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Press release from Business Wire

East West Bancorp Reports Record Net Income for Full Year 2011 of $245 Million; Increase in Annual Dividend Rate to $0.40 and New $200 Million Common Stock Repurchase Program

Thursday, January 19, 2012

East West Bancorp Reports Record Net Income for Full Year 2011 of $245 Million; Increase in Annual Dividend Rate to $0.40 and New $200 Million Common Stock Repurchase Program16:45 EST Thursday, January 19, 2012 PASADENA, Calif. (Business Wire) -- East West Bancorp, Inc. (Nasdaq: EWBC), parent company of East West Bank, the financial bridge between the United States and Greater China, today reported financial results for the fourth quarter and full year 2011. For the fourth quarter of 2011, net income was $66.2 million or $0.43 per dilutive share. For the full year 2011, net income was $245.2 million and net income available to common stockholders was $1.60 per dilutive share. “East West earned $245.2 million for the full year 2011, the highest ever in our history,” stated Dominic Ng, Chairman and Chief Executive Officer of East West. “In the fourth quarter of 2011, East West earned net income of $66.2 million or $0.43 per share, up from $62.4 million or $0.41 per share in the third quarter. In fact, throughout 2011, East West consecutively increased both net income and EPS each quarter.” Ng continued, “These strong results for the fourth quarter and full year 2011 were a direct result of our success in growing the loan portfolio and core deposits to record levels, while maintaining tight control on operating expenses and significantly reducing credit costs. Although the current environment continues to pose challenges for the financial services industry, East West has been able to outperform many of its peers. During 2011, we grew our noncovered commercial loan portfolio to $3.1 billion and increased core deposits by 16% or $1.4 billion to $10.3 billion. This growth was achieved while we maintained strong expense control and improved the efficiency ratio to 43%.” “East West ended 2011 with record assets of $22 billion and record earnings of $245.2 million. Our balance sheet is healthy and our capital levels are excellent. As such, I am pleased to announce that the board of directors has approved a 100% increase in the annual common stock dividend rate to $0.40 per share and has also authorized the repurchase of $200 million of our common stock. As we look to 2012, we are confident in our ability to prudently grow the balance sheet, improve our earnings power and return strong value to our shareholders,” concluded Ng. 2011 Quarterly Results Summary       For the three months ended, Dollars in millions, except per share       December 31,2011           September 30,2011           June 30,2011           March 31,2011 Net income $ 66.2 $ 62.4 $ 60.5 $ 56.1 Net income available to common shareholders 64.5 60.7 58.8 54.4 Earnings per share (diluted) 0.43 0.41 0.39 0.37   Return on average assets 1.20 % 1.13 % 1.12 % 1.07 % Return on average common equity 11.54 % 10.99 % 11.06 % 10.50 %   Tier 1 risk-based capital ratio 14.8 % 14.6 % 15.2 % 15.9 % Total risk-based capital ratio 16.4 % 16.2 % 17.0 % 17.7 %                                               Full Year 2011 HighlightsRecord Earnings – East West increased net income each consecutive quarter of 2011. For the full year 2011, net income totaled a record $245.2 million, a 49% or $80.7 million increase from $164.6 million in 2010. Strong Loan Growth – Total noncovered loans grew to a record $10.6 billion, an increase of 18% or $1.6 billion during the full year 2011. The growth in noncovered loans was fueled by strong growth in commercial and trade finance loans and single family loans. Record Deposit Growth – Total deposits grew to a record $17.5 billion, a 12% or $1.8 billion increase during the full year 2011. Core deposits grew to a record $10.3 billion, an increase of 16% or $1.4 billion year to date. Improved Asset Quality – Charge-offs and provision levels decreased each quarter of 2011. Full year 2011 net charge-offs were $112.1 million, a 45% or $90.5 million decrease as compared to the full year 2010. Nonperforming assets remained low at 0.80% of total assets. Strong Capital Levels – Capital levels for East West remain high. As of December 31, 2011, East West's Tier 1 risk-based capital and total risk-based ratios were 14.8% and 16.4%, respectively, over $800 million greater than the well capitalized requirements of 6% and 10%, respectively. Fourth Quarter 2011 HighlightsStrong Fourth Quarter Earnings – For the fourth quarter of 2011, net income was $66.2 million or $0.43 per dilutive share. Net income grew 6% or $3.8 million from the third quarter of 2011 and 17% or $9.9 million from the fourth quarter of 2010. Earnings per dilutive share grew 5% or $0.02 from the third quarter of 2011 and 95% or $0.21 from the fourth quarter of 2010. Strong Loan Growth – Quarter to date, total loans receivable increased 2% or $291.1 million to $14.5 billion. This increase was largely due to growth in the noncovered loan portfolio. Specifically, noncovered commercial and trade finance loans grew 4% or $130.3 million to $3.1 billion, and noncovered single family loans grew 18% or $278.7 million to $1.8 billion quarter to date. Strong Deposit Growth – Quarter to date, core deposits increased 5% or $482.7 million to a record $10.3 billion and total deposits increased 1% or $144.3 million to $17.5 billion. Strong Net Interest Margin – The adjusted net interest margin for the fourth quarter totaled 4.13%, as compared to 3.98% for the third quarter of 2011 and 4.43% for the fourth quarter of 2010. 1Cost of Funds Down 10 bps from Q3 2011 and Down 20 bps from Q4 2010 – The cost of funds declined 10 basis points from the third quarter of 2011 and 20 basis points from the fourth quarter of 2010 to 0.83% for the fourth quarter of 2011. Our cost of deposits declined 10 basis points from the third quarter of 2011 and 12 basis points from the fourth quarter of 2010 to 0.55% for the quarter ended December 31, 2011. Net Charge-offs Down 10% from Q3 2011, Down 43% from Q4 2010 – Net charge-offs declined to $21.8 million, a decrease of $2.5 million or 10% from the prior quarter and a decrease of $16.5 million or 43% from the fourth quarter of 2010. Nonperforming Assets Stable at 0.80% of Total Assets – Nonperforming assets totaled $175.0 million, or 0.80% of total assets at December 31, 2011, a 4% or $6.1 million increase from September 30, 2011 and a 10% or $19.8 million decrease from December 31, 2010. This is the ninth consecutive quarter East West is reporting a nonperforming assets to total assets ratio under 1.00%. Management Guidance The Company is providing initial guidance for the first quarter and full year of 2012. The planned buyback of up to $200.0 million of the Company's common stock is not factored into this guidance for the first quarter or full year of 2012. Management currently estimates that fully diluted earnings per share for the full year of 2012 will range from $1.72 to $1.76 or an increase of approximately 7% to 10% from 2011. This EPS guidance is based on overall asset growth of 2%, provision for loan losses of approximately $60 million and an adjusted net interest margin of approximately 3.85%1. Management currently estimates that fully diluted earnings per share for the first quarter of 2012 will range from $0.41 to $0.43 per dilutive share. This EPS guidance is based on the following assumptions: Stable balance sheet A stable interest rate environment and an adjusted net interest margin of approximately 3.90% Provision for loan losses of approximately $15 to $20 million Total noninterest expense of approximately $100 million for the quarter, net of amounts to be reimbursed by the FDIC Effective tax rate of approximately 36.5% Balance Sheet Summary As of December 31, 2011, total assets grew to $22.0 billion compared to $21.8 billion at September 30, 2011, and $20.7 billion at December 31, 2010. The increase in the balance sheet is primarily due to loan growth of 2% or $291.1 million for the fourth quarter and loan growth of 5% or $751.9 million for the full year 2011. This growth was funded with an increase in deposits of 1% or $144.3 million for the fourth quarter and 12% or $1.8 billion for the full year 2011. Loans receivable increased to $14.5 billion at December 31, 2011, compared to $14.2 billion at September 30, 2011 and $13.7 billion at December 31, 2010. This increase in loans receivable was due to growth in the noncovered loan portfolio. During the fourth quarter, noncovered loan balances increased 5% or $507.9 million to $10.6 billion at December 31, 2011. The increase in noncovered loans during the fourth quarter was driven by growth in commercial and trade finance loans, single family loans and consumer loans which increased 4% or $130.3 million, 18% or $278.7 million, and 16% or $80.2 million, respectively. Covered Loans Covered loans totaled $3.9 billion as of December 31, 2011, a decrease of 5% or $216.8 million from September 30, 2011. The decrease in the covered loan portfolio was primarily due to payoffs and paydown activity, as well as charge-offs. The covered loan portfolio is comprised of loans acquired from the FDIC-assisted acquisitions of United Commercial Bank (UCB) and Washington First International Bank (WFIB) which are covered under loss share agreements with the FDIC. During the fourth quarter, we recorded a net decrease in the FDIC indemnification asset and receivable included in noninterest income (loss) of $(20.4) million, largely due to continued improved credit performance of the UCB portfolio as compared to our original estimate. Deposits At December 31, 2011, total deposits equaled $17.5 billion as compared to $17.3 billion at September 30, 2011 and $15.6 billion at December 31, 2010. Throughout the year and continuing in the fourth quarter of 2011, we focused on growing commercial and low-cost core deposits and reducing our reliance on time deposits. Core deposits increased to a record $10.3 billion at December 31, 2011, or an increase of 5% or $482.7 million from September 30, 2011. Quarter to date, all core deposit categories grew, with the largest increases in money market deposits which increased 5% or $243.4 million to $4.7 billion, and demand deposits which increased 3% or $115.2 million to a record $3.5 billion. Time deposits totaled $7.1 billion at December 31, 2011, or a decrease of 5% or $338.4 million from September 30, 2011. Fourth Quarter 2011 Operating ResultsNet Interest Income The core net interest margin, excluding the net impact to interest income of $25.0 million resulting from covered loan activity and amortization of the FDIC indemnification asset, remained strong at 4.13% for the fourth quarter of 2011, as compared to 3.98% for the third quarter of 2011 and 4.43% for the fourth quarter of 2010.1 Net interest income, adjusted for the net income of covered loan dispositions, totaled $204.0 million for the fourth quarter, an increase of 3% or $5.5 million from the third quarter of 20111. The increase in both the core net interest margin and adjusted net interest income was primarily due to a reduction in the cost of deposits and an increase in loans receivable. In addition, although quarterly average interest-earning assets declined between the third and fourth quarters of 2011, the composition of interest earnings assets changed and thus resulted in an improvement in our yield on total interest-earning assets. Average loan balances for the fourth quarter totaled $14.3 billion, an increase of 2% or $259.6 million from the average loan balances for the third quarter. The impact of the increase in average loan balances was partially offset by a decrease in the loan yield on noncovered loans. The yield on noncovered loans was 4.76% for the fourth quarter, compared to 4.87% in the prior quarter. The cost of deposits decreased to 0.55% for the fourth quarter of 2011, down 10 basis points from 0.65% in the third quarter of 2011. This improvement in the cost of deposits was primarily achieved through actively managing down higher interest-bearing deposit accounts, particularly time deposits. The average cost on time deposits declined by 11 basis points in the fourth quarter to 1.01%, resulting in cost savings of $2.0 million as compared to the third quarter of 2011. Although operating in a low interest rate environment has been challenging, East West is taking measures to maintain a strong net interest margin while continuing prudent interest rate risk management practices. Additionally, management is confident that East West will continue to organically grow the loan portfolio. As such, while the net interest margin may decrease from current levels, management still expects to maintain a relatively stable net interest margin and expects the adjusted net interest margin to approximate 3.90% for the first quarter of 2012 and 3.85% for the full year 2012. Noninterest Income (Loss) & Expense The Company reported total noninterest income for the fourth quarter of 2011 of $937 thousand, compared to total noninterest (loss) of ($13.5) million in the third quarter of 2011 and noninterest (loss) of ($17.3) million in the fourth quarter of 2010. Branch fees, loan fees and letter of credit and foreign exchange income totaled $15.8 million in the fourth quarter of 2011, as compared to $17.4 million in the third quarter of 2011 and $13.7 million in the fourth quarter of 2010. Also included in noninterest income for the fourth quarter of 2011 were gains on sales of SBA loans of $1.4 million and gains on sales of investment securities of $2.9 million. Noninterest expense totaled $106.7 million for the fourth quarter of 2011, an increase of $2.1 million from the third quarter of 2011 and a decrease of $7.1 million from the fourth quarter of 2010. Noninterest expense, excluding amounts to be reimbursed by the FDIC, totaled $98.1 million for the fourth quarter of 2011.1 A summary of the noninterest expenses for the fourth quarter 2011, compared to the third quarter 2011 and fourth quarter 2010, is detailed below:                           Quarter EndedDecember 31, 2011September 30, 2011December 31, 2010 Total noninterest expense: $ 106,672 $ 104,552 $ 113,743 Amounts to be reimbursed on covered assets (80% of actual expense amount) 8,551 3,539 12,958 Prepayment penalties for FHLB advances and other borrowings   -   3,826   - Noninterest expense excluding reimbursable amounts and prepayment penalties for FHLB advances and other borrowings $ 98,121 $ 97,187 $ 100,785   Overall, noninterest expense for the fourth quarter, excluding amounts to be reimbursed by the FDIC, was in line with the third quarter of 2011. Compensation and employee benefits and occupancy and equipment expense increased 3% or $1.2 million and 1% or $149 thousand, respectively, for the fourth quarter of 2011. Deposit insurance premium expense increased in the fourth quarter 2011 as compared to the prior quarter due to a third quarter adjustment resulting from a lower actual assessment in that period. Credit cycle costs including other real estate owned expense, loan related expense, and legal expense totaled $21.9 million for the fourth quarter 2011, as compared to $15.7 million for the third quarter 2011. Of total credit cycle costs incurred in the fourth quarter, $10.7 million related to covered loans and real estate owned for which we expect that 80% or $8.6 million is reimbursable by the FDIC. Additionally, in the fourth quarter, amortization of investments in affordable housing partnerships decreased $2.4 million to $2.9 million and consulting expense decreased $1.0 million to $1.1 million, as compared to the prior quarter. Management anticipates that in the first quarter of 2012, noninterest expense will total approximately $100.0 million, net of amounts reimbursable from the FDIC. The effective tax rate for the fourth quarter was 35.9% as 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 2011 Operating Results For the full year 2011, adjusted net interest income reached a record $779.4 million, an increase of 3% or $25.5 million from 20101. The adjusted net interest margin for 2011 totaled 4.02% compared to 4.25% for 20101. Although the low interest rate environment reduced our loan yields in 2011 as compared to 2010, East West took actions throughout the year to reduce deposit and borrowing costs. Our total cost of funds declined by 21 basis points from 1.15% for the full year 2010 to 0.94% for the full year 2011. Total fees and other operating income for the full year 2011 increased to $79.5 million, a 19% or $12.8 million increase from full year 2010. As compared to 2010, branch fees increased 3% or $1.1 million, letters of credit fees and foreign exchange income increased 54% or $8.2 million, and other operating income increased 35% or $3.7 million. A summary of these fees and other income is detailed below:                           Year Ended % Change ($ in thousands) December 31, 2011December 31, 2010 (Yr/Yr)   Branch fees $ 33,776 $ 32,634 3 % Letters of credit fees and foreign exchange income 23,140 14,987 54 % Ancillary loan fees 8,350 8,526 -2 % Other operating income   14,270   10,568 35 % Total fees & other operating income $ 79,536 $ 66,715 19 %   Noninterest expense totaled $435.6 million for the full year 2011, a decrease of 9% or $42.3 million as compared to 2010. The decrease in noninterest expense was due to a reduction in credit cycle costs and active expense control. As compared to full year 2010, other real estate owned expenses declined 34% or $21.1 million, compensation expense declined 6% or $10.0 million, deposit insurance premium decreased 19% or $4.7 million, and data processing expense decreased 19% or $2.0 million. These decreases in the full year 2011 as compared to the full year 2010 were partially offset by an increase in amortization of investments in affordable housing partnerships of 73% or $7.3 million due to increased investments. Credit Quality Credit quality continued to improve in the fourth quarter and full year 2011. In each quarter of 2010 and 2011, East West reduced charge-offs and maintained a nonperforming asset to total asset ratio of less than 1.00%. The provision for loan losses was $20.0 million for the fourth quarter of 2011, a decrease of 9% or $2.0 million from the prior quarter, and a decrease of 33% or $9.8 million as compared to the fourth quarter of 2010. Total net charge-offs decreased to $21.8 million for the fourth quarter of 2011, a decrease of 10% or $2.5 million from the previous quarter and a decrease of 43% or $16.5 million compared to the prior year quarter. Additionally, total nonaccrual loans and total nonperforming assets excluding covered assets, continued to remain low, with total nonperforming assets excluding covered assets, to total assets under 1.00% for the ninth consecutive quarter. Nonperforming assets, totaled $175.0 million or 0.80% of total assets at December 31, 2011. East West continues to maintain a strong allowance for noncovered loan losses at $209.9 million or 2.04% of noncovered loans receivable at December 31, 2011. This compares to an allowance for noncovered loan losses of $211.7 million or 2.16% of noncovered loans at September 30, 2011 and $230.4 million or 2.64% of noncovered loans at December 31, 2010. Our allowance for loan losses and provision for loan losses have declined for several quarters as a result of credit quality improvement, partially offset by increases in the allowance for loan losses on commercial and trade finance loans and single family loans, commensurate with the increases in these portfolios. Capital Strength(Dollars in millions)       December 31, 2011           Well CapitalizedRegulatoryRequirement           Total Excess AboveWell CapitalizedRequirement   Tier 1 leverage capital ratio 9.7 % 5.00 % $ 1,001 Tier 1 risk-based capital ratio 14.8 % 6.00 % 1,232 Total risk-based capital ratio 16.4 % 10.00 % 892 Tangible common equity to tangible assets ratio 8.4 % N/A N/A Tangible common equity to risk weighted assets ratio 12.9 % N/A N/A   Our capital ratios remain very strong. As of December 31, 2011, our Tier 1 leverage capital ratio totaled 9.7%, our Tier 1 risk-based capital ratio totaled 14.8% and our total risk-based capital ratio totaled 16.4%. East West exceeds well capitalized requirements for all regulatory guidelines by over $800 million. The Company is focused on active capital management and is committed to maintaining strong capital levels that exceed regulatory requirements while also supporting balance sheet growth and providing a strong return to our shareholders. In light of our commitment to our shareholders, our excellent capital levels and our strong financial performance, the board of directors for East West has approved an increase in our quarterly common stock cash dividend to $0.10 per share from $0.05 per share. Further, the board of directors has also authorized a new stock repurchase program to buy back up to $200.0 million of the Company's common stock. 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 $0.10 is payable on or about February 24, 2012 to shareholders of record on February 10, 2012. This represents an increase of $0.05 per share, or a 100% increase from the prior quarterly dividend of $0.05 per share. The dividend on the Series A Preferred Stock of $20.00 per share is payable on February 1, 2012 to shareholders of record on January 15, 2012. Additionally, the Board has also authorized a new stock repurchase program to buy back up to $200.0 million of the Company's common stock. Conference Call East West will host a conference call to discuss fourth quarter 2011 earnings with the public on Friday, January 20, 2012 at 8:30 a.m. PST/11:30 a.m. EST. The public and investment community are invited to listen as management discusses fourth quarter results and operating developments. The following dial-in information is provided for participation in the conference call: Local call within the US – (877) 317-6789; Call within Canada – (866) 605-3852; International call – (412) 317-6789. A listen-only live broadcast of the call also will be available on the investor relations page of the Company's website at www.eastwestbank.com. About East West East West Bancorp is a publicly owned company with $22.0 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 banks in the United States. Headquartered in California, East West is the premier bank focused exclusively on the United States and Greater China markets. The bank operates with over 130 locations worldwide, including the United States 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, 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 a representative office in 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, 2010 (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 the 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, 2011September 30, 2011December 31, 2010 Assets Cash and cash equivalents $ 1,431,185 $ 1,135,888 $ 1,333,949 Short-term investments 61,834 66,009 143,560 Securities purchased under resale agreements 786,434 951,824 500,000 Investment securities 3,072,578 3,279,592 2,875,941 Loans receivable, excluding covered loans (net of allowance for loan losses of $209,876, $211,738 and $230,408) 10,340,391 9,830,686 8,650,254 Covered loans, net   3,923,142     4,139,902     4,800,876   Total loans receivable, net 14,263,533 13,970,588 13,451,130 Federal Home Loan Bank and Federal Reserve Bank stock 184,409 190,765 210,090 FDIC indemnification asset 511,135 569,157 785,035 Other real estate owned, net 29,350 21,178 21,865 Other real estate owned covered, net 63,624 87,298 123,902 Premiums on deposits acquired, net 67,190 70,115 79,518 Goodwill 337,438 337,438 337,438 Other assets   1,159,957     1,133,194     838,109   Total assets $ 21,968,667   $ 21,813,046   $ 20,700,537     Liabilities and Stockholders' Equity Deposits $ 17,453,002 $ 17,308,700 $ 15,641,259 Federal Home Loan Bank advances 455,251 457,075 1,214,148 Securities sold under repurchase agreements 1,020,208 1,024,949 1,083,545 Long-term debt 212,178 214,178 235,570 Other borrowings - 4,955 10,996 Accrued expenses and other liabilities   516,285     542,020     401,088   Total liabilities 19,656,924 19,551,877 18,586,606 Stockholders' equity   2,311,743     2,261,169     2,113,931   Total liabilities and stockholders' equity $ 21,968,667   $ 21,813,046   $ 20,700,537   Book value per common share $ 14.92 $ 14.62 $ 13.67 Number of common shares at period end 149,328 148,962 148,543   Ending BalancesDecember 31, 2011September 30, 2011December 31, 2010 Loans receivable Real estate - single family $ 1,796,635 $ 1,517,954 $ 1,119,024 Real estate - multifamily 933,168 942,428 974,745 Real estate - commercial 3,487,866 3,459,001 3,392,984 Real estate - land and construction 344,500 372,140 513,754 Commercial 3,142,472 3,012,152 1,983,355 Consumer   583,785     503,575     733,526   Total noncovered loans receivable, excluding loans held for sale 10,288,426 9,807,250 8,717,388 Loans held for sale 278,603 251,920 220,055 Covered loans, net   3,923,142     4,139,902     4,800,876   Total loans receivable 14,490,171 14,199,072 13,738,319 Unearned fees, premiums and discounts (16,762 ) (16,746 ) (56,781 ) Allowance for loan losses on non-covered loans   (209,876 )   (211,738 )   (230,408 ) Net loans receivable $ 14,263,533 $ 13,970,588 $ 13,451,130   Deposits Noninterest-bearing demand $ 3,492,795 $ 3,377,559 $ 2,676,466 Interest-bearing checking 971,179 948,679 757,446 Money market 4,678,409 4,434,983 4,457,376 Savings   1,164,618     1,063,086     984,518   Total core deposits 10,307,001 9,824,307 8,875,806 Time deposits   7,146,001     7,484,393     6,765,453   Total deposits $ 17,453,002 $ 17,308,700 $ 15,641,259                               EAST WEST BANCORP, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share amounts)(unaudited)   Quarter EndedDecember 31, 2011September 30, 2011December 31, 2010   Interest and dividend income $ 268,904 $ 282,741 $ 292,195 Interest expense   (39,830 )   (44,959 )   (45,633 ) Net interest income before provision for loan losses 229,074 237,782 246,562 Provision for loan losses   (20,000 )   (22,000 )   (29,834 ) Net interest income after provision for loan losses 209,074 215,782 216,728 Noninterest income (loss) 937 (13,545 ) (17,279 ) Noninterest expense   (106,672 )   (104,552 )   (113,743 ) Income before provision for income taxes 103,339 97,685 85,706 Provision for income taxes   37,133     35,253     29,357   Net income 66,206 62,432 56,349 Preferred stock dividend and amortization of preferred stock discount   (1,714 )   (1,714 )   (24,109 ) Net income available to common stockholders $ 64,492 $ 60,718 $ 32,240 Net income per share, basic $ 0.44 $ 0.41 $ 0.22 Net income per share, diluted $ 0.43 $ 0.41 $ 0.22 Shares used to compute per share net income: - Basic 147,332 147,162 146,625 - Diluted 153,761 153,453 147,524     Quarter EndedDecember 31, 2011September 30, 2011December 31, 2010 Noninterest income (loss): Branch fees $ 8,072 $ 8,872 $ 7,681 Decrease in FDIC indemnification asset and FDIC receivable (20,441 ) (43,451 ) (36,043 ) Net gain on sales of loans 1,432 5,452 6,265 Letters of credit fees and foreign exchange income 5,504 6,450 3,963 Net gain on sales of investment securities 2,880 3,191 6,488 Net gain (loss) on sale of fixed assets 38 30 (266 ) Impairment loss on investment securities (169 ) - (6,340 ) Ancillary loan fees 2,228 2,076 2,101 Loss on acquisition - - (4,697 ) Other operating income   1,393     3,835     3,569   Total noninterest income (loss) $ 937 $ (13,545 ) $ (17,279 )   Noninterest expense: Compensation and employee benefits $ 41,068 $ 39,885 $ 39,001 Occupancy and equipment expense 12,729 12,580 13,051 Loan related expenses 6,788 5,208 6,503 Other real estate owned expense 10,697 4,489 16,879 Deposit insurance premiums and regulatory assessments 4,077 2,430 3,416 Prepayment penalties for FHLB advances and other borrowings - 3,826 - Legal expense 4,407 6,028 5,186 Amortization of premiums on deposits acquired 2,924 3,067 3,237 Data processing 2,068 1,827 2,441 Consulting expense 1,053 2,094 2,312 Amortization of investments in affordable housing partnerships 2,914 5,287 2,915 Other operating expense   17,947     17,831     18,802   Total noninterest expense $ 106,672 $ 104,552 $ 113,743                           EAST WEST BANCORP, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share amounts)(unaudited)   Year To DateDecember 31, 2011December 31, 2010   Interest and dividend income $ 1,080,448 $ 1,095,831 Interest expense   (177,422 )   (201,117 ) Net interest income before provision for loan losses 903,026 894,714 Provision for loan losses   (95,006 )   (200,159 ) Net interest income after provision for loan losses 808,020 694,555 Noninterest income 10,924 39,270 Noninterest expense   (435,610 )   (477,916 ) Income before provision for income taxes 383,334 255,909 Provision for income taxes   138,100     91,345   Net income 245,234 164,564 Preferred stock dividend and amortization of preferred stock discount   (6,857 )   (43,126 ) Net income available to common stockholders $ 238,377 $ 121,438 Net income per share, basic $ 1.62 $ 0.88 Net income per share, diluted $ 1.60 $ 0.83 Shares used to compute per share net income: - Basic 147,093 137,478 - Diluted 153,467 147,102     Year To DateDecember 31, 2011December 31, 2010 Noninterest income: Branch fees $ 33,776 $ 32,634 Decrease in FDIC indemnification asset and FDIC receivable (100,141 ) (83,213 ) Net gain on sales of loans 20,185 18,515 Letters of credit fees and foreign exchange income 23,140 14,987 Net gain on sales of investment securities 9,703 31,237 Net gain (loss) on sale of fixed assets 2,274 (189 ) Impairment loss on investment securities (633 ) (16,669 ) Ancillary loan fees 8,350 8,526 Gain on acquisition - 22,874 Other operating income   14,270     10,568   Total noninterest income $ 10,924 $ 39,270   Noninterest expense: Compensation and employee benefits $ 160,093 $ 170,052 Occupancy and equipment expense 50,082 52,073 Loan related expenses 19,379 21,070 Other real estate owned expense 40,435 61,568 Deposit insurance premiums and regulatory assessments 20,531 25,201 Prepayment penalties for FHLB advances and other borrowings 12,281 13,832 Legal expense 21,327 19,577 Amortization of premiums on deposits acquired 12,327 13,283 Data processing 8,598 10,615 Consulting expense 7,151 7,984 Amortization of investments in affordable housing partnerships 17,324 10,032 Other operating expense   66,082     72,629   Total noninterest expense $ 435,610 $ 477,916                               EAST WEST BANCORP, INC.SELECTED FINANCIAL INFORMATION(In thousands)(unaudited)   Average BalancesQuarter Ended   December 31, 2011September 30, 2011December 31, 2010 Loans receivable Real estate - single family $ 1,655,379 $ 1,382,715 $ 1,091,042 Real estate - multifamily 937,841 945,007 969,801 Real estate - commercial 3,475,800 3,447,983 3,430,009 Real estate - land and construction 370,577 416,640 548,088 Commercial 3,073,612 2,859,985 1,834,920 Consumer   777,201     773,229     992,408   Total loans receivable, excluding covered loans 10,290,410 9,825,559 8,866,268 Covered loans   4,048,407     4,253,687     4,866,915   Total loans receivable 14,338,817 14,079,246 13,733,183 Investment securities 3,166,140 3,255,701 2,876,561 Earning assets 19,616,560 19,810,633 18,144,027 Total assets 21,837,593 21,978,123 20,467,482   Deposits Noninterest-bearing demand $ 3,448,119 $ 3,236,683 $ 2,649,912 Interest-bearing checking 953,668 895,223 756,741 Money market 4,514,598 4,453,224 4,275,692 Savings   1,126,647     1,048,004     957,781   Total core deposits 10,043,032 9,633,134 8,640,126 Time deposits   7,233,069     7,665,429     6,664,058   Total deposits 17,276,101 17,298,563 15,304,184 Interest-bearing liabilities 15,556,295 15,842,752 15,004,890 Stockholders' equity 2,300,991 2,275,803 2,416,463     Selected RatiosQuarter EndedDecember 31, 2011September 30, 2011December 31, 2010 For The Period Return on average assets 1.20 % 1.13 % 1.10 % Return on average common equity 11.54 % 10.99 % 6.28 % Interest rate spread 4.42 % 4.53 % 5.18 % Net interest margin 4.63 % 4.76 % 5.39 % Yield on earning assets 5.44 % 5.66 % 6.39 % Cost of deposits 0.55 % 0.65 % 0.67 % Cost of funds 0.83 % 0.93 % 1.03 % Noninterest expense/average assets (1) 1.83 % 1.67 % 2.10 % Efficiency ratio (2) 43.81 % 41.19 % 44.77 %   (1) Excludes the amortization of intangibles, amortization of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalties for FHLB advances and other borrowings.   (2) Represents noninterest expense, excluding the amortization of intangibles, amortization of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalties for FHLB advances and other borrowings, divided by the aggregate of net interest income before provision for loan losses and noninterest income, excluding items that are non-recurring in nature.                                         EAST WEST BANCORP, INC.QUARTER TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID (In thousands) (unaudited)   Quarter EndedDecember 31, 2011       December 31, 2010AverageAverageVolume       Interest       Yield(1)       Volume       Interest       Yield(1)ASSETSInterest-earning assets: Due from banks and short-term investments $ 918,784 $ 7,469 3.23 % $ 571,557 $ 2,229 1.55 % Securities purchased under resale agreements 1,005,363 4,773 1.88 % 749,384 2,905 1.52 % Investment securities available-for-sale 3,166,140 22,856 2.86 % 2,876,561 19,410 2.68 % Loans receivable 10,290,410 123,478 4.76 % 8,866,268 124,478 5.57 % Loans receivable - covered 4,048,407 109,498 10.73 % 4,866,915 142,298 11.60 % Federal Home Loan Bank and Federal Reserve Bank stock   187,456           830       1.76 %         213,342           875       1.64 % Total interest-earning assets   19,616,560           268,904       5.44 %         18,144,027           292,195       6.39 %   Noninterest-earning assets: Cash and cash equivalents 276,416 392,139 Allowance for loan losses (222,642 ) (246,871 ) Other assets   2,167,259     2,178,187   Total assets $ 21,837,593   $ 20,467,482       LIABILITIES AND STOCKHOLDERS' EQUITYInterest-bearing liabilities: Checking accounts 953,668 726 0.30 % 756,741 658 0.34 % Money market accounts 4,514,598 3,989 0.35 % 4,275,692 6,109 0.57 % Savings deposits 1,126,647 567 0.20 % 957,781 752 0.31 % Time deposits 7,233,069 18,500 1.01 % 6,664,058 18,139 1.08 % Federal Home Loan Bank advances 465,408 2,715 2.31 % 1,018,491 5,736 2.23 % Securities sold under repurchase agreements 1,028,323 12,210 4.71 % 1,069,208 12,218 4.47 % Long-term debt 214,113 1,049 1.94 % 235,570 1,597 2.65 % Other borrowings   20,469           74       1.43 %         27,349           424       6.07 % Total interest-bearing liabilities   15,556,295           39,830       1.02 %         15,004,890           45,633       1.21 %   Noninterest-bearing liabilities: Demand deposits 3,448,119 2,649,912 Other liabilities 532,188 396,217 Stockholders' equity   2,300,991     2,416,463   Total liabilities and stockholders' equity $ 21,837,593   $ 20,467,482     Interest rate spread 4.42 % 5.18 %   Net interest income and net interest margin $ 229,074 4.63 % $ 246,562 5.39 %   Net interest income and net interest margin, adjusted(2) $ 204,036 4.13 % $ 202,779 4.43 %   (1) Annualized.   (2) Amounts exclude the net impact of covered loan dispositions and amortization of the FDIC indemnification asset of $25.0 million and $43.8 million for the three months ended December 31, 2011 and 2010, respectively.                           EAST WEST BANCORP, INC.SELECTED FINANCIAL INFORMATION(In thousands)(unaudited)   Average BalancesYear To DateDecember 31, 2011December 31, 2010 Loans receivable Real estate - single family $ 1,359,223 $ 1,016,669 Real estate - multifamily 948,750 1,005,790 Real estate - commercial 3,424,414 3,502,013 Real estate - land and construction 437,843 666,992 Commercial 2,613,692 1,599,057 Consumer   884,184     843,762   Total loans receivable, excluding covered loans 9,668,106 8,634,283 Covered loans   4,369,320     5,074,631   Total loans receivable 14,037,426 13,708,914 Investment securities 3,116,671 2,439,034 Earning assets 19,393,404 17,725,514 Total assets 21,573,121 20,178,109   Deposits Noninterest-bearing demand $ 3,087,777 $ 2,418,816 Interest-bearing checking 854,079 677,529 Money market 4,429,567 3,974,936 Savings   1,045,546     967,953   Total core deposits 9,416,969 8,039,234 Time deposits   7,423,695     6,851,461   Total deposits 16,840,664 14,890,695 Interest-bearing liabilities 15,727,853 15,131,431 Stockholders' equity 2,233,962 2,345,578     Selected RatiosYear To DateDecember 31, 2011December 31, 2010 For The Period Return on average assets 1.14 % 0.82 % Return on average common equity 11.08 % 6.42 % Interest rate spread 4.44 % 4.85 % Net interest margin 4.66 % 5.05 % Yield on earning assets 5.57 % 6.18 % Cost of deposits 0.64 % 0.78 % Cost of funds 0.94 % 1.15 % Noninterest expense/average assets (1) 1.82 % 2.18 % Efficiency ratio (2) 43.04 % 47.51 %   (1) Excludes the amortization of intangibles, amortization of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalties for FHLB advances and other borrowings.   (2) Represents noninterest expense, excluding the amortization of intangibles, amortization of premiums on deposits acquired, amortization of investments in affordable housing partnerships and prepayment penalties for FHLB advances and other borrowings, divided by the aggregate of net interest income before provision for loan losses and noninterest income, excluding items that are non-recurring in nature.                                         EAST WEST BANCORP, INC.YEAR TO DATE AVERAGE BALANCES, YIELDS AND RATES PAID (In thousands) (unaudited)   Year To DateDecember 31, 2011       December 31, 2010AverageAverageVolume       Interest       Yield       Volume       Interest       Yield   ASSETSInterest-earning assets: Due from banks and short-term investments $ 1,018,490 $ 22,575 2.22 % $ 828,039 $ 9,634 1.16 % Securities purchased under resale agreements 1,023,043 19,216 1.88 % 529,817 14,208 2.64 % Investment securities available-for-sale 3,116,671 89,469 2.87 % 2,439,034 70,052 2.87 % Loans receivable 9,668,106 478,724 4.95 % 8,634,283 479,451 5.55 % Loans receivable - covered 4,369,320 467,074 10.69 % 5,074,631 519,138 10.23 % Federal Home Loan Bank and Federal Reserve Bank stock   197,774           3,390       1.71 %         219,710           3,348       1.52 % Total interest-earning assets   19,393,404           1,080,448       5.57 %         17,725,514           1,095,831       6.18 %   Noninterest-earning assets: Cash and cash equivalents 271,393 365,041 Allowance for loan losses (228,160 ) (252,318 ) Other assets   2,136,484     2,339,872   Total assets $ 21,573,121   $ 20,178,109       LIABILITIES AND STOCKHOLDERS' EQUITYInterest-bearing liabilities: Checking accounts 854,079 3,009 0.35 % 677,529 2,349 0.35 % Money market accounts 4,429,567 20,610 0.47 % 3,974,936 29,514 0.74 % Savings deposits 1,045,546 2,988 0.29 % 967,953 3,986 0.41 % Time deposits 7,423,695 80,503 1.08 % 6,851,461 80,888 1.18 % Federal Home Loan Bank advances 679,630 15,461 2.27 % 1,324,709 26,641 2.01 % Securities sold under repurchase agreements 1,051,844 48,561 4.62 % 1,047,090 48,993 4.61 % Long-term debt 226,808 5,832 2.57 % 235,570 6,420 2.69 % Other borrowings   16,684           458       2.75 %         52,183           2,326       4.47 % Total interest-bearing liabilities   15,727,853           177,422       1.13 %         15,131,431           201,117       1.33 %   Noninterest-bearing liabilities: Demand deposits 3,087,777 2,418,816 Other liabilities 523,529 282,284 Stockholders' equity   2,233,962     2,345,578   Total liabilities and stockholders' equity $ 21,573,121   $ 20,178,109     Interest rate spread 4.44 % 4.85 %   Net interest income and net interest margin $ 903,026 4.66 % $ 894,714 5.05 %   Net interest income and net interest margin, adjusted(1) $ 779,388 4.02 % $ 753,845 4.25 % (1) Amounts exclude the net impact of covered loan dispositions and amortization of the FDIC indemnification asset of $123.6 million and $140.9 million for the twelve months ended December 31, 2011 and 2010, respectively.                                   EAST WEST BANCORP, INC.QUARTERLY ALLOWANCE FOR LOAN LOSSES RECAP(In thousands)(unaudited)   Quarter Ended12/31/2011       9/30/2011       6/30/2011       3/31/2011       12/31/2010LOANS Allowance balance, beginning of period $ 218,172 $ 220,556 $ 226,161 $ 234,633 $ 244,186 Allowance for unfunded loan commitments and letters of credit 197 - (487 ) (758 ) (1,043 ) Provision for loan losses 20,000 22,000 26,500 26,506 29,834   Net Charge-offs (Recoveries): Real estate - single family 1 1,563 1,120 928 1,770 Real estate - multifamily 3,787 2,069 1,081 2,178 5,048 Real estate - commercial 5,443 1,157 2,164 4,603 13,557 Real estate - land and construction 12,923 12,855 18,143 16,824 11,816 Commercial (426 ) 6,487 8,844 8,660 5,981 Consumer   118           253           266           1,027           172   Total net charge-offs   21,846           24,384           31,618           34,220           38,344   Allowance balance, end of period (3) $ 216,523         $ 218,172         $ 220,556         $ 226,161         $ 234,633     UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT: Allowance balance, beginning of period $ 11,197 $ 11,197 $ 10,710 $ 9,952 $ 8,909 Provision for unfunded loan commitments and letters of credit   (197 )         -           487           758           1,043   Allowance balance, end of period $ 11,000         $ 11,197         $ 11,197         $ 10,710         $ 9,952   GRAND TOTAL, END OF PERIOD $ 227,523         $ 229,369         $ 231,753         $ 236,871         $ 244,585     Nonperforming assets to total assets (1) 0.80 % 0.77 % 0.83 % 0.89 % 0.94 % Allowance for loan losses on non-covered loans to total gross non-covered loans held for investment at end of period 2.04 % 2.16 % 2.29 % 2.50 % 2.64 % 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 2.15 % 2.27 % 2.41 % 2.62 % 2.76 % Allowance on non-covered loans to non-covered nonaccrual loans at end of period 144.11 % 143.35 % 129.80 % 127.59 % 133.24 % Nonaccrual loans to total loans (2) 1.00 % 1.04 % 1.17 % 1.26 % 1.26 %   (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 $6.6 million, $6.4 million, $6.7 million, $5.8 million and $4.2 million related to covered loans as of December 31, 2011, September 30, 2011, June 30, 2011, March 31, 2011 and December 31, 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 the general allowance.                                   EAST WEST BANCORP, INC.TOTAL NON-PERFORMING ASSETS, EXCLUDING COVERED ASSETS(In thousands)(unaudited)   AS OF DECEMBER 31, 2011Total Nonaccrual Loans90+ DaysDelinquentUnder 90+DaysDelinquentTotalNonaccrualLoansREO AssetsTotalNon-PerformingAssetsLoan Type Real estate - single family $ 5,055 $ - $ 5,055 $ 5,882 $ 10,937 Real estate - multifamily 11,306 6,889 18,195 609 18,804 Real estate - commercial 38,046 6,885 44,931 8,014 52,945 Real estate - land and construction 36,090 27,618 63,708 14,285 77,993 Commercial 6,843 4,394 11,237 74 11,311 Consumer   2,506   -   2,506   486   2,992 Total$99,846$45,786$145,632$29,350$174,982   AS OF SEPTEMBER 30, 2011Total Nonaccrual Loans90+ DaysDelinquentUnder 90+DaysDelinquentTotalNonaccrualLoansREO AssetsTotalNon-PerformingAssetsLoan Type Real estate - single family $ 7,173 $ 99 $ 7,272 $ 4,118 $ 11,390 Real estate - multifamily 12,906 5,468 18,374 - 18,374 Real estate - commercial 40,063 17,544 57,607 6,188 63,795 Real estate - land and construction 43,593 3,532 47,125 10,654 57,779 Commercial 11,121 3,275 14,396 142 14,538 Consumer   2,935   -   2,935   76   3,011 Total$117,791$29,918$147,709$21,178$168,887   AS OF DECEMBER 31, 2010Total Nonaccrual Loans90+ DaysDelinquentUnder 90+DaysDelinquentTotalNonaccrualLoansREO AssetsTotalNon-PerformingAssetsLoan Type Real estate - single family $ 7,058 $ 355 $ 7,413 $ 556 $ 7,969 Real estate - multifamily 9,687 7,694 17,381 468 17,849 Real estate - commercial 48,096 7,962 56,058 3,566 59,624 Real estate - land and construction 22,336 46,449 68,785 17,052 85,837 Commercial 8,235 14,437 22,672 223 22,895 Consumer   620   -   620   -   620 Total$96,032$76,897$172,929$21,865$194,794                         EAST WEST BANCORP, INC.GAAP TO NON-GAAP RECONCILIATION(In thousands)(unaudited)   The tangible common equity to risk weighted assets and tangible common equity to tangible assets ratios are non-GAAP disclosures. 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 assets ratio 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 assets ratios.   As ofDecember 31, 2011 Stockholders' equity $ 2,311,743 Less: Preferred equity (83,027 ) Goodwill and other intangible assets   (411,512 ) Tangible common equity $ 1,817,204     Risk-weighted assets   14,042,662     Tangible common equity to risk-weighted assets ratio   12.9 %   As ofDecember 31, 2011 Total assets $ 21,968,667 Less: Goodwill and other intangible assets   (411,512 ) Tangible assets $ 21,557,155     Tangible common equity to tangible assets ratio 8.4 %                         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 operating noninterest expense provides more clarity to the users of financial statements regarding the core noninterest expense amounts.   Quarter EndedDecember 31, 2011 Total noninterest expense: $ 106,672 Amounts to be reimbursed on covered assets (80% of actual expense amount) 8,551 Prepayment penalties for FHLB advances and other borrowings   - Noninterest expense excluding reimbursable amounts and prepayment penalties for FHLB advances and other borrowings $ 98,121   Quarter EndedSeptember 30, 2011 Total noninterest expense: $ 104,552 Amounts to be reimbursed on covered assets (80% of actual expense amount) 3,539 Prepayment penalties for FHLB advances and other borrowings   3,826 Noninterest expense excluding reimbursable amounts and prepayment penalties for FHLB advances and other borrowings $ 97,187   Quarter EndedDecember 31, 2010 Total noninterest expense: $ 113,743 Amounts to be reimbursed on covered assets (80% of actual expense amount) 12,958 Prepayment penalties for FHLB advances and other borrowings   - Noninterest expense excluding reimbursable amounts and prepayment penalties for FHLB advances and other borrowings $ 100,785                               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 income on covered loans includes amounts that are non-core in nature. As such, the Company believes that presenting the net interest income on covered loans excluding such non-core items provides additional clarity to the users of financial statements regarding the covered loan yield, comparability to prior periods and the ongoing performance of the Company.   Quarter Ended December 31, 2011 Average Volume           Interest           Yield(1) Loans receivable - covered $ 4,048,407 $ 109,498 10.73 % Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset   (25,038 ) Covered loans excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset $ 84,460   8.28 %   Quarter Ended September 30, 2011 Average Volume           Interest           Yield(1) Loans receivable - covered $ 4,253,687 $ 123,927 11.56 % Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset   (39,293 ) Covered loans excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset $ 84,634   7.89 %   (1) Annualized.                               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, 2011 Average Volume           Interest           Yield(1) Total interest-earning assets $ 19,616,560 $ 268,904 5.44 % Net interest income and net interest margin $ 229,074 4.63 % Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset   (25,038 ) Net interest income and net interest margin, excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset $ 204,036   4.13 %   Quarter Ended September 30, 2011 Average Volume           Interest           Yield(1) Total interest-earning assets $ 19,810,633 $ 282,741 5.66 % Net interest income and net interest margin $ 237,782 4.76 % Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset   (39,293 ) Net interest income and net interest margin, excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset $ 198,489   3.98 %   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 %   (1) Annualized.                               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.   Year Ended December 31, 2011 Average Volume           Interest           Yield Total interest-earning assets $ 19,393,404 $ 1,080,448 5.57 % Net interest income and net interest margin $ 903,026 4.66 % Less net impact of covered loan dispositions and amortization of the FDIC indemnification asset   (123,638 ) Net interest income and net interest margin, excluding net impact of covered loan dispositions and amortization of the FDIC indemnification asset $ 779,388   4.02 %   Year Ended 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 % East West Bancorp, Inc.Irene OhChief Financial Officer(626) 768-6360