Fair Value Measurement and Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2025

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, 2025 and December 31, 2024:



	Assets and Liabilities Measured at Fair Value on a Recurring Basis as of September 30, 2025
($ in thousands)	Level 1		Level 2		Level 3		Total Fair Value
AFS debt securities:
U.S. Treasury securities	$	856,215	$	—	$	—	$	856,215
U.S. government agency and U.S. government-sponsored enterprise debt securities	—		256,386		—		256,386
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities (1):
Commercial mortgage-backed securities	—		328,431		—		328,431
Residential mortgage-backed securities	—		9,683,435		—		9,683,435
Municipal securities	—		245,182		—		245,182
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities	—		197,993		—		197,993
Residential mortgage-backed securities	—		403,678		—		403,678
Corporate debt securities	—		500,870		—		500,870
Foreign government bonds	—		237,019		—		237,019
Asset-backed securities	—		31,943		—		31,943

Total AFS debt securities	$	856,215	$	11,884,937	$	—	$	12,741,152

Affordable housing partnership, tax credit and CRA investments, net:
Equity securities	$	21,848	$	4,303	$	—	$	26,151
Total affordable housing partnership, tax credit and CRA investments, net	$	21,848	$	4,303	$	—	$	26,151

Other assets:
Equity securities	$	613	$	—	$	—	$	613
Total other assets	$	613	$	—	$	—	$	613

Derivative assets:
Interest rate contracts	$	—	$	313,401	$	—	$	313,401
Foreign exchange contracts	—		45,999		—		45,999
Credit contracts	—		17		—		17
Equity contracts	—		—		547		547
Commodity contracts	—		48,465		—		48,465
Gross derivative assets	$	—	$	407,882	$	547	$	408,429
Netting adjustments (2)	$	—	$	(272,519)	$	—	$	(272,519)
Net derivative assets	$	—	$	135,363	$	547	$	135,910

Derivative liabilities:
Interest rate contracts	$	—	$	270,286	$	—	$	270,286
Foreign exchange contracts	—		40,964		—		40,964
Credit contracts	—		58		—		58
Equity contracts (3)	—		—		15,119		15,119
Commodity contracts	—		55,775		—		55,775
Gross derivative liabilities	$	—	$	367,083	$	15,119	$	382,202
Netting adjustments (2)	$	—	$	(107,154)	$	—	$	(107,154)
Net derivative liabilities	$	—	$	259,929	$	15,119	$	275,048

Refer to table footnotes on the following page.



	Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2024
($ in thousands)	Level 1		Level 2		Level 3		Total Fair Value
AFS debt securities:
U.S. Treasury securities	$	638,265	$	—	$	—	$	638,265
U.S. government agency and U.S. government-sponsored enterprise debt securities	—		262,587		—		262,587
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities (1):
Commercial mortgage-backed securities	—		426,214		—		426,214
Residential mortgage-backed securities	—		7,738,260		—		7,738,260
Municipal securities	—		250,153		—		250,153
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities	—		258,470		—		258,470
Residential mortgage-backed securities	—		433,608		—		433,608
Corporate debt securities	—		526,166		—		526,166
Foreign government bonds	—		233,880		—		233,880
Asset-backed securities	—		34,715		—		34,715
Collateralized loan obligation (“CLOs”)	—		44,493		—		44,493
Total AFS debt securities	$	638,265	$	10,208,546	$	—	$	10,846,811

Affordable housing partnership, tax credit and CRA investments, net:
Equity securities	$	20,817	$	4,204	$	—	$	25,021
Total affordable housing partnership, tax credit and CRA investments, net	$	20,817	$	4,204	$	—	$	25,021
Other assets:
Equity securities	$	568	$	—	$	—	$	568
Total other assets	$	568	$	—	$	—	$	568
Derivative assets:
Interest rate contracts	$	—	$	385,311	$	—	$	385,311
Foreign exchange contracts	—		89,083		—		89,083
Credit contracts	—		1		—		1
Equity contracts	—		—		239		239
Commodity contracts	—		48,499		—		48,499
Gross derivative assets	$	—	$	522,894	$	239	$	523,133
Netting adjustments (2)	$	—	$	(427,292)	$	—	$	(427,292)
Net derivative assets	$	—	$	95,602	$	239	$	95,841

Derivative liabilities:
Interest rate contracts	$	—	$	414,172	$	—	$	414,172
Foreign exchange contracts	—		71,254		—		71,254
Equity contracts (3)	—		—		15,119		15,119
Credit contracts	—		12		—		12
Commodity contracts	—		45,328		—		45,328
Gross derivative liabilities	$	—	$	530,766	$	15,119	$	545,885
Netting adjustments (2)	$	—	$	(112,284)	$	—	$	(112,284)
Net derivative liabilities	$	—	$	418,482	$	15,119	$	433,601

(1)Includes Government National Mortgage Association (“GNMA”) AFS debt securities totaling $9.1 billion and $7.2 billion of fair value as of September 30, 2025 and December 31, 2024, 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 5 — 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 an investment.

Schedule of 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 the warrant equity contracts for the three and nine months ended September 30, 2025 and 2024:



	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2025		2024		2025		2024

Equity contracts
Beginning balance	$	377	$	240	$	239	$	336

Total losses included in earnings (1)	(13)		(8)		(131)		(104)




Issuances (2)	183		—		439		—




Ending balance	$	547	$	232	$	547	$	232

(1)Includes unrealized losses recorded in Lending and loan servicing fees on the Consolidated Statement of Income.

(2)Included in Lending and loan servicing fees on the Consolidated Statement of Income.

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, 2025 and December 31, 2024. 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
September 30, 2025
Derivative assets:
Equity contracts	$	547	Black-Scholes option pricing model	Equity volatility	34% — 53%	42	%	(1)
				Liquidity discount	47%	47	%
Derivative liabilities:
Equity contracts (2)	$	15,119	Internal model	Payout % based on operating revenue and operating EBITDA of investee	84%	84	%
December 31, 2024
Derivative assets:
Equity contracts	$	239	Black-Scholes option pricing model	Equity volatility	38% — 57%	50	%	(1)
				Liquidity discount	47%	47	%
Derivative liabilities:
Equity contracts (2)	$	15,119	Internal model	Payout % 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 September 30, 2025 and December 31, 2024.

(2)Equity contracts classified as derivative liabilities consist of performance-based RSUs granted as part of EWBC’s consideration in an investment.

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, 2025 and December 31, 2024:



($ in thousands)	Fair Value Measurements (Level 3)		Valuation Techniques	Unobservable Inputs	Range of Inputs	Weighted-Average of Inputs
September 30, 2025

Loans held-for-investment	$	17,844	Fair value of collateral	Discount	35% — 70%	41%	(1)
	$	5,574	Fair value of collateral	Contract value	NM	NM
	$	15,203	Fair value of property	Selling cost	8% — 20%	13%	(1)

Affordable housing partnership, tax credit and CRA investments, net	$	976	Individual analysis of each investment	Expected future tax benefits and distributions	NM	NM

OREO	$	6,595	Fair value of property	Selling cost	8%	8%

December 31, 2024


Loans held-for-investment	$	910	Fair value of collateral	Discount	50%	50%
	$	22,993	Fair value of collateral	Contract value	NM	NM
	$	37,583	Fair value of property	Selling cost	8% — 20%	10%	(1)

Affordable housing partnership, tax credit and CRA investments, net	$	5,000	Individual analysis of each investment	Expected future tax benefits and distributions	NM	NM

OREO	$	19,386	Fair value of property	Selling cost	8%	8%

NM — Not meaningful.

(1)Weighted-average of inputs is based on the relative fair value of the respective assets as of September 30, 2025 and December 31, 2024.

Schedule of Carrying Amounts of Assets That Were Still Held and Had Fair Value Changes 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, 2025 and December 31, 2024:



	Assets Measured at Fair Value on a Nonrecurring Basis as of September 30, 2025
($ in thousands)	Level 1		Level 2		Level 3		Fair Value Measurements
Loans held-for-investment:
Commercial:
Commercial and industrial (“C&I”)	$	—	$	—	$	30,755	$	30,755
Commercial real estate (“CRE”):
CRE	—		—		7,866		7,866











Total loans held-for-investment	$	—	$	—	$	38,621	$	38,621
Affordable housing partnership, tax credit and CRA investments, net	$	—	$	—	$	976	$	976
OREO (1)	$	—	$	—	$	6,595	$	6,595



	Assets Measured at Fair Value on a Nonrecurring Basis as of December 31, 2024
($ in thousands)	Level 1		Level 2		Level 3		Fair Value Measurements
Loans held-for-investment:
Commercial:
C&I	$	—	$	—	$	48,384	$	48,384
CRE:
CRE	—		—		1,678		1,678

Construction and land	—		—		11,316		11,316

Total commercial	—		—		61,378		61,378
Consumer:
Residential mortgage:
Single-family residential	—		—		108		108



Total consumer	—		—		108		108
Total loans held-for-investment	$	—	$	—	$	61,486	$	61,486
Affordable housing partnership, tax credit and CRA investments, net	$	—	$	—	$	5,000	$	5,000
OREO (1)	$	—	$	—	$	19,386	$	19,386

(1)Represents the carrying value of OREO property that was written down after its initial classification as OREO and included in Other assets on the Consolidated Balance Sheet.

Schedule of (Decrease) Increase in Fair Value of Assets for which a Nonrecurring Fair Value Adjustment Has Been Recognized

The following table presents the change 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, 2025 and 2024:



	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2025		2024		2025		2024
Loans held-for-investment:
Commercial:
C&I	$	(28,616)	$	(266)	$	(30,897)	$	(16,025)
CRE:
CRE	—		89		(19,885)		—
Multifamily residential	—		(49)		—		(49)
Construction and land	—		(145)		—		(2,289)
Total CRE	—		(105)		(19,885)		(2,338)
Total commercial	(28,616)		(371)		(50,782)		(18,363)
Consumer:
Residential mortgage:
Single-family residential	—		10		—		(1,396)



Total consumer	—		10		—		(1,396)
Total loans held-for-investment	$	(28,616)	$	(361)	$	(50,782)	$	(19,759)

Affordable housing partnership, tax credit and CRA investments, net	(550)		—		(550)		—

OREO	(1,133)		—		(1,133)		(2,576)
Total nonrecurring fair value losses	$	(30,299)	$	(361)	$	(52,465)	$	(22,335)

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, 2025 and December 31, 2024, 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, 2025
($ in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	4,694,194	$	4,694,194	$	—	$	—	$	4,694,194
Interest-bearing deposits with banks	$	68,200	$	—	$	68,200	$	—	$	68,200
Resale agreements	$	425,000	$	—	$	351,212	$	—	$	351,212
HTM debt securities	$	2,880,682	$	519,800	$	1,947,562	$	—	$	2,467,362
Restricted equity securities, at cost	$	152,536	$	—	$	152,536	$	—	$	152,536
Loans held-for-sale	$	19,596	$	—	$	19,596	$	—	$	19,596
Loans held-for-investment, net	$	54,976,252	$	—	$	—	$	53,569,366	$	53,569,366
Mortgage servicing rights	$	4,362	$	—	$	—	$	7,601	$	7,601
Accrued interest receivable	$	315,633	$	—	$	315,633	$	—	$	315,633
Financial liabilities:
Demand, checking, savings and money market deposits	$	41,296,069	$	—	$	41,296,069	$	—	$	41,296,069
Time deposits	$	25,291,487	$	—	$	25,287,515	$	—	$	25,287,515
Short-term borrowings	$	9,851	$	—	$	9,851	$	—	$	9,851

FHLB advances	$	3,000,000	$	—	$	3,002,069	$	—	$	3,002,069
Repurchase agreements	$	53,489	$	—	$	53,489	$	—	$	53,489
Long-term debt	$	32,239	$	—	$	31,629	$	—	$	31,629
Accrued interest payable	$	56,703	$	—	$	56,703	$	—	$	56,703



	December 31, 2024
($ in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	5,250,742	$	5,250,742	$	—	$	—	$	5,250,742
Interest-bearing deposits with banks	$	48,198	$	—	$	48,198	$	—	$	48,198
Resale agreements	$	425,000	$	—	$	329,769	$	—	$	329,769
HTM debt securities	$	2,917,413	$	499,858	$	1,887,896	$	—	$	2,387,754
Restricted equity securities, at cost	$	165,259	$	—	$	165,259	$	—	$	165,259

Loans held-for-investment, net	$	53,024,585	$	—	$	—	$	51,328,254	$	51,328,254

Mortgage servicing rights	$	5,234	$	—	$	—	$	8,822	$	8,822
Accrued interest receivable	$	316,392	$	—	$	316,392	$	—	$	316,392
Financial liabilities:

Demand, checking, savings and money market deposits	$	39,959,251	$	—	$	39,959,251	$	—	$	39,959,251
Time deposits	$	23,215,772	$	—	$	23,225,317	$	—	$	23,225,317

FHLB advances	$	3,500,000	$	—	$	3,497,953	$	—	$	3,497,953

Long-term debt	$	32,001	$	—	$	31,246	$	—	$	31,246
Accrued interest payable	$	61,950	$	—	$	61,950	$	—	$	61,950

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References + Details

EAST WEST BANCORP INC 10-Q