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. From time to time, 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 the Company’s 2022 Form 10-K for additional information.

Available-for-Sale Debt Securities — The fair value of AFS debt securities is generally determined by independent external pricing service providers who have experience in valuing these securities or by taking the average quoted market prices obtained from independent external brokers. 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.

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 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 inputs used by different sources to ascertain the reliability of these sources. On a quarterly basis, the Company reviews the valuation inputs and methodology for each security category furnished by third-party pricing service providers.

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. The Company periodically communicates with the independent external brokers to validate their pricing methodology. Information such as pricing sources, pricing assumptions, data inputs and valuation techniques are reviewed periodically.

Equity Securities — Equity securities consisted of mutual funds as of both June 30, 2023 and December 31, 2022. The Company invested in these mutual funds for Community Reinvestment Act (“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 put back to the transfer agents 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.

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 would 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 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. As of both June 30, 2023 and December 31, 2022, the Bank held foreign currency non-deliverable forward contracts to hedge its net investment in its China subsidiary, East West Bank (China) Limited, a non-U.S. dollar (“USD”) functional currency subsidiary in China. 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 spot rates 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.

Credit Contracts — Credit contracts utilized by the Company are comprised of credit risk participation agreements (“RPAs”) entered into by the Company with 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. 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 all other significant inputs used in deriving the estimated fair value, credit contracts are classified as Level 2.

Equity Contracts — Equity contracts consisted of warrants to purchase common or preferred stock of public and private companies as of both June 30, 2023 and December 31, 2022. The Company values these warrants based on the Black-Scholes option pricing model. For warrants from public companies, the model uses the underlying stock price, stated strike price, warrant expiration date, risk-free interest rate based on a duration-matched U.S. Treasury rate, and market-observable company-specific equity volatility as inputs to value the warrants. Due to the observable nature of the inputs used in deriving the estimated fair value, warrants from public companies are classified as Level 2. For warrants from private companies, 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 option 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 option 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 option 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 option volatility and liquidity discount assumptions is performed.

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.



	Assets and Liabilities Measured at Fair Value on a Recurring Basis as of June 30, 2023
($ in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
AFS debt securities:
U.S. Treasury securities	$	711,706	$	—	$	—	$	711,706
U.S. government agency and U.S. government-sponsored enterprise debt securities	—		460,084		—		460,084
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	—		478,777		—		478,777
Residential mortgage-backed securities	—		1,721,237		—		1,721,237
Municipal securities	—		263,873		—		263,873
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities	—		384,051		—		384,051
Residential mortgage-backed securities	—		608,574		—		608,574
Corporate debt securities	—		485,750		—		485,750
Foreign government bonds	—		224,766		—		224,766
Asset-backed securities	—		44,875		—		44,875
Collateralized loan obligations (“CLOs”)	—		603,565		—		603,565
Total AFS debt securities	$	711,706	$	5,275,552	$	—	$	5,987,258

Investments in qualified affordable housing partnerships, tax credit and other investments, net:
Equity securities	$	19,991	$	4,168	$	—	$	24,159
Total investments in qualified affordable housing partnerships, tax credit and other investments, net	$	19,991	$	4,168	$	—	$	24,159

Derivative assets:
Interest rate contracts	$	—	$	530,235	$	—	$	530,235
Foreign exchange contracts	—		95,582		—		95,582

Equity contracts	—		—		263		263
Commodity contracts	—		139,081		—		139,081
Gross derivative assets	$	—	$	764,898	$	263	$	765,161
Netting adjustments (1)	$	—	$	(472,428)	$	—	$	(472,428)
Net derivative assets	$	—	$	292,470	$	263	$	292,733

Derivative liabilities:
Interest rate contracts	$	—	$	591,447	$	—	$	591,447
Foreign exchange contracts	—		72,342		—		72,342
Credit contracts	—		16		—		16
Commodity contracts	—		147,920		—		147,920
Gross derivative liabilities	$	—	$	811,725	$	—	$	811,725
Netting adjustments (1)	$	—	$	(208,183)	$	—	$	(208,183)
Net derivative liabilities	$	—	$	603,542	$	—	$	603,542



	Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2022
($ in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
AFS debt securities:
U.S. Treasury securities	$	606,203	$	—	$	—	$	606,203
U.S. government agency and U.S. government-sponsored enterprise debt securities	—		461,607		—		461,607
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	—		500,269		—		500,269
Residential mortgage-backed securities	—		1,762,195		—		1,762,195
Municipal securities	—		257,099		—		257,099
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities	—		398,329		—		398,329
Residential mortgage-backed securities	—		649,224		—		649,224
Corporate debt securities	—		526,274		—		526,274
Foreign government bonds	—		227,053		—		227,053
Asset-backed securities	—		49,076		—		49,076
CLOs	—		597,664		—		597,664
Total AFS debt securities	$	606,203	$	5,428,790	$	—	$	6,034,993

Investments in qualified affordable housing partnerships, tax credit and other investments, net:
Equity securities	$	19,777	$	4,177	$	—	$	23,954
Total investments in qualified affordable housing partnerships, tax credit and other investments, net	$	19,777	$	4,177	$	—	$	23,954

Derivative assets:
Interest rate contracts	$	—	$	440,283	$	—	$	440,283
Foreign exchange contracts	—		53,109		—		53,109

Equity contracts	—		—		323		323
Commodity contracts	—		261,613		—		261,613
Gross derivative assets	$	—	$	755,005	$	323	$	755,328
Netting adjustments (1)	$	—	$	(614,783)	$	—	$	(614,783)
Net derivative assets	$	—	$	140,222	$	323	$	140,545

Derivative liabilities:
Interest rate contracts	$	—	$	584,516	$	—	$	584,516
Foreign exchange contracts	—		44,117		—		44,117
Credit contracts	—		23		—		23
Commodity contracts	—		258,608		—		258,608
Gross derivative liabilities	$	—	$	887,264	$	—	$	887,264
Netting adjustments (1)	$	—	$	(242,745)	$	—	$	(242,745)
Net derivative liabilities	$	—	$	644,519	$	—	$	644,519

The following table presents quantitative information about the significant unobservable inputs used in the valuation of Level 3 fair value measurements as of June 30, 2023 and December 31, 2022. 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 (1)
June 30, 2023
Derivative assets:
Equity contracts	$	263	Black-Scholes option pricing model	Equity volatility	41% — 50%	44%
				Liquidity discount	47%	47%
December 31, 2022
Derivative assets:
Equity contracts	$	323	Black-Scholes option pricing model	Equity volatility	42% — 60%	54%
				Liquidity discount	47%	47%

Assets measured at fair value on a nonrecurring basis include certain individually evaluated loans held-for-investment, investments in qualified affordable housing partnerships, tax credit and other investments, other real estate owned (“OREO”), loans held-for-sale, and other nonperforming assets. Nonrecurring fair value adjustments result from the impairment on certain individually evaluated loans held-for-investment and investments in qualified affordable housing partnerships, tax credit and other investments, from write-downs of OREO and other nonperforming assets, or from the application of lower of cost or fair value on loans held-for-sale.

•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.

Investments in Qualified Affordable Housing Partnerships, Tax Credit and Other Investments, Net — The Company conducts due diligence on its investments in qualified affordable housing partnerships, tax credit and other investments prior to the initial investment date and through the placed-in-service date. After these investments are either acquired or placed into service, the Company continues its periodic monitoring process to ensure book values are realizable and that there is no significant tax credit recapture risk. This monitoring process includes reviewing the investment entity’s quarterly financial statements and annual tax returns, the annual financial statements of the guarantor (if any) and a comparison of the actual performance of the investment against the financial projections prepared at the time the investment was made. The Company assesses its tax credit and other investments for possible other-than-temporary impairment 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:

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. 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.

Other Nonperforming Assets — Other nonperforming assets are recorded at fair value upon transfer from loans to foreclosed assets. Subsequently, foreclosed assets are recorded at the lower of carrying value or fair value. Fair value is based on independent market prices, appraised values of the collateral or management’s estimated recovery of the foreclosed asset. The Company records an impairment when the foreclosed asset’s fair value declines below its carrying value. The fair value measurement of other nonperforming assets is classified within one of the three levels in a valuation hierarchy based upon the observability of inputs to the valuation as of the measurement date.



	Assets Measured at Fair Value on a Nonrecurring Basis as of June 30, 2023
($ in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value Measurements
Loans held-for-investment:
Commercial:
Commercial and industrial (“C&I”)	$	—	$	—	$	31,323	$	31,323
Commercial real estate (“CRE”):
CRE	—		—		4,398		4,398



Total commercial	—		—		35,721		35,721







Total loans held-for-investment	$	—	$	—	$	35,721	$	35,721




Investments in qualified affordable housing partnerships, tax credit and other investments, net	$	—	$	—	$	868	$	868



	Assets Measured at Fair Value on a Nonrecurring Basis as of December 31, 2022
($ in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value Measurements
Loans held-for-investment:
Commercial:
C&I	$	—	$	—	$	40,011	$	40,011
CRE:
CRE	—		—		31,380		31,380



Total commercial	—		—		71,391		71,391
Consumer:
Residential mortgage:

Home equity lines of credit (“HELOCs”)	—		—		1,223		1,223


Total consumer	—		—		1,223		1,223
Total loans held-for-investment	$	—	$	—	$	72,614	$	72,614



	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2023		2022		2023		2022
Loans held-for-investment:
Commercial:
C&I	$	(10,419)	$	(6,054)	$	(11,674)	$	(14,740)
CRE:
CRE	(2,252)		(533)		(2,252)		2,330
Multifamily residential	—		(8)		—		(8)


Total commercial	(12,671)		(6,595)		(13,926)		(12,418)
Consumer:
Residential mortgage:

HELOCs	—		82		—		85


Total consumer	—		82		—		85
Total loans held-for-investment	$	(12,671)	$	(6,513)	$	(13,926)	$	(12,333)

Investments in qualified affordable housing partnerships, tax credit and other investments, net	$	(961)	$	—	$	(787)	$	—


Other nonperforming assets	$	—	$	(6,861)	$	—	$	(6,861)



($ in thousands)	Fair Value Measurements (Level 3)		Valuation Techniques	Unobservable Inputs	Range of Inputs	Weighted-Average of Inputs (1)
June 30, 2023
Loans held-for-investment	$	4,989	Discounted cash flows	Discount	15%	15%
	$	17,501	Fair value of collateral	Discount	15% — 81%	43%
	$	6,134	Fair value of collateral	Contract value	NM	NM
	$	7,097	Fair value of property	Selling cost	8%	8%


Investments in qualified affordable housing partnerships, tax credit and other investments, net	$	868	Individual analysis of each investment	Expected future tax benefits and distributions	NM	NM

December 31, 2022
Loans held-for-investment	$	23,322	Discounted cash flows	Discount	4% — 6%	4%

	$	17,912	Fair value of collateral	Discount	15% — 75%	37%

	$	31,380	Fair value of property	Selling cost	8%	8%

The following tables present the fair value estimates for financial instruments as of June 30, 2023 and December 31, 2022, 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.



	June 30, 2023
($ in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	6,377,887	$	6,377,887	$	—	$	—	$	6,377,887
Interest-bearing deposits with banks	$	17,169	$	—	$	17,169	$	—	$	17,169
Resale agreements	$	635,000	$	—	$	541,441	$	—	$	541,441
HTM debt securities	$	2,975,933	$	474,137	$	1,966,347	$	—	$	2,440,484
Restricted equity securities, at cost	$	79,206	$	—	$	79,206	$	—	$	79,206
Loans held-for-sale	$	2,830	$	—	$	2,830	$	—	$	2,830
Loans held-for-investment, net	$	49,192,964	$	—	$	—	$	48,197,217	$	48,197,217
Mortgage servicing rights	$	5,537	$	—	$	—	$	10,078	$	10,078
Accrued interest receivable	$	288,526	$	—	$	288,526	$	—	$	288,526
Financial liabilities:
Demand, checking, savings and money market deposits	$	38,679,009	$	—	$	38,679,009	$	—	$	38,679,009
Time deposits	$	16,979,777	$	—	$	16,866,296	$	—	$	16,866,296
Short-term borrowings	$	4,500,000	$	—	$	4,500,000	$	—	$	4,500,000



Long-term debt	$	148,097	$	—	$	141,990	$	—	$	141,990
Accrued interest payable	$	107,457	$	—	$	107,457	$	—	$	107,457



	December 31, 2022
($ in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	3,481,784	$	3,481,784	$	—	$	—	$	3,481,784
Interest-bearing deposits with banks	$	139,021	$	—	$	139,021	$	—	$	139,021
Resale agreements	$	792,192	$	—	$	693,656	$	—	$	693,656
HTM debt securities	$	3,001,868	$	471,469	$	1,983,702	$	—	$	2,455,171
Restricted equity securities, at cost	$	78,624	$	—	$	78,624	$	—	$	78,624
Loans held-for-sale	$	25,644	$	—	$	25,644	$	—	$	25,644
Loans held-for-investment, net	$	47,606,785	$	—	$	—	$	46,670,690	$	46,670,690

Mortgage servicing rights	$	6,235	$	—	$	—	$	10,917	$	10,917
Accrued interest receivable	$	263,430	$	—	$	263,430	$	—	$	263,430
Financial liabilities:

Demand, checking, savings and money market deposits	$	42,637,316	$	—	$	42,637,316	$	—	$	42,637,316
Time deposits	$	13,330,533	$	—	$	13,228,777	$	—	$	13,228,777


Repurchase agreements	$	300,000	$	—	$	304,097	$	—	$	304,097
Long-term debt	$	147,950	$	—	$	143,483	$	—	$	143,483
Accrued interest payable	$	37,198	$	—	$	37,198	$	—	$	37,198