MAY 1, 2023
Dear Customers,
Another bank, First Republic Bank, was closed by its government banking regulators and sold today. Media commentators are speculating if there are other banks that might be closed, and which banks are the safest place for depositors to keep their money.
First, I want to reassure you that your money is safe with East West Bank. As shown in our recent first quarter 2023 earnings release, East West Bank is in a position of strength. Our business model is diversified, our balance sheet is conservatively managed, and our capital and liquidity are exceptionally strong.
Secondly, it is noteworthy that all First Republic customers’ deposits were covered in full, even though FDIC insurance is generally only $250,000 per customer. Only shareholders lost money. This is also the most common scenario when a bank fails and another bank or the FDIC assumes the obligation to protect all depositors.
At East West, we have both industry-leading profitability and high-quality earnings year after year, and the bank was recently recognized by S&P Global Market Intelligence as the number one bank in the 2022 Ranking of U.S. Public Banks by Financial Performance.
East West Bank is a very different bank from First Republic Bank, Silicon Valley Bank, and Signature Bank. These banks did not operate with adequate capital, effective interest rate risk, and liquidity management. All three banks also had high concentrations of deposits in a few industries.
At East West Bank, we have prioritized a solid and stable foundation:
- Traditional Banking Model: With a diverse base of consumer, small business, and commercial customers, we have prioritized the diversification of our $67 billion balance sheet, including loans and deposits to many sectors to reduce any concentration risks.
- Robust Capital Levels: In the first quarter of 2023, East West Bank earned industry-leading returns. Our capital ratios are among the highest among our peers. In addition, East West has continued to grow its capital levels through outstanding profitability, earnings growth, and prudent balance sheet management. East West Bank’s first quarter 2023 net income was $322.4 million, following a record $1.1 billion net income for the full year 2022.
- Broad Traditional Customer Base: East West’s 550,000+ deposit accounts with an average size of under $100,000 are well spread by geography and diversified by industry and depositor type. As of today, our uninsured and uncollateralized deposit ratio has improved to 41% of our deposits.
- Strong, Conservative Liquidity: East West has a highly liquid balance sheet with ample access to additional liquidity through its cash and available borrowing capacity of $30.6 billion. This is equivalent to 134% of uninsured and uncollateralized deposits. If every customer with deposits that were not covered by FDIC insurance or collateral took their deposits out, East West would have more than enough cash to pay them in full. This was not the situation at First Republic Bank, Silicon Valley Bank, and Signature Bank.
East West Bank’s superior business model, balance sheet, capital, profitability, and liquidity will continue to meet your banking needs, despite banking industry volatility and ongoing market disruption. We appreciate your steady trust in East West Bank as your partner.
Dominic Ng
Chairman and CEO