East West Bancorp(EWBC) - 2025 Q2 - Quarterly Report

Forward-Looking Statements This section outlines the company's forward-looking statements, emphasizing that they are based on current assumptions and subject to inherent uncertainties - Forward-looking statements are based on current assumptions, beliefs, estimates, expectations, and projections, many of which are inherently uncertain and beyond the Company's control[10] - Key risk factors that might cause future results to differ materially include changes in local, regional, and global business, economic, and political conditions, soundness of other financial institutions, changes in trade/tariff/tax policies, and disruptions in operational or security systems[11][12] PART I — FINANCIAL INFORMATION This part presents the unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Consolidated Financial Statements This section presents the unaudited consolidated financial statements of East West Bancorp, Inc. and its subsidiaries for the periods ended June 30, 2025, and December 31, 2024 (for balance sheet) and June 30, 2025 and 2024 (for income, comprehensive income, cash flows, and equity changes) Consolidated Balance Sheets (Unaudited) The Consolidated Balance Sheets show the financial position of East West Bancorp, Inc. and its subsidiaries as of June 30, 2025, and December 31, 2024, highlighting significant changes in assets, liabilities, and stockholders' equity | ASSETS ($ in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Cash and cash equivalents | 4,409,941 | 5,250,742 | | Debt securities: AFS | 12,488,913 | 10,846,811 | | Debt securities: HTM | 2,892,982 | 2,917,413 | | Loans held-for-investment (net) | 54,200,768 | 53,024,585 | | Total Assets | 78,158,067 | 75,976,475 | | LIABILITIES ($ in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Total deposits | 65,029,493 | 63,175,023 | | FHLB advances | 3,500,000 | 3,500,000 | | Total Liabilities | 69,956,300 | 68,253,421 | | STOCKHOLDERS' EQUITY ($ in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Total Stockholders' Equity | 8,201,767 | 7,723,054 | - Total assets increased by $2.18 billion (2.87%) from December 31, 2024, to June 30, 2025, primarily driven by increases in AFS debt securities and net loans held-for-investment[15] - Total deposits increased by $1.85 billion (2.94%) over the same period, with interest-bearing deposits showing a notable increase[15] Consolidated Statement of Income (Unaudited) The Consolidated Statement of Income provides a summary of the company's revenues, expenses, and net income for the three and six months ended June 30, 2025, and 2024, indicating year-over-year performance changes | Income Statement ($ in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total interest and dividend income | 1,058,999 | 1,034,414 | 2,090,801 | 2,058,031 | | Total interest expense | 441,925 | 481,185 | 873,526 | 939,663 | | Net interest income before provision for credit losses | 617,074 | 553,229 | 1,217,275 | 1,118,368 | | Provision for credit losses | 45,000 | 37,000 | 94,000 | 62,000 | | Total noninterest income | 86,178 | 84,171 | 178,280 | 162,658 | | Total noninterest expense | 256,020 | 235,932 | 508,168 | 482,306 | | Net Income | 310,253 | 288,230 | 600,523 | 573,305 | | Basic EPS | 2.25 | 2.07 | 4.35 | 4.12 | | Diluted EPS | 2.24 | 2.06 | 4.32 | 4.09 | - Net income for the three months ended June 30, 2025, increased by $22.02 million (7.64%) year-over-year, primarily due to higher net interest income and noninterest income, partially offset by increased provision for credit losses and noninterest expenses[17] - Net interest income before provision for credit losses for the three months ended June 30, 2025, rose by $63.85 million (11.54%) year-over-year, driven by a decrease in total interest expense[17] Consolidated Statement of Comprehensive Income (Unaudited) The Consolidated Statement of Comprehensive Income details the changes in comprehensive income, including net income and other comprehensive income (loss) components, for the three and six months ended June 30, 2025, and 2024 | Comprehensive Income ($ in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | 310,253 | 288,230 | 600,523 | 573,305 | | Other comprehensive income (loss) | 32,635 | 8,560 | 122,880 | (33,577) | | Comprehensive Income | 342,888 | 296,790 | 723,403 | 539,728 | - Other comprehensive income significantly increased to $32.64 million for the three months ended June 30, 2025, from $8.56 million in the prior year, primarily due to net changes in unrealized gains on AFS debt securities and cash flow hedges[19] - For the six months ended June 30, 2025, other comprehensive income was $122.88 million, a substantial improvement from a loss of $33.58 million in the same period of 2024, driven by positive changes in AFS debt securities and cash flow hedges[19] Consolidated Statement of Changes in Stockholders' Equity (Unaudited) This statement outlines the changes in each component of stockholders' equity for the three and six months ended June 30, 2025, and 2024, including net income, other comprehensive income, stock issuances, repurchases, and cash dividends | Stockholders' Equity ($ in thousands) | Balance, April 1, 2025 | Balance, June 30, 2025 | Balance, January 1, 2025 | | :------------------------------------ | :--------------------- | :--------------------- | :----------------------- | | Total Stockholders' Equity | 7,929,465 | 8,201,767 | 7,723,054 | | Net income | 310,253 | 310,253 | 600,523 | | Other comprehensive income | 32,635 | 32,635 | 122,880 | | Cash dividends on common stock | (83,743) | (83,743) | (167,844) | | Repurchase of common stock | (2,770) | (2,770) | (88,212) | - Total stockholders' equity increased from $7.72 billion at January 1, 2025, to $8.20 billion at June 30, 2025, primarily driven by net income and other comprehensive income, partially offset by cash dividends and stock repurchases[22] - Cash dividends declared for the six months ended June 30, 2025, totaled $167.84 million, representing $1.20 per share[22] Consolidated Statement of Cash Flows (Unaudited) The Consolidated Statement of Cash Flows categorizes cash activities into operating, investing, and financing for the six months ended June 30, 2025, and 2024, showing the net change in cash and cash equivalents | Cash Flows ($ in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | 556,554 | 525,411 | | Net cash used in investing activities | (2,969,683) | (3,284,294) | | Net cash provided by financing activities | 1,569,368 | 2,513,010 | | Net decrease in cash and cash equivalents | (840,801) | (249,293) | | Cash and cash equivalents, end of period | 4,409,941 | 4,365,691 | - Net cash provided by operating activities increased to $556.55 million for the six months ended June 30, 2025, from $525.41 million in the prior year[25] - Net cash used in investing activities decreased to $2.97 billion for the six months ended June 30, 2025, from $3.28 billion in the prior year, mainly due to lower purchases of AFS debt securities[25] - Net cash provided by financing activities decreased to $1.57 billion for the six months ended June 30, 2025, from $2.51 billion in the prior year, primarily due to a lower net change in deposits and FHLB advance repayments[28] Notes to Consolidated Financial Statements (Unaudited) These notes provide detailed disclosures and explanations for the unaudited consolidated financial statements, covering accounting policies, fair value measurements, specific financial instruments like securities and loans, derivatives, commitments, and equity-related activities Note 1 — Basis of Presentation and Current Accounting Developments This note describes the basis of presentation for the unaudited interim consolidated financial statements, which are prepared in accordance with U.S. GAAP and regulatory guidelines - The unaudited interim Consolidated Financial Statements are presented in accordance with U.S. GAAP and applicable regulatory guidelines, primarily updating the Company's 2024 Form 10-K[32] - New accounting pronouncements adopted on January 1, 2025 (ASU 2023-05 and ASU 2024-02) did not have a material impact on the Company's Consolidated Financial Statements[34][35] Note 2 — Fair Value Measurement and Fair Value of Financial Instruments This note details the Company's fair value measurements for assets and liabilities, categorizing them into Level 1, 2, or 3 based on the observability of inputs | Assets Measured at Fair Value on a Recurring Basis ($ in thousands) | June 30, 2025 (Total Fair Value) | December 31, 2024 (Total Fair Value) | | :------------------------------------------------ | :------------------------------- | :------------------------------- | | AFS debt securities | 12,488,913 | 10,846,811 | | Affordable housing partnership, tax credit and CRA investments, net | 25,769 | 25,021 | | Derivative assets (Gross) | 468,056 | 523,133 | | Derivative liabilities (Gross) | 436,446 | 545,885 | - AFS debt securities measured at fair value on a recurring basis increased by $1.64 billion from December 31, 2024, to June 30, 2025[47][48] | Level 3 Fair Value Measurements ($ in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------------------- | :------------ | :---------------- | | Derivative assets: Equity contracts | 377 | 239 | | Derivative liabilities: Equity contracts | 15