EAST WEST BANCORP INC

Deposits are the Company’s primary source of funding, the cost of which has a significant impact on the Company’s net interest income and net interest margin. Additional funding is provided by short- and long-term borrowings, and long-term debt. See Item 7. MD&A — Risk Management — Liquidity Risk Management — Liquidityin this Form 10-K for a discussion of the Company’s liquidity management. The following table summarizes the Company’s sources of funds as of December 31, 2023 and 2022:

NM — Not meaningful.

Deposits

The Company’s strategy is to grow and retain relationship-based deposits to provide a stable and low-cost source of funding and liquidity. Accordingly, the Company offers a wide variety of deposit products to meet the needs of its consumer and commercial customers. As a result, we believe our deposit base is seasoned, stable and well-diversified. The following chart presents the Company’s deposits by customer segment as of December 31, 2023 and 2022.

Total deposits were $56.1 billion as of December 31, 2023, a slight increase of $125 million from $56.0 billion as of December 31, 2022. The increase in deposits was primarily driven by an increase in customer deposits, partially offset by a decrease in brokered deposits. The Company paid down a portion of its brokered deposits, which decreased the percentage of brokered deposits to 3% of total deposits as of December 31, 2023, compared with 6% as of December 31, 2022. Noninterest-bearing demand deposits decreased $5.5 billion year-over-year and comprised 28% and 38% of total deposits as of December 31, 2023 and 2022, respectively. Time deposits increased $4.7 billion year-over-year and comprised 32% and 24% of total deposits as of December 31, 2023 and 2022, respectively. The shift in deposit mix is primarily due to customer migration to higher yielding deposit products in response to the higher interest rate environment.

As of December 31, 2023, customer deposits of $52.9 billion were held in the Company’s domestic offices and $1.6 billion were held in each of the subsidiary bank in China and the branch in Hong Kong. Customer deposit accounts in the U.S. offices are insured by the FDIC for up to $250,000. The deposits in the Company’s subsidiary bank in China and the branch in Hong Kong are insured by each jurisdiction’s deposit insurance authority for up to 500,000 RMB and 500,000 HKD, respectively. Uninsured deposits represent the portion of deposit accounts that exceed the insurance limits of the FDIC and each foreign jurisdiction. The Company calculates its uninsured deposits based on the methodologies and assumptions used for regulatory reporting.

The following table presents total uninsured deposits by location as of December 31, 2023 and 2022:

Uninsured time deposits totaled $10.4 billion as of December 31, 2023. The following table presents the maturity distribution for uninsured customer time deposits by location as of December 31, 2023:

Management believes that presenting uninsured domestic deposits as reported on Schedule RC-OM item 2 of the Bank’s Call Report, with an adjustment to exclude collateralized andaffiliate deposits provides a more accurate view of the deposits at risk, given that collateralized deposits are secured, and affiliate deposits are not customer-facing and are eliminated in consolidation. The Company’s domestic uninsured deposits, excluding collateralized and affiliate deposits, ratio improved to 42% as of December 31, 2023, compared with 51% as of December 31, 2022. The Company is a participant in the IntraFi Network, a network that offers deposit placement services such as CDARS and ICS, that qualify large deposits for FDIC insurance. These reciprocal deposit structures provide protection to depositors by fully insuring deposits with other network banks and give the Company additional funding stability. The increasing use of these products during 2023 contributed to the improvement in the uninsured deposits, excluding collateralized and affiliate deposits ratio.

The following table summarizes the Company’s uninsured domestic deposit balances reported on Schedule RC-OM item 2 of the Bank’s Call Report as of December 31, 2023 and 2022, after certain adjustments:

Additional information regarding the impact of deposits on net interest income, with a comparison of average deposit balances and rates, is provided in Item 7 — MD&A — Results of Operations — Net Interest Income in this Form 10-K.

Other Sources of Funding

The Company had $4.5 billion of short-term borrowings outstanding as of December 31, 2023, consisting of funds borrowed from the BTFP in March 2023. These borrowings were more cost effective than other borrowing sources and have a positive carry as cash placed at the Federal Reserve Bank. There were no short-term borrowings outstanding as of December 31, 2022. Refer to Note 10 — Short-Term Borrowings and Long-Term Debt to the Consolidated Financial Statements in this Form 10-K for additional information on the BTFP and the Company’s related borrowings.

Repurchase agreements were $300 million as of December 31, 2022. The Company extinguished $300 million of repurchase agreements during the first quarter of 2023, and recorded $4 million of charges related to the extinguishment of repurchase agreements. For additional details, see Note 3 — Assets Purchased under Resale Agreements and Sold under Repurchase Agreements to the Consolidated Financial Statements in this Form 10-K.

The Company uses long-term debt to provide funding to acquire interest-earning assets, and to enhance liquidity and regulatory capital adequacy. Long-term debt consists of junior subordinated debt, which qualifies as Tier 2 capital for regulatory capital purposes. Refer to Note 10 — Short-Term Borrowings and Long-Term Debt and Note 19 — Subsequent Eventsto the Consolidated Financial Statements in this Form 10-K for additional information on the junior subordinated debt.