EX-99.1 2 ewbc9918k12312019.htm EXHIBIT 99.1

| Exhibit 99.1
| East West Bancorp, Inc.
135 N. Los Robles Ave., 7th Fl.
Pasadena, CA 91101
Tel. 626.768.6000

NEWS RELEASE |  |  |

FOR INVESTOR INQUIRIES, CONTACT:
Irene Oh | Julianna Balicka
Chief Financial Officer | Director of Strategy and Corporate Development
T: (626) 768-6360 | T: (626) 768-6985
E: irene.oh@eastwestbank.com | E: julianna.balicka@eastwestbank.com

EAST WEST BANCORP REPORTS NET INCOME FOR 2019
OF $674 MILLION AND DILUTED EARNINGS PER SHARE OF $4.61;
RECORD REVENUE OF $1.7 BILLION
Pasadena, California — January 23, 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 full year and fourth quarter of 2019. For the full year 2019, net income was $674.0 million or $4.61 per diluted share. For the fourth quarter of 2019, net income was $188.2 million or $1.29 per diluted share.
“2019 ended a transformational decade for East West, during which we more than doubled our asset size to $44.2 billion and grew both our commercial loans and our noninterest-bearing deposits nearly five-fold. Today, our loan portfolio is well-balanced between commercial, commercial real estate and residential mortgage loans, and our deposits are also well-balanced between commercial and consumer accounts,” stated Dominic Ng, Chairman and Chief Executive Officer of East West.
“Over the course of the decade, we expanded the breadth of our banking products and services in cash management, foreign exchange and interest rate risk hedging advisory, wealth management, and commercial lending solutions. As a result, we strengthened the resilience of our balance sheet, and achieved substantial earnings growth, increasing our diluted earnings per share by 458% to $4.61 in 2019, up from $0.83 in 2010.”
“In 2019, total loans grew $2.4 billion, or 7% year-over-year, to a record $34.8 billion as of December 31, 2019. Total deposits grew $1.9 billion, or 5% year-over-year, to a record $37.3 billion,” continued Ng. “Full year 2019 revenue of $1.7 billion grew by 5% year-over-year, a result of a strong contribution from fee income and record net interest income of $1.5 billion. Loan growth drove net interest income growth, overcoming net interest margin compression from three cuts to the fed funds rate.”
“Overall, we earned a return on average assets of 1.59% in 2019 and a return on average equity of 14.2%. Our growth and profitability reflect the strength of our diverse business model, which we are confident is a strong foundation for continued solid financial performance in the decade ahead,” concluded Ng.
1

HIGHLIGHTS OF RESULTS

• | Full Year Earnings — Full year 2019 net income was $674.0 million and diluted earnings per share (“EPS”) were $4.61, both down by 4% compared to full year 2018 net income of $703.7 million and diluted EPS of $4.81. Full year 2019 adjusted 1 net income was $707.9 million and adjusted 1 diluted EPS were $4.84, both up by 4% compared to full year 2018 adjusted 1 net income of $681.5 million and adjusted 1 diluted EPS of $4.66.

• | Fourth Quarter Earnings — Fourth quarter 2019 net income was $188.2 million and diluted EPS were $1.29, both up by 10% from third quarter 2019 net income of $171.4 million and diluted EPS of $1.17. Fourth quarter 2019 net income and diluted EPS were both up by 9% from fourth quarter 2018 net income of $173.0 million and diluted EPS of $1.18. Fourth quarter 2019 adjusted 1 net income was $187.1 million and adjusted 1 diluted EPS were $1.28, up by 9% quarter-over-quarter and up by 8% year-over-year.

• | Net Interest Income and Net Interest Margin — Full year 2019 net interest income (“NII”) of $1.5 billion increased by $81.3 million or 6% year-over-year. Full year 2019 net interest margin (“NIM”) of 3.64% contracted by 14 basis points year-over-year from 3.78% for the full year 2018.

Fourth quarter 2019 NII was $368.2 million, a quarterly decrease of $1.6 million or 0.4% from third quarter 2019. Fourth quarter 2019 NIM was 3.47%, a 12 basis point contraction from 3.59% in the previous quarter. Quarter-over-quarter, the average loan yield contracted by 20 basis points, and the average cost of deposits decreased by 11 basis points.

• | Record Loans — Total loans of $34.8 billion as of December 31, 2019 increased by $2.4 billion, or 7%, from $32.4 billion as of December 31, 2018; and increased by $753.7 million, or 9% annualized, from $34.0 billion as of September 30, 2019.

Full year 2019 average loans of $33.4 billion grew $3.1 billion, or 10% year-over-year. Average loan growth in 2019 was equally distributed across commercial real estate, residential mortgage and commercial loans. Fourth quarter 2019 average loans of $34.4 billion grew $748.7 million, or 9% linked quarter annualized. Average loan growth in the fourth quarter was led by commercial real estate, followed by residential mortgage.

• | Record Deposits — Total deposits of $37.3 billion as of December 31, 2019 increased by $1.9 billion, or 5%, from $35.4 billion as of December 31, 2018; and increased by $664.7 million, or 7% annualized, from $36.7 billion as of September 30, 2019.

Full year 2019 average deposits of $36.0 billion grew $2.8 billion, or 8% year-over-year. Average deposit growth in 2019 primarily came from growth in time deposits and interest-bearing checking, partially offset by a decrease in noninterest-bearing demand accounts. Fourth quarter 2019 average deposits of $37.4 billion grew $910.9 million, or 10% linked quarter annualized. Average deposit growth in the fourth quarter was led by interest-bearing checking, noninterest-bearing demand and money market accounts, partially offset by a decrease in time deposits.

• | Asset Quality Metrics — The allowance for loan losses was $358.3 million, or 1.03% of loans held-for-investment (“HFI”) as of December 31, 2019; the comparable ratios were 1.02% as of September 30, 2019, and 0.96% as of December 31, 2018. Non-purchased credit impaired (“Non-PCI”) nonperforming assets were $121.5 million, or 0.27% of total assets as of December 31, 2019; the comparable ratios were 0.31% as of September 30, 2019, and 0.23% as of December 31, 2018.

Full year 2019 net charge-offs were $52.8 million, or 0.16% of average loans HFI; the provision for credit losses was $98.7 million. Fourth quarter 2019 net charge-offs were $8.3 million, or annualized 0.10% of average loans HFI; the provision for credit losses was $18.6 million.

• | Capital Levels — Capital levels for East West are strong. As of December 31, 2019, stockholders’ equity was $5.0 billion, or $34.46 per share. Tangible equity 2 per common share was $31.15 as of December 31, 2019, an increase of 3% linked quarter and 15% year-over-year.

As of December 31, 2019, the tangible equity to tangible assets ratio 2 was 10.4%, the common equity tier 1 (“CET1”) capital ratio was 12.9%, and the total risk-based capital ratio was 14.4%.

1 See reconciliation of GAAP to non-GAAP financial measures in Table 13.
2 See reconciliation of GAAP to non-GAAP financial measures in Table 16.

2

OPERATING RESULTS SUMMARY
Fourth Quarter 2019 Compared to Third Quarter 2019
Net Interest Income and Net Interest Margin
Net interest income totaled $368.2 million, a decrease of 0.4% from $369.8 million. Net interest margin of 3.47% contracted by 12 basis points from 3.59%.

• | Average loans of $34.4 billion grew $748.7 million, or 9% linked quarter annualized.

• | Average interest-earning assets of $42.1 billion grew $1.2 billion, or 12% linked quarter annualized. In addition to loan growth, average available-for-sale investment securities increased by $840.9 million, partially offset by decreases from interest-bearing cash and deposits with banks as well as from resale agreements.

• | Average deposits of $37.4 billion grew $910.9 million, or 10% linked quarter annualized.

• | The average yield on loans contracted by 20 basis points to 4.91% from 5.11%, reflecting a 25-basis point reduction in the fed funds rate and a decline in LIBOR rates during the current quarter. The yield on average interest-earning assets contracted by 22 basis points to 4.40% from 4.62%.

• | The average cost of deposits decreased by 11 basis points to 0.94% from 1.05%, and the average cost of interest-bearing deposits decreased by 15 basis points to 1.34% from 1.49%.

Noninterest Income
Noninterest income totaled $63.0 million, a 22% increase from $51.5 million.

• | The largest linked-quarter change in noninterest income was a $9.4 million increase in interest rate contracts and other derivative income to $17.8 million, which reflected a combination of strong customer demand for interest rate hedging products and a favorable quarter-over-quarter change in the credit valuation adjustment.

• | Quarter-over-quarter, lending fees of $17.2 million increased by $2.2 million, other investment income of $2.7 million increased by $2.0 million; foreign exchange income of $6.0 million decreased by $2.0 million.

Noninterest Expense
Noninterest expense totaled $193.4 million, a 9% increase from $176.6 million.

• | Fourth quarter noninterest expense consisted of $165.3 million of adjusted 3 noninterest expense, $27.0 million in amortization of tax credit and other investments, and $1.0 million in amortization of core deposit intangibles.

• | Adjusted noninterest expense of $165.3 million increased by $6.6 million, or 4%, from $158.6 million. The largest linked-quarter change was a $3.2 million increase in compensation and employee benefits expense to $101.1 million. Quarter-over-quarter, other operating expense of $24.5 million increased by $1.7 million, and computer software expense of $7.6 million increased by $1.1 million.

• | The adjusted 3 efficiency ratio was 38.3% in the fourth quarter, compared to 37.7% in the third quarter.

TAX RELATED ITEMS
Full year 2019 income tax expense was $169.9 million and the effective tax rate was 20%. Included in the full year 2019 income tax expense was a $30.1 million reversal of certain previously claimed tax credits. Adjusted, income tax expense 4 was $139.8 million and the effective tax rate 4 was 17% for the full year 2019. This compares to income tax expense of $115.0 million and an effective tax rate of 14% for the full year 2018.

• | Fourth quarter 2019 income tax expense was $31.1 million and the effective tax rate was 14%, compared to income tax expense of $35.0 million and an effective tax rate of 17% for the third quarter of 2019.

3 See reconciliation of GAAP to non-GAAP financial measures in Table 14.
4 See reconciliation of GAAP to non-GAAP financial measures in Table 12.

3

CREDIT QUALITY
The allowance for loan losses totaled $358.3 million, or 1.03% of loans HFI, as of December 31, 2019, compared to $345.6 million, or 1.02% of loans HFI, as of September 30, 2019, and $311.3 million, or 0.96% of loans HFI, as of December 31, 2018.

• | Non-PCI nonperforming assets were $121.5 million, or 0.27% of total assets, as of December 31, 2019, compared to $134.5 million, or 0.31% of total assets, as of September 30, 2019, and $93.0 million, or 0.23% of total assets, as of December 31, 2018.

• | Full year 2019 net charge-offs were $52.8 million, or 0.16% of average loans HFI, compared to 0.13% of average loans HFI for the full year 2018. Fourth quarter 2019 net charge-offs were $8.3 million, or annualized 0.10% of average loans HFI, compared to annualized 0.26% of average loans HFI for the third quarter of 2019, and annualized 0.20% of average loans HFI for the fourth quarter of 2018.

• | Full year 2019 provision for credit losses was $98.7 million, compared to $64.3 million for the full year 2018. Fourth quarter 2019 provision for credit losses was $18.6 million, compared to $38.3 million for the third quarter of 2019, and $18.0 million for the fourth quarter of 2018.

CAPITAL STRENGTH
Capital levels for East West are strong. The following table presents the regulatory capital ratios as of December 31, 2019, September 30, 2019, and December 31, 2018.

EWBC Regulatory Capital Metrics |  | Basel III
($ in millions) |  | December 31, 2019 (a) |  | September 30, 2019 |  | December 31, 2018 |  | Minimum Capital Ratio |  | Well Capitalized Ratio |  | Minimum Capital Ratio + Conservation Buffer (b)
CET1 capital ratio |  | 12.9 | % |  | 12.8 | % |  | 12.2 | % |  | 4.5 | % |  | 6.5 | % |  | 7.0 | %
Tier 1 risk-based capital ratio |  | 12.9 | % |  | 12.8 | % |  | 12.2 | % |  | 6.0 | % |  | 8.0 | % |  | 8.5 | %
Total risk-based capital ratio |  | 14.4 | % |  | 14.2 | % |  | 13.7 | % |  | 8.0 | % |  | 10.0 | % |  | 10.5 | %
Tier 1 leverage capital ratio |  | 10.3 | % |  | 10.3 | % |  | 9.9 | % |  | 4.0 | % |  | 5.0 | % |  | 4.0 | %
Risk-Weighted Assets (“RWA”) (c) |  | $ | 35,136 |  |  | $ | 34,424 |  |  | $ | 32,497 |  |  | N/A |  |  | N/A |  |  | N/A |

N/A Not applicable.

(a) | The Company’s December 31, 2019 regulatory capital ratios and RWA are preliminary.

(b) | An additional 2.5% capital conservation buffer above the minimum capital ratios is 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.

4

DIVIDEND PAYOUT AND CAPITAL ACTIONS
East West’s Board of Directors has declared first quarter 2020 dividends for the Company’s common stock. The common stock cash dividend of $0.275 per share is payable on February 14, 2020 to shareholders of record on February 3, 2020.
Conference Call
East West will host a conference call to discuss fourth quarter and full year 2019 earnings with the public on Thursday, January 23, 2020 at 8:30 a.m. PT/11:30 a.m. ET. The public and investment community are invited to listen as management discusses fourth quarter and full year 2019 results and operating developments.

• | The following dial-in information is provided for participation in the conference call: calls within the U.S. — (877) 506-6399; calls within Canada — (855) 669-9657; international calls — (412) 902-6699.

• | A presentation to accompany the earnings call will be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.

• | A listen-only live broadcast of the call will also be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.

• | A replay of the conference call will be available on January 23, 2020 at 11:30 a.m. Pacific Time through February 23, 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: 10137935.

About East West
East West Bancorp, Inc. is a publicly owned company with total assets of $44.2 billion and is traded on the Nasdaq Global Select Market under the symbol “EWBC”. The Company’s wholly-owned subsidiary, East West Bank, is one of the largest independent banks headquartered in California. East West is a premier bank focused exclusively on the United States and Greater China markets and operates over 125 locations worldwide, including in the United States markets of 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.
5

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 changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing trade dispute between the U.S. and the People’s Republic of China; our ability to compete effectively against other financial institutions in our 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 due to 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 United States (“U.S.”) that resulted in the Secured Overnight Financing Rate (“SOFR”) selected as the preferred alternative reference rate to the London Interbank Offered Rate; impact of failure in, or breach of, our operational or security systems or infrastructure, or those of third parties with whom we do 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; adequacy of our risk management framework, disclosure controls and procedures and internal control over financial reporting; future credit quality and performance, including our expectations regarding future credit losses and allowance levels; impact of adverse changes to our credit ratings from major credit rating agencies; impact of adverse judgments or settlements in litigation; changes in the commercial and consumer real estate markets; changes in consumer spending and savings habits; changes in the U.S. economy, including inflation, deflation, employment levels, rate of growth and general business conditions; government intervention in the financial system, including changes in government interest rate policies; impact of political developments, 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 Board of Governors of the Federal Reserve Board System, 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 and the California Department of Business Oversight — Division of Financial Institutions; impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on our 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 our 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; changes in income tax laws and regulations; impact of other potential federal tax changes and spending cuts; our capital requirements and our ability to generate capital internally or raise capital on favorable terms; changes in our ability to receive dividends from our subsidiaries; any future strategic acquisitions or divestitures; continuing consolidation in the financial services industry; changes in the equity and debt securities markets; fluctuations in our stock price; 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 investment securities portfolio; impact of natural or man-made disasters or calamities or conflicts or other events that may directly or indirectly result in a negative impact on our financial performance; and other factors set forth in our public reports including its Annual Report on Form 10-K for the year ended December 31, 2018, and particularly the discussion of risk factors within that document. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, our results could differ materially from those expressed in, implied or projected by such forward-looking statements. We assume no obligation to update or revise such forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
6

EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
($ and shares in thousands, except per share data)
(unaudited)
Table 1 |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  | December 31, 2019 % or Basis Point Change
|  |  | December 31, 2019 |  | September 30, 2019 |  | December 31, 2018 |  | Qtr-o-Qtr |  | Yr-o-Yr |
Assets |  |  |  |  |  |  |  |  |  |  |
| Cash and due from banks |  | $ | 536,221 |  |  | $ | 475,291 |  |  | $ | 516,291 |  |  | 12.8 | % |  | 3.9 | % |
| Interest-bearing cash with banks |  | 2,724,928 |  |  | 2,566,990 |  |  | 2,485,086 |  |  | 6.2 |  |  | 9.7 |  |
| Cash and cash equivalents |  | 3,261,149 |  |  | 3,042,281 |  |  | 3,001,377 |  |  | 7.2 |  |  | 8.7 |  |
| Interest-bearing deposits with banks |  | 196,161 |  |  | 160,423 |  |  | 371,000 |  |  | 22.3 |  |  | (47.1 | ) |
| Securities purchased under resale agreements (“resale agreements”) (1) |  | 860,000 |  |  | 860,000 |  |  | 1,035,000 |  |  | — |  |  | (16.9 | ) |
| Available-for-sale (“AFS”) investment securities |  | 3,317,214 |  |  | 3,284,034 |  |  | 2,741,847 |  |  | 1.0 |  |  | 21.0 |  |
| Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock |  | 78,580 |  |  | 78,334 |  |  | 74,069 |  |  | 0.3 |  |  | 6.1 |  |
| Loans held-for-sale (“HFS”) |  | 434 |  |  | 294 |  |  | 275 |  |  | 47.6 |  |  | 57.8 |  |
| Loans held-for-investment (''HFI'') (net of allowance for loan losses of $358,287, $345,576 and $311,322) |  | 34,420,252 |  |  | 33,679,400 |  |  | 32,073,867 |  |  | 2.2 |  |  | 7.3 |  |
| Investments in qualified affordable housing partnerships, net |  | 207,037 |  |  | 190,000 |  |  | 184,873 |  |  | 9.0 |  |  | 12.0 |  |
| Investments in tax credit and other investments, net |  | 254,140 |  |  | 211,603 |  |  | 231,635 |  |  | 20.1 |  |  | 9.7 |  |
| Goodwill |  | 465,697 |  |  | 465,697 |  |  | 465,547 |  |  | — |  |  | 0.0 |  |
| Operating lease right-of-use assets |  | 99,973 |  |  | 103,894 |  |  | — |  |  | (3.8 | ) |  | 100.0 |  |
| Other assets |  | 1,035,459 |  |  | 1,198,699 |  |  | 862,866 |  |  | (13.6 | ) |  | 20.0 |  |
| Total assets |  | $ | 44,196,096 |  |  | $ | 43,274,659 |  |  | $ | 41,042,356 |  |  | 2.1 | % |  | 7.7 | % |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Deposits |  | $ | 37,324,259 |  |  | $ | 36,659,526 |  |  | $ | 35,439,628 |  |  | 1.8 | % |  | 5.3 | % |
| Short-term borrowings |  | 28,669 |  |  | 47,689 |  |  | 57,638 |  |  | (39.9 | ) |  | (50.3 | ) |
| FHLB advances |  | 745,915 |  |  | 745,494 |  |  | 326,172 |  |  | 0.1 |  |  | 128.7 |  |
| Securities sold under repurchase agreements (“repurchase agreements”) (1) |  | 200,000 |  |  | 50,000 |  |  | 50,000 |  |  | 300.0 |  |  | 300.0 |  |
| Long-term debt and finance lease liabilities |  | 152,270 |  |  | 152,390 |  |  | 146,835 |  |  | (0.1 | ) |  | 3.7 |  |
| Operating lease liabilities |  | 108,083 |  |  | 112,142 |  |  | — |  |  | (3.6 | ) |  | 100.0 |  |
| Accrued expenses and other liabilities |  | 619,283 |  |  | 624,754 |  |  | 598,109 |  |  | (0.9 | ) |  | 3.5 |  |
| Total liabilities |  | 39,178,479 |  |  | 38,391,995 |  |  | 36,618,382 |  |  | 2.0 |  |  | 7.0 |  |
| Stockholders’ equity |  | 5,017,617 |  |  | 4,882,664 |  |  | 4,423,974 |  |  | 2.8 |  |  | 13.4 |  |
| Total liabilities and stockholders’ equity |  | $ | 44,196,096 |  |  | $ | 43,274,659 |  |  | $ | 41,042,356 |  |  | 2.1 | % |  | 7.7 | % |
| Book value per common share |  | $ | 34.46 |  |  | $ | 33.54 |  |  | $ | 30.52 |  |  | 2.7 | % |  | 12.9 | % |
| Tangible equity (2) per common share |  | $ | 31.15 |  |  | $ | 30.22 |  |  | $ | 27.15 |  |  | 3.1 |  |  | 14.7 |  |
| Number of common shares at period-end |  | 145,625 |  |  | 145,568 |  |  | 144,961 |  |  | 0.0 |  |  | 0.5 |  |
| Tangible equity to tangible assets ratio (2) |  | 10.38 | % |  | 10.28 | % |  | 9.71 | % |  | 10 |  | bps | 67 |  | bps

(1) | Resale and repurchase agreements have been reported net, pursuant to Accounting Standards Codification (“ASC”) 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. Out of $450.0 million of gross repurchase agreements, $250.0 million, $400.0 million, and $400.0 million were eligible for netting against gross resale agreements as of December 31, 2019, September 30, 2019 and December 31, 2018, respectively.

(2) | See reconciliation of GAAP to non-GAAP financial measures in Table 16.

7

EAST WEST BANCORP, INC. AND SUBSIDIARIES
TOTAL LOANS AND DEPOSITS DETAIL
($ in thousands)
(unaudited)
Table 2
|  |  |  |  |  |  |  |  | December 31, 2019 % Change
|  |  | December 31, 2019 |  | September 30, 2019 |  | December 31, 2018 |  | Qtr-o-Qtr |  | Yr-o-Yr
Loans: |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |
| Commercial and industrial (“C&I”) |  | $ | 12,150,931 |  |  | $ | 12,301,002 |  |  | $ | 12,056,970 |  |  | (1.2 | )% |  | 0.8 | %
| Commercial real estate (“CRE”): |  |  |  |  |  |  |  |  |  |
| CRE |  | 10,278,448 |  |  | 9,749,583 |  |  | 9,260,199 |  |  | 5.4 |  |  | 11.0 |
| Multifamily residential |  | 2,856,374 |  |  | 2,589,203 |  |  | 2,470,668 |  |  | 10.3 |  |  | 15.6 |
| Construction and land |  | 628,499 |  |  | 719,900 |  |  | 538,794 |  |  | (12.7 | ) |  | 16.6 |
| Total CRE |  | 13,763,321 |  |  | 13,058,686 |  |  | 12,269,661 |  |  | 5.4 |  |  | 12.2 |
Consumer: |  |  |  |  |  |  |  |  |  |
| Residential mortgage: |  |  |  |  |  |  |  |  |  |
| Single-family residential |  | 7,108,590 |  |  | 6,811,014 |  |  | 6,036,454 |  |  | 4.4 |  |  | 17.8 |
| Home equity lines of credit (“HELOCs”) |  | 1,472,783 |  |  | 1,540,121 |  |  | 1,690,834 |  |  | (4.4 | ) |  | (12.9 | )
| Total residential mortgage |  | 8,581,373 |  |  | 8,351,135 |  |  | 7,727,288 |  |  | 2.8 |  |  | 11.1 |
| Other consumer |  | 282,914 |  |  | 314,153 |  |  | 331,270 |  |  | (9.9 | ) |  | (14.6 | )
Total loans HFI (1)(2) |  | 34,778,539 |  |  | 34,024,976 |  |  | 32,385,189 |  |  | 2.2 |  |  | 7.4 |
Loans HFS |  | 434 |  |  | 294 |  |  | 275 |  |  | 47.6 |  |  | 57.8 |
| Total loans (1)(2) |  | 34,778,973 |  |  | 34,025,270 |  |  | 32,385,464 |  |  | 2.2 |  |  | 7.4 |
Allowance for loan losses |  | (358,287 | ) |  | (345,576 | ) |  | (311,322 | ) |  | 3.7 |  |  | 15.1 |
| Net loans (1)(2) |  | $ | 34,420,686 |  |  | $ | 33,679,694 |  |  | $ | 32,074,142 |  |  | 2.2 | % |  | 7.3 | %
Deposits: |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Noninterest-bearing demand |  | $ | 11,080,036 |  |  | $ | 10,806,937 |  |  | $ | 11,377,009 |  |  | 2.5 | % |  | (2.6 | )%
| Interest-bearing checking |  | 5,200,755 |  |  | 4,837,391 |  |  | 4,584,447 |  |  | 7.5 |  |  | 13.4 |
| Money market |  | 8,711,964 |  |  | 8,400,353 |  |  | 8,262,677 |  |  | 3.7 |  |  | 5.4 |
| Savings |  | 2,117,196 |  |  | 2,094,638 |  |  | 2,146,429 |  |  | 1.1 |  |  | (1.4 | )
| Time deposits |  | 10,214,308 |  |  | 10,520,207 |  |  | 9,069,066 |  |  | (2.9 | ) |  | 12.6 |
| Total deposits |  | $ | 37,324,259 |  |  | $ | 36,659,526 |  |  | $ | 35,439,628 |  |  | 1.8 | % |  | 5.3 | %

(1) | Includes $(43.2) million, $(39.8) million and $(48.9) million as of December 31, 2019, September 30, 2019 and December 31, 2018, respectively, of net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts.

(2) | Includes ASC 310-30 discount of $14.3 million, $16.7 million and $22.2 million as of December 31, 2019, September 30, 2019 and December 31, 2018, respectively.

8

EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
($ and shares in thousands, except per share data)
(unaudited)
Table 3
|  |  | Three Months Ended |  | December 31, 2019 % Change
|  |  | December 31, 2019 |  | September 30, 2019 |  | December 31, 2018 |  | Qtr-o-Qtr |  | Yr-o-Yr
Interest and dividend income |  | $ | 467,233 |  |  | $ | 476,912 |  |  | $ | 457,334 |  |  | (2.0 | )% |  | 2.2 | %
Interest expense |  | 99,014 |  |  | 107,105 |  |  | 87,918 |  |  | (7.6 | ) |  | 12.6 |
Net interest income before provision for credit losses |  | 368,219 |  |  | 369,807 |  |  | 369,416 |  |  | (0.4 | ) |  | (0.3 | )
Provision for credit losses |  | 18,577 |  |  | 38,284 |  |  | 17,959 |  |  | (51.5 | ) |  | 3.4 |
Net interest income after provision for credit losses |  | 349,642 |  |  | 331,523 |  |  | 351,457 |  |  | 5.5 |  |  | (0.5 | )
Noninterest income |  | 63,013 |  |  | 51,474 |  |  | 41,695 |  |  | 22.4 |  |  | 51.1 |
Noninterest expense |  | 193,373 |  |  | 176,630 |  |  | 188,097 |  |  | 9.5 |  |  | 2.8 |
Income before income taxes |  | 219,282 |  |  | 206,367 |  |  | 205,055 |  |  | 6.3 |  |  | 6.9 |
Income tax expense |  | 31,067 |  |  | 34,951 |  |  | 32,037 |  |  | (11.1 | ) |  | (3.0 | )
Net income |  | $ | 188,215 |  |  | $ | 171,416 |  |  | $ | 173,018 |  |  | 9.8 | % |  | 8.8 | %
Earnings per share (“EPS”) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Basic |  | $ | 1.29 |  |  | $ | 1.18 |  |  | $ | 1.19 |  |  | 9.8 | % |  | 8.3 | %
- Diluted |  | $ | 1.29 |  |  | $ | 1.17 |  |  | $ | 1.18 |  |  | 9.7 |  |  | 8.6 |
Weighted average number of shares outstanding |  |  |  |  |  |  |  |  |  |  |  |
- Basic |  | 145,624 |  |  | 145,559 |  |  | 144,960 |  |  | 0.0 | % |  | 0.5 | %
- Diluted |  | 146,318 |  |  | 146,120 |  |  | 146,133 |  |  | 0.1 |  |  | 0.1 |
|  |  | Three Months Ended |  | December 31, 2019 % Change
|  |  | December 31, 2019 |  | September 30, 2019 |  | December 31, 2018 |  | Qtr-o-Qtr |  | Yr-o-Yr
Noninterest income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Lending fees |  | $ | 17,244 |  |  | $ | 15,035 |  |  | $ | 15,168 |  |  | 14.7 | % |  | 13.7 | %
| Deposit account fees |  | 9,843 |  |  | 9,729 |  |  | 9,346 |  |  | 1.2 |  |  | 5.3 |
| Foreign exchange income |  | 6,032 |  |  | 8,065 |  |  | 7,191 |  |  | (25.2 | ) |  | (16.1 | )
| Wealth management fees |  | 4,215 |  |  | 4,841 |  |  | 2,796 |  |  | (12.9 | ) |  | 50.8 |
| Interest rate contracts and other derivative income |  | 17,828 |  |  | 8,423 |  |  | 1,125 |  |  | 111.7 |  |  | NM |
| Net gains on sales of loans |  | 1,068 |  |  | 2,037 |  |  | 1,509 |  |  | (47.6 | ) |  | (29.2 | )
| Net gains on sales of AFS investment securities |  | 864 |  |  | 58 |  |  | 161 |  |  | NM |  |  | NM |
| Net gains on sales of fixed assets |  | 66 |  |  | 48 |  |  | 1,081 |  |  | 37.5 |  |  | (93.9 | )
| Other investment income |  | 2,678 |  |  | 663 |  |  | 801 |  |  | 303.9 |  |  | 234.3 |
| Other income |  | 3,175 |  |  | 2,575 |  |  | 2,517 |  |  | 23.3 |  |  | 26.1 |
Total noninterest income |  | $ | 63,013 |  |  | $ | 51,474 |  |  | $ | 41,695 |  |  | 22.4 | % |  | 51.1 | %
Noninterest expense: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Compensation and employee benefits |  | $ | 101,051 |  |  | $ | 97,819 |  |  | $ | 93,790 |  |  | 3.3 | % |  | 7.7 | %
| Occupancy and equipment expense |  | 17,138 |  |  | 17,912 |  |  | 18,017 |  |  | (4.3 | ) |  | (4.9 | )
| Deposit insurance premiums and regulatory assessments |  | 3,371 |  |  | 3,550 |  |  | 3,093 |  |  | (5.0 | ) |  | 9.0 |
| Legal expense |  | 2,141 |  |  | 1,720 |  |  | 2,145 |  |  | 24.5 |  |  | (0.2 | )
| Data processing |  | 3,588 |  |  | 3,328 |  |  | 3,160 |  |  | 7.8 |  |  | 13.5 |
| Consulting expense |  | 3,159 |  |  | 2,559 |  |  | 1,424 |  |  | 23.4 |  |  | 121.8 |
| Deposit related expense |  | 3,749 |  |  | 3,584 |  |  | 3,043 |  |  | 4.6 |  |  | 23.2 |
| Computer software expense |  | 7,626 |  |  | 6,556 |  |  | 6,205 |  |  | 16.3 |  |  | 22.9 |
| Other operating expense |  | 24,512 |  |  | 22,769 |  |  | 26,262 |  |  | 7.7 |  |  | (6.7 | )
| Amortization of tax credit and other investments |  | 27,038 |  |  | 16,833 |  |  | 30,958 |  |  | 60.6 |  |  | (12.7 | )
Total noninterest expense |  | $ | 193,373 |  |  | $ | 176,630 |  |  | $ | 188,097 |  |  | 9.5 | % |  | 2.8 | %

NM - Not meaningful.
9

EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
($ and shares in thousands, except per share data)
(unaudited)
Table 4
|  |  | Year Ended |  | December 31, 2019 % Change
|  |  | December 31, 2019 |  | December 31, 2018 |  | Yr-o-Yr
Interest and dividend income |  | $ | 1,882,300 |  |  | $ | 1,651,703 |  |  | 14.0 | %
Interest expense |  | 414,487 |  |  | 265,195 |  |  | 56.3 |
Net interest income before provision for credit losses |  | 1,467,813 |  |  | 1,386,508 |  |  | 5.9 |
Provision for credit losses |  | 98,685 |  |  | 64,255 |  |  | 53.6 |
Net interest income after provision for credit losses |  | 1,369,128 |  |  | 1,322,253 |  |  | 3.5 |
Noninterest income |  | 209,377 |  |  | 210,909 |  |  | (0.7 | )
Noninterest expense |  | 734,588 |  |  | 714,466 |  |  | 2.8 |
Income before income taxes |  | 843,917 |  |  | 818,696 |  |  | 3.1 |
Income tax expense |  | 169,882 |  |  | 114,995 |  |  | 47.7 |
Net income |  | $ | 674,035 |  |  | $ | 703,701 |  |  | (4.2 | )%
EPS |  |  |  |  |  |  |  |  |
- Basic |  | $ | 4.63 |  |  | $ | 4.86 |  |  | (4.6 | )%
- Diluted |  | $ | 4.61 |  |  | $ | 4.81 |  |  | (4.2 | )
Weighted average number of shares outstanding |  |  |  |  |  |  |
- Basic |  | 145,497 |  |  | 144,862 |  |  | 0.4 | %
- Diluted |  | 146,179 |  |  | 146,169 |  |  | 0.0 |
|  |  | Year Ended |  | December 31, 2019 % Change
|  |  | December 31, 2019 |  | December 31, 2018 |  | Yr-o-Yr
Noninterest income: |  |  |  |  |  |  |  |
| Lending fees |  | $ | 63,670 |  |  | $ | 59,758 |  |  | 6.5 | %
| Deposit account fees |  | 38,648 |  |  | 39,176 |  |  | (1.3 | )
| Foreign exchange income |  | 26,398 |  |  | 21,259 |  |  | 24.2 |
| Wealth management fees |  | 16,668 |  |  | 13,785 |  |  | 20.9 |
| Interest rate contracts and other derivative income |  | 39,865 |  |  | 18,980 |  |  | 110.0 |
| Net gains on sales of loans |  | 4,035 |  |  | 6,590 |  |  | (38.8 | )
| Net gains on sales of AFS investment securities |  | 3,930 |  |  | 2,535 |  |  | 55.0 |
| Net gains on sales of fixed assets |  | 114 |  |  | 6,683 |  |  | (98.3 | )
| Net gain on sale of business |  | — |  |  | 31,470 |  |  | (100.0 | )
| Other investment income |  | 5,249 |  |  | 1,207 |  |  | 334.9 |
| Other income |  | 10,800 |  |  | 9,466 |  |  | 14.1 |
Total noninterest income |  | $ | 209,377 |  |  | $ | 210,909 |  |  | (0.7 | )%
Noninterest expense: |  |  |  |  |  |  |  |  |
| Compensation and employee benefits |  | $ | 401,700 |  |  | $ | 379,622 |  |  | 5.8 | %
| Occupancy and equipment expense |  | 69,730 |  |  | 68,896 |  |  | 1.2 |
| Deposit insurance premiums and regulatory assessments |  | 12,928 |  |  | 21,211 |  |  | (39.1 | )
| Legal expense |  | 8,441 |  |  | 8,781 |  |  | (3.9 | )
| Data processing |  | 13,533 |  |  | 13,177 |  |  | 2.7 |
| Consulting expense |  | 9,846 |  |  | 11,579 |  |  | (15.0 | )
| Deposit related expense |  | 14,175 |  |  | 11,244 |  |  | 26.1 |
| Computer software expense |  | 26,471 |  |  | 22,286 |  |  | 18.8 |
| Other operating expense |  | 92,249 |  |  | 88,042 |  |  | 4.8 |
| Amortization of tax credit and other investments |  | 85,515 |  |  | 89,628 |  |  | (4.6 | )
Total noninterest expense |  | $ | 734,588 |  |  | $ | 714,466 |  |  | 2.8 | %

10

EAST WEST BANCORP, INC. AND SUBSIDIARIES
SELECTED AVERAGE BALANCES
($ in thousands)
(unaudited)
Table 5 |  |  |  |  |  |
|  | Three Months Ended |  | December 31, 2019 % Change |  | Year Ended |  | December 31, 2019 % Change
|  |  | December 31, 2019 |  | September 30, 2019 |  | December 31, 2018 |  | Qtr-o-Qtr |  | Yr-o-Yr |  | December 31, 2019 |  | December 31, 2018 |  | Yr-o-Yr
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| C&I |  | $ | 12,237,081 |  |  | $ | 12,203,341 |  |  | $ | 11,554,737 |  |  | 0.3 | % |  | 5.9 | % |  | $ | 12,073,820 |  |  | $ | 11,037,992 |  |  | 9.4 | %
| CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| CRE |  | 10,006,424 |  |  | 9,685,092 |  |  | 9,179,181 |  |  | 3.3 |  |  | 9.0 |  |  | 9,642,301 |  |  | 8,955,920 |  |  | 7.7 |
| Multifamily residential |  | 2,771,555 |  |  | 2,561,648 |  |  | 2,347,321 |  |  | 8.2 |  |  | 18.1 |  |  | 2,588,347 |  |  | 2,215,121 |  |  | 16.8 |
| Construction and land |  | 668,147 |  |  | 694,665 |  |  | 582,311 |  |  | (3.8 | ) |  | 14.7 |  |  | 656,142 |  |  | 632,303 |  |  | 3.8 |
| Total CRE |  | 13,446,126 |  |  | 12,941,405 |  |  | 12,108,813 |  |  | 3.9 |  |  | 11.0 |  |  | 12,886,790 |  |  | 11,803,344 |  |  | 9.2 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Residential mortgage: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Single-family residential |  | 6,934,361 |  |  | 6,636,227 |  |  | 5,854,551 |  |  | 4.5 |  |  | 18.4 |  |  | 6,526,415 |  |  | 5,309,689 |  |  | 22.9 |
| HELOCs |  | 1,506,346 |  |  | 1,557,358 |  |  | 1,709,022 |  |  | (3.3 | ) |  | (11.9 | ) |  | 1,580,343 |  |  | 1,754,071 |  |  | (9.9 | )
| Total residential mortgage |  | 8,440,707 |  |  | 8,193,585 |  |  | 7,563,573 |  |  | 3.0 |  |  | 11.6 |  |  | 8,106,758 |  |  | 7,063,760 |  |  | 14.8 |
| Other consumer |  | 286,096 |  |  | 322,951 |  |  | 307,752 |  |  | (11.4 | ) |  | (7.0 | ) |  | 305,768 |  |  | 324,918 |  |  | (5.9 | )
| Total loans (1)(2) |  | $ | 34,410,010 |  |  | $ | 33,661,282 |  |  | $ | 31,534,875 |  |  | 2.2 | % |  | 9.1 | % |  | $ | 33,373,136 |  |  | $ | 30,230,014 |  |  | 10.4 | %
Interest-earning assets |  | $ | 42,114,123 |  |  | $ | 40,919,386 |  |  | $ | 38,688,647 |  |  | 2.9 | % |  | 8.9 | % |  | $ | 40,320,804 |  |  | $ | 36,707,142 |  |  | 9.8 | %
Total assets |  | $ | 44,471,242 |  |  | $ | 43,136,273 |  |  | $ | 40,525,188 |  |  | 3.1 | % |  | 9.7 | % |  | $ | 42,484,885 |  |  | $ | 38,542,569 |  |  | 10.2 | %
Deposits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Noninterest-bearing demand |  | $ | 10,976,368 |  |  | $ | 10,712,612 |  |  | $ | 11,447,345 |  |  | 2.5 | % |  | (4.1 | )% |  | $ | 10,502,618 |  |  | $ | 11,089,537 |  |  | (5.3 | )%
| Interest-bearing checking |  | 5,540,300 |  |  | 4,947,511 |  |  | 4,449,541 |  |  | 12.0 |  |  | 24.5 |  |  | 5,244,867 |  |  | 4,477,793 |  |  | 17.1 |
| Money market |  | 8,592,058 |  |  | 8,344,993 |  |  | 8,180,426 |  |  | 3.0 |  |  | 5.0 |  |  | 8,220,236 |  |  | 7,985,526 |  |  | 2.9 |
| Savings |  | 2,118,911 |  |  | 2,154,592 |  |  | 2,124,697 |  |  | (1.7 | ) |  | (0.3 | ) |  | 2,118,060 |  |  | 2,245,644 |  |  | (5.7 | )
| Time deposits |  | 10,180,922 |  |  | 10,337,990 |  |  | 8,783,068 |  |  | (1.5 | ) |  | 15.9 |  |  | 9,961,289 |  |  | 7,431,749 |  |  | 34.0 |
| Total deposits |  | $ | 37,408,559 |  |  | $ | 36,497,698 |  |  | $ | 34,985,077 |  |  | 2.5 | % |  | 6.9 | % |  | $ | 36,047,070 |  |  | $ | 33,230,249 |  |  | 8.5 | %
Interest-bearing liabilities |  | $ | 27,522,469 |  |  | $ | 26,773,253 |  |  | $ | 24,122,509 |  |  | 2.8 | % |  | 14.1 | % |  | $ | 26,408,961 |  |  | $ | 22,709,554 |  |  | 16.3 | %
Stockholders’ equity |  | $ | 4,977,759 |  |  | $ | 4,838,281 |  |  | $ | 4,335,110 |  |  | 2.9 | % |  | 14.8 | % |  | $ | 4,760,845 |  |  | $ | 4,130,822 |  |  | 15.3 | %

(1) | Includes ASC 310-30 discount of $16.0 million, $18.2 million and $23.8 million for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively, and $18.9 million and $28.4 million for the years ended December 31, 2019 and 2018, respectively.

(2) | Includes loans HFS.

11

EAST WEST BANCORP, INC. AND SUBSIDIARIES
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 6
|  |  | Three Months Ended
|  |  | December 31, 2019 |  | 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 |  | $ | 3,270,431 |  |  | $ | 14,925 |  |  | 1.81 | % |  | $ | 3,547,626 |  |  | $ | 19,772 |  |  | 2.21 | %
| Resale agreements (2) |  | 863,261 |  |  | 5,749 |  |  | 2.64 | % |  | 981,196 |  |  | 6,881 |  |  | 2.78 | %
| AFS investment securities |  | 3,491,961 |  |  | 20,192 |  |  | 2.29 | % |  | 2,651,069 |  |  | 15,945 |  |  | 2.39 | %
| Loans (3) |  | 34,410,010 |  |  | 425,773 |  |  | 4.91 | % |  | 33,661,282 |  |  | 433,658 |  |  | 5.11 | %
| FHLB and FRB stock |  | 78,460 |  |  | 594 |  |  | 3.00 | % |  | 78,213 |  |  | 656 |  |  | 3.33 | %
| Total interest-earning assets |  | 42,114,123 |  |  | 467,233 |  |  | 4.40 | % |  | 40,919,386 |  |  | 476,912 |  |  | 4.62 | %
Noninterest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Cash and due from banks |  | 534,326 |  |  |  |  |  |  | 441,898 |  |  |  |  |  |  |
| Allowance for loan losses |  | (355,759 | ) |  |  |  |  |  | (328,523 | ) |  |  |  |  |  |
| Other assets |  | 2,178,552 |  |  |  |  |  |  | 2,103,512 |  |  |  |  |  |  |
| Total assets |  | $ | 44,471,242 |  |  |  |  |  |  |  |  | $ | 43,136,273 |  |  |  |  |  |  |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Checking deposits |  | $ | 5,540,300 |  |  | $ | 13,589 |  |  | 0.97 | % |  | $ | 4,947,511 |  |  | $ | 14,488 |  |  | 1.16 | %
| Money market deposits |  | 8,592,058 |  |  | 25,223 |  |  | 1.16 | % |  | 8,344,993 |  |  | 26,943 |  |  | 1.28 | %
| Savings deposits |  | 2,118,911 |  |  | 2,266 |  |  | 0.42 | % |  | 2,154,592 |  |  | 2,656 |  |  | 0.49 | %
| Time deposits |  | 10,180,922 |  |  | 47,935 |  |  | 1.87 | % |  | 10,337,990 |  |  | 52,733 |  |  | 2.02 | %
| Federal funds purchased and other short-term borrowings |  | 43,313 |  |  | 404 |  |  | 3.70 | % |  | 40,433 |  |  | 382 |  |  | 3.75 | %
| FHLB advances |  | 745,732 |  |  | 4,686 |  |  | 2.49 | % |  | 745,263 |  |  | 5,021 |  |  | 2.67 | %
| Repurchase agreements (2) |  | 148,892 |  |  | 3,382 |  |  | 9.01 | % |  | 50,000 |  |  | 3,239 |  |  | 25.70 | %
| Long-term debt and finance lease liabilities |  | 152,341 |  |  | 1,529 |  |  | 3.98 | % |  | 152,471 |  |  | 1,643 |  |  | 4.28 | %
| Total interest-bearing liabilities |  | 27,522,469 |  |  | 99,014 |  |  | 1.43 | % |  | 26,773,253 |  |  | 107,105 |  |  | 1.59 | %
Noninterest-bearing liabilities and stockholders’ equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Demand deposits |  | 10,976,368 |  |  |  |  |  |  | 10,712,612 |  |  |  |  |
| Accrued expenses and other liabilities |  | 994,646 |  |  |  |  |  |  | 812,127 |  |  |  |  |
| Stockholders’ equity |  | 4,977,759 |  |  |  |  |  |  | 4,838,281 |  |  |  |  |
| Total liabilities and stockholders’ equity |  | $ | 44,471,242 |  |  |  |  |  |  | $ | 43,136,273 |  |  |  |  |
Interest rate spread |  |  |  |  |  |  | 2.97 | % |  |  |  |  |  | 3.03 | %
Net interest income and net interest margin |  |  |  |  | $ | 368,219 |  |  | 3.47 | % |  |  |  | $ | 369,807 |  |  | 3.59 | %
Adjusted net interest income and adjusted net interest margin (4) |  |  |  |  | $ | 362,166 |  |  | 3.41 | % |  |  |  | $ | 367,286 |  |  | 3.56 | %

(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 2.49% and 2.57% for the three months ended December 31, 2019 and September 30, 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 4.35% and 4.68% for the three months ended December 31, 2019 and September 30, 2019, respectively.

(3) | Includes loans HFS. ASC 310-30 discount was $16.0 million and $18.2 million for the three months ended December 31, 2019 and September 30, 2019, respectively.

(4) | See reconciliation of GAAP to non-GAAP financial measures in Table 15.

12

EAST WEST BANCORP, INC. AND SUBSIDIARIES
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 7
|  | Three Months Ended
| December 31, 2019 |  | December 31, 2018
| 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 |  | $ | 3,270,431 |  |  | $ | 14,925 |  |  | 1.81 | % |  | $ | 3,373,608 |  |  | $ | 19,476 |  |  | 2.29 | %
| Resale agreements (2) |  | 863,261 |  |  | 5,749 |  |  | 2.64 | % |  | 1,035,000 |  |  | 7,819 |  |  | 3.00 | %
| AFS investment securities |  | 3,491,961 |  |  | 20,192 |  |  | 2.29 | % |  | 2,671,257 |  |  | 14,531 |  |  | 2.16 | %
| Loans (3) |  | 34,410,010 |  |  | 425,773 |  |  | 4.91 | % |  | 31,534,875 |  |  | 414,517 |  |  | 5.22 | %
| FHLB and FRB stock |  | 78,460 |  |  | 594 |  |  | 3.00 | % |  | 73,907 |  |  | 991 |  |  | 5.32 | %
| Total interest-earning assets |  | 42,114,123 |  |  | 467,233 |  |  | 4.40 | % |  | 38,688,647 |  |  | 457,334 |  |  | 4.69 | %
Noninterest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Cash and due from banks |  | 534,326 |  |  |  |  |  |  | 482,767 |  |  |  |  |  |  |
| Allowance for loan losses |  | (355,759 | ) |  |  |  |  |  | (314,019 | ) |  |  |  |  |  |
| Other assets |  | 2,178,552 |  |  |  |  |  |  | 1,667,793 |  |  |  |  |  |  |
| Total assets |  | $ | 44,471,242 |  |  |  |  |  |  |  |  | $ | 40,525,188 |  |  |  |  |  |  |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Checking deposits |  | $ | 5,540,300 |  |  | $ | 13,589 |  |  | 0.97 | % |  | $ | 4,449,541 |  |  | $ | 9,963 |  |  | 0.89 | %
| Money market deposits |  | 8,592,058 |  |  | 25,223 |  |  | 1.16 | % |  | 8,180,426 |  |  | 27,640 |  |  | 1.34 | %
| Savings deposits |  | 2,118,911 |  |  | 2,266 |  |  | 0.42 | % |  | 2,124,697 |  |  | 2,257 |  |  | 0.42 | %
| Time deposits |  | 10,180,922 |  |  | 47,935 |  |  | 1.87 | % |  | 8,783,068 |  |  | 39,459 |  |  | 1.78 | %
| Federal funds purchased and other short-term borrowings |  | 43,313 |  |  | 404 |  |  | 3.70 | % |  | 57,198 |  |  | 624 |  |  | 4.33 | %
| FHLB advances |  | 745,732 |  |  | 4,686 |  |  | 2.49 | % |  | 325,826 |  |  | 2,903 |  |  | 3.53 | %
| Repurchase agreements (2) |  | 148,892 |  |  | 3,382 |  |  | 9.01 | % |  | 50,000 |  |  | 3,396 |  |  | 26.95 | %
| Long-term debt and finance lease liabilities |  | 152,341 |  |  | 1,529 |  |  | 3.98 | % |  | 151,753 |  |  | 1,676 |  |  | 4.38 | %
| Total interest-bearing liabilities |  | 27,522,469 |  |  | 99,014 |  |  | 1.43 | % |  | 24,122,509 |  |  | 87,918 |  |  | 1.45 | %
Noninterest-bearing liabilities and stockholders’ equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Demand deposits |  | 10,976,368 |  |  |  |  |  |  | 11,447,345 |  |  |  |  |
| Accrued expenses and other liabilities |  | 994,646 |  |  |  |  |  |  | 620,224 |  |  |  |  |
| Stockholders’ equity |  | 4,977,759 |  |  |  |  |  |  | 4,335,110 |  |  |  |  |
| Total liabilities and stockholders’ equity |  | $ | 44,471,242 |  |  |  |  |  |  | $ | 40,525,188 |  |  |  |  |
Interest rate spread |  |  |  |  |  |  | 2.97 | % |  |  |  |  |  | 3.24 | %
Net interest income and net interest margin |  |  |  |  | $ | 368,219 |  |  | 3.47 | % |  |  |  | $ | 369,416 |  |  | 3.79 | %
Adjusted net interest income and adjusted net interest margin (4) |  |  |  |  | $ | 362,166 |  |  | 3.41 | % |  |  |  | $ | 363,606 |  |  | 3.73 | %

(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 2.49% and 2.72% for the three months ended December 31, 2019 and 2018, respectively. The weighted-average interest rates of gross repurchase agreements were 4.35% and 4.77% for the three months ended December 31, 2019 and 2018, respectively.

(3) | Includes loans HFS. ASC 310-30 discount was $16.0 million and $23.8 million for the three months ended December 31, 2019 and 2018, respectively.

(4) | See reconciliation of GAAP to non-GAAP financial measures in Table 15.

13

EAST WEST BANCORP, INC. AND SUBSIDIARIES
YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 8
| Year Ended
December 31, 2019 |  | December 31, 2018
Average |  |  |  | Average |  | Average |  |  |  | Average
Balance |  | Interest |  | Yield/Rate |  | Balance |  | Interest |  | Yield/Rate
Assets |  |  |  |  |  |  |  |  |  |  |  |
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |
| Interest-bearing cash and deposits with banks |  | $ | 3,065,426 |  |  | $ | 67,028 |  |  | 2.19 | % |  | $ | 2,645,544 |  |  | $ | 55,704 |  |  | 2.11 | %
| Resale agreements (1) |  | 969,384 |  |  | 27,819 |  |  | 2.87 | % |  | 1,020,822 |  |  | 29,328 |  |  | 2.87 | %
| AFS investment securities |  | 2,836,004 |  |  | 67,570 |  |  | 2.38 | % |  | 2,737,071 |  |  | 60,011 |  |  | 2.19 | %
| Loans (2) |  | 33,373,136 |  |  | 1,717,415 |  |  | 5.15 | % |  | 30,230,014 |  |  | 1,503,514 |  |  | 4.97 | %
| FHLB and FRB stock |  | 76,854 |  |  | 2,468 |  |  | 3.21 | % |  | 73,691 |  |  | 3,146 |  |  | 4.27 | %
| Total interest-earning assets |  | 40,320,804 |  |  | 1,882,300 |  |  | 4.67 | % |  | 36,707,142 |  |  | 1,651,703 |  |  | 4.50 | %
Noninterest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Cash and due from banks |  | 471,060 |  |  |  |  |  |  | 445,768 |  |  |  |  |  |  |
| Allowance for loan losses |  | (330,125 | ) |  |  |  |  |  | (298,600 | ) |  |  |  |  |  |
| Other assets |  | 2,023,146 |  |  |  |  |  |  | 1,688,259 |  |  |  |  |  |  |
| Total assets |  | $ | 42,484,885 |  |  |  |  |  |  | $ | 38,542,569 |  |  |  |  |  |  |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Checking deposits |  | $ | 5,244,867 |  |  | $ | 58,168 |  |  | 1.11 | % |  | $ | 4,477,793 |  |  | $ | 34,657 |  |  | 0.77 | %
| Money market deposits |  | 8,220,236 |  |  | 111,081 |  |  | 1.35 | % |  | 7,985,526 |  |  | 83,696 |  |  | 1.05 | %
| Savings deposits |  | 2,118,060 |  |  | 9,626 |  |  | 0.45 | % |  | 2,245,644 |  |  | 8,621 |  |  | 0.38 | %
| Time deposits |  | 9,961,289 |  |  | 196,927 |  |  | 1.98 | % |  | 7,431,749 |  |  | 107,778 |  |  | 1.45 | %
| Federal funds purchased and other short-term borrowings |  | 44,881 |  |  | 1,763 |  |  | 3.93 | % |  | 32,222 |  |  | 1,398 |  |  | 4.34 | %
| FHLB advances |  | 592,257 |  |  | 16,697 |  |  | 2.82 | % |  | 327,435 |  |  | 10,447 |  |  | 3.19 | %
| Repurchase agreements (1) |  | 74,926 |  |  | 13,582 |  |  | 18.13 | % |  | 50,000 |  |  | 12,110 |  |  | 24.22 | %
| Long-term debt and finance lease liabilities |  | 152,445 |  |  | 6,643 |  |  | 4.36 | % |  | 159,185 |  |  | 6,488 |  |  | 4.08 | %
| Total interest-bearing liabilities |  | 26,408,961 |  |  | 414,487 |  |  | 1.57 | % |  | 22,709,554 |  |  | 265,195 |  |  | 1.17 | %
Noninterest-bearing liabilities and stockholders’ equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Demand deposits |  | 10,502,618 |  |  |  |  |  |  | 11,089,537 |  |  |  |  |
| Accrued expenses and other liabilities |  | 812,461 |  |  |  |  |  |  | 612,656 |  |  |  |  |
| Stockholders’ equity |  | 4,760,845 |  |  |  |  |  |  | 4,130,822 |  |  |  |  |
| Total liabilities and stockholders’ equity |  | $ | 42,484,885 |  |  |  |  |  |  | $ | 38,542,569 |  |  |  |  |
Interest rate spread |  |  |  |  |  |  | 3.10 | % |  |  |  |  |  | 3.33 | %
Net interest income and net interest margin |  |  |  |  | $ | 1,467,813 |  |  | 3.64 | % |  |  |  | $ | 1,386,508 |  |  | 3.78 | %
Adjusted net interest income and adjusted net interest margin (3) |  |  |  |  | $ | 1,455,342 |  |  | 3.61 | % |  |  |  | $ | 1,366,336 |  |  | 3.72 | %

(1) | Average balances of resale and repurchase agreements have been reported net, pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. The weighted-average yields of gross resale agreements were 2.65% and 2.63% for the years ended December 31, 2019 and 2018, respectively. The weighted-average interest rates of gross repurchase agreements were 4.74% and 4.46% for the years ended December 31, 2019 and 2018, respectively.

(2) | Includes loans HFS. ASC 310-30 discount was $18.9 million and $28.4 million for the years ended December 31, 2019 and 2018, respectively.

(3) | See reconciliation of GAAP to non-GAAP financial measures in Table 15.

14

EAST WEST BANCORP, INC. AND SUBSIDIARIES
SELECTED RATIOS
(unaudited)
Table 9
|  | Three Months Ended (1) |  | December 31, 2019 Basis Point Change
|  |  | December 31, 2019 |  | September 30, 2019 |  | December 31, 2018 |  | Qtr-o-Qtr |  | Yr-o-Yr |
| Return on average assets |  | 1.68 | % |  | 1.58 | % |  | 1.69 | % |  | 10 |  | bps | (1 | ) | bps
| Adjusted return on average assets (2) |  | 1.67 | % |  | 1.58 | % |  | 1.69 | % |  | 9 |  |  | (2 | ) |
| Return on average equity |  | 15.00 | % |  | 14.06 | % |  | 15.83 | % |  | 94 |  |  | (83 | ) |
| Adjusted return on average equity (2) |  | 14.91 | % |  | 14.06 | % |  | 15.83 | % |  | 85 |  |  | (92 | ) |
| Return on average tangible equity (2) |  | 16.71 | % |  | 15.75 | % |  | 17.97 | % |  | 96 |  |  | (126 | ) |
| Adjusted return on average tangible equity (2) |  | 16.61 | % |  | 15.75 | % |  | 17.97 | % |  | 86 |  |  | (136 | ) |
| Interest rate spread |  | 2.97 | % |  | 3.03 | % |  | 3.24 | % |  | (6 | ) |  | (27 | ) |
| Net interest margin |  | 3.47 | % |  | 3.59 | % |  | 3.79 | % |  | (12 | ) |  | (32 | ) |
| Adjusted net interest margin (2) |  | 3.41 | % |  | 3.56 | % |  | 3.73 | % |  | (15 | ) |  | (32 | ) |
| Average loan yield |  | 4.91 | % |  | 5.11 | % |  | 5.22 | % |  | (20 | ) |  | (31 | ) |
| Adjusted average loan yield (2) |  | 4.84 | % |  | 5.08 | % |  | 5.14 | % |  | (24 | ) |  | (30 | ) |
| Yield on average interest-earning assets |  | 4.40 | % |  | 4.62 | % |  | 4.69 | % |  | (22 | ) |  | (29 | ) |
| Average cost of interest-bearing deposits |  | 1.34 | % |  | 1.49 | % |  | 1.34 | % |  | (15 | ) |  | — |  |
| Average cost of deposits |  | 0.94 | % |  | 1.05 | % |  | 0.90 | % |  | (11 | ) |  | 4 |  |
| Average cost of funds |  | 1.02 | % |  | 1.13 | % |  | 0.98 | % |  | (11 | ) |  | 4 |  |
| Adjusted pre-tax, pre-provision profitability ratio (2) |  | 2.37 | % |  | 2.42 | % |  | 2.50 | % |  | (5 | ) |  | (13 | ) |
| Adjusted noninterest expense/average assets (2) |  | 1.47 | % |  | 1.46 | % |  | 1.53 | % |  | 1 |  |  | (6 | ) |
| Efficiency ratio |  | 44.84 | % |  | 41.93 | % |  | 45.75 | % |  | 291 |  |  | (91 | ) |
| Adjusted efficiency ratio (2) |  | 38.33 | % |  | 37.66 | % |  | 37.92 | % |  | 67 |  | bps | 41 |  | bps
|  |  | Year Ended |  | December 31, 2019 Basis Point Change |  |  |  |
|  |  | December 31, 2019 |  | December 31, 2018 |  | Yr-o-Yr |  |  |  |
| Return on average assets |  | 1.59 | % |  | 1.83 | % |  | (24 | ) | bps |  |  |  |
| Adjusted return on average assets (2) |  | 1.67 | % |  | 1.77 | % |  | (10 | ) |  |  |  |  |
| Return on average equity |  | 14.16 | % |  | 17.04 | % |  | (288 | ) |  |  |  |  |
| Adjusted return on average equity (2) |  | 14.87 | % |  | 16.50 | % |  | (163 | ) |  |  |  |  |
| Return on average tangible equity (2) |  | 15.88 | % |  | 19.48 | % |  | (360 | ) |  |  |  |  |
| Adjusted return on average tangible equity (2) |  | 16.68 | % |  | 18.87 | % |  | (219 | ) |  |  |  |  |
| Interest rate spread |  | 3.10 | % |  | 3.33 | % |  | (23 | ) |  |  |  |  |
| Net interest margin |  | 3.64 | % |  | 3.78 | % |  | (14 | ) |  |  |  |  |
| Adjusted net interest margin (2) |  | 3.61 | % |  | 3.72 | % |  | (11 | ) |  |  |  |  |
| Average loan yield |  | 5.15 | % |  | 4.97 | % |  | 18 |  |  |  |  |  |
| Adjusted average loan yield (2) |  | 5.11 | % |  | 4.90 | % |  | 21 |  |  |  |  |  |
| Yield on average interest-earning assets |  | 4.67 | % |  | 4.50 | % |  | 17 |  |  |  |  |  |
| Average cost of interest-bearing deposits |  | 1.47 | % |  | 1.06 | % |  | 41 |  |  |  |  |  |
| Average cost of deposits |  | 1.04 | % |  | 0.71 | % |  | 33 |  |  |  |  |  |
| Average cost of funds |  | 1.12 | % |  | 0.78 | % |  | 34 |  |  |  |  |  |
| Adjusted pre-tax, pre-provision profitability ratio (2) |  | 2.43 | % |  | 2.46 | % |  | (3 | ) |  |  |  |  |
| Adjusted noninterest expense/average assets (2) |  | 1.52 | % |  | 1.61 | % |  | (9 | ) |  |  |  |  |
| Efficiency ratio |  | 43.80 | % |  | 44.73 | % |  | (93 | ) |  |  |  |  |
| Adjusted efficiency ratio (2) |  | 38.43 | % |  | 39.55 | % |  | (112 | ) | bps |  |  |  |

(1) | Annualized except for efficiency ratio.

(2) | See reconciliation of GAAP to non-GAAP financial measures in Tables 13, 14, 15 and 16.

15

EAST WEST BANCORP, INC. AND SUBSIDIARIES
ALLOWANCE FOR CREDIT LOSSES
($ in thousands)
(unaudited)
Table 10
| Three Months Ended |  | Year Ended
December 31, 2019 |  | September 30, 2019 |  | December 31, 2018 |  | December 31, 2019 |  | December 31, 2018
Non-Purchased Credit Impaired (“Non-PCI”) Loans |  |  |  |  |  |  |  |  |  |
| Allowance for non-PCI loans, beginning of period |  | $ | 345,576 |  |  | $ | 330,620 |  |  | $ | 310,010 |  |  | $ | 311,300 |  |  | $ | 287,070 |
| Provision for loan losses on non-PCI loans |  | 20,843 |  |  | 37,884 |  |  | 17,321 |  |  | 100,115 |  |  | 65,043 |
| Net (charge-offs) recoveries: |  |  |  |  |  |  |  |  |  |
| Commercial: |  |  |  |  |  |  |  |  |  |
| C&I |  | (11,009 | ) |  | (23,450 | ) |  | (21,227 | ) |  | (59,484 | ) |  | (48,827 | )
| CRE: |  |  |  |  |  |  |  |  |  |
| CRE |  | 1,254 |  |  | 875 |  |  | 4,763 |  |  | 4,188 |  |  | 5,194 |
| Multifamily residential |  | 1,480 |  |  | 42 |  |  | 286 |  |  | 1,856 |  |  | 1,757 |
| Construction and land |  | 13 |  |  | 21 |  |  | 24 |  |  | 536 |  |  | 740 |
| Total CRE |  | 2,747 |  |  | 938 |  |  | 5,073 |  |  | 6,580 |  |  | 7,691 |
| Consumer: |  |  |  |  |  |  |  |  |  |
| Residential mortgage: |  |  |  |  |  |  |  |  |  |
| Single-family residential |  | 2 |  |  | 49 |  |  | 106 |  |  | 125 |  |  | 1,213 |
| HELOCs |  | — |  |  | 5 |  |  | 38 |  |  | 7 |  |  | 38 |
| Total residential mortgage |  | 2 |  |  | 54 |  |  | 144 |  |  | 132 |  |  | 1,251 |
| Other consumer |  | (5 | ) |  | (5 | ) |  | (2 | ) |  | (31 | ) |  | (185 | )
| Total net charge-offs |  | (8,265 | ) |  | (22,463 | ) |  | (16,012 | ) |  | (52,803 | ) |  | (40,070 | )
| Foreign currency translation adjustments |  | 133 |  |  | (465 | ) |  | (19 | ) |  | (325 | ) |  | (743 | )
| Allowance for non-PCI loans, end of period |  | 358,287 |  |  | 345,576 |  |  | 311,300 |  |  | 358,287 |  |  | 311,300 |
Purchased Credit Impaired (“PCI”) Loans |  |  |  |  |  |  |  |  |  |  |  |
| Allowance for PCI loans, beginning of period |  | — |  |  | 5 |  |  | 31 |  |  | 22 |  |  | 58 |
| Reversal of loan losses on PCI loans |  | — |  |  | (5 | ) |  | (9 | ) |  | (22 | ) |  | (36 | )
| Allowance for PCI loans, end of period |  | — |  |  | — |  |  | 22 |  |  | — |  |  | 22 |
| Allowance for loan losses |  | 358,287 |  |  | 345,576 |  |  | 311,322 |  |  | 358,287 |  |  | 311,322 |
Unfunded Credit Facilities |  |  |  |  |  |  |  |  |  |  |  |  |
| Allowance for unfunded credit reserves, beginning of period |  | 13,424 |  |  | 13,019 |  |  | 11,919 |  |  | 12,566 |  |  | 13,318 |
| Provision for (reversal of) unfunded credit reserves |  | (2,266 | ) |  | 405 |  |  | 647 |  |  | (1,408 | ) |  | (752 | )
| Allowance for unfunded credit reserves, end of period |  | 11,158 |  |  | 13,424 |  |  | 12,566 |  |  | 11,158 |  |  | 12,566 |
| Allowance for credit losses |  | $ | 369,445 |  |  | $ | 359,000 |  |  | $ | 323,888 |  |  | $ | 369,445 |  |  | $ | 323,888 |

16

| EAST WEST BANCORP, INC. AND SUBSIDIARIES
| CREDIT QUALITY
| ($ in thousands)
| (unaudited)
Table 11
Non-PCI Nonperforming Assets |  | December 31, 2019 |  | September 30, 2019 |  | December 31, 2018
Nonaccrual loans: |  |  |  |  |  |
| Commercial: |  |  |  |  |  |
| C&I |  | $ | 74,835 |  |  | $ | 90,830 |  |  | $ | 43,840 |
| CRE: |  |  |  |  |  |
| CRE |  | 16,441 |  |  | 18,942 |  |  | 24,218 |
| Multifamily residential |  | 819 |  |  | 551 |  |  | 1,260 |
| Total CRE |  | 17,260 |  |  | 19,493 |  |  | 25,478 |
| Consumer: |  |  |  |  |  |
| Residential mortgage: |  |  |  |  |  |
| Single-family residential |  | 14,865 |  |  | 9,484 |  |  | 5,259 |
| HELOCs |  | 10,742 |  |  | 9,924 |  |  | 8,614 |
| Total residential mortgage |  | 25,607 |  |  | 19,408 |  |  | 13,873 |
| Other consumer |  | 2,517 |  |  | 2,495 |  |  | 2,502 |
| Total nonaccrual loans |  | 120,219 |  |  | 132,226 |  |  | 85,693 |
Other real estate owned, net |  | 125 |  |  | 1,122 |  |  | 133 |
Other nonperforming assets |  | 1,167 |  |  | 1,167 |  |  | 7,167 |
| Total nonperforming assets |  | $ | 121,511 |  |  | $ | 134,515 |  |  | $ | 92,993 |
Credit Quality Ratios |  | December 31, 2019 |  | September 30, 2019 |  | December 31, 2018
Non-PCI nonperforming assets to total assets (1) |  | 0.27 | % |  | 0.31 | % |  | 0.23 | %
Non-PCI nonaccrual loans to loans HFI (1) |  | 0.35 | % |  | 0.39 | % |  | 0.26 | %
Allowance for loan losses to loans HFI (1) |  | 1.03 | % |  | 1.02 | % |  | 0.96 | %
Allowance for loan losses to non-PCI nonaccrual loans |  | 298.03 | % |  | 261.35 | % |  | 363.30 | %
Annualized quarterly net charge-offs to average loans HFI |  | 0.10 | % |  | 0.26 | % |  | 0.20 | %
Annual net charge-offs to average loans HFI |  | 0.16 | % |  | N/A |  |  | 0.13 | %

N/A - Not applicable

(1) | Total assets and loans HFI include PCI loans of $222.9 million, $240.7 million and $308.0 million as of December 31, 2019, September 30, 2019 and December 31, 2018, respectively.

17

EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ in thousands)
(unaudited)
Table 12 |  |  |  |  |  |  |  |  |  |  |  |
During the second quarter of 2019, the Company reversed $30.1 million of certain previously claimed tax credits related to the DC Solar tax credit investments (“DC Solar”). The table below shows the computation of the Company’s effective tax rate excluding the impact of the DC Solar tax credits reversal. Management believes that excluding the impact of the DC Solar tax credits reversal from the effective tax rate computation allows comparability to prior periods.
|  |  |  | Three Months Ended |  | Year Ended
|  |  |  | December 31, 2019 |  | September 30, 2019 |  | December 31, 2018 |  | December 31, 2019 |  | December 31, 2018
Income tax expense |  | (a) |  | $ | 31,067 |  |  | $ | 34,951 |  |  | $ | 32,037 |  |  | $ | 169,882 |  |  | $ | 114,995 |
Less: Reversal of certain previously claimed tax credits related to DC Solar |  | (b) |  | — |  |  | — |  |  | — |  |  | (30,104 | ) |  | — |
Adjusted income tax expense |  | (c) |  | $ | 31,067 |  |  | $ | 34,951 |  |  | $ | 32,037 |  |  | $ | 139,778 |  |  | $ | 114,995 |
Income before income taxes |  | (d) |  | 219,282 |  |  | 206,367 |  |  | 205,055 |  |  | 843,917 |  |  | 818,696 |
Effective tax rate |  | (a)/(d) |  | 14.2 | % |  | 16.9 | % |  | 15.6 | % |  | 20.1 | % |  | 14.0 | %
Less: Reversal of certain previously claimed tax credits related to DC Solar |  | (b)/(d) |  | — | % |  | — | % |  | — | % |  | (3.5 | )% |  | — | %
Adjusted effective tax rate |  | (c)/(d) |  | 14.2 | % |  | 16.9 | % |  | 15.6 | % |  | 16.6 | % |  | 14.0 | %

18

EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ and shares in thousands, except for per share data)
(unaudited)
Table 13
During the first, second and fourth quarters of 2019, the Company recorded a $7.0 million pre-tax impairment charge, reversed $30.1 million of certain previously claimed tax credits and recorded a $1.6 million pre-tax impairment recovery related to DC Solar, respectively. During the first quarter of 2018, the Company sold its Desert Community Bank (“DCB”) branches and recognized a pre-tax gain on sale of $31.5 million. 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 provides clarity to financial statement users regarding the ongoing performance of the Company and allows comparability to prior periods.
|  |  |  | Three Months Ended
|  |  | December 31, 2019 |  | September 30, 2019 |  | December 31, 2018
Net income |  | (a) |  | $ | 188,215 |  |  | $ | 171,416 |  |  | $ | 173,018 |
Less: Impairment recovery related to DC Solar (2) |  |  |  | (1,583 | ) |  | — |  |  | — |
Tax effect of adjustment (3) |  |  |  | 468 |  |  | — |  |  | — |
Adjusted net income |  | (b) |  | $ | 187,100 |  |  | $ | 171,416 |  |  | $ | 173,018 |
Diluted weighted average number of shares outstanding |  |  |  | 146,318 |  |  | 146,120 |  |  | 146,133 |
Diluted EPS |  |  |  | $ | 1.29 |  |  | $ | 1.17 |  |  | $ | 1.18 |
Diluted EPS impact of impairment recovery related to DC Solar, net of tax |  |  |  | (0.01 | ) |  | — |  |  | — |
Adjusted diluted EPS |  |  |  | $ | 1.28 |  |  | $ | 1.17 |  |  | $ | 1.18 |
Average total assets |  | (c) |  | $ | 44,471,242 |  |  | $ | 43,136,273 |  |  | $ | 40,525,188 |
Average stockholders’ equity |  | (d) |  | $ | 4,977,759 |  |  | $ | 4,838,281 |  |  | $ | 4,335,110 |
Return on average assets (1) |  | (a)/(c) |  | 1.68 | % |  | 1.58 | % |  | 1.69 | %
Adjusted return on average assets (1) |  | (b)/(c) |  | 1.67 | % |  | 1.58 | % |  | 1.69 | %
Return on average equity (1) |  | (a)/(d) |  | 15.00 | % |  | 14.06 | % |  | 15.83 | %
Adjusted return on average equity (1) |  | (b)/(d) |  | 14.91 | % |  | 14.06 | % |  | 15.83 | %
|  |  |  | Year Ended |  |
|  |  |  | December 31, 2019 |  | December 31, 2018 |  |
Net income |  | (e) |  | $ | 674,035 |  |  | $ | 703,701 |  |  |
Add: Impairment charge related to DC Solar (2) |  |  |  | 6,978 |  |  | — |  |  |
Less: Impairment recovery related to DC Solar (2) |  |  |  | (1,583 | ) |  | — |  |  |
Gain on sale of business |  |  |  | — |  |  | (31,470 | ) |  |
Tax effect of adjustments (3) |  |  |  | (1,595 | ) |  | 9,303 |  |  |
Add: Reversal of certain previously claimed tax credits related to DC Solar |  |  |  | 30,104 |  |  | — |  |  |
Adjusted net income |  | (f) |  | $ | 707,939 |  |  | $ | 681,534 |  |  |
Diluted weighted average number of shares outstanding |  |  |  | 146,179 |  |  | 146,169 |  |  |
Diluted EPS |  |  |  | $ | 4.61 |  |  | $ | 4.81 |  |  |
Diluted EPS impact of impairment charge related to DC Solar, net of tax |  |  |  | 0.03 |  |  | — |  |  |
Diluted EPS impact of impairment recovery related to DC Solar, net of tax |  |  |  | (0.01 | ) |  | — |  |  |
Diluted EPS impact of gain on sale of business, net of tax |  |  |  | — |  |  | (0.15 | ) |  |
Diluted EPS impact of reversal of certain previously claimed tax credits related to DC Solar |  |  |  | 0.21 |  |  | — |  |  |
Adjusted diluted EPS |  |  |  | $ | 4.84 |  |  | $ | 4.66 |  |  |
Average total assets |  | (g) |  | $ | 42,484,885 |  |  | $ | 38,542,569 |  |  |
Average stockholders’ equity |  | (h) |  | $ | 4,760,845 |  |  | $ | 4,130,822 |  |  |
Return on average assets |  | (e)/(g) |  | 1.59 | % |  | 1.83 | % |  |
Adjusted return on average assets |  | (f)/(g) |  | 1.67 | % |  | 1.77 | % |  |
Return on average equity |  | (e)/(h) |  | 14.16 | % |  | 17.04 | % |  |
Adjusted return on average equity |  | (f)/(h) |  | 14.87 | % |  | 16.50 | % |  |

(1) | Annualized.

(2) | Included in Amortization of tax credit and other investments.

(3) | Applied statutory rate of 29.56%.

19

EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ in thousands)
(unaudited)
Table 14
Adjusted efficiency ratio represents adjusted noninterest expense divided by adjusted revenue. Adjusted pre-tax, pre-provision profitability ratio represents the aggregate of adjusted revenue less adjusted noninterest expense, divided by average total assets. Adjusted revenue represents the aggregate of net interest income and adjusted noninterest income, where adjusted noninterest income excludes the gain on the sale of the DCB branches that were sold in the first quarter of 2018 (where applicable). Adjusted noninterest expense excludes the amortization of tax credit and other investments and the amortization of core deposit intangibles. Management believes that the measures and ratios presented below provide clarity to financial statement users regarding the ongoing performance of the Company and allow comparability to prior periods.
|  |  |  | Three Months Ended
|  |  |  | December 31, 2019 |  | September 30, 2019 |  | December 31, 2018
Net interest income before provision for credit losses |  | (a) |  | $ | 368,219 |  |  | $ | 369,807 |  |  | $ | 369,416 |
Total noninterest income |  |  |  | 63,013 |  |  | 51,474 |  |  | 41,695 |
Total revenue |  | (b) |  | $ | 431,232 |  |  | $ | 421,281 |  |  | $ | 411,111 |
Total noninterest expense |  | (c) |  | $ | 193,373 |  |  | $ | 176,630 |  |  | $ | 188,097 |
Less: Amortization of tax credit and other investments |  |  |  | (27,038 | ) |  | (16,833 | ) |  | (30,958 | )
Amortization of core deposit intangibles |  |  |  | (1,044 | ) |  | (1,148 | ) |  | (1,265 | )
Adjusted noninterest expense |  | (d) |  | $ | 165,291 |  |  | $ | 158,649 |  |  | $ | 155,874 |
Efficiency ratio |  | (c)/(b) |  | 44.84 | % |  | 41.93 | % |  | 45.75 | %
Adjusted efficiency ratio |  | (d)/(b) |  | 38.33 | % |  | 37.66 | % |  | 37.92 | %
Adjusted pre-tax, pre-provision income |  | (b)-(d) = (e) |  | $ | 265,941 |  |  | $ | 262,632 |  |  | $ | 255,237 |
Average total assets |  | (f) |  | $ | 44,471,242 |  |  | $ | 43,136,273 |  |  | $ | 40,525,188 |
Adjusted pre-tax, pre-provision profitability ratio (1) |  | (e)/(f) |  | 2.37 | % |  | 2.42 | % |  | 2.50 | %
Adjusted noninterest expense (1)/average assets |  | (d)/(f) |  | 1.47 | % |  | 1.46 | % |  | 1.53 | %
|  |  |  | Year Ended |  |
|  |  |  | December 31, 2019 |  | December 31, 2018 |  |
Net interest income before provision for credit losses |  | (g) |  | $ | 1,467,813 |  |  | $ | 1,386,508 |  |  |
Total noninterest income |  |  |  | 209,377 |  |  | 210,909 |  |  |
Total revenue |  | (h) |  | 1,677,190 |  |  | 1,597,417 |  |  |
Noninterest income |  |  |  | 209,377 |  |  | 210,909 |  |  |
Less: Gain on sale of business |  |  |  | — |  |  | (31,470 | ) |  |
Adjusted noninterest income |  | (i) |  | $ | 209,377 |  |  | $ | 179,439 |  |  |
Adjusted revenue |  | (g)+(i) = (j) |  | $ | 1,677,190 |  |  | $ | 1,565,947 |  |  |
Total noninterest expense |  | (k) |  | $ | 734,588 |  |  | $ | 714,466 |  |  |
Less: Amortization of tax credit and other investments |  |  |  | (85,515 | ) |  | (89,628 | ) |  |
Amortization of core deposit intangibles |  |  |  | (4,518 | ) |  | (5,492 | ) |  |
Adjusted noninterest expense |  | (l) |  | $ | 644,555 |  |  | $ | 619,346 |  |  |
Efficiency ratio |  | (k)/(h) |  | 43.80 | % |  | 44.73 | % |  |
Adjusted efficiency ratio |  | (l)/(j) |  | 38.43 | % |  | 39.55 | % |  |
Adjusted pre-tax, pre-provision income |  | (j)-(l) = (m) |  | $ | 1,032,635 |  |  | $ | 946,601 |  |  |
Average total assets |  | (n) |  | $ | 42,484,885 |  |  | $ | 38,542,569 |  |  |
Adjusted pre-tax, pre-provision profitability ratio |  | (m)/(n) |  | 2.43 | % |  | 2.46 | % |  |
Adjusted noninterest expense /average assets |  | (l)/(n) |  | 1.52 | % |  | 1.61 | % |  |

(1) | Annualized.

20

EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ in thousands)
(unaudited)
Table 15
Management believes that presenting the adjusted average loan yield and adjusted net interest margin that exclude the ASC 310-30 discount accretion impact provides clarity to financial statement users regarding the change in loan contractual yields and allows comparability to prior periods.
Yield on Average Loans |  |  | Three Months Ended |  | Year Ended
| December 31, 2019 |  | September 30, 2019 |  | December 31, 2018 |  | December 31, 2019 |  | December 31, 2018
Interest income on loans |  | (a) |  | $ | 425,773 |  |  | $ | 433,658 |  |  | $ | 414,517 |  |  | $ | 1,717,415 |  |  | $ | 1,503,514 |
Less: ASC 310-30 discount accretion income |  |  |  | (6,053 | ) |  | (2,521 | ) |  | (5,810 | ) |  | (12,471 | ) |  | (20,172 | )
Adjusted interest income on loans |  | (b) |  | $ | 419,720 |  |  | $ | 431,137 |  |  | $ | 408,707 |  |  | $ | 1,704,944 |  |  | $ | 1,483,342 |
Average loans |  | (c) |  | $ | 34,410,010 |  |  | $ | 33,661,282 |  |  | $ | 31,534,875 |  |  | $ | 33,373,136 |  |  | $ | 30,230,014 |
Add: ASC 310-30 discount |  |  |  | 16,012 |  |  | 18,172 |  |  | 23,833 |  |  | 18,915 |  |  | 28,400 |
Adjusted average loans |  | (d) |  | $ | 34,426,022 |  |  | $ | 33,679,454 |  |  | $ | 31,558,708 |  |  | $ | 33,392,051 |  |  | $ | 30,258,414 |
Average loan yield |  | (a)/(c) |  | 4.91 | % | (1) | 5.11 | % | (1) | 5.22 | % | (1) | 5.15 | % |  | 4.97 | %
Adjusted average loan yield |  | (b)/(d) |  | 4.84 | % | (1) | 5.08 | % | (1) | 5.14 | % | (1) | 5.11 | % |  | 4.90 | %
Net Interest Margin |  |  |  |  |  |  |  |  |  |  |  |
Net interest income |  | (e) |  | $ | 368,219 |  |  | $ | 369,807 |  |  | $ | 369,416 |  |  | $ | 1,467,813 |  |  | $ | 1,386,508 |
Less: ASC 310-30 discount accretion income |  |  |  | (6,053 | ) |  | (2,521 | ) |  | (5,810 | ) |  | (12,471 | ) |  | (20,172 | )
Adjusted net interest income |  | (f) |  | $ | 362,166 |  |  | $ | 367,286 |  |  | $ | 363,606 |  |  | $ | 1,455,342 |  |  | $ | 1,366,336 |
Average interest-earning assets |  | (g) |  | $ | 42,114,123 |  |  | $ | 40,919,386 |  |  | $ | 38,688,647 |  |  | $ | 40,320,804 |  |  | $ | 36,707,142 |
Add: ASC 310-30 discount |  |  |  | 16,012 |  |  | 18,172 |  |  | 23,833 |  |  | 18,915 |  |  | 28,400 |
Adjusted average interest-earning assets |  | (h) |  | $ | 42,130,135 |  |  | $ | 40,937,558 |  |  | $ | 38,712,480 |  |  | $ | 40,339,719 |  |  | $ | 36,735,542 |
Net interest margin |  | (e)/(g) |  | 3.47 | % | (1) | 3.59 | % | (1) | 3.79 | % | (1) | 3.64 | % |  | 3.78 | %
Adjusted net interest margin |  | (f)/(h) |  | 3.41 | % | (1) | 3.56 | % | (1) | 3.73 | % | (1) | 3.61 | % |  | 3.72 | %

(1) | Annualized.

21

EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ in thousands)
(unaudited)
Table 16 |  |  |  |  |  |  |  |
The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Tangible equity and tangible equity to tangible assets ratio are non-GAAP financial measures. Tangible equity and tangible assets represent stockholders’ equity and total assets, respectively, which have been reduced by goodwill and other intangible assets. Given that the use of such measures and ratios is more prevalent in the banking industry, and such measures and ratios are used by banking regulators and analysts, the Company has included them below for discussion.
|  |  |  | December 31, 2019 |  | September 30, 2019 |  | December 31, 2018
Stockholders’ equity |  | (a) |  | $ | 5,017,617 |  |  | $ | 4,882,664 |  |  | $ | 4,423,974 |
Less: Goodwill |  |  |  | (465,697 | ) |  | (465,697 | ) |  | (465,547 | )
Other intangible assets (1) |  |  |  | (16,079 | ) |  | (17,435 | ) |  | (22,365 | )
Tangible equity |  | (b) |  | $ | 4,535,841 |  |  | $ | 4,399,532 |  |  | $ | 3,936,062 |
Total assets |  | (c) |  | $ | 44,196,096 |  |  | $ | 43,274,659 |  |  | $ | 41,042,356 |
Less: Goodwill |  |  |  | (465,697 | ) |  | (465,697 | ) |  | (465,547 | )
Other intangible assets (1) |  |  |  | (16,079 | ) |  | (17,435 | ) |  | (22,365 | )
Tangible assets |  | (d) |  | $ | 43,714,320 |  |  | $ | 42,791,527 |  |  | $ | 40,554,444 |
Total stockholders’ equity to total assets ratio |  | (a)/(c) |  | 11.35 | % |  | 11.28 | % |  | 10.78 | %
Tangible equity to tangible assets ratio |  | (b)/(d) |  | 10.38 | % |  | 10.28 | % |  | 9.71 | %

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/(recovery) related to DC Solar and the gain on the sale of the DCB branches; and the reversal of certain previously claimed tax credits related to DC Solar (where applicable). Given that the use of such measures and ratios is more prevalent in the banking industry, and such measures and ratios are used by banking regulators and analysts, the Company has included them below for discussion.
|  |  |  | Three Months Ended |  | Year Ended
|  |  |  | December 31, 2019 |  | September 30, 2019 |  | December 31, 2018 |  | December 31, 2019 |  | December 31, 2018
Net Income |  |  |  | $ | 188,215 |  |  | $ | 171,416 |  |  | $ | 173,018 |  |  | $ | 674,035 |  |  | $ | 703,701 |
Add: Amortization of core deposit intangibles |  |  |  | 1,044 |  |  | 1,148 |  |  | 1,265 |  |  | 4,518 |  |  | 5,492 |
Amortization of mortgage servicing assets |  |  |  | 567 |  |  | 834 |  |  | 448 |  |  | 2,738 |  |  | 1,814 |
Tax effect of adjustments (2) |  |  |  | (476 | ) |  | (586 | ) |  | (506 | ) |  | (2,145 | ) |  | (2,160 | )
Tangible net income |  | (e) |  | $ | 189,350 |  |  | $ | 172,812 |  |  | $ | 174,225 |  |  | $ | 679,146 |  |  | $ | 708,847 |
Add: Impairment charge related to DC Solar (3) |  |  |  | — |  |  | — |  |  | — |  |  | 6,978 |  |  | — |
Less: Impairment recovery related to DC Solar (3) |  |  |  | (1,583 | ) |  | — |  |  | — |  |  | (1,583 | ) |  | — |
Gain on sale of business |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (31,470 | )
Tax effect of adjustment (2) |  |  |  | 468 |  |  | — |  |  | — |  |  | (1,595 | ) |  | 9,303 |
Add: Reversal of certain previously claimed tax credits related to DC Solar |  |  |  | — |  |  | — |  |  | — |  |  | 30,104 |  |  | — |
Adjusted tangible net income |  | (f) |  | $ | 188,235 |  |  | $ | 172,812 |  |  | $ | 174,225 |  |  | $ | 713,050 |  |  | $ | 686,680 |
Average stockholders’ equity |  |  |  | $ | 4,977,759 |  |  | $ | 4,838,281 |  |  | $ | 4,335,110 |  |  | $ | 4,760,845 |  |  | $ | 4,130,822 |
Less: Average goodwill |  |  |  | (465,697 | ) |  | (465,697 | ) |  | (465,547 | ) |  | (465,663 | ) |  | (466,346 | )
Average other intangible assets (1) |  |  |  | (16,793 | ) |  | (18,391 | ) |  | (23,130 | ) |  | (19,340 | ) |  | (25,337 | )
Average tangible equity |  | (g) |  | $ | 4,495,269 |  |  | $ | 4,354,193 |  |  | $ | 3,846,433 |  |  | $ | 4,275,842 |  |  | $ | 3,639,139 |
Return on average tangible equity |  | (e)/(g) |  | 16.71 | % | (4) | 15.75 | % | (4) | 17.97 | % | (4) | 15.88 | % |  | 19.48 | %
Adjusted return on average tangible equity |  | (f)/(g) |  | 16.61 | % | (4) | 15.75 | % | (4) | 17.97 | % | (4) | 16.68 | % |  | 18.87 | %

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

(2) | Applied statutory rate of 29.56%.

(3) | Included in Amortization of tax credit and other investments.

(4) | Annualized.

22