EAST WEST BANCORP INC
For the period ended Sep 30, 2025. Filed Nov 7, 2025.
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Sep 30, 2025 · Filed Nov 7, 2025
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Debt Securities
The Company maintains a portfolio of high quality and liquid debt securities with a moderate duration profile. It closely manages the overall portfolio credit, interest rate and liquidity risks. The Company’s debt securities provide:
interest income for earnings and yield enhancement;
funding availability for needs arising during the normal course of business;
the ability to execute interest rate risk management strategies in response to changes in economic or market conditions; and
collateral to support pledging agreements as required and/or to enhance the Company’s borrowing capacity.
While the Company does not generally intend to sell or trade its debt securities, it may sell AFS debt securities in response to changes in the balance sheet and related interest rate risk to meet liquidity, regulatory and strategic requirements.
The following table presents the distribution of the Company’s AFS and HTM debt securities portfolio as of September 30, 2025 and December 31, 2024, and by credit ratings as of September 30, 2025:
| September 30, 2025 · December 31, 2024 · Ratings as of September 30, 2025 (1) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | Amortized Cost | Fair Value | % of Fair Value | Amortized Cost | Fair Value | % of Fair Value | AAA/AA | A | BBB | BB and Lower | No Rating (2) |
| AFS debt securities: | |||||||||||
| U.S. Treasury securities | $875,577 | $856,215 | 7% | $676,300 | $638,265 | 6% | 100% | —% | —% | —% | —% |
| U.S. government agency and U.S. government-sponsored enterprise (“GSE”) debt securities | 288,368 | 256,386 | 2% | 308,220 | 262,587 | 3% | 100% | —% | —% | —% | —% |
| U.S. government agency and U.S. GSE mortgage-backed securities (MBS”) (3) | 10,176,301 | 10,011,866 | 78% | 8,447,303 | 8,164,474 | 75% | 100% | —% | —% | —% | —% |
| Municipal securities | 282,015 | 245,182 | 2% | 287,301 | 250,153 | 2% | 99% | —% | —% | —% | 1% |
| Non-agency MBS | 691,525 | 601,671 | 5% | 808,762 | 692,078 | 6% | 97% | —% | —% | 2% | 1% |
| Corporate debt securities | 596,900 | 500,870 | 4% | 653,500 | 526,166 | 5% | —% | 35% | 62% | 3% | —% |
| Foreign government bonds | 245,978 | 237,019 | 2% | 244,803 | 233,880 | 2% | 46% | 54% | —% | —% | —% |
| Asset-backed securities | 32,649 | 31,943 | 0% | 35,086 | 34,715 | 0% | 30% | 45% | 25% | —% | —% |
| Collateralized loan obligations | — | — | 0% | 44,500 | 44,493 | 1% | —% | —% | —% | —% | —% |
| Total AFS debt securities | $13,189,313 | $12,741,152 | 100% | $11,505,775 | $10,846,811 | 100% | 95% | 2% | 3% | 0% | 0% |
| HTM debt securities: | |||||||||||
| U.S. Treasury securities | $539,255 | $519,800 | 21% | $535,080 | $499,858 | 21% | 100% | —% | —% | —% | —% |
| U.S. government agency and U.S. GSE debt securities | 1,006,602 | 854,097 | 35% | 1,004,479 | 804,220 | 34% | 100% | —% | —% | —% | —% |
| U.S. government agency and U.S. GSE MBS (4) | 1,148,813 | 948,097 | 38% | 1,190,221 | 943,134 | 39% | 100% | —% | —% | —% | —% |
| Municipal securities | 186,012 | 145,368 | 6% | 187,633 | 140,542 | 6% | 100% | —% | —% | —% | —% |
| Total HTM debt securities | $2,880,682 | $2,467,362 | 100% | $2,917,413 | $2,387,754 | 100% | 100% | —% | —% | —% | —% |
| Total debt securities | $16,069,995 | $15,208,514 | $14,423,188 | $13,234,565 | |||||||
(1)Credit ratings represent independent assessments of the credit quality of debt securities. The Company determines the credit rating of a debt security based on the lowest rating assigned by any of the nationally recognized statistical rating organizations (“NRSROs”) that have rated the security. Investment grade debt securities are those with ratings similar to BBB- or above (as defined by NRSROs), and are generally considered by the rating agencies and market participants to be low credit risk. Ratings percentages are allocated based on fair value.
(2)For debt securities not rated by NRSROs, factors such as the priority in collections within the securitization structure, and whether contractual payments have historically been on time are considered in determining the credit risk of such securities.
(3)Includes Government National Mortgage Association (“GNMA”) AFS debt securities totaling $9.1 billion of amortized cost and fair value as of September 30, 2025, and $7.3 billion of amortized cost and $7.2 billion of fair value as of December 31, 2024.
(4)Includes GNMA HTM debt securities totaling $81 million of amortized cost and $66 million of fair value as of September 30, 2025, and $86 million of amortized cost and $68 million of fair value as of December 31, 2024.
The Company’s AFS and HTM debt securities portfolios had an effective duration (defined as the sensitivity of the value of the portfolio to interest rate changes) of 2.2 and 6.5, respectively, as of September 30, 2025, compared with 2.4 and 7.0, respectively, as of December 31, 2024. The AFS debt securities’ effective duration was relatively unchanged, while the HTM debt securities’ effective duration declined slightly due to the downward shift in the yield curve and portfolio seasoning.
Available-for-Sale Debt Securities
AFS debt securities increased $1.9 billion or 17% from December 31, 2024 to $12.7 billion as of September 30, 2025, primarily due to the purchases of GNMA securities. The Company’s AFS debt securities are carried at fair value with non-credit related unrealized gains and losses, net of tax, reported in Other comprehensive income (loss)on the Consolidated Statement of Comprehensive Income. Pre-tax net unrealized losses on AFS debt securities were $445 million as of September 30, 2025, compared with $659 million as of December 31, 2024.
Of the AFS debt securities with gross unrealized losses, substantially all were rated investment grade as of both September 30, 2025 and December 31, 2024. There was $3 million of allowance for credit losses against the AFS debt securities as of September 30, 2025, which was recognized as provision for credit losses for each of the three and nine months ended September 30, 2025, compared with no allowance for credit losses as of December 31, 2024, and no provision for credit losses recognized for each of the three and nine months ended September 30, 2024.
Held-to-Maturity Debt Securities
All HTM debt securities were issued, guaranteed, or supported by the U.S. government or a GSE. Accordingly, the Company applied a zero credit loss assumption for these securities and no allowance for credit loss was recorded as of both September 30, 2025 and December 31, 2024.
For additional information on AFS and HTM securities, see Note 1 — Summary of Significant Accounting Policiesto the Consolidated Financial Statements in the Company’s 2024 Form 10-K and Note 2 — Fair Value Measurement and Fair Value of Financial Instruments and Note 4 — Securities to the Consolidated Financial Statements in this Form 10-Q.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.