EAST WEST BANCORP INC

Credit risk is the risk of loss arising from a borrower’s or counterparty’s failure to meet its contractual obligations. Credit risk exists in many of the Company’s financial assets and exposures including loans, debt securities and certain derivatives. Lending activities represent the Company’s most significant source of credit risk exposure.

The Company manages credit risk through underwriting standards, portfolio diversification, risk rating processes, concentration limits, ongoing credit monitoring, and independent credit review. At the management level, the Credit Risk Management Committee oversees the implementation and administration of credit risk policies and processes across the organization.

A key component of the Company's credit risk management framework is disciplined underwriting and ongoing portfolio monitoring. Management assesses credit quality and portfolio performance through a combination of quantitative and qualitative measures, including credit quality indicators, nonperforming asset levels, delinquency trends, net charge-offs, portfolio concentrations and allowance for credit losses analyses.

Credit Quality

The Company utilizes an internal credit risk rating system to evaluate, monitor, and manage credit risk within the loan portfolio. Additional information regarding the Company’s credit quality indicators and internal credit risk rating methodology is included in Note 6 — Loans Receivable and Allowance for Credit Losses to the Consolidated Financial Statements in this Form 10-Q.

The following table presents the Company’s criticized loans as of September 30, 2026 and December 31, 2025:

(1)Consists of Substandard, Doubtful and Loss categories.

(2)Excludes loans held-for-sale.

Criticized loans increased $212 million or 19%, to $1.4 billion as of September 30, 2026. This increase primarily reflected higher Special Mention C&I loans, and higher classified C&I and CRE loans, partially offset by a decrease in Special Mention CRE loans.

Nonperforming Assets

Nonperforming assets consist of nonaccrual loans held-for-investment, nonperforming loans held-for-sale, OREO and other nonperforming assets. Other nonperforming assets and OREO include repossessed assets and properties, respectively, acquired through foreclosure, or through full or partial satisfaction of loans held-for-investment.

The following table presents nonperforming assets information as of September 30, 2026 and December 31, 2025:

Loans are generally placed on nonaccrual status when they become 90 days past due or when full collection of principal or interest is no longer probable, regardless of delinquency status. This determination is based on an evaluation of the borrower’s financial condition, repayment capacity, collateral protection, and other relevant factors. Additional information regarding the Company’s nonaccrual loan policy is provided in Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Loans Held-for-Investment to the Consolidated Financial Statements in the Company’s 2025 Form 10-K.

Nonaccrual loans increased $9 million or 5%, to $174 million as of September 30, 2026. The increase primarily reflected additional CRE, C&I and residential mortgage loans placed on nonaccrual status, partially offset by C&I charge-offs and payoffs, CRE loans transferred to OREO, and residential mortgage and CRE loans returning to accrual status. As of September 30, 2026, $17 million or 10% of nonaccrual loans were less than 90 days delinquent, compared with $27 million or 16% as of December 31, 2025.

The following table presents accruing loans past due as of September 30, 2026 and December 31, 2025:

(1)There were no accruing loans past due 90 days or more as of both September 30, 2026 and December 31, 2025.

Allowance for Credit Losses

The allowance for credit losses represents management’s estimate of expected credit losses of financial assets measured at amortized cost and certain off-balance sheet credit exposures. Additional information regarding the Company’s allowance for credit losses methodology, significant judgments and assumptions is provided in Item 7. MD&A — Critical Accounting Estimatesand Item 8. Financial Statements — Note 1 — Summary of Significant Accounting Policiesto the Consolidated Financial Statements in the Company’s 2025 Form 10-K, and Note 6 — Loans Receivable and Allowance for Credit Losses to the Consolidated Financial Statements in this Form 10-Q.

The following table presents the allocation of the allowance for credit losses by loan portfolio segments, debt securities and unfunded credit commitments as of September 30, 2026 and December 31, 2025: