EAST WEST BANCORP INC
For the period ended Dec 31, 2023. Filed Feb 29, 2024.
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FY2023 · Filed Feb 29, 2024
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Noninterest Expense
The following table presents the components of noninterest expense for the periods indicated:
| Year Ended December 31, | ||||
|---|---|---|---|---|
| ($ in thousands) | 2023 | 2022 | % Change from 2022 | 2021 |
| Compensation and employee benefits | $508,538 | $477,635 | 6% | $433,728 |
| Occupancy and equipment expense | 62,763 | 62,501 | 0% | 62,996 |
| Deposit insurance premiums and regulatory assessments | 103,308 | 19,449 | 431% | 17,563 |
| Deposit account expense | 43,143 | 25,508 | 69% | 16,152 |
| Computer software and data processing expenses | 44,475 | 42,776 | 4% | 46,863 |
| Other operating expense | 140,222 | 118,166 | 19% | 96,330 |
| Amortization of tax credit and other investments | 120,299 | 113,358 | 6% | 122,457 |
| Total noninterest expense | $1,022,748 | $859,393 | 19% | $796,089 |
Noninterest expense was $1.0 billion in 2023, an increase of $163 million or 19%, compared with $859 million in 2022. The increase was primarily due to higher deposit insurance premiums and regulatory assessments, compensation and employee benefits, other operating expense, and deposit account expense.
Compensation and employee benefits were $509 million in 2023, an increase of $31 million or 6%, compared with $478 million in 2022. The year-over-year increase was primarily due to wage increases and staffing growth.
Deposit insurance premiums and regulatory assessments were $103 million in 2023, an increase of $84 million or 431%, compared with $19 million in 2022. The year-over-year increase was primarily due to a $70 million FDIC charge incurred as a result of the final rule implemented to recover losses in the DIF following the failures of financial institutions in the first quarter of 2023, and a two bps increase in the base deposit insurance assessment rate under the FDIC’s Amended Restoration Plan.
Deposit account expense was $43 million in 2023, an increase of $18 million or 69%, compared with $26 million in 2022. The year-over-year increase primarily reflected an increase in deposit referral fees which were driven by higher interest rates and an increase in insured cash sweep product fees due to higher deposit balances. Such deposit referral fees are variable fees, sensitive to market rates and paid in lieu of interest on a small portion of the Bank’s deposit balances.
Other operating expense was $140 million in 2023, an increase of $22 million or 19%, compared with $118 million in 2022. The year-over-year increase was primarily due to higher corporate expenses and an increase in interest expense paid on cash collateral, partially offset by a reduction in foreclosure expenses.
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