East West Bancorp Annual Report 2015

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FY2015 Annual Report · East West Bancorp

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EAST WEST BANCORP ANNUAL REPORT

130+

Las Vegas

Houston

Seattle

Dallas

Atlanta

New York

Boston

1 | East West Bancorp 2015 Annual Report

United States

120+
LOCATIONS
Across 60+ cities in
10 metropolitan areas

San Diego

90
Branches in
CALIFORNIA

Los Angeles

San Francisco

75,000+
Surcharge Free ATMS
In addition to our branch ATM network, we
also partner with Allpoint® and MoneyPass®
to offer our customers access to a combined
network of over 75,000 surcharge free ATMs.

YEARS OF
OPERATING
HISTORY

RANKED

IN THE TOP 15

AMERICA’S BEST
BANKS BY FORBES

FOR 6 CONSECUTIVE YEARS (2010-2015)

130+

LOCATIONS
THROUGHOUT

East West Bancorp 2015 Annual Report | 2

Greater China

Shenzhen

Shantou

Guangzhou

Xiamen

Beijing

Shanghai

5
Full-Service
BRANCHES

Chongqing

Shanghai FTZ

Taipei

5
Representative
OFFICES

Hong Kong

2,800

ASSOCIATES AND GROWING

$32

BILLION
IN ASSETS

LARGEST
INDEPENDENT
BANK
HEADQUARTERED IN
SOUTHERN CALIFORNIA

3 | East West Bancorp 2015 Annual Report

A message from

Dear shareholders,

Dominic
Ng

Chairman
and CEO

Relationship building has always been the
foundation of East West Bank’s core values.
Our beyond banking approach stems from our
commitment to provide innovative solutions for
our customers. Our unparalleled connections,
infrastructure, and deep understanding of finance
and culture in both the United States and China
allow us to tailor the creative solutions our
customers need and to open opportunities across
borders for them.

In 2015, we facilitated notable U.S. and China
film industry transactions, as well as helped our
technology, clean energy and emerging market
industry customers in both the U.S. and China. In
the dynamic cross-border market, we are excited
by the future business prospects we see ahead.

East West continues to grow our customer base
and our balance sheet profitably and prudently,
while making investments to strengthen our
internal infrastructure. We are examining all
systems, controls and processes with a critical
eye, and making the necessary upgrades to ensure
that they are scalable for future growth. We have
implemented a bank-wide “operational excellence”
initiative – with our associates taking ownership
to do the right thing, the right way, every time and
relentlessly improving processes through teamwork
and problem solving. By fostering a spirit of
collaboration, we achieve measurable results.

Looking forward to 2016 and beyond, I am confident
that our balance sheet will remain healthy, and
the value proposition we provide our customers
will continue to be unparalleled. With a strong
foundation, we can thrive and successfully build our
business in any market environment and provide
value for our shareholders for years to come.

Record Earnings, Deposits and Loans in 2015

In 2015, East West achieved many new records,
including our highest ever net income of $384.7
million, up 11% from 2014 and diluted earnings per
share of $2.66, up 10% from a year ago. In fact,
2015 was the sixth year in a row that East West
achieved record earnings.

As the bridge between the East and West, we
continue to build market expertise, attract new
customers and build lasting partnerships. As such,
our loan portfolio increased to a record $23.7 billion,
up $1.9 billion or 9% from last year. Similarly, our
deposits also grew to a record $27.5 billion, up $3.5
billion or 14% from the prior year.

Five years ago in 2010, our deposit portfolio was
comprised of 17% noninterest-bearing demand
deposits, 40% other core deposits, and 43% time
deposits. Over the past five years, we have steadily
grown our lower cost commercial deposits and
shifted away from higher cost time deposits. Today,
we have progressed to a more balanced deposit
portfolio of 32% noninterest-bearing demand
deposits, 44% other core deposits and 24%
time deposits.

East West Bancorp 2015 Annual Report | 4

Noninterest-bearing demand deposits
Other core deposits
Time deposits

2010 DEPOSIT MIX

17%

40%

43%

2015 DEPOSIT MIX

32%

24%

44%

Our conservative and disciplined approach to
underwriting loans resulted in the continued
improvement of the credit quality of our loan
portfolio in 2015. Our nonperforming assets to
total assets ratio at the end of 2015 decreased to
0.40%, an improvement from 0.46% from the
prior year end, and net charge-offs to average loans
for the full year 2015 was at a historic low of 0.01%,
also an improvement from 0.18% for the full year of
2014. Classified loans have also decreased by 21%
during the year, down to less than 3% of total loans
outstanding as of December 31, 2015.

Overall, growth in profitability for the banking
industry continues to be challenging, given the
low interest rate environment. Although our net
interest margin fell from 4.03% in 2014 to 3.35%
in 2015, largely due to the lower accretion income
associated with the loans acquired from the Federal
Deposit Insurance Corporation (FDIC) assisted
transaction of United Commercial Bank, we were
able to increase revenue by 8% and increase both
return on average assets and return on average
equity to 1.27% and 12.74%, respectively.

5 | East West Bancorp 2015 Annual Report

Although there may be some disappointment
in our 2016 earnings guidance and forecasted
expenses, we believe that the investments made in
2015 and those that will be made in 2016, will pay
dividends over the long term. We expect that our
investments in people, systems, infrastructure and
technology will lead to higher expenditures in the
next year or so which is likely one of the reasons
why our strong financial results did not have as
much impact on our stock performance. We firmly
believe in the long-term outlook of our Company
and view stock price fluctuations as a normal part
of the market cycle. We are confident that as our
investments begin to materialize in all areas of our
business, our stock price will adjust accordingly.

China’s Economic Transition

Many people are concerned about the slowdown
in China’s economy. Both the Chinese stock market
drop and renminbi devaluation created much
anxiety in 2015, causing an over-reaction in the U.S.
and the rest of the world. However, if you examine
the economic indicators over a longer period
of time, you can see that China is undergoing a
market correction, rather than a deep-rooted crisis.

In my view there is no cause for alarm: the drop
in China’s GDP growth is intentional and a direct
result of the major reforms put forth by the Chinese
leadership. Over the years, China’s double-digit
GDP growth was taken for granted, but it was
unsustainable. China has to transition
its economy away from investments, heavy
industrial manufacturing, and foreign exports, and
shift to a domestic consumer-driven economy with
a focus on environmental protection. It is a positive
step that is essential for the long-term health of
China’s economy.

In the past few decades, China has relied on
traditional heavy industrial manufacturing and
lower-value exports. However, now it is undergoing
a transformation to spur higher-value exports that
target emerging markets, open sectors for private
investors, and promote domestic consumption with

a growing middle-class. This strategy is working
well, with domestic spending accounting for 66.4%
of China’s GDP in 2015, up 15.4% from 2014.

At East West Bank, we are focused on building
expertise and a customer base in growing sectors
such as technology, clean energy, agriculture,
entertainment, digital media, life science and
healthcare. We believe these sectors are key in
expanding bilateral trade and investment between
the U.S. and China. Chinese internet companies
such as Baidu, Alibaba and Tencent; clean energy
companies such as BYD; technology companies
such as Huawei and Xiaomi; and entertainment
studios such as Huayi Brothers and Bona Film, all
have double digit revenue growth.

U.S.-based companies in the consumer goods
sector are also enjoying strong revenue growth
from Chinese domestic consumer markets. Apple,
Nike and Disney are just a few of the U.S.-based
companies that have benefited from the rise of
China's middle class.

Trade and investment activities between the U.S.
and China have continued to be robust. China is
still the fastest-growing export market for the U.S.,
and investment from China into the U.S. continues
to steadily increase. Chinese investors who are
looking for strategic investments in the U.S. are
now focused beyond the real estate market and are
actively investing in the entertainment, technology,
life science and automotive industries. As these
investors and companies play a bigger role in the
global market, strategic business opportunities will
continue to flow to the U.S.

From our perspective, East West Bank is well
positioned for growth compared to many of our
peers. As one of a handful of U.S.-based banks with
a full-service banking license in China, our deep
industry expertise and cross-border relationships
are a competitive advantage as we actively help our
customers manage risk and navigate the changes
that are happening in China.

East West Bancorp 2015 Annual Report | 6

Financial Snapshot

NET INCOME 1
$ in millions

DILUTED EARNINGS
PER COMMON SHARE 1

RETURN ON AVERAGE EQUITY 1

$384.7

$345.9

$293.3

$277.7

$242.8

$400

$300

$200

$100

$2.66

$2.41

$2.09

$1.87

$1.58

$14

$13

$12

$11

$10

12.72% 12.74%

12.50%

11.94%

10.82%

2011 2012 2013 2014 2015

Sixth consecutive
year of record
net income

$384.7
million

Sixth consecutive
year of record diluted
earnings per share

$2.66

Return on
Equity of

12.74%

TOTAL ASSETS 1
$ in billions

TOTAL LOANS
$ in billions

TOTAL DEPOSITS
$ in billions

$32.4

$28.7

$24.7

$22.0 $22.5

$40

$30

$20

$10

$40

$30

$20

$10

$21.8 $23.7

$14.5 $15.1

$18.1

$27.5

$24.0

$20.4

$17.5 $18.3

$40

$30

$20

$10

2011 2012 2013 2014 2015

Record Assets of

$32.4
billion

Record Loans of

$23.7
billion

Record Deposits of

$27.5
billion

1 Prior periods were restated to reflect the retrospective application of adopting the new accounting guidance related to the Company’s investments in qualified
affordable housing projects Accounting Standards Update (ASU) 2014-01.

7 | East West Bancorp 2015 Annual Report

Ultimately, our role and business value goes
“beyond banking.” As the bridge between the
East and West, we build closer relationships
and facilitate strategic partnerships between
the U.S. and China, helping to increase trust and
understanding between two global super powers.
“Beyond banking” is an important and unique
purpose that we at East West Bank work hard to
advance every day.

Improving our BSA/AML Program

Although 2015 was eventful for East West in many
ways, including the achievement of record growth
and earnings, it was also a year where we turned
our focus inward to strengthen our infrastructure,
and to ensure continued strong growth and
performance for many years to come. In November
2015, East West entered into a Written Agreement
with one of our primary regulators, the Federal
Reserve Bank of San Francisco. The Written
Agreement established terms and timeframes of
our commitment to enhance our compliance with
the Bank Secrecy Act and anti-money laundering
(BSA/AML) laws and regulations.

We responded in good faith to the Written
Agreement with a commitment to make the
appropriate changes and to take the necessary
measures to ensure a foundation for strong
risk management.

Overall, the Written Agreement relates to making
improvements in our technology, software, and
internal processes. We have not been asked
by regulators to exit any customer or business
segments because of this Written Agreement, nor
have we been asked by regulators to change the
financial products and services we offer. We have
already added significant resources to meet the
requirements under the Written Agreement and
expect to complete the installation of a new robust
monitoring system by the end of 2016. We are
re-examining our internal governance, processes
and controls for areas of improvement and are

working diligently to ensure that enhancements
are implemented.

At East West Bank, we are committed to complying
with all rules and regulations that govern our
industry. Working towards meeting the terms
and timeframes in the Written Agreement will
be a critical strategic goal for 2016 and we are
committed to making the investments and having
the focus necessary to do so.

Investing in Innovation, Security and Growth

As our customers and their businesses become
global, they demand faster, real-time banking
services and products. To equip our business
customers with better technology-based
solutions, we recently added two new advanced
online banking platforms to our suite of treasury
management products: businessBridge®Premier and
positivePayPlus. These secure and effective tools
help our commercial depository customers reduce
the time required to manage their daily financial
activities so that more time can be devoted to
growing their businesses.

businessBridge®Premier is a new online banking
platform with customizable features that allow
businesses to access critical information with just
one click. Users are able to access vital real-time
account balance and transaction information, make
payments and generate reports, easily and quickly.

positivePayPlus protects businesses from check
fraud and unauthorized electronic transactions.
This advanced suite of fraud protection
services helps businesses strengthen their risk
management controls.

The response to both products has been very
positive as customers recognize the new systems’
breadth of capabilities, efficiency, and ease of use.
The launch of these products puts East West Bank
ahead of many of our peers. Our innovative tools
provide customers a strong foundation to grow
their businesses.

East West Bancorp 2015 Annual Report | 8

clients globally. Les brings to our board a deep
understanding of corporate governance and more
than 30 years of experience in financial services.
Les serves on the board’s Audit Committee and
Risk Oversight Committee.

To our shareholders, we thank you for your
continued confidence in our Company. I am
proud of the achievements we made in 2015 and
look forward to delivering value for you in 2016
and beyond.

Lastly, I want to acknowledge the true pillars of
East West – our 2,800 associates who go above
and beyond for the Company every day. Thank
you for your efforts on behalf of our proud
East West Family.

Sincerely,

Dominic Ng
Chairman and Chief Executive Officer

Looking Ahead

With six consecutive years of record earnings,
East West Bank’s unique focus and strategy in
the U.S. and Greater China continues to pay
dividends. Demand for our knowledge, services
and capabilities is growing on both sides of the
Pacific. Although we may experience short-
term growing pains due to increased regulatory
expectations and market sentiments, the
investments we make in people, technology,
and the communities we serve will allow us to
capitalize on future business opportunities. We
will maintain focus on high-growth industries,
stay ahead of market developments, and
continue to thrive in the years to come.

Acknowledgements

After more than 25 years of distinguished service
at East West Bank, Julia Gouw, President and
Chief Operating Officer of East West Bank retired
from the Company and the board at the end
of March 2016. Julia began her career at East
West in 1989 as the Controller, and soon after
was appointed Chief Financial Officer, a position
she held until 2008. In late 2009, I asked Julia
to come out from her retirement to rejoin East
West as the President and Chief Operating
Officer to lead the integration of East West’s
acquisition of United Commercial Bank. The
complex integration was completed within six
months, allowing the bank to immediately focus
on strategic organic growth. We thank Julia for all
her valuable contributions to the success of the
Company over the last 25 years. We will miss
her dearly and wish her all the best as she starts a
new chapter of her life.

We were pleased to welcome Lester M. Sussman
to our board of directors in October 2015. Les
is Senior Practice Director of Resources Global
Professionals providing corporate governance,
risk management and compliance services to

9 | East West Bancorp 2015 Annual Report

Cross-Border Expertise

Thinking about expanding your business on either side of the Pacific?
Let us be a part of the solution to your bridge banking needs.

Our Strengths in the U.S. and Greater China

Exceptional Value

Largest U.S. bank serving the Asian community

Our extensive network makes banking convenient,
efficient and accessible

Knowledge and experience in:
• Culture
• Geography
• Economics
• Business practices

We guide customers through the intricacies of
complicated business transactions and offer a
comprehensive viewpoint

Well connected with business leaders and service
professionals

By identifying partners, investors and resources for
our customers, we broaden opportunities

Cross-border banking products and services

Customized solutions meet the unique financial
needs of our customers across various industries

Long-term relationship building

Aside from providing our customers with banking
products, our beyond banking approach helps
customers assimilate seamlessly into a new
country

Our bridge banking strategy allows you to confidently rely on us.
We leverage our extensive networks to help businesses meet
cross-border banking needs and achieve financial goals.

Here are just some of the ways our bridge banking expertise
enabled success for our customers in 2015.

East West Bancorp 2015 Annual Report | 10

Cross-Border Entertainment

Background

Cross-border entertainment partnerships
continued to be a big hit in 2015 for the
Hollywood-China industry and for East West Bank.
With box office sales in China exploding by almost
50% in 2015 to $6.8 billion, and with predictions
that it will overtake U.S. box office numbers
next year, Chinese investment in film production
continues to rise. East West Bank’s unparalleled
expertise as the financial bridge between the East
and West enabled us to facilitate some major deals
between big players from China and Hollywood,
including between Lionsgate Entertainment and
Hunan TV; between STX Entertainment and Huayi
Brothers; and between TSG Entertainment and
Bona Film.

The East West Bank Difference

East West Bank is a pioneer in cross-border
entertainment financing between the U.S. and
China. We planted the financial seeds in 2010,
after Chinese President Hu Jintao announced
that promoting China’s culture globally would
be of strategic importance to its economic
development. We realized that East West Bank
was uniquely positioned to play an active role in
this capacity, due to our deep network in Greater
China, and our access to the entertainment capital
of the world. Several years ago, we brought a
seasoned entertainment team on board, and began
cultivating relationships in the entertainment
industry on both sides of the Pacific.

As a financer, we went beyond lending; our
unique proposition was that we have an in-depth
understanding of the financial rules, laws, people,
and cultures of both countries. In addition to
banking services such as lending, foreign exchange
and letters of credit, we also have the capabilities
to execute cross-border transactions and manage
the flow of funds between the U.S. and Greater
China. Our solid relationships with top studios
and entertainment companies in both China and
Hollywood enable us to help our clients find the
right partner.

Result

Our value-added services produced big results. We
took the lead on providing financing for the co-
investment deal between Lionsgate Entertainment
and Hunan TV—an investment spanning a
three-year period to finance the production and
distribution of film and television projects. We
were the sole financer of a transaction between STX
Entertainment and Huayi Brothers for the
co-production and distribution of a dozen theatrical
and streaming video on demand releases annually.
We provided a credit facility to help finance Bona
Film’s $235 million investment in a slate of live
action films distributed by Twentieth Century Fox,
including “The Martian”, a box office hit in both the
U.S. and China, and nominated for seven Academy
Awards, including Best Picture.

In 2015, we also helped finance Le Vision Pictures’
biggest U.S.-China co-production to date. “The
Great Wall” stars Matt Damon and Andy Lau under
the helm of director Zhang Yimou and is expected
to be released in early 2017. We look forward to
supporting more works of distinction that foster
cooperation and understanding between the East
and the West.

In 2015, East West Bank financed notable
Hollywood-China entertainment deals

11 | East West Bancorp 2015 Annual Report

Build Your Dream

Our beyond banking approach draws loyal customers who entrust us
with their daily operational financial needs

Background

Build Your Dream (BYD) began as a rechargeable
battery factory in Shenzhen with 20 employees
in 1995. Today, it has grown into a formidable
company with 180,000 employees internationally
and is one of the largest suppliers of rechargeable
batteries in the world. BYD has further expanded
their business to the field of new energy;
developing solar farms, battery energy storage
stations, electric vehicles and LEDs. BYD’s electric
buses and cars can now be seen running on the
streets of New York, Chicago, and throughout the
state of California.

The East West Bank Difference

BYD’s growth was driven by their innovation and
passion for developing renewable energy. In 2010,
they expanded their footprint to the U.S. market.
At that time, BYD was unfamiliar with certain
aspects of U.S. business culture and regulations.
Knowing this, East West Bank leveraged resources
and connections to help BYD gain footing in a
new market. From helping BYD in their quest for
the right office space, to assisting in their efforts
to develop a human resources program for U.S.
employees, to providing business introductions,

we were there every step of the way. Beyond this,
we connected BYD’s management team to vital
local government officials and community leaders,
further paving the way for growth opportunities.

Result

By being a part of BYD’s business journey in
the U.S. since the beginning, East West Bank
established a solid foundation of trust and loyalty.
Subsequent to opening their North American
headquarters in Los Angeles, BYD has added five
additional facilities in the U.S., which East West
Bank helped finance. In addition, as their primary
bank in North America, we provide both foreign
exchange and treasury management services that
help BYD manage daily transactions that flow
through their operations in the U.S., Canada, and
South America. The relationship we built with BYD
in the U.S. also extends to China; our Shenzhen
branch provides BYD’s head office with financing to
support their business development initiatives.

Appreciating our willingness to go above and
beyond traditional banking, BYD continues to
expand its relationship with East West Bank and
also adds to our business through referrals. It is
gratifying to see our bridge banking approach and
the values we hold dear working – take care of your
customers and receive care in return. We look
forward to being a part of BYD’s success story for
many years to come.

East West Bancorp 2015 Annual Report | 12

Merit Technologies, LLC

East West Bank financed the first export of a water
treatment system by a U.S.–based company to China,
helping to address an urgent need for clean water

Background

Lu’an City, located in the Anhui province of China,
has witnessed a dramatic urban expansion, and
has more than tripled in population over the past
15 years. The existing water treatment plant was
beginning to face challenges in keeping up with
the water demands of the city. To address this
issue, the public utility in Lu’an commissioned
Merit Technologies, LLC (MTI), an environmental
engineering firm based in San Diego, to supply
and install a new water treatment system. Upon
completion of the new water treatment system,
the clean water capacity for Lu’an is expected
to triple.

The U.S.-China Framework Agreement
(Agreement) is a joint program supported by
the Export-Import Bank of the United States (US
Exim Bank) and the Ministry of Finance of China
(Ministry). The Agreement was designed to boost
exports of advanced technology and equipment
from the U.S. to China, whereby the Ministry
guarantees obligational payments of a Chinese
buyer of U.S. exports, to help China benefit from
technological advances and improve the standard
of living for its people. This is a win-win situation
for everyone involved: MTI, the U.S. exporter,
increases sales and is assured payment upon the
completion of the project; and the public utility in
Lu’an, the Chinese buyer, obtains financing at an
attractive interest rate.

The East West Bank Difference

Obtaining financing under the Agreement requires
extensive knowledge and involves multiple
government and business parties from the U.S.
and China. The process is further complicated
by stringent documentation procedures and
intensive negotiations among business, legal, and
accounting professionals from both sides of
the Pacific.

Our team at East West Bank was instrumental
in the success of this project, largely because we
thoroughly understood the different business
cultures and government entities in the U.S.
and China. By leveraging the expertise of our
cross-border banking team and our long-term
relationships with both US Exim Bank and China
Exim Bank, we were able to smoothly facilitate the
communication process between all parties and
complete the transaction in a timely manner.

Result

We are proud to have played a
part in successfully completing
the first environmental transaction
under the Agreement and helped
to open up a new financing option
for future municipal environmental
projects in China. East West
Bank applies creative solutions for
financing needs of every kind, and
our involvement to expand this area
further reinforces our business value. Equipped
with the knowledge and experience, and having laid
the groundwork for future environmental projects,
East West Bank is well-positioned to seize more
environment-related business opportunities.

The scale and impact of this project caught the
attention of the International Finance Corporation
(IFC), a division of the World Bank. IFC has since
become an equity investor in MTI and we are
excited that MTI’s business has flourished even
more since banking with East West Bank. Most
importantly, knowing that millions of citizens in
Lu’an will now have access to clean water makes
our hard work much more worthwhile
and rewarding.

13 | East West Bancorp 2015 Annual Report

2015 Corporate Social
Responsibility Highlights

Corporate Social
Responsibility Award
– Los Angeles Business Journal

Spirit of
Los Angeles Award
– United Way Greater Los Angeles

SBA 2015
Export Lender of the Year
– U.S. Small Business Administration

$820
Million
Small business lending in 2015

$560
Million
Financing for affordable housing and homes in
low-to-moderate income areas in 2015

1 out of 3

17,000+

East West Bank branches
Located in low-to-moderate income areas

Volunteer hours
Dedicated to CRA community development services
over the last 5 years

$15.8
Million
Donations
Corporate donations over the last 5 years

$4.4
Million
Raised
By the Company and its associates for the United
Way campaign over the last 5 years

East West Bancorp 2015 Annual Report | 14

At East West Bank, we believe that vibrant communities are the
cornerstones of economic growth for the nation. That’s why we provide
support for low-to-moderate income individuals and communities
through our work and financial support for affordable housing,
education programs and public services.

Making home ownership a reachable goal

East West Bank believes that home ownership
should be an attainable goal. In 2015, we launched
an affordable lending mortgage product as a
solution to help qualified buyers purchase a home
with a down payment for as little as 3%. This loan
program offers flexible qualification guidelines
and is designed specifically for low-to-moderate
income borrowers and buyers in designated
low-income, minority or disaster-impacted
communities. Our aim is to make home ownership
a realistic goal in the communities that we serve.

Supporting small businesses

Concerned with the difficulties experienced by
small business operators in getting financing,
East West Bank launched a micro loan program
in 2015. With a streamlined application process
and no collateral required, our micro loan program
is an affordable way for small business owners to
quickly obtain loans to help them achieve their
business goals.

Improving the quality of life through affordable
housing

• We support organizations that build and

develop affordable housing. An example of this
is Century Housing, a nonprofit Community
Development Financial Institution. Century
Housing operates as a lender to builders and
other nonprofit organizations that otherwise
cannot obtain credit through conventional
lending channels. A subsidiary of Century
Housing owns and operates low-to-moderate
income housing and develops sites to support
homeless families, including veterans. In 2015,
East West Bank provided financing to Century
Housing to support their initiatives.

• When the Metropolitan Area Advisory

Committee on Anti-Poverty in San Diego
County (MAAC) needed to obtain financing for
a multi-family apartment that provides housing
at affordable rates, East West Bank was ready
and willing to help. The housing project is
available to tenants earning up to 60% of the
Area Median Income, with apartment rental
rates approximately 20% to 30% lower than
the fair market rate in the area. MAAC is a
nonprofit organization that provides various
programs and services such as affordable
housing, childcare, home health services,
and education to low-income families and
individuals throughout San Diego County.

15 | East West Bancorp 2015 Annual Report

Improving the chance of success for people in
our communities through financial education
and developing meaningful workforce skills

•

• East West Bank continues to support

Operation HOPE (HOPE) and its initiatives to
improve lives through three distinct programs.
One program is to help qualified low-income
individuals obtain funding for homes without
resorting to subprime loans; while the other
two programs are educational – designed
to equip students with essential financial
management knowledge and to develop their
leadership skills. In 2015, our associates
educated more than 185 students in Atlanta
and 670 students in southern California to
equip the youth with the financial tools for
success. Cultivating awareness for better
financial decisions helps families to break out
of a cycle of poverty and helps them invest
for the future. The Entrepreneurship Training
Program develops specific skillsets such as
public speaking, project management and
critical thinking. Through the continuous
support of these programs, we invest in a
brighter future for communities.

In addition to HOPE, we partner with the
FDIC’s Money Smart Program to bring financial
education to youths and adults. We provide
information on choosing the appropriate
banking products, managing finances
effectively and understanding financial
concepts. We are firm believers that having the
ability to make informed financial decisions is
important and can have a profound impact on
one’s future.

• Since 2013, we have partnered with Christ Our
Redeemer African Methodist Episcopal Church
to further social services and financial literacy.
The financial literacy education we provide
is mainly focused in these areas: i) Small
business owners are informed of the banking
products that can help manage their daily
operational needs and the types of financing
available to small businesses; ii) Recent
graduates are coached on the importance
of avoiding debt and to begin saving early in
life; and iii) Students are taught basic banking
concepts and products.

East West Bancorp 2015 Annual Report | 16

We continue marching toward progress with
our philanthropic spirit

2016 will be a year of continued dedication to
our communities and also marks the 20th year of
partnership between East West Bank and United
Way. Over the past 19 years, East West Bank
has raised more than $8 million in support of
United Way. In addition to providing the much
needed financial support for implementing vital
community initiatives, East West Bank team
members offer the manpower, intellectual capital
and skill-based volunteering required to get the
job done.

East West Bank’s drive to improve our
communities, empower our youth, and provide
affordable housing and small business loans is an
ongoing commitment. Whether it’s funding an
educational program, volunteering as a team, or
supporting small businesses, we are committed
to the cause. Giving back to the community is an
important part of our value system. We strive to
be an invaluable asset for our community.

•

In 2015, East West Bank became the
founding sponsor of the Mandarin Excellence
Initiative to promote Mandarin education for
kindergarten through high school students
of diverse ethnic backgrounds. We partnered
with Asian Americans Advancing Justice-
Los Angeles, the Committee of 100 and
the UCLA Confucius Institute at the 5th
Annual Mandarin in Schools Conference
to promote best practices in Mandarin
education. As the largest Asian American

bank in the country that operates in multiple
languages on a day-to-day basis, we believe
that learning languages can expose the
mind to new concepts and open doors to
more opportunities. We strongly advocate
for higher diversity as it unites ideas,
cultures, backgrounds and talent. Diversity is
advantageous, and by supporting multiethnic
students to learn Mandarin, we hope to
improve their chances of competing in an
increasingly global market.

17 | East West Bancorp 2015 Annual Report

Board of Directors

Molly Campbell
Director of the Port Commerce Department
Port Authority of New York and New Jersey

Herman Y. Li
Chairman
C&L Restaurant Group, Inc.

Iris S. Chan
Chief Executive Officer
Ameriway, Inc.

Rudolph I. Estrada
President and Chief Executive Officer
Estradagy Business Advisors

Julia S. Gouw
President and Chief Operating Officer
East West Bank

Jack C. Liu, Esq.
Senior Attorney
Alliance International Law Offices

Dominic Ng
Chairman and Chief Executive Officer
East West Bank

Keith W. Renken
Managing Partner
Renken Enterprises

Paul H. Irving
Chairman
Milken Institute Center for the Future of Aging

Lester M. Sussman
Senior Practice Director
Resources Global Professionals

John M. Lee
Vice Chairman
East West Bank

East West Bancorp 2015 Annual Report | 18

5 -Year Summary of Selected Financial Data

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

2015

2014

2013

2012

2011

1,053,815

1,153,698

$ 1,068,685

1,051,095

1,080,448

SUMMARY OF OPERATIONS

Interest and dividend income

Interest expense

Net interest income before provision for credit losses

Provision for credit losses

Net interest income after provision for credit losses

Noninterest income (loss) (1)

Noninterest expense (2)

Income before income taxes (2)

Income tax expense (2)

Net income (2)

Preferred stock dividends

Net income available to common stockholders (2)

PER COMMON SHARE

Basic earnings (2)

Diluted earnings (2)

Dividends declared

Book value (2)

103,376

950,439

14,217

936,222

183,383

540,884

578,721

194,044

384,677

—

384,677

2.67

2.66

0.80

21.70

112,820

112,492

1,040,878

956,193

49,158

22,364

991,720

933,829

(11,714)

532,983

447,023

101,145

345,878

(92,468)

394,215

447,146

153,822

293,324

132,168

918,927

65,184

853,743

(5,618)

406,837

441,288

163,552

277,736

—

3,428

6,857

345,878

2.42

2.41

0.72

19.89

289,896

2.10

2.09

0.60

17.19

270,879

1.89

1.87

0.40

17.01

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING

Basic

Diluted

Common shares outstanding at period-end

AT YEAR END

Total assets (2)

143,818

144,512

143,909

142,952

143,563

143,582

137,342

139,574

137,631

141,457

147,175

140,294

$ 32,350,922

$ 28,743,592

$ 24,732,216

$ 22,539,744

Loans held-for-investment, net

$ 23,378,789

$ 21,468,270

$ 17,600,613

$ 14,645,785

Available-for-sale investment securities

3,773,226

2,626,617

$ 2,733,797

2,607,029

Customer deposits

Long-term debt

Federal Home Loan Bank (FHLB) advances

Stockholders' equity (2)

FINANCIAL RATIOS

Return on average assets (2)

Return on average equity (2)

Common dividend payout ratio (2)

Net interest margin

$ 27,475,981

$ 24,008,774

$ 20,412,918

$ 18,309,354

206,084

1,019,424

3,122,950

225,848

317,241

226,868

315,092

2,856,111

$ 2,366,373

137,178

312,975

2,385,991

1.27%

12.74%

30.21%

3.35%

1.25%

12.72%

30.07%

4.03%

1.24%

12.50%

28.74%

4.38%

1.27%

11.94%

21.26%

4.63%

177,422

903,026

95,006

808,020

10,924

424,377

394,567

151,794

242,773

6,857

235,916

1.60

1.58

0.16

15.53

147,093

153,467

149,328

21,976,451

13,984,930

3,072,578

17,453,002

212,178

455,251

2,319,527

1.13%

10.82%

10.12%

4.66%

(1) Changes in FDIC indemnification asset and receivable/payable was a charge of $38.0 million, $201.4 million, $228.6 million, $122.3 million and $100.1 million for
the years ended December 31, 2015, 2014, 2013, 2012 and 2011, respectively. During the year ended December 31, 2015, the Company terminated the United
Commercial Bank and Washington First International Bank shared-loss agreements.

(2) Prior periods were restated to reflect the retrospective application of adopting the new accounting guidance related to the Company’s investments in qualified
affordable housing projects ASU 2014-01.

19 | East West Bancorp 2015 Annual Report

Consolidated Balance Sheets

($ in thousands)

ASSETS

Cash and cash equivalents

Short-term investments

Securities purchased under resale agreements (resale agreements)

Available-for-sale investment securities, at fair value

Loans held for sale

Loans held-for-investment

(net of allowance for loan losses of $264,959 in 2015 and $261,679 in 2014)

Investment in FHLB stock, at cost

Investment in Federal Reserve Bank stock, at cost

Investments in qualified affordable housing partnerships, net (1)

DECEMBER 31,

2015

2014

1,360,887

1,039,885

299,916

1,600,000

3,773,226

31,958

338,714

1,225,000

2,626,617

45,950

23,378,789

21,468,270

28,770

54,932

193,978

469,433

992,040

31,239

54,451

178,962

180,900

469,433

1,084,171

32,350,922

28,743,592

8,656,805

7,381,030

18,819,176

27,475,981

1,019,424

—

206,084

526,483

16,627,744

24,008,774

317,241

795,000

225,848

540,618

29,227,972

25,887,481

164

1,701,295

1,872,594

(436,162)

(14,941)

3,122,950

164

1,677,767

1,604,141

(430,198)

4,237

2,856,111

32,350,922

28,743,592

Premises and equipment (net of accumulated depreciation of $100,060 in 2015 and $85,409 in 2014)

166,993

Goodwill

Other assets (1)

Total assets (1)

LIABILITIES

Customer deposits:

Noninterest-bearing

Interest-bearing

Total deposits

FHLB advances

Securities sold under repurchase agreements (repurchase agreements)

Long-term debt

Accrued expenses and other liabilities

Total liabilities

STOCKHOLDERS' EQUITY

Common stock, $0.001 par value, 200,000,000 shares authorized; 164,246,517 and 163,772,218 shares issued

in 2015 and 2014, respectively

Additional paid in capital

Retained earnings (1)

Treasury stock at cost - 20,337,284 shares in 2015 and 20,189,989 shares in 2014

Accumulated other comprehensive (loss) income, net of tax

Total stockholders' equity (1)

Total liabilities and stockholders' equity (1)

(1) Prior period was restated to reflect the retrospective application of adopting the new accounting guidance related to the Company’s investments in qualified
affordable housing projects ASU 2014-01.

East West Bancorp 2015 Annual Report | 20

Consolidated Statements of Income

($ in thousands, except per share data)

INTEREST AND DIVIDEND INCOME

Loans receivable, including fees
Available-for-sale investment securities
Resale agreements
Investment in FHLB and Federal Reserve Bank stock
Due from banks and short-term investments

Total interest and dividend income

INTEREST EXPENSE

Customer deposits
Short-term borrowings
FHLB advances
Repurchase agreements
Long-term debt

Total interest expense

YEAR ENDED DECEMBER 31,

2015

2014

968,625
41,375
19,799
6,077
17,939

$ 1,059,205
44,684
20,323
6,272
23,214

1,053,815

1,153,698

73,505
58
4,270
20,907
4,636

103,376

65,486
—
4,116
38,395
4,823

112,820

NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES

950,439

1,040,878

Provision for credit losses

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

NONINTEREST INCOME (LOSS)

Branch fees
Letters of credit fees and foreign exchange income
Ancillary loan fees
Wealth management fees
Derivative commission income
Changes in FDIC indemnification asset and receivable/payable
Net gains on sales of loans
Net gains on sales of available-for-sale investment securities
Other fees and other operating income

Total noninterest income (loss)

NONINTEREST EXPENSE

Compensation and employee benefits
Occupancy and equipment expense
Amortization of tax credit and other investments (1)
Amortization of premiums on deposits acquired
Deposit insurance premiums and regulatory assessments
Deposit related expenses
Other real estate owned income
Legal expense
Data processing
Consulting expense
Repurchase agreements' extinguishment costs
Other operating expense

Total noninterest expense (1)

INCOME BEFORE INCOME TAXES (1)
Income tax expense (1)

NET INCOME (1)

EARNINGS PER SHARE

Basic (1)
Diluted (1)

14,217

936,222

39,495
38,985
15,029
18,268
16,193
(37,980)
24,874
40,367
28,152

183,383

262,193
61,292
36,120
9,234
18,772
9,582
(8,914)
16,373
10,185
17,234
21,818
86,995

540,884

578,721
194,044

384,677

2.67
2.66

$
$

49,158

991,720

37,866
37,323
10,616
16,162
12,753
(201,417)
39,132
10,851
25,000

(11,714)

231,838
63,815
44,092
10,204
21,922
7,536
(3,591)
53,018
15,888
8,511
—
79,750

532,983

447,023
101,145

345,878

2.42
2.41

$
$

21 | East West Bancorp 2015 Annual Report

Stock Snapshot

EWBC 5-YR STOCK PERFORMANCE

$39.71
$38.71
$30.50

$35.43
$34.97
$22.11

$23.79
$19.75
$13.94

$24.39
$21.49
$19.58

$50

$40

$30

$20

$10

$46.50
$41.56
$35.68

- High
- Close
- Low

TOTAL SHAREHOLDER RETURN
(As of December 31, 2015)

2011 2012 2013 2014 2015

1-YR

3-YRS

5-YRS

106%

132%

TOTAL RETURN PERFORMANCE

$250

$200

$150

$100

$50

2010

2011

2012

2013

2014

2015

December 31,

EWBC

S&P 500 Index

2010

2011

$ 100

$ 102

$ 100

$ 102

2012

$ 113

$ 118

2013

2014

2015

$ 187

$ 212

$ 232

$ 157

$ 178

$ 181

This table and graph assume that on December 31,
2010, $100 was invested in EWBC common stock, the
S&P 500 Index and KBW Regional Bank Index (KRX)
Index, and that all dividends were reinvested.

KBW Regional Bank Index

$ 100

$ 95

$ 107

$ 158

$ 162

$ 171

Indices used in the prior year

SNL Western U.S. Bank Index

$ 100

$ 90

SNL U.S. Bank and Thrift Index

$ 100

$ 78

$ 114

$104

$ 160

$ 193

$ 199

$ 143

$ 160

$ 163

In 2015, the Company changed its stock performance
graph indices from the SNL U.S. Bank and Thrift and
SNL Western U.S. Bank Indices to the S&P 500 and
KRX. The KRX was used to further align EWBC with
those companies of a relatively similar size. The S&P
500 was utilized as a benchmark against performance.

DIVIDENDS
East West Bancorp has consistently
paid an annual dividend on common
stock since going public in 1999.

$0.80

$0.72

$0.60

$0.40 $0.40

$0.40

$0.06 $0.06 $0.06

$0.14

$0.20 $0.20 $0.20 $0.20

$0.16

$0.05

$0.04

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

East West Bancorp 2015 Annual Report | 22

Investor Information

Transfer Agent and Registrar

Stockholders with inquiries about accounts, lost
stock certificates or changes of address may
contact the Computershare customer service
department:

Computershare
250 Royall Street
Canton, MA 02021
(877) 254-8651 (available 24-hrs a day)

Independent Registered Public Accounting Firm
KPMG LLP

Exchange
NASDAQ: EWBC

Shares Outstanding at December 31, 2015
143,909,233

Financial Information and Mailings

Annual Meeting

You may obtain the Company’s annual reports on
Form 10-K, quarterly financial results and other
financial information by writing or calling:

The 2016 Annual Meeting of Stockholders
will be held at 2:00 p.m. Pacific Daylight Time
on Tuesday, May 24, 2016 at:

East West Bancorp, Inc.
Investor Relations
135 N. Los Robles Avenue, 7th Floor
Pasadena, CA 91101
(626) 768-6000

To receive Company news releases via e-mail,
please contact Investor Relations at the telephone
number or address above or sign up at
www.eastwestbank.com/investors

East West Bank
Corporate Headquarters
135 N. Los Robles Avenue, 6th Floor
Pasadena, CA 91101

Formal notice of the meeting with a proxy card and
proxy statement is being mailed to all stockholders
of record as of March 28, 2016.

The proxy statement, annual report on Form 10-K
and proxy card are available at:
www.eastwestbank.com/annual

Corporate Headquarters
135 N. Los Robles Avenue
Pasadena, CA 91101
626.768.6000
www.eastwestbank.com