The Company uses derivative instruments to manage exposure to market risk, primarily interest rate and foreign currency risks, as well as to assist customers with their risk management objectives. The Company’s goal is to manage interest rate sensitivity and volatility to mitigate the effect of interest rate changes on earnings or capital. The Company also uses foreign exchange contracts to manage the foreign exchange rate risk associated with certain foreign currency-denominated assets and liabilities, as well as the Bank’s investment in East West Bank (China) Limited. The Company recognizes all derivatives on the Consolidated Balance Sheet at fair value. While the Company designates certain derivatives as hedging instruments in a qualifying hedge accounting relationship, other derivatives serve as economic hedges. For additional information on the Company’s derivatives and hedging activities, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Derivatives to the Consolidated Financial Statements of the Company’s 2023 Form 10-K.

The following table presents the notional amounts and fair values of the Company’s derivatives as of June 30, 2024 and December 31, 2023. Certain derivative contracts are cleared though central clearing organizations where variation margin is applied daily as settlement to the fair values of the contracts. The fair values are presented on a gross basis prior to the application of bilateral collateral and master netting agreements, but after the application of variation margin payments as settlement to fair values of contracts cleared through central clearing organizations. Applying variation margin payments as settlement to the fair values of derivative contracts cleared through the London Clearing House (“LCH”) and the Chicago Mercantile Exchange (“CME”) resulted in reductions in the derivative asset and liability fair values by $28 million and $37 million, respectively, as of June 30, 2024. In comparison, applying variation margin payments as settlement to LCH- and CME-cleared derivative transactions resulted in reductions in both the derivative asset and liability fair values by $43 million as of December 31, 2023. Total derivative asset and liability fair values are adjusted to reflect the effects of legally enforceable master netting agreements and cash collateral received or paid. 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.



	June 30, 2024								December 31, 2023
			Fair Value								Fair Value
($ in thousands)	Notional Amount		Assets			Liabilities			Notional Amount		Assets			Liabilities
Derivatives designated as hedging instruments:


Cash flow hedges:
Interest rate contracts	$	5,250,000	$	11,484		$	54,557		$	5,250,000	$	50,421		$	13,124
Net investment hedges:
Foreign exchange contracts	—		—			—			81,480		3,394			—
Total derivatives designated as hedging instruments	$	5,250,000	$	11,484		$	54,557		$	5,331,480	$	53,815		$	13,124
Derivatives not designated as hedging instruments:
Interest rate contracts	$	16,927,202	$	448,106		$	446,957		$	17,387,909	$	423,486		$	420,812
Commodity contracts (1)	—		60,946			70,900			—		79,604			121,670
Foreign exchange contracts	3,865,583		33,684			25,598			5,827,149		53,678			42,564
Credit contracts (2)	117,751		—			14			118,391		1			25
Equity contracts	—		240		(3)	15,119		(4)	—		336		(3)	15,119		(4)
Total derivatives not designated as hedging instruments	$	20,910,536	$	542,976		$	558,588		$	23,333,449	$	557,105		$	600,190
Gross derivative assets/liabilities			$	554,460		$	613,145				$	610,920		$	613,314
Less: Master netting agreements			(106,525)			(106,525)					(75,534)			(75,534)
Less: Cash collateral received			(335,285)			(2,665)					(237,258)			(636)
Net derivative assets/liabilities			$	112,650		$	503,955				$	298,128		$	537,144

(1)The notional amount of the Company’s commodity contracts totaled 18,230 thousand barrels of crude oil and 421,525 thousand units of natural gas, measured in million British thermal units (“MMBTUs”) as of June 30, 2024. In comparison, the notional amount of the Company’s commodity contracts totaled 18,631 thousand barrels of crude oil and 328,844 thousand MMBTUs of natural gas as of December 31, 2023.

Cash Flow Hedges — The Company uses interest rate swaps to hedge the variability in the interest amount received on certain floating-rate commercial loans, or paid on certain floating-rate borrowings due to changes in contractually specified interest rates. As of June 30, 2024, interest rate contracts in notional amounts of $5.3 billion were designated as cash flow hedges to convert certain variable-rate loans from floating-rate payments to fixed-rate payments. Gains and losses on the hedging derivative instruments are recognized in AOCI and reclassified to earnings in the same period the hedged cash flows impact earnings and within the same income statement line item as the hedged cash flows. Considering the interest rates, yield curve and notional amount as of June 30, 2024, the Company expects to reclassify an estimated $43 million 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 and six months ended June 30, 2024 and 2023. The after-tax impact of cash flow hedges on AOCI is shown in Note 14 — Accumulated Other Comprehensive Income (Loss) to the Consolidated Financial Statements in this Form-10-Q.



	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2024		2023		2024		2023
Gains (losses) recognized in AOCI:
Interest rate contracts	$	25,095	$	(96,457)	$	115,471	$	(66,614)


Gains (losses) reclassified from AOCI into earnings:
Interest expense (for cash flow hedges on borrowings)	$	—	$	—	$	—	$	696
Interest and dividend income (for cash flow hedges on loans)	(24,594)		(20,252)		(49,199)		(33,206)
Noninterest income	—		—		—		1,614		(1)
Total	$	(24,594)	$	(20,252)	$	(49,199)	$	(30,896)

Net Investment Hedges — 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 were used to hedge against the risk of adverse changes in the foreign currency exchange rate of the Chinese Renminbi (“RMB”). The net investment hedge in place as of December 31, 2023 expired during the three months ended March 31, 2024. No new net investment hedge was entered during the three months ended June 30, 2024. The following table presents the pre-tax gains or losses recognized in AOCI on net investment hedges for the three and six months ended June 30, 2024 and 2023:

Customer-Related Positions and Economic Hedge Derivatives — The Company enters into interest rate, commodity, and foreign exchange derivatives at the request of its customers and generally enters into offsetting derivative contracts with third-party financial institutions to mitigate the inherent market risk. The Company also utilizes foreign exchange contracts to mitigate the effect of currency fluctuations on certain foreign currency-denominated on-balance sheet assets and liabilities, primarily foreign currency denominated deposits that it offers to its customers. A majority of the foreign exchange contracts had original maturities of one year or less as of both June 30, 2024 and December 31, 2023.



	June 30, 2024						December 31, 2023
			Fair Value						Fair Value
($ in thousands)	Notional Amount		Assets		Liabilities		Notional Amount		Assets		Liabilities
Customer-related positions:
Interest rate contracts:
Swaps	$	6,826,308	$	9,729	$	423,880	$	6,835,822	$	25,649	$	377,388
Written options	1,369,229		—		9,929		1,522,531		—		12,756
Collars and corridors	259,081		96		2,496		322,732		440		4,481
Subtotal	8,454,618		9,825		436,305		8,681,085		26,089		394,625
Foreign exchange contracts:
Forwards and spot	535,153		5,897		3,428		956,618		9,466		6,756
Swaps	1,197,938		7,515		10,558		1,588,491		5,801		18,118
Purchased options	88,000		2,051		—		136,000		1,839		—
Subtotal	1,821,091		15,463		13,986		2,681,109		17,106		24,874
Total	$	10,275,709	$	25,288	$	450,291	$	11,362,194	$	43,195	$	419,499
Economic hedges:
Interest rate contracts:
Swaps	$	6,844,274	$	425,796	$	10,552	$	6,861,561	$	380,123	$	25,731
Purchased options	1,369,229		9,981		—		1,522,531		12,783		—

Collars and corridors	259,081		2,504		100		322,732		4,491		456
Subtotal	8,472,584		438,281		10,652		8,706,824		397,397		26,187
Foreign exchange contracts:
Forwards and spot	66,546		52		128		148,003		292		94
Swaps	1,889,946		18,169		9,433		2,862,037		36,280		15,757
Written options	88,000		—		2,051		136,000		—		1,839
Subtotal	2,044,492		18,221		11,612		3,146,040		36,572		17,690
Total	$	10,517,076	$	456,502	$	22,264	$	11,852,864	$	433,969	$	43,877

The Company enters into energy commodity contracts with its customers in the oil and gas sector, which allow them to hedge against the risk of fluctuation in energy commodity prices. Offsetting contracts entered with third-party financial institutions are used as economic hedges to manage the Company’s exposure on its customer-related positions. The following table presents the notional amounts in units and the gross fair values of the commodity derivatives issued for customer-related positions and economic hedges as of June 30, 2024 and December 31, 2023:



	June 30, 2024						December 31, 2023
			Fair Value						Fair Value
($ and unit in thousands)	Notional Units		Assets		Liabilities		Notional Units		Assets		Liabilities
Customer-related positions:
Commodity contracts:
Crude oil:
Swaps	3,907	Barrels	$	13,897	$	857	3,277	Barrels	$	3,735	$	15,445
Collars	5,180	Barrels	8,366		43		5,966	Barrels	1,820		5,103

Subtotal	9,087	Barrels	22,263		900		9,243	Barrels	5,555		20,548
Natural gas:
Swaps	148,337	MMBTUs	1,796		43,998		118,325	MMBTUs	438		73,793
Collars	62,277	MMBTUs	1,297		12,005		45,854	MMBTUs	21		20,400
Written options	1,710	MMBTUs	124		—		1,874	MMBTUs	—		233
Subtotal	212,324	MMBTUs	3,217		56,003		166,053	MMBTUs	459		94,426
Total			$	25,480	$	56,903			$	6,014	$	114,974
Economic hedges:
Commodity contracts:
Crude oil:
Swaps	3,963	Barrels	$	1,308	$	10,871	3,422	Barrels	$	9,166	$	4,924
Collars	5,180	Barrels	3		1,983		5,966	Barrels	1,685		1,467

Subtotal	9,143	Barrels	1,311		12,854		9,388	Barrels	10,851		6,391
Natural gas:
Swaps	145,824	MMBTUs	28,395		391		116,463	MMBTUs	49,941		305
Collars	61,667	MMBTUs	5,760		648		44,454	MMBTUs	12,565		—
Purchased options	1,710	MMBTUs	—		104		1,874	MMBTUs	233		—
Subtotal	209,201	MMBTUs	34,155		1,143		162,791	MMBTUs	62,739		305
Total			$	35,466	$	13,997			$	73,590	$	6,696

Credit Contracts — The Company periodically enters into credit RPAs with institutional counterparties to manage the credit exposure of the interest rate contracts associated with syndication loans. Under the RPAs, a portion of the credit exposure is transferred from one party (the purchaser of credit protection) to another party (the seller of credit protection). The seller of credit protection is required to make payments to the purchaser of credit protection if the underlying borrower defaults on the related interest rate contract. The Company may enter into protection sold or protection purchased RPAs. Credit risk on RPAs is managed by monitoring the credit worthiness of the borrowers and the institutional counterparties, which is a part of the Company’s normal credit review and monitoring process. All referenced entities of the protection sold RPAs were investment grade and the weighted-average remaining maturity was 2.3 years and 2.8 years as of June 30, 2024 and December 31, 2023, respectively. Assuming the underlying borrowers referenced in the interest rate contracts defaulted, the maximum exposure in the protection sold RPAs would be $63 thousand and $177 thousand as of June 30, 2024 and December 31, 2023, respectively.

Equity Contracts — As part of the loan origination process, the Company may obtain warrants to purchase the preferred and/or common stock of the borrowers’ companies, which are mainly in the technology and life sciences sectors. Warrants grant the Company the right to buy a certain class of the underlying company’s equity at a certain price before expiration. In connection with the Company’s investment in Rayliant during the third quarter of 2023, the Company granted performance-based RSUs as part of its consideration. The vesting of these equity contracts is contingent on Rayliant meeting certain financial performance targets during the future performance period. For additional information on these equity contracts, refer to Note 3 — Fair Value Measurement and Fair Value of Financial Instruments to the Consolidated Financial Statements in this Form 10-Q.



		Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	Classification on Consolidated Statement of Income	2024		2023		2024		2023
Derivatives not designated as hedging instruments:
Interest rate contracts	Customer derivative income	$	1,099	$	1,222	$	1,583	$	(1,261)
Foreign exchange contracts	Foreign exchange income	14,349		19,898		27,129		30,340
Credit contracts	Customer derivative income	2		12		(3)		7
Equity contracts - warrants	Lending fees	(90)		(14)		(96)		(60)

Commodity contracts	Customer derivative income	433		160		567		166
Net gains		$	15,793	$	21,278	$	29,180	$	29,192

Credit-Risk-Related Contingent Features — Certain of the Company’s over-the-counter derivative contracts contain early termination provisions that require the Company to settle any outstanding balances upon the occurrence of a specified credit-risk-related event. Such an event primarily relates to a downgrade of the credit rating of East West Bank to below investment grade. As of June 30, 2024, the aggregate fair value amounts of all derivative instruments with credit risk-related contingent features that were in a net liability position totaled $2 million, for which $2 million collateral was posted to cover these positions. In comparison, as of December 31, 2023, the aggregate fair value amounts of all derivative instruments with credit risk-related contingent features that were in a net liability position totaled $9 thousand, for which no 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, the Company would have been required to post minimal additional collateral as of both June 30, 2024 and December 31, 2023.

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 to the fair values of contracts cleared through central clearing organizations, where applicable. The collateral amounts in the following tables are limited to the outstanding balances of the related asset or liability. Therefore, instances of over-collateralization are not shown:



($ in thousands)	As of June 30, 2024

			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
	Gross Amounts Recognized (1)		Master Netting Arrangements		Cash Collateral Received (3)				Security Collateral Received (5)		Net Amount
Derivative assets	$	554,460	$	(106,525)	$	(335,285)	$	112,650	$	(78,411)	$	34,239

			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
	Gross Amounts Recognized (2)		Master Netting Arrangements		Cash Collateral Pledged (4)				Security Collateral Pledged (5)		Net Amount
Derivative liabilities	$	613,145	$	(106,525)	$	(2,665)	$	503,955	$	—	$	503,955



($ in thousands)	As of December 31, 2023

			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
	Gross Amounts Recognized (1)		Master Netting Arrangements		Cash Collateral Received (3)				Security Collateral Received (5)		Net Amount
Derivative assets	$	610,920	$	(75,534)	$	(237,258)	$	298,128	$	(246,259)	$	51,869

			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
	Gross Amounts Recognized (2)		Master Netting Arrangements		Cash Collateral Pledged (4)				Security Collateral Pledged (5)		Net Amount
Derivative liabilities	$	613,314	$	(75,534)	$	(636)	$	537,144	$	—	$	537,144

(3)Gross cash collateral received under master netting arrangements or similar agreements was $356 million and $244 million as of June 30, 2024 and December 31, 2023, respectively. Of the gross cash collateral received, $335 million and $237 million were used to offset derivative assets as of June 30, 2024 and December 31, 2023, respectively.

(4)Gross cash collateral pledged under master netting arrangements or similar agreements was $3 million and $1 million as of June 30, 2024 and December 31, 2023, respectively. Of the gross cash collateral pledged, $3 million and $1 million were used to offset derivative liabilities as of June 30, 2024 and December 31, 2023, respectively.

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

In addition to the amounts included in the tables above, the Company has balance sheet netting related to resale agreements. Refer to Note 4 — Securities Purchased under Resale 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.