The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from Business Wire

East West Bancorp Reports Record Net Income for Full Year 2010 of $165 Million

Tuesday, January 25, 2011

East West Bancorp Reports Record Net Income for Full Year 2010 of $165 Million16:45 EST Tuesday, January 25, 2011 PASADENA, Calif. (Business Wire) -- East West Bancorp, Inc. (Nasdaq: EWBC), parent company of East West Bank, one of the nation's premier regional banks, today reported financial results for the fourth quarter and full year 2010. For the fourth quarter of 2010, net income was $56.3 million and net income available to common stockholders was $0.22 per dilutive share. Excluding a noncash charge of $18.7 million or $0.13 per dilutive share resulting from the repurchase of preferred stock issued to the U.S. Treasury, fourth quarter earnings per share increased by 30% to $0.351. For the full year 2010, net income was $164.6 million and net income available to common stockholders was $0.83 per dilutive share. “2010 marks a year of great transformation and success for East West. East West reported net income of $165 million for the full year 2010, the highest ever in our history,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. “Our sound financial performance and 115% increase in profitability was the direct result of the strength of our balance sheet. During 2010, we grew non-covered commercial and trade finance loan balances 32% to a record $2.0 billion and grew core deposits 25% to a record $8.9 billion.” “We also completed the full integrations of two acquisitions in 2010, improving, streamlining, and strengthening our operations. Further, during the fourth quarter of 2010, East West successfully exited the TARP capital purchase program.” Ng concluded, “We increased earnings each and every quarter in 2010 and expect to continue this upward trend throughout 2011. As we embark on the next decade, East West is better positioned than ever before to increase profitability and market share, and to continue to deliver long-term, sustainable value for our shareholders.” 2010 Quarterly Results Summary               For the three months ended, Dollars in millions, except per share December 31, 2010 September 30, 2010 June 30, 2010 March 31, 2010 Net income $ 56.3 $ 47.0 $ 36.3 $ 24.9 Net income available to common shareholders (1) 32.2 40.2 30.2 18.8 Earnings per share (diluted) (1) 0.22 0.27 0.21 0.13   Return on average assets 1.10 % 0.93 % 0.73 % 0.49 % Return on average common equity (1) 6.28 % 8.11 % 6.26 % 4.71 %   Tier 1 risk-based capital ratio (2) 15.9 % 17.9 % 18.9 % 18.9 % Total risk-based capital ratio (2) 17.6 % 19.7 % 20.8 % 20.9 %     (1) Q4 2010 EPS and net income available to common shareholders included a noncash charge of $18.7 million or $0.13 per dilutive share related to the repurchase of preferred stock issued to the U.S. Treasury.     (2) As East West repurchased preferred stock without raising additional capital, Tier 1 and Total risk-based capital declined. East West increased profitability each quarter of 2010, growing net income 46% in the second quarter to $36.3 million, 29% in the third quarter to $47.0 million, and 20% in the fourth quarter to $56.3 million. Full Year 2010 HighlightsRecord Earnings– East West increased net income during each quarter of 2010. For the full year 2010, net income was a record $164.6 million, a 115% increase above $76.6 million in 2009. Successful Integration Efforts– East West successfully integrated the operations of two entities, United Commercial Bank (“UCB”) and Washington First International Bank (“WFIB”). Fully Exited TARP Program– East West repurchased all $306.5 million preferred stock issued to the U.S. Treasury under the TARP program in December 2010. Our capital strength and strong operating results allowed us to redeem TARP without raising any capital. Credit Quality Improved– Charge-offs and provisions decreased each quarter of 2010. Full year 2010 net charge-offs were $202.5 million, a 57% or $272.8 million decrease as compared to the full year 2009. Nonperforming assets remained low at 0.94% of total assets. Record Deposit Growth – Total deposits grew to a record $15.6 billion, a $653.6 million or 4% increase during the full year 2010. Core deposits grew to a record $8.9 billion as of December 31, 2010, an increase of $1.8 billion or 25% increase during the full year 2010. Fourth Quarter 2010 SummaryStrong Fourth Quarter Earnings– For the fourth quarter 2010, net income was $56.3 million, an increase of $9.4 million over net income of $47.0 million reported in the third quarter of 2010. Excluding the noncash charge of $18.7 million or $0.13 per dilutive share resulting from accelerated discount accretion from the repurchase of the preferred stock from the U.S. Treasury, earnings per share totaled $0.35 for the fourth quarter. 1Strong Net Interest Margin –The core net interest margin, excluding the net impact to interest income of $43.8 million resulting from the disposition of covered loans, totaled 4.43% for the quarter. The fourth quarter core net interest margin of 4.43% reflects an increase from 3.98% in the third quarter of 2010. 1Record C&I Loan Growth – Quarter to date, non-covered commercial and trade finance loans grew a record $287.2 million or 17% to $2.0 billion. Significant Deposit Growth – Total deposits grew to a record $15.6 billion, a $343.3 million or 2% increase from September 30, 2010. Core deposits grew to a record $8.9 billion as of December 31, 2010, an increase of $395.7 million or 5% from September 30, 2010. Net Charge-offs Down 15% from Q3 2010, Down 71% from Q4 2009 – Net charge-offs declined to $38.3 million, a decrease of $6.7 million or 15% from the prior quarter and a decrease of $92.3 million or 71% from the fourth quarter of 2009. Nonperforming Assets Remains Below 1%– Nonperforming assets decreased to $194.8 million, or 0.94% of total assets. This is the fifth consecutive quarter East West has reported a nonperforming assets to total assets ratio under 1.00%. Strong Capital Levels – Even after repayment of TARP, our capital levels remain very high. As of December 31, 2010, East West's Tier 1 risk-based capital and total risk-based capital ratios were 15.9% and 17.6%, respectively, significantly higher than the well capitalized requirements of 6% and 10%, respectively. Management Guidance The Company is providing initial guidance for the first quarter and full year 2011. Currently management estimates that fully diluted earnings per share for the full year of 2011 will range from $1.44 to $1.48, or an increase of approximately 73% to 78% from 2010. This EPS guidance is based on overall asset growth of approximately 5%, provision for loan losses of $95 million to $100 million, and an adjusted net interest margin between 4.15% and 4.25%. Management currently estimates that fully diluted earnings per share for the first quarter of 2011 will range from $0.33 to $0.35 per diluted share. This EPS guidance is based on the following assumptions: Stable balance sheet A stable interest rate environment and a net interest margin between 4.15% and 4.20% Provision for loan losses of approximately $25 million to $30 million Total noninterest expense of approximately $100 million, net of amounts to be reimbursed by the FDIC Effective tax rate of approximately 36% Balance Sheet Summary At December 31, 2010, total assets increased to $20.7 billion compared to $20.4 billion at September 30, 2010, and $20.6 billion at December 31, 2009. Total assets were primarily comprised of $13.7 million of loans receivable and $2.9 million of investment securities. Deposits totaled $15.6 billion at December 31, 2010. Loans receivable at December 31, 2010 totaled $13.7 billion compared to $13.6 billion at September 30, 2010, and $14.1 billion at December 31, 2009. During the fourth quarter non-covered loan balances increased $321.1 million or 4%, to $8.9 billion at December 31, 2010. The increase in non-covered loans was primarily driven by an increase in commercial and trade finance loans of $287.2 million or 17%. As of December 31, 2010, we classified $220.1 million of loans as held for sale, primarily comprised of student loans. Covered loans totaled $4.8 billion at December 31, 2010, as compared to $5.0 billion at September 30, 2010, and $5.6 billion at December 31, 2009. Deposit balances increased to a record $15.6 billion at December 31, 2010, compared to $15.3 billion at September 30, 2010, and $15.0 billion at December 31, 2009. Total core deposits increased to a record $8.9 billion as of December 31, 2010, or an increase of $395.7 million or 5% from September 30, 2010, and an increase of $1.8 billion or 25% from December 31, 2009. The increase in core deposits during the fourth quarter was driven by a record increase in both noninterest-bearing demand deposits and money market deposits. Noninterest-bearing demand deposits increased by $104.7 million or 4% to $2.7 billion and money market deposits increased by $266.9 million or 6% to $4.5 billion at December 31, 2010. Covered Loans Covered loans totaled $4.8 billion as of December 31, 2010, a decrease of $174.6 million during the fourth quarter. The decrease in the covered loan portfolio was mainly due to paydowns, payoffs and charge-off activity. The covered loan portfolio is primarily comprised of loans acquired from the FDIC-assisted acquisition of UCB which are covered under loss share agreements with the FDIC. After actively managing the UCB covered loan portfolio for approximately one year, we have resolved many problem loans and concluded that the credit quality is performing better than originally estimated. As such, we lowered the credit discount on the UCB covered loan portfolio in the fourth quarter. Our original credit discount on the UCB covered loan balance was approximately 20% and we have now reduced this to approximately 14%. By lowering the credit discount, interest income will increase over the life of the loans. Correspondingly, with the lowered credit discount, the expected reimbursement from the FDIC under the loss sharing agreement will also decrease, resulting in amortization on the FDIC indemnification asset which is recorded as a charge to noninterest income. The net decrease in the FDIC indemnification asset resulting from loan disposition activity and amortization of the indemnification asset was $43.8 million in the fourth quarter. In total, the net decrease in the FDIC indemnification asset and receivable was $36.0 million for the fourth quarter of 2010 as detailed below:     ($ in thousands) Quarter EndedDecember 31, 2010 Net decrease due to covered loan dispositions and amortization of the indemnification asset $ (43,783 ) Increase due to FDIC reimbursable expenses 12,958 Settlement adjustments   (5,218 ) Net decrease in FDIC indemnification asset and receivable $ (36,043 ) The FDIC receivable was increased by $13.0 million due to reimbursable expense claims. During the fourth quarter we incurred $16.2 million in expenses on covered loans and other real estate owned, 80% of which is reimbursable from the FDIC. The impact of the reimbursable expenses on covered loans and other real estate owned is recorded as an increase to the FDIC receivable as noninterest income. Also, during the fourth quarter, we recorded a decrease to the FDIC receivable of $5.2 million related to settlement adjustments. Fourth Quarter 2010 Operating ResultsNet Interest Income Although the low interest rate environment continues to be a challenge for the industry, our net interest income has remained strong. Throughout 2010, East West has focused on maintaining a strong loan yield, improving the yield on other earning assets and growing low-cost core deposits. East West reduced the cost of deposits to 0.67% for the fourth quarter of 2010, down from 0.75% in the third quarter of 2010 and 1.11% in the fourth quarter of 2009. The core net interest margin, excluding the net impact to interest income of $43.8 million resulting from the loan disposition activity and amortization of the indemnification asset, totaled 4.43% for the quarter, compared to 3.98% in the third quarter 2010. 1 Management believes that this adjusted net interest margin provides more clarity on the core net interest income and net interest margin, comparability to prior periods and the ongoing performance of the Company. Noninterest Income (Loss) The Company reported a total noninterest (loss) for the fourth quarter of ($17.3) million, compared to noninterest income of $29.3 million in the third quarter of 2010 and income of $415.2 million in the fourth quarter of 2009. Noninterest income for the fourth quarter of 2009 included a purchase accounting gain of $471.0 million from the acquisition of UCB. The noninterest loss in the fourth quarter of 2010 was due to a net decrease in the FDIC indemnification asset and receivable of $36.0 million, discussed in more detail above. Total fees and operating income increased to $18.3 million for the fourth quarter, an increase from both the third quarter 2010 and fourth quarter 2009 as detailed below:                             Quarter EndedQuarter EndedQuarter Ended % Change ($ in thousands) December 31, 2010   September 30, 2010   December 31, 2009 (Yr/Yr)   Branch fees $ 7,681 $ 7,976 $ 7,863 -2 % Letters of credit fees and commissions 3,323 2,888 2,570 29 % Ancillary loan fees 2,101 2,367 1,474 43 % Other operating income   5,187   4,178   2,490 108 % Total fees & other operating income $ 18,292 $ 17,409 $ 14,397 27 %   During the fourth quarter, we recorded gains on sales of loans of $6.3 million, primarily from the sale of $206.7 million in student loans and recorded a net gain on sale of investments of $5.2 million, primarily driven by the sale of $269.7 million of investment securities. Further, we recorded an impairment loss of $6.3 million related to one private-label MBS, the only private-label MBS that we own, and recorded a purchase accounting adjustment of $4.7 million related to the WFIB and UCB acquisitions. Noninterest Expense Noninterest expense totaled $113.7 million for the fourth quarter of 2010 compared to $99.9 million for the third quarter of 2010, and $87.9 million for the fourth quarter of 2009. The increase in noninterest expense quarter over quarter was primarily due to an increase in other real estate owned expenses to $16.9 million, compared to $5.7 million in the prior quarter. The increase in other real estate owned expense was largely due to writedowns and losses on sales of covered assets. In the fourth quarter, we incurred $16.2 million in expenses on covered loans and other real estate owned for which we expect that 80% or $13.0 million will be reimbursed by the FDIC. Of the $13.0 million of expenses reimbursable by the FDIC, $10.3 million is related to net writedowns and expenses on other real estate owned, and $2.7 million is related to legal and other loan related expenses. Noninterest expense excluding amounts to be reimbursed by the FDIC totaled $100.8 million for the fourth quarter of 2010. 1 A summary of the noninterest expenses for the fourth quarter, compared to the third quarter, is detailed below:                     Quarter EndedQuarter Ended ($ in thousands) December 31, 2010           September 30, 2010 Total noninterest expense: $ 113,743 $ 99,945 Amounts to be reimbursed on covered assets (80% of actual expense amount)   12,958             7,834 Noninterest expense excluding reimbursement amounts $ 100,785           $ 92,111   In addition to the increase in expenses on covered assets, amortization of affordable housing investments increased $1.5 million and consulting expenses increased $700 thousand. Management anticipates that in the first quarter of 2011, noninterest expense will be approximately $100 million, net of amounts reimbursable from the FDIC. The effective tax rate for the fourth quarter was 34.3% compared to 36.1% in the prior quarter. The effective tax rate is reduced from the statutory tax rate primarily due to the utilization of tax credits related to affordable housing investments. Full Year 2010 Operating Results For the full year 2010, net interest income increased to $894.7 million, compared to $485.7 million for the full year 2009. The adjusted net interest margin for 2010 was 4.25%, a 73 basis point increase from the adjusted net interest margin of 3.52% in 2009. Full year noninterest income for 2010 totaled $39.3 million, a decrease of $351.7 million over 2009. Noninterest income for 2009 included a purchase accounting gain of $471.0 million from the acquisition of UCB. Total fees and other operating income for the full year 2010 increased to $67.8 million, a $23.1 million, or 52% increase from full year 2009. As compared to 2009, branch fees increased $10.3 million or 46%, letters of credit fees and commissions increased $3.5 million or 42%, ancillary loan fees increased $2.2 million or 36%, and other operating income increased $7.1 million or 93%, primarily due to the acquisition of UCB. A summary of these fees and other operating income items is detailed below:                               Year EndedYear Ended % Change ($ in thousands) December 31, 2010December 31, 2009 (Yr/Yr)   Branch fees $ 32,634 $ 22,326 46 % Letters of credit fees and commissions 11,816 8,338 42 % Ancillary loan fees 8,526 6,286 36 % Other operating income   14,794   7,680 93 % Total fees & other operating income $ 67,770 $ 44,630 52 %     Noninterest expense totaled $477.9 million for the full year 2010, 96% or $234.7 million higher than 2009. This increase from 2009 was largely due to our increased size from the acquisitions of UCB and WFIB and due to expenses incurred on covered assets. Year-to-date, the Company incurred approximately $63.1 million of expenses on covered assets, 80% or $50.5 million of which is reimbursable by the FDIC. For the full year 2010, the effective tax rate was 35.7% compared with 21.69% in the prior year. Management anticipates an effective tax rate for the full year 2011 to be approximately 36%. Credit Management Throughout 2010 East West continued to proactively manage credit, resulting in improvements in key asset quality metrics. For the fifth consecutive quarter, both net charge-offs and the provision for loan losses have declined. The provision for loan losses was $29.8 million for the fourth quarter of 2010, a decrease of $8.8 million or 23% compared to the previous quarter. Total net charge-offs decreased to $38.3 million for the fourth quarter, a decrease of $6.7 million or 15% from the previous quarter. The provision for loan losses and net charge-offs for each quarter of 2010 are detailed below:       For the three months ended                                         % Change ($ in thousands) December 31, 2010       September 30, 2010       June 30, 2010       March 31, 2010       December 31, 2009 Yr/Yr Net charge-offs $ 38,344       $ 45,057       $ 55,196       $ 63,929       $ 130,656 -71 % Provision for loan losses $ 29,834 $ 38,648 $ 55,256 $ 76,421 $ 140,001 -79 %     Management expects that the provision for loan losses will continue to decrease and range from $25 million to $30 million for the first quarter of 2011 and range from $95 million to $100 million for the full year 2011. Nonperforming assets, excluding covered assets decreased to $194.8 million or 0.94% of total assets at December 31, 2010. Nonperforming assets, excluding covered assets, as of December 31, 2010 included nonaccrual loans totaling $172.9 million and REO assets totaling $21.9 million. Notwithstanding the improvements in credit noted above, we have maintained a strong allowance for non-covered loan losses at $230.4 million or 2.64% of non-covered loans receivable at December 31, 2010. This compares to an allowance for loan losses of $240.3 million or 2.79% at September 30, 2010 and $238.8 million or 2.81% of outstanding loans at December 31, 2009.       Capital Strength(Dollars in millions)December 31, 2010Well CapitalizedRegulatoryRequirementTotal Excess AboveWell CapitalizedRequirement   Tier 1 leverage capital ratio 9.3 % 5.00 % $ 863 Tier 1 risk-based capital ratio 15.9 % 6.00 % 1,159 Total risk-based capital ratio 17.6 % 10.00 % 897 Tangible common equity to tangible asset 8.0 % N/A N/A Tangible common equity to risk weighted assets ratio 13.7 % 4.00 %*   1,142   *As there is no stated regulatory guideline for this ratio, the SCAP (Supervisory Capital Assessment Program) guideline of 4.00% tangible common equity has been used.     During the fourth quarter, East West repurchased $306.5 million of preferred stock issued under the U.S. Treasury Capital Purchase Program. The repayment of the TARP funds will save the Company $15.3 million in preferred dividend payments or approximately $0.10 per diluted share on an annual basis beginning in 2011. East West's strong capital levels, balance sheet, and profitability allowed the Company to exit TARP without raising any capital. Even after the repayment of TARP, our capital ratios remain very strong. As of the end of the fourth quarter of 2010, our Tier 1 leverage capital ratio totaled 9.3%, Tier 1 risk-based capital ratio totaled 15.9% and the total risk-based capital ratio totaled 17.6%. East West exceeds well capitalized requirements for all regulatory guidelines by over $800 million. Dividend Payout East West's Board of Directors has declared first quarter dividends on the common stock and Series A Preferred Stock. The common stock cash dividend of $0.01 is payable on or about February 24, 2011 to shareholders of record on February 10, 2011. The dividend on the Series A Preferred Stock of $20.00 per share is payable on February 1, 2011 to shareholders of record on January 15, 2011. About East West East West Bancorp is a publicly owned company with $20.7 billion in assets and is traded on the Nasdaq Global Select Market under the symbol “EWBC”. The Company's wholly owned subsidiary, East West Bank, is one of the largest independent commercial banks headquartered in California with over 130 locations worldwide, including the U.S. markets of California, New York, Georgia, Massachusetts, Texas and Washington. In Greater China, East West's presence includes a full service branch in Hong Kong and representative offices in Beijing, Shanghai, Shenzhen and Taipei. Through a wholly-owned subsidiary bank, East West's presence in Greater China also includes full service branches in Shanghai and Shantou and representative offices in Beijing and Guangzhou. For more information on East West Bancorp, visit the Company's website at www.eastwestbank.com. Forward-Looking StatementsThis release may contain forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and accordingly, the cautionary statements contained in East West Bancorp's Annual Report on Form 10-K for the year ended Dec. 31, 2009 (See Item I -- Business, and Item 7 -- Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations), and other filings with the Securities and Exchange Commission are incorporated herein by reference. These factors include, but are not limited to: the effect of interest rate and currency exchange fluctuations; competition in the financial services market for both deposits and loans; EWBC's ability to efficiently incorporate acquisitions into its operations; the ability of borrowers to perform as required under the terms of their loans; effect of additional provisions for loan losses; effect of any goodwill impairment, the ability of EWBC and its subsidiaries to increase its customer base; the effect of regulatory and legislative action, including California tax legislation and an announcement by the state's Franchise Tax Board regarding the taxation of Registered Investment Companies; and regional and general economic conditions.Actual results and performance in future periods may be materially different from any future results or performance suggested by the forward-looking statements in this release. Such forward-looking statements speak only as of the date of this release. East West expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in the Bank's expectations of results or any change in event.1 See reconciliation of the GAAP financial measure to this non-GAAP financial measure in the tables attached. EAST WEST BANCORP, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except per share amounts)(unaudited)         December 31, 2010September 30, 2010December 31, 2009 Assets Cash and cash equivalents $ 1,333,949 $ 1,164,936 $ 1,099,084 Short-term investments 143,560 151,557 246,845 Securities purchased under resale agreements 500,000 350,000 227,444 Investment securities 2,875,941 2,907,349 2,564,081 Loans receivable, excluding covered loans (net of allowance for loan losses of $230,408, $240,286 and $238,833) 8,650,254 8,323,684 8,246,685 Covered loans, net   4,800,876     4,975,502     5,598,155   Total loans receivable, net 13,451,130 13,299,186 13,844,840 Federal Home Loan Bank and Federal Reserve stock 210,090 216,738 217,002 FDIC indemnification asset 792,133 874,759 1,091,814 Other real estate owned, net 21,865 16,936 13,832 Other real estate owned covered, net 123,902 137,353 44,273 Premiums on deposits acquired, net 79,518 82,755 89,735 Goodwill 337,438 337,438 337,438 Other assets   831,011     878,239     782,824   Total assets $ 20,700,537   $ 20,417,246   $ 20,559,212     Liabilities and Stockholders' Equity Deposits $ 15,641,259 $ 15,297,971 $ 14,987,613 Federal Home Loan Bank advances 1,214,148 1,018,074 1,805,387 Securities sold under repurchase agreements 1,083,545 1,045,664 1,026,870 Subordinated debt and trust preferred securities 235,570 235,570 235,570 Other borrowings 10,996 28,328 67,040 Accrued expenses and other liabilities   401,088     406,879     152,073   Total liabilities 18,586,606 18,032,486 18,274,553 Stockholders' equity   2,113,931     2,384,760     2,284,659   Total liabilities and stockholders' equity $ 20,700,537   $ 20,417,246   $ 20,559,212   Book value per common share $ 13.67 $ 13.61 $ 14.47 Number of common shares at period end 148,543 147,982 109,963   Ending BalancesDecember 31, 2010September 30, 2010December 31, 2009 Loans receivable Real estate - single family $ 1,119,024 $ 1,057,696 $ 930,393 Real estate - multifamily 974,745 971,155 1,022,383 Real estate - commercial 3,392,984 3,425,300 3,606,178 Real estate - land 235,707 249,224 358,444 Real estate - construction 278,047 313,787 455,142 Commercial 1,983,355 1,696,173 1,503,709 Consumer   733,526     886,124     624,784   Total loans receivable held for investment, excluding covered loans 8,717,388 8,599,459 8,501,033 Loans held for sale 220,055 16,902 28,014 Covered loans, net   4,800,876     4,975,502     5,598,155   Total loans receivable 13,738,319 13,591,863 14,127,202 Unearned fees, premiums and discounts (56,781 ) (52,391 ) (43,529 ) Allowance for loan losses on non-covered loans   (230,408 )   (240,286 )   (238,833 ) Net loans receivable $ 13,451,130 $ 13,299,186 $ 13,844,840   Deposits Noninterest-bearing demand $ 2,676,466 $ 2,571,750 $ 2,291,259 Interest-bearing checking 757,446 762,633 667,177 Money market 4,457,376 4,190,448 3,138,866 Savings   984,518     955,278     991,520   Total core deposits 8,875,806 8,480,109 7,088,822 Time deposits   6,765,453     6,817,862     7,898,791   Total deposits $ 15,641,259 $ 15,297,971 $ 14,987,613                               EAST WEST BANCORP, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share amounts)(unaudited)   Quarter EndedDecember 31, 2010September 30, 2010December 31, 2009   Interest and dividend income $ 292,195 $ 231,400 $ 283,639 Interest expense   (45,633 )   (48,595 )   (61,770 ) Net interest income before provision for loan losses 246,562 182,805 221,869 Provision for loan losses   (29,834 )   (38,648 )   (140,001 ) Net interest income after provision for loan losses 216,728 144,157 81,868 Noninterest (loss) income (17,279 ) 29,315 415,238 Noninterest expense   (113,743 )   (99,945 )   (87,872 ) Income before benefit for income taxes 85,706 73,527 409,234 Provision for income taxes   29,357     26,576     149,504   Net income 56,349 46,951 259,730 Preferred stock dividend, inducement, and amortization of preferred stock discount   (24,109 )   (6,732 )   (6,129 ) Net income available to common stockholders $ 32,240 $ 40,219 $ 253,601 Net income per share, basic $ 0.22 $ 0.27 $ 2.49 Net income per share, diluted $ 0.22 $ 0.27 $ 1.96 Shares used to compute per share net income: - Basic 146,625 146,454 101,924 - Diluted 147,524 147,113 130,346     Quarter EndedDecember 31, 2010September 30, 2010December 31, 2009 Noninterest (loss) income: Branch fees $ 7,681 $ 7,976 $ 7,863 Increase (decrease) in FDIC indemnification asset and FDIC receivable (36,043 ) 5,826 (23,338 ) Net gain on sales of loans 6,265 4,177 - Letters of credit fees and commissions 3,323 2,888 2,570 Net gain on sales of investments 5,244 2,791 4,545 Impairment loss on investment securities (6,340 ) (888 ) (45,775 ) Ancillary loan fees 2,101 2,367 1,474 (Loss) gain on acquisition (4,697 ) - 471,009 Impairment loss on affordable housing partnerships - - (5,600 ) Other operating income   5,187     4,178     2,490   Total noninterest (loss) income $ (17,279 ) $ 29,315 $ 415,238   Noninterest expense: Compensation and employee benefits $ 39,001 $ 38,693 $ 29,983 Occupancy and equipment expense 13,051 13,963 10,268 Loan related expenses 6,503 6,316 2,306 Other real estate owned expense 16,879 5,694 2,624 Deposit insurance premiums and regulatory assessments 3,416 5,676 9,123 Legal expense 5,186 5,301 3,168 Amortization of premiums on deposits acquired 3,237 3,352 2,609 Data processing 2,441 2,646 2,279 Consulting expense 2,312 1,612 6,256 Amortization of investments in affordable housing partnerships 2,915 1,442 2,329 Other operating expense   18,802     15,250     16,927   Total noninterest expense $ 113,743 $ 99,945 $ 87,872                                     EAST WEST BANCORP, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share amounts)(unaudited)   Year To DateDecember 31, 2010December 31, 2009   Interest and dividend income $ 1,095,831 $ 722,818 Interest expense   (201,117 )   (237,129 ) Net interest income before provision for loan losses 894,714 485,689 Provision for loan losses   (200,159 )   (528,666 ) Net interest income (loss) after provision for loan losses 694,555 (42,977 ) Noninterest income 39,270 390,953 Noninterest expense   (477,916 )   (243,254 ) Income before benefit for income taxes 255,909 104,722 Provision for income taxes   91,345     22,714   Net income before extraordinary item 164,564 82,008 Extraordinary item, net of tax   -     (5,366 ) Net income after extraordinary item $ 164,564 $ 76,642 Preferred stock dividend, inducement, and amortization of preferred stock discount   (43,126 )   (49,115 ) Net income available to common stockholders $ 121,438 $ 27,527 Net income per share, basic $ 0.88 $ 0.35 Net income per share, diluted $ 0.83 $ 0.33 Shares used to compute per share net income: - Basic 137,478 78,770 - Diluted 147,102 84,553     Year To DateDecember 31, 2010December 31, 2009 Noninterest income: Decrease in FDIC indemnification asset and FDIC receivable $ (83,213 ) $ (23,338 ) Impairment loss on investment securities (16,669 ) (107,671 ) Net gain on sales of investments 29,993 11,923 Gain on acquisition 22,874 471,009 Branch fees 32,634 22,326 Net gain on sales of loans 18,515 - Letters of credit fees and commissions 11,816 8,338 Ancillary loan fees 8,526 6,286 Impairment loss on affordable housing partnerships - (5,600 ) Other operating income   14,794     7,680   Total noninterest income $ 39,270 $ 390,953   Noninterest expense: Compensation and employee benefits $ 170,052 $ 79,475 Other real estate owned expense 61,568 19,104 Occupancy and equipment expense 52,073 30,218 Deposit insurance premiums and regulatory assessments 25,201 28,073 Loan related expenses 21,070 7,580 Legal expense 19,577 8,024 Prepayment penalty for FHLB advances 13,832 2,370 Amortization of premiums on deposits acquired 13,283 5,895 Data processing 10,615 5,641 Amortization of investments in affordable housing partnerships 10,032 7,450 Consulting expense 7,984 8,135 Other operating expense   72,629     41,289   Total noninterest expense $ 477,916 $ 243,254                                   EAST WEST BANCORP, INC.SELECTED FINANCIAL INFORMATION(In thousands)(unaudited)   Average BalancesQuarter EndedDecember 31, 2010September 30, 2010December 31, 2009 Loans receivable Real estate - single family $ 1,091,042 $ 1,051,914 $ 908,095 Real estate - multifamily 969,801 984,589 1,037,460 Real estate - commercial 3,430,009 3,452,114 3,610,640 Real estate - land 250,530 273,571 398,109 Real estate - construction 297,558 342,388 586,883 Commercial 1,834,920 1,591,042 1,446,695 Consumer   992,408     803,430     516,951   Total loans receivable, excluding covered loans 8,866,268 8,499,048 8,504,833 Covered loans   4,866,915     5,105,793     3,479,519   Total loans receivable 13,733,183 13,604,841 11,984,352 Investment securities 2,876,561 2,482,951 2,638,943 Earning assets 18,144,027 17,692,002 15,948,521 Total assets 20,467,482 20,097,142 17,563,329   Deposits Noninterest-bearing demand $ 2,649,912 $ 2,436,031 $ 1,953,781 Interest-bearing checking 756,741 731,267 523,519 Money market 4,275,692 4,162,847 2,671,917 Savings   957,781     960,927     775,834   Total core deposits 8,640,126 8,291,072 5,925,051 Time deposits   6,664,058     6,719,637     6,375,919   Total deposits 15,304,184 15,010,709 12,300,970 Interest-bearing liabilities 15,004,890 14,910,922 13,450,563 Stockholders' equity 2,416,463 2,360,025 1,921,591     Selected RatiosQuarter EndedDecember 31, 2010September 30, 2010December 31, 2009 For The Period Return on average assets 1.10 % 0.93 % 5.92 % Return on average common equity 6.28 % 8.11 % 75.27 % Interest rate spread (2) 5.18 % 3.90 % 5.24 % Net interest margin (2) 5.39 % 4.10 % 5.52 % Yield on earning assets (2) 6.39 % 5.19 % 7.06 % Cost of deposits 0.67 % 0.75 % 1.11 % Cost of funds 1.03 % 1.11 % 1.59 % Noninterest expense/average assets (1) 2.10 % 1.89 % 1.83 % Efficiency ratio (3) 49.00 % 47.64 % 48.42 %   (1) Excludes the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalty for FHLB advances.   (2) Yields on certain securities have been adjusted upward to a "fully taxable equivalent" basis in order to reflect the effect of income which is exempt from federal income taxation at the current statutory tax rate.   (3) Represents noninterest expense, excluding the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalty for FHLB advances, divided by the aggregate of net interest income before provision for loan losses, excluding non-core adjustments and noninterest income, excluding impairment loss on investment securities, impairment loss on affordable housing partnerships, gain on acquisition and the decrease in FDIC indemnification asset and FDIC receivable.                                     EAST WEST BANCORP, INC.SELECTED FINANCIAL INFORMATION(In thousands)(unaudited)   Average BalancesYear To DateDecember 31, 2010December 31, 2009 Loans receivable Real estate - single family $ 1,016,669 $ 748,713 Real estate - multifamily 1,005,790 898,927 Real estate - commercial 3,502,013 3,536,846 Real estate - land 299,212 490,546 Real estate - construction 367,780 934,729 Commercial 1,599,057 1,420,453 Consumer   843,762     325,611   Total loans receivable, excluding covered loans 8,634,283 8,355,825 Covered loans   5,074,631     877,029   Total loans receivable 13,708,914 9,232,854 Investment securities 2,439,034 2,569,792 Earning assets 17,725,514 12,910,812 Total assets 20,178,109 13,838,945   Deposits Noninterest-bearing demand $ 2,418,816 $ 1,459,871 Interest-bearing checking 677,529 398,619 Money market 3,974,936 2,035,821 Savings   967,953     506,706   Total core deposits 8,039,234 4,401,017 Time deposits   6,851,461     5,037,122   Total deposits 14,890,695 9,438,139 Interest-bearing liabilities 15,131,431 10,590,039 Stockholders' equity 2,345,578 1,634,897     Selected RatiosYear To DateDecember 31, 2010December 31, 2009 For The Period Return on average assets 0.82 % 0.55 % Return on average common equity 6.42 % 2.37 % Interest rate spread (2) 4.85 % 3.36 % Net interest margin (2) 5.05 % 3.76 % Yield on earning assets (2) 6.18 % 5.60 % Cost of deposits 0.78 % 1.37 % Cost of funds 1.15 % 1.97 % Noninterest expense/average assets (1) 2.18 % 1.64 % Efficiency ratio (3) 52.90 % 48.64 %   (1) Excludes the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalty for FHLB advances.   (2) Yields on certain securities have been adjusted upward to a "fully taxable equivalent" basis in order to reflect the effect of income which is exempt from federal income taxation at the current statutory tax rate.   (3) Represents noninterest expense, excluding the amortization of intangibles, amortization and impairment loss of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalty for FHLB advances, divided by the aggregate of net interest income before provision for loan losses, excluding non-core adjustments and noninterest income, excluding impairment loss on investment securities, impairment loss on affordable housing partnerships, gain on acquisition and the decrease in FDIC indemnification asset and FDIC receivable.                                         EAST WEST BANCORP, INC.QUARTER TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID (In thousands) (unaudited)   Quarter EndedDecember 31, 2010       December 31, 2009AverageAverage   Volume       Interest       Yield (1)       Volume       Interest       Yield (1)   ASSETSInterest-earning assets: Short-term investments and interest bearing deposits in other banks $ 571,557 $ 2,229 1.55 % $ 978,967 $ 1,706 0.69 % Securities purchased under resale agreements 749,384 2,905 1.52 % 165,839 3,290 7.76 % Investment securities (2) 2,876,561 19,410 2.68 % 2,638,943 28,216 4.24 % Loans receivable 8,866,268 124,478 5.57 % 8,504,833 115,022 5.37 % Loans receivable - covered 4,866,915 142,298 11.60 % 3,479,519 135,144 15.41 % Federal Home Loan Bank and Federal Reserve Bank stocks   213,342           875       1.64 %         180,420           368       0.82 % Total interest-earning assets   18,144,027           292,195       6.39 %         15,948,521           283,746       7.06 %   Noninterest-earning assets: Cash and due from banks 392,139 266,287 Allowance for loan losses (246,871 ) (236,858 ) Other assets   2,178,187     1,585,379   Total assets $ 20,467,482   $ 17,563,329       LIABILITIES AND STOCKHOLDERS' EQUITYInterest-bearing liabilities: Checking accounts 756,741 658 0.34 % 523,519 504 0.38 % Money market accounts 4,275,692 6,109 0.57 % 2,671,917 6,919 1.03 % Savings deposits 957,781 752 0.31 % 775,834 1,353 0.69 % Time deposits 6,664,058 18,139 1.08 % 6,375,919 25,768 1.60 % Federal Home Loan Bank advances 1,018,491 5,736 2.23 % 1,731,525 11,749 2.69 % Securities sold under repurchase agreements 1,069,208 12,218 4.47 % 1,086,279 13,709 4.94 % Subordinated debt and trust preferred securities 235,570 1,597 2.65 % 235,570 1,605 2.67 % Other borrowings   27,349           424       6.07 %         50,000           163       1.28 % Total interest-bearing liabilities   15,004,890           45,633       1.21 %         13,450,563           61,770       1.82 %   Noninterest-bearing liabilities: Demand deposits 2,649,912 1,953,781 Other liabilities 396,217 237,394 Stockholders' equity   2,416,463     1,921,591   Total liabilities and stockholders' equity $ 20,467,482   $ 17,563,329     Interest rate spread 5.18 % 5.24 %   Net interest income and net interest margin $ 246,562 5.39 % $ 221,976 5.52 %   Net interest income and net interest margin, adjusted (3) $ 202,779 4.43 % $ 190,046 4.73 %   (1) Annualized. (2) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate. (3) Amounts exclude the net impact of covered loan dispositions and amortization of the FDIC indemnification asset of $43.8 million and $31.9 million for the three months ended December 31, 2010 and 2009, respectively.                                         EAST WEST BANCORP, INC.YEAR TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID (In thousands) (unaudited)   Year To DateDecember 31, 2010       December 31, 2009AverageAverageVolume       Interest       Yield       Volume       Interest       Yield   ASSETSInterest-earning assets: Short-term investments and interest bearing deposits in other banks $ 828,039 $ 9,634 1.16 % $ 881,282 $ 9,047 1.03 % Securities purchased under resale agreements 529,817 14,208 2.64 % 89,883 7,985 8.76 % Investment securities (1) 2,439,034 70,052 2.87 % 2,569,792 116,688 4.54 % Loans receivable 8,634,283 479,451 5.55 % 8,355,825 452,019 5.41 % Loans receivable - covered 5,074,631 519,138 10.23 % 877,029 135,144 15.41 % Federal Home Loan Bank and Federal Reserve Bank stocks   219,710           3,348       1.52 %         137,001           2,337       1.71 % Total interest-earning assets   17,725,514           1,095,831       6.18 %         12,910,812           723,220       5.60 %   Noninterest-earning assets: Cash and due from banks 365,041 147,694 Allowance for loan losses (252,318 ) (216,775 ) Other assets   2,339,872     997,214   Total assets $ 20,178,109   $ 13,838,945       LIABILITIES AND STOCKHOLDERS' EQUITYInterest-bearing liabilities: Checking accounts 677,529 2,349 0.35 % 398,619 1,507 0.38 % Money market accounts 3,974,936 29,514 0.74 % 2,035,821 25,583 1.26 % Savings deposits 967,953 3,986 0.41 % 506,706 3,322 0.66 % Time deposits 6,851,461 80,888 1.18 % 5,037,122 99,065 1.97 % Federal Home Loan Bank advances 1,324,709 26,641 2.01 % 1,333,846 49,940 3.74 % Securities sold under repurchase agreements 1,047,090 48,993 4.61 % 1,027,665 49,725 4.77 % Subordinated debt and trust preferred securities 235,570 6,420 2.69 % 235,570 7,816 3.27 % Other borrowings   52,183           2,326       4.40 %         14,690           171       1.15 % Total interest-bearing liabilities   15,131,431           201,117       1.33 %         10,590,039           237,129       2.24 %   Noninterest-bearing liabilities: Demand deposits 2,418,816 1,459,871 Other liabilities 282,284 154,138 Stockholders' equity   2,345,578     1,634,897   Total liabilities and stockholders' equity $ 20,178,109   $ 13,838,945     Interest rate spread 4.85 % 3.36 %   Net interest income and net interest margin $ 894,714 5.05 % $ 486,091 3.76 %   Net interest income and net interest margin, adjusted (2)   753,845 4.25 % $ 454,161 3.52 %   (1) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate. (2) Amounts exclude the net impact of covered loan dispositions and amortization of the FDIC indemnification asset of $140.9 million and $31.9 million for the twelve months ended December 31, 2010 and 2009 respectively.                                   EAST WEST BANCORP, INC.QUARTERLY ALLOWANCE FOR LOAN LOSSES RECAP(In thousands)(unaudited)   Quarter Ended12/31/2010       9/30/2010       6/30/2010       3/31/2010       12/31/2009LOANS Allowance balance, beginning of period $ 244,186 $ 249,462 $ 250,517 $ 238,833 $ 230,650 Allowance for unfunded loan commitments and letters of credit (1,043 ) 1,133 (1,115 ) (808 ) (1,161 ) Provision for loan losses 29,834 38,648 55,256 76,421 140,000   Net Charge-offs: Real estate - single family 1,770 14,620 3,257 3,426 7,083 Real estate - multifamily 5,048 7,526 7,552 4,860 8,425 Real estate - commercial 13,557 11,779 11,836 8,201 13,305 Real estate - land 8,942 4,236 9,765 26,828 20,390 Real estate - residential construction (212 ) 3,087 3,086 11,642 48,919 Real estate - commercial construction 3,086 977 8,548 2,029 21,355 Commercial 5,326 2,546 10,563 6,422 5,789 Trade finance 655 (7 ) (88 ) (54 ) 2,569 Consumer   172           293           677           575           2,821   Total net charge-offs (recovery)   38,344           45,057           55,196           63,929           130,656   Allowance balance, end of period (3) $ 234,633         $ 244,186         $ 249,462         $ 250,517         $ 238,833     UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT: Allowance balance, beginning of period $ 8,909 $ 10,042 $ 8,927 $ 8,119 $ 6,958 Provision for unfunded loan commitments and letters of credit   1,043           (1,133 )         1,115           808           1,161   Allowance balance, end of period $ 9,952         $ 8,909         $ 10,042         $ 8,927         $ 8,119   GRAND TOTAL, END OF PERIOD $ 244,585         $ 253,095         $ 259,504         $ 259,444         $ 246,952     Nonperforming assets to total assets (1) 0.94 % 0.96 % 0.98 % 0.89 % 0.91 % Allowance for loan losses on non-covered loans to total gross non-covered loans held for investment at end of period 2.64 % 2.79 % 3.00 % 2.93 % 2.81 % Allowance for loan losses on non-covered loans and unfunded loan commitments to total gross non-covered loans held for investment at end of period 2.76 % 2.90 % 3.12 % 3.04 % 2.90 % Allowance on non-covered loans to non-covered nonaccrual loans at end of period 133.24 % 133.95 % 139.31 % 143.62 % 137.91 % Nonaccrual loans to total loans (2) 1.26 % 1.32 % 1.30 % 1.27 % 1.23 %   (1)   Nonperforming assets excludes covered loans and covered REOs. Total assets includes covered assets. (2) Nonaccrual loans excludes covered loans. Total loans includes covered loans. (3) Included in the allowance is $4.2 million and $3.9 million related to covered loans as of December 31, 2010 and September 30, 2010, respectively. This allowance is related to drawdowns on commitments that were in existence as of the acquisition dates and therefore, are covered under the loss share agreements with the FDIC. Allowance on these subsequent drawdowns is accounted for as part of our general allowance.                                         EAST WEST BANCORP, INCTOTAL NON-PERFORMING ASSETS, EXCLUDING COVERED ASSETS(in thousands)(unaudited)   AS OF DECEMBER 31, 2010Total Nonaccrual Loans90+ DaysDelinquent   Under 90+ DaysDelinquent   TotalNonaccrualLoans   REO AssetsTotalNon-PerformingAssetsLoan Type Real estate - single family $ 7,059 $ 355 $ 7,414 $ 556 $ 7,970 Real estate - multifamily 9,687 7,695 17,382 468 17,850 Real estate - commercial 48,096 7,962 56,058 3,566 59,624 Real estate - land 8,138 20,761 28,899 16,180 45,079 Real estate - residential construction - 22,341 22,341 92 22,433 Real estate - commercial construction 14,198 3,347 17,545 780 18,325 Commercial 8,235 14,436 22,671 223 22,894 Trade Finance - - - - - Consumer   620   -   620   -   620 Total$96,033$76,897$172,930$21,865$194,795   AS OF SEPTEMBER 30, 2010Total Nonaccrual Loans90+ DaysDelinquent   Under 90+ DaysDelinquent   TotalNonaccrualLoans   REO AssetsTotalNon-PerformingAssetsLoan Type Real estate - single family $ 5,359 $ - $ 5,359 $ 947 $ 6,306 Real estate - multifamily 10,386 6,263 16,649 3,088 19,737 Real estate - commercial 28,786 30,799 59,585 6,730 66,315 Real estate - land 32,443 14,760 47,203 4,680 51,883 Real estate - residential construction 2,068 - 2,068 92 2,160 Real estate - commercial construction 17,188 4,077 21,265 830 22,095 Commercial 6,653 20,084 26,737 223 26,960 Trade Finance - - - - - Consumer   427   91   518   346   864 Total$103,310$76,074$179,384$16,936$196,320   AS OF JUNE 30, 2010Total Nonaccrual Loans90+ DaysDelinquent   Under 90+ DaysDelinquent   TotalNonaccrualLoans   REO AssetsTotalNon-PerformingAssetsLoan Type Real estate - single family $ 14,835 $ - $ 14,835 $ 395 $ 15,230 Real estate - multifamily 13,180 5,521 18,701 3,131 21,832 Real estate - commercial 15,778 2,569 18,347 7,047 25,394 Real estate - land 43,775 5,292 49,067 2,541 51,608 Real estate - residential construction 1,454 23,370 24,824 2,272 27,096 Real estate - commercial construction 22,997 449 23,446 830 24,276 Commercial 19,310 8,994 28,304 - 28,304 Trade Finance - - - - - Consumer   1,436   104   1,540   346   1,886 Total$132,765$46,299$179,064$16,562$195,626   AS OF DECEMBER 31, 2009Total Nonaccrual Loans90+ DaysDelinquent   Under 90+ DaysDelinquent   TotalNonaccrualLoans   REO AssetsTotalNon-PerformingAssetsLoan Type Real estate - single family $ 3,262 $ - $ 3,262 $ 264 $ 3,526 Real estate - multifamily 10,631 - 10,631 2,118 12,749 Real estate - commercial 11,654 18,450 30,104 5,687 35,791 Real estate - land 27,179 42,666 69,845 4,393 74,238 Real estate - residential construction 17,179 - 17,179 540 17,719 Real estate - commercial construction - 17,132 17,132 830 17,962 Commercial 8,002 16,765 24,767 - 24,767 Trade Finance - - - - - Consumer   114   146   260   -   260 Total$78,021$95,159$173,180$13,832$187,012                     EAST WEST BANCORP, INC.GAAP TO NON-GAAP RECONCILIATION(In thousands)(Unaudited)   The tangible common equity to risk weighted asset and tangible common equity to tangible asset ratios is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. As the use of tangible common equity to tangible asset is more prevalent in the banking industry and with banking regulators and analysts, we have included the tangible common equity to risk-weighted assets and tangible common equity to tangible asset ratios.   As ofDecember 31, 2010 Stockholders' Equity $ 2,113,931 Less: Preferred Equity (83,058 ) Goodwill and other intangible assets   (417,974 ) Tangible common equity $ 1,612,899     Risk-weighted assets   11,771,652     Tangible Common Equity to risk-weighted assets   13.7 %   As ofDecember 31, 2010 Total assets $ 20,700,537 Less: Goodwill and other intangible assets   (417,974 ) Tangible assets $ 20,282,563     Tangible common equity to tangible asset ratio 8.0 %   Operating noninterest income is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. There are noninterest income line items that are non-core in nature. Operating noninterest income excludes such non-core noninterest income line items. The Company believes that presenting the operating noninterest income provides more clarity to the users of financial statements regarding the core noninterest income amounts.   Quarter EndedDecember 31, 2010 Noninterest (loss) income $ (17,279 ) Add: Impairment loss on investment securities 6,340 Less: Net gain on sales of investments (5,244 ) Net gain on sales of loans (6,265 ) Loss on acquisition 4,697 Decrease in FDIC indemnification asset   36,043   Operating noninterest income (non-GAAP) $ 18,292       Quarter EndedDecember 31, 2009 Noninterest income $ 415,238 Add: Impairment loss on investment securities 45,775 Impairment loss on affordable housing partnerships 5,600 Less: Net gain on sales of investments (4,545 ) Gain on acquisition (471,009 ) Decrease in FDIC indemnification asset   23,338   Operating noninterest income (non-GAAP) $ 14,397                       EAST WEST BANCORP, INC.GAAP TO NON-GAAP RECONCILIATION(In thousands)(Unaudited)   Operating noninterest expense is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. These are noninterest expense line items that are non-core in nature. Operating noninterest expense excludes such non-core noninterest expense line items. The Company believes that presenting the operating noninterest expense provides more clarity to the users of financial statements regarding the core noninterest expense amounts.   Quarter EndedDecember 31, 2010 Total noninterest expense: $ 113,743 Amounts to be reimbursed on covered assets (80% of actual expense amount)   12,958 Noninterest expense excluding reimbursement amounts $ 100,785   Quarter EndedSeptember 30, 2010 Total noninterest expense: $ 99,945 Amounts to be reimbursed on covered assets (80% of actual expense amount)   7,834 Noninterest expense excluding reimbursement amounts $ 92,111                     EAST WEST BANCORP, INC.GAAP TO NON-GAAP RECONCILIATION(In thousands)(Unaudited)   Dilutive EPS excluding the noncash impact resulting from the repurchase of preferred stock issued to the U.S. Treasury is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance to provide additional disclosure. The Company believes that presenting the Non-GAAP dilutive EPS provides more clarity to the users of financial statements.   Quarter EndedDecember 31, 2010 GAAP Diluted EPS $ 0.22 Impact of noncash charge resulting from the repurchase of preferred stock issued to the U.S. Treasury   0.13 Non-GAAP Diluted EPS $ 0.35                                   EAST WEST BANCORP, INC.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 to provide additional disclosure. The net interest margin includes amounts that are non-core in nature. As such, the Company believes that presenting the net interest income and net interest margin excluding such non-core items provides additional clarity to the users of financial statements regarding the core net interest income and net interest margin, comparability to prior periods and the ongoing performance of the Company.   Quarter Ended December 31, 2010 Average Volume           Interest           Yield (1) Total interest-earning assets $ 18,144,027 $ 292,195 6.39 % Net interest income and net interest margin $ 246,562 5.39 % Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset   (43,783 ) Net interest income and net interest margin, excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset $ 202,779   4.43 %     Quarter Ended September 30, 2010 Average Volume           Interest           Yield (1) Total interest-earning assets $ 17,692,002 $ 231,400 5.19 % Net interest income and net interest margin $ 182,805 4.10 % Less net impact of covered loan dispositions   (5,511 )   Net interest income and net interest margin, excluding net impact of covered loan dispositions $ 177,294   3.98 %     Year to Date December 31, 2010 Average Volume           Interest           Yield Total interest-earning assets $ 17,725,514 $ 1,095,831 6.18 % Net interest income and net interest margin $ 894,714 5.05 % Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset   (140,869 ) Net interest income and net interest margin, excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset $ 753,845   4.25 %   (1) Annualized.     East West Bancorp, Inc.Irene OhChief Financial Officer626-768-6360