Business Wire | Oct 22, 2020 08:03AM EDT

East West Bancorp Reports Net Income for Third Quarter 2020 of $159.5 Million and Diluted Earnings Per Share of $1.12

Oct. 22, 2020

PASADENA, Calif.--(BUSINESS WIRE)--Oct. 22, 2020--East West Bancorp, Inc. ("East West" or the "Company") (Nasdaq: EWBC), parent company of East West Bank, the financial bridge between the United States and Greater China, today reported its financial results for the third quarter of 2020. For the third quarter of 2020, net income was $159.5 million or $1.12 per diluted share. Third quarter 2020 return on average assets was 1.26% and return on average equity was 12.5%.

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

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

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

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

BALANCE SHEET

* Record Total Assets - Total assets of $50.4 billion as of September 30, 2020 grew by $964 million, or 8% annualized, from $49.4 billion as of June 30, 2020. Third quarter 2020 average interest-earning assets of $47.4 billion grew $2.0 billion, or 18% linked quarter annualized. Growth was primarily from interest-bearing cash and deposits with banks, which grew $1.5 billion quarter-over-quarter. Interest-bearing cash and deposits with banks made up 10% of average interest-earning assets in the third quarter of 2020, up from 8% in the second quarter of 2020.

* Record Loans - Total loans of $37.4 billion as of September 30, 2020 grew by $208 million, or 2% annualized, from $37.2 billion as of June 30, 2020. As of September 30, 2020, Paycheck Protection Program ("PPP") loans were $1.8 billion, unchanged from June 30, 2020. Third quarter 2020 average loans of $37.2 billion increased by $19 million quarter-over-quarter. Growth in total commercial real estate ("CRE") and residential mortgage was offset by decreases in commercial and industrial ("C&I") and other consumer loans.

* Record Deposits - Total deposits of $41.7 billion as of September 30, 2020 increased by $1.0 billion, or 10% annualized, from $40.7 billion as of June 30, 2020. Noninterest-bearing demand deposits reached a record $14.9 billion, and made up 36% of total deposits as of September 30, 2020, up from 34% as of June 30, 2020. Third quarter 2020 average deposits of $41.2 billion grew $1.3 billion, or 13% linked quarter annualized. Strong growth in demand and checking accounts, from both commercial and consumer customers, was partially offset by a reduction in higher-cost time deposits. Average interest-bearing deposits of $26.9 billion grew $0.5 billion, or 8% linked quarter annualized. Average noninterest-bearing deposits of $14.3 billion grew $0.8 billion, or 22% linked quarter annualized.

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

OPERATING RESULTS

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

Third Quarter 2020 Compared to Second Quarter 2020

Net Interest Income and Net Interest Margin

Net interest income ("NII") totaled $324.1 million, a decrease of 6% from $343.8 million. Net interest margin ("NIM") of 2.72% compressed by 32 basis points from 3.04%.

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

Noninterest Income

Noninterest income totaled $49.6 million, a 15% decrease from $58.6 million.

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

Noninterest Expense

Noninterest expense totaled $167.7 million, an 11% decrease from $187.7 million.

* Third quarter noninterest expense consisted of $154.4 million of adjusted3 noninterest expense, $12.3 million in amortization of tax credit and other investments, and $0.9 million in amortization of core deposit intangibles. * Total noninterest expense decreased by $20.0 million, largely due to a $12.5 million decrease in amortization of tax credit and other investments, as well as an $8.7 million decrease in debt extinguishment costs. During the second quarter, the Company prepaid $150.0 million of repurchase agreements and incurred $8.7 million in debt extinguishment cost. * Adjusted noninterest expense of $154.4 million increased by $1.2 million, or 1%, from $153.3 million. The largest linked-quarter changes were a $2.8 million increase in compensation and employee benefits expense, a $1.2 million increase in computer software expense, and a $2.1 million decrease in other operating expenses. * Compensation expense of $99.8 million increased by $2.8 million, or 3%, from $97.0 million. During the second quarter, $7.4 million of compensation expense associated with the origination of $1.8 billion in PPP loans was deferred. Excluding this item, third quarter compensation expense decreased by $4.6 million, or 4%, quarter-over-quarter from $104.3 million in the second quarter. * The adjusted3 efficiency ratio was 41.3% in the third quarter, compared to 38.1% in the second quarter.

TAX RELATED ITEMS

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

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

ASSET QUALITY

The allowance for loan losses totaled $618.3 million, or 1.65% of loans HFI, as of September 30, 2020, compared to $632.1 million, or 1.70% of loans HFI, as of June 30, 2020.

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

CAPITAL STRENGTH

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

EWBCRegulatory Basel IIICapital Metrics

Minimum Minimum Well September June 30, September Capital($ in 30, 30, Capital Capitalized Ratio +millions) 2020 ^(a) 2020 ^(a) 2019 Ratio Ratio Conservation

Buffer ^(b)

Risk-BasedCapital Ratios:

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

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

Total capital 14.5 % 14.4 % 14.2 % 8.0 % 10.0 % 10.5 %ratio

Leverage 9.8 % 9.7 % 10.3 % 4.0 % 5.0 % 4.0 %ratio

Risk-WeightedAssets $ 36,922 $ 36,199 $ 34,424 N/A N/A N/A ("RWA") ^(c)



N/A Not applicable.

(a)

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

(b)

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

(c)

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

DIVIDEND PAYOUT AND CAPITAL ACTIONS

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

On March 3, 2020, East West's Board of Directors authorized the repurchase of up to $500 million of East West's common stock. East West did not repurchase any shares during the third quarter of 2020 under this authorization.

Conference Call

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

* The following dial-in information is provided for participation in the conference call: calls within the U.S. - (877) 506-6399; calls within Canada - (855) 669-9657; international calls - (412) 902-6699. * A presentation to accompany the earnings call will be available on the Investor Relations page of the Company's website at www.eastwestbank.com/investors. * A listen-only live broadcast of the call will also be available on the Investor Relations page of the Company's website at www.eastwestbank.com/investors. * A replay of the conference call will be available on October 22, 2020 at 11:30 a.m. Pacific Time through November 22, 2020. The replay numbers are: within the U.S. - (877) 344-7529; within Canada - (855) 669-9658; International calls - (412) 317-0088; and the replay access code is: 10147892.

About East West

East West Bancorp, Inc. is a publicly owned company with total assets of $50.4 billion and is traded on the Nasdaq Global Select Market under the symbol "EWBC". The Company's wholly-owned subsidiary, East West Bank, is one of the largest independent banks headquartered in California, operating over 125 locations in the United States and Greater China. U.S. markets include California, Georgia, Massachusetts, Nevada, New York, Texas and Washington. In Greater China, East West's presence includes full service branches in Hong Kong, Shanghai, Shantou and Shenzhen, and representative offices in Beijing, Chongqing, Guangzhou, and Xiamen. For more information on East West, visit the Company's website at www.eastwestbank.com.

Forward-Looking Statements

Certain matters set forth herein (including any exhibits hereto) constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to our current business plans and expectations regarding future operating results. Forward-looking statements may include, but are not limited to, the use of forward-looking language, such as "likely result in," "expects," "anticipates," "estimates," "forecasts," "projects," "intends to," "assumes," or may include other similar words or phrases, such as "believes," "plans," "trend," "objective," "continues," "remains," or similar expressions, or future or conditional verbs, such as "will," "would," "should," "could," "may," "might," "can," or similar verbs, and the negative thereof. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties, some of which are beyond our control, include, but are not limited to, the impact of disease pandemics, such as the worldwide spread and any resurgence of COVID-19, on the Company, its operations and its customers, employees and the markets in which the Company operates and in which its loans are concentrated; and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may precipitate or exacerbate one or more of the below-mentioned and/or other risks, and significantly disrupt or prevent the Company from operating its business in the ordinary course for an extended period; changes in governmental policy and regulation, including measures taken in response to economic, business, political and social conditions, such as the Small Business Administration's Payment Protection Program, the CARES Act and any similar or related rules and regulations of the Federal Reserve efforts to provide liquidity to the U.S. financial system, including changes in government interest rate policies, and to provide credit to private commercial and municipal borrowers, and other programs designed to address the effects of the COVID-19 pandemic, as well as the resulting effect of all such items on the Company's operations, liquidity and capital position, and on the financial condition of the Company's borrowers and other customers; changes in the U.S. economy, including an economic slowdown or recession, inflation, deflation, housing prices, employment levels, rate of growth and general business conditions; the changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing trade dispute between the United States ("U.S.") and the People's Republic of China; changes in the commercial and consumer real estate markets; fluctuations in the Company's stock price; changes in income tax laws and regulations; the Company's ability to compete effectively against other financial institutions in its banking markets; success and timing of our business strategies; our ability to retain key officers and employees; impact on our funding costs, net interest income and net interest margin from changes in key variable market interest rates, competition, regulatory requirements and our product mix; changes in our costs of operation, compliance and expansion; our ability to adopt and successfully integrate new technologies into our business in a strategic manner; impact of benchmark interest rate reform in the U.S. that resulted in the Secured Overnight Financing Rate selected as the preferred alternative reference rate to the London Interbank Offered Rate; impact of a communications or technology disruption, failure in, or breach of, the Company's operational or security systems or infrastructure, or those of third parties with whom the Company does business, including as a result of cyber attacks; and other similar matters which could result in, among other things, confidential and/or proprietary information being disclosed or misused and materially impact the Company's ability to provide services to its clients; adequacy of the Company's risk management framework, disclosure controls and procedures and internal control over financial reporting; future credit quality and performance, including the Company's expectations regarding future credit losses and allowance levels; impact of adverse changes to the Company's credit ratings from major credit rating agencies; impact of adverse judgments or settlements in litigation; changes in consumer spending and savings habits; impact on the Company's international operations due to political developments, disease pandemics, wars or other hostilities that may disrupt or increase volatility in securities or otherwise affect economic conditions; changes in laws or the regulatory environment including regulatory reform initiatives and policies of the U.S. Department of Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the U.S. Securities and Exchange Commission, the Consumer Financial Protection Bureau, the California Department of Business Oversight - Division of Financial Institutions, and SBA; impact of the Dodd-Frank Act on the Company's business, business practices, cost of operations and executive compensation; heightened regulatory and governmental oversight and scrutiny of our business practices, including dealings with consumers; impact of reputational risk from negative publicity, fines and penalties and other negative consequences from regulatory violations and legal actions and from the Company's interactions with business partners, counterparties, service providers and other third parties; impact of regulatory enforcement actions; changes in accounting standards as may be required by the Financial Accounting Standards Board or other regulatory agencies and their impact on critical accounting policies and assumptions; impact of other potential federal tax changes and spending cuts; the Company's capital requirements and its ability to generate capital internally or raise capital on favorable terms; impact on the Company's liquidity due to changes in the Company's ability to receive dividends from its subsidiaries; any future strategic acquisitions or divestitures; continuing consolidation in the financial services industry; changes in the equity and debt securities markets; fluctuations in foreign currency exchange rates; a recurrence of significant turbulence or disruption in the capital or financial markets, which could result in, among other things, a reduction in the availability of funding or increases in funding costs, a reduction in investor demand for mortgage loans and declines in asset values and/or recognition of other-than-temporary impairment on securities held in our available-for-sale debt securities portfolio; and impact of natural or man-made disasters or calamities, such as wildfires and earthquakes, which are particular to California, or conflicts or other events that may directly or indirectly result in a negative impact on the Company's financial performance. In addition to the risk factors enumerated above, the economic impact of the COVID-19 pandemic could cause actual outcome to differ, possibly materially, from the Company's forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond the Company's control. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on the Company's business. The extent to which the COVID-19 pandemic impacts the Company will depend on future developments that are uncertain and unpredictable, including the scope, severity and duration of the pandemic and its impact on the Company's customers, the actions taken by governmental authorities in response to the pandemic as well as its impact on global and regional economies, and the pace of recovery when the COVID-19 pandemic subsides, among others. For a more detailed discussion of some of the factors that might cause such differences, see the Company's Annual Report on Form 10-K for the year ended December 31, 2019 under the heading Item 1A. Risk Factors and the information set forth under Item 1A. Risk Factors in the Company's Quarterly Reports on Form 10-Q. The Company does not undertake, and specifically disclaims any obligation to update or revise any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.

__________________________________

1 See reconciliation of GAAP to non-GAAP financial measures in Table 14. 2 See reconciliation of GAAP to non-GAAP financial measures in Table 15. 3 See reconciliation of GAAP to non-GAAP financial measures in Table 13.

N/A Not applicable.

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

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 the obligor, or, if(c) 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 fourth quarter 2020 dividends for the Company's common stock. The common stock cash dividend of $0.275 per share is payable on November 16, 2020 to shareholders of record on November 2, 2020.

On March 3, 2020, East West's Board of Directors authorized the repurchase of up to $500 million of East West's common stock. East West did not repurchase any shares during the third quarter of 2020 under this authorization.

Conference Call

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

* The following dial-in information is provided for participation in the conference call: calls within the U.S. - (877) 506-6399; calls within Canada - (855) 669-9657; international calls - (412) 902-6699. * A presentation to accompany the earnings call will be available on the Investor Relations page of the Company's website at www.eastwestbank.com/investors. * A listen-only live broadcast of the call will also be available on the Investor Relations page of the Company's website at www.eastwestbank.com/investors. * A replay of the conference call will be available on October 22, 2020 at 11:30 a.m. Pacific Time through November 22, 2020. The replay numbers are: within the U.S. - (877) 344-7529; within Canada - (855) 669-9658; International calls - (412) 317-0088; and the replay access code is: 10147892.

About East West

East West Bancorp, Inc. is a publicly owned company with total assets of $50.4 billion and is traded on the Nasdaq Global Select Market under the symbol "EWBC". The Company's wholly-owned subsidiary, East West Bank, is one of the largest independent banks headquartered in California, operating over 125 locations in the United States and Greater China. U.S. markets include California, Georgia, Massachusetts, Nevada, New York, Texas and Washington. In Greater China, East West's presence includes full service branches in Hong Kong, Shanghai, Shantou and Shenzhen, and representative offices in Beijing, Chongqing, Guangzhou, and Xiamen. For more information on East West, visit the Company's website at www.eastwestbank.com.

Forward-Looking Statements

Certain matters set forth herein (including any exhibits hereto) constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to our current business plans and expectations regarding future operating results. Forward-looking statements may include, but are not limited to, the use of forward-looking language, such as "likely result in," "expects," "anticipates," "estimates," "forecasts," "projects," "intends to," "assumes," or may include other similar words or phrases, such as "believes," "plans," "trend," "objective," "continues," "remains," or similar expressions, or future or conditional verbs, such as "will," "would," "should," "could," "may," "might," "can," or similar verbs, and the negative thereof. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties, some of which are beyond our control, include, but are not limited to, the impact of disease pandemics, such as the worldwide spread and any resurgence of COVID-19, on the Company, its operations and its customers, employees and the markets in which the Company operates and in which its loans are concentrated; and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may precipitate or exacerbate one or more of the below-mentioned and/or other risks, and significantly disrupt or prevent the Company from operating its business in the ordinary course for an extended period; changes in governmental policy and regulation, including measures taken in response to economic, business, political and social conditions, such as the Small Business Administration's Payment Protection Program, the CARES Act and any similar or related rules and regulations of the Federal Reserve efforts to provide liquidity to the U.S. financial system, including changes in government interest rate policies, and to provide credit to private commercial and municipal borrowers, and other programs designed to address the effects of the COVID-19 pandemic, as well as the resulting effect of all such items on the Company's operations, liquidity and capital position, and on the financial condition of the Company's borrowers and other customers; changes in the U.S. economy, including an economic slowdown or recession, inflation, deflation, housing prices, employment levels, rate of growth and general business conditions; the changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing trade dispute between the United States ("U.S.") and the People's Republic of China; changes in the commercial and consumer real estate markets; fluctuations in the Company's stock price; changes in income tax laws and regulations; the Company's ability to compete effectively against other financial institutions in its banking markets; success and timing of our business strategies; our ability to retain key officers and employees; impact on our funding costs, net interest income and net interest margin from changes in key variable market interest rates, competition, regulatory requirements and our product mix; changes in our costs of operation, compliance and expansion; our ability to adopt and successfully integrate new technologies into our business in a strategic manner; impact of benchmark interest rate reform in the U.S. that resulted in the Secured Overnight Financing Rate selected as the preferred alternative reference rate to the London Interbank Offered Rate; impact of a communications or technology disruption, failure in, or breach of, the Company's operational or security systems or infrastructure, or those of third parties with whom the Company does business, including as a result of cyber attacks; and other similar matters which could result in, among other things, confidential and/or proprietary information being disclosed or misused and materially impact the Company's ability to provide services to its clients; adequacy of the Company's risk management framework, disclosure controls and procedures and internal control over financial reporting; future credit quality and performance, including the Company's expectations regarding future credit losses and allowance levels; impact of adverse changes to the Company's credit ratings from major credit rating agencies; impact of adverse judgments or settlements in litigation; changes in consumer spending and savings habits; impact on the Company's international operations due to political developments, disease pandemics, wars or other hostilities that may disrupt or increase volatility in securities or otherwise affect economic conditions; changes in laws or the regulatory environment including regulatory reform initiatives and policies of the U.S. Department of Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the U.S. Securities and Exchange Commission, the Consumer Financial Protection Bureau, the California Department of Business Oversight - Division of Financial Institutions, and SBA; impact of the Dodd-Frank Act on the Company's business, business practices, cost of operations and executive compensation; heightened regulatory and governmental oversight and scrutiny of our business practices, including dealings with consumers; impact of reputational risk from negative publicity, fines and penalties and other negative consequences from regulatory violations and legal actions and from the Company's interactions with business partners, counterparties, service providers and other third parties; impact of regulatory enforcement actions; changes in accounting standards as may be required by the Financial Accounting Standards Board or other regulatory agencies and their impact on critical accounting policies and assumptions; impact of other potential federal tax changes and spending cuts; the Company's capital requirements and its ability to generate capital internally or raise capital on favorable terms; impact on the Company's liquidity due to changes in the Company's ability to receive dividends from its subsidiaries; any future strategic acquisitions or divestitures; continuing consolidation in the financial services industry; changes in the equity and debt securities markets; fluctuations in foreign currency exchange rates; a recurrence of significant turbulence or disruption in the capital or financial markets, which could result in, among other things, a reduction in the availability of funding or increases in funding costs, a reduction in investor demand for mortgage loans and declines in asset values and/or recognition of other-than-temporary impairment on securities held in our available-for-sale debt securities portfolio; and impact of natural or man-made disasters or calamities, such as wildfires and earthquakes, which are particular to California, or conflicts or other events that may directly or indirectly result in a negative impact on the Company's financial performance. In addition to the risk factors enumerated above, the economic impact of the COVID-19 pandemic could cause actual outcome to differ, possibly materially, from the Company's forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond the Company's control. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on the Company's business. The extent to which the COVID-19 pandemic impacts the Company will depend on future developments that are uncertain and unpredictable, including the scope, severity and duration of the pandemic and its impact on the Company's customers, the actions taken by governmental authorities in response to the pandemic as well as its impact on global and regional economies, and the pace of recovery when the COVID-19 pandemic subsides, among others. For a more detailed discussion of some of the factors that might cause such differences, see the Company's Annual Report on Form 10-K for the year ended December 31, 2019 under the heading Item 1A. Risk Factors and the information set forth under Item 1A. Risk Factors in the Company's Quarterly Reports on Form 10-Q. The Company does not undertake, and specifically disclaims any obligation to update or revise any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.

__________________________________

1 See reconciliation of GAAP to non-GAAP financial measures in Table 14. 2 See reconciliation of GAAP to non-GAAP financial measures in Table 15. 3 See reconciliation of GAAP to non-GAAP financial measures in Table 13.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

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

(unaudited)

Table 1



September 30, 2020 % or Basis Point Change

September 30, June 30, 2020 September 30, Qtr-o-Qtr Yr-o-Yr 2020 2019

Assets

Cash and due from $ 503,376 $ 602,974 $ 475,291 (16.5 )% 5.9 % banks

Interest-bearing 4,003,565 3,930,528 2,566,990 1.9 56.0 cash with banks

Cash and cash 4,506,941 4,533,502 3,042,281 (0.6 ) 48.1 equivalents

Interest-bearing 699,465 531,591 160,423 31.6 336.0 deposits with banks

Securities purchased under resale agreements 1,210,000 1,260,000 860,000 (4.0 ) 40.7 ("resale agreements") ^(1)

Available-for-sale ("AFS") debt securities (amortized cost of $4,471,694, $3,823,714 and 4,539,160 3,884,574 3,284,034 16.9 38.2 $3,259,784 as of September 30, 2020, June 30, 2020, and September 30, 2019, respectively)

Federal Home Loan Bank ("FHLB") and 79,172 78,963 78,334 0.3 1.1 Federal Reserve Bank ("FRB") stock

Loans held-for-sale 4,148 3,875 294 7.0 NM ("HFS")

Loans held-for-investment (''HFI'') (net of allowance ^(2) for 36,818,877 36,597,341 33,679,400 0.6 9.3 loan losses of $618,252, $632,071 and $345,576)

Investments in qualified 192,913 201,888 190,000 (4.4 ) 1.5 affordable housing partnerships, net

Investments in tax credit and other 254,512 251,318 211,603 1.3 20.3 investments, net

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

Operating lease 96,092 94,898 103,894 1.3 (7.5 ) right-of-use assets

Other assets 1,504,500 1,503,946 1,198,699 0.0 25.5

Total assets $ 50,371,477 $ 49,407,593 $ 43,274,659 2.0 % 16.4 %



Liabilities and Stockholders' Equity

Deposits $ 41,680,555 $ 40,672,678 $ 36,659,526 2.5 % 13.7 %

Short-term 59,613 252,851 47,689 (76.4 ) 25.0 borrowings

FHLB advances 657,185 656,759 745,494 0.1 (11.8 )

Securities sold under repurchase agreements 348,063 300,000 50,000 16.0 596.1 ("repurchase agreements") ^(1)

Long-term debt and finance lease 1,579,317 1,580,442 152,390 (0.1 ) 936.4 liabilities ^(3)

Operating lease 103,673 102,708 112,142 0.9 (7.6 ) liabilities

Accrued expenses and other 816,965 854,912 624,754 (4.4 ) 30.8 liabilities

Total liabilities 45,245,371 44,420,350 38,391,995 1.9 17.9

Stockholders' 5,126,106 4,987,243 4,882,664 2.8 5.0 equity ^(2)

Total liabilities and stockholders' $ 50,371,477 $ 49,407,593 $ 43,274,659 2.0 % 16.4 % equity



Book value per $ 36.22 $ 35.25 $ 33.54 2.8 % 8.0 % common share

Tangible equity ^ (4) per common $ 32.85 $ 31.86 $ 30.22 3.1 8.7 share

Number of common shares at 141,507 141,486 145,568 0.0 (2.8 ) period-end

Tangible equity to tangible assets 9.32 % 9.21 % 10.28 % 11 bps (96 ) bps ratio ^(4)



NM - Not meaningful.

(1)

Resale and repurchase agreements are reported net when the transactions are eligible for netting under Accounting Standards Codification ("ASC") 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. There was no netting of repurchase agreements against resale agreements as of September 30, 2020 and June 30, 2020. $400 million of gross repurchase agreements were eligible for netting against gross resale agreements as of September 30, 2019.

(2)

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

(3)

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

(4)

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

NM - Not meaningful.

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 September 30, 2020 and June 30, 2020. $400 million of gross repurchase agreements were eligible for netting against gross resale agreements as of September 30, 2019.

On January 1, 2020, the Company adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of(2) 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.

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

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

EAST WEST BANCORP, INC. AND SUBSIDIARIES

TOTAL LOANS AND DEPOSITS DETAIL

($ in thousands)

(unaudited)

Table 2

September 30, 2020% Change

September 30,2020

June 30,2020

September 30,2019

Qtr-o-Qtr

Yr-o-Yr

Loans:

Commercial:

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

$

13,305,024

$

13,422,691

$

12,301,002

(0.9

)%

8.2

%

Commercial real estate ("CRE"):

CRE

11,037,987

10,902,114

9,749,583

1.2

13.2

Multifamily residential

3,057,274

3,032,385

2,589,203

0.8

18.1

Construction and land

578,407

567,716

719,900

1.9

(19.7

)

Total CRE

14,673,668

14,502,215

13,058,686

1.2

12.4

Consumer:

Residential mortgage:

Single-family residential

7,785,759

7,660,094

6,811,014

1.6

14.3

Home equity lines of credit ("HELOCs")

1,514,388

1,461,951

1,540,121

3.6

(1.7

)

Total residential mortgage

9,300,147

9,122,045

8,351,135

2.0

11.4

Other consumer

158,290

182,461

314,153

(13.2

)

(49.6

)

Total loans HFI (2)

37,437,129

37,229,412

34,024,976

0.6

10.0

Loans HFS

4,148

3,875

294

7.0

NM

Total loans (2)

37,441,277

37,233,287

34,025,270

0.6

10.0

Allowance for loan losses

(618,252

)

(632,071

)

(345,576

)

(2.2

)

78.9

Net loans (2)

$

36,823,025

$

36,601,216

$

33,679,694

0.6

9.3

Deposits:

Noninterest-bearing demand

$

14,924,917

$

13,940,420

$

10,806,937

7.1

%

38.1

%

Interest-bearing checking

5,731,573

5,280,887

4,837,391

8.5

18.5

Money market

9,553,574

10,002,624

8,400,353

(4.5

)

13.7

Savings

2,401,318

2,186,199

2,094,638

9.8

14.6

Time deposits

9,069,173

9,262,548

10,520,207

(2.1

)

(13.8

)

Total deposits

$

41,680,555

$

40,672,678

$

36,659,526

2.5

%

13.7

%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

TOTAL LOANS AND DEPOSITS DETAIL

($ in thousands)

(unaudited)

Table 2



September 30, 2020 % Change

September 30, June 30, September 30, Qtr-o-Qtr Yr-o-Yr 2020 2020 2019

Loans:

Commercial:

Commercial and industrial ("C&I") $ 13,305,024 $ 13,422,691 $ 12,301,002 (0.9 )% 8.2 % ^(1)

Commercial real estate ("CRE"):

CRE 11,037,987 10,902,114 9,749,583 1.2 13.2

Multifamily 3,057,274 3,032,385 2,589,203 0.8 18.1 residential

Construction and 578,407 567,716 719,900 1.9 (19.7 ) land

Total CRE 14,673,668 14,502,215 13,058,686 1.2 12.4

Consumer:

Residential mortgage:

Single-family 7,785,759 7,660,094 6,811,014 1.6 14.3 residential

Home equity lines of credit 1,514,388 1,461,951 1,540,121 3.6 (1.7 ) ("HELOCs")

Total residential 9,300,147 9,122,045 8,351,135 2.0 11.4 mortgage

Other consumer 158,290 182,461 314,153 (13.2 ) (49.6 )

Total loans HFI ^(2) 37,437,129 37,229,412 34,024,976 0.6 10.0

Loans HFS 4,148 3,875 294 7.0 NM

Total loans ^(2) 37,441,277 37,233,287 34,025,270 0.6 10.0

Allowance for loan (618,252 ) (632,071 ) (345,576 ) (2.2 ) 78.9 losses

Net loans ^(2) $ 36,823,025 $ 36,601,216 $ 33,679,694 0.6 9.3



Deposits:

Noninterest-bearing $ 14,924,917 $ 13,940,420 $ 10,806,937 7.1 % 38.1 % demand

Interest-bearing 5,731,573 5,280,887 4,837,391 8.5 18.5 checking

Money market 9,553,574 10,002,624 8,400,353 (4.5 ) 13.7

Savings 2,401,318 2,186,199 2,094,638 9.8 14.6

Time deposits 9,069,173 9,262,548 10,520,207 (2.1 ) (13.8 )

Total deposits $ 41,680,555 $ 40,672,678 $ 36,659,526 2.5 % 13.7 %



NM - Not meaningful.

(1)

Includes $1.77 billion and $1.75 billion of Paycheck Protection Program ("PPP") loans as of September 30, 2020 and June 30, 2020, respectively.

(2)

Includes net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts of $(67.0) million, $(72.1) million, and $(39.8) million as of September 30, 2020, June 30, 2020, and September 30, 2019, respectively. Net origination fees related to PPP loans were $(22.6) million and $(25.4) million as of September 30, 2020 and June 30, 2020, respectively.

NM - Not meaningful.

(1) Includes $1.77 billion and $1.75 billion of Paycheck Protection Program ("PPP") loans as of September 30, 2020 and June 30, 2020, respectively.

Includes net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts of $(67.0) million, $(72.1) million, and $(39.8)(2) million as of September 30, 2020, June 30, 2020, and September 30, 2019, respectively. Net origination fees related to PPP loans were $(22.6) million and $(25.4) million as of September 30, 2020 and June 30, 2020, respectively.

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

September 30, 2020% Change

September 30, 2020

June 30, 2020

September 30, 2019

Qtr-o-Qtr

Yr-o-Yr

Interest and dividend income (1)

$

365,728

$

398,776

$

476,912

(8.3

)%

(23.3

)%

Interest expense

41,598

55,001

107,105

(24.4

)

(61.2

)

Net interest income before provision for credit losses

324,130

343,775

369,807

(5.7

)

(12.4

)

Provision for credit losses

10,000

102,443

38,284

(90.2

)

(73.9

)

Net interest income after provision for credit losses

314,130

241,332

331,523

30.2

(5.2

)

Noninterest income

49,580

58,637

51,474

(15.4

)

(3.7

)

Noninterest expense

167,650

187,696

176,630

(10.7

)

(5.1

)

Income before income taxes

196,060

112,273

206,367

74.6

(5.0

)

Income tax expense

36,523

12,921

34,951

182.7

4.5

Net income

$

159,537

$

99,352

$

171,416

60.6

%

(6.9

)%

Earnings per share ("EPS")

- Basic

$

1.13

$

0.70

$

1.18

60.6

%

(4.3

)%

- Diluted

$

1.12

$

0.70

$

1.17

60.3

(4.3

)

Weighted-average number of shares outstanding

- Basic

141,498

141,486

145,559

0.0

%

(2.8

)%

- Diluted

142,043

141,827

146,120

0.2

(2.8

)

Three Months Ended

September 30, 2020% Change

September 30, 2020

June 30, 2020

September 30, 2019

Qtr-o-Qtr

Yr-o-Yr

Noninterest income:

Lending fees

$

18,736

$

21,946

$

15,035

(14.6

)%

24.6

%

Deposit account fees

12,573

10,872

9,729

15.6

29.2

Foreign exchange income

3,310

4,562

8,065

(27.4

)

(59.0

)

Wealth management fees

4,553

3,091

4,841

47.3

(5.9

)

Interest rate contracts and other derivative income

5,538

6,107

8,423

(9.3

)

(34.3

)

Net gains on sales of loans

361

132

2,037

173.5

(82.3

)

Gains on sales of AFS debt securities

698

9,640

58

(92.8

)

NM

Other investment income

316

966

663

(67.3

)

(52.3

)

Other income

3,495

1,321

2,623

164.6

33.2

Total noninterest income

$

49,580

$

58,637

$

51,474

(15.4

)%

(3.7

%)

Noninterest expense:

Compensation and employee benefits

$

99,756

$

96,955

$

97,819

2.9

%

2.0

%

Occupancy and equipment expense

16,648

16,217

17,912

2.7

(7.1

)

Deposit insurance premiums and regulatory assessments

4,006

3,700

3,550

8.3

12.8

Legal expense

1,366

1,530

1,720

(10.7

)

(20.6

)

Data processing

3,590

4,480

3,328

(19.9

)

7.9

Consulting expense

1,224

1,413

2,559

(13.4

)

(52.2

)

Deposit related expense

3,113

3,353

3,584

(7.2

)

(13.1

)

Computer software expense

8,539

7,301

6,556

17.0

30.2

Other operating expense

17,122

19,248

22,769

(11.0

)

(24.8

)

Amortization of tax credit and other investments

12,286

24,759

16,833

(50.4

)

(27.0

)

Repurchase agreements' extinguishment cost

-

8,740

-

(100.0

)

-

Total noninterest expense

$

167,650

$

187,696

$

176,630

(10.7

)%

(5.1

)%

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 September 30, 2020 % Change

September June 30, September 30, 2020 30, Qtr-o-Qtr Yr-o-Yr 2020 2019

Interest anddividend income $ 365,728 $ 398,776 $ 476,912 (8.3 )% (23.3 )%^(1)

Interest expense 41,598 55,001 107,105 (24.4 ) (61.2 )

Net interestincome before 324,130 343,775 369,807 (5.7 ) (12.4 )provision forcredit losses

Provision for 10,000 102,443 38,284 (90.2 ) (73.9 )credit losses

Net interestincome after 314,130 241,332 331,523 30.2 (5.2 )provision forcredit losses

Noninterest 49,580 58,637 51,474 (15.4 ) (3.7 )income

Noninterest 167,650 187,696 176,630 (10.7 ) (5.1 )expense

Income before 196,060 112,273 206,367 74.6 (5.0 )income taxes

Income tax 36,523 12,921 34,951 182.7 4.5 expense

Net income $ 159,537 $ 99,352 $ 171,416 60.6 % (6.9 )%

Earnings per share ("EPS")

- Basic $ 1.13 $ 0.70 $ 1.18 60.6 % (4.3 )%

- Diluted $ 1.12 $ 0.70 $ 1.17 60.3 (4.3 )

Weighted-averagenumber of shares outstanding

- Basic 141,498 141,486 145,559 0.0 % (2.8 )%

- Diluted 142,043 141,827 146,120 0.2 (2.8 )



Three Months Ended September 30, 2020 % Change

September June 30, September 30, 2020 30, Qtr-o-Qtr Yr-o-Yr 2020 2019

Noninterest income:

Lending fees $ 18,736 $ 21,946 $ 15,035 (14.6 )% 24.6 %

Deposit 12,573 10,872 9,729 15.6 29.2 account fees

Foreign exchange 3,310 4,562 8,065 (27.4 ) (59.0 ) income

Wealth management 4,553 3,091 4,841 47.3 (5.9 ) fees

Interest rate contracts and other 5,538 6,107 8,423 (9.3 ) (34.3 ) derivative income

Net gains on 361 132 2,037 173.5 (82.3 ) sales of loans

Gains on sales of AFS debt 698 9,640 58 (92.8 ) NM securities

Other investment 316 966 663 (67.3 ) (52.3 ) income

Other income 3,495 1,321 2,623 164.6 33.2

Totalnoninterest $ 49,580 $ 58,637 $ 51,474 (15.4 )% (3.7 %)income

Noninterest expense:

Compensation and employee $ 99,756 $ 96,955 $ 97,819 2.9 % 2.0 % benefits

Occupancy and equipment 16,648 16,217 17,912 2.7 (7.1 ) expense

Deposit insurance premiums and 4,006 3,700 3,550 8.3 12.8 regulatory assessments

Legal expense 1,366 1,530 1,720 (10.7 ) (20.6 )

Data 3,590 4,480 3,328 (19.9 ) 7.9 processing

Consulting 1,224 1,413 2,559 (13.4 ) (52.2 ) expense

Deposit related 3,113 3,353 3,584 (7.2 ) (13.1 ) expense

Computer software 8,539 7,301 6,556 17.0 30.2 expense

Other operating 17,122 19,248 22,769 (11.0 ) (24.8 ) expense

Amortization of tax credit 12,286 24,759 16,833 (50.4 ) (27.0 ) and other investments

Repurchase agreements' - 8,740 - (100.0 ) - extinguishment cost

Totalnoninterest $ 167,650 $ 187,696 $ 176,630 (10.7 )% (5.1 )%expense



NM - Not meaningful.

(1)

Includes $7.8 million and $21.3 million of interest income related to PPP loans for the three months ended September 30, 2020 and June 30, 2020, respectively.

NM - Not meaningful.

Includes $7.8 million and $21.3 million of interest income related to PPP(1) loans for the three months ended September 30, 2020 and June 30, 2020, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

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

(unaudited)

Table 4

Nine Months Ended

September 30, 2020% Change

September 30, 2020

September 30, 2019

Yr-o-Yr

Interest and dividend income (1)

$

1,213,694

$

1,415,067

(14.2

)%

Interest expense

183,082

315,473

(42.0

)

Net interest income before provision for credit losses

1,030,612

1,099,594

(6.3

)

Provision for credit losses

186,313

80,108

132.6

Net interest income after provision for credit losses

844,299

1,019,486

(17.2

)

Noninterest income

162,266

146,364

10.9

Noninterest expense

534,222

541,215

(1.3

)

Income before income taxes

472,343

624,635

(24.4

)

Income tax expense

68,630

138,815

(50.6

)

Net income

$

403,713

$

485,820

(16.9

)%

EPS

- Basic

$

2.83

$

3.34

(15.2

)%

- Diluted

$

2.82

$

3.33

(15.2

)

Weighted-average number of shares outstanding

- Basic

142,595

145,455

(2.0

)%

- Diluted

143,082

146,088

(2.1

)

Nine Months Ended

September 30, 2020% Change

September 30, 2020

September 30, 2019

Yr-o-Yr

Noninterest income:

Lending fees

$

56,455

$

46,427

21.6

%

Deposit account fees

33,892

28,804

17.7

Foreign exchange income

15,691

20,366

(23.0

)

Wealth management fees

12,997

12,415

4.7

Interest rate contracts and other derivative income

18,718

22,037

(15.1

)

Net gains on sales of loans

1,443

2,967

(51.4

)

Gains on sales of AFS debt securities

11,867

3,066

287.1

Other investment income

3,203

2,571

24.6

Other income

8,000

7,711

3.7

Total noninterest income

$

162,266

$

146,364

10.9

%

Noninterest expense:

Compensation and employee benefits

$

298,671

$

300,649

(0.7

)%

Occupancy and equipment expense

49,941

52,592

(5.0

)

Deposit insurance premiums and regulatory assessments

11,133

9,557

16.5

Legal expense

6,093

6,300

(3.3

)

Data processing

11,896

9,945

19.6

Consulting expense

3,854

6,687

(42.4

)

Deposit related expense

10,029

10,426

(3.8

)

Computer software expense

22,006

18,845

16.8

Other operating expense

57,489

67,737

(15.1

)

Amortization of tax credit and other investments

54,370

58,477

(7.0

)

Repurchase agreements' extinguishment cost

8,740

-

100.0

Total noninterest expense

$

534,222

$

541,215

(1.3

)%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

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

(unaudited)

Table 4



September Nine Months Ended 30, 2020 % Change

September 30, September 30, Yr-o-Yr 2020 2019

Interest and dividend income ^(1) $ 1,213,694 $ 1,415,067 (14.2 )%

Interest expense 183,082 315,473 (42.0 )

Net interest income before 1,030,612 1,099,594 (6.3 )provision for credit losses

Provision for credit losses 186,313 80,108 132.6

Net interest income after provision 844,299 1,019,486 (17.2 )for credit losses

Noninterest income 162,266 146,364 10.9

Noninterest expense 534,222 541,215 (1.3 )

Income before income taxes 472,343 624,635 (24.4 )

Income tax expense 68,630 138,815 (50.6 )

Net income $ 403,713 $ 485,820 (16.9 )%

EPS

- Basic $ 2.83 $ 3.34 (15.2 )%

- Diluted $ 2.82 $ 3.33 (15.2 )

Weighted-average number of shares outstanding

- Basic 142,595 145,455 (2.0 )%

- Diluted 143,082 146,088 (2.1 )



September Nine Months Ended 30, 2020 % Change

September 30, September 30, Yr-o-Yr 2020 2019

Noninterest income:

Lending fees $ 56,455 $ 46,427 21.6 %

Deposit account fees 33,892 28,804 17.7

Foreign exchange income 15,691 20,366 (23.0 )

Wealth management fees 12,997 12,415 4.7

Interest rate contracts and other 18,718 22,037 (15.1 ) derivative income

Net gains on sales of loans 1,443 2,967 (51.4 )

Gains on sales of AFS debt 11,867 3,066 287.1 securities

Other investment income 3,203 2,571 24.6

Other income 8,000 7,711 3.7

Total noninterest income $ 162,266 $ 146,364 10.9 %

Noninterest expense:

Compensation and employee $ 298,671 $ 300,649 (0.7 )% benefits

Occupancy and equipment expense 49,941 52,592 (5.0 )

Deposit insurance premiums and 11,133 9,557 16.5 regulatory assessments

Legal expense 6,093 6,300 (3.3 )

Data processing 11,896 9,945 19.6

Consulting expense 3,854 6,687 (42.4 )

Deposit related expense 10,029 10,426 (3.8 )

Computer software expense 22,006 18,845 16.8

Other operating expense 57,489 67,737 (15.1 )

Amortization of tax credit and 54,370 58,477 (7.0 ) other investments

Repurchase agreements' 8,740 - 100.0 extinguishment cost

Total noninterest expense $ 534,222 $ 541,215 (1.3 )%



(1)

Includes $29.1 million of interest income related to PPP loans for the nine months ended September 30, 2020.

(1) Includes $29.1 million of interest income related to PPP loans for the nine months ended September 30, 2020.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED AVERAGE BALANCES

($ in thousands)

(unaudited)

Table 5

Three Months Ended

September 30, 2020% Change

Nine Months Ended

September 30, 2020% Change

September 30,2020

June 30,2020

September 30,2019

Qtr-o-Qtr

Yr-o-Yr

September 30,2020

September 30,2019

Yr-o-Yr

Loans:

Commercial:

C&I (1)

$

13,235,845

$

13,560,719

$

12,203,341

(2.4

)%

8.5

%

$

12,988,486

$

12,018,802

8.1

%

CRE:

CRE

10,942,780

10,812,399

9,685,092

1.2

13.0

10,747,669

9,522,238

12.9

Multifamily residential

3,107,294

2,987,311

2,561,648

4.0

21.3

2,995,227

2,523,962

18.7

Construction and land

564,219

594,965

694,665

(5.2

)

(18.8

)

599,957

652,096

(8.0

)

Total CRE

14,614,293

14,394,675

12,941,405

1.5

12.9

14,342,853

12,698,296

13.0

Consumer:

Residential mortgage:

Single-family residential

7,695,838

7,506,546

6,636,227

2.5

16.0

7,487,347

6,388,939

17.2

HELOCs

1,475,098

1,444,933

1,557,358

2.1

(5.3

)

1,454,237

1,605,279

(9.4

)

Total residential mortgage

9,170,936

8,951,479

8,193,585

2.5

11.9

8,941,584

7,994,218

11.9

Other consumer

139,371

234,900

322,951

(40.7

)

(56.8

)

214,936

312,397

(31.2

)

Total loans (2)

$

37,160,445

$

37,141,773

$

33,661,282

0.1

%

10.4

%

$

36,487,859

$

33,023,713

10.5

%

Interest-earning assets

$

47,428,586

$

45,413,242

$

40,919,386

4.4

%

15.9

%

$

45,076,734

$

39,716,462

13.5

%

Total assets

$

50,247,259

$

48,228,914

$

43,136,273

4.2

%

16.5

%

$

47,753,030

$

41,815,490

14.2

%

Deposits:

Noninterest-bearing demand

$

14,296,475

$

13,534,873

$

10,712,612

5.6

%

33.5

%

$

12,987,813

$

10,342,966

25.6

%

Interest-bearing checking

5,663,873

4,687,178

4,947,511

20.8

14.5

5,119,568

5,145,308

(0.5

)

Money market

9,981,704

9,893,816

8,344,993

0.9

19.6

9,630,918

8,094,933

19.0

Savings

2,259,788

2,149,965

2,154,592

5.1

4.9

2,162,365

2,117,773

2.1

Time deposits

9,008,907

9,634,696

10,337,990

(6.5

)

(12.9

)

9,633,582

9,887,274

(2.6

)

Total deposits

$

41,210,747

$

39,900,528

$

36,497,698

3.3

%

12.9

%

$

39,534,246

$

35,588,254

11.1

%

Interest-bearing liabilities

$

29,552,756

$

28,362,618

$

26,773,253

4.2

%

10.4

%

$

28,506,736

$

26,033,713

9.5

%

Stockholders' equity

$

5,079,351

$

4,982,446

$

4,838,281

1.9

%

5.0

%

$

5,028,122

$

4,687,746

7.3

%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED AVERAGE BALANCES

($ in thousands)

(unaudited)

Table 5



September 30, 2020 September 30, Three Months Ended % Change Nine Months Ended 2020 % Change

September 30, June 30, September 30, Qtr-o-Qtr Yr-o-Yr September 30, September 30, Yr-o-Yr 2020 2020 2019 2020 2019

Loans:

Commercial:

C&I ^(1) $ 13,235,845 $ 13,560,719 $ 12,203,341 (2.4 )% 8.5 % $ 12,988,486 $ 12,018,802 8.1 %

CRE:

CRE 10,942,780 10,812,399 9,685,092 1.2 13.0 10,747,669 9,522,238 12.9

Multifamily 3,107,294 2,987,311 2,561,648 4.0 21.3 2,995,227 2,523,962 18.7 residential

Construction and land 564,219 594,965 694,665 (5.2 ) (18.8 ) 599,957 652,096 (8.0 )

Total CRE 14,614,293 14,394,675 12,941,405 1.5 12.9 14,342,853 12,698,296 13.0

Consumer:

Residential mortgage:

Single-family 7,695,838 7,506,546 6,636,227 2.5 16.0 7,487,347 6,388,939 17.2 residential

HELOCs 1,475,098 1,444,933 1,557,358 2.1 (5.3 ) 1,454,237 1,605,279 (9.4 )

Total residential 9,170,936 8,951,479 8,193,585 2.5 11.9 8,941,584 7,994,218 11.9 mortgage

Other consumer 139,371 234,900 322,951 (40.7 ) (56.8 ) 214,936 312,397 (31.2 )

Total loans ^(2) $ 37,160,445 $ 37,141,773 $ 33,661,282 0.1 % 10.4 % $ 36,487,859 $ 33,023,713 10.5 %



Interest-earning assets $ 47,428,586 $ 45,413,242 $ 40,919,386 4.4 % 15.9 % $ 45,076,734 $ 39,716,462 13.5 %

Total assets $ 50,247,259 $ 48,228,914 $ 43,136,273 4.2 % 16.5 % $ 47,753,030 $ 41,815,490 14.2 %



Deposits:

Noninterest-bearing $ 14,296,475 $ 13,534,873 $ 10,712,612 5.6 % 33.5 % $ 12,987,813 $ 10,342,966 25.6 % demand

Interest-bearing 5,663,873 4,687,178 4,947,511 20.8 14.5 5,119,568 5,145,308 (0.5 ) checking

Money market 9,981,704 9,893,816 8,344,993 0.9 19.6 9,630,918 8,094,933 19.0

Savings 2,259,788 2,149,965 2,154,592 5.1 4.9 2,162,365 2,117,773 2.1

Time deposits 9,008,907 9,634,696 10,337,990 (6.5 ) (12.9 ) 9,633,582 9,887,274 (2.6 )

Total deposits $ 41,210,747 $ 39,900,528 $ 36,497,698 3.3 % 12.9 % $ 39,534,246 $ 35,588,254 11.1 %



Interest-bearing $ 29,552,756 $ 28,362,618 $ 26,773,253 4.2 % 10.4 % $ 28,506,736 $ 26,033,713 9.5 %liabilities

Stockholders' equity $ 5,079,351 $ 4,982,446 $ 4,838,281 1.9 % 5.0 % $ 5,028,122 $ 4,687,746 7.3 %



(1)

Includes average balance of PPP loans of $1.76 billion and $1.47 billion for the three months ended September 30, 2020 and June 30, 2020, respectively, and $1.08 billion for the nine months ended September 30, 2020.

(2)

Includes loans HFS.

Includes average balance of PPP loans of $1.76 billion and $1.47 billion(1) for the three months ended September 30, 2020 and June 30, 2020, respectively, and $1.08 billion for the nine months ended September 30, 2020.

(2) Includes loans HFS.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 6

Three Months Ended

September 30, 2020

June 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

$

4,904,394

$

5,045

0.41

%

$

3,435,920

$

4,564

0.53

%

Resale agreements (2)

1,225,217

5,295

1.72

%

1,037,473

5,514

2.14

%

AFS debt securities

4,059,456

18,493

1.81

%

3,719,209

21,004

2.27

%

Loans (3)

37,160,445

336,542

3.60

%

37,141,773

367,393

3.98

%

FHLB and FRB stock

79,074

353

1.78

%

78,867

301

1.54

%

Total interest-earning assets

47,428,586

365,728

3.07

%

45,413,242

398,776

3.53

%

Noninterest-earning assets:

Cash and due from banks

522,699

498,908

Allowance for loan losses

(632,216

)

(566,473

)

Other assets

2,928,190

2,883,237

Total assets

$

50,247,259

$

48,228,914

Liabilities and Stockholders' Equity

Interest-bearing liabilities:

Checking deposits

$

5,663,873

$

4,345

0.31

%

$

4,687,178

$

5,404

0.46

%

Money market deposits

9,981,704

6,837

0.27

%

9,893,816

8,093

0.33

%

Savings deposits

2,259,788

1,481

0.26

%

2,149,965

1,445

0.27

%

Time deposits

9,008,907

21,135

0.93

%

9,634,696

31,457

1.31

%

Federal funds purchased and other short-term borrowings

84,858

407

1.91

%

242,185

265

0.44

%

FHLB advances

656,906

3,146

1.91

%

653,665

3,343

2.06

%

Repurchase agreements (2)

317,097

2,155

2.70

%

418,681

3,540

3.40

%

Long-term debt and finance lease liabilities

1,579,623

2,092

0.53

%

682,432

1,454

0.86

%

Total interest-bearing liabilities

29,552,756

41,598

0.56

%

28,362,618

55,001

0.78

%

Noninterest-bearing liabilities and stockholders' equity:

Demand deposits

14,296,475

13,534,873

Accrued expenses and other liabilities

1,318,677

1,348,977

Stockholders' equity

5,079,351

4,982,446

Total liabilities and stockholders' equity

$

50,247,259

$

48,228,914

Interest rate spread

2.51

%

2.75

%

Net interest income and net interest margin

$

324,130

2.72

%

$

343,775

3.04

%

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

$

317,611

2.77

%

$

322,949

2.96

%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 6



Three Months Ended

September 30, 2020 June 30, 2020

Average Average Average Average

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

Assets

Interest-earning assets:

Interest-bearingcash and deposits $ 4,904,394 $ 5,045 0.41 % $ 3,435,920 $ 4,564 0.53 %with banks

Resale agreements ^ 1,225,217 5,295 1.72 % 1,037,473 5,514 2.14 %(2)

AFS debt securities 4,059,456 18,493 1.81 % 3,719,209 21,004 2.27 %

Loans ^(3) 37,160,445 336,542 3.60 % 37,141,773 367,393 3.98 %

FHLB and FRB stock 79,074 353 1.78 % 78,867 301 1.54 %

Totalinterest-earning 47,428,586 365,728 3.07 % 45,413,242 398,776 3.53 %assets



Noninterest-earning assets:

Cash and due from 522,699 498,908 banks

Allowance for loan (632,216 ) (566,473 ) losses

Other assets 2,928,190 2,883,237

Total assets $ 50,247,259 $ 48,228,914



Liabilities andStockholders' Equity

Interest-bearing liabilities:

Checking deposits $ 5,663,873 $ 4,345 0.31 % $ 4,687,178 $ 5,404 0.46 %

Money market 9,981,704 6,837 0.27 % 9,893,816 8,093 0.33 %deposits

Savings deposits 2,259,788 1,481 0.26 % 2,149,965 1,445 0.27 %

Time deposits 9,008,907 21,135 0.93 % 9,634,696 31,457 1.31 %

Federal fundspurchased and other 84,858 407 1.91 % 242,185 265 0.44 %short-termborrowings

FHLB advances 656,906 3,146 1.91 % 653,665 3,343 2.06 %

Repurchase 317,097 2,155 2.70 % 418,681 3,540 3.40 %agreements ^(2)

Long-term debt andfinance lease 1,579,623 2,092 0.53 % 682,432 1,454 0.86 %liabilities

Totalinterest-bearing 29,552,756 41,598 0.56 % 28,362,618 55,001 0.78 %liabilities



Noninterest-bearingliabilities and stockholders'equity:

Demand deposits 14,296,475 13,534,873

Accrued expensesand other 1,318,677 1,348,977 liabilities

Stockholders' 5,079,351 4,982,446 equity

Total liabilitiesand stockholders' $ 50,247,259 $ 48,228,914 equity



Interest rate 2.51 % 2.75 %spread

Net interest incomeand net interest $ 324,130 2.72 % $ 343,775 3.04 %margin

Adjusted netinterest income andadjusted net $ 317,611 2.77 % $ 322,949 2.96 %interest margin ^(4)



(1)

Annualized.

(2)

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

(3)

Includes loans HFS.

(4)

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

(1) Annualized.

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

(3) Includes loans HFS.

Net interest income and net interest margin have been adjusted for the(4) impacts 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

September 30, 2020

September 30, 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

$

4,904,394

$

5,045

0.41

%

$

3,547,626

$

19,710

2.20

%

Resale agreements (2)

1,225,217

5,295

1.72

%

981,196

6,943

2.81

%

AFS debt securities

4,059,456

18,493

1.81

%

2,651,069

15,945

2.39

%

Loans (3)

37,160,445

336,542

3.60

%

33,661,282

433,658

5.11

%

FHLB and FRB stock

79,074

353

1.78

%

78,213

656

3.33

%

Total interest-earning assets

47,428,586

365,728

3.07

%

40,919,386

476,912

4.62

%

Noninterest-earning assets:

Cash and due from banks

522,699

441,898

Allowance for loan losses

(632,216

)

(328,523

)

Other assets

2,928,190

2,103,512

Total assets

$

50,247,259

$

43,136,273

Liabilities and Stockholders' Equity

Interest-bearing liabilities:

Checking deposits

$

5,663,873

$

4,345

0.31

%

$

4,947,511

$

14,488

1.16

%

Money market deposits

9,981,704

6,837

0.27

%

8,344,993

26,943

1.28

%

Savings deposits

2,259,788

1,481

0.26

%

2,154,592

2,656

0.49

%

Time deposits

9,008,907

21,135

0.93

%

10,337,990

52,733

2.02

%

Federal funds purchased and other short-term borrowings

84,858

407

1.91

%

40,433

382

3.75

%

FHLB advances

656,906

3,146

1.91

%

745,263

5,021

2.67

%

Repurchase agreements (2)

317,097

2,155

2.70

%

50,000

3,239

25.70

%

Long-term debt and finance lease liabilities

1,579,623

2,092

0.53

%

152,471

1,643

4.28

%

Total interest-bearing liabilities

29,552,756

41,598

0.56

%

26,773,253

107,105

1.59

%

Noninterest-bearing liabilities and stockholders' equity:

Demand deposits

14,296,475

10,712,612

Accrued expenses and other liabilities

1,318,677

812,127

Stockholders' equity

5,079,351

4,838,281

Total liabilities and stockholders' equity

$

50,247,259

$

43,136,273

Interest rate spread

2.51

%

3.03

%

Net interest income and net interest margin

$

324,130

2.72

%

$

369,807

3.59

%

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

$

317,611

2.77

%

$

369,807

3.59

%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 7



Three Months Ended

September 30, 2020 September 30, 2019

Average Average Average Average

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

Assets

Interest-earning assets:

Interest-bearingcash and deposits $ 4,904,394 $ 5,045 0.41 % $ 3,547,626 $ 19,710 2.20 %with banks

Resale agreements ^ 1,225,217 5,295 1.72 % 981,196 6,943 2.81 %(2)

AFS debt securities 4,059,456 18,493 1.81 % 2,651,069 15,945 2.39 %

Loans ^(3) 37,160,445 336,542 3.60 % 33,661,282 433,658 5.11 %

FHLB and FRB stock 79,074 353 1.78 % 78,213 656 3.33 %

Totalinterest-earning 47,428,586 365,728 3.07 % 40,919,386 476,912 4.62 %assets



Noninterest-earning assets:

Cash and due from 522,699 441,898 banks

Allowance for loan (632,216 ) (328,523 ) losses

Other assets 2,928,190 2,103,512

Total assets $ 50,247,259 $ 43,136,273



Liabilities andStockholders' Equity

Interest-bearing liabilities:

Checking deposits $ 5,663,873 $ 4,345 0.31 % $ 4,947,511 $ 14,488 1.16 %

Money market 9,981,704 6,837 0.27 % 8,344,993 26,943 1.28 %deposits

Savings deposits 2,259,788 1,481 0.26 % 2,154,592 2,656 0.49 %

Time deposits 9,008,907 21,135 0.93 % 10,337,990 52,733 2.02 %

Federal fundspurchased and other 84,858 407 1.91 % 40,433 382 3.75 %short-termborrowings

FHLB advances 656,906 3,146 1.91 % 745,263 5,021 2.67 %

Repurchase 317,097 2,155 2.70 % 50,000 3,239 25.70 %agreements ^(2)

Long-term debt andfinance lease 1,579,623 2,092 0.53 % 152,471 1,643 4.28 %liabilities

Totalinterest-bearing 29,552,756 41,598 0.56 % 26,773,253 107,105 1.59 %liabilities



Noninterest-bearingliabilities and stockholders'equity:

Demand deposits 14,296,475 10,712,612

Accrued expensesand other 1,318,677 812,127 liabilities

Stockholders' 5,079,351 4,838,281 equity

Total liabilitiesand stockholders' $ 50,247,259 $ 43,136,273 equity



Interest rate 2.51 % 3.03 %spread

Net interest incomeand net interest $ 324,130 2.72 % $ 369,807 3.59 %margin

Adjusted netinterest income andadjusted net $ 317,611 2.77 % $ 369,807 3.59 %interest margin ^(4)



(1)

Annualized.

(2)

There was no netting of repurchase agreements against resale agreements for the three months ended September 30, 2020. Average balances of resale and repurchase agreements for the three months ended September 30, 2019 have been reported net, pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. The weighted-average yields of gross resale agreements were 1.72% and 2.59% for the three months ended September 30, 2020 and 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 2.70% and 4.68% for the three months ended September 30, 2020 and 2019, respectively.

(3)

Includes loans HFS.

(4)

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

(1) Annualized.

There was no netting of repurchase agreements against resale agreements for the three months ended September 30, 2020. Average balances of resale and repurchase agreements for the three months ended September 30, 2019 have been reported net, pursuant to ASC 210-20-45-11, Balance Sheet Offsetting:(2) Repurchase and Reverse Repurchase Agreements. The weighted-average yields of gross resale agreements were 1.72% and 2.59% for the three months ended September 30, 2020 and 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 2.70% and 4.68% for the three months ended September 30, 2020 and 2019, respectively.

(3) Includes loans HFS.

Net interest income and net interest margin have been adjusted for the(4) impacts 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

Nine Months Ended

September 30, 2020

September 30, 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

$

3,775,242

$

20,717

0.73

%

$

2,996,340

$

51,920

2.32

%

Resale agreements (2)

1,048,923

16,434

2.09

%

1,005,147

22,253

2.96

%

AFS debt securities

3,685,837

59,639

2.16

%

2,614,949

47,378

2.42

%

Loans (3)

36,487,859

1,115,804

4.08

%

33,023,713

1,291,642

5.23

%

FHLB and FRB stock

78,873

1,100

1.86

%

76,313

1,874

3.28

%

Total interest-earning assets

45,076,734

1,213,694

3.60

%

39,716,462

1,415,067

4.76

%

Noninterest-earning assets:

Cash and due from banks

510,750

449,739

Allowance for loan losses

(563,912

)

(321,486

)

Other assets

2,729,458

1,970,775

Total assets

$

47,753,030

$

41,815,490

Liabilities and Stockholders' Equity

Interest-bearing liabilities:

Checking deposits

$

5,119,568

$

19,995

0.52

%

$

5,145,308

$

44,579

1.16

%

Money market deposits

9,630,918

37,178

0.52

%

8,094,933

85,858

1.42

%

Savings deposits

2,162,365

4,743

0.29

%

2,117,773

7,360

0.46

%

Time deposits

9,633,582

94,684

1.31

%

9,887,274

148,992

2.01

%

Federal funds purchased and other short-term borrowings

128,846

1,228

1.27

%

45,410

1,359

4.00

%

FHLB advances

667,935

10,655

2.13

%

540,535

12,011

2.97

%

Repurchase agreements (2)

355,923

9,686

3.64

%

50,000

10,200

27.27

%

Long-term debt and finance lease liabilities

807,599

4,913

0.81

%

152,480

5,114

4.48

%

Total interest-bearing liabilities

28,506,736

183,082

0.86

%

26,033,713

315,473

1.62

%

Noninterest-bearing liabilities and stockholders' equity:

Demand deposits

12,987,813

10,342,966

Accrued expenses and other liabilities

1,230,359

751,065

Stockholders' equity

5,028,122

4,687,746

Total liabilities and stockholders' equity

$

47,753,030

$

41,815,490

Interest rate spread

2.74

%

3.14

%

Net interest income and net interest margin

$

1,030,612

3.05

%

$

1,099,594

3.70

%

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

$

1,003,267

3.05

%

$

1,099,594

3.70

%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES

($ in thousands)

(unaudited)

Table 8



Nine Months Ended

September 30, 2020 September 30, 2019

Average Average Average Average

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

Assets

Interest-earning assets:

Interest-bearingcash and deposits $ 3,775,242 $ 20,717 0.73 % $ 2,996,340 $ 51,920 2.32 %with banks

Resale agreements ^ 1,048,923 16,434 2.09 % 1,005,147 22,253 2.96 %(2)

AFS debt securities 3,685,837 59,639 2.16 % 2,614,949 47,378 2.42 %

Loans^ (3) 36,487,859 1,115,804 4.08 % 33,023,713 1,291,642 5.23 %

FHLB and FRB stock 78,873 1,100 1.86 % 76,313 1,874 3.28 %

Totalinterest-earning 45,076,734 1,213,694 3.60 % 39,716,462 1,415,067 4.76 %assets



Noninterest-earning assets:

Cash and due from 510,750 449,739 banks

Allowance for loan (563,912 ) (321,486 ) losses

Other assets 2,729,458 1,970,775

Total assets $ 47,753,030 $ 41,815,490



Liabilities andStockholders' Equity

Interest-bearing liabilities:

Checking deposits $ 5,119,568 $ 19,995 0.52 % $ 5,145,308 $ 44,579 1.16 %

Money market 9,630,918 37,178 0.52 % 8,094,933 85,858 1.42 %deposits

Savings deposits 2,162,365 4,743 0.29 % 2,117,773 7,360 0.46 %

Time deposits 9,633,582 94,684 1.31 % 9,887,274 148,992 2.01 %

Federal fundspurchased and other 128,846 1,228 1.27 % 45,410 1,359 4.00 %short-termborrowings

FHLB advances 667,935 10,655 2.13 % 540,535 12,011 2.97 %

Repurchase 355,923 9,686 3.64 % 50,000 10,200 27.27 %agreements ^(2)

Long-term debt andfinance lease 807,599 4,913 0.81 % 152,480 5,114 4.48 %liabilities

Totalinterest-bearing 28,506,736 183,082 0.86 % 26,033,713 315,473 1.62 %liabilities



Noninterest-bearingliabilities and stockholders'equity:

Demand deposits 12,987,813 10,342,966

Accrued expensesand other 1,230,359 751,065 liabilities

Stockholders' 5,028,122 4,687,746 equity

Total liabilitiesand stockholders' $ 47,753,030 $ 41,815,490 equity



Interest rate 2.74 % 3.14 %spread

Net interest incomeand net interest $ 1,030,612 3.05 % $ 1,099,594 3.70 %margin

Adjusted netinterest income andadjusted net $ 1,003,267 3.05 % $ 1,099,594 3.70 %interest margin ^(4)



(1)

Annualized

(2)

Average balances of resale and repurchase agreements have been reported net, pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. The weighted-average yields of gross resale agreements were 2.09% and 2.71% for the nine months ended September 30, 2020 and 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 3.48% and 4.87% for the nine months ended September 30, 2020 and 2019, respectively.

(3)

Includes loans HFS.

(4)

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

(1) Annualized

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(2) agreements were 2.09% and 2.71% for the nine months ended September 30, 2020 and 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 3.48% and 4.87% for the nine months ended September 30, 2020 and 2019, respectively.

(3) Includes loans HFS.

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

SELECTED RATIOS

(unaudited)

Table 9

Three Months Ended (1)

September 30, 2020Basis Point Change

September 30,2020

June 30,2020

September 30,2019

Qtr-o-Qtr

Yr-o-Yr

Return on average assets

1.26

%

0.83

%

1.58

%

43

bps

(32)

bps

Return on average equity

12.50

%

8.02

%

14.06

%

448

(156)

Return on average tangible equity (2)

13.88

%

8.96

%

15.75

%

492

(187)

Interest rate spread

2.51

%

2.75

%

3.03

%

(24)

(52)

Net interest margin

2.72

%

3.04

%

3.59

%

(32)

(87)

Adjusted net interest margin (2)

2.77

%

2.96

%

3.59

%

(19)

(82)

Average loan yield

3.60

%

3.98

%

5.11

%

(38)

(151)

Adjusted average loan yield (2)

3.70

%

3.90

%

5.11

%

(20)

(141)

Yield on average interest-earning assets

3.07

%

3.53

%

4.62

%

(46)

(155)

Average cost of interest-bearing deposits

0.50

%

0.71

%

1.49

%

(21)

(99)

Average cost of deposits

0.33

%

0.47

%

1.05

%

(14)

(72)

Average cost of funds

0.38

%

0.53

%

1.13

%

(15)

(75)

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

1.74

%

2.08

%

2.42

%

(34)

(68)

Adjusted noninterest expense/average assets (2)

1.22

%

1.28

%

1.46

%

(6)

(24)

Efficiency ratio

44.86

%

46.64

%

41.93

%

(178)

293

Adjusted efficiency ratio (2)

41.33

%

38.09

%

37.66

%

324

bps

367

bps

Nine Months Ended (1)

September 30, 2020Basis Point Change

September 30,2020

September 30,2019

Yr-o-Yr

Return on average assets

1.13

%

1.55

%

(42)

bps

Adjusted return on average assets (2)

1.13

%

1.67

%

(54)

Return on average equity

10.73

%

13.86

%

(313)

Adjusted return on average equity (2)

10.73

%

14.85

%

(412)

Return on average tangible equity (2)

11.95

%

15.58

%

(363)

Adjusted return on average tangible equity (2)

11.95

%

16.70

%

(475)

Interest rate spread

2.74

%

3.14

%

(40)

Net interest margin

3.05

%

3.70

%

(65)

Adjusted net interest margin (2)

3.05

%

3.70

%

(65)

Average loan yield

4.08

%

5.23

%

(115)

Adjusted average loan yield (2)

4.10

%

5.23

%

(113)

Yield on average interest-earning assets

3.60

%

4.76

%

(116)

Average cost of interest-bearing deposits

0.79

%

1.52

%

(73)

Average cost of deposits

0.53

%

1.08

%

(55)

Average cost of funds

0.59

%

1.16

%

(57)

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

2.03

%

2.45

%

(42)

Adjusted noninterest expense/average assets (2)

1.31

%

1.53

%

(22)

Efficiency ratio

44.78

%

43.44

%

134

Adjusted efficiency ratio (2)

39.26

%

38.47

%

79

bps

EAST WEST BANCORP, INC. AND SUBSIDIARIES

SELECTED RATIOS

(unaudited)

Table 9



Three Months Ended ^(1) September 30, 2020 Basis Point Change

September June 30, September 30, 2020 30, Qtr-o-Qtr Yr-o-Yr 2020 2019

Return on 1.26 % 0.83 % 1.58 % 43 bps (32) bps average assets

Return on 12.50 % 8.02 % 14.06 % 448 (156) average equity

Return on average tangible 13.88 % 8.96 % 15.75 % 492 (187) equity ^(2)

Interest rate 2.51 % 2.75 % 3.03 % (24) (52) spread

Net interest 2.72 % 3.04 % 3.59 % (32) (87) margin

Adjusted net interest margin 2.77 % 2.96 % 3.59 % (19) (82) ^(2)

Average loan 3.60 % 3.98 % 5.11 % (38) (151) yield

Adjusted average 3.70 % 3.90 % 5.11 % (20) (141) loan yield ^(2)

Yield on average interest-earning 3.07 % 3.53 % 4.62 % (46) (155) assets

Average cost of interest-bearing 0.50 % 0.71 % 1.49 % (21) (99) deposits

Average cost of 0.33 % 0.47 % 1.05 % (14) (72) deposits

Average cost of 0.38 % 0.53 % 1.13 % (15) (75) funds

Adjusted pre-tax, pre-provision 1.74 % 2.08 % 2.42 % (34) (68) profitability ratio ^(2)

Adjusted noninterest 1.22 % 1.28 % 1.46 % (6) (24) expense/average assets ^(2)

Efficiency ratio 44.86 % 46.64 % 41.93 % (178) 293

Adjusted efficiency ratio 41.33 % 38.09 % 37.66 % 324 bps 367 bps ^(2)





September 30, Nine Months Ended ^ 2020 (1) Basis Point Change

September September 30, 30, Yr-o-Yr 2020 2019

Return on 1.13 % 1.55 % (42) bps average assets

Adjusted return on average 1.13 % 1.67 % (54) assets ^(2)

Return on 10.73 % 13.86 % (313) average equity

Adjusted return on average 10.73 % 14.85 % (412) equity ^(2)

Return on average tangible 11.95 % 15.58 % (363) equity ^(2)

Adjusted return on average 11.95 % 16.70 % (475) tangible equity ^(2)

Interest rate 2.74 % 3.14 % (40) spread

Net interest 3.05 % 3.70 % (65) margin

Adjusted net interest margin 3.05 % 3.70 % (65) ^(2)

Average loan 4.08 % 5.23 % (115) yield

Adjusted average 4.10 % 5.23 % (113) loan yield ^(2)

Yield on average interest-earning 3.60 % 4.76 % (116) assets

Average cost of interest-bearing 0.79 % 1.52 % (73) deposits

Average cost of 0.53 % 1.08 % (55) deposits

Average cost of 0.59 % 1.16 % (57) funds

Adjusted pre-tax, pre-provision 2.03 % 2.45 % (42) profitability ratio ^(2)

Adjusted noninterest 1.31 % 1.53 % (22) expense/average assets ^(2)

Efficiency ratio 44.78 % 43.44 % 134

Adjusted efficiency ratio 39.26 % 38.47 % 79 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. Note that there were no non-recurring adjustments during 2020.

(1) Annualized except for efficiency ratio.

(2) See reconciliation of GAAP to non-GAAP financial measures in Tables 12, 13, 14 and 15. Note that there were no non-recurring adjustments during 2020.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

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

($ in thousands)

(unaudited)

Table 10

ASU 2016-13 replaced the incurred loss methodology used in calculating the allowance for loan losses with a current expected credit loss model ("CECL"). The Company adopted ASU 2016-13 using the modified retrospective approach on January 1, 2020. As a result, prior comparative periods have not been adjusted for the CECL model. In addition, ASU 2016-13 introduces the concept of Purchased Credit Deteriorated ("PCD") financial assets, which replaces purchased credit-impaired ("PCI") assets. For PCD assets, the initial allowance for loan losses is added to the purchase price and is considered to be part of the PCD loan amortized cost basis, hence, there is no income statement impact on acquisition. This contrasts with PCI loans where allowance for loan losses only reflects losses that are incurred by the Company after the acquisition. The allowance for loan losses is evaluated each quarter and adjusted as necessary by recognizing or reversing loan loss expense. There were no PCD loans during the three and nine months ended September 30, 2020.

Three Months Ended September 30, 2020

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

)

-

-

-

-

(32

)

(26,557

)

Gross recoveries

1,218

485

665

30

-

43

(92

)

2,349

Total net (charge-offs) recoveries

(23,893

)

(929

)

665

30

-

43

(124

)

(24,208

)

Foreign currency translation 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 June 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, March 31, 2020

$

362,629

$

132,819

$

16,530

$

11,018

$

26,822

$

3,881

$

3,304

$

557,003

Provision for (reversal of) credit losses on loans

(a)

37,862

43,315

7,908

7,526

(1,667

)

205

(849

)

94,300

Gross charge-offs

(20,378

)

(320

)

-

-

-

(221

)

(30

)

(20,949

)

Gross recoveries

602

226

620

7

159

2

93

1,709

Total net (charge-offs) recoveries

(19,776

)

(94

)

620

7

159

(219

)

63

(19,240

)

Foreign currency translation adjustment

8

-

-

-

-

-

-

8

Allowance for loan losses, June 30, 2020

$

380,723

$

176,040

$

25,058

$

18,551

$

25,314

$

3,867

$

2,518

$

632,071

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 and nine months ended September 30, 2020.



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

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

Gross charge-offs (25,111 ) (1,414 ) - - - - (32 ) (26,557 )

Gross recoveries 1,218 485 665 30 - 43 (92 ) 2,349

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

Foreign currency 500 - - - - - - 500 translation adjustment

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





Three Months Ended June 30, 2020

Commercial Consumer

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

Allowance for loan $ 362,629 $ 132,819 $ 16,530 $ 11,018 $ 26,822 $ 3,881 $ 3,304 $ 557,003 losses, March 31, 2020

Provision for(reversal of) credit (a) 37,862 43,315 7,908 7,526 (1,667 ) 205 (849 ) 94,300 losses on loans

Gross charge-offs (20,378 ) (320 ) - - - (221 ) (30 ) (20,949 )

Gross recoveries 602 226 620 7 159 2 93 1,709

Total net(charge-offs) (19,776 ) (94 ) 620 7 159 (219 ) 63 (19,240 )recoveries

Foreign currency 8 - - - - - - 8 translation adjustment

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

Three Months Ended September 30, 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, June 30, 2019

$

205,503

$

39,811

$

19,280

$

22,961

$

32,763

$

6,177

$

4,130

$

330,625

Provision for (reversal of) credit losses on loans

(a)

37,281

(3,213

)

985

6,189

(2,877

)

(326

)

(160

)

37,879

Gross charge-offs

(25,098

)

(1,021

)

-

-

(11

)

-

(12

)

(26,142

)

Gross recoveries

1,648

1,896

42

21

60

5

7

3,679

Total net (charge-offs) recoveries

(23,450

)

875

42

21

49

5

(5

)

(22,463

)

Foreign currency translation adjustment

(465

)

-

-

-

-

-

-

(465

)

Allowance for loan losses, September 30, 2019

$

218,869

$

37,473

$

20,307

$

29,171

$

29,935

$

5,856

$

3,965

$

345,576



Three Months Ended September 30, 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, $ 205,503 $ 39,811 $ 19,280 $ 22,961 $ 32,763 $ 6,177 $ 4,130 $ 330,625 June 30, 2019

Provision for(reversal of) (a) 37,281 (3,213 ) 985 6,189 (2,877 ) (326 ) (160 ) 37,879 credit losseson loans

Gross (25,098 ) (1,021 ) - - (11 ) - (12 ) (26,142 )charge-offs

Gross 1,648 1,896 42 21 60 5 7 3,679 recoveries

Total net(charge-offs) (23,450 ) 875 42 21 49 5 (5 ) (22,463 )recoveries

Foreigncurrency (465 ) - - - - - - (465 )translationadjustment

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



EAST WEST BANCORP, INC. AND SUBSIDIARIES

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

($ in thousands)

(unaudited)

Table 10 (continued)

Nine Months Ended September 30, 2020

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)

130,171

46,449

7,273

828

(2,659

)

(20

)

(3,197

)

178,845

Gross charge-offs

(57,466

)

(2,688

)

-

-

-

(221

)

(88

)

(60,463

)

Gross recoveries

3,395

10,371

1,820

58

424

47

2

16,117

Total net (charge-offs) recoveries

(54,071

)

7,683

1,820

58

424

(174

)

(86

)

(44,346

)

Foreign currency translation adjustment

308

-

-

-

-

-

-

308

Allowance for loan losses, September 30, 2020

$

389,021

$

166,810

$

23,807

$

10,401

$

22,622

$

3,273

$

2,318

$

618,252

EAST WEST BANCORP, INC. AND SUBSIDIARIES

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

($ in thousands)

(unaudited)

Table 10 (continued)



Nine Months Ended September 30, 2020

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) 130,171 46,449 7,273 828 (2,659 ) (20 ) (3,197 ) 178,845 credit losseson loans

Gross (57,466 ) (2,688 ) - - - (221 ) (88 ) (60,463 )charge-offs

Gross 3,395 10,371 1,820 58 424 47 2 16,117 recoveries

Total net(charge-offs) (54,071 ) 7,683 1,820 58 424 (174 ) (86 ) (44,346 )recoveries

Foreigncurrency 308 - - - - - - 308 translationadjustment

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

Nine Months Ended September 30, 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)

78,685

(6,127

)

46

8,358

(1,528

)

75

(259

)

79,250

Gross charge-offs

(54,087

)

(1,021

)

-

-

(11

)

-

(40

)

(55,159

)

Gross recoveries

5,612

3,955

376

523

134

7

14

10,621

Total net (charge-offs) recoveries

(48,475

)

2,934

376

523

123

7

(26

)

(44,538

)

Foreign currency translation adjustment

(458

)

-

-

-

-

-

-

(458

)

Allowance for loan losses, September 30, 2019

$

218,869

$

37,473

$

20,307

$

29,171

$

29,935

$

5,856

$

3,965

$

345,576



Nine Months Ended September 30, 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) 78,685 (6,127 ) 46 8,358 (1,528 ) 75 (259 ) 79,250 credit losseson loans

Gross (54,087 ) (1,021 ) - - (11 ) - (40 ) (55,159 )charge-offs

Gross 5,612 3,955 376 523 134 7 14 10,621 recoveries

Total net(charge-offs) (48,475 ) 2,934 376 523 123 7 (26 ) (44,538 )recoveries

Foreigncurrency (458 ) - - - - - - (458 )translationadjustment

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

Three Months Ended

Nine Months Ended

September 30,2020

June 30,2020

September 30,2019

September 30,2020

September 30,2019

Unfunded Credit Facilities

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

$

28,972

$

20,829

$

13,019

$

11,158

$

12,566

Impact of ASU 2016-13 adoption

-

-

-

10,457

-

Provision for credit losses on unfunded credit commitments

(b)

111

8,143

405

7,468

858

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

$

29,083

$

28,972

$

13,424

$

29,083

$

13,424

Provision for credit losses

(a) + (b)

$

10,000

$

102,443

$

38,284

$

186,313

$

80,108



Three Months Ended Nine Months Ended

September June 30, September September September 30, 2020 30, 30, 30, 2020 2019 2020 2019

UnfundedCredit Facilities

Allowancefor unfundedcredit $ 28,972 $ 20,829 $ 13,019 $ 11,158 $ 12,566 commitments,beginning ofperiod ^(1)

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

Provisionfor creditlosses on (b) 111 8,143 405 7,468 858 unfundedcreditcommitments

Allowancefor unfundedcredit $ 29,083 $ 28,972 $ 13,424 $ 29,083 $ 13,424commitments,end ofperiod ^(1)



Provision (a)for credit + $ 10,000 $ 102,443 $ 38,284 $ 186,313 $ 80,108 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 September 30, 2020 and June 30, 2020 include all loans that are 90 or more days past due, unless the loan is well-collateralized or guaranteed by government agencies, and in the process of collection. Nonaccrual loans presented as of September 30, 2019 include only Non-PCI nonaccrual loans.

Nonperforming Assets

September 30, 2020

June 30, 2020

September 30, 2019

TotalNonaccrual loans

TotalNonaccrual loans

Non-PCINonaccrual Loans

Commercial:

C&I

$

145,986

$

84,823

$

90,830

CRE:

CRE

55,996

56,577

18,942

Multifamily residential

3,728

774

551

Total CRE

59,724

57,351

19,493

Consumer:

Residential mortgage:

Single-family residential

15,894

20,070

9,484

HELOCs

12,395

14,068

9,924

Total residential mortgage

28,289

34,138

19,408

Other consumer

2,495

2,508

2,495

Total nonaccrual loans

236,494

178,820

132,226

Other real estate owned, net

19,504

19,504

1,122

Other nonperforming assets

3,890

3,890

1,167

Total nonperforming assets

$

259,888

$

202,214

$

134,515

Credit Quality Ratios

September 30, 2020

June 30, 2020

September 30, 2019

Nonperforming assets to total assets

0.52

%

0.41

%

0.31

%

Nonaccrual loans to loans HFI

0.63

%

0.48

%

0.39

%

Allowance for loan losses to loans HFI

1.65

%

1.70

%

1.02

%

Allowance for loan losses to nonaccrual loans

261.42

%

353.47

%

261.35

%

Annualized quarterly net charge-offs to average loans HFI

0.26

%

0.21

%

0.26

%

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 September 30, 2020 and June 30, 2020include all loans that are 90 or more days past due, unless the loan iswell-collateralized or guaranteed by government agencies, and in the process ofcollection. Nonaccrual loans presented as of September 30, 2019 include onlyNon-PCI nonaccrual loans.



Nonperforming Assets^ September June 30, September 30, 2020 2020 30, 2019

Total Total Non-PCI Nonaccrual Nonaccrual Nonaccrual loans loans Loans

Commercial:

C&I $ 145,986 $ 84,823 $ 90,830

CRE:

CRE 55,996 56,577 18,942

Multifamily residential 3,728 774 551

Total CRE 59,724 57,351 19,493

Consumer:

Residential mortgage:

Single-family residential 15,894 20,070 9,484

HELOCs 12,395 14,068 9,924

Total residential mortgage 28,289 34,138 19,408

Other consumer 2,495 2,508 2,495

Total nonaccrual loans 236,494 178,820 132,226

Other real estate owned, net 19,504 19,504 1,122

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

Total nonperforming assets $ 259,888 $ 202,214 $ 134,515







Credit Quality Ratios September June 30, September 30, 2020 2020 30, 2019

Nonperforming assets to total 0.52 % 0.41 % 0.31 %assets

Nonaccrual loans to loans HFI 0.63 % 0.48 % 0.39 %

Allowance for loan losses to loans 1.65 % 1.70 % 1.02 %HFI

Allowance for loan losses to 261.42 % 353.47 % 261.35 %nonaccrual loans

Annualized quarterly net 0.26 % 0.21 % 0.26 %charge-offs to average loans HFI



EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

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

(unaudited)

Table 12

The Company recorded a $7.0 million pre-tax impairment charge and reversed $30.1 million of certain previously claimed tax credits related to DC Solar during the first and second quarters of 2019, respectively. There were no non-recurring adjustments during 2020. Management believes that presenting the computations of the adjusted net income, adjusted diluted earnings per common share, adjusted return on average assets and adjusted return on average equity that adjust for the above discussed non-recurring items provide clarity to financial statement users regarding the ongoing performance of the Company and allows comparability to prior periods.

Three Months Ended

September 30, 2020

June 30, 2020

September 30, 2019

Net income

(a)

$

159,537

$

99,352

$

171,416

Diluted weighted-average number of shares outstanding

142,043

141,827

146,120

Diluted EPS

$

1.12

$

0.70

$

1.17

Average total assets

(b)

$

50,247,259

$

48,228,914

$

43,136,273

Average stockholders' equity

(c)

$

5,079,351

$

4,982,446

$

4,838,281

Return on average assets (1)

(a)/(b)

1.26

%

0.83

%

1.58

%

Return on average equity (1)

(a)/(c)

12.50

%

8.02

%

14.06

%

Nine Months Ended

September 30, 2020

September 30, 2019

Net income

(d)

$

403,713

$

485,820

Add: Impairment charge related to DC Solar (2)

-

6,978

Tax effect of adjustments (3)

-

(2,063

)

Add: Reversal of certain previously claimed tax credits related to DC Solar

-

30,104

Adjusted net income

(e)

$

403,713

$

520,839

Diluted weighted average number of shares outstanding

143,082

146,088

Diluted EPS

$

2.82

$

3.33

Diluted EPS impact of impairment charge related to DC Solar, net of tax

-

0.03

Diluted EPS impact of reversal of certain previously claimed tax credits related to DC Solar

-

0.21

Adjusted diluted EPS

$

2.82

$

3.57

Average total assets

(f)

$

47,753,030

$

41,815,490

Average stockholders' equity

(g)

$

5,028,122

$

4,687,746

Return on average assets (1)

(d)/(f)

1.13

%

1.55

%

Adjusted return on average assets (1)

(e)/(f)

1.13

%

1.67

%

Return on average equity (1)

(d)/(g)

10.73

%

13.86

%

Adjusted return on average equity (1)

(e)/(g)

10.73

%

14.85

%

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

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

(unaudited)

Table 12

The Company recorded a $7.0 million pre-tax impairment charge and reversed$30.1 million of certain previously claimed tax credits related to DC Solarduring the first and second quarters of 2019, respectively. There were nonon-recurring adjustments during 2020. Management believes that presenting thecomputations of the adjusted net income, adjusted diluted earnings per commonshare, adjusted return on average assets and adjusted return on average equitythat adjust for the above discussed non-recurring items provide clarity tofinancial statement users regarding the ongoing performance of the Company andallows comparability to prior periods.



Three Months Ended September 30, June 30, 2020 September 30, 2020 2019

Net income (a) $ 159,537 $ 99,352 $ 171,416

Dilutedweighted-average 142,043 141,827 146,120 number of sharesoutstanding

Diluted EPS $ 1.12 $ 0.70 $ 1.17

Average total assets (b) $ 50,247,259 $ 48,228,914 $ 43,136,273

Average stockholders' (c) $ 5,079,351 $ 4,982,446 $ 4,838,281 equity

Return on average (a)assets ^(1) / 1.26 % 0.83 % 1.58 % (b)

Return on average (a)equity ^(1) / 12.50 % 8.02 % 14.06 % (c)





Nine Months Ended

September 30, September 30, 2020 2019

Net income (d) $ 403,713 $ 485,820

Add: Impairment chargerelated to DC Solar ^ - 6,978 (2)

Tax effect of - (2,063 ) adjustments ^(3)

Add: Reversal ofcertain previously - 30,104 claimed tax creditsrelated to DC Solar

Adjusted net income (e) $ 403,713 $ 520,839



Diluted weightedaverage number of 143,082 146,088 shares outstanding

Diluted EPS $ 2.82 $ 3.33

Diluted EPS impact ofimpairment charge - 0.03 related to DC Solar,net of tax

Diluted EPS impact ofreversal of certainpreviously claimed tax - 0.21 credits related to DCSolar

Adjusted diluted EPS $ 2.82 $ 3.57



Average total assets (f) $ 47,753,030 $ 41,815,490

Average stockholders' (g) $ 5,028,122 $ 4,687,746 equity

Return on average (d)assets ^(1) / 1.13 % 1.55 % (f)

Adjusted return on (e)average assets ^(1) / 1.13 % 1.67 % (f)

Return on average (d)equity ^(1) / 10.73 % 13.86 % (g)

Adjusted return on (e)average equity ^(1) / 10.73 % 14.85 % (g)



(1)

Annualized.

(2)

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

(3)

Applied statutory rate of 29.56% for the nine months ended September 30, 2019.

(1) Annualized.

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

(3) Applied statutory rate of 29.56% for the nine months ended September 30, 2019.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

($ in thousands)

(unaudited)

Table 13

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

Three Months Ended

September 30, 2020

June 30, 2020

September 30, 2019

Net interest income before provision for credit losses

(a)

$

324,130

$

343,775

$

369,807

Total noninterest income

49,580

58,637

51,474

Total revenue

(b)

$

373,710

$

402,412

$

421,281

Total noninterest expense

(c)

$

167,650

$

187,696

$

176,630

Less: Amortization of tax credit and other investments

(12,286

)

(24,759

)

(16,833

)

Amortization of core deposit intangibles

(927

)

(931

)

(1,148

)

Repurchase agreements' extinguishment cost

-

(8,740

)

-

Adjusted noninterest expense

(d)

$

154,437

$

153,266

$

158,649

Efficiency ratio

(c)/(b)

44.86

%

46.64

%

41.93

%

Adjusted efficiency ratio

(d)/(b)

41.33

%

38.09

%

37.66

%

Adjusted pre-tax, pre-provision income

(b)-(d) = (e)

$

219,273

$

249,146

$

262,632

Average total assets

(f)

$

50,247,259

$

48,228,914

$

43,136,273

Adjusted pre-tax, pre-provision profitability ratio (1)

(e)/(f)

1.74

%

2.08

%

2.42

%

Adjusted noninterest expense/average assets (1)

(d)/(f)

1.22

%

1.28

%

1.46

%

Nine Months Ended

September 30, 2020

September 30, 2019

Net interest income before provision for credit losses

(g)

$

1,030,612

$

1,099,594

Total noninterest income

162,266

146,364

Total revenue

(h)

1,192,878

1,245,958

Total noninterest expense

(i)

$

534,222

$

541,215

Less: Amortization of tax credit and other investments

(54,370

)

(58,477

)

Amortization of core deposit intangibles

(2,811

)

(3,474

)

Repurchase agreements' extinguishment cost

(8,740

)

-

Adjusted noninterest expense

(j)

$

468,301

$

479,264

Efficiency ratio

(i)/(h)

44.78

%

43.44

%

Adjusted efficiency ratio

(j)/(h)

39.26

%

38.47

%

Adjusted pre-tax, pre-provision income

(h)-(j) = (k)

$

724,577

$

766,694

Average total assets

(l)

$

47,753,030

$

41,815,490

Adjusted pre-tax, pre-provision profitability ratio (1)

(k)/(l)

2.03

%

2.45

%

Adjusted noninterest expense/average assets (1)

(j)/(l)

1.31

%

1.53

%

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

September 30, June 30, 2020 September 30, 2020 2019

Net interest incomebefore provision for (a) $ 324,130 $ 343,775 $ 369,807 credit losses

Total noninterest 49,580 58,637 51,474 income

Total revenue (b) $ 373,710 $ 402,412 $ 421,281



Total noninterest (c) $ 167,650 $ 187,696 $ 176,630 expense

Less: Amortizationof tax credit and (12,286 ) (24,759 ) (16,833 )other investments

Amortization of core (927 ) (931 ) (1,148 )deposit intangibles

Repurchaseagreements' - (8,740 ) - extinguishment cost

Adjusted noninterest (d) $ 154,437 $ 153,266 $ 158,649 expense

Efficiency ratio (c)/ 44.86 % 46.64 % 41.93 % (b)

Adjusted efficiency (d)/ 41.33 % 38.09 % 37.66 %ratio (b)

Adjusted pre-tax, (b)-pre-provision income (d) = $ 219,273 $ 249,146 $ 262,632 (e)

Average total assets (f) $ 50,247,259 $ 48,228,914 $ 43,136,273

Adjusted pre-tax,pre-provision (e)/ 1.74 % 2.08 % 2.42 %profitability ratio (f)^(1)

Adjusted noninterest (d)/expense/average (f) 1.22 % 1.28 % 1.46 %assets ^(1)





Nine Months Ended

September 30, September 30, 2020 2019

Net interest incomebefore provision for (g) $ 1,030,612 $ 1,099,594 credit losses

Total noninterest 162,266 146,364 income

Total revenue (h) 1,192,878 1,245,958



Total noninterest (i) $ 534,222 $ 541,215 expense

Less: Amortizationof tax credit and (54,370 ) (58,477 ) other investments

Amortization of core (2,811 ) (3,474 ) deposit intangibles

Repurchaseagreements' (8,740 ) - extinguishment cost

Adjusted noninterest (j) $ 468,301 $ 479,264 expense

Efficiency ratio (i)/ 44.78 % 43.44 % (h)

Adjusted efficiency (j)/ 39.26 % 38.47 % ratio (h)

Adjusted pre-tax, (h)-pre-provision income (j) = $ 724,577 $ 766,694 (k)

Average total assets (l) $ 47,753,030 $ 41,815,490

Adjusted pre-tax,pre-provision (k)/ 2.03 % 2.45 % profitability ratio^ (l)(1)

Adjusted noninterest (j)/expense/average (l) 1.31 % 1.53 % assets ^(1)

(1)

Annualized.

(1) 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.

September 30,2020

June 30,2020

September 30,2019

Stockholders' equity

(a)

$

5,126,106

$

4,987,243

$

4,882,664

Less: Goodwill

(465,697

)

(465,697

)

(465,697

)

Other intangible assets (1)

(12,369

)(13,490

)

(17,435

)

Tangible equity

(b)

$

4,648,040

$

4,508,056

$

4,399,532

Total assets

(c)

$

50,371,477

$

49,407,593

$

43,274,659

Less: Goodwill

(465,697

)

(465,697

)

(465,697

)

Other intangible assets (1)

(12,369

)

(13,490

)

(17,435

)

Tangible assets

(d)

$

49,893,411

$

48,928,406

$

42,791,527

Total stockholders' equity to total assets ratio

(a)/(c)

10.18

%

10.09

%

11.28

%

Tangible equity to tangible assets ratio

(b)/(d)

9.32

%

9.21

%

10.28

%

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

Three Months Ended

Nine Months Ended

September 30,2020

June 30,2020

September 30,2019

September 30,2020

September 30,2019

Net Income

$

159,537

$

99,352

$

171,416

$

403,713

$

485,820

Add: Amortization of core deposit intangibles

927

931

1,148

2,811

3,474

Amortization of mortgage servicing assets

450

458

834

1,492

2,171

Tax effect of adjustments (2)

(390

)

(394

)

(586

)

(1,220

)

(1,669

)

Tangible net income

(e)

$

160,524

$

100,347

$

172,812

$

406,796

$

489,796

Add: Impairment charge related to DC Solar (3)

-

-

-

-

6,978

Tax effect of adjustment (2)

-

-

-

-

(2,063)

Add: Reversal of certain previously claimed tax credits related to DC Solar

-

-

-

-

30,104

Adjusted tangible net income

(f)

$

160,524

$

100,347

$

172,812

$

406,796

$

524,815

Average stockholders' equity

$

5,079,351

$

4,982,446

$

4,838,281

$

5,028,122

$

4,687,746

Less: Average goodwill

(465,697

)

(465,697

)

(465,697

)

(465,697

)

(465,652

)

Average other intangible assets (1)

(13,083

)

(14,247

)

(18,391

)

(14,302

)

(20,198

)

Average tangible equity

(g)

$

4,600,571

$

4,502,502

$

4,354,193

$

4,548,123

$

4,201,896

Return on average tangible equity (4)

13.88

%

8.96

%

15.75

%

11.95

%

15.58

%

Adjusted return on average tangible equity (4)

13.88

%

8.96

%

15.75

%

11.95

%

16.70

%

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.



September 30, June 30, September 30, 2020 2020 2019

Stockholders' equity (a) $ 5,126,106 $ 4,987,243 $ 4,882,664

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

Other intangible assets ^(1) (12,369 ) (13,490 ) (17,435 )

Tangible equity (b) $ 4,648,040 $ 4,508,056 $ 4,399,532



Total assets (c) $ 50,371,477 $ 49,407,593 $ 43,274,659

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

Other intangible assets ^(1) (12,369 ) (13,490 ) (17,435 )

Tangible assets (d) $ 49,893,411 $ 48,928,406 $ 42,791,527

Total stockholders' equity to (a)/ 10.18 % 10.09 % 11.28 %total assets ratio (c)

Tangible equity to tangible (b)/ 9.32 % 9.21 % 10.28 %assets ratio (d)



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 and the reversal of certainpreviously claimed tax credits related to DC Solar (where applicable). Giventhat 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.



Three Months Ended Nine Months Ended

September 30, June 30, September 30, September September 30, 2020 2020 2019 30, 2019 2020

Net Income $ 159,537 $ 99,352 $ 171,416 $ 403,713 $ 485,820

Add:Amortizationof core 927 931 1,148 2,811 3,474 depositintangibles

Amortizationof mortgage 450 458 834 1,492 2,171 servicingassets

Tax effect ofadjustments ^ (390 ) (394 ) (586 ) (1,220 ) (1,669 )(2)

Tangible net (e) $ 160,524 $ 100,347 $ 172,812 $ 406,796 $ 489,796 income

Add:Impairmentcharge - - - - 6,978 related to DCSolar ^(3)

Tax effect ofadjustment ^ - - - - (2,063) (2)

Add: Reversalof certainpreviouslyclaimed tax - - - - 30,104 creditsrelated to DCSolar

Adjustedtangible net (f) $ 160,524 $ 100,347 $ 172,812 $ 406,796 $ 524,815 income



Averagestockholders' $ 5,079,351 $ 4,982,446 $ 4,838,281 $ 5,028,122 $ 4,687,746 equity

Less: Average (465,697 ) (465,697 ) (465,697 ) (465,697 ) (465,652 )goodwill

Average otherintangible (13,083 ) (14,247 ) (18,391 ) (14,302 ) (20,198 )assets ^(1)

Averagetangible (g) $ 4,600,571 $ 4,502,502 $ 4,354,193 $ 4,548,123 $ 4,201,896 equity

Return onaverage 13.88 % 8.96 % 15.75 % 11.95 % 15.58 %tangibleequity ^(4)

Adjustedreturn onaverage 13.88 % 8.96 % 15.75 % 11.95 % 16.70 %tangibleequity ^(4)



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

(2)

Applied statutory rate of 28.35% for the three and nine months ended September 30, 2020, and the three months ended June 30, 2020. Applied statutory rate of 29.56% for the three and nine months ended September 30, 2019.

(3)

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

(4)

Annualized.

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

Applied statutory rate of 28.35% for the three and nine months ended(2) September 30, 2020, and the three months ended June 30, 2020. Applied statutory rate of 29.56% for the three and nine months ended September 30, 2019.

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

(4) Annualized.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

($ in thousands)

(unaudited)

Table 15

In April 2020, the Company started accepting applications under the PPP administered by the Small Business Administration ("SBA") under the Coronavirus Aid, Relief, and Economic Security Act and began to originate loans to qualified small businesses. These loans are included in the Company's C&I portfolio, have an interest rate of one percent, and are 100% guaranteed by the SBA. As of September 30, 2020, the majority of the Company's PPP loans have a contractual term of two years. The SBA pays the Company fees for processing PPP loans in the following amounts: (i) five percent for loans of not more than $350,000; (ii) three percent for loans of more than $350,000 and less than $2,000,000; and (iii) one percent for loans of at least $2,000,000. Loan processing fees paid to the Company from the SBA are accounted for as loan origination fees, where net deferred fees are recognized on a straight line basis over the estimated life of the loan as a yield adjustment on the loans. If a loan is paid off or forgiven by the SBA prior to its projected estimated life, the remaining unamortized deferred fees will be recognized as interest income in that period. As of September 30, 2020, the Company has drawn down $1.43 billion from the PPPLF and pledged the same amount in PPP loans as collateral.

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

Three Months Ended

Nine Months Ended

Yield on Average Loans

September 30,2020

June 30,2020

September 30,2019

September 30,2020

September 30,2019

Interest income on loans

(a)

$

336,542

$

367,393

$

433,658

$

1,115,804

$

1,291,642

Less: Interest income on PPP loans

(7,778

)

(21,289

)

-

(29,067

)

-

Adjusted interest income on loans

(b)

$

328,764

$

346,104

$

433,658

$

1,086,737

$

1,291,642

Average loans

(c)

$

37,160,445

$

37,141,773

$

33,661,282

$

36,487,859

$

33,023,713

Less: Average PPP loans

(1,764,411

)

(1,465,013

)

-

(1,078,985

)

-

Adjusted average loans

(d)

$

35,396,034

$

35,676,760

$

33,661,282

$

35,408,874

$

33,023,713

Average loan yield (1)

(a)/(c)

3.60

%

3.98

%

5.11

%

4.08

%

5.23

%

Adjusted average loan yield (1)

(b)/(d)

3.70

%

3.90

%

5.11

%

4.10

%

5.23

%

Net Interest Margin

Net interest income

(e)

$

324,130

$

343,775

$

369,807

$

1,030,612

$

1,099,594

Less: Interest income on PPP loans

(7,778

)

(21,289

)

-

(29,067

)

-

Add: Interest expense on advances from the PPPLF

1,259

463

-

1,722

-

Adjusted net interest income

(f)

$

317,611

$

322,949

$

369,807

$

1,003,267

$

1,099,594

Average interest-earning assets

(g)

$

47,428,586

$

45,413,242

$

40,919,386

$

45,076,734

$

39,716,462

Less: Average PPP loans

(1,764,411

)

(1,465,013

)

-

(1,078,985

)

-

Adjusted average interest-earning assets

(h)

$

45,664,175

$

43,948,229

$

40,919,386

$

43,997,749

$

39,716,462

Net interest margin (1)

(e)/(g)

2.72

%

3.04

%

3.59

%

3.05

%

3.70

%

Adjusted net interest margin (1)

(f)/(h)

2.77

%

2.96

%

3.59

%

3.05

%

3.70

%

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 September 30, 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. As of September 30, 2020, the Company has drawn down$1.43 billion from the PPPLF and pledged the same amount in PPP loans ascollateral.



Adjusted loan yield for the three months ended September 30, 2020 and June 30,2020, and nine months ended September 30, 2020 excludes the impact of PPPloans. Adjusted net interest margin for the three months ended September 30,2020 and June 30, 2020, and nine months ended September 30, 2020 excludes theimpact 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 Nine Months Ended Yield on Average September 30, June 30, September 30, September 30, September 30,Loans 2020 2020 2019 2020 2019

Interest income on (a) $ 336,542 $ 367,393 $ 433,658 $ 1,115,804 $ 1,291,642 loans

Less: Interest (7,778 ) (21,289 ) - (29,067 ) - income on PPP loans

Adjusted interest (b) $ 328,764 $ 346,104 $ 433,658 $ 1,086,737 $ 1,291,642 income on loans



Average loans (c) $ 37,160,445 $ 37,141,773 $ 33,661,282 $ 36,487,859 $ 33,023,713

Less: Average PPP (1,764,411 ) (1,465,013 ) - (1,078,985 ) - loans

Adjusted average (d) $ 35,396,034 $ 35,676,760 $ 33,661,282 $ 35,408,874 $ 33,023,713 loans



Average loan yield^ (a)/ 3.60 % 3.98 % 5.11 % 4.08 % 5.23 %(1) (c)

Adjusted average (b)/ 3.70 % 3.90 % 5.11 % 4.10 % 5.23 %loan yield ^(1) (d)



Net Interest Margin

Net interest income (e) $ 324,130 $ 343,775 $ 369,807 $ 1,030,612 $ 1,099,594

Less: Interest (7,778 ) (21,289 ) - (29,067 ) - income on PPP loans

Add: Interestexpense on advances 1,259 463 - 1,722 - from the PPPLF

Adjusted net (f) $ 317,611 $ 322,949 $ 369,807 $ 1,003,267 $ 1,099,594 interest income



Averageinterest-earning (g) $ 47,428,586 $ 45,413,242 $ 40,919,386 $ 45,076,734 $ 39,716,462 assets

Less: Average PPP (1,764,411 ) (1,465,013 ) - (1,078,985 ) - loans

Adjusted averageinterest-earning (h) $ 45,664,175 $ 43,948,229 $ 40,919,386 $ 43,997,749 $ 39,716,462 assets



Net interest margin (e)/ 2.72 % 3.04 % 3.59 % 3.05 % 3.70 %^(1) (g)

Adjusted net (f)/interest margin ^ (h) 2.77 % 2.96 % 3.59 % 3.05 % 3.70 %(1)



(1)

Annualized.

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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