What changed in this filing

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Item 1. Business

2025-02-28 compared with 2024-02-29 · 148 added, 167 removed, 238 unchanged (57% of the section changed)

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branches and offices are located in California, Texas, New York, Washington, Georgia, Massachusetts, Illinois and Nevada.

In Asia, the Bank has four full-service branches in Hong Kong, Shanghai, Shantou and Shenzhen;

five representative offices in Beijing, Chongqing, Guangzhou, Xiamen and Singapore;

In Asia, the Bank has full-service branches in Hong Kong, Shanghai, Shantou and Shenzhen;

representative offices in Beijing, Chongqing, Guangzhou, Xiamen and Singapore;

and administrative support offices in Beijing and Shanghai.

We are committed to enhancing long-term stockholder 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.

Our strategy focuses on seeking out and deepening client relationships that meet our risk/return parameters.

This guides our decision-making across every aspect of our operations:

the products and services we develop, the expertise we cultivate, and the infrastructure we build to help our customers conduct their businesses.

We expect our relationship-focused business model to continue to generate organic growth from existing customers and to expand our targeted customer bases.

We constantly invest in technology to improve the customer user experience, strengthen critical business infrastructure, and streamline core processes, while properly managing operating expenses.

Our risk management activities are focused on ensuring that the Bank identifies and manages risks to sustain safety and soundness while maximizing profitability.

East West Bank has a commercial business operating license in China through its subsidiary, East West Bank (China) Limited, which makes it unique among U.S.-based regional banks.

This license allows the Bank to open branches, make loans and collect deposits in the country.

East West Bank has a commercial banking license in China through its subsidiary, East West Bank (China) Limited, which makes it unique among U.S.-based regional banks.

This license allows the Bank to open branches, make loans and collect deposits in China.

The Bank continues to develop its international banking presence in Asia with its network of overseas branches and representative offices.

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As of December 31, 2024, East West Bank was the largest independent commercial bank headquartered in Southern California based on total assets.

The Bank is the largest independent bank in the U.S.

The Bank is also the largest independent bank in the U.S.

focused on the financial service needs of individuals and businesses that operate both in the U.S.

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Our strategic priorities include the use of technology to innovate and expand commercial payments, treasury management products and services, and consumer banking.

We have developed mobile and online banking platforms, which are continually enhanced to enrich our customer user experience, and which offer a full suite of banking services tailored to our customers’ unique needs.

We have developed mobile and online banking platforms, which are continually enhanced to enrich our customer’s user experience, and which offer a full suite of banking services tailored to our customers’ unique needs.

In our view, the omnichannel banking service approach increases efficiency and deepens customer relationships.

Operating Segments

The Bank’s three operating segments, (1) Consumer and Business Banking, (2) Commercial Banking and (3) Other, are based on the Bank’s core strategy.

The Bank’s three operating segments, (1) Consumer and Business Banking, (2) Commercial Banking and (3) Treasury and Other, are based on the Bank’s core strategy.

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.

The Commercial Banking segment primarily generates commercial loans and deposits.

The remaining centralized functions, including the corporate treasury activities of the Company and eliminations of inter-segment amounts, are aggregated and included in the Other segment.

The Commercial Banking segment primarily generates domestic commercial loans and deposits.

The remaining centralized functions, including the corporate treasury activities of the Company and eliminations of inter-segment amounts, are aggregated and included in the Treasury and Other segment.

For complete discussion and disclosure, see Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) — Results of Operation — Operating Segment Results and Note 17 — Business Segments to the Consolidated Financial Statements in this Form 10-K.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) — Results of Operations — Operating Segment Results and Note 17 — Business Segments to the Consolidated Financial Statements in this Form 10-K.

The Bank operates in a highly competitive environment.

The Company faces intense competition from domestic and foreign lending institutions, numerous other financial services providers and other entities, including as a result of emerging technologies.

The Company faces intense competition from domestic and foreign lending institutions, numerous other financial services providers and other new technology-driven products and services.

Competition is based on a number of factors including, among others, customer service and convenience, quality and range of products and services offered, reputation, fees, interest rates on loans and deposits and lending limits.

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The Company is a leader of banking market share in the Asian American community.

The Company maintains a differentiated presence within selected markets by providing cross-border commercial banking expertise to customers between the U.S.

The Company maintains a differentiated presence within selected markets by providing cross-border commercial banking expertise to customers operating in the U.S.

While the Company believes it is well positioned within a highly competitive industry, the industry could become even more competitive as a result of legislative, regulatory, economic, and technological changes, as well as continuing consolidation.

Human Capital

As a company that delivers relationship-driven financial solutions to a diverse customer base, we believe the strength of our workforce is one of the most significant contributors to our success.

Our key human capital objectives are to attract, develop and retain quality talent who embody our values and enable us to serve our customers.

To achieve these objectives, our human resource programs have been designed based on our core values and the attributes we seek to foster, which include absolute integrity;

customer orientation;

respect and fairness;

expertise and professionalism;

and selflessness.

We use these core values to better service our customers and prepare our employees for leadership positions and to advance their careers.

We are also committed to promoting diversity in employment and advancement, and recognizing our employees for their contributions and service to our bank.

As of December 31, 2023, we had 3,206 full-time equivalent employees, of which 229 were located in China, Hong Kong and Singapore.

Nearly all of our workforce were full-time employees, predominantly located in our core markets of California, Texas and New York.

The Company’s compensation and employee benefits expense was $509 million and $478 million, or 50% and 56% of total noninterest expense in 2023 and 2022, respectively.

As a company that delivers relationship-driven financial solutions to our customers, we believe the strength of our workforce is one of the most significant contributors to our success.

Our key human capital objectives are to attract, develop, and retain quality talent that embody our values and enable us to attract customers and serve them effectively.

To achieve these objectives, our human resource programs have been designed to incorporate our core values of absolute integrity, customer orientation, creativity, respect and fairness, teamwork, expertise and professionalism, and selflessness.

Embracing these core values position our employees to better serve our customers and pave the way for their future career advancement.

We are committed to strengthening our recruiting process and growing internal talent to prepare for our next phase of growth.

We also seek to recognize our employees for their contributions and service to the Bank.

As of December 31, 2024, we had approximately 3,100 full-time equivalent employees.

The majority of our workforce consisted of full-time employees who were located in our core markets in California, Texas, and New York.

The Company’s full-time equivalent employees also included 230 employees located in China, Hong Kong, and Singapore.

None of our employees are subject to a collective bargaining agreement.

Diversity and Inclusion

East West Bank was founded in 1973 in Chinatown, Los Angeles, California as a savings & loan association for immigrants who were underserved by mainstream banks.

As of December 31, 2023, the Bank was the largest FDIC-insured, minority-operated depository institution headquartered in the U.S., serving communities with diverse ethnicities and socio-economic backgrounds in eight states across the nation.

Our operations are concentrated in areas that include larger numbers of immigrants and minorities.

We proudly offer home loans and other products and services that support low-to-moderate income, minority and immigrant communities.

We also provide community development loans, and partner with a diverse list of nonprofit and community-based organizations to promote wealth generation and entrepreneurship in underserved communities.

Our focus on basic, fair-priced products and alternative credit criteria supports the under-banked, which is part of our founding mission.

In addition, given our diverse customer base and the diversity of the communities that we serve, our retail bankers are able to assist customers in English and in over 10 other languages.

Promoting diversity and inclusion in our workforce and executive leadership is critical to our continued growth and success, and is at the core of our guiding principles.

Our commitment to this mission is reflected in the composition of our employees.

In addition, we have adopted an Environmental and Social Policy Framework that governs our mission to support diversity, and formed an LGBTQ+ & Allies employee resource group in addition to our two existing employee resource groups that focus on cultural awareness and empowering women to pursue leadership development and opportunities.

As of December 31, 2023, the composition of our workforce was as follows:

% of Total Workforce % of Total Managers

Female 62% 58%

Race/ethnicity:

Asian minorities 74% 74%

Non-Asian minorities 15% 12%

White 11% 14%

(1) Presented as a percentage of the respective populations who self-identified.

To put our diversity in context, minorities made up 46% of the workforce and 18% of the managers of FDIC-regulated institutions, according to the most recently available 2020 Diversity Self-Assessment from the FDIC’s Financial Institution Diversity Self-Assessment program.

Our organizational commitment to diversity, under the leadership and oversight of our Board of Directors, is further reflected by the composition of our 11-member Board, which is presented in the following table as of December 31, 2023.

This commitment to diversity was acknowledged in Bank Director’s 2022 “RankingBanking” study, in which we received the “Best Board” ranking due to our strong corporate governance practices, and the diversity and expertise of our directors.

Race/ethnicity:

Asian minorities 2 2

Non-Asian minorities 1 2

Sexual orientation:

Talent Acquisition, Development, Promotion and Engagement

An experienced and well-qualified workforce is essential to delivering high quality and reliable banking services to our customers and to managing the Company in a safe and sound manner.

We endeavor to attract, develop, and retain diverse, motivated talent as part of our ongoing commitment to building a stronger workforce to serve our customers and communities.

As a result, we were able to continue our quality hiring efforts with over 500 external new hires in 2023.

An experienced, dedicated and well-qualified workforce is essential in delivering high quality and reliable banking services to our customers and in managing the Company.

We endeavor to attract, develop, and retain motivated individuals as part of our ongoing commitment in building a stronger workforce to serve our customers and communities.

In 2024, we were able to continue our quality hiring efforts with nearly 500 external new hires.

The focus on leadership development and promoting from within is a critical part of our succession planning for key roles throughout the organization and fostering organizational stability.

We recognize the importance of employee development and career growth in fostering retention of our employees, which is one of the Company's strategic objectives.

In 2023, 18% of our employees advanced their careers within the Bank through over 550 internal promotions or new opportunities.

We provide a variety of resources to help all employees grow in their current roles and build new skills for future advancement, including the encouragement of continuing education and providing benefits such as tuition reimbursement.

We celebrate our employees’ dedicated years of service to the Bank through our Milestone Anniversary Program, which offers rewards and recognition through gifts and events when our employees reach certain service milestones.

As of December 31, 2023, approximately 300 of our employees have celebrated 20 years or more of service.

In 2023, we commemorated our 50th anniversary.

With our employees’ commitment, strength, expertise and contribution, we earned the “No.

1 Performing Bank” ranking in the $50 billion and above asset category in Bank Director’s 2023 RankingBanking study.

We were also ranked among the top 5 in Fortune’s Best Workplaces for Women in 2023 and were named one of Newsweek’s 100 Most Loved Workplaces in 2022 and 2023.

We were also recognized as one of five banks featured in ARTnews’ 75 Top Art World Professionals in 2023.

Fair and Equitable Compensation

Our compensation and benefits program provides both short- and long-term awards, incentivizing performance, and aligning employee and stockholder interests.

Employee compensation packages include a competitive base salary and, subject to Company and individual performance, may include an annual cash and stock incentive bonus.

We are committed to fair and equitable compensation programs, and regularly assess the current business environment and labor markets to review our compensation and benefits program for pay equity.

We sponsor a 401(k) plan for U.S.

employees, provide a Company matching contribution, and maintain other defined contribution retirement plans.

As of December 31, 2023, 98% of employees participated in our 401(k) plan.

To foster a strong sense of ownership and to align the interests of our employees with our stockholders, restricted stock units are awarded to eligible employees under our stock incentive programs.

W e also award stock grants under our “Spirit of Ownership” program to all of our employees, regardless of job title or part-time/full-time status.

The program allows each employee to share directly in the success they help create.

The fact that all our employees are also owners is a source of pride for us.

In 2023, the Company granted over 600 thousand restricted stock units as part of its stock compensation programs.

We recognize the importance of employee development and career growth in supporting employee retention, which is one of the Company's strategic objectives.

In 2024, 16% of our employees have advanced their careers within the Bank through over 510 internal promotions or new opportunities, which highlights our commitment to rewarding results-driven performance.

We also provide a variety of resources to help employees grow in their current roles and acquire new skills for future advancement through continuing education and tuition reimbursement.

We celebrate our employees’ dedicated years of service to the Bank through our Milestone Anniversary Program, which offers rewards and recognition through gifts and events upon attaining certain service milestones.

As of December 31, 2024, 335 of our employees have celebrated 20 years or more of service.

Our dedication to results-driven performance earned us the recognition of the top-ranked performing bank in the $50 billion and above asset category in Bank Director’s 2024 Ranking Banking study, and among the top 10 in Forbes’ 2024 America’s Best Bank list.

We have also been included in Newsweek’s 100 Most Loved Workplaces since 2022.

The Company’s compensation and employee benefits expense of $551 million and $509 million, comprised 57% and 50% of total noninterest expense in 2024 and 2023, respectively.

Employee compensation packages include a competitive base salary and, subject to Company and individual performance, may include an annual cash and/or stock incentive bonus.

As part of our commitment to fair and equitable compensation programs, we regularly assess the current business environment and labor markets to review our compensation and benefits program for pay equity.

The Bank also matches 75% of the U.S.

employees’ contributions up to the first 6% of their eligible compensation and maintains a deferred compensation plan.

To foster a strong sense of ownership and to align the interests of our employees with our stockholders, restricted stock units (“RSUs”) are awarded to eligible employees under our stock incentive programs.

We also award stock grants under our “Spirit of Ownership” program to all our employees, regardless of job title or part-time/full-time status.

The program allows each employee to share directly in the Company’s success.

In 2024, the Company granted over 650 thousand RSUs as part of its stock compensation programs.

Health and Well-being

We are committed to supporting our employees’ well-being by offering flexible and competitive benefits.

We offer a hybrid schedule to promote flexibility and enhance productivity among our associates.

We offer a hybrid schedule to promote flexibility and enhance productivity.

Comprehensive health insurance coverage (medical, dental and vision) is offered to employees working at least 30 hours each week.

We further demonstrate our commitment to employee well-being by absorbing the increases in our employees’ health benefits.

We offer life insurance, disability insurance, parental leave, wellness and benefits programs designed to assist employees in maintaining a healthy work-life balance, paid time off such as vacation hours, and 10 days of annual sick time, which is more than the required allotment from any of the states in which we do business.

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We are committed to making positive and lasting impacts in our communities through our business activities and our volunteer and charitable efforts.

We aim to enhance the quality of life in our communities by engaging in meaningful and effective programs that help increase homeownership, preserve affordable housing, promote wealth building, enable more inclusive access to banking services and help alleviate homelessness.

We are a vital part of the communities in which we live and work, and we encourage our employees to engage with our local communities by leading or participating in events to foster community development.

We engage in meaningful and effective programs that help increase homeownership, preserve affordable housing, promote wealth building, enable greater access to banking services and help alleviate homelessness.

Information about our Executive Officers

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Dominic Ng 66 Chairman and Chief Executive Officer of the Company and the Bank since 1992.

Christopher J.

Del Moral-Niles

53 Executive Vice President and Chief Financial Officer of the Company and the Bank since October 2023;

2012 - 2022 Executive Vice President and Chief Financial Officer of Associated Bancorp and Associated Bank, N.A.

Oh 46 Executive Vice President and Chief Risk Officer of the Company and the Bank since October 2023;

Executive Vice President and Chief Financial Officer of the Company and the Bank.

Kim 59 Executive Vice President, General Counsel and Corporate Secretary of the Company and the Bank since 2020;

Executive Vice President, General Counsel and Secretary of Cathay General Bancorp and Cathay Bank.

Krause 68 Vice Chairman and Chief Corporate Officer of the Company and the Bank since 2020;

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Executive Vice President, Chief Risk Officer and General Counsel.

Christopher J.

Del Moral-Niles 54 Executive Vice President and Chief Financial Officer of the Company and the Bank since October 2023;

2012 - 2022 Executive Vice President and Chief Financial Officer of Associated Banc-Corp and Associated Bank, N.A.

Kim 60 Executive Vice President, General Counsel and Corporate Secretary of the Company and the Bank since 2020;

Executive Vice President, General Counsel and Secretary of Cathay General Bancorp and Cathay Bank.

Deborah Leerhsen

45 Executive Vice President and Head of Global Banking of the Company and the Bank since December 2024;

Executive General Manager, Institutional Banking & Markets at Commonwealth Bank of Australia;

Deputy Head of Asia & Oceania Corporate Banking, Hong Kong and Singapore at Mizuho Bank Ltd;

Head of Global Banking, Hong Kong at HSBC Holdings plc.

Oh 47 Executive Vice President and Chief Risk Officer of the Company and the Bank since October 2023;

Executive Vice President and Chief Financial Officer of the Company and the Bank.

Parker Shi 55 Executive Vice President and Chief Operating Officer of the Company and the Bank since December 2021;

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Supervision and Regulation

East West and the Bank are subject to extensive and comprehensive regulations under U.S.

East West and the Bank are subject to regulations under U.S.

federal and state laws.

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As a bank holding company, East West is subject to primary regulation, supervision, and examination by the Federal Reserve under the BHC Act.

The Bank is regulated, supervised, and examined by the Federal Reserve, the DFPI, and, with respect to consumer laws, the CFPB.

As the insurer of the Bank’s deposits, the FDIC has back-up examination authority of the Bank as well.

The Bank is regulated, supervised, and examined by the Federal Reserve, the California Department of Financial Protection and Innovation (“DFPI”), and, with respect to consumer laws, the Consumer Financial Protection Bureau (“CFPB’).

As the insurer of the Bank’s deposits, the FDIC has back-up examination and other regulatory authority of the Bank as well.

In addition, the Bank and its wholly-owned subsidiary, East West Bank (China) Limited, are regulated by foreign regulatory agencies in international jurisdictions where we have a presence, including China, Hong Kong and Singapore.

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The BHC Act and other federal statutes grant the Federal Reserve authority to, among other things:

• require periodic reports and such additional information as the Federal Reserve may require in its discretion;

• require bank holding companies to maintain certain levels of capital and, under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), limit the ability of bank holding companies to pay dividends or bonuses unless their capital levels exceed the capital conservation buffer (see the section captioned “Regulatory Capital Requirements” included elsewhere under this item);

• require bank holding companies to serve as a source of financial and managerial strength to subsidiary banks and commit resources, as necessary, to support each subsidiary bank, including at times when bank holding companies may not be inclined to do so, and the failure to do so generally may be considered by the Federal Reserve to be an unsafe and unsound banking practice and a violation of Federal Reserve regulations;

• restrict dividends and other distributions from subsidiary banks to their parent bank holding companies;

• require periodic reports and such additional information as the Federal Reserve may require;

• require bank holding companies to maintain certain levels of capital and restrict dividends and other distributions from bank holding companies and their subsidiaries (see the sections captioned “Regulatory Capital Requirements” and “Dividends and Other Transfers of Funds” included elsewhere under this item);

• require bank holding companies to terminate an activity or terminate control of or liquidate or divest certain nonbank subsidiaries, affiliates or investments if the Federal Reserve believes that the activity, ownership, or control of the nonbank subsidiary or affiliate constitutes a serious risk to the financial safety, soundness or stability of the bank holding company, or if the activity, ownership, or control is inconsistent with the purposes of the BHC Act;

• regulate provisions of certain bank holding company debt, including by imposing interest ceilings and reserve requirements and requiring a bank holding company to obtain prior approval to purchase or redeem its securities in certain situations;

• approve in advance senior executive officer or director changes and prohibit certain golden parachute payments to officers and employees, including change in control agreements and new employment agreements, that are contingent upon termination;

• regulate provisions of certain bank holding company debt, including a bank holding company obtaining prior approval to purchase or redeem its securities in certain situations;

• approve in advance certain senior executive officer or director changes and prohibit certain golden parachute payments to officers and employees, including change in control agreements and new employment agreements, that are contingent upon termination;

• approve in advance the acquisitions of and mergers with bank holding companies, banks and other financial companies, and consider competitive, managerial resources, financial stability and other factors in granting these approvals.

DFPI approval may also be required for certain acquisitions and mergers involving a California state-chartered bank such as the Bank.

East West has elected to be a financial holding company as permitted under the Gramm-Leach-Bliley Act of 1999 (“GLBA”).

Financial holding companies are generally allowed to engage in any activity that the Federal Reserve has determined to be financial in nature or incidental or complementary to activities that are financial in nature, or acquire and retain the shares of a company engaged in any such activity, without prior Federal Reserve approval.

East West has elected to be a financial holding company under the Gramm-Leach-Bliley Act of 1999 (“GLBA”).

Financial holding companies are generally allowed to engage in, or acquire and retain ownership in a company engaged in any activity that the Federal Reserve has determined to be financial in nature or incidental or complementary to activities that are financial in nature, without prior Federal Reserve approval.

Activities that are considered financial in nature include securities underwriting and dealing, insurance agency and underwriting, merchant banking activities and activities that the Federal Reserve, in consultation with the U.S.

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regulators and the applicable regulatory authority in the host country in which each overseas office is located.

Specific federal and state laws and regulations that are applicable to banks monitor, among other things, their regulatory capital levels, the scope of their business, their investments, their reserves against deposits, the timing of the availability of deposited funds, and the nature and amount of collateral for certain loans.

Specific federal and state laws and regulations that are applicable to banks govern, among other things, their regulatory capital levels, the scope of their business, their investments, their reserves against deposits, the timing of the availability of deposited funds, and the nature and amount of collateral for certain loans.

Bank regulatory agencies also have extensive discretion to impose various restrictions on management or operations and to issue policies and guidance in connection with their supervisory and enforcement activities and examination policies.

California law permits state-chartered commercial banks to engage in any activity permissible for national banks, unless such activity is expressly prohibited by state law.

The Bank may also form subsidiaries to engage in many activities commonly conducted by national banks in operating subsidiaries.

Further, pursuant to the GLBA, the Bank may conduct certain “financial” activities in a subsidiary to the same extent permitted for a national bank, provided the Bank is “well capitalized” and “well managed” and has a CRA rating of at least “Satisfactory.”

Regulation of Foreign Subsidiaries and Branches

The Bank’s foreign subsidiary, East West Bank (China) Limited, is subject to applicable foreign laws and regulations, such as those implemented by the PBOC and the NAFR.

East West Bank’s Hong Kong branch is subject to applicable foreign laws and regulations, such as those implemented by the HKMA and the HKSFC.

The Bank’s Singapore representative office is subject to applicable foreign laws and regulations, such as those implemented by the MAS.

The Bank’s foreign subsidiary, East West Bank (China) Limited, is subject to applicable foreign laws and regulations, such as those implemented by the People’s Bank of China and the National Financial Regulatory Administration.

East West Bank’s Hong Kong branch is subject to applicable foreign laws and regulations, such as those implemented by the Hong Kong Monetary Authority and the Hong Kong Securities and Futures Commission.

The Bank’s Singapore representative office is subject to applicable foreign laws and regulations, such as those implemented by the Monetary Authority of Singapore.

Regulatory Capital Requirements

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From time to time, the regulatory agencies propose changes and amendments to, and issue interpretations of, risk-based capital requirements and related reporting instructions.

Such proposals and interpretations could, if implemented in the future, affect our regulatory capital requirements and reported capital ratios.

Pursuant to the five-year transition rule approved by the U.S.

federal banking agencies in March 2020, the effects of the current expected credit loss accounting standard (“CECL”) on the Company’s and the Bank’s regulatory capital were delayed through the year 2021, after which the effects are being phased-in over a three-year period from January 1, 2022 through December 31, 2024.

For additional discussion and disclosure on CECL, see Item 7.

MD&A — Regulatory Capital and Ratios and Note 16 — Regulatory Requirements and Matters to the Consolidated Financial Statements in this Form 10-K.

On July 27, 2023, the federal banking agencies jointly released a proposed rule to implement the international capital standards issued by the Basel Committee on Banking Supervision and known as “Basel III Endgame.” The Basel III Endgame proposal would revise the capital framework applicable to large banking organizations with $100 billion or more in total consolidated assets or with significant trading activity and, if finalized, would likely result in meaningfully increased capital requirements for those organizations.

The Company has total consolidated assets of less than $100 billion and does not have significant trading activity, and therefore would not be subject to the Basel III Endgame requirements if they are finalized as proposed.

However, by imposing additional costs on banking organizations with $100 billion or more in total consolidated assets, this rule proposal could reduce the benefits of growth beyond that size for a banking organization that has less than $100 billion in total consolidated assets, such as the Company.

Such proposals and interpretations could, if implemented, affect our regulatory capital requirements and reported capital ratios.

On July 27, 2023, the federal banking agencies jointly released a proposed rule, known as the “Basel III Endgame,” to implement the international capital standards issued by the Basel Committee on Banking Supervision.

The Basel III Endgame proposal would revise the capital framework applicable to large banking organizations with $100 billion or more in total consolidated assets or with significant trading activity and, if finalized, would likely result in meaningfully increased capital requirements for those organizations.

On September 10, 2024, the Vice Chair for Supervision of the Board of Governors of the Federal Reserve System announced that he will recommend re-proposing the Basel III Endgame rules.

Under the expected re-proposal of the rules, banks with assets between $100 billion and $250 billion would no longer be subject to the Basel III Endgame changes, other than the requirement to recognize unrealized gains and losses of their securities in regulatory capital.

The Company had total consolidated assets of less than $100 billion as of December 31, 2024, and therefore would not be subject to the Basel III Endgame requirements as proposed or as expected to be re-proposed.

However, any Basel III Endgame requirements that are adopted and applied to banking organizations with $100 billion or more in total consolidated assets could reduce the benefits of growth beyond that size for a banking organization that has less than $100 billion in total consolidated assets, such as the Company.

Prompt Corrective Action

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The capital tiers in the PCA framework do not apply directly to bank holding companies (such as the Company);

however, the Federal Reserve is authorized to take action at the bank holding company level based on the undercapitalized status of the bank holding company’s subsidiary banking institution.

Under the federal banking agencies’ regulations implementing the PCA provisions of the FDIA, an IDI (such as the Bank) generally is classified in the following categories based on the capital measures indicated:

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The FDIA also generally permits only “well capitalized” IDIs to accept brokered deposits, although an “adequately capitalized” institution may apply to the FDIC for a waiver of this restriction.

Economic Growth, Regulatory Relief, and Consumer Protection Act and Stress Testing

In May 2018, the enactment of the Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRCPA”) amended certain provisions in the Dodd-Frank Act and other statutes administered by the Federal Reserve and other federal banking agencies.

The EGRRCPA lifted the asset size threshold for many of the Dodd-Frank Act enhanced prudential standards that had previously applied to banks and bank holding companies with total consolidated assets between $50 billion and $100 billion, except for the requirement to maintain a risk committee.

The EGRRCPA also raised the asset size threshold for required company-run stress testing at banks and bank holding companies from $10 billion to $250 billion.

Additionally, based on authority provided in the EGRRCPA, the Federal Reserve raised the asset size threshold for required supervisory stress testing at bank holding companies from $50 billion to $100 billion.

Although the Company and the Bank are not required to conduct company-run or supervisory stress tests, we continue to conduct annual capital and quarterly liquidity stress tests.

Stress Testing

Under the enhanced prudential standards adopted by the Federal Reserve, bank holding companies with $100 billion or more in total assets are subject to supervisory capital stress tests and internal liquidity stress testing requirements.

Although the Company and the Bank are not required to conduct capital or liquidity stress tests, we conduct annual capital and quarterly liquidity stress tests as part of our risk management processes.

Consumer Financial Protection Bureau Supervision

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Failure to comply with federal and state laws prohibiting unfair, abusive, or fraudulent business practices, untrue or misleading advertising and unfair competition, can subject the Bank to various penalties, including, but not limited to, enforcement actions, injunctions, fines or criminal penalties, punitive damages, restitution to consumers, and the loss of certain contractual rights or business opportunities and may also result in significant reputational harm.

On October 22, 2024, the CFPB released a final rule to implement Section 1033 of the Dodd-Frank Act.

Under the final rule, financial institutions are required, upon request, to make available to a consumer or third party authorized by the consumer certain information the Bank has concerning a consumer financial product or service covered by the rule, such as a credit card or a deposit account.

In issuing this rule, the CFPB said that the rule will move the U.S.

closer to an “open banking” system that will allow consumers to switch banks or other providers more easily.

The final rule also requires, among other things, covered data providers, such as the Bank, to establish a developer interface that satisfies certain performance and data security specifications through which the data provider can receive requests for, and provide, specific types of data covered by the rule in an electronic, usable form to authorized third parties directly or through data aggregators.

Under the final rule, the Bank will be prohibited from charging fees for maintaining the developer interface or providing access to such data.

The Bank may also act as an authorized third party to request and access covered data from other financial institutions that are covered data providers.

The final rule places data security, authorization, and other obligations on those authorized third parties, including limitations on secondary uses of the data received.

Industry organizations have challenged the final rule in court and the litigation is ongoing.

If the challenge is not successful, as a data provider, the Bank must comply with the rule beginning April 1, 2027.

We are monitoring the status of the litigation and evaluating the impact of this rule.

The final outcome of any proposed and final rules issued by the CFPB is uncertain as they may conflict with the rulemaking agenda and vision for the bureau under the Trump administration.

Federal Home Loan Bank and the Federal Reserve’s Reserve Requirements

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As an FHLB member, the Bank is required to own a certain amount of capital stock in the FHLB.

The Bank may also access the FHLB for both short- and long-term secured credit.

The Federal Reserve requires all depository institutions to maintain reserves at specified levels against their transaction accounts either in the form of vault cash or an interest-bearing account at the Federal Reserve Bank, or a pass-through account as defined by the Federal Reserve.

Effective March 26, 2020, the Federal Reserve reduced reserve requirement ratios to zero percent, eliminating the reserve requirement for all depository institutions, an action that provides liquidity in the banking system to support lending to households and businesses.

The Bank is a member bank and stockholder of the Federal Reserve Bank of San Francisco (“FRBSF”).

The Bank may also access both short- and long-term secured credit from the FHLB.

The Federal Reserve requires all depository institutions to maintain reserves at specified levels against their transaction accounts either in the form of vault cash or an interest-bearing account at the Federal Reserve Bank (“FRB”), or a pass-through account as defined by the Federal Reserve.

Effective March 26, 2020, the Federal Reserve reduced reserve requirement ratios to zero percent, eliminating the reserve requirement for all depository institutions.

The Bank is a member bank and stockholder of the FRB of San Francisco.

Dividends and Other Transfers of Funds

The principal source of liquidity of East West is dividends received from the Bank.

The Bank is subject to various statutory and regulatory restrictions on its ability to pay dividends.

In addition, the banking agencies may prohibit or limit the Bank from paying dividends, depending upon the Bank’s financial condition, if such payment is deemed to constitute an unsafe or unsound practice.

Federal and California law limit the Bank’s ability to pay dividends to East West.

Regulatory approval is required under federal law if the total of all dividends declared by the Bank in any calendar year would exceed the sum of the Bank’s net income for that year and its retained earnings for the preceding two years.

Federal law also prohibits the Bank from paying dividends that would be greater than its undivided profits unless the Bank has received prior approval from the Federal Reserve.

California law imposes its own limitations on capital distributions by California-chartered banks that could require the Bank to obtain the approval of the DFPI prior to making a distribution to East West.

Furthermore, under the federal PCA regime, the Federal Reserve or FDIC may prohibit a bank holding company from paying any dividends if the holding company’s bank subsidiary is classified as “significantly undercapitalized” or, in some circumstances, “undercapitalized.” It is the Federal Reserve’s policy that a bank holding company should generally pay dividends on common stock only if the company’s net income available to common stockholders over the past four quarters, net of distributions, would be sufficient to fully fund the dividends, and if the prospective rate of earnings retention appears consistent with the company’s capital needs, asset quality and overall financial condition.

It is also the Federal Reserve’s policy that a bank holding company should not maintain dividend levels that undermine the company’s ability to be a financial source of strength to its banking subsidiaries.

The Federal Reserve requires bank holding companies to continuously review their dividend policy in light of their organizations’ financial condition and in compliance with regulatory capital requirements, and has discouraged payment ratios that are at maximum allowable levels, unless both asset quality and capital are strong.

The Federal Reserve requires bank holding companies to continuously review their dividend policy in light of their organizations’ financial condition and in compliance with regulatory capital requirements, and discourages payment ratios that are at maximum allowable levels, unless both asset quality and capital are strong.

Transactions with Affiliates and Insiders

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On October 24, 2023, the federal banking agencies issued a final rule revising their framework for evaluating banks’ records of community reinvestment under the CRA.

Under the revised framework, banks with assets of at least $2 billion, such as the Bank, are considered large banks and their retail lending, retail services and products, community development financing, and community development services will be subject to periodic evaluation.

Depending on a large bank’s geographic distribution of lending, the evaluation of retail lending may include assessment areas in which the bank extends loans but does not operate any deposit-taking facilities, in addition to assessment areas in which the bank has deposit taking facilities.

The rule becomes effective April 1, 2024.

Compliance with most provisions of the final rule will be required beginning January 1, 2026, and compliance with the remaining provisions will be required beginning January 1, 2027.

The Company is evaluating the impact of the final rule.

The final rule provides that banks with assets of at least $2 billion, such as the Bank, are considered large banks and their retail lending, retail services and products, community development financing, and community development services are subject to periodic evaluation.

Under the final rule, depending on a large bank’s geographic distribution of lending, the evaluation of retail lending may include assessment areas in which the bank extends loans but does not operate any deposit-taking facilities, in addition to assessment areas in which the bank has deposit taking facilities.

Industry organizations have challenged the final rule in court, and on March 29, 2024, the United States District Court for the Northern District of Texas granted an injunction and stay of the final rule.

The final outcome of such challenges remains uncertain.

FDIC Deposit Insurance Assessments

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In October 2022, the FDIC adopted a final rule, applicable to all IDIs, to increase the initial base deposit insurance assessment rate schedules uniformly by two basis points (“bps”) to increase the likelihood that the DIF reserve ratio reaches the statutory minimum of 1.35 percent by the statutory deadline of September 30, 2028.

The increase in rates took effect in the first quarterly assessment period of 2023.

The increase in rates took effect in the first quarterly assessment period of 2023 and will remain in effect unless and until the reserve ratio of the DIF meets or exceeds 2 percent.

In November 2023, the FDIC approved a final rule to implement a special deposit insurance assessment to recover losses to the 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 IDI’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 bps.

The Company recognized the entire assessment expense of approximately $70 million in the fourth quarter of 2023.

Depending on future adjustments to the DIF’s estimated loss, the FDIC has retained the ability to cease collection early, extend the special assessment collection period, or impose a one-time final shortfall assessment.

The FDIC will collect the special assessment over eight initial quarterly assessment periods starting with the first quarter of 2024, at a quarterly rate of 3.36 bps.

The Company recognized the entire initial FDIC special assessment charge (the “FDIC charge”) 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 one-time final shortfall assessment.

During 2024, the FDIC updated its estimate of the DIF’s losses and projected that the special assessment would be collected for an additional two quarters beyond the initial eight-quarter collection periods, at an estimated quarterly rate of 1.69 bps.

Accordingly, the Company recognized an additional FDIC charge of $9 million in 2024.

The FDIC may terminate a depository institution’s deposit insurance upon a finding that the institution’s financial condition is unsafe or unsound, that the institution has engaged in unsafe or unsound practices, or that the institution has violated any applicable rule, regulation, condition, or order imposed by the FDIC.

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OFAC publishes lists of persons and organizations suspected of aiding, harboring or engaging in terrorist acts, known as Specially Designated Nationals and Blocked Persons.

Generally, if a bank identifies a transaction or account relating to a person or entity on an OFAC list, it must freeze the account or block the transaction, file a suspicious activity report and notify the appropriate authorities.

Generally, if a bank identifies a transaction or account relating to a person or entity on an OFAC list, it must freeze the account, block or reject the transaction, file a suspicious activity report and/or notify the appropriate authorities.

Failure to comply with these sanctions could have serious legal, compliance, operational, financial, and reputational consequences, and result in civil monetary penalties on the Company and the Bank.

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For example, the interagency council of the federal banking agencies, the Federal Financial Institutions Examination Council (“FFIEC”), has issued several policy statements and other guidance for banks in light of the growing risk posed by cybersecurity threats.

The FFIEC has recently focused on such matters as compromised customer credentials, cyber resilience and business continuity planning.

The FFIEC has continued to focus on such matters as compromised customer credentials, cyber resilience and business continuity planning.

Examinations by the banking agencies now include review of an institution’s information technology and its ability to thwart or mitigate cyber-attacks.

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A new agency, the California Privacy Protection Agency, was established to enforce California privacy law.

The privacy and data protection regime in China is in a period of change and there has been significant activity in the field of privacy and cybersecurity legislation in recent years.

The Personal Information Protection Law (“PIPL”), the Cybersecurity Law and the Data Security Law form a regulatory framework for privacy and data protection in China.

The PIPL establishes guiding principles on the protection of a Chinese citizen’s personal information and applies to entities operating in China, foreign organizations, and individuals processing personal information outside China.

The Cybersecurity Law focuses on cybersecurity concerns and requires network operators to implement measures to safeguard the security of networks and systems.

The Data Security Law complements the PIPL and Cybersecurity Law by addressing broader data security issues, emphasizing the protection of critical data infrastructure and promoting a risk-based approach to data security.

The PIPL establishes guiding principles on the protection of a Chinese citizen’s personal information and applies to entities operating in China.

In limited circumstances, the PIPL also applied to certain processing activities of Chinese citizen’s personal information outside China.

The Cybersecurity Law focuses on cybersecurity concerns and requires network operators to implement measures to safeguard the security of networks and systems in China.

On September 30, 2024, China released the Network Data Security Management Regulation, which becomes effective on January 1, 2025.

The Network Data Security Management Regulation was formulated under the framework pillars of the PIPL and the Cybersecurity Law and provides practical implementation requirements and guidance on various aspects of data compliance, covering both personal information and certain non-personal information categories.

New supporting guidelines and standards are expected as China's cybersecurity, data security, and personal information protection framework continues to evolve.

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Climate-Related Risk Management

In recent years, the federal banking agencies have increased their focus on climate-related risks affecting the operations of banks, the communities they serve and the broader financial system.

The agencies have begun to enhance their supervisory expectations regarding banks’ climate risk management practices, including by proposing guidance that would encourage banking organizations to, among other things:

In recent years, the federal banking agencies increased their focus on climate-related risks affecting the operations of banks, the communities they serve and the broader financial system.

The agencies enhanced their supervisory expectations regarding banks’ climate risk management practices, including by adopting guidance that encourages large banking organizations to, among other things:

evaluate the potential impact of climate-related risks on the bank’s financial condition, operations and business objectives as part of its strategic planning process;

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and prepare for the transition risks to the bank associated with the adjustment to a low-carbon economy and related changes in laws, regulations, governmental policies, technology, and consumer behavior and expectations.

In October 2023, the federal banking agencies released interagency guidance, “Principles for Climate-Related Financial Risk Management for Large Financial Institutions” (the “Principles”), which are intended to encourage banking organizations with $100 billion or more in assets to focus on key aspects of climate-related financial risk management.

The Principles cover six areas:

policies, procedures, and limits;

strategic planning;

risk management;

data, risk measurement, and reporting;

and scenario analysis.

The Principles also describe how large banking organizations should manage climate-related financial risks that can arise in risk categories such as credit, liquidity, and other financial risk, and operational, legal and compliance, and other nonfinancial risk.

While the agencies’ efforts to-date, including the Principles, have focused on banking organizations with $100 billion or more in total assets, their supervisory expectations on climate risk management practices ultimately may apply to smaller banking organizations such as the Bank.

In addition, states such as California, are taking similar actions on climate-related financial risks.

States such as California are taking similar actions on climate-related financial risks.

In October 2023, California Governor Gavin Newsom signed into law Senate Bill 253, the Climate Corporate Data Accountability Act (“CCDAA”) and Senate Bill 261, the Climate-Related Financial Risk Act (“CRFRA”).

The CCDAA is applicable to U.S.-organized entities that do business in California with annual revenue in excess of $1 billion.

Subject to the adoption of implementing regulations by the California Air Resources Board, these entities will need to file annual reports publicly disclosing their direct greenhouse gas (“GHG”) emissions from operations (“Scope 1 emissions”), indirect GHG emissions from energy use (“Scope 2 emissions”) and indirect upstream and downstream supply-chain GHG emissions (“Scope 3 emissions”).

Subject to the adoption of implementing regulations by the California Air Resources Board (“CARB”), these entities will need to file annual reports publicly disclosing their direct greenhouse gas (“GHG”) emissions from operations (“Scope 1 emissions”), indirect GHG emissions from energy use (“Scope 2 emissions”) and indirect upstream and downstream supply-chain GHG emissions (“Scope 3 emissions”).

The reporting requirements related to Scope 1 and 2 emissions will begin in 2026, while the reporting requirements of Scope 3 emissions will begin in 2027.

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The initial round of the climate risk disclosure reports will be due by January 1, 2026.

On September 27, 2024, California Governor Gavin Newsom signed Senate Bill 219 (“SB 219”) into law, which extended the date for the CARB to adopt the regulation for the CCDAA to July 1, 2025.

SB 219 also clarified that reports under the CCDAA would be permitted to be consolidated at the parent company level and that subsidiaries subject to the law would not be required to file separate reports in addition to a parent-level report.

The reporting requirements for Scope 1 and Scope 2 emissions under the CCDAA remain in 2026;

reporting entities will be required to report Scope 3 emissions at a date in 2027 to be specified by the CARB.

The first deadline for required reports under CRFRA remains on or before January 1, 2026.

The Company is a reporting entity under both laws and may incur compliance, maintenance, and remediation costs to conform to such requirements.

Resolution Planning

On June 20, 2024, the FDIC released a final rule that requires covered IDIs to develop and submit detailed plans demonstrating how they could be resolved in an orderly and timely manner in the event of receivership.

IDIs with total assets of $100 billion or more are required to submit full resolution plans, and IDIs with total assets between $50 billion and $100 billion, including the Bank, are required to submit more limited informational filings.

Going forward, the Bank will be required to submit informational filings every three years and interim supplements annually.

Under the final rule, if the FDIC deemed a resolution plan or informational filing not credible and the IDI failed to resubmit a credible plan, the IDI could become subject to an enforcement action.

The Company has established a management-level working group to meet the requirements under the final rule for timely submission on or before October 1, 2025.

Potential Regulatory Reforms

On August 29, 2023, the FDIC released a proposed rule that would require covered IDIs to develop and submit detailed plans demonstrating how they could be resolved in an orderly and timely manner in the event of receivership.

IDIs with total assets of $100 billion or more would be required to submit full resolution plans, and IDIs with total assets between $50 billion and $100 billion, including the Bank, would be required to submit more limited informational filings.

Under the proposal, if the FDIC deemed a resolution plan or informational filing not credible and the IDI failed to resubmit a credible plan, the IDI could become subject to an enforcement action.

The Company is evaluating the impact of this proposal.

The federal banking agencies also jointly released a proposed rule on August 29, 2023 that would require bank holding companies and non-consolidated banks with total assets of $100 billion or more to issue and maintain minimum amounts of long-term debt.

On August 29, 2023, the federal banking agencies jointly released a proposed rule that would require bank holding companies and non-consolidated banks with total assets of $100 billion or more to issue and maintain minimum amounts of long-term debt.

The Company has total consolidated assets of less than $100 billion and would not be subject to the long-term debt requirements if they are finalized as proposed.

However, by imposing additional costs on bank holding companies with $100 billion or more in total consolidated assets, this rule proposal could reduce the benefits of growth beyond that size for a bank holding company that has less than $100 billion in total consolidated assets, such as the Company.

On July 30, 2024, the FDIC issued a proposed rule that would revise the FDIC’s regulations governing the classification and treatment of brokered deposits.

The proposal would require many IDIs to classify a greater amount of their deposits obtained with the involvement of third parties as brokered deposits.

An increase in brokered deposits on the Company’s balance sheet could, among other consequences, increase the Company’s deposit insurance assessment costs.

On September 17, 2024, the U.S.

Department of Justice (the “DOJ”) withdrew its 1995 Bank Merger Guidelines and announced that it will instead evaluate the competitive impact of bank mergers using its 2023 Merger Guidelines that the DOJ applies to mergers in all industries.

Compared to the 1995 Bank Merger Guidelines, the 2023 Merger Guidelines set forth more stringent market concentration limits and add several largely qualitative bases on which the DOJ may challenge a merger.

While the effect of these changes in the DOJ’s bank merger antitrust policy for particular transactions remains unclear, these changes may make it more difficult and/or costly for banks to obtain regulatory approval for an acquisition or otherwise result in more onerous conditions to obtain approval for an acquisition.

On January 20, 2025, President Trump released an executive memo, “Regulatory Freeze Pending Review,” halting all rulemaking processes at executive agencies.

The memo, which does not apply to independent agencies including several federal financial regulators, directs all executive agencies not to propose or issue any rule without the approval of an appointed agency head or the President.

The memo also directs executive agencies to withdraw any rules that have been submitted to the Office of the Federal Register but have not been published.

In addition, the memo directs executive agencies to consider postponing the effective dates of rules that have been finalized and published in the Federal Register, but have not become effective yet.

The Company expects the Trump administration will seek to implement a regulatory reform agenda that is significantly different than that of the Biden administration, which will impact the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies, even if those agencies are not directly subject to the executive memo.

Future Legislation, Regulation and Supervision Activities

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These reports are also available on the SEC’s website at www.sec.gov .

In addition, the Company’s Code of Conduct, Corporate Governance Guidelines, charters of the Audit Committee, Compensation and Management Development Committee, Executive Committee, Risk Oversight Committee and Nominating/Corporate Governance Committee, and other corporate governance materials are available on the Investor Relations section of the Company’s website.

In addition, the Company’s Code of Conduct, Corporate Governance Guidelines, charters of the Audit Committee, Compensation and Management Development Committee, Executive Committee, Risk Oversight Committee (“ROC”) and Nominating/Corporate Governance Committee, and other corporate governance materials are available on the Investor Relations section of the Company’s website.

The information contained on the Company’s website as referenced in this report is not part of this report.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business