Business Wire | Jan 28, 2021 08:01AM EST

East West Bancorp Reports Net Income for 2020 of $568 Million and Diluted Earnings Per Share of $3.97, Increases Dividend By 20%

Jan. 28, 2021

PASADENA, Calif.--(BUSINESS WIRE)--Jan. 28, 2021--East West Bancorp, Inc. ("East West" or the "Company") (Nasdaq: EWBC), parent company of East West Bank, the financial bridge between the United States and Greater China, today reported its financial results for the full year and fourth quarter of 2020. For the full year 2020, net income was $567.8 million, or $3.97 per diluted share. For the fourth quarter of 2020, net income was $164.1 million, or $1.15 per diluted share.

"Thanks to the tireless commitment of all our associates, East West successfully navigated the challenges posed by the COVID-19 pandemic in 2020, delivering solid financial performance. For the full year 2020, we earned a return on average assets of 1.16% and return on average equity of 11.2%," stated Dominic Ng, Chairman and Chief Executive Officer of East West. "We ended 2020 on a strong note and are raising our common stock dividend by 20%."

"As of December 31, 2020, our total loans reached a record $38.4 billion, growing by 10% annualized from September 30, 2020, and our total deposits reached a record $44.9 billion, growing by 30% annualized during the same period," continued Ng. "Quarter-over-quarter, our revenue grew by 10%, reflecting loan growth and higher fee income. Expenses were well-managed and our operating efficiency improved. Importantly, we saw across-the-board improvement in our asset quality metrics, in the form of declining deferral and delinquency rates, lower net charge-offs and decreasing nonperforming and criticized assets."

"Throughout the past year, we have been inspired by our customers' resiliency and adaptability. It has been our privilege to provide essential banking services and support the rebuilding of businesses and communities. We are optimistic about an improving macroeconomic outlook, the broader distribution of COVID-19 vaccines and expectations for increased government stimulus. We are looking forward to a strengthening economic recovery in the second half of the new year, and are confident that we will be able to continue our growth and generate strong returns for our shareholders in 2021," concluded Ng.

BALANCE SHEET

* Record Assets - Total assets reached $52.2 billion as of December 31, 2020, growing by $1.8 billion, or 14% annualized, from $50.4 billion as of September 30, 2020. Year-over-year, total assets grew by 18%. Fourth quarter 2020 average interest-earning assets of $49.7 billion grew by $2.3 billion, or 19% linked quarter annualized, driven by very strong deposit growth in the quarter. Deposit growth outpaced loan growth and as a result, average available-for-sale debt securities increased by $970.4 million in the fourth quarter, followed by an increase of $705.6 million in average interest-bearing cash and deposits with banks.

* Record Loans - Total loans reached $38.4 billion as of December 31, 2020, growing by $1.0 billion, or 10% annualized, from $37.4 billion as of September 30, 2020. Year-over-year, total loans grew by $3.6 billion or 10%. Excluding Paycheck Protection Program ("PPP") loans, end-of-period loans grew by 6% year-over-year. PPP loans were $1.6 billion as of December 31, 2020, a decrease of $204.1 million from September 30, 2020 due to loan forgiveness by the SBA. As of January 27, 2021, the Company funded over 2,600 new PPP loans totaling over $380 million. Fourth quarter 2020 average loans of $37.7 billion grew by $565.3 million, or 6% linked quarter annualized. Fourth quarter average loan growth was led by total residential mortgage, followed by commercial and industrial ("C&I") loans, excluding PPP loans, and total commercial real estate ("CRE") loans. The average balance of PPP loans in the fourth quarter was $1.7 billion. Excluding PPP loans, average loans grew by 7% annualized from the third quarter of 2020.

* Record Deposits - Total deposits reached $44.9 billion as of December 31, 2020, growing by $3.2 billion, or 30% annualized, from $41.7 billion as of September 30, 2020. Year-over-year, total deposits grew by $7.5 billion or 20%. Noninterest-bearing demand deposits reached a record $16.3 billion as of December 31, 2020. Throughout 2020, growth in noninterest-bearing deposit accounts outpaced total deposit growth. Noninterest-bearing demand deposits made up 36% of total deposits as of December 31, 2020, up from 30% as of December 31, 2019. Fourth quarter 2020 average deposits of $44.4 billion grew by $3.2 billion, or 31% linked quarter annualized. Fourth quarter average deposit growth was led by noninterest-bearing demand deposits, which increased by $2.0 billion, or 56% linked quarter annualized, followed by growth in money market, interest-bearing checking and savings accounts.

* PPP Liquidity Facility ("PPPLF") - In October 2020, the Company paid off in full its PPPLF, which was $1.4 billion as of September 30, 2020.

* Capital Levels - Capital levels for East West are strong. As of December 31, 2020, stockholders' equity was $5.3 billion, or $37.22 per share. Tangible equity1 per common share was $33.85 as of December 31, 2020, an increase of 3% from $32.85 as of September 30, 2020, and an increase of 9% from $31.15 as of December 31, 2019. As of December 31, 2020, the tangible equity to tangible assets ratio1 was 9.3%, the common equity tier 1 ("CET1") capital ratio was 12.7%, and the total risk-based capital ratio was 14.3%.

* Dividend Increase - First quarter 2021 common stock dividend was increased by 20%, or 5.5 cents per share. The new quarterly dividend is $0.33, up from $0.275 per share. The new annual dividend is $1.32 per share, compared with $1.10 per share previously. 1 See reconciliation of GAAP to non-GAAP financial measures in Table 14.

OPERATING RESULTS

* Full Year Earnings - Full year 2020 net income was $567.8 million, or $3.97 per diluted share, a decrease of 16% from $674.0 million, or $4.61 per diluted share, for the full year 2019. Full year 2020 adjusted net income2 was $565.2 million, or $3.95 per diluted share, a decrease of 20% from adjusted net income of $707.9 million, or $4.84 per diluted share, for the full year 2019. Non-GAAP adjustments exclude the impacts of the impairment, recoveries and income tax items related to DC Solar tax credit investments in 2020 and 2019, as applicable.

* Fourth Quarter Earnings - Fourth quarter 2020 net income was $164.1 million, or $1.15 per diluted share, an increase of 3% from $159.5 million, or $1.12 per diluted share, for the third quarter of 2020. Fourth quarter 2020 adjusted net income2 was $161.5 million, or $1.13 per diluted share, a quarter-over-quarter increase of 1% from $159.5 million. Fourth quarter 2020 earnings were adjusted for items related to DC Solar tax credit investments, which added $2.6 million, or two cents per share to earnings. There were no adjustments to third quarter 2020 earnings. 2 See reconciliation of GAAP to non-GAAP financial measures in Table 12.

Fourth Quarter 2020 Compared to Third Quarter 2020

Net Interest Income and Net Interest Margin

Net interest income ("NII") totaled $346.6 million, an increase of 7% from $324.1 million. Net interest margin ("NIM") of 2.77% increased by five basis points from 2.72%. The quarter-over-quarter changes in the NII and the NIM reflect an increase in PPP-related income, stability of core loan yields, a decrease in the cost of deposits, loan growth, and growth in available-for-sale debt securities.

* Adjusted NII3 totaled $332.7 million, an increase of 5% from $317.6 million. Adjusted NIM3 of 2.76% contracted by one basis point from 2.77%. Adjusted NII and adjusted NIM exclude PPP loan related income and PPPLF expense. * Average loan yield of 3.68% expanded by eight basis points from 3.60%, reflecting a higher amount of deferred fee income accreted on PPP loans. Interest and fees earned on PPP loans contributed $14.2 million to interest income in the fourth quarter, an increase from $7.8 million in the third quarter. Third quarter PPP fee income was lower because of slower than anticipated forgiveness of PPP loans by the SBA. * Excluding the impact of PPP loans, the adjusted average loan yield3 of 3.69% contracted by one basis point from 3.70%, reflecting the general stability of yields of the underlying loan portfolio. * The average cost of interest-bearing deposits decreased by 10 basis points to 0.40%, down from 0.50%. The average cost of deposits decreased by eight basis points to 0.25%, down from 0.33%. The decrease in the cost of deposits reflects growth in low-cost deposit accounts and continued downward repricing of maturing time deposits. 3 See reconciliation of GAAP to non-GAAP financial measures in Table 15.

Noninterest Income

Noninterest income totaled $69.8 million, a 28% increase from $54.5 million. The quarter-over-quarter increase was primarily driven by a favorable change in the credit valuation adjustment of interest rate contracts; an increase in customer-driven foreign exchange transactions, and an increase in net gains on sale of SBA loans.

Noninterest Expense

Noninterest expense totaled $178.7 million, an increase of 4% from $172.6 million.

* Fourth quarter noninterest expense consisted of $165.6 million of adjusted noninterest expense4, $12.3 million in amortization of tax credit and other investments, and $0.8 million in amortization of core deposit intangibles. * Adjusted noninterest expense of $165.6 million increased by $11.1 million, or 7%, from $154.4 million in the third quarter. The quarter-over-quarter change was primarily driven by increased bonus accrual in compensation and employee benefits expense, and a write-down on other real estate owned, which was included in other operating expense. Year-over-year, adjusted noninterest expense was essentially flat, compared with $165.3 million in the fourth quarter of 2019. * Amortization of tax credit and other investments totaled $12.3 million, a decrease from $17.2 million in the third quarter. Fourth quarter amortization of tax credit and other investments was lower because it included $10.7 million of recoveries related to DC Solar tax credit investments. * The adjusted efficiency ratio4 was 39.8% in the fourth quarter, an improvement from 40.8% in the third quarter. 4 See reconciliation of GAAP to non-GAAP financial measures in Table 13.

TAX RELATED ITEMS

Full year 2020 income tax expense was $118.0 million and the effective tax rate was 17%, compared with income tax expense of $169.9 million and an effective tax rate of 20% for the full year of 2019.

* Fourth quarter 2020 income tax expense was $49.3 million and the effective tax rate was 23%, compared with income tax expense of $36.5 million and an effective tax rate of 19% for the third quarter of 2020. * Fourth quarter 2020 income tax expense and effective tax rate were elevated by $8.1 million related to DC Solar tax credit investments. Combined with the $10.7 million of recoveries included as part of amortization of tax credit and other investments, as noted above, the DC Solar-related items in the fourth quarter of 2020 added $2.6 million after tax, or two cents per share.

ASSET QUALITY

The allowance for loan losses ("ALLL") totaled $620.0 million, or 1.61% of loans held for investment ("HFI"), as of December 31, 2020, compared with $618.3 million, or 1.65% of loans HFI, as of September 30, 2020.

* During the fourth quarter of 2020, we recorded a $24.3 million provision for credit losses, compared with $10.0 million for the third quarter of 2020. * Quarter-over-quarter, the ALLL increased by $1.7 million, although the ratio of ALLL to loans HFI decreased by 4 basis points. The change in the ALLL reflects the loan growth during the quarter, an improved macroeconomic forecast, and positive trends in deferrals, delinquencies, criticized assets and other asset quality metrics. * Fourth quarter 2020 net charge-offs were $18.8 million, or annualized 0.20% of average loans HFI, a decrease from $24.2 million, or annualized 0.26% of average loans HFI for the third quarter of 2020. A quarter-over-quarter increase in CRE charge-offs in the fourth quarter was more than offset by the quarter-over-quarter decrease in C&I charge-offs. The full year 2020 net charge-off ratio was 0.17% of average loans HFI, compared with 0.16% for full year 2019. * Nonperforming assets were $234.9 million, or 0.45% of total assets, as of December 31, 2020, a 10% decrease from nonperforming assets of $259.9 million, or 0.52% of total assets, as of September 30, 2020. The quarter-over-quarter decrease in nonperforming assets was largely due to a decrease in C&I and CRE nonaccrual loans.

CAPITAL STRENGTH

Capital levels for East West are strong. The following table presents the regulatory capital ratios as of December 31, 2020, September 30, 2020, and December 31, 2019.

EWBCRegulatory Basel IIICapitalMetrics

Minimum Minimum December September December Well($ in 31, 30, 31, Capital Capitalized Capital millions) 2020 ^(a) 2020 ^(a) 2019 Ratio Ratio + Ratio Conservation Buffer ^(b)

Risk-BasedCapital Ratios:

CET1 capital 12.7 % 12.8 % 12.9 % 4.5 % 6.5 % 7.0 %ratio

Tier 1 capital 12.7 % 12.8 % 12.9 % 6.0 % 8.0 % 8.5 %ratio

Total capital 14.3 % 14.5 % 14.4 % 8.0 % 10.0 % 10.5 %ratio

Leverage ratio 9.4 % 9.8 % 10.3 % 4.0 % 5.0 % 4.0 %

Risk-WeightedAssets ("RWA") $ 38,533 $ 36,922 $ 35,136 N/A N/A N/A ^(c)



N/A Not applicable.

(a)

The Company has elected to use the 2020 CECL transition provision in the calculation of its December 31, 2020 and September 30, 2020 regulatory capital ratios. The Company's December 31, 2020 regulatory capital ratios and RWA are preliminary.

(b)

An additional 2.5% capital conservation buffer above the minimum capital ratios are required in order to avoid limitations on distributions, including dividend payments and certain discretionary bonus payments to executive officers.

(c)

Under regulatory guidelines, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories based on the nature of the obligor, or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar value in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total RWA.

DIVIDEND PAYOUT AND CAPITAL ACTIONS

East West's Board of Directors has declared first quarter 2021 dividends for the Company's common stock. The common stock cash dividend of $0.33 per share is payable on February 23, 2021 to shareholders of record on February 9, 2021. This represents a 20% increase, or 5.5 cents per share, to the quarterly common stock dividend, up from $0.275 per share previously. The new annual dividend is $1.32 per share, compared with $1.10 per share previously.

On March 3, 2020, East West's Board of Directors authorized the repurchase of up to $500 million of East West's common stock. In 2020, the Company repurchased $145.9 million of common stock, or 4.5 million shares, under this authorization during the first quarter. East West did not repurchase any shares during the fourth quarter of 2020 under this authorization.

Conference Call

East West will host a conference call to discuss fourth quarter and full year 2020 earnings with the public on Thursday, January 28, 2021 at 8:30 a.m. PT/11:30 a.m. ET. The public and investment community are invited to listen as management discusses fourth quarter and full year 2020 results and operating developments.

* The following dial-in information is provided for participation in the conference call: calls within the U.S. - (877) 506-6399; calls within Canada - (855) 669-9657; international calls - (412) 902-6699. * A presentation to accompany the earnings call will be available on the Investor Relations page of the Company's website at www.eastwestbank.com/investors. * A listen-only live broadcast of the call will also be available on the Investor Relations page of the Company's website at www.eastwestbank.com/investors. * A replay of the conference call will be available on January 28, 2021 at 11:30 a.m. Pacific Time through February 28, 2021. The replay numbers are: within the U.S. - (877) 344-7529; within Canada - (855) 669-9658; International calls - (412) 317-0088; and the replay access code is: 10150890.

About East West

East West Bancorp, Inc. is a publicly owned company with total assets of $52.2 billion and is traded on the Nasdaq Global Select Market under the symbol "EWBC". The Company's wholly owned subsidiary, East West Bank, is one of the largest independent banks headquartered in California, operating over 120 locations in the United States and Greater China. U.S. markets include California, Georgia, Massachusetts, Nevada, New York, Texas and Washington. In Greater China, East West's presence includes full service branches in Hong Kong, Shanghai, Shantou and Shenzhen, and representative offices in Beijing, Chongqing, Guangzhou, and Xiamen. For more information on East West, visit the Company's website at www.eastwestbank.com.

Forward-Looking Statements

Certain matters set forth herein (including any exhibits hereto) constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to our current business plans and expectations regarding future operating results. Forward-looking statements may include, but are not limited to, the use of forward-looking language, such as "likely result in," "expects," "anticipates," "estimates," "forecasts," "projects," "intends to," "assumes," or may include other similar words or phrases, such as "believes," "plans," "trend," "objective," "continues," "remains," or similar expressions, or future or conditional verbs, such as "will," "would," "should," "could," "may," "might," "can," or similar verbs, and the negative thereof. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected.

These risks and uncertainties, some of which are beyond our control, include, but are not limited to, the impact of disease pandemics, such as the resurgences and subsequent waves of the COVID-19 pandemic, on the Company, its operations and its customers, employees and the markets in which the Company operates and in which its loans are concentrated; and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may precipitate or exacerbate one or more of the below-mentioned and/or other risks, and significantly disrupt or prevent the Company from operating its business in the ordinary course for an extended period; changes in governmental policy and regulation, including measures taken in response to economic, business, political and social conditions, such as the Small Business Administration's ("SBA") Paycheck Protection Program, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and any similar or related rules and regulations, the Board of Governors of the Federal Reserve System ("Federal Reserve") efforts to provide liquidity to the United States ("U.S.") financial system, including changes in government interest rate policies, and to provide credit to private commercial and municipal borrowers, and other programs designed to address the effects of the COVID-19 pandemic, as well as the resulting effect of all such items on the Company's operations, liquidity and capital position, and on the financial condition of the Company's borrowers and other customers; changes in the U.S. economy, including an economic slowdown or recession, inflation, deflation, housing prices, employment levels, rate of growth and general business conditions; changes in laws or the regulatory environment including regulatory reform initiatives and policies of the U.S. Department of Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation ("FDIC"), the Office of the Comptroller of the Currency, the U.S. Securities and Exchange Commission ("SEC"), the Consumer Financial Protection Bureau ("CFPB") and the California Department of Financial Protection and Innovation ("DFPI") - Division of Financial Institutions, and SBA; the changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing trade dispute between the U.S. and the People's Republic of China; changes in the commercial and consumer real estate markets; changes in consumer spending and savings habits; fluctuations in the Company's stock price; changes in income tax laws and regulations; the Company's ability to compete effectively against other financial institutions in its banking markets; success and timing of the Company's business strategies; the Company's ability to retain key officers and employees; impact on the Company's funding costs, net interest income and net interest margin from changes in key variable market interest rates, competition, regulatory requirements and the Company's product mix; changes in the Company's costs of operation, compliance and expansion; the Company's ability to adopt and successfully integrate new technologies into its business in a strategic manner; impact of benchmark interest rate reform in the U.S. that resulted in the Secured Overnight Financing Rate ("SOFR") selected as the preferred alternative reference rate to the London Interbank Offered Rate ("LIBOR"); impact of a communications or technology disruption, failure in, or breach of, the Company's operational or security systems or infrastructure, or those of third parties with whom the Company does business, including as a result of cyber-attacks; and other similar matters which could result in, among other things, confidential and/or proprietary information being disclosed or misused and materially impact the Company's ability to provide services to its clients; adequacy of the Company's risk management framework, disclosure controls and procedures and internal control over financial reporting; future credit quality and performance, including the Company's expectations regarding future credit losses and allowance levels; impact of adverse changes to the Company's credit ratings from major credit rating agencies; impact of adverse judgments or settlements in litigation; impact on the Company's international operations due to political developments, disease pandemics, wars or other hostilities that may disrupt or increase volatility in securities or otherwise affect economic conditions; heightened regulatory and governmental oversight and scrutiny of the Company's business practices, including dealings with consumers; impact of reputational risk from negative publicity, fines and penalties and other negative consequences from regulatory violations and legal actions and from the Company's interactions with business partners, counterparties, service providers and other third parties; impact of regulatory enforcement actions; changes in accounting standards as may be required by the Financial Accounting Standards Board ("FASB") or other regulatory agencies and their impact on critical accounting policies and assumptions; impact of other potential federal tax changes and spending cuts; the Company's capital requirements and its ability to generate capital internally or raise capital on favorable terms; impact on the Company's liquidity due to changes in the Company's ability to receive dividends from its subsidiaries; any future strategic acquisitions or divestitures; continuing consolidation in the financial services industry; changes in the equity and debt securities markets; fluctuations in foreign currency exchange rates; a recurrence of significant turbulence or disruption in the capital or financial markets, which could result in, among other things, a reduction in the availability of funding or increases in funding costs, a reduction in investor demand for mortgage loans and declines in asset values and/or recognition of other-than-temporary impairment ("OTTI") on securities held in the Company's available-for-sale ("AFS") debt securities portfolio; and impact of natural or man-made disasters or calamities, such as wildfires and earthquakes, which are particular to California, or conflicts or other events that may directly or indirectly result in a negative impact on the Company's financial performance. In addition to the risk factors enumerated above, the economic impact of the COVID-19 pandemic could cause actual outcomes to differ, possibly materially, from the Company's forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond the Company's control. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on the Company's business. The extent to which the COVID-19 pandemic impacts the Company will depend on future developments that are uncertain and unpredictable, including the scope, severity and duration of the pandemic and its impact on the Company's customers, the actions taken by governmental authorities in response to the pandemic as well as its impact on global and regional economies, and the pace of recovery when the COVID-19 pandemic subsides, among others.

For a more detailed discussion of some of the factors that might cause such differences, see the Company's Annual Report on Form 10-K for the year ended December 31, 2019 under the heading Item 1A. Risk Factors and the information set forth under Item 1A. Risk Factors in the Company's Quarterly Reports on Form 10-Q. The Company does not undertake, and specifically disclaims any obligation to update or revise any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.

N/A Not applicable.

The Company has elected to use the 2020 CECL transition provision in the(a) calculation of its December 31, 2020 and September 30, 2020 regulatory capital ratios. The Company's December 31, 2020 regulatory capital ratios and RWA are preliminary.

An additional 2.5% capital conservation buffer above the minimum capital(b) ratios are required in order to avoid limitations on distributions, including dividend payments and certain discretionary bonus payments to executive officers.

Under regulatory guidelines, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories based on the nature of(c) the obligor, or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar value in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total RWA.

DIVIDEND PAYOUT AND CAPITAL ACTIONS

East West's Board of Directors has declared first quarter 2021 dividends for the Company's common stock. The common stock cash dividend of $0.33 per share is payable on February 23, 2021 to shareholders of record on February 9, 2021. This represents a 20% increase, or 5.5 cents per share, to the quarterly common stock dividend, up from $0.275 per share previously. The new annual dividend is $1.32 per share, compared with $1.10 per share previously.

On March 3, 2020, East West's Board of Directors authorized the repurchase of up to $500 million of East West's common stock. In 2020, the Company repurchased $145.9 million of common stock, or 4.5 million shares, under this authorization during the first quarter. East West did not repurchase any shares during the fourth quarter of 2020 under this authorization.

Conference Call

East West will host a conference call to discuss fourth quarter and full year 2020 earnings with the public on Thursday, January 28, 2021 at 8:30 a.m. PT/11:30 a.m. ET. The public and investment community are invited to listen as management discusses fourth quarter and full year 2020 results and operating developments.

* The following dial-in information is provided for participation in the conference call: calls within the U.S. - (877) 506-6399; calls within Canada - (855) 669-9657; international calls - (412) 902-6699. * A presentation to accompany the earnings call will be available on the Investor Relations page of the Company's website at www.eastwestbank.com/investors. * A listen-only live broadcast of the call will also be available on the Investor Relations page of the Company's website at www.eastwestbank.com/investors. * A replay of the conference call will be available on January 28, 2021 at 11:30 a.m. Pacific Time through February 28, 2021. The replay numbers are: within the U.S. - (877) 344-7529; within Canada - (855) 669-9658; International calls - (412) 317-0088; and the replay access code is: 10150890.

About East West

East West Bancorp, Inc. is a publicly owned company with total assets of $52.2 billion and is traded on the Nasdaq Global Select Market under the symbol "EWBC". The Company's wholly owned subsidiary, East West Bank, is one of the largest independent banks headquartered in California, operating over 120 locations in the United States and Greater China. U.S. markets include California, Georgia, Massachusetts, Nevada, New York, Texas and Washington. In Greater China, East West's presence includes full service branches in Hong Kong, Shanghai, Shantou and Shenzhen, and representative offices in Beijing, Chongqing, Guangzhou, and Xiamen. For more information on East West, visit the Company's website at www.eastwestbank.com.

Forward-Looking Statements

Certain matters set forth herein (including any exhibits hereto) constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to our current business plans and expectations regarding future operating results. Forward-looking statements may include, but are not limited to, the use of forward-looking language, such as "likely result in," "expects," "anticipates," "estimates," "forecasts," "projects," "intends to," "assumes," or may include other similar words or phrases, such as "believes," "plans," "trend," "objective," "continues," "remains," or similar expressions, or future or conditional verbs, such as "will," "would," "should," "could," "may," "might," "can," or similar verbs, and the negative thereof. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected.

These risks and uncertainties, some of which are beyond our control, include, but are not limited to, the impact of disease pandemics, such as the resurgences and subsequent waves of the COVID-19 pandemic, on the Company, its operations and its customers, employees and the markets in which the Company operates and in which its loans are concentrated; and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may precipitate or exacerbate one or more of the below-mentioned and/or other risks, and significantly disrupt or prevent the Company from operating its business in the ordinary course for an extended period; changes in governmental policy and regulation, including measures taken in response to economic, business, political and social conditions, such as the Small Business Administration's ("SBA") Paycheck Protection Program, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and any similar or related rules and regulations, the Board of Governors of the Federal Reserve System ("Federal Reserve") efforts to provide liquidity to the United States ("U.S.") financial system, including changes in government interest rate policies, and to provide credit to private commercial and municipal borrowers, and other programs designed to address the effects of the COVID-19 pandemic, as well as the resulting effect of all such items on the Company's operations, liquidity and capital position, and on the financial condition of the Company's borrowers and other customers; changes in the U.S. economy, including an economic slowdown or recession, inflation, deflation, housing prices, employment levels, rate of growth and general business conditions; changes in laws or the regulatory environment including regulatory reform initiatives and policies of the U.S. Department of Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation ("FDIC"), the Office of the Comptroller of the Currency, the U.S. Securities and Exchange Commission ("SEC"), the Consumer Financial Protection Bureau ("CFPB") and the California Department of Financial Protection and Innovation ("DFPI") - Division of Financial Institutions, and SBA; the changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing trade dispute between the U.S. and the People's Republic of China; changes in the commercial and consumer real estate markets; changes in consumer spending and savings habits; fluctuations in the Company's stock price; changes in income tax laws and regulations; the Company's ability to compete effectively against other financial institutions in its banking markets; success and timing of the Company's business strategies; the Company's ability to retain key officers and employees; impact on the Company's funding costs, net interest income and net interest margin from changes in key variable market interest rates, competition, regulatory requirements and the Company's product mix; changes in the Company's costs of operation, compliance and expansion; the Company's ability to adopt and successfully integrate new technologies into its business in a strategic manner; impact of benchmark interest rate reform in the U.S. that resulted in the Secured Overnight Financing Rate ("SOFR") selected as the preferred alternative reference rate to the London Interbank Offered Rate ("LIBOR"); impact of a communications or technology disruption, failure in, or breach of, the Company's operational or security systems or infrastructure, or those of third parties with whom the Company does business, including as a result of cyber-attacks; and other similar matters which could result in, among other things, confidential and/or proprietary information being disclosed or misused and materially impact the Company's ability to provide services to its clients; adequacy of the Company's risk management framework, disclosure controls and procedures and internal control over financial reporting; future credit quality and performance, including the Company's expectations regarding future credit losses and allowance levels; impact of adverse changes to the Company's credit ratings from major credit rating agencies; impact of adverse judgments or settlements in litigation; impact on the Company's international operations due to political developments, disease pandemics, wars or other hostilities that may disrupt or increase volatility in securities or otherwise affect economic conditions; heightened regulatory and governmental oversight and scrutiny of the Company's business practices, including dealings with consumers; impact of reputational risk from negative publicity, fines and penalties and other negative consequences from regulatory violations and legal actions and from the Company's interactions with business partners, counterparties, service providers and other third parties; impact of regulatory enforcement actions; changes in accounting standards as may be required by the Financial Accounting Standards Board ("FASB") or other regulatory agencies and their impact on critical accounting policies and assumptions; impact of other potential federal tax changes and spending cuts; the Company's capital requirements and its ability to generate capital internally or raise capital on favorable terms; impact on the Company's liquidity due to changes in the Company's ability to receive dividends from its subsidiaries; any future strategic acquisitions or divestitures; continuing consolidation in the financial services industry; changes in the equity and debt securities markets; fluctuations in foreign currency exchange rates; a recurrence of significant turbulence or disruption in the capital or financial markets, which could result in, among other things, a reduction in the availability of funding or increases in funding costs, a reduction in investor demand for mortgage loans and declines in asset values and/or recognition of other-than-temporary impairment ("OTTI") on securities held in the Company's available-for-sale ("AFS") debt securities portfolio; and impact of natural or man-made disasters or calamities, such as wildfires and earthquakes, which are particular to California, or conflicts or other events that may directly or indirectly result in a negative impact on the Company's financial performance. In addition to the risk factors enumerated above, the economic impact of the COVID-19 pandemic could cause actual outcomes to differ, possibly materially, from the Company's forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond the Company's control. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on the Company's business. The extent to which the COVID-19 pandemic impacts the Company will depend on future developments that are uncertain and unpredictable, including the scope, severity and duration of the pandemic and its impact on the Company's customers, the actions taken by governmental authorities in response to the pandemic as well as its impact on global and regional economies, and the pace of recovery when the COVID-19 pandemic subsides, among others.

For a more detailed discussion of some of the factors that might cause such differences, see the Company's Annual Report on Form 10-K for the year ended December 31, 2019 under the heading Item 1A. Risk Factors and the information set forth under Item 1A. Risk Factors in the Company's Quarterly Reports on Form 10-Q. The Company does not undertake, and specifically disclaims any obligation to update or revise any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

($ and shares in thousands, except per share data)

(unaudited)

Table 1



December 31, 2020 % or Basis Point Change

December 31, September 30, December 31, Qtr-o-Qtr Yr-o-Yr 2020 2020 2019

Assets

Cash and due from $ 592,117 $ 503,376 $ 536,221 17.6 % 10.4 % banks

Interest-bearing 3,425,854 4,003,565 2,724,928 (14.4 ) 25.7 cash with banks

Cash and cash 4,017,971 4,506,941 3,261,149 (10.8 ) 23.2 equivalents

Interest-bearing 809,728 699,465 196,161 15.8 312.8 deposits with banks

Assets purchasedunder resale 1,460,000 1,210,000 860,000 20.7 69.8 agreements ("resaleagreements") ^(1)

Available-for-sale("AFS") debtsecurities(amortized cost of$5,470,523,$4,471,694 and 5,544,658 4,539,160 3,317,214 22.2 67.1 $3,320,648 as ofDecember 31, 2020,September 30, 2020and December 31,2019, respectively)

Federal Home LoanBank ("FHLB") and 83,046 79,172 78,580 4.9 5.7 Federal Reserve Bank("FRB") stock

Loans held-for-sale 1,788 4,148 434 (56.9 ) 312.0 ("HFS")

Loansheld-for-investment(''HFI'') (net ofallowance for loan 37,770,972 36,818,877 34,420,252 2.6 9.7 losses ^(2) of$619,983, $618,252and $358,287)

Investments inqualified affordable 213,555 192,913 207,037 10.7 3.1 housingpartnerships, net

Investments in taxcredit and other 266,525 254,512 254,140 4.7 4.9 investments, net

Goodwill 465,697 465,697 465,697 - -

Operating lease 95,460 96,092 99,973 (0.7 ) (4.5 ) right-of-use assets

Other assets 1,427,513 1,504,500 1,035,459 (5.1 ) 37.9

Total assets $ 52,156,913 $ 50,371,477 $ 44,196,096 3.5 % 18.0 %



Liabilities and Stockholders' Equity

Deposits $ 44,862,752 $ 41,680,555 $ 37,324,259 7.6 % 20.2 %

Short-term 21,009 59,613 28,669 (64.8 ) (26.7 ) borrowings

FHLB advances 652,612 657,185 745,915 (0.7 ) (12.5 )

Assets sold underrepurchaseagreements 300,000 348,063 200,000 (13.8 ) 50.0 ("repurchaseagreements") ^(1)

Long-term debt andfinance lease 151,739 1,579,317 ^(3) 152,270 (90.4 ) (0.3 ) liabilities

Operating lease 102,830 103,673 108,083 (0.8 ) (4.9 ) liabilities

Accrued expenses and 796,796 816,965 619,283 (2.5 ) 28.7 other liabilities

Total liabilities 46,887,738 45,245,371 39,178,479 3.6 19.7

Stockholders' equity 5,269,175 5,126,106 5,017,617 2.8 5.0 ^(2)

Total liabilitiesand stockholders' $ 52,156,913 $ 50,371,477 $ 44,196,096 3.5 % 18.0 % equity



Book value per $ 37.22 $ 36.22 $ 34.46 2.7 % 8.0 % common share

Tangible equity ^(4) $ 33.85 $ 32.85 $ 31.15 3.0 8.7 per common share

Number of common 141,565 141,507 145,625 0.0 (2.8 ) shares at period-end

Tangible equity totangible assets 9.27 % 9.32 % 10.38 % (5 ) bps (111 ) bpsratio ^(4)



(1)

Resale and repurchase agreements are reported net when the transactions are eligible for netting under Accounting Standards Codification ("ASC") 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. There was no netting of repurchase agreements against resale agreements as of December 31, 2020 and September 30, 2020. $250.0 million of gross repurchase agreements were eligible for netting against gross resale agreements as of December 31, 2019.

(2)

On January 1, 2020, the Company adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments using the modified retrospective approach. We recorded $125.2 million increase to allowance for loan losses and $98.0 million after-tax decrease to opening retained earnings as of January 1, 2020.

(3)

Includes $1.43 billion of advances from the Federal Reserve Paycheck Protection Program Liquidity Facility ("PPPLF") as of September 30, 2020.

(4)

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

Resale and repurchase agreements are reported net when the transactions are eligible for netting under Accounting Standards Codification ("ASC") 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase(1) Agreements. There was no netting of repurchase agreements against resale agreements as of December 31, 2020 and September 30, 2020. $250.0 million of gross repurchase agreements were eligible for netting against gross resale agreements as of December 31, 2019.

On January 1, 2020, the Company adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326):(2) Measurement of Credit Losses on Financial Instruments using the modified retrospective approach. We recorded $125.2 million increase to allowance for loan losses and $98.0 million after-tax decrease to opening retained earnings as of January 1, 2020.

(3) Includes $1.43 billion of advances from the Federal Reserve Paycheck Protection Program Liquidity Facility ("PPPLF") as of September 30, 2020.

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

EAST WEST BANCORP, INC. AND SUBSIDIARIES

TOTAL LOANS AND DEPOSITS DETAIL

($ in thousands)

(unaudited)

Table 2

December 31, 2020% Change

December 31,2020

September 30,2020

December 31,2019

Qtr-o-Qtr

Yr-o-Yr

Loans:

Commercial:

Commercial and industrial ("C&I") (1)

$

13,631,726

$

13,305,024

$

12,150,931

2.5

%

12.2

%

Commercial real estate ("CRE"):

CRE

11,174,611

11,037,987

10,278,448

1.2

8.7

Multifamily residential

3,033,998

3,057,274

2,856,374

(0.8

)

6.2

Construction and land

599,692

578,407

628,499

3.7

(4.6

)

Total CRE

14,808,301

14,673,668

13,763,321

0.9

7.6

Consumer:

Residential mortgage:

Single-family residential

8,185,953

7,785,759

7,108,590

5.1

15.2

Home equity lines of credit ("HELOCs")

1,601,716

1,514,388

1,472,783

5.8

8.8

Total residential mortgage

9,787,669

9,300,147

8,581,373

5.2

14.1

Other consumer

163,259

158,290

282,914

3.1

(42.3

)

Total loans HFI (2)

38,390,955

37,437,129

34,778,539

2.5

10.4

Loans HFS

1,788

4,148

434

(56.9

)

312.0

Total loans (2)

38,392,743

37,441,277

34,778,973

2.5

10.4

Allowance for loan losses

(619,983

)

(618,252

)

(358,287

)

0.3

73.0

Net loans (2)

$

37,772,760

$

36,823,025

$

34,420,686

2.6

9.7

Deposits:

Noninterest-bearing demand

$

16,298,301

$

14,924,917

$

11,080,036

9.2

%

47.1

%

Interest-bearing checking

6,142,193

5,731,573

5,200,755

7.2

18.1

Money market

10,740,667

9,553,574

8,711,964

12.4

23.3

Savings

2,681,242

2,401,318

2,117,196

11.7

26.6

Time deposits

9,000,349

9,069,173

10,214,308

(0.8

)

(11.9

)

Total deposits

$

44,862,752

$

41,680,555

$

37,324,259

7.6

%

20.2

%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

TOTAL LOANS AND DEPOSITS DETAIL

($ in thousands)

(unaudited)

Table 2



December 31, 2020 % Change

December 31, September 30, December 31, Qtr-o-Qtr Yr-o-Yr 2020 2020 2019

Loans:

Commercial:

Commercial andindustrial ("C&I") $ 13,631,726 $ 13,305,024 $ 12,150,931 2.5 % 12.2 %^(1)

Commercial real estate ("CRE"):

CRE 11,174,611 11,037,987 10,278,448 1.2 8.7

Multifamily 3,033,998 3,057,274 2,856,374 (0.8 ) 6.2 residential

Construction and 599,692 578,407 628,499 3.7 (4.6 )land

Total CRE 14,808,301 14,673,668 13,763,321 0.9 7.6

Consumer:

Residential mortgage:

Single-family 8,185,953 7,785,759 7,108,590 5.1 15.2 residential

Home equity linesof credit 1,601,716 1,514,388 1,472,783 5.8 8.8 ("HELOCs")

Total residential 9,787,669 9,300,147 8,581,373 5.2 14.1 mortgage

Other consumer 163,259 158,290 282,914 3.1 (42.3 )

Total loans HFI ^ 38,390,955 37,437,129 34,778,539 2.5 10.4 (2)

Loans HFS 1,788 4,148 434 (56.9 ) 312.0

Total loans ^(2) 38,392,743 37,441,277 34,778,973 2.5 10.4

Allowance for loan (619,983 ) (618,252 ) (358,287 ) 0.3 73.0 losses

Net loans ^(2) $ 37,772,760 $ 36,823,025 $ 34,420,686 2.6 9.7



Deposits:

Noninterest-bearing $ 16,298,301 $ 14,924,917 $ 11,080,036 9.2 % 47.1 %demand

Interest-bearing 6,142,193 5,731,573 5,200,755 7.2 18.1 checking

Money market 10,740,667 9,553,574 8,711,964 12.4 23.3

Savings 2,681,242 2,401,318 2,117,196 11.7 26.6

Time deposits 9,000,349 9,069,173 10,214,308 (0.8 ) (11.9 )

Total deposits $ 44,862,752 $ 41,680,555 $ 37,324,259 7.6 % 20.2 %



(1)

Includes $1.57 billion and $1.77 billion of Paycheck Protection Program ("PPP") loans as of December 31, 2020 and September 30, 2020, respectively.

(2)

Includes net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts of $(58.8) million, $(67.0) million, and $(43.2) million as of December 31, 2020, September 30, 2020, and December 31, 2019, respectively. Net origination fees related to PPP loans were $(12.7) million and $(22.6) million as of December 31, 2020 and September 30, 2020, respectively.

Includes $1.57 billion and $1.77 billion of Paycheck Protection Program(1) ("PPP") loans as of December 31, 2020 and September 30, 2020, respectively.

Includes net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts of $(58.8) million, $(67.0) million, and $(43.2)(2) million as of December 31, 2020, September 30, 2020, and December 31, 2019, respectively. Net origination fees related to PPP loans were $(12.7) million and $(22.6) million as of December 31, 2020 and September 30, 2020, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

($ and shares in thousands, except per share data)

(unaudited)

Table 3

Three Months Ended

December 31, 2020% Change

December 31, 2020

September 30, 2020

December 31, 2019

Qtr-o-Qtr

Yr-o-Yr

Interest and dividend income (1)

$

381,348

$

365,728

$

467,233

4.3

%

(18.4

)%

Interest expense

34,767

41,598

99,014

(16.4

)

(64.9

)

Net interest income before provision for credit losses

346,581

324,130

368,219

6.9

(5.9

)

Provision for credit losses

24,340

10,000

18,577

143.4

31.0

Net interest income after provision for credit losses

322,241

314,130

349,642

2.6

(7.8

)

Noninterest income (2)

69,832

54,503

65,797

28.1

6.1

Noninterest expense (2)

178,651

172,573

196,157

3.5

(8.9

)

Income before income taxes

213,422

196,060

219,282

8.9

(2.7

)

Income tax expense

49,338

36,523

31,067

35.1

58.8

Net income

$

164,084

$

159,537

$

188,215

2.9

%

(12.8

)%

Earnings per share ("EPS")

- Basic

$

1.16

$

1.13

$

1.29

2.8

%

(10.3

)%

- Diluted

$

1.15

$

1.12

$

1.29

2.5

(10.5

)

Weighted-average number of shares outstanding

- Basic

141,564

141,498

145,624

0.0

%

(2.8

)%

- Diluted

142,529

142,043

146,318

0.3

(2.6

)

Three Months Ended

December 31, 2020% Change

December 31, 2020

September 30, 2020

December 31, 2019

Qtr-o-Qtr

Yr-o-Yr

Noninterest income:

Lending fees

$

18,387

$

18,736

$

17,244

(1.9

)%

6.6

%

Deposit account fees

14,256

12,573

9,843

13.4

44.8

Interest rate contracts and other derivative income

12,967

5,538

17,828

134.1

(27.3

)

Foreign exchange income

6,679

3,310

6,032

101.8

10.7

Wealth management fees

4,497

4,553

4,132

(1.2

)

8.8

Net gains on sales of loans

3,058

361

1,068

747.1

186.3

Gains on sales of AFS debt securities

432

698

864

(38.1

)

(50.0

)

Other investment income (2)

3,989

5,239

5,462

(23.9

)

(27.0

)

Other income

5,567

3,495

3,324

59.3

67.5

Total noninterest income (2)

$

69,832

$

54,503

$

65,797

28.1

%

6.1

%

Noninterest expense:

Compensation and employee benefits

$

105,400

$

99,756

$

101,051

5.7

%

4.3

%

Occupancy and equipment expense

16,548

16,648

17,138

(0.6

)

(3.4

)

Deposit insurance premiums and regulatory assessments

3,995

4,006

3,371

(0.3

)

18.5

Deposit account expense

3,501

3,113

3,749

12.5

(6.6

)

Data processing

4,707

3,590

3,588

31.1

31.2

Computer software expense

7,027

8,539

7,626

(17.7

)

(7.9

)

Consulting expense

1,537

1,224

3,159

25.6

(51.3

)

Legal expense

1,673

1,366

2,141

22.5

(21.9

)

Other operating expense

22,000

17,122

24,512

28.5

(10.2

)

Amortization of tax credit and other investments (2)

12,263

17,209

29,822

(28.7

)

(58.9

)

Total noninterest expense (2)

$

178,651

$

172,573

$

196,157

3.5

%

(8.9

)%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

($ and shares in thousands, except per share data)

(unaudited)

Table 3



Three Months Ended December 31, 2020 % Change

December September December Qtr-o-Qtr Yr-o-Yr 31, 2020 30, 2020 31, 2019

Interest and dividend $ 381,348 $ 365,728 $ 467,233 4.3 % (18.4 )income ^(1) %

Interest expense 34,767 41,598 99,014 (16.4 ) (64.9 )

Net interest income beforeprovision for credit 346,581 324,130 368,219 6.9 (5.9 )losses

Provision for credit 24,340 10,000 18,577 143.4 31.0 losses

Net interest income afterprovision for credit 322,241 314,130 349,642 2.6 (7.8 )losses

Noninterest income^ (2) 69,832 54,503 65,797 28.1 6.1

Noninterest expense ^(2) 178,651 172,573 196,157 3.5 (8.9 )

Income before income taxes 213,422 196,060 219,282 8.9 (2.7 )

Income tax expense 49,338 36,523 31,067 35.1 58.8

Net income $ 164,084 $ 159,537 $ 188,215 2.9 % (12.8 ) %

Earnings per share ("EPS")

- Basic $ 1.16 $ 1.13 $ 1.29 2.8 % (10.3 ) %

- Diluted $ 1.15 $ 1.12 $ 1.29 2.5 (10.5 )

Weighted-average number of shares outstanding

- Basic 141,564 141,498 145,624 0.0 % (2.8 ) %

- Diluted 142,529 142,043 146,318 0.3 (2.6 )



Three Months Ended December 31, 2020 % Change

December September December Qtr-o-Qtr Yr-o-Yr 31, 2020 30, 2020 31, 2019

Noninterest income:

Lending fees $ 18,387 $ 18,736 $ 17,244 (1.9 )% 6.6 %

Deposit account fees 14,256 12,573 9,843 13.4 44.8

Interest rate contractsand other derivative 12,967 5,538 17,828 134.1 (27.3 )income

Foreign exchange income 6,679 3,310 6,032 101.8 10.7

Wealth management fees 4,497 4,553 4,132 (1.2 ) 8.8

Net gains on sales of 3,058 361 1,068 747.1 186.3 loans

Gains on sales of AFS debt 432 698 864 (38.1 ) (50.0 )securities

Other investment income ^ 3,989 5,239 5,462 (23.9 ) (27.0 )(2)

Other income 5,567 3,495 3,324 59.3 67.5

Total noninterest income ^ $ 69,832 $ 54,503 $ 65,797 28.1 % 6.1 %(2)

Noninterest expense:

Compensation and employee $ 105,400 $ 99,756 $ 101,051 5.7 % 4.3 %benefits

Occupancy and equipment 16,548 16,648 17,138 (0.6 ) (3.4 )expense

Deposit insurance premiums 3,995 4,006 3,371 (0.3 ) 18.5 and regulatory assessments

Deposit account expense 3,501 3,113 3,749 12.5 (6.6 )

Data processing 4,707 3,590 3,588 31.1 31.2

Computer software expense 7,027 8,539 7,626 (17.7 ) (7.9 )

Consulting expense 1,537 1,224 3,159 25.6 (51.3 )

Legal expense 1,673 1,366 2,141 22.5 (21.9 )

Other operating expense 22,000 17,122 24,512 28.5 (10.2 )

Amortization of tax credit 12,263 17,209 29,822 (28.7 ) (58.9 )and other investments ^(2)

Total noninterest expense $ 178,651 $ 172,573 $ 196,157 3.5 % (8.9 )^(2) %



(1)

Includes $14.2 million and $7.8 million of interest income related to PPP loans for the three months ended December 31, 2020 and September 30, 2020, respectively.

(2)

In the fourth quarter of 2020, the Company reclassified certain income/losses from equity method investments from Amortization of tax credit and other investments to Other investment income, with no effect on net income. Prior period amounts have been revised to conform with the current presentation. Includes $10.7 million in recoveries related to the Company's investment in DC Solar for the three months ended December 31, 2020.

Includes $14.2 million and $7.8 million of interest income related to PPP(1) loans for the three months ended December 31, 2020 and September 30, 2020, respectively.

In the fourth quarter of 2020, the Company reclassified certain income/ losses from equity method investments from Amortization of tax credit and other investments to Other investment income, with no effect on net(2) income. Prior period amounts have been revised to conform with the current presentation. Includes $10.7 million in recoveries related to the Company's investment in DC Solar for the three months ended December 31, 2020.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

($ and shares in thousands, except per share data)

(unaudited)

Table 4

Year Ended

December 31, 2020% Change

December 31, 2020

December 31, 2019

Yr-o-Yr

Interest and dividend income (1)

$

1,595,042

$

1,882,300

(15.3

)%

Interest expense

217,849

414,487

(47.4

)

Net interest income before provision for credit losses

1,377,193

1,467,813

(6.2

)

Provision for credit losses

210,653

98,685

113.5

Net interest income after provision for credit losses

1,166,540

1,369,128

(14.8

)

Noninterest income (2)

235,547

222,245

6.0

Noninterest expense (2)

716,322

747,456

(4.2

)

Income before income taxes

685,765

843,917

(18.7

)

Income tax expense

117,968

169,882

(30.6

)

Net income

$

567,797

$

674,035

(15.8

)%

EPS

- Basic

$

3.99

$

4.63

(13.9

)%

- Diluted

$

3.97

$

4.61

(13.9

)

Weighted-average number of shares outstanding

- Basic

142,336

145,497

(2.2

)%

- Diluted

142,991

146,179

(2.2

)

Year Ended

December 31, 2020% Change

December 31, 2020

December 31, 2019

Yr-o-Yr

Noninterest income:

Lending fees

$

74,842

$

63,670

17.5

%

Deposit account fees

48,148

38,648

24.6

Interest rate contracts and other derivative income

31,685

39,865

(20.5

)

Foreign exchange income

22,370

26,398

(15.3

)

Wealth management fees

17,494

16,547

5.7

Net gains on sales of loans

4,501

4,035

11.5

Gains on sales of AFS debt securities

12,299

3,930

213.0

Other investment income (2)

10,641

18,117

(41.3

)

Other income

13,567

11,035

22.9

Total noninterest income (2)

$

235,547

$

222,245

6.0

%

Noninterest expense:

Compensation and employee benefits

$

404,071

$

401,700

0.6

%

Occupancy and equipment expense

66,489

69,730

(4.6

)

Deposit insurance premiums and regulatory assessments

15,128

12,928

17.0

Deposit account expense

13,530

14,175

(4.6

)

Data processing

16,603

13,533

22.7

Computer software expense

29,033

26,471

9.7

Consulting expense

5,391

9,846

(45.2

)

Legal expense

7,766

8,441

(8.0

)

Other operating expense

79,489

92,249

(13.8

)

Amortization of tax credit and other investments (2)

70,082

98,383

(28.8

)

Repurchase agreements' extinguishment cost

8,740

-

100.0

Total noninterest expense (2)

$

716,322

$

747,456

(4.2

)%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

($ and shares in thousands, except per share data)

(unaudited)

Table 4



December 31, Year Ended 2020 % Change

December 31, December 31, Yr-o-Yr 2020 2019

Interest and dividend income ^(1) $ 1,595,042 $ 1,882,300 (15.3 )%

Interest expense 217,849 414,487 (47.4 )

Net interest income before provision 1,377,193 1,467,813 (6.2 )for credit losses

Provision for credit losses 210,653 98,685 113.5

Net interest income after provision 1,166,540 1,369,128 (14.8 )for credit losses

Noninterest income ^(2) 235,547 222,245 6.0

Noninterest expense^ (2) 716,322 747,456 (4.2 )

Income before income taxes 685,765 843,917 (18.7 )

Income tax expense 117,968 169,882 (30.6 )

Net income $ 567,797 $ 674,035 (15.8 )%

EPS

- Basic $ 3.99 $ 4.63 (13.9 )%

- Diluted $ 3.97 $ 4.61 (13.9 )

Weighted-average number of shares outstanding

- Basic 142,336 145,497 (2.2 )%

- Diluted 142,991 146,179 (2.2 )



December 31, Year Ended 2020 % Change

December 31, December 31, Yr-o-Yr 2020 2019

Noninterest income:

Lending fees $ 74,842 $ 63,670 17.5 %

Deposit account fees 48,148 38,648 24.6

Interest rate contracts and other 31,685 39,865 (20.5 )derivative income

Foreign exchange income 22,370 26,398 (15.3 )

Wealth management fees 17,494 16,547 5.7

Net gains on sales of loans 4,501 4,035 11.5

Gains on sales of AFS debt securities 12,299 3,930 213.0

Other investment income ^(2) 10,641 18,117 (41.3 )

Other income 13,567 11,035 22.9

Total noninterest income ^(2) $ 235,547 $ 222,245 6.0 %

Noninterest expense:

Compensation and employee benefits $ 404,071 $ 401,700 0.6 %

Occupancy and equipment expense 66,489 69,730 (4.6 )

Deposit insurance premiums and 15,128 12,928 17.0 regulatory assessments

Deposit account expense 13,530 14,175 (4.6 )

Data processing 16,603 13,533 22.7

Computer software expense 29,033 26,471 9.7

Consulting expense 5,391 9,846 (45.2 )

Legal expense 7,766 8,441 (8.0 )

Other operating expense 79,489 92,249 (13.8 )

Amortization of tax credit and other 70,082 98,383 (28.8 )investments^ (2)

Repurchase agreements' extinguishment 8,740 - 100.0 cost

Total noninterest expense^ (2) $ 716,322 $ 747,456 (4.2 )%



(1)

Includes $43.3 million of interest income related to PPP loans for the year ended December 31, 2020.

(2)

In the fourth quarter of 2020, the Company reclassified certain income/losses from equity method investments from Amortization of tax credit and other investments to Other investment income, with no effect on net income. Prior period amounts have been revised to conform with the current presentation. Includes $10.7 million in recoveries related to the Company's investment in DC Solar for the twelve months ended December 31, 2020.

(1) Includes $43.3 million of interest income related to PPP loans for the year ended December 31, 2020.

In the fourth quarter of 2020, the Company reclassified certain income/ losses from equity method investments from Amortization of tax credit and other investments to Other investment income, with no effect on net(2) income. Prior period amounts have been revised to conform with the current presentation. Includes $10.7 million in recoveries related to the Company's investment in DC Solar for the twelve months ended December 31, 2020.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED AVERAGE BALANCES

($ in thousands)

(unaudited)

Table 5

Three Months Ended

December 31, 2020% Change

Year Ended

December 31, 2020% Change

December 31,2020

September 30,2020

December 31,2019

Qtr-o-Qtr

Yr-o-Yr

December 31,2020

December 31,2019

Yr-o-Yr

Loans:

Commercial:

C&I (1)

$

13,332,194

$

13,235,845

$

12,237,081

0.7

%

8.9

%

$

13,074,883

$

12,073,820

8.3

%

CRE:

CRE

11,067,392

10,942,780

10,006,424

1.1

10.6

10,828,037

9,642,301

12.3

Multifamily residential

3,051,472

3,107,294

2,771,555

(1.8

)

10.1

3,009,365

2,588,347

16.3

Construction and land

588,665

564,219

668,147

4.3

(11.9

)

597,118

656,142

(9.0

)

Total CRE

14,707,529

14,614,293

13,446,126

0.6

9.4

14,434,520

12,886,790

12.0

Consumer:

Residential mortgage:

Single-family residential

7,990,035

7,695,838

6,934,361

3.8

15.2

7,613,706

6,526,415

16.7

HELOCs

1,558,781

1,475,098

1,506,346

5.7

3.5

1,480,516

1,580,343

(6.3

)

Total residential mortgage

9,548,816

9,170,936

8,440,707

4.1

13.1

9,094,222

8,106,758

12.2

Other consumer

137,186

139,371

286,096

(1.6

)

(52.0

)

195,392

305,768

(36.1

)

Total loans (2)

$

37,725,725

$

37,160,445

$

34,410,010

1.5

%

9.6

%

$

36,799,017

$

33,373,136

10.3

%

Interest-earning assets

$

49,703,349

$

47,428,586

$

42,114,123

4.8

%

18.0

%

$

46,239,709

$

40,320,804

14.7

%

Total assets

$

52,466,325

$

50,247,259

$

44,471,242

4.4

%

18.0

%

$

48,937,793

$

42,484,885

15.2

%

Deposits:

Noninterest-bearing demand

$

16,311,010

$

14,296,475

$

10,976,368

14.1

%

48.6

%

$

13,823,152

$

10,502,618

31.6

%

Interest-bearing checking

6,067,849

5,663,873

5,540,300

7.1

9.5

5,357,934

5,244,867

2.2

Money market

10,626,940

9,981,704

8,592,058

6.5

23.7

9,881,284

8,220,236

20.2

Savings

2,450,980

2,259,788

2,118,911

8.5

15.7

2,234,913

2,118,060

5.5

Time deposits

8,965,337

9,008,907

10,180,922

(0.5

)

(11.9

)

9,465,608

9,961,289

(5.0

)

Total deposits

$

44,422,116

$

41,210,747

$

37,408,559

7.8

%

18.7

%

$

40,762,891

$

36,047,070

13.1

%

Interest-bearing liabilities

$

29,666,559

$

29,552,756

$

27,522,469

0.4

%

7.8

%

$

28,798,277

$

26,408,961

9.0

%

Stockholders' equity

$

5,243,203

$

5,079,351

$

4,977,759

3.2

%

5.3

%

$

5,082,186

$

4,760,845

6.7

%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED AVERAGE BALANCES

($ in thousands)

(unaudited)

Table 5



December 31, 2020 December Three Months Ended % Change Year Ended 31, 2020 % Change

December 31, September December 31, December 31, December 31, 2020 30, 2019 Qtr-o-Qtr Yr-o-Yr 2020 2019 Yr-o-Yr 2020

Loans:

Commercial:

C&I ^(1) $ 13,332,194 $ 13,235,845 $ 12,237,081 0.7 % 8.9 % $ 13,074,883 $ 12,073,820 8.3 %

CRE:

CRE 11,067,392 10,942,780 10,006,424 1.1 10.6 10,828,037 9,642,301 12.3

Multifamily 3,051,472 3,107,294 2,771,555 (1.8 ) 10.1 3,009,365 2,588,347 16.3 residential

Construction and 588,665 564,219 668,147 4.3 (11.9 ) 597,118 656,142 (9.0 )land

Total CRE 14,707,529 14,614,293 13,446,126 0.6 9.4 14,434,520 12,886,790 12.0

Consumer:

Residential mortgage:

Single-family 7,990,035 7,695,838 6,934,361 3.8 15.2 7,613,706 6,526,415 16.7 residential

HELOCs 1,558,781 1,475,098 1,506,346 5.7 3.5 1,480,516 1,580,343 (6.3 )

Total residential 9,548,816 9,170,936 8,440,707 4.1 13.1 9,094,222 8,106,758 12.2 mortgage

Other consumer 137,186 139,371 286,096 (1.6 ) (52.0 ) 195,392 305,768 (36.1 )

Total loans ^(2) $ 37,725,725 $ 37,160,445 $ 34,410,010 1.5 % 9.6 % $ 36,799,017 $ 33,373,136 10.3 %



Interest-earning $ 49,703,349 $ 47,428,586 $ 42,114,123 4.8 % 18.0 % $ 46,239,709 $ 40,320,804 14.7 %assets

Total assets $ 52,466,325 $ 50,247,259 $ 44,471,242 4.4 % 18.0 % $ 48,937,793 $ 42,484,885 15.2 %



Deposits:

Noninterest-bearing $ 16,311,010 $ 14,296,475 $ 10,976,368 14.1 % 48.6 % $ 13,823,152 $ 10,502,618 31.6 %demand

Interest-bearing 6,067,849 5,663,873 5,540,300 7.1 9.5 5,357,934 5,244,867 2.2 checking

Money market 10,626,940 9,981,704 8,592,058 6.5 23.7 9,881,284 8,220,236 20.2

Savings 2,450,980 2,259,788 2,118,911 8.5 15.7 2,234,913 2,118,060 5.5

Time deposits 8,965,337 9,008,907 10,180,922 (0.5 ) (11.9 ) 9,465,608 9,961,289 (5.0 )

Total deposits $ 44,422,116 $ 41,210,747 $ 37,408,559 7.8 % 18.7 % $ 40,762,891 $ 36,047,070 13.1 %



Interest-bearing $ 29,666,559 $ 29,552,756 $ 27,522,469 0.4 % 7.8 % $ 28,798,277 $ 26,408,961 9.0 %liabilities

Stockholders' $ 5,243,203 $ 5,079,351 $ 4,977,759 3.2 % 5.3 % $ 5,082,186 $ 4,760,845 6.7 %equity



(1)

Includes average balances of PPP loans of $1.70 billion and $1.76 billion for the three months ended December 31, 2020 and September 30, 2020, respectively, and $1.24 billion for the year ended December 31, 2020.

(2)

Includes loans HFS.

Includes average balances of PPP loans of $1.70 billion and $1.76 billion(1) for the three months ended December 31, 2020 and September 30, 2020, respectively, and $1.24 billion for the year ended December 31, 2020.

(2) Includes loans HFS.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 6

Three Months Ended

December 31, 2020

September 30, 2020

Average

Average

Average

Average

Balance

Interest

Yield/Rate (1)

Balance

Interest

Yield/Rate (1)

Assets

Interest-earning assets:

Interest-bearing cash and deposits with banks

$

5,609,965

$

4,458

0.32

%

$

4,904,394

$

5,045

0.41

%

Resale agreements (2)

1,257,826

4,955

1.57

%

1,225,217

5,295

1.72

%

AFS debt securities

5,029,820

22,914

1.81

%

4,059,456

18,493

1.81

%

Loans (3)

37,725,725

348,578

3.68

%

37,160,445

336,542

3.60

%

FHLB and FRB stock

80,013

443

2.20

%

79,074

353

1.78

%

Total interest-earning assets

49,703,349

381,348

3.05

%

47,428,586

365,728

3.07

%

Noninterest-earning assets:

Cash and due from banks

580,989

522,699

Allowance for loan losses

(618,207

)

(632,216

)

Other assets

2,800,194

2,928,190

Total assets

$

52,466,325

$

50,247,259

Liabilities and Stockholders' Equity

Interest-bearing liabilities:

Checking deposits

$

6,067,849

$

4,218

0.28

%

$

5,663,873

$

4,345

0.31

%

Money market deposits

10,626,940

5,542

0.21

%

9,981,704

6,837

0.27

%

Savings deposits

2,450,980

1,655

0.27

%

2,259,788

1,481

0.26

%

Time deposits

8,965,337

16,727

0.74

%

9,008,907

21,135

0.93

%

Federal funds purchased and other short-term borrowings

47,500

276

2.31

%

84,858

407

1.91

%

FHLB advances

653,748

3,137

1.91

%

656,906

3,146

1.91

%

Repurchase agreements (2)

335,737

2,080

2.46

%

317,097

2,155

2.70

%

Long-term debt and finance lease liabilities

518,468

1,132

0.87

%

1,579,623

2,092

0.53

%

Total interest-bearing liabilities

29,666,559

34,767

0.47

%

29,552,756

41,598

0.56

%

Noninterest-bearing liabilities and stockholders' equity:

Demand deposits

16,311,010

14,296,475

Accrued expenses and other liabilities

1,245,553

1,318,677

Stockholders' equity

5,243,203

5,079,351

Total liabilities and stockholders' equity

$

52,466,325

$

50,247,259

Interest rate spread

2.58

%

2.51

%

Net interest income and net interest margin

$

346,581

2.77

%

$

324,130

2.72

%

Adjusted net interest income and adjusted net interest margin (4)

$

332,701

2.76

%

$

317,611

2.77

%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 6



Three Months Ended

December 31, 2020 September 30, 2020

Average Average Average Average

Yield/ Yield/ Balance Interest Rate ^ Balance Interest Rate ^ (1) (1)

Assets

Interest-earning assets:

Interest-bearingcash and deposits $ 5,609,965 $ 4,458 0.32 % $ 4,904,394 $ 5,045 0.41 %with banks

Resale agreements ^ 1,257,826 4,955 1.57 % 1,225,217 5,295 1.72 %(2)

AFS debt securities 5,029,820 22,914 1.81 % 4,059,456 18,493 1.81 %

Loans ^(3) 37,725,725 348,578 3.68 % 37,160,445 336,542 3.60 %

FHLB and FRB stock 80,013 443 2.20 % 79,074 353 1.78 %

Totalinterest-earning 49,703,349 381,348 3.05 % 47,428,586 365,728 3.07 %assets



Noninterest-earning assets:

Cash and due from 580,989 522,699 banks

Allowance for loan (618,207 ) (632,216 ) losses

Other assets 2,800,194 2,928,190

Total assets $ 52,466,325 $ 50,247,259



Liabilities andStockholders' Equity

Interest-bearing liabilities:

Checking deposits $ 6,067,849 $ 4,218 0.28 % $ 5,663,873 $ 4,345 0.31 %

Money market 10,626,940 5,542 0.21 % 9,981,704 6,837 0.27 %deposits

Savings deposits 2,450,980 1,655 0.27 % 2,259,788 1,481 0.26 %

Time deposits 8,965,337 16,727 0.74 % 9,008,907 21,135 0.93 %

Federal fundspurchased and other 47,500 276 2.31 % 84,858 407 1.91 %short-termborrowings

FHLB advances 653,748 3,137 1.91 % 656,906 3,146 1.91 %

Repurchase 335,737 2,080 2.46 % 317,097 2,155 2.70 %agreements ^(2)

Long-term debt andfinance lease 518,468 1,132 0.87 % 1,579,623 2,092 0.53 %liabilities

Totalinterest-bearing 29,666,559 34,767 0.47 % 29,552,756 41,598 0.56 %liabilities



Noninterest-bearingliabilities and stockholders'equity:

Demand deposits 16,311,010 14,296,475

Accrued expensesand other 1,245,553 1,318,677 liabilities

Stockholders' 5,243,203 5,079,351 equity

Total liabilitiesand stockholders' $ 52,466,325 $ 50,247,259 equity



Interest rate 2.58 % 2.51 %spread

Net interest incomeand net interest $ 346,581 2.77 % $ 324,130 2.72 %margin

Adjusted netinterest income andadjusted net $ 332,701 2.76 % $ 317,611 2.77 %interest margin ^(4)



(1)

Annualized.

(2)

There was no netting of repurchase agreements against resale agreements for the three months ended December 31, 2020 and September 30, 2020.

(3)

Includes loans HFS.

(4)

Net interest income and net interest margin have been adjusted for the impact of PPP loans and advances from the PPPLF. See reconciliation of GAAP to non-GAAP financial measures in Table 15.

(1) Annualized.

(2) There was no netting of repurchase agreements against resale agreements for the three months ended December 31, 2020 and September 30, 2020.

(3) Includes loans HFS.

Net interest income and net interest margin have been adjusted for the(4) impact of PPP loans and advances from the PPPLF. See reconciliation of GAAP to non-GAAP financial measures in Table 15.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 7

Three Months Ended

December 31, 2020

December 31, 2019

Average

Average

Average

Average

Balance

Interest

Yield/Rate (1)

Balance

Interest

Yield/Rate (1)

Assets

Interest-earning assets:

Interest-bearing cash and deposits with banks

$

5,609,965

$

4,458

0.32

%

$

3,213,016

$

14,598

1.80

%

Resale agreements (2)

1,257,826

4,955

1.57

%

863,261

5,808

2.67

%

AFS debt securities

5,029,820

22,914

1.81

%

3,549,376

20,460

2.29

%

Loans (3)

37,725,725

348,578

3.68

%

34,410,010

425,773

4.91

%

FHLB and FRB stock

80,013

443

2.20

%

78,460

594

3.00

%

Total interest-earning assets

49,703,349

381,348

3.05

%

42,114,123

467,233

4.40

%

Noninterest-earning assets:

Cash and due from banks

580,989

534,326

Allowance for loan losses

(618,207

)

(355,759

)

Other assets

2,800,194

2,178,552

Total assets

$

52,466,325

$

44,471,242

Liabilities and Stockholders' Equity

Interest-bearing liabilities:

Checking deposits

$

6,067,849

$

4,218

0.28

%

$

5,540,300

$

13,589

0.97

%

Money market deposits

10,626,940

5,542

0.21

%

8,592,058

25,223

1.16

%

Savings deposits

2,450,980

1,655

0.27

%

2,118,911

2,266

0.42

%

Time deposits

8,965,337

16,727

0.74

%

10,180,922

47,935

1.87

%

Federal funds purchased and other short-term borrowings

47,500

276

2.31

%

43,313

404

3.70

%

FHLB advances

653,748

3,137

1.91

%

745,732

4,686

2.49

%

Repurchase agreements (2)

335,737

2,080

2.46

%

148,892

3,382

9.01

%

Long-term debt and finance lease liabilities

518,468

1,132

0.87

%

152,341

1,529

3.98

%

Total interest-bearing liabilities

29,666,559

34,767

0.47

%

27,522,469

99,014

1.43

%

Noninterest-bearing liabilities and stockholders' equity:

Demand deposits

16,311,010

10,976,368

Accrued expenses and other liabilities

1,245,553

994,646

Stockholders' equity

5,243,203

4,977,759

Total liabilities and stockholders' equity

$

52,466,325

$

44,471,242

Interest rate spread

2.58

%

2.97

%

Net interest income and net interest margin

$

346,581

2.77

%

$

368,219

3.47

%

Adjusted net interest income and adjusted net interest margin (4)

$

332,701

2.76

%

$

368,219

3.47

%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 7



Three Months Ended

December 31, 2020 December 31, 2019

Average Average Average Average

Yield/ Yield/ Balance Interest Rate ^ Balance Interest Rate ^ (1) (1)

Assets

Interest-earning assets:

Interest-bearingcash and deposits $ 5,609,965 $ 4,458 0.32 % $ 3,213,016 $ 14,598 1.80 %with banks

Resale agreements ^ 1,257,826 4,955 1.57 % 863,261 5,808 2.67 %(2)

AFS debt securities 5,029,820 22,914 1.81 % 3,549,376 20,460 2.29 %

Loans ^(3) 37,725,725 348,578 3.68 % 34,410,010 425,773 4.91 %

FHLB and FRB stock 80,013 443 2.20 % 78,460 594 3.00 %

Totalinterest-earning 49,703,349 381,348 3.05 % 42,114,123 467,233 4.40 %assets



Noninterest-earning assets:

Cash and due from 580,989 534,326 banks

Allowance for loan (618,207 ) (355,759 ) losses

Other assets 2,800,194 2,178,552

Total assets $ 52,466,325 $ 44,471,242



Liabilities andStockholders' Equity

Interest-bearing liabilities:

Checking deposits $ 6,067,849 $ 4,218 0.28 % $ 5,540,300 $ 13,589 0.97 %

Money market 10,626,940 5,542 0.21 % 8,592,058 25,223 1.16 %deposits

Savings deposits 2,450,980 1,655 0.27 % 2,118,911 2,266 0.42 %

Time deposits 8,965,337 16,727 0.74 % 10,180,922 47,935 1.87 %

Federal fundspurchased and other 47,500 276 2.31 % 43,313 404 3.70 %short-termborrowings

FHLB advances 653,748 3,137 1.91 % 745,732 4,686 2.49 %

Repurchase 335,737 2,080 2.46 % 148,892 3,382 9.01 %agreements ^(2)

Long-term debt andfinance lease 518,468 1,132 0.87 % 152,341 1,529 3.98 %liabilities

Totalinterest-bearing 29,666,559 34,767 0.47 % 27,522,469 99,014 1.43 %liabilities



Noninterest-bearingliabilities and stockholders'equity:

Demand deposits 16,311,010 10,976,368

Accrued expensesand other 1,245,553 994,646 liabilities

Stockholders' 5,243,203 4,977,759 equity

Total liabilitiesand stockholders' $ 52,466,325 $ 44,471,242 equity



Interest rate 2.58 % 2.97 %spread

Net interest incomeand net interest $ 346,581 2.77 % $ 368,219 3.47 %margin

Adjusted netinterest income andadjusted net $ 332,701 2.76 % $ 368,219 3.47 %interest margin ^(4)



(1)

Annualized.

(2)

There was no netting of repurchase agreements against resale agreements for the three months ended December 31, 2020. Average balances of resale and repurchase agreements for the three months ended December 31, 2019 have been reported net, pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. The weighted-average yields of gross resale agreements were 1.57% and 2.50% for the three months ended December 31, 2020 and 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 2.46% and 4.34% for the three months ended December 31, 2020 and 2019, respectively.

(3)

Includes loans HFS.

(4)

Net interest income and net interest margin have been adjusted for the impact of PPP loans and advances from the PPPLF. See reconciliation of GAAP to non-GAAP financial measures in Table 15.

(1) Annualized.

There was no netting of repurchase agreements against resale agreements for the three months ended December 31, 2020. Average balances of resale and repurchase agreements for the three months ended December 31, 2019 have been reported net, pursuant to ASC 210-20-45-11, Balance Sheet(2) Offsetting: Repurchase and Reverse Repurchase Agreements. The weighted-average yields of gross resale agreements were 1.57% and 2.50% for the three months ended December 31, 2020 and 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 2.46% and 4.34% for the three months ended December 31, 2020 and 2019, respectively.

(3) Includes loans HFS.

Net interest income and net interest margin have been adjusted for the(4) impact of PPP loans and advances from the PPPLF. See reconciliation of GAAP to non-GAAP financial measures in Table 15.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 8

Year Ended

December 31, 2020

December 31, 2019

Average

Average

Average

Average

Balance

Interest

Yield/Rate

Balance

Interest

Yield/Rate

Assets

Interest-earning assets:

Interest-bearing cash and deposits with banks

$

4,236,430

$

25,175

0.59

%

$

3,050,954

$

66,518

2.18

%

Resale agreements (1)

1,101,434

21,389

1.94

%

969,384

28,061

2.89

%

AFS debt securities

4,023,668

82,553

2.05

%

2,850,476

67,838

2.38

%

Loans (2)

36,799,017

1,464,382

3.98

%

33,373,136

1,717,415

5.15

%

FHLB and FRB stock

79,160

1,543

1.95

%

76,854

2,468

3.21

%

Total interest-earning assets

46,239,709

1,595,042

3.45

%

40,320,804

1,882,300

4.67

%

Noninterest-earning assets:

Cash and due from banks

528,406

471,060

Allowance for loan losses

(577,560

)

(330,125

)

Other assets

2,747,238

2,023,146

Total assets

$

48,937,793

$

42,484,885

Liabilities and Stockholders' Equity

Interest-bearing liabilities:

Checking deposits

$

5,357,934

$

24,213

0.45

%

$

5,244,867

$

58,168

1.11

%

Money market deposits

9,881,284

42,720

0.43

%

8,220,236

111,081

1.35

%

Savings deposits

2,234,913

6,398

0.29

%

2,118,060

9,626

0.45

%

Time deposits

9,465,608

111,411

1.18

%

9,961,289

196,927

1.98

%

Federal funds purchased and other short-term borrowings

108,398

1,504

1.39

%

44,881

1,763

3.93

%

FHLB advances

664,370

13,792

2.08

%

592,257

16,697

2.82

%

Repurchase agreements (1)

350,849

11,766

3.35

%

74,926

13,582

18.13

%

Long-term debt and finance lease liabilities

734,921

6,045

0.82

%

152,445

6,643

4.36

%

Total interest-bearing liabilities

28,798,277

217,849

0.76

%

26,408,961

414,487

1.57

%

Noninterest-bearing liabilities and stockholders' equity:

Demand deposits

13,823,152

10,502,618

Accrued expenses and other liabilities

1,234,178

812,461

Stockholders' equity

5,082,186

4,760,845

Total liabilities and stockholders' equity

$

48,937,793

$

42,484,885

Interest rate spread

2.69

%

3.10

%

Net interest income and net interest margin

$

1,377,193

2.98

%

$

1,467,813

3.64

%

Adjusted net interest income and adjusted net interest margin (3)

$

1,335,968

2.97

%

$

1,467,813

3.64

%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 8



Year Ended

December 31, 2020 December 31, 2019 Average Average Average Average

Balance Interest Yield/ Balance Interest Yield/ Rate Rate

Assets

Interest-earning assets:

Interest-bearingcash and deposits $ 4,236,430 $ 25,175 0.59 % $ 3,050,954 $ 66,518 2.18 %with banks

Resale agreements ^ 1,101,434 21,389 1.94 % 969,384 28,061 2.89 %(1)

AFS debt securities 4,023,668 82,553 2.05 % 2,850,476 67,838 2.38 %

Loans^ (2) 36,799,017 1,464,382 3.98 % 33,373,136 1,717,415 5.15 %

FHLB and FRB stock 79,160 1,543 1.95 % 76,854 2,468 3.21 %

Totalinterest-earning 46,239,709 1,595,042 3.45 % 40,320,804 1,882,300 4.67 %assets



Noninterest-earning assets:

Cash and due from 528,406 471,060 banks

Allowance for loan (577,560 ) (330,125 ) losses

Other assets 2,747,238 2,023,146

Total assets $ 48,937,793 $ 42,484,885



Liabilities andStockholders' Equity

Interest-bearing liabilities:

Checking deposits $ 5,357,934 $ 24,213 0.45 % $ 5,244,867 $ 58,168 1.11 %

Money market 9,881,284 42,720 0.43 % 8,220,236 111,081 1.35 %deposits

Savings deposits 2,234,913 6,398 0.29 % 2,118,060 9,626 0.45 %

Time deposits 9,465,608 111,411 1.18 % 9,961,289 196,927 1.98 %

Federal fundspurchased and other 108,398 1,504 1.39 % 44,881 1,763 3.93 %short-termborrowings

FHLB advances 664,370 13,792 2.08 % 592,257 16,697 2.82 %

Repurchase 350,849 11,766 3.35 % 74,926 13,582 18.13 %agreements ^(1)

Long-term debt andfinance lease 734,921 6,045 0.82 % 152,445 6,643 4.36 %liabilities

Totalinterest-bearing 28,798,277 217,849 0.76 % 26,408,961 414,487 1.57 %liabilities



Noninterest-bearingliabilities and stockholders'equity:

Demand deposits 13,823,152 10,502,618

Accrued expensesand other 1,234,178 812,461 liabilities

Stockholders' 5,082,186 4,760,845 equity

Total liabilitiesand stockholders' $ 48,937,793 $ 42,484,885 equity



Interest rate 2.69 % 3.10 %spread

Net interest incomeand net interest $ 1,377,193 2.98 % $ 1,467,813 3.64 %margin

Adjusted netinterest income andadjusted net $ 1,335,968 2.97 % $ 1,467,813 3.64 %interest margin ^(3)



(1)

Average balances of resale and repurchase agreements have been reported net, pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. The weighted-average yields of gross resale agreements were 1.94% and 2.66% for the year ended December 31, 2020 and 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 3.25% and 4.74% for the year ended December 31, 2020 and 2019, respectively.

(2)

Includes loans HFS.

(3)

Net interest income and net interest margin have been adjusted for the impact of PPP loans and advances from the PPPLF. See reconciliation of GAAP to non-GAAP financial measures in Table 15.

Average balances of resale and repurchase agreements have been reported net, pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. The weighted-average yields of gross(1) resale agreements were 1.94% and 2.66% for the year ended December 31, 2020 and 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 3.25% and 4.74% for the year ended December 31, 2020 and 2019, respectively.

(2) Includes loans HFS.

Net interest income and net interest margin have been adjusted for the(3) impact of PPP loans and advances from the PPPLF. See reconciliation of GAAP to non-GAAP financial measures in Table 15.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED RATIOS

(unaudited)

Table 9

Three Months Ended (1)

December 31, 2020Basis Point Change

December 31,2020

September 30,2020

December 31,2019

Qtr-o-Qtr

Yr-o-Yr

Return on average assets

1.24

%

1.26

%

1.68

%

(2

)

bps

(44

)

bps

Adjusted return on average assets (2)

1.22

%

1.26

%

1.67

%

(4

)

(45

)

Return on average equity

12.45

%

12.50

%

15.00

%

(5

)

(255

)

Adjusted return on average equity (2)

12.26

%

12.50

%

14.91

%

(24

)

(265

)

Return on average tangible equity (2)

13.77

%

13.88

%

16.71

%

(11

)

(294

)

Adjusted return on average tangible equity (2)

13.56

%

13.88

%

16.61

%

(32

)

(305

)

Interest rate spread

2.58

%

2.51

%

2.97

%

7

(39

)

Net interest margin

2.77

%

2.72

%

3.47

%

5

(70

)

Adjusted net interest margin (2)

2.76

%

2.77

%

3.47

%

(1

)

(71

)

Average loan yield

3.68

%

3.60

%

4.91

%

8

(123

)

Adjusted average loan yield (2)

3.69

%

3.70

%

4.91

%

(1

)

(122

)

Yield on average interest-earning assets

3.05

%

3.07

%

4.40

%

(2

)

(135

)

Average cost of interest-bearing deposits

0.40

%

0.50

%

1.34

%

(10

)

(94

)

Average cost of deposits

0.25

%

0.33

%

0.94

%

(8

)

(69

)

Average cost of funds

0.30

%

0.38

%

1.02

%

(8

)

(72

)

Adjusted pre-tax, pre-provision profitability ratio (2)

1.90

%

1.78

%

2.40

%

12

(50

)

Adjusted noninterest expense/average assets (2)

1.26

%

1.22

%

1.47

%

4

(21

)

Efficiency ratio

42.90

%

45.58

%

45.20

%

(268

)

(230

)

Adjusted efficiency ratio (2)

39.76

%

40.79

%

38.08

%

(103

)

bps

168

bps

Year Ended

December 31, 2020Basis Point Change

December 31,2020

December 31,2019

Yr-o-Yr

Return on average assets

1.16

%

1.59

%

(43

)

bps

Adjusted return on average assets (2)

1.16

%

1.67

%

(51

)

Return on average equity

11.17

%

14.16

%

(299

)

Adjusted return on average equity (2)

11.12

%

14.87

%

(375

)

Return on average tangible equity (2)

12.42

%

15.88

%

(346

)

Adjusted return on average tangible equity (2)

12.37

%

16.68

%

(431

)

Interest rate spread

2.69

%

3.10

%

(41

)

Net interest margin

2.98

%

3.64

%

(66

)

Adjusted net interest margin (2)

2.97

%

3.64

%

(67

)

Average loan yield

3.98

%

5.15

%

(117

)

Adjusted average loan yield (2)

4.00

%

5.15

%

(115

)

Yield on average interest-earning assets

3.45

%

4.67

%

(122

)

Average cost of interest-bearing deposits

0.69

%

1.47

%

(78

)

Average cost of deposits

0.45

%

1.04

%

(59

)

Average cost of funds

0.51

%

1.12

%

(61

)

Adjusted pre-tax, pre-provision profitability ratio (2)

2.00

%

2.46

%

(46

)

Adjusted noninterest expense/average assets (2)

1.30

%

1.52

%

(22

)

Efficiency ratio

44.42

%

44.23

%

19

Adjusted efficiency ratio (2)

39.30

%

38.14

%

116

bps

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED RATIOS

(unaudited)

Table 9



Three Months Ended ^(1) December 31, 2020 Basis Point Change

December September December 31, 30, 31, Qtr-o-Qtr Yr-o-Yr 2020 2020 2019

Return on average 1.24 % 1.26 % 1.68 % (2 ) bps (44 ) bpsassets

Adjusted return onaverage assets ^ 1.22 % 1.26 % 1.67 % (4 ) (45 ) (2)

Return on average 12.45 % 12.50 % 15.00 % (5 ) (255 ) equity

Adjusted return onaverage equity ^ 12.26 % 12.50 % 14.91 % (24 ) (265 ) (2)

Return on averagetangible equity ^ 13.77 % 13.88 % 16.71 % (11 ) (294 ) (2)

Adjusted return onaverage tangible 13.56 % 13.88 % 16.61 % (32 ) (305 ) equity ^(2)

Interest rate 2.58 % 2.51 % 2.97 % 7 (39 ) spread

Net interest 2.77 % 2.72 % 3.47 % 5 (70 ) margin

Adjusted netinterest margin ^ 2.76 % 2.77 % 3.47 % (1 ) (71 ) (2)

Average loan yield 3.68 % 3.60 % 4.91 % 8 (123 )

Adjusted average 3.69 % 3.70 % 4.91 % (1 ) (122 ) loan yield ^(2)

Yield on averageinterest-earning 3.05 % 3.07 % 4.40 % (2 ) (135 ) assets

Average cost ofinterest-bearing 0.40 % 0.50 % 1.34 % (10 ) (94 ) deposits

Average cost of 0.25 % 0.33 % 0.94 % (8 ) (69 ) deposits

Average cost of 0.30 % 0.38 % 1.02 % (8 ) (72 ) funds

Adjusted pre-tax,pre-provision 1.90 % 1.78 % 2.40 % 12 (50 ) profitabilityratio ^(2)

Adjustednoninterest 1.26 % 1.22 % 1.47 % 4 (21 ) expense/averageassets ^(2)

Efficiency ratio 42.90 % 45.58 % 45.20 % (268 ) (230 )

Adjustedefficiency ratio ^ 39.76 % 40.79 % 38.08 % (103 ) bps 168 bps(2)





December 31, Year Ended 2020 Basis Point Change

December December 31, 31, Yr-o-Yr 2020 2019

Return on average 1.16 % 1.59 % (43 ) bps assets

Adjusted return onaverage assets ^ 1.16 % 1.67 % (51 ) (2)

Return on average 11.17 % 14.16 % (299 ) equity

Adjusted return onaverage equity ^ 11.12 % 14.87 % (375 ) (2)

Return on averagetangible equity ^ 12.42 % 15.88 % (346 ) (2)

Adjusted return onaverage tangible 12.37 % 16.68 % (431 ) equity ^(2)

Interest rate 2.69 % 3.10 % (41 ) spread

Net interest 2.98 % 3.64 % (66 ) margin

Adjusted netinterest margin ^ 2.97 % 3.64 % (67 ) (2)

Average loan yield 3.98 % 5.15 % (117 )

Adjusted average 4.00 % 5.15 % (115 ) loan yield ^(2)

Yield on averageinterest-earning 3.45 % 4.67 % (122 ) assets

Average cost ofinterest-bearing 0.69 % 1.47 % (78 ) deposits

Average cost of 0.45 % 1.04 % (59 ) deposits

Average cost of 0.51 % 1.12 % (61 ) funds

Adjusted pre-tax,pre-provision 2.00 % 2.46 % (46 ) profitabilityratio ^(2)

Adjustednoninterest 1.30 % 1.52 % (22 ) expense/averageassets ^(2)

Efficiency ratio 44.42 % 44.23 % 19

Adjustedefficiency ratio ^ 39.30 % 38.14 % 116 bps (2)



(1)

Annualized except for efficiency ratio.

(2)

See reconciliation of GAAP to non-GAAP financial measures in Tables 12, 13, 14 and 15.

(1) Annualized except for efficiency ratio.

(2) See reconciliation of GAAP to non-GAAP financial measures in Tables 12, 13, 14 and 15.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES

($ in thousands)

(unaudited)

Table 10

ASU 2016-13 replaced the incurred loss methodology used in calculating the allowance for loan losses with a current expected credit loss model ("CECL"). The Company adopted ASU 2016-13 using the modified retrospective approach on January 1, 2020. As a result, prior comparative periods have not been adjusted for the CECL model. In addition, ASU 2016-13 introduces the concept of Purchased Credit Deteriorated ("PCD") financial assets, which replaces purchased credit-impaired ("PCI") assets. For PCD assets, the initial allowance for loan losses is added to the purchase price and is considered to be part of the PCD loan amortized cost basis, hence, there is no income statement impact on acquisition. This contrasts with PCI loans where allowance for loan losses only reflects losses that are incurred by the Company after the acquisition. The allowance for loan losses is evaluated each quarter and adjusted as necessary by recognizing or reversing loan loss expense. There were no PCD loans during the three months and year ended December 31, 2020.

Three Months Ended December 31, 2020

Commercial

Consumer

Total

CRE

Residential Mortgage

C&I

CRE

Multi- Family Residential

Construction and Land

Single- Family Residential

HELOCs

Other Consumer

Allowance for loan losses, September 30, 2020

$

389,021

$

166,810

$

23,807

$

10,401

$

22,622

$

3,273

$

2,318

$

618,252

Provision for (reversal of) credit losses on loans

(a)

15,041

9,415

3,606

(184

)

(7,263

)

(585

)

(184

)

19,846

Gross charge-offs

(8,759

)

(12,518

)

-

-

-

-

(5

)

(21,282

)

Gross recoveries

2,033

84

160

22

161

2

1

2,463

Total net (charge-offs) recoveries

(6,726

)

(12,434

)

160

22

161

2

(4

)

(18,819

)

Foreign currency translation adjustment

704

-

-

-

-

-

-

704

Allowance for loan losses, December 31, 2020

$

398,040

$

163,791

$

27,573

$

10,239

$

15,520

$

2,690

$

2,130

$

619,983

EAST WEST BANCORP, INC. AND SUBSIDIARIES

ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES

($ in thousands)

(unaudited)

Table 10

ASU 2016-13 replaced the incurred loss methodology used in calculating theallowance for loan losses with a current expected credit loss model ("CECL").The Company adopted ASU 2016-13 using the modified retrospective approach onJanuary 1, 2020. As a result, prior comparative periods have not been adjustedfor the CECL model. In addition, ASU 2016-13 introduces the concept ofPurchased Credit Deteriorated ("PCD") financial assets, which replacespurchased credit-impaired ("PCI") assets. For PCD assets, the initial allowancefor loan losses is added to the purchase price and is considered to be part ofthe PCD loan amortized cost basis, hence, there is no income statement impacton acquisition. This contrasts with PCI loans where allowance for loan lossesonly reflects losses that are incurred by the Company after the acquisition.The allowance for loan losses is evaluated each quarter and adjusted asnecessary by recognizing or reversing loan loss expense. There were no PCDloans during the three months and year ended December 31, 2020.



Three Months Ended December 31, 2020

Commercial Consumer

CRE Residential Mortgage Total Multi- Construction Single- Other C&I CRE Family and Land Family HELOCs Consumer Residential Residential

Allowance forloan losses, $ 389,021 $ 166,810 $ 23,807 $ 10,401 $ 22,622 $ 3,273 $ 2,318 $ 618,252 September 30,2020

Provision for(reversal of) (a) 15,041 9,415 3,606 (184 ) (7,263 ) (585 ) (184 ) 19,846 credit losseson loans

Gross (8,759 ) (12,518 ) - - - - (5 ) (21,282 )charge-offs

Gross 2,033 84 160 22 161 2 1 2,463 recoveries

Total net(charge-offs) (6,726 ) (12,434 ) 160 22 161 2 (4 ) (18,819 )recoveries

Foreigncurrency 704 - - - - - - 704 translationadjustment

Allowance forloan losses, $ 398,040 $ 163,791 $ 27,573 $ 10,239 $ 15,520 $ 2,690 $ 2,130 $ 619,983 December 31,2020



Three Months Ended September 30, 2020

Commercial

Consumer

Total

CRE

Residential Mortgage

C&I

CRE

Multi- Family Residential

Construction and Land

Single- Family Residential

HELOCs

Other Consumer

Allowance for loan losses, June 30, 2020

$

380,723

$

176,040

$

25,058

$

18,551

$

25,314

$

3,867

$

2,518

$

632,071

Provision for (reversal of) credit losses on loans

(a)

31,691

(8,301

)

(1,916

)

(8,180

)

(2,692

)

(637

)

(76

)

9,889

Gross charge-offs

(25,111

)

(1,414

)

-

-

-

-

(124

)

(26,649

)

Gross recoveries

1,218

485

665

30

-

43

-

2,441

Total net (charge-offs) recoveries

(23,893

)

(929

)

665

30

-

43

(124

)

(24,208

)

Foreign currency translation adjustment

500

-

-

-

-

-

-

500

Allowance for loan losses, September 30, 2020

$

389,021

$

166,810

$

23,807

$

10,401

$

22,622

$

3,273

$

2,318

$

618,252



Three Months Ended September 30, 2020

Commercial Consumer

CRE Residential Mortgage Total Multi- Construction Single- Other C&I CRE Family and Land Family HELOCs Consumer Residential Residential

Allowance forloan losses, $ 380,723 $ 176,040 $ 25,058 $ 18,551 $ 25,314 $ 3,867 $ 2,518 $ 632,071 June 30, 2020

Provision for(reversal of) (a) 31,691 (8,301 ) (1,916 ) (8,180 ) (2,692 ) (637 ) (76 ) 9,889 credit losseson loans

Gross (25,111 ) (1,414 ) - - - - (124 ) (26,649 )charge-offs

Gross 1,218 485 665 30 - 43 - 2,441 recoveries

Total net(charge-offs) (23,893 ) (929 ) 665 30 - 43 (124 ) (24,208 )recoveries

Foreigncurrency 500 - - - - - - 500 translationadjustment

Allowance forloan losses, $ 389,021 $ 166,810 $ 23,807 $ 10,401 $ 22,622 $ 3,273 $ 2,318 $ 618,252 September 30,2020



Three Months Ended December 31, 2019

Commercial

Consumer

Total

CRE

Residential Mortgage

C&I

CRE

Multi- Family Residential

Construction and Land

Single- Family Residential

HELOCs

Other Consumer

Allowance for loan losses, September 30, 2019

$

218,869

$

37,473

$

20,307

$

29,171

$

29,935

$

5,856

$

3,965

$

345,576

Provision for (reversal of) credit losses on loans

(a)

30,383

1,782

1,039

(9,780

)

(1,410

)

(591

)

(580

)

20,843

Gross charge-offs

(19,898

)

-

-

-

-

-

(10

)

(19,908

)

Gross recoveries

8,889

1,254

1,480

13

2

-

5

11,643

Total net (charge-offs) recoveries

(11,009

)

1,254

1,480

13

2

-

(5

)

(8,265

)

Foreign currency translation adjustment

133

-

-

-

-

-

-

133

Allowance for loan losses, December 31, 2019

$

238,376

$

40,509

$

22,826

$

19,404

$

28,527

$

5,265

$

3,380

$

358,287



Three Months Ended December 31, 2019

Commercial Consumer

CRE Residential Mortgage Total Multi- Construction Single- Other C&I CRE Family and Land Family HELOCs Consumer Residential Residential

Allowance forloan losses, $ 218,869 $ 37,473 $ 20,307 $ 29,171 $ 29,935 $ 5,856 $ 3,965 $ 345,576 September 30,2019

Provision for(reversal of) (a) 30,383 1,782 1,039 (9,780 ) (1,410 ) (591 ) (580 ) 20,843 credit losseson loans

Gross (19,898 ) - - - - - (10 ) (19,908 )charge-offs

Gross 8,889 1,254 1,480 13 2 - 5 11,643 recoveries

Total net(charge-offs) (11,009 ) 1,254 1,480 13 2 - (5 ) (8,265 )recoveries

Foreigncurrency 133 - - - - - - 133 translationadjustment

Allowance forloan losses, $ 238,376 $ 40,509 $ 22,826 $ 19,404 $ 28,527 $ 5,265 $ 3,380 $ 358,287 December 31,2019



EAST WEST BANCORP, INC. AND SUBSIDIARIES

ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES

($ in thousands)

(unaudited)

Table 10 (continued)

Year Ended December 31, 2020

Commercial

Consumer

Total

CRE

Residential Mortgage

C&I

CRE

Multi- Family Residential

Construction and Land

Single- Family Residential

HELOCs

Other Consumer

Allowance for loan losses, December 31, 2019

$

238,376

$

40,509

$

22,826

$

19,404

$

28,527

$

5,265

$

3,380

$

358,287

Impact of ASU 2016-13 adoption

74,237

72,169

(8,112

)

(9,889

)

(3,670

)

(1,798

)

2,221

125,158

Allowance for loan losses, January 1, 2020

$

312,613

$

112,678

$

14,714

$

9,515

$

24,857

$

3,467

$

5,601

$

483,445

Provision for (reversal of) credit losses on loans

(a)

145,212

55,864

10,879

644

(9,922

)

(605

)

(3,381

)

198,691

Gross charge-offs

(66,225

)

(15,206

)

-

-

-

(221

)

(185

)

(81,837

)

Gross recoveries

5,428

10,455

1,980

80

585

49

95

18,672

Total net (charge-offs) recoveries

(60,797

)

(4,751

)

1,980

80

585

(172

)

(90

)

(63,165

)

Foreign currency translation adjustment

1,012

-

-

-

-

-

-

1,012

Allowance for loan losses, December 31, 2020

$

398,040

$

163,791

$

27,573

$

10,239

$

15,520

$

2,690

$

2,130

$

619,983

EAST WEST BANCORP, INC. AND SUBSIDIARIES

ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES

($ in thousands)

(unaudited)

Table 10 (continued)



Year Ended December 31, 2020

Commercial Consumer

CRE Residential Mortgage Total Multi- Construction Single- Other C&I CRE Family and Land Family HELOCs Consumer Residential Residential

Allowance forloan losses, $ 238,376 $ 40,509 $ 22,826 $ 19,404 $ 28,527 $ 5,265 $ 3,380 $ 358,287 December 31,2019

Impact of ASU2016-13 74,237 72,169 (8,112 ) (9,889 ) (3,670 ) (1,798 ) 2,221 125,158 adoption

Allowance forloan losses, $ 312,613 $ 112,678 $ 14,714 $ 9,515 $ 24,857 $ 3,467 $ 5,601 $ 483,445 January 1,2020

Provision for(reversal of) (a) 145,212 55,864 10,879 644 (9,922 ) (605 ) (3,381 ) 198,691 credit losseson loans

Gross (66,225 ) (15,206 ) - - - (221 ) (185 ) (81,837 )charge-offs

Gross 5,428 10,455 1,980 80 585 49 95 18,672 recoveries

Total net(charge-offs) (60,797 ) (4,751 ) 1,980 80 585 (172 ) (90 ) (63,165 )recoveries

Foreigncurrency 1,012 - - - - - - 1,012 translationadjustment

Allowance forloan losses, $ 398,040 $ 163,791 $ 27,573 $ 10,239 $ 15,520 $ 2,690 $ 2,130 $ 619,983 December 31,2020

Year Ended December 31, 2019

Commercial

Consumer

Total

CRE

Residential Mortgage

C&I

CRE

Multi- Family Residential

Construction and Land

Single- Family Residential

HELOCs

Other Consumer

Allowance for loan losses, December 31. 2018

$

189,117

$

40,666

$

19,885

$

20,290

$

31,340

$

5,774

$

4,250

$

311,322

Provision for (reversal of) credit losses on loans

(a)

109,068

(4,345

)

1,085

(1,422

)

(2,938

)

(516

)

(839

)

100,093

Gross charge-offs

(73,985

)

(1,021

)

-

-

(11

)

-

(50

)

(75,067

)

Gross recoveries

14,501

5,209

1,856

536

136

7

19

22,264

Total net (charge-offs) recoveries

(59,484

)

4,188

1,856

536

125

7

(31

)

(52,803

)

Foreign currency translation adjustment

(325

)

-

-

-

-

-

-

(325

)

Allowance for loan losses, December 31, 2019

$

238,376

$

40,509

$

22,826

$

19,404

$

28,527

$

5,265

$

3,380

$

358,287



Year Ended December 31, 2019

Commercial Consumer

CRE Residential Mortgage Total Multi- Construction Single- Other C&I CRE Family and Land Family HELOCs Consumer Residential Residential

Allowance forloan losses, $ 189,117 $ 40,666 $ 19,885 $ 20,290 $ 31,340 $ 5,774 $ 4,250 $ 311,322 December 31.2018

Provision for(reversal of) (a) 109,068 (4,345 ) 1,085 (1,422 ) (2,938 ) (516 ) (839 ) 100,093 credit losseson loans

Gross (73,985 ) (1,021 ) - - (11 ) - (50 ) (75,067 )charge-offs

Gross 14,501 5,209 1,856 536 136 7 19 22,264 recoveries

Total net(charge-offs) (59,484 ) 4,188 1,856 536 125 7 (31 ) (52,803 )recoveries

Foreigncurrency (325 ) - - - - - - (325 )translationadjustment

Allowance forloan losses, $ 238,376 $ 40,509 $ 22,826 $ 19,404 $ 28,527 $ 5,265 $ 3,380 $ 358,287 December 31,2019

Three Months Ended

Year Ended

December 31,2020

September 30,2020

December 31,2019

December 31,2020

December 31,2019

Unfunded Credit Facilities

Allowance for unfunded credit commitments, beginning of period (1)

$

29,083

$

28,972

$

13,424

$

11,158

$

12,566

Impact of ASU 2016-13 adoption

-

-

-

10,457

-

Provision for (reversal of) credit losses on unfunded credit commitments

(b)

4,494

111

(2,266

)

11,962

(1,408

)

Allowance for unfunded credit commitments, end of period (1)

$

33,577

$

29,083

$

11,158

$

33,577

$

11,158

Provision for credit losses

(a)+(b)

$

24,340

$

10,000

$

18,577

$

210,653

$

98,685



Three Months Ended Year Ended

December September December December December 31, 30, 31, 31, 31, 2020 2020 2019 2020 2019

UnfundedCredit Facilities

Allowancefor unfundedcredit $ 29,083 $ 28,972 $ 13,424 $ 11,158 $ 12,566 commitments,beginning ofperiod ^(1)

Impact ofASU 2016-13 - - - 10,457 - adoption

Provisionfor(reversalof) credit (b) 4,494 111 (2,266 ) 11,962 (1,408 )losses onunfundedcreditcommitments

Allowancefor unfundedcredit $ 33,577 $ 29,083 $ 11,158 $ 33,577 $ 11,158 commitments,end ofperiod ^(1)



Provision (a)for credit + $ 24,340 $ 10,000 $ 18,577 $ 210,653 $ 98,685 losses (b)



(1)

Included in Accrued expense and other liabilities on the Consolidated Balance Sheet.

(1) Included in Accrued expense and other liabilities on the Consolidated Balance Sheet.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CREDIT QUALITY

($ in thousands)

(unaudited)

Table 11

The Company adopted ASU 2016-13 using the modified retrospective approach on January 1, 2020. As a result, prior comparative periods have not been adjusted. PCI loans prior to the adoption of ASU 2016-13 were classified as PCD loans as of January 1, 2020. Nonaccrual loans as of December 31, 2020 and September 30, 2020 include all loans that are 90 or more days past due, unless the loan is well-collateralized and in the process of collection. Nonaccrual loans presented as of December 31, 2019 include only non-PCI nonaccrual loans.

Nonperforming Assets

December 31, 2020

September 30, 2020

December 31, 2019

TotalNonaccrual loans

TotalNonaccrual loans

Non-PCINonaccrual Loans

Commercial:

C&I

$

133,939

$

145,986

$

74,835

CRE:

CRE

46,546

55,996

16,441

Multifamily residential

3,668

3,728

819

Total CRE

50,214

59,724

17,260

Consumer:

Residential mortgage:

Single-family residential

16,814

15,894

14,865

HELOCs

11,696

12,395

10,742

Total residential mortgage

28,510

28,289

25,607

Other consumer

2,491

2,495

2,517

Total nonaccrual loans

215,154

236,494

120,219

Other real estate owned, net

15,824

19,504

125

Other nonperforming assets

3,890

3,890

1,167

Total nonperforming assets

$

234,868

$

259,888

$

121,511

Credit Quality Ratios

December 31, 2020

September 30, 2020

December 31, 2019

Nonperforming assets to total assets

0.45

%

0.52

%

0.27

%

Nonaccrual loans to loans HFI

0.56

%

0.63

%

0.35

%

Allowance for loan losses to loans HFI

1.61

%

1.65

%

1.03

%

Allowance for loan losses to nonaccrual loans

288.16

%

261.42

%

298.03

%

Annualized quarterly net charge-offs to average loans HFI

0.20

%

0.26

%

0.10

%

Annual net charge-offs to average loans HFI

0.17

%

N/A

0.16

%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CREDIT QUALITY

($ in thousands)

(unaudited)

Table 11

The Company adopted ASU 2016-13 using the modified retrospective approach onJanuary 1, 2020. As a result, prior comparative periods have not been adjusted.PCI loans prior to the adoption of ASU 2016-13 were classified as PCD loans asof January 1, 2020. Nonaccrual loans as of December 31, 2020 and September 30,2020 include all loans that are 90 or more days past due, unless the loan iswell-collateralized and in the process of collection. Nonaccrual loanspresented as of December 31, 2019 include only non-PCI nonaccrual loans.



Nonperforming Assets^ December 31, September December 31, 2020 30, 2020 2019

Total Total Non-PCI Nonaccrual Nonaccrual Nonaccrual loans loans Loans

Commercial:

C&I $ 133,939 $ 145,986 $ 74,835

CRE:

CRE 46,546 55,996 16,441

Multifamily residential 3,668 3,728 819

Total CRE 50,214 59,724 17,260

Consumer:

Residential mortgage:

Single-family residential 16,814 15,894 14,865

HELOCs 11,696 12,395 10,742

Total residential mortgage 28,510 28,289 25,607

Other consumer 2,491 2,495 2,517

Total nonaccrual loans 215,154 236,494 120,219

Other real estate owned, net 15,824 19,504 125

Other nonperforming assets 3,890 3,890 1,167

Total nonperforming assets $ 234,868 $ 259,888 $ 121,511







Credit Quality Ratios December 31, September December 31, 2020 30, 2020 2019

Nonperforming assets to total assets 0.45 % 0.52 % 0.27 %

Nonaccrual loans to loans HFI 0.56 % 0.63 % 0.35 %

Allowance for loan losses to loans 1.61 % 1.65 % 1.03 %HFI

Allowance for loan losses to 288.16 % 261.42 % 298.03 %nonaccrual loans

Annualized quarterly net charge-offs 0.20 % 0.26 % 0.10 %to average loans HFI

Annual net charge-offs to average 0.17 % N/A 0.16 %loans HFI



N/A - Not applicable

N/A - Not applicable

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

($ and shares in thousands, except for per share data)

(unaudited)

Table 12

During the fourth quarter of 2020, the Company recorded $10.7 million in pre-tax recovery and $5.1 million in uncertain tax position related to the Company's investment in DC Solar. In addition, the Company recorded a $7.0 million pre-tax impairment charge, reversed $30.1 million of certain previously claimed tax credits and recorded a $1.6 million in pre-tax recovery related to DC Solar during the first, second and fourth quarters of 2019, respectively. Management believes that presenting the computations of the adjusted net income, adjusted diluted earnings per common share, adjusted return on average assets and adjusted return on average equity that adjust for the above discussed non-recurring items provide clarity to financial statement users regarding the ongoing performance of the Company and allows comparability to prior periods.

Three Months Ended

December 31, 2020

September 30, 2020

December 31, 2019

Net income

(a)

$

164,084

$

159,537

$

188,215

Adjustments related to DC Solar

Less: Recoveries (2)

(10,739

)

-

(1,583

)

Tax effect of recoveries (3)

3,047

-

468

Add: Uncertain tax position recorded in income tax expense

5,127

-

-

Adjusted net income

(b)

$

161,519

$

159,537

$

187,100

Diluted weighted-average number of shares outstanding

142,529

142,043

146,318

Diluted EPS

$

1.15

$

1.12

$

1.29

Adjustments related to DC Solar

Recoveries, net of tax

(0.06

)

-

(0.01

)

Uncertain tax position recorded in income tax expense

0.04

-

-

Adjusted diluted EPS

$

1.13

$

1.12

$

1.28

Average total assets

(c)

$

52,466,325

$

50,247,259

$

44,471,242

Average stockholders' equity

(d)

$

5,243,203

$

5,079,351

$

4,977,759

Return on average assets (1)

(a)/(c)

1.24

%

1.26

%

1.68

%

Adjusted return on average assets (1)

(b)/(c)

1.22

%

1.26

%

1.67

%

Return on average equity (1)

(a)/(d)

12.45

%

12.50

%

15.00

%

Adjusted return on average equity (1)

(b)/(d)

12.26

%

12.50

%

14.91

%

Year Ended

December 31, 2020

December 31, 2019

Net income

(e)

$

567,797

$

674,035

Adjustments related to DC Solar

Add: Impairment charge (2)

-

6,978

Less: Recoveries (2)

(10,739

)

(1,583

)

Tax effect of adjustments (3)

3,047

(1,595

)

Add: Reversal of certain previously claimed tax credits

-

30,104

Add: Uncertain tax position recorded in income tax expense

5,127

-

Adjusted net income

(f)

$

565,232

$

707,939

Diluted weighted-average number of shares outstanding

142,991

146,179

Diluted EPS

$

3.97

$

4.61

Adjustments related to DC Solar

Impairment charge, net of tax

-

0.03

Recoveries, net of tax

(0.06

)

(0.01

)

Reversal of certain previously claimed tax credits

-

0.21

Uncertain tax position recorded in income tax expense

0.04

-

Adjusted diluted EPS

$

3.95

$

4.84

Average total assets

(g)

$

48,937,793

$

42,484,885

Average stockholders' equity

(h)

$

5,082,186

$

4,760,845

Return on average assets

(e)/(g)

1.16

%

1.59

%

Adjusted return on average assets

(f)/(g)

1.16

%

1.67

%

Return on average equity

(e)/(h)

11.17

%

14.16

%

Adjusted return on average equity

(f)/(h)

11.12

%

14.87

%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

($ and shares in thousands, except for per share data)

(unaudited)

Table 12

During the fourth quarter of 2020, the Company recorded $10.7 million inpre-tax recovery and $5.1 million in uncertain tax position related to theCompany's investment in DC Solar. In addition, the Company recorded a $7.0million pre-tax impairment charge, reversed $30.1 million of certain previouslyclaimed tax credits and recorded a $1.6 million in pre-tax recovery related toDC Solar during the first, second and fourth quarters of 2019, respectively.Management believes that presenting the computations of the adjusted netincome, adjusted diluted earnings per common share, adjusted return on averageassets and adjusted return on average equity that adjust for the abovediscussed non-recurring items provide clarity to financial statement usersregarding the ongoing performance of the Company and allows comparability toprior periods.



Three Months Ended December 31, September 30, December 31, 2020 2020 2019

Net income (a) $ 164,084 $ 159,537 $ 188,215

Adjustments related to DC Solar

Less: Recoveries ^(2) (10,739 ) - (1,583 )

Tax effect of 3,047 - 468 recoveries ^(3)

Add: Uncertain taxposition recorded in 5,127 - - income tax expense

Adjusted net income (b) $ 161,519 $ 159,537 $ 187,100

Dilutedweighted-average number 142,529 142,043 146,318 of shares outstanding

Diluted EPS $ 1.15 $ 1.12 $ 1.29

Adjustments related to DC Solar

Recoveries, net of tax (0.06 ) - (0.01 )

Uncertain tax positionrecorded in income tax 0.04 - - expense

Adjusted diluted EPS $ 1.13 $ 1.12 $ 1.28

Average total assets (c) $ 52,466,325 $ 50,247,259 $ 44,471,242

Average stockholders' (d) $ 5,243,203 $ 5,079,351 $ 4,977,759 equity

Return on average (a)/ 1.24 % 1.26 % 1.68 %assets ^(1) (c)

Adjusted return on (b)/ 1.22 % 1.26 % 1.67 %average assets ^(1) (c)

Return on average (a)/ 12.45 % 12.50 % 15.00 %equity ^(1) (d)

Adjusted return on (b)/ 12.26 % 12.50 % 14.91 %average equity ^(1) (d)





Year Ended

December 31, December 31, 2020 2019

Net income (e) $ 567,797 $ 674,035

Adjustments related to DC Solar

Add: Impairment charge - 6,978 ^(2)

Less: Recoveries ^(2) (10,739 ) (1,583 )

Tax effect of 3,047 (1,595 ) adjustments ^(3)

Add: Reversal ofcertain previously - 30,104 claimed tax credits

Add: Uncertain taxposition recorded in 5,127 - income tax expense

Adjusted net income (f) $ 565,232 $ 707,939

Dilutedweighted-average number 142,991 146,179 of shares outstanding

Diluted EPS $ 3.97 $ 4.61

Adjustments related to DC Solar

Impairment charge, net - 0.03 of tax

Recoveries, net of tax (0.06 ) (0.01 )

Reversal of certainpreviously claimed tax - 0.21 credits

Uncertain tax positionrecorded in income tax 0.04 - expense

Adjusted diluted EPS $ 3.95 $ 4.84

Average total assets (g) $ 48,937,793 $ 42,484,885

Average stockholders' (h) $ 5,082,186 $ 4,760,845 equity

Return on average (e)/ 1.16 % 1.59 % assets (g)

Adjusted return on (f)/ 1.16 % 1.67 % average assets (g)

Return on average (e)/ 11.17 % 14.16 % equity (h)

Adjusted return on (f)/ 11.12 % 14.87 % average equity (h)



(1)

Annualized.

(2)

Included in Amortization of tax credit and other investments on the Consolidated Statement of Income.

(3)

Applied statutory tax rates of 28.37% and 29.56% for both the three and twelve months ended December 31, 2020 and 2019, respectively.

(1) Annualized.

(2) Included in Amortization of tax credit and other investments on the Consolidated Statement of Income.

(3) Applied statutory tax rates of 28.37% and 29.56% for both the three and twelve months ended December 31, 2020 and 2019, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

($ in thousands)

(unaudited)

Table 13

Adjusted efficiency ratio represents adjusted noninterest expense divided by revenue. Adjusted pre-tax, pre-provision profitability ratio represents revenue less adjusted noninterest expense, divided by average total assets. Adjusted noninterest expense excludes the amortization of tax credit and other investments, the amortization of core deposit intangibles, and the extinguishment cost on repurchase agreements. Management believes that the measures and ratios presented below provide clarity to financial statement users regarding the ongoing performance of the Company and allow comparability to prior periods.

Three Months Ended

December 31, 2020

September 30, 2020

December 31, 2019

Net interest income before provision for credit losses

(a)

$

346,581

$

324,130

$

368,219

Total noninterest income (1)

69,832

54,503

65,797

Total revenue

(b)

$

416,413

$

378,633

$

434,016

Total noninterest expense (1)

(c)

$

178,651

$

172,573

$

196,157

Less: Amortization of tax credit and other investments (1)

(12,263

)

(17,209

)

(29,822

)

Amortization of core deposit intangibles

(823

)

(927

)

(1,044

)

Adjusted noninterest expense

(d)

$

165,565

$

154,437

$

165,291

Efficiency ratio

(c)/(b)

42.90

%

45.58

%

45.20

%

Adjusted efficiency ratio

(d)/(b)

39.76

%

40.79

%

38.08

%

Adjusted pre-tax, pre-provision income

(b)-(d) = (e)

$

250,848

$

224,196

$

268,725

Average total assets

(f)

$

52,466,325

$

50,247,259

$

44,471,242

Adjusted pre-tax, pre-provision profitability ratio (2)

(e)/(f)

1.90

%

1.78

%

2.40

%

Adjusted noninterest expense/average assets (2)

(d)/(f)

1.26

%

1.22

%

1.47

%

Year Ended

December 31, 2020

December 31, 2019

Net interest income before provision for credit losses

(g)

$

1,377,193

$

1,467,813

Total noninterest income (1)

235,547

222,245

Total revenue

(h)

1,612,740

1,690,058

Total noninterest expense (1)

(i)

$

716,322

$

747,456

Less: Amortization of tax credit and other investments (1)

(70,082

)

(98,383

)

Amortization of core deposit intangibles

(3,634

)

(4,518

)

Repurchase agreements' extinguishment cost

(8,740

)

-

Adjusted noninterest expense

(j)

$

633,866

$

644,555

Efficiency ratio

(i)/(h)

44.42

%

44.23

%

Adjusted efficiency ratio

(j)/(h)

39.30

%

38.14

%

Adjusted pre-tax, pre-provision income

(h)-(j) = (k)

$

978,874

$

1,045,503

Average total assets

(l)

$

48,937,793

$

42,484,885

Adjusted pre-tax, pre-provision profitability ratio

(k)/(l)

2.00

%

2.46

%

Adjusted noninterest expense/average assets

(j)/(l)

1.30

%

1.52

%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

($ in thousands)

(unaudited)

Table 13

Adjusted efficiency ratio represents adjusted noninterest expense divided byrevenue. Adjusted pre-tax, pre-provision profitability ratio represents revenueless adjusted noninterest expense, divided by average total assets. Adjustednoninterest expense excludes the amortization of tax credit and otherinvestments, the amortization of core deposit intangibles, and theextinguishment cost on repurchase agreements. Management believes that themeasures and ratios presented below provide clarity to financial statementusers regarding the ongoing performance of the Company and allow comparabilityto prior periods.



Three Months Ended

December 31, September 30, December 31, 2020 2020 2019

Net interest incomebefore provision for (a) $ 346,581 $ 324,130 $ 368,219 credit losses

Total noninterest 69,832 54,503 65,797 income ^(1)

Total revenue (b) $ 416,413 $ 378,633 $ 434,016



Total noninterest (c) $ 178,651 $ 172,573 $ 196,157 expense ^(1)

Less: Amortization oftax credit and other (12,263 ) (17,209 ) (29,822 )investments ^(1)

Amortization of core (823 ) (927 ) (1,044 )deposit intangibles

Adjusted noninterest (d) $ 165,565 $ 154,437 $ 165,291 expense

Efficiency ratio (c)/ 42.90 % 45.58 % 45.20 % (b)

Adjusted efficiency (d)/ 39.76 % 40.79 % 38.08 %ratio (b)

(b)-Adjusted pre-tax, (d) $ 250,848 $ 224,196 $ 268,725 pre-provision income = (e)

Average total assets (f) $ 52,466,325 $ 50,247,259 $ 44,471,242

Adjusted pre-tax,pre-provision (e)/ 1.90 % 1.78 % 2.40 %profitability ratio ^ (f)(2)

Adjusted noninterest (d)/expense/average (f) 1.26 % 1.22 % 1.47 %assets ^(2)





Year Ended

December 31, December 31, 2020 2019

Net interest incomebefore provision for (g) $ 1,377,193 $ 1,467,813 credit losses

Total noninterest 235,547 222,245 income ^(1)

Total revenue (h) 1,612,740 1,690,058



Total noninterest (i) $ 716,322 $ 747,456 expense^ (1)

Less: Amortization oftax credit and other (70,082 ) (98,383 ) investments^ (1)

Amortization of core (3,634 ) (4,518 ) deposit intangibles

Repurchaseagreements' (8,740 ) - extinguishment cost

Adjusted noninterest (j) $ 633,866 $ 644,555 expense

Efficiency ratio (i)/ 44.42 % 44.23 % (h)

Adjusted efficiency (j)/ 39.30 % 38.14 % ratio (h)

(h)-Adjusted pre-tax, (j) $ 978,874 $ 1,045,503 pre-provision income = (k)

Average total assets (l) $ 48,937,793 $ 42,484,885

Adjusted pre-tax, (k)/pre-provision (l) 2.00 % 2.46 % profitability ratio

Adjusted noninterest (j)/expense/average (l) 1.30 % 1.52 % assets



(1)

In the fourth quarter of 2020, the Company reclassified certain income/losses from equity-method investments from Amortization of tax credit and other investments to Other investment income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.

(2)

Annualized.

In the fourth quarter of 2020, the Company reclassified certain income/ losses from equity-method investments from Amortization of tax credit and(1) other investments to Other investment income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.

(2) Annualized.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

($ in thousands)

(unaudited)

Table 14

The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance. Tangible equity and tangible equity to tangible assets ratio are non-GAAP financial measures. Tangible equity and tangible assets represent stockholders' equity and total assets, respectively, which have been reduced by goodwill and other intangible assets. Given that the use of such measures and ratios is more prevalent in the banking industry, and such measures and ratios are used by banking regulators and analysts, the Company has included them below for discussion.

December 31,2020

September 30,2020

December 31,2019

Stockholders' equity

(a)

$

5,269,175

$

5,126,106

$

5,017,617

Less: Goodwill

(465,697

)

(465,697

)

(465,697

)

Other intangible assets (1)

(11,899

)

(12,369

)

(16,079

)

Tangible equity

(b)

$

4,791,579

$

4,648,040

$

4,535,841

Total assets

(c)

$

52,156,913

$

50,371,477

$

44,196,096

Less: Goodwill

(465,697

)

(465,697

)

(465,697

)

Other intangible assets (1)

(11,899

)

(12,369

)

(16,079

)

Tangible assets

(d)

$

51,679,317

$

49,893,411

$

43,714,320

Total stockholders' equity to total assets ratio

(a)/(c)

10.10

%

10.18

%

11.35

%

Tangible equity to tangible assets ratio

(b)/(d)

9.27

%

9.32

%

10.38

%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

($ in thousands)

(unaudited)

Table 14

The Company uses certain non-GAAP financial measures to provide supplementalinformation regarding the Company's performance. Tangible equity and tangibleequity to tangible assets ratio are non-GAAP financial measures. Tangibleequity and tangible assets represent stockholders' equity and total assets,respectively, which have been reduced by goodwill and other intangible assets.Given that the use of such measures and ratios is more prevalent in the bankingindustry, and such measures and ratios are used by banking regulators andanalysts, the Company has included them below for discussion.



December 31, September 30, December 31, 2020 2020 2019

Stockholders' equity (a) $ 5,269,175 $ 5,126,106 $ 5,017,617

Less: Goodwill (465,697 ) (465,697 ) (465,697 )

Other intangible (11,899 ) (12,369 ) (16,079 )assets ^(1)

Tangible equity (b) $ 4,791,579 $ 4,648,040 $ 4,535,841



Total assets (c) $ 52,156,913 $ 50,371,477 $ 44,196,096

Less: Goodwill (465,697 ) (465,697 ) (465,697 )

Other intangible (11,899 ) (12,369 ) (16,079 )assets ^(1)

Tangible assets (d) $ 51,679,317 $ 49,893,411 $ 43,714,320

Total stockholders' (a)equity to total assets / 10.10 % 10.18 % 11.35 %ratio (c)

Tangible equity to (b)tangible assets ratio / 9.27 % 9.32 % 10.38 % (d)



Adjusted return on average tangible equity represents adjusted tangible net income divided by average tangible equity. Adjusted tangible net income excludes the after-tax impacts of the amortization of core deposit intangibles and mortgage servicing assets, impairment charge, recoveries, uncertain tax position and the reversal of certain previously claimed tax credits related to DC Solar (where applicable). Given that the use of such measures and ratios is more prevalent in the banking industry, and such measures and ratios are used by banking regulators and analysts, the Company has included them below for discussion.

Three Months Ended

Year Ended

December 31,2020

September 30,2020

December 31,2019

December 31,2020

December 31,2019

Net Income

$

164,084

$

159,537

$

188,215

$

567,797

$

674,035

Add: Amortization of core deposit intangibles

823

927

1,044

3,634

4,518

Amortization of mortgage servicing assets

428

450

567

1,920

2,738

Tax effect of amortization adjustments (2)

(355

)

(390

)

(476

)

(1,575

)

(2,145

)

Tangible net income

(e)

$

164,980

$

160,524

$

189,350

$

571,776

$

679,146

Adjustments related to DC Solar

Add: Impairment charge (3)

-

-

-

-

6,978

Less: Recoveries (3)

(10,739

)

-

(1,583

)

(10,739

)

(1,583

)

Tax effects of adjustments (2)

3,047

-

468

3,047

(1,595

)

Add: Reversal of certain previously claimed tax credits

-

-

-

-

30,104

Add: Uncertain tax position recorded in income tax expense

5,127

-

-

5,127

-

Adjusted tangible net income

(f)

$

162,415

$

160,524

$

188,235

$

569,211

$

713,050

Average stockholders' equity

$

5,243,203

$

5,079,351

$

4,977,759

$

5,082,186

$

4,760,845

Less: Average goodwill

(465,697

)

(465,697

)

(465,697

)

(465,697

)

(465,663

)

Average other intangible assets (1)

(12,182

)

(13,083

)

(16,793

)

(13,769

)

(19,340

)

Average tangible equity

(g)

$

4,765,324

$

4,600,571

$

4,495,269

$

4,602,720

$

4,275,842

Return on average tangible equity

(e)/(g)

13.77

%

(4)

13.88

%

(4)

16.71

%

(4)

12.42

%

15.88

%

Adjusted return on average tangible equity

(f)/(g)

13.56

%

(4)

13.88

%

(4)

16.61

%

(4)

12.37

%

16.68

%

Adjusted return on average tangible equity represents adjusted tangible netincome divided by average tangible equity. Adjusted tangible net incomeexcludes the after-tax impacts of the amortization of core deposit intangiblesand mortgage servicing assets, impairment charge, recoveries, uncertain taxposition and the reversal of certain previously claimed tax credits related toDC Solar (where applicable). Given that the use of such measures and ratios ismore prevalent in the banking industry, and such measures and ratios are usedby banking regulators and analysts, the Company has included them below fordiscussion.



Three Months Ended Year Ended

December 31, September 30, December 31, December 31, December 31, 2020 2020 2019 2020 2019

Net Income $ 164,084 $ 159,537 $ 188,215 $ 567,797 $ 674,035

Add:Amortizationof core 823 927 1,044 3,634 4,518 depositintangibles

Amortizationof mortgage 428 450 567 1,920 2,738 servicingassets

Tax effect ofamortization (355 ) (390 ) (476 ) (1,575 ) (2,145 )adjustments ^(2)

Tangible net (e) $ 164,980 $ 160,524 $ 189,350 $ 571,776 $ 679,146 income

Adjustmentsrelated to DC Solar

Add:Impairment - - - - 6,978 charge ^(3)

Less:Recoveries ^ (10,739 ) - (1,583 ) (10,739 ) (1,583 )(3)

Tax effectsof 3,047 - 468 3,047 (1,595 )adjustments ^(2)

Add: Reversalof certainpreviously - - - - 30,104 claimed taxcredits

Add:Uncertain taxposition 5,127 - - 5,127 - recorded inincome taxexpense

Adjustedtangible net (f) $ 162,415 $ 160,524 $ 188,235 $ 569,211 $ 713,050 income



Averagestockholders' $ 5,243,203 $ 5,079,351 $ 4,977,759 $ 5,082,186 $ 4,760,845 equity

Less: Average (465,697 ) (465,697 ) (465,697 ) (465,697 ) (465,663 )goodwill

Average otherintangible (12,182 ) (13,083 ) (16,793 ) (13,769 ) (19,340 )assets ^(1)

Averagetangible (g) $ 4,765,324 $ 4,600,571 $ 4,495,269 $ 4,602,720 $ 4,275,842 equity

Return on (e)average / 13.77 % ^ 13.88 % ^ 16.71 % ^ 12.42 % 15.88 %tangible (g) (4) (4) (4)equity

Adjustedreturn on (f) ^ ^ ^average / 13.56 % (4) 13.88 % (4) 16.61 % (4) 12.37 % 16.68 %tangible (g)equity



(1)

Includes core deposit intangibles and mortgage servicing assets.

(2)

Applied statutory tax rates of 28.37% and 29.56% for both the three and twelve months ended December 31, 2020 and 2019, respectively, and 28.35% for the three months ended September 30, 2020.

(3)

Included in Amortization of tax credit and other investments on the Consolidated Statement of Income.

(4)

Annualized.

(1) Includes core deposit intangibles and mortgage servicing assets.

Applied statutory tax rates of 28.37% and 29.56% for both the three and(2) twelve months ended December 31, 2020 and 2019, respectively, and 28.35% for the three months ended September 30, 2020.

(3) Included in Amortization of tax credit and other investments on the Consolidated Statement of Income.

(4) Annualized.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

($ in thousands)

(unaudited)

Table 15

In April 2020, the Company started accepting applications under the PPP administered by the Small Business Administration ("SBA") under the Coronavirus Aid, Relief, and Economic Security Act and began to originate loans to qualified small businesses. These loans are included in the Company's C&I portfolio, have an interest rate of one percent, and are 100% guaranteed by the SBA. As of December 31, 2020, the majority of the Company's PPP loans have a contractual term of two years. The SBA pays the Company fees for processing PPP loans in the following amounts: (i) five percent for loans of not more than $350,000; (ii) three percent for loans of more than $350,000 and less than $2,000,000; and (iii) one percent for loans of at least $2,000,000. Loan processing fees paid to the Company from the SBA are accounted for as loan origination fees, where net deferred fees are recognized on a straight line basis over the estimated life of the loan as a yield adjustment on the loans. If a loan is paid off or forgiven by the SBA prior to its projected estimated life, the remaining unamortized deferred fees will be recognized as interest income in that period. The Company drew down $1.44 billion from the PPPLF during the second quarter of 2020. The remaining balance of $1.43 billion as of September 2020 was repaid in full during the fourth quarter of 2020.

Adjusted loan yield for the three months ended December 31, 2020 and September 30, 2020, and twelve months ended December 31, 2020 excludes the impact of PPP loans. Adjusted net interest margin for the three months ended December 31, 2020 and September 30, 2020, and twelve months ended December 31, 2020 excludes the impact of PPP loans and advances from the PPPLF. Management believes that presenting the adjusted average loan yield and adjusted net interest margin provides comparability to prior periods and these non-GAAP financial measures provide supplemental information regarding the Company's performance.

Three Months Ended

Year Ended

Yield on Average Loans

December 31,2020

September 30,2020

December 31,2019

December 31,2020

December 31,2019

Interest income on loans

(a)

$

348,578

$

336,542

$

425,773

$

1,464,382

$

1,717,415

Less: Interest income on PPP loans

(14,204

)

(7,778

)

-

(43,271

)

-

Adjusted interest income on loans

(b)

$

334,374

$

328,764

$

425,773

$

1,421,111

$

1,717,415

Average loans

(c)

$

37,725,725

$

37,160,445

$

34,410,010

$

36,799,017

$

33,373,136

Less: Average PPP loans

(1,704,608

)

(1,764,411

)

-

(1,236,246

)

-

Adjusted average loans

(d)

$

36,021,117

$

35,396,034

$

34,410,010

$

35,562,771

$

33,373,136

Average loan yield

(a)/(c)

3.68

%

(1)

3.60

%

(1)

4.91

%

(1)

3.98

%

5.15

%

Adjusted average loan yield

(b)/(d)

3.69

%

(1)

3.70

%

(1)

4.91

%

(1)

4.00

%

5.15

%

Net Interest Margin

Net interest income

(e)

$

346,581

$

324,130

$

368,219

$

1,377,193

$

1,467,813

Less: Interest income on PPP loans

(14,204

)

(7,778

)

-

(43,271

)

-

Add: Interest expense on advances from the PPPLF

324

1,259

-

2,046

-

Adjusted net interest income

(f)

$

332,701

$

317,611

$

368,219

$

1,335,968

$

1,467,813

Average interest-earning assets

(g)

$

49,703,349

$

47,428,586

$

42,114,123

$

46,239,709

$

40,320,804

Less: Average PPP loans

(1,704,608

)

(1,764,411

)

-

(1,236,246

)

-

Adjusted average interest-earning assets

(h)

$

47,998,741

$

45,664,175

$

42,114,123

$

45,003,463

$

40,320,804

Net interest margin

(e)/(g)

2.77

%

(1)

2.72

%

(1)

3.47

%

(1)

2.98

%

3.64

%

Adjusted net interest margin

(f)/(h)

2.76

%

(1)

2.77

%

(1)

3.47

%

(1)

2.97

%

3.64

%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

($ in thousands)

(unaudited)

Table 15

In April 2020, the Company started accepting applications under the PPPadministered by the Small Business Administration ("SBA") under the CoronavirusAid, Relief, and Economic Security Act and began to originate loans toqualified small businesses. These loans are included in the Company's C&Iportfolio, have an interest rate of one percent, and are 100% guaranteed by theSBA. As of December 31, 2020, the majority of the Company's PPP loans have acontractual term of two years. The SBA pays the Company fees for processing PPPloans in the following amounts: (i) five percent for loans of not more than$350,000; (ii) three percent for loans of more than $350,000 and less than$2,000,000; and (iii) one percent for loans of at least $2,000,000. Loanprocessing fees paid to the Company from the SBA are accounted for as loanorigination fees, where net deferred fees are recognized on a straight linebasis over the estimated life of the loan as a yield adjustment on the loans.If a loan is paid off or forgiven by the SBA prior to its projected estimatedlife, the remaining unamortized deferred fees will be recognized as interestincome in that period. The Company drew down $1.44 billion from the PPPLFduring the second quarter of 2020. The remaining balance of $1.43 billion as ofSeptember 2020 was repaid in full during the fourth quarter of 2020.

Adjusted loan yield for the three months ended December 31, 2020 and September30, 2020, and twelve months ended December 31, 2020 excludes the impact of PPPloans. Adjusted net interest margin for the three months ended December 31,2020 and September 30, 2020, and twelve months ended December 31, 2020 excludesthe impact of PPP loans and advances from the PPPLF. Management believes thatpresenting the adjusted average loan yield and adjusted net interest marginprovides comparability to prior periods and these non-GAAP financial measuresprovide supplemental information regarding the Company's performance.



Three Months Ended Year Ended Yield on Average December 31, September 30, December 31, December 31, December 31,Loans 2020 2020 2019 2020 2019

Interest income on (a) $ 348,578 $ 336,542 $ 425,773 $ 1,464,382 $ 1,717,415 loans

Less: Interestincome on PPP (14,204 ) (7,778 ) - (43,271 ) - loans

Adjusted interest (b) $ 334,374 $ 328,764 $ 425,773 $ 1,421,111 $ 1,717,415 income on loans



Average loans (c) $ 37,725,725 $ 37,160,445 $ 34,410,010 $ 36,799,017 $ 33,373,136

Less: Average PPP (1,704,608 ) (1,764,411 ) - (1,236,246 ) - loans

Adjusted average (d) $ 36,021,117 $ 35,396,034 $ 34,410,010 $ 35,562,771 $ 33,373,136 loans



Average loan yield (a)/ 3.68 % ^ 3.60 % ^ 4.91 % ^ 3.98 % 5.15 % (c) (1) (1) (1)

Adjusted average (b)/ 3.69 % ^ 3.70 % ^ 4.91 % ^ 4.00 % 5.15 %loan yield (d) (1) (1) (1)



Net Interest Margin

Net interest (e) $ 346,581 $ 324,130 $ 368,219 $ 1,377,193 $ 1,467,813 income

Less: Interestincome on PPP (14,204 ) (7,778 ) - (43,271 ) - loans

Add: Interestexpense on 324 1,259 - 2,046 - advances from thePPPLF

Adjusted net (f) $ 332,701 $ 317,611 $ 368,219 $ 1,335,968 $ 1,467,813 interest income



Averageinterest-earning (g) $ 49,703,349 $ 47,428,586 $ 42,114,123 $ 46,239,709 $ 40,320,804 assets

Less: Average PPP (1,704,608 ) (1,764,411 ) - (1,236,246 ) - loans

Adjusted averageinterest-earning (h) $ 47,998,741 $ 45,664,175 $ 42,114,123 $ 45,003,463 $ 40,320,804 assets



Net interest (e)/ 2.77 % ^ 2.72 % ^ 3.47 % ^ 2.98 % 3.64 %margin (g) (1) (1) (1)

Adjusted net (f)/ 2.76 % ^ 2.77 % ^ 3.47 % ^ 2.97 % 3.64 %interest margin (h) (1) (1) (1)



(1)

Annualized.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210128005400/en/

CONTACT: FOR INVESTOR INQUIRIES, CONTACT: Irene Oh Chief Financial Officer T: (626) 768-6360 E: irene.oh@eastwestbank.com

CONTACT: Julianna Balicka Director of Strategy and Corporate Development T: (626) 768-6985 E: julianna.balicka@eastwestbank.com