EAST WEST BANCORP INC - Quarter Report: 2022 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-24939

EAST WEST BANCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

95-4703316

(I.R.S. Employer Identification No.)

135 North Los Robles Ave., 7th Floor, Pasadena, California 91101

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code:

(626) 768-6000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange
on which registered

Common Stock, par value $0.001 per share

EWBC

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Number of shares outstanding of the issuer’s common stock on the latest practicable date: 140,946,569 shares as of October 31, 2022.

TABLE OF CONTENTS


			Page
PART I — FINANCIAL INFORMATION			3

	Item 1.	Consolidated Financial Statements	3
		Consolidated Balance Sheet (Unaudited)	3
		Consolidated Statement of Income (Unaudited)	4
		Consolidated Statement of Comprehensive Income (Unaudited)	5
		Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)	6
		Consolidated Statement of Cash Flows (Unaudited)	7
		Notes to Consolidated Financial Statements (Unaudited)	9
		1 — Basis of Presentation	9
		2 — Current Accounting Developments and Summary of Significant Accounting Policies	10
		3 — Fair Value Measurement and Fair Value of Financial Instruments	11
		4 — Assets Purchased under Resale Agreements and Sold under Repurchase Agreements	21
		5 — Securities	23
		6 — Derivatives	29
		7 — Loans Receivable and Allowance for Credit Losses	36
		8 — Investments in Qualified Affordable Housing Partnerships, Tax Credit and Other Investments, Net and Variable Interest Entities	50
		9 — Goodwill	52
		10 — Commitments and Contingencies	52


		11 — Stock Compensation Plans	53
		12 — Stockholders’ Equity and Earnings Per Share	55
		13 — Accumulated Other Comprehensive Income (Loss)	56
		14 — Business Segments	58


	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	61










	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	106

	Item 4.	Controls and Procedures	106


PART II — OTHER INFORMATION			107

	Item 1.	Legal Proceedings	107
	Item 1A.	Risk Factors	107
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	107



	Item 6.	Exhibits	108

GLOSSARY OF ACRONYMS			109

SIGNATURE			110

PART I — FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

($ in thousands, except shares)

(Unaudited)



	September 30, 2022		December 31, 2021
	(Unaudited)
ASSETS
Cash and due from banks	$	554,260	$	527,317
Interest-bearing cash with banks	1,609,093		3,385,618
Cash and cash equivalents	2,163,353		3,912,935
Interest-bearing deposits with banks	630,543		736,492
Assets purchased under resale agreements (“resale agreements”)	892,986		2,353,503
Securities:
Available-for-sale (“AFS”) debt securities, at fair value (amortized cost of $6,771,354 and $10,087,179)	5,906,090		9,965,353
Held-to-maturity (“HTM”) debt securities, at amortized cost (fair value of $2,459,135)	3,012,667		—

Loans held-for-sale	14,500		635
Loans held-for-investment (net of allowance for loan losses of $582,517 and $541,579)	46,859,738		41,152,202
Investments in qualified affordable housing partnerships, tax credit and other investments, net	725,254		628,263

Premises and equipment (net of accumulated depreciation of $146,073 and $139,358)	91,587		97,302
Goodwill	465,697		465,697
Operating lease right-of-use assets	105,411		98,632
Other assets	1,708,235		1,459,687
TOTAL	$	62,576,061	$	60,870,701
LIABILITIES
Deposits:
Noninterest-bearing	$	21,645,394	$	22,845,464
Interest-bearing	32,211,968		30,505,068
Total deposits	53,857,362		53,350,532

Federal funds purchased	200,000		—
Federal Home Loan Bank (“FHLB”) advances	324,920		249,331
Assets sold under repurchase agreements (“repurchase agreements”)	611,785		300,000
Long-term debt and finance lease liabilities	152,610		151,997
Operating lease liabilities	113,477		105,534
Accrued expenses and other liabilities	1,655,239		876,089
Total liabilities	56,915,393		55,033,483
COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS’ EQUITY
Common stock, $0.001 par value, 200,000,000 shares authorized; 168,427,227 and 167,790,645 shares issued	168		168
Additional paid-in capital	1,926,393		1,893,557
Retained earnings	5,302,897		4,683,659
Treasury stock, at cost 27,509,715 and 25,882,691 shares	(768,758)		(649,785)
Accumulated other comprehensive loss (“AOCI”), net of tax	(800,032)		(90,381)
Total stockholders’ equity	5,660,668		5,837,218
TOTAL	$	62,576,061	$	60,870,701

See accompanying Notes to Consolidated Financial Statements.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

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

(Unaudited)



	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
INTEREST AND DIVIDEND INCOME
Loans receivable, including fees	$	560,452	$	363,503	$	1,376,978	$	1,057,964
Debt securities	51,092		37,826		139,935		101,616

Resale agreements	6,769		8,957		23,705		23,077
Restricted equity securities	843		500		2,274		1,588
Interest-bearing cash and deposits with banks	9,080		4,521		17,127		11,781
Total interest and dividend income	628,236		415,307		1,560,019		1,196,026
INTEREST EXPENSE
Deposits	68,894		15,970		104,371		55,790
Federal funds purchased and other short-term borrowings	1,177		—		1,427		42
FHLB advances	392		857		1,529		6,025
Repurchase agreements	4,421		2,012		8,855		5,981
Long-term debt and finance lease liabilities	1,543		762		3,463		2,314
Total interest expense	76,427		19,601		119,645		70,152
Net interest income before provision for (reversal of) credit losses	551,809		395,706		1,440,374		1,125,874
Provision for (reversal of) credit losses	27,000		(10,000)		48,500		(25,000)
Net interest income after provision for (reversal of) credit losses	524,809		405,706		1,391,874		1,150,874
NONINTEREST INCOME
Lending fees	20,289		17,516		59,869		56,965
Deposit account fees	23,636		18,508		66,323		51,233
Interest rate contracts and other derivative income	8,761		7,156		29,695		20,981
Foreign exchange income	10,083		13,101		34,143		35,634
Wealth management fees	8,903		5,598		21,494		20,460
Net gains on sales of loans	2,129		3,329		5,968		6,601
Gains on sales of AFS debt securities	—		354		1,306		1,178


Other investment (loss) income	(580)		5,349		5,910		13,870
Other income	2,331		2,198		9,031		7,484
Total noninterest income	75,552		73,109		233,739		214,406
NONINTEREST EXPENSE
Compensation and employee benefits	127,580		105,751		357,213		318,985
Occupancy and equipment expense	15,920		15,851		46,853		47,150
Deposit insurance premiums and regulatory assessments	4,875		4,641		14,519		12,791
Deposit account expense	6,707		4,136		17,071		11,845
Data processing	3,725		3,575		10,876		12,088
Computer software expense	6,889		8,426		20,755		23,106
Consulting expense	1,620		1,635		5,474		4,978
Legal expense	689		2,363		2,454		5,840
Other operating expense	28,094		20,998		78,315		58,544
Amortization of tax credit and other investments	19,874		38,008		48,753		90,657

Total noninterest expense	215,973		205,384		602,283		585,984
INCOME BEFORE INCOME TAXES	384,388		273,431		1,023,330		779,296
INCOME TAX EXPENSE	89,049		47,982		232,010		124,111
NET INCOME	$	295,339	$	225,449	$	791,320	$	655,185
EARNINGS PER SHARE (“EPS”)
BASIC	$	2.10	$	1.59	$	5.59	$	4.62
DILUTED	$	2.08	$	1.57	$	5.55	$	4.58
WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING
BASIC	140,917		141,880		141,453		141,799
DILUTED	142,011		143,143		142,601		143,051

See accompanying Notes to Consolidated Financial Statements.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

($ in thousands)

(Unaudited)



	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income	$	295,339	$	225,449	$	791,320	$	655,185
Other comprehensive loss, net of tax:
Net changes in unrealized losses on AFS debt securities	(161,445)		(41,178)		(523,593)		(101,577)
Net changes in unrealized gains (losses) on securities transferred from AFS to HTM	3,256		—		(103,674)		—
Net changes in unrealized (losses) gains on cash flow hedges	(33,269)		51		(64,372)		551
Foreign currency translation adjustments	(7,926)		(1,752)		(18,012)		(867)
Other comprehensive loss	(199,384)		(42,879)		(709,651)		(101,893)
COMPREHENSIVE INCOME	$	95,955	$	182,570	$	81,669	$	553,292

See accompanying Notes to Consolidated Financial Statements.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

($ in thousands, except shares)

(Unaudited)



	Common Stock and Additional Paid-in Capital			Retained Earnings		Treasury Stock		AOCI, Net of Tax		Total Stockholders’ Equity
	Shares	Amount
BALANCE, JULY 1, 2021	141,877,505	$	1,876,247	$	4,335,327	$	(649,337)	$	(14,689)	$	5,547,548
Net income	—	—		225,449		—		—		225,449
Other comprehensive loss	—	—		—		—		(42,879)		(42,879)
Issuance of common stock pursuant to various stock compensation plans and agreements	9,643	7,792		—		—		—		7,792
Repurchase of common stock pursuant to various stock compensation plans and agreements	(3,417)	—		—		(254)		—		(254)
Cash dividends on common stock ($0.33 per share)	—	—		(47,455)		—		—		(47,455)
BALANCE, SEPTEMBER 30, 2021	141,883,731	$	1,884,039	$	4,513,321	$	(649,591)	$	(57,568)	$	5,690,201
BALANCE, JULY 1, 2022	140,917,389	$	1,914,232	$	5,064,650	$	(768,752)	$	(600,648)	$	5,609,482
Net income	—	—		295,339		—		—		295,339
Other comprehensive loss	—	—		—		—		(199,384)		(199,384)
Issuance of common stock pursuant to various stock compensation plans and agreements	206	12,329		—		—		—		12,329
Repurchase of common stock pursuant to various stock compensation plans and agreements	(83)	—		—		(6)		—		(6)

Cash dividends on common stock ($0.40 per share)	—	—		(57,092)		—		—		(57,092)
BALANCE, SEPTEMBER 30, 2022	140,917,512	$	1,926,561	$	5,302,897	$	(768,758)	$	(800,032)	$	5,660,668



	Common Stock and Additional Paid-in Capital			Retained Earnings		Treasury Stock		AOCI, Net of Tax		Total Stockholders’ Equity
	Shares	Amount
BALANCE, JANUARY 1, 2021	141,565,229	$	1,858,519	$	4,000,414	$	(634,083)	$	44,325	$	5,269,175

Net income	—	—		655,185		—		—		655,185
Other comprehensive loss	—	—		—		—		(101,893)		(101,893)



Issuance of common stock pursuant to various stock compensation plans and agreements	523,449	25,520		—		—		—		25,520
Repurchase of common stock pursuant to various stock compensation plans and agreements	(204,947)	—		—		(15,508)		—		(15,508)

Cash dividends on common stock ($0.99 per share)	—	—		(142,278)		—		—		(142,278)
BALANCE, SEPTEMBER 30, 2021	141,883,731	$	1,884,039	$	4,513,321	$	(649,591)	$	(57,568)	$	5,690,201
BALANCE, JANUARY 1, 2022	141,907,954	$	1,893,725	$	4,683,659	$	(649,785)	$	(90,381)	$	5,837,218

Net income	—	—		791,320		—		—		791,320
Other comprehensive loss	—	—		—		—		(709,651)		(709,651)



Issuance of common stock pursuant to various stock compensation plans and agreements	640,053	32,836		—		—		—		32,836
Repurchase of common stock pursuant to various stock compensation plans and agreements	(244,978)	—		—		(18,983)		—		(18,983)

Repurchase of common stock pursuant to the Stock Repurchase Plan	(1,385,517)	—		—		(99,990)		—		(99,990)
Cash dividends on common stock ($1.20 per share)	—	—		(172,082)		—		—		(172,082)
BALANCE, SEPTEMBER 30, 2022	140,917,512	$	1,926,561	$	5,302,897	$	(768,758)	$	(800,032)	$	5,660,668

See accompanying Notes to Consolidated Financial Statements.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

($ in thousands)

(Unaudited)



	Nine Months Ended September 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	791,320	$	655,185
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	81,980		116,371
Amortization of premiums and accretion of discount, net	26,336		17,392
Stock compensation costs	29,338		24,047
Deferred income tax (benefit) expense	(6,107)		787
Provision for (reversal of) credit losses	48,500		(25,000)
Net gains on sales of loans	(5,968)		(6,601)
Gains on sales of AFS debt securities	(1,306)		(1,178)




Loans held-for-sale:
Originations and purchases	(447)		(9,323)
Proceeds from sales and paydowns/payoffs of loans originally classified as held-for-sale	461		11,337


Proceeds from distributions received from equity method investees	5,642		7,624
Net change in accrued interest receivable and other assets	56,958		(78,649)
Net change in accrued expenses and other liabilities	584,655		30,179
Other operating activities, net	5,057		3,660
Total adjustments	825,099		90,646
Net cash provided by operating activities	1,616,419		745,831
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in:
Investments in qualified affordable housing partnerships, tax credit and other investments	(91,710)		(141,882)
Interest-bearing deposits with banks	105,479		4,576
Resale agreements:
Proceeds from paydowns and maturities	1,719,076		698,274
Purchases	(258,559)		(1,834,416)
AFS debt securities:
Proceeds from sales	129,181		236,967
Proceeds from repayments, maturities and redemptions	711,950		1,346,839
Purchases	(769,007)		(5,884,389)
HTM debt securities:
Proceeds from repayments, maturities and redemptions	60,140		—
Purchases	(50,000)		—
Loans held-for-investment:
Proceeds from sales of loans originally classified as held-for-investment	453,315		416,426
Purchases	(599,660)		(746,395)
Other changes in loans held-for-investment, net	(5,675,012)		(1,798,011)





Proceeds from sales of OREO	—		28,560
Purchase of bank-owned life insurance	—		(150,000)
Proceeds from distributions received from equity method investees	13,557		5,626

Other investing activities, net	920		(61)
Net cash used in investing activities	(4,250,330)		(7,817,886)

See accompanying Notes to Consolidated Financial Statements.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

($ in thousands)

(Unaudited)

(Continued)



	Nine Months Ended September 30,
	2022		2021



















































CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits	623,025		8,486,734
Net change in federal funds purchased and short-term borrowings	200,006		(21,143)

FHLB advances:
Proceeds	4,600,200		—
Repayment	(4,525,200)		(405,000)
Repurchase agreements:
Proceeds from repurchase agreements	311,785		—


Long-term debt and lease liabilities:

Repayment of long-term debt and lease liabilities	(710)		(909)
Common stock:
Repurchase of common stocks pursuant to the Stock Repurchase Program	(99,990)		—
Proceeds from issuance pursuant to various stock compensation plans and agreements	1,444		1,180
Stocks tendered for payment of withholding taxes	(18,983)		(15,508)
Cash dividends paid	(171,991)		(141,911)
Net cash provided by financing activities	919,586		7,903,443
Effect of exchange rate changes on cash and cash equivalents	(35,257)		3,542
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(1,749,582)		834,930
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	3,912,935		4,017,971
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	2,163,353	$	4,852,901

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	107,146	$	70,833
Income taxes, net	$	233,082	$	137,452
Noncash investing and financing activities:

Securities transferred from AFS to HTM debt securities	$	3,010,003	$	—
Loans transferred from held-for-investment to held-for-sale	$	463,769	$	411,416




Loans transferred to other real estate owned (“OREO”) and other foreclosed assets	$	—	$	49,122

See accompanying Notes to Consolidated Financial Statements.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Basis of Presentation

East West Bancorp, Inc. (referred to herein on an unconsolidated basis as “East West” and on a consolidated basis as the “Company”) is a registered bank holding company that offers a full range of banking services to individuals and businesses through its subsidiary bank, East West Bank and its subsidiaries (“East West Bank” or the “Bank”). The unaudited interim Consolidated Financial Statements in this Quarterly Report on Form 10-Q (“this Form 10-Q”) include the accounts of East West, East West Bank and East West’s subsidiaries. Intercompany transactions and accounts have been eliminated in consolidation. As of September 30, 2022, East West also has six wholly-owned subsidiaries that are statutory business trusts (the “Trusts”). In accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 810, Consolidation, the Trusts are not included on the Consolidated Financial Statements.

The unaudited interim Consolidated Financial Statements are presented in accordance with United States (“U.S.”) Generally Accepted Accounting Principles (“GAAP”), applicable guidelines prescribed by regulatory authorities and general practices in the banking industry. While the unaudited interim Consolidated Financial Statements reflect all adjustments that, in the opinion of management, are necessary for fair presentation, they primarily serve to update the most recently filed annual report on Form 10-K, and may not include all the information and notes necessary to constitute a complete set of financial statements. Accordingly, they should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission on February 28, 2022 (the “Company’s 2021 Form 10-K”). In addition, certain items on the Consolidated Financial Statements and notes for the prior periods have been reclassified to conform to the current period presentation.

The preparation of the Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Consolidated Financial Statements, income and expenses during the reporting periods, and the related disclosures. Although our current estimates contemplate current conditions and how we expect them to change in the future, it is reasonably possible that actual results could be materially different from those estimates. Hence, the current period’s results of operations are not necessarily indicative of results that may be expected for any future interim period or for the year as a whole. Events subsequent to the Consolidated Balance Sheet date have been evaluated through the date the Consolidated Financial Statements are issued for inclusion in the accompanying Consolidated Financial Statements.

Note 2 — Current Accounting Developments and Summary of Significant Accounting Policies

Recent Accounting Pronouncements


Standard	Required Date of Adoption	Description	Effect on Financial Statements
Standards Not Yet Adopted
Accounting Standards Update (“ASU”) 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and the Vintage Disclosures	January 1, 2023	ASU 2022-02 eliminates the troubled debt restructuring (“TDRs”) accounting model for creditors and instead requires companies to apply the loan refinancing and restructuring guidance to determine whether a modification made to a borrower results in a new loan or a continuation of an existing loan. In addition, companies are no longer required to use a discounted cash flow method to measure the allowance for credit losses for certain TDRs and instead allows for the use of an expected loss approach for all loans. The guidance also introduces new disclosure requirements related to restructuring of financing receivables made to borrowers experiencing financial difficulty, and amends vintage disclosures to require current-period gross write-off by year of origination. The guidance should be applied on a prospective basis except for amendments related to recognition and measurement of TDRs, where a modified retrospective transition method is optional.	The Company does not expect the adoption of this guidance to have a material impact on the Company’s Consolidated Financial Statements. The Company expects to adopt ASU 2022-02 on January 1, 2023.
ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions	January 1, 2024	ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. This ASU also requires the following disclosures for equity securities that are subject to contractual restrictions: the fair value of equity securities subject to contractual sale restrictions; nature and remaining duration of the restrictions; and circumstances that could cause a lapse in the restrictions. The guidance should be applied on a prospective basis with any adjustments from the adoption of the amendment recognized in earnings and disclosed on the date of adoption.	The Company does not expect the adoption of this guidance to have an impact on the Company’s Consolidated Financial Statements. The Company expects to adopt ASU 2022-03 on January 1, 2024.

Significant Accounting Policies Update

During the first quarter of 2022, the Company transferred $3.01 billion in fair value of debt securities from AFS to HTM.

Transfer between Categories of Debt Securities — Upon transfer of a debt security from the AFS to HTM category, the security’s new amortized cost is reset to fair value, reduced by any previous write-offs but excluding any allowance for credit losses. Unrealized gains or losses at the date of transfer of these securities continue to be reported in AOCI and are amortized into interest income over the remaining life of the securities as effective yield adjustments, in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. For transfers of securities from the AFS to HTM category, any allowance for credit losses that was previously recorded under the AFS model is reversed and an allowance for credit losses is subsequently recorded under the HTM debt security model. The reversal and re-establishment of the allowance for credit losses are recorded in the provision for credit losses.

Held-to-Maturity Debt Securities — Debt securities that the Company has the intent and ability to hold until maturity are classified as HTM and are carried at amortized cost, net of allowance for credit losses. The criteria used to place HTM debt securities on nonaccrual are largely similar to those described for loans. The amortized cost of the Company’s HTM debt securities excludes accrued interest, which is included in Other assets on the Consolidated Balance Sheet. The Company has made an accounting policy election not to recognize an allowance for credit losses for accrued interest receivables on HTM debt securities, as the Company reverses any accrued interest against interest income if a debt security is placed on nonaccrual status. Any cash collected on nonaccrual HTM securities is applied to reduce the security’s amortized cost basis and not as interest income. Generally, the Company returns an HTM security to accrual status when all delinquent interest and principal become current under the contractual terms of the security, and the collectability of remaining principal and interest is no longer doubtful.

Allowance for Credit Losses on Held-to-Maturity Debt Securities — For each major HTM debt security type, the allowance for credit losses is estimated collectively for groups of securities with similar risk characteristics. For securities that do not share similar risk characteristics, the losses are estimated individually. The Company applies a zero credit loss assumption to certain HTM debt securities, including debt securities that are either guaranteed or issued by the U.S. government or government-sponsored enterprises, are highly rated by nationally recognized statistical rating organizations (“NRSROs”), and have a long history of no credit losses. Any expected credit loss is recorded through the allowance for credit losses on HTM debt securities and deducted from the amortized cost basis of the security, reflecting the net amount the Company expects to collect.

Note 3 — Fair Value Measurement and Fair Value of Financial Instruments

Fair Value Determination

Fair value is defined as the price that would be received to sell an asset or the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining the fair value of financial instruments, the Company uses various methods including market and income approaches. Based on these approaches, the Company utilizes certain assumptions that market participants would use in pricing an asset or a liability. These inputs can be readily observable, market corroborated or generally unobservable. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy described below is based on the quality and reliability of the information used to determine fair value. The fair value hierarchy gives the highest priority to quoted prices available in active markets and the lowest priority to prices derived from data lacking transparency. The fair value of the Company’s assets and liabilities is classified and disclosed in one of the following three categories:

•Level 1 — Valuation is based on quoted prices for identical instruments traded in active markets.

•Level 2 — Valuation is based on quoted prices for similar instruments traded in active markets; quoted prices for identical or similar instruments traded in markets that are not active; and model-derived valuations whose inputs are observable and can be corroborated by market data.

•Level 3 — Valuation is based on significant unobservable inputs for determining the fair value of assets or liabilities. These significant unobservable inputs reflect assumptions that market participants may use in pricing the assets or liabilities.

The classification of assets and liabilities within the hierarchy is based on whether inputs to the valuation methodology used are observable or unobservable, and the significance of those inputs in the fair value measurement. The Company’s assets and liabilities are classified in their entirety based on the lowest level of input that is significant to their fair value measurements.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following section describes the valuation methodologies used by the Company to measure financial assets and liabilities on a recurring basis, as well as the general classification of these instruments pursuant to the fair value hierarchy.

Available-for-Sale Debt Securities — The fair value of AFS debt securities is generally determined by independent external pricing service providers who have experience in valuing these securities or by taking the average quoted market prices obtained from independent external brokers. The valuations provided by the third-party pricing service providers are based on observable market inputs, which include benchmark yields, reported trades, issuer spreads, benchmark securities, bids, offers, prepayment expectations and reference data obtained from market research publications. Inputs used by the third-party pricing service providers in valuing collateralized mortgage obligations and other securitization structures also include new issue data, monthly payment information, whole loan collateral performance, tranche evaluation and “To Be Announced” prices. In valuing securities issued by state and political subdivisions, inputs used by third-party pricing service providers also include material event notices.

On a monthly basis, the Company validates the valuations provided by third-party pricing service providers to ensure that the fair value determination is consistent with the applicable accounting guidance and the financial instruments are properly classified in the fair value hierarchy. To perform this validation, the Company evaluates the fair values of securities by comparing the fair values provided by the third-party pricing service providers to prices from other available independent sources for the same securities. When significant variances in prices are identified, the Company further compares inputs used by different sources to ascertain the reliability of these sources. On a quarterly basis, the Company reviews the valuation inputs and methodology for each security category furnished by third-party pricing service providers.

When available, the Company uses quoted market prices to determine the fair value of AFS debt securities that are classified as Level 1. Level 1 AFS debt securities consist of U.S. Treasury securities. When pricing is unavailable from third-party pricing service providers for certain securities, the Company requests market quotes from various independent external brokers and utilizes the average quoted market prices. In addition, the Company obtains market quotes from other official published sources. As these valuations are based on observable inputs in the current marketplace, they are classified as Level 2. The Company periodically communicates with the independent external brokers to validate their pricing methodology. Information such as pricing sources, pricing assumptions, data inputs and valuation techniques are reviewed periodically.

Equity Securities — Equity securities consisted of mutual funds as of both September 30, 2022 and December 31, 2021. The Company invested in these mutual funds for Community Reinvestment Act (“CRA”) purposes. The Company uses net asset value (“NAV”) information to determine the fair value of these equity securities. When NAV is available periodically and the equity securities can be put back to the transfer agents at the publicly available NAV, the fair value of the equity securities is classified as Level 1. When NAV is available periodically, but the equity securities may not be readily marketable at its periodic NAV in the secondary market, the fair value of these equity securities is classified as Level 2.

Interest Rate Contracts — The Company enters into interest rate swap and option contracts that are not designated as hedging instruments with its borrowers to lock in attractive intermediate and long-term interest rates, resulting in the customer obtaining a synthetic fixed-rate loan. To economically hedge against the interest rate risks in the products offered to its customers, the Company enters into mirrored offsetting interest rate contracts with third-party financial institutions. The Company also enters into interest rate swap or interest rate collar contracts with institutional counterparties to hedge against certain variable interest rate borrowings and variable interest rate loans. These interest rate contracts with institutional counterparties are designated as cash flow hedges. The fair value of the interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments). The fair value of the interest rate options, which consist of floors and caps, is determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates fall below (rise above) the strike rate of the floors (caps). In addition, to comply with the provisions of ASC 820, Fair Value Measurement, the Company incorporates credit valuation adjustments to appropriately reflect both its own and the respective counterparty’s nonperformance risk in the fair value measurements of its derivatives. The credit valuation adjustments associated with the Company’s derivatives utilize model-derived credit spreads, which are Level 3 inputs. Considering the observable nature of all other significant inputs utilized, the Company classifies these derivative instruments as Level 2.

Foreign Exchange Contracts — The Company enters into foreign exchange contracts to accommodate the business needs of its customers. For a majority of the foreign exchange contracts entered with its customers, the Company entered into offsetting foreign exchange contracts with third-party financial institutions to manage its exposure. The Company also utilizes foreign exchange contracts that are not designated as hedging instruments to mitigate the economic effect of fluctuations in certain foreign currency on-balance sheet assets and liabilities, primarily foreign currency denominated deposits that it offers to its customers. The fair value of foreign exchange contracts is determined at each reporting period based on changes in the foreign exchange rates. These are over-the-counter contracts where quoted market prices are not readily available. Valuation is measured using conventional valuation methodologies with observable market data. Due to the short-term nature of the majority of these contracts, the counterparties’ credit risks are considered nominal and result in no adjustments to the valuation of the foreign exchange contracts. Due to the observable nature of the inputs used in deriving the fair value of these contracts, the valuation of foreign exchange contracts is classified as Level 2. As of September 30, 2022 and December 31, 2021, the Bank held foreign currency non-deliverable forward contracts to hedge its net investment in its China subsidiary, East West Bank (China) Limited, a non-U.S. dollar (“USD”) functional currency subsidiary in China. These foreign currency non-deliverable forward contracts were designated as net investment hedges. The fair value of foreign currency non-deliverable forward contracts is determined by comparing the contracted foreign exchange rate to the current market foreign exchange rate. Key inputs of the current market exchange rate include spot rates and forward rates of the contractual currencies. Foreign exchange forward curves are used to determine which forward rate pertains to a specific maturity. Due to the observable nature of the inputs used in deriving the estimated fair value, these instruments are classified as Level 2.

Credit Contracts — The Company may periodically enter into credit risk participation agreements (“RPAs”) to manage the credit exposure on interest rate contracts associated with the syndicated loans. The Company may enter into protection sold or protection purchased RPAs with institutional counterparties. The fair value of RPAs is calculated by determining the total expected asset or liability exposure of the derivatives to the borrowers and applying the borrowers’ credit spread to that exposure. Total expected exposure incorporates both the current and potential future exposure of the derivatives, derived from using observable inputs, such as yield curves and volatilities. Since the majority of the inputs used to value the RPAs are observable, RPAs are classified as Level 2.

Equity Contracts — As part of the loan origination process, the Company may obtain warrants to purchase preferred and/or common stock of the borrowers, which are mainly in the technology and life sciences sectors. As of September 30, 2022 and December 31, 2021, the warrants included on the Consolidated Financial Statements were from both public and private companies. The Company values these warrants based on the Black-Scholes option pricing model. For warrants from public companies, the model uses the underlying stock price, stated strike price, warrant expiration date, risk-free interest rate based on a duration-matched U.S. Treasury rate, and market-observable company-specific option volatility as inputs to value the warrants. Due to the observable nature of the inputs used in deriving the estimated fair value, warrants from public companies are classified as Level 2. For warrants from private companies, the model uses inputs such as the offering price observed in the most recent round of funding, stated strike price, warrant expiration date, risk-free interest rate based on duration-matched U.S. Treasury rate and option volatility. The Company applies proxy volatilities based on the industry sectors of the private companies. The model values are then adjusted for a general lack of liquidity due to the private nature of the underlying companies. Since both option volatility and liquidity discount assumptions are subject to management’s judgment, measurement uncertainty is inherent in the valuation of private company warrants. Due to the unobservable nature of the option volatility and liquidity discount assumptions used in deriving the estimated fair value, warrants from private companies are classified as Level 3. On a quarterly basis, the changes in the fair value of warrants from private companies are reviewed for reasonableness, and a measurement of uncertainty analysis on the option volatility and liquidity discount assumptions is performed.

Commodity Contracts — The Company enters into energy commodity contracts consisting of swaps and options with its oil and gas loan customers, which allow them to hedge against the risk of fluctuation in energy commodity prices. The fair value of the commodity option contracts is determined using the Black-Scholes model and assumptions that include expectations of future commodity price and volatility. The future commodity contract price is derived from observable inputs such as the market price of the commodity. Commodity swaps are structured as an exchange of fixed cash flows for floating cash flows. The fair value of the commodity swaps is determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments) based on the market prices of the commodity. The fixed cash flows are predetermined based on the known volumes and fixed price as specified in the swap agreement. The floating cash flows are correlated with the change of forward commodity prices, which is derived from market corroborated futures settlement prices. As a result, the Company classifies these derivative instruments as Level 2 due to the observable nature of the significant inputs utilized.

The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021:



($ in thousands)	Assets and Liabilities Measured at Fair Value on a Recurring Basis as of September 30, 2022
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
AFS debt securities:
U.S. Treasury securities	$	600,677	$	—	$	—	$	600,677
U.S. government agency and U.S. government-sponsored enterprise debt securities	—		260,424		—		260,424
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	—		521,885		—		521,885
Residential mortgage-backed securities	—		1,793,429		—		1,793,429
Municipal securities	—		249,502		—		249,502
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities	—		397,975		—		397,975
Residential mortgage-backed securities	—		671,538		—		671,538
Corporate debt securities	—		529,565		—		529,565
Foreign government bonds	—		225,810		—		225,810
Asset-backed securities	—		64,870		—		64,870
Collateralized loan obligations (“CLOs”)	—		590,415		—		590,415
Total AFS debt securities	$	600,677	$	5,305,413	$	—	$	5,906,090

Investments in tax credit and other investments:
Equity securities	$	19,637	$	4,200	$	—	$	23,837
Total investments in tax credit and other investments	$	19,637	$	4,200	$	—	$	23,837

Derivative assets:
Interest rate contracts	$	—	$	430,038	$	—	$	430,038
Foreign exchange contracts	—		81,874		—		81,874

Equity contracts	—		1		345		346
Commodity contracts	—		369,146		—		369,146
Gross derivative assets	$	—	$	881,059	$	345	$	881,404
Netting adjustments (1)	$	—	$	(605,957)	$	—	$	(605,957)
Net derivative assets	$	—	$	275,102	$	345	$	275,447

Derivative liabilities:
Interest rate contracts	$	—	$	615,327	$	—	$	615,327
Foreign exchange contracts	—		64,049		—		64,049
Credit contracts	—		27		—		27
Commodity contracts	—		350,198		—		350,198
Gross derivative liabilities	$	—	$	1,029,601	$	—	$	1,029,601
Netting adjustments (1)	$	—	$	(239,206)	$	—	$	(239,206)
Net derivative liabilities	$	—	$	790,395	$	—	$	790,395



($ in thousands)	Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2021
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
AFS debt securities:
U.S. Treasury securities	$	1,032,681	$	—	$	—	$	1,032,681
U.S. government agency and U.S. government-sponsored enterprise debt securities	—		1,301,971		—		1,301,971
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	—		1,228,980		—		1,228,980
Residential mortgage-backed securities	—		2,928,283		—		2,928,283
Municipal securities	—		523,158		—		523,158
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities	—		496,443		—		496,443
Residential mortgage-backed securities	—		881,931		—		881,931
Corporate debt securities	—		649,665		—		649,665
Foreign government bonds	—		257,733		—		257,733
Asset-backed securities	—		74,558		—		74,558
CLOs	—		589,950		—		589,950
Total AFS debt securities	$	1,032,681	$	8,932,672	$	—	$	9,965,353

Investments in tax credit and other investments:
Equity securities	$	22,130	$	4,474	$	—	$	26,604
Total investments in tax credit and other investments	$	22,130	$	4,474	$	—	$	26,604

Derivative assets:
Interest rate contracts	$	—	$	240,222	$	—	$	240,222
Foreign exchange contracts	—		21,033		—		21,033

Equity contracts	—		5		215		220
Commodity contracts	—		222,709		—		222,709
Gross derivative assets	$	—	$	483,969	$	215	$	484,184
Netting adjustments (1)	$	—	$	(100,953)	$	—	$	(100,953)
Net derivative assets	$	—	$	383,016	$	215	$	383,231

Derivative liabilities:
Interest rate contracts	$	—	$	179,962	$	—	$	179,962
Foreign exchange contracts	—		15,501		—		15,501
Credit contracts	—		141		—		141
Commodity contracts	—		194,567		—		194,567
Gross derivative liabilities	$	—	$	390,171	$	—	$	390,171
Netting adjustments (1)	$	—	$	(232,727)	$	—	$	(232,727)
Net derivative liabilities	$	—	$	157,444	$	—	$	157,444

(1)Represents balance sheet netting of derivative assets and liabilities and related cash collateral under master netting agreements or similar agreements. See Note 6 — Derivatives to the Consolidated Financial Statements in this Form 10-Q for additional information.

For the three and nine months ended September 30, 2022 and 2021, Level 3 fair value measurements that were measured on a recurring basis consisted of equity contracts issued by private companies. The following table provides a reconciliation of the beginning and ending balances of these equity contracts for the three and nine months ended September 30, 2022 and 2021:



($ in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Equity contracts
Beginning balance	$	357	$	223	$	215	$	273

Total (losses) gains included in earnings (1)	(12)		(9)		39		37




Issuances	—		12		91		12

Settlements	—		—		—		(96)

Transfers out of Level 3 (2)	—		(6)		—		(6)
Ending balance	$	345	$	220	$	345	$	220

(1)Includes unrealized (losses) gains of $(12) thousand and $(9) thousand for the three months ended September 30, 2022 and 2021, respectively, and $39 thousand and $(38) thousand for the nine months ended September 30, 2022 and 2021, respectively. The realized/unrealized gains (losses) of equity contracts are recorded in Lending fees on the Consolidated Statement of Income.

(2)During the three and nine months ended September 30, 2021, the Company transferred $6 thousand of equity contracts measured on a recurring basis out of Level 3 into Level 2 after the corresponding issuer of the equity contracts, which was previously a private company completed its initial public offering and became a public company.

The following table presents quantitative information about the significant unobservable inputs used in the valuation of Level 3 fair value measurements as of September 30, 2022 and December 31, 2021. The significant unobservable inputs presented in the table below are those that the Company considers significant to the fair value of the Level 3 assets. The Company considers unobservable inputs to be significant if, by their exclusion, the fair value of the Level 3 assets would be impacted by a predetermined percentage change.



($ in thousands)	Fair Value Measurements (Level 3)		Valuation Technique	Unobservable Inputs	Range of Inputs	Weighted- Average of Inputs (1)
September 30, 2022
Derivative assets:
Equity contracts	$	345	Black-Scholes option pricing model	Equity volatility	49% — 70%	59%
				Liquidity discount	47%	47%
December 31, 2021
Derivative assets:
Equity contracts	$	215	Black-Scholes option pricing model	Equity volatility	44% — 54%	49%
				Liquidity discount	47%	47%

(1)Weighted-average of inputs is calculated based on the fair value of equity contracts as of September 30, 2022 and December 31, 2021.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets measured at fair value on a nonrecurring basis include certain individually evaluated loans held-for-investment, investments in qualified affordable housing partnerships, tax credit and other investments, OREO, loans held-for-sale, and other nonperforming assets. Nonrecurring fair value adjustments result from the impairment on certain individually evaluated loans held-for-investment and investments in qualified affordable housing partnerships, tax credit and other investments, from write-downs of OREO and other nonperforming assets, or from the application of lower of cost or fair value on loans held-for-sale.

Individually Evaluated Loans Held-for-Investment — Individually evaluated loans held-for-investment are classified as Level 3 assets. The following two methods are used to derive the fair value of individually evaluated loans held-for-investment:

•Discounted cash flow valuation techniques that consist of developing an expected stream of cash flows over the life of the loans, and then calculating the present value of the loans by discounting the expected cash flows at a designated discount rate.

•When the repayment of an individually evaluated loan is dependent on the sale of the collateral, the fair value of the loan is determined based on the fair value of the underlying collateral, which may take the form of real estate, inventory, equipment, contracts or guarantees. The fair value of the underlying collateral is generally based on third-party appraisals, or an internal valuation if a third-party appraisal is not required by regulations or unavailable. An internal valuation utilizes one or more valuation techniques such as the income, market and/or cost approaches.

Investments in Qualified Affordable Housing Partnerships, Tax Credit and Other Investments, Net — The Company conducts due diligence on its investments in qualified affordable housing partnerships, tax credit and other investments prior to the initial investment date and through the placed-in-service date. After these investments are either acquired or placed into service, the Company continues its periodic monitoring process to ensure book values are realizable and that there is no significant tax credit recapture risk. This monitoring process includes the quarterly review of the financial statements, the annual review of tax returns of the investment entity, the annual review of the financial statements of the guarantor (if any) and a comparison of the actual performance of the investment against the financial projections prepared at the time when the investment was made. The Company assesses its tax credit and other investments for possible other-than-temporary impairment (“OTTI”) on an annual basis or when events or circumstances suggest that the carrying amount of the investments may not be realizable. These circumstances can include, but are not limited to the following factors:

•expected future cash flows that are less than the carrying amount of the investment;

•changes in the economic, market or technological environment that could adversely affect the investee’s operations; and

•other factors that raise doubt about the investee’s ability to continue as a going concern, such as negative cash flows from operations and the continuing prospects of the underlying operations of the investment.

All available information is considered in assessing whether a decline in value is other-than-temporary. Generally, none of the aforementioned factors are individually conclusive and the relative importance placed on individual facts may vary depending on the situation. In accordance with ASC 323-10-35-32, Investments — Equity Method and Joint Ventures, an impairment charge would only be recognized in earnings for a decline in value that is determined to be other-than-temporary.

Other Real Estate Owned — The Company’s OREO represents properties acquired through foreclosure, or through full or partial satisfaction of loans held-for-investment. These OREO properties are recorded at estimated fair value less the costs to sell at the time of foreclosure and at the lower of cost or estimated fair value less the costs to sell subsequent to acquisition. On a monthly basis, the current fair market value of each OREO property is reviewed to ensure that the current carrying value is appropriate. OREO properties are classified as Level 3.

Loans Held-for-Sale — Loans held-for-investment subsequently transferred to held-for-sale are recorded at the lower of cost or fair value upon transfer. Loans held-for-sale may be measured at fair value on a nonrecurring basis when fair value is less than cost. Fair value is generally determined based on available market data for similar loans and therefore, are classified as Level 2.

Other Nonperforming Assets — Other nonperforming assets are recorded at fair value upon transfer from loans to foreclosed assets. Subsequently, foreclosed assets are recorded at the lower of carrying value or fair value. Fair value is based on independent market prices, appraised values of the collateral or management’s estimated recovery of the foreclosed asset. The Company records an impairment when the foreclosed asset’s fair value declines below its carrying value. The fair value measurement of other nonperforming assets is classified within one of the three levels in a valuation hierarchy based upon the observability of inputs to the valuation as of the measurement date.

The following tables present the carrying amounts of assets that were still held and had fair value adjustments measured on a nonrecurring basis as of September 30, 2022 and December 31, 2021:



($ in thousands)	Assets Measured at Fair Value on a Nonrecurring Basis as of September 30, 2022
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value Measurements
Loans held-for-investment:
Commercial:
Commercial and industrial (“C&I”)	$	—	$	—	$	57,696	$	57,696
Commercial real estate (“CRE”):
CRE	—		—		30,359		30,359
Multifamily residential	—		—		1,008		1,008


Total commercial	—		—		89,063		89,063
Consumer:
Residential mortgage:

Home equity lines of credit (“HELOCs”)	—		—		1,235		1,235


Total consumer	—		—		1,235		1,235
Total loans held-for-investment	$	—	$	—	$	90,298	$	90,298



($ in thousands)	Assets Measured at Fair Value on a Nonrecurring Basis as of December 31, 2021
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value Measurements
Loans held-for-investment:
Commercial:
C&I	$	—	$	—	$	102,349	$	102,349
CRE:
CRE	—		—		21,891		21,891



Total commercial	—		—		124,240		124,240
Consumer:
Residential mortgage:

HELOCs	—		—		2,744		2,744


Total consumer	—		—		2,744		2,744
Total loans held-for-investment	$	—	$	—	$	126,984	$	126,984

Other nonperforming assets	$	391	$	—	$	—	$	391

The following table presents the increase (decrease) in fair value of certain assets held at the end of the respective reporting periods, for which a nonrecurring fair value adjustment was recognized for the three and nine months ended September 30, 2022 and 2021:



($ in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Loans held-for-investment:
Commercial:
C&I	$	(15,265)	$	(4,977)	$	(30,011)	$	(13,590)
CRE:
CRE	(118)		(106)		2,212		(7,186)
Multifamily residential	(5,931)		16		(5,939)		—


Total commercial	(21,314)		(5,067)		(33,738)		(20,776)
Consumer:
Residential mortgage:

HELOCs	81		3		166		(6)

Other consumer	—		—		—		(2,491)
Total consumer	81		3		166		(2,497)
Total loans held-for-investment	$	(21,233)	$	(5,064)	$	(33,572)	$	(23,273)

Investments in tax credit and other investments, net	$	—	$	—	$	—	$	877

Other nonperforming assets	$	—	$	(43)	$	(6,861)	$	(3,933)

The following table presents the quantitative information about the significant unobservable inputs used in the valuation of Level 3 fair value measurements that are measured on a nonrecurring basis as of September 30, 2022 and December 31, 2021:



($ in thousands)	Fair Value Measurements (Level 3)		Valuation Techniques	Unobservable Inputs	Range of Inputs	Weighted- Average of Inputs (1)
September 30, 2022
Loans held-for-investment	$	40,559	Discounted cash flows	Discount	4% — 6%	4%
	$	18,372	Fair value of collateral	Discount	40% — 94%	52%

	$	31,367	Fair value of property	Selling cost	8%	8%




December 31, 2021
Loans held-for-investment	$	64,919	Discounted cash flows	Discount	4% — 15%	7%

	$	38,537	Fair value of collateral	Discount	15% — 75%	41%

	$	23,528	Fair value of property	Selling cost	8%	8%

(1)Weighted-average of inputs is based on the relative fair value of the respective assets as of September 30, 2022 and December 31, 2021.

Disclosures about Fair Value of Financial Instruments

The following tables present the fair value estimates for financial instruments as of September 30, 2022 and December 31, 2021, excluding financial instruments recorded at fair value on a recurring basis as they are included in the tables presented elsewhere in this Note. The carrying amounts in the following tables are recorded on the Consolidated Balance Sheet under the indicated captions, except for accrued interest receivable, restricted equity securities, at cost, and mortgage servicing rights that are included in Other assets, and accrued interest payable which is included in Accrued expenses and other liabilities. These financial assets and liabilities are measured on an amortized cost basis on the Company’s Consolidated Balance Sheet.



($ in thousands)	September 30, 2022
	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	2,163,353	$	2,163,353	$	—	$	—	$	2,163,353
Interest-bearing deposits with banks	$	630,543	$	—	$	630,543	$	—	$	630,543
Resale agreements	$	892,986	$	—	$	790,239	$	—	$	790,239
HTM debt securities	$	3,012,667	$	466,085	$	1,993,050	$	—	$	2,459,135
Restricted equity securities, at cost	$	78,254	$	—	$	78,254	$	—	$	78,254
Loans held-for-sale	$	14,500	$	—	$	14,500	$	—	$	14,500
Loans held-for-investment, net	$	46,859,738	$	—	$	—	$	46,147,082	$	46,147,082
Mortgage servicing rights	$	6,523	$	—	$	—	$	10,532	$	10,532
Accrued interest receivable	$	208,520	$	—	$	208,520	$	—	$	208,520
Financial liabilities:
Demand, checking, savings and money market deposits	$	43,498,799	$	—	$	43,498,799	$	—	$	43,498,799
Time deposits	$	10,358,563	$	—	$	10,256,100	$	—	$	10,256,100

Federal funds purchased	$	200,000	$	—	$	200,000	$	—	$	200,000
FHLB advances	$	324,920	$	—	$	325,000	$	—	$	325,000
Repurchase agreements	$	611,785	$	—	$	617,513	$	—	$	617,513
Long-term debt	$	147,875	$	—	$	140,902	$	—	$	140,902
Accrued interest payable	$	23,934	$	—	$	23,934	$	—	$	23,934



($ in thousands)	December 31, 2021
	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	3,912,935	$	3,912,935	$	—	$	—	$	3,912,935
Interest-bearing deposits with banks	$	736,492	$	—	$	736,492	$	—	$	736,492
Resale agreements	$	2,353,503	$	—	$	2,335,901	$	—	$	2,335,901

Restricted equity securities, at cost	$	77,434	$	—	$	77,434	$	—	$	77,434
Loans held-for-sale	$	635	$	—	$	635	$	—	$	635
Loans held-for-investment, net	$	41,152,202	$	—	$	—	$	41,199,599	$	41,199,599

Mortgage servicing rights	$	5,706	$	—	$	—	$	9,104	$	9,104
Accrued interest receivable	$	159,833	$	—	$	159,833	$	—	$	159,833
Financial liabilities:

Demand, checking, savings and money market deposits	$	45,388,550	$	—	$	45,388,550	$	—	$	45,388,550
Time deposits	$	7,961,982	$	—	$	7,966,116	$	—	$	7,966,116

FHLB advances	$	249,331	$	—	$	250,372	$	—	$	250,372
Repurchase agreements	$	300,000	$	—	$	310,525	$	—	$	310,525
Long-term debt	$	147,658	$	—	$	151,020	$	—	$	151,020
Accrued interest payable	$	11,435	$	—	$	11,435	$	—	$	11,435

Note 4 — Assets Purchased under Resale Agreements and Sold under Repurchase Agreements

Assets Purchased under Resale Agreements

With resale agreements, the Company is exposed to credit risk for both the counterparties and the underlying collateral. The Company manages credit exposure from certain transactions by entering into master netting agreements and collateral arrangements with the counterparties. The relevant agreements allow for the efficient closeout of the transaction, liquidation and set-off of collateral against the net amount owed by the counterparty following a default. It is also the Company’s policy to take possession, where possible, of the assets underlying resale agreements. As a result of the Company’s credit risk mitigation practices with respect to resale agreements as described above, the Company did not hold any reserves for credit impairment with respect to these agreements as of both September 30, 2022 and December 31, 2021.

Securities Purchased under Resale Agreements — Total securities purchased under resale agreements were $885.0 million as of September 30, 2022, and $1.33 billion as of December 31, 2021. The weighted-average yields were 2.41% and 1.50% for the three months ended September 30, 2022 and 2021, respectively; and 1.96% and 1.53% for the nine months ended September 30, 2022 and 2021, respectively.

Loans Purchased under Resale Agreements — Total loans purchased under resale agreements were $8.0 million as of September 30, 2022, and $1.02 billion as of December 31, 2021. The weighted-average yields were 3.87% and 1.48% for the three months ended September 30, 2022 and 2021, respectively; and 2.10% and 1.57% for the nine months ended September 30, 2022 and 2021, respectively.

Assets Sold under Repurchase Agreements — As of September 30, 2022, securities sold under repurchase agreements consisted of U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities, and U.S. Treasury securities. Gross repurchase agreements were $611.8 million as of September 30, 2022, and $300.0 million as of December 31, 2021. The weighted-average interest rates were 2.81% and 2.57% for the three months ended September 30, 2022 and 2021, respectively; and 2.73% and 2.62% for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, $311.8 million and $300.0 million of the securities sold under repurchase agreements will mature in 2022 and 2023, respectively.

Balance Sheet Offsetting

The Company’s resale and repurchase agreements are transacted under legally enforceable master repurchase agreements that, in the event of default by the counterparty, provide the Company the right to liquidate securities held and to offset receivables and payables with the same counterparty. The Company nets resale and repurchase transactions with the same counterparty on the Consolidated Balance Sheet when it has a legally enforceable master netting agreement and the transactions are eligible for netting under ASC 210-20-45-11, Balance Sheet Offsetting Repurchase and Reverse Repurchase Agreements. Collateral received includes securities and loans that are not recognized on the Consolidated Balance Sheet. Collateral pledged consists of securities that are not netted on the Consolidated Balance Sheet against the related collateralized liability. Securities received or pledged as collateral in resale and repurchase agreements with other financial institutions may also be sold or re-pledged by the secured party, and are usually delivered to and held by the third-party trustees.

The following tables present the resale and repurchase agreements included on the Consolidated Balance Sheet as of September 30, 2022 and December 31, 2021:



($ in thousands)	September 30, 2022

Assets	Gross Amounts of Recognized Assets		Gross Amounts Offset on the Consolidated Balance Sheet		Net Amounts of Assets Presented on the Consolidated Balance Sheet		Gross Amounts Not Offset on the Consolidated Balance Sheet			Net Amount

							Collateral Received
Resale agreements	$	892,986	$	—	$	892,986	$	(810,574)	(1)	$	82,412

Liabilities	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Consolidated Balance Sheet		Net Amounts of Liabilities Presented on the Consolidated Balance Sheet		Gross Amounts Not Offset on the Consolidated Balance Sheet			Net Amount

							Collateral Pledged
Repurchase agreements	$	611,785	$	—	$	611,785	$	(606,766)	(2)	$	5,019



($ in thousands)	December 31, 2021

	Gross Amounts of Recognized Assets		Gross Amounts Offset on the Consolidated Balance Sheet		Net Amounts of Assets Presented on the Consolidated Balance Sheet		Gross Amounts Not Offset on the Consolidated Balance Sheet
Assets										Net Amount
							Collateral Received
Resale agreements	$	2,353,503	$	—	$	2,353,503	$	(2,327,687)	(1)	$	25,816

Liabilities	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Consolidated Balance Sheet		Net Amounts of Liabilities Presented on the Consolidated Balance Sheet		Gross Amounts Not Offset on the Consolidated Balance Sheet
										Net Amount
							Collateral Pledged
Repurchase agreements	$	300,000	$	—	$	300,000	$	(300,000)	(2)	$	—

(1)Represents the fair value of assets the Company has received under resale agreements, limited for table presentation purposes to the amount of the recognized asset due from each counterparty. The application of collateral cannot reduce the net position below zero. Therefore, excess collateral, if any, is not reflected above.

(2)Represents the fair value of assets the Company has pledged under repurchase agreements, limited for table presentation purposes to the amount of the recognized liability due to each counterparty. The application of collateral cannot reduce the net position below zero. Therefore, excess collateral, if any, is not reflected above.

In addition to the amounts included in the tables above, the Company also has balance sheet netting related to derivatives. Refer to Note 6 — Derivatives to the Consolidated Financial Statements in this Form 10-Q for additional information.

Note 5 — Securities

The following tables present the amortized cost, gross unrealized gains and losses and fair value by major categories of AFS and HTM debt securities as of September 30, 2022 and December 31, 2021:



($ in thousands)	September 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
AFS debt securities:
U.S. Treasury securities	$	676,312	$	—	$	(75,635)	$	600,677
U.S. government agency and U.S. government-sponsored enterprise debt securities	319,070		—		(58,646)		260,424
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	595,342		—		(73,457)		521,885
Residential mortgage-backed securities	2,043,791		58		(250,420)		1,793,429
Municipal securities	307,084		—		(57,582)		249,502
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities	448,790		173		(50,988)		397,975
Residential mortgage-backed securities	784,700		—		(113,162)		671,538
Corporate debt securities	673,502		—		(143,937)		529,565
Foreign government bonds	238,720		528		(13,438)		225,810
Asset-backed securities	66,793		—		(1,923)		64,870
CLOs	617,250		—		(26,835)		590,415
Total AFS debt securities	6,771,354		759		(866,023)		5,906,090
HTM debt securities:
U.S. Treasury securities	522,713		—		(56,628)		466,085
U.S. government agency and U.S. government-sponsored enterprise debt securities	998,233		—		(215,616)		782,617
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	509,139		—		(92,507)		416,632
Residential mortgage-backed securities	792,685		—		(142,978)		649,707
Municipal securities	189,897		—		(45,803)		144,094
Total HTM debt securities	3,012,667		—		(553,532)		2,459,135
Total debt securities	$	9,784,021	$	759	$	(1,419,555)	$	8,365,225



($ in thousands)	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
AFS debt securities:
U.S. Treasury securities	$	1,049,238	$	130	$	(16,687)	$	1,032,681
U.S. government agency and U.S. government-sponsored enterprise debt securities	1,333,984		2,697		(34,710)		1,301,971
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	1,242,043		15,791		(28,854)		1,228,980
Residential mortgage-backed securities	2,968,789		8,629		(49,135)		2,928,283
Municipal securities	519,381		10,065		(6,288)		523,158
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities	498,920		3,000		(5,477)		496,443
Residential mortgage-backed securities	889,937		971		(8,977)		881,931
Corporate debt securities	657,516		8,738		(16,589)		649,665
Foreign government bonds	260,447		767		(3,481)		257,733
Asset-backed securities	74,674		185		(301)		74,558
CLOs	592,250		52		(2,352)		589,950
Total AFS debt securities	$	10,087,179	$	51,025	$	(172,851)	$	9,965,353

During the first quarter of 2022, the Company transferred $3.01 billion in fair value of debt securities from AFS to HTM. At the time of the transfer, $113.0 million of unrealized losses, net of tax, was retained in AOCI.

As of September 30, 2022 and December 31, 2021, the amortized cost of debt securities excluded accrued interest receivables of $33.8 million and $33.1 million, respectively, which are included in Other assets on the Consolidated Balance Sheet. For the Company’s accounting policy related to debt securities’ accrued interest receivable, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Allowance for Credit Losses on Available-for-Sale Debt Securities to the Consolidated Financial Statements in the Company’s 2021 Form 10-K and Note 2 — Current Accounting Developments and Summary of Significant Accounting Policies to the Consolidated Financial Statements in this Form 10-Q.

Unrealized Losses of Available-for-Sale Debt Securities

The following tables present the fair value and the associated gross unrealized losses of the Company’s AFS debt securities, aggregated by investment category and the length of time that the securities have been in a continuous unrealized loss position as of September 30, 2022 and December 31, 2021.



($ in thousands)	September 30, 2022
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
AFS debt securities:
U.S. Treasury securities	$	263,772	$	(25,232)	$	336,905	$	(50,403)	$	600,677	$	(75,635)
U.S. government agency and U.S. government sponsored enterprise debt securities	88,168		(16,401)		172,256		(42,245)		260,424		(58,646)
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	334,460		(39,330)		187,425		(34,127)		521,885		(73,457)
Residential mortgage-backed securities	700,318		(72,088)		1,085,253		(178,332)		1,785,571		(250,420)
Municipal securities	203,157		(46,271)		46,345		(11,311)		249,502		(57,582)
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities	170,101		(8,351)		218,124		(42,637)		388,225		(50,988)
Residential mortgage-backed securities	188,584		(23,168)		482,954		(89,994)		671,538		(113,162)
Corporate debt securities	247,533		(24,969)		282,032		(118,968)		529,565		(143,937)
Foreign government bonds	68,733		(336)		36,899		(13,102)		105,632		(13,438)
Asset-backed securities	54,811		(1,579)		10,059		(344)		64,870		(1,923)
CLOs	190,370		(8,730)		400,045		(18,105)		590,415		(26,835)
Total AFS debt securities	$	2,510,007	$	(266,455)	$	3,258,297	$	(599,568)	$	5,768,304	$	(866,023)



($ in thousands)	December 31, 2021
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
AFS debt securities:
U.S. Treasury securities	$	935,776	$	(14,689)	$	47,881	$	(1,998)	$	983,657	$	(16,687)
U.S. government agency and U.S. government-sponsored enterprise debt securities	773,647		(18,000)		402,907		(16,710)		1,176,554		(34,710)
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	440,734		(13,589)		257,745		(15,265)		698,479		(28,854)
Residential mortgage-backed securities	2,138,542		(37,691)		330,522		(11,444)		2,469,064		(49,135)
Municipal securities	177,065		(5,682)		17,003		(606)		194,068		(6,288)
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities	301,925		(4,158)		40,013		(1,319)		341,938		(5,477)
Residential mortgage-backed securities	707,792		(8,966)		6,431		(11)		714,223		(8,977)
Corporate debt securities	183,916		(3,084)		251,494		(13,505)		435,410		(16,589)
Foreign government bonds	27,097		(5)		133,279		(3,476)		160,376		(3,481)
Asset-backed securities	24,885		(301)		—		—		24,885		(301)
CLOs	221,586		(64)		291,712		(2,288)		513,298		(2,352)
Total AFS debt securities	$	5,932,965	$	(106,229)	$	1,778,987	$	(66,622)	$	7,711,952	$	(172,851)

As of September 30, 2022, the Company had a total of 557 AFS debt securities in a gross unrealized loss position with no credit impairment, consisting primarily of 262 U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities, 100 non-agency mortgage-backed securities, and 68 corporate debt securities. In comparison, as of December 31, 2021, the Company had a total of 431 AFS debt securities in a gross unrealized loss position with no credit impairment, consisting primarily of 180 U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities, 50 U.S. government agency and U.S. government-sponsored agency debt securities, 21 U.S. Treasury securities, and 30 corporate debt securities.

Allowance for Credit Losses on Available-for-Sale Debt Securities

Each reporting period, the Company assesses each AFS debt security that is in an unrealized loss position to determine whether the decline in fair value below the amortized cost basis resulted from a credit loss or other factors. For a discussion of the factors and criteria the Company uses in analyzing securities for impairment related to credit losses, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Allowance for Credit Losses on Available-for-Sale Debt Securities to the Consolidated Financial Statements in the Company’s 2021 Form 10-K.

The gross unrealized losses presented in the preceding tables were primarily attributable to interest rate movement and the widening of liquidity and/or credit spreads. U.S. Treasury, U.S. government agency, U.S. government-sponsored agency, and U.S. government-sponsored enterprise mortgage-backed securities are issued, guaranteed, or otherwise supported by the U.S. government and have a zero credit loss assumption. The other securities that were in an unrealized loss position as of September 30, 2022 were mainly comprised of the following:

•Non-agency mortgage-backed securities — The market value decline as of September 30, 2022, was primarily due to interest rate movement and spread widening. Since these securities are rated investment grade by NRSROs, or have high priority in the cash flow waterfall within the securitization structure, and the contractual payments have historically been on time, the Company believes the risk of credit losses on these securities is low.

•Corporate debt securities — The market value decline as of September 30, 2022 was primarily due to interest rate movement and spread widening. Since these securities are nearly all rated investment grade by NRSROs or, if not, the issuer is a well-capitalized financial institution with strong profitability, and the contractual payments from these bonds have been, and are expected to be, received on time, the Company believes that the risk of credit losses on these securities is low.

As of September 30, 2022 and December 31, 2021, the Company had the intent to hold the AFS debt securities with unrealized losses through the anticipated recovery period and it was more-likely-than-not that the Company will not have to sell these securities before the recovery of their amortized cost. The issuers of these securities have not, to the Company’s knowledge, established any cause for default on these securities. As a result, the Company expects to recover the entire amortized cost basis of these securities. Accordingly, there was no allowance for credit losses as of September 30, 2022 and December 31, 2021 provided against these securities. In addition, there was no provision for credit losses recognized for the three and nine months ended September 30, 2022 and 2021. If a credit loss had been identified, the Company would record an impairment through the allowance for credit losses with a corresponding Provision for credit losses on the Consolidated Statement of Income.

Allowance for Credit Losses on Held-to-Maturity Debt Securities

The Company separately evaluates its HTM debt securities for any credit losses using an expected loss model, similar to the methodology used for loans. Any expected credit loss is recorded through the allowance for credit losses and is deducted from the amortized cost basis. The net amount the Company expects to collect is reflected on the Consolidated Balance Sheet.

The Company monitors the credit quality of the HTM debt securities using external credit ratings. As of September 30, 2022, all HTM securities were rated investment grade by NRSROs and issued, guaranteed, or supported by U.S. government entities and agencies. Accordingly, the Company applied a zero credit loss assumption and no allowance for credit losses was recorded as of September 30, 2022. Overall, the Company believes that the credit support levels of the debt securities are strong and, based on current assessments and macroeconomic forecasts, expects that full contractual cash flows will be received. For more information on the Company’s credit loss methodology, refer to Note 2 — Current Accounting Developments and Summary of Significant Accounting Policies to the Consolidated Financial Statements in this Form 10-Q.

Realized Gains and Losses

The following table presents the gross realized gains and tax expense related to the sales of AFS debt securities for the three and nine months ended September 30, 2022 and 2021:



($ in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021

Gross realized gains	$	—	$	354	$	1,306	$	1,178
Related tax expense	$	—	$	104	$	386	$	348

Interest Income

The following table presents the composition of interest income on debt securities for the three and nine months ended September 30, 2022 and 2021:



($ in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021

Taxable interest	$	46,172	$	34,755	$	125,626	$	92,909
Nontaxable interest	4,920		3,071		14,309		8,707
Total interest income on debt securities	$	51,092	$	37,826	$	139,935	$	101,616

Contractual Maturities of Available-for-Sale and Held-to-Maturity Debt Securities

The following tables present the contractual maturities, amortized cost, fair value and weighted average yields of AFS and HTM debt securities as of September 30, 2022. Expected maturities will differ from contractual maturities on certain securities as the issuers and borrowers of the underlying collateral may have the right to call or prepay obligations with or without prepayment penalties.



($ in thousands)	Within One Year			After One Year through Five Years			After Five Years through Ten Years			After Ten Years			Total
AFS debt securities:
U.S. Treasury securities
Amortized cost	$	—		$	576,605		$	99,707		$	—		$	676,312
Fair value	—			516,595			84,082			—			600,677
Weighted-average yield (1)	—		%	1.28		%	0.74		%	—		%	1.20		%
U.S. government agency and U.S. government-sponsored enterprise debt securities
Amortized cost	—			24,775			125,000			169,295			319,070
Fair value	—			22,787			102,540			135,097			260,424
Weighted-average yield (1)	—		%	1.47		%	1.16		%	2.10		%	1.69		%
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities
Amortized cost	—			24,417			173,899			2,440,817			2,639,133
Fair value	—			23,529			157,827			2,133,958			2,315,314
Weighted-average yield (1)	—		%	3.26		%	2.71		%	2.70		%	2.71		%
Municipal securities
Amortized cost	1,511			38,079			6,855			260,639			307,084
Fair value	1,510			35,025			5,753			207,214			249,502
Weighted-average yield (1) (2)	3.13		%	2.44		%	1.85		%	2.24		%	2.26		%
Non-agency mortgage-backed securities
Amortized cost	28,574			187,564			25,832			991,520			1,233,490
Fair value	28,195			179,900			24,897			836,521			1,069,513
Weighted-average yield (1)	4.84		%	3.87		%	0.84		%	2.37		%	2.62		%
Corporate debt securities
Amortized cost	10,000			—			334,502			329,000			673,502
Fair value	9,857			—			296,184			223,524			529,565
Weighted average yield (1)	3.95		%	—		%	3.59		%	1.98		%	2.81		%
Foreign government bonds
Amortized cost	138,720			—			50,000			50,000			238,720
Fair value	139,060			—			49,851			36,899			225,810
Weighted-average yield (1)	2.15		%	—		%	2.66		%	1.50		%	2.12		%
Asset-backed securities
Amortized cost	—			—			—			66,793			66,793
Fair value	—			—			—			64,870			64,870
Weighted-average yield (1)	—		%	—		%	—		%	4.15		%	4.15		%
CLOs
Amortized cost	—			—			25,000			592,250			617,250
Fair value	—			—			24,168			566,247			590,415
Weighted average yield (1)	—		%	—		%	3.66		%	3.86		%	3.85		%
Total AFS debt securities
Amortized cost	$	178,805		$	851,440		$	840,795		$	4,900,314		$	6,771,354
Fair value	$	178,622		$	777,836		$	745,302		$	4,204,330		$	5,906,090
Weighted-average yield (1)	2.69		%	1.96		%	2.56		%	2.69		%	2.58		%



($ in thousands)	Within One Year			After One Year through Five Years			After Five Years through Ten Years			After Ten Years			Total
HTM debt securities:
U.S. Treasury securities
Amortized cost	$	—		$	285,325		$	237,388		$	—		$	522,713
Fair value	—			255,365			210,720			—			466,085
Weighted-average yield (1)	—		%	0.96		%	1.14		%	—		%	1.05		%
U.S. government agency and U.S. government-sponsored enterprise debt securities
Amortized cost	—			—			255,708			742,525			998,233
Fair value	—			—			215,684			566,933			782,617
Weighted-average yield (1)	—		%	—		%	1.94		%	1.88		%	1.90		%
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities
Amortized cost	—			—			96,433			1,205,391			1,301,824
Fair value	—			—			81,526			984,813			1,066,339
Weighted-average yield (1)	—		%	—		%	1.56		%	1.63		%	1.63		%
Municipal securities
Amortized cost	—			—			—			189,897			189,897
Fair value	—			—			—			144,094