EAST WEST BANCORP INC
For the period ended Sep 30, 2026. Filed Nov 6, 2026.
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Sep 30, 2026 · Filed Nov 6, 2026
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Debt Securities
The Company maintains a portfolio of high quality and liquid debt securities with a moderate duration profile and actively manages its overall portfolio credit, interest rate and liquidity risks. The Company’s debt securities generate interest income, provide contingent liquidity and funding flexibility, support asset-liability and interest rate risk management, and serve as collateral to enhance borrowing capacity. While the Company generally does not sell or trade its debt securities, it may sell AFS debt securities to manage liquidity, interest rate risk, regulatory requirements, or other strategic objectives.
The following table presents the distribution of the Company’s AFS and HTM debt securities portfolio by amortized cost and fair value as of September 30, 2026 and December 31, 2025, and by credit ratings as of September 30, 2026:
| September 30, 2026 · December 31, 2025 · Ratings as of September 30, 2026 (1) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | Amortized Cost | Fair Value | % of Fair Value | Amortized Cost | Fair Value | % of Fair Value | AAA/AA | A | BBB | BB and Lower |
| AFS debt securities: | ||||||||||
| U.S. Treasury securities | $1,697,635 | $1,649,102 | 11% | $1,010,053 | $993,913 | 7% | 100% | —% | —% | —% |
| U.S. government agency and U.S. government-sponsored enterprise debt securities | 285,602 | 242,951 | 2% | 287,687 | 257,654 | 2% | 100% | —% | —% | —% |
| U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities (2) | 12,704,065 | 11,933,032 | 78% | 10,544,278 | 10,397,991 | 79% | 100% | —% | —% | —% |
| Municipal securities | 268,488 | 216,354 | 1% | 277,275 | 243,102 | 2% | 100% | —% | —% | —% |
| Non-agency mortgage-backed securities | 602,934 | 503,670 | 3% | 667,195 | 584,735 | 4% | 97% | —% | 3% | —% |
| Corporate debt securities | 484,704 | 384,202 | 3% | 554,158 | 464,981 | 4% | —% | 53% | 43% | 4% |
| Foreign government bonds | 267,681 | 256,273 | 2% | 247,249 | 238,455 | 2% | 42% | 58% | —% | —% |
| Asset-backed securities | — | — | —% | 31,886 | 31,389 | 0% | —% | —% | —% | —% |
| Total AFS debt securities | $16,311,109 | $15,185,584 | 100% | $13,619,781 | $13,212,220 | 100% | 97% | 2% | 1% | —% |
| HTM debt securities: | ||||||||||
| U.S. Treasury securities | $544,885 | $530,749 | 22% | $540,666 | $524,887 | 21% | 100% | —% | —% | —% |
| U.S. government agency and U.S. government-sponsored enterprise debt securities | 1,009,192 | 808,133 | 35% | 1,007,055 | 860,134 | 35% | 100% | —% | —% | —% |
| U.S. government agency and U.S. government-sponsored enterprise mortgage-backed securities (3) | 1,097,007 | 847,670 | 37% | 1,136,874 | 943,227 | 38% | 100% | —% | —% | —% |
| Municipal securities | 183,626 | 129,120 | 6% | 185,463 | 151,498 | 6% | 100% | —% | —% | —% |
| Total HTM debt securities | $2,834,710 | $2,315,672 | 100% | $2,870,058 | $2,479,746 | 100% | 100% | —% | —% | —% |
| Total debt securities | $19,145,819 | $17,501,256 | $16,489,839 | $15,691,966 | ||||||
(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)Includes Government National Mortgage Association (“GNMA”) AFS debt securities totaling $10.5 billion of amortized cost and $10.0 billion of fair value as of September 30, 2026, and amortized cost and fair value both totaling $9.6 billion as of December 31, 2025.
(3)Includes GNMA HTM debt securities totaling $74 million of amortized cost and $57 million of fair value as of September 30, 2026, and $79 million of amortized cost and $65 million of fair value as of December 31, 2025.
The effective duration (defined as the sensitivity of the value of the portfolio to interest rate changes) of the Company’s AFS and HTM debt securities portfolios was 4.4 years and 5.1 years, respectively, as of September 30, 2026, compared with 3.0 years and 5.9 years, respectively, as of December 31, 2025. The increase in the effective duration of the AFS debt securities primarily reflected purchases of fixed-rate AFS securities, sales of floating-rate AFS securities, and duration extension resulting from higher interest rates during the period. The decrease in the HTM debt securities’ effective duration was primarily attributable to portfolio run-off.
Available-for-Sale Debt Securities
AFS debt securities increased $2.0 billion or 15%, from December 31, 2025, to $15.2 billion as of September 30, 2026. The increase primarily reflected purchases of agency mortgage-backed securities issued or guaranteed by U.S. government agencies and government-sponsored enterprises, as well as purchases of U.S. Treasury securities. AFS debt securities are carried at fair value with non-credit related unrealized gains and losses, net of tax, reported in Other comprehensive (loss) incomeon the Consolidated Statement of Comprehensive Income. Pre-tax net unrealized losses on AFS debt securities were $1.1 billion as of September 30, 2026, compared with $406 million as of December 31, 2025, primarily reflecting the impact of higher market interest rates on the fair value of fixed-rate debt securities during the period.
Substantially all AFS debt securities in an unrealized loss position were rated investment grade as of both September 30, 2026 and December 31, 2025. Based on the Company's evaluation, the unrealized losses were primarily attributable to changes in market interest rates rather than credit deterioration. For additional information regarding thepolicies, methodologies and judgments used to determinethe allowance for credit losses on AFS debt securities, see 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 4 — Securities to the Consolidated Financial Statements in this Form 10-Q.
Held-to-Maturity Debt Securities
All HTM debt securities were issued, guaranteed, or supported by U.S. government entities, agencies, or government-sponsored enterprises. Accordingly, the Company applied a zero credit loss assumption to these securities and recorded no allowance for credit losses as of both September 30, 2026 and December 31, 2025.
For additional information regarding the Company’s debt securities portfolio, see Note 1 — Summary of Significant Accounting Policiesto the Consolidated Financial Statements in the Company’s 2025 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.
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