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Fair Value Measurement and Fair Value of Financial Instruments (Tables)
 3 Months Ended
Mar. 31, 2024
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 March 31, 2024 and December 31, 2023:
Assets and Liabilities Measured at Fair Value on a Recurring Basis
as of March 31, 2024
($ in thousands)
Level 1
Level 2
Level 3
Total
Fair Value
AFS debt securities:
U.S. Treasury securities$621,094 $— $— $621,094 
U.S. government agency and U.S. government-sponsored enterprise debt securities— 360,802 — 360,802 
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities (1):
Commercial mortgage-backed securities— 455,619 — 455,619 
Residential mortgage-backed securities— 4,992,399 — 4,992,399 
Municipal securities— 258,495 — 258,495 
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities— 333,996 — 333,996 
Residential mortgage-backed securities— 519,657 — 519,657 
Corporate debt securities— 502,647 — 502,647 
Foreign government bonds— 227,196 — 227,196 
Asset-backed securities— 40,712 — 40,712 
Collateralized loan obligations (“CLOs”)— 87,851 — 87,851 
Total AFS debt securities
$621,094 $7,779,374 $— $8,400,468 
Affordable housing partnership, tax credit and CRA investments, net:
Equity securities$20,402 $4,137 $— $24,539 
Total affordable housing partnership, tax credit and CRA investments, net
$20,402 $4,137 $— $24,539 
Derivative assets:
Interest rate contracts$— $484,794 $— $484,794 
Foreign exchange contracts— 60,499 — 60,499 
Equity contracts— — 330 330 
Commodity contracts— 76,615 — 76,615 
Gross derivative assets$— $621,908 $330 $622,238 
Netting adjustments (2)
$— $(489,262)$— $(489,262)
Net derivative assets$— $132,646 $330 $132,976 
Derivative liabilities:
Interest rate contracts$— $518,330 $— $518,330 
Foreign exchange contracts— 53,153 — 53,153 
Equity contracts (3)
— — 15,119 15,119 
Credit contracts— 16 — 16 
Commodity contracts— 106,930 — 106,930 
Gross derivative liabilities$— $678,429 $15,119 $693,548 
Netting adjustments (2)
$— $(134,963)$— $(134,963)
Net derivative liabilities$— $543,466 $15,119 $558,585 
Assets and Liabilities Measured at Fair Value on a Recurring Basis
as of December 31, 2023
($ in thousands)
Level 1
Level 2
Level 3
Total
Fair Value
AFS debt securities:
U.S. Treasury securities$1,060,375 $— $— $1,060,375 
U.S. government agency and U.S. government-sponsored enterprise debt securities— 364,446 — 364,446 
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities (1):
Commercial mortgage-backed securities— 468,259 — 468,259 
Residential mortgage-backed securities— 1,727,594 — 1,727,594 
Municipal securities— 261,016 — 261,016 
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities— 367,516 — 367,516 
Residential mortgage-backed securities— 553,671 — 553,671 
Corporate debt securities— 502,425 — 502,425 
Foreign government bonds— 227,874 — 227,874 
Asset-backed securities— 42,300 — 42,300 
CLOs— 612,861 — 612,861 
Total AFS debt securities
$1,060,375 $5,127,962 $— $6,188,337 
Affordable housing partnership, tax credit and CRA investments, net:
Equity securities$20,509 $4,150 $— $24,659 
Affordable housing partnership, tax credit and CRA investments, net
$20,509 $4,150 $— $24,659 
Derivative assets:
Interest rate contracts$— $473,907 $— $473,907 
Foreign exchange contracts— 57,072 — 57,072 
Credit contracts— 1 — 1 
Equity contracts— — 336 336 
Commodity contracts— 79,604 — 79,604 
Gross derivative assets$— $610,584 $336 $610,920 
Netting adjustments (2)
$— $(312,792)$— $(312,792)
Net derivative assets$— $297,792 $336 $298,128 
Derivative liabilities:
Interest rate contracts$— $433,936 $— $433,936 
Foreign exchange contracts— 42,564 — 42,564 
Equity contracts (3)
— — 15,119 15,119 
Credit contracts— 25 — 25 
Commodity contracts— 121,670 — 121,670 
Gross derivative liabilities$— $598,195 $15,119 $613,314 
Netting adjustments (2)
$— $(76,170)$— $(76,170)
Net derivative liabilities$— $522,025 $15,119 $537,144 
(1)Includes Government National Mortgage Association (“GNMA”) AFS debt securities totaling $4.4 billion and $1.2 billion of fair value as of March 31, 2024 and December 31, 2023, respectively.
(2)Represents the balance sheet netting of derivative assets and liabilities and related cash collateral under master netting agreements or similar agreements. See Note 6 — Derivatives to the Consolidated Financial Statements in this Form 10-Q for additional information.
(3)Equity contracts classified as derivative liabilities consist of performance-based RSUs granted as part of EWBC’s consideration in its investment in Rayliant.
Reconciliation Of The Beginning And Ending Balances Of Equity Contracts Measured At Fair Value On a Recurring Basis Using Significant Unobservable Inputs (Level 3) The following table provides a reconciliation of the beginning and ending balances of these equity contracts for the three months ended March 31, 2024 and 2023:
Three Months Ended March 31,
($ in thousands)20242023
Derivative assets:
Equity contracts
Beginning balance$336 $323 
Total losses included in earnings (1)
(6)(46)
Ending balance$330 $277 
Derivative liabilities:
Equity contracts (2)
Beginning balance$15,119 $— 
Total gains (losses) included in earnings
— — 
Ending balance$15,119 $— 
(1)Includes unrealized losses recorded in Lending fees on the Consolidated Statement of Income.
(2)Equity contracts classified as derivative liabilities consist of performance-based RSUs granted as part of EWBC’s consideration in its investment in Rayliant.
Schedule Of Quantitative Information About Significant Unobservable Inputs Used In The Valuation Of Level 3 Fair Value Measurements
The following table presents quantitative information about the significant unobservable inputs used in the valuation of Level 3 fair value measurements as of March 31, 2024 and December 31, 2023. The significant unobservable inputs presented in the table below are those that the Company considers significant to the fair value of the Level 3 assets. The Company considers unobservable inputs to be significant if, by their exclusion, the fair value of the Level 3 assets would be impacted by a predetermined percentage change.
($ in thousands)Fair Value Measurements (Level 3)Valuation TechniqueUnobservable InputsRange of Inputs
Weighted-Average of Inputs
March 31, 2024
Derivative assets:
Equity contracts$330 
Black-Scholes option pricing model
Equity volatility
39% — 50%
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, 2023
Derivative assets:
Equity contracts$336 
Black-Scholes option pricing model
Equity volatility
37% — 48%
45 %
(1)
Liquidity discount47%47 %
Derivative liabilities:
Equity contracts (2)
$15,119 
Internal model
Payout % designated based on operating revenue and operating EBITDA of investee
84%84 %
(1)Weighted-average of inputs is calculated based on the fair value of equity contracts as of both March 31, 2024 and December 31, 2023.
(2)Equity contracts classified as derivative liabilities consist of performance-based RSUs granted as part of EWBC’s consideration in its investment in Rayliant.
The following table presents the quantitative information about the significant unobservable inputs used in the valuation of Level 3 fair value measurements that are measured on a nonrecurring basis as of March 31, 2024 and December 31, 2023:
($ in thousands)Fair Value Measurements (Level 3)Valuation TechniquesUnobservable InputsRange of InputsWeighted-Average of Inputs
March 31, 2024
Loans held-for-investment$6,917 Fair value of collateralDiscount
20%
20%
$8,471 Fair value of collateralContract valueNMNM
$32,906 Fair value of propertySelling cost
8%
8%
December 31, 2023
Loans held-for-investment$16,328 Fair value of collateralDiscount
15% — 75%
45%
(1)
$3,009 Fair value of collateralContract valueNMNM
$26,555 Fair value of propertySelling cost
8%
8%
Affordable housing partnership, tax credit and CRA investments, net
$868 Individual analysis of each investmentExpected future tax benefits and distributionsNMNM
NM — Not meaningful.
(1)Weighted-average of inputs is based on the relative fair value of the respective assets as of December 31, 2023.
Schedule Of Carrying Amounts Of Assets That Were Still Held And Had Fair Value Adjustments Measured On a Nonrecurring Basis
The following tables present the carrying amounts of assets that were still held and had fair value adjustments measured on a nonrecurring basis as of March 31, 2024 and December 31, 2023:
Assets Measured at Fair Value on a Nonrecurring Basis
as of March 31, 2024
($ in thousands)
Level 1
Level 2
Level 3
Fair Value Measurements
Loans held-for-investment:
Commercial:
Commercial and industrial (“C&I”)$— $— $25,914 $25,914 
Commercial real estate (“CRE”):
CRE— — 10,028 10,028 
Construction and land— — 12,236 12,236 
Total commercial— — 48,178 48,178 
Consumer:
Residential mortgage:
Single-family residential— — 116 116 
Total consumer— — 116 116 
Total loans held-for-investment$— $— $48,294 $48,294 
Assets Measured at Fair Value on a Nonrecurring Basis
as of December 31, 2023
($ in thousands)
Level 1
Level 2
Level 3
Fair Value Measurements
Loans held-for-investment:
Commercial:
C&I$— $— $22,035 $22,035 
CRE:
CRE— — 22,653 22,653 
Total commercial— — 44,688 44,688 
Consumer:
Residential mortgage:
Home equity lines of credit (“HELOCs”)
— — 1,204 1,204 
Total consumer— — 1,204 1,204 
Total loans held-for-investment$— $— $45,892 $45,892 
Affordable housing partnership, tax credit and CRA investments, net
$— $— $868 $868 
Schedule Of Increase (Decrease) In Fair Value Of Assets For Which a Fair Value Adjustment Was Recognized, Nonrecurring Basis
The following table presents the (decrease) increase in the fair value of certain assets held at the end of the respective reporting periods, for which a nonrecurring fair value adjustment was recognized for the three months ended March 31, 2024 and 2023:
Three Months Ended March 31,
($ in thousands)20242023
Loans held-for-investment:
Commercial:
C&I$(12,843)$(1,255)
CRE:
CRE(2,006)— 
Construction and land(1,224)— 
Total commercial(16,073)(1,255)
Consumer:
Residential mortgage:
Single-family residential(1,384)— 
Total consumer(1,384)— 
Total loans held-for-investment$(17,457)$(1,255)
Affordable housing partnership, tax credit and CRA investments, net
$— $174 
Schedule Of The Carrying And Fair Value Estimates Per The Fair Value Hierarchy Of Financial Instruments Measured On a Nonrecurring Basis
The following tables present the fair value estimates for financial instruments as of March 31, 2024 and December 31, 2023, excluding financial instruments recorded at fair value on a recurring basis as they are included in the tables presented elsewhere in this Note. The carrying amounts in the following tables are recorded on the Consolidated Balance Sheet under the indicated captions, except for accrued interest receivable, restricted equity securities, at cost, and mortgage servicing rights that are included in Other assets, and accrued interest payable which is included in Accrued expenses and other liabilities. These financial instruments are measured on an amortized cost basis on the Company’s Consolidated Balance Sheet.
March 31, 2024
($ in thousands)Carrying AmountLevel 1Level 2Level 3Estimated Fair Value
Financial assets:
Cash and cash equivalents$4,210,801 $4,210,801 $— $— $4,210,801 
Interest-bearing deposits with banks$24,593 $— $24,593 $— $24,593 
Resale agreements$485,000 $— $391,403 $— $391,403 
HTM debt securities$2,948,642 $485,400 $1,929,078 $— $2,414,478 
Restricted equity securities, at cost$164,402 $— $164,402 $— $164,402 
Loans held-for-sale$13,280 $— $13,280 $— $13,280 
Loans held-for-investment, net$51,322,224 $— $— $49,849,727 $49,849,727 
Mortgage servicing rights$6,234 $— $— $10,787 $10,787 
Accrued interest receivable$336,428 $— $336,428 $— $336,428 
Financial liabilities:
Demand, checking, savings and money market deposits$37,789,344 $— $37,789,344 $— $37,789,344 
Time deposits$20,771,280 $— $20,715,628 $— $20,715,628 
Short-term borrowings$19,173 $— $19,173 $— $19,173 
FHLB advances$3,500,000 $— $3,500,000 $— $3,500,000 
Long-term debt$31,768 $— $30,201 $— $30,201 
Accrued interest payable$63,470 $— $63,470 $— $63,470 
December 31, 2023
($ in thousands)Carrying AmountLevel 1Level 2Level 3Estimated Fair Value
Financial assets:
Cash and cash equivalents$4,614,984 $4,614,984 $— $— $4,614,984 
Interest-bearing deposits with banks$10,498 $— $10,498 $— $10,498 
Resale agreements$785,000 $— $699,056 $— $699,056 
HTM debt securities$2,956,040 $488,551 $1,965,420 $— $2,453,971 
Restricted equity securities, at cost$79,811 $— $79,811 $— $79,811 
Loans held-for-sale$116 $— $116 $— $116 
Loans held-for-investment, net$51,542,039 $— $— $50,256,565 $50,256,565 
Mortgage servicing rights$6,602 $— $— $9,470 $9,470 
Accrued interest receivable$331,490 $— $331,490 $— $331,490 
Financial liabilities:
Demand, checking, savings and money market deposits$38,048,974 $— $38,048,974 $— $38,048,974 
Time deposits$18,043,464 $— $18,004,951 $— $18,004,951 
BTFP borrowings
$4,500,000 $— $4,500,000 $— $4,500,000 
Long-term debt$148,249 $— $150,896 $— $150,896 
Accrued interest payable$205,430 $— $205,430 $— $205,430