,291)(25,358)(21,829)
Amortization of core deposit intangibles(710)(732)(931)
Repurchase agreements’ extinguishment cost— — (8,740)
Adjusted noninterest expense(d)$161,522 $164,987 $153,266 
Efficiency ratio(c)/(b)42.60 %44.79 %46.25 %
Adjusted efficiency ratio(d)/(b)36.30 %38.68 %38.37 %
Adjusted pre-tax, pre-provision income(b)-(d) = (e)$283,382 $261,574 $246,216 
Average total assets(f)$57,771,837 $55,594,283 $48,228,914 
Adjusted pre-tax, pre-provision profitability ratio (2)
(e)/(f)1.97 %1.91 %2.05 %
Adjusted noninterest expense/average assets (2)
(d)/(f)1.12 %1.20 %1.28 %
 Six Months Ended
 June 30, 2021June 30, 2020
Net interest income before provision for credit losses(g)$730,168 $706,482 
Total noninterest income (1)
141,297 111,213 
Total revenue(h)871,465 817,695 
Total noninterest expense (1)
(i)$380,600 $365,099 
Less: Amortization of tax credit and other investments (1)
(52,649)(40,611)
Amortization of core deposit intangibles(1,442)(1,884)
Repurchase agreements’ extinguishment cost— (8,740)
Adjusted noninterest expense(j)$326,509 $313,864 
Efficiency ratio(i)/(h)43.67 %44.65 %
Adjusted efficiency ratio(j)/(h)37.47 %38.38 %
Adjusted pre-tax, pre-provision income(h)-(j) = (k)$544,956 $503,831 
Average total assets(l)$56,689,075 $46,492,211 
Adjusted pre-tax, pre-provision profitability ratio (2)
(k)/(l)1.94 %2.18 %
Adjusted noninterest expense/average assets (2)
(j)/(l)1.16 %1.36 %
(1)In the fourth quarter of 2020, the Company reclassified certain income/losses from equity-method investments from Amortization of tax credit and other investments to Other investment income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
(2)Annualized.

19


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.
 June 30, 2021March 31, 2021June 30, 2020
Stockholders’ equity(a)$5,547,548 $5,285,027 $4,987,243 
Less: Goodwill(465,697)(465,697)(465,697)
Other intangible assets (1)
(10,309)(11,151)(13,490)
Tangible equity(b)$5,071,542 $4,808,179 $4,508,056 
Total assets(c)$59,854,876 $56,874,146 $49,407,593 
Less: Goodwill(465,697)(465,697)(465,697)
Other intangible assets (1)
(10,309)(11,151)(13,490)
Tangible assets(d)$59,378,870 $56,397,298 $48,928,406 
Total stockholders’ equity to total assets ratio(a)/(c)9.27 %9.29 %10.09 %
Tangible equity to tangible assets ratio(b)/(d)8.54 %8.53 %9.21 %
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 EndedSix Months Ended
June 30, 2021March 31, 2021June 30, 2020June 30, 2021June 30, 2020
Net Income$224,742 $204,994 $99,352 $429,736 $244,176 
Add: Amortization of core deposit intangibles
710 732 931 1,442 1,884 
          Amortization of mortgage servicing assets
420 414 458 834 1,042 
Tax effect of amortization adjustments (2)
(321)(325)(394)(646)(830)
Tangible net income(e)$225,551 $205,815 $100,347 $431,366 $246,272 
Average stockholders’ equity$5,425,952 $5,338,098 $4,982,446 $5,382,267 $5,002,226 
Less: Average goodwill(465,697)(465,697)(465,697)(465,697)(465,697)
          Average other intangible assets (1)
(10,827)(11,594)(14,247)(11,209)(14,918)
Average tangible equity(f)$4,949,428 $4,860,807 $4,502,502 $4,905,361 $4,521,611 
Return on average tangible equity (3)
(e)/(f)18.28 %17.17 %8.96 %17.73 %10.95 %
(1)Includes core deposit intangibles and mortgage servicing assets.
(2)Applied statutory tax rate of 28.37% for the three and six months ended June 30, 2021, and the three months ended March 31, 2021. Applied statutory tax rate of 28.35% for the three and six months ended June 30, 2020.
(3)Annualized.

20


EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ in thousands)
(unaudited)
Table 14
In April 2020, the Company started accepting applications under the PPP administered by the Small Business Administration (“SBA”) under the Coronavirus Aid, Relief, and Economic Security Act and began to originate loans to qualified small businesses. In January 2021, the Company began processing applications under the second round of the SBA’s PPP in response to the Consolidated Appropriations Act, 2021 signed by the President on December 27, 2020. The PPP ended on May 31, 2021.
These loans are included in the Company’s C&I portfolio, have an interest rate of one percent and are 100% guaranteed by the SBA. Loan processing fees paid to the Company from the SBA are accounted for as loan origination fees, where net deferred fees are recognized on a straight line basis over the estimated life of the loan as a yield adjustment on the loans. If a loan is paid off or forgiven by the SBA prior to its projected estimated life, the remaining unamortized deferred fees will be recognized as interest income in that period. The Company drew down $1.44 billion from the PPPLF during the second quarter of 2020. The remaining balance of $1.43 billion as of September 2020 was repaid in full during the fourth quarter of 2020.
Adjusted loan yield and adjusted net interest margin for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, and six months ended June 30, 2021 and 2020 exclude the impact of PPP loans. Net interest margin for the three and six months ended June 30, 2020 has also been adjusted for advances from the PPPLF. Management believes that presenting the adjusted average loan yield and adjusted net interest margin provide comparability to prior periods and these non-GAAP financial measures provide supplemental information regarding the Company’s performance.
Three Months EndedSix Months Ended
Yield on Average LoansJune 30, 2021March 31, 2021June 30, 2020June 30, 2021June 30, 2020
Interest income on loans(a)$352,453 $342,008 $367,393 $694,461 $779,262 
Less: Interest income on PPP loans(15,377)(15,017)(21,289)(30,394)(21,289)
Adjusted interest income on loans(b)$337,076 $326,991 $346,104 $664,067 $757,973 
Average loans(c)$39,622,270 $38,729,307 $37,141,773 $39,178,255 $36,147,871 
Less: Average PPP loans(1,870,385)(1,931,071)(1,465,013)(1,900,560)(732,506)
Adjusted average loans(d)$37,751,885 $36,798,236 $35,676,760 $37,277,695 $35,415,365 
Average loan yield (1)
(a)/(c)3.57 %3.58 %3.98 %(1)3.57 %4.34 %
Adjusted average loan yield (1)
(b)/(d)3.58 %3.60 %3.90 %(1)3.59 %4.30 %
Net Interest Margin
Net interest income(e)$376,473 $353,695 $343,775 $730,168 $706,482 
Less: Interest income on PPP loans(15,377)(15,017)(21,289)(30,394)(21,289)
Add: Interest expense on advances from the PPPLF— — 463 — 463 
Adjusted net interest income(f)$361,096 $338,678 $322,949 $699,774 $685,656 
Average interest-earning assets(g)$54,901,209 $52,852,045 $45,413,242 $53,882,288 $43,887,886 
Less: Average PPP loans(1,870,385)(1,931,071)(1,465,013)(1,900,560)(732,506)
Adjusted average interest-earning assets(h)$53,030,824 $50,920,974 $43,948,229 $51,981,728 $43,155,380 
Net interest margin (1)
(e)/(g)2.75 %2.71 %3.04 %(1)2.73 %3.24 %
Adjusted net interest margin (1)
(f)/(h)2.73 %2.70 %2.96 %(1)2.71 %3.20 %
(1)Annualized.
21