EX-99.1 2 ewbc9918k6302020.htm EX-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 SECOND QUARTER 2020
OF $99.4 MILLION AND DILUTED EARNINGS PER SHARE OF $0.70
Pasadena, California — July 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 second quarter of 2020. For the second quarter of 2020, net income was $99.4 million or $0.70 per diluted share. Second quarter 2020 return on average assets was 0.83% and return on average equity was 8.02%.
“East West is steadfast in its commitment to support our existing and new customers and the communities we operate in. Despite the challenges presented by adapting to the COVID-19 pandemic, total loans grew $1.3 billion, or 15% annualized, to a record $37.2 billion as of June 30, 2020 from $35.9 billion as of March 31, 2020,” stated Dominic Ng, Chairman and Chief Executive Officer of East West.
“During the second quarter, East West funded $1.8 billion of Paycheck Protection Program loans for over 7,200 customers. In addition, residential mortgage loans grew by 12% annualized and total commercial real estate loans grew by 9% annualized. This well-balanced loan growth demonstrates the strength of East West’s business model and our ability to generate responsible and attractive growth, even under difficult economic conditions.”
“Total deposits grew $2.0 billion, or 21% annualized, to a record $40.7 billion as of June 30, 2020 from $38.7 billion as of March 31, 2020,” continued Ng. “Second quarter 2020 deposit growth was driven by strong growth in noninterest-bearing demand and in low-cost money market deposits. Further, we proactively reduced higher-cost deposit balances. Overall, the average cost of deposits declined by 35 basis points quarter-over-quarter.”
“East West’s adjusted1 pre-tax, pre-provision profitability ratio remained strong at over 2% for the second quarter of 2020, despite the very low interest rate environment. During the quarter, we further strengthened our allowance for loan losses coverage to 1.70% of our loan portfolio, to reflect a more adverse macroeconomic outlook,” added Ng.
“We added to our already substantial levels of liquidity by participating in the Paycheck Protection Program Liquidity Facility, bolstering our balance sheet capacity to serve our customers. Quarter-over-quarter, our capital increased and our high capital ratios position us in a place of strength,” concluded Ng. “I wish to thank all of our associates for all of their hard work, dedication and adaptability in serving our customers in these unprecedented and challenging times.”

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

1

SUMMARY OF THE QUARTER
•Second Quarter Earnings — Second quarter 2020 net income was $99.4 million and diluted earnings per share (“EPS”) were $0.70, compared to first quarter 2020 net income of $144.8 million and diluted EPS of $1.00.
•Record Loans — Total loans of $37.2 billion as of June 30, 2020 increased by $1.3 billion, or 15% annualized, from $35.9 billion as of March 31, 2020. As of June 30, 2020, Paycheck Protection Program (“PPP”) loans were $1.7 billion.
Second quarter 2020 average loans of $37.1 billion grew $2.0 billion, or 23% linked quarter annualized. Loan growth during the quarter came from each of East West’s major loan portfolios, with the strongest growth from commercial and industrial (“C&I”), driven by PPP loan growth. Commercial real estate and residential mortgage loans contributed to the growth during the quarter as well.
•Record Deposits — Total deposits of $40.7 billion as of June 30, 2020 increased by $2.0 billion, or 21% annualized, from $38.7 billion as of March 31, 2020.
Second quarter 2020 average deposits of $39.9 billion grew $2.4 billion, or 26% linked quarter annualized, primarily driven by growth in noninterest-bearing demand accounts. Average non-interest bearing deposits increased to 34% of total deposits in the second quarter, up from 30% in the first quarter of 2020. Deposit growth in the second quarter was attributable to strong growth from consumer and small business commercial customers, as well as to PPP funds held in deposit accounts, partially offset by the intentional run-off of higher-cost balances.
•Balance Sheet Management – During the second quarter of 2020, the Company participated in the PPP Liquidity Facility (“PPPLF”), adding $1.4 billion to low-cost funding at a rate of 35 basis points. Also during the second quarter, East West prepaid $150.0 million of repurchase agreements and incurred a debt extinguishment cost of $8.7 million.
•Net Interest Income and Net Interest Margin — Second quarter 2020 net interest income (“NII”) was $343.8 million, a decrease of $18.9 million or 5% from first quarter 2020 NII of $362.7 million. Second quarter 2020 net interest margin (“NIM”) was 3.04%, a 40 basis point compression from 3.44% in the first quarter of 2020. The changes in the NII and in the NIM reflect the quarter-over-quarter drop in the average Prime and LIBOR interest rates.
•Noninterest Expense and Efficiency Ratio — Second quarter 2020 noninterest expense totaled $187.7 million, including $153.3 million of adjusted2 noninterest expense. Adjusted noninterest expense of $153.3 million decreased by $7.3 million, or 5%, from $160.6 million in the first quarter of 2020. Correspondingly, the adjusted2 efficiency ratio was 38.1% in the second quarter, compared to 38.5% in the first quarter.
•Asset Quality Metrics — The allowance for loan losses (“ALLL”) totaled $632.1 million, or 1.70% of loans held-for-investment (“HFI”), as of June 30, 2020, compared to $557.0 million, or 1.55% of loans HFI, as of March 31, 2020.
Second quarter 2020 provision for credit losses was $102.4 million, compared to $73.9 million for the first quarter of 2020. Second quarter 2020 net charge-offs were $19.2 million, or annualized 0.21% of average loans HFI, compared to annualized 0.01% of average loans HFI in the first quarter of 2020. Nonperforming assets were $202.2 million, or 0.41% of total assets, as of June 30, 2020, compared to 0.33% of total assets as of March 31, 2020.
•Capital Levels — Capital levels for East West are strong. As of June 30, 2020, stockholders’ equity was $5.0 billion, or $35.25 per share. Tangible equity3 per common share was $31.86 as of June 30, 2020, an increase of 2% from $31.27 as of March 31, 2020. As of June 30, 2020, the tangible equity to tangible assets ratio3 was 9.2%, the common equity tier 1 (“CET1”) capital ratio was 12.7%, and the total risk-based capital ratio was 14.4%.

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

2

OPERATING RESULTS
Second Quarter 2020 Compared to First Quarter 2020
Net Interest Income and Net Interest Margin
Net interest income totaled $343.8 million, a decrease of 5% from $362.7 million. Net interest margin of 3.04% decreased by 40 basis points from 3.44%.
•Interest and fees earned on PPP loans contributed $21.3 million to interest income, and interest expense paid on the related PPPLF was $0.5 million.
•Average interest-earning assets of $45.4 billion grew $3.1 billion, or 29% linked quarter annualized. Average loan growth of $2.0 billion, or 23% linked quarter annualized, was mainly due to growth from PPP loans. The average balance of PPP loans was $1.5 billion in the second quarter of 2020.
•Average interest-bearing deposits were essentially flat at $26.4 billion. Average noninterest-bearing deposits of $13.5 billion grew $2.4 billion, or 87% linked quarter annualized. The average balance of the PPPLF, classified as long-term debt, was $530.3 million.
•The average loan yield contracted by 73 basis points to 3.98%, down from 4.71%, reflecting materially lower interest rates during the second quarter.
•The yield on average interest-earning assets contracted by 73 basis points to 3.53%, down from 4.26%.
•The average cost of interest-bearing deposits decreased by 46 basis points to 0.71%, down from 1.17%. The average cost of deposits decreased by 35 basis points to 0.47%, down from 0.82%.
Noninterest Income
Noninterest income totaled $58.6 million, an 8% increase from $54.0 million.
•Gains on sales of available-for-sale debt securities were $9.6 million, driven by $131.6 million in sales of municipal bonds during the second quarter.
•Lending fees of $21.9 million increased by $6.2 million, primarily reflecting an increase in the valuation of warrants received as part of lending relationships.
•The largest linked-quarter decreases in noninterest income were a $3.3 million decrease in foreign exchange income and a $2.3 million decrease in wealth management fees, both reflecting a decrease in customer-driven transactions during the second quarter.
Noninterest Expense
Noninterest expense totaled $187.7 million, a 5% increase from $178.9 million.
•Second quarter noninterest expense consisted of $153.3 million of adjusted noninterest expense, $24.8 million in amortization of tax credit and other investments, $8.7 million of debt extinguishment cost, and $0.9 million in amortization of core deposit intangibles.
•During the second quarter, the Company prepaid $150.0 million of repurchase agreements and incurred a debt extinguishment cost of $8.7 million.
•Adjusted noninterest expense of $153.3 million decreased by $7.3 million, or 5%, from $160.6 million. The largest linked-quarter change was a $5.0 million decrease in compensation and employee benefits expense, followed by a $1.9 million decrease in other operating expenses and a $1.7 million decrease in legal expense.
•The adjusted efficiency ratio was 38.1% in the second quarter, compared to 38.5% in the first quarter.
3

TAX RELATED ITEMS
Second quarter 2020 income tax expense was $12.9 million and the effective tax rate was 12%, compared to income tax expense of $19.2 million and an effective tax rate of 12% for the first quarter of 2020.
ASSET QUALITY
The allowance for loan losses totaled $632.1 million, or 1.70% of loans HFI, as of June 30, 2020, compared to $557.0 million, or 1.55% of loans HFI, as of March 31, 2020.
1
•Second quarter 2020 provision for credit losses was $102.4 million, compared to $73.9 million for the first quarter of 2020, and $19.2 million for the second quarter of 2019. Second quarter 2020 provision for credit losses was primarily driven by a more adverse macroeconomic forecast as of June 30, 2020, relative to March 31, 2020, as well as loan risk rating downgrades.
•Second quarter 2020 net charge-offs were $19.2 million, or annualized 0.21% of average loans HFI, compared to first quarter 2020 net charge-offs of $0.9 million, or annualized 0.01% of average loans HFI, and net charge-offs of $7.6 million, or annualized 0.09% of average loans HFI, for the second quarter of 2019. Second quarter 2020 net charge-offs were largely from loans in the oil and gas industry.
•Nonperforming assets were $202.2 million, or 0.41% of total assets, as of June 30, 2020, compared to nonperforming assets of $150.9 million, or 0.33% of total assets, as of March 31, 2020, and $119.3 million, or 0.28% of total assets, as of June 30, 2019. The increase in nonperforming assets was largely due to inflows to nonaccrual status of oil and gas and commercial real estate loans, partially offset by pay-offs and charge-offs of C&I loans.
CAPITAL STRENGTH
Capital levels for East West are strong. The following table presents the regulatory capital ratios as of June 30, 2020, March 31, 2020, and June 30, 2019.

EWBC Regulatory Capital Metrics |  |  |  | Basel III |  |  |  |  |  |  |  |  |  |
($ in millions) |  |  |  | June 30, 2020 (a) |  | March 30, 2020 (a) |  | June 30, 2019 |  | Minimum Capital Ratio |  | Well Capitalized Ratio |  | Minimum Capital Ratio + Conservation Buffer (b)
Risk-Based Capital Ratios: |  |  |  |  |  |  |  |  |  |  |  |  |  |
CET 1 capital ratio |  |  |  | 12.7 | % |  | 12.4 | % |  | 12.5 | % |  | 4.5 | % |  | 6.5 | % |  | 7.0 | %
Tier 1 capital ratio |  |  |  | 12.7 | % |  | 12.4 | % |  | 12.5 | % |  | 6.0 | % |  | 8.0 | % |  | 8.5 | %
Total capital ratio |  |  |  | 14.4 | % |  | 13.9 | % |  | 13.9 | % |  | 8.0 | % |  | 10.0 | % |  | 10.5 | %
Leverage ratio |  |  |  | 9.7 | % |  | 10.2 | % |  | 10.4 | % |  | 4.0 | % |  | 5.0 | % |  | 4.0 | %
Risk-Weighted Assets (“RWA”) (c) |  |  |  | $ | 36,199 |  |  | $ | 36,548 |  |  | $ | 34,154 |  |  | N/A |  | N/A |  | N/A

N/A Not applicable.
(a)The Company has elected to use the 2020 CECL transition provision in the calculation of its June 30, 2020 and March 31, 2020 regulatory capital ratios. The Company’s June 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.
4

DIVIDEND PAYOUT AND CAPITAL ACTIONS
East West’s Board of Directors has declared third quarter 2020 dividends for the Company’s common stock. The common stock cash dividend of $0.275 per share is payable on August 17, 2020 to shareholders of record on August 4, 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 second quarter of 2020 under this authorization.
Conference Call
East West will host a conference call to discuss second quarter 2020 earnings with the public on Thursday, July 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 second 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 July 23, 2020 at 11:30 a.m. Pacific Time through August 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: 10145315.
About East West
East West Bancorp, Inc. is a publicly owned company with total assets of $49.4 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.
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 impact of disease pandemics, such as the worldwide spread of COVID-19, on us, our operations and our customers and employees; 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 us 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 Board of Governors of the Federal Reserve Board System’s (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 program designed to address the effects of the COVID-19 pandemic, as well as the resulting effect of all such items on our operations, liquidity and capital position, and on the financial condition of our borrowers and other customers; changes in the U.S. economy, including an economic slowdowns or recession, inflation, deflation, 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; fluctuations in our stock price; changes in income tax laws and regulations; 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 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 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; impact on our 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 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; 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; impact on our liquidity due to 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 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; impact of natural or man-made disasters or calamities, such as wildfires 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 our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Reports on Form 10-Q, and particularly the discussion of risk factors within those documents. 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 our forward-looking statement due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on our business. The extent to which the COVID-19 pandemic impacts us will depend on future developments that are uncertain and unpredictable, including the scope, severity and duration of the pandemic and its impact on our 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. 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 |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  | June 30, 2020 % or Basis Point Change |  |  |
|  |  | June 30, 2020 |  | March 31, 2020 |  | June 30, 2019 |  | Qtr-o-Qtr |  | Yr-o-Yr |
Assets |  |  |  |  |  |  |  |  |  |  |  |
| Cash and due from banks |  | $ | 602,974 |  |  | $ | 427,415 |  |  | $ | 425,949 |  |  | 41.1 | % |  | 41.6 | % |
| Interest-bearing cash with banks |  | 3,930,528 |  |  | 2,652,627 |  |  | 3,195,665 |  |  | 48.2 |  |  | 23.0 |  |
| Cash and cash equivalents |  | 4,533,502 |  |  | 3,080,042 |  |  | 3,621,614 |  |  | 47.2 |  |  | 25.2 |  |
| Interest-bearing deposits with banks |  | 531,591 |  |  | 293,509 |  |  | 150,273 |  |  | 81.1 |  |  | 253.8 |  |
| Securities purchased under resale agreements (“resale agreements”) (1) |  | 1,260,000 |  |  | 860,000 |  |  | 1,010,000 |  |  | 46.5 |  |  | 24.8 |  |
| Available-for-sale (“AFS”) debt securities (amortized cost of $3,823,714 and $3,660,413 as of June 30, 2020 and March 31, 2020, respectively) |  | 3,884,574 |  |  | 3,695,943 |  |  | 2,592,913 |  |  | 5.1 |  |  | 49.8 |  |
| Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock |  | 78,963 |  |  | 78,745 |  |  | 78,093 |  |  | 0.3 |  |  | 1.1 |  |
| Loans held-for-sale (“HFS”) |  | 3,875 |  |  | 1,594 |  |  | 3,879 |  |  | 143.1 |  |  | (0.1) |  |
| Loans held-for-investment (''HFI'') (net of allowance for loan losses of $632,071, $557,003 (2) and $330,625) |  | 36,597,341 |  |  | 35,336,390 |  |  | 33,399,752 |  |  | 3.6 |  |  | 9.6 |  |
| Investments in qualified affordable housing partnerships, net |  | 201,888 |  |  | 198,653 |  |  | 198,466 |  |  | 1.6 |  |  | 1.7 |  |
| Investments in tax credit and other investments, net |  | 251,318 |  |  | 268,330 |  |  | 210,387 |  |  | (6.3) |  |  | 19.5 |  |
| Goodwill |  | 465,697 |  |  | 465,697 |  |  | 465,697 |  |  | — |  |  | — |  |
| Operating lease right-of-use assets |  | 94,898 |  |  | 101,381 |  |  | 109,032 |  |  | (6.4) |  |  | (13.0) |  |
| Other assets |  | 1,503,946 |  |  | 1,568,261 |  |  | 1,052,252 |  |  | (4.1) |  |  | 42.9 |  |
| Total assets |  | $ | 49,407,593 |  |  | $ | 45,948,545 |  |  | $ | 42,892,358 |  |  | 7.5 | % |  | 15.2 | % |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |
| Deposits |  | $ | 40,672,678 |  |  | $ | 38,686,958 |  |  | $ | 36,477,542 |  |  | 5.1 | % |  | 11.5 | % |
| Short-term borrowings |  | 52,851 |  |  | 66,924 |  |  | 19,972 |  |  | (21.0) |  |  | 164.6 |  |
| Federal funds purchased |  | 200,000 |  |  | — |  |  | — |  |  | 100.0 |  |  | 100.0 |  |
| FHLB advances |  | 656,759 |  |  | 646,336 |  |  | 745,074 |  |  | 1.6 |  |  | (11.9) |  |
| Securities sold under repurchase agreements (“repurchase agreements”) (1) |  | 300,000 |  |  | 450,000 |  |  | 50,000 |  |  | (33.3) |  |  | 500.0 |  |
| Long-term debt and finance lease liabilities (3) |  | 1,580,442 |  |  | 152,162 |  |  | 152,506 |  |  | 938.7 |  |  | 936.3 |  |
| Operating lease liabilities |  | 102,708 |  |  | 109,356 |  |  | 117,448 |  |  | (6.1) |  |  | (12.6) |  |
| Accrued expenses and other liabilities |  | 854,912 |  |  | 933,824 |  |  | 595,223 |  |  | (8.5) |  |  | 43.6 |  |
| Total liabilities |  | 44,420,350 |  |  | 41,045,560 |  |  | 38,157,765 |  |  | 8.2 |  |  | 16.4 |  |
| Stockholders’ equity (2) |  | 4,987,243 |  |  | 4,902,985 |  |  | 4,734,593 |  |  | 1.7 |  |  | 5.3 |  |
| Total liabilities and stockholders’ equity |  | $ | 49,407,593 |  |  | $ | 45,948,545 |  |  | $ | 42,892,358 |  |  | 7.5 | % |  | 15.2 | % |
| Book value per common share |  | $ | 35.25 |  |  | $ | 34.67 |  |  | $ | 32.53 |  |  | 1.7 | % |  | 8.4 | % |
| Tangible equity (4) per common share |  | $ | 31.86 |  |  | $ | 31.27 |  |  | $ | 29.20 |  |  | 1.9 |  |  | 9.1 |  |
| Number of common shares at period-end |  | 141,486 |  |  | 141,435 |  |  | 145,547 |  |  | 0.0 |  |  | (2.8) |  |
| Tangible equity to tangible assets ratio (4) |  | 9.21 | % |  | 9.73 | % |  | 10.02 | % |  | (52) |  | bps | (81) |  | bps

(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 June 30, 2020 and March 31, 2020. $400 million of gross repurchase agreements were eligible for netting against gross resale agreements as of June 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. The March 31, 2020 Allowance for loan loss reflects an increase of $125.2 million as a result of adopting ASU 2016-13. We recorded an after-tax decrease to opening retained earnings of $98.0 million as of January 1, 2020.
(3)Includes $1.43 billion of advances from the Paycheck Protection Program Liquidity Facility (“PPPLF”).
(4)See reconciliation of GAAP to non-GAAP financial measures in Table 15.
7

EAST WEST BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |  |  |
TOTAL LOANS AND DEPOSITS DETAIL |  |  |  |  |  |  |  |  |  |  |
($ in thousands) |  |  |  |  |  |  |  |  |  |  |
(unaudited) |  |  |  |  |  |  |  |  |  |  |
Table 2 |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  | June 30, 2020 % Change |  |
|  |  | June 30, 2020 |  | March 31, 2020 |  | June 30, 2019 |  | Qtr-o-Qtr |  | Yr-o-Yr
Loans: |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |
| Commercial and industrial (“C&I”) (1) |  | $ | 13,422,691 |  |  | $ | 12,590,764 |  |  | $ | 12,402,967 |  |  | 6.6 | % |  | 8.2 | %
| Commercial real estate (“CRE”): |  |  |  |  |  |  |  |  |  |
| CRE |  | 10,902,114 |  |  | 10,682,242 |  |  | 9,663,624 |  |  | 2.1 |  |  | 12.8 |
| Multifamily residential |  | 3,032,385 |  |  | 2,902,601 |  |  | 2,577,154 |  |  | 4.5 |  |  | 17.7 |
| Construction and land |  | 567,716 |  |  | 606,209 |  |  | 674,798 |  |  | (6.3) |  |  | (15.9) |
| Total CRE |  | 14,502,215 |  |  | 14,191,052 |  |  | 12,915,576 |  |  | 2.2 |  |  | 12.3 |
Consumer: |  |  |  |  |  |  |  |  |  |  |
| Residential mortgage: |  |  |  |  |  |  |  |  |  |
| Single-family residential |  | 7,660,094 |  |  | 7,403,723 |  |  | 6,494,882 |  |  | 3.5 |  |  | 17.9 |
| Home equity lines of credit (“HELOCs”) |  | 1,461,951 |  |  | 1,452,862 |  |  | 1,575,150 |  |  | 0.6 |  |  | (7.2) |
| Total residential mortgage |  | 9,122,045 |  |  | 8,856,585 |  |  | 8,070,032 |  |  | 3.0 |  |  | 13.0 |
| Other consumer |  | 182,461 |  |  | 254,992 |  |  | 341,802 |  |  | (28.4) |  |  | (46.6) |
Total loans HFI (2) |  |  | 37,229,412 |  |  | 35,893,393 |  |  | 33,730,377 |  |  | 3.7 |  |  | 10.4 |
Loans HFS |  |  | 3,875 |  |  | 1,594 |  |  | 3,879 |  |  | 143.1 |  |  | (0.1) |
| Total loans (2) |  | 37,233,287 |  |  | 35,894,987 |  |  | 33,734,256 |  |  | 3.7 |  |  | 10.4 |
Allowance for loan losses |  |  | (632,071) |  |  | (557,003) |  |  | (330,625) |  |  | 13.5 |  |  | 91.2 |
| Net loans (2) |  | $ | 36,601,216 |  |  | $ | 35,337,984 |  |  | $ | 33,403,631 |  |  | 3.6 |  |  | 9.6 |
Deposits: |  |  |  |  |  |  |  |  |  |  |
| Noninterest-bearing demand |  | $ | 13,940,420 |  |  | $ | 11,833,397 |  |  | $ | 10,599,088 |  |  | 17.8 | % |  | 31.5 | %
| Interest-bearing checking |  | 5,280,887 |  |  | 5,467,508 |  |  | 5,083,675 |  |  | (3.4) |  |  | 3.9 |
| Money market |  | 10,002,624 |  |  | 9,302,246 |  |  | 8,009,325 |  |  | 7.5 |  |  | 24.9 |
| Savings |  | 2,186,199 |  |  | 2,117,274 |  |  | 2,188,738 |  |  | 3.3 |  |  | (0.1) |
| Time deposits |  | 9,262,548 |  |  | 9,966,533 |  |  | 10,596,716 |  |  | (7.1) |  |  | (12.6) |
| Total deposits |  | $ | 40,672,678 |  |  | $ | 38,686,958 |  |  | $ | 36,477,542 |  |  | 5.1 | % |  | 11.5 | %

(1)Includes $1.75 billion of Paycheck Protection Program (“PPP”) loans as of June 30, 2020.
(2)Includes net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts of $(72.1) million, $(50.3) million, and $(43.8) million as of June 30, 2020, March 31, 2020 and June 30, 2019, respectively. Net origination fees related to PPP loans were $(25.4) million as of June 30, 2020.
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 |  |  |  |  |  | June 30, 2020 % Change |  |
|  |  | June 30, 2020 |  | March 31, 2020 |  | June 30, 2019 |  | Qtr-o-Qtr |  | Yr-o-Yr
Interest and dividend income (1) |  |  | $ | 398,776 |  |  | $ | 449,190 |  |  | $ | 474,844 |  |  | (11.2) | % |  | (16.0) | %
Interest expense |  |  | 55,001 |  |  | 86,483 |  |  | 107,518 |  |  | (36.4) |  |  | (48.8) |
Net interest income before provision for credit losses |  |  | 343,775 |  |  | 362,707 |  |  | 367,326 |  |  | (5.2) |  |  | (6.4) |
Provision for credit losses |  |  | 102,443 |  |  | 73,870 |  |  | 19,245 |  |  | 38.7 |  |  | 432.3 |
Net interest income after provision for credit losses |  |  | 241,332 |  |  | 288,837 |  |  | 348,081 |  |  | (16.4) |  |  | (30.7) |
Noninterest income |  |  | 58,637 |  |  | 54,049 |  |  | 52,759 |  |  | 8.5 |  |  | 11.1 |
Noninterest expense |  |  | 187,696 |  |  | 178,876 |  |  | 177,663 |  |  | 4.9 |  |  | 5.6 |
Income before income taxes |  |  | 112,273 |  |  | 164,010 |  |  | 223,177 |  |  | (31.5) |  |  | (49.7) |
Income tax expense |  |  | 12,921 |  |  | 19,186 |  |  | 72,797 |  |  | (32.7) |  |  | (82.3) |
Net income |  |  | $ | 99,352 |  |  | $ | 144,824 |  |  | $ | 150,380 |  |  | (31.4) | % |  | (33.9) | %
Earnings per share (“EPS”) |  |  |  |  |  |  |  |  |  |  |
- Basic |  |  | $ | 0.70 |  |  | $ | 1.00 |  |  | $ | 1.03 |  |  | (29.8) | % |  | (32.0) | %
- Diluted |  |  | $ | 0.70 |  |  | $ | 1.00 |  |  | $ | 1.03 |  |  | (29.7) |  |  | (32.0) |
Weighted-average number of shares outstanding |  |  |  |  |  |  |  |  |  |  |
- Basic |  |  | 141,486 |  |  | 144,814 |  |  | 145,546 |  |  | (2.3) | % |  | (2.8) | %
- Diluted |  |  | 141,827 |  |  | 145,285 |  |  | 146,052 |  |  | (2.4) |  |  | (2.9) |
|  |  | Three Months Ended |  |  |  |  |  | June 30, 2020 % Change |  |
|  |  | June 30, 2020 |  | March 31, 2020 |  | June 30, 2019 |  | Qtr-o-Qtr |  | Yr-o-Yr
Noninterest income: |  |  |  |  |  |  |  |  |  |  |
| Lending fees |  | $ | 21,946 |  |  | $ | 15,773 |  |  | $ | 16,423 |  |  | 39.1 | % |  | 33.6 | %
| Deposit account fees |  | 10,872 |  |  | 10,447 |  |  | 9,607 |  |  | 4.1 |  |  | 13.2 |
| Foreign exchange income |  | 4,562 |  |  | 7,819 |  |  | 7,286 |  |  | (41.7) |  |  | (37.4) |
| Wealth management fees |  | 3,091 |  |  | 5,353 |  |  | 3,800 |  |  | (42.3) |  |  | (18.7) |
| Interest rate contracts and other derivative income |  | 6,107 |  |  | 7,073 |  |  | 10,398 |  |  | (13.7) |  |  | (41.3) |
| Net gains on sales of loans |  | 132 |  |  | 950 |  |  | 15 |  |  | (86.1) |  |  | 780.0 |
| Gains on sales of AFS debt securities |  | 9,640 |  |  | 1,529 |  |  | 1,447 |  |  | 530.5 |  |  | 566.2 |
| Other investment income |  | 966 |  |  | 1,921 |  |  | 706 |  |  | (49.7) |  |  | 36.8 |
| Other income |  | 1,321 |  |  | 3,184 |  |  | 3,077 |  |  | (58.5) |  |  | (57.1) |
Total noninterest income |  |  | $ | 58,637 |  |  | $ | 54,049 |  |  | $ | 52,759 |  |  | 8.5 | % |  | 11.1 | %
Noninterest expense: |  |  |  |  |  |  |  |  |  |  |
| Compensation and employee benefits |  | $ | 96,955 |  |  | $ | 101,960 |  |  | $ | 100,531 |  |  | (4.9) | % |  | (3.6) | %
| Occupancy and equipment expense |  | 16,217 |  |  | 17,076 |  |  | 17,362 |  |  | (5.0) |  |  | (6.6) |
| Deposit insurance premiums and regulatory assessments |  | 3,700 |  |  | 3,427 |  |  | 2,919 |  |  | 8.0 |  |  | 26.8 |
| Legal expense |  | 1,530 |  |  | 3,197 |  |  | 2,355 |  |  | (52.1) |  |  | (35.0) |
| Data processing |  | 4,480 |  |  | 3,826 |  |  | 3,460 |  |  | 17.1 |  |  | 29.5 |
| Consulting expense |  | 1,413 |  |  | 1,217 |  |  | 2,069 |  |  | 16.1 |  |  | (31.7) |
| Deposit related expense |  | 3,353 |  |  | 3,563 |  |  | 3,338 |  |  | (5.9) |  |  | 0.4 |
| Computer software expense |  | 7,301 |  |  | 6,166 |  |  | 6,211 |  |  | 18.4 |  |  | 17.5 |
| Other operating expense |  | 19,248 |  |  | 21,119 |  |  | 22,679 |  |  | (8.9) |  |  | (15.1) |
| Amortization of tax credit and other investments |  | 24,759 |  |  | 17,325 |  |  | 16,739 |  |  | 42.9 |  |  | 47.9 |
| Repurchase agreements’ extinguishment cost |  | 8,740 |  |  | — |  |  | — |  |  | 100.0 |  |  | 100.0 |
Total noninterest expense |  |  | $ | 187,696 |  |  | $ | 178,876 |  |  | $ | 177,663 |  |  | 4.9 | % |  | 5.6 | %

(1)Includes $21.3 million of interest income related to PPP loans for the three months ended June 30, 2020.
9

EAST WEST BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |
CONDENSED CONSOLIDATED STATEMENT OF INCOME |  |  |  |  |  |  |
($ and shares in thousands, except per share data) |  |  |  |  |  |  |
(unaudited) |  |  |  |  |  |  |
Table 4 |  |  |  |  |  |  |
|  |  | Six Months Ended |  |  |  | June 30, 2020 % Change
|  |  | June 30, 2020 |  | June 30, 2019 |  | Yr-o-Yr
Interest and dividend income (1) |  |  | $ | 847,966 |  |  | $ | 938,155 |  |  | (9.6) | %
Interest expense |  |  | 141,484 |  |  | 208,368 |  |  | (32.1) |
Net interest income before provision for credit losses |  |  | 706,482 |  |  | 729,787 |  |  | (3.2) |
Provision for credit losses |  |  | 176,313 |  |  | 41,824 |  |  | 321.6 |
Net interest income after provision for credit losses |  |  | 530,169 |  |  | 687,963 |  |  | (22.9) |
Noninterest income |  |  | 112,686 |  |  | 94,890 |  |  | 18.8 |
Noninterest expense |  |  | 366,572 |  |  | 364,585 |  |  | 0.5 |
Income before income taxes |  |  | 276,283 |  |  | 418,268 |  |  | (33.9) |
Income tax expense |  |  | 32,107 |  |  | 103,864 |  |  | (69.1) |
Net income |  |  | $ | 244,176 |  |  | $ | 314,404 |  |  | (22.3) | %
EPS |  |  |  |  |  |  |
- Basic |  |  | $ | 1.71 |  |  | $ | 2.16 |  |  | (21.1) | %
- Diluted |  |  | $ | 1.70 |  |  | $ | 2.15 |  |  | (21.0) |
Weighted-average number of shares outstanding |  |  |  |  |  |  |
- Basic |  |  | 143,150 |  |  | 145,402 |  |  | (1.5) | %
- Diluted |  |  | 143,560 |  |  | 146,016 |  |  | (1.7) |
|  |  | Six Months Ended |  |  |  | June 30, 2020 % Change
|  |  | June 30, 2020 |  | June 30, 2019 |  | Yr-o-Yr
Noninterest income: |  |  |  |  |  |  |
| Lending fees |  | $ | 37,719 |  |  | $ | 31,392 |  |  | 20.2 | %
| Deposit account fees |  | 21,319 |  |  | 19,075 |  |  | 11.8 |
| Foreign exchange income |  | 12,381 |  |  | 12,301 |  |  | 0.7 |
| Wealth management fees |  | 8,444 |  |  | 7,574 |  |  | 11.5 |
| Interest rate contracts and other derivative income |  | 13,180 |  |  | 13,614 |  |  | (3.2) |
| Net gains on sales of loans |  | 1,082 |  |  | 930 |  |  | 16.3 |
| Gains on sales of AFS debt securities |  | 11,169 |  |  | 3,008 |  |  | 271.3 |
| Other investment income |  | 2,887 |  |  | 1,908 |  |  | 51.3 |
| Other income |  | 4,505 |  |  | 5,088 |  |  | (11.5) |
Total noninterest income |  |  | $ | 112,686 |  |  | $ | 94,890 |  |  | 18.8 | %
Noninterest expense: |  |  |  |  |  |  |
| Compensation and employee benefits |  | $ | 198,915 |  |  | $ | 202,830 |  |  | (1.9) | %
| Occupancy and equipment expense |  | 33,293 |  |  | 34,680 |  |  | (4.0) |
| Deposit insurance premiums and regulatory assessments |  | 7,127 |  |  | 6,007 |  |  | 18.6 |
| Legal expense |  | 4,727 |  |  | 4,580 |  |  | 3.2 |
| Data processing |  | 8,306 |  |  | 6,617 |  |  | 25.5 |
| Consulting expense |  | 2,630 |  |  | 4,128 |  |  | (36.3) |
| Deposit related expense |  | 6,916 |  |  | 6,842 |  |  | 1.1 |
| Computer software expense |  | 13,467 |  |  | 12,289 |  |  | 9.6 |
| Other operating expense |  | 40,367 |  |  | 44,968 |  |  | (10.2) |
| Amortization of tax credit and other investments |  | 42,084 |  |  | 41,644 |  |  | 1.1 |
| Repurchase agreements’ extinguishment cost |  | 8,740 |  |  | — |  |  | 100.0 |
Total noninterest expense |  |  | $ | 366,572 |  |  | $ | 364,585 |  |  | 0.5 | %

(1)Includes $21.3 million of interest income related to PPP loans for the six months ended June 30, 2020.
10

EAST WEST BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
SELECTED AVERAGE BALANCES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
($ in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(unaudited) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Table 5 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | Three Months Ended |  |  |  |  |  | June 30, 2020 % Change |  |  |  | Six Months Ended |  |  |  | June 30, 2020 % Change
|  |  | June 30, 2020 |  | March 31, 2020 |  | June 30, 2019 |  | Qtr-o-Qtr |  | Yr-o-Yr |  | June 30, 2020 |  | June 30, 2019 |  | Yr-o-Yr
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| C&I (1) |  | $ | 13,560,719 |  |  | $ | 12,166,178 |  |  | $ | 12,003,277 |  |  | 11.5 | % |  | 13.0 | % |  | $ | 12,863,449 |  |  | $ | 11,925,003 |  |  | 7.9 | %
| CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| CRE |  | 10,812,399 |  |  | 10,485,683 |  |  | 9,501,566 |  |  | 3.1 |  |  | 13.8 |  |  | 10,649,041 |  |  | 9,439,946 |  |  | 12.8 |
| Multifamily residential |  | 2,987,311 |  |  | 2,889,844 |  |  | 2,510,271 |  |  | 3.4 |  |  | 19.0 |  |  | 2,938,577 |  |  | 2,504,320 |  |  | 17.3 |
| Construction and land |  | 594,965 |  |  | 641,079 |  |  | 675,967 |  |  | (7.2) |  |  | (12.0) |  |  | 618,022 |  |  | 630,459 |  |  | (2.0) |
| Total CRE |  | 14,394,675 |  |  | 14,016,606 |  |  | 12,687,804 |  |  | 2.7 |  |  | 13.5 |  |  | 14,205,640 |  |  | 12,574,725 |  |  | 13.0 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Residential mortgage: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Single-family residential |  | 7,506,546 |  |  | 7,257,367 |  |  | 6,373,715 |  |  | 3.4 |  |  | 17.8 |  |  | 7,381,956 |  |  | 6,263,246 |  |  | 17.9 |
| HELOCs |  | 1,444,933 |  |  | 1,442,450 |  |  | 1,607,311 |  |  | 0.2 |  |  | (10.1) |  |  | 1,443,692 |  |  | 1,629,637 |  |  | (11.4) |
| Total residential mortgage |  | 8,951,479 |  |  | 8,699,817 |  |  | 7,981,026 |  |  | 2.9 |  |  | 12.2 |  |  | 8,825,648 |  |  | 7,892,883 |  |  | 11.8 |
| Other consumer |  | 234,900 |  |  | 271,367 |  |  | 309,267 |  |  | (13.4) |  |  | (24.0) |  |  | 253,134 |  |  | 307,033 |  |  | (17.6) |
| Total loans (2) |  | $ | 37,141,773 |  |  | $ | 35,153,968 |  |  | $ | 32,981,374 |  |  | 5.7 | % |  | 12.6 | % |  | $ | 36,147,871 |  |  | $ | 32,699,644 |  |  | 10.5 | %
Interest-earning assets |  |  | $ | 45,413,242 |  |  | $ | 42,362,531 |  |  | $ | 39,461,101 |  |  | 7.2 | % |  | 15.1 | % |  | $ | 43,887,886 |  |  | $ | 39,105,030 |  |  | 12.2 | %
Total assets |  |  | $ | 48,228,914 |  |  | $ | 44,755,509 |  |  | $ | 41,545,441 |  |  | 7.8 | % |  | 16.1 | % |  | $ | 46,492,211 |  |  | $ | 41,144,152 |  |  | 13.0 | %
Deposits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Noninterest-bearing demand |  | $ | 13,534,873 |  |  | $ | 11,117,710 |  |  | $ | 10,237,868 |  |  | 21.7 | % |  | 32.2 | % |  | $ | 12,326,291 |  |  | $ | 10,155,079 |  |  | 21.4 | %
| Interest-bearing checking |  | 4,687,178 |  |  | 5,001,672 |  |  | 5,221,110 |  |  | (6.3) |  |  | (10.2) |  |  | 4,844,425 |  |  | 5,245,845 |  |  | (7.7) |
| Money market |  | 9,893,816 |  |  | 9,013,381 |  |  | 7,856,055 |  |  | 9.8 |  |  | 25.9 |  |  | 9,453,599 |  |  | 7,967,831 |  |  | 18.6 |
| Savings |  | 2,149,965 |  |  | 2,076,270 |  |  | 2,106,626 |  |  | 3.5 |  |  | 2.1 |  |  | 2,113,118 |  |  | 2,099,058 |  |  | 0.7 |
| Time deposits |  | 9,634,696 |  |  | 10,264,007 |  |  | 9,904,726 |  |  | (6.1) |  |  | (2.7) |  |  | 9,949,351 |  |  | 9,658,181 |  |  | 3.0 |
| Total deposits |  | $ | 39,900,528 |  |  | $ | 37,473,040 |  |  | $ | 35,326,385 |  |  | 6.5 | % |  | 12.9 | % |  | $ | 38,686,784 |  |  | $ | 35,125,994 |  |  | 10.1 | %
Interest-bearing liabilities |  |  | $ | 28,362,618 |  |  | $ | 27,593,341 |  |  | $ | 25,860,541 |  |  | 2.8 | % |  | 9.7 | % |  | $ | 27,977,979 |  |  | $ | 25,657,814 |  |  | 9.0 | %
Stockholders’ equity |  |  | $ | 4,982,446 |  |  | $ | 5,022,005 |  |  | $ | 4,684,348 |  |  | (0.8) | % |  | 6.4 | % |  | $ | 5,002,226 |  |  | $ | 4,611,231 |  |  | 8.5 | %

(1)Includes average balance of PPP loans of $1.47 billion and $732.5 million for the three and six months ended June 30, 2020, 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 |  |  |  |  |  |  |  |  |  |  |  |
|  |  | June 30, 2020 |  |  |  |  |  | March 31, 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 |  | $ | 3,435,920 |  |  | $ | 4,564 |  |  | 0.53 | % |  | $ | 2,973,006 |  |  | $ | 11,108 |  |  | 1.50 | % |  |
| Resale agreements (2) |  | 1,037,473 |  |  | 5,514 |  |  | 2.14 | % |  | 882,142 |  |  | 5,625 |  |  | 2.56 | % |  |
| AFS debt securities |  | 3,719,209 |  |  | 21,004 |  |  | 2.27 | % |  | 3,274,740 |  |  | 20,142 |  |  | 2.47 | % |  |
| Loans (3) |  | 37,141,773 |  |  | 367,393 |  |  | 3.98 | % |  | 35,153,968 |  |  | 411,869 |  |  | 4.71 | % |  |
| FHLB and FRB stock |  | 78,867 |  |  | 301 |  |  | 1.54 | % |  | 78,675 |  |  | 446 |  |  | 2.28 | % |  |
| Total interest-earning assets |  | 45,413,242 |  |  | 398,776 |  |  | 3.53 | % |  | 42,362,531 |  |  | 449,190 |  |  | 4.26 | % |  |
Noninterest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Cash and due from banks |  | 498,908 |  |  |  |  |  |  | 510,512 |  |  |  |  |  |  |
| Allowance for loan losses |  | (566,473) |  |  |  |  |  |  | (492,297) |  |  |  |  |  |  |
| Other assets |  | 2,883,237 |  |  |  |  |  |  | 2,374,763 |  |  |  |  |  |  |
| Total assets |  | $ | 48,228,914 |  |  |  |  |  |  | $ | 44,755,509 |  |  |  |  |  |  |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Checking deposits |  | $ | 4,687,178 |  |  | $ | 5,404 |  |  | 0.46 | % |  | $ | 5,001,672 |  |  | $ | 10,246 |  |  | 0.82 | % |  |
| Money market deposits |  | 9,893,816 |  |  | 8,093 |  |  | 0.33 | % |  | 9,013,381 |  |  | 22,248 |  |  | 0.99 | % |  |
| Savings deposits |  | 2,149,965 |  |  | 1,445 |  |  | 0.27 | % |  | 2,076,270 |  |  | 1,817 |  |  | 0.35 | % |  |
| Time deposits |  | 9,634,696 |  |  | 31,457 |  |  | 1.31 | % |  | 10,264,007 |  |  | 42,092 |  |  | 1.65 | % |  |
| Federal funds purchased and other short-term borrowings |  | 242,185 |  |  | 265 |  |  | 0.44 | % |  | 59,978 |  |  | 556 |  |  | 3.73 | % |  |
| FHLB advances |  | 653,665 |  |  | 3,343 |  |  | 2.06 | % |  | 693,357 |  |  | 4,166 |  |  | 2.42 | % |  |
| Repurchase agreements (2) |  | 418,681 |  |  | 3,540 |  |  | 3.40 | % |  | 332,417 |  |  | 3,991 |  |  | 4.83 | % |  |
| Long-term debt and finance lease liabilities |  | 682,432 |  |  | 1,454 |  |  | 0.86 | % |  | 152,259 |  |  | 1,367 |  |  | 3.61 | % |  |
| Total interest-bearing liabilities |  | 28,362,618 |  |  | 55,001 |  |  | 0.78 | % |  | 27,593,341 |  |  | 86,483 |  |  | 1.26 | % |  |
Noninterest-bearing liabilities and stockholders’ equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Demand deposits |  | 13,534,873 |  |  |  |  |  |  | 11,117,710 |  |  |  |  |  |  |
| Accrued expenses and other liabilities |  | 1,348,977 |  |  |  |  |  |  | 1,022,453 |  |  |  |  |  |  |
| Stockholders’ equity |  | 4,982,446 |  |  |  |  |  |  | 5,022,005 |  |  |  |  |  |  |
| Total liabilities and stockholders’ equity |  | $ | 48,228,914 |  |  |  |  |  |  | $ | 44,755,509 |  |  |  |  |  |  |
Interest rate spread |  |  |  |  |  |  | 2.75 | % |  |  |  |  |  | 3.00 | % |  |
Net interest income and net interest margin |  |  |  |  | $ | 343,775 |  |  | 3.04 | % |  |  |  | $ | 362,707 |  |  | 3.44 | % |  |

(1)Annualized.
(2)There was no netting of repurchase agreements against resale agreements for the three months ended June 30, 2020. Average balances of resale and repurchase agreements for the three months ended March 31, 2020 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 2.14% and 2.50% for the three months ended June 30, 2020 and March 31, 2020, respectively. The weighted-average interest rates of gross repurchase agreements were 3.40% and 4.10% for the three months ended June 30, 2020 and March 31, 2020, respectively.
(3)Includes loans HFS.
12

EAST WEST BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
($ in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(unaudited) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Table 7 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | Three Months Ended |  |  |  |  |  |  |  |  |  |  |  |
|  |  | June 30, 2020 |  |  |  |  |  | June 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 |  | $ | 3,435,920 |  |  | $ | 4,564 |  |  | 0.53 | % |  | $ | 2,852,060 |  |  | $ | 16,800 |  |  | 2.37 | % |  |
| Resale agreements (2) |  | 1,037,473 |  |  | 5,514 |  |  | 2.14 | % |  | 999,835 |  |  | 7,404 |  |  | 2.98 | % |  |
| AFS debt securities |  | 3,719,209 |  |  | 21,004 |  |  | 2.27 | % |  | 2,551,383 |  |  | 15,685 |  |  | 2.47 | % |  |
| Loans (3) |  | 37,141,773 |  |  | 367,393 |  |  | 3.98 | % |  | 32,981,374 |  |  | 434,450 |  |  | 5.28 | % |  |
| FHLB and FRB stock |  | 78,867 |  |  | 301 |  |  | 1.54 | % |  | 76,449 |  |  | 505 |  |  | 2.65 | % |  |
| Total interest-earning assets |  | 45,413,242 |  |  | 398,776 |  |  | 3.53 | % |  | 39,461,101 |  |  | 474,844 |  |  | 4.83 | % |  |
Noninterest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Cash and due from banks |  | 498,908 |  |  |  |  |  |  | 439,449 |  |  |  |  |  |  |
| Allowance for loan losses |  | (566,473) |  |  |  |  |  |  | (321,335) |  |  |  |  |  |  |
| Other assets |  | 2,883,237 |  |  |  |  |  |  | 1,966,226 |  |  |  |  |  |  |
| Total assets |  | $ | 48,228,914 |  |  |  |  |  |  | $ | 41,545,441 |  |  |  |  |  |  |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Checking deposits |  | $ | 4,687,178 |  |  | $ | 5,404 |  |  | 0.46 | % |  | $ | 5,221,110 |  |  | $ | 15,836 |  |  | 1.22 | % |  |
| Money market deposits |  | 9,893,816 |  |  | 8,093 |  |  | 0.33 | % |  | 7,856,055 |  |  | 28,681 |  |  | 1.46 | % |  |
| Savings deposits |  | 2,149,965 |  |  | 1,445 |  |  | 0.27 | % |  | 2,106,626 |  |  | 2,477 |  |  | 0.47 | % |  |
| Time deposits |  | 9,634,696 |  |  | 31,457 |  |  | 1.31 | % |  | 9,904,726 |  |  | 50,970 |  |  | 2.06 | % |  |
| Federal funds purchased and other short-term borrowings |  | 242,185 |  |  | 265 |  |  | 0.44 | % |  | 35,575 |  |  | 361 |  |  | 4.07 | % |  |
| FHLB advances |  | 653,665 |  |  | 3,343 |  |  | 2.06 | % |  | 533,841 |  |  | 4,011 |  |  | 3.01 | % |  |
| Repurchase agreements (2) |  | 418,681 |  |  | 3,540 |  |  | 3.40 | % |  | 50,000 |  |  | 3,469 |  |  | 27.83 | % |  |
| Long-term debt and finance lease liabilities |  | 682,432 |  |  | 1,454 |  |  | 0.86 | % |  | 152,608 |  |  | 1,713 |  |  | 4.50 | % |  |
| Total interest-bearing liabilities |  | 28,362,618 |  |  | 55,001 |  |  | 0.78 | % |  | 25,860,541 |  |  | 107,518 |  |  | 1.67 | % |  |
Noninterest-bearing liabilities and stockholders’ equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Demand deposits |  | 13,534,873 |  |  |  |  |  |  | 10,237,868 |  |  |  |  |  |  |
| Accrued expenses and other liabilities |  | 1,348,977 |  |  |  |  |  |  | 762,684 |  |  |  |  |  |  |
| Stockholders’ equity |  | 4,982,446 |  |  |  |  |  |  | 4,684,348 |  |  |  |  |  |  |
| Total liabilities and stockholders’ equity |  | $ | 48,228,914 |  |  |  |  |  |  | $ | 41,545,441 |  |  |  |  |  |  |
Interest rate spread |  |  |  |  |  |  | 2.75 | % |  |  |  |  |  | 3.16 | % |  |
Net interest income and net interest margin |  |  |  |  | $ | 343,775 |  |  | 3.04 | % |  |  |  | $ | 367,326 |  |  | 3.73 | % |  |

(1)Annualized.
(2)There was no netting of repurchase agreements against resale agreements for the three months ended June 30, 2020. Average balances of resale and repurchase agreements for the three months ended June 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 2.14% and 2.71% for the three months ended June 30, 2020 and 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 3.40% and 4.93% for the three months ended June 30, 2020 and 2019, respectively.
(3)Includes loans HFS.
13

EAST WEST BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
($ in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(unaudited) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Table 8 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | Six Months Ended |  |  |  |  |  |  |  |  |  |  |  |
|  |  | June 30, 2020 |  |  |  |  |  | June 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 |  | $ | 3,204,463 |  |  | $ | 15,672 |  |  | 0.98 | % |  | $ | 2,716,128 |  |  | $ | 32,210 |  |  | 2.38 | % |  |
| Resale agreements (2) |  | 959,807 |  |  | 11,139 |  |  | 2.33 | % |  | 1,017,320 |  |  | 15,310 |  |  | 3.03 | % |  |
| AFS investment securities |  | 3,496,974 |  |  | 41,146 |  |  | 2.37 | % |  | 2,596,590 |  |  | 31,433 |  |  | 2.44 | % |  |
| Loans (3) |  | 36,147,871 |  |  | 779,262 |  |  | 4.34 | % |  | 32,699,644 |  |  | 857,984 |  |  | 5.29 | % |  |
| FHLB and FRB stock |  | 78,771 |  |  | 747 |  |  | 1.91 | % |  | 75,348 |  |  | 1,218 |  |  | 3.26 | % |  |
| Total interest-earning assets |  | 43,887,886 |  |  | 847,966 |  |  | 3.89 | % |  | 39,105,030 |  |  | 938,155 |  |  | 4.84 | % |  |
Noninterest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Cash and due from banks |  | 504,710 |  |  |  |  |  |  | 453,725 |  |  |  |  |  |  |
| Allowance for loan losses |  | (529,385) |  |  |  |  |  |  | (317,909) |  |  |  |  |  |  |
| Other assets |  | 2,629,000 |  |  |  |  |  |  | 1,903,306 |  |  |  |  |  |  |
| Total assets |  | $ | 46,492,211 |  |  |  |  |  |  | $ | 41,144,152 |  |  |  |  |  |  |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Checking deposits |  | $ | 4,844,425 |  |  | $ | 15,650 |  |  | 0.65 | % |  | $ | 5,245,845 |  |  | $ | 30,091 |  |  | 1.16 | % |  |
| Money market deposits |  | 9,453,599 |  |  | 30,341 |  |  | 0.65 | % |  | 7,967,831 |  |  | 58,915 |  |  | 1.49 | % |  |
| Savings deposits |  | 2,113,118 |  |  | 3,262 |  |  | 0.31 | % |  | 2,099,058 |  |  | 4,704 |  |  | 0.45 | % |  |
| Time deposits |  | 9,949,351 |  |  | 73,549 |  |  | 1.49 | % |  | 9,658,181 |  |  | 96,259 |  |  | 2.01 | % |  |
| Federal funds purchased and other short-term borrowings |  | 151,081 |  |  | 821 |  |  | 1.09 | % |  | 47,939 |  |  | 977 |  |  | 4.11 | % |  |
| FHLB advances |  | 673,511 |  |  | 7,509 |  |  | 2.24 | % |  | 436,475 |  |  | 6,990 |  |  | 3.23 | % |  |
| Repurchase agreements (2) |  | 375,549 |  |  | 7,531 |  |  | 4.03 | % |  | 50,000 |  |  | 6,961 |  |  | 28.07 | % |  |
| Long-term debt and finance lease liabilities |  | 417,345 |  |  | 2,821 |  |  | 1.36 | % |  | 152,485 |  |  | 3,471 |  |  | 4.59 | % |  |
| Total interest-bearing liabilities |  | 27,977,979 |  |  | 141,484 |  |  | 1.02 | % |  | 25,657,814 |  |  | 208,368 |  |  | 1.64 | % |  |
Noninterest-bearing liabilities and stockholders’ equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Demand deposits |  | 12,326,291 |  |  |  |  |  |  | 10,155,079 |  |  |  |  |  |  |
| Accrued expenses and other liabilities |  | 1,185,715 |  |  |  |  |  |  | 720,028 |  |  |  |  |  |  |
| Stockholders’ equity |  | 5,002,226 |  |  |  |  |  |  | 4,611,231 |  |  |  |  |  |  |
| Total liabilities and stockholders’ equity |  | $ | 46,492,211 |  |  |  |  |  |  | $ | 41,144,152 |  |  |  |  |  |  |
Interest rate spread |  |  |  |  |  |  | 2.87 | % |  |  |  |  |  | 3.20 | % |  |
Net interest income and net interest margin |  |  |  |  | $ | 706,482 |  |  | 3.24 | % |  |  |  | $ | 729,787 |  |  | 3.76 | % |  |

(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 2.32% and 2.77% for the six months ended June 30, 2020 and 2019, respectively. The weighted-average interest rates of gross repurchase agreements were 3.76% and 4.97% for the six months ended June 30, 2020 and 2019, respectively.
(3)Includes loans HFS.
14

EAST WEST BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |  |  |  |
SELECTED RATIOS |  |  |  |  |  |  |  |  |  |  |  |
(unaudited) |  |  |  |  |  |  |  |  |  |  |  |
Table 9 |  |  |  |  |  |  |  |  |  |  |  |
|  |  | Three Months Ended (1) |  |  |  |  |  | June 30, 2020 Basis Point Change |  |  |
|  |  | June 30, 2020 |  | March 31, 2020 |  | June 30, 2019 |  | Qtr-o-Qtr |  | Yr-o-Yr |
| Return on average assets |  | 0.83 | % |  | 1.30 | % |  | 1.45 | % |  | (47) |  | bps | (62) |  | bps
| Adjusted return on average assets (2) |  | 0.83 | % |  | 1.30 | % |  | 1.74 | % |  | (47) |  |  | (91) |  |
| Return on average equity |  | 8.02 | % |  | 11.60 | % |  | 12.88 | % |  | (358) |  |  | (486) |  |
| Adjusted return on average equity (2) |  | 8.02 | % |  | 11.60 | % |  | 15.45 | % |  | (358) |  |  | (743) |  |
| Return on average tangible equity (2) |  | 8.96 | % |  | 12.93 | % |  | 14.51 | % |  | (397) |  |  | (555) |  |
| Adjusted return on average tangible equity (2) |  | 8.96 | % |  | 12.93 | % |  | 17.39 | % |  | (397) |  |  | (843) |  |
| Interest rate spread |  | 2.75 | % |  | 3.00 | % |  | 3.16 | % |  | (25) |  |  | (41) |  |
| Net interest margin |  | 3.04 | % |  | 3.44 | % |  | 3.73 | % |  | (40) |  |  | (69) |  |
| Average loan yield |  | 3.98 | % |  | 4.71 | % |  | 5.28 | % |  | (73) |  |  | (130) |  |
| Yield on average interest-earning assets |  | 3.53 | % |  | 4.26 | % |  | 4.83 | % |  | (73) |  |  | (130) |  |
| Average cost of interest-bearing deposits |  | 0.71 | % |  | 1.17 | % |  | 1.57 | % |  | (46) |  |  | (86) |  |
| Average cost of deposits |  | 0.47 | % |  | 0.82 | % |  | 1.11 | % |  | (35) |  |  | (64) |  |
| Average cost of funds |  | 0.53 | % |  | 0.90 | % |  | 1.19 | % |  | (37) |  |  | (66) |  |
| Adjusted pre-tax, pre-provision profitability ratio (2) |  | 2.08 | % |  | 2.30 | % |  | 2.51 | % |  | (22) |  |  | (43) |  |
| Adjusted noninterest expense/average assets (2) |  | 1.28 | % |  | 1.44 | % |  | 1.54 | % |  | (16) |  |  | (26) |  |
| Efficiency ratio |  | 46.64 | % |  | 42.92 | % |  | 42.29 | % |  | 372 |  |  | 435 |  |
| Adjusted efficiency ratio (2) |  | 38.09 | % |  | 38.54 | % |  | 38.03 | % |  | (45) |  | bps | 6 |  | bps
|  |  | Six Months Ended (1) |  |  |  | June 30, 2020 Basis Point Change |  |  |  |  |
|  |  | June 30, 2020 |  | June 30, 2019 |  | Yr-o-Yr |  |  |  |  |
| Return on average assets |  | 1.06 | % |  | 1.54 | % |  | (48) |  | bps |  |  |  |
| Adjusted return on average assets (2) |  | 1.06 | % |  | 1.71 | % |  | (65) |  |  |  |  |  |
| Return on average equity |  | 9.82 | % |  | 13.75 | % |  | (393) |  |  |  |  |  |
| Adjusted return on average equity (2) |  | 9.82 | % |  | 15.28 | % |  | (546) |  |  |  |  |  |
| Return on average tangible equity (2) |  | 10.95 | % |  | 15.50 | % |  | (455) |  |  |  |  |  |
| Adjusted return on average tangible equity (2) |  | 10.95 | % |  | 17.21 | % |  | (626) |  |  |  |  |  |
| Interest rate spread |  | 2.87 | % |  | 3.20 | % |  | (33) |  |  |  |  |  |
| Net interest margin |  | 3.24 | % |  | 3.76 | % |  | (52) |  |  |  |  |  |
| Average loan yield |  | 4.34 | % |  | 5.29 | % |  | (95) |  |  |  |  |  |
| Yield on average interest-earning assets |  | 3.89 | % |  | 4.84 | % |  | (95) |  |  |  |  |  |
| Average cost of interest-bearing deposits |  | 0.94 | % |  | 1.53 | % |  | (59) |  |  |  |  |  |
| Average cost of deposits |  | 0.64 | % |  | 1.09 | % |  | (45) |  |  |  |  |  |
| Average cost of funds |  | 0.71 | % |  | 1.17 | % |  | (46) |  |  |  |  |  |
| Adjusted pre-tax, pre-provision profitability ratio (2) |  | 2.19 | % |  | 2.47 | % |  | (28) |  |  |  |  |  |
| Adjusted noninterest expense/average assets (2) |  | 1.36 | % |  | 1.57 | % |  | (21) |  |  |  |  |  |
| Efficiency ratio |  | 44.75 | % |  | 44.21 | % |  | 54 |  |  |  |  |  |
| Adjusted efficiency ratio (2) |  | 38.31 | % |  | 38.88 | % |  | (57) |  | bps |  |  |  |

(1)Annualized except for efficiency ratio.
(2)See reconciliation of GAAP to non-GAAP financial measures in Tables 13, 14 and 15.
15

EAST WEST BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
($ in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(unaudited) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Table 10 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
ASU 2016-13 replaced the incurred loss methodology used in calculating the allowance for loan losses with a current expected credit loss model (“CECL”). The Company adopted ASU 2016-13 using the modified retrospective approach on January 1, 2020. As a result, prior comparative periods have not been adjusted for the CECL model. In addition, ASU 2016-13 introduces the concept of Purchased Credit Deteriorated (“PCD”) financial assets, which replaces purchased credit-impaired (“PCI”) assets. For PCD assets, the initial allowance for loan losses is added to the purchase price and is considered to be part of the PCD loan amortized cost basis, hence, there is no income statement impact on acquisition. This contrasts with PCI loans where allowance for loan losses only reflects losses that are incurred by the Company after the acquisition. The allowance for loan losses is evaluated each quarter and adjusted as necessary by recognizing a loan loss expense or a reversal of loan loss expense. There were no PCD loans during the three and six months ended June 30, 2020. |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | 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 |
|  |  | Three Months Ended March 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | Commercial |  |  |  |  |  |  |  | Consumer |  |  |  |  |  | Total
|  |  |  |  | CRE |  |  |  |  |  | Residential Mortgage |  |  |  |  |  |
|  |  | C&I |  | CRE |  | Multi-Family Residential |  | Construction and Land |  | Single- Family Residential |  | HELOCs |  | Other Consumer |  |
Allowance for loan losses, December 31, 2019 |  |  | $ | 238,376 |  |  | $ | 40,509 |  |  | $ | 22,826 |  |  | $ | 19,404 |  |  | $ | 28,527 |  |  | $ | 5,265 |  |  | $ | 3,380 |  |  | $ | 358,287 |
Impact of ASU 2016-13 adoption |  |  | 74,237 |  |  | 72,169 |  |  | (8,112) |  |  | (9,889) |  |  | (3,670) |  |  | (1,798) |  |  | 2,221 |  |  | 125,158 |
Allowance for loan losses, January 1, 2020 |  |  | $ | 312,613 |  |  | $ | 112,678 |  |  | $ | 14,714 |  |  | $ | 9,515 |  |  | $ | 24,857 |  |  | $ | 3,467 |  |  | $ | 5,601 |  |  | $ | 483,445 |
Provision for (reversal of) credit losses on loans | (a) |  | 60,618 |  |  | 11,435 |  |  | 1,281 |  |  | 1,482 |  |  | 1,700 |  |  | 412 |  |  | (2,272) |  |  | 74,656 |
Gross charge-offs |  |  | (11,977) |  |  | (954) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (26) |  |  | (12,957) |
Gross recoveries |  |  | 1,575 |  |  | 9,660 |  |  | 535 |  |  | 21 |  |  | 265 |  |  | 2 |  |  | 1 |  |  | 12,059 |
Total net (charge-offs) recoveries |  |  | (10,402) |  |  | 8,706 |  |  | 535 |  |  | 21 |  |  | 265 |  |  | 2 |  |  | (25) |  |  | (898) |
Foreign currency translation adjustment |  |  | (200) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (200) |
Allowance for loan losses, March 31, 2020 |  |  | $ | 362,629 |  |  | $ | 132,819 |  |  | $ | 16,530 |  |  | $ | 11,018 |  |  | $ | 26,822 |  |  | $ | 3,881 |  |  | $ | 3,304 |  |  | $ | 557,003 |

|  |  | Three Months Ended June 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, March 31, 2019 |  |  | $ | 189,757 |  |  | $ | 39,224 |  |  | $ | 19,169 |  |  | $ | 22,349 |  |  | $ | 35,759 |  |  | $ | 7,401 |  |  | $ | 4,235 |  |  | $ | 317,894 |  |
Provision for (reversal of) credit losses on loans | (a) |  | 26,140 |  |  | (1,250) |  |  | 58 |  |  | 173 |  |  | (3,068) |  |  | (1,224) |  |  | (98) |  |  | 20,731 |  |
Gross charge-offs |  |  | (11,745) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (14) |  |  | (11,759) |  |
Gross recoveries |  |  | 1,713 |  |  | 1,837 |  |  | 53 |  |  | 439 |  |  | 72 |  |  | — |  |  | 7 |  |  | 4,121 |  |
Total net (charge-offs) recoveries |  |  | (10,032) |  |  | 1,837 |  |  | 53 |  |  | 439 |  |  | 72 |  |  | — |  |  | (7) |  |  | (7,638) |  |
Foreign currency translation adjustment |  |  | (362) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (362) |  |
Allowance for loan losses, June 30, 2019 |  |  | $ | 205,503 |  |  | $ | 39,811 |  |  | $ | 19,280 |  |  | $ | 22,961 |  |  | $ | 32,763 |  |  | $ | 6,177 |  |  | $ | 4,130 |  |  | $ | 330,625 |  |

16

EAST WEST BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
($ in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(unaudited) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Table 10 (continued) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | Six 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, 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) |  | 98,480 |  |  | 54,750 |  |  | 9,189 |  |  | 9,008 |  |  | 33 |  |  | 617 |  |  | (3,121) |  |  | 168,956 |
Gross charge-offs |  |  | (32,355) |  |  | (1,274) |  |  | — |  |  | — |  |  | — |  |  | (221) |  |  | (56) |  |  | (33,906) |
Gross recoveries |  |  | 2,177 |  |  | 9,886 |  |  | 1,155 |  |  | 28 |  |  | 424 |  |  | 4 |  |  | 94 |  |  | 13,768 |
Total net (charge-offs) recoveries |  |  | (30,178) |  |  | 8,612 |  |  | 1,155 |  |  | 28 |  |  | 424 |  |  | (217) |  |  | 38 |  |  | (20,138) |
Foreign currency translation adjustment |  |  | (192) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (192) |
Allowance for loan losses, June 30, 2020 |  |  | $ | 380,723 |  |  | $ | 176,040 |  |  | $ | 25,058 |  |  | $ | 18,551 |  |  | $ | 25,314 |  |  | $ | 3,867 |  |  | $ | 2,518 |  |  | $ | 632,071 |

|  |  | Six Months Ended June 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) |  | 41,404 |  |  | (2,914) |  |  | (939) |  |  | 2,169 |  |  | 1,349 |  |  | 401 |  |  | (99) |  |  | 41,371 |  |  |
Gross charge-offs |  |  | (28,989) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (28) |  |  | (29,017) |  |  |
Gross recoveries |  |  | 3,964 |  |  | 2,059 |  |  | 334 |  |  | 502 |  |  | 74 |  |  | 2 |  |  | 7 |  |  | 6,942 |  |  |
Total net (charge-offs) recoveries |  |  | (25,025) |  |  | 2,059 |  |  | 334 |  |  | 502 |  |  | 74 |  |  | 2 |  |  | (21) |  |  | (22,075) |  |  |
Foreign currency translation adjustment |  |  | 7 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 7 |  |  |
Allowance for loan losses, June 30, 2019 |  |  | $ | 205,503 |  |  | $ | 39,811 |  |  | $ | 19,280 |  |  | $ | 22,961 |  |  | $ | 32,763 |  |  | $ | 6,177 |  |  | $ | 4,130 |  |  | $ | 330,625 |  |  |

|  |  | Three Months Ended |  |  |  |  |  | Six Months Ended |  |
|  |  | June 30, 2020 |  | March 31, 2020 |  | June 30, 2019 |  | June 30, 2020 |  | June 30, 2019
Unfunded Credit Facilities |  |  |  |  |  |  |  |  |  |  |
Allowance for unfunded credit commitments, beginning of period (1) |  |  | $ | 20,829 |  |  | $ | 11,158 |  |  | $ | 14,505 |  |  | $ | 11,158 |  |  | $ | 12,566 |
Impact of ASU 2016-13 adoption |  |  | — |  |  | 10,457 |  |  | — |  |  | 10,457 |  |  | — |
Provision for (reversal of) credit losses on unfunded credit commitments | (b) |  | 8,143 |  |  | (786) |  |  | (1,486) |  |  | 7,357 |  |  | 453 |
Allowance for unfunded credit commitments, end of period (1) |  |  | $ | 28,972 |  |  | $ | 20,829 |  |  | $ | 13,019 |  |  | $ | 28,972 |  |  | $ | 13,019 |
Provision for credit losses | (a) + (b) |  | $ | 102,443 |  |  | $ | 73,870 |  |  | $ | 19,245 |  |  | $ | 176,313 |  |  | $ | 41,824 |

1
(1)Included in Accrued expense and other liabilities on the Consolidated Balance Sheet.
17

| 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 June 30, 2020 and March 31, 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 June 30, 2019 included only Non-PCI nonaccrual loans. |  |  |  |  |  |  |  |
Nonperforming Assets |  |  | June 30, 2020 |  | March 31, 2020 |  | June 30, 2019 |
|  |  | Total Nonaccrual loans |  | Total Nonaccrual loans |  | Non-PCI Nonaccrual Loans |
Commercial: |  |  |  |  |  |  |  |
| C&I |  | $ | 84,823 |  |  | $ | 89,079 |  |  | $ | 73,150 |  |
| CRE: |  |  |  |  |  |  |
| CRE |  | 56,577 |  |  | 6,298 |  |  | 20,914 |  |
| Multifamily residential |  | 774 |  |  | 803 |  |  | 1,027 |  |
| Total CRE |  | 57,351 |  |  | 7,101 |  |  | 21,941 |  |
Consumer: |  |  |  |  |  |  |  |
| Residential mortgage: |  |  |  |  |  |  |
| Single-family residential |  | 20,070 |  |  | 17,536 |  |  | 13,075 |  |
| HELOCs |  | 14,068 |  |  | 10,446 |  |  | 7,344 |  |
| Total residential mortgage |  | 34,138 |  |  | 27,982 |  |  | 20,419 |  |
| Other consumer |  | 2,508 |  |  | 2,506 |  |  | 2,504 |  |
| Total nonaccrual loans |  | 178,820 |  |  | 126,668 |  |  | 118,014 |  |
Other real estate owned, net |  |  | 19,504 |  |  | 19,504 |  |  | 130 |  |
Other nonperforming assets |  |  | 3,890 |  |  | 4,758 |  |  | 1,167 |  |
| Total nonperforming assets |  | $ | 202,214 |  |  | $ | 150,930 |  |  | $ | 119,311 |  |
Credit Quality Ratios |  |  | June 30, 2020 |  | March 31, 2020 |  | June 30, 2019 |
Nonperforming assets to total assets |  |  | 0.41 | % |  | 0.33 | % |  | 0.28 | % |
Nonaccrual loans to loans HFI |  |  | 0.48 | % |  | 0.35 | % |  | 0.35 | % |
Allowance for loan losses to loans HFI |  |  | 1.70 | % |  | 1.55 | % |  | 0.98 | % |
Allowance for loan losses to nonaccrual loans |  |  | 353.47 | % |  | 439.73 | % |  | 280.16 | % |
Annualized quarterly net charge-offs to average loans HFI |  |  | 0.21 | % |  | 0.01 | % |  | 0.09 | % |

18

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 |  |  |  |  |  | Six Months Ended |  |
|  |  |  | June 30, 2020 |  | March 31, 2020 |  | June 30, 2019 |  | June 30, 2020 |  | June 30, 2019
Income tax expense |  | (a) |  | $ | 12,921 |  |  | $ | 19,186 |  |  | $ | 72,797 |  |  | $ | 32,107 |  |  | $ | 103,864 |
Less: Reversal of certain previously claimed tax credits related to DC Solar |  | (b) |  | — |  |  | — |  |  | (30,104) |  |  | — |  |  | (30,104) |
Adjusted income tax expense |  | (c) |  | $ | 12,921 |  |  | $ | 19,186 |  |  | $ | 42,693 |  |  | $ | 32,107 |  |  | $ | 73,760 |
Income before income taxes |  | (d) |  | 112,273 |  |  | 164,010 |  |  | 223,177 |  |  | 276,283 |  |  | 418,268 |
Effective tax rate |  | (a)/(d) |  | 11.5 | % |  | 11.7 | % |  | 32.6 | % |  | 11.6 | % |  | 24.8 | %
Less: Reversal of certain previously claimed tax credits related to DC Solar |  | (b)/(d) |  | — | % |  | — | % |  | (13.5) | % |  | — | % |  | (7.2) | %
Adjusted effective tax rate |  | (c)/(d) |  | 11.5 | % |  | 11.7 | % |  | 19.1 | % |  | 11.6 | % |  | 17.6 | %

19

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 and second quarters of 2019, the Company recorded a $7.0 million pre-tax impairment charge and reversed $30.1 million of certain previously claimed tax credits related to the DC Solar tax credit investments (“DC Solar”), respectively. Management believes that presenting the computations of the adjusted net income, adjusted diluted earnings per common share, adjusted return on average assets and adjusted return on average equity that adjust for the above discussed non-recurring items provides clarity to financial statement users regarding the ongoing performance of the Company and allows comparability to prior periods. |  |  |  |  |  |  |  |
|  |  |  | Three Months Ended |  |  |  |
|  |  |  | June 30, 2020 |  | March 31, 2020 |  | June 30, 2019
Net income |  | (a) |  | $ | 99,352 |  |  | $ | 144,824 |  |  | $ | 150,380 |
Add: Reversal of certain previously claimed tax credits related to DC Solar |  |  |  | — |  |  | — |  |  | 30,104 |
Adjusted net income |  | (b) |  | $ | 99,352 |  |  | $ | 144,824 |  |  | $ | 180,484 |
Diluted weighted-average number of shares outstanding |  |  |  | 141,827 |  |  | 145,285 |  |  | 146,052 |
Diluted EPS |  |  |  | $ | 0.70 |  |  | $ | 1.00 |  |  | $ | 1.03 |
Diluted EPS impact of reversal of certain previously claimed tax credits related to DC Solar |  |  |  | — |  |  | — |  |  | 0.21 |
Adjusted diluted EPS |  |  |  | $ | 0.70 |  |  | $ | 1.00 |  |  | $ | 1.24 |
Average total assets |  | (c) |  | $ | 48,228,914 |  |  | $ | 44,755,509 |  |  | $ | 41,545,441 |
Average stockholders’ equity |  | (d) |  | $ | 4,982,446 |  |  | $ | 5,022,005 |  |  | $ | 4,684,348 |
Return on average assets (1) |  | (a)/(c) |  | 0.83 | % |  | 1.30 | % |  | 1.45 | %
Adjusted return on average assets (1) |  | (b)/(c) |  | 0.83 | % |  | 1.30 | % |  | 1.74 | %
Return on average equity (1) |  | (a)/(d) |  | 8.02 | % |  | 11.60 | % |  | 12.88 | %
Adjusted return on average equity (1) |  | (b)/(d) |  | 8.02 | % |  | 11.60 | % |  | 15.45 | %
|  |  |  | Six Months Ended |  |  |  |
|  |  |  | June 30, 2020 |  | June 30, 2019 |  |
Net income |  | (e) |  | $ | 244,176 |  |  | $ | 314,404 |  |  |
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 |  | (f) |  | $ | 244,176 |  |  | $ | 349,423 |  |  |
Diluted weighted average number of shares outstanding |  |  |  | 143,560 |  |  | 146,016 |  |  |
Diluted EPS |  |  |  | $ | 1.70 |  |  | $ | 2.15 |  |  |
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 |  |  |  | $ | 1.70 |  |  | $ | 2.39 |  |  |
Average total assets |  | (g) |  | $ | 46,492,211 |  |  | $ | 41,144,152 |  |  |
Average stockholders’ equity |  | (h) |  | $ | 5,002,226 |  |  | $ | 4,611,231 |  |  |
Return on average assets (1) |  | (e)/(g) |  | 1.06 | % |  | 1.54 | % |  |
Adjusted return on average assets (1) |  | (f)/(g) |  | 1.06 | % |  | 1.71 | % |  |
Return on average equity (1) |  | (e)/(h) |  | 9.82 | % |  | 13.75 | % |  |
Adjusted return on average equity (1) |  | (f)/(h) |  | 9.82 | % |  | 15.28 | % |  |

(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 three and six months ended June 30, 2019.
20

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 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 |  |  |  |
|  |  |  | June 30, 2020 |  | March 31, 2020 |  | June 30, 2019
Net interest income before provision for credit losses |  | (a) |  | $ | 343,775 |  |  | $ | 362,707 |  |  | $ | 367,326 |
Total noninterest income |  |  |  | 58,637 |  |  | 54,049 |  |  | 52,759 |
Total revenue |  | (b) |  | $ | 402,412 |  |  | $ | 416,756 |  |  | $ | 420,085 |
Total noninterest expense |  | (c) |  | $ | 187,696 |  |  | $ | 178,876 |  |  | $ | 177,663 |
Less: Amortization of tax credit and other investments |  |  |  | (24,759) |  |  | (17,325) |  |  | (16,739) |
Amortization of core deposit intangibles |  |  |  | (931) |  |  | (953) |  |  | (1,152) |
Repurchase agreements’ extinguishment cost |  |  |  | (8,740) |  |  | — |  |  | — |
Adjusted noninterest expense |  | (d) |  | $ | 153,266 |  |  | $ | 160,598 |  |  | $ | 159,772 |
Efficiency ratio |  | (c)/(b) |  | 46.64 | % |  | 42.92 | % |  | 42.29 | %
Adjusted efficiency ratio |  | (d)/(b) |  | 38.09 | % |  | 38.54 | % |  | 38.03 | %
Adjusted pre-tax, pre-provision income |  | (b)-(d) = (e) |  | $ | 249,146 |  |  | $ | 256,158 |  |  | $ | 260,313 |
Average total assets |  | (f) |  | $ | 48,228,914 |  |  | $ | 44,755,509 |  |  | $ | 41,545,441 |
Adjusted pre-tax, pre-provision profitability ratio (1) |  | (e)/(f) |  | 2.08 | % |  | 2.30 | % |  | 2.51 | %
Adjusted noninterest expense/average assets (1) |  | (d)/(f) |  | 1.28 | % |  | 1.44 | % |  | 1.54 | %
|  |  |  | Six Months Ended |  |  |  |
|  |  |  | June 30, 2020 |  | June 30, 2019 |  |
Net interest income before provision for credit losses |  | (g) |  | $ | 706,482 |  |  | $ | 729,787 |  |  |
Total noninterest income |  |  |  | 112,686 |  |  | 94,890 |  |  |
Total revenue |  | (h) |  | 819,168 |  |  | 824,677 |  |  |
Total noninterest expense |  | (i) |  | $ | 366,572 |  |  | $ | 364,585 |  |  |
Less: Amortization of tax credit and other investments |  |  |  | (42,084) |  |  | (41,644) |  |  |
Amortization of core deposit intangibles |  |  |  | (1,884) |  |  | (2,326) |  |  |
Repurchase agreements’ extinguishment cost |  |  |  | (8,740) |  |  | — |  |  |
Adjusted noninterest expense |  | (j) |  | $ | 313,864 |  |  | $ | 320,615 |  |  |
Efficiency ratio |  | (i)/(h) |  | 44.75 | % |  | 44.21 | % |  |
Adjusted efficiency ratio |  | (j)/(h) |  | 38.31 | % |  | 38.88 | % |  |
Adjusted pre-tax, pre-provision income |  | (h)-(j) = (k) |  | $ | 505,304 |  |  | $ | 504,062 |  |  |
Average total assets |  | (l) |  | $ | 46,492,211 |  |  | $ | 41,144,152 |  |  |
Adjusted pre-tax, pre-provision profitability ratio (1) |  | (k)/(l) |  | 2.19 | % |  | 2.47 | % |  |
Adjusted noninterest expense /average assets (1) |  | (j)/(l) |  | 1.36 | % |  | 1.57 | % |  |

(1)Annualized.
21

EAST WEST BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |
GAAP TO NON-GAAP RECONCILIATION |  |  |  |  |  |  |  |
($ in thousands) |  |  |  |  |  |  |  |
(unaudited) |  |  |  |  |  |  |  |
Table 15 |  |  |  |  |  |  |  |
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. |  |  |  |  |  |  |  |
|  |  |  | June 30, 2020 |  | March 31, 2020 |  | June 30, 2019
Stockholders’ equity |  | (a) |  | $ | 4,987,243 |  |  | $ | 4,902,985 |  |  | $ | 4,734,593 |
Less: Goodwill |  |  |  | (465,697) |  |  | (465,697) |  |  | (465,697) |
Other intangible assets (1) |  |  |  | (13,490) |  |  | (14,769) |  |  | (18,952) |
Tangible equity |  | (b) |  | $ | 4,508,056 |  |  | $ | 4,422,519 |  |  | $ | 4,249,944 |
Total assets |  | (c) |  | $ | 49,407,593 |  |  | $ | 45,948,545 |  |  | $ | 42,892,358 |
Less: Goodwill |  |  |  | (465,697) |  |  | (465,697) |  |  | (465,697) |
Other intangible assets (1) |  |  |  | (13,490) |  |  | (14,769) |  |  | (18,952) |
Tangible assets |  | (d) |  | $ | 48,928,406 |  |  | $ | 45,468,079 |  |  | $ | 42,407,709 |
Total stockholders’ equity to total assets ratio |  | (a)/(c) |  | 10.09 | % |  | 10.67 | % |  | 11.04 | %
Tangible equity to tangible assets ratio |  | (b)/(d) |  | 9.21 | % |  | 9.73 | % |  | 10.02 | %

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 |  |  |  |  |  | Six Months Ended |  |
|  |  |  | June 30, 2020 |  | March 31, 2020 |  | June 30, 2019 |  | June 30, 2020 |  | June 30, 2019
Net Income |  |  |  | $ | 99,352 |  |  | $ | 144,824 |  |  | $ | 150,380 |  |  | $ | 244,176 |  |  | $ | 314,404 |
Add: Amortization of core deposit intangibles |  |  |  | 931 |  |  | 953 |  |  | 1,152 |  |  | 1,884 |  |  | 2,326 |
Amortization of mortgage servicing assets |  |  |  | 458 |  |  | 584 |  |  | 1,013 |  |  | 1,042 |  |  | 1,337 |
Tax effect of adjustments (2) |  |  |  | (394) |  |  | (436) |  |  | (640) |  |  | (830) |  |  | (1,083) |
Tangible net income |  | (e) |  | $ | 100,347 |  |  | $ | 145,925 |  |  | $ | 151,905 |  |  | $ | 246,272 |  |  | $ | 316,984 |
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 |  |  | — |  |  | 30,104 |
Adjusted tangible net income |  | (f) |  | $ | 100,347 |  |  | $ | 145,925 |  |  | $ | 151,905 |  |  | $ | 246,272 |  |  | $ | 352,003 |
Average stockholders’ equity |  |  |  | $ | 4,982,446 |  |  | $ | 5,022,005 |  |  | $ | 4,684,348 |  |  | $ | 5,002,226 |  |  | $ | 4,611,231 |
Less: Average goodwill |  |  |  | (465,697) |  |  | (465,697) |  |  | (465,697) |  |  | (465,697) |  |  | (465,629) |
Average other intangible assets (1) |  |  |  | (14,247) |  |  | (15,588) |  |  | (20,380) |  |  | (14,918) |  |  | (21,116) |
Average tangible equity |  | (g) |  | $ | 4,502,502 |  |  | $ | 4,540,720 |  |  | $ | 4,198,271 |  |  | $ | 4,521,611 |  |  | $ | 4,124,486 |
Return on average tangible equity (4) |  | (e)/(g) |  | 8.96 | % |  | 12.93 | % |  | 14.51 | % |  | 10.95 | % |  | 15.50 | %
Adjusted return on average tangible equity (4) |  | (f)/(g) |  | 8.96 | % |  | 12.93 | % |  | 17.39 | % |  | 10.95 | % |  | 17.21 | %

(1)Includes core deposit intangibles and mortgage servicing assets.
(2)Applied statutory rate of 28.35% for the three and six months ended June 30, 2020, and the three months ended March 31, 2020. Applied statutory rate of 29.56% for the three and six months ended June 30, 2019.
(3)Included in Amortization of tax credit and other investments on the Consolidated Statement of Income.
(4)Annualized.
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