495,981

Issuance of common stock pursuant to various stock compensation plans and agreements (in shares)

(510,267)

639,847

Issuance of common stock pursuant to various stock compensation plans and agreements

20,507

Repurchase of common stock pursuant to the Stock Repurchase Program/various stock compensation plans and agreements (in shares)

(244,895)

(1,385,517)

Repurchase of common stock pursuant to the Stock Repurchase Program/various stock compensation plans and agreements

$ (18,977)

$ (99,990)

$ (18,977)

Ending balance (in shares) at Jun. 30, 2022

(114,990)

140,917,389

Ending balance at Jun. 30, 2022

5,609,482

1,914,232

5,064,650

(768,752)

(600,648)

Beginning balance (in shares) at Mar. 31, 2022

142,256,520

Beginning balance at Mar. 31, 2022

5,703,456

1,903,042

4,863,721

(668,382)

(394,925)

258,329

Issuance of common stock pursuant to various stock compensation plans and agreements (in shares)

(205,723)

51,733

Issuance of common stock pursuant to various stock compensation plans and agreements

11,190

Repurchase of common stock pursuant to the Stock Repurchase Program/various stock compensation plans and agreements (in shares)

(5,347)

(1,385,517)

Repurchase of common stock pursuant to the Stock Repurchase Program/various stock compensation plans and agreements

(380)

$ (99,990)

(380)

$ (99,990)

Ending balance (in shares) at Jun. 30, 2022

(57,400)

140,917,389

Ending balance at Jun. 30, 2022

5,609,482

1,914,232

5,064,650

(768,752)

(600,648)

Beginning balance (in shares) at Dec. 31, 2022

140,947,846

Beginning balance at Dec. 31, 2022

5,984,612

1,936,557

5,582,546

(768,862)

(765,629)

Beginning balance (Accounting Standards Update 2022-02) at Dec. 31, 2022

^[1]

$ (4,262)

634,470

Issuance of common stock pursuant to various stock compensation plans and agreements (in shares)

(16,303)

851,819

Issuance of common stock pursuant to various stock compensation plans and agreements

23,227

Repurchase of common stock pursuant to the Stock Repurchase Program/various stock compensation plans and agreements (in shares)

(315,997)

Repurchase of common stock pursuant to the Stock Repurchase Program/various stock compensation plans and agreements

(23,028)

Ending balance (in shares) at Jun. 30, 2023

(137,019)

141,483,668

Ending balance at Jun. 30, 2023

6,461,697

1,959,784

6,075,735

(791,890)

(781,932)

Beginning balance (in shares) at Mar. 31, 2023

141,395,800

Beginning balance at Mar. 31, 2023

6,309,331

1,947,687

5,832,291

(790,653)

(679,994)

312,031

Issuance of common stock pursuant to various stock compensation plans and agreements (in shares)

(101,938)

111,097

Issuance of common stock pursuant to various stock compensation plans and agreements

12,097

Repurchase of common stock pursuant to the Stock Repurchase Program/various stock compensation plans and agreements (in shares)

(23,229)

Repurchase of common stock pursuant to the Stock Repurchase Program/various stock compensation plans and agreements

$ (1,237)

Ending balance (in shares) at Jun. 30, 2023

(68,587)

141,483,668

Ending balance at Jun. 30, 2023

$ 6,461,697

$ 1,959,784

$ 6,075,735

$ (791,890)

$ (781,932)

[1]

Represents the change in the Company’s allowance for loan losses as a result of the adoption of Accounting Standards Update (“ASU”) 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and the Vintage Disclosures on January 1, 2023. Refer to Note 2 — Current Accounting Developments and Summary of Significant Accounting Policies in this Form 10-Q for additional information.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Stockholders' Equity [Abstract]
Dividends declared per common share (in dollars per share)	$ 0.48	$ 0.40	$ 0.96	$ 0.80

CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 634,470	$ 495,981
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	106,579	48,911
Amortization of premiums and accretion of discount, net	(10,489)	21,519
Stock compensation costs	20,439	17,009
Deferred income tax expense (benefit)	1,098	(7,554)
Provision for credit losses	46,000	21,500
Net losses (gains) on sales of loans	29	(3,839)
Net losses (gains) on AFS debt securities	10,000	(1,306)
Loans held-for-sale:
Originations and purchases	0	(447)
Proceeds from sales and paydowns/payoffs of loans originally classified as held-for-sale	0	461
Proceeds from distributions received from equity method investees	2,696	4,412
Net change in accrued interest receivable and other assets	(273,537)	(128,071)
Net change in accrued expenses and other liabilities	(55,634)	457,296
Other operating activities, net	(283)	3,182
Total adjustments	(153,102)	433,073
Net cash provided by operating activities	481,368	929,054
Net change in:
Investments in qualified affordable housing partnerships, tax credit and other investments	(69,946)	(49,545)
Interest-bearing deposits with banks	121,774	23,442
Resale agreements:
Proceeds from paydowns and maturities	169,917	1,162,172
Purchases	(12,725)	(231,463)
AFS debt securities:
Proceeds from sales	0	129,181
Proceeds from repayments, maturities and redemptions	623,108	613,244
Purchases	(594,214)	(767,015)
HTM debt securities:
Proceeds from repayments, maturities and redemptions	33,882	40,072
Purchases	0	(50,000)
Loans held-for-investment:
Proceeds from sales of loans originally classified as held-for-investment	302,811	325,813
Purchases	(272,637)	(541,997)
Other changes in loans held-for-investment, net	(1,649,160)	(4,639,384)
Proceeds from distributions received from equity method investees	13,113	8,717
Other investing activities, net	(6,170)	1,354
Net cash used in investing activities	(1,340,247)	(3,975,409)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits	(262,287)	1,046,046
Net change in short-term borrowings	4,500,017	(49)
FHLB advances:
Proceeds	6,000,000	3,950,000
Repayment	(6,000,000)	(4,025,000)
Repurchase agreements:
Proceeds from repurchase agreements	0	311,785
Repayment of repurchase agreements	(300,000)	0
Repurchase agreements’ extinguishment cost	(3,872)	0
Long-term debt and lease liabilities:
Repayment of long-term debt and lease liabilities	(421)	(457)
Common stock:
Repurchase of common stocks pursuant to the Stock Repurchase Program	0	(99,990)
Proceeds from issuance pursuant to various stock compensation plans and agreements	0	1,444
Stock tendered for payment of withholding taxes	(23,028)	(18,977)
Cash dividends paid	(138,914)	(115,623)
Net cash provided by financing activities	3,771,495	1,049,179
Effect of exchange rate changes on cash and cash equivalents	(16,513)	(13,706)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	2,896,103	(2,010,882)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	3,481,784	3,912,935
CASH AND CASH EQUIVALENTS, END OF PERIOD	6,377,887	1,902,053
Cash paid during the period for:
Interest	504,774	45,057
Income taxes, net	255,432	188,510
Noncash investing and financing activities:
Securities transferred from AFS to HTM debt securities	0	3,010,003
Loans transferred from held-for-investment to held-for-sale	280,026	351,406
Loans transferred from held-for-sale to held-for-investment	$ 0	$ 631

Basis of Presentation	6 Months Ended
Basis of Presentation	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation East West Bancorp, Inc. is a registered bank holding company that offers a full range of banking services to individuals and businesses through its subsidiary bank, East West Bank and its subsidiaries (“East West Bank” or the “Bank”). The unaudited interim Consolidated Financial Statements in this Form 10-Q include the accounts of East West, East West Bank and East West’s subsidiaries. Intercompany transactions and accounts have been eliminated in consolidation. As of June 30, 2023, East West also has six wholly-owned subsidiaries that are statutory business trusts (the “Trusts”). In accordance with FASB Accounting Standards Codification (“ASC”) Topic 810, Consolidation, the Trusts are not included on the Consolidated Financial Statements. The unaudited interim Consolidated Financial Statements are presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), applicable guidelines prescribed by regulatory authorities and general practices in the banking industry. While the unaudited interim Consolidated Financial Statements reflect all adjustments that, in the opinion of management, are necessary for fair presentation, they primarily serve to update the most recently filed annual report on Form 10-K, and may not include all the information and notes necessary to constitute a complete set of financial statements. Accordingly, they should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company’s 2022 Form 10-K. The preparation of the Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Consolidated Financial Statements, income and expenses during the reporting periods, and the related disclosures. Although our estimates contemplate current conditions and how we expect them to change in the future, it is reasonably possible that actual results could be materially different from those estimates. Hence, the current period’s results of operations are not necessarily indicative of results that may be expected for any future interim period or for the year as a whole. Events subsequent to the Consolidated Balance Sheet date have been evaluated through the date the Consolidated Financial Statements are issued for inclusion in the accompanying Consolidated Financial Statements. Risk and Uncertainties The failures of Silicon Valley Bank, Signature Bank and First Republic Bank earlier in the year have resulted in significant disruption in the financial services industry, which has adversely impacted the volatility and market prices of the securities of financial institutions. In addition, these bank failures have caused concern and uncertainty regarding the liquidity of the banking sector as a whole and resulted in some regional bank customers choosing to maintain deposits with larger financial institutions. Further, competition for deposits has increased in recent periods, and the cost of funding has similarly increased, putting pressure on our net interest margin. These events have adversely impacted, and could continue to adversely affect, our business, results of operations, and financial condition, as well as the market price and volatility of our common stock.

Current Accounting Developments and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Current Accounting Developments and Summary of Significant Accounting Policies

Accounting Pronouncements Adopted in 2023


Standard	Required Date of Adoption	Description	Effect on Financial Statements
ASU 2022-02, Financial Instruments —Credit Losses (Topic 326): Troubled Debt Restructurings and the Vintage Disclosures	January 1, 2023 Early adoption is permitted	ASU 2022-02 eliminates the •accounting guidance for troubled debt restructurings (“TDR”), and requires the Company to apply the loan refinancing and restructuring guidance to determine whether a modification made to a loan results in a new loan or a continuation of an existing loan; and •requirement to use a discounted cash flow method to measure receivables. The guidance also requires •enhanced disclosures for certain loan refinancings and restructurings by creditors when the borrower is experiencing financial difficulty; and •vintage disclosures of current period gross charge-offs (on a current year-to-date basis) by year of loan origination for financing receivables and net investments in leases within the scope of ASC 326-20: Financial Instruments — Credit Losses — Measured at Amortized Cost.	The Company adopted ASU 2022-02 on January 1, 2023 on a prospective basis, except for the guidance related to the elimination of TDR recognition and measurement, which was adopted on a modified retrospective approach. This adoption increased the allowance for loan losses on TDRs as of December 31, 2022 by $6.0 million and decreased opening retained earnings on January 1, 2023 by $4.3 million after-tax. Disclosures as of June 30, 2023 are presented in accordance with this guidance while prior year amounts are reported in accordance with previously applicable GAAP.

Recent Accounting Pronouncements Yet to be Adopted


Standard	Required Date of Adoption	Description	Effect on Financial Statements
Standards Not Yet Adopted
ASU 2023-01, Leases (Topic 842): Common Control Arrangements	January 1, 2024 Early adoption is permitted	ASU 2023-01 amends the accounting for leasehold improvements for leases between entities under common control arrangements. The guidance requires leasehold improvements associated with leases between companies under common control to be amortized by a lessee over the economic life of the leasehold improvements, regardless of the lease term or, until the lessee ceases to control the use of the underlying asset through a lease, at which time the remaining value of the leasehold improvement would be accounted for as a transfer between companies under common control through an adjustment to equity. The amendments in this guidance may be applied retrospectively to the beginning of the period in which the entity first applied Topic 842 or prospectively (1) to all new leasehold improvements recognized on or after the date the entity first applies the amendments, or (2) to all new and existing leasehold improvements recognized on or after the date the entity first applies the amendments.	The Company does not expect the adoption of this guidance to have a material impact on the Company’s Consolidated Financial Statements. The Company expects to adopt ASU 2023-01 on January 1, 2024 on a prospective basis.
ASU 2023-02, Investments — Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method	January 1, 2024 Early adoption is permitted	ASU 2023-02 expands the scope of the proportional amortization method to equity tax credit investment programs if certain conditions are met. Previously, the proportional amortization method could only be used for investments in low-income housing tax credit structures. Under this guidance, companies are able to elect, on a tax credit program-by-tax credit program basis, to apply the proportional amortization method to all equity investments meeting the criteria in ASC 323-740-25-1. The amendments in this guidance must be applied on a modified retrospective or a retrospective basis.	The Company is currently evaluating the impact of this guidance on the Company’s Consolidated Financial Statements.

Significant Accounting Policies Update

Loan Modifications — Certain loans are modified in the normal course of business for competitive reasons or in conjunction with the Company’s loss mitigation activities. Upon the adoption of ASU 2022-02, the Company applies the general loan modification guidance provided in ASC 310-20 to all loan modifications, including modifications made to borrowers experiencing financial difficulty. Under the general loan modification guidance, a modification is treated as a new loan only if the following two conditions are met: (1) the terms of the new loan are at least as favorable to the Company as the terms for comparable loans to other customers with similar collection risks; and (2) modifications to the terms of the original loan are more than minor. If either condition is not met, the modification is accounted for as a continuation of the existing loan with any effect of the modification treated as a prospective adjustment to the loan’s effective interest rate. A modification made to borrowers experiencing financial difficulty may vary by program and by borrower-specific characteristics, and may include rate reductions, principal forgiveness, term extensions, and payment delays, and is intended to minimize the Company’s economic loss and to avoid foreclosure or repossession of collateral. The Company applies the same credit loss methodology it uses for similar loans that were not modified. For the Company’s accounting policy related to the loan modifications’ allowance for loan losses, see Note 7 — Loans Receivable and Allowance for Credit Losses — Allowance for Credit Losses to the Consolidated Financial Statements in this Form 10-Q.

Fair Value Measurement and Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurement and Fair Value of Financial Instruments

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.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following section describes the valuation methodologies used by the Company to measure financial assets and liabilities on a recurring basis, as well as the general classification of these instruments within the fair value hierarchy.

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.

The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022:



	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

(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.

For the three and six months ended June 30, 2023 and 2022, Level 3 fair value measurements that were measured on a recurring basis consisted of equity contracts issued by private companies. The following table provides a reconciliation of the beginning and ending balances of these equity contracts for the three and six months ended June 30, 2023 and 2022:



	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2023		2022		2023		2022
Equity contracts
Beginning balance	$	277	$	309	$	323	$	215

Total (losses) gains included in earnings (1)	(14)		48		(60)		51




Issuances	—		—		—		91




Ending balance	$	263	$	357	$	263	$	357

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

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%

(1)Weighted-average of inputs is calculated based on the fair value of equity contracts as of both June 30, 2023 and December 31, 2022.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

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.

Individually Evaluated Loans Held-for-Investment — Individually evaluated loans held-for-investment are classified as Level 3 assets. The following two methods are used to derive the fair value of individually evaluated loans held-for-investment:

•Discounted cash flow valuation techniques that consist of developing an expected stream of cash flows over the life of the loans, and then calculating the present value of the loans by discounting the expected cash flows at a designated discount rate.

•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:

•expected future cash flows that are less than the carrying amount of the investment;

•changes in the economic, market or technological environment that could adversely affect the investee’s operations;

•the potential for tax credit recapture; and

•other factors that raise doubt about the investee’s ability to continue as a going concern, such as negative cash flows from operations and the continuing prospects of the underlying operations of the investment.

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.

Loans Held-for-Sale — Loans held-for-investment subsequently transferred to held-for-sale are recorded at the lower of cost or fair value upon transfer. Loans held-for-sale may be measured at fair value on a nonrecurring basis when fair value is less than cost. Fair value is generally determined based on available market data for similar loans and therefore, are classified as Level 2.

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.

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 June 30, 2023 and December 31, 2022:



	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

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 six months ended June 30, 2023 and 2022:



	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)

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 June 30, 2023 and December 31, 2022:



($ 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%

NM — Not meaningful.

(1)Weighted-average of inputs is based on the relative fair value of the respective assets as of June 30, 2023 and December 31, 2022.

Disclosures about the Fair Value of Financial Instruments

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

RESALE AND REPURCHASE AGREEMENTS [Abstract]

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Assets Purchased under Resale Agreements and Sold under Repurchase Agreements

6 Months Ended

Jun. 30, 2023

Assets Purchased under Resale Agreements and Sold under Repurchase Agreements

Assets Purchased under Resale Agreements

With resale agreements, the Company is exposed to credit risk for both the counterparties and the underlying collateral. The Company manages credit exposure from certain transactions by entering into master netting agreements and collateral arrangements with the counterparties. The relevant agreements allow for an efficient closeout of the transaction, liquidation and set-off of collateral against the net amount owed by the counterparty following a default. It is also the Company’s policy to take possession, where possible, of the assets underlying resale agreements. As a result of the Company’s credit risk mitigation practices with respect to resale agreements as described above, the Company did not hold any reserves for credit impairment with respect to these agreements as of both June 30, 2023 and December 31, 2022.

Securities Purchased under Resale Agreements — Total securities purchased under resale agreements were $635.0 million as of June 30, 2023, and $760.0 million as of December 31, 2022. The weighted-average yields were 2.42% and 1.96% for the three months ended June 30, 2023 and 2022, respectively; and 2.46% and 1.79% for the six months ended June 30, 2023 and 2022, respectively.

Loans Purchased under Resale Agreements — Loans purchased under resale agreements were $32.2 million as of December 31, 2022. During the first six months of 2023, all the loans purchased under resale agreements matured and the Company had no loans purchased under resale agreements as of June 30, 2023. The weighted-average yields were 7.75% and 2.47% for the three months ended June 30, 2023 and 2022, respectively; and 7.27% and 1.91% for the six months ended June 30, 2023 and 2022, respectively.

Assets Sold under Repurchase Agreements — Gross repurchase agreements were $300.0 million as of December 31, 2022. The Company recorded $3.9 million of charges related to the extinguishment of $300.0 million of repurchase agreements during the first quarter of 2023. In comparison, no extinguishment charges were recorded for the three and six months ended June 30, 2022. The weighted-average interest rates were 5.43% and 2.70% for the three months ended June 30, 2023 and 2022, respectively; and 4.18% and 2.66% for the six months ended June 30, 2023 and 2022, respectively. These weighted-average interest rates also reflect the impact of short-term repurchase agreements entered and repaid during the periods presented.

Balance Sheet Offsetting

The Company’s resale and repurchase agreements are transacted under legally enforceable master repurchase agreements that, in the event of default by the counterparty, provide the Company the right to liquidate securities held and to offset receivables and payables with the same counterparty. The Company nets resale and repurchase transactions with the same counterparty on the Consolidated Balance Sheet when it has a legally enforceable master netting agreement and the transactions are eligible for netting under ASC 210-20-45-11, Balance Sheet Offsetting Repurchase and Reverse Repurchase Agreements. Collateral received includes securities and loans that are not recognized on the Consolidated Balance Sheet. Collateral pledged consists of securities that are not netted on the Consolidated Balance Sheet against the related collateralized liability. Securities received or pledged as collateral in resale and repurchase agreements with other financial institutions may also be sold or re-pledged by the secured party, and are usually delivered to and held by the third-party trustees.

The following tables present the resale and repurchase agreements included on the Consolidated Balance Sheet as of June 30, 2023 and December 31, 2022:



($ in thousands)	June 30, 2023

	Gross Amounts of Recognized Assets		Gross Amounts Offset on the Consolidated Balance Sheet		Net Amounts of Assets Presented on the Consolidated Balance Sheet		Gross Amounts Not Offset on the Consolidated Balance Sheet			Net Amount

Assets							Collateral Received
Resale agreements	$	635,000	$	—	$	635,000	$	(550,872)	(1)	$	84,128

	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Consolidated Balance Sheet		Net Amounts of Liabilities Presented on the Consolidated Balance Sheet		Gross Amounts Not Offset on the Consolidated Balance Sheet			Net Amount

Liabilities							Collateral Pledged
Repurchase agreements	$	—	$	—	$	—	$	—		$	—



($ in thousands)	December 31, 2022

	Gross Amounts of Recognized Assets		Gross Amounts Offset on the Consolidated Balance Sheet		Net Amounts of Assets Presented on the Consolidated Balance Sheet		Gross Amounts Not Offset on the Consolidated Balance Sheet
Assets										Net Amount
							Collateral Received
Resale agreements	$	792,192	$	—	$	792,192	$	(701,790)	(1)	$	90,402

Liabilities	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Consolidated Balance Sheet		Net Amounts of Liabilities Presented on the Consolidated Balance Sheet		Gross Amounts Not Offset on the Consolidated Balance Sheet
										Net Amount
							Collateral Pledged
Repurchase agreements	$	300,000	$	—	$	300,000	$	(300,000)	(2)	$	—

(1)Represents the fair value of assets the Company has received under resale agreements, limited for table presentation purposes to the amount of the recognized asset due from each counterparty. The application of collateral cannot reduce the net position below zero. Therefore, excess collateral, if any, is not reflected above.

(2)Represents the fair value of assets the Company has pledged under repurchase agreements, limited for table presentation purposes to the amount of the recognized liability due to each counterparty. The application of collateral cannot reduce the net position below zero. Therefore, excess collateral, if any, is not reflected above.

In addition to the amounts included in the tables above, the Company also has balance sheet netting related to derivatives. Refer to Note 6 — Derivatives to the Consolidated Financial Statements in this Form 10-Q for additional information.

Securities

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Securities

The following tables present the amortized cost, gross unrealized gains and losses and fair value by major categories of AFS and HTM debt securities as of June 30, 2023 and December 31, 2022:



	June 30, 2023
($ in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
AFS debt securities:
U.S. Treasury securities	$	779,973	$	15	$	(68,282)	$	711,706
U.S. government agency and U.S. government-sponsored enterprise debt securities	514,594		—		(54,510)		460,084
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	552,859		—		(74,082)		478,777
Residential mortgage-backed securities	1,966,906		15		(245,684)		1,721,237
Municipal securities	304,204		28		(40,359)		263,873
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities	432,782		2		(48,733)		384,051
Residential mortgage-backed securities	715,775		—		(107,201)		608,574
Corporate debt securities	653,502		—		(167,752)		485,750
Foreign government bonds	236,392		152		(11,778)		224,766
Asset-backed securities	46,332		—		(1,457)		44,875
CLOs	617,250		—		(13,685)		603,565
Total AFS debt securities	6,820,569		212		(833,523)		5,987,258
HTM debt securities:
U.S. Treasury securities	526,794		—		(52,657)		474,137
U.S. government agency and U.S. government-sponsored enterprise debt securities	1,000,415		—		(202,544)		797,871
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	496,852		—		(93,114)		403,738
Residential mortgage-backed securities	762,573		—		(147,285)		615,288
Municipal securities	189,299		—		(39,849)		149,450
Total HTM debt securities	2,975,933		—		(535,449)		2,440,484
Total debt securities	$	9,796,502	$	212	$	(1,368,972)	$	8,427,742



	December 31, 2022
($ in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
AFS debt securities:
U.S. Treasury securities	$	676,306	$	—	$	(70,103)	$	606,203
U.S. government agency and U.S. government-sponsored enterprise debt securities	517,806		67		(56,266)		461,607
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	577,392		—		(77,123)		500,269
Residential mortgage-backed securities	2,011,054		41		(248,900)		1,762,195
Municipal securities	303,884		3		(46,788)		257,099
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities	447,512		213		(49,396)		398,329
Residential mortgage-backed securities	762,202		—		(112,978)		649,224
Corporate debt securities	673,502		—		(147,228)		526,274
Foreign government bonds	241,165		174		(14,286)		227,053
Asset-backed securities	51,152		—		(2,076)		49,076
CLOs	617,250		—		(19,586)		597,664
Total AFS debt securities	6,879,225		498		(844,730)		6,034,993
HTM debt securities:
U.S. Treasury securities	524,081		—		(52,612)		471,469
U.S. government agency and U.S. government-sponsored enterprise debt securities	998,972		—		(209,560)		789,412
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	506,965		—		(98,566)		408,399
Residential mortgage-backed securities	782,141		—		(148,230)		633,911
Municipal securities	189,709		—		(37,729)		151,980
Total HTM debt securities	3,001,868		—		(546,697)		2,455,171
Total debt securities	$	9,881,093	$	498	$	(1,391,427)	$	8,490,164

As of June 30, 2023 and December 31, 2022, the amortized cost of debt securities excluded accrued interest receivables of $41.0 million and $41.8 million, respectively, which are included in Other assets on the Consolidated Balance Sheet. For the Company’s accounting policy related to debt securities’ accrued interest receivable, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Allowance for Credit Losses on Available-for-Sale Debt Securities and Allowance for Credit Losses on Held-to-Maturity Debt Securities to the Consolidated Financial Statements in the Company’s 2022 Form 10-K.

Unrealized Losses of Available-for-Sale Debt Securities

The following tables present the fair value and the associated gross unrealized losses of the Company’s AFS debt securities, aggregated by investment category and the length of time that the securities have been in a continuous unrealized loss position as of June 30, 2023 and December 31, 2022.



	June 30, 2023
	Less Than 12 Months				12 Months or More				Total
($ in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
AFS debt securities:
U.S. Treasury securities	$	—	$	—	$	608,012	$	(68,282)	$	608,012	$	(68,282)
U.S. government agency and U.S. government sponsored enterprise debt securities	206,807		(1,696)		253,277		(52,814)		460,084		(54,510)
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	20,690		(1,580)		458,087		(72,502)		478,777		(74,082)
Residential mortgage-backed securities	26,838		(1,074)		1,692,202		(244,610)		1,719,040		(245,684)
Municipal securities	7,651		(111)		254,201		(40,248)		261,852		(40,359)
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities	—		—		381,043		(48,733)		381,043		(48,733)
Residential mortgage-backed securities	—		—		608,574		(107,201)		608,574		(107,201)
Corporate debt securities	29,702		(4,299)		456,048		(163,453)		485,750		(167,752)
Foreign government bonds	68,206		(516)		38,738		(11,262)		106,944		(11,778)
Asset-backed securities	—		—		44,875		(1,457)		44,875		(1,457)
CLOs	—		—		603,565		(13,685)		603,565		(13,685)
Total AFS debt securities	$	359,894	$	(9,276)	$	5,398,622	$	(824,247)	$	5,758,516	$	(833,523)



	December 31, 2022
	Less Than 12 Months				12 Months or More				Total
($ in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
AFS debt securities:
U.S. Treasury securities	$	131,843	$	(8,761)	$	474,360	$	(61,342)	$	606,203	$	(70,103)
U.S. government agency and U.S. government-sponsored enterprise debt securities	97,403		(6,902)		214,136		(49,364)		311,539		(56,266)
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	252,144		(30,029)		248,125		(47,094)		500,269		(77,123)
Residential mortgage-backed securities	307,536		(20,346)		1,448,658		(228,554)		1,756,194		(248,900)
Municipal securities	95,655		(10,194)		159,439		(36,594)		255,094		(46,788)
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities	106,184		(3,309)		282,301		(46,087)		388,485		(49,396)
Residential mortgage-backed securities	22,715		(1,546)		626,509		(111,432)		649,224		(112,978)
Corporate debt securities	173,595		(17,907)		352,679		(129,321)		526,274		(147,228)
Foreign government bonds	107,576		(429)		36,143		(13,857)		143,719		(14,286)
Asset-backed securities	12,450		(524)		36,626		(1,552)		49,076		(2,076)
CLOs	144,365		(4,735)		453,299		(14,851)		597,664		(19,586)
Total AFS debt securities	$	1,451,466	$	(104,682)	$	4,332,275	$	(740,048)	$	5,783,741	$	(844,730)

As of June 30, 2023, the Company had 564 AFS debt securities in a gross unrealized loss position with no credit impairment, primarily consisting of 269 U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities, 66 corporate debt securities, 99 non-agency mortgage-backed securities, and 15 U.S. Treasury securities. In comparison, as of December 31, 2022, the Company had 559 AFS debt securities in a gross unrealized loss position with no credit impairment, primarily consisting of 263 U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities, 100 non-agency mortgage-backed securities, 68 corporate debt securities, and 15 U.S. Treasury securities.

Allowance for Credit Losses on Available-for-Sale Debt Securities

The Company evaluates each AFS debt security where the fair value declines below amortized cost. For a discussion of the factors and criteria the Company uses in analyzing securities for impairment related to credit losses, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Allowance for Credit Losses on Available-for-Sale Debt Securities to the Consolidated Financial Statements in the Company’s 2022 Form 10-K.

The gross unrealized losses presented in the preceding tables were primarily attributable to interest rate movement and the widening of liquidity and/or credit spreads. U.S. Treasury, U.S. government agency, U.S. government-sponsored agency, and U.S. government-sponsored enterprise debt and mortgage-backed securities are issued, guaranteed, or otherwise supported by the U.S. government and have a zero credit loss assumption. The remaining securities that were in an unrealized loss position as of June 30, 2023 were mainly comprised of the following:

•Non-agency mortgage-backed securities — The market value decline as of June 30, 2023, was primarily due to interest rate movement and spread widening. Since these securities are rated investment grade by nationally recognized statistical rating organizations (“NRSROs”), or have high priority in the cash flow waterfall within the securitization structure, and the contractual payments have historically been on time, the Company believes the risk of credit losses on these securities is low.

•Corporate debt securities — The market value decline as of June 30, 2023 was primarily due to interest rate movement and spread widening. A portion of the corporate debt securities is comprised of subordinated debt securities issued by U.S. banks. Despite the reduction of the market value of these securities after the banking sector disruption in the first half of 2023, these securities are nearly all rated investment grade by NRSROs or issued by well-capitalized financial institutions with strong profitability. The contractual payments from these corporate debt securities have been and are expected to be received on time. The Company will continue to monitor the market developments in the banking sector and the credit performance of these securities.

As of both June 30, 2023 and December 31, 2022, the Company intended to hold the AFS debt securities with unrealized losses through the anticipated recovery period and it was more-likely-than-not that the Company would not have to sell these securities before the recovery of their amortized cost. The issuers of these securities have not, to the Company’s knowledge, established any cause for default on these securities. As a result, the Company expects to recover the entire amortized cost basis of these securities. Accordingly, there was no allowance for credit losses provided against these securities as of both June 30, 2023 and December 31, 2022. In addition, there was no provision for credit losses recognized for the three and six months ended June 30, 2023 and 2022.

Allowance for Credit Losses on Held-to-Maturity Debt Securities

The Company separately evaluates its HTM debt securities for any credit losses using an expected loss model, similar to the methodology used for loans. For additional information on the Company’s credit loss methodology, refer to Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Allowance for Credit Losses on Held-to-Maturity Debt Securities to the Consolidated Financial Statements in the Company’s 2022 Form 10-K.

The Company monitors the credit quality of the HTM debt securities using external credit ratings. As of June 30, 2023, all HTM securities were rated investment grade by NRSROs and issued, guaranteed, or supported by U.S. government entities and agencies. Accordingly, the Company applied a zero credit loss assumption and no allowance for credit losses was recorded as of June 30, 2023 and December 31, 2022. Overall, the Company believes that the credit support levels of the debt securities are strong, and based on current assessments and macroeconomic forecasts, expects that full contractual cash flows will be received.

Realized Gains and Losses

The following table presents the gross realized gains from the sales and impairment write-off of AFS debt securities and the related tax expense (benefit) included in earnings for the three and six months ended June 30, 2023 and 2022:



	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2023		2022		2023		2022

Gross realized gains from sales	$	—	$	28	$	—	$	1,306
Impairment write-off (1)	$	—	$	—	$	10,000	$	—
Related tax expense (benefit)	$	—	$	8	$	(2,956)	$	386

(1)During the first quarter of 2023, the Company fully wrote down a subordinated debt security and recorded the impairment loss as a component of noninterest income in the Company’s Consolidated Statement of Income.

Interest Income

The following table presents the composition of interest income on debt securities for the three and six months ended June 30, 2023 and 2022:



	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2023		2022		2023		2022

Taxable interest	$	64,139	$	41,250	$	125,188	$	79,454
Nontaxable interest	4,831		4,926		9,713		9,389
Total interest income on debt securities	$	68,970	$	46,176	$	134,901	$	88,843

Contractual Maturities of Available-for-Sale and Held-to-Maturity Debt Securities

The following tables present the contractual maturities, amortized cost, fair value and weighted-average yields of AFS and HTM debt securities as of June 30, 2023. Expected maturities will differ from contractual maturities on certain securities as the issuers and borrowers of the underlying collateral may have the right to call or prepay obligations with or without prepayment penalties.



($ in thousands)	Within One Year			After One Year through Five Years			After Five Years through Ten Years			After Ten Years			Total
AFS debt securities:
U.S. Treasury securities
Amortized cost	$	103,679		$	676,294		$	—		$	—		$	779,973
Fair value	103,694			608,012			—			—			711,706
Weighted-average yield (1)	4.82		%	1.20		%	—		%	—		%	1.68		%
U.S. government agency and U.S. government-sponsored enterprise debt securities
Amortized cost	150,000			98,133			100,000			166,461			514,594
Fair value	149,305			93,146			82,433			135,200			460,084
Weighted-average yield (1)	4.98		%	3.07		%	1.26		%	2.09		%	2.96		%
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities
Amortized cost	—			38,030			151,754			2,329,981			2,519,765
Fair value	—			35,886			137,852			2,026,276			2,200,014
Weighted-average yield (1) (2)	—		%	3.20		%	2.71		%	3.48		%	3.43		%
Municipal securities
Amortized cost	2,301			37,167			10,777			253,959			304,204
Fair value	2,288			34,380			9,454			217,751			263,873
Weighted-average yield (1) (2)	2.21		%	2.46		%	2.73		%	2.24		%	2.28		%
Non-agency mortgage-backed securities
Amortized cost	102,877			105,584			12,946			927,150			1,148,557
Fair value	101,397			101,371			12,525			777,332			992,625
Weighted-average yield (1)	6.86		%	4.18		%	0.80		%	2.57		%	3.08		%
Corporate debt securities
Amortized cost	—			—			349,502			304,000			653,502
Fair value	—			—			279,402			206,348			485,750
Weighted-average yield (1)	—		%	—		%	3.48		%	1.97		%	2.78		%
Foreign government bonds
Amortized cost	74,140			62,252			50,000			50,000			236,392
Fair value	74,116			62,364			49,548			38,738			224,766
Weighted-average yield (1)	3.02		%	2.33		%	5.46		%	1.50		%	3.03		%
Asset-backed securities
Amortized cost	—			—			—			46,332			46,332
Fair value	—			—			—			44,875			44,875
Weighted-average yield (1)	—		%	—		%	—		%	5.75		%	5.75		%
CLOs
Amortized cost	—			—			319,000			298,250			617,250
Fair value	—			—			311,589			291,976			603,565
Weighted-average yield (1)	—		%	—		%	6.38		%	6.43		%	6.40		%
Total AFS debt securities
Amortized cost	$	432,997		$	1,017,460		$	993,979		$	4,376,133		$	6,820,569
Fair value	$	430,800		$	935,159		$	882,803		$	3,738,496		$	5,987,258
Weighted-average yield (1)	5.04		%	1.88		%	4.12		%	3.26		%	3.29		%



($ in thousands)	Within One Year			After One Year through Five Years			After Five Years through Ten Years			After Ten Years			Total
HTM debt securities:
U.S. Treasury securities
Amortized cost	$	—		$	526,794		$	—		$	—		$	526,794
Fair value	—			474,137			—			—			474,137
Weighted-average yield (1)	—		%	1.05		%	—		%	—		%	1.05		%
U.S. government agency and U.S. government-sponsored enterprise debt securities
Amortized cost	—			—			280,571			719,844			1,000,415
Fair value	—			—			237,713			560,158			797,871
Weighted-average yield (1)	—		%	—		%	1.92		%	1.89		%	1.90		%
U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities
Amortized cost	—			—			95,527			1,163,898			1,259,425
Fair value	—			—			80,230			938,796			1,019,026
Weighted-average yield (1) (2)	—		%	—		%	1.56		%	1.68		%	1.67		%
Municipal securities
Amortized cost	—			—			—			189,299			189,299
Fair value	—			—			—			149,450			149,450
Weighted-average yield (1) (2)	—		%	—		%	—		%	1.98		%	1.98		%
Total HTM debt securities
Amortized cost	$	—		$	526,794		$	376,098		$	2,073,041		$	2,975,933
Fair value	$	—		$	474,137		$	317,943		$	1,648,404		$	2,440,484
Weighted-average yield (1)	—		%	1.05		%	1.83		%	1.78		%	1.66		%

(1)Weighted-average yields are computed based on amortized cost balances.

(2)Yields on tax-exempt securities are not presented on a tax-equivalent basis.

As of June 30, 2023 and December 31, 2022, AFS and HTM debt securities with carrying values of $7.21 billion and $794.2 million, respectively, were pledged to secure borrowings, public deposits, repurchase agreements and for other purposes required or permitted by law.

Restricted Equity Securities

The following table presents the restricted equity securities included in Other assets on the Consolidated Balance Sheet as of June 30, 2023 and December 31, 2022:



($ in thousands)	June 30, 2023		December 31, 2022
Federal Reserve Bank of San Francisco (“FRBSF”) stock	$	61,956	$	61,374
FHLB stock	17,250		17,250
Total restricted equity securities	$	79,206	$	78,624

Derivatives

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

DerivativesThe 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 2022 Form 10-K.

The following table presents the notional amounts and fair values of the Company’s derivatives as of June 30, 2023 and December 31, 2022. 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 $24.6 million and $63.5 million, respectively, as of June 30, 2023. In comparison, applying variation margin payments as settlement to LCH- and CME-cleared derivative transactions resulted in reductions in the derivative asset and liability fair values by $167.2 million and $81.3 million, respectively, as of December 31, 2022. 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, 2023						December 31, 2022
			Fair Value						Fair Value
($ in thousands)	Notional Amount		Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives designated as hedging instruments:


Cash flow hedges:
Interest rate contracts	$	5,250,000	$	2,430	$	51,862	$	3,450,000	$	13,455	$	19,687
Net investment hedges:
Foreign exchange contracts	81,480		3,646		—		84,832		5,590		—
Total derivatives designated as hedging instruments	$	5,331,480	$	6,076	$	51,862	$	3,534,832	$	19,045	$	19,687
Derivatives not designated as hedging instruments:
Interest rate contracts	$	17,885,894	$	527,805	$	539,585	$	16,932,414	$	426,828	$	564,829
Commodity contracts (1)	—		139,081		147,920		—		261,613		258,608
Foreign exchange contracts	4,724,615		91,936		72,342		2,982,891		47,519		44,117
Credit contracts (2)	109,370		—		16		140,950		—		23
Equity contracts (3)	—		263		—		—		323		—
Total derivatives not designated as hedging instruments	$	22,719,879	$	759,085	$	759,863	$	20,056,255	$	736,283	$	867,577
Gross derivative assets/liabilities			$	765,161	$	811,725			$	755,328	$	887,264
Less: Master netting agreements			(208,183)		(208,183)				(242,745)		(242,745)
Less: Cash collateral received			(264,245)		—				(372,038)		—
Net derivative assets/liabilities			$	292,733	$	603,542			$	140,545	$	644,519

(1)The notional amount of the Company’s commodity contracts totaled 16,446 thousand barrels of crude oil and 306,161 thousand units of natural gas, measured in million British thermal units (“MMBTUs”) as of June 30, 2023. In comparison, the notional amount of the Company’s commodity contracts totaled 12,005 thousand barrels of crude oil and 247,704 thousand MMBTUs of natural gas as of December 31, 2022.

(2)The notional amount for credit contracts reflects the Company’s pro-rata share of the derivative instruments in RPAs.

(3)The Company held equity contracts in one public company and 10 private companies as of June 30, 2023. In comparison, the Company held equity contracts in one public company and 13 private companies as of December 31, 2022.

In anticipation of LIBOR’s cessation date on June 30, 2023, certain LIBOR-indexed interest-rate swap contracts with LCH were subject to a conversion process, where the original LIBOR swap contract was exchanged for a SOFR forward-starting swap contract, along with one or more overlap swap contracts replicating the final LIBOR cash flows of the original LIBOR swap contract. The swap contracts exchanged were substantially economically equivalent. The SOFR replacement and overlap LIBOR swaps are considered separate contracts, and the overlay LIBOR swaps will result in a gross-up of the notional amounts presented, until these swaps mature upon settlement of the final LIBOR payment. The interest rate contracts included as cash flow and economic hedges reflect notional gross-ups of $1.00 billion and $161.9 million. These overlay LIBOR swaps are expected to mature in the third quarter of 2023.

Derivatives Designated as Hedging Instruments

Cash Flow Hedges — The Company uses interest rate swaps to hedge the variability in interest 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, 2023, interest rate contracts in notional amounts of $5.25 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, 2023, the Company expects to reclassify an estimated $65.5 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, 2023 and 2022. 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)	2023		2022		2023			2022
Losses recognized in AOCI:
Interest rate contracts	$	(96,457)	$	(7,837)	$	(66,614)		$	(40,446)


Gains (losses) reclassified from AOCI into earnings:
Interest expense (for cash flow hedges on borrowings)	—		308		696			135
Interest and dividend income (for cash flow hedges on loans)	(20,252)		812		(33,206)			3,085
Noninterest income	—		—		1,614		(1)	—
Total	$	(20,252)	$	1,120	$	(30,896)		$	3,220

(1)Represents the amounts in AOCI reclassified into earnings as a result that the forecasted cash flows were no longer probable to occur.

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 following table presents the pre-tax gains recognized in AOCI on net investment hedges for the three and six months ended June 30, 2023 and 2022:



	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2023		2022		2023		2022
Gains recognized in AOCI	$	3,899	$	3,255	$	2,823	$	1,684

Derivatives Not Designated as Hedging Instruments

Customer-Related Positions and other 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, 2023 and December 31, 2022.

The following table presents the notional amounts and the gross fair values of the interest rate and foreign exchange derivatives entered into for customer-related positions and with third-party financial institutions, labeled as “other economic hedges”, as of June 30, 2023 and December 31, 2022:



	June 30, 2023						December 31, 2022
			Fair Value						Fair Value
($ in thousands)	Notional Amount		Assets		Liabilities		Notional Amount		Assets		Liabilities
Customer-related positions:
Interest rate contracts:
Swaps	$	6,900,309	$	2,117	$	503,261	$	6,656,491	$	1,438	$	521,719
Written options	1,621,207		—		24,166		1,548,158		—		30,904
Collars and corridors	296,585		12		8,743		215,773		—		8,924
Subtotal	8,818,101		2,129		536,170		8,420,422		1,438		561,547
Foreign exchange contracts:
Forwards and spot	1,410,862		23,596		31,829		993,588		17,009		18,090
Swaps	888,018		17,862		4,767		623,143		6,629		12,178
Other	129,000		5,939		—		121,631		2,070		245
Subtotal	2,427,880		47,397		36,596		1,738,362		25,708		30,513
Total	$	11,245,981	$	49,526	$	572,766	$	10,158,784	$	27,146	$	592,060
Other economic hedges:
Interest rate contracts:
Swaps	$	7,088,622	$	491,972	$	2,707	$	6,683,828	$	384,201	$	2,047
Purchased options	1,651,896		24,927		—		1,580,275		32,233		—
Written options	30,690		—		696		32,117		—		1,235
Collars and corridors	296,585		8,777		12		215,772		8,956		—
Subtotal	9,067,793		525,676		3,415		8,511,992		425,390		3,282
Foreign exchange contracts:
Forwards and spot	24,935		88		155		77,998		3,050		87
Swaps	2,142,800		44,451		29,652		1,044,900		18,516		11,447
Other	129,000		—		5,939		121,631		245		2,070
Subtotal	2,296,735		44,539		35,746		1,244,529		21,811		13,604
Total	$	11,364,528	$	570,215	$	39,161	$	9,756,521	$	447,201	$	16,886

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, labeled below as “other economic hedges” are used 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 other economic hedges as of June 30, 2023 and December 31, 2022:



	June 30, 2023						December 31, 2022
			Fair Value						Fair Value
($ and unit in thousands)	Notional Units		Assets		Liabilities		Notional Units		Assets		Liabilities
Customer-related positions:
Commodity contracts:
Crude oil:
Swaps	2,717	Barrels	$	9,106	$	14,142	2,465	Barrels	$	39,955	$	6,178
Collars	5,474	Barrels	1,824		7,375		3,011	Barrels	16,038		2,630
Written options	—	Barrels	—		—		—	Barrels	558		—
Subtotal	8,191	Barrels	10,930		21,517		5,476	Barrels	56,551		8,808
Natural gas:
Swaps	115,608	MMBTUs	39,171		59,359		92,590	MMBTUs	112,314		73,208
Collars	36,161	MMBTUs	524		17,545		32,072	MMBTUs	2,217		18,317
Written options	1,559	MMBTUs	—		179		—	MMBTUs	—		—
Subtotal	153,328	MMBTUs	39,695		77,083		124,662	MMBTUs	114,531		91,525
Total			$	50,625	$	98,600			$	171,082	$	100,333
Other economic hedges:
Commodity contracts:
Crude oil:
Swaps	2,781	Barrels	$	14,787	$	8,770	2,587	Barrels	$	6,935	$	36,060
Collars	5,474	Barrels	6,580		1,700		3,942	Barrels	1,378		12,856
Purchased options	—	Barrels	—		—		—	Barrels	—		516
Subtotal	8,255	Barrels	21,367		10,470		6,529	Barrels	8,313		49,432
Natural gas:
Swaps	115,453	MMBTUs	50,828		38,326		91,900	MMBTUs	69,767		106,883
Collars	35,821	MMBTUs	16,082		524		31,142	MMBTUs	12,451		1,960
Purchased options	1,559	MMBTUs	179		—		—	MMBTUs	—		—
Subtotal	152,833	MMBTUs	67,089		38,850		123,042	MMBTUs	82,218		108,843
Total			$	88,456	$	49,320			$	90,531	$	158,275

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 2.5 years and 2.4 years, as of June 30, 2023 and December 31, 2022, respectively. Assuming that the underlying borrowers referenced in the interest rate contracts defaulted, the Company would not have any current exposure in the protection sold RPAs as of both June 30, 2023 and December 31, 2022. The Company did not have any outstanding protection purchased RPAs as of both June 30, 2023 and December 31, 2022.

Equity Contracts — As part of the loan origination process, the Company may obtain warrants to purchase 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.

The following table presents the net gains (losses) recognized on the Company’s Consolidated Statement of Income related to derivatives not designated as hedging instruments for the three and six months ended June 30, 2023 and 2022:



	Classification on Consolidated Statement of Income	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)		2023		2022		2023		2022
Derivatives not designated as hedging instruments:
Interest rate contracts	Interest rate contracts and other derivative income	$	1,222	$	5,984	$	(1,261)	$	13,569
Foreign exchange contracts	Foreign exchange income	19,898		(4,557)		30,340		2,765
Credit contracts	Interest rate contracts and other derivative income	12		(9)		7		65
Equity contracts	Lending fees	(14)		93		(60)		187
Commodity contracts	Interest rate contracts and other derivative income	160		344		166		295
Net gains		$	21,278	$	1,855	$	29,192	$	16,881

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, 2023, the aggregate fair value amounts of all derivative instruments with credit-risk-related contingent features that were in a net liability position totaled $13 thousand, and no collateral was posted to cover these positions. In comparison, as of December 31, 2022, the aggregate fair value amounts of all derivative instruments with credit-risk-related contingent features that were in a net liability position totaled $2.6 million, of which $1.1 million of collateral was posted to cover these positions. If 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, 2023 and December 31, 2022.

Offsetting of Derivatives

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, 2023

	Gross Amounts Recognized (1)		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		Net Amount
			Master Netting Arrangements		Cash Collateral Received (3)				Security Collateral Received (5)
Derivative assets	$	765,161	$	(208,183)	$	(264,245)	$	292,733	$	(258,757)	$	33,976

	Gross Amounts Recognized (2)		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		Net Amount
			Master Netting Arrangements		Cash Collateral Pledged (4)				Security Collateral Pledged (5)
Derivative liabilities	$	811,725	$	(208,183)	$	—	$	603,542	$	—	$	603,542



($ in thousands)	As of December 31, 2022

	Gross Amounts Recognized (1)		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		Net Amount
			Master Netting Arrangements		Cash Collateral Received (3)				Security Collateral Received (5)
Derivative assets	$	755,328	$	(242,745)	$	(372,038)	$	140,545	$	(60,567)	$	79,978

	Gross Amounts Recognized (2)		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		Net Amount
			Master Netting Arrangements		Cash Collateral Pledged (4)				Security Collateral Pledged (5)
Derivative liabilities	$	887,264	$	(242,745)	$	—	$	644,519	$	(38,438)	$	606,081

(1)Includes $287 thousand and $2.1 million of gross fair value assets with counterparties that were not subject to enforceable master netting arrangements or similar agreements as of June 30, 2023 and December 31, 2022, respectively.

(2)Includes $12 thousand and $566 thousand of gross fair value liabilities with counterparties that were not subject to enforceable master netting arrangements or similar agreements as of June 30, 2023 and December 31, 2022, respectively.

(3)Gross cash collateral received under master netting arrangements or similar agreements was $275.7 million and $384.9 million as of June 30, 2023 and December 31, 2022, respectively. Of the gross cash collateral received, $264.2 million and $372.0 million were used to offset against derivative assets as of June 30, 2023 and December 31, 2022, respectively.

(4)Gross cash collateral pledged under master netting arrangements or similar agreements was zero and $490 thousand as of June 30, 2023 and December 31, 2022, respectively. No cash collateral was used to offset against derivative liabilities as of both June 30, 2023 and December 31, 2022.

(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 and repurchase agreements. Refer to Note 4 — Assets Purchased under Resale Agreements and Sold under Repurchase 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.

Loans Receivable and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2023

Loans and Leases Receivable Disclosure [Abstract]

Loans Receivable and Allowance for Credit Losses

Loans Receivable and Allowance for Credit LossesLoans Receivable and Allowance for Credit Losses

The following table presents the composition of the Company’s loans held-for-investment outstanding as of June 30, 2023 and December 31, 2022:



($ in thousands)	June 30, 2023		December 31, 2022
Commercial:
C&I	$	15,670,084	$	15,711,095
CRE:
CRE	14,373,385		13,857,870
Multifamily residential	4,764,180		4,573,068
Construction and land	781,068		638,420
Total CRE	19,918,633		19,069,358
Total commercial	35,588,717		34,780,453
Consumer:
Residential mortgage:
Single-family residential	12,308,613		11,223,027
HELOCs	1,862,928		2,122,655
Total residential mortgage	14,171,541		13,345,682
Other consumer	68,106		76,295
Total consumer	14,239,647		13,421,977
Total loans held-for-investment (1)	$	49,828,364	$	48,202,430
Allowance for loan losses	(635,400)		(595,645)
Loans held-for-investment, net (1)	$	49,192,964	$	47,606,785

(1)Includes $74.0 million and $70.4 million comprising unamortized deferred and unearned fees, net of premiums as of June 30, 2023 and December 31, 2022, respectively.

Accrued interest receivable on loans held-for-investment was $229.7 million and $208.4 million as of June 30, 2023 and December 31, 2022, respectively, and was included in Other assets on the Consolidated Balance Sheet. The interest income reversed was insignificant for both the three and six months ended June 30, 2023 and 2022. For the Company’s accounting policy on accrued interest receivable related to loans held-for-investment, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Loans Held-for-Investment to the Consolidated Financial Statements of the Company’s 2022 Form 10-K. The Company also has loans held-for-sale. For the Company’s accounting policy on loans held-for-sale, refer to Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Loans Held-for-Sale to the Consolidated Financial Statements in the Company’s 2022 Form 10-K.

The Company’s FRBSF and FHLB borrowings are primarily secured by loans held-for-investment. Loans held-for-investment totaling $34.19 billion and $28.30 billion, respectively, were pledged to secure borrowings and provide additional borrowing capacity as of June 30, 2023 and December 31, 2022.

Credit Quality Indicators

All loans are subject to the Company’s credit review and monitoring process. For the commercial loan portfolio, loans are risk rated based on an analysis of the borrower’s current payment performance or delinquency, repayment sources, financial and liquidity factors, including industry and geographic considerations. For the consumer loan portfolio, payment performance or delinquency is typically the driving indicator for risk ratings.

The Company utilizes internal credit risk ratings to assign each individual loan a risk rating of 1 through 10:

•Pass — loans risk rated 1 through 5 are assigned an internal risk rating category of “Pass.” Loans risk rated 1 are typically loans fully secured by cash. Pass loans have sufficient sources of repayment to repay the loan in full, in accordance with all terms and conditions.

•Special mention — loans assigned a risk rating of 6 have potential weaknesses that warrant closer attention by management; these are assigned an internal risk rating category of “Special Mention.”

•Substandard — loans assigned a risk rating of 7 or 8 have well-defined weaknesses that may jeopardize the full and timely repayment of the loan; these are assigned an internal risk rating category of “Substandard.”

•Doubtful — loans assigned a risk rating of 9 have insufficient sources of repayment and a high probability of loss; these are assigned an internal risk rating category of “Doubtful.”

•Loss — loans assigned a risk rating of 10 are uncollectible and of such little value that they are no longer considered bankable assets; these are assigned an internal risk rating category of “Loss.”

Loan exposures categorized as criticized consist of special mention, substandard, doubtful and loss categories. The Company reviews the internal risk ratings of its loan portfolio on a regular basis, and adjusts the ratings based on changes in the borrowers’ financial status and the collectability of the loans.

The following tables summarize the Company’s loans held-for-investment and current year-to-date gross write-offs by loan portfolio segments, internal risk ratings and vintage year as of the periods presented. The vintage year is the year of loan origination, renewal or major modification. Revolving loans that are converted to term loans presented in the tables below are excluded from term loans by vintage year columns.



	June 30, 2023


	Term Loans by Origination Year

($ in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving Loans Converted to Term Loans (1)		Total
Commercial:
C&I:
Pass	$	1,427,799	$	2,285,112	$	1,610,248	$	415,562	$	267,164	$	217,673	$	9,016,889	$	20,345	$	15,260,792
Criticized (accrual)	18,452		93,118		81,361		26,033		26,027		22,837		79,585		—		347,413
Criticized (nonaccrual)	2,657		22,800		1,773		8,987		7,798		12,697		5,167		—		61,879


Total C&I	1,448,908		2,401,030		1,693,382		450,582		300,989		253,207		9,101,641		20,345		15,670,084

YTD gross write-offs (3)	185		1,996		95		15		4,930		1,683		—		—		8,904

CRE:

Pass	1,358,049		4,119,439		2,323,453		1,481,659		1,689,335		2,936,955		111,043		53,747		14,073,680
Criticized (accrual)	36,966		2,757		23,746		68,936		37,981		111,969		1,455		—		283,810
Criticized (nonaccrual)	—		171		15,099		—		460		165		—		—		15,895


Subtotal CRE	1,395,015		4,122,367		2,362,298		1,550,595		1,727,776		3,049,089		112,498		53,747		14,373,385

YTD gross write-offs	—		—		2,253		—		—		119		—		—		2,372

Multifamily residential:
Pass	289,218		1,497,280		875,986		625,489		507,401		926,253		9,425		1,295		4,732,347
Criticized (accrual)	—		—		—		—		700		26,430		—		—		27,130
Criticized (nonaccrual)	—		—		—		—		—		4,703		—		—		4,703


Subtotal multifamily residential	289,218		1,497,280		875,986		625,489		508,101		957,386		9,425		1,295		4,764,180



Construction and land:
Pass	85,733		355,949		259,113		34,103		816		2,986		14,952		—		753,652
Criticized (accrual)	5,865		—		—		—		—		21,551		—		—		27,416

Subtotal construction and land	91,598		355,949		259,113		34,103		816		24,537		14,952		—		781,068



Total CRE	1,775,831		5,975,596		3,497,397		2,210,187		2,236,693		4,031,012		136,875		55,042		19,918,633

YTD gross write-offs	—		—		2,253		—		—		119		—		—		2,372

Total commercial	$	3,224,739	$	8,376,626	$	5,190,779	$	2,660,769	$	2,537,682	$	4,284,219	$	9,238,516	$	75,387	$	35,588,717

YTD total commercial gross write-offs (3)	$	185	$	1,996	$	2,348	$	15	$	4,930	$	1,802	$	—	$	—	$	11,276


	June 30, 2023


	Term Loans by Origination Year
($ in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving Loans Converted to Term Loans (1)		Total
Consumer:
Residential mortgage:
Single-family residential:
Pass (2)	$	1,585,454	$	3,445,517	$	2,369,777	$	1,680,587	$	1,044,089	$	2,152,061	$	—	$	—	$	12,277,485
Criticized (accrual)	547		574		934		1,708		471		5,647		—		—		9,881
Criticized (nonaccrual) (2)	1,470		138		1,103		2,432		3,581		12,523		—		—		21,247
Subtotal single-family residential mortgage	1,587,471		3,446,229		2,371,814		1,684,727		1,048,141		2,170,231		—		—		12,308,613


HELOCs:
Pass	978		751		1,793		6,004		2,033		12,007		1,711,411		115,557		1,850,534
Criticized (accrual)	—		801		208		—		—		—		232		102		1,343
Criticized (nonaccrual)	—		—		223		835		—		5,022		704		4,267		11,051
Subtotal HELOCs	978		1,552		2,224		6,839		2,033		17,029		1,712,347		119,926		1,862,928
YTD gross write-offs (3)	—		—		—		—		—		—		—		6		6

Total residential mortgage	1,588,449		3,447,781		2,374,038		1,691,566		1,050,174		2,187,260		1,712,347		119,926		14,171,541
YTD gross write-offs (3)	—		—		—		—		—		—		—		6		6

Other consumer:
Pass	885		16,824		136		5,356		—		11,810		33,071		—		68,082

Criticized (nonaccrual)	—		—		—		—		—		—		24		—		24
Total other consumer	885		16,824		136		5,356		—		11,810		33,095		—		68,106
YTD gross write-offs	—		—		—		—		—		—		88		—		88

Total consumer	$	1,589,334	$	3,464,605	$	2,374,174	$	1,696,922	$	1,050,174	$	2,199,070	$	1,745,442	$	119,926	$	14,239,647
YTD total consumer gross write-offs (3)	$	—	$	—	$	—	$	—	$	—	$	—	$	88	$	6	$	94

Total loans held-for-investment:
Pass	$	4,748,116	$	11,720,872	$	7,440,506	$	4,248,760	$	3,510,838	$	6,259,745	$	10,896,791	$	190,944	$	49,016,572
Criticized (accrual)	61,830		97,250		106,249		96,677		65,179		188,434		81,272		102		696,993
Criticized (nonaccrual)	4,127		23,109		18,198		12,254		11,839		35,110		5,895		4,267		114,799



Total	$	4,814,073	$	11,841,231	$	7,564,953	$	4,357,691	$	3,587,856	$	6,483,289	$	10,983,958	$	195,313	$	49,828,364
YTD total loans held-for-investment gross write-offs (3)	$	185	$	1,996	$	2,348	$	15	$	4,930	$	1,802	$	88	$	6	$	11,370



	December 31, 2022


	Term Loans by Origination Year

($ in thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term Loans (1)		Total
Commercial:
C&I:
Pass	$	2,831,834	$	2,053,215	$	623,026	$	392,013	$	143,970	$	97,605	$	9,177,401	$	20,548	$	15,339,612
Criticized (accrual)	72,210		34,296		48,761		34,221		20,646		12,933		97,988		—		321,055
Criticized (nonaccrual)	18,722		4,797		10,733		243		5,618		10,315		—		—		50,428


Total C&I	2,922,766		2,092,308		682,520		426,477		170,234		120,853		9,275,389		20,548		15,711,095

CRE:
Pass	4,178,780		2,404,634		1,505,150		1,771,679		1,471,710		1,909,925		165,653		22,009		13,429,540
Criticized (accrual)	3,518		60,573		159,424		40,095		91,132		32,173		1,455		16,716		405,086
Criticized (nonaccrual)	—		19,044		—		—		—		4,200		—		—		23,244


Subtotal CRE	4,182,298		2,484,251		1,664,574		1,811,774		1,562,842		1,946,298		167,108		38,725		13,857,870
Multifamily residential:
Pass	1,500,289		892,598		641,677		519,614		350,044		625,293		11,325		—		4,540,840
Criticized (accrual)	—		—		—		707		4,276		27,076		—		—		32,059
Criticized (nonaccrual)	—		—		—		—		—		169		—		—		169


Subtotal multifamily residential	1,500,289		892,598		641,677		520,321		354,320		652,538		11,325		—		4,573,068
Construction and land:
Pass	288,394		276,839		31,804		3,104		2,805		231		9,073		—		612,250
Criticized (accrual)	4,504		—		—		—		21,666		—		—		—		26,170

Subtotal construction and land	292,898		276,839		31,804		3,104		24,471		231		9,073		—		638,420
Total CRE	5,975,485		3,653,688		2,338,055		2,335,199		1,941,633		2,599,067		187,506		38,725		19,069,358
Total commercial	$	8,898,251	$	5,745,996	$	3,020,575	$	2,761,676	$	2,111,867	$	2,719,920	$	9,462,895	$	59,273	$	34,780,453
Consumer:
Residential mortgage:
Single-family residential:
Pass (2)	$	3,548,894	$	2,453,717	$	1,775,696	$	1,101,965	$	817,164	$	1,500,359	$	—	$	—	$	11,197,795
Criticized (accrual)	—		1,275		785		1,463		4,352		3,935		—		—		11,810
Criticized (nonaccrual) (2)	141		—		204		3,202		1,721		8,154		—		—		13,422
Subtotal single-family residential mortgage	3,549,035		2,454,992		1,776,685		1,106,630		823,237		1,512,448		—		—		11,223,027
HELOCs:
Pass	520		3,583		7,336		3,203		525		8,960		1,958,692		127,401		2,110,220
Criticized (accrual)	—		6		—		—		—		—		4		1,079		1,089
Criticized (nonaccrual)	—		—		483		231		1,017		4,844		1,001		3,770		11,346
Subtotal HELOCs	520		3,589		7,819		3,434		1,542		13,804		1,959,697		132,250		2,122,655
Total residential mortgage	3,549,555		2,458,581		1,784,504		1,110,064		824,779		1,526,252		1,959,697		132,250		13,345,682
Other consumer:
Pass	17,088		137		5,356		—		—		15,808		37,804		—		76,193
Criticized (accrual)	3		—		—		—		—		—		—		—		3
Criticized (nonaccrual)	—		—		—		—		—		—		99		—		99
Total other consumer	17,091		137		5,356		—		—		15,808		37,903		—		76,295
Total consumer	$	3,566,646	$	2,458,718	$	1,789,860	$	1,110,064	$	824,779	$	1,542,060	$	1,997,600	$	132,250	$	13,421,977
Total by Risk Rating:
Pass	$	12,365,799	$	8,084,723	$	4,590,045	$	3,791,578	$	2,786,218	$	4,158,181	$	11,359,948	$	169,958	$	47,306,450
Criticized (accrual)	80,235		96,150		208,970		76,486		142,072		76,117		99,447		17,795		797,272
Criticized (nonaccrual)	18,863		23,841		11,420		3,676		8,356		27,682		1,100		3,770		98,708



Total	$	12,464,897	$	8,204,714	$	4,810,435	$	3,871,740	$	2,936,646	$	4,261,980	$	11,460,495	$	191,523	$	48,202,430

(1)$1.4 million and $13.5 million of total commercial loans, primarily comprised of CRE revolving loans converted to term loans during the three and six months ended June 30, 2023, respectively. In comparison, $26.4 million of total commercial loans, comprised of CRE revolving loans converted to term loans during both the three and six months ended June 30, 2022. $9.7 million and $14.5 million of total consumer loans, comprised of HELOCs were converted to term loans during three and six months ended June 30, 2023, respectively. In comparison, there were no consumer loans converted to term loans during the three and six months ended June 30, 2022.

(2)As of June 30, 2023 and December 31, 2022, $734 thousand and $818 thousand, respectively, of nonaccrual loans whose payments are guaranteed by the Federal Housing Administration were classified with a “Pass” rating.

(3)Excludes gross write-offs associated with loans the Company sold or settled.

Nonaccrual and Past Due Loans

Loans that are 90 or more days past due are generally placed on nonaccrual status unless the loan is well-collateralized and in the process of collection. Loans that are less than 90 days past due but have identified deficiencies, such as when the full collection of principal or interest becomes uncertain, are also placed on nonaccrual status. The following tables present the aging analysis of loans held-for-investment as of June 30, 2023 and December 31, 2022:



	June 30, 2023
($ in thousands)	Current Accruing Loans		Accruing Loans 30-59 Days Past Due		Accruing Loans 60-89 Days Past Due		Total Accruing Past Due Loans		Total Nonaccrual Loans		Total Loans
Commercial:
C&I	$	15,602,567	$	3,247	$	2,391	$	5,638	$	61,879	$	15,670,084
CRE:
CRE	14,342,301		15,189		—		15,189		15,895		14,373,385
Multifamily residential	4,758,515		962		—		962		4,703		4,764,180
Construction and land	759,516		21,552		—		21,552		—		781,068
Total CRE	19,860,332		37,703		—		37,703		20,598		19,918,633
Total commercial	35,462,899		40,950		2,391		43,341		82,477		35,588,717
Consumer:
Residential mortgage:
Single-family residential	12,254,680		21,752		10,200		31,952		21,981		12,308,613
HELOCs	1,840,064		10,471		1,342		11,813		11,051		1,862,928
Total residential mortgage	14,094,744		32,223		11,542		43,765		33,032		14,171,541
Other consumer	67,099		142		841		983		24		68,106
Total consumer	14,161,843		32,365		12,383		44,748		33,056		14,239,647
Total	$	49,624,742	$	73,315	$	14,774	$	88,089	$	115,533	$	49,828,364



	December 31, 2022
($ in thousands)	Current Accruing Loans		Accruing Loans 30-59 Days Past Due		Accruing Loans 60-89 Days Past Due		Total Accruing Past Due Loans		Total Nonaccrual Loans		Total Loans
Commercial:
C&I	$	15,651,312	$	6,482	$	2,873	$	9,355	$	50,428	$	15,711,095
CRE:
CRE	13,820,441		14,185		—		14,185		23,244		13,857,870
Multifamily residential	4,571,899		678		322		1,000		169		4,573,068
Construction and land	638,420		—		—		—		—		638,420
Total CRE	19,030,760		14,863		322		15,185		23,413		19,069,358
Total commercial	34,682,072		21,345		3,195		24,540		73,841		34,780,453
Consumer:
Residential mortgage:
Single-family residential	11,183,134		13,523		12,130		25,653		14,240		11,223,027
HELOCs	2,102,523		7,700		1,086		8,786		11,346		2,122,655
Total residential mortgage	13,285,657		21,223		13,216		34,439		25,586		13,345,682
Other consumer	73,004		109		3,083		3,192		99		76,295
Total consumer	13,358,661		21,332		16,299		37,631		25,685		13,421,977
Total	$	48,040,733	$	42,677	$	19,494	$	62,171	$	99,526	$	48,202,430

The following table presents the amortized cost of loans on nonaccrual status for which there was no related allowance for loan losses as of both June 30, 2023 and December 31, 2022. Nonaccrual loans may not have an allowance for credit losses if the loan balances are well-secured by the collateral value and there is no loss expectation.



($ in thousands)	June 30, 2023		December 31, 2022

Commercial:
C&I	$	27,690	$	11,398

CRE	15,100		22,944
Multifamily residential	4,235		—


Total commercial	47,025		34,342
Consumer:

Single-family residential	6,077		2,998
HELOCs	5,076		7,245


Total consumer	11,153		10,243
Total nonaccrual loans with no related allowance for loan losses	$	58,178	$	44,585

Foreclosed Assets

The Company acquires assets from borrowers through loan restructurings, workouts, and foreclosures. Assets acquired may include real properties (e.g., residential real estate, land, and buildings) and commercial and personal properties. The Company recognizes foreclosed assets upon receiving assets in satisfaction of a loan (e.g., taking legal title or physical possession).

Foreclosed assets, consisting of OREO and other nonperforming assets, are included in Other assets on the Consolidated Balance Sheet. The Company had no foreclosed assets as of June 30, 2023, compared with $270 thousand as of December 31, 2022. The Company commences the foreclosure process on consumer mortgage loans after a borrower becomes more than 120 days delinquent in accordance with the CFPB guidelines. The carrying value of consumer real estate loans that were in an active or suspended foreclosure process was $7.1 million and $7.5 million as of June 30, 2023 and December 31, 2022, respectively.

Loan Modifications to Borrowers Experiencing Financial Difficulty

Effective January 1, 2023, the Company adopted ASU 2022-02, which in part eliminated the accounting for TDR and enhanced disclosures requirements for loan modifications to borrowers experiencing financial difficulty. See Note 2 — Current Accounting Developments and Summary of Significant Accounting Policies — Significant Accounting Policies Update — Loan Modifications to the Consolidated Financial Statements in this Form 10-Q for additional information. As part of the Company’s loss mitigation efforts, the Company may agree to modify the contractual terms of a loan to assist borrowers experiencing financial difficulty. The Company negotiates loan modifications on a case-by-case basis to achieve mutually agreeable terms that maximize loan collectability and meet the borrower’s financial needs. The Company considers various factors to identify borrowers experiencing financial difficulty. The primary factor for consumer borrowers is delinquency status. For commercial loan borrowers, these factors include credit risk ratings, the probability of loan risk rating downgrades, and overall risk profile changes. The modification may include, but is not limited to, payment deferrals, interest rate reductions, term extensions, principal forgiveness, or a combination of such modifications. Commercial loan borrowers that require immaterial modifications such as insignificant interest rate changes, short-term extensions (90 days or less) from the original maturity date, or temporary waivers or extensions of financial covenants which would not constitute material credit actions are generally not considered to be experiencing financial difficulty and are not included in the disclosure. Insignificant payment deferrals (three months or less in the last 12 months) are also not included in the disclosure.

The following tables present the amortized cost of loans that were modified during the three and six months ended June 30, 2023 by loan class and modification type:



	Three Months Ended June 30, 2023
	Modification Type
($ in thousands)	Term Extension		Payment Delay		Combo- Term Extension/ Payment Delay		Combo- Rate Reduction/ Term Extension		Combo- Principal Forgiveness Rate Reduction/ Term Extension		Total		Modification as a % of Loan Class
Commercial:
C&I	$	13,475	$	12,788	$	—	$	—	$	298	$	26,561	0.17	%
CRE:
CRE	—		—		—		32,791		—		32,791		0.16	%



Total commercial	13,475		12,788		—		32,791		298		59,352
Consumer:
Residential mortgage:
Single-family residential:	—		5,085		551		—		—		5,636		0.05	%
HELOCs	—		978		—		—		—		978		0.05	%




Total consumer	—		6,063		551		—		—		6,614
Total	$	13,475	$	18,851	$	551	$	32,791	$	298	$	65,966



	Six Months Ended June 30, 2023
	Modification Type
($ in thousands)	Term Extension		Payment Delay		Combo- Term Extension/ Payment Delay		Combo- Rate Reduction/ Term Extension		Combo- Principal Forgiveness Rate Reduction/ Term Extension		Total		Modification as a % of Loan Class
Commercial:
C&I	$	33,098	$	26,799	$	—	$	—	$	298	$	60,195	0.38	%
CRE:
CRE	526		—		—		32,791		—		33,317		0.17	%



Total commercial	33,624		26,799		—		32,791		298		93,512
Consumer:
Residential mortgage:
Single-family residential:	—		5,085		551		—		—		5,636		0.05	%
HELOCs	—		978		726		—		—		1,704		0.09	%




Total consumer	—		6,063		1,277		—		—		7,340
Total	$	33,624	$	32,862	$	1,277	$	32,791	$	298	$	100,852

The following tables present the financial effects of the loan modifications for the three and six months ended June 30, 2023 by loan class and modification type:



	Financial Effects of Loan Modifications
	Three Months Ended June 30, 2023

($ in thousands)	Principal Forgiveness			Weighted-Average Interest Rate Reduction			Weighted-Average Term Extension (in years)	Weighted-Average Payment Delay (in years)
Commercial:
C&I	$	345	(1)	8.50	%	(1)	1.71	0.63

CRE	—			3.00	%		2.50	—




Consumer:

Single-family residential	—			—			9.70	0.89
HELOCs	—			—			—	0.64





Total	$	345



		Financial Effects of Loan Modifications
Six months ended June 30, 2023

	($ in thousands)	Principal Forgiveness			Weighted-Average Interest Rate Reduction			Weighted-Average Term Extension (in years)	Weighted-Average Payment Delay (in years)
	Commercial:
	C&I	$	345	(1)	8.50	%	(1)	1.47	0.82

	CRE	—			3.00	%		2.49	—




	Consumer:

	Single-family residential	—			—			9.70	0.89
	HELOCs	—			—			14.75	0.51





	Total	$	345

(1)Comprised of a C&I loan modified during the three and six months ended June 30, 2023 where the interest is waived in addition to principal forgiveness.

A modified loan may become delinquent and may result in a payment default (generally 90 days past due) subsequent to modification. There were no loans that received modifications which subsequently defaulted during the three and six months ended June 30, 2023.

The Company closely monitors the performance of modified loans to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the performance of loans that were modified as of June 30, 2023 since the adoption of ASU 2022-02 on January 1, 2023.



	Payment Performance as of June 30, 2023
($ in thousands)		Current		30 - 89 Days Past Due		90+ Days Past Due		Total
Commercial:
C&I		$	48,206	$	7,000	$	4,989	$	60,195
CRE:
CRE		33,317		—		—		33,317



Total commercial		81,523		7,000		4,989		93,512
Consumer:
Residential mortgage:
Single-family residential		5,045		591		—		5,636
HELOCs		1,704		—		—		1,704


Total consumer		6,749		591		—		7,340
Total		$	88,272	$	7,591	$	4,989	$	100,852

As of June 30, 2023, commitments to lend additional funds to borrowers whose loans were modified were $15.1 million.

Troubled Debt Restructurings Prior to the Adoption of ASU 2022-02

Prior to the adoption of ASU 2022-02, the Company accounted for a modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulties as a TDR. ASU 2022-02 eliminated TDR accounting prospectively for all restructurings occurring on or after January 1, 2023.

The following table presents the additions to TDRs for the three and six months ended June 30, 2022:



	Loans Modified as TDRs
	Three Months Ended June 30, 2022							Six Months Ended June 30, 2022
($ in thousands)	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment (1)		Financial Impact (2)		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment (1)		Financial Impact (2)
Commercial:
C&I	2	$	12,955	$	12,245	$	2,111	3	$	30,134	$	21,428	$	10,157












Total	2	$	12,955	$	12,245	$	2,111	3	$	30,134	$	21,428	$	10,157

(1)Includes subsequent payments after modification and reflects the balance as of June 30, 2022.

(2)Includes charge-offs since the modification date.

The following table presents the TDR post-modification outstanding balances by the primary modification type for the three and six months ended June 30, 2022:



	Modification Type
	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
($ in thousands)	Principal			Other (1)		Total		Principal (2)		Other (1)		Total
Commercial:
C&I	$	—		$	12,245	$	12,245	$	9,183	$	12,245	$	21,428













Total	$	—		$	12,245	$	12,245	$	9,183	$	12,245	$	21,428

(1)Includes increase in new commitment.

(2)Includes principal deferments that modify the terms of the loan from principal and interest payments to interest payments only.

After a loan is modified as a TDR, the Company continues to monitor its performance under its most recent restructured terms. A TDR may become delinquent and result in payment default (generally 90 days past due) subsequent to restructuring. The following table presents information on loans that entered into default during the three and six months ended June 30, 2022 that were modified as TDRs during the 12 months preceding payment default:



	Loan Modified as TDRs that Subsequently Defaulted
	Three Months Ended June 30, 2022			Six Months Ended June 30, 2022
($ in thousands)	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
Commercial:
C&I	1	$	1,055	2	$	4,305













Total	1	$	1,055	2	$	4,305

As of December 31, 2022, the remaining lending commitments to borrowers whose terms of their outstanding owed balances were modified as TDRs was $16.2 million.

Allowance for Credit Losses

The Company has a current expected credit losses framework for all financial assets measured at amortized cost and certain off-balance sheet credit exposures. The Company’s allowance for credit losses, which includes both the allowance for loan losses and the allowance for unfunded credit commitments, is calculated with the objective of maintaining a reserve sufficient to absorb losses inherent in our credit portfolios. The measurement of the allowance for credit losses is based on management’s best estimate of lifetime expected credit losses, and periodic evaluation of the loan portfolio, lending-related commitments, and other relevant factors.

The allowance for credit losses is deducted from the amortized cost basis of a financial asset or a group of financial assets so that the balance sheet reflects the net amount the Company expects to collect. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, deferred fees and costs, and escrow advances. Subsequent changes in expected credit losses are recognized in net income as a provision for, or a reversal of, credit loss expense.

The allowance for credit losses estimation involves procedures to consider the unique risk characteristics of the portfolio segments. The majority of the Company’s credit exposures that share risk characteristics with other similar exposures are collectively evaluated. The collectively evaluated loans include performing loans and unfunded credit commitments. If an exposure does not share risk characteristics with other exposures, the Company generally estimates expected credit losses on an individual basis.

Allowance for Collectively Evaluated Loans

The allowance for collectively evaluated loans consists of a quantitative component that assesses the different risk factors considered in our models and a qualitative component that considers risk factors external to the models. Each of these components are described below.

Quantitative Component — The Company applies quantitative methods to estimate loan losses by considering a variety of factors such as historical loss experience, the current credit quality of the portfolio, and an economic outlook over the life of the loan. The Company incorporates forward-looking information using macroeconomic scenarios, which include variables that are considered key drivers of increases and decreases in credit losses. The Company utilizes a probability-weighted, multiple-scenario forecast approach. These scenarios may consist of a base forecast representing management's view of the most likely outcome, combined with downside or upside scenarios reflecting possible worsening or improving economic conditions. The quantitative models incorporate a probability-weighted calculation of these macroeconomic scenarios over a reasonable and supportable forecast period. If the life of loans extends beyond the reasonable and supportable forecast period, the Company will consider historical experience or long-run macroeconomic trends over the remaining lives of the loans to estimate the allowance for loan losses.

There were no changes to the overall model methodology or the reasonable and supportable forecast period and reversion to the historical loss experience method for the three and six months ended June 30, 2023 and 2022.

The following table provides key credit risk characteristics and macroeconomic variables that the Company uses to estimate the expected credit losses by portfolio segment:

Portfolio Segment

Risk Characteristics

Macroeconomic Variables

C&I

Age, size and spread at origination, and risk rating

Volatility Index and BBB yield to 10-year U.S. Treasury spread

CRE, Multifamily residential, and Construction and land

Delinquency status, maturity date, collateral value, property type, and geographic location

Unemployment rate, Gross Domestic Product (“GDP”), and U.S. Treasury rates

Single-family residential and HELOCs

FICO score, delinquency status, maturity date, collateral value, and geographic location

Unemployment rate, GDP, and home price index

Other consumer

Loss rate approach

Immaterial (1)

(1)Macroeconomic variables are included in the qualitative estimate.

Allowance for Loan Losses for the Commercial Loan Portfolio

The Company’s C&I lifetime loss rate model estimates the loss rate expected over the life of a loan. This loss rate is applied to the amortized cost basis, excluding accrued interest receivable, to determine expected credit losses. The lifetime loss rate model’s reasonable and supportable period spans 11 quarters, thereafter, immediately reverting to the historical average loss rate, expressed through the loan-level lifetime loss rate.

To generate estimates of expected loss at the loan level for CRE, multifamily residential, and construction and land loans, projected probabilities of default (“PDs”) and loss given defaults (“LGDs”) are applied to the estimated exposure at default, considering the term and payment structure of the loan. The forecast of future economic conditions returns to long-run historical economic trends within the reasonable and supportable period.

In order to estimate the life of a loan under both models, the contractual term of the loan is adjusted for estimated prepayments based on historical prepayment experience.

Allowance for Loan Losses for the Consumer Loan Portfolio

For single-family residential and HELOC loans, projected PDs and LGDs are applied to the estimated exposure at default, considering the term and payment structure of the loan, to generate estimates of expected loss at the loan level. The forecast of future economic conditions returns to long-run historical economic trends after the reasonable and supportable period. To estimate the life of a loan for the single-family residential and HELOC loan portfolios, the contractual term of the loan is adjusted for estimated prepayments based on historical prepayment experience. For other consumer loans, the Company uses a loss rate approach.

Qualitative Component — The Company also considers the following qualitative factors in the determination of the collectively evaluated allowance if these factors have not already been captured by the quantitative model. Such qualitative factors may include, but are not limited to:

— loan growth trends;

— the volume and severity of past due financial assets, and the volume and severity of adversely classified financial assets;

— the Company’s lending policies and procedures, including changes in lending strategies, underwriting standards, collection, write-off, and recovery practices;

— knowledge of a borrower’s operations;

— the quality of the Company’s credit review system;

— the experience, ability and depth of the Company’s management and associates;

— the effect of other external factors such as the regulatory and legal environments, or changes in technology;

— actual and expected changes in international, national, regional, and local economic and business conditions in which the Company operates; and

— risk factors in certain industry sectors not captured by the quantitative models.

The magnitude of the impact of these factors on the Company’s qualitative assessment of the allowance for credit losses changes from period to period according to changes made by management in its assessment of these factors. The extent to which these factors change may be dependent on whether they are already reflected in quantitative loss estimates during the current period and the extent to which changes in these factors diverge from period to period.

While the Company’s allowance methodologies strive to reflect all relevant credit risk factors, there continues to be uncertainty associated with, but not limited to, potential imprecision in the estimation process due to the inherent time lag of obtaining information and normal variations between expected and actual outcomes. The Company may hold additional qualitative reserves that are designed to provide coverage for losses attributable to such risk.

Allowance for Individually Evaluated Loans

When a loan no longer shares similar risk characteristics with other loans, such as in the case of certain nonaccrual loans, the Company estimates the allowance for loan losses on an individual loan basis. The allowance for loan losses for individually evaluated loans is measured as the difference between the recorded value of the loans and their fair value. For loans evaluated individually, the Company uses one of three different asset valuation measurement methods: (1) the fair value of collateral less costs to sell; (2) the present value of expected future cash flows; or (3) the loan's observable market price. If an individually evaluated loan is determined to be collateral dependent, the Company applies the fair value of the collateral less costs to sell method. If an individually evaluated loan is determined not to be collateral dependent, the Company uses the present value of future cash flows or the observable market value of the loan.

•Collateral-Dependent Loans — The allowance of a collateral-dependent loan is limited to the difference between the recorded value and fair value of the collateral less cost of disposal or sale. As of June 30, 2023, collateral-dependent commercial and consumer loans totaled $22.0 million and $11.2 million, respectively. In comparison, collateral-dependent commercial and consumer loans totaled $47.4 million and $13.4 million, respectively, as of December 31, 2022. The collateral-dependent loans decreased from December 31, 2022, predominantly driven by the adoption of ASU 2022-02 related to the elimination of TDR guidance. The Company's collateral-dependent loans were secured by real estate. As of both June 30, 2023 and December 31, 2022, the collateral value of the properties securing the collateral-dependent loans, net of selling costs, exceeded the recorded value of the loans.

The following tables summarize the activity in the allowance for loan losses by portfolio segments for the three and six months ended June 30, 2023 and 2022:



		Three Months Ended June 30, 2023
		Commercial								Consumer
				CRE						Residential Mortgage
($ in thousands)		C&I		CRE		Multifamily Residential		Construction and Land		Single-Family Residential		HELOCs		Other Consumer		Total
Allowance for loan losses, beginning of period		$	376,325	$	155,067	$	24,526	$	9,322	$	48,007	$	4,971	$	1,675	$	619,893
Provision for (reversal of) credit losses on loans	(a)	5,259		15,685		(1,604)		1,995		3,501		(444)		(367)		24,025
Gross charge-offs		(7,335)		(2,366)		—		—		—		(6)		(48)		(9,755)
Gross recoveries		2,065		119		16		8		5		5		—		2,218
Total net (charge-offs) recoveries		(5,270)		(2,247)		16		8		5		(1)		(48)		(7,537)
Foreign currency translation adjustment		(981)		—		—		—		—		—		—		(981)
Allowance for loan losses, end of period		$	375,333	$	168,505	$	22,938	$	11,325	$	51,513	$	4,526	$	1,260	$	635,400



		Three Months Ended June 30, 2022
		Commercial								Consumer
				CRE						Residential Mortgage
($ in thousands)		C&I		CRE		Multifamily Residential		Construction and Land		Single-Family Residential		HELOCs		Other Consumer		Total
Allowance for loan losses, beginning of period		$	339,446	$	147,104	$	24,176	$	11,016	$	18,210	$	3,748	$	1,985	$	545,685
Provision for (reversal of) credit losses on loans	(a)	19,030		(6,819)		1,976		(4,338)		3,461		(339)		(502)		12,469
Gross charge-offs		(240)		(671)		(8)		—		—		(193)		(34)		(1,146)
Gross recoveries		6,514		631		408		4		169		4		—		7,730
Total net recoveries (charge-offs)		6,274		(40)		400		4		169		(189)		(34)		6,584
Foreign currency translation adjustment		(1,468)		—		—		—		—		—		—		(1,468)
Allowance for loan losses, end of period		$	363,282	$	140,245	$	26,552	$	6,682	$	21,840	$	3,220	$	1,449	$	563,270



		Six Months Ended June 30, 2023
		Commercial								Consumer
				CRE						Residential Mortgage
($ in thousands)		C&I		CRE		Multifamily Residential		Construction and Land		Single-Family Residential		HELOCs		Other Consumer		Total
Allowance for loan losses, December 31, 2022		$	371,700	$	149,864	$	23,373	$	9,109	$	35,564	$	4,475	$	1,560	$	595,645
Impact of ASU 2022-02 adoption		5,683		337		6		—		1		1		—		6,028
Allowance for loan losses, beginning of period		377,383		150,201		23,379		9,109		35,565		4,476		1,560		601,673
Provision for (reversal of) credit losses on loans	(a)	4,581		20,361		(469)		2,205		15,943		136		(212)		42,545
Gross charge-offs		(9,235)		(2,372)		—		—		—		(97)		(88)		(11,792)
Gross recoveries		3,276		315		28		11		5		11		—		3,646
Total net (charge-offs) recoveries		(5,959)		(2,057)		28		11		5		(86)		(88)		(8,146)
Foreign currency translation adjustment		(672)		—		—		—		—		—		—		(672)
Allowance for loan losses, end of period		$	375,333	$	168,505	$	22,938	$	11,325	$	51,513	$	4,526	$	1,260	$	635,400



		Six Months Ended June 30, 2022
		Commercial								Consumer
				CRE						Residential Mortgage
($ in thousands)		C&I		CRE		Multifamily Residential		Construction and Land		Single-Family Residential		HELOCs		Other Consumer		Total
Allowance for loan losses, beginning of period		$	338,252	$	150,940	$	14,400	$	15,468	$	17,160	$	3,435	$	1,924	$	541,579
Provision for (reversal of) credit losses on loans	(a)	28,292		(10,312)		11,633		(8,844)		4,387		(40)		(395)		24,721
Gross charge-offs		(11,428)		(1,069)		(9)		—		—		(193)		(80)		(12,779)
Gross recoveries		9,516		686		528		58		293		18		—		11,099
Total net (charge-offs) recoveries		(1,912)		(383)		519		58		293		(175)		(80)		(1,680)
Foreign currency translation adjustment		(1,350)		—		—		—		—		—		—		(1,350)
Allowance for loan losses, end of period		$	363,282	$	140,245	$	26,552	$	6,682	$	21,840	$	3,220	$	1,449	$	563,270

In addition to the allowance for loan losses, the Company maintains an allowance for unfunded credit commitments. The Company has three general areas for which it provides the allowance for unfunded credit commitments: (1) recourse obligations for loans sold, (2) letters of credit, and (3) unfunded lending commitments. The allowance for unfunded credit commitments is maintained at a level that management believes to be sufficient to absorb estimated expected credit losses related to unfunded credit facilities. See Note 11 — Commitments and Contingencies to the Consolidated Financial Statements in this Form 10-Q for additional information related to unfunded credit commitments. The following table summarizes the activities in the allowance for unfunded credit commitments for the three and six months ended June 30, 2023 and 2022:



		Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)		2023		2022		2023		2022
Unfunded credit facilities
Allowance for unfunded credit commitments, beginning of period		$	27,741	$	23,262	$	26,264	$	27,514

Provision for (reversal of) credit losses on unfunded credit commitments	(b)	1,975		1,031		3,455		(3,221)
Foreign currency translation adjustment		12		11		9		11
Allowance for unfunded credit commitments, end of period		$	29,728	$	24,304	$	29,728	$	24,304

Provision for credit losses	(a) + (b)	$	26,000	$	13,500	$	46,000	$	21,500

The allowance for credit losses was $665.1 million as of June 30, 2023, an increase of $43.2 million, compared with $621.9 million as of December 31, 2022. The increase in the allowance for credit losses was primarily driven by the current economic outlook as well as loan growth. The current economic outlook reflected ongoing concerns with inflation, global supply chain disruptions and high interest rates.

The Company considers multiple economic scenarios to develop the estimate of the allowance for loan losses. The scenarios may consist of a baseline forecast representing management's view of the most likely outcome, and downside or upside scenarios that reflect possible worsening or improving economic conditions, respectively. As of June 30, 2023, the Company did not assign a weighting to its upside scenario. Instead, it assigned a slightly higher weighting to its downside scenario, while maintaining the same weighting to its baseline scenario, compared with the weightings assigned as of December 31, 2022. Management remains cautious regarding the economic outlook given the persistently high level of inflation, high interest rates, the recent strain to the financial system, and continued concerns on global oil prices and supply-chain issues. The U.S. baseline GDP growth forecast for the second half of 2023 has been lowered compared with the December 2022 forecast. The GDP growth forecast for the full year 2024, was lowered to 1.4% from the previous 2.0% forecasted as of December 31, 2022, reflecting an expected GDP slow-down as interest-sensitive spending weakens amid elevated interest rate environment. Average unemployment rates in the U.S. are expected to remain stable at 3.6% for the second half of 2023. However, job market softening is expected in 2024 and 2025. Compared with the baseline scenario, the downside scenario assumes that the combination of increasing supply shortages, political tensions between China and Taiwan, recent bank failures, still-elevated inflation, and the Federal Reserve’s decision to keep the federal funds rate elevated will lead to a recession in the third quarter of 2023.

Loan Transfers, Sales and Purchases

The Company’s primary business focus is on directly originated loans. The Company also purchases loans and participates in loan financing with other banks. In the normal course of business, the Company also provides other financial institutions with the ability to participate in commercial loans that it originates, by selling loans to such institutions. Purchased loans may be transferred from held-for-investment to held-for-sale, and write-downs to allowance for loan losses are recorded, when appropriate. The following tables provide information on the carrying value of loans transferred, sold and purchased for the held-for-investment portfolio, during the three and six months ended June 30, 2023 and 2022:



	Three Months Ended June 30, 2023
	Commercial				Consumer
							Residential Mortgage
($ in thousands)	C&I		CRE		Construction and Land			Single-Family Residential		Total
Loans transferred from held-for-investment to held-for-sale (1)	$	111,396	$	—	$	8,154		$	—	$	119,550

Sales (2)(3)	$	115,735	$	—	$	8,154		$	—	$	123,889
Purchases (4)	$	38,279	$	—	$	—		$	79,137	$	117,416



	Three Months Ended June 30, 2022
	Commercial				Consumer
					Residential Mortgage
($ in thousands)	C&I		CRE			Single-Family Residential		Total
Loans transferred from held-for-investment to held-for-sale (1)	$	208,335	$	9,854		$	—	$	218,189
Loans transferred from held-for-sale to held-for-investment	$	—	$	—		$	631	$	631
Sales (2)(3)	$	180,029	$	9,854		$	—	$	189,883
Purchases (4)	$	194,066	$	—		$	122,723	$	316,789



	Six Months Ended June 30, 2023
	Commercial						Consumer
							Residential Mortgage
($ in thousands)	C&I		CRE		Construction and Land			Single-Family Residential		Total
Loans transferred from held-for-investment to held-for-sale (1)	$	268,272	$	3,600	$	8,154		$	—	$	280,026

Sales (2)(3)	$	291,667	$	3,600	$	8,154		$	—	$	303,421
Purchases (4)	$	60,962	$	—	$	—		$	211,136	$	272,098



	Six Months Ended June 30, 2022
	Commercial				Consumer
					Residential Mortgage
($ in thousands)	C&I		CRE			Single-Family Residential		Total
Loans transferred from held-for-investment to held-for-sale (1)	$	319,772	$	31,634		$	—	$	351,406
Loans transferred from held-for-sale to held-for-investment	$	—	$	—		$	631	$	631
Sales (2)(3)	$	287,503	$	31,634		$	451	$	319,588
Purchases (4)	$	304,662	$	—		$	237,098	$	541,760

(1)Includes write-downs of $308 thousand and $581 thousand to the allowance for loan losses related to loans transferred from held-for-investment to held-for-sale for the three and six months ended June 30, 2023, respectively, and $158 thousand and $217 thousand for the three and six months ended June 30, 2022, respectively.

(2)Includes originated loans sold of $92.2 million and $203.2 million for the three and six months ended June 30, 2023, respectively, and $55.4 million and $167.7 million for the three and six months ended June 30, 2022, respectively. Originated loans sold consisted primarily of C&I loans for each of the three and six months ended June 30, 2023 and 2022.

(3)Includes $31.7 million and $100.3 million of purchased loans sold in the secondary market for the three and six months ended June 30, 2023, respectively, and $134.5 million and $151.9 million for the three and six months ended June 30, 2022, respectively.

(4)C&I loan purchases were comprised primarily of syndicated C&I term loans.

Investments in Qualified Affordable Housing Partnerships, Tax Credit and Other Investments, Net and Variable Interest Entities

6 Months Ended

Jun. 30, 2023

Investments in Qualified Affordable Housing Partnerships, Tax Credit and Other Investments, Net and Variable Interest Entities [Abstract]

Investments in Qualified Affordable Housing Partnerships, Tax Credit and Other Investments, Net and Variable Interest Entities

Investments in Qualified Affordable Housing Partnerships, Tax Credit and Other Investments, Net and Variable Interest EntitiesThe CRA encourages banks to meet the credit needs of their communities, particularly low- and moderate-income individuals and neighborhoods. The Company invests in certain affordable housing projects in the form of ownership interests in limited partnerships or limited liability companies that qualify for CRA consideration and tax credits. These entities are formed to develop and operate apartment complexes designed as high-quality affordable housing for lower income tenants throughout the U.S. To fully utilize the available tax credits, each of these entities must meet the regulatory affordable housing requirements for a 15-year minimum compliance period. In addition to affordable housing projects, the Company invests in small business investment companies and new market tax credit projects that qualify for CRA consideration, as well as eligible projects that qualify for renewable energy and historic tax credits. Investments in renewable energy tax credits help promote the development of renewable energy sources, and investments in historic tax credits promote the rehabilitation of historic buildings and economic revitalization of the surrounding areas. For the Company’s accounting policies on tax credit investments, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Securities and Investments in Qualified Affordable Housing Partnerships, Tax Credit and Other Investments, Net to the Consolidated Financial Statements in the Company’s 2022 Form 10-K for additional details. For a discussion on the Company’s impairment evaluation and monitoring process of tax credit investments, refer to Note 3 — Fair Value Measurement and Fair Value of Financial Instruments — Investments in Qualified Affordable Housing Partnerships, Tax Credit and Other Investments, Net to the Consolidated Financial Statements in this Form 10-Q.

The following table presents investments and unfunded commitments of the Company’s qualified affordable housing partnerships, tax credit, and other investments as of June 30, 2023 and December 31, 2022:



	June 30, 2023				December 31, 2022
($ in thousands)	Assets		Liabilities - Unfunded Commitments (1)		Assets		Liabilities - Unfunded Commitments (1)

Investments in qualified affordable housing partnerships, net	$	422,331	$	255,066	$	413,253	$	266,654
Investments in tax credit and other investments, net	393,140		278,915		350,003		185,797
Total	$	815,471	$	533,981	$	763,256	$	452,451

(1)Included in Accrued expenses and other liabilities on the Consolidated Balance Sheet.

Investments in tax credit and other investments, net presented in the table above include equity securities that are mutual funds with readily determinable fair values of $24.2 million and $24.0 million as of June 30, 2023 and December 31, 2022, respectively. The Company invests in these mutual funds for CRA purposes. The Company also held equity securities without readily determinable fair values totaling $37.0 million and $36.5 million as of June 30, 2023 and December 31, 2022, respectively.

The following table presents additional information related to the investments in qualified affordable housing partnerships, tax credit and other investments for the three and six months ended June 30, 2023 and 2022:



	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2023		2022		2023		2022
Investments in qualified housing partnerships, net:
Tax credits and other tax benefits recognized	$	15,304	$	12,754	$	31,398	$	25,584
Amortization expense included in income tax expense	$	10,506	$	10,042	$	23,172	$	20,067
Investments in tax credit and other investments, net:
Amortization of tax credit and other investments (1)	$	55,914	$	14,979	$	66,024	$	28,879
Unrealized losses on equity securities with readily determinable values	$	(369)	$	(783)	$	(8)	$	(1,944)

(1)Includes net impairment recoveries of $1.4 million and $1.6 million for the three and six months ended June 30, 2023, respectively, primarily related to historic tax credits. In comparison, there were no impairment recoveries or losses for three or six months ended June 30, 2022.

Variable Interest Entities

The majority of both the investments in affordable housing partnerships and tax credit and other investments discussed above are variable interest entities where the Company is a limited partner in these partnerships, and an unrelated third party is typically the general partner or managing member who has control over the significant activities of these investments. While the Company’s interest in some of the investments may exceed 50% of the outstanding equity interests, the Company does not consolidate these investments due to the general partner’s or managing member’s ability to manage the entity, which is indicative of the general partner’s or managing member’s power over the entity. The Company’s maximum exposure to loss in connection with these partnerships consists of the unamortized investment balance and any tax credits claimed that may become subject to recapture.

Goodwill	6 Months Ended
Goodwill	Jun. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	GoodwillTotal goodwill was $465.7 million as of both June 30, 2023 and December 31, 2022. The Company’s goodwill impairment test is performed annually, as of December 31, or more frequently as events occur or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. Based on the Company’s annual goodwill impairment test as of December 31, 2022, there was no impairment. Additional information pertaining to the Company’s accounting policy for goodwill is summarized in Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Goodwill to the Consolidated Financial Statements in the Company’s 2022 Form 10-K. Given the recent volatility in the banking industry, the Company performed an analysis of goodwill during the second quarter of 2023 that consisted of a qualitative assessment to determine if it is more likely than not that the carrying values of each reporting unit exceeded their estimated fair values. The results of this analysis indicated that no impairment of goodwill existed as of June 30, 2023.

Short-Term Borrowings and Long-Term Debt

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Short-Term Borrowings and Long-Term Debt

Short-Term Borrowings — Bank Term Funding Program

As of June 30, 2023, the Company’s short-term borrowings consisted of funds from the Bank Term Funding Program (“BTFP”). In March 2023, the Federal Reserve announced the creation of the BTFP, which was designed to provide additional liquidity to U.S. depository institutions. The advances will be limited to the par value of eligible collateral pledged by the borrower, for a term of up to one year. U.S. federally insured depository institutions can request advances under the BTFP until at least March 11, 2024.

The following table presents details of the Company’s short-term borrowings as of June 30, 2023. The Company pledged eligible U.S. government agency and U.S. government-sponsored enterprise debt and mortgage-backed securities, and U.S. Treasury securities as collateral for the borrowings under the BTFP. As of June 30, 2023, the carrying amount of the Company’s pledged securities to the BTFP totaled $4.46 billion with a remaining borrowing capacity of $299.4 million. In comparison, there were no short-term borrowings as of December 31, 2022.

June 30, 2023

($ in thousands)

Interest Rate

Maturity Date

Amount

Short-term borrowings

4.37%

3/19/2024

$

4,500,000

Long-Term Debt — Junior Subordinated Debt

Long-term debt totaled $148.1 million as of June 30, 2023 and $148.0 million as of December 31, 2022. The interest rates on the junior subordinated debt were based on London Interbank Offered Rate plus the applicable stated margin through June 30, 2023. The junior subordinated debt will be based on the Secured Overnight Financing Rate at the next scheduled repricing date, subsequent to June 30, 2023. The junior subordinated debt had coupon interest rates ranging from 6.90% to 7.45% as of June 30, 2023 and 6.12% to 6.67% as of December 31, 2022. The junior subordinated debt had remaining maturities ranging between 11.4 years and 14.2 years as of June 30, 2023. For additional information on the junior subordinated debt, refer to Note 10 — Federal Home Loan Bank Advances and Long-Term Debt to the Consolidated Financial Statements in the Company’s 2022 Form 10-K.

Commitments and Contingencies Disclosure [Abstract]

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 470
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//470/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1E
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies

Commitments to Extend Credit — In the normal course of business, the Company provides loan commitments to customers on predetermined terms. These outstanding commitments to extend credit are not reflected in the accompanying Consolidated Financial Statements. While the Company does not anticipate losses from these transactions, commitments to extend credit are included in determining the appropriate level of allowance for unfunded credit commitments, and outstanding commercial letters of credit and standby letters of credit (“SBLCs”).

The following table presents the Company’s credit-related commitments as of June 30, 2023 and December 31, 2022:



	June 30, 2023										December 31, 2022
($ in thousands)	Expire in One Year or Less		Expire After One Year Through Three Years		Expire After Three Years Through Five Years		Expire After Five Years		Total		Total
Loan commitments	$	4,583,179	$	3,734,399	$	993,345	$	125,704	$	9,436,627	$	8,211,571
Commercial letters of credit and SBLCs	717,105		513,359		90,696		1,094,248		2,415,408		2,291,966
Total	$	5,300,284	$	4,247,758	$	1,084,041	$	1,219,952	$	11,852,035	$	10,503,537

Loan commitments are agreements to lend to customers provided there are no violations of any conditions established in the agreement. Commitments generally have fixed expiration dates or other termination clauses and may require commitment fees. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future funding requirements.

Commercial letters of credit are issued to facilitate domestic and foreign trade transactions, while SBLCs are generally contingent upon the failure of the customers to perform according to the terms of the underlying contract with the third party. As a result, the total contractual amounts do not necessarily represent future funding requirements. The Company’s historical experience is that SBLCs typically expire without being funded. Additionally, in many cases, the Company holds collateral in various forms against these SBLCs. As part of its risk management activities, the Company monitors the creditworthiness of customers in conjunction with its SBLC exposure. Customers are obligated to reimburse the Company for any payment made on the customers’ behalf. If the customers fail to pay, the Company would, as applicable, liquidate the collateral and/or offset existing accounts. As of June 30, 2023, total letters of credit of $2.42 billion consisted of SBLCs of $2.38 billion and commercial letters of credit of $33.5 million. In comparison, as of December 31, 2022, total letters of credit of $2.29 billion consisted of SBLCs of $2.27 billion and commercial letters of credit of $21.6 million. As of both June 30, 2023 and December 31, 2022, substantially all SBLCs were graded as “Pass” utilizing the Bank’s internal credit risk rating system.

The Company applies the same credit underwriting criteria to extend loans, commitments, and conditional obligations to customers. Each customer’s creditworthiness is evaluated on a case-by-case basis. Collateral and financial guarantees may be obtained based on management’s assessment of a customer’s credit risk. Collateral may include cash, accounts receivable, inventory, personal property, plant and equipment, and real estate property.

Estimated exposure to loss from these commitments is included in the allowance for unfunded credit commitments and amounted to $29.7 million and $26.2 million as of June 30, 2023 and December 31, 2022, respectively.

Guarantees — From time to time, the Company sells or securitizes single-family and multifamily residential loans with recourse in the ordinary course of business. The Company is obligated to repurchase up to the recourse component of the loans if the loans default. The following table presents the carrying amounts of loans sold or securitized with recourse and the maximum potential future payments as of June 30, 2023 and December 31, 2022:



	Maximum Potential Future Payments										Carrying Value
	June 30, 2023								December 31, 2022		June 30, 2023		December 31, 2022
($ in thousands)	Expire in One Year or Less		Expire After One Year Through Three Years		Expire After Three Years Through Five Years		Expire After Five Years		Total		Total		Total		Total
Single-family residential loans sold or securitized with recourse	$	35	$	39	$	30	$	6,258	$	6,362	$	6,781	$	6,362	$	6,781
Multifamily residential loans sold or securitized with recourse	—		—		—		14,996		14,996		14,996		20,726		21,320
Total	$	35	$	39	$	30	$	21,254	$	21,358	$	21,777	$	27,088	$	28,101

The Company’s recourse reserve related to these guarantees is included in the allowance for unfunded credit commitments and totaled $36 thousand and $37 thousand as of June 30, 2023 and December 31, 2022, respectively. The allowance for unfunded credit commitments is included in Accrued expenses and other liabilities on the Consolidated Balance Sheet. The Company continues to experience minimal losses from the single-family and multifamily residential loan portfolios sold or securitized with recourse.

Litigation — The Company is a party to various legal actions arising in the ordinary course of its business. In accordance with ASC 450, Contingencies, the Company accrues reserves for outstanding lawsuits, claims and proceedings when a loss contingency is probable and can be reasonably estimated. The Company estimates the amount of loss contingencies using current available information from legal proceedings, advice from legal counsel and available insurance coverage. Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to the Company from the legal proceedings in question. Thus, the Company’s exposure and ultimate losses may be higher, and possibly significantly more, than the amounts accrued.

While it is impossible to ascertain the ultimate resolution or range of financial liability, based on information known to the Company, as of June 30, 2023, the Company does not believe there is any pending legal proceeding to which the Company is a party that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the Company’s financial condition. In light of the inherent uncertainty in legal proceedings, however, there can be no assurance that the ultimate resolution will not exceed established reserves and it is possible that the outcome of a particular matter, or a combination of matters, may be material to the Company’s financial condition for a particular period, depending upon the size of the loss and the Company’s income for that particular period.

Stock Compensation Plans

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock Compensation Plans

Pursuant to the Company’s 2021 Stock Incentive Plan, as amended, the Company may issue stock, stock options, restricted stock, restricted stock units (“RSUs”) including performance-based RSUs, stock purchase warrants, stock appreciation rights, phantom stock and dividend equivalents to eligible employees, non-employee directors, consultants, and other service providers of the Company and its subsidiaries. The Company has granted RSUs as its primary incentive awards. There were no outstanding awards other than RSUs as of both June 30, 2023 and December 31, 2022.

The following table presents a summary of the total share-based compensation expense and the related net tax benefits associated with the Company’s various employee share-based compensation plans for the three and six months ended June 30, 2023 and 2022:



	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2023		2022		2023		2022
Stock compensation costs	$	9,364	$	8,576	$	20,439	$	17,009
Related net tax benefits for stock compensation plans	$	525	$	109	$	8,815	$	5,268

Restricted Stock Units — RSUs are granted under the Company’s long-term incentive plan at no cost to the recipient. RSUs generally cliff vest after three years of continued employment from the date of the grant, and are authorized to settle in shares of the Company’s common stock. Dividends are accrued during the vesting period and paid at the time of vesting. While a portion of RSUs are time-based vesting awards, others vest subject to the attainment of specified performance goals, referred to as “performance-based RSUs.” Performance-based RSUs are granted annually upon approval by the Company’s Compensation Committee based on the performance in the year prior to the grant date of the award. The number of awards that vest can range from zero percent to a maximum of 200% of the granted number of awards based on the Company’s achievement of specified performance criteria over a performance period of three years. For information on accounting on stock-based compensation plans, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Stock-Based Compensation to the Consolidated Financial Statements of the Company’s 2022 Form 10-K.

The following table presents a summary of the activities for the Company’s time-based and performance-based RSUs that will be settled in shares for the six months ended June 30, 2023. The number of performance-based RSUs stated below reflects the number of awards granted on the grant date.





	Time-Based RSUs	Performance-Based RSUs
		Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value
Outstanding, January 1, 2023		1,296,866	$	60.77	332,510	$	60.40

Granted		483,906	74.32		96,271	57.50
Vested		(518,628)	40.56		(152,558)	39.39
Forfeited		(33,925)	73.98		—	—
Outstanding, June 30, 2023		1,228,219	$	74.28	276,223	$	70.99

As of June 30, 2023, there were $36.7 million of unrecognized compensation costs related to unvested time-based RSUs expected to be recognized over a weighted-average period of 2.1 years, and $21.0 million of unrecognized compensation costs related to unvested performance-based RSUs expected to be recognized over a weighted-average period of 2.1 years.

Stockholders' Equity and Earnings Per Share

6 Months Ended

Jun. 30, 2023

Stockholders' Equity and Earnings Per Share [Abstract]

Stockholders' Equity and Earnings Per Share

Stockholders’ Equity and Earnings Per Share

The following table presents the basic and diluted EPS calculations for the three and six months ended June 30, 2023 and 2022. For more information on the calculation of EPS, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Earnings Per Share to the Consolidated Financial Statements of the Company’s 2022 Form 10-K.



($ and shares in thousands, except per share data)	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Basic:
Net income	$	312,031	$	258,329	$	634,470	$	495,981
Weighted-average number of shares outstanding	141,468		141,429		141,291		141,725
Basic EPS	$	2.21	$	1.83	$	4.49	$	3.50
Diluted:
Net income	$	312,031	$	258,329	$	634,470	$	495,981
Weighted-average number of shares outstanding	141,468		141,429		141,291		141,725
Add: Dilutive impact of unvested RSUs	408		943		619		1,113
Diluted weighted-average number of shares outstanding	141,876		142,372		141,910		142,838
Diluted EPS	$	2.20	$	1.81	$	4.47	$	3.47

For the three and six months ended June 30, 2023, approximately 690 thousand and 439 thousand weighted-average shares of anti-dilutive RSUs, respectively, were excluded from the diluted EPS computations. In comparison, 381 thousand and 70 thousand weighted-average shares of anti-dilutive RSUs were excluded from the diluted EPS computations for the three and six months ended June 30, 2022, respectively.

Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

The following tables present the changes in the components of AOCI balances for the three and six months ended June 30, 2023 and 2022:



($ in thousands)	Debt Securities (1)		Cash Flow Hedges		Foreign Currency Translation Adjustments (2)		Total
Balance, April 1, 2022	$	(365,653)	$	(24,466)	$	(4,806)	$	(394,925)
Net unrealized losses arising during the period	(192,858)		(5,582)		(10,215)		(208,655)
Amounts reclassified from AOCI	3,730		(798)		—		2,932
Changes, net of tax	(189,128)		(6,380)		(10,215)		(205,723)
Balance, June 30, 2022	$	(554,781)	$	(30,846)	$	(15,021)	$	(600,648)

Balance, April 1, 2023	$	(640,734)	$	(20,918)	$	(18,342)	$	(679,994)
Net unrealized losses arising during the period	(43,618)		(68,207)		(7,249)		(119,074)
Amounts reclassified from AOCI	2,816		14,320		—		17,136
Changes, net of tax	(40,802)		(53,887)		(7,249)		(101,938)
Balance, June 30, 2023	$	(681,536)	$	(74,805)	$	(25,591)	$	(781,932)



($ in thousands)	Debt Securities (1)		Cash Flow Hedges		Foreign Currency Translation Adjustments (2)		Total
Balance, January 1, 2022	$	(85,703)	$	257	$	(4,935)	$	(90,381)
Net unrealized losses arising during the period	(474,219)		(28,809)		(10,086)		(513,114)
Amounts reclassified from AOCI	5,141		(2,294)		—		2,847
Changes, net of tax	(469,078)		(31,103)		(10,086)		(510,267)
Balance, June 30, 2022	$	(554,781)	$	(30,846)	$	(15,021)	$	(600,648)

Balance, January 1, 2023	$	(694,815)	$	(49,531)	$	(21,283)	$	(765,629)
Net unrealized gains (losses) arising during the period	657		(47,121)		(4,308)		(50,772)
Amounts reclassified from AOCI	12,622		21,847		—		34,469
Changes, net of tax	13,279		(25,274)		(4,308)		(16,303)
Balance, June 30, 2023	$	(681,536)	$	(74,805)	$	(25,591)	$	(781,932)

(1)Includes after-tax unamortized losses related to AFS debt securities that were transferred to HTM in 2022.

(2)Represents foreign currency translation adjustments related to the Company’s net investment in non-U.S. operations, including related hedges. The functional currency and reporting currency of the Company’s foreign subsidiary is RMB and USD, respectively.

The following tables present the components of other comprehensive income (loss), reclassifications to net income and the related tax effects for the three and six months ended June 30, 2023 and 2022:



	Three Months Ended June 30,
	2023						2022
($ in thousands)	Before-Tax		Tax Effect		Net-of-Tax		Before-Tax		Tax Effect		Net-of-Tax
Debt securities:
Net unrealized losses on AFS debt securities arising during the period	$	(61,939)	$	18,321	$	(43,618)	$	(273,840)	$	80,982	$	(192,858)
Reclassification adjustments:
Net realized gains on AFS debt securities reclassified into net income (1)	—		—		—		(28)		8		(20)
Amortization of unrealized losses on transferred debt securities (2)	3,998		(1,182)		2,816		5,324		(1,574)		3,750
Net change	(57,941)		17,139		(40,802)		(268,544)		79,416		(189,128)
Cash flow hedges:
Net unrealized losses arising during the period	(96,457)		28,250		(68,207)		(7,837)		2,255		(5,582)
Net realized losses (gains) reclassified into net income (3)	20,252		(5,932)		14,320		(1,120)		322		(798)
Net change	(76,205)		22,318		(53,887)		(8,957)		2,577		(6,380)
Foreign currency translation adjustments, net of hedges:
Net unrealized losses arising during the period	(6,107)		(1,142)		(7,249)		(9,278)		(937)		(10,215)
Net change	(6,107)		(1,142)		(7,249)		(9,278)		(937)		(10,215)
Other comprehensive loss	$	(140,253)	$	38,315	$	(101,938)	$	(286,779)	$	81,056	$	(205,723)



	Six Months Ended June 30,
	2023							2022
($ in thousands)	Before-Tax			Tax Effect		Net-of-Tax		Before-Tax		Tax Effect		Net-of-Tax
Debt securities:
Net unrealized gains (losses) on AFS debt securities arising during the period	$	921		$	(264)	$	657	$	(512,886)	$	151,658	$	(361,228)
Unrealized losses on debt securities transferred from AFS to HTM	—			—		—		(160,416)		47,425		(112,991)
Reclassification adjustments:
Net realized losses (gains) on AFS debt securities reclassified into net income (1)	10,000		(4)	(2,956)		7,044		(1,306)		386		(920)
Amortization of unrealized losses on transferred debt securities (2)	7,919			(2,341)		5,578		8,605		(2,544)		6,061
Net change	18,840			(5,561)		13,279		(666,003)		196,925		(469,078)
Cash flow hedges:
Net unrealized losses arising during the period	(66,614)			19,493		(47,121)		(40,446)		11,637		(28,809)
Net realized losses (gains) reclassified into net income (3)	30,896			(9,049)		21,847		(3,220)		926		(2,294)
Net change	(35,718)			10,444		(25,274)		(43,666)		12,563		(31,103)
Foreign currency translation adjustments, net of hedges:
Net unrealized losses arising during the period	(3,481)			(827)		(4,308)		(9,600)		(486)		(10,086)
Net change	(3,481)			(827)		(4,308)		(9,600)		(486)		(10,086)
Other comprehensive loss	$	(20,359)		$	4,056	$	(16,303)	$	(719,269)	$	209,002	$	(510,267)

(1)Pre-tax amounts were reported in Net gains (losses) on AFS debt securities on the Consolidated Statement of Income.

(2)Represents unrealized losses amortized over the remaining lives of securities that were transferred from the AFS to HTM portfolio in 2022.

(3)Pre-tax amounts related to cash flow hedges on variable rate loans and long-term borrowings, where applicable, were reported in Interest and dividend income and in Interest expense, respectively, on the Consolidated Statement of Income.

(4)Represents the full write-off of an impaired subordinated debt security during the first quarter of 2023.

Business Segments

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Business Segments

The Company organizes its operations into three reportable operating segments: (1) Consumer and Business Banking; (2) Commercial Banking; and (3) Other. These segments are defined by the type of customers served and the related products and services provided. The segments reflect how financial information is currently evaluated by management. Operating segment results are based on the Company’s internal management reporting process, which reflects assignments and allocations of certain balance sheet and income statement items. The information presented is not indicative of how the segments would perform if they operated as independent entities.

The Consumer and Business Banking segment primarily provides financial products and services to consumer and commercial customers through the Company’s domestic branch network and digital banking platform. This segment offers consumer and commercial deposits, mortgage and home equity loans, and other products and services. It also originates commercial loans for small- and medium-sized enterprises through the Company’s branch network. Other products and services provided by this segment include wealth management, treasury management, interest rate risk hedging and foreign exchange services.

The Commercial Banking segment primarily generates commercial loan and deposit products. Commercial loan products include CRE lending, construction financing, commercial business lending, working capital lines of credit, trade finance, letters of credit, affordable housing lending, asset-based lending, asset-backed finance, project finance and equipment financing. Commercial deposit products and other financial services include treasury management, foreign exchange services and interest rate and commodity risk hedging.

The remaining centralized functions, including the corporate treasury activities of the Company and eliminations of inter-segment amounts, have been aggregated and included in the Other segment, which provides broad administrative support to the two core segments, namely the Consumer and Business Banking and the Commercial Banking segments.

The Company utilizes an internal reporting process to measure the performance of the three operating segments within the Company. The internal reporting process derives operating segment results by utilizing allocation methodologies for revenues and expenses. Net interest income of each segment represents the difference between actual interest earned on assets and interest incurred on liabilities of the segment, adjusted for funding charges or credits through the Company’s internal funds transfer pricing (“FTP”) process. Noninterest income and noninterest expense directly attributable to a business segment are assigned to that segment. Indirect costs, including technology-related costs and corporate overhead, are allocated based on a segment’s estimated usage using factors including but not limited to, full-time equivalent employees, net interest income, and loan and deposit volume. Charge-offs are recorded to the segment directly associated with the respective loans charged off, and provision for credit losses is recorded to the segments based on the related loans for which allowances are evaluated. The Company’s internal reporting process utilizes a full-allocation methodology. Under this methodology, corporate and indirect expenses incurred by the Other segment are allocated to the Consumer and Business Banking and the Commercial Banking segments, except certain corporate treasury-related expenses and insignificant unallocated expenses.

The corporate treasury function within the Other segment is responsible for the Company’s liquidity and interest rate management and the internal FTP process. The FTP process is formulated with the goal of encouraging loan and deposit growth that is consistent with the Company’s overall profitability objectives, as well as to provide a reasonable and consistent basis for the measurement of its business segments’ net interest margins and profitability. The FTP process charges a cost to fund loans (“FTP charges for loans”) and allocates credits for funds provided from deposits (“FTP credits for deposits”) using internal FTP rates. FTP charges for loans are determined based on a matched cost of funds, which is tied to the pricing and term characteristics of the loans. FTP credits for deposits are based on matched funding credit rates, which are tied to the implied or stated maturity of the deposits. FTP credits for deposits reflect the long-term value generated by the deposits. The net spread between the total internal FTP charges and credits is recorded as part of net interest income in the Other segment. The FTP process transfers the corporate interest rate risk exposure to the treasury function within the Other segment, where such exposures are centrally managed. The Company’s internal FTP assumptions and methodologies are reviewed at least annually to ensure that the process is reflective of current market conditions.

The following tables present the operating results and other key financial measures for the individual operating segments as of and for the three and six months ended June 30, 2023 and 2022:



($ in thousands)	Consumer and Business Banking		Commercial Banking		Other		Total
Three Months Ended June 30, 2023






Net interest income (loss) before provision for credit losses	$	307,522	$	263,040	$	(3,816)	$	566,746
Provision for credit losses	5,524		20,476		—		26,000
Noninterest income	27,120		42,538		8,973		78,631
Noninterest expense	107,027		88,333		66,429		261,789
Segment income (loss) before income taxes	222,091		196,769		(61,272)		357,588

Segment net income	$	156,853	$	139,030	$	16,148	$	312,031
As of June 30, 2023

Segment assets	$	18,411,209	$	33,754,957	$	16,366,515	$	68,532,681



($ in thousands)	Consumer and Business Banking		Commercial Banking		Other		Total
Three Months Ended June 30, 2022






Net interest income (loss) before provision for credit losses	$	284,373	$	230,964	$	(42,385)	$	472,952
Provision for credit losses	2,898		10,602		—		13,500
Noninterest income	28,384		48,032		2,028		78,444
Noninterest expense	94,295		81,023		21,542		196,860
Segment income (loss) before income taxes	215,564		187,371		(61,899)		341,036

Segment net income (loss)	$	153,549	$	133,861	$	(29,081)	$	258,329
As of June 30, 2022

Segment assets	$	16,472,373	$	32,256,044	$	13,665,866	$	62,394,283


($ in thousands)	Consumer and Business Banking		Commercial Banking		Other		Total
Six Months Ended June 30, 2023






Net interest income before provision for credit losses	$	611,764	$	499,763	$	55,080	$	1,166,607
Provision for credit losses	20,536		25,464		—		46,000
Noninterest income (loss)	53,122		86,137		(650)		138,609
Noninterest expense	220,850		175,581		83,805		480,236
Segment income (loss) before income taxes	423,500		384,855		(29,375)		778,980

Segment net income	$	299,100	$	273,487	$	61,883	$	634,470
As of June 30, 2023

Segment assets	$	18,411,209	$	33,754,957	$	16,366,515	$	68,532,681


($ in thousands)	Consumer and Business Banking		Commercial Banking		Other		Total
Six Months Ended June 30, 2022






Net interest income (loss) before provision for credit losses	$	497,587	$	439,041	$	(48,063)	$	888,565
Provision for credit losses	6,002		15,498		—		21,500
Noninterest income	53,583		97,109		7,495		158,187
Noninterest expense	190,390		154,418		41,502		386,310
Segment income (loss) before income taxes	354,778		366,234		(82,070)		638,942

Segment net income (loss)	$	252,713	$	261,368	$	(18,100)	$	495,981
As of June 30, 2022

Segment assets	$	16,472,373	$	32,256,044	$	13,665,866	$	62,394,283

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-15

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-URI https://asc.fasb.org//1943274/2147482810/280-10-50-31

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Section 50
-Paragraph 32
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Section 50
-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-42

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Name Accounting Standards Codification
-Section 50
-Paragraph 40
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-40

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-URI https://asc.fasb.org//280/tableOfContent

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-26

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Name Accounting Standards Codification
-Section 50
-Paragraph 34
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-34

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-41

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-21

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-21

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

+ Details

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net income	$ 312,031	$ 258,329	$ 634,470	$ 495,981