ewbc-20201022
0001069157false00010691572020-10-222020-10-22


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
  
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)
October 22, 2020

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

Delaware
(State or other jurisdiction of incorporation)

000-24939
(Commission File Number)

95-4703316
(IRS Employer Identification No.)

135 N Los Robles Ave., 7th Floor, Pasadena, California 91101
(Address of principal executive offices) (Zip code)

(626) 768-6000
(Registrant’s telephone number, including area code)

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

Securities registered pursuant to Section 12(b) of the Act: 
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 Par ValueEWBCThe Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐




Item 2.02. Results of Operations and Financial Condition

On October 22, 2020, East West Bancorp, Inc. (the “Company”) announced, via press release, its financial results for the quarter ended September 30, 2020 (the “Press Release”). The Press Release is available on the Company’s website. The Press Release is “furnished” as Exhibit 99.1 to this Current Report on Form 8-K pursuant to General Instruction B.2 of Form 8-K and the information provided in Item 2.02 of this report, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities under that Section. The information provided in Item 2.02 of this report, including Exhibit 99.1, shall not be deemed incorporated by reference into any filings the Company has made or may make under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, except as otherwise expressly stated in such filing.

Item 7.01. Regulation FD Disclosure

On October 22, 2020, the Company will hold a conference call to discuss its financial results for the quarter ended September 30, 2020, including the Press Release and other matters relating to the Company. The Company has also made available on its website presentation materials containing certain historical and forward-looking information relating to the Company (the “Presentation Materials”). The Presentation Materials are furnished as Exhibit 99.2 and are incorporated by reference in this Item 7.01. All information in Exhibit 99.2 is presented as of the particular date or dates referenced therein, and the Company does not undertake any obligation to, and disclaims any duty to, update any of the information provided. The information provided in Item 7.01 of this report, including Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, nor shall the information or Exhibit 99.2 be deemed incorporated by reference in any filings the Company has made or may make under the Exchange Act or the Securities Act, except as otherwise expressly stated in such filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits
Press Release, dated October 22, 2020.
Presentation Materials, dated October 22, 2020.
104Cover Page Interactive Data (formatted as Inline XBRL). Filed herewith.


2




SIGNATURE

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


 EAST WEST BANCORP, INC.
  
Date: October 22, 2020By:/s/ Irene H. Oh 
  Irene H. Oh
  Executive Vice President and Chief Financial Officer


3




Exhibit 99.1
ewbclogoa1311.jpg
East West Bancorp, Inc.
135 N. Los Robles Ave., 7th Fl.
Pasadena, CA 91101
Tel. 626.768.6000
NEWS RELEASE
FOR INVESTOR INQUIRIES, CONTACT:
Irene Oh
Julianna Balicka
Chief Financial Officer
Director of Strategy and Corporate Development
T: (626) 768-6360
T: (626) 768-6985
E: [email protected]E: [email protected]


EAST WEST BANCORP REPORTS NET INCOME FOR THIRD QUARTER 2020
OF $159.5 MILLION AND DILUTED EARNINGS PER SHARE OF $1.12


Pasadena, California — October 22, 2020 – East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq: EWBC), parent company of East West Bank, the financial bridge between the United States and Greater China, today reported its financial results for the third quarter of 2020. For the third quarter of 2020, net income was $159.5 million or $1.12 per diluted share. Third quarter 2020 return on average assets was 1.26% and return on average equity was 12.5%.

“Total deposits grew to a record $41.7 billion as of September 30, 2020, driven by 28% annualized growth in noninterest-bearing demand deposits,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. “As of September 30, 2020, demand deposits reached a record $14.9 billion. We are pleased with the strength and quality of the deposit growth.”

“During the third quarter, East West’s positive loan growth was led by residential mortgage and commercial real estate loans. Total loans reached a record $37.4 billion as of September 30, 2020,” continued Ng. “We are cautiously optimistic. Although current economic indicators are weak, business activity is resuming and trending positive, reflecting the resilience of our customers and the communities we operate in.”

“We are encouraged that active COVID-19 related payment deferrals for our customers have declined by close to 50% since June 30, 2020, and full payment deferrals are down to 2.7% of total loans as of September 30, 2020. The macroeconomic outlook has improved and we modestly decreased our allowance for loan losses as of September 30, 2020. This resulted in a low provision for credit losses of $10 million in the third quarter of 2020. The reduction in the provision was the primary driver of the quarter-over-quarter increase in our net income, which was up by 61% to $159.5 million.”

“East West Bank is operating from a position of strength. We are prudently growing our balance sheet and capital so that we can continue to assist our customers with their personal and business banking needs as they rebuild from the impact of the pandemic. I am confident that our customers will deftly emerge from these unprecedented times and be positioned to take advantage of future opportunities, with East West Bank as a valued partner,” concluded Ng.












1

BALANCE SHEET

•Record Total Assets — Total assets of $50.4 billion as of September 30, 2020 grew by $964 million, or 8% annualized, from $49.4 billion as of June 30, 2020.

Third quarter 2020 average interest-earning assets of $47.4 billion grew $2.0 billion, or 18% linked quarter annualized. Growth was primarily from interest-bearing cash and deposits with banks, which grew $1.5 billion quarter-over-quarter. Interest-bearing cash and deposits with banks made up 10% of average interest-earning assets in the third quarter of 2020, up from 8% in the second quarter of 2020.

•Record Loans — Total loans of $37.4 billion as of September 30, 2020 grew by $208 million, or 2% annualized, from $37.2 billion as of June 30, 2020. As of September 30, 2020, Paycheck Protection Program (“PPP”) loans were $1.8 billion, unchanged from June 30, 2020.

Third quarter 2020 average loans of $37.2 billion increased by $19 million quarter-over-quarter. Growth in total commercial real estate (“CRE”) and residential mortgage was offset by decreases in commercial and industrial (“C&I”) and other consumer loans.

•Record Deposits — Total deposits of $41.7 billion as of September 30, 2020 increased by $1.0 billion, or 10% annualized, from $40.7 billion as of June 30, 2020. Noninterest-bearing demand deposits reached a record $14.9 billion, and made up 36% of total deposits as of September 30, 2020, up from 34% as of June 30, 2020.

Third quarter 2020 average deposits of $41.2 billion grew $1.3 billion, or 13% linked quarter annualized. Strong growth in demand and checking accounts, from both commercial and consumer customers, was partially offset by a reduction in higher-cost time deposits. Average interest-bearing deposits of $26.9 billion grew $0.5 billion, or 8% linked quarter annualized. Average noninterest-bearing deposits of $14.3 billion grew $0.8 billion, or 22% linked quarter annualized.

•Capital Levels – Capital levels for East West are strong. As of September 30, 2020, stockholders’ equity was $5.1 billion, or $36.22 per share. Tangible equity1 per common share was $32.85 as of September 30, 2020, an increase of 3% from $31.86 as of June 30, 2020. As of September 30, 2020, the tangible equity to tangible assets ratio1 was 9.3%, the common equity tier 1 (“CET1”) capital ratio was 12.8%, and the total risk-based capital ratio was 14.5%. All of the Company’s capital ratios increased quarter-over-quarter.
































1 See reconciliation of GAAP to non-GAAP financial measures in Table 14.
2

OPERATING RESULTS

Third Quarter Earnings – Third quarter 2020 net income was $159.5 million and diluted earnings per share (“EPS”) were $1.12, an increase in net income of 61% and in EPS of 60%, compared to second quarter 2020 net income of $99.4 million and diluted EPS of $0.70.

Third Quarter 2020 Compared to Second Quarter 2020

Net Interest Income and Net Interest Margin
Net interest income (“NII”) totaled $324.1 million, a decrease of 6% from $343.8 million. Net interest margin (“NIM”) of 2.72% compressed by 32 basis points from 3.04%.
•Adjusted2 NII totaled $317.6 million, a decrease of 2% from $322.9 million. Adjusted2 NIM of 2.77% contracted by 19 basis points from 2.96%. Adjusted NII and NIM excluded the impact of PPP loans and the related PPP Liquidity Facility (“PPPLF”).
•The quarter-over-quarter changes in the NII and the NIM reflected downward repricing of earning asset yields, a decrease in PPP loan fee income, and inflow of interest-bearing cash and deposits with banks, partially offset by a lower cost of deposits.
•The average loan yield of 3.60% contracted by 38 basis points from 3.98%, reflecting downward repricing of variable-rate loans to benchmark interest rates, as well as a lower amount of deferred fee income accreted on PPP loans. Excluding the impact of PPP loans, the adjusted2 average loan yield of 3.70% contracted by 20 basis points quarter-over-quarter.
•Interest and fees earned on PPP loans contributed $7.8 million to interest income in the third quarter of 2020, and interest expense paid on the PPPLF was $1.3 million. Third quarter 2020 average balance of PPP loans was $1.8 billion and the average balance of the PPPLF, classified as long-term debt, was $1.4 billion.
•The yield on average interest-earning assets of 3.07% contracted by 46 basis points from 3.53%. This primarily reflects the change in the average loan yield, downward repricing of the securities portfolio, and inflow of lower-yielding assets in the earning asset mix.
•The average cost of interest-bearing deposits decreased by 21 basis points to 0.50%, down from 0.71%. The average cost of deposits decreased by 14 basis points to 0.33%, down from 0.47%.

Noninterest Income
Noninterest income totaled $49.6 million, a 15% decrease from $58.6 million.
•Gains on sales of available-for-sale (“AFS”) debt securities were $0.7 million, compared to $9.6 million in the second quarter, during which the Company sold $131.6 million of municipal bonds.
•Lending fees of $18.7 million decreased by $3.2 million. Third quarter lending fees included $3.6 million from an increase in the valuation of warrants received as part of lending relationships, which decreased from $8.1 million in the second quarter. Included in lending fees are letters of credit fees of $10.1 million for the third quarter, which increased $0.9 million quarter-over-quarter with increased customer activity.
•Reflecting an increase in customer-driven transactions, deposit account fees of $12.6 million increased by $1.7 million, and wealth management fees of $4.6 million increased by $1.5 million.
•
•Foreign exchange income of $3.3 million decreased by $1.3 million, reflecting downward revaluations of foreign currency-denominated balance sheet items, partially offset by an increase in customer-driven transactions.

Noninterest Expense
Noninterest expense totaled $167.7 million, an 11% decrease from $187.7 million.
•Third quarter noninterest expense consisted of $154.4 million of adjusted3 noninterest expense, $12.3 million in amortization of tax credit and other investments, and $0.9 million in amortization of core deposit intangibles.
•Total noninterest expense decreased by $20.0 million, largely due to a $12.5 million decrease in amortization of tax credit and other investments, as well as an $8.7 million decrease in debt extinguishment costs. During the second quarter, the Company prepaid $150.0 million of repurchase agreements and incurred $8.7 million in debt extinguishment cost.





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

•Adjusted noninterest expense of $154.4 million increased by $1.2 million, or 1%, from $153.3 million. The largest linked-quarter changes were a $2.8 million increase in compensation and employee benefits expense, a $1.2 million increase in computer software expense, and a $2.1 million decrease in other operating expenses.
•Compensation expense of $99.8 million increased by $2.8 million, or 3%, from $97.0 million. During the second quarter, $7.4 million of compensation expense associated with the origination of $1.8 billion in PPP loans was deferred. Excluding this item, third quarter compensation expense decreased by $4.6 million, or 4%, quarter-over-quarter from $104.3 million in the second quarter.
•The adjusted3 efficiency ratio was 41.3% in the third quarter, compared to 38.1% in the second quarter.


TAX RELATED ITEMS

Third quarter 2020 income tax expense was $36.5 million and the effective tax rate was 19%, compared to income tax expense of $12.9 million and an effective tax rate of 12% for the second quarter of 2020. As of September 30, 2020, the Company expects that the full-year effective tax rate will be 15%.

The quarter-over-quarter change in the income tax expense and effective tax rate reflects growth in income before income taxes and the updated estimate for the full-year effective tax rate. Third quarter 2020 income before income taxes was $196.1 million, a 75% increase from $112.3 million in the second quarter of 2020. The third quarter increase in the income before income taxes reset the run-rate for the full year, increasing the Company’s estimate of the full-year effective tax rate.


ASSET QUALITY

The allowance for loan losses totaled $618.3 million, or 1.65% of loans HFI, as of September 30, 2020, compared to $632.1 million, or 1.70% of loans HFI, as of June 30, 2020.
1
•Quarter-over-quarter, the ALLL decreased by $13.8 million. This decrease was primarily driven by an improved macroeconomic forecast as of September 30, 2020 compared to June 30, 2020, which decreased the expected lifetime loan losses for the loan portfolio.
•Third quarter 2020 net charge-offs were $24.2 million, or annualized 0.26% of average loans HFI, compared to $19.2 million, or annualized 0.21% of average loans HFI in the second quarter of 2020. Charge-offs of loans in the oil and gas industry totaled $22.1 million during the third quarter of 2020, and were 91% of net charge-offs.
•Third quarter 2020 provision for credit losses was $10.0 million, compared to $102.4 million for the second quarter of 2020 and $73.9 million for the first quarter of 2020. The quarter-over-quarter decrease in the provision expense reflects the quarter-over-quarter net change in the allowance, which required less provision expense.
•Nonperforming assets were $259.9 million, or 0.52% of total assets, as of September 30, 2020, compared to nonperforming assets of $202.2 million, or 0.41% of total assets, as of June 30, 2020. The quarter-over-quarter increase in nonperforming assets was largely due to inflows to nonaccrual status of oil and gas related loans, partially offset by charge-offs. Oil and gas related loans made up 50% of nonperforming assets as of September 30, 2020.
















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

CAPITAL STRENGTH

Capital levels for East West are strong. The following table presents the regulatory capital ratios as of September 30, 2020, June 30, 2020, and September 30, 2019.
EWBC Regulatory Capital MetricsBasel III
($ in millions)
September 30,
2020 (a)
June 30,
2020 (a)
September 30,
2019		Minimum
Capital
Ratio		Well
Capitalized
Ratio
Minimum
Capital Ratio +
Conservation Buffer (b)
Risk-Based Capital Ratios:
CET 1 capital ratio12.8 %12.7 %12.8 %4.5 %6.5 %7.0 %
Tier 1 capital ratio12.8 %12.7 %12.8 %6.0 %8.0 %8.5 %
Total capital ratios14.5 %14.4 %14.2 %8.0 %10.0 %10.5 %
Leverage ratio9.8 %9.7 %10.3 %4.0 %5.0 %4.0 %
Risk-Weighted Assets (“RWA”) (c)
$36,922 $36,199 $34,424 N/A N/A N/A
N/A Not applicable.
(a)The Company has elected to use the 2020 CECL transition provision in the calculation of its September 30, 2020 and June 30, 2020 regulatory capital ratios. The Company’s September 30, 2020 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.

5

DIVIDEND PAYOUT AND CAPITAL ACTIONS

East West’s Board of Directors has declared fourth quarter 2020 dividends for the Company’s common stock. The common stock cash dividend of $0.275 per share is payable on November 16, 2020 to shareholders of record on November 2, 2020.

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 third quarter of 2020 under this authorization.


Conference Call

East West will host a conference call to discuss third quarter 2020 earnings with the public on Thursday, October 22, 2020 at 8:30 a.m. PT/11:30 a.m. ET. The public and investment community are invited to listen as management discusses third quarter 2020 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 October 22, 2020 at 11:30 a.m. Pacific Time through November 22, 2020. 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: 10147892.


About East West

East West Bancorp, Inc. is a publicly owned company with total assets of $50.4 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 125 locations in the United States and Greater China. U.S. markets include California, Georgia, Massachusetts, Nevada, New York, Texas and Washington. In Greater China, East West’s presence includes full service branches in Hong Kong, Shanghai, Shantou and Shenzhen, and representative offices in Beijing, Chongqing, Guangzhou, and Xiamen. For more information on East West, visit the Company’s website at www.eastwestbank.com.
6

Forward-Looking Statements
Certain matters set forth herein (including any exhibits hereto) constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to our current business plans and expectations regarding future operating results. Forward-looking statements may include, but are not limited to, the use of forward-looking language, such as “likely result in,” “expects,” “anticipates,” “estimates,” “forecasts,” “projects,” “intends to,” “assumes,” or may include other similar words or phrases, such as “believes,” “plans,” “trend,” “objective,” “continues,” “remains,” or similar expressions, or future or conditional verbs, such as “will,” “would,” “should,” “could,” “may,” “might,” “can,” or similar verbs, and the negative thereof. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties, some of which are beyond our control, include, but are not limited to, the impact of disease pandemics, such as the worldwide spread and any resurgence of COVID-19, on the Company, its operations and its customers, employees and the markets in which the Company operates and in which its loans are concentrated; and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may precipitate or exacerbate one or more of the below-mentioned and/or other risks, and significantly disrupt or prevent the Company from operating its business in the ordinary course for an extended period; changes in governmental policy and regulation, including measures taken in response to economic, business, political and social conditions, such as the Small Business Administration’s Payment Protection Program, the CARES Act and any similar or related rules and regulations of the Federal Reserve efforts to provide liquidity to the U.S. financial system, including changes in government interest rate policies, and to provide credit to private commercial and municipal borrowers, and other programs designed to address the effects of the COVID-19 pandemic, as well as the resulting effect of all such items on the Company’s operations, liquidity and capital position, and on the financial condition of the Company’s borrowers and other customers; changes in the U.S. economy, including an economic slowdown or recession, inflation, deflation, housing prices, employment levels, rate of growth and general business conditions; the changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing trade dispute between the United States (“U.S.”) and the People’s Republic of China; changes in the commercial and consumer real estate markets; fluctuations in the Company’s stock price; changes in income tax laws and regulations; the Company’s ability to compete effectively against other financial institutions in its banking markets; success and timing of our business strategies; our ability to retain key officers and employees; impact on our funding costs, net interest income and net interest margin from changes in key variable market interest rates, competition, regulatory requirements and our product mix; changes in our costs of operation, compliance and expansion; our ability to adopt and successfully integrate new technologies into our business in a strategic manner; impact of benchmark interest rate reform in the U.S. that resulted in the Secured Overnight Financing Rate selected as the preferred alternative reference rate to the London Interbank Offered Rate; 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; changes in consumer spending and savings habits; 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; 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 U.S. Securities and Exchange Commission, the Consumer Financial Protection Bureau, the California Department of Business Oversight — Division of Financial Institutions, and SBA; impact of the Dodd-Frank Act on the Company’s business, business practices, cost of operations and executive compensation; heightened regulatory and governmental oversight and scrutiny of our 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 receive dividends from its subsidiaries; any future strategic acquisitions or divestitures; continuing consolidation in the financial services industry; changes in the equity and debt securities markets; fluctuations in foreign currency exchange rates; a recurrence of significant turbulence or disruption in the capital or financial markets, which could result in, among other things, a reduction in the availability of funding or increases in funding costs, a reduction in investor demand for mortgage loans and declines in asset values and/or recognition of other-than-temporary impairment on securities held in our available-for-sale 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 or other events that may directly or indirectly result in a negative impact on the Company’s financial performance. In addition to the risk factors enumerated above, the economic impact of the COVID-19 pandemic could cause actual outcome to differ, possibly materially, from the Company’s forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond the Company’s control. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on the Company’s business. The extent to which the COVID-19 pandemic impacts the Company will depend on future developments that are uncertain and unpredictable, including the scope, severity and duration of the pandemic and its impact on the Company’s customers, the actions taken by governmental authorities in response to the pandemic as well as its impact on global and regional economies, and the pace of recovery when the COVID-19 pandemic subsides, among others. For a more detailed discussion of some of the factors that might cause such differences, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 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.
7

EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
($ and shares in thousands, except per share data)
(unaudited)
Table 1   
September 30, 2020
% or Basis Point Change
 September 30, 2020June 30, 2020September 30, 2019Qtr-o-QtrYr-o-Yr
Assets   
 Cash and due from banks$503,376 $602,974 $475,291 (16.5)%5.9 %
Interest-bearing cash with banks4,003,565 3,930,528 2,566,990 1.9 56.0 
Cash and cash equivalents4,506,941 4,533,502 3,042,281 (0.6)48.1 
 Interest-bearing deposits with banks699,465 531,591 160,423 31.6 336.0 
 
Securities purchased under resale agreements (“resale agreements”) (1)
1,210,000 1,260,000 860,000 (4.0)40.7 
 Available-for-sale (“AFS”) debt securities (amortized cost of $4,471,694, $3,823,714 and $3,259,784 as of September 30, 2020, June 30, 2020, and September 30, 2019, respectively)4,539,160 3,884,574 3,284,034 16.9 38.2 
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock
79,172 78,963 78,334 0.3 1.1 
 Loans held-for-sale (“HFS”)4,148 3,875 294 7.0 NM
 
Loans held-for-investment (''HFI'') (net of allowance (2) for loan losses of $618,252, $632,071 and $345,576)
36,818,877 36,597,341 33,679,400 0.6 9.3 
 
Investments in qualified affordable housing partnerships, net
192,913 201,888 190,000 (4.4)1.5 
Investments in tax credit and other investments, net
254,512 251,318 211,603 1.3 20.3 
 Goodwill465,697 465,697 465,697 — — 
Operating lease right-of-use assets96,092 94,898 103,894 1.3 (7.5)
 Other assets 1,504,500 1,503,946 1,198,699 0.0 25.5 
 Total assets $50,371,477 $49,407,593 $43,274,659 2.0 %16.4 %
Liabilities and Stockholders’ Equity   
 Deposits$41,680,555 $40,672,678 $36,659,526 2.5 %13.7 %
Short-term borrowings59,613 252,851 47,689 (76.4)25.0 
 FHLB advances657,185 656,759 745,494 0.1 (11.8)
 
Securities sold under repurchase agreements (“repurchase agreements”) (1)
348,063 300,000 50,000 16.0 596.1 
 
Long-term debt and finance lease liabilities (3)
1,579,317 1,580,442 152,390 (0.1)936.4 
Operating lease liabilities 103,673 102,708 112,142 0.9 (7.6)
 Accrued expenses and other liabilities816,965 854,912 624,754 (4.4)30.8 
 Total liabilities45,245,371 44,420,350 38,391,995 1.9 17.9 
 
Stockholders’ equity (2)
5,126,106 4,987,243 4,882,664 2.8 5.0 
 Total liabilities and stockholders’ equity $50,371,477 $49,407,593 $43,274,659 2.0 %16.4 %
 Book value per common share $36.22 $35.25 $33.54 2.8 %8.0 %
 
Tangible equity (4) per common share
$32.85 $31.86 $30.22 3.1 8.7 
 Number of common shares at period-end141,507 141,486 145,568 0.0 (2.8)
Tangible equity to tangible assets ratio (4)
9.32 %9.21 %10.28 %11 bps(96)bps
NM - Not meaningful.
(1)Resale and repurchase agreements are reported net when the transactions are eligible for netting under Accounting Standards Codification (“ASC”) 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. There was no netting of repurchase agreements against resale agreements as of September 30, 2020 and June 30, 2020. $400 million of gross repurchase agreements were eligible for netting against gross resale agreements as of September 30, 2019.
(2)On January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments using the modified retrospective approach. We recorded $125.2 million increase to allowance for loan losses and $98.0 million after-tax decrease to opening retained earnings as of January 1, 2020.
(3)Includes $1.43 billion of advances from the Federal Reserve Paycheck Protection Program Liquidity Facility (“PPPLF”) as of September 30, 2020 and June 30, 2020.
(4)See reconciliation of GAAP to non-GAAP financial measures in Table 14.
8

EAST WEST BANCORP, INC. AND SUBSIDIARIES
TOTAL LOANS AND DEPOSITS DETAIL
($ in thousands)
(unaudited)
Table 2
September 30, 2020
% Change
  September 30,
2020		June 30,
2020		September 30,
2019		Qtr-o-QtrYr-o-Yr
Loans:   
Commercial:
Commercial and industrial (“C&I”) (1)
$13,305,024 $13,422,691 $12,301,002 (0.9)%8.2 %
Commercial real estate (“CRE”):
 
CRE
11,037,987 10,902,114 9,749,583 1.2 13.2 
 
Multifamily residential
3,057,274 3,032,385 2,589,203 0.8 18.1 
 
Construction and land
578,407 567,716 719,900 1.9 (19.7)
Total CRE
14,673,668 14,502,215 13,058,686 1.2 12.4 
Consumer:
Residential mortgage:
 
Single-family residential
7,785,759 7,660,094 6,811,014 1.6 14.3 
 
Home equity lines of credit (“HELOCs”)1,514,388 1,461,951 1,540,121 3.6 (1.7)
Total residential mortgage
9,300,147 9,122,045 8,351,135 2.0 11.4 
Other consumer
158,290 182,461 314,153 (13.2)(49.6)
Total loans HFI (2)
37,437,129 

37,229,412 

34,024,976 0.6 10.0 
Loans HFS
4,148 3,875 294 7.0 NM
 
Total loans (2)
37,441,277 37,233,287 34,025,270 0.6 10.0 
Allowance for loan losses(618,252)(632,071)(345,576)(2.2)78.9 
 
Net loans (2)
$36,823,025 $36,601,216 $33,679,694 0.6 9.3 
Deposits:
   
 
Noninterest-bearing demand
$14,924,917 $13,940,420 $10,806,937 7.1 %38.1 %
 
Interest-bearing checking
5,731,573 5,280,887 4,837,391 8.5 18.5 
 
Money market
9,553,574 10,002,624 8,400,353 (4.5)13.7 
 
Savings
2,401,318 2,186,199 2,094,638 9.8 14.6 
 
Time deposits
9,069,173 9,262,548 10,520,207 (2.1)(13.8)
 
Total deposits
$41,680,555 $40,672,678 $36,659,526 2.5 %13.7 %
NM - Not meaningful.
(1)Includes $1.77 billion and $1.75 billion of Paycheck Protection Program (“PPP”) loans as of September 30, 2020 and June 30, 2020, respectively.
(2)Includes net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts of $(67.0) million, $(72.1) million, and $(39.8) million as of September 30, 2020, June 30, 2020, and September 30, 2019, respectively. Net origination fees related to PPP loans were $(22.6) million and $(25.4) million as of September 30, 2020 and June 30, 2020, respectively.



9

EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
($ and shares in thousands, except per share data)
(unaudited)
Table 3
Three Months EndedSeptember 30, 2020
% Change
September 30, 2020June 30, 2020September 30, 2019Qtr-o-QtrYr-o-Yr
Interest and dividend income (1)
$365,728 $398,776 $476,912 (8.3)%(23.3)%
Interest expense
41,598 55,001 107,105 (24.4)(61.2)
Net interest income before provision for credit losses
324,130 343,775 369,807 (5.7)(12.4)
Provision for credit losses
10,000 102,443 38,284 (90.2)(73.9)
Net interest income after provision for credit losses
314,130 241,332 331,523 30.2 (5.2)
Noninterest income
49,580 58,637 51,474 (15.4)(3.7)
Noninterest expense
167,650 187,696 176,630 (10.7)(5.1)
Income before income taxes
196,060 112,273 206,367 74.6 (5.0)
Income tax expense
36,523 12,921 34,951 182.7 4.5 
Net income
$159,537 $99,352 $171,416 60.6 %(6.9)%
Earnings per share (“EPS”)
   
- Basic
$1.13 $0.70 $1.18 60.6 %(4.3)%
- Diluted
$1.12 $0.70 $1.17 60.3 (4.3)
Weighted-average number of shares outstanding
- Basic
141,498 141,486 145,559 0.0 %(2.8)%
- Diluted
142,043 141,827 146,120 0.2 (2.8)
 
 
Three Months EndedSeptember 30, 2020
% Change
 
 
September 30, 2020June 30, 2020September 30, 2019Qtr-o-QtrYr-o-Yr
Noninterest income:
   
 
Lending fees
$18,736 $21,946 $15,035 (14.6)%24.6 %
Deposit account fees12,573 10,872 9,729 15.6 29.2 
 
Foreign exchange income
3,310 4,562 8,065 (27.4)(59.0)
 
Wealth management fees
4,553 3,091 4,841 47.3 (5.9)
Interest rate contracts and other derivative income
5,538 6,107 8,423 (9.3)(34.3)
 
Net gains on sales of loans
361 132 2,037 173.5 (82.3)
 
Gains on sales of AFS debt securities
698 9,640 58 (92.8)NM
Other investment income
316 966 663 (67.3)(52.3)
Other income
3,495 1,321 2,623 164.6 33.2 
Total noninterest income
$49,580 $58,637 $51,474 (15.4)%(3.7)%
Noninterest expense:
   
 
Compensation and employee benefits
$99,756 $96,955 $97,819 2.9% 2.0 %
 
Occupancy and equipment expense
16,648 16,217 17,912 2.7 (7.1)
 
Deposit insurance premiums and regulatory assessments
4,006 3,700 3,550 8.312.8
 
Legal expense
1,366 1,530 1,720 (10.7)(20.6)
 
Data processing
3,590 4,480 3,328 (19.9)7.9 
 
Consulting expense
1,224 1,413 2,559 (13.4)(52.2)
Deposit related expense
3,113 3,353 3,584 (7.2)(13.1)
Computer software expense
8,539 7,301 6,556 17.0 30.2 
 
Other operating expense
17,122 19,248 22,769 (11.0)(24.8)
Amortization of tax credit and other investments
12,286 24,759 16,833 (50.4)(27.0)
Repurchase agreements’ extinguishment cost— 8,740 — (100.0)— 
Total noninterest expense
$167,650 $187,696 $176,630 (10.7)%(5.1)%
NM - Not meaningful.
(1)Includes $7.8 million and $21.3 million of interest income related to PPP loans for the three months ended September 30, 2020 and June 30, 2020, respectively.
10

EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
($ and shares in thousands, except per share data)
(unaudited)
Table 4
 Nine Months EndedSeptember 30, 2020
% Change
  September 30, 2020September 30, 2019Yr-o-Yr
Interest and dividend income (1)
$1,213,694 $1,415,067 (14.2)%
Interest expense
183,082 315,473 (42.0)
Net interest income before provision for credit losses
1,030,612 1,099,594 (6.3)
Provision for credit losses186,313 80,108 132.6 
Net interest income after provision for credit losses
844,299 1,019,486 (17.2)
Noninterest income
162,266 146,364 10.9 
Noninterest expense
534,222 541,215 (1.3)
Income before income taxes
472,343 624,635 (24.4)
Income tax expense
68,630 138,815 (50.6)
Net income
$403,713 $485,820 (16.9)%
EPS
  
- Basic
$2.83 $3.34 (15.2)%
- Diluted
$2.82 $3.33 (15.2)
Weighted-average number of shares outstanding
- Basic
142,595 145,455 (2.0)%
- Diluted
143,082 146,088 (2.1)
 
 
Nine Months EndedSeptember 30, 2020
% Change
 
 
September 30, 2020September 30, 2019Yr-o-Yr
Noninterest income:
  
 
Lending fees
$56,455 $46,427 21.6 %
 
Deposit account fees
33,892 28,804 17.7 
 
Foreign exchange income
15,691 20,366 (23.0)
 
Wealth management fees
12,997 12,415 4.7 
Interest rate contracts and other derivative income
18,718 22,037 (15.1)
 
Net gains on sales of loans
1,443 2,967 (51.4)
 
Gains on sales of AFS debt securities11,867 3,066 287.1 
Other investment income
3,203 2,571 24.6 
Other income
8,000 7,711 3.7 
Total noninterest income
$162,266 $146,364 10.9 %
Noninterest expense:
  
 
Compensation and employee benefits
$298,671 $300,649 (0.7)%
 
Occupancy and equipment expense
49,941 52,592 (5.0)
 
Deposit insurance premiums and regulatory assessments
11,133 9,557 16.5 
 
Legal expense
6,093 6,300 (3.3)
 
Data processing
11,896 9,945 19.6 
 
Consulting expense
3,854 6,687 (42.4)
Deposit related expense
10,029 10,426 (3.8)
Computer software expense
22,006 18,845 16.8 
 
Other operating expense
57,489 67,737 (15.1)
Amortization of tax credit and other investments
54,370 58,477 (7.0)
Repurchase agreements’ extinguishment cost8,740 — 100.0 
Total noninterest expense
$534,222 $541,215 (1.3)%
(1)Includes $29.1 million of interest income related to PPP loans for the nine months ended September 30, 2020.
11

EAST WEST BANCORP, INC. AND SUBSIDIARIES
SELECTED AVERAGE BALANCES
($ in thousands)
(unaudited)
Table 5
Three Months EndedSeptember 30, 2020
% Change		Nine Months EndedSeptember 30, 2020
% Change
  September 30,
2020		June 30,
2020		September 30,
2019		Qtr-o-QtrYr-o-YrSeptember 30,
2020		September 30,
2019		Yr-o-Yr
Loans:
     
Commercial:
 
C&I (1)
$13,235,845 $13,560,719 $12,203,341 (2.4)%8.5 %$12,988,486 $12,018,802 8.1 %
CRE:
 
CRE
10,942,780 10,812,399 9,685,092 1.2 13.0 10,747,669 9,522,238 12.9 
 
Multifamily residential
3,107,294 2,987,311 2,561,648 4.0 21.3 2,995,227 2,523,962 18.7 
 
Construction and land
564,219 594,965 694,665 (5.2)(18.8)599,957 652,096 (8.0)
Total CRE
14,614,293 14,394,675 12,941,405 1.5 12.9 14,342,853 12,698,296 13.0 
Consumer:
Residential mortgage:
 
Single-family residential
7,695,838 7,506,546 6,636,227 2.5 16.0 7,487,347 6,388,939 17.2 
 
HELOCs
1,475,098 1,444,933 1,557,358 2.1 (5.3)1,454,237 1,605,279 (9.4)
Total residential mortgage
9,170,936 8,951,479 8,193,585 2.5 11.9 8,941,584 7,994,218 11.9 
Other consumer
139,371 234,900 322,951 (40.7)(56.8)214,936 312,397 (31.2)
 
Total loans (2)
$37,160,445 $37,141,773 $33,661,282 0.1 %10.4 %$36,487,859 $33,023,713 10.5 %
Interest-earning assets
$47,428,586 $45,413,242 $40,919,386 4.4 %15.9 %$45,076,734 $39,716,462 13.5 %
Total assets
$50,247,259 $48,228,914 $43,136,273 4.2 %16.5 %$47,753,030 $41,815,490 14.2 %
Deposits:     
Noninterest-bearing demand
$14,296,475 $13,534,873 $10,712,612 5.6 %33.5 %$12,987,813 $10,342,966 25.6 %
Interest-bearing checking
5,663,873 4,687,178 4,947,511 20.8 14.5 5,119,568 5,145,308 (0.5)
Money market
9,981,704 9,893,816 8,344,993 0.9 19.6 9,630,918 8,094,933 19.0 
Savings
2,259,788 2,149,965 2,154,592 5.1 4.9 2,162,365 2,117,773 2.1 
Time deposits
9,008,907 9,634,696 10,337,990 (6.5)(12.9)9,633,582 9,887,274 (2.6)
Total deposits
$41,210,747 $39,900,528 $36,497,698 3.3 %12.9 %$39,534,246 $35,588,254 11.1 %
Interest-bearing liabilities
$29,552,756 $28,362,618 $26,773,253 4.2 %10.4 %$28,506,736 $26,033,713 9.5 %
Stockholders’ equity
$5,079,351 $4,982,446 $4,838,281 1.9 %5.0 %$5,028,122 $4,687,746 7.3 %
(1)Includes average balance of PPP loans of $1.76 billion and $1.47 billion for the three months ended September 30, 2020 and June 30, 2020, respectively, and $1.08 billion for the nine months ended September 30, 2020.
(2)Includes loans HFS.

12

EAST WEST BANCORP, INC. AND SUBSIDIARIES
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 6
 
 
Three Months Ended
 
 
September 30, 2020June 30, 2020
 
 
Average Average Average Average
 
 
BalanceInterest
Yield/Rate (1)
BalanceInterest
Yield/Rate (1)
Assets
      
Interest-earning assets:
      
 
Interest-bearing cash and deposits with banks
$4,904,394 $5,045 0.41 %$3,435,920 $4,564 0.53 %
 
Resale agreements (2)
1,225,217 5,295 1.72 %1,037,473 5,514 2.14 %
 
AFS debt securities
4,059,456 18,493 1.81 %3,719,209 21,004 2.27 %
 
Loans (3)
37,160,445 336,542 3.60 %37,141,773 367,393 3.98 %
 
FHLB and FRB stock
79,074 353 1.78 %78,867 301 1.54 %
 
Total interest-earning assets
47,428,586 365,728 3.07 %45,413,242 398,776 3.53 %
Noninterest-earning assets:
      
 
Cash and due from banks
522,699 498,908   
 
Allowance for loan losses(632,216)(566,473)  
 
Other assets
2,928,190 2,883,237   
 
Total assets
$50,247,259   $48,228,914   
Liabilities and Stockholders’ Equity
     
Interest-bearing liabilities:
      
 
Checking deposits
$5,663,873 $4,345 0.31 %$4,687,178 $5,404 0.46 %
 
Money market deposits
9,981,704 6,837 0.27 %9,893,816 8,093 0.33 %
 
Savings deposits
2,259,788 1,481 0.26 %2,149,965 1,445 0.27 %
 
Time deposits
9,008,907 21,135 0.93 %9,634,696 31,457 1.31 %
 
Federal funds purchased and other short-term borrowings
84,858 407 1.91 %242,185 265 0.44 %
 
FHLB advances
656,906 3,146 1.91 %653,665 3,343 2.06 %
 
Repurchase agreements (2)
317,097 2,155 2.70 %418,681 3,540 3.40 %
 
Long-term debt and finance lease liabilities
1,579,623 2,092 0.53 %682,432 1,454 0.86 %
 
Total interest-bearing liabilities
29,552,756 41,598 0.56 %28,362,618 55,001 0.78 %
Noninterest-bearing liabilities and stockholders’ equity:
     
 
Demand deposits
14,296,475 13,534,873 
 
Accrued expenses and other liabilities
1,318,677 1,348,977 
 
Stockholders’ equity
5,079,351 4,982,446 
 
Total liabilities and stockholders’ equity
$50,247,259 $48,228,914 
Interest rate spread
 2.51 %2.75 %
Net interest income and net interest margin
 $324,130 2.72 %$343,775 3.04 %
Adjusted net interest income and adjusted net interest margin (4)
$317,611 2.77 %$322,949 2.96 %
(1)Annualized.
(2)There was no netting of repurchase agreements against resale agreements for the three months ended September 30, 2020 and June 30, 2020.
(3)Includes loans HFS.
(4)Net interest income and net interest margin have been adjusted for the impacts of PPP loans and advances from the PPPLF. See reconciliation of GAAP to non-GAAP financial measures in Table 15.
13

EAST WEST BANCORP, INC. AND SUBSIDIARIES
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 7
 Three Months Ended
September 30, 2020September 30, 2019
Average Average Average Average
BalanceInterest
Yield/Rate (1)
BalanceInterest
Yield/Rate (1)
Assets
      
Interest-earning assets:
      
 
Interest-bearing cash and deposits with banks
$4,904,394 $5,045 0.41 %$3,547,626 $19,710 2.20 %
 
Resale agreements (2)
1,225,217 5,295 1.72 %981,196 6,943 2.81 %
 
AFS debt securities
4,059,456 18,493 1.81 %2,651,069 15,945 2.39 %
 
Loans (3)
37,160,445 336,542 3.60 %33,661,282 433,658 5.11 %
 
FHLB and FRB stock
79,074 353 1.78 %78,213 656 3.33 %
 
Total interest-earning assets
47,428,586 365,728 3.07 %40,919,386 476,912 4.62 %
Noninterest-earning assets:
      
 
Cash and due from banks
522,699 441,898   
 
Allowance for loan losses(632,216)(328,523)  
 
Other assets
2,928,190 2,103,512   
 
Total assets
$50,247,259   $43,136,273   
Liabilities and Stockholders’ Equity
     
Interest-bearing liabilities:
      
 
Checking deposits
$5,663,873 $4,345 0.31 %$4,947,511 $14,488 1.16 %
 
Money market deposits
9,981,704 6,837 0.27 %8,344,993 26,943 1.28 %
 
Savings deposits
2,259,788 1,481 0.26 %2,154,592 2,656 0.49 %
 
Time deposits
9,008,907 21,135 0.93 %10,337,990 52,733 2.02 %
 
Federal funds purchased and other short-term borrowings
84,858 407 1.91 %40,433 382 3.75 %
 
FHLB advances
656,906 3,146 1.91 %745,263 5,021 2.67 %
 
Repurchase agreements (2)
317,097 2,155 2.70 %50,000 3,239 25.70 %
 
Long-term debt and finance lease liabilities
1,579,623 2,092 0.53 %152,471 1,643 4.28 %
 
Total interest-bearing liabilities
29,552,756 41,598 0.56 %26,773,253 107,105 1.59 %
Noninterest-bearing liabilities and stockholders’ equity:
      
 
Demand deposits
14,296,475 10,712,612 
 
Accrued expenses and other liabilities
1,318,677 812,127 
 
Stockholders’ equity
5,079,351 4,838,281 
 
Total liabilities and stockholders’ equity
$50,247,259 $43,136,273 
Interest rate spread
 2.51 %3.03 %
Net interest income and net interest margin
 $324,130 2.72 %$369,807 3.59 %
Adjusted net interest income and adjusted net interest margin (4)
$317,611 2.77 %$369,807 3.59 %
(1)Annualized.
(2)There was no netting of repurchase agreements against resale agreements for the three months ended September 30, 2020. Average balances of resale and repurchase agreements for the three months ended September 30, 2019 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 agreements were 1.72% and 2.59% for the three months ended September 30, 2020 and 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 2.70% and 4.68% for the three months ended September 30, 2020 and 2019, respectively.
(3)Includes loans HFS.
(4)Net interest income and net interest margin have been adjusted for the impacts of PPP loans and advances from the PPPLF. See reconciliation of GAAP to non-GAAP financial measures in Table 15.
14

EAST WEST BANCORP, INC. AND SUBSIDIARIES
YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 8
 Nine Months Ended
September 30, 2020September 30, 2019
Average Average Average Average
BalanceInterest
Yield/Rate (1)
BalanceInterest
Yield/Rate (1)
Assets
      
Interest-earning assets:
      
 
Interest-bearing cash and deposits with banks
$3,775,242 $20,717 0.73 %$2,996,340 $51,920 2.32 %
 
Resale agreements (2)
1,048,923 16,434 2.09 %1,005,147 22,253 2.96 %
 
AFS debt securities3,685,837 59,639 2.16 %2,614,949 47,378 2.42 %
 
Loans (3)
36,487,859 1,115,804 4.08 %33,023,713 1,291,642 5.23 %
 
FHLB and FRB stock
78,873 1,100 1.86 %76,313 1,874 3.28 %
 
Total interest-earning assets
45,076,734 1,213,694 3.60 %39,716,462 1,415,067 4.76 %
Noninterest-earning assets:
      
 
Cash and due from banks
510,750 449,739   
 
Allowance for loan losses
(563,912)(321,486)  
 
Other assets
2,729,458 1,970,775   
 
Total assets
$47,753,030 $41,815,490   
Liabilities and Stockholders’ Equity
     
Interest-bearing liabilities:
      
 
Checking deposits
$5,119,568 $19,995 0.52 %$5,145,308 $44,579 1.16 %
 
Money market deposits
9,630,918 37,178 0.52 %8,094,933 85,858 1.42 %
 
Savings deposits
2,162,365 4,743 0.29 %2,117,773 7,360 0.46 %
 
Time deposits
9,633,582 94,684 1.31 %9,887,274 148,992 2.01 %
 
Federal funds purchased and other short-term borrowings
128,846 1,228 1.27 %45,410 1,359 4.00 %
 
FHLB advances
667,935 10,655 2.13 %540,535 12,011 2.97 %
 
Repurchase agreements (2)
355,923 9,686 3.64 %50,000 10,200 27.27 %
 
Long-term debt and finance lease liabilities
807,599 4,913 0.81 %152,480 5,114 4.48 %
 
Total interest-bearing liabilities
28,506,736 183,082 0.86 %26,033,713 315,473 1.62 %
Noninterest-bearing liabilities and stockholders’ equity:
 
Demand deposits
12,987,813 10,342,966 
 
Accrued expenses and other liabilities
1,230,359 751,065 
 
Stockholders’ equity
5,028,122 4,687,746 
 
Total liabilities and stockholders’ equity
$47,753,030 $41,815,490 
Interest rate spread
 2.74 %3.14 %
Net interest income and net interest margin
 $1,030,612 3.05 %$1,099,594 3.70 %
Adjusted net interest income and adjusted net interest margin (4)
$1,003,267 3.05 %$1,099,594 3.70 %
(1)Annualized
(2)Average balances of resale and repurchase agreements 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 agreements were 2.09% and 2.71% for the nine months ended September 30, 2020 and 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 3.48% and 4.87% for the nine months ended September 30, 2020 and 2019, respectively.
(3)Includes loans HFS.
(4)Net interest income and net interest margin have been adjusted for the impact of PPP loans and advances from the PPPLF. See reconciliation of GAAP to non-GAAP financial measures in Table 15.


15

EAST WEST BANCORP, INC. AND SUBSIDIARIES
SELECTED RATIOS
(unaudited)
Table 9
Three Months Ended (1)
September 30, 2020
Basis Point Change
 
 
September 30,
2020		June 30,
2020		September 30,
2019		Qtr-o-QtrYr-o-Yr
 
Return on average assets
1.26 %0.83 %1.58 %43 bps(32)bps
 
Return on average equity
12.50 %8.02 %14.06 %448 (156)
Return on average tangible equity (2)
13.88 %8.96 %15.75 %492 (187)
 
Interest rate spread
2.51 %2.75 %3.03 %(24)(52)
 
Net interest margin
2.72 %3.04 %3.59 %(32)(87)
Adjusted net interest margin (2)
2.77 %2.96 %3.59 %(19)(82)
Average loan yield
3.60 %3.98 %5.11 %(38)(151)
Adjusted average loan yield (2)
3.70 %3.90 %5.11 %(20)(141)
 
Yield on average interest-earning assets
3.07 %3.53 %4.62 %(46)(155)
Average cost of interest-bearing deposits
0.50 %0.71 %1.49 %(21)(99)
 
Average cost of deposits
0.33 %0.47 %1.05 %(14)(72)
 
Average cost of funds
0.38 %0.53 %1.13 %(15)(75)
Adjusted pre-tax, pre-provision profitability ratio (2)
1.74 %2.08 %2.42 %(34)(68)
 
Adjusted noninterest expense/average assets (2)
1.22 %1.28 %1.46 %(6)(24)
Efficiency ratio
44.86 %46.64 %41.93 %(178)293 
 
Adjusted efficiency ratio (2)
41.33 %38.09 %37.66 %324 bps367 bps
Nine Months Ended (1)
September 30, 2020
Basis Point Change
September 30,
2020		September 30,
2019		Yr-o-Yr
Return on average assets
1.13 %1.55 %(42)bps
Adjusted return on average assets (2)
1.13 %1.67 %(54)
Return on average equity
10.73 %13.86 %(313)
Adjusted return on average equity (2)
10.73 %14.85 %(412)
Return on average tangible equity (2)
11.95 %15.58 %(363)
Adjusted return on average tangible equity (2)
11.95 %16.70 %(475)
Interest rate spread
2.74 %3.14 %(40)
Net interest margin
3.05 %3.70 %(65)
Adjusted net interest margin (2)
3.05 %3.70 %(65)
Average loan yield
4.08 %5.23 %(115)
Adjusted average loan yield (2)
4.10 %5.23 %(113)
Yield on average interest-earning assets
3.60 %4.76 %(116)
Average cost of interest-bearing deposits
0.79 %1.52 %(73)
Average cost of deposits
0.53 %1.08 %(55)
Average cost of funds
0.59 %1.16 %(57)
Adjusted pre-tax, pre-provision profitability ratio (2)
2.03 %2.45 %(42)
Adjusted noninterest expense/average assets (2)
1.31 %1.53 %(22)
Efficiency ratio
44.78 %43.44 %134 
Adjusted efficiency ratio (2)
39.26 %38.47 %79 bps
(1)Annualized except for efficiency ratio.
(2)See reconciliation of GAAP to non-GAAP financial measures in Tables 12, 13, 14 and 15. Note that there were no non-recurring adjustments during 2020.
16

EAST WEST BANCORP, INC. AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 10
ASU 2016-13 replaced the incurred loss methodology used in calculating the allowance for loan losses with a current expected credit loss model (“CECL”). The Company adopted ASU 2016-13 using the modified retrospective approach on January 1, 2020. As a result, prior comparative periods have not been adjusted for the CECL model. In addition, ASU 2016-13 introduces the concept of Purchased Credit Deteriorated (“PCD”) financial assets, which replaces purchased credit-impaired (“PCI”) assets. For PCD assets, the initial allowance for loan losses is added to the purchase price and is considered to be part of the PCD loan amortized cost basis, hence, there is no income statement impact on acquisition. This contrasts with PCI loans where allowance for loan losses only reflects losses that are incurred by the Company after the acquisition. The allowance for loan losses is evaluated each quarter and adjusted as necessary by recognizing or reversing loan loss expense. There were no PCD loans during the three and nine months ended September 30, 2020.
Three Months Ended September 30, 2020
CommercialConsumerTotal
CREResidential Mortgage
C&ICREMulti-Family ResidentialConstruction and LandSingle-Family ResidentialHELOCsOther Consumer
Allowance for loan losses, June 30, 2020$380,723 $176,040 $25,058 $18,551 $25,314 $3,867 $2,518 $632,071 
Provision for (reversal of) credit losses on loans(a)31,691 (8,301)(1,916)(8,180)(2,692)(637)(76)9,889 
Gross charge-offs(25,111)(1,414)— — — — (32)(26,557)
Gross recoveries1,218 485 665 30 — 43 (92)2,349 
Total net (charge-offs) recoveries(23,893)(929)665 30 — 43 (124)(24,208)
Foreign currency translation adjustment500 — — — — — — 500 
Allowance for loan losses, September 30, 2020$389,021 $166,810 $23,807 $10,401 $22,622 $3,273 $2,318 $618,252 


Three Months Ended June 30, 2020
CommercialConsumerTotal
CREResidential Mortgage
C&ICREMulti-Family ResidentialConstruction and LandSingle-Family ResidentialHELOCsOther Consumer
Allowance for loan losses, March 31, 2020$362,629 $132,819 $16,530 $11,018 $26,822 $3,881 $3,304 $557,003 
Provision for (reversal of) credit losses on loans(a)37,862 43,315 7,908 7,526 (1,667)205 (849)94,300 
Gross charge-offs(20,378)(320)— — — (221)(30)(20,949)
Gross recoveries602 226 620 7 159 2 93 1,709 
Total net (charge-offs) recoveries(19,776)(94)620 7 159 (219)63 (19,240)
Foreign currency translation adjustment8 — — — — — — 8
Allowance for loan losses, June 30, 2020$380,723 $176,040 $25,058 $18,551 $25,314 $3,867 $2,518 $632,071 


Three Months Ended September 30, 2019
CommercialConsumerTotal
CREResidential Mortgage
C&ICREMulti-Family ResidentialConstruction and LandSingle-Family ResidentialHELOCsOther Consumer
Allowance for loan losses, June 30, 2019$205,503 $39,811 $19,280 $22,961 $32,763 $6,177 $4,130 $330,625 
Provision for (reversal of) credit losses on loans(a)37,281 (3,213)985 6,189 (2,877)(326)(160)37,879 
Gross charge-offs(25,098)(1,021)— — (11)— (12)(26,142)
Gross recoveries1,648 1,896 42 21 60 5 7 3,679 
Total net (charge-offs) recoveries(23,450)875 42 21 49 5 (5)(22,463)
Foreign currency translation adjustment(465)— — — — — — (465)
Allowance for loan losses, September 30, 2019$218,869 $37,473 $20,307 $29,171 $29,935 $5,856 $3,965 $345,576 

17

EAST WEST BANCORP, INC. AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 10 (continued)
Nine Months Ended September 30, 2020
CommercialConsumerTotal
CREResidential Mortgage
C&ICREMulti-Family ResidentialConstruction and LandSingle-Family ResidentialHELOCsOther Consumer
Allowance for loan losses, December 31, 2019$238,376 $40,509 $22,826 $19,404 $28,527 $5,265 $3,380 $358,287 
Impact of ASU 2016-13 adoption74,237 72,169 (8,112)(9,889)(3,670)(1,798)2,221 125,158 
Allowance for loan losses, January 1, 2020$312,613 $112,678 $14,714 $9,515 $24,857 $3,467 $5,601 $483,445 
Provision for (reversal of) credit losses on loans(a)130,171 46,449 7,273 828 (2,659)(20)(3,197)178,845 
Gross charge-offs(57,466)(2,688)— — — (221)(88)(60,463)
Gross recoveries3,395 10,371 1,820 58 424 47 2 16,117 
Total net (charge-offs) recoveries(54,071)7,683 1,820 58 424 (174)(86)(44,346)
Foreign currency translation adjustment308 — — — — — — 308 
Allowance for loan losses, September 30, 2020$389,021 $166,810 $23,807 $10,401 $22,622 $3,273 $2,318 $618,252 


Nine Months Ended September 30, 2019
CommercialConsumerTotal
CREResidential Mortgage
C&ICREMulti-Family ResidentialConstruction and LandSingle-Family ResidentialHELOCsOther Consumer
Allowance for loan losses, December 31. 2018$189,117 $40,666 $19,885 $20,290 $31,340 $5,774 $4,250 $311,322 
Provision for (reversal of) credit losses on loans(a)78,685 (6,127)46 8,358 (1,528)75 (259)79,250 
Gross charge-offs(54,087)(1,021)— — (11)— (40)(55,159)
Gross recoveries5,612 3,955 376 523 134 7 14 10,621 
Total net (charge-offs) recoveries(48,475)2,934 376 523 123 7 (26)(44,538)
Foreign currency translation adjustment(458)— — — — — — (458)
Allowance for loan losses, September 30, 2019$218,869 $37,473 $20,307 $29,171 $29,935 $5,856 $3,965 $345,576 



Three Months EndedNine Months Ended
September 30,
2020		June 30,
2020		September 30,
2019		September 30,
2020		September 30,
2019
Unfunded Credit Facilities
Allowance for unfunded credit commitments, beginning of period (1)
$28,972 $20,829 $13,019 $11,158 $12,566 
Impact of ASU 2016-13 adoption— — — 10,457 — 
Provision for credit losses on unfunded credit commitments(b)111 8,143 405 7,468 858 
Allowance for unfunded credit commitments, end of period (1)
$29,083 $28,972 $13,424 $29,083 $13,424 
Provision for credit losses(a)+(b)$10,000 $102,443 $38,284 $186,313 $80,108 
(1)Included in Accrued expense and other liabilities on the Consolidated Balance Sheet.

18

EAST WEST BANCORP, INC. AND SUBSIDIARIES
CREDIT QUALITY
($ in thousands)
(unaudited)
Table 11
The Company adopted ASU 2016-13 using the modified retrospective approach on January 1, 2020. As a result, prior comparative periods have not been adjusted. PCI loans prior to the adoption of ASU 2016-13 were classified as PCD loans as of January 1, 2020. Nonaccrual loans as of September 30, 2020 and June 30, 2020 include all loans that are 90 or more days past due, unless the loan is well-collateralized or guaranteed by government agencies, and in the process of collection. Nonaccrual loans presented as of September 30, 2019 include only non-PCI nonaccrual loans.

Nonperforming Assets
September 30, 2020June 30, 2020September 30, 2019
Total
Nonaccrual loans		Total
Nonaccrual loans		Non-PCI
Nonaccrual Loans
Commercial:
C&I$145,986 $84,823 $90,830 
CRE:
CRE55,996 56,577 18,942 
Multifamily residential3,728 774 551 
Total CRE59,724 57,351 19,493 
Consumer:
Residential mortgage:
Single-family residential15,894 20,070 9,484 
HELOCs12,395 14,068 9,924 
Total residential mortgage28,289 34,138 19,408 
Other consumer2,495 2,508 2,495 
Total nonaccrual loans236,494 178,820 132,226 
Other real estate owned, net19,504 19,504 1,122 
Other nonperforming assets3,890 3,890 1,167 
Total nonperforming assets$259,888 $202,214 $134,515 
Credit Quality RatiosSeptember 30, 2020June 30, 2020September 30, 2019
Nonperforming assets to total assets 0.52 %0.41 %0.31 %
Nonaccrual loans to loans HFI 0.63 %0.48 %0.39 %
Allowance for loan losses to loans HFI 1.65 %1.70 %1.02 %
Allowance for loan losses to nonaccrual loans 261.42 %353.47 %261.35 %
Annualized quarterly net charge-offs to average loans HFI
0.26 %0.21 %0.26 %

19

EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ and shares in thousands, except for per share data)
(unaudited)
Table 12
The Company recorded a $7.0 million pre-tax impairment charge and reversed $30.1 million of certain previously claimed tax credits related to DC Solar during the first and second quarters of 2019, respectively. There were no non-recurring adjustments during 2020. Management believes that presenting the computations of the adjusted net income, adjusted diluted earnings per common share, adjusted return on average assets and adjusted return on average equity that adjust for the above discussed non-recurring items provide clarity to financial statement users regarding the ongoing performance of the Company and allows comparability to prior periods.
 Three Months Ended
September 30, 2020June 30, 2020September 30, 2019
Net income
(a)$159,537 $99,352 $171,416 
Diluted weighted-average number of shares outstanding142,043 141,827 146,120 
Diluted EPS
$1.12 $0.70 $1.17 
Average total assets
(b)$50,247,259 $48,228,914 $43,136,273 
Average stockholders’ equity
(c)$5,079,351 $4,982,446 $4,838,281 
Return on average assets (1)
(a)/(b)1.26 %0.83 %1.58 %
Return on average equity (1)
(a)/(c)12.50 %8.02 %14.06 %
Nine Months Ended
September 30, 2020September 30, 2019
Net income
(d)$403,713 $485,820 
Add: Impairment charge related to DC Solar (2)
— 6,978 
Tax effect of adjustments (3)
— (2,063)
Add: Reversal of certain previously claimed tax credits related to DC Solar— 30,104 
Adjusted net income
(e)$403,713 $520,839 
Diluted weighted-average number of shares outstanding143,082 146,088 
Diluted EPS
$2.82 $3.33 
Diluted EPS impact of impairment charge related to DC Solar, net of tax
— 0.03 
Diluted EPS impact of reversal of certain previously claimed tax credits related to DC Solar
— 0.21 
Adjusted diluted EPS
$2.82 $3.57 
Average total assets
(f)$47,753,030 $41,815,490 
Average stockholders’ equity
(g)$5,028,122 $4,687,746 
Return on average assets (1)
(d)/(f)1.13 %1.55 %
Adjusted return on average assets (1)
(e)/(f)1.13 %1.67 %
Return on average equity (1)
(d)/(g)10.73 %13.86 %
Adjusted return on average equity (1)
(e)/(g)10.73 %14.85 %
(1)Annualized.
(2)Included in Amortization of tax credit and other investments on the Consolidated Statement of Income.
(3)Applied statutory rate of 29.56% for the nine months ended September 30, 2019.

20

EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ in thousands)
(unaudited)
Table 13
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 agreements. 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
 September 30, 2020June 30, 2020September 30, 2019
Net interest income before provision for credit losses(a)$324,130 $343,775 $369,807 
Total noninterest income 49,580 58,637 51,474 
Total revenue(b)$373,710 $402,412 $421,281 
Total noninterest expense (c)$167,650 $187,696 $176,630 
Less: Amortization of tax credit and other investments (12,286)(24,759)(16,833)
Amortization of core deposit intangibles(927)(931)(1,148)
Repurchase agreements’ extinguishment cost— (8,740)— 
Adjusted noninterest expense(d)$154,437 $153,266 $158,649 
Efficiency ratio(c)/(b)44.86 %46.64 %41.93 %
Adjusted efficiency ratio(d)/(b)41.33 %38.09 %37.66 %
Adjusted pre-tax, pre-provision income (b)-(d) = (e)$219,273 $249,146 $262,632 
Average total assets(f)$50,247,259 $48,228,914 $43,136,273 
Adjusted pre-tax, pre-provision profitability ratio (1)
(e)/(f)1.74 %2.08 %2.42 %
Adjusted noninterest expense/average assets (1)
(d)/(f)1.22 %1.28 %1.46 %
 Nine Months Ended
 September 30, 2020September 30, 2019
Net interest income before provision for credit losses(g)$1,030,612 $1,099,594 
Total noninterest income162,266 146,364 
Total revenue(h)1,192,878 1,245,958 
Total noninterest expense(i)$534,222 $541,215 
Less: Amortization of tax credit and other investments (54,370)(58,477)
Amortization of core deposit intangibles(2,811)(3,474)
Repurchase agreements’ extinguishment cost(8,740)— 
Adjusted noninterest expense(j)$468,301 $479,264 
Efficiency ratio(i)/(h)44.78 %43.44 %
Adjusted efficiency ratio(j)/(h)39.26 %38.47 %
Adjusted pre-tax, pre-provision income (h)-(j) = (k)$724,577 $766,694 
Average total assets (l)$47,753,030 $41,815,490 
Adjusted pre-tax, pre-provision profitability ratio (1)
(k)/(l)2.03 %2.45 %
Adjusted noninterest expense/average assets (1)
(j)/(l)1.31 %1.53 %
(1)Annualized

21

EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ in thousands)
(unaudited)
Table 14   
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.
 September 30,
2020		June 30,
2020		September 30,
2019
Stockholders’ equity (a)$5,126,106 $4,987,243 $4,882,664 
Less: Goodwill(465,697)(465,697)(465,697)
Other intangible assets (1)
(12,369)(13,490)(17,435)
Tangible equity (b)$4,648,040 $4,508,056 $4,399,532 
Total assets(c)$50,371,477 $49,407,593 $43,274,659 
Less: Goodwill(465,697)(465,697)(465,697)
Other intangible assets (1)
(12,369)(13,490)(17,435)
Tangible assets (d)$49,893,411 $48,928,406 $42,791,527 
Total stockholders’ equity to total assets ratio(a)/(c)10.18 %10.09 %11.28 %
Tangible equity to tangible assets ratio (b)/(d)9.32 %9.21 %10.28 %
Adjusted return on average tangible equity represents adjusted tangible net income divided by average tangible equity. Adjusted tangible net income excludes the after-tax impacts of the amortization of core deposit intangibles and mortgage servicing assets, impairment charge and the reversal of certain previously claimed tax credits related to DC Solar (where applicable). 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 EndedNine Months Ended
September 30,
2020		June 30,
2020		September 30,
2019		September 30,
2020		September 30,
2019
Net Income$159,537 $99,352 $171,416 $403,713 $485,820 
Add: Amortization of core deposit intangibles
927 931 1,148 2,811 3,474 
          Amortization of mortgage servicing assets
450 458 834 1,492 2,171 
Tax effect of adjustments (2)
(390)(394)(586)(1,220)(1,669)
Tangible net income(e)$160,524 $100,347 $172,812 $406,796 $489,796 
Add: Impairment charge related to DC Solar (3)
— — — — 6,978 
Tax effect of adjustment (2)
— — — — (2,063)
Add: Reversal of certain previously claimed tax credits related to DC Solar— — — — 30,104 
Adjusted tangible net income(f)$160,524 $100,347 $172,812 $406,796 $524,815 
Average stockholders’ equity $5,079,351 $4,982,446 $4,838,281 $5,028,122 $4,687,746 
Less: Average goodwill(465,697)(465,697)(465,697)(465,697)(465,652)
          Average other intangible assets (1)
(13,083)(14,247)(18,391)(14,302)(20,198)
Average tangible equity (g)$4,600,571 $4,502,502 $4,354,193 $4,548,123 $4,201,896 
Return on average tangible equity (4)
(e)/(g)13.88 %8.96 %15.75 %11.95 %15.58 %
Adjusted return on average tangible equity (4)
(f)/(g)13.88 %8.96 %15.75 %11.95 %16.70 %
(1)Includes core deposit intangibles and mortgage servicing assets.
(2)Applied statutory rate of 28.35% for the three and nine months ended September 30, 2020, and the three months ended June 30, 2020. Applied statutory rate of 29.56% for the three and nine months ended September 30, 2019.
(3)Included in Amortization of tax credit and other investments on the Consolidated Statement of Income.
(4)Annualized.

22

EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ in thousands)
(unaudited)
Table 15
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. 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. As of September 30, 2020, the majority of the Company’s PPP loans have a contractual term of two years. The SBA pays the Company fees for processing PPP loans in the following amounts: (i) five percent for loans of not more than $350,000; (ii) three percent for loans of more than $350,000 and less than $2,000,000; and (iii) one percent for loans of at least $2,000,000. 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. As of September 30, 2020, the Company has drawn down $1.43 billion from the PPPLF and pledged the same amount in PPP loans as collateral.
Adjusted loan yield for the three months ended September 30, 2020 and June 30, 2020, and nine months ended September 30, 2020 excludes the impact of PPP loans. Adjusted net interest margin for the three months ended September 30, 2020 and June 30, 2020, and nine months ended September 30, 2020 excludes the impact of PPP loans and advances from the PPPLF. Management believes that presenting the adjusted average loan yield and adjusted net interest margin provides comparability to prior periods and these non-GAAP financial measures provide supplemental information regarding the Company’s performance.
Three Months EndedNine Months Ended
Yield on Average LoansSeptember 30,
2020		June 30,
2020		September 30,
2019		September 30,
2020		September 30,
2019
Interest income on loans(a)$336,542 $367,393 $433,658 $1,115,804 $1,291,642 
Less: Interest income on PPP loans
(7,778)(21,289)— (29,067)— 
Adjusted interest income on loans (b)$328,764 $346,104 $433,658 $1,086,737 $1,291,642 
Average loans(c)$37,160,445 $37,141,773 $33,661,282 $36,487,859 $33,023,713 
Less: Average PPP loans(1,764,411)(1,465,013)— (1,078,985)— 
Adjusted average loans(d)$35,396,034 $35,676,760 $33,661,282 $35,408,874 $33,023,713 
Average loan yield (1)
(a)/(c)3.60 %3.98 %5.11 %4.08 %5.23 %
Adjusted average loan yield (1)
(b)/(d)3.70 %3.90 %5.11 %4.10 %5.23 %
Net Interest Margin
Net interest income(e)$324,130 $343,775 $369,807 $1,030,612 $1,099,594 
Less: Interest income on PPP loans
(7,778)(21,289)— (29,067)— 
Add: Interest expense on advances from the PPPLF1,259 463 — 1,722 — 
Adjusted net interest income(f)$317,611 $322,949 $369,807 $1,003,267 $1,099,594 
Average interest-earning assets(g)$47,428,586 $45,413,242 $40,919,386 $45,076,734 $39,716,462 
Less: Average PPP loans(1,764,411)(1,465,013)— (1,078,985)— 
Adjusted average interest-earning assets
(h)$45,664,175 $43,948,229 $40,919,386 $43,997,749 $39,716,462 
Net interest margin (1)
(e)/(g)2.72 %3.04 %3.59 %3.05 %3.70 %
Adjusted net interest margin (1)
(f)/(h)2.77 %2.96 %3.59 %3.05 %3.70 %
(1)Annualized.
23
EWBC Earnings Results   Third Quarter 2020   October 22, 2020    
 
Forward-Looking Statements   2   Forward-Looking Statements   Certain matters set forth herein (including any exhibits hereto) constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-   looking statements relating to our current business plans and expectations regarding future operating results. Forward-looking statements may include, but are not limited to, the use of forward-looking   language, such as “likely result in,” “expects,” “anticipates,” “estimates,” “forecasts,” “projects,” “intends to,” “assumes,” or may include other similar words or phrases, such as “believes,” “plans,”   “trend,” “objective,” “continues,” “remains,” or similar expressions, or future or conditional verbs, such as “will,” “would,” “should,” “could,” “may,” “might,” “can,” or similar verbs, and the negative thereof.   These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and   uncertainties, some of which are beyond our control, include, but are not limited to, the impact of disease pandemics, such as the worldwide spread and any resurgence of COVID-19, on the Company,   its operations and its customers, employees and the markets in which the Company operates and in which its loans are concentrated; and the measures that international, federal, state and local   governments, agencies, law enforcement and/or health authorities implement to address it, which may precipitate or exacerbate one or more of the below-mentioned and/or other risks, and significantly   disrupt or prevent the Company from operating its business in the ordinary course for an extended period; changes in governmental policy and regulation, including measures taken in response to   economic, business, political and social conditions, such as the Small Business Administration’s Payment Protection Program, the CARES Act and any similar or related rules and regulations of the   Federal Reserve efforts to provide liquidity to the U.S. financial system, including changes in government interest rate policies, and to provide credit to private commercial and municipal borrowers, and   other programs designed to address the effects of the COVID-19 pandemic, as well as the resulting effect of all such items on the Company’s operations, liquidity and capital position, and on the   financial condition of the Company’s borrowers and other customers; changes in the U.S. economy, including an economic slowdown or recession, inflation, deflation, housing prices, employment   levels, rate of growth and general business conditions; the changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing trade dispute between the United States   (“U.S.”) and the People’s Republic of China; changes in the commercial and consumer real estate markets; fluctuations in the Company’s stock price; changes in income tax laws and regulations; the   Company’s ability to compete effectively against other financial institutions in its banking markets; success and timing of our business strategies; our ability to retain key officers and employees; impact   on our funding costs, net interest income and net interest margin from changes in key variable market interest rates, competition, regulatory requirements and our product mix; changes in our costs of   operation, compliance and expansion; our ability to adopt and successfully integrate new technologies into our business in a strategic manner; impact of benchmark interest rate reform in the U.S. that   resulted in the Secured Overnight Financing Rate selected as the preferred alternative reference rate to the London Interbank Offered Rate; 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; changes in consumer spending and savings habits; 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; 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 U.S. Securities and Exchange Commission, the   Consumer Financial Protection Bureau, the California Department of Business Oversight — Division of Financial Institutions, and SBA; impact of the Dodd-Frank Act on the Company’s business,   business practices, cost of operations and executive compensation; heightened regulatory and governmental oversight and scrutiny of our 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 receive dividends from its   subsidiaries; any future strategic acquisitions or divestitures; continuing consolidation in the financial services industry; changes in the equity and debt securities markets; fluctuations in foreign currency   exchange rates; a recurrence of significant turbulence or disruption in the capital or financial markets, which could result in, among other things, a reduction in the availability of funding or increases in   funding costs, a reduction in investor demand for mortgage loans and declines in asset values and/or recognition of other-than-temporary impairment on securities held in our available-for-sale 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 or other events that may directly or   indirectly result in a negative impact on the Company’s financial performance. In addition to the risk factors enumerated above, the economic impact of the COVID-19 pandemic could cause actual   outcome to differ, possibly materially, from the Company’s forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond the   Company’s control. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on the Company’s business. The extent to which the   COVID-19 pandemic impacts the Company will depend on future developments that are uncertain and unpredictable, including the scope, severity and duration of the pandemic and its impact on the   Company’s customers, the actions taken by governmental authorities in response to the pandemic as well as its impact on global and regional economies, and the pace of recovery when the COVID-19   pandemic subsides, among others. For a more detailed discussion of some of the factors that might cause such differences, see the Company’s Annual Report on Form 10-K for the year ended   December 31, 2019 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.    
 
$263   $249   $219   2.42%   2.08%   1.74%   2.30%   0.25% 0.25%   $-   $50   $100   $150   $200   $250   3Q19 2Q20 3Q20   Adj.* PTPP income Adj.* PTPP profitability ratio   Avg. Fed Funds rate   1.58%   0.83%   1.26%   3Q19 2Q20 3Q20   14.1%   8.0%   12.5%   3Q19 2Q20 3Q20   15.7%   9.0%   13.9%   3Q19 2Q20 3Q20   Summary of Third Quarter 2020 Results   3   * See reconciliation of GAAP to non-GAAP financial measures in the   appendix and in the Company’s Earnings Press Releases.   Return on Average Assets   3Q20 Net Income   $160 million   3Q20 Diluted EPS   $1.12   Record Loans   $37.4 billion   Record Deposits   $41.7 billion   Record Demand Deposits   $14.9 billion   3Q20 Total Revenue   $374 million   3Q20 Adj.* Efficiency Ratio   41.3%   Adjusted* Pre-Tax, Pre-Provision   Income & Profitability Ratio   Return on Average Tangible Equity*Return on Average Equity   Adj.* PTPP income Adj.* PTPP profitability ratio   Avg. Fed Funds rate    
 
$ in millions, except per share data 09.30.20 06.30.20 $ Change   Cash equivalents & ST investments $ 5,206 $ 5,065 $ 141   AFS debt securities & repo assets 5,749 5,145 604   Gross loans (ex. PPP) $ 35,669 $ 35,487 $ 182   PPP loans 1,772 1,747 25   Total loans, net of discounts $ 37,441 $ 37,233 $ 208   Allowance for loan losses (ALLL) (618) (632) 14   Net Loans $ 36,823 $ 36,601 $ 222   Other assets 2,593 2,597 (4)   Total Assets $ 50,371 $ 49,408 $ 963   Customer deposits $ 41,681 $ 40,673 $ 1,008   Short-term borrowings 60 253 (193)   FHLB advances & repo funding 1,005 957 48   PPP Liquidity Facility (PPPLF) 1,427 1,428 (1)   Other LT debt & finance lease liab. 152 152 -   Other liabilities 920 957 (37)   Total Liabilities $ 45,245 $ 44,420 $ 825   Total Stockholders' Equity $ 5,126 $ 4,987 $ 139   Book value per share $ 36.22 $ 35.25 $ 0.97   Tangible equity per share* $ 32.85 $ 31.86 $ 0.99   Gross loans / deposits 89.8% 91.5% (171) bp   ALLL / gross loans 1.65% 1.70% (5) bp   Tang. equity to tang. assets ratio* 9.32% 9.21% $ 11 bp   $11.5   31%$14.7   39%   $9.4   25%   $1.8   5%   $14.9   36%   $9.6   23%   $8.1   19%   $9.1   22%   4   09.30.20: Strong, Well-Diversified Balance Sheet   Record Loans as of 09.30.20: $37.4 billion   ($ in billions)   C&I (ex. PPP) Resi. mortgage & other consumerTotal CREPPP   IB Checking & SavingsMMDADDA Time   Record Deposits of 09.30.20: $41.7 billion   ($ in billions)   * See reconciliation of GAAP to non-GAAP financial measures in the appendix and in the Company’s Earnings Press   Releases.    
 
09.30.20: Strong Capital Ratios    Growing Equity: Book value per share of $36.22 as of 09.30.20: +3% Q-o-Q and +8% Y-o-Y.    Tangible equity* per share of $32.85 as of 09.30.20: +3% Q-o-Q and +9% Y-o-Y.    Tangible equity* to tangible assets ratio of 9.3% as of 09.30.20, increased from 9.2% as of 06.30.20.    Increasing risk-based capital ratios: CET1 capital, Tier 1 capital & total capital ratios all increased Q-o-Q as of 09.30.20.    Capital return to shareholders:    Dividend: Quarterly common stock dividend of 27.5 cents per share, or $1.10 per share annualized.    No buybacks during 3Q20.   5   Note: regulatory capital ratios as of 09.30.20 are preliminary.   * See reconciliation of GAAP to non-GAAP financial measures in the appendix of this presentation and in the Company’s Earnings Press Releases.   Higher of the Regulatory requirement for the Minimum Capital Ratio + 2.5% Conservation Buffer,   or the Well Capitalized Ratio   EWBC as of 09.30.20EWBC as of 06.30.20   7.0%   8.5%   10.5%   5.0%   12.7% 12.7%   14.4%   9.7%   12.8% 12.8%   14.5%   9.8%   CET1   capital ratio   Tier 1   capital ratio   Total   capital ratio   Leverage   ratio    
 
Grocers & Food Producers1%   1%   2%   3%   3%   3%   2%   2%   11%   1%   General Manufacturing & Wholesale   Private Equity   Oil & Gas   Entertainment   Real Estate Related   Technology & Life Science   Consumer Goods   Clean Energy   Healthcare   All Other C&I   Total Residential   Mortgage &   Other Consumer   25%   Total CRE   39%   PPP   5%   $11.5 billion   C&I   31% 2%   $37.4   billion   Total Loans   6   Total Loans: C&I Loans by Industry as % of Total Loans Outstanding   09.30.20: Diversified Commercial Loan Portfolio    C&I loans (ex. PPP): $11.5bn loans O/S plus $4.8bn undisbursed   commitments = $16.3bn total commitments as of 09.30.20.    Growth in C&I total commitments: $16.3bn as of 09.30.20,   up by 1% Q-o-Q (+5% ann.) from $16.1bn as of 06.30.20.    C&I loan line utilization: 71% as of 09.30.20, vs. 72%   as of 06.30.20, 75% as of 03.31.20, 71% as of 12.31.19.    C&I loans O/S (ex. PPP): M-o-M growth turned positive in Sep.,   reversing trend of negative monthly growth since March.    Q-o-Q, C&I loans O/S (ex. PPP) decreased $143mm, or   -1% (-5% ann.) from 06.30.20. Rate of change an   improvement relative to 2Q20 decrease of 7% (-29% ann.).    PPP loans: $1.8bn as of 09.30.20, up by $26mm Q-o-Q.     
 
SoCal   55%   NorCal   23%   NY   6%   TX   6%   WA   3% Other   7%   09.30.20: Diversified Commercial Real Estate Portfolio   7   Total Loans: Total CRE Loans by Property Type as % of   Total Loans Outstanding    Total CRE loans: $14.7bn as of 09.30.20, Q-o-Q increase of   $171mm, up 1% Q-o-Q (+5% ann.).    Construction & land loans (in All Other CRE): $578mm, or 1.5%   of total loans. Total construction & land exposure of $906mm:   loans O/S plus $328mm in undisbursed commitments.    Geographic distribution reflects EWBC’s branch footprint.    Owner-occupied CRE of $2.2bn as of 09.30.20, equivalent   to 6% of total loans.   $14.7   billion   Total CRE   loans   Total CRE: Distribution by   Geography   Total Residential   Mortgage &   Other Consumer   25%   C&I   31%   $14.7 billion   Total CRE   39%   Retail, 9%   Office, 7%   Industrial, 6%   Hotel, 5%   All Other CRE, 4%   MFR, 8%PPP   5% $37.4   billion   Total Loans    
 
<=50%   40%   >50% to 55%   16%   >55% to 60%   16%   >60% to 65%   16%   >65% to 70%   7%   >70%   5%   Total CRE: Distribution by LTV   $2.4 million   Avg. size   51%   Weigh. avg. LTV   8   09.30.20: Low LTV Commercial Real Estate Portfolio   ($ in mm)   Average   Loan Size   Weight. Avg.   LTV   Retail $ 2.2 mm 50%   Multifamily 1.2 mm 51%   Office 3.9 mm 53%   Industrial 2.4 mm 50%   Hotel 8.4 mm 53%   Construction &   Land   10.0 mm* 53%   Other 2.1 mm 49%   Total CRE $ 2.4 mm 51%   CRE LTV & Size by Property Type   * Construction & Land avg. size based on total commitment.    High percentage of CRE loans have full recourse & personal guarantees   from individuals or guarantors with substantial net worth.    Many of our customers have long-term relationships with East West Bank.    
 
SoCal   42%   NorCal   14%   NY   27%   WA   8%   TX   2%   Other   7%   <=50%   32%   >50% to 55%   13%   >55% to 60%   45%   >60%   10%   09.30.20: Low LTV Single Family Mortgage Portfolio   9   SFR: Distribution by Geography SFR: Distribution by LTV   $7.8 billion   Single-family   mortgage   $386,000   Avg. outstanding   SFR size   53%   Avg. LTV    Single-family residential (SFR) loans of $7.8bn as of 09.30.20,   Q-o-Q increase of $126mm, up 2% Q-o-Q (+7% ann.).    Primarily originated through East West Bank branches.    Residential mortgage origination volume: strong origination   volume continued in 3Q20, consistent with pace from 1H2020.    3Q20 origination volume of $768mm ($519mm SFR & $250mm   HELOC), up by 19% Y-o-Y from $644mm in 3Q19.     
 
<=50%   55%   >50% to 55%   7%   >55% to 60%   35%   >60%: 3%   SoCal   47%   NorCal   24%   NY   12%   WA   11%   Other   6%   09.30.20: Low LTV Home Equity Line of Credit Portfolio   10   HELOC: Distribution by Geography HELOC: Distribution by LTV*   $1.5 billion   HELOC   Loans   outstanding   $367,000   Avg. HELOC   commitment   48%   Avg. LTV*    HELOC: $1.5bn loans O/S plus $1.6bn in undisbursed   commitments = $3.1bn total commitments as of 09.30.20.    3Q20 growth: loans O/S increased $52mm, up 4% Q-o-Q   (+14% ann.). Total commitment up 3% Q-o-Q (+11% ann.).    Utilization rate of 48% as of 09.30.20, unchanged Q-o-Q.    As of 09.30.20, 86% of HELOC commitments were in first lien   position. HELOCs primarily originated through East West   Bank branches.   * Combined LTV   for 1st and 2nd   liens. Based on   commitment.   :    
 
3Q20: COVID-19 Loan Deferral Statistics   11   Total Loans   Total CRE Loans   C&I Loans (ex. PPP)   Loans on Deferral:   Full vs. Partial Payment   Full payment deferral Partial payment deferral   1.9%2.7%   6.1% 1.5%   1.5%   1.9%   3.4%   4.2%   8.0%   10.20.2009.30.2006.30.20   0.3%0.3%   1.0%   0.2%   0.3%0.3%   1.2%   10.20.2009.30.2006.30.20   * Note: Deferrals as of 10.20.20: status: Active or Pending as of   10.20.20; balances: recorded investment as of 09.30.20.   Deferrals 06.30.20 Deferrals 09.30.20 9.30 vs. 6.30 Deferrals 10.20.20 10.20 vs. 09.30   $ in mm, except   ratios   $ Deferral   Balance   % of Loan   Portfolio   $ Deferral   Balance   % of Loan   Portfolio $ %   $ Deferral   Balance   % of Loan   Portfolio $ %   CRE - Hotel $ 731 37.6% $ 661 33.6% $ (70) -10% $ 543 27.6% $ (118) -18%   CRE - Retail 441 12.8% 252 7.4% (189) -43% 186 5.4% (66) -26%   CRE - All Other 374 4.1% 255 2.7% (119) -32% 236 2.5% (19) -7%   Total CRE $ 1,546 10.7% $ 1,168 8.0% $ (378) -24% $ 966 6.6% $ (203) -17%   Resi. Mortgage 1,303 14.3% 382 4.1% (921) -71% 272 3.0% (110) -29%   C&I (ex. PPP) 135 1.2% 33 0.3% (103) -76% 33 0.3% 1 2%   Total Loans $ 2,979 8.0% $ 1,582 4.2% $ (1,396) -47% $ 1,271 3.4% $ (312) -20%   2.8%   4.1%   6.0%   3.8%   3.9%   4.7%   6.6%   8.0%   10.7%   10.20.2009.30.2006.30.20    As of 10.20.20, $1.3bn loans on COVID-19 related deferral*, or 3.4% of   total loans, down QTD from 4.2% as of 09.30.20, and down from 8.0% as   of 06.30.20.    Only 1.9% of total loans are on full payment deferral as of 10.20.20.    55% of commercial loans on deferral are making partial payments   (generally, modifying principal & interest to interest-only payments).    4Q QTD & 3Q Q-o-Q decrease in deferrals: As of 10.20.20, loans on   deferral decreased 20% from 09.30.20, after decreasing 47% from   06.30.20.    Residential mortgage loans on deferral decreased 79% since 06.30.20;   reflects resiliency of East West’s customer base. Residential mortgage   loans on deferral: 3.0% as of 10.20.20.    Continued very low rate of C&I loans on deferral.    Tenor: most deferrals granted in 3-month increments.    
 
ALLL by Loan Type:   $358   $483   $557   $632 $618   1.70% 1.65%   1.03%   1.39%   1.55%   1.78% 1.73%   0.50%   1.00%   1.50%   2.00%   2.50%   $-   $500   12.31.19 01.01.20   (CECL)   03.31.20 06.30.20 09.30.20   Allowance for loan losses ALLL/Loans HFI ALLL/Loans HFI (ex. PPP)    Allowance coverage of loans HFI: 1.65% as of 09.30.20, or   1.73% excluding PPP loans. Q-o-Q, the ALLL decreased $14mm.    Macroeconomic forecast as of 09.30.20 improved relative to   forecast as of 06.30.20; was the primarily driver for the Q-o-Q   reduction in the ALLL.    Updated forecast as of 09.30.20 projects less severe economic   conditions: unemployment rate, GDP growth.    The forecast-driven ALLL reduction was partially offset by   increased reserves for oil & gas loans, which increased from   9% to 10%.    3Q20 provision for credit losses: $10mm, compared to $102mm   in 2Q20 or $74mm in 1Q20.    3Q20 charge-offs: primarily from oil & gas: $22mm or 91% of net   charge-offs in 3Q20.   3Q20: Allowance for Loan Losses & Credit Costs   12   Composition of ALLL by Portfolio:   Allowance for Loan Losses Coverage Ratio   $   in   m   ill   io   n   s   Provision for Credit Losses & Net Charge-offs   $   in   m   ill   io   n   s   Total: $632   $   in   m   ill   io   n   s   ;   ra   tio   i   s   a   llo   w   a   n   c   e     c   o   v   e   ra   g   e   b   y   p   o   rt   fo   lio   Total:1.70%Total: $618 Total:1.65%   38   19   74   102   10   22   8   1   19   24   0.26%   0.10%   0.01%   0.21%   0.26%   3Q19 4Q19 1Q 2Q20 3Q20   Provision for credit los es Net Charge-offs NCO ratio (ann.)   C&I: oil & gas Total CREAll other C&I (ex. PPP) Resi. mortgage & consumer   114 118 9.0% 10.0%   267 271 2.6% 2.6%   220 201 1.5% 1.4%   31 28 0.34% 0.30%   0   06.30.20 09.30.20 06.30.20 09.30.20    
 
$276   36%   $212   28%   $241   32%   $29   4%   09.30.20: Asset Quality Metrics by Portfolio   13   Special Mention Loans   Mix by Portfolio   Classified Loans   Mix by Portfolio   Nonaccrual Loans/Total Loans: 0.6%   $   in   m   ill   io   n   s   Nonperforming Assets   Mix by Portfolio   (subset of Classified)    Criticized loans: 3.9% of total loans as of   09.30.20, or $1,481mm, +18% Q-o-Q.    Special Mention: 1.9% of total loans,   or $723mm, +26% Q-o-Q, largely due   to inflows from CRE.    Classified: 2.0% of total loans, or   $758mm, +11% Q-o-Q, largely due to   inflows from oil & gas, followed by   inflows from other C&I.    Nonperforming Assets: 0.52% of total   assets as of 09.30.20, or $260mm, +29%   Q-o-Q, primarily from net inflow of O&G   loans to nonaccrual status.    Accruing loans 30-89 days past due:   0.23% of total loans as of 09.30.20, or   $85mm, Q-o-Q decrease of 25%.    Oil & Gas Loan Portfolio as of 09.30.20:    Reducing oil & gas exposure through   exits, charge-offs and workouts.    O&G Loans O/S: $1.2bn, down 8% Q-   o-Q, total commitments: $1.5bn, down   8% Q-o-Q.    YTD, O&G loans O/S down 12% and   total commitments down 17%.    Portfolio: 60% E&P; 33% midstream &   downstream; 7% oilfield services &   other.    Oil & Gas E&P production mix by   volume: 29% oil, 53% gas & 18% NGL   for 2021. Production hedged: 52% oil   and 59% gas hedged for 2021.   Classified Loans/Total Loans: 2.0%Special Mention / Total Loans: 1.9%   C&I: oil & gas CRE OREO & other NPAAll other C&I (ex. PPP) Resi. mortgage & consumer   $   in   m   ill   io   n   s   $   in   m   ill   io   n   s   $130   50%   $16   6%   $60   23%   $30   12%   $23   9%   $123   17%   $289   40%   $305   42%   $6   1%   Total:   $758mm   Total:   $723mm   Total:   $260mm   Special Mention Loans   Ratio by Portfolio   Classified Loans   Ratio by Portfolio   Nonaccrual Loans   Ratio by Portfolio   (subset of Classified)   23.5%   2.0% 1.6%   0.3%   09.30.20   10.5%   2.8% 2.1%   0.1%   09.30.20   11.1%   0.2% 0.4% 0.3%   09.30.20    
 
3Q20: Summary Income Statement   14   * See slide 19 for noninterest income detail by category.   ** See reconciliation of GAAP to non-GAAP financial measures in the appendix of this presentation and in the Company’s Earnings Press Releases.   Notable Items    2Q20 included gains on sales of AFS   debt securities of $10mm, driven by   $132mm in sales of municipal bonds in   2Q20.    2Q20 included debt extinguishment costs   of $9mm. Prepaid $150mm of   repurchase agreements in 2Q20.    Amortization of tax credit & other   investments: $12mm in 3Q20 vs. $25mm   in 2Q20.    Q-o-Q change reflects timing of tax   credit investment.    3Q20 effective tax rate: 19%, up from   12% in 2Q20 and 12% in 1Q20.    As of 09.30.20, expect full-year   effective tax rate will be 15%.    The Q-o-Q change in the 2Q effective   tax rate reflects the updated full-year   effective tax rate estimate.   3Q20 vs. 2Q20   $ in millions, except per share data 3Q20 2Q20 $ Change % Change   Net Interest Income $ 324.1 $ 343.8 $ (19.6) -6%   Fee income & net gains on sales of   loans*   48.0 52.2 (4.2) -8%   Gains on sales of AFS debt securities 0.7 9.6 (8.9) -93%   Other 0.9 (3.2) 4.1 NM   Total Noninterest Income* $ 49.6 $ 58.6 $ (9.1) -15%   Adjusted** noninterest expense $ 154.4 $ 153.3 $ 1.2 1%   Debt extinguishment costs - 8.7 (8.7) NM   Amortization of tax credit & other   investments + core deposit intangibles   13.2 25.7 (12.5) -49%   Total Noninterest Expense $ 167.6 $ 187.7 $ (20.1) -11%   Provision for credit losses on loans $ 9.9 $ 94.3 (84.4) -90%   Provision for credit losses on unfunded   commitments   0.1 8.1 (8.0) NM   Provision for credit losses $ 10.0 $ 102.4 $ (92.4) -90%   Income tax expense 36.6 12.9 23.7 183%   Effective tax rate 19% 12% 7%   Net Income $ 159.5 $ 99.4 $ 60.1 61%   Diluted EPS $ 1.12 $ 0.70 $ 0.42 60%   Weigh. avg. diluted shar s (in mm) 142.0 141.8 0.2 0%    
 
12.2 12.2 12.2 12.1 11.5   12.9 13.4 14.0 14.4 14.6   8.6 8.8 9.0   9.1 9.3   1.5 1.8 $33.7   $34.5 $35.2   $37.1 $37.2    $-   $5.0   $10.0   $15.0   $20.0   $25.0   $30.0   $35.0   $40.0   $45.0   0   5   10   15   20   25   30   35   40   45   3Q19 4Q19 1Q20 2Q20 3Q20   9% 11% 10% 11% 11%   9% 8% 7% 8% 10%   L/D: 92% L/D: 92%   L/D: 94% L/D: 93%   L/D: 90%   3Q19 4Q19 1Q20 2Q20 3Q20   Loans / AEA Securities & other / AEA   IB Cash & equivalent / AEA Avg. Loan / Deposit Ratio   3Q20: Average Balance Sheet: Growth & Mix   15    3Q20 avg. loans grew $19mm Q-o-Q. Growth in CRE and resi.   mortgage offset by decrease in C&I and other consumer.    3Q20 avg. deposit growth of 3% Q-o-Q (+13% LQA). Strong   growth in demand & checking accounts, partially offset by   reduction in higher-cost CDs.    Avg. Non-IB DDA: 35% of total deposits in 3Q20, up from 34%   in 2Q20, and up from 29% in 3Q19.    Deposit growth in excess of loan growth: redeployed into lower   yielding assets, largely IB cash & deposits with banks.    Avg. loan-to-deposit ratio: 90% in 3Q20, down from 93% in   2Q20. Ex. PPP loans, avg. L/D ratio of 86% in 3Q.    IB cash & deposits with banks made up 10% of average earning   assets (“AEA”) in 3Q20, vs. 8% in 2Q20.   $   in   b   ill   io   n   s   Average Loans & Growth   0.2%   +9%   +23%   +9%   LQA avg. loan growth   C&I (ex. PPP) Total CRE Residential mortgage & other consumerPPP   Average Deposits & Growth   $   in   b   ill   io   n   s   LQA average deposit growth   +1%   +26% +13%   +10%   Avg. Earning Asset (AEA) Mix & Loan-to-Deposit Ratio   10.7 11.0 11.1 13.5   14.3   8.3 8.6 9.0   9.9 10.0   7.2 7.6 7.1   6.9 7.9   10.3 10.2 10.3   9.6 9.0   $36.6 $37.4 $37.5   $39.9 $41.2    $-   $5.0   $10.0   $15.0   $20.0   $25.0   $30.0   $35.0   $40.0   0   5   10   15   20   25   30   3   4   3Q19 4Q19 1Q20 2Q20 3Q20   DDA MMDA IB Checking & Savings Time    
 
3Q20: Net Interest Income & Net Interest Margin   16    3Q20 NII: $324mm, -6% Q-o-Q from $344mm in 2Q20.    3Q20 adj.* NII: $318mm, -2% Q-o-Q from $323mm in 2Q20.    3Q20 NIM: 2.72%, down 32 bps Q/Q. Adj.* NIM: 2.77%, down 19 bps Q/Q.    Adjusted NII & NIM exclude impact of PPP loans & PPPLF.    PPP loan interest & deferred fee income, net of interest expense on   PPPLF: $6.5mm in 3Q20 (vs. $21mm in 2Q20).    Slower than expected forgiveness of loans reduced PPP fee income   accretion in 3Q20. Expecting 4Q20 PPP income (including interest) of   $15mm.    3Q20 avg. PPP loans: $1.8bn; avg. PPPLF: $1.4bn.    4Q20 Outlook: NII: up 3%-5%; GAAP NIM: 2.75% - 2.85% (with PPP).    Repricing of maturing CDs to lower rates.    Repayment of PPPLF ahead of PPP loan forgiveness.    Future stability in loan yields as variable-rate loans have largely been   repriced down.   Impact to NIM from Q-o-Q Change in Yields, Rates, PPP & AEA Mix   Adj.* Net Interest Income & Adj.* Net Interest Margin   $   in   m   ill   io   n   s   * Adj. NII & adj. NIM: ex. PPP in 3Q20 & 2Q20; ex SOP-03 in 3Q19 and 4Q19.   2Q20   NIM   3Q20   NIM   Lower   loan   yields   Lower   other asset   yields   More lower   yielding assets   in AEA mix   Lower   cost of   deposits   Adj.*   NIM ex   PPP:   2.96%   Lower   cost of   borrowings   Reduced   PPP fee   income   -14 bps   -6 bps   -12 bps   -13 bps   +12 bps +1 bp   2Q20   NIM:   3.04%   3Q20   NIM:   2.72%   Adj.*   NIM ex   PPP:   2.77%   * See reconciliation of GAAP to non-GAAP financial   measures in the appendix and in the Company’s Earnings   Press Releases.   $367 $362 $363   $323 $318   3.56% 3.41% 3.44%   2.96%   2.77%   3.59% 3.47% 3.44%   3.04%   2.72%   2.30%   1.83%   1.42%   0.25%   0.25%   2.17%   1.79%   1.41% 0.36%   0.16%   3Q19 4Q19 1Q20 2Q20 3Q20   Adj.* NII Adj.* NIM NIM   Avg. Fed Funds rate Avg. 1M LIBOR rate    
 
453 468   476   576   377   356   463 435   343 343   447 430   C&I (ex. PPP) Total CRE SFR HELOC   1Q20 2Q20 3Q20   13%   17%   30%   29%   6% 5%   3Q20: Average Loan Yields   17   Adj.* Avg. Loan Yield vs. Prime & LIBOR   Adj.* avg. loan yield   Avg. 1M LIBOR Rate   Avg. Prime Rate   Loan Portfolio by Index Rate (09.30.20)   Average Loan Yield (in bps) by Portfolio in 2020    3Q20 avg. loan yield: 3.60% (vs. 3.98% in 2Q20). Ex. PPP, adj.* avg.   loan yield: 3.70% in 3Q20 (vs. 3.90% in 2Q20).    Variable-rate portfolio repriced: nearly 90% of variable rate loans   linked to benchmark interest rates with duration of 3M or less, primarily   Prime or 1-month LIBOR.    Relatively stable SFR yield: lower rate sensitivity for EWBC’s core   low-doc SFR product. Between 3Q20 and 1Q20, the rate on this   portfolio declined by only 29 bps.    Loan Yields: growing fixed-rate loans to organically reduce asset   sensitivity. Year-over-year, fixed rate loans (ex. PPP) increased 30%.   * See reconciliation of GAAP to non-GAAP financial   measures in the appendix and in the Company’s Earnings   Press Releases.   Total fixed   and hybrid   in fixed   period 30%   (ex PPP).   GAAP Yield:   3.98%   GAAP   Yield:   3.60%   Variable:   LIBOR rates   Hybrid in fixed   rate period   Fixed rate   Variable:   Prime rate   Variable:   all other rates   PPP   C&I: 70%   LIBOR or   Prime w/   weigh. avg.   reset:   1.3 mo.   CRE: 74%   LIBOR or   Prime w/   weigh. avg.   reset:   1.2 mo.   SFR: 55%   Hybrid in   fixed-rate   period.   28% Fixed   rate.   HELOC:   100%   Prime w/   weigh. avg.   reset:   1 mo.   4.71%   3.90%   3.70% 4.42%   3.25% 3.25%   1.41%   0.36%   0.16%   1Q20 2Q20 3Q20    
 
105   94   82   47   33   149   134   117   71   50   2.30%   1.83%   1.42%   0.25%   0.25%   3Q19 4Q19 1Q20 2Q20 3Q20   Avg. cost of deposits Avg. cost of IB deposits Avg. Fed Funds Rate   3Q20: Average Cost of Deposits   18   Avg. Cost of Deposits (in bps) Relative to Fed Funds Rate  Spot rate of total deposits: 0.29% as of 09.30.20 (vs.   0.33% avg. in 3Q20).    Spot rate of IB deposits: 0.46% as of 09.30.20 (vs.   0.50% avg. in 3Q20).    For historical context 3Q15 vs. 3Q20: in 3Q15 – last   full quarter under zero interest rate policy – avg. cost of   deposits was 28 bps and avg. cost of IB deposits was   40 bps. Largest difference comes from the avg. cost of   CDs. Currently, CD book still in process of maturing and   repricing to lower rates.    Continued decrease in deposit costs: repricing of   maturing CDs to lower rates.    Domestic CD spot rate as of 09.30.20: 0.81% (down   from 1.08% as of 06.30.20).    Originations & renewals of CDs in 3Q20: $5.1bn @   blended rate of 0.43%. High rate of retention on   maturing domestic branch CDs.    Retention rate of domestic branch CDs: 92% in   3Q20 (up from 86% in 2Q20).    Future maturities of CDs with interest rate >1.00%:    4Q20: $1.4bn @ blended rate of 1.45%.    1Q21: $1.3bn @ blended rate of 1.26%.   Avg. Cost of Deposits (in bps):   3Q15 (last full quarter in a ZIRP) vs. 3Q20   28   40   30 29   20   62   33   50   31   27 26   93   Cost of   deposits   IB Cost of   deposits   IB Checking MMDA Savings Time   3Q15 3Q20    
 
15.0   17.2 15.8   21.9   18.7 39%   9.7   9.8   10.4   10.9   12.6 26%   8.1   6.0 7.8   4.6   3.3 7%   4.8 4.2   5.4   3.1   4.6 9%   11.1   14.1   14.1 11.6   8.5 18%   1%   $50.9   $52.5   $54.4   $52.2   $48.0   0.0   10.0   20.0   30.0   40.0   50.0   60.0   3Q19 4Q19 1Q20 2Q20 3Q20 3Q20 Mix   Lending fees Deposit account fees Foreign exchange income   Wealth management fees IRC revenue Net gains on sales of loans   Total noninterest income: $50mm in 3Q20 vs. $59mm in 2Q20.    Fee income and net gains on sales of loans:   $48mm in 3Q20, down $4mm or -8% Q-o-Q.    Lending fees: $19mm in 3Q20, down $3mm Q-o-Q.    3Q lending fees included $4mm from increase in the   valuation of warrants received as part of lending   relationships, vs. $8mm included in 2Q.    Customer-driven letters of credit fees ($10mm in 3Q)   increased by $1mm Q-o-Q.    Increase in customer-driven transactions: deposit account   fees: up $2mm Q-o-Q; wealth mgmt. fees: up $1.5mm Q-o-Q.    FX fees: $3mm in 3Q20, down $1mm Q-o-Q due to   downward revaluations of FX-denominated balance sheet   items, partially offset by increase in customer-driven   transactions.   3Q20: Noninterest Income Detail   19   Interest Rate Contracts and Other Derivative Income Detail   ($ in millions) 3Q19 4Q19 1Q20 2Q20 3Q20   Revenue $ 11.1 $ 14.1 $ 14.1 $ 11.6 $ 8.5   CVA (2.7) 3.7 (7.0) (5.5) (3.0)   Total $ 8.4 $ 17.8 $ 7.1 $ 6.1 $ 5.5   * Fee income excludes: credit valuation adjustment (“CVA”) related to   interest rate contracts (“IRC”) and other derivatives; net gains on   sales of securities; gains on sale of fixed assets, and other income.    Revenue – interest rate contracts and other derivatives transaction fees.    CVA – related to interest rate contracts and other derivatives.   Fee Income & Net Gains on Sales of Loans *   $   in   m   ill   io   n   s    
 
97.8 101.1 102.0 97.0 99.8 65%   17.9 17.1   17.1   16.2 16.6 11%   9.9 11.2 10.0 11.8 12.1 8%   7.1   9.4 9.5   9.1 8.4 5%   23.4   23.3   20.8   17.8 16.2 11%   $158.6   $165.3   $160.6   $153.3 $154.4   0.0   20.0   40.0   60.0   80.0   100.0   120.0   140.0   160.0   180.0   3Q19 4Q19 1Q20 2Q20 3Q20 3Q20 Mix   Comp and employee benefits Occupancy & Equipment   Computer software & Data processing Deposit & loan related   Consulting Other operating expense   $159 $165 $161 $153 $154   37.7% 38.3% 38.5% 38.1% 41.3%   0.0%   70.0%   $-   $170   3Q19 4Q19 1Q20 2Q20 3Q20   Adj.* noninterest expense Adj.* efficiency ratio   3Q20: Operating Expense & Efficiency   20   Adjusted* Noninterest Expense   $   in   m   ill   io   n   s   *See reconciliation of GAAP to non-GAAP financial measures in the appendix of this presentation and   in the Company’s Earnings Press Releases.   Adj.* Noninterest Expense & Adj.* Efficiency Ratio    3Q20 total noninterest expense: $168mm, decrease of   11% Q-o-Q.    3Q20 adj.* noninterest expense: $154mm, increase of   1% Q-o-Q and decrease of 3% Y-o-Y.    Excluding the impact of PPP loan origination costs   deferred in 2Q20, 3Q20 compensation expense of   $100mm decreased 4% Q-o-Q from $104mm in 2Q20.   In 2Q20, $7mm of comp. expense associated with   PPP loan origination was deferred.    Q-o-Q increase in computer software expense reflects   amortization of previously capitalized investment   spend.   $   in   m   ill   io   n   s    
 
APPENDIX    
 
Appendix: GAAP to Non-GAAP Reconciliation   22   EAST WEST BANCORP, INC. AND SUBSIDIARIES   GAAP TO NON-GAAP RECONCILIATION   ($ in thousands)   (unaudited)   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 agreements. 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.   (1) Annualized.   Three Months Ended   September 30, 2020 June 30, 2020 September 30, 2019   Net interest income before provision for credit losses (a) $ 324,130 $ 343,775 $ 369,807   Total noninterest income 49,580 58,637 51,474   Total revenue (b) $ 373,710 $ 402,412 $ 421,281   Total noninterest expense (c) $ 167,650 $ 187,696 $ 176,630   Less: Amortization of tax credit and other investments (12,286) (24,759) (16,833)   Amortization of core deposit intangibles (927) (931) (1,148)   Repurchase agreements’ extinguishment cost — (8,740) —   Adjusted noninterest expense (d) $ 154,437 $ 153,266 $ 158,649   Efficiency ratio (c)/(b) 44.86 % 46.64 % 41.93 %   Adjusted efficiency ratio (d)/(b) 41.33 % 38.09 % 37.66 %   Adjusted pre-tax, pre-provision income (b)-(d) = (e) $ 219,273 $ 249,146 $ 262,632   Average total assets (f) $ 50,247,259 $ 48,228,914 $ 43,136,273   Adjusted pre-tax, pre-provision profitability ratio (1) (e)/(f) 1.74 % 2.08 % 2.42 %   Adjusted noninterest expense/average assets (1) (d)/(f) 1.22 % 1.28 % 1.46 %    
 
Appendix: GAAP to Non-GAAP Reconciliation   23   EAST WEST BANCORP, INC. AND SUBSIDIARIES   GAAP TO NON-GAAP RECONCILIATION   ($ in thousands)   (unaudited)   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.   (1) Includes core deposit intangibles and mortgage servicing assets.   September 30,   2020   June 30,   2020   September 30,   2019   Stockholders’ equity (a) $ 5,126,106 $ 4,987,243 $ 4,882,664   Less: Goodwill (465,697) (465,697) (465,697)   Other intangible assets (1) (12,369) (13,490) (17,435)   Tangible equity (b) $ 4,648,040 $ 4,508,056 $ 4,399,532   Total assets (c) $ 50,371,477 $ 49,407,593 $ 43,274,659   Less: Goodwill (465,697) (465,697) (465,697)   Other intangible assets (1) (12,369) (13,490) (17,435)   Tangible assets (d) $ 49,893,411 $ 48,928,406 $ 42,791,527   Total stockholders’ equity to total assets ratio (a)/(c) 10.18 % 10.09 % 11.28 %   Tangible equity to tangible assets ratio (b)/(d) 9.32 % 9.21 % 10.28 %    
 
24   Appendix: GAAP to Non-GAAP Reconciliation (cont’d)   EAST WEST BANCORP, INC. AND SUBSIDIARIES   GAAP TO NON-GAAP RECONCILIATION   ($ in thousands)   (unaudited)   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. 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. As of September 30, 2020, the majority of the Company’s PPP loans have a contractual term of two   years. The SBA pays the Company fees for processing PPP loans in the following amounts: (i) five percent for loans of not more than $350,000; (ii) three percent for loans of more than $350,000 and less than $2,000,000; and (iii) one percent for   loans of at least $2,000,000. 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. As of September 30, 2020, the Company has drawn down   $1.43 billion from the PPPLF and pledged the same amount in PPP loans as collateral.   Adjusted loan yield for the three months ended September 30, 2020 and June 30, 2020, and nine months ended September 30, 2020 excludes the impact of PPP loans. Adjusted net interest margin for the three months ended September 30, 2020 and   June 30, 2020, and nine months ended September 30, 2020 excludes the impact of PPP loans and advances from the PPPLF. Management believes that presenting the adjusted average loan yield and adjusted net interest margin provides   comparability to prior periods and these non-GAAP financial measures provide supplemental information regarding the Company’s performance.         Three Months Ended Nine Months Ended   Yield on Average Loans   September 30,   2020   June 30,   2020   September 30,   2019   September 30,   2020   September 30,   2019   Interest income on loans (a) $ 336,542 $ 367,393 $ 433,658 $ 1,115,804 $ 1,291,642   Less: Interest income on PPP loans (7,778) (21,289) — (29,067) —   Adjusted interest income on loans (b) $ 328,764 $ 346,104 $ 433,658 $ 1,086,737 $ 1,291,642    Average loans (c) $ 37,160,445 $ 37,141,773 $ 33,661,282 $ 36,487,859 $ 33,023,713   Less: Average PPP loans (1,764,411) (1,465,013) — (1,078,985) —   Adjusted average loans (d) $ 35,396,034 $ 35,676,760 $ 33,661,282 $ 35,408,874 $ 33,023,713    Average loan yield (1) (a)/(c) 3.60 % 3.98 % 5.11 % 4.08 % 5.23 %   Adjusted average loan yield (1) (b)/(d) 3.70 % 3.90 % 5.11 % 4.10 % 5.23 %    Net Interest Margin   Net interest income (e) $ 324,130 $ 343,775 $ 369,807 $ 1,030,612 $ 1,099,594   Less: Interest income on PPP loans (7,778) (21,289) — (29,067) —   Add: Interest expense on advances from the   PPPLF 1,259 463 — 1,722 —   Adjusted net interest income (f) $ 317,611 $ 322,949 $ 369,807 $ 1,003,267 $ 1,099,594    Average interest- arni g assets (g) $ 47,428,586 $ 45,413,242 $ 40,919,386 $ 45,076,734 $ 39,716,462   Less: Averag PPP loa (1,764,411) (1,465,013) — (1,078,985) —   Adjusted average interest-earning assets (h) $ 45,664,175 $ 43,948,229 $ 40,919,386 $ 43,997,749 $ 39,716,462    Net interest margin (1) (e)/(g) 2.72 % 3.04 % 3.59 % 3.05 % 3.70 %   Adjusted net interest margin (1) (f)/(h) 2.77 % 2.96 % 3.59 % 3.05 % 3.70 %      (1) Annualized.