The following table presents the total notional amounts and gross fair values of the Company’s derivatives, as well as the balance sheet netting adjustments on an aggregate basis as of March 31, 2021 and December 31, 2020. The derivative assets and liabilities are presented on a gross basis prior to the application of bilateral collateral and master netting agreements, but after the variation margin payments with central clearing organizations have been applied as settlement, as applicable. Total derivative assets and liabilities are adjusted to take into consideration the effects of legally enforceable master netting agreements and cash collateral received or paid as of March 31, 2021 and December 31, 2020. The resulting net derivative asset and liability fair values are included in Other assets and Accrued expenses and other liabilities, respectively, on the Consolidated Balance Sheet.



($ in thousands)	March 31, 2021						December 31, 2020
	Notional Amount		Fair Value				Notional Amount		Fair Value
			Derivative Assets		Derivative Liabilities				Derivative Assets		Derivative Liabilities
Derivatives designated as hedging instruments:


Cash flow hedges:
Interest rate contracts	$	275,000	$	—	$	1,258	$	275,000	$	—	$	1,864
Net investment hedges:
Foreign exchange contracts	83,936		908		—		84,269		—		235
Total derivatives designated as hedging instruments	$	358,936	$	908	$	1,258	$	359,269	$	—	$	2,099
Derivatives not designated as hedging instruments:
Interest rate contracts	$	17,891,960	$	319,049	$	229,032	$	18,155,678	$	489,132	$	315,834
Foreign exchange contracts	4,036,958		38,654		27,287		3,108,488		30,300		22,524
Credit contracts	76,992		5		153		76,992		13		206
Equity contracts	—		272		—		—		858		—
Commodity contracts	—		98,429		86,405		—		82,451		84,165
Total derivatives not designated as hedging instruments	$	22,005,910	$	456,409	$	342,877	$	21,341,158	$	602,754	$	422,729
Gross derivative assets/liabilities			$	457,317	$	344,135			$	602,754	$	424,828
Less: Master netting agreements			(100,454)		(100,454)				(93,063)		(93,063)
Less: Cash collateral received/paid			(7,781)		(86,233)				(8,449)		(91,634)
Net derivative assets/liabilities			$	349,082	$	157,448			$	501,242	$	240,131

(2)The notional amount of the Company’s commodity contracts entered with its customers totaled 8,258 thousand barrels of crude oil and 102,996 thousand units of natural gas, measured in million British thermal units (“MMBTUs”) as of March 31, 2021. In comparison, the notional amount of the Company’s commodity contracts entered with its customers totaled 6,321 thousand barrels of crude oil and 109,635 thousand MMBTUs of natural gas as of December 31, 2020. The Company simultaneously entered into the offsetting commodity contracts with mirrored terms with third-party financial institutions.

Fair Value Hedges — The Company entered into interest rate swaps designated as fair value hedges to hedge changes in the fair value of certain certificates of deposit due to changes in the benchmark interest rate. The interest rate swaps involved the exchange of variable-rate payments over the life of the agreements without exchanging the underlying notional amounts. During the fourth quarter of 2020, both the hedging interest rate swaps and hedged certificates of deposit were called.

As of both March 31, 2021 and December 31, 2020, there were no fair value hedges or hedged certificates of deposit outstanding. There were no gains or losses recognized on the Consolidated Statement of Income related to the derivatives designated as fair value hedges for the three months ended March 31, 2021. The net gains recognized on interest rate swaps were $2.0 million and the net losses recognized on certificates of deposit were $1.4 million, both recorded in interest expense on the Consolidated Statement of Income for the three months ended March 31, 2020.

Cash Flow Hedges — The Company entered into interest rate swaps that were designated and qualified as cash flow hedges to limit the exposure to the variability in interest payments on certain floating rate borrowings. For cash flow hedges, the entire change in the fair value of the hedging instruments is recognized in AOCI and reclassified to earnings in the same period when the hedged cash flows impact earnings. Reclassified gains and losses on interest rate swaps are recorded in the same line item as the interest payments of the hedged long-term borrowings within Interest expense in the Consolidated Statements of Income. Considering the interest rates, yield curve and notional amounts as of March 31, 2021, the Company expected to reclassify an estimated $560 thousand of after-tax net losses on derivative instruments designated as cash flow hedges from AOCI into earnings during the next 12 months.

The following table presents the pre-tax changes in AOCI from cash flow hedges for the three months ended March 31, 2021 and 2020. The after-tax impact of cash flow hedges on AOCI is shown in Note 13 — Accumulated Other Comprehensive Income (Loss) to the Consolidated Financial Statements in this Form-10-Q.

Net Investment Hedges — ASC 830-20, Foreign Currency Matters — Foreign Currency Transactions and ASC 815, Derivatives and Hedging, allow hedging of the foreign currency risk of a net investment in a foreign operation. The Company enters into foreign currency forward contracts to hedge a portion of the Bank’s investment in East West Bank (China) Limited, a non-USD functional currency subsidiary in China. The hedging instruments designated as net investment hedges involve hedging the risk of changes in the USD equivalent value of a designated monetary amount of the Bank’s net investment in East West Bank (China) Limited, against the risk of adverse changes in the foreign currency exchange rate of the Chinese Renminbi (“RMB”). The Company may de-designate the net investment hedges when the Company expects the hedge will cease to be highly effective.

Interest Rate Contracts — The Company enters into interest rate contracts, which include interest rate swaps and options with its customers to allow customers to hedge against the risk of rising interest rates on their variable rate loans. To economically hedge against the interest rate risks in the products offered to its customers, the Company enters into mirrored offsetting interest rate contracts with third-party financial institutions, including central clearing organizations.



($ in thousands)	March 31, 2021
	Customer Counterparty						($ in thousands)	Financial Counterparty
	Notional Amount		Fair Value					Notional Amount		Fair Value
			Assets		Liabilities					Assets		Liabilities
Written options	$	800,962	$	—	$	544	Purchased options	$	800,962	$	551	$	—
Sold collars and corridors	531,840		5,849		158		Collars and corridors	531,840		160		5,888
Swaps	7,597,856		279,361		53,975		Swaps	7,628,500		33,128		168,467
Total	$	8,930,658	$	285,210	$	54,677	Total	$	8,961,302	$	33,839	$	174,355



($ in thousands)	December 31, 2020
	Customer Counterparty						($ in thousands)	Financial Counterparty
	Notional Amount		Fair Value					Notional Amount		Fair Value
			Assets		Liabilities					Assets		Liabilities
Written options	$	957,393	$	—	$	115	Purchased options	$	957,393	$	101	$	15
Sold collars and corridors	518,477		7,673		—		Collars and corridors	518,477		—		7,717
Swaps	7,586,414		479,634		1,364		Swaps	7,617,524		1,724		306,623
Total	$	9,062,284	$	487,307	$	1,479	Total	$	9,093,394	$	1,825	$	314,355

In January 2018, the London Clearing House (“LCH”) amended its rulebook to legally characterize variation margin payments made to and received from LCH as settlements of derivatives, and not as collateral against derivatives. Included in the total notional amount of $8.96 billion of interest rate contracts entered into with financial counterparties as of March 31, 2021, was a notional amount of $2.93 billion of interest rate swaps that cleared through LCH. Applying variation margin payments as settlement to LCH cleared derivative transactions resulted in a reduction in derivative asset fair value of $27.2 million and liability fair values of $116.2 million as of March 31, 2021. In comparison, included in the total notional amount of $9.09 billion of interest rate contracts entered into with financial counterparties as of December 31, 2020, was a notional amount of $2.98 billion of interest rate swaps that cleared through LCH. Applying variation margin payments as settlement to LCH cleared derivative transactions resulted in a reduction in derivative asset fair values of $1.3 million and liability fair values of $187.4 million as of December 31, 2020.

Foreign Exchange Contracts — The Company enters into foreign exchange contracts with its customers, consisting of forwards, spot, swap and option contracts to accommodate the business needs of its customers. The Company enters into offsetting foreign exchange contracts with third-party financial institutions to manage its foreign exchange exposure with its customers, or enters into bilateral collateral and master netting agreements with certain customer counterparties to manage its credit exposure. The Company also utilizes foreign exchange contracts, which are not designated as hedging instruments, to mitigate the economic effect of currency fluctuations on certain foreign currency-denominated on-balance sheet assets and liabilities, primarily foreign currency-denominated deposits offered to its customers. A majority of the foreign exchange contracts had original maturities of one year or less as of both March 31, 2021 and December 31, 2020.



($ in thousands)	March 31, 2021
	Customer Counterparty						($ in thousands)	Financial Counterparty
	Notional Amount		Fair Value					Notional Amount		Fair Value
			Assets		Liabilities					Assets		Liabilities
Forwards and spot	$	2,468,974	$	27,803	$	21,835	Forwards and spot	$	168,942	$	869	$	494
Swaps	184,584		1,902		247		Swaps	974,974		7,733		4,364
Written options	116,575		—		336		Purchased options	116,575		336		—
Collars	3,167		—		11		Collars	3,167		11		—
Total	$	2,773,300	$	29,705	$	22,429	Total	$	1,263,658	$	8,949	$	4,858



($ in thousands)	December 31, 2020
	Customer Counterparty						($ in thousands)	Financial Counterparty
	Notional Amount		Fair Value					Notional Amount		Fair Value
			Assets		Liabilities					Assets		Liabilities
Forwards and spot	$	1,522,888	$	17,575	$	17,928	Forwards and spot	$	145,197	$	1,230	$	273
Swaps	13,590		872		91		Swaps	1,191,355		10,049		3,658
Written options	117,729		—		574		Purchased options	117,729		574		—

Total	$	1,654,207	$	18,447	$	18,593	Total	$	1,454,281	$	11,853	$	3,931

Credit Contracts — The Company may periodically enter into RPA contracts with institutional counterparties to manage the credit exposure on interest rate contracts associated with syndicated loans. The Company may enter into protection sold or protection purchased RPAs. Under the RPAs, the Company will make or receive a payment if a borrower defaults on the related interest rate contract. Credit risk on RPAs is managed by monitoring the credit worthiness of the borrowers and institutional counterparties, which is based on the normal credit review process. The majority of the reference entities of the protection sold RPAs were investment grade as of March 31, 2021, while all were investment grade as of December 31, 2020. Assuming the underlying borrower referenced in the interest rate contracts defaulted as of March 31, 2021 and December 31, 2020, the maximum exposure of protection sold RPAs would be $4.9 million and $6.0 million, respectively. As of March 31, 2021 and December 31, 2020, the weighted-average remaining maturities of the outstanding protection sold RPAs were 3.3 years and 3.5 years, respectively.

The notional amount of the RPAs reflects the Company’s pro-rata share of the derivative instrument. The following table presents the notional amounts and the gross fair values of RPAs sold and purchased outstanding as of March 31, 2021 and December 31, 2020:



($ in thousands)	March 31, 2021						December 31, 2020
	Notional Amount		Fair Value				Notional Amount		Fair Value
			Assets		Liabilities				Assets		Liabilities
RPAs - protection sold	$	66,278	$	—	$	153	$	66,278	$	—	$	206
RPAs - protection purchased	10,714		5		—		10,714		13		—
Total RPAs	$	76,992	$	5	$	153	$	76,992	$	13	$	206

Equity Contracts — Periodically, as part of the Company’s loan origination process, the Company obtains warrants to purchase preferred and/or common stock of technology and life sciences companies to which it provides loans. Warrants grant the Company the right to buy a certain class of the underlying company’s equity at a certain price before expiration. The Company held warrants in 18 private companies as of March 31, 2021, and held warrants in two public companies and 17 private companies as of December 31, 2020. The total fair value of the warrants held in both public and private companies was $272 thousand and $858 thousand as of March 31, 2021 and December 31, 2020, respectively.

Commodity Contracts — The Company enters into energy commodity contracts in the form of swaps and options with its commercial loan customers to allow them to hedge against the risk of energy commodity price fluctuation. To economically hedge against the risk of commodity price fluctuation in the products offered to its customers, the Company enters into offsetting commodity contracts with third-party financial institutions to manage the exposure.



($ and units in thousands)	March 31, 2021
	Customer Counterparty						($ and units in thousands)	Financial Counterparty
	Notional Unit		Fair Value					Notional Unit		Fair Value
			Assets		Liabilities					Assets		Liabilities
Crude oil:							Crude oil:
Written options	248	Barrels	$	211	$	25	Purchased options	248	Barrels	$	—	$	48
Collars	2,361	Barrels	11,181		219		Collars	2,361	Barrels	219		10,989
Swaps	5,649	Barrels	37,076		1,206		Swaps	5,649	Barrels	1,058		28,624
Total	8,258		$	48,468	$	1,450	Total	8,258		$	1,277	$	39,661

Natural gas:							Natural gas:
Written options	8,065	MMBTUs	$	52	$	319	Purchased options	8,065	MMBTUs	$	319	$	52
Collars	10,823	MMBTUs	879		—		Collars	14,023	MMBTUs	—		555
Swaps	84,108	MMBTUs	28,878		18,449		Swaps	91,790	MMBTUs	18,556		25,919
Total	102,996		$	29,809	$	18,768	Total	113,878		$	18,875	$	26,526

Total			$	78,277	$	20,218	Total			$	20,152	$	66,187



($ and units in thousands)	December 31, 2020
	Customer Counterparty						($ and units in thousands)	Financial Counterparty
	Notional Unit		Fair Value					Notional Unit		Fair Value
			Assets		Liabilities					Assets		Liabilities
Crude oil:							Crude oil:

Collars	2,022	Barrels	$	2,344	$	2,193	Collars	2,022	Barrels	$	2,217	$	2,402
Swaps	4,299	Barrels	9,282		14,283		Swaps	4,299	Barrels	8,220		7,135
Total	6,321		$	11,626	$	16,476	Total	6,321		$	10,437	$	9,537

Natural gas:							Natural gas:
Written options	597	MMBTUs	$	—	$	59	Purchased options	597	MMBTUs	$	59	$	—
Collars	12,733	MMBTUs	1,063		205		Collars	16,293	MMBTUs	205		813
Swaps	96,305	MMBTUs	32,073		27,238		Swaps	103,973	MMBTUs	26,988		29,837
Total	109,635		$	33,136	$	27,502	Total	120,863		$	27,252	$	30,650

Total			$	44,762	$	43,978	Total			$	37,689	$	40,187

Beginning in January 2017, the Chicago Mercantile Exchange (“CME”) amended its rulebook to legally characterize variation margin payments made to and received from CME as settlements of derivatives and not as collateral against derivatives. As of March 31, 2021, the notional quantities that cleared through CME totaled 1,320 thousand barrels of crude oil and 27,850 thousand MMBTUs of natural gas. Applying the variation margin payments as settlement to CME-cleared derivative transactions resulted in reductions to the gross derivative asset fair value of $897 thousand and to the liability fair value of $10.0 million as of March 31, 2021, to a net fair value of zero. In comparison, the notional quantities that cleared through CME totaled 1,275 thousand barrels of crude oil and 29,733 thousand MMBTUs of natural gas as of December 31, 2020. Applying the variation margin payments as settlement to CME-cleared derivative transactions resulted in a reduction to the gross derivative asset fair value of $7.9 million and to the liability fair value of $3.7 million, respectively, as of December 31, 2020, to a net fair value of zero.



($ in thousands)	Classification on Consolidated Statement of Income	Three Months Ended March 31,
		2021		2020
Derivatives not designated as hedging instruments:
Interest rate contracts	Interest rate contracts and other derivative income	$	13,901	$	(7,011)
Foreign exchange contracts	Foreign exchange income	10,243		2,861
Credit contracts	Interest rate contracts and other derivative income	45		(23)
Equity contracts	Lending fees	311		309
Commodity contracts	Interest rate contracts and other derivative income	169		24
Net gains (losses)		$	24,669	$	(3,840)

Credit Risk-Related Contingent Features — Certain over-the-counter derivative contracts of the Company contain early termination provisions that may require the Company to settle any outstanding balances upon the occurrence of a specified credit risk-related event. These events, which are defined by the existing derivative contracts, primarily relate to a downgrade in the credit rating of East West Bank to below investment grade. As of March 31, 2021, the aggregate fair value amounts of all derivative instruments with credit risk-related contingent features that were in a net liability position totaled $64.9 million, in which $64.9 million of collateral was posted to cover these positions. As of December 31, 2020, the aggregate fair value amounts of all derivative instruments with credit risk-related contingent features that were in a net liability position totaled $107.4 million, in which $106.8 million of collateral was posted to cover these positions. In the event that the credit rating of East West Bank had been downgraded to below investment grade, minimal additional collateral would have been required to be posted as of March 31, 2021 and December 31, 2020.

The following tables present the gross derivative fair values, the balance sheet netting adjustments and the resulting net fair values recorded on the consolidated balance sheet, as well as the cash and noncash collateral associated with master netting arrangements. The gross amounts of derivative assets and liabilities are presented after the application of variation margin payments as settlements with central counterparties, where applicable. The collateral amounts in the following tables are limited to the outstanding balances of the related asset or liability, after the application of netting; therefore instances of overcollateralization are not shown:



($ in thousands)	As of March 31, 2021

	Gross Amounts Recognized (1)		Gross Amounts Offset on the Consolidated Balance Sheet				Net Amounts Presented on the Consolidated Balance Sheet		Gross Amounts Not Offset on the Consolidated Balance Sheet		Net Amount
			Master Netting Arrangements		Cash Collateral Received (3)				Security Collateral Received (5)
Derivative assets	$	457,317	$	(100,454)	$	(7,781)	$	349,082	$	—	$	349,082
	Gross Amounts Recognized (2)		Gross Amounts Offset on the Consolidated Balance Sheet				Net Amounts Presented on the Consolidated Balance Sheet		Gross Amounts Not Offset on the Consolidated Balance Sheet		Net Amount
			Master Netting Arrangements		Cash Collateral Pledged (4)				Security Collateral Pledged (5)
Derivative liabilities	$	344,135	$	(100,454)	$	(86,233)	$	157,448	$	(64,816)	$	92,632



($ in thousands)	As of December 31, 2020

	Gross Amounts Recognized (1)		Gross Amounts Offset on the Consolidated Balance Sheet				Net Amounts Presented on the Consolidated Balance Sheet		Gross Amounts Not Offset on the Consolidated Balance Sheet		Net Amount
			Master Netting Arrangements		Cash Collateral Received (3)				Security Collateral Received (5)
Derivative assets	$	602,754	$	(93,063)	$	(8,449)	$	501,242	$	(35)	$	501,207
	Gross Amounts Recognized (2)		Gross Amounts Offset on the Consolidated Balance Sheet				Net Amounts Presented on the Consolidated Balance Sheet		Gross Amounts Not Offset on the Consolidated Balance Sheet		Net Amount
			Master Netting Arrangements		Cash Collateral Pledged (4)				Security Collateral Pledged (5)
Derivative liabilities	$	424,828	$	(93,063)	$	(91,634)	$	240,131	$	(221,150)	$	18,981

(3)Gross cash collateral received under master netting arrangements or similar agreements were $11.9 million and $15.8 million as of March 31, 2021 and December 31, 2020, respectively. Of the gross cash collateral received, $7.8 million and $8.4 million were used to offset against derivative assets, respectively, as of March 31, 2021 and December 31, 2020.

(4)Gross cash collateral pledged under master netting arrangements or similar agreements were $90.8 million and $91.6 million as of March 31, 2021 and December 31, 2020, respectively. Of the gross cash collateral pledged, $86.2 million and $91.6 million were used to offset against derivative liabilities, respectively, as of March 31, 2021 and December 31, 2020.

(5)Represents the fair value of security collateral received and pledged limited to derivative assets and liabilities that are subject to enforceable master netting arrangements or similar agreements. GAAP does not permit the netting of noncash collateral on the consolidated balance sheet but requires disclosure of such amounts.

In addition to the amounts included in the tables above, the Company also has balance sheet netting related to resale and repurchase agreements. Refer to Note 4 — Assets Purchased under Resale Agreements and Sold under Repurchase Agreements to the Consolidated Financial Statements in this Form 10-Q for additional information. Refer to Note 3 — Fair Value Measurement and Fair Value of Financial Instruments to the Consolidated Financial Statements in this Form 10-Q for fair value measurement disclosures on derivatives.