EWBC 10-K & 10-Q changes, risk factors and insider trading

We, like other financial institutions, face numerous risks inherent to our business, results of operations, and financial condition.condition, The risks below address factorsmany of which we are currentlybeyond awareour control. The risk factors described below relate to known risks that could materially impact usour materially by causing actualbusiness, results toof differoperations, fromfinancial ourcondition historical results orand the resultsoutcome contemplatedof byany thematter as to which forward-looking statements contained in this Form 10-K.10-K are made. Although these risks are organized by headings and each risk is discussed separately, many are interrelated. In addition, there may be additional risks and uncertainties that may materially impact us materiallyin an adverse manner that are not presently known, that are not currently believed to be significant, or that are common to all businesses.

Risks Related to GeopoliticalGeographic and Political Uncertainties

A substantial number of our customers have economic and cultural ties to Asia. The Bank’s international presence includes locations in Hong Kong, China and Singapore. Our presence in Asia carries certain risks, including risks relating to our ability to generate revenues from foreign operations and to leverage and conduct business on an international basis, due to legal, regulatory, and tax requirements and restrictions, including restrictions relating to transactions involving access to certain data by persons outside of the U.S.; tariffs, trade barriers, or other trade restrictions; uncertainties regarding liability; difficulties in staffing and managing foreign operations; political and economic risks; and financial risks including currency and payment risks. For example, economic trade and political tensions, including tariffs and other punitive trade policies and disputes between the U.S. and Chinaother countries pose a risk to our business and customers. On February 1,During 2025, the TrumpU.S. administrationsignificantly announced the imposition of a 10% tariff on imports from China and a 25% tariff on imports from Mexico and Canada. However, theincreased tariffs on Mexicovarious andtrading Canadapartners, havehowever, beensome temporarilyof pausedthese fortariffs 30were dayssubsequently followingreversed agreementsor from both countries.reduced. The timing and extentscope of these tradefuture policy changesshifts remain subject to further developments.uncertain. The imposition of tariffs, retaliatory tariffs, export controls or other trade restrictions on products, materials or other goods that our customers import or export could impact prices, reduce demand, or otherwise negatively impact our customers’ businesses and their ability to service debt. We may also experience a decrease in the demand for loans and other financial products or a deterioration in the credit quality of the loans extended to customers in industry sectors that are most sensitive to the trade restrictions.

Further, a downturn in economic growthgrowth, andor in stock or real estate markets in China and volatility in the Shanghai and Hong Kong stock exchanges,Asia, among other things, may negatively impact asset values and the profitability and liquidity of our customers operating in thisthat region. These risks could adversely affect the success of our international operations and could have a material adverse effect on our overall business, results of operations, and financial condition. In addition, we face risks that our employees and affiliates may fail to comply with applicable U.S. and foreign laws and regulations governing our international operations, including the U.S. Foreign Corrupt Practices Act and other anti-corruption laws. Failure to comply with such laws and regulations could, among other things, result in enforcement actions and fines against us, limitations on our conduct and reputational harm, any of which could have a material adverse effect on our business, results of operations and financial condition. Changes in such laws and regulations, regulatory oversight, foreign exchange controls, tariffs, or geopolitical conflict also may adversely impact our international operations.

Since many of our loans are secured by real estate, a decline in the real estate markets could impact our business and financial condition. Real estate values and real estate markets are generally affected by changes in general economic conditions and employment levels, fluctuations in interest rates, the availability of loans to potential purchasers and the availability and demand for types of real property investments, changes in tax laws and other governmental statutes, regulations and policies, and natural disasters, such as wildfires and earthquakes, which are particularly prevalent in California, where a significant portion of our real estate collateral is located. For example, during 2024, the commercial real estate (“CRE”) market remained under pressure, primarily from decreased demand for office space, which affected the demand for CRE loans and loan performance. If real estate values decline, the value of real estate collateral securing our loans could be significantly reduced. Our ability to recover on defaulted loans by foreclosing and selling the real estate collateral would be further diminished, and we would be more likely to suffer losses on defaulted loans. Furthermore, commercial real estate (“CRE and multifamily residential”) loans typically involve larger balances to single borrowers or groups of related borrowers. Since paymentsPayments on these loans are often dependent on the successful operation or management of the properties, as well as the business and financial condition of the borrowers,borrowers. repaymentRepayment of such loans may be subject to adverse conditions in the real estate market,market such as declining property values, rising interest rates, higher vacancy rates or tenant defaults, adverse economic conditions, shifts in demand for different types of properties, or changes in applicable government regulations. Borrowers’ inability to repay such loans may have an adverse effect on our business, results of operations and financial condition.

Our financial results depend substantially on net interest income, which is the difference between the interest income we earn on interest-earning assets and the interest expense we pay on interest-bearing liabilities. Interest-earning assets primarily include loans extended, securities held in our investment portfolio, and excess cash held to manage short-term liquidity. We fund our assets using deposits and borrowings. We offer interest-bearing deposit products, and a portion of our deposit balances are from noninterest-bearing products. We also enter into interest rate derivatives to manage interest rate risk exposure. The interest rates we receive on our interest-earning assets and pay on our interest-bearing liabilities could be affected by various factors, including macroeconomic challenges, Federal Reserve policies, market interest rate changes in response to inflation, competition, regulatory requirements or a change in our product mix. Changes in key variable market interest rates, such as the federal funds, national prime, or U.S. Treasury rates generally impact our interest rate spread. Because of the differences in maturities and repricing characteristics of our interest-earning assets and interest-bearing liabilities, changes in interest rates do not produce equivalent changes in interest income earned on interest-earning assets and interest expense paid on interest-bearing liabilities. Rising interest rates may cause our funding costs to increase at a faster pace than the yield we earn from our assets, ultimatelywhich causingwould cause our net interest margin to decrease. Higher interest rates may also result in lower loan production and increased charge-offs in certain segments of theour loan portfolio. Falling interest rates may put negative pressure on net interest margin if interest-earning assets reprice faster than interest-bearing liabilities. Declining interest rates could also lead to higher loan refinancing activity, which, in turn, would increase the likelihood of prepayments of loans and mortgage related securities. Changes in interest rates also impact the value of our investments in debt securities, particularly debt securities with longer maturities. Accordingly, changes in levels of interest rates could materially and adversely affect our net interest income, net interest margin, cost of deposits, loan origination volume, average loan portfolio balance, asset quality, liquidity, and overall profitability.

Inflation riskresults is the risk thatin the value of assets or income from investments will bebeing worth less in the future asdue inflationto decreasesa decrease in the value of money. RecentInterest datarates hasare indicatedlikely theto pacebe higher during periods of inflation in the U.S. is slowing and the Federal Reserve has begun to cut the federal funds rate. However, the future rate ofelevated inflation andand, othertogether, economicthese factors remaintypically uncertain, and the Federal Reserve may decrease or increase interest rates slower or faster than anticipated. If inflation increases and interest rates rise,cause the value of our investment securities, particularly those with longer maturities, willto decrease, although this effect is less pronounced for floating rate instruments than for fixed-rate instruments. Prolonged periods of inflation also may impact our profitability by negatively impacting our costs and expenses, including increasing funding costs and expenses related to talent acquisition and retention, and negatively impacting the demand for our products and services. Moreover, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans. Adverse changes in inflation and interest rates could negatively impact consumer and business confidence, and adversely affect the economy as well as our business, results of operations and financial condition.

The Federal Reserve Board regulates the supply of money and credit in the U.S. Its policies determine in large part the cost of funds for lending and investing and affect the return earned on those loans and investments, both of which in turn affect our net interest margin. TheyIt can also materially decrease the value of financial assets we hold. Federal Reserve policies may also adversely affect borrowers, potentially increasing the risk that they may fail to repay their loans, or could adversely create asset bubbles resulting from prolonged periods of accommodative policy. This, in turn, may result in volatile markets and rapidly declining collateral values. Changes in Federal Reserve personnel and policies are beyond our control. Consequently, the impact of these changes on our business, results of operations and financial condition is difficult to predict. While we monitor and manage exposure to changes in monetary policy through asset liability management and risk mitigation strategies, there can be no assurance that shifts in monetary policy, including as a result of the appointment of a new Chairman of the Federal Reserve, will not adversely affect our business, results of operations, and financial condition.

Further downgrades of the U.S. credit rating, potential automatic spending cuts or a government shutdownshutdowns could negatively impact our business, results of operationoperations and financial condition.

Over the past few years, U.S. debt ceiling and budget deficit concerns have increased the possibility of U.S. government shutdowns, automatic spending cuts, additional U.S. credit rating downgrades and economic slowdowns, or a recession in the U.S. As the federal debt level rises and interest rates remain elevated,at elevated levels, the cost of servicing the debt may increase and the perceived creditworthiness of the U.S. government may decrease. The impact of any further downgrades to the U.S. government’s sovereign credit rating or its perceived creditworthiness could adversely affect the U.S. and global financial markets and economic conditions. Adverse political and economic conditions could have an adverse effect on our business, results of operationoperations and financial condition.

As a regulated entity, we are subject to capital requirements, and a failure to meet these standards could adversely affect our financial condition.

We and the Bank are subject to certain capital and liquidity rules, including the Basel III Capital Rules, which establish the minimum capital adequacy requirements and may require us to increase our regulatory capital levels and/or liquidity targets, increase regulatory capital ratios, or change how we calculate regulatory capital. We may be required to increase our capital levels,targets even in the absence of actual adverse economic conditions or forecasts, and enhance capital planning based on hypothetical future adverse economic scenarios. As of December 31, 2024,2025, we met the requirements of the Basel III Capital Rules, including the capital conservation buffer. Compliance with capital requirements may limit capital-intensive operations and increase operational costs, and we may be limited or prohibited from distributing dividends or repurchasing our stock. This could adversely affect our ability to expand or maintain present business levels, which may adversely affect our business, results of operations and financial condition. Additional information on the regulatory capital requirements applicable to us and the Bank is set forth in Item 1. Business — Supervision and Regulation — Regulatory Capital Requirements in this Form 10-K.

Credit rating agencies evaluate us regularly, and their ratings are based on several factors, including our financial strength, capital adequacy, liquidity, asset quality and ability to generate earnings. Some of these factors are not entirely within our control, including conditions affecting the financial services industry as a whole. Severe downgrades in our credit ratings could impact our business and reduce our profitability in different ways, including a reduction in our access to capital markets, triggering additional collateral or funding obligations which could negatively affect our liquidity. In addition, our counterparties, as well as our clients, rely on our financial strength and stability and evaluate the risks of doing business with us on a regular basis. If we experience aA decline in our credit ratings, thisratings could result in a decrease in the number of counterparties and clients who may be willing to transact with us. Our borrowing costs may also be affected by various external factors, including market volatility and concerns or perceptions about the financial services industry. There can be no assurance that we can maintain our credit ratings nor that they will not be changed in the future.

A significant factor in the 2023 bank failures may have been the proportion of the deposits held by institutionsDeposits that exceededexceed applicable FDIC insurance limits, and the possibility of the withdrawal of such deposits over a short period of time.time, pose a liquidity risk and have been a source of instability in the banking system during prior periods of stress. The ease and speed of the electronic withdrawals may accelerateincrease this process.risk. If a significant portion of our deposits were to be withdrawn within a short period of time such that additional sources of funding would be required to meet withdrawal demands, we may be unable to obtain funding at favorable terms, which may have an adverse effect on our net interest margin. Moreover, obtaining adequate funding to meet our deposit obligations may be more challenging during periods of elevated interest rates and financial industry instability. Our ability to attract depositors during a time of actual or perceived distress or instability in the marketplace may be limited. Further, interest rates paid for borrowing generally exceed the interest rates paid on deposits. This spread may be exacerbated by higher prevailing interest rates. In addition, because our available-for-sale (“AFS”) debt securities lose value when interest rates rise, our ability to cover liquidity needs from sale or pledging of these securities may be negatively impacted during periods of elevated interest rates. Under these circumstances, we may be required to access additional funding from other sources in order to manage our liquidity risk.

We establish an allowance for credit losses in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), which includes the allowance for loan and lease losses (“ALLL”) and the reserve for unfunded credit commitments. Our allowance for loan lossesALLL is based on our evaluation of risks associated with our loans held-for-investment portfolio, including historical loss experience, current borrower characteristics, current economic conditions, reasonable and supportable forecasts of future economic conditions, delinquencies, performing status, the size and composition of the loan portfolio, and concentrations within the portfolio. The allowance estimation process requires subjective and complex judgments, including analysis of economic conditions and how these economic conditions might impair the ability of our borrowers to repay their loans. Unexpected changes in economic, market, operating and other conditions in the U.S. and in the international markets could result in, among other things, greater than expected deterioration in credit quality of our loan portfolio or in the value of collateral securing these loans. Due to the inherent risk associated with accounting estimates, our allowance for loan lossesALLL and our reserve for losses associated with our unfunded credit commitments, which is determined using a similar methodology as that used to establish our allowance for loan losses,ALLL, may not be adequate to absorb actual losses, and future provisions for such losses could have a material adverse effect on our business, results of operations, and financial condition.

Our business is highly dependent on the security and efficacy of our infrastructure, computer, network and data management systems, as well as those of third parties with which we interact. We face risks of loss resulting from, but not limited to, errors relating to transaction processing and technology, breaches of our internal control system or external compliance requirements, fraud or unauthorized transactions by employees or third parties, cybersecurity incidents, ineffective business continuation and disaster recovery.recovery activities. The potential for operational loss exposure exists throughout our organization and among our interactions with third parties, and areis expected to increase as we expand our interconnectivity with our customers and other third parties. Any of these operational risk exposures, if realized, could adversely impact our results of operations, financial condition, cash flows, and liquidity, and result in regulatory action, significant litigation exposure and harm to our reputation.

Cybersecurity risks, including ransomware, malware, social engineering, and phishing attacks, for financial institutions have significantly increased in recent years in part because of the proliferation of new technologies, the use of the internet and telecommunication technologies to conduct financial transactions, the significant increased use of remote workstations by employees in recent years, and the increased sophistication and activities of organized crime, hackers, terrorists, nation-states, and other threat actors. Our business and many of our customers may have experienced, and may experience again in the future, losses incurred due to fraud or theft related to customers, employees or third parties. These losses may negatively affect our business, results of operations, financial condition, reputation orand prospects. We have limited ability to assure the safety and security of our customers’ transactions with us to the extent our customers are using their own devices or are a victim of cyberattacks, fraud or other scams by threat actors. Failure to mitigate breaches of security, or to comply with increasingly demanding new and changing industry standards and regulatory requirements could also result in violation of applicable privacy laws, reputational damage, regulatory fines, litigation exposure, increased security compliance costs, and could have an adverse effect on our business, results of operations and financial condition.

The financial services industry is continuously undergoing rapid technological change with frequent introductions of new technology-driven products and services, including financialrecent technologyrapid anddevelopments non-bankingin entities.artificial intelligence. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success depends, in part, on our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological solutions. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers.customers, and our efforts to use technological developments to improve the efficiency of our operations may not be effective or may lag our competitors. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, our results of operations and financial condition. In addition, if we do not implement systems effectively or if our outsourcing business partners do not perform their functions properly, there could be an adverse effect on us. There can be no assurance that we will be able to effectively maintain or improve our systems and processes, or utilize outsourced talent, to meet our business needs successfully. Any such failure could adversely affect our business, results of operations, financial condition and reputation.

Bank failures may increase the risk of a recession or lead to regulatory changes and initiatives, such as enhanced capital, liquidity, or risk management requirements, which could adversely impact us. Changes to laws or regulations, or the imposition of additional restrictions through supervisory or enforcement activities, could have a material impact on our business. Regulatory changes could also adversely impact our ability to access funding, increase the cost of funding, limit our access to capital markets, and negatively impact our overall financial condition. The 2023 bank failures also resulted in a special assessment by the FDIC to replenish the DIF.DIF, which has increased our deposit insurance costs.

Our enterprise risk management programprogram, and our controls and procedures, may not be effective at mitigating the risks to which we are subject, based upon our size, scope, and complexity.

We have established processescorporate governance and enterprise risk management policies and procedures intended to identify, measure, monitor, report, and analyze the types of risk to which we are subject, including capital, market, liquidity, credit, operational, compliance, legal, strategic, technology and reputational risks. Although we seek to manage our exposure to such risks, and employ a broad and diverse set of risk monitoring and mitigation techniques in the process, including internal controls and disclosure controls and procedures, those techniques are inherently limited because they cannot anticipate the existence or development of risks that are currently unknown or unanticipated. Any system of control and any system to reduce risk exposure, however well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the system are met. Further, in some cases we use analytical or forecasting models in our management of risks. If the models are inadequate, or are subject to ineffective governance, our risk management program may also prove ineffective. Actions taken to mitigate identified risks may prove less effective than anticipated. If our risk management program proves ineffective, we could suffer unexpected losses and reputational damage.

Competition for qualified personnel in the banking industry is intense and there is a limited number of qualified people with knowledge of, and experience in, the regional banking industry, especially in the West Coast markets, and in international banking operations, especially in Asia. The process of recruiting personnel with the combination of skills and attributes required to carry out our strategies is often lengthy. The labor market is currently challenging, with high employee turnover and increased wage pressure. In addition, the proliferation of hybrid work environments may exacerbate the challenges of attracting and retaining talented employees as job markets may be less constrained by physical geography. Our success depends, to a significant degree, on our ability to attract and retain highly-skilled and qualified personnel, as well as the continued contributions of those individuals. In particular, our success has been and continues to be highly dependent upon the abilities of certain key executives. Accordingly, we believe that our future success is dependent upon the development and, when needed, implementation of adequate succession plans. Although both the Board of Directors and management monitor our succession planning for our senior management team, the loss of key personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business, financial condition, orand operating results.

We operate in a highly competitive environment. Our competitors include, but are not limited to, commercial banks, savings and loan associations, finance companies, brokerage firms, insurance companies, credit unions, mortgage banks, nonbank financial institutions, and other regional, national, and global financial institutions. Some of our major competitors include multinational financial service companies whose greater resources may afford them a marketplace advantage by enabling them to maintain numerous locations and mount extensive promotional and advertising campaigns. Areas of competition include interest rates on loans and deposits, customer services,service, and range of price and quality of products and services, including new technology-driven products and services. We also face competition from products outside of the traditional finance system, such as stablecoins. The enactment of the GENIUS Act in July 2025 has the potential to accelerate stablecoin adoption. If consumers and businesses shift to stablecoins for payments and liquidity management, we may face reduced demand for our traditional products. Ongoing or increased competition may put pressure on the pricing for our products and services or may cause us to lose market share, particularly with respect to traditional banking products such as loans and deposits. Failure to attract and retain banking customers may adversely impact our loan and deposit growth and in turn, our revenues.

We invest in certain tax-advantaged investments that support qualified affordable housing projects, community development, and renewable energy resources. Our investments in these projects are designed to generate a return in part through the realization of federal and state income tax credits, and other tax benefits, over specified time periods. We are subject to the risk that previously recorded tax credits, which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level, may fail to meet certain government compliance requirements and may not be able to be realized. The risk of not being able to realize, or of subsequently incurring a recapture of, the tax credits and other tax benefits depends on various factors, some of which are outside of our control, including changes in the applicable tax code, as well as the continued economic viability of the project and project operator. InThe addition,OBBBA accelerated the Trumpphase‑out administrationof hasmany announced an intent to repeal greenrenewable energy tax credits, althoughincluding solar and wind-related investment and production tax credits, which could require us to shift our tax credit investment strategy in the timingfuture. andAny extentmodification, repeal, expiration, delay or reinterpretation of changes inapplicable tax creditsincentive remainsregimes, uncertain.or a project’s failure to satisfy evolving qualification or compliance standards, could reduce or eliminate anticipated tax benefits. The possible inability to realize these tax credits and other tax benefits would have a negative impact on our financial results.

We are subject to extensive regulation under federal and state laws, as well as supervision and examinationexaminations by the DFPI, FDIC, Federal Reserve, SEC, CFPB in the U.S. and foreign regulators and other government authorities. We are also subject to enforcement oversight by the DOJ and state attorneys general. In addition, we face certain legal, reputational, and financial risks as a result of serving customers in new or evolving industries that are subject to changing, and at times conflicting laws. Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations, or policies could affect the manner in which we conduct business. Such changes could also subject us to additional costs and may limit the types of financial services and products we offer, and the investments we make. Further, as we increase in size additional regulatory requirements may become applicable to us.

We are also required to comply with the U.S. economic and trade sanctions administered by the OFAC regarding, among other things, the prohibition of transacting business with, and the need to freeze assets of, certain persons and organizations identified as a threat to the national security, foreign policy, or economy of the U.S. economy. A violation of any AML or OFAC-related law or regulation could subject us to significant civil and criminal penalties as well as regulatory enforcement actions, which may include restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including any acquisition plans. Any of these violations could have a material adverse effect on our business, results of operations, financial condition, reputation, and future prospects.

We are subject to complex and evolving laws and regulations, both inside and outside the U.S., governing the privacy and protection of personal information. Individuals whose personal information may be protected by law can include our customers (and in some cases our customers’ customers), prospective customers, job applicants, employees, and the employees of our suppliers, and third parties. Complying with laws and regulations applicable to our collection, use, transfer, and storage of personal information can increase operating costs, impact the development and marketing of new products or services, and reduce operational efficiency. Any mishandling or misuse of personal information by us or a third party affiliated with us could expose us to litigation or regulatory fines, penalties or other sanctions. See Item 1. Business — Supervision and Regulation — Privacy and Cybersecurity in this Form 10-K for more information about the regulations governing customer data to which we are subject.

Additionally, prior approval of the Federal Reserve and the DFPI is generally required for any person to acquire control of us, and control for these purposes may be presumed to exist when a person owns 10% or more of our outstanding common stock. Federal Reserve approval is also generally required for a bank holding company to acquire more than 5% of our outstanding common stock. These and other provisions could make it more difficult for a third party to acquire us, even if an acquisition might be in the best interest of the stockholders.

Further discussion of the potential impacts on the Company’s business due to the economic environment has been provided in Item 1A. — Risk Factors — Risks Related to Geographic and Political Uncertainties and — Risks Related to Financial Matters in this Form 10-K.

The Company’s 20242025 net income was $1.2$1.3 billion, a $4$160 million or 0.4%14% increase from 2023.2024. The increase was primarily due to a decrease in noninterest expense and an increase in noninterest income, partially offsetdriven by higher provision for credit losses, lower net interest income before provision for credit losses, increased noninterest income and a decrease in provision for credit losses, partially offset by higher noninterest expense and income tax expense. Noteworthy items about the Company’s performance for 20242025 included:

•Net interest income and net interest margin. Year-over-year net interest income before provision for credit losses decreasedincreased $34$274 million or 1%12% to $2.3$2.6 billion in 2024.2025. Full year 20242025 net interest margin was 3.27%,3.41%, a 3414 bp decreaseincrease year-over-year.

•Earnings per share growth. Full year 20242025 basic EPS and diluted EPS eachboth expanded 2%14% to $8.39$9.58 and $8.33,$9.52, respectively.

•Efficiency ratio improvement.ratio. The efficiency ratio was 36.65%35.69% in 2024,2025, a 25796 bp improvement compared with 2023.2024. The improvement in the efficiency ratio primarily reflected a year-over-year decreaseincrease in thenet amortizationinterest ofincome taxbefore provision for credit and CRA investments due to the expanded application of the proportional amortization method (“PAM”) since the adoption of Accounting Standards Update (“ASU”) 2023-02, Investments — Equity Method and Joint Ventures on January 1, 2024, and a decrease in the FDIC charge.losses.

•Asset growth. Total assets reached $76.0$80.4 billion as of December 31, 2024,2025, an increase of $6.4$4.5 billion or 9%6% year-over-year, primarily driven by loan growth of $3.0 billion or 6%, and an increase in AFS debt securities of $4.7$2.4 billion or 75%, and loan growth of $1.5 billion or 3%.22%.

•Deposit growth. Total deposits were $63.2$67.1 billion as of December 31, 2024,2025, an increase of $7.1$3.9 billion or 13%6% year-over-year, primarily reflecting growth acrossin thetime Consumerdeposits and Businessnoninterest-bearing Banking,demand and Commercial Banking segments.deposits.

•Strong capitalCapital levels. Stockholders’ equity was $7.7$8.9 billion as of December 31, 2024,2025, up from $7.0$1.2 billion asor of15%, from December 31, 2023.2024. Book value per share of $55.79$64.68 as of December 31, 2024,2025, increased $6.15$8.89 or 12%16% from December 31, 2023.2024. Tangible book value per share of $52.39$61.27 as of December 31, 2024,2025, increased $6.12$8.88 or 13%17% from December 31, 2023.2024. Tangible book value per share is a non-GAAP financial measure. For additional details, see the reconciliation of non-GAAP financial measures presented under Item 7. MD&A — Reconciliation of GAAP to Non-GAAP Financial Measures in this Form 10-K.

Average interest-earning assets increased $5.7$5.2 billion or 9%7% to $69.7$74.9 billion in 2024.2025. The year-over-year increase in average interest-earning assets primarily reflected increases in AFS debt securities and loan growth. The yield on average interest-earning assets was 6.01%5.73% in 2024,2025, ana increasedecrease of 2428 bps from 2023.2024. The increasesyear-over-year decrease in both the average balance and yield on average interest-earning assets primarily reflected loanthe growth,impact anof increase in AFS debt securities, and higherlower benchmark interest rates.rates of the loan portfolio.

The average loan yield was 6.67%6.40% in 2024,2025, ana increasedecrease of 27 bps from 2023.2024. The year-over-year changedecrease in the average loan yield primarily reflected loan growth and the loan portfolio’s sensitivity to higherlower benchmark interest rates. Excluding the $32 million discount accretion and interest recoveries from the full payment on purchased credit impaired and workout loans from the 2025 loans’ interest income, the adjusted average loan yield for 2025 was 6.34%, compared with 6.67% in 2024. Adjusted average loan yield is a non-GAAP financial ratio. For additional details, refer to Item 7. MD&A — Reconciliation of GAAP to Non-GAAP Financial Measures in this Form 10-K. Approximately 58% of loans held-for-investment were variable-rate as of both December 31, 20242025 and 2023.2024.

Deposits are an important source of funds and impact both net interest income and net interest margin. Average deposits of $59.7$64.8 billion in 2024,2025, increased $4.7$5.2 billion or 9% from 2023.2024. Average noninterest-bearing deposits of $14.8$15.6 billion in 2024,2025, decreasedincreased $2.4$799 billionmillion or 14%5% from 2023.2024. Average noninterest-bearing deposits made up 25%24% and 31%25% of average deposits forin 20242025 and 2023,2024, respectively.

The average cost of deposits was 2.88%2.46% in 2024,2025, ana increasedecrease of 6942 bps from 2023.2024. The average cost of interest-bearing deposits was 3.83%3.24% in 2024,2025, ana increasedecrease of 6459 bps from 2023.2024. These year-over-year increasesdecreases primarily reflected shiftsthe inimpacts of lower benchmark interest rates and the depositCompany’s mixefforts to time and money market deposits, and higherreduce deposit costs in response to the interest rate environment.costs.

The average cost of funds calculation includes deposits, short-term borrowings, FHLB advances, assets sold under repurchase agreements (“repurchase agreements”) and long-term debt. In 2024,2025, the average cost of funds was 3.02%,2.56%, ana increasedecrease of 6746 bps from 2023.2024. The year-over-year increasedecrease was mainly driven by the change in the average cost of deposits as discussed above.

(1)Includes the average balances and interest income for securities and loans purchased under resale agreements for 2023. There were no loans purchased under resale agreements for both 2025 and 2024.

(56)Includes the accretion of net deferred loan fees and amortization of net premiums, which totaled $81 million for 2025 and $53 million for each of 2024 and 2023, and $50 million for 2022.2023.

(1)Includes the impactaverage of securities purchased under resale agreements for 2024,balances and bothinterest income for securities and loans purchased under resale agreements for 20232023. There were no loans purchased under resale agreements for both 2025 and 2022.2024.

Noninterest income comprised 13% and 11% of total revenue in 2024both 2025 and 2023, respectively.2024. Noninterest income for 20242025 was $335$379 million, ana $44 million or 13% increase of $40 million compared with 2023.2024. The increase was primarily due to higher lending, wealth management,management fees, lending and depositloan accountservicing fees, netcommercial gainsand onconsumer AFSdeposit-related debtfees, securities,other income, other investment income, and foreign exchange income, partially offset by lower customer derivative, other investment income and net gains on sales of loans.income.

DepositCommercial accountand consumer deposit-related fees were $104$112 million in 2024,2025, an increase of $10$8 million or 11%,8%, compared with 2023.2024. TheThis year-over-year increase was primarily due to analysis service fees, which reflected feehigher increasescommercial customer activity and customerfee growth.increases.

Lending and loan servicing fees were $98$108 million in 2024,2025, an increase of $15$10 million or 17%,10%, compared with 2023.2024. The year-over-year increase was primarily due to higher trade finance and commitmentcredit enhancement fees driven by increased customer growth, and higher credit enhancement fee income.activity.

Foreign exchange income was $55$59 million, an increase of $6$4 million or 13%,8%, compared with 2023.2024. The year-over-year increase was primarily due to increased customer activity and the favorable valuation of certain foreign currency denominated balance sheet items.items, partially offset by losses on foreign exchange trades.

Wealth management fees were $39$50 million in 2024,2025, an increase of $12$11 million or 43%,29%, compared with 2023.2024. The year-over-year increase primarily reflected higher customer demand for higher-yieldingwealth management products insuch responseas tofixed-rate thecorporate interestbonds rateand environment.fixed annuities.

Other investment income was $6$11 million in 2024,2025, aan decreaseincrease of $4$5 million or 40%94% compared with 2023.2024. The year-over-year decreaseincrease primarily reflected lower$5 earningsmillion of recoveries, $3 million of which were related to the Company’s previous investment in DC Solar recorded in other investment income, $1 million of fair value gains from the Company’sderivative liability-classified equity methodcontract CRArelated to the 2023 Rayliant investment, and higher distributions from affordable housing partnership investments.

Noninterest expense was $1.0 billion in 2024,2025, aan decreaseincrease of $65$88 million or 6%,9%, compared with 2023.2024. The decreaseincrease was primarily due to lowerhigher compensation and employee benefits, amortization of tax credit and CRA investments, other operating expense, and computer and software related expenses, partially offset by lower deposit insurance premiums and regulatory assessments, partially offset by higher compensation and employeedeposit benefits, and other operatingaccount expense.

OtherDeposit operatingaccount expense was $148$35 million in 2024,2025, ana increasedecrease of $8$12 million or 6%,26%, compared with 2023.2024. The year-over-year increasedecrease was primarily duedriven toby write-downslower ofbalances otherand realreferral estaterates ownedpaid (“OREO”).on certain deposit accounts.

Amortization of tax credit and CRA investments was $54$75 million in 2024,2025, aan decreaseincrease of $66$21 million or 55%,38%, compared with 2023.2024. The year-over-year decreaseincrease was primarily due to the expanded application of the PAM since the adoption of ASU 2023-02, Investments — Equity Method and Joint Ventures on January 1, 2024, and the timing of tax credit investments that closed in a given period. For additional information on the PAM, see Note 1 — Summary of Significant Accounting Policies and Note 7 — Affordable Housing Partnership, Tax Credit and Community Reinvestment Act Investments, Net to the Consolidated Financial Statements in this Form 10-K.

The following table presents the income before income taxes, income tax expense and effective tax rate for the periods indicated:

Income tax expense for 2024,2025, compared with 2023,2024, increased $18$84 million or 6%,27%, primarily due to thehigher impactspre-tax fromincome, and the expandedone-time applicationrevaluation of PAM on the Company’sdeferred tax creditassets investmentsdue followingto the adoption of ASUthe 2023-02California onsingle Januarysales 1,factor 2024,apportionment method in 2025, partially offset by anfavorable increaseadjustments indriven by a lower California state tax credits and prior period adjustments in 2023.apportionment. The differences between the 20242025 and 20232024 effective tax rates from the federal statutory rate of 21% were primarily due to state taxestaxes, andpartially offset by tax credits associated with renewableenergy, energy,affordable housing, historic and new market tax credit relatedinvestments. projectsRefer as described into Note 11 — Income Taxes to the Consolidated Financial Statements in this Form 10-K.

The Company organizes its operations into three reportable operating segments: (1) Consumer and Business Banking; (2) Commercial Banking; and (3) Treasury and Other. These segments are defined bybased on customer type, the typechannels ofwhere customers are served, and the related products and services provided. For a description of the Company’s internal management reporting process, including the segment cost allocation methodology, see Note 17 — Business Segments to the Consolidated Financial Statements in this Form 10-K.

Segment net interest income represents the difference between actual interest earned on assets and interest incurred on liabilities of the segment, adjusted for funding charges or credits through the Company’s internal funds transfer pricing (“FTP”) process.

Consumer and Business Banking segment net income decreased $32 million or 5% to $563 million in 2024, primarily due to a decrease in net interest income and higher compensation and employee benefits, partially offset by lower other noninterest expense and provision for credit losses. The decrease in net interest income before provision for credit losses was primarily driven by athe year-over-year decline in interest rates. The increase in noninterest income was mainly driven by higher costwealth ofmanagement interest-bearing deposits and a continued shift to interest-bearing productsfees in the deposit mix.2025. The decreaseincrease in provision for credit losses was primarily driven by loan growth and the improvement in theworsening macroeconomic outlook in the residential mortgage loan sector.sector in 2025. The increase in compensation and employee benefits was primarily drivendue byto annualstaffing merit increasesgrowth and staffingincreased growth.wealth management commissions. The decrease in other noninterest expense was primarily driven by lowerdecreased deposit insurance premiums and regulatory assessmentsassessments, comparedfrom with the higherlower FDIC special assessment charge recognized in 2023.charges.

The Commercial Banking segment primarily generates domestic commercial loan and deposit products. Commercial loan products include CRE lending, construction finance, commercial business lending, working capital lines of credit, trade finance, letters of credit, affordable housing lending, asset-based lending, asset-backed finance, project financefinance, equipment financing, and equipmentloan financing.syndication. Commercial deposit products and other financial services include treasury management, foreign exchange services, and interest rate and commodity risk hedging.

Commercial Banking segment net income decreased $35$42 million or 6%8% year-over-year to $536$494 million in 2024,2025, primarily driven by increasesa $98 million decrease in net interest income, partially offset by a $20 million increase in noninterest income and a $15 million decrease in provision for credit losses and compensation and employee benefits, partially offset by higher noninterest income. The increase in noninterest income was primarily driven by higher lending and deposit account fees. The increase in provision for credit losses was primarily driven by higher net charge-offs in the C&I portfolio. The increase in compensation and employee benefits was primarily driven by annual merit increases and staffing growth.losses.

Centralized functions, including the corporate treasury activities of the Company, tax credit investment activity, eliminations of inter-segment amounts, and centrally managed departments, have been aggregated and included in the Treasury and Other segment. Tax credit investment amortization is recorded in the Treasury and Other segment.

Income tax expense is allocated to the Consumer and Business Banking and the Commercial Banking segments by applying statutory income tax rates to the respective segment income before income taxes. The income tax expense or benefit in the Treasury and Other segment consists of the remaining unallocated income tax expense or benefit after allocating income tax expense to the two core segments, and reflects the impact of tax credit investment activity.

(1)Credit ratings expressrepresent opinionsindependent aboutassessments of the credit quality of a debt security.securities. The Company determines the credit rating of a debt security accordingbased toon the lowest credit rating made availableassigned 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 values.value.

(2)For debt securities not rated by NRSROs, the Company uses other factors whichsuch include but are not limited toas the priority in collections within the securitization structure, and whether the contractual payments have historically been on time.time are considered in determining the credit risk of such securities.

East West is a bank holding company incorporated in Delaware on August 26, 1998, and is registered under the Bank Holding Company Act of 1956, as amended. The Company commenced business on December 30, 1998 when, pursuant to a reorganization, it acquired all of the voting stock of the Bank, which became its principal asset. The Bank is an independent commercial bank headquartered in California that focuses on the financial service needs of individuals and businesses that operate in both the U.S. and Asia. Through over 110 locations in the U.S. and Asia, the Company provides a full range of consumer and commercial products and services through the following three business segments: (1) Consumer and Business Banking and (2) Commercial Banking, with the remaining operations recorded in (3) Treasury and Other. The Company’s principal activity is lending to and accepting deposits from businesses and individuals. We are committed to enhancing long-term shareholder value by growing loans, deposits and revenue, improving profitability, and investing for the future while managing risks, expenses and capital. Our business model is built on customer loyalty and engagement, understanding our customers’ financial goals, and meeting our customers’ financial needs through our diverse products and services. We expect our relationship-focused business model to continue generating organic growth from existing customers and to expand our targeted customer bases. As of MarchJune 31,30, 2026, the Company had $82.9$84.8 billion in total assets and approximately 3,4003,500 full-time equivalent employees. For additional information on our strategy, and the products and services provided by the Bank, see Item 1. Business — Organization and Banking Services in the Company’s 2025 Form 10-K.

Evolving geopolitical uncertainties, including armedrecent conflict involving Iran or heightened tensionsdevelopments in otherthe regions,Middle asEast welland asongoing changesshifts in global trade policies and tariffs, continue to raisecreate concernsuncertainty aboutregarding inflation, oilprices and energy price volatility, andpotential supply chain disruptions. At its Marchmost andrecent April 2026 meetings,meeting, the Federal Reserve maintained the target rate of the federal funds target rate, reflecting a cautious stance as it managescontinues to balance economic uncertainty, persistent inflationary pressures and acontinued graduallystrength coolingin the labor market amid an increasingly uncertain global environment.market. These factorsconditions may createcontribute to market volatility thatand couldinfluence affectthe bothpace of inflation and overall economic growth. The U.S. economy continues to expand at a moderate pace, with Federal Reserve projections indicating GDP growth of 2% and inflation expected to gradually moderate. Commercial and consumer loan demand remains solid, supported by healthy consumer spending and business investment. The Company monitorscontinues to monitor changes in economicthe economic, regulatory and industrybanking conditionsenvironment and their potential impacts on theits Company’s business, customers, employees, communitiesbusiness and markets.customers.

In March 2026, the federal banking agencies issued proposed revisions to the U.S. regulatory capital framework.framework Thethat proposals would, among other things,would modify certain aspects of the standardized approach to risk-based capital treatment of certain exposure categories that are material to the Company. The proposed changes address the definition of capital, the calculation of certain risk-weighted assets and future indexing of certain dollar-based thresholds. The Company has been monitoring these proposals and assessing their potential impacts on its regulatory capital position.

The Company’s net income for the second quarter and first quarterhalf of 2026 was $358$364 million and $721 million, arespectively, $68which increased $53 million or 23%17%, increaseand $121 million or 20%, respectively, from the same prior year period.periods. The year-over-year increaseincreases waswere primarily driven by higher net interest income before provision for credit losses, increased noninterest income, and lower provision for credit losses, and increased noninterest income, partially offset by higher noninterest expense. Noteworthy aspects of the Company’s performance for the second quarter and first quarterhalf of 2026 included:

•Net interest income and net interest margin. FirstSecond quarter 2026 net interest income before provision for credit losses was $685 million, an increase of $671 million increased $71$68 million or 12%11% from the firstsecond quarter of 2025. FirstSecond quarter 2026 net interest margin ofwas 3.49%3.43% increasedup 148 bps year-over-year.from the prior-year quarter. For the first half of 2026, net interest income before the provision for credit losses totaled $1.4 billion, an increase of $139 million or 11% compared with the first half of 2025. Net interest margin was 3.46% for the first half of 2026, an increase of 11 bps year over year.

•Earnings per share growth. FirstSecond quarter 2026 basic and diluted earnings per share both(“EPS”) each increased 23%18% to $2.59$2.65 and $2.57,$2.63, respectively, fromcompared with the firstsecond quarter of 2025. For the first half of 2026, basic EPS increased 20% to $5.24, while diluted EPS increased 21% to $5.21, compared with the first half of 2025.

•Profitability ratios. FirstSecond quarter 2026 ROA, ROAE and theROATCE ROATCEwere 1.75%, 16.01% and 16.88%, respectively, representing year-over-year increases of 1.79%, 16.04% and 16.92%, respectively, increased 2313 bps, 10859 bps and 10049 bps, respectively. For the first half of 2026, ROA, ROAE and ROATCE were 1.77%, 16.02% and 16.90%, respectively, up 18 bps, 83 bps year-over-year,and respectively.74 bps, respectively, from the same period in 2025. ROATCE is a non-GAAP financial measure. For additional information regarding the reconciliation of non-GAAP financial measures, refer to Item 2. MD&A — Reconciliation of GAAP to Non-GAAP Financial Measures in this Form 10-Q.

•Efficiency ratios. FirstSecond quarter 2026 efficiency ratio was 36.23%,36.73%, compared with 36.42%36.41% forin the samesecond periodquarter inof 2025. TheFor improvementthe infirst half of 2026, the efficiency ratio was primarily36.48%, duecompared towith higher net interest income before provision for credit losses and an increase36.41% in noninterestthe income.prior-year period.

•Asset growth. Total assets reached $82.9$84.8 billion as of MarchJune 31,30, 2026, an increase of $2.5$4.3 billion from December 31, 2025, primarily driven by a $1.2$2.1 billion or 2%4% increase in net loans held-for-investment and ana $881$1.4 millionbillion or 7%10% increase in available-for-sale (“AFS”) debt securities.

•Deposit growth. Total deposits were $68.9$70.1 billion as of MarchJune 31,30, 2026, an increase of $1.8$3.0 billion or 3%,4%, from December 31, 2025, primarily driven by growth in noninterest-bearing demand and money market and noninterest-bearing demand deposits.

•Capital levels. Stockholders’ equity was $9.0$9.2 billion as of MarchJune 31,30, 2026, up $100$347 million or 1%,4%, from December 31, 2025. Book value per share of $65.70$67.48 as of MarchJune 31,30, 2026, increased $1.02$2.80 or 2%,4% compared with December 31, 2025. Tangible book value per share of $62.27$64.06 as of MarchJune 31,30, 2026, increased $1.00$2.79 or 2%,5% compared with December 31, 2025. Tangible book value per share is a non-GAAP financial measure. For additional details, see the reconciliation of non-GAAP financial measures presented under Item 2. MD&A — Reconciliation of GAAP to Non-GAAP Financial Measures in this Form 10-Q.

Net interest income and net interest margin for the second quarter and first quarterhalf of 2026 increased year-over-year. The $71 million or 12%These year-over-year increase in net interest income, and the 14 bp year-over-year increase in net interest marginincreases primarily reflected lower interest-bearing deposit funding costs and Federal Home Loan Bank (“FHLB”) advances, and increases in loans and AFS debt securities’ average balances, partially offset by lower yields on loans, AFS debt securities, and interest-bearing cash and deposits with banks.banks, and AFS debt securities.

Average interest-earning assets were $78.0$80.1 billion for the firstsecond quarter of 2026, an increase of $5.3$6.2 billion or 7%8% from the second quarter of 2025. For the first half of 2026, average interest-earning assets were $79.0 billion, an increase of $5.7 billion or 8% from the first quarterhalf of 2025. The year-over-year increaseincreases in average interest-earning assets primarily reflected loan growth and increases in AFS debt securities, partially offset by decreases in interest-bearing cash and deposits with banks.securities.

The yield on average costinterest-earning assets for the second quarter of deposits2026 was 5.41%, a decrease of 2.13%34 bps from the second quarter of 2025. The yield on average interest-earning assets for the first quarterhalf of 2026,2026 decreasedwas 415.45%, a decrease of 30 bps from the first quarter of 2025. The average cost of interest-bearing deposits of 2.84% for the first quarter of 2026, decreased 50 bps, from the first quarterhalf of 2025. These year-over-year decreases for both periods primarily reflected the impactsimpact of lower benchmark interest rates andon the Company’sloan efforts to reduce deposit costs.portfolio.

The average cost of funds calculation includes deposits, Federal Home Loan Bank (“FHLB”) advances, securities sold under repurchase agreements (“repurchase agreements”), long-term debt, and short-term borrowings. The average cost of funds of 2.21%2.19% for the second quarter and 2.20% for the first quarterhalf of 20262026, both decreased 4344 bps,bps from the firstprior quarteryear of 2025.periods. The year-over-year decreasedecreases waswere mainly driven by the decrease in the cost of deposits as discussed above.

The following table presents the interest spread, net interest margin, average balances, interest income and expense, and the average yield/rate by asset and liability component for the firstsecond quarters of 2026 and 2025:

(3)Includes the amortization of net premiums on AFS debt securities of $1$61 millionthousand and $8$10 million for the firstsecond quarters of 2026 and 2025, respectively.

(5)Loans include the accretion of net deferred loan fees and amortization of net premiums, which totaled $11$8 million and $12$13 million for the firstsecond quarters of 2026 and 2025, respectively.

The following table presents the components of noninterest income for the second quarters and first quartershalves of 2026 and 2025:

Noninterest income for the firstsecond quarter of 2026 was $103$106 million, aan $10increase of $20 million or 11% increase24% compared with the firstsecond quarter of 2025. The year-over-year increase was primarily due to increases in wealth management fees, commercial and consumer deposit-related fees, other income, lending and customerloan derivativeservicing fees, and net gains on AFS debt securities. Noninterest income for the first half of 2026 was $209 million, an increase of $31 million or 17% compared with the first half of 2025. The year-over-year increase was primarily due to increases in wealth management fees, commercial and derivativeconsumer mark-to-marketdeposit-related adjustments,fees, partiallyand offsetnet bygains otheron losses.AFS debt securities.

Commercial and consumer deposit-related fees were $31$32 million for the firstsecond quarter of 2026, aan $4increase of $5 million or 13%18% compared with the second quarter of 2025. For the first half of 2026, commercial and consumer deposit-related fees were $62 million, an increase of $8 million or 15% compared with the first quarterhalf of 2025. The year-over-year increaseincreases waswere primarily due to higher commercial customer activity.

Wealth management fees were $22$19 million for the firstsecond quarter of 2026, aan increase of $9 million or 63%81% compared with the second quarter of 2025. For the first half of 2026, wealth management fees were $42 million, an increase of $17 million or 71% compared with the first quarterhalf of 2025. The year-over-year increaseincreases primarily reflected higher customer activity, including increased demand for wealth management products such as fixed-rate corporate bondsbonds, andas fixedwell annuities and increased commission and fees fromas new customer activity.acquisitions.

CustomerNet derivativegains incomeon AFS debt securities of $3 million and derivative$4 mark-to-market adjustments were $6 millionmillion, for the second quarter and first quarterhalf of 2026, arespectively, $1increased $2 million increaseand $3 million, respectively, compared with the firstprior quarteryear of 2025.periods. The year-over-year increaseincreases primarily reflected favorablethe creditsales valuationof adjustments,U.S. partiallygovernment offsetagency byresidential lowermortgage-backed customer activity.securities.

The following table presents the components of noninterest expense for the second quarters and first quartershalves of 2026 and 2025:

Noninterest expense was $280$291 million for the firstsecond quarter of 2026, aan $28increase of $35 million or 11%14% compared with the second quarter of 2025. For the first half of 2026, noninterest expense was $571 million, an increase of $63 million or 12% compared with the first quarterhalf of 2025. TheThese year-over-year increaseincreases waswere primarily duedriven toby increases inhigher compensation and employee benefitsbenefits, occupancy and equipment expense, and computer and software related expenses. The increase for the second quarter also reflected higher OREO expense, partially offset by a decrease in amortization of tax credit and CRA investments, partially offset by OREO income.investments.

Compensation and employee benefits were $173 million for the firstsecond quarter of 2026, aan $26increase of $28 million or 18%19% compared with the second quarter of 2025. For the first half of 2026, compensation and employee benefits were $345 million, an increase of $54 million or 19% compared with the first quarterhalf of 2025. The increaseyear-over-year wasincreases were primarily driven by higher incentive compensationcompensation, staffing growth, additional employer matching contributions under the Company’s 401(k) plan, and staffinghigher growth.costs associated with the deferred compensation plan.

Amortization of tax creditComputer and CRAsoftware investmentsrelated wasexpenses $22were $15 million for the firstsecond quarter of 2026, aan $6increase of $2 million or 40%15% compared with the second quarter of 2025. For the first half of 2026, computer and software related expense was $30 million, an increase of $3 million or 13% compared with the first quarterhalf of 2025. The year-over-year increaseincreases waswere primarilymainly dueattributable to thehigher timingsoftware ofexpenses taxresulting creditfrom continued investments that closed in atechnology giveninfrastructure period.to support the Company’s growth.

The following table presents income before income taxes, income tax expense and the effective tax rate for the firstsecond quarters of 2026 and 2025:

FirstSecond quarter 2026 income tax expense was $100$104 millionmillion, and the effective tax rate was 21.8%,22.2%, compared with firstsecond quarter 2025 income tax expense of $101$92 million and an effective tax rate of 25.8%.22.9%. For the first half of 2026, income tax expense was $203 million, and the effective tax rate was 22.0%, compared with income tax expense of $193 million and an effective tax rate of 24.3% for the same period in 2025. The decreasesincrease in income tax expense and effective tax rate wereis primarily due to higher pre-tax income, partially offset by the release of a valuation allowance associatedrelated withto foreign tax credits in 2026 and favorablethe adjustmentsone-time drivenrevaluation byof adeferred lowertax assets recorded in 2025 due to the adoption of the California state tax apportionment,apportionment partiallyin offset by higher pre-tax income and a partial derecognition of a purchased tax credit.2025.

The Company organizes its operations into three reportable operating segments: (1) Consumer and Business Banking; (2) Commercial Banking; and (3) Treasury and Other. These segments are defined based on customer type, the channels through which customers are served, and the products and services provided. For a description of the Company’s internal management reporting process, including the segmentmethodology costused allocationto methodology,allocate costs among segments, see Note 13 — Business Segments to the Consolidated Financial Statements in this Form 10-Q.

Segment net interest income represents the difference between actual interest earned on segment assets and interest incurred on liabilitiessegment of the segment,liabilities, adjusted for funding charges or credits through the Company’s internal funds transfer pricing (“FTP”) process.

The Consumer and Business Banking segment primarily provides financial products and services to consumer and commercial customers through the Company’s domestic branch network and digital banking platforms. This segment offers consumer and commercial deposits, mortgage and home equity loans, and other banking products and services. It also originates commercial loans for small- and medium-sized enterprises through the Company’s branch network. OtherAdditional banking products and services provided by this segment include wealth management, private banking, treasury management, interest rate risk hedging and foreign exchange services.

The following tabletables presentspresent financial information for the Consumer and Business Banking segment for the periods indicated:

The Commercial Banking segment primarily generates commercial loan and deposit products. Commercial loan products include CRE lending, construction finance, commercial business lending, working capital lines of credit, trade finance, letters of credit, affordable housing lending, asset-based lending, asset-backed finance, project finance, equipment financing, and loan syndication. Commercial deposit products and other financial services include treasury management, foreign exchange services, and interest rate and commodity risk hedging. This segment also includes the Company’s international branch activities.