EAST WEST BANCORP INC

Note 13 —Business Segments

The Company manages its operations through three reportable operating segments: Consumer and Business Banking, Commercial Banking, and Treasury and Other. These segments are defined based on the customers served, products and services offered and distribution channels. The Company’s chief operating decision maker (“CODM”), the Chairman and Chief Executive Officer, regularly reviews segment operating results, including segment net income and comparisons of actual results to forecasts, to assess performance and allocate resources. Segment results are derived from the Company’s internal management reporting process and include allocations of certain balance sheet and income statement items. Segment results may not necessarily be indicative of the results that would have been achieved had the segments operated as independent entities.

The Consumer and Business Banking segment provides financial products and services primarily to consumer and commercial customers through the Company’s domestic branch network and digital banking platforms. Products and services include consumer and commercial deposits, residential mortgage and home equity loans, commercial loans to small- and medium-sized businesses, wealth management, private banking, treasury management, foreign exchange and interest rate risk hedging solutions.

The Commercial Banking segment, which includes the Company's international branch activities, provides commercial lending, deposit, and other financial services. Lending products include CRE, construction, and commercial business loans, working capital lines of credit, trade finance, letters of credit, affordable housing and asset-based lending, asset-backed finance, project and equipment financing, and loan syndications. Other financial services include treasury management, foreign exchange, and interest rate and commodity risk hedging solutions.

The Treasury and Other segment includes corporate treasury, credit risk management, tax credit investment activities, net funds transfer pricing (“FTP”), inter-segment eliminations, and centrally managed corporate functions and shared services, including risk management, accounting, audit, executive office, corporate communications, human resources, marketing, properties and technology. The segment includes the centralized management of the Company’s funding, liquidity, credit and capital. Shared service costs are allocated to Consumer and Business Banking and Commercial Banking, while certain corporate administrative expenses and amortization of tax credit and CRA investments are generally retained within Treasury and Other. Income tax expense is allocated to the Consumer and Business Banking and Commercial Banking segments based on statutory tax rates applied to each segment’s income before income taxes. Income tax expense or benefit in Treasury and Other represents the residual tax effect after these allocations and includes the impact of the Company’s tax credit investment activities.

The Company uses an internal reporting framework that includes an FTP process and other allocation methodologies. The FTP process allocates funding charges to loans and provides FTP credits for deposits based on internally established FTP rates that consider relevant pricing, maturity, funding characteristics and other factors. The net difference between aggregate FTP charges and credits is reflected in net interest income within Treasury and Other. FTP assumptions and methodologies are reviewed periodically and updated, as appropriate, to reflect changes in funding characteristics, market conditions and management’s assessment of the relative funding value of assets and liabilities.

Segment net interest income reflects interest earned on segment assets less interest incurred on segment liabilities, adjusted for FTP charges and credits. Noninterest income and noninterest expense directly attributable to a business segment are assigned to that segment. Provision for credit losses is allocated to Consumer and Business Banking and Commercial Banking based on segment loan balances and management’s credit risk assumptions, withthe difference between these allocations and the Company’s consolidated provision for credit losses reflected in Treasury and Other. Shared service costs incurred within Treasury and Other are allocated to the Consumer and Business Banking and Commercial Banking segments using estimated usage factors, including full-time equivalent employees, net interest income, and loan and deposit balances. Amortization of tax credit and CRA investmentsand certain corporate administrative expenses outside of shared services are generally retained within Treasury and Other.

During the third quarter of 2026, the Company revised certain methodologies used to measure segment performance. The Company revised its FTP methodology for insured deposits and deposits other than certificates of deposit to provide additional FTP credits reflecting their relative funding characteristics and value. The Company also removed the credit risk component from loan FTP charges and revised its provision allocation methodology to reflect credit risk through the provision for credit losses allocated to Consumer and Business Banking and Commercial Banking. Under the revised methodology, these provisions are based on segment loan balances and management’s credit risk assumptions and do not necessarily represent each segment’s proportionate share of the Company’s consolidated provision for credit losses. The difference between the provisions allocated to Consumer and Business Banking and Commercial Banking and the Company’s consolidated provision for credit losses is reflected in Treasury and Other. Accordingly, the provision or reversal in Treasury and Other does not necessarily reflect credit activity associated with loans attributed to that segment.

For the three months ended September 30, 2026, the revised methodologies increased net interest income allocated to Consumer and Business Banking and Commercial Banking by approximately $34 million and $86 million, respectively, with a corresponding $120 million decrease in Treasury and Other. Provision for credit losses allocated to Consumer and Business Banking and Commercial Banking increased by approximately $7 million and $42 million, respectively, with a corresponding $49 million reversal of credit losses allocated to Treasury and Other. As a result, segment net income increased by approximately $20 million and $31 million for Consumer and Business Banking and Commercial Banking, respectively, and decreased by approximately $51 million for Treasury and Other. These changes reflect revisions to the Company’s internal allocation methodologies and do not, by themselves, indicate changes in the underlying credit performance of the respective segments. Because the revised methodologies were applied beginning in the third quarter of 2026, the effects for the nine months ended September 30, 2026 are the same as those for the three months ended September 30, 2026.

The revised methodologies affected the allocation of net interest income, provision for credit losses and related income tax expense among the Company’s reportable segments but had no effect on the Company’s consolidated results. The revisions changed the basis used to measure segment performance and affect comparability with prior periods but did not change the Company’s reportable segments or segment net income as the measure of segment performance reviewed by the CODM. Prior-period segment information has not been recast to reflect the revised measurement methodologies.

The following tables present the operating results and other key financial measures for the Company’s reportable operating segments as of and for the three and nine months ended September 30, 2026 and 2025:

(1)Primarily generated from the Company’s debt securities portfolio. See Note 4 —Securities to the Consolidated Financial Statements in this Form 10-Q for additional information regarding the Company’s debt securities portfolio.

(2)Consumer and Business Banking other noninterest expense primarily consists of allocated shared service costs, occupancy and equipment expense, and other operating expense. Commercial Banking other noninterest expense primarily consists of allocated shared service costs, deposit account expense, occupancy and equipment expense and other operating expense. Other noninterest expense for Treasury and Other primarily consists of amortization of tax credit and CRA investments and other operating expense, net of any shared service costs allocated to other segments.

(3)Effective January 1, 2026, certain loans previously reflected in Treasury and Other were reallocated to the Commercial Banking and Consumer and Business Banking segments to align with the Company’s current internal management reporting.

(4)Prior-period deposit balances have been reclassified to conform with the current-period presentation following a change in the Company’s internal deposit allocation methodology.