East West Bank Reports Record Earnings for the 1998 Third Quarter and Nine-Month Period

Business Wire, Oct 15, 1998

SAN MARINO, Calif.--(BUSINESS WIRE)--Oct. 15, 1998--East West Bank reported a 52 percent increase in net income to a record $4.7 million, or $0.20 per basic and diluted common share, for the third quarter of 1998 compared with net income of $3.1 million, or $0.13 per basic and diluted common share, for the third quarter of 1997.

The company also achieved record net income of $11.5 million, or $0.49 per basic and diluted share, for the first nine months of 1998, posting a 42 percent increase over net income of $8.1 million, or $0.34 per basic and diluted share, for the corresponding prior year period.

"East West Bank's consistently strong results reflect our ongoing strategy to grow our niche, high-margin business," said Dominic Ng, chairman, president and chief executive officer.

East West Bank's total average assets rose 15 percent to $1.83 billion for the third quarter of 1998, the highest level in company history, compared with $1.59 billion in average assets in the third quarter of 1997.

The company's average deposits for the third quarter increased 6 percent over the prior-year period, led by increases in low-cost transaction accounts. Return on average assets in the third quarter reached 1.02 percent, compared with 0.78 percent in the third quarter of 1997, and return on average common equity was 13.12 percent, compared with 9.73 percent in the corresponding prior-year quarter.

Net interest income grew 24 percent to $13.8 million in the third quarter of 1998 over $11.1 million a year ago. The third quarter interest rate spread was 2.72 percent, compared with 2.44 percent in the prior-year period due primarily to higher yields on loans.

Non-interest income of $3.2 million for the third quarter continued a sustained growth trend, representing a 32 percent increase over the $2.4 million earned in the same period a year ago. Increases in loan fees, letters of credit fees and commissions and branch fees contributed to the growth in non-interest income.

Non-interest expense was $8.4 million in the third quarter of 1998, compared with $7.0 million in the third quarter of 1997. The increase principally reflects the addition of personnel, in line with the company's overall growth.

East West Bank's effective tax rate of 36.3 percent in the third quarter of 1998 decreased from a 40.9 percent rate in the 1997 third quarter, primarily due to the utilization of tax credits from real estate investments.

Total nonperforming assets decreased to $20.9 million, or 1.12 percent of total assets, at Sept. 30, 1998. In comparison, total nonperforming assets amounted to $25.1 million, or 1.49 percent of assets, at Sept. 30, 1997 and $21.6 million, or 1.25 percent of assets, at Dec. 31, 1997.

The allowance for loan losses at Sept. 30, 1998 was $15.8 million, or 1.51 percent of outstanding loans, compared with $11.6 million, or 1.19 percent, at Sept. 30, 1997. The allowance for loan losses as a percentage of nonaccrual loans stood at 167.92 percent at Sept. 30, 1998, compared with 88.08 percent at Sept. 30, 1997.

Total capital and Tier 1 capital ratios of 12.27 percent and 11.03 percent compare favorably with the capitalization ratios of 10.00 percent and 6.00 percent required for an institution to be classified as "well-capitalized." The company's leverage ratio was 7.72 percent compared with a regulatory minimum for a well-capitalized institution of 5.00 percent.

Separately, the company announced that it has filed with its regulators for permission to form a bank holding company and that an S-4 filing to register the company's 23.8 million shares has been filed with the Securities and Exchange Commission. The company is awaiting comments from its regulators and the SEC and expects to finalize the process before year end.

East West Bank is the fifth largest commercial bank with headquarters in Southern California with assets of $1.86 billion and 23 branches throughout the state. It is also one of the largest financial institutions in the nation focusing on the Chinese-American community. -0-