Certain matters discussed in this Quarterly Report on Form 10-Q (this “Form 10-Q”) contain “forward-looking statements” that are intended to be covered by the safe harbor for such statements provided by the Private Securities Litigation Reform Act of 1995. East West Bancorp, Inc. (referred to herein on an unconsolidated basis as “East West” and on a consolidated basis as the “Company,” “we,” “us,” “our” or “EWBC”) may make forward-looking statements in other documents that it files with, or furnishes to, the United States (“U.S.”) Securities and Exchange Commission (“SEC”) and management may make forward-looking statements to analysts, investors, media members and others. Forward-looking statements are those that do not relate to historical facts and that are based on current assumptions, beliefs, estimates, expectations and projections, many of which, by their nature, are inherently uncertain and beyond the Company’s control. Forward-looking statements may relate to various matters, including the Company’s financial condition, results of operations, plans, objectives, future performance, business or industry, and usually can be identified by the use of forward-looking words, such as “anticipates,” “assumes,” “believes,” “can,” “continues,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “likely,” “may,” “might,” “objective,” “plans,” “potential,” “projects,” “remains,” “should,” “target,” “trend,” “will,” “would,” or similar expressions or variations thereof, and the negative thereof, but these terms are not the exclusive means of identifying such statements. You should not place undue reliance on forward-looking statements, as they are subject to risks and uncertainties, including, but not limited to, those described below. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements the Company may make.

There are various important factors that could cause future results to differ materially from historical performance and any forward-looking statements. Factors that might cause such differences, include, but are not limited to:

•changes in the global economy, including an economic slowdown, capital or financial market disruption, supply chain disruption, level of inflation, interest rate environment, residential and commercial property prices, employment levels, rate of growth and general business conditions, which could result in, among other things, reduced demand for loans, reduced availability of funding or increased funding costs, declines in asset values and/or recognition of allowance for credit losses;

•changes in local, regional and global business, economic and political conditions and geopolitical events, such as political unrest, wars and acts of terrorism;

•the soundness of other financial institutions and the impacts related to or resulting from bank failures and other economic and industry volatility, including potential increased regulatory requirements, Federal Deposit Insurance Corporation (“FDIC”) insurance premiums and assessments, deposit withdrawals, or other adverse consequences of negative market perceptions of the banking industry or us;

•changes in laws or the regulatory environment, including regulatory reform initiatives and policies of the U.S. Department of the Treasury, the Board of Governors of the Federal Reserve System (“Federal Reserve”), the FDIC, the SEC, the Consumer Financial Protection Bureau (“CFPB”), the California Department of Financial Protection and Innovation — Division of Financial Institutions, the People’s Bank of China, China’s National Administration of Financial Regulation, the Hong Kong Monetary Authority, the Hong Kong Securities and Futures Commission, and the Monetary Authority of Singapore;

•changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing trade, economic and political disputes between the U.S. and the People’s Republic of China and the monetary policies of the Federal Reserve;

•changes in the commercial and consumer real estate markets;

•changes in consumer or commercial spending, savings and borrowing habits, and patterns and behaviors;

•the impact from changes to income tax laws and regulations, federal spending and economic stimulus programs;

•the impact of any future U.S. federal government shutdown and uncertainty regarding the U.S. federal government’s debt limit and credit rating;

•the Company’s ability to compete effectively against financial institutions and other entities, including as a result of emerging technologies;

•the success and timing of the Company’s business strategies;

•the Company’s ability to retain key officers and employees;

•the impact on the Company’s funding costs, net interest income and net interest margin from changes in key variable market interest rates, competition, regulatory requirements and the Company’s product mix;

•changes in the Company’s costs of operation, compliance and expansion;

•the Company’s ability to adopt and successfully integrate new initiatives or technologies into its business in a strategic manner;

•the impact of communications or technology disruption, failure in, or breach of, the Company’s operational or security systems or infrastructure, or those of third-party vendors with which the Company does business, including as a result of cyber-attacks, and other similar matters which could result in, among other things, confidential, proprietary, or personally identifiable information being disclosed or misused, and materially impact the Company’s ability to provide services to its clients;

•the adequacy of the Company’s risk management framework, disclosure controls and procedures and internal control over financial reporting;

•future credit quality and performance, including the Company’s expectations regarding future credit losses and allowance levels;

•the impact of adverse changes to the Company’s credit ratings from major credit rating agencies;

•the impact of adverse judgments or settlements in litigation and other proceedings;

•the impact of political developments, pandemics, wars, civil unrest, terrorism or other hostilities that may disrupt or increase volatility in securities or otherwise affect business and economic conditions on the Company and its customers;

•heightened regulatory and governmental oversight and scrutiny of the Company’s business practices, including dealings with consumers;

•the impact of reputational risk from negative publicity, fines, penalties and other negative consequences from regulatory violations, legal actions and the Company’s interactions with business partners, counterparties, service providers and other third parties;

•the impact of regulatory investigations, regulatory agreements, supervisory criticisms, and enforcement actions;

•changes in accounting standards as may be required by the Financial Accounting Standards Board (“FASB”) or other regulatory agencies and their impact on the Company’s critical accounting policies and assumptions;

•the Company’s capital requirements and its ability to generate capital internally or raise capital on favorable terms;

•the impact on the Company’s liquidity due to changes in the Company’s ability to receive dividends from its subsidiaries;

•any strategic acquisitions or divestitures and the introduction of new or expanded products and services;

•changes in the equity and debt securities markets;

•fluctuations in the Company’s stock price;

•fluctuations in foreign currency exchange rates;

•the impact of increased focus on social, environmental and sustainability matters, which may affect the operations of the Company and its customers and the economy more broadly; and

•the impact of climate change, natural or man-made disasters or calamities, such as wildfires, droughts, hurricanes, flooding and earthquakes or other events that may directly or indirectly result in a negative impact on the financial performance of the Company and its customers.

For a more detailed discussion of some of the factors that might cause such differences, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 29, 2024 (the “Company’s 2023 Form 10-K”) under the heading Item 1A. Risk Factors. You should treat forward-looking statements as speaking only as of the date they are made and based only on information then actually known to the Company. The Company does not undertake, and specifically disclaims, any obligation to update or revise any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.

PART I — FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

($ in thousands, except shares)

(Unaudited)

March 31,
2024

December 31,
2023

ASSETS

Cash and due from banks

Interest-bearing cash with banks

Cash and cash equivalents

Interest-bearing deposits with banks

Securities purchased under resale agreements (“resale agreements”)

Securities:

Available-for-sale (“AFS”) debt securities, at fair value (amortized cost of $ and $)

Held-to-maturity (“HTM”) debt securities, at amortized cost (fair value of $ and $)

Loans held-for-sale

Loans held-for-investment (net of allowance for loan losses of $ and $)

Affordable housing partnership, tax credit and Community Reinvestment Act (“CRA”) investments, net

Premises and equipment (net of accumulated depreciation of $ and $)

Goodwill

Operating lease right-of-use assets

Other assets

TOTAL

LIABILITIES

Deposits:

Noninterest-bearing

Interest-bearing

Total deposits

Short-term borrowings

Bank Term Funding Program (“BTFP”) borrowings

Federal Home Loan Bank (“FHLB”) advances

Long-term debt and finance lease liabilities

Operating lease liabilities

Accrued expenses and other liabilities

Total liabilities

COMMITMENTS AND CONTINGENCIES (Note 11)

par value, shares authorized; and shares issued

Additional paid-in capital

Retained earnings

Treasury stock, at cost and shares

()

Accumulated other comprehensive loss (“AOCI”), net of tax

()

Total stockholders’ equity

TOTAL

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 March 31,

2024

2023

INTEREST AND DIVIDEND INCOME

Loans receivable, including fees

Debt securities

Resale agreements

Restricted equity securities

Interest-bearing cash and deposits with banks

Total interest and dividend income

INTEREST EXPENSE

Deposits

Federal funds purchased and other short-term borrowings

FHLB advances

Securities sold under repurchase agreements (“repurchase agreements”)

Long-term debt and finance lease liabilities

Total interest expense

Net interest income before provision for credit losses

Provision for credit losses

Net interest income after provision for credit losses

NONINTEREST INCOME

Deposit account fees

Lending fees

Foreign exchange income

Wealth management fees

Customer derivative income

Net losses on sales of loans

()

Net gains (losses) on AFS debt securities

()

Other investment income

Other income

Total noninterest income

NONINTEREST EXPENSE

Compensation and employee benefits

Occupancy and equipment expense

Deposit insurance premiums and regulatory assessments

Deposit account expense

Computer software and data processing expenses

Other operating expense

Amortization of tax credit and CRA investments

Total noninterest expense

INCOME BEFORE INCOME TAXES

INCOME TAX EXPENSE

NET INCOME

EARNINGS PER SHARE (“EPS”)

BASIC

DILUTED

WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING

BASIC

DILUTED

See accompanying Notes to Consolidated Financial Statements.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

($ in thousands)

(Unaudited)



	Three Months Ended March 31,
	2024	2023
Net income	$	$
Other comprehensive (loss) income, net of tax:
Net changes in unrealized (losses) gains on AFS debt securities	()

Amortization of unrealized losses on debt securities transferred from AFS to HTM
Net changes in unrealized (losses) gains on cash flow hedges	()
Foreign currency translation adjustments
Other comprehensive (loss) income	()
COMPREHENSIVE INCOME	$	$

See accompanying Notes to Consolidated Financial Statements.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

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

(Unaudited)

Common Stock and Additional Paid-in Capital

Amount

Retained Earnings

Treasury Stock

AOCI, Net of Tax

Total Stockholders’ Equity

BALANCE, JANUARY 1, 2023

()

Cumulative-effect of a change in accounting principle (1)

—

()

—

()

Net income

—

Other comprehensive income

—

Issuance of common stock pursuant to various stock compensation plans and agreements

—

Repurchase of common stock pursuant to various stock compensation plans and agreements

()

—

()

—

()

See accompanying Notes to Consolidated Financial Statements.

EAST WEST BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 —

wholly-owned subsidiary that is a statutory business trust (the “Trust”). In accordance with FASB Accounting Standards Codification (“ASC”) Topic 810, Consolidation, the Trust is not included on the Consolidated Financial Statements.

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 estimates consider 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. Certain items on the Consolidated Financial Statements and notes for the prior periods have been reclassified to conform to the current presentation. 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 —

million.

The following standards were adopted on January 1, 2024, but they did not have a material impact on the Company’s Consolidated Financial Statements:

•ASU 2023-01, Leases (Topic 842): Common Control Arrangements

•ASU 2022-03, Fair Value Measurement (Topic 820) Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

Note 3 —

% equity interest in Rayliant Global Advisors Limited (“Rayliant”) during the third quarter of 2023, the Company granted shares of performance-based restricted stock units (“RSUs”) as part of its consideration, in addition to $ million in cash. The vesting of these equity contracts on September 1, 2028, is contingent on Rayliant meeting certain financial performance targets during the performance period. The fair value of liability-classified equity contracts varies based on the operating revenue and operating EBITDA of Rayliant to be achieved during the future performance period, and these performance-based RSUs are expected to vest into a variable number of the Company’s common stock, ranging from % to % of the target performance-based RSUs granted. Due to the unobservable nature of the input assumptions, these equity contracts are classified as Level 3. For additional information on the equity contracts, refer to Note 6 — Derivatives to the Consolidated Financial Statements in this Form 10-Q.

$ $ $ U.S. government agency and U.S. government-sponsored enterprise debt securities

U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities (1):

Commercial mortgage-backed securities Residential mortgage-backed securities Municipal securities Non-agency mortgage-backed securities:Commercial mortgage-backed securities Residential mortgage-backed securities Corporate debt securities Foreign government bonds Asset-backed securities Collateralized loan obligations (“CLOs”)

Total AFS debt securities

$ $ $ $

Affordable housing partnership, tax credit and CRA investments, net:

Equity securities$ $ $ $

Total affordable housing partnership, tax credit and CRA investments, net

$ $ $ $ Derivative assets:Interest rate contracts$ $ $ $ Foreign exchange contracts Equity contracts Commodity contracts Gross derivative assets$ $ $ $

Netting adjustments (2)

$ $()$ $()Net derivative assets$ $ $ $ Derivative liabilities:Interest rate contracts$ $ $ $ Foreign exchange contracts

Equity contracts (3)

Credit contracts Commodity contracts Gross derivative liabilities$ $ $ $

Netting adjustments (2)

$ $()$ $()Net derivative liabilities$ $ $ $

$ $ $ U.S. government agency and U.S. government-sponsored enterprise debt securities

U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities (1):

Total AFS debt securities

$ $ $ $

Affordable housing partnership, tax credit and CRA investments, net:

Equity securities$ $ $ $

Affordable housing partnership, tax credit and CRA investments, net

$ $ $ $ Derivative assets:Interest rate contracts$ $ $ $ Foreign exchange contracts Credit contracts Equity contracts Commodity contracts Gross derivative assets$ $ $ $

Netting adjustments (2)

$ $()$ $()Net derivative assets$ $ $ $ Derivative liabilities:Interest rate contracts$ $ $ $ Foreign exchange contracts

Equity contracts (3)

Credit contracts Commodity contracts Gross derivative liabilities$ $ $ $

Netting adjustments (2)

$ $()$ $()Net derivative liabilities$ $ $ $

(1)Includes Government National Mortgage Association (“GNMA”) AFS debt securities totaling $ billion and $ billion of fair value as of March 31, 2024 and December 31, 2023, respectively.

(2)Represents the 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.

(3)Equity contracts classified as derivative liabilities consist of performance-based RSUs granted as part of EWBC’s consideration in its investment in Rayliant.

Total losses included in earnings (1)

()()Ending balance$ $

Derivative liabilities:

Equity contracts (2)

Beginning balance$ $

Total gains (losses) included in earnings

Ending balance$ $

(1)Includes unrealized losses recorded in Lending fees on the Consolidated Statement of Income.

(2)Equity contracts classified as derivative liabilities consist of performance-based RSUs granted as part of EWBC’s consideration in its investment in Rayliant.

Black-Scholes option pricing model

Equity volatility

% — %

(1)

Liquidity discount% %

Derivative liabilities:

Equity contracts (2)

Internal model

Payout % designated based on operating revenue and operating EBITDA of investee

% %December 31, 2023Derivative assets:Equity contracts$

Black-Scholes option pricing model

Equity volatility

% — %

(1)

Liquidity discount% %

Derivative liabilities:

Equity contracts (2)

Internal model

Payout % designated based on operating revenue and operating EBITDA of investee

% %

(1)Weighted-average of inputs is calculated based on the fair value of equity contracts as of both March 31, 2024 and December 31, 2023.

(2)Equity contracts classified as derivative liabilities consist of performance-based RSUs granted as part of EWBC’s consideration in its investment in Rayliant.

$ $ $ Commercial real estate (“CRE”):CRE Construction and land Total commercial Consumer:Residential mortgage:Single-family residential Total consumer Total loans held-for-investment$ $ $ $

Assets Measured at Fair Value on a Nonrecurring Basis
as of December 31, 2023

($ in thousands)

Level 1

Level 2

Level 3

Fair Value Measurements

Loans held-for-investment:

Commercial:

C&I

CRE:

CRE

Total commercial

Consumer:

Residential mortgage:

Home equity lines of credit (“HELOCs”)

Total consumer

Total loans held-for-investment

Affordable housing partnership, tax credit and CRA investments, net

)$()CRE:CRE() Construction and land() Total commercial()()Consumer:Residential mortgage:Single-family residential() Total consumer() Total loans held-for-investment$()$()

Affordable housing partnership, tax credit and CRA investments, net

$ $

Fair value of collateralDiscount

%$ Fair value of collateralContract valueNMNM$ Fair value of propertySelling cost

%December 31, 2023Loans held-for-investment$ Fair value of collateralDiscount

% — %

(1)

$ Fair value of collateralContract valueNMNM$ Fair value of propertySelling cost

Affordable housing partnership, tax credit and CRA investments, net

$ Individual analysis of each investmentExpected future tax benefits and distributionsNMNM

NM — Not meaningful.

(1)Weighted-average of inputs is based on the relative fair value of the respective assets as of December 31, 2023.

$ $ $ $ Interest-bearing deposits with banks$ $ $ $ $ Resale agreements$ $ $ $ $ HTM debt securities$ $ $ $ $ Restricted equity securities, at cost$ $ $ $ $ Loans held-for-sale$ $ $ $ $ Loans held-for-investment, net$ $ $ $ $ Mortgage servicing rights$ $ $ $ $ Accrued interest receivable$ $ $ $ $ Financial liabilities:Demand, checking, savings and money market deposits$ $ $ $ $ Time deposits$ $ $ $ $ Short-term borrowings$ $ $ $ $ FHLB advances$ $ $ $ $ Long-term debt$ $ $ $ $ Accrued interest payable$ $ $ $ $

December 31, 2023

($ in thousands)

Carrying Amount

Level 1

Level 2

Level 3

Estimated Fair Value

Financial assets:

Cash and cash equivalents

Interest-bearing deposits with banks

Resale agreements

HTM debt securities

Restricted equity securities, at cost

Loans held-for-sale

Loans held-for-investment, net

Mortgage servicing rights

Accrued interest receivable

Financial liabilities:

Demand, checking, savings and money market deposits

Time deposits

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

($ in thousands)

Collateral Received (1)

Net Amount

Resale agreements as of March 31, 2024

()

Resale agreements as of December 31, 2023

()

(1)Amortized cost excludes accrued interest receivables which are presented within Other assets on the Consolidated Balance Sheet. As of March 31, 2024 and December 31, 2023, the accrued interest receivables were $ million and $ million, respectively. For the Company’s accounting policy related to debt securities’ accrued interest receivables, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Allowance for Credit Losses on Available-for-Sale Debt Securities and Allowance for Credit Losses on Held-to-Maturity Debt Securities to the Consolidated Financial Statements in the Company’s 2023 Form 10-K.

(2)Includes GNMA AFS debt securities totaling $ billion of amortized cost and $ billion of fair value as of March 31, 2024, and $ billion of amortized cost and $ billion of fair value as of December 31, 2023.

(3)Includes GNMA HTM debt securities totaling $ million of amortized cost and $ million of fair value as of March 31, 2024, and $ million of amortized cost and $ million of fair value of as of December 31, 2023.

$ $ $()$ $()U.S. government agency and U.S. government sponsored enterprise debt securities () ()U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:Commercial mortgage-backed securities () ()Residential mortgage-backed securities () () ()Municipal securities () () ()Non-agency mortgage-backed securities:Commercial mortgage-backed securities () ()Residential mortgage-backed securities () ()Corporate debt securities () ()Foreign government bonds () () ()Asset-backed securities () ()CLOs () ()Total AFS debt securities$ $()$ $()$ $()

December 31, 2023

Less Than 12 Months

12 Months or More

Total

($ in thousands)

Fair Value

Gross Unrealized Losses

Fair Value

Gross Unrealized Losses

Fair Value

Gross Unrealized Losses

AFS debt securities:

U.S. Treasury securities

()

U.S. government agency and U.S. government-sponsored enterprise debt securities

()

U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:

Commercial mortgage-backed securities

()

Residential mortgage-backed securities

()

Municipal securities

()

Non-agency mortgage-backed securities:

Commercial mortgage-backed securities

()

Residential mortgage-backed securities

()

Corporate debt securities

()

Foreign government bonds

()

Asset-backed securities

()

CLOs

()

Total AFS debt securities

()

AFS debt securities in a gross unrealized loss position with credit impairment, primarily consisting of U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities, corporate debt securities, and non-agency mortgage-backed securities. In comparison, as of December 31, 2023, the Company had AFS debt securities in a gross unrealized loss position with credit impairment, primarily consisting of U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities, corporate debt securities, and non-agency mortgage-backed securities.

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

The Company evaluates each AFS debt security where the fair value declines below amortized cost. 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 2023 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 debt and mortgage-backed securities are issued, guaranteed, or otherwise supported by the U.S. government and have a zero credit loss assumption. The remaining securities that were in an unrealized loss position as of March 31, 2024 were mainly comprised of the following:

•Corporate debt securities — The market value decline as of March 31, 2024 was primarily due to interest rate movement and spread widening. A portion of the corporate debt securities is comprised of subordinated debt securities issued by U.S. banks. Despite the reduction of the market value of these securities after the banking sector disruption in 2023, these securities are nearly all rated investment grade by nationally recognized statistical rating organizations (“NRSROs”) or issued by well-capitalized financial institutions with strong profitability. The contractual payments from these corporate debt securities have been and are expected to be received on time. The Company will continue to monitor the market developments in the banking sector and the credit performance of these securities.

•Non-agency mortgage-backed securities — The market value decline as of March 31, 2024 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.

As of both March 31, 2024 and December 31, 2023, the Company intended to hold the AFS debt securities with unrealized losses through the anticipated recovery period and it was more-likely-than-not that the Company would 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 allowance for credit losses provided against these securities as of both March 31, 2024 and December 31, 2023. In addition, there was provision for credit losses recognized for the three months ended March 31, 2024 and 2023.

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. For additional information on the Company’s credit loss methodology, refer to Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Allowance for Credit Losses on Held-to-Maturity Debt Securities to the Consolidated Financial Statements in the Company’s 2023 Form 10-K.

The Company monitors the credit quality of the HTM debt securities using external credit ratings. As of March 31, 2024, 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 allowance for credit losses was recorded as of both March 31, 2024 and December 31, 2023. 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.

Impairment write-off (1)

$ $()

Related tax expense (benefit)

$ $()

(1)During the first quarter of 2023, the Company recognized a $ million impairment write-off on a subordinated debt security as a component of noninterest income in the Company’s Consolidated Statement of Income.

Interest Income

$ Nontaxable interest Total interest income on debt securities$ $

(1)Represents the amounts in AOCI reclassified into earnings as a result that the forecasted cash flows were no longer probable to occur.

Net Investment Hedges — The Company enters into foreign currency forward contracts to hedge a portion of the Bank’s investment in East West Bank (China) Limited, a non-USD functional currency subsidiary in China. The hedging instruments designated as net investment hedges were used to hedge against the risk of adverse changes in the foreign currency exchange rate of the Chinese Renminbi (“RMB”). The net investment hedge in place as of December 31, 2023 expired during the three months ended March 31, 2024.

$()

Derivatives Not Designated as Hedging Instruments

Customer-Related Positions and Economic Hedge Derivatives — The Company enters into interest rate, commodity, and foreign exchange derivatives at the request of its customers and generally enters into offsetting derivative contracts with third-party financial institutions to mitigate the inherent market risk. The Company also utilizes foreign exchange contracts to mitigate the effect of currency fluctuations on certain foreign currency-denominated on-balance sheet assets and liabilities, primarily foreign currency denominated deposits that it offers to its customers. A majority of the foreign exchange contracts had original maturities of or less as of both March 31, 2024 and December 31, 2023.

$ $ $ $ $ Written options Collars and corridors Subtotal Foreign exchange contracts:Forwards and spot Swaps

Purchased options

Subtotal Total$ $ $ $ $ $

Economic hedges:

Interest rate contracts:Swaps$ $ $ $ $ $ Purchased options Collars and corridors Subtotal Foreign exchange contracts:Forwards and spot Swaps

Written options

Subtotal Total$ $ $ $ $ $

Barrels$ $ Barrels$ $ Collars Barrels Barrels Subtotal Barrels Barrels Natural gas:Swaps MMBTUs MMBTUs Collars MMBTUs MMBTUs Written options MMBTUs MMBTUs Subtotal MMBTUs MMBTUs Total$ $ $ $

Economic hedges:

Commodity contracts:Crude oil:Swaps Barrels$ $ Barrels$ $ Collars Barrels Barrels Subtotal Barrels Barrels Natural gas:Swaps MMBTUs MMBTUs Collars MMBTUs MMBTUs Purchased options MMBTUs MMBTUs Subtotal MMBTUs MMBTUs Total$ $ $ $

Credit Contracts — The Company periodically enters into credit RPAs with institutional counterparties to manage the credit exposure of the interest rate contracts associated with syndication loans. Under the RPAs, a portion of the credit exposure is transferred from one party (the purchaser of credit protection) to another party (the seller of credit protection). The seller of credit protection is required to make payments to the purchaser of credit protection if the underlying borrower defaults on the related interest rate contract. The Company may enter into protection sold or protection purchased RPAs. Credit risk on RPAs is managed by monitoring the credit worthiness of the borrowers and the institutional counterparties, which is a part of the Company’s normal credit review and monitoring process. All referenced entities of the protection sold RPAs were investment grade and the weighted-average remaining maturity was years and years as of March 31, 2024 and December 31, 2023, respectively. Assuming the underlying borrowers referenced in the interest rate contracts defaulted, the maximum exposure in the protection sold RPAs would be $ thousand and $ thousand as of March 31, 2024 and December 31, 2023, respectively.

As of both March 31, 2024 and December 31, 2023, the Company had outstanding protection purchased RPA with notional amount of $ million and minimal fair value.

$()Foreign exchange contractsForeign exchange income Credit contracts

Customer derivative income

()()

Equity contracts - warrants

Lending fees()()Commodity contracts

Customer derivative income

Net gains$ $

Credit-Risk-Related Contingent Features — Certain of the Company’s over-the-counter derivative contracts contain early termination provisions that require the Company to settle any outstanding balances upon the occurrence of a specified credit-risk-related event. Such an event primarily relates to a downgrade of the credit rating of East West Bank to below investment grade. As of March 31, 2024, the aggregate fair value amounts of all derivative instruments with credit risk-related contingent features that were in a net liability position totaled $ million, for which $ million collateral was posted to cover these positions. In comparison, as of December 31, 2023, the aggregate fair value amounts of all derivative instruments with credit risk-related contingent features that were in a net liability position totaled $ thousand, for which collateral was posted to cover these positions. In the event that the credit rating of East West Bank had been downgraded to below investment grade, the Company would have been required to post minimal additional collateral as of both March 31, 2024 and December 31, 2023.

$()$()$ $()$

Gross Amounts Recognized (2)

Gross Amounts Offset on the Consolidated Balance Sheet

Net Amounts Presented on the Consolidated Balance Sheet

Gross Amounts Not Offset on the Consolidated Balance Sheet

Net Amount

Master Netting Arrangements

Cash Collateral Pledged (4)

Security Collateral Pledged (5)

Derivative liabilities$ $()$()$ $ $

($ in thousands)

As of December 31, 2023

$ $ $ $ $ $ $ $ Criticized (accrual)

Criticized (nonaccrual) (4)

Subtotal single-family residential mortgage HELOCs:Pass Criticized (accrual) Criticized (nonaccrual) Subtotal HELOCs Total residential mortgage Other consumer:Pass Criticized (accrual) Criticized (nonaccrual) Total other consumer

Gross write-offs for the three months ended March 31, 2024 (2)

Total consumer$ $ $ $ $ $ $ $ $

Total consumer gross write-offs for the three months ended March 31, 2024 (2)

$ $ $ $ $ $ $ $ $ Total loans held-for-investment:Pass$ $ $ $ $ $ $ $ $ Criticized (accrual) Criticized (nonaccrual) Total$ $ $ $ $ $ $ $ $

Total loans held-for-investment gross write-offs for the three months ended March 31, 2024 (2)

$ $ $ $ $ $ $()

(3)

$ $

$ $ $ $ $ $ $ $ Criticized (accrual) Criticized (nonaccrual) Total C&I

Gross write-offs for the year ended December 31, 2023 (2)

CRE:Pass Criticized (accrual) Criticized (nonaccrual) Subtotal CRE

Gross write-offs for the year ended December 31, 2023 (2)

Multifamily residential:

Pass Criticized (accrual) Criticized (nonaccrual) Subtotal multifamily residential

Gross write-offs for the year ended December 31, 2023

Construction and land:Pass Subtotal construction and land Total CRE

Total CRE gross write-offs for the year ended December 31, 2023 (2)

Total commercial$ $ $ $ $ $ $ $ $

Total commercial gross write-offs for the year ended December 31, 2023 (2)

$ $ $ $ $ $ $ $ Criticized (accrual)

Criticized (nonaccrual) (4)

Subtotal single-family residential mortgage HELOCs:Pass Criticized (accrual) Criticized (nonaccrual) Subtotal HELOCs

Gross write-offs for the year ended December 31, 2023 (2)

Total residential mortgage

Total residential mortgage gross write-offs for the year ended December 31, 2023 (2)

Other consumer:Pass Criticized (nonaccrual)

Total other consumer

Total consumer$ $ $ $ $ $ $ $ $

Total consumer gross write-offs for the year ended December 31, 2023 (2)

$ $ $ $ $ $ $ $ $ Total by Risk Rating:Pass$ $ $ $ $ $ $ $ $ Criticized (accrual) Criticized (nonaccrual)

Foreclosed Assets

The Company acquires assets from borrowers through loan restructurings, workouts, or foreclosures. Assets acquired may include real properties (e.g., real estate, land, and buildings) and commercial and personal properties. The Company recognizes foreclosed assets upon receiving assets in satisfaction of a loan (e.g., taking legal title or physical possession).

Foreclosed assets, consisting of OREO and other nonperforming assets, are included in Other assets on the Consolidated Balance Sheet. The Company had $ million of foreclosed assets as of March 31, 2024, compared with $ million as of December 31, 2023. The Company commences the foreclosure process on consumer mortgage loans after a borrower becomes more than 120 days delinquent in accordance with the CFPB guidelines. The carrying value of the consumer real estate loans that were in an active or suspended foreclosure process was $ million as of both March 31, 2024 and December 31, 2023.

$ % % Consumer: % % $

Three Months Ended March 31, 2023

Modification Type

Total

Modification as a % of Loan Class

Commercial:

Consumer:

A modified loan may become delinquent and result in a payment default (generally 90 days past due) subsequent to modification.

Consumer: $ $ $ $ $ $

As of March 31, 2024 and December 31, 2023, commitments to lend additional funds to borrowers whose loans were modified were $ million and $ million, respectively.

quarters to quarters due to model redevelopment during the third quarter of 2023.

Quantitative Component — Allowance for Loan Losses for the Commercial Loan Portfolio

The Company’s C&I lifetime loss rate model estimates the loss rate expected over the life of a loan. This loss rate is applied to the amortized cost basis, excluding accrued interest receivable, to determine expected credit losses. The lifetime loss rate model’s reasonable and supportable period spans quarters, thereafter immediately reverting to the historical average loss rate, expressed through the loan-level lifetime loss rate.

To generate estimates of expected loss at the loan level for CRE, multifamily residential, and construction and land loans, projected probabilities of default (“PDs”) and loss given defaults (“LGDs”) are applied to the estimated exposure at default, considering the term and payment structure of the loan. The forecast of future economic conditions returns to long-run historical economic trends within the reasonable and supportable period.

To estimate the life of a loan under both models, the contractual term of the loan is adjusted for estimated prepayments based on historical prepayment experience.

Quantitative Component — Allowance for Loan Losses for the Consumer Loan Portfolio

For single-family residential and HELOC loans, projected PDs and LGDs are applied to the estimated exposure at default, considering the term and payment structure of the loan, to generate estimates of expected loss at the loan level. The forecast of future economic conditions returns to long-run historical economic trends after the reasonable and supportable period. To estimate the life of a loan for the single-family residential and HELOC loan portfolios, the contractual term of the loan is adjusted for estimated prepayments based on historical prepayment experience. For other consumer loans, the Company uses a loss rate approach.

Qualitative Component — The Company considers the following qualitative factors in the determination of the collectively evaluated allowance if these factors have not already been captured by the quantitative model. Such qualitative factors may include, but are not limited to:

•loan growth trends;

•the volume and severity of past due financial assets, and criticized or adversely classified financial assets;

•the Company’s lending policies and procedures, including changes in lending strategies, underwriting standards, collection, write-off and recovery practices;

•knowledge of a borrower’s operations;

•the quality of the Company’s credit review system;

•the experience, ability and depth of the Company’s management and associates;

•the effect of other external factors such as the regulatory and legal environments, or changes in technology;

•actual and expected changes in international, national, regional, and local economic and business conditions in which the Company operates; and

•risk factors in certain industry sectors not captured by the quantitative models.

The magnitude of the impact of these factors on the Company’s qualitative assessment of the allowance for credit losses changes from period to period according to changes made by management in its assessment of these factors. The extent to which these factors change may be dependent on whether they are already reflected in quantitative loss estimates during the current period and the extent to which changes in these factors diverge from period to period.

As of March 31, 2024, collateral-dependent commercial and consumer loans totaled $ million and $ million, respectively. In comparison, collateral-dependent commercial and consumer loans totaled $ million and $ million, respectively, as of December 31, 2023. The Company's collateral-dependent loans were secured by real estate. As of both March 31, 2024 and December 31, 2023, the collateral value of the properties securing the collateral-dependent loans, net of selling costs, exceeded the recorded value of the majority of the loans.

$ $ $ $ $ $ $

Provision for (reversal of) credit losses on loans

(a) ()() Gross charge-offs()()()() ()()Gross recoveries Total net (charge-offs) recoveries()() () ()()Foreign currency translation adjustment() ()Allowance for loan losses, end of period$ $ $ $ $ $ $ $

$ $ $ $ $ $ $ Impact of ASU 2022-02 adoption Allowance for loan losses, January 1, 2023 (Reversal of) provision for credit losses on loans(a)() Gross charge-offs()() ()()()Gross recoveries Total net (charge-offs) recoveries () ()()()Foreign currency translation adjustment Allowance for loan losses, end of period$ $ $ $ $ $ $ $

In addition to the allowance for loan losses, the Company maintains an allowance for unfunded credit commitments. The Company has three general areas for which it provides the allowance for unfunded credit commitments: (1) recourse obligations for loans sold, (2) letters of credit, and (3) unfunded lending commitments. The allowance for unfunded credit commitments is maintained at a level that management believes to be sufficient to absorb estimated expected credit losses related to unfunded credit facilities. See Note 11 — Commitments and Contingencies to the Consolidated Financial Statements in this Form 10-Q for additional information related to unfunded credit commitments.

Provision for credit losses on unfunded credit commitments

(b) Foreign currency translation adjustment ()Allowance for unfunded credit commitments, end of period$ $ Provision for credit losses(a) + (b)$ $

(1)Includes write-downs of $ million and $ thousand to the allowance for loan losses related to loans transferred from held-for-investment to held-for-sale for the three months ended March 31, 2024, and 2023, respectively.

(2)Includes originated loans sold of $ million and $ million for the three months ended March 31, 2024 and 2023, respectively. Originated loans sold consisted primarily of C&I loans for both periods.

(3)Includes $ million and $ million of purchased loans sold in the secondary market for the three months ended March 31, 2024 and 2023, respectively.

(4)C&I loan purchases were comprised primarily of syndicated C&I term loans.

Note 8 —

minimum compliance period. The Company also invests in small business investment companies and new markets tax credit projects that qualify for CRA consideration, as well as eligible projects that qualify for production, historic and renewable energy tax credits. Investments in new markets tax credits promote development in low-income communities, investments in production and renewable energy tax credits help promote the development of renewable energy sources, and investments in historic tax credits promote the rehabilitation of historic buildings and economic revitalization of the surrounding areas.

The majority of affordable housing partnership, tax credit and CRA investments discussed above are variable interest entities where the Company is a limited partner in these investments, and an unrelated third party is typically the general partner or managing member who has control over the significant activities of these investments. While the Company’s interest in some of the investments may exceed 50% of the outstanding equity interests, the Company does not consolidate these investments due to the general partner’s or managing member’s ability to manage the entity, which is indicative of the general partner’s or managing member’s power over the entity. The Company’s maximum exposure to loss in connection with these partnerships consists of the unamortized investment balance and any tax credits claimed that may become subject to recapture.

$ $ $

Tax credit and CRA investments

Equity method of accounting and other:

Tax credits and CRA investments

Total$ $ $ $

(1)Included in Accrued expenses and other liabilities on the Consolidated Balance Sheet.

Tax credit and CRA investments

Equity method of accounting and other:

Tax credit and CRA investments

Total tax credits and benefits

$ $

Amortization:

PAM:

Affordable housing partnership investments (2)

$ $

Tax credit and CRA investments (3)

Equity method of accounting and other:

Tax credit and CRA investments (4)

Total amortization

$ $

Maturity Dates

AmountAmount% — %%% — %%12/15/2035$ $

(1)The weighted-average interest rates for FHLB advances were % as of March 31, 2024.

(2)Floating interest rates are based on the Secured Overnight Financing Rate plus the established spread.

(3)The weighted-average interest rates for junior subordinated debt were % and % as of March 31, 2024 and December 31, 2023, respectively.

The Bank’s available borrowing capacity from FHLB advances totaled $ billion as of March 31, 2024. The Bank’s available borrowing capacity from the FHLB is derived from its portfolio of loans that are pledged to the FHLB, reduced by any outstanding FHLB advances. As of March 31, 2024, all advances were secured by real estate loans.

During the first quarter of 2024, the Company redeemed approximately $ million of junior subordinated debt and repaid $ billion of BTFP borrowings upon maturity. For additional information on the BTFP and junior subordinated debt, refer to Note 10 — Short-Term Borrowings and Long-Term Debt to the Consolidated Financial Statements in the Company’s 2023 Form 10-K.

Note 11 —

$ $ $ $ $

Commercial letters of credit and standby letters of credit (“SBLCs”)

Total$ $ $ $ $ $

Loan commitments are agreements to lend to customers provided there are no violations of any conditions established in the agreement. Commitments generally have fixed expiration dates or other termination clauses and may require commitment fees. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future funding requirements.

Commercial letters of credit are issued to facilitate domestic and foreign trade transactions, while SBLCs are generally contingent upon the failure of the customers to perform according to the terms of the underlying contract with the third party. As a result, the total contractual amounts do not necessarily represent future funding requirements. The Company’s historical experience is that SBLCs typically expire without being funded. Additionally, in many cases, the Company holds collateral in various forms against these SBLCs. As part of its risk management activities, the Company monitors the creditworthiness of customers in conjunction with its SBLC exposure. Customers are obligated to reimburse the Company for any payment made on the customers’ behalf. If the customers fail to pay, the Company would, as applicable, liquidate the collateral and/or offset existing accounts. As of March 31, 2024, total letters of credit of $ billion consisted of SBLCs of $ billion and commercial letters of credit of $ million. In comparison, as of December 31, 2023, total letters of credit of $ billion consisted of SBLCs of $ billion and commercial letters of credit of $ million. As of both March 31, 2024 and December 31, 2023, substantially all letters of credit were graded “Pass” using the Bank’s internal credit risk rating system.

The Company applies the same credit underwriting criteria to extend loans, commitments, and conditional obligations to customers. Each customer’s creditworthiness is evaluated on a case-by-case basis. Collateral and financial guarantees may be obtained based on management’s assessment of a customer’s credit risk. Collateral may include cash, accounts receivable, inventory, personal property, plant and equipment, and real estate property.

Estimated exposure to loss from these commitments is included in the allowance for unfunded credit commitments and amounted to $ million and $ million as of March 31, 2024 and December 31, 2023, respectively.

Guarantees — From time to time, the Company sells or securitizes single-family and multifamily residential loans with recourse in the ordinary course of business. The Company is obligated to repurchase up to the recourse component of the loans if the loans default.

$ $ $ $ $ $ $ $ $ $ $ $ $ $ )) $ $

As of March 31, 2024, there were $ million of unrecognized compensation costs related to unvested time-based RSUs expected to be recognized over a weighted-average period of years, and $ million of unrecognized compensation costs related to unvested performance-based RSUs expected to be recognized over a weighted-average period of years.

Note 13 —

$ $ Diluted: $ $

Approximately thousand and thousand weighted-average shares of anti-dilutive RSUs were excluded from the diluted EPS computations for the three months ended March 31, 2024 and 2023, respectively.

Stock Repurchase Program — In 2020, the Company’s Board of Directors authorized a stock repurchase program to buy back up to $ million of the Company’s common stock. For the three months ended March 31, 2024, the Company repurchased shares at an average price of $ per share at $ million. The Company did not repurchase any shares during the three months ended March 31, 2023. As of March 31, 2024, the Company had approximately $ million available for repurchases under its stock repurchase program.

Note 14 —

)$()$()$()Net unrealized gains arising during the period Amounts reclassified from AOCI Changes, net of tax

Balance, March 31, 2023

$()$()$()$()Balance, January 1, 2024$()$ $()$()

Net unrealized (losses) gains arising during the period

()() ()Amounts reclassified from AOCI Changes, net of tax () ()

Balance, March 31, 2024

$()

$()$()$()

(1)Includes after-tax unamortized losses related to AFS debt securities that were transferred to HTM in 2022.

(2)Represents foreign currency translation adjustments related to the Company’s net investment in non-U.S. operations, including related hedges. The functional currency and reporting currency of the Company’s foreign subsidiary was RMB and USD, respectively.

)$ $()$ $()$ Reclassification adjustments:

Net realized (gains) losses on AFS debt securities reclassified into net income (1)

() ()

(2)

()

Amortization of unrealized losses on transferred debt securities (3)

() () Net change () () Cash flow hedges:Net unrealized (losses) gains arising during the period() () ()

Net realized losses reclassified into net income (4)

() () Net change() () () Foreign currency translation adjustments, net of hedges:

Net unrealized gains arising during the period

() Net change () Other comprehensive (loss) income$()$ $()$ $()$

(1)Pre-tax amounts were reported in Net gains (losses) on AFS debt securities on the Consolidated Statement of Income.

(2)Represents the loss related to an AFS debt security that was written off in the first quarter of 2023.

(3)Represents unrealized losses amortized over the remaining lives of securities that were transferred from the AFS to HTM portfolio in 2022.

(4)Pre-tax amounts related to cash flow hedges on variable rate loans and long-term borrowings, where applicable, were reported in Interest and dividend income and in Interest expense, respectively, on the Consolidated Statement of Income. In the first quarter of 2023, the pre-tax amount also included the terminated cash flow hedge where the forecasted cash flows were no longer probable to occur and was reported in Noninterest income on the Consolidated Statement of Income.

Note 15 —

reportable operating segments: (1) Consumer and Business Banking; (2) Commercial Banking; and (3) Other. These segments are defined by the type of customers served, and the related products and services provided. The segments reflect how financial information is currently evaluated by management. Operating segment results are based on the Company’s internal management reporting process, which reflects assignments and allocations of certain balance sheet and income statement items. The information presented is not indicative of how the segments would perform if they operated as independent entities.

The Consumer and Business Banking segment primarily provides financial products and services to consumer and commercial customers through the Company’s domestic branch network and digital banking platforms. This segment offers consumer and commercial deposits, mortgage and home equity loans, and other products and services. It also originates commercial loans for small- and medium-sized enterprises through the Company’s branch network. Other products and services provided by this segment include wealth management, treasury management, interest rate risk hedging and foreign exchange services.

The Commercial Banking segment primarily generates commercial loan and deposit products. Commercial loan products include CRE lending, construction financing, commercial business lending, working capital lines of credit, trade finance, letters of credit, affordable housing lending, asset-based lending, asset-backed finance, project finance and equipment financing. Commercial deposit products and other financial services include treasury management, foreign exchange services and interest rate and commodity risk hedging.

The remaining centralized functions, including the corporate treasury activities of the Company and eliminations of inter-segment amounts, have been aggregated and included in the Other segment, which provides broad administrative support to the core segments, namely the Consumer and Business Banking and the Commercial Banking segments.

The Company utilizes an internal reporting process to measure the performance of the operating segments within the Company. The internal reporting process derives operating segment results by utilizing allocation methodologies for revenues and expenses. Net interest income of each segment represents the difference between actual interest earned on assets and interest incurred on liabilities of the segment, adjusted for funding charges or credits through the Company’s internal funds transfer pricing (“FTP”) process. Noninterest income and noninterest expense directly attributable to a business segment are assigned to that segment. Indirect costs, including technology-related costs and corporate overhead, are allocated based on a segment’s estimated usage using factors including but not limited to, full-time equivalent employees, net interest income, and loan and deposit volume. Charge-offs are recorded to the segment directly associated with the respective loans charged off, and provision for credit losses is recorded to the segments based on the related loans for which allowances are evaluated. The Company’s internal reporting process utilizes a full-allocation methodology. Under this methodology, corporate and indirect expenses incurred by the Other segment are allocated to the Consumer and Business Banking and the Commercial Banking segments, except certain corporate treasury-related expenses and insignificant unallocated expenses.

The corporate treasury function within the Other segment is responsible for the Company’s liquidity and interest rate management, and the internal FTP process. The FTP process is formulated with the goal of encouraging loan and deposit growth that is consistent with the Company’s overall profitability objectives, as well as providing a reasonable and consistent basis for the measurement of its business segments’ net interest margins and profitability. The FTP process charges a cost to fund loans (“FTP charges for loans”) and allocates credits for funds provided from deposits (“FTP credits for deposits”) using internal FTP rates. FTP charges for loans are determined based on a matched cost of funds, which is tied to the pricing and term characteristics of the loans. FTP credits for deposits are based on matched funding credit rates, which are tied to the implied or stated maturity of the deposits. FTP credits for deposits reflect the long-term value generated by the deposits. The net spread between the total internal FTP charges and credits is recorded as part of net interest income in the Other segment. The FTP process transfers the corporate interest rate risk exposure to the treasury function within the Other segment, where such exposures are centrally managed. The Company’s internal FTP assumptions and methodologies are reviewed at least annually to ensure that the process is reflective of current market conditions.

$ $ $ Provision for credit losses Noninterest income Noninterest expense

Segment income (loss) before income taxes

() Segment net income$ $ $ $ As of March 31, 2024Segment assets$ $ $ $

($ in thousands)

Consumer and Business Banking

Commercial Banking

Other

Total

Three Months Ended March 31, 2023

Net interest income before provision for credit losses

Provision for credit losses

Noninterest income (loss)

()

Noninterest expense

Segment income before income taxes

Segment net income

As of March 31, 2023

Segment assets

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The following discussion provides information about the results of operations, financial condition, liquidity and capital resources of East West Bancorp, Inc. (referred to herein on an unconsolidated basis as “East West” and on a consolidated basis as the “Company,” “we” or “EWBC”) and its subsidiaries, including its subsidiary bank, East West Bank and its subsidiaries (referred to herein as “East West Bank” or the “Bank”). This information is intended to facilitate the understanding and assessment of significant changes and trends related to the Company’s results of operations and financial condition. This discussion and analysis should be read in conjunction with the Consolidated Financial Statements and the accompanying notes presented elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”), and the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) on February 29, 2024 (the “Company’s 2023 Form 10-K”).

Organization and Strategy

East West is a bank holding company incorporated in Delaware on August 26, 1998, and is registered under the Bank Holding Company Act of 1956, as amended. The Company commenced business on December 30, 1998 when, pursuant to a reorganization, it acquired all of the voting stock of the Bank, which became its principal asset. The Bank is an independent commercial bank headquartered in California that focuses on the financial service needs of individuals and businesses that operate in both the U.S. and Asia. Through 120 locations in the U.S. and Asia, the Company provides a full range of consumer and commercial products and services through the following three business segments: (1) Consumer and Business Banking and (2) Commercial Banking, with the remaining operations recorded in (3) Other. The Company’s principal activity is lending to and accepting deposits from businesses and individuals. We are committed to enhancing long-term shareholder value by growing loans, deposits and revenue, improving profitability, and investing for the future while managing risks, expenses and capital. Our business model is built on customer loyalty and engagement, understanding our customers’ financial goals, and meeting our customers’ financial needs through our diverse products and services. We expect our relationship-focused business model to continue generating organic growth from existing customers and to expand our targeted customer bases. As of March 31, 2024, the Company had $70.9 billion in total assets and approximately 3,200 full-time equivalent employees. For additional information on our strategy, and the products and services provided by the Bank, see Item 1. Business — Strategy and Banking Services in the Company’s 2023 Form 10-K.

Current Developments

Economic Developments

Recent external data indicate that inflation has not progressed closer to the Board of Governors of the Federal Reserve System’s (“Federal Reserve”) 2% target. In response to the persistent inflation, the Federal Reserve has communicated the appropriateness of its current restrictive policy, which has lowered expectations of rate cuts by midyear 2024. The higher interest rate environment continues to negatively impact the market value of banking organizations’ investment securities, while the commercial real estate (“CRE”) market remains under pressure from tighter credit conditions and decreased demand. Factors such as the economic impacts of unrest, wars, and acts of terrorism could lead to higher oil prices and increased inflationary pressures, along with the likelihood that the Federal Reserve will cut interest rates slower than anticipated. The Company monitors changes in economic and industry conditions and their impacts on the Company’s business, customers, employees, communities and markets.

Further discussion of the potential impacts on the Company’s business due to the higher interest rate environment has been provided in Item 1A. — Risk Factors — Risks Related to Financial Matters in the Company’s 2023 Form 10-K.

Federal Deposit Insurance Corporation Special Assessment

In November 2023, the Federal Deposit Insurance Corporation (“FDIC”) approved a final rule to implement a special deposit insurance assessment to recover losses to the Deposit Insurance Fund (“DIF”) arising from the protection of uninsured depositors following the receiverships of failed institutions in the spring of 2023. Under the final rule, the assessment base for the special assessment is equal to an insured depository institution’s estimated uninsured deposits, reported for the quarter ended December 31, 2022, minus the first $5 billion in estimated uninsured deposits. The FDIC will collect the special assessment over eight quarterly assessment periods starting with the first quarter of 2024, at a quarterly rate of 3.36 basis points (“bps”). The Company recognized the entire assessment expense of approximately $70 million in the fourth quarter of 2023. However, depending on future adjustments to the DIF’s estimated loss, the FDIC retained the ability to cease collection early, extend the special assessment collection period, or impose a final shortfall special assessment.

As of the publication of the final rule, the FDIC estimated that losses to the DIF totaled $16.3 billion. In February 2024, the FDIC updated its estimate of the DIF’s losses to $20.4 billion before the $1.7 billion residual interest in the Silicon Valley Bridge Bank, N.A. receivership’s trust. In the first quarter of 2024, the Company updated its estimate to recognize an anticipated additional FDIC special assessment charge (“FDIC charge”) of $10 million, which represents the proportional increase in the FDIC’s estimated loss.

Climate Accountability

On March 6, 2024, the SEC adopted final rules requiring registrants to disclose certain climate-related information in registration statements and annual reports. The final rules include disclosures related to climate-related risks and risk management as well as the board and management’s governance of such risks. The rules also incorporate requirements to disclose the financial effects of certain severe weather events and other natural conditions in the audited financial statements. Larger registrants will also be required to disclose information about greenhouse gas emissions, to the extent material, which will be subject to a phased-in third-party assurance requirement.

On April 4, 2024, the SEC voluntarily stayed implementation of the rules pending the completion of judicial review of consolidated legal challenges to the rules by the United States Court of Appeals for the Eighth Circuit. The Company is evaluating the impact of the climate disclosure rules and monitoring the outcome of the litigation regarding their adoption.

Financial Review



						Three Months Ended March 31,

Summary of operations:
599,861









322,439

Per share:
2.28
2.27
2.32
0.48



Weighted-average number of shares outstanding:




Performance metrics:
%
%
%

%
%
%
%


At period end:	March 31, 2024		December 31, 2023
Total assets	$	70,875,670	$	69,612,884
Total loans	$	52,005,784	$	52,210,898
Total deposits	$	58,560,624	$	56,092,438
Common shares outstanding at period-end	139,121		140,027
Book value per share	$	50.48	$	49.64
Tangible book value per share (1)	$	47.09	$	46.27

(1)For additional information regarding the reconciliation of these non-U.S. Generally Accepted Accounting Principles (“GAAP”) financial measures, refer to Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) — Reconciliation of GAAP to Non-GAAP Financial Measures in this Form 10-Q.

(2)Efficiency ratio is calculated as noninterest expense divided by total revenue.

The Company’s first quarter 2024 net income was $285 million, a decrease of $37 million or 12%, compared with first quarter 2023 net income of $322 million. The decrease was primarily due to lower net interest income and higher noninterest expense, partially offset by higher noninterest income and lower income tax expense during the quarter. Noteworthy items about the Company’s performance for the first quarter of 2024 included:

•Asset growth. Total assets reached $70.9 billion as of March 31, 2024, an increase of $1.3 billion or 2% from December 31, 2023, primarily driven by a $2.2 billion or 36% increase in available-for-sale (“AFS”) debt securities mainly funded by a $2.5 billion increase in deposits, partially offset by decreases in cash and cash equivalents and securities purchased under resale agreements (“resale agreements”).

•Deposit growth. Total deposits were $58.6 billion as of March 31, 2024, an increase of $2.5 billion or 4%, from $56.1 billion as of December 31, 2023, primarily reflecting an increase in customer deposits related to a successful branch-based certificates of deposit (“CD”) campaign for the Lunar New Year.

•Borrowings. Total borrowings and long-term debt decreased $1.1 billion to $3.6 billion as of March 31, 2024, compared with December 31, 2023. The net decrease was primarily driven by the $4.5 billion payoff of Bank Term Funding Program (“BTFP”) borrowings and the $117 million redemption of East West Capital Trust securities, partially offset by a $3.5 billion increase in Federal Home Loan Bank (“FHLB”) advances.

•Strong capital levels. Stockholders’ equity was $7.0 billion as of March 31, 2024, up 1% compared with December 31, 2023. Book value and tangible book value per share of $50.48 and $47.09, respectively, as of March 31, 2024, were both up 2% compared with December 31, 2023. Tangible book value per share is a non-GAAP financial measure. For additional details, see the reconciliation of non-GAAP financial measures presented under Item 2. MD&A - Reconciliation of GAAP to non-GAAP Financial Measures in this Form 10-Q.

•Net interest income and net interest margin. First quarter 2024 net interest income before provision for credit losses was $565 million, a decrease of $35 million or 6% from the first quarter of 2023. First quarter 2024 net interest margin of 3.34% was down 62 basis points (“bps”) year-over-year.

•Profitability ratios. First quarter 2024 ROA, ROE and the return on average TCE were 1.60%, 16.40% and 17.60%, respectively. Return on average TCE is a non-GAAP financial measure. For additional details, see the reconciliation of non-GAAP financial measures presented under Item 2. MD&A — Reconciliation of GAAP to Non-GAAP Financial Measures in this Form 10-Q.

Results of Operations

Net Interest Income

The Company’s primary source of revenue is net interest income, which is the interest income earned on interest-earning assets less interest expense paid on interest-bearing liabilities. Net interest margin is the ratio of net interest income to average interest-earning assets. Net interest income and net interest margin are impacted by several factors, including changes in average balances and the composition of interest-earning assets and funding sources, market interest rate fluctuations and the slope of the yield curve, repricing characteristics and maturity of interest-earning assets and interest-bearing liabilities, the volume of noninterest-bearing sources of funds and asset quality.

Net interest income and net interest margin for the first quarter of 2024 decreased year-over-year, which primarily reflected the higher cost of interest-bearing deposits, shifts in the deposit mix to time deposits and higher average balances of short-term and BTFP borrowings, partially offset by higher loan yields, loan growth and an increase in interest-bearing cash and deposits with banks. The changes in yields and rates reflected higher benchmark interest rates.

Average interest-earning assets were $68.1 billion for the first quarter of 2024, an increase of $6.6 billion or 11% from $61.5 billion for the first quarter of 2023. The increase in average interest-earning assets primarily reflected loan growth, and higher interest-bearing cash and deposits with banks.

The yield on average interest-earning assets for the first quarter of 2024 was 6.04%, an increase of 53 bps from 5.51% for the first quarter of 2023. The year-over-year increase in the yield on average interest-earning assets primarily resulted from higher benchmark interest rates.

The average loan yield for the first quarter of 2024 was 6.71%, an increase of 57 bps from 6.14% for the first quarter of 2023. The year-over-year increase in the average loan yield reflected the loan portfolio’s sensitivity to higher benchmark interest rates and loan growth. Approximately 57% and 59% of loans held-for-investment were variable-rate as of March 31, 2024 and 2023, respectively.

Noninterest-_and_Interest-bearing_Deposit_Mix_($_in_billions) v2.jpg

M130-8_AVG cost of dep relative to EFFR Q124 v2.jpg

Deposits are an important source of funds and impact both net interest income and net interest margin. Average deposits were $57.4 billion for the first quarter of 2024, which increased $2.5 billion or 5% from $55.0 billion for the first quarter of 2023. Average noninterest-bearing deposits were $15.0 billion for the first quarter of 2024, a decrease of $4.7 billion or 24% from $19.7 billion for the first quarter of 2023, which reflected the deposit mix shift to time deposits. Average noninterest-bearing deposits made up 26% and 36% of average deposits for the first quarters of 2024 and 2023, respectively.

The average cost of deposits was 2.84% for the first quarter of 2024, a 124 bps increase from 1.60% for the first quarter of 2023. The average cost of interest-bearing deposits was 3.85% for the first quarter of 2024, a 136 bps increase from 2.49% for the first quarter of 2023. The year-over-year increase primarily reflected higher rates paid on time deposits, money market and checking deposits in response to the higher interest rate environment.

The average cost of funds calculation includes deposits, short-term and BTFP borrowings, FHLB advances, assets sold under repurchase agreements (“repurchase agreements”), and long-term debt. For the first quarter of 2024, the average cost of funds was 2.97%, a 128 bps increase from 1.69% for the first quarter of 2023. The year-over year increase was mainly driven by the increased cost of deposits discussed above.

The Company utilizes various tools to manage interest rate risk. Refer to the Interest Rate Risk Management section of Item 2. MD&A — Risk Management — Market Risk Management in this Form 10-Q.

The following table presents the interest spread, net interest margin, average balances, interest income and expense, and the average yield/rate by asset and liability component for the first quarters of 2024 and 2023:



	Three Months Ended March 31,
	2024						2023
($ in thousands)	Average Balance		Interest		Average Yield/ Rate (1)		Average Balance		Interest		Average Yield/ Rate (1)
ASSETS
Interest-earning assets:
Interest-bearing cash and deposits with banks	$	5,861,517	$	74,382	5.10	%	$	3,449,626	$	35,647	4.19	%
Assets purchased under resale agreements (2)	725,659		6,115		3.39	%	688,778		4,503		2.65	%
Debt securities:
AFS debt securities (3)(4)	6,566,368		62,858		3.85	%	6,108,825		53,197		3.53	%
Held-to-maturity (“HTM”) debt securities (3)	2,950,686		12,534		1.71	%	2,995,677		12,734		1.72	%
Total debt securities (3)	9,517,054		75,392		3.19	%	9,104,502		65,931		2.94	%
Loans:
C&I	16,251,622		325,810		8.06	%	15,400,996		275,573		7.26	%
CRE	20,413,584		324,087		6.39	%	19,207,899		282,464		5.96	%
Residential mortgage	15,202,345		215,674		5.71	%	13,468,255		169,494		5.10	%
Other consumer	57,289		818		5.74	%	72,687		855		4.77	%
Total loans (5)(6)	51,924,840		866,389		6.71	%	48,149,837		728,386		6.14	%







Restricted equity securities	92,975		1,339		5.79	%	90,790		1,039		4.64	%
Total interest-earning assets	$	68,122,045	$	1,023,617	6.04	%	$	61,483,533	$	835,506	5.51	%

Noninterest-earning assets:
Cash and due from banks	445,767						621,104
Allowance for loan losses	(679,116)						(602,754)
Other assets	3,789,700						3,611,721
Total assets	$	71,678,396					$	65,113,604

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Checking deposits	$	7,695,429	$	53,821	2.81	%	$	6,493,865	$	23,174	1.45	%
Money market deposits	13,636,210		134,661		3.97	%	11,260,715		76,102		2.74	%
Savings deposits	1,809,568		4,120		0.92	%	2,436,587		3,669		0.61	%
Time deposits	19,346,243		213,597		4.44	%	15,052,762		113,849		3.07	%
Short-term and BTFP borrowings	3,864,525		42,106		4.38	%	811,551		8,825		4.41	%
Repurchase agreements	2,549		35		5.52	%	106,785		1,052		4.00	%
FHLB advances	554,946		7,739		5.61	%	500,000		6,430		5.22	%
Long-term debt and finance lease liabilities	125,818		2,399		7.67	%	152,420		2,544		6.77	%
Total interest-bearing liabilities	$	47,035,288	$	458,478	3.92	%	$	36,814,685	$	235,645	2.60	%

Noninterest-bearing liabilities and stockholders’ equity:
Demand deposits	14,954,953						19,709,980
Accrued expenses and other liabilities	2,695,597						2,405,615
Stockholders’ equity	6,992,558						6,183,324
Total liabilities and stockholders’ equity	$	71,678,396					$	65,113,604

Interest rate spread					2.12	%					2.91	%
Net interest income and net interest margin			$	565,139	3.34	%			$	599,861	3.96	%

(1)Annualized.

(2)Includes the average balances and interest income for securities and loans purchased under resale agreements for the first quarter of 2023.

(3)Yields on tax-exempt securities are not presented on a tax-equivalent basis.

(4)Includes the amortization of net premiums on AFS debt securities of $7 million and $9 million for the first quarters of 2024 and 2023, respectively.

(5)Average balances include nonperforming loans and loans held-for-sale.

(6)Loans include the accretion of net deferred loan fees and amortization of net premiums, which totaled $14 million for each of the first quarters of 2024 and 2023.

The following table summarizes the extent to which changes in (1) interest rates, and (2) volume of average interest-earning assets and average interest-bearing liabilities impacted the Company’s net interest income for the periods presented. The total change for each category of interest-earning assets and interest-bearing liabilities is segmented into changes attributable to variations in volume and yield/rate. Changes that are not solely due to either volume or yield/rate are allocated proportionally based on the absolute value of the change related to average volume and average yield/rate.



	Three Months Ended March 31,
	2024 vs. 2023
			Changes Due to
($ in thousands)	Total Change		Volume		Yield/Rate
Interest-earning assets:
Interest-bearing cash and deposits with banks	$	38,735	$	29,533	$	9,202
Assets purchased under resale agreements (1)	1,612		260		1,352
Debt securities:
AFS debt securities	9,661		4,384		5,277
HTM debt securities	(200)		(125)		(75)
Total debt securities	9,461		4,259		5,202
Loans:
C&I	50,237		16,678		33,559
CRE	41,623		19,582		22,041
Residential mortgage	46,180		24,098		22,082
Other consumer	(37)		(198)		161
Total loans	138,003		60,160		77,843
Restricted equity securities	300		27		273
Total interest and dividend income	$	188,111	$	94,239	$	93,872
Interest-bearing liabilities:
Checking deposits	$	30,647	$	5,024	$	25,623
Money market deposits	58,559		18,715		39,844
Savings deposits	451		(1,103)		1,554
Time deposits	99,748		38,819		60,929
Short-term and BTFP borrowings	33,281		33,338		(57)
FHLB advances	1,309		776		533
Repurchase agreements	(1,017)		(1,314)		297
Long-term debt and finance lease liabilities	(145)		(469)		324
Total interest expense	$	222,833	$	93,786	$	129,047
Change in net interest income	$	(34,722)	$	453	$	(35,175)

(1)Includes the impact of securities and loans purchased under resale agreements for the first quarter of 2023.

Noninterest Income

The following table presents the components of noninterest income for the first quarters of 2024 and 2023:

Three Months Ended March 31,

NM — Not meaningful.

Noninterest income comprised 12% of total revenue for the first quarter of 2024, compared with 9% for the first quarter of 2023. Noninterest income for the first quarter of 2024 was $79 million, an increase of $19 million or 32%, compared with $60 million for the first quarter of 2023. The increase was primarily due to net gains on AFS debt securities and increases in lending, wealth management and deposit account fees.

Deposit account fees were $25 million for the first quarter of 2024, an increase of $2 million or 8%, compared with $23 million for the first quarter of 2023. The increase was primarily related to analysis charges, which reflected customer growth and fee increases.

Lending fees were $23 million for the first quarter of 2024, an increase of $2 million or 11%, compared with $21 million for the first quarter of 2023. The increase was primarily due to higher unused commitment and trade finance fees driven by an increase in customers.

Wealth management fees were $9 million for the first quarter of 2024, an increase of approximately $2 million or 36%, compared with $6 million for the first quarter of 2023. The increase reflected customer demand for higher-yielding products in response to the interest rate environment and potential rate cuts.

Net gains on AFS debt securities were $49 thousand for the first quarter of 2024. In comparison, net losses on AFS debt securities were $10 million for the first quarter of 2023 due to the write-off of an impaired subordinated AFS debt security.

Noninterest Expense

The following table presents the components of noninterest expense for the first quarters of 2024 and 2023:

Three Months Ended March 31,

First quarter 2024 noninterest expense was $247 million, an increase of $28 million or 13%, compared with $218 million for the first quarter of 2023. The increase was primarily due to increases in compensation and employee benefits and deposit insurance premiums and regulatory assessments.

Compensation and employee benefits were $142 million for the first quarter of 2024, an increase of $12 million or 9%, compared with $130 million for the first quarter of 2023. The increase was primarily driven by staffing growth and annual merit increases.

Deposit insurance premiums and regulatory assessments were $20 million for the first quarter of 2024, an increase of $12 million or 148%, compared with $8 million for the first quarter of 2023. The increase was primarily due to an additional $10 million FDIC charge. For additional information about the FDIC special assessment, refer to Item 2. MD&A — Overview — Current Developments in this Form 10-Q.

Income Taxes



	Three Months Ended March 31,
($ in thousands)	2024			2023			% Change
Income before income taxes	$	372,252		$	421,392		(12)	%
Income tax expense	$	87,177		$	98,953		(12)	%
Effective tax rate	23.4		%	23.5		%

First quarter 2024 income tax expense was $87 million and the effective tax rate was 23.4%, compared with first quarter 2023 income tax expense of $99 million and an effective tax rate of 23.5%. The decrease in income tax expense for the first quarter of 2024 compared with the year-ago period was primarily due to lower pre-tax income.

Operating Segment Results

The Company organizes its operations into three reportable operating segments: (1) Consumer and Business Banking; (2) Commercial Banking; and (3) Other. These segments are defined by the type of customers served and the related products and services provided. For a description of the Company’s internal management reporting process, including the segment cost allocation methodology, see Note 15 — Business Segments to the Consolidated Financial Statements in this Form 10-Q.

Segment net interest income represents the difference between actual interest earned on assets and interest incurred on liabilities of the segment, adjusted for funding charges or credits through the Company’s internal funds transfer pricing process.

The following table presents the results by operating segment for the periods indicated:



	Three Months Ended March 31,
	Consumer and Business Banking				Commercial Banking				Other
($ in thousands)	2024		2023		2024		2023		2024		2023
Total revenue	$	317,306	$	330,244	$	306,815	$	280,322	$	20,006	$	49,273
Provision for credit losses	2,565		15,012		22,435		4,988		—		—























Noninterest expense	119,300		113,823		106,307		87,248		21,268		17,376
Segment income (loss) before income taxes	195,441		201,409		178,073		188,086		(1,262)		31,897

Segment net income	$	137,672	$	142,247	$	125,581	$	134,457	$	21,822	$	45,735

Consumer and Business Banking

The Consumer and Business Banking segment primarily provides financial products and services to consumer and commercial customers through the Company’s domestic branch network and digital banking platform. This segment offers consumer and commercial deposits, mortgage and home equity loans, and other products and services. It also originates commercial loans for small- and medium-sized enterprises through the Company’s branch network. Other products and services provided by this segment include wealth management, treasury management, interest rate risk hedging and foreign exchange services.

The following table presents additional financial information for the Consumer and Business Banking segment for the periods indicated:



	Three Months Ended March 31,
					Change from 2023
($ in thousands)	2024		2023		$		%
Net interest income before provision for credit losses	$	291,764	$	304,242	$	(12,478)	(4)	%
Noninterest income	25,542		26,002		(460)		(2)	%
Total revenue	317,306		330,244		(12,938)		(4)	%
Provision for credit losses	2,565		15,012		(12,447)		(83)	%
Noninterest expense	119,300		113,823		5,477		5	%
Segment income before income taxes	195,441		201,409		(5,968)		(3)	%
Income tax expense	57,769		59,162		(1,393)		(2)	%
Segment net income	$	137,672	$	142,247	$	(4,575)	(3)	%
Average loans	$	19,137,292	$	17,110,917	$	2,026,375	12	%
Average deposits	$	33,786,818	$	33,848,051	$	(61,233)	0	%

Consumer and Business Banking segment net income decreased by $5 million or 3% year-over-year to $138 million for the first quarter of 2024. This decrease was primarily driven by a decrease in net interest income and an increase in noninterest expense, partially offset by a decrease in provision for credit losses. Net interest income before provision for credit losses decreased by $12 million or 4% year-over-year to $292 million for the first quarter of 2024. This decrease was primarily driven by a higher cost of interest-bearing deposits and continued deposit mix shift. Provision for credit losses decreased by $12 million or 83% year-over-year to $3 million for the first quarter of 2024. This decrease was primarily driven by the substantial residential mortgage loan growth from the Bridge To Home Ownership program that required higher provision for credit losses in the first quarter of 2023. Noninterest expense increased $5 million or 5% year-over-year to $119 million for the first quarter of 2024, primarily due to an increase in deposit insurance premiums and regulatory assessments largely resulting from the FDIC charge.

Commercial Banking

The Commercial Banking segment primarily generates commercial loan and deposit products. Commercial loan products include CRE lending, construction finance, commercial business lending, working capital lines of credit, trade finance, letters of credit, affordable housing lending, asset-based lending, asset-backed finance, project finance and equipment financing. Commercial deposit products and other financial services include treasury management, foreign exchange services, and interest rate and commodity risk hedging.

The following table presents additional financial information for the Commercial Banking segment for the periods indicated:



	Three Months Ended March 31,
					Change from 2023
($ in thousands)	2024		2023		$		%
Net interest income before provision for credit losses	$	260,349	$	236,723	$	23,626	10	%
Noninterest income	46,466		43,599		2,867		7	%
Total revenue	306,815		280,322		26,493		9	%
Provision for credit losses	22,435		4,988		17,447		350	%
Noninterest expense	106,307		87,248		19,059		22	%
Segment income before income taxes	178,073		188,086		(10,013)		(5)	%
Income tax expense	52,492		53,629		(1,137)		(2)	%
Segment net income	$	125,581	$	134,457	$	(8,876)	(7)	%
Average loans	$	32,787,548	$	31,038,920	$	1,748,628	6	%
Average deposits	$	21,054,189	$	17,282,964	$	3,771,225	22	%

Commercial Banking segment net income decreased by $9 million or 7% year-over-year to $126 million for the first quarter of 2024. This decrease was due to higher noninterest expense and provision for credit losses, partially offset by higher net interest income. Net interest income before provision for credit losses increased $24 million or 10% year-over-year to $260 million for the first quarter of 2024. This increase was primarily due to higher loan interest income from commercial loan growth. Provision for credit losses increased $17 million or 350% year-over-year to $22 million for the first quarter of 2024, primarily driven by continued caution regarding the CRE market outlook. Noninterest expense increased $19 million or 22% year-over-year to $106 million for the first quarter of 2024, primarily due to higher compensation and employee benefits, deposit insurance premiums and regulatory assessments, and deposit account expense.

Other

Centralized functions, including the corporate treasury activities of the Company and eliminations of inter-segment amounts, have been aggregated and included in the Other segment, which provides broad administrative support to the two core segments, namely the Consumer and Business Banking and the Commercial Banking segments.

The following table presents additional financial information for the Other segment for the periods indicated:



	Three Months Ended March 31,
					Change from 2023
($ in thousands)	2024		2023		$		%
Net interest income before provision for credit losses	$	13,026	$	58,896	$	(45,870)	(78)	%
Noninterest income (loss)	6,980		(9,623)		16,603		173	%
Total revenue	20,006		49,273		(29,267)		(59)	%

Noninterest expense	21,268		17,376		3,892		22	%
Segment (loss) income before income taxes	(1,262)		31,897		(33,159)		(104)	%
Income tax benefit	23,084		13,838		9,246		67	%
Segment net income	$	21,822	$	45,735	$	(23,913)	(52)	%

Average deposits	$	2,601,396	$	3,822,894	$	(1,221,498)	(32)	%

The Other segment reported segment loss before income taxes of $1 million and segment net income of $22 million, reflecting an income tax benefit of $23 million for the first quarter of 2024. The decrease in segment net income was primarily driven by lower net interest income, partially offset by an increase in noninterest income. The $46 million decrease in net interest income before provision for credit losses was primarily driven by the higher cost of BTFP borrowings. Noninterest income increased by $17 million for the first quarter of 2024, mainly due to a $10 million write-off of an impaired AFS debt security during the first quarter of 2023 and an increase in foreign exchange income.

The income tax expense or benefit in the Other segment consists of the remaining unallocated income tax expense or benefit after allocating income tax expense to the two core segments, and reflects the impact of tax credit investment activity. Income tax expense is allocated to the Consumer and Business Banking and the Commercial Banking segments by applying statutory income tax rates to the segment income before income taxes. Tax credit investment amortization is allocated to the Other segment.

Balance Sheet Analysis

Debt Securities

The Company maintains a portfolio of high quality and liquid debt securities with a moderate duration profile. It closely manages the overall portfolio credit, interest rate and liquidity risks. The Company’s debt securities provide:

•interest income for earnings and yield enhancement;

•funding availability for needs arising during the normal course of business;

•the ability to execute interest rate risk management strategies in response to changes in economic or market conditions; and

•collateral to support pledging agreements as required and/or to enhance the Company’s borrowing capacity.

While the Company does not intend to sell its debt securities, it may sell AFS debt securities in response to changes in the balance sheet and related interest rate risk to meet liquidity, regulatory and strategic requirements.

The following table presents the distribution of the Company’s AFS and HTM debt securities portfolio as of March 31, 2024 and December 31, 2023, and by credit ratings as of March 31, 2024:

(1)



	A				BBB			BB and Lower			No Rating (2)
AFS debt securities:
%		—		%		—	%		—	%		—	%
%		—		%		—	%		—	%		—	%
%		—		%		—	%		—	%		—	%
%		—		%		—	%		—	%		2	%
%		—		%		—	%		—	%		14	%
%		31		%		66	%		3	%		—	%
%		53		%		—	%		—	%		—	%
%		—		%		—	%		—	%		—	%
%		28		%		—	%		—	%		—	%
%		4		%		4	%		0	%		1	%

HTM debt securities:
%		—		%		—	%		—	%		—	%
%		—		%		—	%		—	%		—	%
%		—		%		—	%		—	%		—	%
%		—		%		—	%		—	%		—	%
%		—		%		—	%		—	%		—	%
9,872,531			$	8,642,308

(1)Credit ratings express opinions about the credit quality of a debt security. The Company determines the credit rating of a security according to the lowest credit rating made available by nationally recognized statistical rating organizations (“NRSROs”). Debt securities rated investment grade, which are those with ratings similar to BBB- or above (as defined by NRSROs), are generally considered by the rating agencies and market participants to be low credit risk. Ratings percentages are allocated based on fair value.

(2)For debt securities not rated by NRSROs, the Company uses other factors which include but are not limited to the priority in collections within the securitization structure, and whether the contractual payments have historically been on time.

(3)Includes Government National Mortgage Association (“GNMA”) AFS debt securities totaling $4.5 billion of amortized cost and $4.4 billion of fair value as of March 31, 2024, and $1.3 billion of amortized cost and $1.2 billion of fair value as of December 31, 2023.

(4)Includes GNMA HTM debt securities totaling $91 million of amortized cost and $73 million of fair value as of March 31, 2024, and $92 million of amortized cost and $75 million of fair value of as of December 31, 2023.

As of March 31, 2024, the Company’s AFS and HTM debt securities portfolios had an effective duration (defined as the sensitivity of the value of the portfolio to interest rate changes) of 2.8 and 7.4, respectively, compared with 3.6 and 7.5, respectively, as of December 31, 2023. The decrease in the AFS effective duration was primarily due to the purchases of floating rate GNMA securities. The decrease in the HTM effective duration was due to the portfolio seasoning.

Available-for-Sale Debt Securities

The fair value of AFS debt securities totaled $8.4 billion as of March 31, 2024, an increase of $2.2 billion or 36% from $6.2 billion as of December 31, 2023. The increase was primarily due to the purchases of GNMA securities, which were mainly funded by an increase in deposits. The Company’s AFS debt securities are carried at fair value with non-credit related unrealized gains and losses, net of tax, reported in Other comprehensive income (loss) on the Consolidated Statement of Comprehensive Income. Pre-tax net unrealized losses on AFS debt securities were $731 million as of March 31, 2024, compared with $728 million as of December 31, 2023.

As of March 31, 2024 and December 31, 2023, 99% and 97%, respectively, of the carrying value of the AFS debt securities portfolio was rated investment grade by NRSROs. Of the AFS debt securities with gross unrealized losses, substantially all were rated investment grade as of both March 31, 2024 and December 31, 2023. There was no allowance for credit losses provided against the AFS debt securities as of each of March 31, 2024 and December 31, 2023. Additionally, there were no credit losses recognized in earnings for the first quarters of 2024 and 2023.

Held-to-Maturity Debt Securities

All HTM debt securities were issued, guaranteed, or supported by the U.S. government or government-sponsored enterprises. Accordingly, the Company applied a zero credit loss assumption for these securities and no allowance for credit loss was recorded as of both March 31, 2024 and December 31, 2023.

For additional information on AFS and HTM securities, see Note 1 — Summary of Significant Accounting Policies to the Consolidated Financial Statements in the Company’s 2023 Form 10-K and Note 3 — Fair Value Measurement and Fair Value of Financial Instruments and Note 5 — Securities to the Consolidated Financial Statements in this Form 10-Q.

Loan Portfolio

The Company offers a broad range of financial products designed to meet the credit needs of its borrowers. The Company’s loan portfolio segments include commercial loans, which consist of C&I, CRE, multifamily residential, and construction and land loans, as well as consumer loans, which consist of single-family residential, home equity lines of credit (“HELOCs”) and other consumer loans. Loans held-for-investment totaled $52.0 billion and $52.2 billion as of March 31, 2024 and December 31, 2023, respectively, and the composition of the loan portfolio as of March 31, 2024 was similar to the composition as of December 31, 2023.

The following table presents the composition of the Company’s total loan portfolio by loan type as of March 31, 2024 and December 31, 2023:



	March 31, 2024				December 31, 2023
($ in thousands)	Amount		%		Amount		%
Commercial:
C&I	$	16,350,191	31	%	$	16,581,079	32	%
CRE:
CRE	14,609,655		28	%	14,777,081		28	%
Multifamily residential	5,010,245		10	%	5,023,163		10	%
Construction and land	673,939		1	%	663,868		1	%
Total CRE	20,293,839		39	%	20,464,112		39	%
Total commercial	36,644,030		70	%	37,045,191		71	%
Consumer:
Residential mortgage:
Single-family residential	13,563,738		26	%	13,383,060		26	%
HELOCs	1,731,233		4	%	1,722,204		3	%
Total residential mortgage	15,294,971		30	%	15,105,264		29	%
Other consumer	53,503		0	%	60,327		0	%
Total consumer	15,348,474		30	%	15,165,591		29	%
Total loans held-for-investment (1)	51,992,504		100	%	52,210,782		100	%
Allowance for loan losses	(670,280)				(668,743)
Loans held-for-sale (2)	13,280				116
Total loans, net	$	51,335,504			$	51,542,155

(1)Includes $63 million and $71 million of net deferred loan fees and net unamortized premiums as of March 31, 2024 and December 31, 2023, respectively.

(2)Consists of C&I loans as of March 31, 2024 and a single family-residential loan as of December 31, 2023.

Commercial

The commercial loan portfolio comprised 70% and 71% of total loans as of March 31, 2024 and December 31, 2023, respectively. The Company actively monitors the commercial lending portfolio for credit risk and reviews credit exposures for sensitivity to changing economic conditions.

Commercial — Commercial and Industrial Loans. Total C&I loan commitments were $24.7 billion and $24.6 billion as of March 31, 2024 and December 31, 2023, respectively, with a utilization rate of 66% as of March 31, 2024, compared with 67% as of December 31, 2023. Total C&I loans were $16.4 billion as of March 31, 2024, a decrease of $231 million or 1% from $16.6 billion as of December 31, 2023. Total C&I loans made up 31% and 32% of total loans held-for-investment as of March 31, 2024 and December 31, 2023, respectively. The C&I loan portfolio includes loans and financing for businesses across a wide spectrum of industries. The Company offers a variety of C&I products, including commercial business lending, working capital lines of credit, trade finance, letters of credit, asset-based lending, asset-backed finance, project finance and equipment financing. Additionally, the Company has a portfolio of broadly syndicated C&I loans, which represent revolving or term loan facilities that are marketed and sold primarily to institutional investors. This portfolio totaled $502 million and $645 million as of March 31, 2024 and December 31, 2023, respectively. The majority of the C&I loans had variable interest rates as of both March 31, 2024 and December 31, 2023.

The C&I portfolio is well-diversified by industry. The Company monitors concentrations within the C&I loan portfolio by industry and customer exposure, and has exposure limits by industry and loan product. The following table presents the industry mix within the Company’s C&I loan portfolio as of March 31, 2024 and December 31, 2023:



	March 31, 2024					December 31, 2023 (1)
($ in thousands)	Amount		%		($ in thousands)	Amount		%
Industry:					Industry:
Real estate investment & management	$	2,067,855	13	%	Capital call lending	$	2,171,367	13	%
Capital call lending	1,944,730		12	%	Real estate investment & management	1,970,713		12	%
Media & entertainment	1,801,303		11	%	Media & entertainment	1,891,199		11	%
Manufacturing & wholesale	1,084,648		7	%	Financial services	1,136,731		7	%
Financial services	1,041,937		6	%	Manufacturing & wholesale	1,110,544		7	%
Infrastructure & clean energy	986,436		6	%	Infrastructure & clean energy	1,023,662		6	%
Food production & distribution	686,035		4	%	Tech & telecom	729,922		4	%
Tech & telecom	679,839		4	%	Food production & distribution	655,340		4	%
Consumer finance	584,290		4	%	Consumer finance	586,468		4	%
Oil & gas	581,122		3	%	Hospitality & leisure	576,328		3	%
Other	4,891,996		30	%	Other	4,728,805		29	%
Total C&I	$	16,350,191	100	%	Total C&I	$	16,581,079	100	%

(1)Revised segmentation to conform with the current presentation.

Commercial — Total Commercial Real Estate Loans. Total CRE loans totaled $20.3 billion and $20.5 billion as of March 31, 2024 and December 31, 2023, respectively, and accounted for 39% of total loans held-for-investment as of both March 31, 2024 and December 31, 2023. The total CRE portfolio consists of CRE, multifamily residential, and construction and land loans, and affordable housing lending. The Company’s underwriting parameters for CRE loans are established in compliance with supervisory guidance, including property type, geography and loan-to-value (“LTV”). The consistency of the Company’s low LTV underwriting standards has historically resulted in lower credit losses.

The Company’s total CRE loan portfolio is well-diversified by property type with an average CRE loan size of $3 million as of both March 31, 2024 and December 31, 2023. The following table summarizes the Company’s total CRE loans by property type as of March 31, 2024 and December 31, 2023:



	March 31, 2024				December 31, 2023
($ in thousands)	Amount		%		Amount		%
Property types:
Multifamily	$	5,010,245	25	%	$	5,023,164	25	%
Retail (1)	4,256,919		21	%	4,297,569		21	%
Industrial (1)	4,028,488		20	%	3,997,764		20	%
Hotel (1)	2,431,463		12	%	2,446,504		12	%
Office (1)	2,245,781		11	%	2,271,508		11	%
Healthcare (1)	724,422		4	%	852,362		4	%
Construction and land	673,939		3	%	663,868		3	%
Other (1)	922,582		4	%	911,373		4	%
Total CRE loans	$	20,293,839	100	%	$	20,464,112	100	%

(1)Included in CRE loans, which is a subset of Total CRE loans.

The weighted-average LTV ratio of the total CRE loan portfolio was 50% as of both March 31, 2024 and December 31, 2023. Weighted average LTV is based on the most recent LTV, which is based on the latest available appraisal and current loan commitment. Approximately 91% of total CRE loans had an LTV ratio of 65% or lower as of both March 31, 2024 and December 31, 2023.

The following tables provide a summary of the Company’s CRE, multifamily residential, and construction and land loans by geography as of March 31, 2024 and December 31, 2023. The distribution of the total CRE loan portfolio largely reflects the Company’s geographical branch footprint, which is primarily concentrated in California.



	March 31, 2024
($ in thousands)	CRE		%		Multifamily Residential		%		Construction and Land		%		Total CRE		%
Geographic markets:
Southern California	$	7,545,016	51	%	$	2,340,771	47	%	$	264,824	39	%	$	10,150,611	50	%
Northern California	2,729,200		19	%	1,059,018		21	%	159,425		24	%	3,947,643		19	%
California	10,274,216		70	%	3,399,789		68	%	424,249		63	%	14,098,254		69	%
Texas	1,103,921		8	%	443,215		9	%	62,992		9	%	1,610,128		8	%
New York	703,714		5	%	261,894		5	%	43,406		6	%	1,009,014		5	%
Washington	492,470		3	%	163,383		3	%	10,380		2	%	666,233		3	%
Arizona	368,389		2	%	148,591		3	%	46,259		7	%	563,239		3	%
Nevada	256,218		2	%	141,975		3	%	11,244		2	%	409,437		2	%
Other markets	1,410,727		10	%	451,398		9	%	75,409		11	%	1,937,534		10	%
Total loans	$	14,609,655	100	%	$	5,010,245	100	%	$	673,939	100	%	$	20,293,839	100	%



	December 31, 2023
($ in thousands)	CRE		%		Multifamily Residential		%		Construction and Land		%		Total CRE		%
Geographic markets:
Southern California	$	7,604,053	51	%	$	2,295,592	46	%	$	294,879	44	%	$	10,194,524	50	%
Northern California	2,737,635		19	%	1,055,852		21	%	147,031		22	%	3,940,518		19	%
California	10,341,688		70	%	3,351,444		67	%	441,910		66	%	14,135,042		69	%
Texas	1,122,428		8	%	445,391		9	%	41,768		6	%	1,609,587		8	%
New York	696,950		5	%	287,961		6	%	43,227		7	%	1,028,138		5	%
Washington	495,577		3	%	173,367		3	%	10,375		2	%	679,319		3	%
Arizona	355,047		2	%	148,970		3	%	38,897		6	%	542,914		3	%
Nevada	257,105		2	%	142,133		3	%	6,325		1	%	405,563		2	%
Other markets	1,508,286		10	%	473,897		9	%	81,366		12	%	2,063,549		10	%
Total loans	$	14,777,081	100	%	$	5,023,163	100	%	$	663,868	100	%	$	20,464,112	100	%

As of both March 31, 2024 and December 31, 2023, 69% of total CRE loans were concentrated in California. Changes in California’s economy and real estate values could have a significant impact on the collectability of these loans and the required level of allowance for loan losses. For additional information related to the higher degree of risk from a downturn in the California economic and real estate markets, see Item 1A. Risk Factors — Risks Related to Geopolitical Uncertainties to the Company’s 2023 Form 10-K.

Commercial — Commercial Real Estate Loans. The Company focuses on providing financing to experienced real estate investors and developers who have moderate levels of leverage, many of whom are long-time customers of the Bank. CRE loans totaled $14.6 billion as of March 31, 2024, compared with $14.8 billion as of December 31, 2023, and accounted for 28% of total loans held-for-investment as of both dates. Interest rates on CRE loans may be fixed, variable or hybrid. As of March 31, 2024, 57% of our CRE portfolio had variable rates, of which 52% had customer-level interest rate derivative contracts in place. These were hedging contracts offered by the Company to help our customers manage their interest rate risk while the Bank’s exposure remained variable rate. In comparison, as of December 31, 2023, 58% of our CRE portfolio had variable rates, of which 50% had customer-level interest rate derivative contracts in place. The Company seeks to underwrite loans with conservative standards for cash flows, debt service coverage and LTV.

Owner-occupied properties comprised 20% of the CRE loans as of both March 31, 2024 and December 31, 2023. The remainder were non-owner-occupied properties, where 50% or more of the debt service for the loan is typically provided by rental income from an unaffiliated third party.

Commercial — Multifamily Residential Loans. The multifamily residential loan portfolio is largely comprised of loans secured by residential properties with five or more units. Multifamily residential loans totaled $5.0 billion and accounted for 10% of total loans held-for-investment as of both March 31, 2024 and December 31, 2023. The Company offers a variety of first lien mortgages, including fixed- and variable-rate loans, as well as hybrid loans with interest rates that adjust annually after an initial fixed rate period of three to ten years. As of both March 31, 2024 and December 31, 2023, 48% of our multifamily residential portfolio had variable rates, of which 40% had customer-level interest rate derivative contracts in place. These were hedging contracts offered by the Company to help our customers manage their interest rate risk while the Bank’s own exposure remained variable rate.

Commercial — Construction and Land Loans. Construction and land loans provide financing for a portfolio of projects diversified by real estate property type. Construction and land loans totaled $674 million as of March 31, 2024, compared with $664 million as of December 31, 2023, and accounted for 1% of total loans held-for-investment as of both dates. Construction loan exposure was made up of $538 million in loans outstanding, plus $641 million in unfunded commitments as of March 31, 2024, compared with $526 million in loans outstanding, plus $672 million in unfunded commitments as of December 31, 2023. Land loans totaled $136 million as of March 31, 2024, compared with $138 million as of December 31, 2023.

Consumer

Residential mortgage loans are primarily originated through the Bank’s branch network. The average total residential loan size was $435 thousand and $436 thousand as of March 31, 2024 and December 31, 2023, respectively. The following tables summarize the Company’s single-family residential and HELOC loan portfolios by geography as of March 31, 2024 and December 31, 2023:



	March 31, 2024
($ in thousands)	Single-Family Residential		%		HELOCs		%		Total Residential Mortgage		%
Geographic markets:
Southern California	$	5,041,793	37	%	$	812,239	47	%	$	5,854,032	38	%
Northern California	1,701,556		13	%	372,302		21	%	2,073,858		14	%
California	6,743,349		50	%	1,184,541		68	%	7,927,890		52	%
New York	4,396,997		33	%	247,026		14	%	4,644,023		30	%
Washington	691,594		5	%	182,112		11	%	873,706		6	%
Massachusetts	409,538		3	%	65,516		4	%	475,054		3	%
Georgia	448,234		3	%	18,879		1	%	467,113		3	%
Nevada	422,840		3	%	31,658		2	%	454,498		3	%
Texas	435,538		3	%	—		—	%	435,538		3	%
Other markets	15,648		0	%	1,501		0	%	17,149		0	%
Total	$	13,563,738	100	%	$	1,731,233	100	%	$	15,294,971	100	%
Lien priority:
First mortgage	$	13,563,738	100	%	$	1,324,007	76	%	$	14,887,745	97	%
Junior lien mortgage	—		—	%	407,226		24	%	407,226		3	%
Total	$	13,563,738	100	%	$	1,731,233	100	%	$	15,294,971	100	%



	December 31, 2023
($ in thousands)	Single-Family Residential		%		HELOCs		%		Total Residential Mortgage		%
Geographic markets:
Southern California	$	4,990,848	37	%	$	799,571	46	%	$	5,790,419	38	%
Northern California	1,650,905		13	%	370,989		22	%	2,021,894		13	%
California	6,641,753		50	%	1,170,560		68	%	7,812,313		51	%
New York	4,376,416		33	%	247,202		14	%	4,623,618		31	%
Washington	696,028		5	%	184,843		11	%	880,871		6	%
Massachusetts	391,666		3	%	67,016		4	%	458,682		3	%
Georgia	432,258		3	%	17,123		1	%	449,381		3	%
Nevada	404,837		3	%	33,959		2	%	438,796		3	%
Texas	423,972		3	%	—		—	%	423,972		3	%
Other markets	16,130		0	%	1,501		0	%	17,631		0	%
Total	$	13,383,060	100	%	$	1,722,204	100	%	$	15,105,264	100	%
Lien priority:
First mortgage	$	13,383,060	100	%	$	1,331,509	77	%	$	14,714,569	97	%
Junior lien mortgage	—		—	%	390,695		23	%	390,695		3	%
Total	$	13,383,060	100	%	$	1,722,204	100	%	$	15,105,264	100	%

Consumer — Single-Family Residential Loans. Single-family residential loans totaled $13.6 billion as of March 31, 2024, compared with $13.4 billion as of December 31, 2023, and accounted for 26% of total loans held-for-investment as of both dates. The Company was in a first lien position for all of its single-family residential loans as of both March 31, 2024 and December 31, 2023. Many of these loans are reduced documentation loans, for which a substantial down payment is required, resulting in a low LTV ratio at origination, typically 65% or less. The weighted-average LTV ratio was 52% as of March 31, 2024 and 53% as of December 31, 2023. These loans have historically experienced low delinquency and loss rates. The Company offers a variety of single-family residential first lien mortgage loan programs, including fixed- and variable-rate loans, as well as hybrid loans with interest rates that adjust on a regular basis, typically annually, after an initial fixed rate period.

Consumer — Home Equity Lines of Credit. Total HELOC commitments were $5.2 billion, with a utilization rate of 33%, as of both March 31, 2024 and December 31, 2023. Substantially all of the Company’s unfunded HELOC commitments are unconditionally cancellable. HELOCs outstanding totaled $1.7 billion as of both March 31, 2024 and December 31, 2023, and accounted for 4% and 3% of total loans held-for-investment as of March 31, 2024 and December 31, 2023, respectively. The Company was in a first lien position for 76% and 77% of total outstanding HELOCs as of March 31, 2024 and December 31, 2023, respectively. The weighted-average LTV ratio was 48% on HELOC commitments as of both dates. Weighted-average LTV ratio represents the loan’s balance divided by the estimated current property value. Combined LTV ratios are used for junior lien home equity loans. Many of these loans are reduced documentation loans, resulting in a low LTV ratio at origination, typically 65% or less. As a result, these loans have historically experienced low delinquency and loss rates. Substantially all of the Company’s HELOCs were variable-rate loans as of both March 31, 2024 and December 31, 2023.

All originated commercial and consumer loans are subject to the Company’s conservative underwriting guidelines and loan origination standards. Management believes that the Company’s underwriting criteria and procedures adequately consider the unique risks associated with these products. The Company conducts a variety of quality control procedures and periodic audits, including the review of lending and legal requirements, to ensure that the Company is in compliance with these requirements.

Foreign Outstandings

The Company’s overseas offices, which include the branch in Hong Kong and the subsidiary bank in China, are subject to the general risks inherent in conducting business in foreign countries, such as regulatory, economic and political uncertainties. As such, the Company’s international operation risk exposure is largely concentrated in China and Hong Kong. In addition, the Company’s financial assets held in the Hong Kong branch and the subsidiary bank in China may be affected by fluctuations in currency exchange rates or other factors. The following table presents the major financial assets held in the Company’s overseas offices as of March 31, 2024 and December 31, 2023:



	March 31, 2024				December 31, 2023
($ in thousands)	Amount		% of Total Consolidated Assets		Amount		% of Total Consolidated Assets
Hong Kong branch:
Cash and cash equivalents	$	543,831	1	%	$	631,487	1	%

AFS debt securities (1)	$	541,262	1	%	$	546,495	1	%
Loans held-for-investment (2)	$	807,506	1	%	$	934,734	1	%
Total assets	$	1,897,761	3	%	$	2,115,857	3	%
Subsidiary bank in China:
Cash and cash equivalents	$	753,207	1	%	$	719,058	1	%

AFS debt securities (3)	$	120,570	0	%	$	120,167	0	%
Loans held-for-investment (2)	$	1,358,047	2	%	$	1,328,383	2	%
Total assets	$	2,240,428	3	%	$	2,156,548	3	%

(1)Comprised of U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities, U.S. Treasury securities, and foreign government bonds as of March 31, 2024; comprised of foreign government bonds and U.S. Treasury securities as of December 31, 2023.

(2)Primarily comprised of C&I loans as of both March 31, 2024 and December 31, 2023.

(3)Comprised of foreign government bonds as of both March 31, 2024 and December 31, 2023.

The following table presents the total revenue generated by the Company’s overseas offices for the first quarters of 2024 and 2023:



	Three Months Ended March 31,
	2024				2023
($ in thousands)	Amount		% of Total Consolidated Revenue		Amount		% of Total Consolidated Revenue
Hong Kong Branch:
Total revenue	$	18,093	3	%	$	15,318	2	%
Subsidiary Bank in China:
Total revenue	$	7,444	1	%	$	7,885	1	%

Capital

The Company maintains a strong capital base to support its anticipated asset growth, operating needs, and credit risks, and to ensure that the Company and the Bank are in compliance with all regulatory capital guidelines. The Company engages in regular capital planning processes on at least an annual basis to optimize the use of available capital and to appropriately plan for future capital needs, allocating capital to existing and future business activities. Furthermore, the Company conducts capital stress tests as part of its capital planning process. The stress tests enable the Company to assess the impact of adverse changes in the economy and interest rates on its capital base.

On March 3, 2020, the Company’s Board of Directors authorized the repurchase of $500 million of the Company’s common stock. During the first quarter of 2024, the Company repurchased $82 million of common stock or 1,181,851 shares at an average price of $69.76 per share. In comparison, the Company repurchased $82 million of common stock or 1,506,091 shares, at an average price of $54.56 per share in 2023. The total remaining available capital authorized for repurchase as of March 31, 2024 was $89 million.

The Company’s stockholders’ equity was $7.0 billion as of both March 31, 2024 and December 31, 2023, which increased $72 million or 1% during the first quarter of 2024. The increase in the Company’s stockholders’ equity was primarily due to $285 million of net income, partially offset by $82 million of common stock repurchases, $78 million of cash dividends declared, and $42 million of other comprehensive loss. For other factors that contributed to the changes in stockholders’ equity, refer to Item 1. Consolidated Financial Statements — Consolidated Statement of Changes in Stockholders’ Equity in this Form 10-Q.

Book value per share was $50.48 as of March 31, 2024, an increase of 2% from $49.64 per share as of December 31, 2023, a result of both the increase in the Company’s stockholders’ equity described above and a decrease in the Company’s common shares outstanding. Tangible book value per share was $47.09 as of March 31, 2024, compared with $46.27 as of December 31, 2023. For additional details, see the reconciliation of non-GAAP measures presented under Item 2. MD&A — Reconciliation of GAAP to Non-GAAP Financial Measures in this Form 10-Q.

The Company paid a quarterly common stock cash dividend of $0.55 and $0.48 per share during the first quarters of 2024 and 2023, respectively. In April 2024, the Company’s Board of Directors declared a second quarter 2024 cash dividend of $0.55 per share. The dividend is payable on May 17, 2024, to stockholders of record as of May 3, 2024.

Deposits and Other Sources of Funding

Deposits are the Company’s primary source of funding, the cost of which has a significant impact on the Company’s net interest income and net interest margin. Additional funding is provided by short- and long-term borrowings, and long-term debt. See Item 2. MD&A — Risk Management — Liquidity Risk Management — Liquidity in this Form 10-Q for a discussion of the Company’s liquidity management. The following table summarizes the Company’s sources of funds as of March 31, 2024 and December 31, 2023:



	March 31, 2024				December 31, 2023				Change
($ in thousands)	Amount		%		Amount		%		$		%
Deposits:

Noninterest-bearing demand	$	14,798,927	25	%	$	15,539,872	28	%	$	(740,945)	(5)	%
Interest-bearing checking	7,570,427		13	%	7,558,908		14	%	11,519		0	%
Money market	13,585,597		23	%	13,108,727		23	%	476,870		4	%
Savings	1,834,393		3	%	1,841,467		3	%	(7,074)		0	%




Time deposits	20,771,280		36	%	18,043,464		32	%	2,727,816		15	%
Total deposits	$	58,560,624	100	%	$	56,092,438	100	%	$	2,468,186	4	%





Other Funds:
Short-term borrowings	$	19,173	0	%	$	—	—	%	19,173		100	%
BTFP borrowings	—		—	%	4,500,000		97	%	(4,500,000)		(100)	%

FHLB advances	3,500,000		99	%	—		—	%	3,500,000		100	%

Long-term debt	31,768		1	%	148,249		3	%	(116,481)		(79)	%
Total other funds	$	3,550,941	100	%	$	4,648,249	100	%	$	(1,097,308)	(24)	%
Total sources of funds	$	62,111,565			$	60,740,687			$	1,370,878	2	%

Deposits

The Company’s strategy is to grow and retain relationship-based deposits to provide a stable and low-cost source of funding and liquidity. Accordingly, the Company offers a wide variety of deposit products to meet the needs of its consumer and commercial customers. As a result, we believe our deposit base is seasoned, stable and well-diversified. The following chart presents the Company’s deposits by type as of March 31, 2024 and December 31, 2023.

Total deposits were $58.6 billion as of March 31, 2024, an increase of $2.5 billion or 4% from $56.1 billion as of December 31, 2023. The increase in deposits was primarily driven by an increase in customer deposits. Time deposits comprised 36% and 32% of total deposits as of March 31, 2024 and December 31, 2023, respectively. Noninterest-bearing demand deposits comprised 25% and 28% of total deposits as of March 31, 2024 and December 31, 2023, respectively. The shift in deposit mix was primarily due to continued customer migration to higher yielding deposit products.

Uninsured deposits represent the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit. Management believes that presenting uninsured domestic deposits as reported on Schedule RC-OM item 2 of the Bank’s Call Report, with an adjustment to exclude collateralized and affiliate deposits provides a more accurate view of the deposits at risk, given that collateralized deposits are secured, and affiliate deposits are not customer-facing and are eliminated in consolidation.

The following table summarizes the Company’s uninsured domestic deposit balances reported on Schedule RC-OM item 2 of the Bank’s Call Report as of March 31, 2024 and December 31, 2023, after certain adjustments:



($ in thousands)		March 31, 2024			December 31, 2023
Uninsured deposits, per regulatory reporting requirements		$	29,006,693		$	27,592,714
Less: Collateralized deposits		(5,258,927)			(4,631,047)
Affiliate deposits		(333,846)			(491,992)
Uninsured deposits, excluding collateralized and affiliate deposits	(a)	$	23,413,920		$	22,469,675

Total domestic deposits per Call Report	(b)	$	55,684,012		$	53,486,990
Uninsured deposits, excluding collateralized and affiliate deposits, ratio	(a) / (b)	42		%	42		%

Additional information regarding the impact of deposits on net interest income, with a comparison of average deposit balances and rates, is provided in Item 2. MD&A — Results of Operations — Net Interest Income in this Form 10-Q. See also the discussion of the impact of deposits on liquidity in Item 2. MD&A — Liquidity Risk Management — Liquidity in this Form 10-Q.

Other Sources of Funding

Short-term borrowings totaled $19 million as of March 31, 2024. Refer to Note 10 — Short-Term Borrowings and Long-Term Debt to the Consolidated Financial Statements in this Form 10-Q for additional information on the short-term borrowings.

The Company had $4.5 billion of BTFP borrowings outstanding as of December 31, 2023. These borrowings were repaid upon maturity during the first quarter of 2024.

The Company had $3.5 billion of FHLB advances as of March 31, 2024, compared with no FHLB advances as of December 31, 2023. FHLB advances as of March 31, 2024 had floating interest rates of 5.49% to 5.56% with remaining maturities between six months and 1.5 years.

The Company uses long-term debt to provide funding to acquire interest-earning assets, and to enhance liquidity and regulatory capital adequacy. Long-term debt consists of junior subordinated debt, which qualifies as Tier 2 capital for regulatory capital purposes. During the first quarter of 2024, the Company redeemed approximately $117 million of junior subordinated debt. Refer to Note 10 — Short-Term Borrowings and Long-Term Debt to the Consolidated Financial Statements in this Form 10-Q for additional information on the junior subordinated debt.

Regulatory Capital and Ratios

The federal banking agencies have risk-based capital adequacy requirements intended to ensure that banking organizations maintain capital that is commensurate with the degree of risk associated with their operations. The Company and the Bank are each subject to these regulatory capital adequacy requirements. See Item 1. Business — Supervision and Regulation — Regulatory Capital Requirements and Regulatory Capital-Related Development in the Company’s 2023 Form 10-K for additional details.

The Company adopted Accounting Standards Update 2016-13 on January 1, 2020, which requires the measurement of the allowance for credit losses to be based on management’s best estimate of lifetime expected credit losses inherent in the Company’s relevant financial assets. The Company has elected the phase-in option provided by a final rule that delays an estimate of the current expected credit losses (“CECL”) effect on regulatory capital for two years and phases in the impact over three years. The rule permits certain banking organizations to exclude from regulatory capital the initial adoption impact of CECL, plus 25% of the cumulative changes in the allowance for credit losses under CECL for each period until December 31, 2021, followed by a three-year phase-out period in which the aggregate benefit is reduced by 25% in 2022, 50% in 2023 and 75% in 2024. Accordingly, our capital ratios as of March 31, 2024 reflect a delay of 25% of the estimated impact of CECL on regulatory capital.

The following table presents the Company’s and the Bank’s capital ratios as of March 31, 2024 and December 31, 2023 under the Basel III Capital Rules, and those required by regulatory agencies for capital adequacy and well-capitalized classification purposes:



	Basel III Capital Rules
	March 31, 2024				December 31, 2023
	Company		Bank		Company		Bank		Minimum Regulatory Requirements		Minimum Regulatory Requirements including Capital Conservation Buffer		Well-Capitalized Requirements
Risk-based capital ratios:
Common Equity Tier 1 capital (1)	13.5	%	12.9	%	13.3	%	12.6	%	4.5	%	7.0	%	6.5	%
Tier 1 capital (2)	13.5	%	12.9	%	13.3	%	12.6	%	6.0	%	8.5	%	8.0	%
Total capital	14.8	%	14.1	%	14.8	%	13.8	%	8.0	%	10.5	%	10.0	%
Tier 1 leverage (1)	10.1	%	9.6	%	10.2	%	9.6	%	4.0	%	4.0	%	5.0	%

(1)The Common Equity Tier 1 capital and Tier 1 leverage well-capitalized requirements apply only to the Bank since there is no Common Equity Tier 1 capital component or Tier 1 leverage ratio component in the definition of a well-capitalized bank holding company.

(2)The well-capitalized Tier 1 capital ratio requirements for the Company and the Bank are 6.0% and 8.0%, respectively.

The Company is committed to maintaining strong capital levels to assure its investors, customers and regulators that the Company and the Bank are financially sound. As of both March 31, 2024 and December 31, 2023, the Company and the Bank continued to exceed all “well-capitalized” capital requirements and the minimum capital requirements under the Basel III Capital Rules. Total risk-weighted assets were $53.4 billion as of March 31, 2024, a decrease of $217 million from $53.7 billion as of December 31, 2023.

Risk Management

Overview

In the normal course of business, the Company is exposed to a variety of risks, some of which are inherent to the financial services industry and others of which are more specific to the Company’s business. The Company operates under a Board-approved enterprise risk management (“ERM”) framework, which outlines the company-wide approach to risk management and oversight, and describes the structures and practices employed to manage the current and emerging risks inherent to the Company. The Company’s ERM program incorporates risk management throughout the organization in identifying, managing, monitoring, and reporting risks. It identifies the Company’s major risk categories as: credit, liquidity, capital, market, operational, compliance, legal, strategic, technology and reputational.

The Risk Oversight Committee (“ROC”) of the Board of Directors monitors the ERM program through such identified risk categories and provides oversight of the Company’s risk appetite and control environment. The ROC provides focused oversight of the Company’s identified enterprise risk categories on behalf of the full Board of Directors. Under the authority of the ROC, management committees apply targeted strategies to manage the risks to which the Company’s operations are exposed.

The Company’s ERM program is executed along the three lines of defense model, which provides for a consistent and standardized risk management control environment across the enterprise. The first line of defense is comprised of production, operational and support units. The second line of defense is comprised of various risk management and control functions charged with monitoring and managing specific major risk categories and/or risk subcategories. The third line of defense is comprised of the Internal Audit and Independent Asset Review (“IAR”) functions. Internal Audit reports to the Chief Audit Executive (“CAE”) who reports to the Board’s Audit Committee. Internal Audit provides assurance and evaluates the effectiveness of risk management, control, and governance processes as established by the Company. IAR serves as an internal loan review and independent credit risk monitoring function within the Bank that works under the direction of the CAE and reports to the Audit Committee. IAR provides management and the Audit Committee with an objective and independent assessment of the Bank’s credit profile and credit risk management processes. Further discussion and analysis of selected primary risk areas are discussed in the following subsections of Risk Management.

Credit Risk Management

Credit risk is the risk that a borrower or a counterparty will fail to perform according to the terms and conditions of a loan or investment and expose the Company to loss. Credit risk exists with many of the Company’s assets and exposures such as loans, debt securities and certain derivatives. The majority of the Company’s credit risk is associated with lending activities.

The ROC has primary oversight responsibility for the identified enterprise risk categories including credit risk. The ROC monitors management’s assessment of asset quality, credit risk trends, credit quality administration, underwriting standards, and portfolio credit risk management strategies and processes, such as diversification and liquidity, all of which enable management to control credit risk. At the management level, the Credit Risk Management Committee has primary oversight responsibility for credit risk. The Senior Credit Supervision function manages credit policy for the line of business transactional credit risk, assuring that all exposure is risk-rated according to the requirements of the credit risk rating policy. The Senior Credit Supervision function evaluates and reports the overall credit risk exposure to senior management and the ROC. Reporting directly to the Board’s Audit Committee, the IAR function provides additional support to the Company’s strong credit risk management culture by performing an independent and objective assessment of underwriting and documentation quality. A key focus of our credit risk management is adherence to a well-controlled underwriting and loan monitoring process.

The Company assesses the overall credit quality performance of the loans held-for-investment portfolio through an integrated analysis of specific performance ratios. This approach forms the basis of the discussion in the sections immediately following: Credit Quality, Nonperforming Assets and Allowance for Credit Losses.

Credit Quality

The Company utilizes a credit risk rating system to assist in monitoring credit quality. Loans are evaluated using the Company’s internal credit risk rating of 1 through 10. For more information on the Company’s credit quality indicators and internal credit risk ratings, refer to Note 7 — Loans Receivable and Allowance for Credit Losses to the Consolidated Financial Statements in this Form 10-Q.

The following table presents the Company’s criticized loans as of March 31, 2024 and December 31, 2023:



							Change
($ in thousands)	March 31, 2024			December 31, 2023			$		%
Criticized loans:




































Special mention loans	$	543,573		$	404,241		$	139,332	34	%
Classified loans (1)	651,485			573,969			77,516		14	%
Total criticized loans (2)	$	1,195,058		$	978,210		$	216,848	22	%

Special mention loans to loans held-for-investment	1.05		%	0.77		%
Classified loans to loans held-for-investment	1.25		%	1.10		%
Criticized loans to loans held-for-investment	2.30		%	1.87		%

(1)Consists of substandard, doubtful and loss categories.

(2)Excludes loans held-for-sale.

Criticized loans were $1.2 billion as of March 31, 2024, an increase of $217 million or 22%, compared with $978 million as of December 31, 2023. The increase was primarily driven by CRE and C&I loans.

Nonperforming Assets

Nonperforming assets are comprised of nonaccrual loans, other real estate owned (“OREO”) and other nonperforming assets. Other nonperforming assets and OREO are repossessed assets and properties, respectively, acquired through foreclosure, or through full or partial satisfaction of loans held-for-investment. Nonperforming assets were $165 million or 0.23% of total assets as of March 31, 2024, an increase of $51 million or 45%, compared with $114 million or 0.16% of total assets as of December 31, 2023.

The following table presents nonperforming assets information as of March 31, 2024 and December 31, 2023:



													Change
($ in thousands)			March 31, 2024					December 31, 2023					$				%
Commercial:
C&I			$	48,962				$	37,036				$	11,926			32		%
CRE:
CRE			35,006					23,249					11,757				51		%
Multifamily residential			4,646					4,669					(23)				0		%
Construction and land			12,236					—					12,236				100		%
Total CRE			51,888					27,918					23,970				86		%
Consumer:
Residential mortgage:
Single-family residential			35,669					24,377					11,292				46		%
HELOCs			11,498					13,411					(1,913)				(14)		%
Total residential mortgage			47,167					37,788					9,379				25		%
Other consumer			162					132					30				23		%
Total nonaccrual loans			148,179					102,874					45,305				44		%
OREO, net			16,692					11,141					5,551				50		%


Total nonperforming assets			$	164,871				$	114,015				$	50,856			45		%
Nonperforming assets to total assets			0.23		%			0.16		%
Nonaccrual loans to loans held-for-investment			0.29		%			0.20		%
Allowance for loan losses to nonaccrual loans			452.34		%			650.06		%


	597					(229)					(38)		%		0.01		%			0.01		%
Construction and land
107,924		$	122,999				$	(15,075)				(12)		%		0.21		%			0.24		%

(1)There were no accruing loans past due 90 days or more as of both March 31, 2024 and December 31, 2023.

Allowance for Credit Losses

The Company maintains its allowance for credit losses at a level sufficient to provide appropriate reserves to absorb estimated future credit losses in accordance with GAAP. For additional information on the policies, methodologies and judgments used to determine the allowance for credit losses, see Item 7. MD&A — Critical Accounting Estimates and Item 8. Financial Statements — Note 1 — Summary of Significant Accounting Policies to the Consolidated Financial Statements in the Company’s 2023 Form 10-K, and Note 7 — Loans Receivable and Allowance for Credit Losses to the Consolidated Financial Statements in this Form 10-Q.

The following table presents an allocation of the allowance for loan losses by loan portfolio segments and unfunded credit commitments as of March 31, 2024 and December 31, 2023:



	March 31, 2024					December 31, 2023
($ in thousands)	Allowance Allocation			% of Loan Type to Total Loans		Allowance Allocation			% of Loan Type to Total Loans
Allowance for loan losses
Commercial:
C&I	$	373,631		32	%	$	392,685		32	%
CRE:
CRE	187,460			28	%	170,592			28	%
Multifamily residential	37,418			10	%	34,375			10	%
Construction and land	10,819			1	%	10,469			1	%
Total CRE	235,697			39	%	215,436			39	%
Total commercial	609,328			71	%	608,121			71	%
Consumer:
Residential mortgage:
Single-family residential	55,922			26	%	55,018			26	%
HELOCs	3,563			3	%	3,947			3	%
Total residential mortgage	59,485			29	%	58,965			29	%
Other consumer	1,467			0	%	1,657			0	%
Total consumer	60,952			29	%	60,622			29	%
Total allowance for loan losses	$	670,280		100	%	$	668,743		100	%
Allowance for unfunded credit commitments	$	38,544				$	37,699
Total allowance for credit losses	$	708,824				$	706,442

Loans held-for-investment	$	51,992,504				$	52,210,782
Allowance for loan losses to loans held-for-investment	1.29		%			1.28		%

	Three Months Ended March 31,
	2024					2023
Average loans held-for-investment	$	51,924,317				$	48,144,120

Annualized net charge-offs to average loans held-for-investment	0.17				%	0.01				%

First quarter of 2024 net charge-offs were $23 million, or annualized 0.17% of average loans held-for-investment, compared with net charge-offs of $1 million, or annualized 0.01% of average loans held-for-investment for the first quarter of 2023. The increase in net charge-offs was primarily driven by higher losses in the C&I portfolio.

Liquidity Risk Management

Liquidity

Liquidity risk arises from the Company’s inability to meet its customer deposit withdrawals and obligations to other counterparties as they come due, or to obtain adequate funding at a reasonable cost to meet those obligations. Liquidity risk also considers the stability of deposits. The objective of liquidity management is to manage the potential mismatch of asset and liability cash flows. Maintaining an adequate level of liquidity depends on the institution’s ability to efficiently meet both expected and unexpected cash flow and collateral needs without adversely affecting daily operations or the financial condition of the institution. To achieve this objective, the Company analyzes its liquidity risk, maintains readily available liquid assets, and utilizes diverse funding sources including its stable core deposit base.

The ROC has primary oversight responsibility over liquidity risk management. At the management level, the Company’s Asset/Liability Committee (“ALCO”) establishes the liquidity guidelines that govern the day-to-day active management of the Company’s liquidity position by requiring sufficient asset-based liquidity to cover potential funding requirements and avoid over-dependence on volatile, less reliable funding markets. These guidelines are established and monitored for both the Bank and East West on a stand-alone basis to ensure that the Company can serve as a source of strength for its subsidiaries. The ALCO regularly monitors the Company’s liquidity status and related management processes, and provides regular reports on the Company’s liquidity position relative to policy limits and guidelines to the Board of Directors. The liquidity management practices have been effective under normal operating and stressed market conditions.

The Company also maintains a Liquidity Contingency Plan that provides an early-warning methodology to detect liquidity problems and provide a timely response. The Liquidity Contingency Plan describes the procedures, roles and responsibilities, and communication protocols for managing any identified liquidity problem. Management monitors the early-warning indicators defined in the Liquidity Contingency Plan, which include metrics for measuring the Company’s internal liquidity status as well as company-specific and market-wide external factors. When early-warning signals are detected, the ALCO is informed, and the problem is evaluated for severity. The ALCO will determine the course of action and appropriate contingency funding sources, if any, that are needed.

Liquidity Risk — Liquidity Sources. The Company’s primary source of funding is from deposits, generated by its banking business, which we believe is a relatively stable and low-cost source of funding. Our loans are funded by deposits, which amounted to $58.6 billion as of March 31, 2024, compared with $56.1 billion as of December 31, 2023. The Company’s loan-to-deposit ratio was 89% as of March 31, 2024, compared with 93% as of December 31, 2023.

In addition to deposits, the Company has access to various sources of wholesale financing, including borrowing capacity with the FHLB and Federal Reserve Bank of San Francisco (“FRBSF”), unsecured federal funds lines of credit with various correspondent banks, and several master repurchase agreements with major brokerage companies to sustain an adequate liquid asset portfolio, meet daily cash demands and allow management flexibility to execute its business strategy. However, general financial market and economic conditions could impact our access and cost of external funding. Additionally, the Company’s access to capital markets is affected by the ratings received from various credit rating agencies.

Unencumbered loans and/or debt securities were pledged to the FHLB and the FRBSF discount window as collateral. The Company has established operational procedures to enable borrowing against these assets, including regular monitoring of the total pool of loans and debt securities eligible as collateral. Eligibility of collateral is defined in guidelines from the FHLB and FRBSF and is subject to change at their discretion. See Item 2 — MD&A — Balance Sheet Analysis — Deposits and Other Sources of Funding in this Form 10-Q for further details related to the Company’s funding sources. The Company believes its cash and cash equivalents, and available borrowing capacity described below provide sufficient liquidity above its expected cash needs.

The Company maintains its source of liquidity in the form of cash and cash equivalents and borrowing capacity with its eligible loans and debt securities as collateral. The following table presents the Company’s total cash and cash equivalents and collateralized borrowing capacity as of March 31, 2024 and December 31, 2023:



					Change
($ in thousands)	March 31, 2024		December 31, 2023		$		%
Cash and cash equivalents	$	4,210,801	$	4,614,984	$	(404,183)	(9)	%
Interest-bearing deposits with banks	24,593		10,498		14,095		134	%

Collateralized borrowing capacity:
FHLB	7,617,334		12,373,002		(4,755,668)		(38)	%
FRBSF	13,104,803		9,830,769		3,274,034		33	%
Unpledged available securities	5,138,819		1,988,526		3,150,293		158	%












Total	$	30,096,350	$	28,817,779	$	1,278,571	4	%

The Company’s cash and cash equivalents and collateralized borrowing capacity totaled $30.1 billion as of March 31, 2024, compared with $28.8 billion as of December 31, 2023. The increase was primarily related to an increase in available borrowing capacity at the FRBSF due to the repayment of BTFP borrowings, and an increase in unpledged available securities. This increase was partially offset by a decrease in available borrowing capacity at the FHLB, primarily due to the increase in FHLB advances during the first quarter of 2024.

Liquidity Risk — Cash Requirements. In the ordinary course of business, the Company enters contractual obligations that require future cash payments, including funding for customer deposit withdrawals, repayments for short- and long-term borrowings, and other cash commitments. For additional information on these obligations, see Note 9 — Deposits to the Consolidated Financial Statements in the Company’s 2023 Form 10-K, and Note 8 — Affordable Housing Partnership, Tax Credit and Community Reinvestment Act Investments, Net and Note 10 — Short-Term Borrowings and Long-Term Debt to the Consolidated Financial Statements in this Form 10-Q. During the first quarter of 2024, the Company redeemed approximately $117 million of junior subordinated debt.

The Company also has off-balance sheet arrangements which represent transactions that are not recorded on the Consolidated Balance Sheet. The Company’s off-balance sheet arrangements include (1) commitments to extend credit, such as loan commitments, commercial letters of credit for foreign and domestic trade, standby letters of credit (“SBLCs”), and financial guarantees, to meet the financing needs of its customers, (2) future interest obligations related to customer deposits and the Company’s borrowings, and (3) transactions with unconsolidated entities that provide financing, liquidity, market risk or credit risk support to the Company, or engage in leasing, hedging or research and development services with the Company. Because many of these commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future funding requirements. The Company does not expect the total commitment amounts as of March 31, 2024 to have a material current or future impact on the Company’s financial conditions or results of operations. Information about the Company’s loan commitments, commercial letters of credit and SBLCs is provided in Note 11 — Commitments and Contingencies to the Consolidated Financial Statements in this Form 10-Q.

The Consolidated Statement of Cash Flows summarizes the Company’s sources and uses of cash by type of activity for the first quarters of 2024 and 2023. Excess cash generated by operating and investing activities may be used to repay outstanding debt or invest in liquid assets.

Liquidity Risk — Liquidity for East West. In addition to bank level liquidity management, the Company manages liquidity at the parent company level for various operating needs including payment of dividends, repurchases of common stock, principal and interest payments on its borrowings, acquisitions and additional investments in its subsidiaries. East West’s primary source of liquidity is from cash dividends distributed by its subsidiary, East West Bank. The Bank is subject to various statutory and regulatory restrictions on its ability to pay dividends as discussed in Item 1. Business — Supervision and Regulation — Dividends and Other Transfers of Funds in the Company’s 2023 Form 10-K. East West held $287 million and $446 million in cash and cash equivalents as of March 31, 2024 and December 31, 2023, respectively. Management believes that East West has sufficient cash and cash equivalents to meet the projected cash obligations for the coming year.

Liquidity Risk — Liquidity Stress Testing. The Company utilizes liquidity stress analysis to determine the appropriate amounts of liquidity to maintain at the Company, foreign subsidiary and foreign branch to meet contractual and contingent cash outflows under a range of scenarios. Scenario analyses include assumptions about significant changes in key funding sources, market triggers, potential uses of funding and economic conditions in certain countries. In addition, Company specific events are incorporated into the stress testing. Liquidity stress tests are conducted to ascertain potential mismatches between liquidity sources and uses over various time horizons and under a variety of stressed conditions. Given the range of potential stresses, the Company maintains contingency funding plans on a consolidated basis and for individual entities.

As of March 31, 2024, the Company believes it has adequate liquidity resources to conduct operations and meet other needs in the ordinary course of business, and is not aware of any events that are reasonably likely to have a material adverse effect on its liquidity, capital resources or operations. Given the uncertain and rapidly changing market and economic conditions, the Company will continue to actively evaluate the impact on its business and financial position. For more details on how economic conditions may impact our liquidity, see Item 1A. Risk Factors in the Company’s 2023 Form 10-K.

Market Risk Management

Market risk refers to the risk of potential loss due to adverse movements in market risk factors, including interest rates, foreign exchange rates, commodity prices, and credit spreads. The Company is primarily exposed to interest rate risk through its core business activities of extending loans and acquiring deposits. There have been no significant changes in our risk management practices as described in Item 7. MD&A — Market Risk Management in the Company’s 2023 Form 10-K.

Interest Rate Risk Management

Interest rate risk is the risk that market fluctuations in interest rates can have a negative impact on the Company’s earnings and capital stemming from mismatches in the Company’s asset and liability cash flows primarily arising from customer-related activities such as lending and deposit-taking. The Company is subject to interest rate risk because:

•Assets and liabilities may mature or reprice at different times. If assets reprice faster than liabilities and interest rates are generally rising, earnings will initially increase;

•Assets and liabilities may reprice at the same time but by different amounts;

•Short- and long-term market interest rates may change by different amounts. For example, the shape of the yield curve may affect the yield of new loans and funding costs differently;

•The remaining maturity of various assets or liabilities may shorten or lengthen as interest rates change. For example, if long-term mortgage interest rates increase sharply, mortgage-related products may pay down at a slower rate than anticipated, which could impact portfolio income and valuation; or

•Interest rates may have a direct or indirect effect on loan demand, collateral values, mortgage origination volume, and the fair value of other financial instruments.

The ALCO coordinates the overall management of the Company’s interest rate risk, meets regularly to review the Company’s open market positions and establishes policies to monitor and limit exposure to market risk. Interest rate risk management is carried out primarily through strategies involving the Company’s loan portfolio, debt securities portfolio, available funding channels and capital market activities. In addition, the Company’s policies permit the use of derivative instruments to assist in managing interest rate risk.

We measure and monitor interest rate risk exposure through various risk management tools, which include a simulation model that performs interest rate sensitivity analyses under multiple interest rate scenarios against a baseline. The simulation model incorporates the market’s forward rate expectations and the Company’s earning assets and liabilities. The Company uses both a static balance sheet and a forward growth balance sheet to perform the interest rate sensitivity analyses. The simulated interest rate scenarios include an instantaneous non-parallel shift in the yield curve and a gradual non-parallel shift in the yield curve (“rate ramp”). In addition, the Company also performs simulations using other alternative interest rate scenarios, including various permutations of the yield curve flattening, steepening or inverting. The Company uses the results of these simulations to formulate and gauge strategies to achieve a desired risk profile within its capital and liquidity guidelines.

The net interest income simulation model is based on the maturity and repricing characteristics of the Company’s interest rate sensitive assets, liabilities, and related derivative contracts. This model also incorporates various assumptions, which management believes to be reasonable but that may have a significant impact on the results. These key assumptions include the timing and magnitude of changes in interest rates, the yield curve evolution and shape, the correlation between various interest rate indices, financial instruments’ future repricing characteristics and spread relative to benchmark rates, and the effect of interest rate floors and caps. The modeled results are highly sensitive to deposit decay and deposit beta assumptions, which we derive from a regression analysis of the Company’s historical deposit data.

Simulation results are highly dependent on modeled behaviors and input assumptions. To the extent that actual behaviors are different from the assumptions used in the models, there could be material changes to the interest rate sensitivity results. The key behavioral models impacting interest rate sensitivity simulations include deposit repricing, deposit balance forecasts, and mortgage prepayments. These models and assumptions are documented, supported, and periodically back-tested to assess the reasonableness and effectiveness. The Company also regularly monitors the sensitivity of the other important modeling assumptions, such as loan and security prepayments and early withdrawal on fixed-rate customer liabilities. The Company makes appropriate calibrations to the model as needed and continually validates the model, methodology and results. Changes to key model assumptions are reviewed by the ALCO. Scenario results do not reflect strategies that the management could employ to limit the impact of changing interest rate expectations. The simulation does not represent a forecast of the Company’s net interest income but is a tool utilized to assess the risk of the impact of changing market interest rates across a range of interest rate environments.

The Company employs a variety of quantitative and qualitative approaches to capture historical deposit repricing and balance behaviors. These historical observations are performed at a granular level based on key product characteristics, including distinctions for brokered, public, and large commercial deposits, which are then combined with forward-looking market expectations and the competitive landscape to generate the deposit repricing and balance forecasting models. The Company uses these deposit repricing models to forecast deposit interest expense. The repricing models provide sufficient granularity to reflect key behavioral differences across product and customer types. The deposit beta is a key parameter of the deposit rate forecast. The deposit beta defines the sensitivity of deposit rates to changes in the Effective Fed Funds Rate.

In March 2024, the Company assumed a weighted-average beta of 52% for total deposits, an increase of approximately 1.5% from December 31, 2023, which was due to deposit product mix changes as product level deposit beta assumptions were not updated. The Company updated the deposit mix assumptions in March of 2024 to assume that noninterest-bearing deposits would migrate to interest-bearing CDs. The updated assumptions reduced the proportion of noninterest-bearing deposits for the base case and decreasing interest rate scenarios, and reduced the repricing speed of the CD portfolio to better reflect its maturity profile.

As loan and security prepayment assumptions are key components of the Company’s model, the Company incorporates third-party vendor models to forecast prepayment behavior on mortgage loans and securities, which have mortgage loans as underlying collateral. These third-party vendor models have access to more comprehensive industry-level data which can capture specific borrower and collateral characteristics over a variety of interest rate cycles. The Company will periodically assess and adjust the vendor models when appropriate to include its own available observations and expectations. In 2023, the Company updated its version of the vendor prepayment model to better support the transition from London Interbank Offered Rate to Secured Overnight Financing Rate (“SOFR”) indexed loans and updated tuning factors to slow prepayment speeds on single-family residential mortgages to better align them with actual and expected prepayments.

Twelve-Month Net Interest Income Simulation

Net interest income simulation modeling measures interest rate risk through earnings volatility. The simulation projects the cash flow changes in interest rate sensitive assets and liabilities, expressed in terms of net interest income, over a specified time horizon for defined interest rate scenarios. Net interest income simulations provide insight into the impact of market rate changes on earnings, which help guide risk management decisions. The Company assesses interest rate risk by comparing the changes of net interest income in different interest rate scenarios.

The following table presents the Company’s net interest income sensitivity related to an instantaneous and sustained non-parallel shift in market interest rates by 100 and 200 bps as of March 31, 2024 and December 31, 2023, on a balance sheet assuming flat forward rates and flat loan and deposit growth on the date of analysis. The non-parallel shift scenarios were calibrated internally based on historical analysis.



	Net Interest Income Volatility (1)
Change in Interest Rates (in bps)	March 31, 2024		December 31, 2023
+200	2.7	%	1.3	%
+100	2.0	%	1.2	%
-100	(3.2)	%	(1.8)	%
-200	(6.6)	%	(4.1)	%

(1)The percentage change represents net interest income change over a 12-month period in a stable interest rate environment versus in the various interest rate scenarios.

The composition of the Company’s loan portfolio creates sensitivity to interest rate movements due to a mismatch of repricing behavior between the floating-rate loan portfolio and deposit products. In the table above, net interest income volatility expressed in relation to base-case net interest income increased as of March 31, 2024. This increase reflects updated deposit product mix assumptions, which better reflect the expected repricing profile of the CD portfolio and the amount of noninterest-bearing deposits for the shocked interest rate scenarios.

The Company also models scenarios based on gradual shifts in interest rates and assesses the corresponding impacts. These interest rate scenarios provide additional information to estimate the Company’s underlying interest rate risk. The rate ramp table below shows the net interest income volatility under a gradual non-parallel shift of the yield curve, in even monthly increments over the first 12 months, followed by rates held constant thereafter based on a flat balance sheet as of the date of the analysis.



	Net Interest Income Volatility
Change in Interest Rates (in bps)	March 31, 2024		December 31, 2023
+200 Rate Ramp	2.8	%	0.8	%
+100 Rate Ramp	1.6	%	0.5	%
-100 Rate Ramp	(1.8)	%	(0.6)	%
-200 Rate Ramp	(3.6)	%	(1.3)	%

As of March 31, 2024, the Company’s net interest income profile reflects an asset sensitive position, where assets reprice faster or more significantly than liabilities. Net interest income is expected to increase when interest rates rise as the Company has a large population of variable rate loans, primarily tied to Prime and Term SOFR indices. The Company’s interest income is sensitive to changes in short-term interest rates. As of March 31, 2024, the Company designated interest rate contracts with a notional amount of $5.3 billion as cash flow hedges, which reduced net interest income volatility by approximately 1.8% of the base net interest income for every 100 bps change in interest rate.

The Company’s deposit portfolio is primarily composed of non-maturity deposits, which are not directly tied to short-term interest rate indices, but are, nevertheless, sensitive to changes in short-term interest rates. The modeled results are highly sensitive to modeled behavior and assumptions. Actual net interest income results may deviate from the model’s net interest income due to earning asset growth variation and deposit mix changes based on customer preferences relative to the interest rate environment. During a period of declining interest rates, balance sheet growth could offset headwinds to net interest income from yield compression.

Economic Value of Equity at Risk

Economic value of equity (“EVE”) is a cash flow calculation that takes the present value of all asset cash flows and subtracts the present value of all liability cash flows. This calculation is used for asset/liability management and measures changes in the economic value of the bank’s assets and liabilities due to changes in interest rates.

The economic value approach provides a comparatively broader scope than the net interest income volatility approach since it represents the discounted present value of cash flows over the expected life of the instruments. Due to this longer horizon, EVE is useful to identify risks arising from repricing, prepayment and maturity gaps between assets and liabilities on the balance sheet, as well as from off-balance sheet derivative exposures, over their lifetime. This long-term economic perspective into the Company’s interest rate risk profile allows the Company to identify anticipated negative effects of interest rate fluctuations. However, the difference in time horizons can cause the EVE analysis to diverge from the shorter-term net interest income analysis presented above. Given the uncertainty of the magnitude, timing and direction of future interest rate movements, the shape of the yield curve, and potential changes to the balance sheet, actual results may vary from those predicted by the Company’s model.

The following table presents the Company’s EVE sensitivity related to an instantaneous non-parallel shift in market interest rates by 100 and 200 bps as of March 31, 2024 and December 31, 2023. The non-parallel shift scenarios were calibrated internally based on historical analysis.



	EVE Volatility (1)
Change in Interest Rates (in bps)	March 31, 2024		December 31, 2023
+200	(10.4)	%	(10.3)	%
+100	(4.9)	%	(5.4)	%
-100	2.6	%	3.0	%
-200	5.1	%	6.0	%

(1)The percentage change represents net portfolio value change of the Company in a stable interest rate environment versus in the various interest rate scenarios.

As of March 31, 2024, the Company’s EVE is expected to decrease when interest rates rise. The change in EVE sensitivity was due to changes in the structure of the balance sheet as well as changes in the underlying valuations and durations of assets and liabilities.

Derivatives

It is the Company’s policy not to speculate on the future direction of interest rates, foreign currency exchange rates and commodity prices. However, the Company periodically enters into derivative transactions in order to manage its exposure to market risk, primarily interest rate risk and foreign currency risk. The Company believes these derivative transactions, when properly structured and managed, provide a hedge against inherent risk in certain assets and liabilities or against risk in specific transactions. Hedging transactions may be implemented using a variety of derivative instruments such as swaps, forwards, options, and collars. The Company uses interest rate swaps to hedge the variability in interest received on certain floating-rate commercial loans and interest paid on certain floating-rate borrowings. Foreign exchange derivatives are used in net investment hedging strategies to mitigate the risk of changes in the U.S. dollar equivalent value of a designated monetary amount of the Company’s net investment in East West Bank (China) Limited. Prior to entering any hedge accounting activity, the Company analyzes the costs and benefits of the hedge in comparison to alternative strategies. The Company also repositions its hedging derivatives portfolio based on the current assessment of economic and financial conditions, including the interest rate and foreign currency environments, balance sheet composition and trends, and the relative mix of its cash and derivative positions.

In addition, the Company enters into derivative transactions in order to accommodate its customers with their business needs or to assist customers with their risk management objectives, such as managing exposure to fluctuations in interest rates, foreign currencies and commodity prices. To economically hedge against the derivative contracts entered into with the Company’s customers, the Company enters into offsetting derivative contracts with third-party financial institutions, some of which are cleared through central clearing organizations. The exposures from derivative transactions are collateralized by cash and/or eligible securities based on limits as set forth in the respective agreements between the Company and counterparty financial institutions. The fair value changes of the derivative contracts traded with third-party financial institutions are expected to be largely comparable to the fair value changes of the derivative transactions executed with customers throughout the terms of these contracts, except for the credit valuation adjustment component in the contracts and the spread variances between the customer derivatives and the offsetting financial counterparty positions. 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 offered to its customers.

The Company is subject to credit risk associated with the counterparties to the derivative contracts. This counterparty credit risk is a multi-dimensional form of risk, affected by both the exposure and credit quality of the counterparty, both of which are sensitive to market-induced changes. The Company’s Credit Risk Management Committee provides oversight of credit risk and the Company has guidelines in place to manage counterparty concentration, tenor limits, and collateral. The Company manages the credit risk of its derivative positions by diversifying its positions among various counterparties, by entering into legally enforceable master netting agreements, and by requiring collateral arrangements, where possible. The Company may also transfer counterparty credit risk related to interest rate swaps to third-party financial institutions through the use of credit risk participation agreements. Certain derivative contracts are required to be cleared through central clearinghouses, to further mitigate counterparty credit risk, where variation margin is applied daily as settlement to the fair value of the derivative contracts. In addition, the Company incorporates credit value adjustments and other market standard methodologies to appropriately reflect the counterparty’s and the Company’s own nonperformance risk in the fair value measurement of its derivatives. As of March 31, 2024, the Company anticipates performance by its counterparties and has not incurred any related credit losses.

The following table summarizes certain information on derivative instruments designated as accounting hedges and utilized by the Company in its management of interest rate and foreign currency risks as of March 31, 2024 and December 31, 2023:

			(1)(2)(3)
Cash flow hedges
4,000,000
Weighted average:
%
%



($ in thousands)	Foreign Exchange Contracts	Foreign Exchange Contracts
Net investment hedges
81,480
%

NA — Not applicable.

(1)Represents receive-fixed/pay-floating interest rate swaps and excludes interest rate collars. Floating rates paid are based on SOFR or Prime.

(2)Excludes interest rate collars in total notional amount of $250 million as of both March 31, 2024 and December 31, 2023.

(3)Excludes forward-starting swaps in total notional amount of $1.0 billion not effective as of both March 31, 2024 and December 31, 2023.

(4)Represents percentage between the notional of outstanding foreign exchange contracts and the net RMB exposure from East West Bank (China) Limited. The Company does not have active net investment hedges as of March 31, 2024.

Additional information on the Company’s derivatives is presented in Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Derivatives to the Consolidated Financial Statements in the Company’s 2023 Form 10-K, Note 3 — Fair Value Measurement and Fair Value of Financial Instruments, and Note 6 — Derivatives to the Consolidated Financial Statements in this Form 10-Q.

Critical Accounting Policies and Estimates

The Company’s significant accounting policies are described in Note 1 — Summary of Significant Accounting Policies to the Consolidated Financial Statements in the Company’s 2023 Form 10-K. Certain of these policies include critical accounting estimates, which are subject to valuation assumptions, subjective or complex judgments about matters that are inherently uncertain, and it is likely that materially different amounts could be reported under different assumptions and conditions. The Company has procedures and processes in place to facilitate making these judgments. The following accounting policies are critical to the Company’s Consolidated Financial Statements:

•allowance for credit losses;

•fair value estimates;

•goodwill impairment; and

•income taxes.

For additional information on the Company’s critical accounting estimates involving significant judgments, see Item 7. MD&A — Critical Accounting Estimates in the Company’s 2023 Form 10-K.

Reconciliation of GAAP to Non-GAAP Financial Measures

To supplement the Company’s unaudited interim Consolidated Financial Statements presented in accordance with U.S. GAAP, the Company uses certain non-GAAP measures of financial performance. Non-GAAP financial measures are not prepared in accordance with, or as an alternative to U.S. GAAP. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance that either excludes or includes amounts, or is subject to adjustments that have such an effect, that are not normally excluded or included in the most directly comparable financial measure that is calculated and presented in accordance with U.S. GAAP. The non-GAAP financial measures discussed in this Form 10-Q are return on average TCE, adjusted efficiency ratio, adjusted diluted EPS, and tangible book value per share. Certain additional non-GAAP financial measures that are components of the foregoing non-GAAP financial measures are also set forth and reconciled in the table below. The Company believes these non-GAAP financial measures, when taken together with the corresponding U.S. GAAP financial measures, provide meaningful supplemental information regarding its performance, and allow comparability to prior periods. These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.

The following tables present the reconciliations of U.S. GAAP to non-GAAP financial measures for the periods presented:



		Three Months Ended March 31,
($ in thousands)		2024			2023
Net income	(a)	$	285,075		$	322,439
Add: Amortization of core deposit intangibles		—			441
Amortization of mortgage servicing assets		308			356
Tax effect of amortization adjustments (1)		(91)			(233)
Tangible net income (non-GAAP)	(b)	$	285,292		$	323,003

Average stockholders’ equity	(c)	$	6,992,558		$	6,183,324
Less: Average goodwill		(465,697)			(465,697)
Average other intangible assets (2)		(6,473)			(7,696)
Average tangible book value (non-GAAP)	(d)	$	6,520,388		$	5,709,931

ROE (3)	(a)/(c)	16.40		%	21.15		%
Return on average TCE (3) (non-GAAP)	(b)/(d)	17.60		%	22.94		%



		Three Months Ended March 31,
($ in thousands)		2024			2023
Net interest income before provision for credit losses	(a)	$	565,139		$	599,861
Total noninterest income		78,988			59,978
Total revenue	(b)	$	644,127		$	659,839
Noninterest income		78,988			59,978
Add: Net loss on AFS debt security (4)		—			10,000
Adjusted noninterest income (non-GAAP)	(c)	78,988			69,978
Adjusted revenue (non-GAAP)	(a)+(c)=(d)	$	644,127		$	669,839

Total noninterest expense	(e)	$	246,875		$	218,447
Less: Amortization of tax credit and other investments		(13,207)			(10,110)
Amortization of core deposit intangibles		—			(441)
FDIC charge (5)		(10,305)			—
Repurchase agreements’ extinguishment cost (6)		—			(3,872)
Adjusted noninterest expense (non-GAAP)	(f)	$	223,363		$	204,024

Efficiency ratio	(e)/(b)	38.33		%	33.11		%
Adjusted efficiency ratio (non-GAAP)	(f)/(d)	34.68		%	30.46		%

2.08 $2.32

(1)Applied statutory tax rate of 29.56% for the first quarter of 2024 and 29.29% for the first quarter of 2023.

(2)Includes core deposit intangibles and mortgage servicing assets.

(3)Annualized.

(4)Represents the net loss related to an AFS debt security that was written-off in the first quarter of 2023.

(5)During the first quarter of 2024, the Company recorded a $10 million pre-tax FDIC charge (included in Deposit insurance premiums and regulatory assessments on the Consolidated Statement of Income).

(6)The Company prepaid $300 million of repurchase agreements and incurred a debt extinguishment cost of $4 million in the first quarter of 2023.



($ and shares in thousands, except per share data)		March 31, 2024		December 31, 2023
Stockholders’ equity	(a)	$	7,023,232	$	6,950,834
Less: Goodwill		(465,697)		(465,697)
Other intangible assets (1)		(6,234)		(6,602)
Tangible book value (non-GAAP)	(b)	$	6,551,301	$	6,478,535









Number of common shares at period-end	(c)	139,121		140,027
Book value per share	(a)/(c)	$	50.48	$	49.64
Tangible book value per share (non-GAAP)	(b)/(c)	$	47.09	$	46.27

(1)Includes core deposit intangibles and mortgage servicing assets.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures regarding market risk in the Company’s portfolio, see Note 6 — Derivatives to the Consolidated Financial Statements in this Form 10-Q and Item 2. MD&A — Risk Management — Market Risk Management in this Form 10-Q.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of March 31, 2024, pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company conducted an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act). Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2024.

The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC. The Company’s disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that the Company files under the Exchange Act is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Change in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended March 31, 2024, that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 11 — Commitments and Contingencies — Litigation to the Consolidated Financial Statements in Part I of this Form 10-Q, incorporated herein by reference.

ITEM 1A. RISK FACTORS

The Company’s 2023 Form 10-K contains disclosure regarding the risks and uncertainties related to the Company’s business under the heading Item 1A. Risk Factors. There have been no material changes to the Company’s risk factors as presented in the Company’s 2023 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Repurchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table summarizes the Company’s common stock repurchase activity during the first quarter of 2024:



Calendar Month	Total Number of Shares Purchased (1)	Average Price Paid per Share of Common Stock		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (2)
January	—	$	—	—	$	172
February	1,181,851	$	69.76	1,181,851	$	89
March	—	$	—	—	$	89
First quarter	1,181,851	$	69.76	1,181,851

(1)Excludes the repurchase of common stock pursuant to various stock compensation plans and agreements.

(2)On March 3, 2020, the Company’s Board of Directors authorized, and the Company announced, a stock repurchase program under which the Company may repurchase up to $500 million of its common stock. The stock repurchase authorization has no expiration date.

ITEM 5. OTHER INFORMATION

During the three months ended March 31, 2024, or any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of the SEC’s Regulation S-K).

ITEM 6. EXHIBITS

The following exhibit index lists Exhibits filed, or in the case of Exhibits 32.1 and 32.2 furnished, with this report:


Exhibit No.						Exhibit Description

3.1						Certificate of Incorporation of the Registrant [Incorporated by reference to Exhibit 3(i) from Registrant’s Registration Statement on Form S-4 filed with the Commission on September 17, 1998 (File No. 333-63605).]

3.1.1						Certificate of Amendment to Certificate of Incorporation of the Registrant [Incorporated by reference to Exhibit 3(i).1 from Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002 filed with the Commission on March 28, 2003 (File No. 000-24939).]

3.1.2						Amendment to Certificate of Incorporation to Increase Authorized Shares of the Registrant [Incorporated by reference from Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Commission on April 15, 2005 (File No. 000-24939).]

3.1.3						Certificate of Amendment to Certificate of Incorporation of the Registrant [Incorporated by reference to Exhibit A from Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Commission on April 23, 2008 (File No. 000-24939).]

3.1.4						Certificate of Designations of 8.00% Non-Cumulative Perpetual Convertible Preferred Stock, Series A of the Registrant [Incorporated by reference to Exhibit 3.1 from Registrant’s Current Report on Form 8-K, filed with the Commission on April 30, 2008 (File No. 000-24939).]

3.1.5						Certificate of Designations of Fixed Rate Cumulative Perpetual Preferred Stock, Series B of the Registrant [Incorporated by reference to Exhibit 3.1, 4.1 from Registrant’s Current Report on Form 8-K filed with the Commission on December 9, 2008 (File No. 000-24939).]

3.1.6						Certificate of Designations of Mandatorily Convertible Cumulative Non-Voting Perpetual Preferred Stock, Series C of the Registrant [Incorporated by reference to Exhibit 3.1, 4.1 from Registrant’s Current Report on Form 8-K filed with the Commission on November 12, 2009 (File No. 000-24939).]

3.2						Amended and Restated Bylaws of the Registrant dated March 14, 2023 [Incorporated by reference to Exhibit 3.1 from Registrant’s Current Report on Form 8-K filed with the Commission on Ma rch 1 7, 202 3 (File No. 000-24939).]

10.1						Amendment to Employment Agreement — Dominic Ng.* Filed herewith.

10.2						Amendment to Employment Agreement — Douglas Krause.* Filed herewith.











31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

32.1						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.

32.2						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.

101.INS						The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

101.SCH						Inline XBRL Taxonomy Extension Schema Document. Filed herewith.

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document. Filed herewith.

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document. Filed herewith.

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document. Filed herewith.

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document. Filed herewith.

104						Cover Page Interactive Data (formatted as Inline XBRL and contained in Exhibit 101 filed herewith). Filed herewith.

GLOSSARY OF ACRONYMS


AFS	Available-for-sale	HELOC	Home equity lines of credit
ALCO	Asset/Liability Committee	HTM	Held-to-maturity
AOCI	Accumulated other comprehensive income	IAR	Independent Asset Review
ASC	Accounting Standards Codification	LCH	London Clearing House
ASU	Accounting Standards Update	LGD	Loss given default
BTFP	Bank Term Funding Program	LTV	Loan-to-value
C&I	Commercial and industrial	MD&A	Management’s Discussion and Analysis of Financial Condition and Results of Operations
CD	Certificate of deposit	MMBTU	Million British thermal unit
CECL	Current expected credit losses	NAV	Net asset value
CFPB	Consumer Financial Protection Bureau	NRSRO	Nationally recognized statistical rating organizations
CLO	Collateralized loan obligations	OREO	Other real estate owned
CME	Chicago Mercantile Exchange	PAM	Proportional amortization method
CRA	Community Reinvestment Act	PD	Probability of default
CRE	Commercial real estate	RMB	Chinese Renminbi
DIF	Deposit Insurance Fund	ROA	Return on average assets
EPS	Earnings per share	ROC	Risk Oversight Committee
ERM	Enterprise risk management	ROE	Return on average common equity
EVE	Economic value of equity	RPA	Credit risk participation agreement
FASB	Financial Accounting Standards Board	RSU	Restricted stock unit
FDIC	Federal Deposit Insurance Corporation	SBLC	Standby letters of credit
FHLB	Federal Home Loan Bank	SEC	U.S. Securities and Exchange Commission
FRBSF	Federal Reserve Bank of San Francisco	SOFR	Secured Overnight Financing Rate
FTP	Funds transfer pricing	TCE	Tangible Common Equity
GAAP	Generally Accepted Accounting Principles	U.S.	United States
GDP	Gross Domestic Product	USD	U.S. dollar
GNMA	Government National Mortgage Association

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated:

May 9, 2024

EAST WEST BANCORP, INC.
(Registrant)

/s/ Christopher J. Del Moral-Niles

Christopher J. Del Moral-Niles

Executive Vice President and
Chief Financial Officer


		Page
Overview		59
Financial Review		60
Results of Operations		61
	Net Interest Income	61
	Noninterest Income	66
	Noninterest Expense	66
	Income Taxes	67
	Operating Segment Results	67
Balance Sheet Analysis		69
	Debt Securities	69
	Loan Portfolio	71
	Foreign Outstandings	76
	Capital	77
	Deposits and Other Sources of Funding	78
	Regulatory Capital and Ratios	79
Risk Management		80
	Credit Risk Management	81
	Liquidity Risk Management	84
	Market Risk Management	86
Critical Accounting Policies and Estimates		91
Reconciliation of GAAP to Non-GAAP Financial Measures		92

EAST WEST BANCORP INC - Quarter Report: 2024 March (Form 10-Q)

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