10-K – 2026-02-27 – ewbc-20251231.htm

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.

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The following table presents the allowance for credit losses allocated by loan portfolio segments, debt securities and unfunded credit commitments as of the periods indicated:

December 31,
2025 2024
($ in thousands) Allowance Allocation  % of Loan Type to Total Loans Allowance Allocation % of Loan Type to Total Loans
ALLL
Commercial:
C&I $ 475,613  33 % $ 384,319  32 %
CRE:
CRE 221,494  27 % 218,677  28 %
Multifamily residential 36,555  9 % 32,117  9 %
Construction and land 15,468  1 % 17,497  1 %
Total CRE 273,517  37 % 268,291  38 %
Total commercial 749,130   70 % 652,610   70 %
Consumer:
Residential mortgage:
Single-family residential 53,463  27 % 44,816  27 %
HELOCs 5,804  3 % 3,132  3 %
Total residential mortgage 59,267  30 % 47,948  30 %
Other consumer 1,376  0 % 1,494  0 %
Total consumer 60,643   30 % 49,442   30 %
Total ALLL $ 809,773   100 % $ 702,052   100 %
Allowance for debt securities $ 1,900   $ —  
Allowance for unfunded credit commitments $ 48,690   $ 39,526  
Total allowance for credit losses $ 860,363   $ 741,578  
Loans held-for-investment $ 56,878,172  $ 53,726,637 
ALLL to loans held-for-investment 1.42 % 1.31 %

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The following table presents net charge-offs and the net charge-offs to average loans ratios based on the loan categories as of the periods indicated:

December 31,
2025 2024
($ in thousands) Net Charge-Offs (Recoveries) Average Loans Held-for-Investment % of Net Charge-Offs (Recoveries) to Average Loans Held-for-Investment
Net Charge-Offs (Recoveries) Average Loans Held-for-Investment % of Net Charge-Offs (Recoveries) to Average Loans Held-for-Investment
Commercial:
C&I $ 34,275  $ 17,440,477  0.20  % $ 118,908  $ 16,490,180  0.72  %
CRE:
CRE 24,008  15,003,349  0.16  % 13,823  14,587,444  0.09  %
Multifamily residential (52) 4,991,171  0.00  % (426) 5,061,821  (0.01) %
Construction and land 1,984  715,283  0.28  % 2,086  666,748  0.31  %
Total CRE 25,940  20,709,803  0.13  % 15,483  20,316,013  0.08  %
Total commercial 60,215   38,150,280   0.16   % 134,391   36,806,193   0.37   %
Consumer:
Residential mortgage:
Single-family residential (249) 14,571,485  0.00  % 26  13,753,247  0.00  %
HELOCs (16) 1,848,861  0.00  % (58) 1,751,500  0.00  %
Total residential mortgage (265) 16,420,346  0.00  % (32) 15,504,747  0.00  %
Other consumer (111) 47,456  (0.23) % 4,259  55,500  7.67  %
Total consumer (376) 16,467,802   0.00   % 4,227   15,560,247   0.03   %
Total $ 59,839   $ 54,618,082   0.11   % $ 138,618   $ 52,366,440   0.26   %

Liquidity Risk Management

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

The ROC has primary oversight responsibility over liquidity risk management. At the management level, the Company’s Asset/Liability Committee (“ALCO”) establishes the liquidity guidelines that govern the day-to-day active management of the Company’s liquidity position by requiring sufficient asset-based liquidity to cover potential funding requirements and avoid over-dependence on volatile, less reliable funding markets. These guidelines are established and monitored for both the Bank and East West on a stand-alone basis to ensure that 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 Company believes its liquidity management practices have been effective under normal operating and stressed market conditions.

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The Company also maintains a Contingency Funding Plan that utilizes early-warning indicators that are 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 — Deposits. The Company’s primary source of funding is from deposits, generated by its banking business, which we believe is a relatively stable and low-cost source of funding. Our loans are funded by deposits, which amounted to $67.1 billion as of December 31, 2025, compared with $63.2 billion as of December 31, 2024. The Company’s loan-to-deposit ratio was 85% as of both December 31, 2025 and 2024. See Item 7. — MD&A — Balance Sheet Analysis — Deposits in this Form 10-K for further details related to the Company’s deposits.

Other Liquidity Sources. In addition to deposits, the Company has access to various sources of wholesale financing, including borrowing capacity with the FHLB and FRB discount window, FRB Standing Repurchase Agreement Facility (“SRF”), 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.

Sources of funding included $3.0 billion and $3.5 billion of FHLB advances as of December 31, 2025 and 2024, respectively. As of December 31, 2025, the FHLB advances were comprised of an overnight advance of $250 million with an interest rate of 4.02% and $2.8 billion of term advances that had fixed and floating interest rates ranging from 3.87% to 4.01% and with remaining maturities of six days to one year. The Company also held long-term debt of $32 million in the form of junior subordinated debt as of both December 31, 2025 and 2024, which qualifies as Tier 2 capital for regulatory capital purposes. Refer to Note 10 — Federal Home Loan Bank Advances and Long-Term Debt to the Consolidated Financial Statements in this Form 10-K for additional information on the junior subordinated debt.

The Company has pledged loans and/or debt securities to the FHLB and the FRB discount window as collateral. Additionally, effective in the third quarter of 2025, the Company prepositioned unpledged debt securities as collateral for overnight repurchase agreements at the FRB SRF. 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 FRB and is subject to change at their discretion. The Company operated below its established risk limits for liquidity measures as of December 31, 2025. Accordingly, the Company believes the cash and cash equivalents, and available collateralized borrowing capacity described below provide sufficient liquidity above its expected cash needs.

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The Company maintains its sources of liquidity in the form of cash and cash equivalents, unpledged and prepositioned debt securities, and secured borrowing capacity with eligible loans and debt securities pledged as collateral. The following table presents the Company’s total available liquidity as of December 31, 2025 and 2024:

Change
($ in thousands) December 31, 2025 December 31, 2024 $ %
Cash and cash equivalents $ 4,188,139  $ 5,250,742  $ (1,062,603) (20) %
Interest-bearing deposits with banks 16,189  48,198  (32,009) (66) %
Unused secured borrowing capacity from:

FHLB 11,849,692  9,928,152  1,921,540  19  %
FRB (1)
13,235,104  12,383,005  852,099  7  %
Unpledged and prepositioned securities

Unpledged securities
6,326,512  7,819,531  (1,493,019) (19) %
Securities prepositioned for FRB SRF (2)
4,581,604  —  4,581,604  NM
Total available liquidity
$ 40,197,240   $ 35,429,628   $ 4,767,612   13   %

NM — Not meaningful.
(1) The Company had no outstanding borrowings with the FRB as of December 31, 2025 and 2024.
(2) The Company enrolled as an eligible counterparty with the FRB SRF in the third quarter of 2025.

The Company’s total available liquidity increased to $40.2 billion as of December 31, 2025, compared with $35.4 billion as of December 31, 2024. The increase in borrowing capacity was primarily due to an increase in total securities available to be pledged or prepositioned and loans pledged, as well as a decrease in FHLB advances outstanding.

Cash Requirements. In the ordinary course of business, the Company enters into 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 7 — Affordable Housing Partnership, Tax Credit and Community Reinvestment Act Investments, Net
• Note 9 — Deposits
• Note 10 — Federal Home Loan Bank Advances and Long-Term Debt

The Company also has off-balance sheet arrangements which represent transactions that are not recorded on the Consolidated Balance Sheet. The Company’s off-balance sheet arrangements include (1) commitments to extend credit, such as loan commitments, commercial letters of credit for foreign and domestic trade, standby letters of credit (“SBLCs”), and financial guarantees, to meet the financing needs of its customers, (2) future interest obligations related to customer deposits and the Company’s borrowings, and (3) transactions with unconsolidated entities that provide financing, liquidity, market risk or credit risk support to the Company, or engage in leasing, hedging or research and development services with the Company. A portion of these commitments are expected to expire unused or only partially used, therefore the total commitment amounts do not necessarily represent future cash requirements. The Company does not expect the total commitment amounts as of December 31, 2025 to have a material current or future impact on the Company’s financial conditions or results of operations. 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 2025, 2024 and 2023. Excess cash generated by operating and investing activities may be used to repay outstanding debt or invest in liquid assets.

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Liquidity for East West. In addition to bank level liquidity management, the Company manages liquidity at the parent company level for various operating needs including payment of dividends, repurchases of common stock, principal and interest payments on its borrowings, acquisitions and additional investments in its subsidiaries. East West’s primary source of liquidity is from cash dividends distributed by its subsidiary, East West Bank. The Bank is subject to various statutory and regulatory restrictions on its ability to pay dividends as discussed in Item 1 . Business — Supervision and Regulation — Dividends and Other Transfers of Funds in this Form 10-K. East West held $664 million and $395 million in cash and cash equivalents as of December 31, 2025 and 2024, respectively. Management believes that East West has sufficient sources of liquidity to meet the projected cash obligations for the coming year.

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

As of December 31, 2025, 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. For more details on how economic conditions may impact our liquidity, see Item 1A. Risk Factors in this Form 10-K.

Market Risk Management

Market risk refers to the risk of potential loss due to adverse movements in market risk factors, including interest rates, foreign exchange rates, commodity prices, and credit spreads. The Company is primarily exposed to interest rate risk through its core business activities of extending loans and acquiring deposits. 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.

Interest Rate Risk Management

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

• Assets and liabilities may mature or reprice at different times. If assets reprice faster than liabilities and interest rates are generally rising, earnings will initially increase;
• Assets and liabilities may reprice at the same time but by different amounts;
• Short- and long-term market interest rates may change by different amounts. For example, the shape of the yield curve may affect the yield of new loans and funding costs differently;
• The remaining maturity of various assets or liabilities may shorten or lengthen as interest rates change. For example, if long-term mortgage interest rates increase sharply, mortgage-related products may pay down at a slower rate than anticipated, which could impact portfolio income and valuation; or
• Interest rates may have a direct or indirect effect on loan demand, collateral values, mortgage origination volume, and the fair value of other financial instruments.

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

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The Company measures and monitors interest rate risk exposure through various risk management tools, which include a simulation model that performs monthly interest rate sensitivity analyses under multiple interest rate scenarios against a baseline. The simulation model incorporates the market’s forward rate expectations and the Company’s earning assets and liabilities. The Company uses 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.

The Company’s net interest income volatility simulations are based on a dynamic balance sheet approach and market forward rates to better reflect the interest rate risk on the Company’s financial statements. The Company’s simulation scenarios use parallel shocks for both instantaneous and gradual net interest income simulations, as well as economic value of equity (“EVE”) simulations. These simulations conform with industry-standard scenario definitions and 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 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 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. To the extent that actual behaviors are different from the assumptions used in the models, there could be material changes to the interest rate sensitivity results. The key behavioral models impacting interest rate sensitivity simulations include deposit repricing, deposit balance forecasts, and mortgage prepayments. These models and assumptions are documented, supported, and periodically back-tested to assess the reasonableness and effectiveness. The Company also regularly monitors the sensitivity of the other important modeling assumptions, such as loan and security prepayments and early withdrawal on fixed-rate customer liabilities. The Company makes appropriate calibrations to the model as needed and continually validates the model, methodology and results. Changes to key model assumptions are reviewed by the 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. The simulation does not represent a forecast of the Company’s net interest income but is a tool utilized to assess the risk of the impact of changing market interest rates across a range of interest rate environments.

The Company employs a variety of quantitative and qualitative approaches to capture historical deposit repricing and balance behaviors. These historical observations are performed at a granular level based on key product characteristics, including distinctions for brokered, public, and large commercial deposits, which are then combined with forward-looking market expectations and the competitive landscape to generate the deposit repricing and balance forecasting models. The Company uses these deposit repricing models to forecast deposit interest expense. The repricing models provide sufficient granularity to reflect key behavioral differences across product and customer types. The deposit beta, 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, 2025, the Company assumed a weighted-average beta of 56% for total deposits, an increase of approximately 1% from December 31, 2024. This increase was primarily due to 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.

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Twelve-Month Net Interest Income Simulation

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

The following table presents the Company’s net interest income sensitivity related to an instantaneous and sustained parallel shift in market interest rates by 100 and 200 bps as of December 31, 2025 and 2024, 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)

December 31,
2025 2024
Change in Interest Rates (in bps) % %
+200 5.6 % 4.7  %
+100 3.2 % 3.5  %
-100 (3.2) % (4.0) %
-200 (5.9) % (7.4) %

(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, the net interest income volatility expressed in relation to base-case net interest income decreased under the falling rate scenarios as of December 31, 2025, reflecting updated assumptions on deposit mix and a shift in balance sheet composition toward a higher proportion of fixed-rate assets.

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 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
December 31,
2025 2024
Change in Interest Rates (in bps) % %
+200 Rate ramp 3.4 % 4.3 %
+100 Rate ramp 1.7  % 2.3 %
-100 Rate ramp (1.5) % (2.4) %
-200 Rate ramp (3.0) % (4.6) %

As of December 31, 2025, the Company’s net interest income profile remains asset-sensitive under both instantaneous parallel and gradual shifts in interest rates, with a higher proportion of interest-earning assets repricing in the near term, compared to interest-bearing liabilities. This position is primarily driven by a significant volume of variable-rate loans indexed to Prime and Term Secured Overnight Financing Rate (“SOFR”). A declining rate environment could negatively impact the net interest income. However, this potential impact could be partially mitigated by several structural factors, including balance sheet growth and mix evolution, ongoing reinvestment of cash flows into assets at rates above legacy lower yielding instruments, and prevailing yield‑curve conditions.

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To reduce volatility, the Company has designated $4.3 billion in notional value of interest rate contracts as cash flow hedges, which are estimated to mitigate net interest income variability by approximately 1.27% of base net interest income for every 100 basis point change in interest rates. A portion of the Company’s interest-bearing deposit portfolio consists of non-maturity deposits that are not directly indexed to short-term rates but remain sensitive to rate changes. The Company actively manages deposit pricing and employs quantitative models to evaluate and forecast deposit behavior under various interest rate scenarios.

Actual results may differ from modeled projections due to variations in earning asset growth and changes in deposit composition driven by customer preferences. Modeled outcomes are highly dependent on behavioral assumptions, including deposit mix shifts and customer rate sensitivity.

Economic Value of Equity at Risk

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

The following table presents the Company’s EVE sensitivity related to an instantaneous parallel shift in market interest rates by 100 and 200 bps as of December 31, 2025 and 2024.

Economic Value of Equity Volatility  (1)

December 31,
2025 2024
Change in Interest Rates (in bps) % %
+200 (14.1) % (12.5) %
+100 (6.6) % (5.2) %
-100 5.2  % 4.6  %
-200 9.5  % 9.5  %

(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, 2025, the Company’s EVE is expected to decrease when interest rates rise. 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.

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Derivatives

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

In addition, the Company enters into derivative transactions in order to accommodate its customers with their business needs or to assist customers with their risk management objectives, such as managing exposure to fluctuations in interest rates, foreign currencies and commodity prices. To economically hedge against the derivative contracts entered into with the Company’s customers, the Company enters into offsetting derivative contracts with third-party financial institutions, some of which are cleared through central clearing organizations. The exposures from derivative transactions are collateralized by cash and/or eligible securities based on limits as set forth in the respective agreements between the Company and counterparty financial institutions. The fair value changes of the derivative contracts traded with third-party financial institutions are expected to be largely comparable to the fair value changes of the derivative transactions executed with customers throughout the terms of these contracts, except for the credit valuation adjustment component of the contracts and the spread variances between the customer derivatives and the offsetting financial counterparty positions. The Company also utilizes foreign exchange contracts that are not designated as hedging instruments to mitigate the economic effect of fluctuations in certain foreign currency on-balance sheet assets and liabilities and to meet funding needs in certain foreign currencies.

The Company is subject to credit risk associated with the counterparties to the derivative contracts. This counterparty credit risk is a multi-dimensional form of risk, affected by both the exposure and credit quality of the counterparty, both of which are sensitive to market-induced changes. The Company’s Credit Risk Management Committee provides oversight of credit risk and the Company has guidelines in place to manage counterparty concentration, tenor limits, and collateral. The Company manages the credit risk of its derivative positions by diversifying its positions among various counterparties, by entering into legally enforceable master netting agreements, and by requiring collateral arrangements, where possible. The Company may also transfer counterparty credit risk related to interest rate swaps to third-party financial institutions through the use of credit risk participation agreements. Certain derivative contracts are required to be cleared through central clearing organizations, 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, 2025, the Company anticipates performance by all of its counterparties and has not incurred any related credit losses.

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The following tables summarize certain information on derivative instruments designated as accounting hedges and utilized by the Company in its management of interest rate risk as of December 31, 2025 and 2024:

December 31, 2025
Weighted-Average

($ in thousands) Notional Amount Fair Value Assets Fair Value Liabilities Fixed Rate Floating Rate (1)
Remaining Term (in months)
Cash flow hedges
Derivative contracts hedging loans:
Interest rate swaps - Receive fixed pay floating (2)
$ 4,000,000  $ 39,997  $ 139  5.66  % 5.71  % 28.6

Interest rate collars - Buy floor sell cap 250,000  —  —  Cap: 4.58%
Floor: 1.50% 3.87  % 5.0
Total cash flow hedges $ 4,250,000   $ 39,997   $ 139  

December 31, 2024
Weighted-Average

($ in thousands) Notional Amount Fair Value Assets Fair Value Liabilities Fixed Rate Floating Rate (1)
Remaining Term (in months)
Cash flow hedges
Derivative contracts hedging loans:
Interest rate swaps - Receive fixed pay floating $ 4,000,000  $ 1,808  $ 29,102  4.95  % 6.47  % 23.8
Interest rate swaps - Receive fixed pay floating - Forward starting (2)
1,000,000  3,839  5,893  3.90  % N/A 67.8
Interest rate collars - Buy floor sell cap 250,000  —  216  Cap: 4.58%
Floor: 1.50% 4.55  % 17.0

Total cash flow hedges $ 5,250,000   $ 5,647   $ 35,211  

(1) Floating rates are indexed to SOFR or Prime.
(2) Forward starting swaps with a total notional value of $1 billion became effective during 2025.

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.

Critical Accounting Estimates

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

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Allowance for Credit Losses

The Company’s allowance for credit losses represents management’s estimate of expected credit losses over the remaining expected life of the Company’s financial assets measured at amortized cost, including loans and certain lending-related commitments. The allowance for credit losses involves significant judgment on various matters including development and weighting of macroeconomic forecasts, incorporation of historical loss experience, assessment of key credit risk characteristics, assignment of risk ratings, valuation of collateral, and the determination of remaining expected life. For additional information on these judgments and the Company’s policies and methodologies used to determine the allowance for credit losses, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Allowance for Loan and Lease Losses and Unfunded Credit Commitments, and Note 6 — Loans Receivable and Allowance for Credit Losses to the Consolidated Financial Statements in this Form 10-K.

A critical judgment in the process is estimating the Company’s allowance for credit losses related to macroeconomic forecasts that are incorporated into quantitative methods. As any one economic outlook is inherently uncertain, the Company utilizes a baseline as well as upside and downside scenarios that are applied based on a probability weighting, to better reflect management’s estimate of the expected credit losses given existing market conditions and the changes in the economic environment. 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 2025 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. Given the dynamic relationship between macroeconomic variables within the Company’s models, it is difficult to estimate the impact of a change in any one factor or input on the allowance. Changes in the factors and inputs considered may not occur at the same rate and may not be consistent across all geographies or product types, and changes in factors and input may be directionally inconsistent, such that improvement in one factor may offset deterioration in others. However, to provide additional context regarding the sensitivity of the allowance for credit losses to changes in key variables, the Company compared the quantitative modeled estimate when applying a 100% probability weighting to the downside scenario rather than the weighting of multiple scenarios used to estimate the allowance for credit losses at December 31, 2025. Without considering model overlays and qualitative adjustments which could result in a materially different estimate, this sensitivity analysis would have been approximately $423 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 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, 2025.

Fair Value Estimates

Certain financial instruments are carried at fair value on the Consolidated Balance Sheet on a recurring basis, including AFS debt securities, certain equity securities and derivatives. 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, 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.

72

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 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 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.

Significant judgment is also required to determine the fair value hierarchy for certain financial instruments. When fair values are based on valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement, the financial assets and liabilities are classified as Level 3 of the fair value hierarchy established under Accounting Standards Codification (“ASC”) 820-10, Fair Value Measurement .

The following table presents the Company’s assets recorded at fair value and the portion of such assets that are classified within level 3 of the fair value hierarchy.

December 31,
2025 2024
($ in thousands) Total Balance (1)
Level 3 Total Balance (1)
Level 3
Total assets measured at fair value on a recurring basis $ 13,648,713  $ 522  $ 11,395,533  $ 239 
Total assets measured at fair value on a nonrecurring basis 33,239  33,239  85,872  85,872 
Total assets measured at fair value (a) $ 13,681,952   (b) $ 33,761   (d) $ 11,481,405   (f) $ 86,111  
Total assets (c) $ 80,434,997   (e) $ 75,976,475  
Level 3 assets at fair value as a percentage of total assets (b)/(c) 0.04 % (f)/(e) 0.11 %
Level 3 assets at fair value as a percentage of total assets at fair value (b)/(a) 0.25 % (f)/(d) 0.75 %

(1) Before derivative netting adjustments.

For a complete discussion on the Company’s fair value hierarchy of financial instruments, fair value measurement techniques and assumptions, and the impact on the Consolidated Financial Statements, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Fair Value and Note 2 — Fair Value Measurement and Fair Value of Financial Instruments to the Consolidated Financial Statements in this Form 10-K.

Goodwill Impairment

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 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, 2025.

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.

73

Income Taxes

The Company files income tax returns in the jurisdictions in which it conducts business and evaluates income tax expense in two components: current and deferred income tax expense. Accrued taxes represent the net estimated amount due to or due from various tax jurisdictions in the current year and deferred tax assets represent amounts available to reduce income taxes payable in future years. The Company’s interpretations of the tax laws, including the U.S., its states and the municipalities, and the tax jurisdictions in Hong Kong and China, are complex and subject to audit by taxing authorities that disputes may occur regarding its view on a tax position taken by the Company.

In estimating accrued taxes, the Company assesses the appropriate tax treatment of transactions and filing positions after considering statutes, regulations, judicial precedent, and other pertinent information. The income tax laws are complex and subject to different interpretations by the Company and the relevant government taxing authorities. Significant judgment is required in determining the tax accruals and in evaluating the tax positions, including evaluating uncertain tax positions. Changes in the estimate of accrued taxes occur periodically due to changes in tax rates, tax credits, interpretations of tax laws, the status of examinations by the tax authorities, and newly enacted statutory, judicial, and regulatory guidance that could impact the relative merits and risks of tax positions. 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 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, 2025 . For further information on the Company’s accounting for income taxes and significant tax attributes, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Income Taxes and Note 11 — Income Taxes to the Consolidated Financial Statements in this Form 10-K.

Recently Adopted Accounting Standards

For detailed discussion and disclosure on new accounting pronouncements adopted, see Note 1 — Summary of Significant Accounting Policies to the Consolidated Financial Statements in this Form 10-K.

Reconciliation of GAAP to Non-GAAP Financial Measures

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

74

The following tables present the reconciliations of U.S. GAAP to non-GAAP financial measures for 2025 and 2024:

Year Ended December 31,
($ in thousands) 2025 2024
Net income (a) $ 1,325,188  $ 1,165,586 

Add: Amortization of mortgage servicing assets 1,124  1,322 
Tax effect of amortization adjustments (1)
(315) (393)
Tangible net income (non-GAAP) (b) $ 1,325,997   $ 1,166,515  

Average stockholders’ equity (c) $ 8,276,408  $ 7,315,174 
Less: Average goodwill (465,697) (465,697)
Average mortgage servicing assets (4,684) (5,953)
Average tangible book value (non-GAAP) (d) $ 7,806,027   $ 6,843,524  

ROAE
(a)/(c) 16.01 % 15.93 %
ROATCE (non-GAAP) (b)/(d) 16.99 % 17.05 %

December 31,
($ and shares in thousands, except per share data) 2025 2024

Stockholders’ equity (a) $ 8,899,202  $ 7,723,054 
Less: Goodwill (465,697) (465,697)
Mortgage servicing assets (4,119) (5,234)
Tangible book value (non-GAAP) (b) $ 8,429,386   $ 7,252,123  

Number of common shares at period-end (c) 137,579   138,437  
Book value per share (a)/(c) $ 64.68   $ 55.79  
Tangible book value per share (non-GAAP) (b)/(c) $ 61.27   $ 52.39  

Year Ended December 31,
2025 2024

Average loan yield
Interest income on loans (d) $ 3,494,661  $ 3,490,979 
Less: Loan payoff discount accretion and interest recoveries (32,296) — 
Adjusted interest income on loans (e) $ 3,462,365   $ 3,490,979  

Average loans (f) $ 54,624,959  $ 52,368,780 

Average loan yield (d)/(f) 6.40   % 6.67   %
Adjusted average loan yield (e)/(f) 6.34   % 6.67   %

(1) Applied blended statutory rate of 28.02% for 2025 and 29.73% for 2024.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    For quantitative and qualitative disclosures regarding market risk in the Company’s portfolio, see Item 7 . MD&A — Risk Management — Market Risk Management and Note 5 — Derivatives to the Consolidated Financial Statements in this Form 10-K.
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EAST WEST BANCORP, INC.
ITEM 8.  FINANCIAL STATEMENTS
TABLE OF CONTENTS

Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
77

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets
80

Consolidated Statement of Income
81

Consolidated Statement of Comprehensive Income
82

Consolidated Statement of Changes in Stockholders’ Equity
83

Consolidated Statement of Cash Flows
84

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 — Summary of Significant Accounting Policies
86

2 — Fair Value Measurement and Fair Value of Financial Instruments
97

3 — Securities Purchased under Resale Agreements
107

4 — Securities
108

5 — Derivatives
115

6 — Loans Receivable and Allowance for Credit Losses
121

7 — Affordable Housing Partnerships, Tax Credit and Community Reinvestment Act Investments, Net
137

8 — Goodwill
139

9 — Deposits
139

10 — Federal Home Loan Bank Advances and Long-Term Debt
140

11 — Income Taxes
141

12 — Commitments and Contingencies
144

13 — Stock Compensation Plans
146

1 4 — Stockholders’ Equity and Earnings Per Share
147

15 — Accumulated Other Comprehensive (Loss) Income
148

1 6 — Regulatory Requirements and Matters
149

1 7 — Business Segments
150

1 8 — Parent Company Condensed Financial Statements
153

19 — Subsequent Events
155

76

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors
East West Bancorp, Inc.:

Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of East West Bancorp, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 27, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Allowance for loan and lease losses for commercial loans evaluated on a collective pool basis
As discussed in Notes 1 and 6 to the consolidated financial statements, the Company’s allowance for loan and lease losses (“ALLL”) is established as management’s estimate of expected credit losses inherent in the Company’s lending activities. As of December 31, 2025 the ALLL was $810 million, which includes the ALLL for commercial loans evaluated on a collective pool basis (the commercial collective ALLL). The ALLL is the portion of the loan’s amortized cost basis that the Company does not expect to collect due to anticipated credit losses over the loan’s contractual life, adjusted for estimated prepayments. The Company measured the expected credit losses on a collective pool basis when similar risk characteristics existed. The December 31, 2025 commercial collective ALLL included quantitative and qualitative components. The Company developed and documented the commercial collective ALLL methodology at the portfolio segment level. The commercial collective ALLL methodology used various models and estimation techniques based on the Company’s historical loss experience, current borrower
77

characteristics, which included internal risk ratings, current conditions, and reasonable and supportable macroeconomic forecasts. The commercial loan portfolio is comprised of commercial and industrial (“C&I”) and commercial real estate (“CRE”), which also included multifamily residential, and construction and land loans. The Company’s C&I lifetime loss rate model estimated credit losses by estimating a loss rate expected over the life of a loan which is applied to the amortized cost basis, excluding accrued interest receivables, to determine expected credit losses. The Company’s CRE model applies projected probability of defaults (“PDs”) and loss given defaults (“LGDs”) to the estimated exposure at default, considering the term and payment structure of the loan, to generate estimates of expected loss. The Company incorporated forward-looking information using macroeconomic scenarios, which included variables that are considered key drivers of increases and decreases in credit losses. A probability-weighted multiple scenario forecast over a reasonable and supportable forecast period is incorporated into both the quantitative models. The Company’s C&I lifetime loss rate model reverts to the historical average loss rate, expressed through the loan-level lifetime loss rate, after the reasonable and supportable forecast period. The Company’s CRE model considers the contractual life of the loans and the forecast of future economic conditions return to long-run historical economic trends within the reasonable and supportable period. In order to estimate the life of a loan under both quantitative models, the contractual term of the loan is adjusted for estimated prepayments based on historical prepayment experience. The Company also considered qualitative factors in determining the commercial collective ALLL, if these factors have not already been captured by the quantitative model.
We identified the December 31, 2025 commercial collective ALLL as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment due to significant measurement uncertainty. Specifically, the assessment encompassed the evaluation of the commercial collective ALLL methodology, including an evaluation of the conceptual soundness and performance of the methods and models used to estimate (1) the quantitative component and its significant data elements and assumptions, which included portfolio segments, historic loss experience, reasonable and supportable forecast period, internal risk ratings, probability-weighted macroeconomic forecast scenarios, contractual term of the loan adjusted for estimated prepayments, and (2) the qualitative component. In addition, auditor judgment was required to evaluate the sufficiency of audit evidence obtained.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s measurement of the commercial collective ALLL estimates, including controls over the:

• development of the commercial collective ALLL methodology

• continued use and appropriateness of changes made to the quantitative models

• performance monitoring of the quantitative models

• identification and determination of the significant data elements and assumptions used in the quantitative models

• development of the qualitative component

• analysis of the commercial collective ALLL results, trends, and ratios.

We evaluated the Company’s process to develop the commercial collective ALLL estimates by testing the models, significant data elements and assumptions that the Company used, and considered the relevance and reliability of such models, data, factors, and assumptions. We performed ratio and trend analysis over key ratios and peer comparison information relevant to the commercial collective ALLL. In addition, we involved credit risk professionals with specialized skills and knowledge, who assisted in:

• evaluating the Company’s commercial collective ALLL methodology for compliance with U.S. generally accepted accounting principles

• evaluating judgments made by the Company relative to the assessment, conceptual soundness and performance testing of the quantitative models, which are based on historical loss experience by comparing them to relevant Company-specific metrics and trends and the applicable industry and regulatory practices

• evaluating the judgments made by the Company in selecting the macroeconomic forecast scenarios, including the reasonable and supportable period and the related probability-weighted macroeconomic forecast scenarios

78

• determining whether the loan portfolio is pooled based on loans with similar risk characteristics by comparing to the Company’s business environment and relevant industry practices

• evaluating risk ratings for a selection of collectively evaluated loans

• evaluating the conceptual soundness of the framework used to develop the qualitative factors and the effect of those factors on the commercial collective ALLL compared with relevant credit risk factors and consistency with credit trends and identified limitations of the underlying quantitative models.

We also assessed the sufficiency of the audit evidence obtained related to the commercial collective ALLL estimates by evaluating the:

• cumulative results of audit procedures

• qualitative aspects of the Company’s accounting practices

• potential bias in accounting estimates.

/s/ KPMG LLP

We have served as the Company’s auditor since 2009.

Los Angeles, California
February 27, 2026

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EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands, except shares)

December 31,
2025 2024
ASSETS
Cash and due from banks $ 656,125   $ 360,734  
Interest-bearing cash with banks 3,532,014   4,890,008  
Cash and cash equivalents 4,188,139   5,250,742  
Interest-bearing deposits with banks 16,189   48,198  
Securities purchased under resale agreements (“resale agreements”) 425,000   425,000  
Debt securities:
Available-for-sale (“AFS”), at fair value (amortized cost of $ 13,619,781 and $ 11,505,775 )
13,212,220   10,846,811  
Held-to-maturity (“HTM”), at amortized cost (fair value of $ 2,479,746 and $ 2,387,754 )
2,870,058   2,917,413  
Loans held-for-sale 20,976   —  
Loans held-for-investment (net of allowance for loan and lease losses (“ALLL”) of $ 809,773 and $ 702,052 )
56,068,399   53,024,585  
Affordable housing partnership, tax credit and Community Reinvestment Act (“CRA”) investments, net 969,492   926,640  
Premises and equipment (net of accumulated depreciation of $ 175,297 and $ 166,154 )
82,310   82,233  
Operating lease right-of-use assets 125,407   81,967  
Goodwill 465,697   465,697  
Other assets 1,991,110   1,907,189  
TOTAL $ 80,434,997   $ 75,976,475  
LIABILITIES
Deposits:
Noninterest-bearing $ 16,697,099   $ 15,450,428  
Interest-bearing 50,385,602   47,724,595  
Total deposits 67,082,701   63,175,023  

Federal Home Loan Bank (“FHLB”) advances 3,000,000   3,500,000  

Long-term debt and finance lease liabilities 35,645   35,974  
Operating lease liabilities 138,206   89,263  
Accrued expenses and other liabilities 1,279,243   1,453,161  
Total liabilities 71,535,795   68,253,421  
COMMITMENTS AND CONTINGENCIES (Note 12)
STOCKHOLDERS’ EQUITY
Common stock, $ 0.001 par value, 200,000,000 shares authorized; 170,487,574 and 169,925,379 shares issued
170   170  
Additional paid-in capital 2,111,316   2,030,712  
Retained earnings 8,301,522   7,311,542  
Treasury stock, at cost 32,908,712 and 31,488,080 shares
( 1,168,196 ) ( 1,034,110 )
Accumulated other comprehensive loss (“AOCI”), net of tax ( 345,610 ) ( 585,260 )
Total stockholders’ equity 8,899,202   7,723,054  
TOTAL $ 80,434,997   $ 75,976,475  

See accompanying Notes to Consolidated Financial Statements.

80

EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
($ and shares in thousands, except per share data)

Year Ended December 31,
2025 2024 2023
INTEREST AND DIVIDEND INCOME
Loans receivable, including fees $ 3,494,661   $ 3,490,979   $ 3,172,746  
Debt securities
621,937   449,065   276,190  
Resale agreements 6,475   11,254   20,164  
Restricted equity securities 11,242   10,104   4,062  
Interest-bearing cash and deposits with banks 159,081   231,794   220,643  
Total interest and dividend income 4,293,396   4,193,196   3,693,805  
INTEREST EXPENSE
Deposits 1,594,529   1,720,174   1,205,550  
Federal funds purchased and other short-term borrowings 22   42,163   157,002  
FHLB advances 141,472   147,269   6,430  
Securities sold under repurchase agreements (“repurchase agreements”) 2,082   197   1,497  
Long-term debt and finance lease liabilities 2,662   4,677   11,072  
Total interest expense 1,740,767   1,914,480   1,381,551  
Net interest income before provision for credit losses 2,552,629   2,278,716   2,312,254  
Provision for credit losses 160,000   174,000   125,000  
Net interest income after provision for credit losses 2,392,629   2,104,716   2,187,254  
NONINTEREST INCOME
Commercial and consumer deposit-related fees 111,844   103,880   93,811  
Lending and loan servicing fees 107,988   98,455   83,876  
Foreign exchange income 58,905   54,605   48,276  
Wealth management fees 50,000   38,627   26,994  
Customer derivative income, net of mark-to-market adjustments 16,856   16,401   20,200  
Net gains (losses) on AFS debt securities
963   2,069   ( 6,862 )
Other investment income 10,868   5,611   9,348  
Other income 21,803   15,570   17,469  
Total noninterest income 379,227   335,218   293,112  
NONINTEREST EXPENSE
Compensation and employee benefits 618,753   550,734   508,538  
Occupancy and equipment expense 66,129   64,399   64,528  
Deposit account expense 35,218   47,390   43,143  
Computer and software related expenses 54,737   47,271   44,475  
Deposit insurance premiums and regulatory assessments 31,725   45,736   103,308  

Other operating expense 165,039   148,301   136,305  
Amortization of tax credit and CRA investments 74,795   54,242   120,299  

Total noninterest expense 1,046,396   958,073   1,020,596  
INCOME BEFORE INCOME TAXES 1,725,460   1,481,861   1,459,770  
Income tax expense 400,272   316,275   298,609  
NET INCOME $ 1,325,188   $ 1,165,586   $ 1,161,161  
EARNINGS PER SHARE (“EPS”)
BASIC $ 9.58   $ 8.39   $ 8.23  
DILUTED $ 9.52   $ 8.33   $ 8.18  
WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING
BASIC 138,342   138,898   141,164  
DILUTED 139,130   139,958   141,902  

See accompanying Notes to Consolidated Financial Statements.

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EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
($ in thousands)

Year Ended December 31,
2025 2024 2023
Net income $ 1,325,188   $ 1,165,586   $ 1,161,161  
Other comprehensive income, net of tax:
Net changes in unrealized gains on AFS debt securities 178,328   48,845   81,763  

Amortization of unrealized losses on debt securities transferred from AFS to HTM
10,592   10,884   11,171  
Net changes in unrealized gains (losses) on cash flow hedges
48,996   ( 23,411 ) 52,155  
Foreign currency translation adjustments 1,734   ( 982 ) ( 56 )
Other comprehensive income 239,650   35,336   145,033  
COMPREHENSIVE INCOME $ 1,564,838   $ 1,200,922   $ 1,306,194  

See accompanying Notes to Consolidated Financial Statements.

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EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
($ in thousands, except shares and per share data)

Common Stock and Additional Paid-in Capital
Shares Amount Retained Earnings Treasury Stock AOCI, Net of Tax Total Stockholders’ Equity
BALANCE, DECEMBER 31, 2022 140,947,846   $ 1,936,557   $ 5,582,546   $ ( 768,862 ) $ ( 765,629 ) $ 5,984,612  
Cumulative-effect of change in accounting principle (1)
—  —  ( 4,262 ) —  —  ( 4,262 )
Net income —  —  1,161,161   —  —  1,161,161  
Other comprehensive income —  —  —  —  145,033   145,033  

Issuance of common stock pursuant to various stock compensation plans and agreements 913,185   44,430   —  —  —  44,430  
Repurchase of common stock pursuant to various stock compensation plans and agreements ( 327,573 ) —  —  ( 23,751 ) —  ( 23,751 )
Repurchase of common stock pursuant to the stock repurchase program ( 1,506,091 ) —  —  ( 82,174 ) —  ( 82,174 )
Cash dividends on common stock ($ 1.92 per share)
—  —  ( 274,215 ) —  —  ( 274,215 )
BALANCE, DECEMBER 31, 2023 140,027,367   $ 1,980,987   $ 6,465,230   $ ( 874,787 ) $ ( 620,596 ) $ 6,950,834  
Cumulative-effect of change in accounting principle (2)
—  —  ( 9,482 ) —  —  ( 9,482 )
Net income —  —  1,165,586   —  —  1,165,586  
Other comprehensive income —  —  —  —  35,336   35,336  

Issuance of common stock pursuant to various stock compensation plans and agreements 553,149   49,895   —  —  —  49,895  
Repurchase of common stock pursuant to various stock compensation plans and agreements ( 199,871 ) —  —  ( 14,877 ) —  ( 14,877 )
Repurchase of common stock pursuant to the stock repurchase program ( 1,943,346 ) —  —  ( 144,446 ) —  ( 144,446 )
Cash dividends on common stock ($ 2.20 per share)
—  —  ( 309,792 ) —  —  ( 309,792 )
BALANCE, DECEMBER 31, 2024 138,437,299   $ 2,030,882   $ 7,311,542   $ ( 1,034,110 ) $ ( 585,260 ) $ 7,723,054  

Net income —  —  1,325,188   —  —  1,325,188  
Other comprehensive income —  —  —  —  239,650   239,650  

Issuance of common stock pursuant to various stock compensation plans and agreements 562,195   80,604   —  —  —  80,604  
Repurchase of common stock pursuant to various stock compensation plans and agreements ( 208,108 ) —  —  ( 19,156 ) —  ( 19,156 )
Repurchase of common stock pursuant to the stock repurchase program ( 1,212,524 ) —  —  ( 114,930 ) —  ( 114,930 )
Cash dividends on common stock ($ 2.40 per share)
—  —  ( 335,208 ) —  —  ( 335,208 )
BALANCE, DECEMBER 31, 2025 137,578,862   $ 2,111,486   $ 8,301,522   $ ( 1,168,196 ) $ ( 345,610 ) $ 8,899,202  

(1) Represents the change in the Company’s ALLL as a result of the adoption of Accounting Standards Update (“ASU”) 2022-02 , Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and the Vintage Disclosures on January 1, 2023.
(2) Represents the impact of the adoption of ASU 2023-02 , Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method on January 1, 2024.

See accompanying Notes to Consolidated Financial Statements.

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EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
($ in thousands)

Year Ended December 31,
2025 2024 2023
CASH FLOWS FROM OPERATING ACTIVITIES      
Net income $ 1,325,188   $ 1,165,586   $ 1,161,161  
Adjustments to reconcile net income to net cash provided by operating activities:      
Provision for credit losses 160,000   174,000   125,000  
Depreciation, amortization and accretion, net 213,164   212,338   174,183  
Stock compensation costs 76,189   45,535   39,867  
Deferred income tax benefit ( 7,775 ) ( 14,283 ) ( 49,139 )
Net (gains) losses on AFS debt securities ( 963 ) ( 2,069 ) 6,862  
Net losses (gains) on other real estate owned (“OREO”) write-downs and sales 10,275   7,275   ( 3,451 )
Loans held-for-sale:
Originations and purchases ( 4,105 ) ( 2,881 ) ( 116 )
Proceeds from sales and paydowns/payoffs of loans originally classified as held-for-sale 4,102   3,020   —  
Net change in accrued interest receivable and other assets ( 97,306 ) 63,743   ( 146,270 )
Net change in accrued expenses and other liabilities ( 167,970 ) ( 242,443 ) 105,304  
Other operating activities, net ( 9,099 ) 1,846   11,508  
Total adjustments 176,512   246,081   263,748  
Net cash provided by operating activities 1,501,700   1,411,667   1,424,909  
CASH FLOWS FROM INVESTING ACTIVITIES      
Net (increase) decrease in:      
Affordable housing partnership, tax credit and CRA investments ( 351,786 ) ( 378,305 ) ( 228,550 )
Interest-bearing deposits with banks 33,115   ( 38,352 ) 128,523  
Assets purchased under resale agreements:
Proceeds from paydowns and maturities —   360,000   219,917  
Purchases —   —   ( 212,725 )
AFS debt securities:
Proceeds from sales 952,413   1,428,829   3,138  
Proceeds from repayments, maturities and redemptions 3,851,138   1,547,058   1,470,819  
Purchases ( 6,939,256 ) ( 7,599,454 ) ( 1,549,846 )
Loans held-for-investment:
Proceeds from sales of loans originally classified as held-for-investment 310,408   715,088   711,862  
Purchases ( 963,327 ) ( 1,000,637 ) ( 600,930 )
Other changes in loans held-for-investment, net ( 2,486,715 ) ( 1,341,549 ) ( 4,166,572 )
Proceeds from sales of OREO and other foreclosed assets 36,122   33,055   3,721  
Proceeds from repayments and redemptions of HTM debt securities
62,832   54,249   61,744  
Redemption (purchases) of FHLB stock, net 14,024   ( 84,079 ) —  
Other investing activities, net 4,527   8,894   ( 88,262 )
Net cash used in investing activities ( 5,476,505 ) ( 6,295,203 ) ( 4,247,161 )

See accompanying Notes to Consolidated Financial Statements.

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EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
($ in thousands)
(Continued)

Year Ended December 31,
2025 2024 2023
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits 3,863,717   7,108,377   144,468  
Net change in short-term borrowings 2   ( 4,500,000 ) 4,500,000  
FHLB advances:
Proceeds 2,500,000   4,000,400   6,000,000  
Repayments ( 3,000,000 ) ( 500,400 ) ( 6,000,000 )
Repurchase agreements:
Repayment —   —   ( 300,000 )
Extinguishment cost —   —   ( 3,872 )
Repayment of lease liabilities and junior subordinated debt ( 836 ) ( 117,437 ) ( 871 )
Common stock:
Proceeds from issuance pursuant to various stock compensation plans and agreements 3,212   3,023   3,208  
Stock tendered for payment of withholding taxes ( 19,239 ) ( 14,877 ) ( 23,751 )
Repurchase of common stock pursuant to the stock repurchase program ( 115,590 ) ( 143,082 ) ( 82,174 )
Cash dividends paid ( 334,041 ) ( 308,478 ) ( 274,554 )
Net cash provided by financing activities 2,897,225   5,527,526   3,962,454  
Effect of exchange rate changes on cash and cash equivalents 14,977   ( 8,232 ) ( 7,002 )
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 1,062,603 ) 635,758   1,133,200  
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 5,250,742   4,614,984   3,481,784  
CASH AND CASH EQUIVALENTS, END OF YEAR $ 4,188,139   $ 5,250,742   $ 4,614,984  

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:      
Interest $ 1,742,199   $ 2,057,967   $ 1,213,319  
Income taxes, net $ 278,182   $ 246,945   $ 291,685  
Noncash investing and financing activities:
Loans transferred from held-for-investment to held-for-sale $ 331,227   $ 659,322   $ 739,379  

Loans transferred to OREO or other foreclosed assets $ 33,513   $ 67,379   $ 11,141  

See accompanying Notes to Consolidated Financial Statements.

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EAST WEST BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Summary of Significant Accounting Policies

Organization

East West Bancorp, Inc. (referred to herein on an unconsolidated basis as “East West” and on a consolidated basis as the “Company”) is a registered bank holding company that offers a full range of banking services to individuals and businesses through its subsidiary bank, East West Bank and its subsidiaries (“East West Bank” or the “Bank”). The Bank is the Company’s principal asset. As of December 31, 2025, the Company operated i n over 110 locations in the United States (“U.S.”) and Asia. In the U.S., the Bank’s corporate headquarters and main administrative offices are located in California, and its branches are located in California, Texas, New York, Washington, Georgia, Massachusetts and Nevada. In Asia, East West’s presence includes branches in China and Hong Kong, and representative offices in China and Singapore. The Bank has a banking subsidiary based in China — East West Bank (China) Limited (“EWCN”).

Significant Accounting Policies

Basis of Presentation — The accounting and reporting policies of the Company conform with the U.S. Generally Accepted Accounting Principles (“GAAP”), applicable guidelines prescribed by regulatory authorities and common practices in the banking industry. The preparation of the Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Consolidated Financial Statements, income and expenses during the reporting period, and the related disclosures. Actual results could differ materially from those estimates. Certain items on the Consolidated Financial Statements and notes for the prior years have been reclassified to conform to the 2025 presentation.

Principles of Consolidation — The Consolidated Financial Statements in this Form 10-K include the accounts of East West and its subsidiaries that are majority owned and in which the Company has a controlling financial interest, and variable interest entities (“VIE”) in which the Company has determined to be the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a VIE.

For a VIE, a controlling financial interest is where the Company has the power to direct the activities of an entity that most significantly impact the entity’s economic performance and has an obligation to absorb losses or the right to receive benefits from the VIE. For an entity that does not meet the definition of a VIE, the entity is determined to be a voting interest entity. The Company consolidates a voting interest entity if it can exert control over the financial and operating policies of an investee, which can occur if the Company has a more than 50% voting interest in the entity. For unconsolidated entities, the Company uses the proportional amortization method (“PAM”), equity, cost or measurement alternative method based on the Company’s voting or economic interest.

East West has one wholly-owned subsidiary that is a statutory business trust (the “Trust”). In accordance with the guidance in Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 810, Consolidation, the Trust has not been consolidated by the Company.

Cash and Cash Equivalents — Cash and cash equivalents include cash on hand, cash items in transit, cash due from the Federal Reserve Bank (“FRB”) of San Francisco and other financial institutions, money market funds, and federal funds sold with original maturities up to three months.

Interest-Bearing Deposits with Banks — Interest-bearing deposits with banks include cash placed with other banks with original maturities greater than three months and less than one year.

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Assets Purchased under Resale Agreements and Securities Sold under Repurchase Agreements — Resale agreements are recorded as receivables based on the values at which the securities or loans are acquired. Repurchase agreements are accounted for as collateralized financing transactions and recorded as liabilities based on the values at which the securities are sold. The Company monitors the values of the underlying assets collateralizing the resale and repurchase agreements, including accrued interest, and obtains or posts additional collateral in order to maintain the appropriate collateral requirements for the transactions. For allowance for credit losses on resale agreements, refer to the Allowance for Collateral-Dependent Financial Assets section of this note for details.

Debt Securities — Debt securities are recorded on the Consolidated Balance Sheet as of their trade dates. The Company initially classifies its debt securities as trading securities, AFS or HTM debt securities based on management’s intention on the date of the purchase. Debt securities are purchased for liquidity and investment purposes, as part of asset/liability management and other strategic activities.

Debt securities for which the Company has the positive intention and ability to hold until maturity are classified as HTM and are carried at amortized cost, net of allowance for credit losses. Debt securities not classified as trading securities or HTM securities are classified as AFS. AFS debt securities are reported at fair value, net of the allowance for credit losses, with unrealized gains and losses recorded in AOCI, net of applicable income taxes. For details of the allowance for credit losses on debt securities, refer to the Allowance for Credit Losses on Available-for-Sale and Held-to-Maturity Debt Securities sections of this note. Interest income, including any amortization of premium or accretion of discount, is included in debt securities interest and dividend income in the Company’s Consolidated Statement of Income. The Company recognizes realized gains and losses on the sale of AFS debt securities in earnings, using the specific identification method.

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

Equity Securities — The Company’s equity securities include both marketable and non-marketable equity securities. Marketable equity securities with readily determinable fair values are recorded at fair value with unrealized gains and losses due to changes in fair value, and are included in Other investment income on the Consolidated Statement of Income. Marketable equity securities include mutual fund investments, which are included in Affordable housing partnership, tax credit and CRA investments, net on the Consolidated Balance Sheet.

Non-marketable equity securities including tax credit investments, and other equity investments that do not have readily determinable fair values are recorded in Affordable housing partnership, tax credit and CRA investments, net, and Other assets on the Consolidated Balance Sheet and are accounted for under one of the following accounting methods:
• Equity Method — When the Company has the ability to exercise significant influence over the investee.
• Proportional Amortization Method — For qualifying tax credit investments, the Company amortizes the initial cost of the investment in proportion to the income tax credits and other income tax benefits received, and recognizes the amortization in Income tax expense on the Consolidated Statement of Income.
• Cost Method — The cost method is applied to restricted equity securities held for membership and regulatory purposes, such as FRB of San Francisco and FHLB stock. These investments are held at their cost minus impairment. If impaired, the carrying value is written down to the fair value of the security.
• Measurement Alternative — This method is applied to all remaining non-marketable equity securities. These securities are carried at cost adjusted for impairment, if any, plus or minus observable price changes in orderly transactions of an identical or similar security of the same issuer.
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The Company’s impairment review for equity method, cost method and measurement alternative securities typically includes an analysis of the facts and circumstances of each security, the intent or requirement to sell the security, the expectations of cash flows, capital needs and the viability of its business model. For equity and cost method investments, the Company reduces the asset’s carrying value when the Company considers declines in value to be other-than-temporary impairment (“OTTI”). For securities accounted for under the measurement alternative, the Company reduces the asset value when the fair value is less than the carrying value, without the consideration of recovery.

Loans Held-for-Sale — Loans are initially classified as loans held-for-sale when they are individually identified as being available for immediate sale and management has committed to a formal plan to sell them. Loans held-for-sale are carried at lower of cost or fair value. Subject to periodic review under the Company’s evaluation process, including asset/liability and credit risk management, the Company may transfer certain loans from held-for-investment to held-for-sale measured at lower of cost or fair value. Any write-downs in the carrying amount of the loan at the date of transfer are recorded as charge-offs to the ALLL. Loan origination fees on loans held-for-sale, net of certain costs in processing and closing the loans, are deferred until the time of sale and are included in the periodic determination of the lower of cost or fair value adjustments and/or the gain or loss recognized at the time of sale. A valuation allowance is established if the fair value of such loans is lower than their cost. If the loan or a portion of the loan cannot be sold, it is subsequently transferred back to the loans held-for-investment portfolio from the loans held-for-sale portfolio at the lower of cost or fair value on the transfer date.

Loans Held-for-Investment — At the time of commitment to originate or purchase a loan, the loan is determined to be held-for-investment if it is the Company’s intent to hold the loan to maturity or for the foreseeable future. Loans held-for-investment are stated at their outstanding principal, reduced by an ALLL and net of deferred loan fees or costs, or unearned fees on originated loans, net of unamortized premiums or unaccreted discounts from purchased loans. Nonrefundable fees and direct costs associated with the origination or purchase of loans are deferred and netted against outstanding loan balances. The deferred net loan fees and costs are recognized in interest income as an adjustment to yield over the loan term using the effective interest method. Discounts/premiums on purchased loans are accreted/amortized to interest income using the effective interest method over the remaining contractual maturity. Interest on loans is calculated using the simple-interest method on daily balances of the principal amounts outstanding. Generally, loans are placed on nonaccrual status when they become 90 days past due or more. Loans are considered past due when contractually required principal or interest payments have not been made on the due dates. Loans are also placed on nonaccrual status when management believes, after considering economic and business conditions and collection efforts, that the borrower’s financial condition is such that full collection of principal or interest becomes uncertain, regardless of the length of past due status. Once a loan is placed on nonaccrual status, interest accrual is discontinued and all unpaid accrued interest is reversed against interest income. Interest payments received on nonaccrual loans are reflected as a reduction of principal and not as interest income. A loan is returned to accrual status when the borrower has demonstrated a satisfactory payment trend subject to management’s assessment of the borrower’s ability to repay the loan.

Loan Modifications — The Company applies the general loan modification guidance provided in ASC 310-20 to all loan modifications, including modifications made to borrowers experiencing financial difficulty. Under ASC 310-20-35-9 to 310-20-35-10, a modification is treated as a new loan only if the following two conditions are met: (1) the terms of the new loan are at least as favorable to the Company as the terms for comparable loans to other customers with similar collection risks; and (2) modifications to the terms of the original loan are more than minor. If either condition is not met, the modification is accounted for as the continuation of the existing loan with any effect of the modification treated as a prospective adjustment to the loan’s effective interest rate. A modification may vary by program and by borrower-specific characteristics, and may include rate reductions, principal forgiveness, term extensions, and payment delays, and is intended to minimize the Company’s economic loss and to avoid foreclosure or repossession of collateral. The Company applies the same credit loss methodology it uses for similar loans that were not modified. ASC 310-10-50-42 requires disclosures of modification made to borrowers experiencing financial difficulty in the forms of principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions or a combination of these types of modifications.

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Allowance for Loan and Lease Losses — The ALLL is established as management’s estimate of expected credit losses inherent in the Company’s lending activities; it is increased by the provision for credit losses and decreased by net charge-offs. The ALLL is evaluated quarterly by management based on regular reviews of the collectability of the Company’s loans, and more often if deemed necessary. The Company develops and documents the ALLL methodology at the portfolio segment level. The commercial loan portfolio is comprised of commercial and industrial (“C&I”), commercial real estate (“CRE”), multifamily residential, and construction and land loans; and the consumer loan portfolio is comprised of single-family residential, home equity lines of credit (“HELOCs”), and other consumer loans.

The ALLL represents the portion of a loan’s amortized cost basis that the Company does not expect to collect due to anticipated credit losses over the loan’s contractual life, adjusted for prepayments. The Company measures the expected loan losses on a collective pool basis when similar risk characteristics exist. Models consisting of quantitative and qualitative components are designed for each pool to develop the expected credit loss estimates. Reasonable and supportable forecast periods vary by loan portfolio. The Company has adopted lifetime loss rate models for the portfolios, which use historical loss rates and forecast economic variables to calculate the expected credit losses for each loan pool. When loans do not share similar risk characteristics, the Company evaluates the loan for expected credit losses on an individual basis. Individually assessed loans include nonaccrual loans. The Company evaluates loans for expected credit losses on an individual basis if, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the original contractual terms of the loan agreement. When the loan is deemed uncollectible, it is the Company’s policy to charge off the uncollectible amount against the ALLL.

The amortized cost of loans held-for-investment excludes accrued interest, which is included in Other assets on the Consolidated Balance Sheet. The Company has made an accounting policy election to not recognize an ALLL for accrued interest receivables as the Company reverses accrued interest if a loan is on nonaccrual status.

The ALLL is reported on the Consolidated Balance Sheet and the Provision for credit losses is reported on the Consolidated Statement of Income.

Allowance for Unfunded Credit Commitments — The allowance for unfunded credit commitments includes reserves provided for unfunded loan commitments, letters of credit, standby letters of credit (“SBLCs”) and recourse obligations for loans sold. The Company estimates the allowance for unfunded credit commitments over the contractual period in which the entity is exposed to credit risk via a present contractual obligation to extend credit. Within the period of credit exposure, the Company considers both the likelihood that funding will occur, and the expected credit losses on the commitments that are expected to fund over their estimated lives.

The allowance for unfunded credit commitments is maintained at a level believed by management to be sufficient to absorb expected credit losses related to unfunded credit facilities. The determination of the adequacy of the allowance is based on periodic evaluations of the unfunded credit facilities. For all off-balance sheet instruments and commitments, the unfunded credit exposure is calculated using assumptions based on the Company's historical utilization experience in related portfolio segments. Loss rates are applied to the calculated exposure balances to estimate the allowance for unfunded credit commitments. Other elements such as credit risk factors for loans outstanding, terms and expiration dates of the unfunded credit facilities, and other pertinent information are considered to determine the adequacy of the allowance.

The allowance for unfunded credit commitments is included in the Accrued expenses and other liabilities on the Consolidated Balance Sheet. Changes to the allowance for unfunded credit commitments are included in Provision for credit losses on the Consolidated Income Statements.

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Allowance for Credit Losses on Available-for-Sale Debt Securities — For each reporting period, each AFS debt security that is in an unrealized loss position is individually analyzed as part of the Company’s ongoing assessments to determine whether a fair value below the amortized cost basis has resulted from a credit loss or other factors. The initial indicator of impairment is a decline in fair value below the amortized cost of the AFS debt security, excluding accrued interest. The Company first considers whether there is a plan to sell the AFS debt security or it is more-likely-than-not that it will be required to sell the AFS debt security before recovery of the amortized cost. In determining whether an impairment is due to credit related factors, the Company considers the severity of the decline in fair value, nature of the security, the underlying collateral, the financial condition of the issuer, changes in the AFS debt security’s ratings and other qualitative factors. For AFS debt securities that are guaranteed or issued by the U.S. government, or government-sponsored enterprises of high credit quality, the Company applies a zero credit loss assumption.

When the Company does not intend to sell the impaired AFS debt security and it is more-likely-than-not that the Company will not be required to sell the impaired debt security prior to recovery of its amortized cost basis, the credit component of the unrealized loss of the impaired AFS debt security is recognized as an allowance for credit losses, with a corresponding Provision for credit losses on the Consolidated Statement of Income and the non-credit component is recognized in Other comprehensive income (loss) on the Consolidated Statement of Comprehensive Income, net of applicable taxes. At each reporting period, the Company increases or decreases the allowance for credit losses as appropriate, while limiting reversals of the allowance for credit losses to the extent of the amounts previously recorded. If the Company intends to sell the impaired debt security or it is more-likely-than-not that the Company will be required to sell the impaired debt security prior to recovering its amortized cost basis, the entire impairment amount is recognized as an adjustment to the debt security’s amortized cost basis, with a corresponding Provision for credit losses on the Consolidated Statement of Income.

The amortized cost of the Company’s AFS debt securities excludes accrued interest, which is included in Other assets on the Consolidated Balance Sheet. The Company has made an accounting policy election not to recognize an allowance for credit losses for accrued interest receivables on AFS debt securities as the Company reverses any accrued interest if a debt security is impaired. As each AFS debt security has a unique security structure, where the accrual status is clearly determined when certain criteria listed in the terms are met, the Company assesses the default status of each security as defined by the debt security’s specific security structure.

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

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

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Allowance for Collateral-Dependent Financial Assets — A financial asset is considered collateral-dependent if repayment is expected to be provided substantially through the operation or sale of the collateral. The allowance for credit losses is measured on an individual basis for collateral-dependent financial assets and determined by comparing the fair value of the collateral less the cost to sell, to the amortized cost basis of the related financial asset at the reporting date. Other than loans, collateral-dependent financial assets could also include resale agreements. In arrangements which the borrower must continually adjust the collateral securing the asset to reflect changes in the collateral’s fair value (e.g., resale agreements), the Company estimates the expected credit losses on the basis of the unsecured portion of the amortized cost as of the balance sheet date. If the fair value of the collateral is equal to or greater than the amortized cost of the resale agreement, the expected losses would be zero. If the fair value of the collateral is less than the amortized cost of the asset, the expected losses are limited to the difference between the fair value of the collateral and the amortized cost basis of the resale agreement.

Allowance for Purchased Credit Deteriorated Assets — Purchased assets that have experienced a more-than-insignificant deterioration in credit quality since origination are deemed Purchased Credit Deteriorated (“PCD”) assets. For PCD HTM debt securities and PCD loans, the company records the allowance for credit losses by grossing up the initial amortized cost, which includes the purchase price and the allowance for credit losses. The expected credit losses of PCD debt securities are measured at the individual security level. The expected credit losses for PCD loans are measured based on the loan’s unpaid principal balance. Under this approach, there is no income statement impact from the acquisition. Subsequent changes in the allowance for credit losses on PCD assets will be recognized in Provision for credit losses on the Consolidated Statement of Income. The non-credit discount or premium will be accreted to interest income based on the effective interest rate on the PCD assets determined after the gross-up for the allowance for credit losses. At the acquisition date, the initial allowance for credit losses determined on a collective basis is allocated to individual assets in accordance with ASC 326-20-30-13. Subsequent changes in the allowance for credit losses on PCD assets are recognized as Provision for credit losses (or reversal of provision for credit losses) on the Consolidated Statement of Income.

Premises and Equipment, Net — The Company’s premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed based on the straight-line method over the estimated useful lives of the various classes of assets. The ranges of estimated useful lives for the principal classes of assets are as follows:

Premises and Equipment Useful Lives
Buildings 25 years
Building improvements 15 years

Furniture, fixtures and equipment, including computer equipment 3 to 7 years

Leasehold improvements Remaining term of lease or useful life, whichever is shorter

The Company reviews its long-lived assets for impairment annually, or when events or changes in circumstances indicate that the carrying amounts of these assets may not be recoverable. An asset is considered impaired when the fair value, which is the expected undiscounted cash flows over the remaining useful life, is less than the net book value. The excess of the net book value over its fair value is charged as impairment loss to noninterest expense.

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Goodwill — Goodwill represents the excess of the purchase price over the fair value of net assets acquired in an acquisition. Goodwill is tested for impairment on an annual basis as of December 31, or more frequently if an event occurs or circumstances change that indicate a potential impairment at the reporting unit level. The Company assesses goodwill for impairment at each operating segment level. The Company organizes its operations into three reporting segments: (1) Consumer and Business Banking; (2) Commercial Banking; and (3) Treasury and Other. For information on how the reporting units are identified and the components are aggregated, see Note 17 — Business Segments to the Consolidated Financial Statements in this Form 10-K. The Company has the option to perform a qualitative assessment of goodwill or elect to bypass the qualitative test and proceed directly to a quantitative test. If the Company performs a qualitative assessment of goodwill to test for impairment and concludes it is more likely than not that a reporting unit’s fair value is greater than its carrying value, quantitative tests are not required. If the qualitative analysis indicates that it is more likely than not that a reporting unit’s fair value is less than its carrying value, the Company is required to perform a quantitative assessment to determine if there is goodwill impairment. Factors considered in the qualitative assessments include but are not limited to macroeconomic conditions, industry and market considerations, financial performance of the respective operating segment and other relevant entity- and reporting-unit specific considerations. A quantitative valuation involves determining the fair value of each reporting unit and comparing the fair value to its corresponding carrying value. Goodwill impairment loss is recorded as a charge to noninterest expense and an adjustment to the carrying value of goodwill. Subsequent reversals of goodwill impairment are not allowed.

Derivatives — As part of its asset/liability management strategy, the Company uses derivative financial instruments to mitigate exposure to interest rate and foreign currency risks, and to assist customers with their risk management objectives. Derivatives utilized by the Company primarily include swaps, forwards and option contracts. Derivative instruments are included in Other assets or Accrued expenses and other liabilities on the Consolidated Balance Sheet at fair value. All derivatives designated as fair value hedges and hedges of the net investments in certain foreign operations are linked to specific hedged items or to groups of specific assets and liabilities on the Consolidated Balance Sheet. Cash flow hedges are linked to the forecasted transactions related to a recognized asset/liability or to groups of recognized assets/liabilities. The related cash flows impacts of derivatives are recognized on the Cash flows from operating activities section on the Consolidated Statement of Cash Flows.

The Company uses accounting hedges based on the exposure being hedged as either fair value hedges, cash flow hedges or hedges of the net investments in certain foreign operations. For fair value hedges of interest rate risk, changes in fair value of derivatives are reported in the same line item where the earnings effect of the hedged item is presented, as Interest expense or Interest and dividend income on the Consolidated Statement of Income. Changes in fair value of derivatives designated as hedges of the net investments in foreign operations are recorded as a component of AOCI. For cash flow hedges of floating-rate interest payments or receipts, the change in the fair value of hedges is recognized in AOCI on the Consolidated Balance Sheet and reclassified to earnings in the same period when the hedged cash flows impact earnings. The changes in the fair value of the hedging instrument are recorded in the same income statement line item as the hedged item’s expense or income is recorded. For example, fair value changes of hedges on borrowings are recorded within Interest expense , and fair value changes of hedges on loan assets are recorded as interest income within Interest and dividend income on the Consolidated Statements of Income.

To qualify as an accounting hedge under the hedge accounting rules (versus an economic hedge where hedge accounting is not sought), a derivative must be highly effective in offsetting the risk designated as being hedged at the inception and on an ongoing basis. The Company evaluates the hedge effectiveness and formally documents its hedging relationships at inception, including the identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction at the time the derivative contract is executed. Subsequent to inception, on a quarterly basis, the Company assesses whether the derivatives used in hedging transactions are highly effective in offsetting changes in the fair value of the hedged items or the cash flows of attributable hedged risks. The quarterly assessment is performed on both a prospective basis (to reconfirm forward-looking expectations that the hedge will be highly effective) and a retrospective basis (to determine whether the hedging relationship was highly effective).

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The Company discontinues hedge accounting prospectively when (i) a derivative is no longer highly effective in offsetting the risk being hedged; (ii) a derivative expires, or is sold, terminated or exercised, or (iii) the Company determines that designation of a derivative as a hedge is no longer appropriate. If a fair value hedge is discontinued, the derivative will continue to be recorded on the Consolidated Balance Sheet at fair value with changes in fair value recognized on the Consolidated Statement of Income. When the hedged net investment is discontinued, any amounts that have not yet been recognized in earnings remain in AOCI until the net investment is either sold or substantially liquidated where the changes in the fair value of the derivatives are reclassified out of AOCI into Foreign exchange income on the Consolidated Statement of Income. If a cash flow hedge is discontinued but the hedged forecasted cash flow is still expected to happen, the derivative net gain or loss will remain in AOCI and be reclassified into earnings in the periods in which the hedged forecasted cash flow affects earnings. If a cash flow hedge is discontinued and it becomes probable that the forecasted cash flow is not expected to happen, the derivative net gain or loss will be reclassified into earnings immediately.

The Company also offers various interest rate, commodity and foreign exchange derivative products to customers. These derivative contracts are recorded at fair value with changes in fair value recorded in Customer derivative income or Foreign exchange income on the Consolidated Statement of Income.

As part of its loan origination process, the Company may periodically receive equity warrants to purchase preferred and/or common stock of the public or private companies to which it provides loans. Separately, the Company granted performance-based restricted stock units (“RSUs”) as part of its consideration for an investment made during the third quarter of 2023. The vesting of these performance-based RSUs is contingent on the investee meeting certain financial performance targets during the future performance period. These equity contracts are accounted for as derivatives and recorded at fair value in Other assets or Accrued expenses and other liabilities on the Consolidated Balance Sheet with changes in fair value recorded in Lending fees , for equity warrants related to the loan origination process , or Other investment income, for performance-based RSU’s, on the Consolidated Statement of Income.

The Company is exposed to counterparty credit risk, which is the risk that counterparties to the derivative contracts do not perform as expected. Valuation of derivative assets and liabilities reflect the value of the instrument inclusive of the nonperformance risk. The Company uses master netting arrangements to mitigate counterparty credit risk in derivative transactions. To the extent the derivatives are subject to master netting arrangements, the Company takes into account the impact of master netting arrangements that allow the Company to set off all derivative contracts executed with the same counterparty on a net basis, and to offset the net derivative position with the related cash and securities collateral. The Company elects to offset derivative transactions with the same counterparty on the Consolidated Balance Sheet when a derivative transaction has a legally enforceable master netting arrangement and when it is eligible for netting under ASC 210-20-45-1, Balance Sheet Offsetting: Netting Derivative Positions on Balance Sheet. Derivative balances and related cash collateral are presented net on the Consolidated Balance Sheet. In addition, the Company applies the Settlement to Market treatment for the cash variation margin received/pledged on our interest rate and commodity contracts cleared through certain centrally cleared counterparties. As a result, derivative balances with these counterparties are considered settled by the variation margin.

Fair Value — The Company records or discloses certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining the fair value of financial instruments, the Company uses various methods including market and income approaches. Based on these approaches, the Company utilizes certain assumptions that market participants would use in pricing an asset or a liability. These inputs can be readily observable, market corroborated or generally unobservable. Fair value measurements are based on the exit price notion that maximizes the use of observable inputs and minimizes the use of unobservable inputs. However, for certain instruments, the Company must utilize unobservable inputs in determining fair value due to the lack of observable inputs in the market, which requires greater judgment in the measurement of fair value.

All inputs, whether observable or unobservable, are ranked in accordance with a prescribed fair value hierarchy that assigns the highest priority to quoted prices in active markets and the lowest priority to prices derived from data lacking transparency. The Company’s assets and liabilities are classified in their entirety based on the lowest level of input that is significant to their fair value measurements. The fair value of the Company’s assets and liabilities is classified and disclosed in one of the following three categories:

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• Level 1 — Valuation is based on quoted prices for identical instruments traded in active markets.
• Level 2 — Valuation is based on quoted prices for similar instruments traded in active markets; quoted prices for identical or similar instruments traded in markets that are not active; and model-derived valuations whose inputs are observable and can be corroborated by market data.
• Level 3 — Valuation is based on significant unobservable inputs for determining the fair value of assets or liabilities. These significant unobservable inputs reflect assumptions that market participants may use in pricing the assets or liabilities.

For additional information on fair value, see Note 2 — Fair Value Measurement and Fair Value of Financial Instruments to the Consolidated Financial Statements in this Form 10-K.

Stock-Based Compensation — The Company grants time-based RSUs, which include service conditions for vesting. RSUs that vest in the form of shares of the Company’s common stock are classified as equity. Compensation cost for these time-based awards is based on the quoted market price of the Company’s common stock at the grant date. RSUs that will be settled in cash instead of shares are liability classified awards and compensation cost for these awards is adjusted to fair value based on changes in the Company’s stock price up to the settlement date. In addition, the Company grants performance-based RSUs, which contain additional performance goals and market conditions that are required to be met in order for the awards to vest. Compensation expense for these performance-based RSUs is based on the grant-date fair value considering both performance and market conditions. Subsequently, the Company evaluates the probable outcome of the performance conditions quarterly and makes cumulative adjustments for current and prior periods in compensation expense in the period of change. Market conditions subsequent to the grant date have no impact on the amount of compensation expense.

Compensation cost is amortized on a straight-line basis over the requisite service period for the entire award, reduced by expected forfeitures. Effective third quarter 2025, compensation cost related to awards granted to employees who meet certain age plus years-of-service requirements (“retirement-eligible employees”) is accrued over the service period required to earn the award prior to the grant date, in accordance with ASC 718-10-55-108. This change in the timing of recognition for awards that were granted to or are expected to be granted to retirement-eligible employees resulted in $ 31 million of additional compensation expense in 2025. Forfeitures are estimated at the time of grant and are updated quarterly. If the estimated forfeitures are revised, a cumulative effect of changes in estimated forfeitures for the current and prior periods is recognized in compensation expense in the period of change. Excess tax benefits and deficiencies on share-based payment awards are recognized within Income tax expense on the Consolidated Statement of Income. Refer to Note 13 — Stock Compensation Plans to the Consolidated Financial Statements in this Form 10-K for additional information.

Revenue from Contracts with Customers — The Company recognizes two primary types of revenue on its Consolidated Statement of Income: Net interest income and Noninterest income . The Company’s revenue from contracts with customers consists of service charges and fees related to deposit accounts, card income and wealth management fees. These revenue streams as described below comprised 43 %, 43 % and 41 % of total noninterest income for the years ended December 31, 2025, 2024 and 2023, respectively.
• Deposit Service Charges and Related Fee Income — The Company offers a range of deposit products to individuals and businesses, which includes savings, money market, checking and time deposit accounts. In addition to ongoing maintenance charges, treasury management and business account analysis services are offered to commercial deposit customers. Other optional services such as various in-branch services, automated teller machine/debit card usage, wire transfer services or check orders are also offered. The monthly account fees may vary with the amount of average monthly deposit balances maintained, or the Company may charge a fixed monthly account maintenance fee if certain average balances are not maintained. In addition, each time a deposit customer selects an optional service, the Company may earn transaction fees, generally recognized by the Company at the point when the transaction occurs. For business analysis accounts, commercial deposit customers receive an earnings credit based on their account balance, which can be used to offset the cost of banking and treasury management services. Business analysis accounts that are assessed fees in excess of earnings credits received are typically charged at the end of each month, after all transactions are known and the credits are calculated. Deposit service charges and related fee income are recognized in all operating segments and included in Commercial and consumer d eposit-related account fees on the Consolidated Statement of Income.

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• Wealth Management Fees — The Company provides investment planning services for customers including wealth management services, asset allocation strategies, portfolio analysis and monitoring, investment strategies and risk management strategies. The fees the Company earns are variable and are generally received monthly. The Company recognizes revenue for the services performed at quarter-end based on actual transaction details received from the broker-dealer with whom the Company engages. Wealth management fees are recognized in both consumer and business banking, and commercial banking segments.
• Card Income — Card income primarily consists of merchant referral fees where the Company provides marketing and referral services to acquiring banks for merchant card processing services and earns variable referral fees based on transaction activities. The Company satisfies its performance obligation over time as the Company identifies, solicits, and refers business customers who are provided such services. Card income is recognized in the consumer and business banking, and commercial banking segments and is included in Commercial and consumer deposit-related fees on the Consolidated Statement of Income.

Income Taxes — The Company files consolidated federal income tax returns, foreign tax returns, and various combined and separate company state tax returns. The calculation of the Company’s income tax provision and related tax accruals requires the use of estimates and judgments. Income tax expense consists of two components: current and deferred. Current tax expense represents taxes to be paid or refunded for the current period and includes income tax expense related to our uncertain tax positions. Income tax liabilities (receivables) represent the estimated amounts due to (due from) the various taxing jurisdictions where the Company has established a tax presence and are reported in Accrued expenses and other liabilities or Other assets on the Consolidated Balance Sheets. Deferred tax expense results from changes in deferred tax assets and liabilities between periods, and is determined using the balance sheet method. Under the balance sheet method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax basis of assets and liabilities. Deferred tax assets are also recognized for tax attributes such as net operating loss carryforwards and tax credit carryforwards. Management regularly reviews the Company’s tax positions and deferred tax balances. In concluding whether a valuation allowance is required, the Company considers all available evidence, both positive and negative, based on the more-likely-than-not criteria that such assets will be realized. Factors considered in this analysis include the Company’s ability to generate future taxable income, implement tax-planning strategies (as defined in ASC 740, Income Taxes ) and utilize taxable income from prior carryback years (if such carryback is permitted under the applicable tax law), as well as future reversals of existing taxable temporary differences. To the extent a deferred tax asset is no longer expected more-likely-than-not to be realized, a valuation allowance is established. Deferred tax assets net of deferred tax liabilities are included in Other assets on the Consolidated Balance Sheet.

The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken, or expected to be taken, in an income tax return. Uncertain tax positions that meet the more-likely-than-not recognition threshold are measured to determine the amount of benefit to recognize. An uncertain tax position is measured at the largest amount of benefit that management believes has a greater than 50% likelihood of realization upon settlement. Tax benefits not meeting our realization criteria represent unrecognized tax benefits. The Company establishes a liability for potential taxes, interest and penalties related to uncertain tax positions based on facts and circumstances, including the interpretation of existing law, new judicial or regulatory guidance, and the status of tax audits.

The Company uses the PAM for affordable housing partnership investments, whereby the associated tax credits are recognized as a reduction to tax expense. Upon the adoption of ASU 2023-02 on January 1, 2024, the Company also began applying the PAM to new markets, historic, production and renewable energy tax credit investments. The Company also holds investments in other tax credit investments using either equity method or the measurement alternative method of accounting. These tax credits are recognized on the Consolidated Financial Statements to the extent they are utilized on the Company’s income tax returns in the year the credit arises under the flow through method of accounting.

From time to time, the Company purchases tax credits. The purchased credit is either recorded as an adjustment to income taxes refundable (payable) or as a deferred tax asset, or if the purchased credit is expected to be carried forward to be utilized on future income tax returns, the difference between the purchase price, including direct costs to acquire the credit, and the purchased tax credit is recognized as a deferred credit. The deferred credit is recognized in income tax expense in proportion to the reversal of the associated deferred tax asset.
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Earnings Per Share — Basic EPS is computed by dividing net income by the weighted-average number of outstanding common shares. Outstanding common shares include contingently issuable shares when the contingent condition has been satisfied. Employee share-based payment awards in the form of shares that vest when an employee retires or become retirement-eligible are treated as contingently issuable shares. Diluted EPS is computed by taking net income, adjusted for fair value changes of liability-classified equity contracts that are share-settled, divided by the weighted-average number of common shares outstanding during each period, plus any incremental dilutive common share equivalents calculated for outstanding time- and performance-based RSUs and contingently issuable shares computed using the treasury stock method.

Foreign Currency Translation — When the functional currency of a foreign operation differs from the Company’s reporting currency, the U.S. dollar (“USD”), the assets and liabilities of the foreign operations are translated, for consolidation purposes, from the functional currency to the Company’s reporting currency using period-end spot foreign exchange rates. Revenues and expenses of the foreign operations are translated, for the purpose of consolidation, from its functional currency into the reporting currency USD at the transaction date foreign exchange rates. The effects of these translation adjustments are reported in the Foreign currency translation adjustments account within Other comprehensive income (loss) on the Consolidated Statement of Comprehensive Income, net of any related hedged effects. For transactions that are denominated in a currency other than the functional currency, including transactions denominated in the local currencies of foreign operations that use the USD as their functional currency, the effects of changes in exchange rates are reported in Foreign exchange income on the Consolidated Statement of Income.

Accounting Pronouncement Adopted in 2025

Standard Required Date of Adoption Description Effect on Financial Statements
ASU No. 2023-09, Income Taxes (Topic 740) : Improvements to Income Tax Disclosures

December 31, 2025

Early adoption is permitted. ASU 2023-09 amends the disclosure requirements for income tax rate reconciliation and income taxes paid. The guidance requires public business entities to provide on an annual basis:

• A reconciliation of statutory tax rate to effective tax rate, using both percentages and reporting currency amounts, into specific categories with reconciling items at or above 5% of the statutory federal income rate.
• The amount of income taxes paid (net of refunds) disaggregated by federal, state and foreign taxes, with further disaggregation by individual jurisdictions that are equal to 5% or more of income taxes paid.
• Income (or loss) before income tax expense (or benefit) disaggregated between domestic and foreign, and income tax expense (or benefit) disaggregated by federal, state and foreign.
The Company adopted ASU 2023-09 on December 31, 2025, retrospectively by providing the revised disclosures for all periods presented.

Recent Accounting Pronouncements Yet to be Adopted

Standard Required Date of Adoption Description Effect on Financial Statements

ASU No. 2025-09, Derivatives and Hedging (Topic 815) : Hedge Accounting Improvements
January 1, 2027

Early adoption is permitted.
ASU 2025-09 addresses five specific matters:

1. Broadens the set of hedged risk that may be combined within a group of individual forecasted transactions in a cash flow hedge.
2. Enables entities to apply cash flow hedge accounting on “choose-your-rate” debt.
3. Broadens situations where hedge accounting can be applied to forecasted purchases and sales of nonfinancial assets.
4. Removes the requirement to perform net written option assessment for a compound derivative when it is designated as a hedging instrument.
5. In the case of a dual hedge where a foreign- currency-denominated debt instrument is designated as the hedging instrument in a net investment hedge and a hedged item in a fair value of interest rate risk, the ASU requires the debt instruments’ fair value-hedge basis adjustment be excluded when performing the net investment hedge effectiveness assessment.

This guidance must be applied prospectively for all hedging relationships. The Company may elect to adopt this ASU amendments for hedging relationships as of the adoption date.
The Company is currently evaluating the impact of this guidance and does not expect adoption to have a material impact on the Company’s Consolidated Financial Statements.

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Recent Accounting Pronouncements Yet to be Adopted (Continued)

Standard Required Date of Adoption Description Effect on Financial Statements

ASU No. 2025-08, Financial Instruments—Credit Losses (Topic 326)
January 1, 2027

Early adoption is permitted. ASU 2025-08 broadens the population of financial assets that are within scope of the gross up approach under ASC 326 to include purchased seasoned loans which are defined as:

• Non-PCD loans that are obtained in a business combination.
• Non-PCD loans that are (1) obtained in an asset acquisition or upon consolidation of a VIE that is not a business and (2) are acquired more than 90 days after their origination date by a transferee that was not involved in their origination.

The guidance introduces an accounting policy election to use the amortized cost basis of the asset rather than the discounted cash flow analysis to subsequently measure the credit losses on purchased seasoned loans.

The new guidance is not applicable to credit card loans, ASC 606 receivables, or debt securities. The guidance must be applied prospectively.
The Company is currently evaluating the impact of this guidance on the Company’s Consolidated Financial Statements.
ASU No. 2024-03, Income Statement —Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): D isaggregation of Income Statement Expenses
December 31, 2027

Early adoption is permitted. ASU 2024-03 requires public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to financial statements. Disclosures of disaggregated expenses include the following:

• The amounts of (a) purchases of inventory; (b) employee compensation; (c) depreciation; (d) intangible asset amortization; and (e) depreciation, depletion and amortization of capitalized costs related to oil- and gas-producing activities in each relevant expense caption.
• A qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.
The Company is currently evaluating the impact of this guidance on the Company’s Consolidated Financial Statements.

Note 2 — Fair Value Measurement and Fair Value of Financial Instruments

Under applicable accounting standards, the Company measures a portion of its assets and liabilities at fair value. These assets and liabilities are predominantly recorded at fair value on a recurring basis. At times, certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, they are subject to fair value adjustments only as required through the application of an accounting method such as lower of cost or fair value or write-down of individual assets. The Company categorizes its assets and liabilities into three levels based on the established fair value hierarchy and conducts a review of fair value hierarchy classifications on a quarterly basis. For more information regarding the fair value hierarchy and how the Company measures fair value, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Fair Value to the Consolidated Financial Statements in this Form 10-K.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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

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

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On a monthly basis, the Company validates the valuations provided by third-party pricing service providers to ensure that the fair value determination is consistent with the applicable accounting guidance and that the financial instruments are properly classified in the fair value hierarchy. To perform this validation, the Company evaluates the fair values of securities by comparing the fair values provided by the third-party pricing service providers to prices from other available independent sources for the same securities. When significant variances in prices are identified, the Company further compares the inputs used by different sources to ascertain the reliability of these sources. On a quarterly basis, the Company reviews the valuation inputs and methodology furnished by third-party pricing service providers for each security category. On an annual basis, the Company assesses the reasonableness of broker pricing by reviewing the related pricing methodologies. This review includes corroborating pricing with market data, performing pricing input reviews under current market-related conditions, and investigating security pricing by instrument as needed.

When a quoted price in an active market exists for the identical security, this price is used to determine the fair value and the AFS debt security is classified as Level 1. Level 1 AFS debt securities consist of U.S. Treasury securities. When pricing is unavailable from third-party pricing service providers for certain securities, the Company requests market quotes from various independent external brokers and utilizes the average quoted market prices. In addition, the Company obtains market quotes from other official published sources. As these valuations are based on observable inputs in the current marketplace, they are classified as Level 2.

Equity Securities — Equity securities consist of mutual funds and exchange-traded equity securities. The Company invests in these mutual funds for CRA purposes. The Company uses net asset value (“NAV”) information to determine the fair value of these equity securities. When NAV is available periodically and the equity securities can be redeemed at the publicly available NAV, the fair value of the equity securities is classified as Level 1. When NAV is available periodically, but the equity securities may not be readily marketable at its periodic NAV in the secondary market, the fair value of these equity securities is classified as Level 2. Exchange-traded equity securities are measured based on quoted prices on an active exchange market, and classified as Level 1.

Interest Rate Contracts — Interest rate contracts consist of interest rate swaps and options. The fair value of the interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments). The fair value of the interest rate options, which consist of floors and caps, is determined using the market standard methodology of discounting the future expected cash receipts that will occur if variable interest rates fall below (rise above) the strike rate of the floors (caps). In addition, to comply with the provisions of ASC 820, Fair Value Measurement , the Company incorporates credit valuation adjustments to appropriately reflect both its own and the respective counterparty’s nonperformance risk in the fair value measurements of its derivatives. The credit valuation adjustments associated with the Company’s derivatives utilize model-derived credit spreads, which are Level 3 inputs. Considering the observable nature of all other significant inputs utilized, the Company classifies these derivative instruments as Level 2.

Foreign Exchange Contracts — The fair value of foreign exchange contracts is determined at each reporting period based on changes in the applicable foreign exchange rates. These are over-the-counter contracts where quoted market prices are not readily available. Valuation is measured using conventional valuation methodologies with observable market data. Due to the short-term nature of the majority of these contracts, the counterparties’ credit risks are considered nominal and result in no adjustments to the valuation of the foreign exchange contracts. Due to the observable nature of the inputs used in deriving the fair value of these contracts, the valuation of foreign exchange contracts is classified as Level 2. In addition, the Bank managed its foreign currency exposure in the net investment in its China subsidiary, EWCN, a non-USD functional currency subsidiary, with foreign currency non-deliverable forward contracts. These foreign currency non-deliverable forward contracts were designated as net investment hedges. The fair value of foreign currency non-deliverable forward contracts is determined by comparing the contracted foreign exchange rate to the current market foreign exchange rate. Key inputs of the current market exchange rate include the spot and forward rates of the contractual currencies. Foreign exchange forward curves are used to determine which forward rate pertains to a specific maturity. Due to the observable nature of the inputs used in deriving the estimated fair value, these instruments are classified as Level 2.

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Credit Contracts — Credit contracts utilized by the Company are comprised of credit risk participation agreements (“RPAs”) between the Company and institutional counterparties. The fair value of the RPAs is calculated by determining the total expected asset or liability exposure of the derivatives to the borrowers and applying the borrowers’ credit spread to that exposure, which is an unobservable input. Total expected exposure incorporates both the current and potential future exposure of the derivatives, derived from using observable inputs, such as yield curves and volatilities. Due to the observable nature of the majority of significant inputs used in deriving the estimated fair value, credit contracts are classified as Level 2.

Equity Contracts — Equity contracts consist of warrants to purchase private company common or preferred stock, and any liability-classified contingently issuable shares of the Company. The fair value of the warrants is based on the Black-Scholes option pricing model. The model uses inputs such as the offering price observed in the most recent round of funding, stated strike price, warrant expiration date, risk-free interest rate based on duration-matched U.S. Treasury rate and equity volatility. The Company applies proxy volatilities based on the industry sectors of the private companies. The model values are then adjusted for a general lack of liquidity due to the private nature of the underlying companies. Since both equity volatility and liquidity discount assumptions are subject to management’s judgment, measurement uncertainty is inherent in the valuation of private company warrants. Due to the unobservable nature of the equity volatility and liquidity discount assumptions used in deriving the estimated fair value, warrants from private companies are classified as Level 3. On a quarterly basis, the changes in the fair value of warrants from private companies are reviewed for reasonableness, and a measurement of uncertainty analysis on the equity volatility and liquidity discount assumptions is performed.

In connection with the Company’s acquisition of a 49.99 % equity interest in an investee during the third quarter of 2023, the Company granted 349 thousand performance-based RSUs as part of its consideration, in addition to $ 95 million in cash. The vesting of these equity contracts on September 1, 2028, is contingent on the investee meeting certain financial performance targets during the performance period. The fair value of liability-classified equity contracts varies based on the operating revenue and measure of operating profit of the investee to be achieved during the future performance period, as well as the Company’s stock price. These performance-based RSUs are expected to vest into a variable number of the Company’s common stock, ranging from 20 % to 200 % of the target performance-based RSUs granted. Due to the use of significant unobservable inputs in their valuation, these equity contracts are classified as Level 3. For additional information on the equity contracts, refer to Note 5 — Derivatives to the Consolidated Financial Statements in this Form 10-K.

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

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The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2025 and 2024:

Assets and Liabilities Measured at Fair Value on a Recurring Basis
as of December 31, 2025
($ in thousands) Level 1 Level 2 Level 3 Total Fair Value
AFS debt securities:
U.S. Treasury securities $ 993,913   $ —   $ —   $ 993,913  
U.S. government agency and U.S. government sponsored enterprise debt securities —   257,654   —   257,654  
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities (1) :

Commercial mortgage-backed securities —   265,338   —   265,338  
Residential mortgage-backed securities —   10,132,653   —   10,132,653  
Municipal securities —   243,102   —   243,102  
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities —   190,948   —   190,948  
Residential mortgage-backed securities —   393,787   —   393,787  
Corporate debt securities —   464,981   —   464,981  
Foreign government bonds —   238,455   —   238,455  
Asset-backed securities —   31,389   —   31,389  

Total AFS debt securities $ 993,913   $ 12,218,307   $ —   $ 13,212,220  
Affordable housing partnership, tax credit and CRA investments, net:
Equity securities $ 22,098   $ 4,298   $ —   $ 26,396  
Total affordable housing partnership, tax credit and CRA investments, net $ 22,098   $ 4,298   $ —   $ 26,396  
Other assets:
Equity securities $ 630   $ —   $ —   $ 630  
Total other assets $ 630   $ —   $ —   $ 630  
Derivative assets:
Interest rate contracts $ —   $ 298,558   $ —   $ 298,558  
Foreign exchange contracts —   44,340   —   44,340  
Credit contracts —   25   —   25  
Equity contracts —   —   522   522  
Commodity contracts —   66,022   —   66,022  
Gross derivative assets $ —   $ 408,945   $ 522   $ 409,467  
Netting adjustments (2)
$ —   $ ( 257,525 ) $ —   $ ( 257,525 )
Net derivative assets $ —   $ 151,420   $ 522   $ 151,942  
Derivative liabilities:
Interest rate contracts $ —   $ 256,870   $ —   $ 256,870  
Foreign exchange contracts —   43,160   —   43,160  
Equity contracts (3)
—   —   13,734   13,734  
Credit contracts —   51   —   51  
Commodity contracts —   72,158   —   72,158  
Gross derivative liabilities $ —   $ 372,239   $ 13,734   $ 385,973  
Netting adjustments (2)
$ —   $ ( 101,640 ) $ —   $ ( 101,640 )
Net derivative liabilities $ —   $ 270,599   $ 13,734   $ 284,333  

Refer to table footnotes on the following page.
100

Assets and Liabilities Measured at Fair Value on a Recurring Basis
as of December 31, 2024
($ in thousands) Level 1 Level 2 Level 3 Total Fair Value
AFS debt securities:
U.S. Treasury securities $ 638,265   $ —   $ —   $ 638,265  
U.S. government agency and U.S. government sponsored enterprise debt securities —   262,587   —   262,587  
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities (1) :

Commercial mortgage-backed securities —   426,214   —   426,214  
Residential mortgage-backed securities —   7,738,260   —   7,738,260  
Municipal securities —   250,153   —   250,153  
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities —   258,470   —   258,470  
Residential mortgage-backed securities —   433,608   —   433,608  
Corporate debt securities —   526,166   —   526,166  
Foreign government bonds —   233,880   —   233,880  
Asset-backed securities —   34,715   —   34,715  
Collateralized loan obligations (“CLOs”)
—   44,493   —   44,493  
Total AFS debt securities $ 638,265   $ 10,208,546   $ —   $ 10,846,811  
Affordable housing partnership, tax credit and CRA investments, net:
Equity securities $ 20,817   $ 4,204   $ —   $ 25,021  
Total affordable housing partnership, tax credit and CRA investments, net $ 20,817   $ 4,204   $ —   $ 25,021  
Other assets:
Equity securities $ 568   $ —   $ —   $ 568  
Total other assets $ 568   $ —   $ —   $ 568  
Derivative assets:
Interest rate contracts $ —   $ 385,311   $ —   $ 385,311  
Foreign exchange contracts —   89,083   —   89,083  
Credit contracts —   1   —   1  
Equity contracts —   —   239   239  
Commodity contracts —   48,499   —   48,499  
Gross derivative assets $ —   $ 522,894   $ 239   $ 523,133  
Netting adjustments (2)
$ —   $ ( 427,292 ) $ —   $ ( 427,292 )
Net derivative assets $ —   $ 95,602   $ 239   $ 95,841  
Derivative liabilities:
Interest rate contracts $ —   $ 414,172   $ —   $ 414,172  
Foreign exchange contracts —   71,254   —   71,254  
Equity contracts (3)
—   —   15,119   15,119  
Credit contracts —   12   —   12  
Commodity contracts —   45,328   —   45,328  
Gross derivative liabilities $ —   $ 530,766   $ 15,119   $ 545,885  
Netting adjustments (2)
$ —   $ ( 112,284 ) $ —   $ ( 112,284 )
Net derivative liabilities $ —   $ 418,482   $ 15,119   $ 433,601  

(1) Includes Government National Mortgage Association (“GNMA”) AFS debt securities totaling $ 9.6 billion and $ 7.2 billion of fair value as of December 31, 2025 and 2024, respectively.
(2) Represents the balance sheet netting of derivative assets and liabilities and related cash collateral under master netting agreements or similar agreements. See Note 5 — Derivatives to the Consolidated Financial Statements in this Form 10-K for additional information.
(3) Equity contracts classified as derivative liabilities consist of performance-based RSUs granted as part of EWBC’s consideration in an investment.
101

For the years ended December 31, 2025, 2024 and 2023, Level 3 fair value measurements that were measured on a recurring basis consisted of warrant equity contracts issued by private companies and liability-classified contingently issuable shares of the Company. The following table provides a reconciliation of the beginning and ending balances of these equity contracts for the years ended December 31, 2025, 2024 and 2023:

Year Ended December 31,
($ in thousands) 2025 2024 2023

Derivative assets:
Equity contracts
Beginning balance $ 239   $ 336   $ 323  

Total losses included in earnings (1)
( 156 ) ( 97 ) ( 79 )

Issuances (2)
439   —   92  

Ending balance $ 522   $ 239   $ 336  
Derivative liabilities:
Equity contracts (3)

Beginning balance $ 15,119   $ 15,119   $ —  
Total gains included in earnings (4)
( 1,385 ) —   —  
Issuances —   —   15,119  
Ending balance $ 13,734   $ 15,119   $ 15,119  

(1) Includes unrealized losses recorded in Lending and loan servicing fees on the Consolidated Statement of Income.
(2) Included in Lending and loan servicing fees on the Consolidated Statement of Income.
(3) Equity contracts classified as derivative liabilities consist of performance-based RSUs granted as part of EWBC’s consideration in an investment.
(4) Included in Other investment income on the Consolidated Statement of Income.

The following table presents quantitative information about the significant unobservable inputs used in the valuation of Level 3 fair value measurements as of December 31, 2025 and 2024. The significant unobservable inputs presented in the table below are those that the Company considers significant to the fair value of the Level 3 assets. The Company considers unobservable inputs to be significant if, by their exclusion, the fair value of the Level 3 assets would be impacted by a predetermined percentage change.

($ in thousands) Fair Value Measurements (Level 3) Valuation Technique Unobservable Inputs Range of Inputs Weighted- Average of Inputs

December 31, 2025
Derivative assets:
Equity contracts $ 522   Black-Scholes option pricing model Equity volatility 34 % — 53 %
40 % (1)

Liquidity discount 47 % 47 %
Derivative liabilities:
Equity contracts (2)
$ 13,734   Internal model Payout % based on operating revenue and measure of operating profit of investee
35 % 35 %
December 31, 2024
Derivative assets:
Equity contracts $ 239   Black-Scholes option pricing model Equity volatility 38 % — 57 %
50 % (1)

Liquidity discount 47 % 47 %
Derivative liabilities:
Equity contracts (2)
$ 15,119   Internal model Payout % based on operating revenue and measure of operating profit of investee
84 % 84 %

(1) Weighted-average of inputs is calculated based on the fair value of equity contracts as of December 31, 2025 and 2024.
(2) Equity contracts classified as derivative liabilities consist of performance-based RSUs granted as part of EWBC’s consideration in an investment.

102

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

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

Individually Evaluated Loans Held-for-Investment — Individually evaluated loans held-for-investment are classified as Level 3 assets. The following two methods are used to derive the fair value of individually evaluated loans held-for-investment:
• Discounted cash flow valuation techniques consist of developing an expected stream of cash flows over the life of the loans, and then calculating the present value of the loans by discounting the expected cash flows at a designated discount rate.
• When the repayment of an individually evaluated loan is dependent on the sale of the collateral, the fair value of the loan is determined based on the fair value of the underlying collateral, which may take the form of real estate, inventory, equipment, contracts or guarantees. The fair value of the underlying collateral is generally based on third-party appraisals, or an internal valuation if a third-party appraisal is not required by regulations, or is unavailable. An internal valuation utilizes one or more valuation techniques such as the income, market and/or cost approaches.

Affordable Housing Partnership, Tax Credit and CRA Investments, Net — The Company conducts due diligence and secures applicable internal and external approval on its affordable housing partnership, tax credit and CRA investments prior to closing the investment and initial funding. After closing, the Company continues its periodic monitoring process to ensure that book values are realizable, the investments are performing as expected and there is no significant tax credit recapture risk. This monitoring process includes reviewing the investment entity’s financial statements, production reports and a nnual tax returns, the annual financial statements of the sponsor and guarantor (if any) and a comparison of the actual performance to plan based on the final financial model at the time of closing. The Company assesses its tax credit and other investments for possible OTTI on an annual basis or when events or circumstances suggest that the carrying amount of the investments may not be realizable. These circumstances can include, but are not limited to the following factors:
• expected future cash flows that are less than the carrying amoun t of the investment;
• changes in the economic, market or technological environment that could adversely affect the investee’s operations;
• the potential for tax credit recapture; and
• other factors that raise doubt about the investee’s ability to continue as a going concern, such as negative cash flows from operations and the continuing prospects of the underlying operations of the investment.

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

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

103

The following tables present the carrying amounts of assets that were still held and had fair value adjustments measured on a nonrecurring basis as of December 31, 2025 and 2024:

Assets Measured at Fair Value on a Nonrecurring Basis
as of December 31, 2025
($ in thousands) Level 1 Level 2 Level 3 Fair Value Measurements
Loans held-for-investment:

Commercial:
C&I $ —   $ —   $ 5,916   $ 5,916  
CRE:
CRE —   —   13,335   13,335  

Total loans held-for-investment $ —   $ —   $ 19,251   $ 19,251  
Affordable housing partnership, tax credit and CRA investments, net $ —   $ —   $ 953   $ 953  

OREO (1)
$ —   $ —   $ 13,035   $ 13,035  

Assets Measured at Fair Value on a Nonrecurring Basis
as of December 31, 2024
($ in thousands) Level 1 Level 2 Level 3 Fair Value Measurements
Loans held-for-investment:

Commercial:
C&I $ —   $ —   $ 48,384   $ 48,384  
CRE:
CRE —   —   1,678   1,678  

Construction and land —   —   11,316   11,316  
Total commercial —   —   61,378   61,378  
Consumer:
Residential mortgage:

HELOCs —   —   108   108  

Total consumer —   —   108   108  
Total loans held-for-investment $ —   $ —   $ 61,486   $ 61,486  
Affordable housing partnership, tax credit and CRA investments, net $ —   $ —   $ 5,000   $ 5,000  
OREO (1)
$ —   $ —   $ 19,386   $ 19,386  

(1) Represents the carrying value of OREO property that was written down subsequent to its initial classification as OREO and is included in Other assets on the Consolidated Balance Sheet.

104

The following table presents the change in the fair value of certain assets held at the end of the respective reporting periods, for which a nonrecurring fair value adjustment was recognized for the years ended December 31, 2025, 2024 and 2023:

Year Ended December 31,
($ in thousands) 2025 2024 2023
Loans held-for-investment:

Commercial:
C&I $ ( 40,996 ) $ ( 43,754 ) $ ( 6,152 )
CRE:
CRE ( 21,830 ) ( 78 ) ( 1,183 )

Construction and land —   ( 2,289 ) —  
Total CRE ( 21,830 ) ( 2,367 ) ( 1,183 )
Total commercial ( 62,826 ) ( 46,121 ) ( 7,335 )
Consumer:
Residential mortgage:
Single-family residential —   ( 1,392 ) —  
HELOCs —   —   ( 40 )

Total consumer —   ( 1,392 ) ( 40 )
Total loans held-for-investment $ ( 62,826 ) $ ( 47,513 ) $ ( 7,375 )
Affordable housing partnership, tax credit and CRA investments, net ( 550 ) ( 685 ) ( 1,140 )
OREO ( 7,381 ) ( 7,735 ) —  

Total nonrecurring fair value losses $ ( 70,757 ) $ ( 55,933 ) $ ( 8,515 )

The following table presents the quantitative information about the significant unobservable inputs used in the valuation of Level 3 fair value measurements that are measured on a nonrecurring basis as of December 31, 2025 and 2024:

($ in thousands) Fair Value Measurements (Level 3) Valuation Techniques Unobservable Inputs Range of Inputs Weighted-Average of Inputs
December 31, 2025

Loans held-for-investment $ 4,516   Fair value of collateral Discount 75 % — 100 %
75 % (1)

$ 14,735   Fair value of property Selling cost 8 %
8 %

Affordable housing partnership, tax credit and CRA investments, net $ 953   Individual analysis of each investment Expected future tax
benefits and distributions NM NM

OREO $ 13,035   Fair value of property Selling cost 8 % 8 %

December 31, 2024

Loans held-for-investment $ 910   Fair value of collateral Discount 50 % 50 %
$ 22,993   Fair value of collateral Contract value NM NM
$ 37,583   Fair value of property Selling cost 8 % — 20 %
10 % (1)

Affordable housing partnership, tax credit and CRA investments, net $ 5,000   Individual analysis of each investment Expected future tax
benefits and distributions NM NM

OREO $ 19,386   Fair value of property Selling cost 8 % 8 %

NM - Not meaningful
(1) Weighted-average of inputs is based on the relative fair value of the respective assets as of both December 31, 2025 and 2024.
105

Disclosures about the Fair Value of Financial Instruments

The following tables present the fair value estimates for financial instruments as of December 31, 2025 and 2024, excluding financial instruments recorded at fair value on a recurring basis as they are included in the tables presented elsewhere in this Note. The carrying amounts in the following tables are recorded on the Consolidated Balance Sheet under the indicated captions, except for accrued interest receivable, restricted equity securities, at cost, and mortgage servicing rights that are included in Other assets , and accrued interest payable which is included in Accrued expenses and other liabilities . These financial instruments are measured on an amortized cost basis on the Company’s Consolidated Balance Sheet.

December 31, 2025
($ in thousands) Carrying Amount Level 1 Level 2 Level 3 Estimated Fair Value
Financial assets:
Cash and cash equivalents $ 4,188,139   $ 4,188,139   $ —   $ —   $ 4,188,139  
Interest-bearing deposits with banks $ 16,189   $ —   $ 16,189   $ —   $ 16,189  
Resale agreements $ 425,000   $ —   $ 351,065   $ —   $ 351,065  
HTM debt securities $ 2,870,058   $ 524,887   $ 1,954,859   $ —   $ 2,479,746  
Restricted equity securities, at cost $ 153,484   $ —   $ 153,484   $ —   $ 153,484  
Loans held-for-sale $ 20,976   $ —   $ 20,976   $ —   $ 20,976  
Loans held-for-investment, net $ 56,068,399   $ —   $ —   $ 54,665,865   $ 54,665,865  
Mortgage servicing rights $ 4,119   $ —   $ —   $ 7,114   $ 7,114  
Accrued interest receivable $ 315,669   $ —   $ 315,669   $ —   $ 315,669  
Financial liabilities:
Demand, checking, savings and money market deposits $ 41,797,887   $ —   $ 41,797,887   $ —   $ 41,797,887  
Time deposits $ 25,284,814   $ —   $ 25,285,076   $ —   $ 25,285,076  

FHLB advances $ 3,000,000   $ —   $ 3,001,878   $ —   $ 3,001,878  

Long-term debt $ 32,320   $ —   $ 32,070   $ —   $ 32,070  
Accrued interest payable $ 60,513   $ —   $ 60,513   $ —   $ 60,513  

December 31, 2024
($ in thousands) Carrying Amount Level 1 Level 2 Level 3 Estimated Fair Value
Financial assets:
Cash and cash equivalents $ 5,250,742   $ 5,250,742   $ —   $ —   $ 5,250,742  
Interest-bearing deposits with banks $ 48,198   $ —   $ 48,198   $ —   $ 48,198  
Resale agreements $ 425,000   $ —   $ 329,769   $ —   $ 329,769  
HTM debt securities $ 2,917,413   $ 499,858   $ 1,887,896   $ —   $ 2,387,754  
Restricted equity securities, at cost $ 165,259   $ —   $ 165,259   $ —   $ 165,259  

Loans held-for-investment, net $ 53,024,585   $ —   $ —   $ 51,328,254   $ 51,328,254  
Mortgage servicing rights $ 5,234   $ —   $ —   $ 8,822   $ 8,822  

Accrued interest receivable $ 316,392   $ —   $ 316,392   $ —   $ 316,392  
Financial liabilities:
Demand, checking, savings and money market deposits $ 39,959,251   $ —   $ 39,959,251   $ —   $ 39,959,251  
Time deposits $ 23,215,772   $ —   $ 23,225,317   $ —   $ 23,225,317  
FHLB advances $ 3,500,000   $ —   $ 3,497,953   $ —   $ 3,497,953  

Long-term debt $ 32,001   $ —   $ 31,246   $ —   $ 31,246  
Accrued interest payable $ 61,950   $ —   $ 61,950   $ —   $ 61,950  

106

Note 3 — Securities Purchased under Resale Agreements

The Company’s resale agreements expose it to credit risk from both the counterparties and the underlying collateral. The Company manages credit exposure from certain transactions by entering into master netting agreements and collateral arrangements with the counterparties. The relevant agreements allow for an efficient closeout of the transaction, liquidation and set-off of collateral against the net amount owed by the counterparty following a default. It is the Company’s policy to take possession, where possible, of the collateral underlying resale agreements. As a result of the Company’s credit risk mitigation practices with respect to resale agreements as described above, the Company did not hold any reserves for credit impairment with respect to these agreements as of both December 31, 2025 and 2024. Gross securities purchased under resale agreements were $ 425 million as of both December 31, 2025 and 2024.

Balance Sheet Offsetting

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

The following table presents the resale agreements included on the Consolidated Balance Sheet as of December 31, 2025 and 2024:

Gross Amounts Not Offset on the Consolidated Balance Sheet
($ in thousands) Gross Amounts of Recognized Assets Gross Amounts Offset on the Consolidated Balance Sheet Net Amounts of Assets Presented on the Consolidated Balance Sheet Collateral Received (1)
Net Amount
Resale agreements as of December 31, 2025
$ 425,000   $ —   $ 425,000   $ ( 350,953 ) $ 74,047  

Resale agreements as of December 31, 2024
$ 425,000   $ —   $ 425,000   $ ( 329,603 ) $ 95,397  

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

In addition to the amounts included in the table above, the Company also has balance sheet netting related to derivatives. Refer to Note 5 — Derivatives to the Consolidated Financial Statements in this Form 10-K for additional information.
107

Note 4 — Securities

The following tables present the amortized cost, gross unrealized gains and losses, allowance for credit losses, and fair value by major categories of AFS and HTM debt securities as of December 31, 2025 and 2024:

December 31, 2025
($ in thousands) Amortized Cost (1)
Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value
AFS debt securities:
U.S. Treasury securities $ 1,010,053   $ 837   $ ( 16,977 ) $ —   $ 993,913  
U.S. government agency and U.S. government-sponsored enterprise debt securities 287,687   —   ( 30,033 ) —   257,654  
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities (2) :

Commercial mortgage-backed securities 292,564   86   ( 27,312 ) —   265,338  
Residential mortgage-backed securities 10,251,714   68,588   ( 187,649 ) —   10,132,653  
Municipal securities
277,275   20   ( 34,193 ) —   243,102  
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities 214,987   —   ( 22,139 ) ( 1,900 ) 190,948  
Residential mortgage-backed securities 452,208   —   ( 58,421 ) —   393,787  
Corporate debt securities 554,158   6   ( 89,183 ) —   464,981  
Foreign government bonds 247,249   437   ( 9,231 ) —   238,455  
Asset-backed securities 31,886   —   ( 497 ) —   31,389  

Total AFS debt securities 13,619,781   69,974   ( 475,635 ) ( 1,900 ) 13,212,220  
HTM debt securities
U.S. Treasury securities 540,666   —   ( 15,779 ) —   524,887  
U.S. government agency and U.S. government-sponsored enterprise debt securities 1,007,055   —   ( 146,921 ) —   860,134  
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities (3) :

Commercial mortgage-backed securities 474,747   —   ( 69,471 ) —   405,276  
Residential mortgage-backed securities 662,127   —   ( 124,176 ) —   537,951  
Municipal securities 185,463   —   ( 33,965 ) —   151,498  
Total HTM debt securities 2,870,058   —   ( 390,312 ) —   2,479,746  
Total debt securities $ 16,489,839   $ 69,974   $ ( 865,947 ) $ ( 1,900 ) $ 15,691,966  

108

December 31, 2024

($ in thousands) Amortized Cost (1)
Gross Unrealized Gains Gross Unrealized Losses Fair Value
AFS debt securities:
U.S. Treasury securities $ 676,300   $ —   $ ( 38,035 ) $ 638,265  
U.S. government agency and U.S. government-sponsored enterprise debt securities 308,220   —   ( 45,633 ) 262,587  
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities (2) :

Commercial mortgage-backed securities 472,535   886   ( 47,207 ) 426,214  
Residential mortgage-backed securities 7,974,768   12,278   ( 248,786 ) 7,738,260  
Municipal securities 287,301   38   ( 37,186 ) 250,153  
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities 294,235   2   ( 35,767 ) 258,470  
Residential mortgage-backed securities 514,527   —  

( 80,919 ) 433,608  
Corporate debt securities 653,500   —   ( 127,334 ) 526,166  
Foreign government bonds 244,803   2,069   ( 12,992 ) 233,880  
Asset-backed securities 35,086   —   ( 371 ) 34,715  
CLOs 44,500   —   ( 7 ) 44,493  
Total AFS debt securities 11,505,775   15,273   ( 674,237 ) 10,846,811  
HTM debt securities:
U.S. Treasury securities 535,080   —   ( 35,222 ) 499,858  
U.S. government agency and U.S. government-sponsored enterprise debt securities 1,004,479   —   ( 200,259 ) 804,220  
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities (3) :

Commercial mortgage-backed securities 486,388   —   ( 91,461 ) 394,927  
Residential mortgage-backed securities 703,833   —   ( 155,626 ) 548,207  
Municipal securities 187,633   —   ( 47,091 ) 140,542  
Total HTM debt securities 2,917,413   —   ( 529,659 ) 2,387,754  
Total debt securities $ 14,423,188   $ 15,273   $ ( 1,203,896 ) $ 13,234,565  

(1) Amortized cost excludes accrued interest receivables, which are included in Other assets on the Consolidated Balance Sheet. As of December 31, 2025 and 2024, the accrued interest receivables were $ 54 million and $ 45 million, respectively. For the Company’s accounting policy related to debt securities’ accrued interest receivables, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Allowance for Credit Losses on Available-for-Sale Debt Securities and Allowance for Credit Losses on Held-to-Maturity Debt Securities to the Consolidated Financial Statements in this Form 10-K.
(2) Includes GNMA AFS debt securities totaling $ 9.6  billion of both amortized cost and fair value as of December 31, 2025, and $ 7.3 billion of amortized cost and $ 7.2 billion of fair value as of December 31, 2024.
(3) Includes GNMA HTM debt securities totaling $ 79  million of amortized cost and $ 65  million of fair value as of December 31, 2025, and $ 86 million of amortized cost and $ 68 million of fair value as of December 31, 2024.
109

Unrealized Losses of Available-for-Sale Debt Securities

The following tables present the fair value and the associated gross unrealized losses of the Company’s AFS debt securities, aggregated by investment category and the length of time that the securities have been in a continuous unrealized loss position, as of December 31, 2025 and 2024:

December 31, 2025
Less Than 12 Months 12 Months or More Total
($ in thousands) Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses
AFS debt securities:
U.S. Treasury securities $ 323,019   $ ( 1,627 ) $ 575,638   $ ( 15,350 ) $ 898,657   $ ( 16,977 )
U.S. government agency and U.S. government-sponsored enterprise debt securities —   —   257,654   ( 30,033 ) 257,654   ( 30,033 )
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities —   —   256,503   ( 27,312 ) 256,503   ( 27,312 )
Residential mortgage-backed securities 1,052,833   ( 5,480 ) 1,582,952   ( 182,169 ) 2,635,785   ( 187,649 )
Municipal securities —   —   237,214   ( 34,193 ) 237,214   ( 34,193 )
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities —   —   190,948   ( 22,139 ) 190,948   ( 22,139 )
Residential mortgage-backed securities —   —   393,787   ( 58,421 ) 393,787   ( 58,421 )
Corporate debt securities —   —   454,975   ( 89,183 ) 454,975   ( 89,183 )
Foreign government bonds —   —   90,769   ( 9,231 ) 90,769   ( 9,231 )
Asset-backed securities —   —   31,389   ( 497 ) 31,389   ( 497 )

Total AFS debt securities $ 1,375,852   $ ( 7,107 ) $ 4,071,829   $ ( 468,528 ) $ 5,447,681   $ ( 475,635 )

December 31, 2024
Less Than 12 Months 12 Months or More Total
($ in thousands) Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses
AFS debt securities:
U.S. Treasury securities $ —   $ —   $ 638,265   $ ( 38,035 ) $ 638,265   $ ( 38,035 )
U.S. government agency and U.S. government-sponsored enterprise debt securities —   —   262,587   ( 45,633 ) 262,587   ( 45,633 )
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities 2,741   ( 30 ) 377,756   ( 47,177 ) 380,497   ( 47,207 )
Residential mortgage-backed securities 2,719,228   ( 16,404 ) 1,528,252   ( 232,382 ) 4,247,480   ( 248,786 )
Municipal securities 2,763   ( 95 ) 245,360   ( 37,091 ) 248,123   ( 37,186 )
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities 10,767   ( 332 ) 235,668   ( 35,435 ) 246,435   ( 35,767 )
Residential mortgage-backed securities —   —   433,608   ( 80,919 ) 433,608   ( 80,919 )
Corporate debt securities —   —   526,166   ( 127,334 ) 526,166   ( 127,334 )
Foreign government bonds —   —   87,008   ( 12,992 ) 87,008   ( 12,992 )
Asset-backed securities —   —   34,715   ( 371 ) 34,715   ( 371 )
CLOs —   —   44,493   ( 7 ) 44,493   ( 7 )
Total AFS debt securities $ 2,735,499   $ ( 16,861 ) $ 4,413,878   $ ( 657,376 ) $ 7,149,377   $ ( 674,237 )

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As of December 31, 2025, the Company had 429 AFS debt securities in a gross unrealized loss position, primarily consisting of 222 U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities, 47 corporate debt securities, and 66 non-agency mortgage-backed securities. In comparison, as of December 31, 2024, the Company had 541 AFS debt securities in a gross unrealized loss position, primarily consisting of 290 U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities, 66 corporate debt securities, and 83 non-agency mortgage-backed securities.

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

The Company evaluates each AFS debt security where the fair value declines below amortized cost. For a discussion of the factors and criteria the Company uses in analyzing securities for impairment related to credit losses, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Allowance for Credit Losses on Available-for-Sale Debt Securities to the Consolidated Financial Statements in this Form 10-K.

The gross unrealized losses presented in the preceding tables were primarily attributable to interest rate movement and the widening of liquidity and/or credit spreads. U.S. Treasury, U.S. government agency, U.S. government-sponsored agency, and U.S. government-sponsored enterprise debt and mortgage-backed securities are issued, guaranteed, or otherwise supported by the U.S. government and have a zero credit loss assumption. The remaining securities that were in an unrealized loss position as of December 31, 2025 were mainly comprised of the following:
• Corporate debt securities — The market value movement as of December 31, 2025 was primarily due to interest rate movement and spread change. A portion of the corporate debt securities is comprised of subordinated debt securities issued by U.S. banks. These securities are nearly all rated investment grade by NRSROs and issued by well-capitalized financial institutions with strong profitability. The contractual payments from these corporate debt securities have been and are expected to be received on time. The Company will continue to monitor the market developments in the banking sector and the credit performance of these securities.
• Non-agency mortgage-backed securities — The market value movement for the majority of these securities as of December 31, 2025 was primarily due to interest rate movement and spread change. In contrast, one non-agency commercial mortgage-backed security experienced a deterioration in both its credit rating and expected cash flows, resulting in its fair value falling below its amortized cost. Consequently, a credit-related impairment of $ 2  million was recognized through allowance for credit losses as of December 31, 2025. For the remaining non-agency mortgage-backed securities, a substantial majority are rated investment grade by NRSROs or have high priority in the cash flow waterfall within the securitization structure, and the contractual payments have been on time. Accordingly, the Company believes the risk of credit losses on the remaining securities is low.

As of both December 31, 2025 and 2024, the Company intended to hold the AFS debt securities with unrealized losses through the anticipated recovery period and it was more-likely-than-not that the Company would not have to sell these securities before the recovery of their amortized cost. The issuers of these securities have not, to the Company’s knowledge, established any cause for default on these securities. As a result, the Company expects to recover the entire amortized cost basis of these securities.

The Company recorded $ 2  million in allowance for credit losses related to a non-agency commercial mortgage-backed security as of December 31, 2025, which was recognized as a provision for credit losses, compared with no allowance for credit losses provided against these securities as of 2024. In addition, there was no provision for credit losses recognized for both the years ended December 31, 2024 and 2023.

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

The Company separately evaluates its HTM debt securities for any credit losses using an expected loss model, similar to the methodology used for loans. For additional information on the Company’s credit loss methodology, refer to Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Allowance for Credit Losses on Held-to-Maturity Debt Securities to the Consolidated Financial Statements in this Form 10-K.

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The Company monitors the credit quality of the HTM debt securities using external credit ratings. As of December 31, 2025, all HTM securities were rated investment grade by NRSROs and issued, guaranteed, or supported by U.S. government entities and agencies. Accordingly, the Company applied a zero credit loss assumption and no allowance for credit losses was recorded as of December 31, 2025 and 2024. Overall, the Company believes that the credit support levels of the debt securities are strong and, based on current assessments and macroeconomic forecasts, expects that full contractual cash flows will be received.

Realized Gains and Credit Losses

The following table presents the gross realized gains from the sales of AFS debt securities (pre-tax), credit losses, the impairment write-off of AFS debt securities, and the related tax (benefit) expense included in earnings for the years ended December 31, 2025, 2024 and 2023:

Year Ended December 31,
($ in thousands) 2025 2024 2023

Gross realized gains from sales (1)
$ 963   $ 2,069   $ 3,138  
Credit losses $ ( 1,900 ) $ —   $ —  
Impairment write-off (1)
$ —   $ —   $ ( 10,000 )
Related tax (benefit) expense
$ ( 277 ) $ 612   $ ( 2,029 )