What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-02-28 compared with 2024-02-29 · 423 added, 472 removed, 857 unchanged (51% of the section changed)

24 unchanged sentences

Business in this Form 10-K.

Current Developments

Economic Developments

Although recent external data indicates that inflation remains above the Federal Reserve’s 2% target, the steadily slowing pace of inflation could point to receding fears of a recession in 2024.

The likelihood of a “soft landing” scenario appears more likely given the Federal Reserve’s commitment to this outcome.

The Federal Reserve has held interest rates steady over the latter half of 2023 and recently indicated the potential for rate cuts in 2024 and beyond.

However, the higher interest rate environment continues to negatively impact the market value of bank-held securities, and the CRE industry has slowed due to tighter credit conditions and decreased demand.

Other 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 possibility that the Federal Reserve could maintain high interest rates longer than anticipated.

government shutdown was averted in 2023, a future shutdown is possible and could negatively impact the economy.

Current Economic Developments

The Board of Governors of the Federal Reserve System (“Federal Reserve”) cut the Federal Funds Rate by a total of 100 bps through three consecutive cuts in September, November, and December of 2024 in response to the slower pace of inflation demonstrated by external data in the second half of 2024.

The Federal Reserve indicated at its December 2024 meeting that the interest rate cuts in 2025 would likely continue at a slower pace than previously anticipated, which was in line with the January 2025 decision to hold rates steady.

However, concerns over persistent inflation, labor market trends, and the potential impact of the Trump administration’s economic policies may influence the Federal Reserve’s response in 2025.

Elevated interest rates created affordability challenges for many borrowers in 2024.

The CRE market remained under pressure during 2024, primarily from decreased demand for office space, which affected the demand for CRE loans and loan performance.

It is uncertain whether such trends will continue or whether potential U.S.

economic growth in 2025 will include a moderate recovery in real estate investment activity.

The Company monitors changes in economic and industry conditions and their impacts on the Company’s business, customers, employees, communities and markets.

For additional discussion of the potential impacts on the Company’s business due to interest rate hikes, see Item 1A.

Further discussion of the potential impacts on the Company’s business due to the economic environment has been provided in Item 1A.

— Risk Factors — Risks Related to Financial Matters in this Form 10-K.

8 unchanged sentences

Net interest income before provision for credit losses $ 2,278,716 $ 2,312,254

$ 2,312,254 $ 2,045,881

Noninterest income 335,218 295,264

295,264 298,666

Total revenue 2,613,934 2,607,518

2,607,518 2,344,547

Provision for credit losses 174,000 125,000

125,000 73,500

Noninterest expense 958,073 1,022,748

1,022,748 859,393

Income before income taxes 1,481,861 1,459,770

1,459,770 1,411,654

Income tax expense 316,275 298,609

298,609 283,571

$ 1,161,161 $ 1,128,083

Net income $ 1,165,586 $ 1,161,161

Basic earnings $ 8.39 $ 8.23

$ 8.23 $ 7.98

Diluted earnings $ 8.33 $ 8.18

$ 8.18 $ 7.92

Adjusted diluted earnings (1)

$ 8.56 $ 7.92

Dividends declared $ 2.20 $ 1.92

$ 1.92 $ 1.60

Weighted-average number of shares outstanding:

141,164 141,326

141,902 142,492

Basic 138,898 141,164

Diluted 139,958 141,902

Performance metrics:

1 unchanged sentence

Return on average common equity (“ROE”) 15.93 % 17.91 %

17.91 % 19.51 %

Return on average tangible common equity (“TCE”) (1)

1 unchanged sentence

Common dividend payout ratio 26.58 % 23.62 %

23.62 % 20.32 %

Net interest margin 3.27 % 3.61 %

3.61 % 3.45 %

Efficiency ratio (2)

36.65 % 39.22 %

Adjusted efficiency ratio (1)

31.63 % 31.74 %

$ 69,612,884 $ 64,112,150

$ 52,210,898 $ 48,228,074

Total assets $ 75,976,475 $ 69,612,884

Total loans $ 53,726,637 $ 52,210,898

Total deposits $ 63,175,023 $ 56,092,438

$ 56,092,438 $ 55,967,849

Common shares outstanding at period-end 138,437 140,027

6 unchanged sentences

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

The Company’s 2023 net income was $1.2 billion, an increase of $33 million, or 3%, from 2022 net income of $1.1 billion.

The increase was primarily due to higher net interest income before provision for credit losses, partially offset by increases in the noninterest expense, provision for credit losses and income tax expense.

The Company’s 2024 net income was $1.2 billion, a $4 million or 0.4% increase from 2023.

The increase was primarily due to a decrease in noninterest expense and an increase in noninterest income, partially offset by higher provision for credit losses, lower net interest income before provision for credit losses, and higher income tax expense.

Noteworthy items about the Company’s performance for 2024 included:

• Net interest income growth and net interest margin expansion.

Year-over-year net interest income before provision for credit losse s grew by $266 million or 13% to $2.3 billion in 2023, from $2.0 billion in 2022.

Full year 2023 net interest margin was 3.61% , up 16 bps year-ov er-year.

• Net interest income and net interest margin.

Year-over-year net interest income before provision for credit losse s decreased $34 million or 1% to $2.3 billion in 2024.

Full year 2024 net interest margin was 3.27% , a 34 bp decrease year-ov er-year.

• Earnings per share growth.

Basic, diluted and adjusted diluted EPS for 2023 increased to $8.23, $8.18 and $8.56, respectively, compared with $7.98, $7.92 and $7.92, respectively, in 2022.

The adjusted diluted EPS for 2023 excluded the $70 million pre-tax FDIC special assessment-related charge (the “FDIC charge”) incurred as a result of the final rule implemented by the FDIC to recover losses in the DIF, and a net loss of $7 million pre-tax on an AFS debt security.

Adjusted diluted EPS is a non-GAAP financial measure.

For additional details, see the reconciliation of non-GAAP financial measures presented under Item 7.

MD&A — Reconciliation of GAAP to Non-GAAP Financial Measures in this Form 10-K.

• Efficiency ratios.

The e fficiency ratio was 39.22% in 2023, or 257 bps higher compared with 2022, while the adjusted efficiency ratio was 31.63% in 2023, an improvement of 11 bps from 2022.

The higher efficiency ratio in 2023 was due to the FDIC charge discussed above.

Adjusted efficiency ratio is a non-GAAP financial measure.

For additional details, see the reconciliation of non-GAAP financial measures presented under Item 7.

MD&A — Reconciliation of GAAP to Non-GAAP Financial Measures in this Form 10-K.

Full year 2024 basic and diluted EPS each expanded 2% to $8.39 and $8.33, respectively.

• Efficiency ratio improvement.

The efficiency ratio was 36.65% in 2024, a 257 bp improvement compared with 2023.

The improvement in the efficiency ratio primarily reflected a year-over-year decrease in the amortization of tax credit and CRA investments due to the expanded application of the proportional amortization method (“PAM”) since the adoption of Accounting Standards Update (“ASU”) 2023-02, Investments — Equity Method and Joint Ventures on January 1, 2024, and a decrease in the FDIC charge.

• Asset growth.

Total assets reached $69.6 billion, an increase of $5.5 billion or 9% year-over-year, primarily driven by loan growth of $4.0 billion or 8%, and an increase in cash and cash equivalents of $1.1 billion or 33%.

The increase in cash and cash equivalents was primarily funded with borrowings from the Bank Term Funding Program (“BTFP”).

• Loan growth.

Total loans were $52.2 billion as of December 31, 2023, a year-over-year increase of $4.0 billion or 8% from $48.2 billion.

This was primarily driven by growth in the residential mortgage, CRE, and commercial and industrial (“C&I”) loan segments.

Total assets reached $76.0 billion as of December 31, 2024, an increase of $6.4 billion or 9% year-over-year, primarily driven by an increase in AFS debt securities of $4.7 billion or 75%, and loan growth of $1.5 billion or 3%.

• Deposit growth.

Total deposits were $63.2 billion as of December 31, 2024, an increase of $7.1 billion or 13% year-over-year, primarily reflecting growth across the Consumer and Business Banking, and Commercial Banking segments.

• Strong capital levels.

Stockholders’ equity was $7.0 billion or $49.64 per share as of December 31, 2023, up from $6.0 billion or $42.46 per share as of December 31, 2022.

Tangible book value per share of $46.27 as of December 31, 2023, increased $7.17 or 18% from $39.10 as of December 31, 2022.

Stockholders’ equity was $7.7 billion as of December 31, 2024, up from $7.0 billion as of December 31, 2023.

Book value per share of $55.79 as of December 31, 2024, increased $6.15 or 12% from December 31, 2023.

Tangible book value per share of $52.39 as of December 31, 2024, increased $6.12 or 13% from December 31, 2023.

Tangible book value per share is a non-GAAP financial measure.

6 unchanged sentences

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 2023 increased year-over-year, which primarily reflected higher loan yields, increased loan volume, and higher yields on interest-bearing cash and deposits with banks, and AFS debt securities, partially offset by a higher cost of interest-bearing deposits and higher short-term borrowings.

The changes in yields and rates reflected higher benchmark interest rates.

Average interest-earning assets were $64.0 billion in 2023, an increase of $4.7 billion or 8% from $59.3 billion in 2022.

The increase in average interest-earning assets primarily reflected loan growth, and higher interest-bearing cash and deposits with banks, partially offset by decreases in assets purchased under resale agreements (“resale agreements”) and AFS debt securities.

The yield on average interest-earning assets was 5.77% in 2023, an increase of 186 bps from 3.91% in 2022.

The year-over-year increase in the yield on average interest-earning assets primarily resulted from higher benchmark interest rates.

The average loan yield was 6.40% in 2023, an increase of 188 bps from 4.52% in 2022.

The year-over-year change in the average loan yield reflected the loan portfolio’s sensitivity to higher benchmark interest rates.

Approximately 58% and 62% of loans held-for-investment were variable-rate as of December 31, 2023 and 2022, respectively.

Net interest income and net interest margin for 2024 decreased year-over-year, which primarily reflected higher deposit funding costs and shifts in the deposit mix to higher cost time and money market deposits, partially offset by loan growth and higher loan yields, and increases in AFS debt securities’ volume and yield.

Although the Federal Reserve cut interest rates three times since September 2024, the impacts of prior interest rate hikes spurred customers to seek high-yielding time deposits, which increased deposit costs at a faster rate than the increase in loan yields, and resulted in slight pressures on the Company’s net interest margin during 2024.

Average interest-earning assets increased $5.7 billion or 9% to $69.7 billion in 2024.

The yield on average interest-earning assets was 6.01% in 2024, an increase of 24 bps from 2023.

The increases in both the average balance and yield on interest-earning assets primarily reflected loan growth, an increase in AFS debt securities, and higher benchmark interest rates.

The average loan yield was 6.67% in 2024, an increase of 27 bps from 2023.

The year-over-year change in the average loan yield primarily reflected loan growth and the loan portfolio’s sensitivity to higher benchmark interest rates.

Approximately 58% of loans held-for-investment were variable-rate as of both December 31, 2024 and 2023.

Deposits are an important source of funds and impact both net interest income and net interest margin.

Average deposits were $55.0 billion in 2023, an increase of $663 million or 1% from $54.3 billion in 2022.

Average noninterest-bearing deposits were $17.2 billion in 2023, a decrease of $5.6 billion or 25% from $22.8 billion in 2022.

Average deposits of $59.7 billion in 2024, increased $4.7 billion or 9% from 2023.

Average noninterest-bearing deposits of $14.8 billion in 2024, decreased $2.4 billion or 14% from 2023.

Average noninterest-bearing deposits made up 25% and 31% of average deposits for 2024 and 2023, respectively.

The average cost of deposits was 2.19% in 2023, an increase of 173 bps from 0.46% in 2022.

The average cost of interest-bearing deposits was 3.19% in 2023, an increase of 239 bps from 0.80% in 2022.

The year-over-year increases reflected higher rates paid on time deposits, money market and checking deposits, and the customer migration to higher yielding deposit products in response to the higher interest rate environment.

The average cost of deposits was 2.88% in 2024, an increase of 69 bps from 2023.

The average cost of interest-bearing deposits was 3.83% in 2024, an increase of 64 bps from 2023.

These year-over-year increases primarily reflected shifts in the deposit mix to time and money market deposits, and higher deposit costs in response to the interest rate environment.

The average cost of funds calculation includes deposits, short-term borrowings, FHLB advances, assets sold under repurchase agreements (“repurchase agreements”) and long-term debt.

In 2023, the average cost of funds was 2.35%, an increase of 185 bps from 0.50% in 2022.

In 2024, the average cost of funds was 3.02%, an increase of 67 bps from 2023.

The year-over-year increase was mainly driven by the change in the average cost of deposits discussed above.

8 unchanged sentences

Interest-bearing cash and deposits with banks $ 4,936,550 $ 231,794 4.70 % $ 4,638,630 $ 220,643 4.76 % $ 3,127,234 $ 41,113 1.31 %

Resale agreements 691,223 20,164 2.92 % 1,398,080 29,767 2.13 % 2,107,157 32,239 1.53 %

AFS debt securities (1)(2)

Assets purchased under resale agreements (1)

519,263 11,254 2.17 % 691,223 20,164 2.92 % 1,398,080 29,767 2.13 %

Held-to-maturity (“HTM”) debt securities (1)

Debt securities:

8,811,274 399,280 4.53 % 6,105,999 225,592 3.69 % 6,629,945 152,514 2.30 %

C&I 15,499,899 1,190,940 7.68 % 15,013,560 715,778 4.77 % 13,656,720 472,260 3.46 %

CRE 19,824,272 1,227,795 6.19 % 17,896,853 791,839 4.42 % 15,322,059 514,921 3.36 %

Held-to-maturity (“HTM”) (2)

2,935,937 49,785 1.70 % 2,976,237 50,598 1.70 % 2,756,382 46,392 1.68 %

Total debt securities (2)

11,747,211 449,065 3.82 % 9,082,236 276,190 3.04 % 9,386,327 198,906 2.12 %

Commercial and industrial (“C&I”) (2)

16,492,472 1,294,451 7.85 % 15,499,899 1,190,940 7.68 % 15,013,560 715,778 4.77 %

20,316,013 1,292,973 6.36 % 19,824,272 1,227,795 6.19 % 17,896,853 791,839 4.42 %

Residential mortgage 15,504,795 900,514 5.81 % 14,155,784 750,813 5.30 % 12,315,334 538,255 4.37 %

13 unchanged sentences

Money market deposits 13,970,375 525,870 3.76 % 11,680,540 399,482 3.42 % 12,443,437 107,442 0.86 %

Saving deposits 2,128,943 15,573 0.73 % 2,901,940 8,550 0.29 % 2,746,933 7,496 0.27 %

Savings deposits 1,770,041 17,764 1.00 % 2,128,943 15,573 0.73 % 2,901,940 8,550 0.29 %

Time deposits 21,400,834 955,173 4.46 % 16,301,856 611,295 3.75 % 9,473,744 106,038 1.12 %

Federal funds purchased and other short-term borrowings 3,591,114 157,002 4.37 % 81,719 1,801 2.20 % 1,584 42 2.65 %

Total interest-bearing deposits 44,873,078 1,720,174 3.83 % 37,769,753 1,205,550 3.19 % 31,515,321 251,838 0.80 %

Bank Term Funding Program (“BTFP”), short-term borrowings and federal funds purchased

962,061 42,163 4.38 % 3,591,114 157,002 4.37 % 81,719 1,801 2.20 %

FHLB advances 2,752,733 147,269 5.35 % 123,288 6,430 5.22 % 105,966 1,754 1.66 %

Repurchase agreements

3,613 197 5.45 % 34,443 1,497 4.35 % 467,413 14,362 3.07 %

Long-term debt and finance lease liabilities 58,467 4,677 8.00 % 152,790 11,072 7.25 % 152,325 5,595 3.67 %

7 unchanged sentences

Net interest income and net interest margin $ 2,278,716 3.27 % $ 2,312,254 3.61 % $ 2,045,881 3.45 %

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

(1) Includes the average balances and interest income for securities and loans purchased under resale agreements for 2023.

There were no loans purchased under resale agreements for 2024.

(2) Yields on tax-exempt debt securities and loans are not presented on a tax-equivalent basis.

(3) Includes the amortization of net premiums on AFS debt securities of $35 million, $31 million and $72 million for 2024, 2023 and 2022, respectively.

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

(4) Loans include the accretion of net deferred loan fees and amortization of net premiums, which totaled $53 million, $50 million and $62 million for 2023, 2022 and 2021, respectively.

(5) Includes the accretion of net deferred loan fees and amortization of net premiums, which totaled $53 million for each of 2024 and 2023, and $50 million for 2022.

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 affected the Company’s net interest income for the periods presented.

7 unchanged sentences

Interest-bearing cash and deposits with banks $ 11,151 $ 14,019 $ (2,868) $ 179,530 $ 27,977 $ 151,553

Resale agreements (9,603) (18,266) 8,663 (2,472) (12,812) 10,340

AFS debt securities 73,078 (12,895) 85,973 8,531 (32,250) 40,781

HTM debt securities 4,206 3,733 473 46,392 46,392 —

Assets purchased under resale agreements (1)

(8,910) (4,382) (4,528) (9,603) (18,266) 8,663

Debt securities:

AFS 173,688 114,930 58,758 73,078 (12,895) 85,973

HTM (813) (684) (129) 4,206 3,733 473

Total debt securities 172,875 114,246 58,629 77,284 (9,162) 86,446

C&I 103,511 77,492 26,019 475,162 23,900 451,262

10 unchanged sentences

Time deposits 343,878 213,823 130,055 505,257 118,581 386,676

Federal funds purchased and short-term borrowings 155,201 151,725 3,476 1,759 1,767 (8)

Total interest-bearing deposits 514,624 296,148 218,476 953,712 113,685 840,027

BTFP, short-term borrowings and federal funds purchased (114,839) (115,219) 380 155,201 151,725 3,476

FHLB advances 140,839 140,669 170 4,676 330 4,346

2 unchanged sentences

Total interest expense $ 532,929 $ 312,549 $ 220,380 $ 1,106,201 $ 248,644 $ 857,557

Change in net interest income $ 266,373 $ (42,377) $ 308,750 $ 514,310 $ 203,243 $ 311,067

Changes in net interest income

$ (33,538) $ (1,827) $ (31,711) $ 266,373 $ (42,377) $ 308,750

(1) Includes the impact of securities purchased under resale agreements for 2024 , and both securities and loans purchased under resale agreements for 2023 and 2022.

Noninterest Income

2 unchanged sentences

($ in thousands) 2024 2023 % Change from 2023 2022

Lending fees $ 83,876 $ 79,208 6 % $ 77,704

Deposit account fees $ 103,880 $ 93,811 11 % $ 95,177

Customer derivative income 20,200 29,057 (30) % 22,913

Lending fees 98,455 83,876 17 % 79,208

Foreign exchange income 54,605 48,276 13 % 41,416

Wealth management fees 38,627 26,994 43 % 27,738

Customer derivative income 16,401 20,200 (19) % 29,057

Net gains on sales of loans 44 3,634 (99) % 6,411

Net (losses) gains on AFS debt securities (6,862) 1,306 NM 1,568

Net gains (losses) on AFS debt securities

2,069 (6,862) NM 1,306

Other investment income 5,611 9,348 (40) % 7,037

3 unchanged sentences

Noninterest income comprised 13% and 11% of total revenue in 2024 and 2023, respectively.

Noninterest income for 2023 was $295 million, compared with $299 million in 2022.

The decrease was primarily due to lower customer derivative income and net losses on AFS debt securities, partially offset by increases in other income, lending fees, and foreign exchange income.

Lending fees were $84 million in 2023, an increase of $5 million or 6%, compared with $79 million in 2022.

The year-over-year increase was driven by higher unused commitment and letter of credit facility fees.

Customer derivative income was $20 million in 2023, a decrease of $9 million or 30%, compared with $29 million in 2022.

The year-over-year decrease was primarily due to unfavorable credit valuation adjustments, partially offset by higher transaction volume, interest received on derivative collateral posted and energy contract income.

Foreign exchange income was $52 million, an increase of $4 million or 9%, compared with $48 million in 2022.

The year-over-year increase was primarily due to higher gains on foreign exchange trades, partially offset by the unfavorable valuation of certain foreign currency denominated balance sheet items.

Net losses on AFS debt securities of $7 million in 2023 were due to a $10 million write-off of an impaired subordinated AFS debt security during the first quarter of 2023, partially offset by a $3 million gain when the security was sold in the fourth quarter of 2023.

In comparison, net gains on AFS debt securities were $1 million in 2022.

Other income was $16 million in 2023, an increase of $5 million or 41%, compared with $11 million in 2022.

The year-over-year increase was primarily due to higher income from bank-owned life insurance policies.

Noninterest income for 2024 was $335 million, an increase of $40 million compared with 2023.

The increase was primarily due to higher lending, wealth management, and deposit account fees, net gains on AFS debt securities, and foreign exchange income, partially offset by lower customer derivative, other investment income and net gains on sales of loans.

Deposit account fees were $104 million in 2024, an increase of $10 million or 11%, compared with 2023.

The year-over-year increase was primarily due to analysis service fees, which reflected fee increases and customer growth.

Lending fees were $98 million in 2024, an increase of $15 million or 17%, compared with 2023.

The year-over-year increase was primarily due to higher trade finance and commitment fees driven by customer growth, and higher credit enhancement fee income.

Foreign exchange income was $55 million, an increase of $6 million or 13%, compared with 2023.

The year-over-year increase was primarily due to the favorable valuation of certain foreign currency denominated balance sheet items.

Wealth management fees were $39 million in 2024, an increase of $12 million or 43%, compared with 2023.

The year-over-year increase primarily reflected customer demand for higher-yielding products in response to the interest rate environment.

Customer derivative income was $16 million, a decrease of $4 million or 19% compared with 2023.

The year-over-year decrease primarily reflected lower fee income due to decreased customer activity, partially offset by favorable credit valuation adjustments.

Net gains on sales of loans were $44 thousand, a decrease of $4 million, or 99%, compared with 2023.

The 2023 net gain on sales of loans primarily reflected CRE loan sales.

Net gains on AFS debt securities of $2 million in 2024 were due to sale s of U.S.

government agency residential mortgage-backed securities.

In comparison, net losses on AFS debt securities of $7 million in 2023, was due to a $10 million write-off of an impaired subordinated AFS debt security, partially offset by a $3 million gain when the security was subsequently sold.

Other investment income was $6 million in 2024, a decrease of $4 million or 40% compared with 2023.

The year-over-year decrease primarily reflected lower earnings from the Company’s equity method CRA investments.

Noninterest Expense

4 unchanged sentences

Occupancy and equipment expense 64,399 62,763 3 % 62,501

Deposit insurance premiums and regulatory assessments 103,308 19,449 431 % 17,563

Deposit account expense 47,390 43,143 10 % 25,508

Computer software and data processing expenses 44,475 42,776 4 % 46,863

Computer and software related expenses 47,271 44,475 6 % 42,776

Deposit insurance premiums and regulatory assessments 45,736 103,308 (56) % 19,449

Other operating expense 148,301 140,222 6 % 118,166

Amortization of tax credit and other investments 120,299 113,358 6 % 122,457

Amortization of tax credit and CRA investments

54,242 120,299 (55) % 113,358

Total noninterest expense $ 958,073 $ 1,022,748 (6) % $ 859,393

Noninterest expense was $1.0 billion in 2023, an increase of $163 million or 19%, compared with $859 million in 2022.

The increase was primarily due to higher deposit insurance premiums and regulatory assessments, compensation and employee benefits, other operating expense, and deposit account expense.

Compensation and employee benefits were $509 million in 2023, an increase of $31 million or 6%, compared with $478 million in 2022.

The year-over-year increase was primarily due to wage increases and staffing growth.

Deposit insurance premiums and regulatory assessments were $103 million in 2023, an increase of $84 million or 431%, compared with $19 million in 2022.

The year-over-year increase was primarily due to a $70 million FDIC charge incurred as a result of the final rule implemented to recover losses in the DIF following the failures of financial institutions in the first quarter of 2023, and a two bps increase in the base deposit insurance assessment rate under the FDIC’s Amended Restoration Plan.

Deposit account expense was $43 million in 2023, an increase of $18 million or 69%, compared with $26 million in 2022.

The year-over-year increase primarily reflected an increase in deposit referral fees which were driven by higher interest rates and an increase in insured cash sweep product fees due to higher deposit balances.

Such deposit referral fees are variable fees, sensitive to market rates and paid in lieu of interest on a small portion of the Bank’s deposit balances.

Other operating expense was $140 million in 2023, an increase of $22 million or 19%, compared with $118 million in 2022.

The year-over-year increase was primarily due to higher corporate expenses and an increase in interest expense paid on cash collateral, partially offset by a reduction in foreclosure expenses.

Noninterest expense was $1.0 billion in 2024, a decrease of $65 million or 6%, compared with 2023.

The decrease was primarily due to lower amortization of tax credit and CRA investments, and deposit insurance premiums and regulatory assessments, partially offset by higher compensation and employee benefits, and other operating expense.

Compensation and employee benefits were $551 million in 2024, an increase of $42 million or 8%, compared with 2023.

The year-over-year increase was primarily driven by annual merit increases and staffing growth.

Deposit insurance premiums and regulatory assessments were $46 million in 2024, a decrease of $58 million or 56%, compared with 2023.

The year-over-year decrease was primarily due to a $9 million FDIC charge recorded in 2024, compared with the initial $70 million FDIC charge recorded in 2023.

For additional information related to the FDIC charge, see Item 1.

Business — Supervision and Regulation — FDIC Deposit Insurance Assessments in this Form 10-K.

Other operating expense was $148 million in 2024, an increase of $8 million or 6%, compared with 2023.

The year-over-year increase was primarily due to write-downs of other real estate owned (“OREO”).

Amortization of tax credit and CRA investments was $54 million in 2024, a decrease of $66 million or 55%, compared with 2023.

The year-over-year decrease was primarily due to the expanded application of the PAM since the adoption of ASU 2023-02, Investments — Equity Method and Joint Ventures on January 1, 2024, and the timing of tax credit investments that closed in a given period.

For additional information on the PAM, see Note 1 — Summary of Significant Accounting Policies and Note 7 — Affordable Housing Partnership, Tax Credit and Community Reinvestment Act Investments, Net to the Consolidated Financial Statements in this Form 10-K.

The following table presents the income before income taxes, income tax expense and effective tax rate for the periods indicated:

4 unchanged sentences

Effective tax rate 21.3 % 20.5 % 20.1 %

Income tax expense was $299 million in 2023, compared with $284 million in 2022, resulting in an effective tax rate of 20.5% and 20.1%, respectively.

The increase in the income tax expense was primarily related to an increase in pre-tax net income, which was partially offset by an increase in tax credits.

The differences between the 2023 and 2022 effective tax rates from the federal statutory rate of 21% were primarily due to tax credits associated with renewable energy, historic and new market tax credit related projects and state taxes as described in Note 11 — Income Taxes to the Consolidated Financial Statements in this Form 10-K.

Income tax expense for 2024, compared with 2023, increased $18 million or 6%, primarily due to the impacts from the expanded application of PAM on the Company’s tax credit investments following the adoption of ASU 2023-02 on January 1, 2024, partially offset by an increase in tax credits and prior period adjustments in 2023.

The differences between the 2024 and 2023 effective tax rates from the federal statutory rate of 21% were primarily due to state taxes and tax credits associated with renewable energy, historic and new market tax credit related projects as described in Note 11 — Income Taxes to the Consolidated Financial Statements in this Form 10-K.

Operating Segment Results

2 unchanged sentences

(2) Commercial Banking;

and (3) Other.

and (3) Treasury and Other.

These segments are defined by the type of customers served, and the related products and services provided.

1 unchanged sentence

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 (“FTP”) process.

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

Year Ended December 31,

Consumer and Business Banking Commercial Banking Other

($ in thousands) 2023 2022 2021 2023 2022 2021 2023 2022 2021

Total revenue (loss) $ 1,340,938 $ 1,280,989 $ 791,226 $ 1,166,984 $ 1,071,634 $ 929,970 $ 99,596 $ (8,076) $ 96,270

Provision for (reversal of) credit losses 18,422 27,197 (4,998) 106,578 46,303 (30,002) — — —

Noninterest expense 477,622 397,882 364,635 382,865 314,185 275,649 162,261 147,326 155,805

Segment income (loss) before income taxes 844,894 855,910 431,589 677,541 711,146 684,323 (62,665) (155,402) (59,535)

Segment net income $ 596,366 $ 608,120 $ 308,630 $ 478,418 $ 507,467 $ 489,233 $ 86,377 $ 12,496 $ 75,118

During 2024, the Company refined its segment allocation methodology and reclassified certain deposits and their related income or expenses from the “Consumer and Business Banking” segment to the “Commercial Banking” or “Treasury and Other” segments, and certain loan balances and their related income or expenses from the “Commercial Banking” segment to the “Treasury and Other” segment.

Prior years’ balances have been reclassified for comparability.

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:

Other products and services provided by this segment include wealth management, private banking, treasury management, interest rate risk hedging and foreign exchange services.

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

Year Ended December 31,

1 unchanged sentence

($ in thousands) 2024 2023 $ % 2022

Net interest income before provision for (reversal of) credit losses $ 1,238,829 $ 1,170,850 $ 67,979 6 % $ 697,101

Noninterest income 102,109 110,139 (8,030) (7) % 94,125

Total revenue 1,340,938 1,280,989 59,949 5 % 791,226

Provision for (reversal of) credit losses 18,422 27,197 (8,775) (32) % (4,998)

Noninterest expense 477,622 397,882 79,740 20 % 364,635

Total revenue before provision for credit losses

$ 1,260,806 $ 1,329,844 $ (69,038) (5) % $ 1,174,960

Provision for credit losses 8,691 21,454 (12,763) (59) % 25,983

Compensation and employee benefits 217,612 203,387 14,225 7 % 195,394

Other noninterest expense 234,494 262,086 (27,592) (11) % 196,581

Total noninterest expense 452,106 465,473 (13,367) (3) % 391,975

Segment income before income taxes 800,009 842,917 (42,908) (5) % 757,002

3 unchanged sentences

Average deposits $ 30,815,912 $ 28,174,781 $ 2,641,131 9 % $ 27,276,151

Consumer and Business Banking segment net income decreased by $12 million or 2% year-over-year to $596 million in 2023, due to an increase in noninterest expense, partially offset by an increase in net interest income.

Net interest income before provision for credit losses increased $68 million or 6% year-over-year to $1.2 billion.

This increase was primarily driven by higher deposit FTP credits due to the year-over-year increase in market rates.

Noninterest expense increased by $80 million or 20%, to $478 million, primarily due to higher deposit insurance premiums and regulatory assessments from the FDIC charge in the fourth quarter of 2023 and allocated corporate overhead expenses .

Consumer and Business Banking segment net income decreased $32 million or 5% to $563 million in 2024, primarily due to a decrease in net interest income and higher compensation and employee benefits, partially offset by lower other noninterest expense and provision for credit losses.

The decrease in net interest income before provision for credit losses was primarily driven by a higher cost of interest-bearing deposits and a continued shift to interest-bearing products in the deposit mix.

The decrease in provision for credit losses was primarily driven by the improvement in the macroeconomic outlook in the residential mortgage loan sector.

The increase in compensation and employee benefits was primarily driven by annual merit increases and staffing growth.

The decrease in other noninterest expense was primarily driven by lower deposit insurance premiums and regulatory assessments compared with the higher FDIC special assessment charge recognized in 2023.

Commercial Banking

The Commercial Banking segment primarily generates commercial loan and deposit products.

The Commercial Banking segment primarily generates domestic 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:

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

Year Ended December 31,

1 unchanged sentence

($ in thousands) 2024 2023 $ % 2022

Net interest income before provision for (reversal of) credit losses $ 992,519 $ 892,386 $ 100,133 11 % $ 766,202

Noninterest income 174,465 179,248 (4,783) (3) % 163,768

Total revenue 1,166,984 1,071,634 95,350 9 % 929,970

Provision for (reversal of) credit losses 106,578 46,303 60,275 130 % (30,002)

Noninterest expense 382,865 314,185 68,680 22 % 275,649

Total revenue before provision for credit losses

$ 1,323,711 $ 1,284,515 $ 39,196 3 % $ 1,162,523

Provision for credit losses 166,953 100,391 66,562 66 % 48,248

Compensation and employee benefits 234,240 217,663 16,577 8 % 211,355

Other noninterest expense 161,969 158,949 3,020 2 % 102,018

Total noninterest expense 396,209 376,612 19,597 5 % 313,373

Segment income before income taxes 760,549 807,512 (46,963) (6) % 800,902

3 unchanged sentences

Average deposits $ 25,820,956 $ 23,304,066 $ 2,516,890 11 % $ 23,252,073

Commercial Banking segment net income decreased by $29 million or 6% year-over-year to $478 million in 2023.

This decrease was primarily driven by higher noninterest expense and provision for credit losses, partially offset by higher net interest income.

Net interest income before provision for credit losses increased by $100 million or 11% to $993 million, driven by higher loan interest income from commercial loan growth.

Provision for credit losses increased by $60 million or 130% year-over-year to $107 million, primarily driven by loan growth and changes to the macroeconomic outlook.

Noninterest expense increased by $69 million or 22% to $383 million, primarily due to higher deposit insurance premiums and regulatory assessments from the FDIC charge in the fourth quarter of 2023, deposit account expense, and allocated corporate overhead expenses.

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:

Commercial Banking segment net income decreased $35 million or 6% to $536 million in 2024, primarily driven by increases in provision for credit losses and compensation and employee benefits, partially offset by higher noninterest income.

The increase in noninterest income was primarily driven by higher lending and deposit account fees.

The increase in provision for credit losses was primarily driven by higher net charge-offs in the C&I portfolio.

The increase in compensation and employee benefits was primarily driven by annual merit increases and staffing growth.

Treasury and Other

Centralized functions, including the corporate treasury activities of the Company, eliminations of inter-segment amounts, and centrally managed departments, have been aggregated and included in the Treasury and Other segment.

Tax credit investment amortization is recorded in the Treasury and Other segment.

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

Year Ended December 31,

1 unchanged sentence

($ in thousands) 2024 2023 $ % 2022

Net interest income (loss) $ 80,906 $ (17,355) $ 98,261 NM $ 68,268

Noninterest income 18,690 9,279 9,411 101 % 28,002

Total revenue (loss) 99,596 (8,076) 107,672 NM 96,270

Noninterest expense 162,261 147,326 14,935 10 % 155,805

Total revenue (loss) before (reversal of) provision for credit losses

$ 29,417 $ (6,841) $ 36,258 NM $ 7,064

(Reversal of) provision for credit losses

(1,644) 3,155 (4,799) NM (731)

Compensation and employee benefits 98,882 87,488 11,394 13 % 70,886

Other noninterest expense 10,876 93,175 (82,299) (88) % 83,159

Total noninterest expense 109,758 180,663 (70,905) (39) % 154,045

Segment loss before income taxes (78,697) (190,659) 111,962 59 % (146,250)

Income tax benefit (145,413) (186,702) 41,289 22 % (166,597)

Segment net income $ 86,377 $ 12,496 $ 73,881 NM $ 75,118

Segment net income (loss)

$ 66,716 $ (3,957) $ 70,673 NM $ 20,347

Average loans $ 405,897 $ 439,605 $ (33,708) (8) % $ 463,498

Average deposits $ 3,036,171 $ 3,483,884 $ (447,713) (13) % $ 3,771,355

NM — Not meaningful.

The Other segment reported segment loss before income taxes of $63 million and segment net income of $86 million, reflecting an income tax benefit of $149 million in 2023.

The decrease in segment loss before income taxes was primarily driven by higher net interest income.

The $98 million year-over-year increase in net interest income was primarily driven by a higher yield on interest-bearing cash and deposits with banks and debt securities in 2023, partially offset by higher costs of borrowings.

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.

Treasury and Other segment loss before income taxes decreased $112 million in 2024, primarily driven by lower noninterest expense and higher net interest income.

The increase in net interest income was primarily driven by higher interest income from AFS debt securities.

The decrease in noninterest expense was primarily due to lower amortization of tax credit and CRA investments resulting from the expanded application of PAM since the adoption of ASU 2023-02 on January 1, 2024, where the amortization of tax credit and CRA investments were recorded as a component of income tax benefit in this segment.

Income tax expense is allocated to the Consumer and Business Banking and the Commercial Banking segments by applying statutory income tax rates to the respective segment income before income taxes.

The income tax expense or benefit in the Treasury and Other segment consists of the remaining unallocated income tax expense or benefit after allocating income tax expense to the two core segments, and the impact of tax credit investment activity.

Balance Sheet Analysis

9 unchanged sentences

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

December 31, 2023 December 31, 2022 Rating as of December 31, 2023 (1)

December 31, 2024

December 31, 2023

Rating as of December 31, 2024 (1)

($ in thousands) Amortized Cost Fair Value % of Fair Value Amortized Cost Fair Value % of Fair Value AAA/AA A BBB BB and Lower No Rating (2)

5 unchanged sentences

government-sponsored enterprise mortgage-backed securities (3)

8,447,303 8,164,474 75 % 2,488,304 2,195,853 35 % 100 % — % — % — % — %

Municipal securities 287,301 250,153 2 % 297,283 261,016 4 % 99 % — % — % — % 1 %

11 unchanged sentences

government-sponsored enterprise mortgage-backed securities (4)

1,190,221 943,134 39 % 1,235,784 1,004,697 41 % 100 % — % — % — % — %

Municipal securities 187,633 140,542 6 % 188,872 145,791 6 % 100 % — % — % — % — %

3 unchanged sentences

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.

Investment grade debt securities are those with ratings similar to BBB- or above (as defined by NRSROs), and are generally considered by the rating agencies and market participants to be low credit risk.

Ratings percentages are allocated based on fair values.

(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 $7.3 billion of amortized cost and $7.2 billion of fair value as of December 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 $86 million of amortized cost and $68 million of fair value as of December 31, 2024, and $92 million of amortized cost and $75 million of fair value of as of December 31, 2023.

As of December 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 2.4 and 7.0, respectively, compared with 3.6 and 7.5, respectively, as of December 31, 2023.

The modest decreases in both the AFS and HTM effective durations were due to the portfolio seasoning.

The decrease in the AFS effective duration was primarily due to the purchases of floating rate GNMA securities during 2024.

The decrease in the HTM effective duration was due to the portfolio seasoning.

The Company estimated that the effective duration of its AFS debt securities was 3.1 for an instantaneous 100 bp parallel increase and 2.1 for an instantaneous 100 bp parallel decrease as of December 31, 2024.

Available-for-Sale Debt Securities

The fair value of AFS debt securities totaled $6.2 billion as of December 31, 2023, an increase of $153 million or 3% from $6.0 billion as of December 31, 2022.

The increase was primarily due to yield curve movement.

The fair value of AFS debt securities increased $4.7 billion or 75% to $10.8 billion in 2024 from December 31, 2023, primarily due to the purchases of GNMA securities.

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 $659 million as of December 31, 2024, compared with $728 million as of December 31, 2023.

As of both December 31, 2023 and 2022, 97% of the carrying value of the AFS debt securities portfolio was rated investment grade by NRSROs.

As of December 31, 2024 and 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 December 31, 2024 and 2023.

There was no allowance for credit losses provided against the AFS debt securities as of both December 31, 2024 and 2023.

During 2023, the Company recognized $7 million in net losses on AFS debt securities, consisting of a $10 million impairment write-off on a subordinated debt security, partially offset by a $3 million gain on the sale of the same security.

There were no credit losses recognized in earnings for 2022.

Additionally, there were no credit losses recognized in earnings for both 2024 and 2023.

Held-to-Maturity Debt Securities

6 unchanged sentences

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 $52.2 billion as of December 31, 2023, an increase of $4.0 billion, or 8%, from $48.2 billion as of December 31, 2022.

This increase was primarily driven by increases of $1.8 billion or 13% in total residential mortgage loans, $1.4 billion or 7% in total CRE loans, and $870 million or 6% in C&I loans.

The composition of the loan portfolio as of December 31, 2024 was similar to the composition as of December 31, 2023.

19 unchanged sentences

(1) Includes $46 million and $71 million of net deferred loan fees and net unamortized premiums as of December 31, 2024, and 2023, respectively.

(2) Consists of a single-family residential loan as of December 31, 2023 and C&I loans as of December 31, 2022.

The commercial loan portfolio comprised 71% and 72% of total loans as of December 31, 2023 and 2022, 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 $24.6 billion as of December 31, 2023, an increase of $1.8 billion or 8% from $22.8 billion as of December 31, 2022, with a utilization rate of 67% as of December 31, 2023, compared with 69% as of December 31, 2022.

Total C&I loans were $16.6 billion as of December 31, 2023, an increase of $870 million or 6% from $15.7 billion as of December 31, 2022.

Total C&I loans made up 32% and 33% of total loans held-for-investment as of December 31, 2023 and 2022, respectively.

Total C&I loan commitments were $25.8 billion and $24.6 billion as of December 31, 2024 and 2023, respectively, with a utilization rate of 67% as of both dates.

As of December 31, 2024, total C&I loans were $17.4 billion, up $816 million or 5% from December 31, 2023.

The C&I loan portfolio includes loans and financing for businesses across a wide spectrum of industries.

8 unchanged sentences

($ in thousands) Amount % ($ in thousands) Amount %

Private equity $ 2,553,718 16 % Private equity $ 2,238,723 14 %

Real estate investment & management $ 2,381,186 14 % Capital call lending $ 2,171,367 13 %

Capital call lending 2,230,457 13 % Real estate investment & management 1,970,713 12 %

Media & entertainment 2,031,242 12 % Media & entertainment 1,891,199 11 %

Real estate investment & management 1,540,516 9 % Real estate investment & management 1,272,169 8 %

Infrastructure & clean energy 890,307 5 % Manufacturing & wholesale 1,091,933 7 %

Manufacturing & wholesale 803,606 5 % Infrastructure & clean energy 820,095 5 %

Tech & telecom 729,922 4 % Food production & distribution 738,636 5 %

Food production & distribution 655,340 4 % Tech & telecom 618,719 4 %

Hospitality & leisure 576,328 4 % Hospitality & leisure 562,234 4 %

Oil & gas 563,350 3 % Oil & gas 519,784 3 %

Consumer nondurable goods 378,583 2 % Consumer nondurable goods 425,214 3 %

All other C&I 5,998,210 36 % All other C&I 5,581,869 35 %

Manufacturing & wholesale 1,074,073 6 % Financial services 1,136,731 7 %

Financial services 1,005,216 6 % Manufacturing & wholesale 1,110,544 7 %

Infrastructure & clean energy 963,165 5 % Infrastructure & clean energy 1,023,662 6 %

Tech & telecom 770,521 4 % Tech & telecom 729,922 4 %

Healthcare 685,550 4 % Food production & distribution 655,340 4 %

Food production & distribution 664,135 4 % Consumer finance 586,468 4 %

Oil & gas 576,605 3 % Hospitality & leisure 576,328 3 %

Other 5,015,008 29 % Other 4,728,805 29 %

Total C&I $ 17,397,158 100 % Total C&I $ 16,581,079 100 %

(1) Revised prior year’s segmentation to conform with the current year’s categories.

Commercial — Total Commercial Real Estate Loans.

Total CRE loans totaled $20.5 billion as of December 31, 2023, which grew by $1.4 billion, or 7%, from $19.1 billion as of December 31, 2022, and accounted for 39% of total loans held-for-investment as of both December 31, 2023 and 2022.

The total CRE portfolio consists of CRE, multifamily residential, and construction and land loans, and affordable housing lending.

The increase in total CRE loans was driven by well-diversified growth across our major property types, partially offset by a decrease in office CRE loans.

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 December 31, 2024 and 2023.

2 unchanged sentences

($ in thousands) Amount % Amount %

Property type:

Property types:

Multifamily $ 4,953,442 24 % $ 5,023,164 25 %

4,347,032 21 % 4,297,569 21 %

Industrial (1)

3,972,389 20 % 3,997,764 20 %

1 unchanged sentence

2,125,210 11 % 2,271,508 11 %

Healthcare (1)

788,806 4 % 852,362 4 %

2 unchanged sentences

Total CRE loans $ 20,274,944 100 % $ 20,464,112 100 %

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

The weighted-average LTV ratio of the total CRE loan portfolio was 50% as of December 31, 2023, compared with 51% as of December 31, 2022.

Weighted average LTV is based on the most recent LTV, which is based on the latest available appraisal and current loan commitment.

Approximately 91% and 90% of total CRE loans had an LTV ratio of 65% or lower as of December 31, 2023 and 2022, respectively.

The weighted-average LTV ratio of the total CRE loan portfolio was 50% as of both December 31, 2024 and 2023.

Weighted-average LTV is based on the most recent LTV, which considers the latest available appraisal and current loan commitment.

Approximately 91% of total CRE loan commitments had an LTV ratio of 65% or lower as of both December 31, 2024 and 2023.

The following tables provide a summary of the Company’s CRE, multifamily residential, and construction and land loans by geography as of December 31, 2024 and 2023.

1 unchanged sentence

December 31, 2024

($ in thousands) CRE % Multifamily Residential % Construction and Land % Total %

($ in thousands) CRE % Multifamily Residential % Construction and Land % Total CRE %

Geographic markets:

10 unchanged sentences

December 31, 2023

($ in thousands) CRE % Multifamily Residential % Construction and Land % Total %

($ in thousands) CRE % Multifamily Residential % Construction and Land % Total CRE %

Geographic markets:

9 unchanged sentences

Total loans $ 14,777,081 100 % $ 5,023,163 100 % $ 663,868 100 % $ 20,464,112 100 %

As of December 31, 2023 and 2022, 69% and 71%, respectively, of total CRE loans were concentrated in California.

As of both December 31, 2024 and 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 real estate markets, see Item 1A.

Risk Factors — Risks Related to Geopolitical Uncertainties in this Form 10-K.

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 and Risks Related to Financial Matters in this 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 $14.8 billion as of December 31, 2023, compared with $13.9 billion as of December 31, 2022, and accounted for 28% and 29% of total loans held-for-investment as of December 31, 2023 and 2022, respectively.

Interest rates on CRE loans may be fixed, variable or hybrid.

As of December 31, 2023, 58% of our CRE portfolio was variable rate, of which 50% 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.

In comparison, as of December 31, 2022, 65% of our CRE portfolio was variable rate, of which 47% had customer-level interest rate derivative contracts in place.

Loans are underwritten with conservative standards for cash flows, debt service coverage and LTV.

As of December 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 December 31, 2024 and 2023.

2 unchanged sentences

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 as of December 31, 2023, compared with $4.6 billion as of December 31, 2022, and accounted for 10% and 9% of total loans held-for-investment as of December 31, 2023 and 2022, respectively.

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 December 31, 2023, 48% of our multifamily residential portfolio was variable rate, 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.

In comparison, as of December 31, 2022, 57% of our multifamily residential loan portfolio was variable rate, of which 34% had customer-level interest rate derivative contracts in place.

As of December 31, 2024, 50% of our multifamily residential portfolio had variable rates, of which 45% had customer-level interest rate derivative contracts in place.

In comparison, as of December 31, 2023, 48% of our multifamily residential loan 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 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 $664 million as of December 31, 2023, compared with $638 million as of December 31, 2022, and accounted for 1% of total loans held-for-investment as of both dates.

Construction loan exposure was made up of $526 million in loans outstanding and $672 million in unfunded commitments, as of December 31, 2023, compared with $537 million in loans outstanding and $611 million in unfunded commitments as of December 31, 2022.

Construction loan exposure was made up of $506 million in loans outstanding, plus $391 million in unfunded commitments as of December 31, 2024, compared with $526 million in loans outstanding, plus $672 million in unfunded commitments as of December 31, 2023.

Land loans totaled $160 million as of December 31, 2024, compared with $138 million as of December 31, 2023.

39 unchanged sentences

Consumer — Single-Family Residential Loans.

Single-family residential loans totaled $13.4 billion or 26% of total loans held-for-investment as of December 31, 2023, compared with $11.2 billion or 23% of total loans held-for-investment as of December 31, 2022.

Year-over-year, single-family residential loans increased $2.2 billion or 19%, primarily driven by organic growth in mortgages and residential properties in California and New York.

The Company was in a first lien position for all of its single-family residential loans as of both December 31, 2024 and 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 53% as of both December 31, 2023 and 2022.

The weighted-average LTV ratio was 52% and 53% as of December 31, 2024 and 2023, respectively.

These loans have historically experienced low delinquency and loss rates.

1 unchanged sentence

Consumer — Home Equity Lines of Credit.

Total HELOC commitments were $5.2 billion as of December 31, 2023, which decreased by $274 million or 5% from $5.5 billion as of December 31, 2022, with a utilization rate of 33% as of December 31, 2023, compared with 39% as of December 31, 2022.

Total HELOC commitments were $5.3 billion and $5.2 billion as of December 31, 2024 and 2023, respectively, with a utilization rate of 34% as of December 31, 2024, compared with 33% as of December 31, 2023.

Substantially all of the Company’s unfunded HELOC commitments are unconditionally cancellable.

HELOCs outstanding totaled $1.7 billion as of December 31, 2023, compared with $2.1 billion as of December 31, 2022, and accounted for 3% and 5% of total loans held-for-investment as of December 31, 2023 and 2022, respectively.

Year-over-year, HELOCs outstanding decreased $400 million, or 19%.

The Company was in a first lien position for 73% and 77% of total outstanding HELOCs as of December 31, 2024 and 2023, respectively.

The weighted-average LTV ratio was 48% on HELOC commitments as of December 31, 2023, compared with 49% as of December 31, 2022.

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, for which a substantial down payment is required, resulting in a low LTV ratio at origination, typically 65% or less.

First lien HELOC LTV ratios are obtained by dividing the first lien HELOC against the value of the property at origination.

Junior lien HELOCs for which the Bank also holds the first lien loan, are evaluated using combined LTV.

The combined LTV measures the carrying value of the Bank’s loan and available line of credit combined with any outstanding senior liens against the value of the property at origination.

The weighted-average LTV ratio was 46% and 48% as of December 31, 2024 and 2023, respectively.

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.

2 unchanged sentences

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.

The Company conducts 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.

The following table presents the contractual loan maturities by loan category and the contractual distribution of loans to changes in interest rates as of December 31, 2024:

($ in thousands) Due within one year

Due after one year through five years Due after five years through fifteen years Due after fifteen years Total

($ in thousands) Due within one year Due after one year through five years Due after five years through fifteen years Due after fifteen years Total

C&I $ 6,779,126 $ 9,429,395 $ 1,024,787 $ 163,850 $ 17,397,158

17 unchanged sentences

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 December 31, 2024 and 2023:

2 unchanged sentences

Cash and cash equivalents $ 730,227 1 % $ 631,487 1 %

Interest-bearing deposits with banks $ — — % $ 28,772 0 %

AFS debt securities (1)

11 unchanged sentences

(1) Comprised of U.S.

Treasury securities and foreign government bonds as of both December 31, 2023 and 2022.

government agency and U.S.

government-sponsored enterprise mortgage-backed securities, U.S.

Treasury securities, and foreign government bonds as of December 31, 2024;

comprised of U.S.

Treasury securities and foreign government bonds as of December 31, 2023.

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

13 unchanged sentences

On March 3, 2020, the Company’s Board of Directors authorized the repurchase of $500 million of the Company’s common stock.

During the fourth quarter of 2023, the Company repurchased $82 million of common stock or 1,506,091 shares, at an average price of $54.56 per share.

In comparison, the Company repurchased $100 million of common stock or 1,385,517 shares, at an average price of $72.17 per share in 2022.

The total remaining available capital authorized for repurchase as of December 31, 2023 was $172 million.

The Company’s stockholders’ equity was $7.0 billion as of December 31, 2023, an increase of $966 million or 16% from $6.0 billion as of December 31, 2022.

The increase in the Company’s stockholders’ equity was primarily due to 2023 net income of $1.2 billion, partially offset by cash dividends declared of $274 million.

The Company repurchased $144 million of common stock or 1,943,346 shares, at an average cost of $74.33 per share in 2024.

In comparison, the Company repurchased $82 million of common stock or 1,506,091 shares, at an average cost of $54.56 per share in 2023.

As of December 31, 2024, the total remaining amount under the repurchase authorization was $29 million, excluding excise taxes and commissions.

In addition, on January 22, 2025, East West’s Board of Directors authorized the repurchase of up to an additional $300 million East West stock.

The Company’s stockholders’ equity as of December 31, 2024 increased $772 million or 11% to $7.7 billion from December 31, 2023.

The increase was primarily due to $1.2 billion of net income, partially offset by $310 million of cash dividends declared and $144 million of common stock repurchases.

For other factors that contributed to the changes in stockholders’ equity, refer to Item 8.

Financial Statements — Consolidated Statement of Changes in Stockholders’ Equity in this Form 10-K.

Book value was $49.64 per common share as of December 31, 2023, an increase of 17% from $42.46 per common share as of December 31, 2022, primarily due to the factors described above.

Tangible book value per share was $46.27 as of December 31, 2023, compared with $39.10 as of December 31, 2022.

For additional details, see the reconciliation of non-GAAP measures presented under Item 7.

MD&A — Reconciliation of GAAP to Non-GAAP Financial Measures in this Form 10-K.

The Company paid a cash dividend of $1.92 per share in 2023, compared with $1.60 per share in 2022, an increase of 20%.

In January 2024, the Company’s Board of Directors declared a first quarter 2024 cash dividend of $0.55 per share, which represents a 15% increase or seven cents per share, from the previous quarterly cash dividend of $0.48 per share.

The Company paid a cash dividend of $2.20 per share in 2024, an increase of 15% from 2023.

In January 2025, the Company’s Board of Directors declared a first quarter 2025 cash dividend of $0.60 per share, which represents a 9% or five cents per share increase from the previous quarter.

The dividend was paid on February 17, 2025, to stockholders of record as of February 3, 2025.

2 unchanged sentences

Additional funding is provided by short- and long-term borrowings, and long-term debt.

MD&A — Risk Management — Liquidity Risk Management — Liquidity in this Form 10-K for a discussion of the Company’s liquidity management.

MD&A — Risk Management — Liquidity Risk Management in this Form 10-K for a discussion of the Company’s liquidity management.

The following table summarizes the Company’s sources of funds as of December 31, 2024 and 2023:

7 unchanged sentences

Total deposits $ 63,175,023 100 % $ 56,092,438 100 % $ 7,082,585 13 %

Short-term borrowings $ 4,500,000 97 % $ — — % $ 4,500,000 100 %

Repurchase agreements — — % 300,000 67 % (300,000) (100) %

BTFP borrowings

$ — — % $ 4,500,000 97 % $ (4,500,000) (100) %

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

Long-term debt 32,001 1 % 148,249 3 % (116,248) (78) %

Total other funds $ 4,648,249 100 % $ 447,950 100 % $ 4,200,299 NM

Total other funds $ 3,532,001 100 % $ 4,648,249 100 % $ (1,116,248) (24) %

Total sources of funds $ 66,707,024 $ 60,740,687 $ 5,966,337 10 %

NM — Not meaningful.

The Company’s strategy is to grow and retain relationship-based deposits to provide a stable and low-cost source of funding and liquidity.

1 unchanged sentence

As a result, we believe our deposit base is seasoned, stable and well-diversified.

The following chart presents the Company’s deposits by customer segment as of December 31, 2023 and 2022.

Total deposits were $56.1 billion as of December 31, 2023, a slight increase of $125 million from $56.0 billion as of December 31, 2022.

The increase in deposits was primarily driven by an increase in customer deposits, partially offset by a decrease in brokered deposits.

The Company paid down a portion of its brokered deposits, which decreased the percentage of brokered deposits to 3% of total deposits as of December 31, 2023, compared with 6% as of December 31, 2022.

Noninterest-bearing demand deposits decreased $5.5 billion year-over-year and comprised 28% and 38% of total deposits as of December 31, 2023 and 2022, respectively.

Time deposits increased $4.7 billion year-over-year and comprised 32% and 24% of total deposits as of December 31, 2023 and 2022, respectively.

The shift in deposit mix is primarily due to customer migration to higher yielding deposit products in response to the higher interest rate environment.

As of December 31, 2023, customer deposits of $52.9 billion were held in the Company’s domestic offices and $1.6 billion were held in each of the subsidiary bank in China and the branch in Hong Kong.

Total deposits of $63.2 billion as of December 31, 2024 increased $7.1 billion or 13%, compared with the prior year, primarily due to growth in time and money market deposits.

The following table provides a breakdown of the Company’s deposits by segment and region as of December 31, 2024 and 2023:

($ in thousands)

December 31, 2024

December 31, 2023

Deposits by segment/region:

Consumer and Business Banking - U.S.

$ 32,832,926 $ 28,571,255 $ 4,261,671 15 %

Commercial Banking - U.S.

23,405,769 22,059,662 1,346,107 6 %

International Branches (2)

3,412,262 3,172,222 240,040 8 %

Treasury and Other - U.S.

3,524,066 2,289,299 1,234,767 54 %

Total deposits $ 63,175,023 $ 56,092,438 $ 7,082,585 13 %

(1) Excludes deposits presented under International Branches.

(2) Deposits of our Hong Kong branch and China subsidiary, primarily a subset of Commercial Banking segment deposits.

(3) Treasury and Other segment deposits reflect wholesale, public funds, and brokered deposits, primarily managed by the Company’s Treasury department.

Customer deposit accounts in the U.S.

17 unchanged sentences

Total $ 11,420,548 $ 1,002,949 $ 1,036,718 $ 13,460,215

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 Company’s domestic uninsured deposits, excluding collateralized and affiliate deposits, ratio improved to 42% as of December 31, 2023, compared with 51% as of December 31, 2022.

The Company is a participant in the IntraFi Network, a network that offers deposit placement services such as CDARS and ICS, that qualify large deposits for FDIC insurance.

These reciprocal deposit structures provide protection to depositors by fully insuring deposits with other network banks and give the Company additional funding stability.

The increasing use of these products during 2023 contributed to the improvement in the uninsured deposits, excluding collateralized and affiliate deposits ratio.

Uninsured deposits, per regulatory requirements represent the portion of deposit accounts in U.S.

offices that exceed the FDIC insurance limit as reported on Schedule RC-OM item 2 of the Bank’s Call Report.

Management believes that presenting uninsured domestic deposits 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 December 31, 2024 and 2023, after certain adjustments:

4 unchanged sentences

Uninsured deposits, excluding collateralized and affiliate deposits (a) $ 27,500,479 $ 22,469,675

Total domestic deposits per the Call Report (b) $ 53,486,990 $ 53,225,764

Total domestic deposits per Call Report (b) $ 60,326,394 $ 53,486,990

Uninsured deposits, excluding collateralized and affiliate deposits, ratio (a) / (b) 46 % 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 7 — MD&A — Results of Operations — Net Interest Income in this Form 10-K.

See also the discussion of the impact of deposits on liquidity in Item 7.

MD&A — Liquidity Risk Management in this Form 10-K.

Other Sources of Funding

The Company had $4.5 billion of short-term borrowings outstanding as of December 31, 2023, consisting of funds borrowed from the BTFP in March 2023.

These borrowings were more cost effective than other borrowing sources and have a positive carry as cash placed at the Federal Reserve Bank.

There were no short-term borrowings outstanding as of December 31, 2022.

Refer to Note 10 — Short-Term Borrowings and Long-Term Debt to the Consolidated Financial Statements in this Form 10-K for additional information on the BTFP and the Company’s related borrowings.

Repurchase agreements were $300 million as of December 31, 2022.

The Company extinguished $300 million of repurchase agreements during the first quarter of 2023, and recorded $4 million of charges related to the extinguishment of repurchase agreements.

For additional details, see Note 3 — Assets Purchased under Resale Agreements and Sold under Repurchase Agreements to the Consolidated Financial Statements in this Form 10-K.

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.

Refer to Note 10 — Short-Term Borrowings and Long-Term Debt and Note 19 — Subsequent Events to the Consolidated Financial Statements in this Form 10-K for additional information on the junior subordinated debt.

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 December 31, 2024, compared with no FHLB advances as of December 31, 2023.

FHLB advances as of December 31, 2024 had fixed and floating interest rates ranging from 3.87% to 4.61% with remaining maturities between 2 months and 2.0 years.

The Company’s 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-K for additional information on the junior subordinated debt.

Regulatory Capital and Ratios

2 unchanged sentences

Business — Supervision and Regulation — Regulatory Capital Requirements and Regulatory Capital-Related Development in this 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 rule that 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.

The measurement of the allowance for credit losses is based on management’s best estimate of lifetime expected credit losses inherent in the Company’s relevant financial assets in accordance with ASU 2016-13.

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 December 31, 2024 reflect a delay of 25% of the estimated impact of CECL on regulatory capital.

2 unchanged sentences

December 31, 2024 December 31, 2023

Company East West Bank Company East West Bank Minimum Regulatory Requirements Minimum Regulatory Requirements including Capital Conservation Buffer Well-Capitalized Requirements

Company Bank Company Bank Minimum Regulatory Requirements Minimum Regulatory Requirements including Capital Conservation Buffer Well-Capitalized Requirements

Risk-based capital ratios:

6 unchanged sentences

10.4 % 9.8 % 10.2 % 9.6 % 4.0 % 4.0 % 5.0 %

(1) The CET1 capital and Tier 1 leverage well-capitalized requirements apply only to the Bank since there is no CET1 capital component or Tier 1 leverage ratio component in the definition of a well-capitalized bank holding company.

(1) The CET1 capital and Tier 1 leverage well-capitalized requirements apply to the Bank only.

There is no requirement on CET1 capital ratio or Tier 1 leverage ratio for 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.

1 unchanged sentence

As of both December 31, 2024 and 2023, the Company and the Bank continued to exceed all “well-capitalized” capital requirements and the required minimum capital requirements under the Basel III Capital Rules.

Total risk-weighted assets were $53.7 billion as of December 31, 2023, compared with $50.0 billion as of December 31, 2022.

The increase in risk-weighted assets was primarily due to growth across all major loan portfolios.

Total risk-weighted assets as of December 31, 2024 increased $1.3 billion to $54.9 billion from December 31, 2023, primarily due to growth across major loan portfolios.

Risk Management

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 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.

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 which are more specific to the Company’s business.

The Company operates under a Board-approved ERM program.

The Company’s ERM program outlines the company-wide approach to risk management and oversight, and describes the structures and practices employed to manage 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 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 Risk Oversight Committee provides focused oversight of the Company’s identified enterprise risk categories on behalf of the full Board of Directors.

Under the direction of the Risk Oversight Committee, management committees apply targeted strategies to manage the risks to which the Company’s operations are exposed.

credit, liquidity, market, operational, reputational, legal, compliance, BSA/AML & OFAC, strategic, and technology risk.

The ROC of the Board of Directors monitors the ERM program through such identified enterprise 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 first line of defense is comprised of revenue generating, operational and support units.

The second line of defense is comprised of risk management and control functions that provide independent risk oversight of first line activities and report to the Chief Risk Officer.

The Chief Risk Officer reports to both the ROC and the Chief Executive Officer.

The third line of defense is comprised of the Internal Audit and Independent Asset Review (“IAR”) functions.

1 unchanged sentence

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 Board’s Risk Oversight Committee (“ROC”).

IAR provides management and the ROC with an objective and independent assessment of the Bank’s credit profile and credit risk management process.

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 is the risk that a borrower or a counterparty will fail to perform according to the terms and conditions of a loan, investment or derivative 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 identified enterprise risk categories including credit risk.

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.

1 unchanged sentence

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 ROC, 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.

The Senior Credit Supervision function also 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 validation of support to the Company’s robust 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.

The Company assesses the overall performance and credit quality 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:

5 unchanged sentences

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

($ in thousands) December 31, 2023 December 31, 2022 $ %

($ in thousands) December 31, 2024

December 31, 2023

Criticized loans:

9 unchanged sentences

(2) Excludes loans held-for-sale.

Criticized loans increased $195 million or 20%, to $1.2 billion from December 31, 2023, primarily driven by an increase in criticized CRE loans.

Nonperforming Assets

Nonperforming assets are comprised of nonaccrual loans, other real estate owned (“OREO”) and other nonperforming assets.

Nonperforming assets are comprised of nonaccrual loans, 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 $114 million or 0.16% of total assets as of December 31, 2023, an increase of $14 million or 14%, compared with $100 million or 0.16% of total assets as of December 31, 2022.

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

($ in thousands) December 31, 2023 December 31, 2022 $ %

($ in thousands) December 31, 2024

December 31, 2023

C&I $ 86,165 $ 37,036 $ 49,129 133 %

CRE 2,430 23,249 (20,819) (90) %

Multifamily residential 4,669 169 4,500 NM

Multifamily residential 4,572 4,669 (97) (2) %

Construction and land 11,316 — 11,316 100 %

Total CRE 18,318 27,918 (9,600) (34) %

5 unchanged sentences

Total nonaccrual loans 159,018 102,874 56,144 55 %

OREO, net 11,141 270 10,871 NM

OREO, net 35,077 11,141 23,936 215 %

Total nonperforming assets $ 194,095 $ 114,015 $ 80,080 70 %

2 unchanged sentences

Allowance for loan losses to nonaccrual loans 441.49 % 650.06 %

NM — Not meaningful.

Loans are generally placed on nonaccrual status when they become 90 days past due or when the full collection of principal or interest becomes uncertain regardless of the length of past due status.

Loans are generally placed on nonaccrual status at the earlier of when they become 90 days past due or when the full collection of principal or interest becomes uncertain regardless of the length of past due status.

Collectability is generally assessed based on economic and business conditions, the borrower’s financial condition and the adequacy of collateral, if any.

For additional details regarding the Company’s nonaccrual loan policy, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Loans Held-for-Investment to the Consolidated Financial Statements in this Form 10-K.

Nonaccrual loans were $103 million and $100 million as of December 31, 2023 and 2022, respectively.

Increases in single-family, multifamily residential and HELOC nonaccrual loans were predominantly offset by higher charge-offs of C&I loans.

Nonaccrual loans of $159 million as of December 31, 2024 increased $56 million or 55% from December 31, 2023, primarily driven by an increase in C&I nonaccrual loans.

As of December 31, 2024, $49 million or 31% of nonaccrual loans were less than 90 days delinquent.

2 unchanged sentences

Total Accruing Past Due Loans (1)

Change Percentage of

Total Loans Outstanding

($ in thousands) December 31, 2023 December 31, 2022 $ % December 31, 2023 December 31, 2022

Change Percentage of Total Loans Outstanding

($ in thousands) December 31, 2024

December 31, 2023

$ % December 31, 2024

December 31, 2023

C&I $ 22,855 $ 35,649 $ (12,794) (36) % 0.13 % 0.21 %

13 unchanged sentences

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 judgements used to determine the allowance for credit losses, see Item 7.

The Company maintains its allowance for credit losses at a level it believes is 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, Note 1 — Summary of Significant Accounting Policies and Note 6 — Loans Receivable and Allowance for Credit Losses to the Consolidated Financial Statements in this Form 10-K.

The following table presents an allocation of the allowance for loan losses by loan portfolio segments as of the periods indicated:

The following table presents an allocation of the allowance for loan losses by loan portfolio segments and unfunded credit commitments as of the periods indicated:

($ in thousands) Allowance Allocation % of Loan Type to Total Loans Allowance Allocation % of Loan Type to Total Loans

33 unchanged sentences

Total $ 138,618 $ 52,366,440 0.26 % $ 46,254 $ 49,542,927 0.09 %

2023 net charge-offs were $46 million, or 0.09% of average loans held-for-investment, compared with $18 million, or 0.04% of average loans held-for-investment in 2022.

The increase was primarily due to higher losses in the C&I and construction and land portfolios, as well as lower recoveries in the C&I portfolio.

These increases were partially offset by lower charge-offs in the multifamily residential and CRE portfolios.

Liquidity Risk Management

6 unchanged sentences

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.

These guidelines are established and monitored for both the Bank and East West on a stand-alone basis to ensure that East West 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 believes its liquidity management practices have been effective under normal operating and stressed market conditions.

The Company also maintains a Contingency Funding Plan that utilizes early-warning indicators that will be monitored to provide timely detection of adverse liquidity situations and enable management to promptly respond.

The Contingency Funding Plan describes the procedures, roles and responsibilities, and communication protocols for managing any identified emerging liquidity problem.

Management monitors the early-warning indicators defined in the Contingency Funding 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 indicators are triggered, management will evaluate the severity of the emerging liquidity problem and exercise appropriate management actions to address any liquidity and funding shortfalls.

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.

1 unchanged sentence

The Company’s loan-to-deposit ratio was 85% as of December 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 FRBSF, such as under the BTFP, 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.

In addition to deposits, the Company has access to various sources of wholesale financing, including borrowing capacity with the FHLB and FRB, 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, the FRBSF discount window, and the FRBSF BTFP as collateral.

Unencumbered loans and/or debt securities are pledged to the FHLB and the FRB 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.

Eligibility of collateral is defined in guidelines from the FHLB and FRB and is subject to change at their discretion.

— MD&A — Balance Sheet Analysis — Deposits and Other Sources of Funding in this Form 10-K 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 operated below its established risk limits for liquidity measures as of December 31, 2024.

Accordingly, the Company believes the cash and cash equivalents, and available collateralized 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 borrowing capacity as of December 31, 2023 and 2022:

The following table presents the Company’s total cash and cash equivalents and collateralized borrowing capacity as of December 31, 2024 and 2023:

($ in thousands) December 31, 2024 December 31, 2023 $ %

1 unchanged sentence

Interest-bearing deposits with banks 48,198 10,498 37,700 359 %

Borrowing capacity:

Collateralized borrowing capacity:

FHLB 9,928,152 12,373,002 (2,444,850) (20) %

FRBSF 9,830,769 2,049,048 7,781,721 380 %

Unpledged available securities 1,988,526 6,939,591 (4,951,065) (71) %

Federal funds facility 946,000 1,136,000 (190,000) (17) %

FRB 12,383,005 9,830,769 2,552,236 26 %

Unpledged available debt securities

7,819,531 1,988,526 5,831,005 293 %

Total $ 35,429,628 $ 28,817,779 $ 6,611,849 23 %

The Company’s cash and cash equivalents and borrowing capacity totaled $29.8 billion as of December 31, 2023, compared with $26.5 billion as of December 31, 2022.

The increase was primarily related to an increase in collateral available at the FRBSF and an increase in cash and cash equivalents, which was funded by borrowings from the BTFP in the first quarter of 2023.

The BTFP borrowings were secured by pledged securities and reflected the Company’s conservative liquidity management practices in response to the volatility in the banking industry earlier in the year.

Liquidity Risk — Cash Requirements.

The Company’s cash and cash equivalents and collateralized borrowing capacity increased to $35.4 billion as of December 31, 2024, compared with $28.8 billion as of December 31, 2023.

The increase was primarily related to increases in unpledged available debt securities and available borrowing capacity at the FRB due to the repayment of BTFP borrowings.

This increase was partially offset by a decrease in available borrowing capacity at the FHLB, primarily due to the increase in FHLB advances.

Deposit growth during 2024 allowed the Company to grow its debt securities portfolio, which was a primary driver of the increase in unpledged available securities.

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 the following Notes to the Consolidated Financial Statements in this Form 10-K:

• Note 3 — Assets Purchased under Resale Agreements and Sold under Repurchase Agreements

• Note 7 — Investments in Qualified Affordable Housing Partnerships, Tax Credit and Other Investments, Net and Variable Interest Entities

• Note 7 — Affordable Housing Partnership, Tax Credit and Community Reinvestment Act Investments, Net

• Note 9 — Deposits

• Note 10 — Short-Term Borrowings and Long-Term Debt

In January 2024, the Company provided notice that it would redeem $113 million of the principal face value of junior subordinated debt and $4 million of the principal face value of trust preferred securities issued by the East West Capital Trusts.

Of these amounts, $16 million was redeemed in February 2024 and the remaining $101 million is scheduled to be redeemed in March 2024.

The Company also has off-balance sheet arrangements which represent transactions that are not recorded on the Consolidated Balance Sheet.

2 unchanged sentences

The Company does not expect the total commitment amounts as of December 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 12 — Commitments and Contingencies to the Consolidated Financial Statements in this Form 10-K.

Additional information about the Company’s loan commitments, commercial letters of credit and SBLCs is provided in Note 12 — Commitments and Contingencies to the Consolidated Financial Statements in this Form 10-K.

The Consolidated Statement of Cash Flows summarizes the Company’s sources and uses of cash by type of activity for 2024, 2023 and 2022.

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.

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.

4 unchanged sentences

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.

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.

1 unchanged sentence

In addition, Company specific events are incorporated into the stress testing.

For example, based on the Company’s analysis of the banking industry disruption earlier in 2023, deposit runoffs were assumed to be more front-loaded to trigger earlier remediation actions.

Liquidity stress tests are conducted to ascertain potential mismatches between liquidity sources and uses over a variety of time horizons, both immediate and longer term, and over a variety of stressed conditions.

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 December 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.

Given the 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.

3 unchanged sentences

The Company is primarily exposed to interest rate risk through its core business activities of extending loans and acquiring deposits.

The Risk Oversight Committee of the Company’s Board of Directors has primary oversight responsibility and has given the ALCO the task of market risk management.

The ROC of the Company’s Board of Directors has primary oversight responsibility and has given the ALCO the task of market risk management.

The ALCO establishes guidelines, risk measures and limits, and monitors compliance with the policies and risk limits pertaining to market risk management activities.

15 unchanged sentences

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”).

The Company uses a dynamic balance sheet, incorporating expected forward growth and/or deposit product mix shift to perform the interest rate sensitivity analyses.

The simulated interest rate scenarios include an instantaneous parallel shift in the yield curve and a gradual parallel shift in the yield curve (“linear 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.

In the third quarter of 2024, the Company transitioned its net interest income volatility simulations from a static to a dynamic balance sheet approach and adopted market forward rates instead of flat forward rates.

This change better reflects the interest rate risk on the Company’s financial statements.

Furthermore, the Company standardized its simulation scenarios by shifting from non-parallel to parallel shocks for both instantaneous and gradual net interest income simulations, as well as for economic value of equity (“EVE”) simulations.

This alignment with industry-standard scenario definitions is intended to enhance interpretability and comparability.

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.

This model also incorporates various assumptions, which management believes to be reasonable but 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.

The modeled results are highly sensitive to deposit mix and deposit beta assumptions, which are derived from a regression analysis of the Company’s historical deposit data.

Simulation results are highly dependent on modeled behaviors and input assumptions.

4 unchanged sentences

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.

Changes to key model assumptions are reviewed by the Technical ALCO, a subcommittee of ALCO.

Scenario results do not reflect strategies that the management could employ to limit the impact of changing interest rate expectations.

4 unchanged sentences

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 (“EFFR”).

The Company recalibrated its deposit repricing models and betas in December 2022, and qualitatively increased the long run (through the cycle) betas during 2023 to better reflect increased competition and higher terminal fed funds rates than previously observed in the historical data.

Overall, the Company observed a weighted-average increase of approximately 17% during the year to total deposit beta of 51% as of December 31, 2023.

These increases reflected the Company’s forward-looking views of deposit rates given the expected EFFR at the time.

The Company also modified deposit balance runoff models in December 2022, to better capture behavioral differences across product and customer types and carved out stable and non-stable balances to reflect the volatility and interest rate sensitivity of such deposit balances.

The assumptions used for the identification of stable balances were updated in June and September 2023 to reflect a larger portion of potential non-stable balances.

The assumptions for the identification of stable balances had no significant updates in December 2023.

Additionally, to reflect changes in interest expense due to the shift from noninterest-bearing to interest-bearing accounts in the deposit mix, the Company utilized a qualitative assumption in March 2023.

This assumption considered the amount of surplus noninterest-bearing deposits assumed to be rate sensitive and migrated them to interest-bearing deposits.

This assumption was included in the net interest income volatility simulations to reflect more realistic net interest income volatility in rising rate scenarios.

The qualitative assumption was enhanced in June 2023 with a more robust quantitative approach.

This updated approach incorporated internally observed historical data reflecting the evolution of noninterest-bearing deposits as a percent of total deposits, based on the historical behavior observed during the prior rising interest rate cycle.

The assumption forecasts that a portion of noninterest-bearing deposits would migrate to interest-bearing certificates of deposits as the 12-month moving average of the overnight indexed swap rate increases.

No further enhancements to the deposit mix assumption were made in December 2023.

In the net interest income simulations, the Company also makes assumptions on the yield related to the re-investment of investment securities and the yields on new loan originations.

These assumptions are updated quarterly to reflect recent market conditions as well as forward-looking expectations but generally do not have significant impact to NII sensitivity.

During 2023, loans and deposits with cash flows indexed to China related benchmark interest rates were removed from the interest rate scenario shocks.

The associated change to the net interest income sensitivity was insignificant.

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 deposit beta, which defines the sensitivity of deposit rates to changes in the effective federal funds rate, is a key parameter of the deposit rate forecast.

For the year ended December 31, 2024, the Company assumed a weighted-average beta of 55% for total deposits, an increase of approximately 4% from December 31, 2023.

This increase was primarily due to deposit beta assumption updates and deposit product mix changes.

As loan and debt 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 that captures 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.

During 2023, the Company updated its version of the asset liability management simulation tool and vendor prepayment model.

This change updated the calibration of the vendor model to better fit recent data and better supported the transition from London Interbank Offered Rate (“LIBOR”) to Secured Overnight Financing Rate (“SOFR”) indexed loans.

Overall, the update had minimal impact on forecasted prepayments.

During 2023, the Company updated the vendor prepayment model tuning factors to slow down prepayment speeds on single-family residential mortgages so that it better aligned with actual and expected prepayments.

During the third quarter of 2023, the Company replaced the U.S.

dollar (“USD”) LIBOR Swap curve and rates with the respective SOFR Swap and SOFR reference rates.

This change had a minimal impact on the overall results of net interest income and economic value of equity (“EVE”) simulations as the overall yields and discount rates were not impacted.

Twelve-Month Net Interest Income Simulation

3 unchanged sentences

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 December 31, 2023 and 2022, 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.

The following table presents the Company’s net interest income sensitivity related to an instantaneous and sustained parallel shift in market interest rates by 100 and 200 bps as of December 31, 2024 and 2023, on a balance sheet assuming market implied forward rates and a dynamic balance sheet with forecasted loan and deposit growth on the date of analysis.

Net Interest Income Volatility (1)

4 unchanged sentences

-200 (7.4) % (6.7) %

(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.

(1) The percentage change represents net interest income change over a 12-month period under market forward rates and expected balance sheet growth as of the analysis date versus 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 decreased as of December 31, 2023.

This decrease reflected updates to the deposit repricing assumptions and deposit product mix.

Noninterest-bearing deposit account balances are assumed to be sensitive to interest rate levels and migrate to interest-bearing deposit accounts.

In the table above, the net interest income volatility expressed in relation to base-case net interest income increased in both rising and decreasing rate scenarios as of December 31, 2024.

This change reflects deposit product mix assumptions, which assume noninterest-bearing deposits decrease in higher interest rate environments and are replaced with term deposit products.

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.

The rate ramp table below shows the net interest income volatility under a gradual parallel shift of the market implied forward rates, in even monthly increments over the first 12 months, with the full shift passed through to the forward rates thereafter.

The results are based on a dynamic balance sheet with expected loan and deposit growth as of the date of the analysis.

Net Interest Income Volatility

4 unchanged sentences

-200 Rate ramp (4.6) % (3.8) %

As of December 31, 2023, the Company’s net interest income profile reflects a modestly 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.

As of December 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 Secured Overnight Financing Rate (“ SOFR”) indices.

The Company’s interest income is sensitive to changes in short-term interest rates.

As of December 31, 2023 , 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 1.6% 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.

As of December 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 1.30% of the base net interest income for every 100 bp change in interest rate .

A majority of the Company’s deposit portfolio is 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.

3 unchanged sentences

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.

This calculation is used for asset/liability management and measures changes in the present 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.

3 unchanged sentences

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 December 31, 2023 and 2022.

The non-parallel shift scenarios were calibrated internally based on historical analysis.

The following table presents the Company’s EVE sensitivity related to an instantaneous parallel shift in market interest rates by 100 and 200 bps as of December 31, 2024 and 2023.

Economic Value of Equity Volatility (1)

4 unchanged sentences

-200 9.5 % 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.

(1) The percentage change represents net present value change of the balance sheet as of the analysis date versus the various interest rate scenarios.

As of December 31, 2024, the Company’s EVE is expected to decrease when interest rates rise.

The change in EVE sensitivity was due to shorter deposit durations as a result of deposit modeling assumptions, slower prepayments on fixed-rate mortgages and mortgage-backed securities, and additional cash flow hedges to reduce net interest income volatility.

The EVE sensitivity represents a duration mismatch between fixed-rate assets versus fixed-rate liabilities where more fixed- rate assets are expected to produce more stable net interest income in the short term but may lead to decreases in net present value of future cash flows.

It is the Company’s policy not to speculate on the future direction of interest rates, foreign currency exchange rates and commodity prices.

3 unchanged sentences

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 USD equivalent value of a designated monetary amount of the Company’s net investment in East West Bank (China) Limited.

Prior to entering into any accounting hedge activities, the Company analyzes the costs and benefits of the hedge in comparison to alternative strategies.

Foreign exchange derivatives are used in net investment hedging strategies to mitigate the risk of changes in the U.S.

dollar (“USD”) equivalent value of a designated monetary amount of the Company’s net investment in East West Bank (China) Limited.

Prior to entering any accounting hedge 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.

1 unchanged sentence

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.

The Company is subject to credit risk associated with the counterparties to 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.

1 unchanged sentence

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.

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 (“RPAs”).

Certain derivative contracts are required to be cleared through central counterparty clearing houses, 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 valuation 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 December 31, 2024, the Company anticipates performance by all 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 December 31, 2024 and 2023.

December 31, 2023 December 31, 2022

($ in thousands) Interest Rate Contracts Hedging Loans (1)

Interest Rate Contracts Hedging Borrowings (2)

Interest Rate Contracts Hedging Loans (1)

Interest Rate Contracts Hedging Borrowings (2)

The Company does not have active net investment hedges as of December 31, 2024:

December 31, 2024

Weighted Average

($ in thousands) Notional Amount

Fair Value Assets (Liabilities)

Floating Rate

(1) Remaining Term (In months)

Cash flow hedges

Notional amount $ 4,000,000 (3)(4)

Derivative Contracts Hedging Loans:

Interest rate swaps - Receive fixed pay floating $ 4,000,000 $ (27,294) 4.95 % 6.47 % 23.8

Interest rate swaps - Receive fixed pay floating -

Forward Starting 1,000,000 (2,054) 3.90 % N/A (2) 67.8

Interest rate collars - Buy floor sell cap 250,000 (216) Cap:

1.50% 4.55 % 17.0

Total cash flow hedges

$ 5,250,000 $ (29,564)

December 31, 2023

Weighted Average

Receive rate 4.95 % NA 4.91 % 3.83 %

Pay rate 7.32 % NA 6.23 % 0.48 %

Remaining term (in months) 35.8 NA 46.6 3.2

($ in thousands) Foreign Exchange Contracts Foreign Exchange Contracts

Net investment hedges

Notional amount $ 81,480 $ 84,832

Hedged percentage (5)

($ in thousands) Notional Amount

Fair Value Assets (Liabilities)

Fixed Rate Floating Rate

(1) Remaining Term (In months)

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) Represents receive-floating/pay-fixed interest rate swaps.

Floating rate received was based on three-month LIBOR.

The hedge was terminated during the first quarter of 2023.

(3) Excludes interest rate collars in total notional amount of $250 million as of both December 31, 2023 and 2022.

(4) Excludes forward-starting swaps in total notional amount of $1.0 billion, which were not effective as of December 31, 2023.

(5) Represents percentage between the notional of outstanding foreign exchange contracts and the net RMB exposure from East West Bank (China) Limited.

Cash flow hedges

Derivative Contracts Hedging Loans:

Interest rate swaps - Receive fixed pay floating $ 4,000,000 $ 6,489 4.95 % 7.32 % 35.8

Interest rate swaps - Receive fixed pay floating -

Forward Starting 1,000,000 32,101 3.90 % N/A (2) 79.8

Interest rate collars - Buy floor sell cap 250,000 (1,293) Cap:

1.50% 5.34 % 29.0

Total cash flow hedges

$ 5,250,000 $ 37,297

Net investment hedges

Derivative Contracts Hedging Net Investment in

East West Bank (China) Limited

Foreign exchange forwards

$ 81,480 $ 3,394 6.75 (3) 7.05 (4) 2.7

(1) Floating rates are indexed to SOFR or Prime.

(2) The swaps are forward starting and not effective as of both December 31, 2024 and 2023.

(3) Represents the weighted average strike foreign exchange rate between Chinese Yuan (“CNY”) and USD.

(4) Represents the weighted average market foreign exchange rate between CNY and USD as of December 31, 2023.

Additional information on the Company’s derivatives is presented in Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Derivatives, Note 2 — Fair Value Measurement and Fair Value of Financial Instruments, and Note 5 — Derivatives to the Consolidated Financial Statements in this Form 10-K.

11 unchanged sentences

Changes in the Company’s assumptions and economic forecasts could significantly affect its estimate of expected credit losses, which could potentially lead to significant changes in the estimate from one reporting period to the next.

For further discussion on the economic forecast incorporated into the 2023 model, see Item 7.

MD&A — Risk Management — Credit Risk Management — Allowance for Credit Losses.

For further discussion on the economic forecast incorporated into the 2024 model, see Note 6 — Loans Receivable and Allowance for Credit Losses to the Consolidated Financial Statements in this Form 10-K.

The allowance for credit losses is sensitive to changes in macroeconomic forecast assumptions.

3 unchanged sentences

Without considering model overlays and qualitative adjustments which could result in a materially different estimate, this sensitivity analysis would have been approximately $483 million higher.

This analysis demonstrates the sensitivity to the allowance for credit losses to key quantitative assumptions and is not intended to estimate changes in the overall allowance for credit losses as it does not capture all the potential unknown variables that could arise in the forecast period, but it provides an approximation of a possible outcome under hypothetical severe conditions.

This analysis demonstrates the sensitivity to the allowance for credit losses to key quantitative assumptions and is not intended to estimate changes in the overall allowance for credit losses as it does not capture all the potentially unknown variables that could arise in the forecast period, but it provides an approximation of a possible outcome under hypothetical severe conditions.

Management believes that the estimate for the allowance for credit losses was reasonable and appropriate as of December 31, 2024.

2 unchanged sentences

Changes in fair value are recorded either through earnings or other comprehensive income (loss).

Other financial instruments, such as certain individually evaluated loans held-for-investment, loans held-for-sale, investments in qualified affordable housing partnerships, tax credit and other investments, OREO and other nonperforming assets, are not carried at fair value each period but may require nonrecurring fair value adjustments primarily due to application of lower of cost or fair value accounting or write-downs of individual assets.

Other financial instruments, such as certain individually evaluated loans held-for-investment, loans held-for-sale, affordable housing partnership, tax credit and CRA investments, OREO and other nonperforming assets, are not carried at fair value each period but may require nonrecurring fair value adjustments primarily due to application of lower of cost or fair value accounting or write-downs of individual assets.

In determining the fair value of financial instruments, the Company uses market prices of the same or similar instruments whenever such prices are available.

Changes in the market conditions such as reduced liquidity in the capital markets or changes in secondary market activities, may increase variability or reduce the availability of market prices used to determine fair value.

Changes in market conditions, such as reduced liquidity in the capital markets or changes in secondary market activities, may increase variability or reduce the availability of market prices used to determine fair value.

If observable market prices are unavailable or impracticable to obtain, then fair value is estimated using modeling techniques such as discounted cash flows analysis.

These modeling techniques incorporate management’s assessments regarding assumptions that market participants would use in pricing the asset or the liability, including the risks inherent in a particular valuation technique and the risk of nonperformance.

These modeling techniques incorporate management’s assessments regarding the assumptions that market participants would use in pricing the asset or the liability, including the risks inherent in a particular valuation technique and the risk of nonperformance.

The use of methodologies or assumptions different than those used by the Company could result in different estimates of fair value of financial instruments.

14 unchanged sentences

The valuation and testing methodologies used in the Company’s analysis of goodwill impairment are discussed in Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Goodwill, Note 8 — Goodwill, and Note 17 — Business Segments to the Consolidated Financial Statements in this Form 10-K .

The Company performed its annual goodwill impairment test on all three reporting units using a combination of income and market approaches to estimate the fair value of each reporting unit.

The Company performed its annual goodwill impairment test on all three reporting units using a qualitative assessment.

The qualitative test indicated that it was more likely than not that the fair values of all the Company’s reporting units exceeded their carrying values.

The Company concluded that the goodwill allocated to its reporting units was not impaired as of December 31, 2024.

The fair value of each reporting unit exceeded its carrying amount and there was no indication of a significant risk of goodwill impairment based on current projections.

Analyzing goodwill includes consideration of various factors that continue to evolve and for which significant uncertainty remains, including estimates of the profitability of the Company’s reporting units, long term growth rates and the estimated market cost of equity, such as the discount rate and price multiples of comparable companies.

Imprecision in estimating these factors can affect the estimated fair value of the reporting units.

Certain events or circumstances could have a negative effect on the estimated fair value of the reporting units, including declines in business performance, increases in credit losses, as well as deterioration in economic or market conditions and adverse regulatory or legislative changes, which could result in a material impairment charge to earnings in a future period.

In evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company assesses relevant events and circumstances such as macroeconomic conditions, industry and market considerations, financial performance, the Company’s stock price and other relevant entity- and reporting-unit specific considerations.

The Company files income tax returns in the jurisdictions in which it conducts business and evaluates income tax expense in two components:

7 unchanged sentences

These changes, when they occur, impact tax expense and can materially affect our operating results and financial condition.

The Company reviews its tax positions on a quarterly basis and makes adjustments to accrued taxes as new information becomes available.

The Company reviews its tax positions on a quarterly basis and adjusts to accrued taxes as new information becomes available.

The Company believes that adequate provisions have been recorded for all income tax uncertainties consistent with ASC 740, Income Taxes as of December 31, 2024 .

7 unchanged sentences

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.

The non-GAAP financial measures discussed in this Form 10-K are return on average TCE, adjusted efficiency ratio, adjusted diluted EPS, and tangible book value per share.

The non-GAAP financial measures discussed in this Form 10-K are return on average TCE 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.

2 unchanged sentences

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 reconciliation of U.S.

The following tables present the reconciliations of U.S.

GAAP to non-GAAP financial measures for 2024 and 2023 :

5 unchanged sentences

Tax effect of amortization adjustments (1)

(914) (966) (1,274)

Tangible net income (non-GAAP) (b) $ 1,166,515 $ 1,163,338

6 unchanged sentences

Return on average TCE (non-GAAP) (b)/(d) 17.05 % 19.35 %

Year Ended December 31,

($ in thousands) 2023 2022 2021

Net interest income before provision for (reversal of) credit losses (a) $ 2,312,254 $ 2,045,881 $ 1,531,571

Total noninterest income 295,264 298,666 285,895

Total revenue (b) $ 2,607,518 $ 2,344,547 $ 1,817,466

Noninterest income $ 295,264 $ 298,666 $ 285,895

Net loss on AFS debt security (3)

Adjusted noninterest income (non-GAAP) (c) 302,126 298,666 285,895

Adjusted revenue (non-GAAP) (a)+(c)=(d) $ 2,614,380 $ 2,344,547 $ 1,817,466

Total noninterest expense (e) $ 1,022,748 $ 859,393 $ 796,089

Amortization of tax credit and other investments (120,299) (113,358) (122,457)

Amortization of core deposit intangibles (1,763) (1,865) (2,749)

FDIC charge (4)

Repurchase agreements’ extinguishment cost (5)

Adjusted noninterest expense (non-GAAP) (f) $ 826,828 $ 744,170 $ 670,883

Efficiency ratio (e)/(b) 39.22 % 36.65 % 43.80 %

Adjusted efficiency ratio (non-GAAP) (f)/(d) 31.63 % 31.74 % 36.91 %

Year Ended December 31,

($ and shares in thousands, except per share data) 2024 2023

Net income (a) $ 1,161,161 $ 1,128,083 $ 872,981

FDIC charge (4)

Net loss on AFS debt security (3)

Tax effect of adjustment (1)

Adjusted net income (non-GAAP) (b) $ 1,215,293 $ 1,128,083 $ 872,981

Diluted weighted-average number of shares outstanding (c) $ 141,902 $ 142,492 $ 143,140

Diluted EPS (a)/(c) 8.18 7.92 6.10

FDIC charge (4)

Net loss on AFS debt security (3)

Adjusted diluted EPS (non-GAAP) (b)/(c) $ 8.56 $ 7.92 $ 6.10

(1) Applied statutory rate of 29.56% for 2023, 29.37% for 2022, and 28.77% for 2021.

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

(3) Represents the net loss related to an AFS debt security that was written-off in the first quarter of 2023 and subsequently sold during the fourth quarter of 2023.

(4) During the fourth quarter of 2023, the Company recorded $70 million pre-tax FDIC charge (included in Deposit insurance premiums and regulatory assessments on the Consolidated Statement of Income).

(5) In 2023, the Company prepaid $300 million of repurchase agreements and incurred a debt extinguishment cost of $4 million.

($ and shares in thousands, except per share data) 2023 2022 2021

Stockholders’ equity (a) $ 7,723,054 $ 6,950,834

6 unchanged sentences

Tangible book value per share (non-GAAP) (b)/(c) $ 52.39 $ 46.27

(1) Applied statutory rate of 29.73% for 2024 and 29.56% for 2023.

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

There were no core deposit intangibles in 2024.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

3 unchanged sentences

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 7. Management’s Discussion and Analysis