FULLTEXT DEL 3 AV 3

10-Q – 2026-05-08 – ewbc-20260331.htm

As of March 31, 2026, the Company’s net interest income profile remains modestly asset-sensitive under gradual ramped 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.

To reduce net interest income 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 1.19% 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 March 31, 2026 and December 31, 2025.

EVE Volatility (1)

Change in Interest Rates (in bps) March 31, 2026 December 31, 2025
+200 (13.8) % (14.1) %
+100 (6.6) % (6.6) %
-100 5.1 % 5.2 %
-200 8.8 % 9.5 %

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

As of March 31, 2026, 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.

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. 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 offset by 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 March 31, 2026, the Company anticipates performance by all of its counterparties and has not incurred any related credit losses.

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 March 31, 2026 and December 31, 2025:

March 31, 2026
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 $ 22,611 $ 5,319 5.66 % 5.59 % 25.6

Interest rate collars - Buy floor sell cap 250,000 — — Cap: 4.58%
Floor: 1.50% 3.67 % 2.0
Total cash flow hedges
$ 4,250,000 $ 22,611 $ 5,319

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 $ 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

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

Additional information on the Company’s derivatives is presented in Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Derivatives to the Consolidated Financial Statements in the Company’s 2025 Form 10-K, Note 2 — Fair Value Measurement and Fair Value of Financial Instruments, and Note 5 — Derivatives to the Consolidated Financial Statements in this Form 10-Q.

Critical Accounting Policies and Estimates

The Company’s significant accounting policies are described in Note 1 — Summary of Significant Accounting Policies to the Consolidated Financial Statements in the Company’s 2025 Form 10-K. Certain of these policies include critical accounting estimates, which are subject to valuation assumptions, subjective or complex judgments about matters that are inherently uncertain, and it is likely that materially different amounts could be reported under different assumptions and conditions. The Company has procedures and processes in place to facilitate making these judgments. The following accounting policies are critical to the Company’s Consolidated Financial Statements:
• allowance for credit losses;
• fair value estimates;
• goodwill impairment; and
• income taxes.
For additional information on the Company’s critical accounting estimates involving significant judgments, see Item 7. MD&A — Critical Accounting Estimates in the Company’s 2025 Form 10-K.

Reconciliation of GAAP to Non-GAAP Financial Measures

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

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

Three Months Ended March 31,
($ in thousands) 2026 2025
Net income (a) $ 357,796 $ 290,270

Add: Amortization of mortgage servicing assets
149 293
Tax effect of amortization adjustment (1)
(42) (87)
Tangible net income (non-GAAP) (b) $ 357,903 $ 290,476

Average stockholders’ equity (c)
$ 9,047,373 $ 7,869,074
Less: Average goodwill (465,697) (465,697)
Average mortgage servicing assets
(4,025) (5,120)
Average tangible book value (non-GAAP) (d) $ 8,577,651 $ 7,398,257

ROAE (2)
(a)/(c) 16.04 % 14.96 %
ROATCE (2) (non-GAAP)
(b)/(d) 16.92 % 15.92 %

($ and shares in thousands, except per share data)
March 31, 2026 December 31, 2025
Stockholders’ equity (a) $ 8,999,435 $ 8,899,202
Less: Goodwill (465,697) (465,697)
Mortgage servicing assets (3,978) (4,119)
Tangible book value (non-GAAP) (b) $ 8,529,760 $ 8,429,386

Number of common shares at period-end (c) 136,979 137,579
Book value per share (a)/(c) $ 65.70 $ 64.68
Tangible book value per share (non-GAAP) (b)/(c) $ 62.27 $ 61.27

(1) Applied statutory tax rate of 28.02% and 29.73% for the three months ended March 31, 2026 and 2025, respectively.
(2) Annualized.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures regarding market risk in the Company’s portfolio, see Note 5 — Derivatives to the Consolidated Financial Statements in this Form 10-Q and Item 2. MD&A — Risk Management — Market Risk Management in this Form 10-Q.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of March 31, 2026, pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company conducted an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act). Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2026.

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

Change in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended March 31, 2026, that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 9 — Commitments and Contingencies — Litigation to the Consolidated Financial Statements in Part I of this Form 10-Q, incorporated herein by reference.

ITEM 1A. RISK FACTORS

The Company’s 2025 Form 10-K contains disclosure regarding the risks and uncertainties related to the Company’s business under the heading Item 1A. Risk Factors . There have been no material changes to the Company’s risk factors as presented in the Company’s 2025 Form 10-K.

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

Repurchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table summarizes the Company’s common stock repurchase activity during the first quarter of 2026:

Calendar Month Total Number of Shares Purchased (1)
Average Price Paid
per Share of
Common Stock (2)
Total Number of Shares Purchased as Part of Publicly Announced
Plans or Programs
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (2) (3)

January — $ — — $ 215
February — $ — — $ 215
March 937,710 $ 104.32 937,710 $ 117
First quarter
937,710 $ 104.32 937,710

(1) Excludes the repurchase of common stock pursuant to various stock compensation plans and agreements.
(2) Excludes excise taxes and commissions. As part of the Inflation Reduction Act of 2022, a 1% excise tax was imposed on net share repurchases effective January 1, 2023.
(3) On January 22, 2025, the Company’s Board of Directors authorized the repurchase of up to $300 million of its common stock through December 31, 2026.

ITEM 5. OTHER INFORMATION
During the three months ended March 31, 2026, none of the Company’s directors or Section 16 reporting officers adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of the SEC’s Regulation S-K).

ITEM 6. EXHIBITS

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

Exhibit No. Exhibit Description

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

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

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

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

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

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

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

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

10.1 Amendment to Employment Agreement — Dominic Ng, dated as of March 3, 202 6 .* Filed herewith.

10.2 Amendment to Employment Agreement — Douglas Krause, dated as of March 3, 202 6 .* Filed herewith.

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

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

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

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

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

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

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

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

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

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

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

* Denotes management contract or compensatory plan or arrangement.

GLOSSARY OF ACRONYMS

AFS Available-for-sale IAR Independent Asset Review
ALCO Asset/Liability Committee LCH London Clearing House
ALLL Allowance for loan and leases losses LGD Loss given default
AOCI Accumulated other comprehensive (loss) income LTV Loan-to-value
ASC Accounting Standards Codification MD&A Management’s Discussion and Analysis of Financial Condition and Results of Operations
ASU Accounting Standards Update MMBTU Million British thermal unit
BTHO
Bridge to home ownership
NDFI Non-depository financial institutions
C&I Commercial and industrial NRSRO Nationally recognized statistical rating organizations
CET1 Common equity tier 1 OREO Other real estate owned
CME Chicago Mercantile Exchange PAM Proportional amortization method
CODM Chief operating decision maker PCD Non-purchased credit deteriorated
CRA Community Reinvestment Act PD Probability of default
CRE Commercial real estate ROA Return on average assets
EPS Earnings per share ROAE Return on average common equity
ERM Enterprise risk management ROATCE Return on average tangible common equity
EVE Economic value of equity ROC Risk Oversight Committee
FDIC Federal Deposit Insurance Corporation RPA Credit risk participation agreements
FHLB Federal Home Loan Bank RSUs Restricted stock unit
FRB Federal Reserve Bank SBLC Standby letter of credit
FTP Funds transfer pricing SEC U.S. Securities and Exchange Commission
GAAP Generally accepted accounting principles SOFR Secured overnight financing rate
GDP Gross domestic product SFR
Single-family residential

GNMA Government National Mortgage Association SRF Standing repurchase agreement facility
HELOC Home equity lines of credit U.S. United States
HTM Held-to-maturity

SIGNATURE

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

Dated: May 8, 2026

EAST WEST BANCORP, INC.
(Registrant)

By /s/ Christopher J. Del Moral-Niles
Christopher J. Del Moral-Niles
Executive Vice President and
Chief Financial Officer