XML 44 R28.htm IDEA: XBRL DOCUMENT v3.23.3
Fair Value Measurement and Fair Value of Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2023
Fair Value Disclosures [Abstract]  
Schedule Of Financial Assets (Liabilities) Measured At Fair Value On a Recurring Basis
The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022:
Assets and Liabilities Measured at Fair Value on a Recurring Basis
as of September 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$904,101 $— $— $904,101 
U.S. government agency and U.S. government-sponsored enterprise debt securities— 447,464 — 447,464 
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities— 462,332 — 462,332 
Residential mortgage-backed securities— 1,694,342 — 1,694,342 
Municipal securities— 243,556 — 243,556 
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities— 365,320 — 365,320 
Residential mortgage-backed securities— 570,787 — 570,787 
Corporate debt securities— 475,434 — 475,434 
Foreign government bonds— 222,790 — 222,790 
Asset-backed securities— 43,757 — 43,757 
Collateralized loan obligations (“CLOs”)— 609,954 — 609,954 
Total AFS debt securities
$904,101 $5,135,736 $— $6,039,837 
Investments in qualified affordable housing partnerships, tax credit and other investments, net:
Equity securities$19,447 $4,154 $— $23,601 
Total investments in qualified affordable housing partnerships, tax credit and other investments, net$19,447 $4,154 $— $23,601 
Derivative assets:
Interest rate contracts$— $624,087 $— $624,087 
Foreign exchange contracts— 100,377 — 100,377 
Equity contracts— — 352 352 
Commodity contracts— 137,500 — 137,500 
Gross derivative assets$— $861,964 $352 $862,316 
Netting adjustments (1)
$— $(530,331)$— $(530,331)
Net derivative assets$— $331,633 $352 $331,985 
Derivative liabilities:
Interest rate contracts$— $712,302 $— $712,302 
Foreign exchange contracts— 77,099 — 77,099 
Equity contracts (2)
— — 15,119 15,119 
Credit contracts— 12 — 12 
Commodity contracts— 143,855 — 143,855 
Gross derivative liabilities$— $933,268 $15,119 $948,387 
Netting adjustments (1)
$— $(262,873)$— $(262,873)
Net derivative liabilities$— $670,395 $15,119 $685,514 
Assets and Liabilities Measured at Fair Value on a Recurring Basis
as of December 31, 2022
($ 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 $— $644,519 
(1)Represents balance sheet netting of derivative assets and liabilities and related cash collateral under master netting agreements or similar agreements. See Note 6 — Derivatives to the Consolidated Financial Statements in this Form 10-Q for additional information.
(2)Equity contracts classified as derivative liabilities consist of PRSUs granted as part of EWBC’s consideration in its investment in Rayliant.
Reconciliation Of The Beginning And Ending Balances Of Equity Contracts Measured At Fair Value On a Recurring Basis Using Significant Unobservable Inputs (Level 3) The following table provides a reconciliation of the beginning and ending balances of these equity contracts for the three and nine months ended September 30, 2023 and 2022:
Three Months Ended September 30,Nine Months Ended September 30,
($ in thousands)2023202220232022
Derivative assets:
Equity contracts
Beginning balance$263 $357 $323 $215 
Total (losses) gains included in earnings (1)
(3)(12)(63)39 
Issuances92 — 92 91 
Ending balance$352 $345 $352 $345 
Derivative liabilities:
Equity contracts (2)
Beginning balance$— $— $— $— 
Issuances15,119 — 15,119 — 
Ending balance$15,119 $— $15,119 $— 
(1)Includes unrealized (losses) gains recorded in Lending fees on the Consolidated Statement of Income.
(2)Equity contracts classified as derivative liabilities consist of PRSUs granted as part of EWBC’s consideration in its investment in Rayliant.
Schedule Of Quantitative Information About Significant Unobservable Inputs Used In The Valuation Of Level 3 Fair Value Measurements
The following table presents quantitative information about the significant unobservable inputs used in the valuation of Level 3 fair value measurements as of September 30, 2023 and December 31, 2022. The significant unobservable inputs presented in the table below are those that the Company considers significant to the fair value of the Level 3 assets. The Company considers unobservable inputs to be significant if, by their exclusion, the fair value of the Level 3 assets would be impacted by a predetermined percentage change.
($ in thousands)Fair Value Measurements (Level 3)Valuation TechniqueUnobservable InputsRange of Inputs
Weighted-Average of Inputs
September 30, 2023
Derivative assets:
Equity contracts$352 
Black-Scholes option pricing model
Equity volatility
41% — 51%
46 %
(1)
Liquidity discount47%47 %
Derivative liabilities:
Equity contracts (2)
$15,119 
Internal model
Payout % designated based on operating revenue and operating EBITDA of investee
84%84 %
December 31, 2022
Derivative assets:
Equity contracts$323 
Black-Scholes option pricing model
Equity volatility
42% — 60%
54 %
(1)
Liquidity discount47%47 %
(1)The calculation for the weighted-average of inputs for the derivative asset equity contracts is based on the fair value of equity contracts as of both September 30, 2023 and December 31, 2022.
(2)Equity contracts classified as derivative liabilities consist of PRSUs granted as part of EWBC’s consideration in its investment in Rayliant.
The following table presents the quantitative information about the significant unobservable inputs used in the valuation of Level 3 fair value measurements that are measured on a nonrecurring basis as of September 30, 2023 and December 31, 2022:
($ in thousands)Fair Value Measurements (Level 3)Valuation TechniquesUnobservable InputsRange of Inputs
Weighted-Average of Inputs (1)
September 30, 2023
Loans held-for-investment$13,955 Fair value of collateralDiscount
15% — 75%
48 %
(1)
$6,134 Fair value of collateralContract valueNMNM
$15,044 Fair value of propertySelling cost
8%
8 %
Investments in qualified affordable housing partnerships, tax credit and other investments, net$1,038 Individual analysis of each investmentExpected future tax benefits and distributionsNMNM
December 31, 2022
Loans held-for-investment$23,322 Discounted cash flowsDiscount
4% — 6%
4 %
(1)
$17,912 Fair value of collateralDiscount
15% — 75%
37 %
(1)
$31,380 Fair value of propertySelling cost
8%
8 %
NM — Not meaningful.
(1)The calculation for the weighted-average of inputs is based on the relative fair value of the respective assets as of September 30, 2023 and December 31, 2022.
Schedule Of Carrying Amounts Of Assets That Were Still Held And Had Fair Value Adjustments Measured On a Nonrecurring Basis
The following tables present the carrying amounts of assets that were still held and had fair value adjustments measured on a nonrecurring basis as of September 30, 2023 and December 31, 2022:
Assets Measured at Fair Value on a Nonrecurring Basis
as of September 30, 2023
($ 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”)$— $— $22,788 $22,788 
Commercial real estate (“CRE”):
Construction and land— — 11,141 11,141 
Total commercial— — 33,929 33,929 
Consumer:
Residential mortgage:
Home equity lines of credit (“HELOCs”)— — 1,204 1,204 
Total consumer— — 1,204 1,204 
Total loans held-for-investment$— $— $35,133 $35,133 
Investments in qualified affordable housing partnerships, tax credit and other investments, net$— $— $1,038 $1,038 
Assets Measured at Fair Value on a Nonrecurring Basis
as of December 31, 2022
($ 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 $40,011 
CRE:
CRE— — 31,380 31,380 
Total commercial— — 71,391 71,391 
Consumer:
Residential mortgage:
HELOCs
— — 1,223 1,223 
Total consumer— — 1,223 1,223 
Total loans held-for-investment$— $— $72,614 $72,614 
Schedule Of Increase (Decrease) In Fair Value Of Assets For Which a Fair Value Adjustment Was Recognized, Nonrecurring Basis
The following table presents the increase (decrease) in the fair value of certain assets held at the end of the respective reporting periods, for which a nonrecurring fair value adjustment was recognized for the three and nine months ended September 30, 2023 and 2022:
Three Months Ended September 30,Nine Months Ended September 30,
($ in thousands)2023202220232022
Loans held-for-investment:
Commercial:
C&I$366 $(15,265)$(4,437)$(30,011)
CRE:
CRE— (118)— 2,212 
Multifamily residential— (5,931)— (5,939)
Construction and land(10,413)— (10,413)— 
Total commercial(10,047)(21,314)(14,850)(33,738)
Consumer:
Residential mortgage:
HELOCs(41)81 (41)166 
Total consumer(41)81 (41)166 
Total loans held-for-investment$(10,088)$(21,233)$(14,891)$(33,572)
Investments in qualified affordable housing partnerships, tax credit and other investments, net$(790)$— $(1,577)$— 
Other nonperforming assets$— $— $— $(6,861)
Schedule Of The Carrying And Fair Value Estimates Per The Fair Value Hierarchy Of Financial Instruments Measured On a Nonrecurring Basis
The following tables present the fair value estimates for financial instruments as of September 30, 2023 and December 31, 2022, excluding financial instruments recorded at fair value on a recurring basis as they are included in the tables presented elsewhere in this Note. The carrying amounts in the following tables are recorded on the Consolidated Balance Sheet under the indicated captions, except for accrued interest receivable, restricted equity securities, at cost, and mortgage servicing rights that are included in Other assets, and accrued interest payable which is included in Accrued expenses and other liabilities. These financial instruments are measured on an amortized cost basis on the Company’s Consolidated Balance Sheet.
September 30, 2023
($ in thousands)Carrying AmountLevel 1Level 2Level 3Estimated Fair Value
Financial assets:
Cash and cash equivalents$4,561,178 $4,561,178 $— $— $4,561,178 
Interest-bearing deposits with banks$17,213 $— $17,213 $— $17,213 
Resale agreements$785,000 $— $672,250 $— $672,250 
HTM debt securities$2,964,235 $470,618 $1,837,430 $— $2,308,048 
Restricted equity securities, at cost$79,522 $— $79,522 $— $79,522 
Loans held-for-sale$4,762 $— $4,762 $— $4,762 
Loans held-for-investment, net$50,251,661 $— $— $48,992,846 $48,992,846 
Mortgage servicing rights$5,208 $— $— $9,821 $9,821 
Accrued interest receivable$317,881 $— $317,881 $— $317,881 
Financial liabilities:
Demand, checking, savings and money market deposits$38,435,954 $— $38,435,954 $— $38,435,954 
Time deposits$16,651,077 $— $16,547,883 $— $16,547,883 
Short-term borrowings$4,500,000 $— $4,500,000 $— $4,500,000 
Long-term debt$148,173 $— $144,214 $— $144,214 
Accrued interest payable$150,890 $— $150,890 $— $150,890 
December 31, 2022
($ in thousands)Carrying AmountLevel 1Level 2Level 3Estimated 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