[Forward-Looking Statements](index=4&type=section&id=FORWARD-LOOKING%20STATEMENTS) Forward-looking statements are based on current assumptions and subject to inherent uncertainties and risks that could cause actual results to differ materially - Forward-looking statements are subject to known and unknown risks and uncertainties, and readers **should not place undue reliance on them**[10](index=10&type=chunk) - Key risk factors include changes in **local, regional, and global business, economic, and political conditions**, soundness of other financial institutions, changes in laws or regulatory environment, and changes in interest rates[11](index=11&type=chunk) [PART I — FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This part presents the unaudited consolidated financial statements and detailed notes for the quarterly period ended March 31, 2025 [Item 1. Consolidated Financial Statements](index=6&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This item provides the unaudited consolidated financial statements, offering a snapshot of the company's financial position and performance [Consolidated Balance Sheets (Unaudited)](index=6&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) The balance sheets detail the company's financial position, showing a slight increase in total assets driven by AFS debt securities and loans Consolidated Balance Sheet Highlights | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Total Assets | 76,165,013 | 75,976,475 | | Cash and cash equivalents | 3,448,284 | 5,250,742 | | AFS Debt Securities | 12,384,912 | 10,846,811 | | Loans held-for-investment (net) | 53,517,878 | 53,024,585 | | Total Deposits | 63,052,105 | 63,175,023 | | Total Liabilities | 68,235,548 | 68,253,421 | | Total Stockholders' Equity | 7,929,465 | 7,723,054 | [Consolidated Statement of Income (Unaudited)](index=7&type=section&id=Consolidated%20Statement%20of%20Income%20(Unaudited)) The income statement shows a 2% year-over-year increase in net income, driven by higher net interest and noninterest income Consolidated Income Statement Highlights | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Total interest and dividend income | 1,031,802 | 1,023,617 | | Total interest expense | 431,601 | 458,478 | | Net interest income before provision | 600,201 | 565,139 | | Provision for credit losses | 49,000 | 25,000 | | Total noninterest income | 92,102 | 78,487 | | Total noninterest expense | 252,148 | 246,374 | | Income before income taxes | 391,155 | 372,252 | | Income tax expense | 100,885 | 87,177 | | Net Income | 290,270 | 285,075 | | Basic EPS | 2.10 | 2.04 | | Diluted EPS | 2.08 | 2.03 | [Consolidated Statement of Comprehensive Income (Unaudited)](index=8&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income%20(Unaudited)) Comprehensive income increased significantly due to positive net changes in unrealized gains on AFS debt securities and cash flow hedges Consolidated Comprehensive Income Highlights | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Net income | 290,270 | 285,075 | | Net changes in unrealized gains (losses) on AFS debt securities | 57,285 | (2,317) | | Net changes in unrealized gains (losses) on cash flow hedges | 31,280 | (46,330) | | Other comprehensive income (loss) | 90,245 | (42,137) | | Comprehensive Income | 380,515 | 242,938 | [Consolidated Statement of Changes in Stockholders' Equity (Unaudited)](index=9&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Stockholders'%20Equity%20(Unaudited)) Total stockholders' equity increased by $206 million, driven by net income and other comprehensive income, offset by share repurchases Changes in Stockholders' Equity | Metric | Amount ($ in thousands) | | :--- | :--- | | Balance, January 1, 2025 | 7,723,054 | | Net income | 290,270 | | Other comprehensive income | 90,245 | | Issuance of common stock | 13,186 | | Repurchase of common stock (stock compensation) | (17,747) | | Repurchase of common stock (repurchase program) | (85,442) | | Cash dividends on common stock | (84,101) | | Balance, March 31, 2025 | 7,929,465 | [Consolidated Statement of Cash Flows (Unaudited)](index=10&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows%20(Unaudited)) The cash flow statement details a net decrease in cash, with increased cash from operations offset by higher usage in investing activities Consolidated Cash Flow Highlights | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | 277,886 | 266,239 | | Net cash used in investing activities | (2,035,470) | (1,871,576) | | Net cash (used in) provided by financing activities | (45,677) | 1,201,987 | | Net decrease in cash and cash equivalents | (1,802,458) | (404,183) | | Cash and cash equivalents, end of period | 3,448,284 | 4,210,801 | [Notes to Consolidated Financial Statements (Unaudited)](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes provide crucial details on the basis of presentation, accounting policies, and specific financial instruments [Note 1 — Basis of Presentation and Current Accounting Developments](index=12&type=section&id=Note%201%20%E2%80%94%20Basis%20of%20Presentation%20and%20Current%20Accounting%20Developments) The interim financial statements are prepared per U.S. GAAP and should be read in conjunction with the 2024 Form 10-K - The interim financial statements are presented in accordance with U.S. GAAP and should be read in conjunction with the **2024 Form 10-K**[33](index=33&type=chunk) - New accounting pronouncements adopted on January 1, 2025 (ASU 2023-05 and ASU 2024-02) **did not have a material impact** on the Consolidated Financial Statements[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 2 — Fair Value Measurement and Fair Value of Financial Instruments](index=12&type=section&id=Note%202%20%E2%80%94%20Fair%20Value%20Measurement%20and%20Fair%20Value%20of%20Financial%20Instruments) This note details fair value measurement practices, categorizing financial instruments into Level 1, 2, or 3 based on input observability - The company categorizes assets and liabilities into three levels based on the fair value hierarchy, with **Level 1** for quoted prices in active markets, **Level 2** for observable inputs, and **Level 3** for unobservable inputs[35](index=35&type=chunk)[40](index=40&type=chunk) Assets Measured at Fair Value on a Recurring Basis | Asset Category | Level 1 ($ in thousands) | Level 2 ($ in thousands) | Level 3 ($ in thousands) | Total Fair Value ($ in thousands) | | :--- | :--- | :--- | :--- | :--- | | AFS debt securities | 930,981 | 11,453,931 | — | 12,384,912 | | Affordable housing partnership, tax credit and CRA investments, net (Equity securities) | 21,280 | 4,235 | — | 25,515 | | Other assets (Equity securities) | 630 | — | — | 630 | | Gross derivative assets | — | 513,479 | 418 | 513,897 | Liabilities Measured at Fair Value on a Recurring Basis | Liability Category | Level 1 ($ in thousands) | Level 2 ($ in thousands) | Level 3 ($ in thousands) | Total Fair Value ($ in thousands) | | :--- | :--- | :--- | :--- | :--- | | Gross derivative liabilities | — | 448,965 | 15,119 | 464,084 | - **Level 3** fair value measurements for recurring items primarily consist of warrant equity contracts issued by private companies and liability-classified contingently issuable shares related to the Rayliant investment[51](index=51&type=chunk) [Note 3 — Securities Purchased under Resale Agreements and Sold under Repurchase Agreements](index=22&type=section&id=Note%203%20%E2%80%94%20Securities%20Purchased%20under%20Resale%20Agreements%20and%20Sold%20under%20Repurchase%20Agreements) This note details resale and repurchase agreements, highlighting their role in credit risk management and balance sheet offsetting - Gross securities purchased under resale agreements were **$425 million** as of both March 31, 2025, and December 31, 2024[69](index=69&type=chunk) - Overnight gross securities sold under repurchase agreements with unrelated counterparties were **$270 million** as of March 31, 2025, with no such agreements as of December 31, 2024[70](index=70&type=chunk) - The company manages credit exposure from these transactions using **master netting agreements and collateral arrangements**, and did not hold any reserves for credit impairment for these agreements[68](index=68&type=chunk) [Note 4 — Securities](index=24&type=section&id=Note%204%20%E2%80%94%20Securities) This note details the AFS and HTM debt securities portfolios, showing a $1.5 billion increase in AFS securities while HTM remained stable AFS Debt Securities | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Amortized Cost | 12,962,469 | 11,505,775 | | Gross Unrealized Gains | 27,372 | 15,273 | | Gross Unrealized Losses | (604,929) | (674,237) | | Fair Value | 12,384,912 | 10,846,811 | HTM Debt Securities | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Amortized Cost | 2,905,341 | 2,917,413 | | Gross Unrealized Losses | (470,049) | (529,659) | | Fair Value | 2,435,292 | 2,387,754 | - As of March 31, 2025, the company had **536 AFS debt securities** in a gross unrealized loss position, primarily due to interest rate movement and spread widening, but **no credit impairment was recognized**[84](index=84&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) [Note 5 — Derivatives](index=30&type=section&id=Note%205%20%E2%80%94%20Derivatives) This note describes the use of derivative instruments to manage interest rate and foreign currency risks and to assist customers - The company uses **interest rate swaps and collars** as cash flow hedges to manage variability in interest received on floating-rate commercial loans[102](index=102&type=chunk) Derivative Financial Instruments | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Notional Amount (Cash flow hedges) | 4,250,000 | 5,250,000 | | Fair Value Assets (Cash flow hedges) | 25,982 | 5,647 | | Fair Value Liabilities (Cash flow hedges) | 12,153 | 35,211 | - Derivatives not designated as hedging instruments include interest rate, commodity, and foreign exchange derivatives entered into with customers and **offsetting economic hedges** with third-party financial institutions[105](index=105&type=chunk) [Note 6 — Loans Receivable and Allowance for Credit Losses](index=37&type=section&id=Note%206%20%E2%80%94%20Loans%20Receivable%20and%20Allowance%20for%20Credit%20Losses) This note details the loan portfolio composition, credit quality, and a $33 million increase in the allowance for credit losses Loans Held-for-Investment | Loan Type | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Commercial & Industrial (C&I) | 17,460,744 | 17,397,158 | | Total Commercial Real Estate (CRE) | 20,529,960 | 20,274,944 | | Total Residential Mortgage | 16,211,399 | 15,987,074 | | Total Loans Held-for-Investment | 54,252,734 | 53,726,637 | Allowance for Credit Losses | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Allowance for loan losses | 734,856 | 702,052 | | Allowance for unfunded credit commitments | 40,464 | 39,526 | | Total allowance for credit losses | 775,320 | 741,578 | - The increase in the allowance for credit losses was primarily driven by **net loan growth, qualitative risk assessment, and a cautious economic outlook** reflecting concerns about inflation and high interest rates[157](index=157&type=chunk) [Note 7 — Affordable Housing Partnership, Tax Credit and Community Reinvestment Act Investments, Net](index=50&type=section&id=Note%207%20%E2%80%94%20Affordable%20Housing%20Partnership%2C%20Tax%20Credit%20and%20Community%20Reinvestment%20Act%20Investments%2C%20Net) This note details investments in affordable housing, tax credit, and CRA projects, which qualify for CRA consideration and tax credits - The company invests in affordable housing projects and other tax credit initiatives for CRA purposes, utilizing the **proportional amortization method (PAM)** for eligible investments[161](index=161&type=chunk)[163](index=163&type=chunk) Investment Balances | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Total Assets | 930,058 | 926,640 | | Total Unfunded Commitments | 382,583 | 407,864 | Tax Credits and Amortization | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Total tax credits and benefits | 49,300 | 58,162 | | Total amortization | 44,012 | 50,377 | [Note 8 — Goodwill](index=53&type=section&id=Note%208%20%E2%80%94%20Goodwill) Total goodwill remained unchanged at $466 million, with a qualitative assessment in Q1 2025 concluding no impairment existed - Total goodwill was **$466 million** as of both March 31, 2025, and December 31, 2024, with **no impairment identified** after a qualitative assessment in Q1 2025[169](index=169&type=chunk) - The company's investment in Rayliant included **$101 million of equity method goodwill** as of March 31, 2025[170](index=170&type=chunk) [Note 9 — Federal Home Loan Bank Advances and Long-Term Debt](index=54&type=section&id=Note%209%20%E2%80%94%20Federal%20Home%20Loan%20Bank%20Advances%20and%20Long-Term%20Debt) FHLB advances remained at $3.5 billion, with available borrowing capacity totaling $10.3 billion as of March 31, 2025 Debt Balances | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Junior subordinated debt | 32,079 | 32,001 | | FHLB advances | 3,500,000 | 3,500,000 | - The Bank's available borrowing capacity from FHLB advances totaled **$10.3 billion** as of March 31, 2025, secured by real estate loans[173](index=173&type=chunk) [Note 10 — Commitments and Contingencies](index=54&type=section&id=Note%2010%20%E2%80%94%20Commitments%20and%20Contingencies) This note outlines credit-related commitments totaling $12.04 billion, with an estimated loss exposure of $40 million Credit-Related Commitments | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Loan commitments | 9,107,690 | 9,128,040 | | Commercial letters of credit and SBLCs | 2,932,661 | 2,917,029 | | Total | 12,040,351 | 12,045,069 | - The estimated exposure to loss from these commitments is included in the allowance for unfunded credit commitments, totaling **$40 million** as of March 31, 2025[178](index=178&type=chunk) - The company is a party to various legal actions but does not believe any pending proceedings would have a **material adverse effect** on its financial condition[181](index=181&type=chunk)[182](index=182&type=chunk) [Note 11 — Stock Compensation Plans](index=56&type=section&id=Note%2011%20%E2%80%94%20Stock%20Compensation%20Plans) This note details stock compensation plans, with total costs of $13.2 million for Q1 2025 and $85 million of unrecognized costs Stock Compensation Costs | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Stock compensation costs | 13,186 | 12,989 | | Related net tax benefits | 2,655 | 783 | - As of March 31, 2025, there was **$58 million** of unrecognized compensation costs for time-based RSUs and **$27 million** for performance-based RSUs[186](index=186&type=chunk) [Note 12 — Stockholders' Equity and Earnings Per Share](index=57&type=section&id=Note%2012%20%E2%80%94%20Stockholders'%20Equity%20and%20Earnings%20Per%20Share) Diluted EPS increased to $2.08, and the company authorized an additional $300 million for stock repurchases Earnings Per Share | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Basic EPS | $2.10 | $2.04 | | Diluted EPS | $2.08 | $2.03 | - The company's Board of Directors authorized an additional **$300 million** for common stock repurchases on January 22, 2025, valid until December 31, 2026[189](index=189&type=chunk)[378](index=378&type=chunk) [Note 13 — Accumulated Other Comprehensive Income (Loss)](index=57&type=section&id=Note%2013%20%E2%80%94%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) AOCI improved from a loss of $(585) million to $(495) million, driven by unrealized gains on debt securities and cash flow hedges Changes in AOCI | Metric | Amount ($ in thousands) | | :--- | :--- | | Balance, January 1, 2025 | (585,260) | | Net unrealized gains (losses) arising during the period (Debt Securities) | 57,377 | | Net unrealized gains (losses) arising during the period (Cash Flow Hedges) | 26,325 | | Net unrealized gains (losses) arising during the period (Foreign Currency Translation) | (1,012) | | Amounts reclassified from AOCI | 7,555 | | Balance, March 31, 2025 | (495,015) | - The net change in AOCI for the three months ended March 31, 2025, was a **gain of $90.245 million**, a significant improvement compared to a loss of $42.137 million in the same period of 2024[190](index=190&type=chunk) [Note 14 — Business Segments](index=58&type=section&id=Note%2014%20%E2%80%94%20Business%20Segments) This note describes the company's three reportable operating segments and the internal funds transfer pricing process used for reporting - The company operates through three segments: **Consumer and Business Banking, Commercial Banking, and Treasury and Other**, defined by customer type and services[194](index=194&type=chunk) - The internal **funds transfer pricing (FTP)** process charges a cost to fund loans and allocates credits for funds from deposits, using internal FTP rates to measure segment profitability[198](index=198&type=chunk) Income (Loss) Before Income Taxes by Segment | Segment | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Consumer and Business Banking | 175,177 | 202,577 | | Commercial Banking | 162,296 | 205,135 | | Treasury and Other | 53,682 | (35,460) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=60&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This item provides a comprehensive discussion of the company's results of operations, financial condition, liquidity, and capital resources [Overview](index=63&type=section&id=Overview) East West Bancorp is a bank holding company focused on the U.S. and Asia, monitoring potential impacts of new tariffs and regulations - East West Bancorp, Inc. is a bank holding company with **$76.2 billion in total assets** as of March 31, 2025, focusing on U.S. and Asia markets through consumer, commercial, and treasury segments[205](index=205&type=chunk) - Recent economic developments, including **new tariffs**, have raised concerns about economic growth, inflation, and market volatility, potentially affecting loan demand and performance[206](index=206&type=chunk) - The company is monitoring **California Climate Reporting Laws** (SB 253, SB 261, SB 219) and SEC climate disclosure rules, engaging a third-party firm for implementation[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) [Financial Review](index=65&type=section&id=Financial%20Review) The financial review highlights a 2% year-over-year increase in net income to $290 million, driven by higher revenue and improved efficiency Financial Highlights | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Net interest income before provision for credit losses | 600,201 | 565,139 | | Noninterest income | 92,102 | 78,487 | | Total revenue | 692,303 | 643,626 | | Net income | 290,270 | 285,075 | | Diluted earnings per share | 2.08 | 2.03 | | Return on average assets (ROAA) | 1.56 % | 1.60 % | | Efficiency ratio | 36.42 % | 38.28 % | - Total assets reached **$76.2 billion** as of March 31, 2025, an increase of $189 million from December 31, 2024, driven by AFS debt securities and net loans[220](index=220&type=chunk) - Stockholders' equity was **$7.9 billion** as of March 31, 2025, up $206 million or 3% from December 31, 2024, contributing to a book value per share of $57.54[220](index=220&type=chunk) [Results of Operations](index=66&type=section&id=Results%20of%20Operations) This section analyzes operating results, focusing on the drivers behind the 2% increase in net income for Q1 2025 compared to Q1 2024 [Net Interest Income](index=66&type=section&id=Net%20Interest%20Income) Net interest income increased by 6% to $600 million, and net interest margin increased by one basis point to 3.35% for Q1 2025 Net Interest Income and Margin | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net interest income before provision for credit losses ($ in thousands) | 600,201 | 565,139 | | Net interest margin | 3.35 % | 3.34 % | - Average interest-earning assets increased by **$4.6 billion (7%)** year-over-year to $72.7 billion, driven by a $5.2 billion increase in AFS debt securities and $1.4 billion in loan growth[223](index=223&type=chunk) - The average cost of funds **decreased by 33 basis points** year-over-year to 2.64% for Q1 2025, mainly due to a 30 basis point decrease in the average cost of deposits[229](index=229&type=chunk)[230](index=230&type=chunk) [Noninterest Income](index=71&type=section&id=Noninterest%20Income) Noninterest income increased by 17% to $92 million, driven by higher wealth management, foreign exchange, and lending fees Noninterest Income Breakdown | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Commercial and consumer deposit-related fees | 27,075 | 24,948 | | Lending and loan servicing fees | 26,230 | 22,925 | | Foreign exchange income | 15,837 | 11,469 | | Wealth management fees | 13,679 | 8,637 | | Total noninterest income | 92,102 | 78,487 | - The increase in wealth management fees was due to **higher customer demand** for products like fixed-rate bonds and fixed income annuities[240](index=240&type=chunk) [Noninterest Expense](index=71&type=section&id=Noninterest%20Expense) Noninterest expense increased by 2% to $252 million, mainly due to higher operating expenses and compensation and benefits Noninterest Expense Breakdown | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Compensation and employee benefits | 146,435 | 141,812 | | Deposit account expense | 9,042 | 12,188 | | Computer and software related expenses | 13,314 | 11,344 | | Deposit insurance premiums and regulatory assessments | 10,385 | 19,649 | | Other operating expense | 41,541 | 32,458 | | Amortization of tax credit and CRA investments | 15,742 | 13,207 | | Total noninterest expense | 252,148 | 246,374 | - The decrease in deposit insurance premiums was primarily due to a **lower FDIC special assessment charge** ($1 million in Q1 2025 vs. $10 million in Q1 2024)[245](index=245&type=chunk) [Income Taxes](index=72&type=section&id=Income%20Taxes) Income tax expense increased by 16% to $101 million, with the effective tax rate rising to 25.8% from 23.4% Income Tax Analysis | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Income before income taxes | 391,155 | 372,252 | | Income tax expense | 100,885 | 87,177 | | Effective tax rate | 25.8 % | 23.4 % | [Operating Segment Results](index=72&type=section&id=Operating%20Segment%20Results) This section breaks down financial performance by operating segment, highlighting varying contributions and changes in net income - **Consumer and Business Banking** net income decreased by 14% year-over-year, primarily due to lower net interest income from decreased interest rates[253](index=253&type=chunk) - **Commercial Banking** net income decreased by 21% year-over-year, mainly due to a decline in net interest income and an increased provision for credit losses[255](index=255&type=chunk) - **Treasury and Other** segment income before income taxes significantly increased by $89 million, primarily due to a $98 million increase in net interest income[258](index=258&type=chunk) [Balance Sheet Analysis](index=75&type=section&id=Balance%20Sheet%20Analysis) This section analyzes key balance sheet components, including debt securities, loans, deposits, and regulatory capital ratios [Debt Securities](index=75&type=section&id=Debt%20Securities) The debt securities portfolio is managed for interest income and liquidity, with AFS securities increasing 14% to $12.4 billion - AFS debt securities increased by **$1.5 billion (14%)** from December 31, 2024, to $12.4 billion, mainly due to purchases of GNMA securities[267](index=267&type=chunk) - Pre-tax net unrealized losses on AFS debt securities were **$578 million** as of March 31, 2025, an improvement from $659 million as of December 31, 2024[267](index=267&type=chunk) - All HTM debt securities are issued, guaranteed, or supported by the U.S. government, resulting in a **zero credit loss assumption** and no allowance for credit losses[269](index=269&type=chunk) [Loan Portfolio](index=78&type=section&id=Loan%20Portfolio) The diversified loan portfolio increased by 1% to $54.25 billion, with commercial loans constituting 70% of the total Loan Portfolio Composition | Loan Type | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Commercial & Industrial (C&I) | 17,460,744 | 17,397,158 | | Total Commercial Real Estate (CRE) | 20,529,960 | 20,274,944 | | Total Consumer | 16,262,030 | 16,054,535 | | Total Loans Held-for-Investment | 54,252,734 | 53,726,637 | - The C&I loan portfolio is **well-diversified by industry**, with real estate investment & management, capital call lending, and media & entertainment being the largest sectors[276](index=276&type=chunk) - The total CRE loan portfolio has a weighted-average LTV ratio of **49%** and is primarily concentrated in **California (68%)**[277](index=277&type=chunk)[279](index=279&type=chunk) [Foreign Outstandings](index=84&type=section&id=Foreign%20Outstandings) International branches in Hong Kong and China hold significant financial assets, each representing 3% of total consolidated assets Foreign Branch Assets | Branch | Cash and cash equivalents ($ in thousands) | AFS debt securities ($ in thousands) | Loans held-for-investment ($ in thousands) | Total Assets ($ in thousands) | % of Total Consolidated Assets | | :--- | :--- | :--- | :--- | :--- | :--- | | Hong Kong | 752,879 | 741,528 | 964,130 | 2,465,208 | 3% | | China Subsidiary Bank | 652,847 | 126,572 | 1,172,225 | 1,977,880 | 3% | Foreign Branch Revenue | Branch | Total Revenue ($ in thousands) | % of Total Consolidated Revenue | | :--- | :--- | :--- | | Hong Kong | 17,813 | 3% | | China Subsidiary Bank | 7,752 | 1% | [Capital](index=84&type=section&id=Capital) The company maintains a strong capital base, with stockholders' equity increasing by 3% to $7.9 billion as of March 31, 2025 - Stockholders' equity increased by **$206 million (3%)** to $7.9 billion as of March 31, 2025, primarily due to net income and other comprehensive income[292](index=292&type=chunk) - The company's Board of Directors authorized an additional **$300 million** for common stock repurchases on January 22, 2025[293](index=293&type=chunk) - The company paid a quarterly common stock cash dividend of **$0.60 per share** in Q1 2025, up from $0.55 per share in Q1 2024[294](index=294&type=chunk) [Deposits](index=85&type=section&id=Deposits) Deposits, the primary funding source, totaled $63.1 billion, with a slight decrease driven by changes in checking and demand deposits Deposit Composition | Deposit Type | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Noninterest-bearing demand | 15,169,775 | 15,450,428 | | Interest-bearing checking | 7,591,847 | 7,940,692 | | Time deposits | 23,664,707 | 23,215,772 | | Total deposits | 63,052,105 | 63,175,023 | - The loan-to-deposit ratio was **86%** as of March 31, 2025, up from 85% as of December 31, 2024[325](index=325&type=chunk) - Uninsured domestic deposits represented **44% of total domestic deposits** as of March 31, 2025, down from 46% at December 31, 2024[298](index=298&type=chunk) [Regulatory Capital and Ratios](index=86&type=section&id=Regulatory%20Capital%20and%20Ratios) The company and its subsidiary bank continue to exceed all "well-capitalized" regulatory capital requirements under Basel III Capital Rules Regulatory Capital Ratios | Ratio | March 31, 2025 (Company) | December 31, 2024 (Company) | Minimum Regulatory Requirements including Capital Conservation Buffer | Well-Capitalized Requirements | | :--- | :--- | :--- | :--- | :--- | | Common Equity Tier 1 (CET1) capital | 14.3 % | 14.3 % | 7.0 % | 6.5 % (Bank only) | | Tier 1 capital | 14.3 % | 14.3 % | 8.5 % | 8.0 % | | Total capital | 15.6 % | 15.6 % | 10.5 % | 10.0 % | | Tier 1 leverage | 10.5 % | 10.4 % | 4.0 % | 5.0 % (Bank only) | - Total risk-weighted assets increased by **$424 million to $55.4 billion** from December 31, 2024, primarily due to loan growth[305](index=305&type=chunk) - The **CECL transition provision**, which allowed for a phase-out of the initial adoption impact on regulatory capital, was no longer in effect as of March 31, 2025[301](index=301&type=chunk) [Risk Management](index=87&type=section&id=Risk%20Management) The company operates under a Board-approved enterprise risk management program to identify, manage, monitor, and report various risks [Credit Risk Management](index=88&type=section&id=Credit%20Risk%20Management) Credit risk is managed through a robust framework, with criticized loans increasing by 6% while nonaccrual loans decreased by 4% - Criticized loans increased by **$72 million (6%) to $1.2 billion** during Q1 2025, primarily due to higher criticized CRE loans[314](index=314&type=chunk) - Nonaccrual loans decreased by **$6 million (4%) to $153 million** as of March 31, 2025, driven by paydowns and charge-offs of commercial nonaccrual loans[318](index=318&type=chunk) Nonperforming Assets | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Total nonaccrual loans | 153,200 | 159,018 | | OREO, net | 29,003 | 35,077 | | Total nonperforming assets | 182,203 | 194,095 | | Nonperforming assets to total assets | 0.24 % | 0.26 % | [Liquidity Risk Management](index=91&type=section&id=Liquidity%20Risk%20Management) The company manages liquidity risk by maintaining liquid assets and diverse funding sources, with total available liquidity at $36.1 billion - The company's primary funding source is deposits, totaling **$63.1 billion** as of March 31, 2025, with a loan-to-deposit ratio of 86%[325](index=325&type=chunk) Available Liquidity | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | 3,448,284 | 5,250,742 | | Unused secured borrowing capacity from FHLB | 10,337,616 | 9,928,152 | | Unused secured borrowing capacity from FRB | 13,226,882 | 12,383,005 | | Unpledged securities | 9,018,423 | 7,819,531 | | Total available liquidity | 36,063,993 | 35,429,628 | - The parent company, East West, held **$359 million in on-hand liquidity** as of March 31, 2025, primarily from cash dividends from its subsidiary, East West Bank[334](index=334&type=chunk) [Market Risk Management](index=94&type=section&id=Market%20Risk%20Management) Market risk, primarily interest rate risk, is managed by the ALCO using simulation models and interest rate sensitivity analyses - The company is primarily exposed to **interest rate risk** due to mismatches in asset and liability cash flows from lending and deposit-taking activities[338](index=338&type=chunk) - The company transitioned its net interest income volatility simulations from a **static to a dynamic balance sheet approach** and adopted market forward rates[341](index=341&type=chunk) Net Interest Income Sensitivity Analysis | Change in Interest Rates (in bps) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | +200 | 4.2 % | 4.7 % | | +100 | 3.2 % | 3.5 % | | -100 | (3.7)% | (4.0)% | | -200 | (6.5)% | (7.4)% | [Critical Accounting Policies and Estimates](index=99&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights critical accounting policies involving significant judgments, including allowance for credit losses and fair value estimates - Critical accounting policies and estimates include **allowance for credit losses, fair value estimates, goodwill impairment, and income taxes**, all involving subjective judgments[363](index=363&type=chunk) [Reconciliation of GAAP to Non-GAAP Financial Measures](index=99&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section provides reconciliations of non-GAAP measures like ROATCE and tangible book value per share to their GAAP equivalents Return on Average Tangible Common Equity (ROATCE) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net income ($ in thousands) | 290,270 | 285,075 | | Tangible net income (non-GAAP, $ in thousands) | 290,476 | 285,292 | | Return on average common equity (ROAE) | 14.96 % | 16.40 % | | Return on average tangible common equity (ROATCE) (non-GAAP) | 15.92 % | 17.60 % | Tangible Book Value Per Share | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Book value per share | $57.54 | $55.79 | | Tangible book value per share (non-GAAP) | $54.13 | $52.39 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=101&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item refers to other sections for quantitative and qualitative disclosures regarding the company's market risk - Disclosures about market risk are provided in **Note 5 (Derivatives)** and **Item 2. MD&A (Market Risk Management)**[370](index=370&type=chunk) [Item 4. Controls and Procedures](index=101&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - The company's disclosure controls and procedures were deemed **effective** as of March 31, 2025, following an evaluation by management, including the CEO and CFO[371](index=371&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter ended March 31, 2025[373](index=373&type=chunk) [PART II — OTHER INFORMATION](index=102&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This part contains other information not included in the financial statements, such as legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=102&type=section&id=Item%201.%20Legal%20Proceedings) This item refers to Note 10 for information on legal proceedings, which is incorporated by reference - Information on legal proceedings is incorporated by reference from **Note 10 — Commitments and Contingencies**[375](index=375&type=chunk) [Item 1A. Risk Factors](index=102&type=section&id=Item%201A.%20Risk%20Factors) This item states that there have been no material changes to the company's risk factors as presented in its 2024 Form 10-K - **No material changes** to the company's risk factors have occurred since the 2024 Form 10-K filing[376](index=376&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=103&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item summarizes common stock repurchase activity during Q1 2025, with $244 million remaining under its repurchase programs Issuer Purchases of Equity Securities | Calendar Month | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased (in millions) | | :--- | :--- | :--- | :--- | | January | — | $— | $329 | | February | 476,900 | $97.58 | $283 | | March | 441,449 | $88.09 | $244 | | First quarter | 918,349 | $93.02 | | - The company repurchased **918,349 shares** of common stock in Q1 2025, with **$244 million remaining** under its authorized repurchase programs[377](index=377&type=chunk) [Item 5. Other Information](index=103&type=section&id=Item%205.%20Other%20Information) No directors or Section 16 reporting officers adopted or terminated any Rule 10b5-1 trading arrangement during the quarter - **No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements** were adopted or terminated by directors or Section 16 officers during Q1 2025[379](index=379&type=chunk) [Item 6. Exhibits](index=103&type=section&id=Item%206.%20Exhibits) This item lists the exhibits filed with the quarterly report, including corporate governance documents, certifications, and XBRL files - The exhibits include corporate governance documents, employment agreements, **Sarbanes-Oxley Act certifications**, and Inline XBRL taxonomy documents[381](index=381&type=chunk) [GLOSSARY OF ACRONYMS](index=105&type=section&id=GLOSSARY%20OF%20ACRONYMS) This section provides a comprehensive list of acronyms used throughout the report and their corresponding definitions - The glossary defines key acronyms used in the report, such as **AFS** (Available-for-sale), **HTM** (Held-to-maturity), **CECL** (Current expected credit Losses), and **ROATCE** (Return on average tangible common equity)[383](index=383&type=chunk) [SIGNATURE](index=106&type=section&id=SIGNATURE) This section contains the signature of the registrant, certifying the due authorization of the report - The report is signed by **Christopher J. Del Moral-Niles, Executive Vice President and Chief Financial Officer** of East West Bancorp, Inc., on May 9, 2025[386](index=386&type=chunk)

Company Overview - East West Bancorp (EWBC) is headquartered in Pasadena and has experienced a price change of -10.97% this year [3] - The company currently pays a dividend of $0.6 per share, resulting in a dividend yield of 2.81%, which is lower than the Banks - West industry's yield of 3.33% and the S&P 500's yield of 1.65% [3] Dividend Performance - The current annualized dividend of $2.40 represents a 9.1% increase from the previous year [4] - Over the past 5 years, East West Bancorp has increased its dividend 5 times, achieving an average annual increase of 18.60% [4] - The company's payout ratio is currently 29%, indicating that it paid out 29% of its trailing 12-month EPS as dividends [4] Earnings Growth - The Zacks Consensus Estimate for EWBC's earnings for 2025 is $8.74 per share, reflecting a year-over-year growth rate of 5.30% [5] Investment Considerations - EWBC is considered a compelling investment opportunity due to its strong dividend profile and current Zacks Rank of 3 (Hold) [7] - The company is positioned as a strong dividend play, appealing to income investors despite the general trend of high-yielding stocks struggling during periods of rising interest rates [7]

Financial Data and Key Metrics Changes - The company reported record revenue for the first quarter of 2025, with end-of-period loans growing 1% quarter-over-quarter to a new record level of $54 billion [6][7] - Net interest income increased to $600 million, up $12 million from Q4, and net interest margin rose by 11 basis points to 3.35% [20][21] - The return on tangible common equity was nearly 16%, and the return on average assets was 1.6% [10] Business Line Data and Key Metrics Changes - Fee income grew by 8%, driven by strong customer activity across various categories [8][21] - Residential mortgage origination remained steady, with a strong pipeline for Q2, while commercial real estate balances also grew [16] - The efficiency ratio for Q1 was 36.4%, indicating industry-leading efficiency [22] Market Data and Key Metrics Changes - The non-performing assets ratio decreased by two basis points to 24 basis points at quarter-end [9][25] - The criticized loans ratio increased to 2.3%, with classified loans rising to 1.38% [25][28] - The allowance for loan losses increased to 1.35% of total loans, reflecting a proactive approach to credit risk management [26][28] Company Strategy and Development Direction - The company aims to capitalize on opportunities arising from economic uncertainties while maintaining a strong capital position [13][28] - There is a focus on diversifying revenue streams and enhancing fee income through customer engagement and service expansion [7][21] - The management emphasized the importance of a strong balance sheet to support customers and navigate economic challenges [13][60] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are adapting to economic uncertainties and diversifying supply chains, which positions the company favorably [11][12] - The company remains vigilant regarding credit risk and is prepared for potential economic downturns [26][60] - Future loan growth will depend on economic conditions, with a cautious approach to lending in uncertain times [62][66] Other Important Information - The company repurchased approximately 920,000 shares for $85 million and distributed $85 million to shareholders via dividends [29][30] - The effective tax rate for 2025 is expected to be below 23% [31] Q&A Session Summary Question: Why is the NII guide not moving higher? - The guidance remains appropriate due to anticipated rate cuts and current economic outlook [35] Question: Can the deposit beta be sustained? - The positive momentum may slow as the forward curve flattens, but the company expects to remain above the 50% guide [37] Question: What is the outlook for capital return and buybacks? - The company will continue to be opportunistic with buybacks while maintaining a strong position to support customers [45][46] Question: Are current tariff risks larger than in previous years? - Clients are better prepared now compared to 2017, and the company is actively engaging with clients to manage risks [50][52] Question: How does the company view loan growth opportunities? - The company has the capital and balance sheet to support clients, but loan growth will depend on economic conditions [60][62] Question: What is the strategy for growing fee income? - The company focuses on domestic lending fees and wealth management, with some fees tied to cross-border activity [71] Question: Can you elaborate on the allowance build rationale? - The allowance increase was driven by a higher weighting for downside scenarios due to economic uncertainties [74] Question: What are the expectations for expenses in the coming quarters? - The company remains comfortable with its expense guidance while continuing to invest in technology and infrastructure [80] Question: What is the strategy for security purchases in liquidity management? - The focus is on purchasing high-quality liquid assets, primarily Ginnie Mae securities [120]

This quarterly report represents an earnings surprise of 1.95%. A quarter ago, it was expected that this bank holding company would post earnings of $2.13 per share when it actually produced earnings of $2.08, delivering a surprise of -2.35%. East West Bancorp (EWBC) came out with quarterly earnings of $2.09 per share, beating the Zacks Consensus Estimate of $2.05 per share. This compares to earnings of $2.08 per share a year ago. These figures are adjusted for non-recurring items. There are no easy answers ...

East West Bancorp, Inc. 1Q Earnings Presentation April 22, 2025 Basis of Presentation The preparation of the Company's consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements, income and expenses during the reporting periods, and the related disclosures. Although our estimates consider curr ...

East West Bancorp, Inc. 135 N. Los Robles Ave., 7th Fl. Pasadena, CA 91101 Tel. 626.768.6000 NEWS RELEASE EAST WEST BANCORP REPORTS NET INCOME FOR FIRST QUARTER OF 2025 OF $290 MILLION AND DILUTED EARNINGS PER SHARE OF $2.08; RECORD QUARTERLY REVENUE, FEE INCOME, AND LOANS Pasadena, California – April 22, 2025 – East West Bancorp, Inc. ("East West" or the "Company") (Nasdaq: EWBC), parent company of East West Bank, reported its financial results for the first quarter of 2025. First quarter 2025 net income w ...

Wall Street analysts forecast that East West Bancorp (EWBC) will report quarterly earnings of $2.05 per share in its upcoming release, pointing to a year-over-year decline of 1.4%. It is anticipated that revenues will amount to $671.3 million, exhibiting an increase of 4.2% compared to the year-ago quarter.The consensus EPS estimate for the quarter has undergone a downward revision of 1.4% in the past 30 days, bringing it to its present level. This represents how the covering analysts, as a whole, have reas ...

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for East West Bancorp despite higher revenues, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - East West Bancorp is expected to report quarterly earnings of $2.05 per share, reflecting a -1.4% change year-over-year, while revenues are projected at $671.3 million, a 4.2% increase from the previous year [3]. - The earnings report is scheduled for April 22, 2025, and could lead to stock price increases if results exceed expectations [2]. Estimate Revisions - The consensus EPS estimate has been revised down by 1.38% over the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for East West Bancorp is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +0.17% [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive Earnings ESP reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [8]. - East West Bancorp currently holds a Zacks Rank of 3, indicating a likelihood of beating the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, East West Bancorp had an expected EPS of $2.13 but delivered $2.08, resulting in a -2.35% surprise [12]. - Over the past four quarters, the company has beaten consensus EPS estimates three times [13]. Industry Context - Zions, another player in the Zacks Banks - West industry, is expected to report an EPS of $1.20 for the same quarter, showing a +16.5% year-over-year change, with revenues projected at $808.26 million, a 7.5% increase [17]. - Zions has also seen a revision of its consensus EPS estimate down by 0.8% over the last 30 days, but a higher Most Accurate Estimate has resulted in an Earnings ESP of 0.80%, indicating a likely earnings beat [18].

East West Bancorp (EWBC) shares rallied 8.6% in the last trading session to close at $77.16. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 15.8% loss over the past four weeks.East West Bancorp shares rallied sharply, benefiting from broad market strength following President Donald Trump’s announcement of a 90-day suspension on tariffs for non-retaliating countries. The policy shift eased trade tensions and ...

Employee Compensation and Development - The Bank's compensation and employee benefits expense was $551 million in 2024, comprising 57% of total noninterest expense, compared to $509 million and 50% in 2023[29]. - In 2024, the Bank achieved 16% of employees advancing their careers through over 510 internal promotions, highlighting its commitment to employee development[27]. - The Bank granted over 650 thousand restricted stock units (RSUs) as part of its stock compensation programs in 2024[30]. - The Bank's employee compensation packages include a competitive base salary and may include annual cash and/or stock incentive bonuses based on performance[29]. Regulatory Compliance and Capital Requirements - The Bank's operations are subject to regulation and supervision by the Federal Reserve, California DFPI, and other regulatory bodies, ensuring compliance and stability[35]. - As of December 31, 2024, the Company and the Bank's capital ratios exceeded the minimum capital adequacy requirements, including the capital conservation buffer, and were classified as "well capitalized"[42]. - The Company is required to maintain a minimum CET1 capital ratio of at least 4.5% to risk-weighted assets, with additional capital conservation buffer of 2.5%[42]. - The proposed "Basel III Endgame" rule could lead to increased capital requirements for large banking organizations, but the Company, with total consolidated assets under $100 billion, would not be subject to these changes[45]. - The Company conducts annual capital and quarterly liquidity stress tests as part of its risk management processes, despite not being required to do so under current regulations[49]. - The Bank is subject to additional capital requirements under the Prompt Corrective Action regulations, which classify institutions into five capital tiers based on their capital levels[46]. Community Engagement and Social Responsibility - The Bank is committed to community engagement through programs that promote homeownership, affordable housing, and access to banking services[32]. - The Bank was rated "outstanding" in its most recent Community Reinvestment Act examination as of March 8, 2021, indicating strong performance in serving community credit needs[58]. Financial Performance and Metrics - Total assets increased to $75.98 billion in 2024, up from $69.61 billion in 2023, representing an increase of approximately 9.4%[360]. - Net interest income after provision for credit losses was $2.10 billion in 2024, compared to $2.19 billion in 2023, a decrease of about 4.0%[362]. - Total deposits rose to $63.18 billion in 2024, up from $56.09 billion in 2023, reflecting an increase of approximately 12.4%[360]. - Net income for 2024 was $1.17 billion, slightly up from $1.16 billion in 2023, indicating a growth of about 0.4%[362]. - Earnings per share (EPS) increased to $8.39 in 2024 from $8.23 in 2023, a rise of approximately 1.9%[362]. - Noninterest income totaled $335.22 million in 2024, compared to $295.26 million in 2023, marking an increase of about 13.5%[362]. Risk Factors - A significant portion of the loan portfolio is secured by real estate, which is at higher risk due to potential downturns in real estate markets[88]. - The company is exposed to interest rate risk, with net interest income being significantly affected by changes in interest rates[89]. - Inflation poses a risk to the company's profitability and may negatively impact customers' ability to repay loans[90]. - The Federal Reserve's monetary policies could materially affect the company's earnings and asset values[91]. - The company is subject to fluctuations in foreign currency exchange rates, particularly from its operations in China[93]. - Geopolitical uncertainties and trade tensions, especially between the U.S. and China, may adversely impact the company's business[84]. - Natural disasters and climate change could lead to increased nonperforming assets and credit losses[86]. - The company may experience a decrease in demand for loans and financial products due to adverse economic conditions[84]. Legal and Compliance Risks - The Consumer Financial Protection Bureau (CFPB) has implemented a final rule requiring financial institutions to provide certain consumer data upon request, which the Bank must comply with by April 1, 2027[51]. - Federal law limits the Bank's ability to pay dividends, requiring regulatory approval if total dividends exceed the sum of net income for the year and retained earnings for the preceding two years[55]. - The Federal Reserve's policy discourages bank holding companies from maintaining dividend levels that undermine their ability to support their banking subsidiaries[55]. - The Company is subject to various federal and state regulations regarding privacy and cybersecurity, which may impact operational costs and compliance efforts[66][68]. - The company faces significant financial and reputational risks from lawsuits and legal proceedings, which could adversely affect its operations[124]. Technological and Competitive Challenges - The company faces intense competition in the financial services industry, which may lead to margin declines and loss of business[112]. - The company may face challenges in keeping pace with technological changes, which could adversely affect its competitive position[106]. - Cybersecurity risks have increased, potentially impacting the company's operations and financial condition[105]. Accounting and Financial Reporting - The Company adheres to U.S. GAAP for its financial reporting, requiring management to make estimates that could materially affect reported amounts[378]. - Changes in accounting standards could materially impact the company's financial statements and reporting[125]. - The Company’s financial statements have been audited and present fairly its financial position as of December 31, 2024, in conformity with U.S. generally accepted accounting principles[347]. Environmental and Regulatory Changes - California's Climate Corporate Data Accountability Act requires entities with annual revenue over $1 billion to disclose greenhouse gas emissions starting in 2026[72]. - The Company may incur compliance costs related to the Climate-Related Financial Risk Act, which mandates biennial climate risk disclosures for entities with revenues over $500 million, starting January 1, 2026[72]. - Evolving expectations regarding environmental, social, and governance (ESG) considerations may expose the Company to additional costs and reputational harm[132].