UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 |
For the fiscal year ended December 31, 2021
OR
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TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the transition period from _______ to _______
Commission file number 000-24939
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A. |
Full title of the plan and the address of the plan, if different
from that of the issuer named below: |
East West Bank Employees 401(k) Savings Plan
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B. |
Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office: |
East West Bancorp, Inc.
135 North Los Robles Avenue, 7th
Floor
Pasadena, California 91101
EAST WEST BANK EMPLOYEES 401(k) SAVINGS PLAN
TABLE OF CONTENTS
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FINANCIAL STATEMENTS: |
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NOTE: |
All other schedules required by Section 2520.103-10 of the
Department of Labor’s Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of
1974 have been omitted because they are not applicable. |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
Plan Administrator and Participants
East West Bank Employees 401(k) Savings
Plan
Pasadena, California
Opinion on the Financial Statements
We have audited the accompanying statements of net assets available
for benefits of the East West Bank Employees 401(k) Savings Plan
(the “Plan”) as of December 31, 2021 and 2020, the related
statement of changes in net assets available for benefits for the
year ended December 31, 2021, and the related notes
(collectively, the “financial statements”). In our opinion, the
financial statements present fairly, in all material respects, the
net assets available for benefits of the Plan as of
December 31, 2021 and 2020, and the changes in net assets
available for benefits for the year ended December 31, 2021,
in conformity with accounting principles generally accepted in the
United States (“U.S.”) of America.
Basis for Opinion
These financial statements are the responsibility of the Plan’s
management. Our responsibility is to express an opinion on the
Plan’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be
independent with respect to the Plan in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Plan is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting.
As part of our audits we are required to obtain an understanding of
internal control over financial reporting but not for the purpose
of expressing an opinion on the effectiveness of the Plan’s
internal control over financial reporting. Accordingly, we express
no such opinion.
Our audits included performing procedures to assess the risk of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by the Plan’s
management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Supplemental Information
The supplemental information in the accompanying Schedule H, Line
4i
—
Schedule of Assets (Held at End of Year) as of December 31,
2021, has been subjected to audit procedures performed in
conjunction with the audit of the Plan’s financial statements. The
supplemental information is presented for the purpose of additional
analysis and is not a required part of the financial statements but
included supplemental information required by the Department of
Labor’s Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The
supplemental information is the responsibility of the Plan’s
management. Our audit procedures included determining whether the
supplemental information reconciles to the financial statements or
the underlying accounting and other records, as applicable, and
performing procedures to test the completeness and accuracy of the
information presented in the supplemental information. In forming
our opinion on the supplemental information, we evaluated whether
the supplemental information, including its form and content, is
presented in conformity with the Department of Labor’s Rules and
Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. In our opinion, the
supplemental information is fairly stated, in all material
respects, in relation to the financial statements as a
whole.
We have served as the Plan’s auditor since 2016.
Los Angeles, California
June 24, 2022
EAST WEST BANK EMPLOYEES 401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
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December 31, |
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2021 |
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2020 |
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ASSETS |
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Investments: |
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Investments at fair value (Notes 2 and 3) |
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$ |
422,403,082 |
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$ |
334,621,378 |
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Investment in a fully benefit-responsive investment contract, at
contract value (Note 4) |
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78,843,590 |
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72,522,145 |
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Total investments |
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501,246,672 |
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407,143,523 |
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Receivables: |
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Notes receivable from participants (Note 2) |
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3,814,047 |
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4,077,991 |
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Participant contributions |
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1,388 |
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2,719 |
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Employer contributions |
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720,264 |
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355,052 |
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Total receivables |
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4,535,699 |
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4,435,762 |
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Total assets |
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505,782,371 |
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411,579,285 |
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LIABILITIES |
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— |
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— |
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NET ASSETS AVAILABLE FOR BENEFITS |
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$ |
505,782,371 |
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$ |
411,579,285 |
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See accompanying Notes to Financial Statements.
EAST WEST BANK EMPLOYEES 401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS
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Year Ended December 31, 2021 |
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ADDITIONS TO NET ASSETS AVAILABLE FOR BENEFITS ATTRIBUTED
TO: |
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Investment income: |
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Net appreciation in fair value of investments |
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73,985,062 |
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Dividends |
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4,659,452 |
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Interest |
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1,381,247 |
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Net investment income |
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80,025,761 |
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Other income: |
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Interest income on notes receivable from participants |
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196,063 |
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Contributions: |
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Participant |
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25,742,033 |
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Participant rollover |
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4,007,556 |
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Employer, net of forfeitures |
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10,363,931 |
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Total contributions, net of forfeitures |
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40,113,520 |
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TOTAL ADDITIONS |
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120,335,344 |
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DEDUCTIONS TO NET ASSETS AVAILABLE FOR BENEFITS ATTRIBUTED
TO: |
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Benefits paid to participants |
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25,600,134 |
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Administrative expenses |
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532,124 |
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TOTAL DEDUCTIONS |
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26,132,258 |
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NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS |
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94,203,086 |
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NET ASSETS AVAILABLE FOR BENEFITS: |
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Beginning of year |
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411,579,285 |
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End of year |
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$ |
505,782,371 |
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See accompanying Notes to Financial Statements.
EAST WEST BANK EMPLOYEES 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 1 — DESCRIPTION OF THE PLAN
The following description of the East West Bank Employees 401(k)
Savings Plan (the “Plan”) provides only general information. Plan
participants should refer to the Plan documents, as amended, for a
more complete description of the Plan’s provisions. The Plan is
subject to the requirements of the Employee Retirement Income
Security Act of 1974 (“ERISA”).
General —
The Plan is a defined contribution plan sponsored by East West Bank
(the “Bank” or the “Plan Sponsor”), a wholly-owned bank subsidiary
of East West Bancorp, Inc. (“East West”). The Plan is administered
by the 401(k) Plan Committee appointed by the Board of Directors of
East West. Prudential Trust Company (the “Trustee”) serves as the
trustee for the Plan. The Plan became effective on January 1, 1986,
and its provisions were amended and restated on April 1,
2019.
Eligibility —
Employees are eligible to participate in the Plan as of the first
day of the first calendar month after the date they have completed
three months of service with the Bank and have attained the age of
18. Eligible employees are automatically enrolled in the Plan at a
3% contribution rate unless the participants elect another rate or
opt out. For Plan participants who are automatically enrolled and
do not direct the investment of their accounts, their contributions
will be invested by default into the age-appropriate conservative
portfolio available under GoalMaker®, a computer asset allocation
program available to the Plan participants.
Contributions —
Eligible employees may elect to defer 1% to 80% of their pre-tax
and/or after-tax (Roth) 401(k) annual compensation subject to the
annual maximum allowable participant contribution, which was
$19,500 for the year ended December 31, 2021. For 2021, Plan
participants age 50 years or older before the end of the Plan year
were also permitted to make additional catch-up contributions up to
$6,500. Plan participants may rollover into the Plan eligible
distributions from other tax-qualified retirement plans or
individual retirement accounts (“IRAs”)
The Bank matches $0.75 for each $1.00 contributed by Plan
participants, up to the first 6% of the Plan participant’s eligible
compensation. The Bank has the discretion to true-up matching
contributions for the Plan year in situations where deferral
percentages exceed the 6% limit in certain periods but are less
than the 6% limit in other periods, as long as the total employer
matching amounts do not exceed the designated matching amounts for
the full Plan year.
Employer contributions receivable
on the Statements of Net Assets Available for Benefits represents
the Bank’s true-up matching contributions for the years ended
December 31, 2021 and 2020, which were deposited after each year
end. Contributions to the Plan are held in a trust fund (the
“Trust”). The Trustee is responsible for the safekeeping of the
Trust, including holding and investing the Plan’s
assets.
Investments —
During the year ended December 31, 2021, Plan participants directed
and allocated the investments of their contributions among various
investment options offered by the Plan, which included the common
stock of East West, a guaranteed income fund (“GIF”) managed by
Prudential Retirement Insurance and Annuity Company (“PRIAC”) and
mutual funds. Participants are allowed to change their investment
options at any time.
Vesting, Benefits and Benefits Payable —
Plan participants are fully vested in their salary deferral
contributions and the amounts rolled over from former employers’
tax-qualified retirement plans or IRAs. Plan participants become
vested in the matching contributions received from the employer at
the rate of 20% per year for each full year of service and are
fully vested after five years of service.
Upon separation from service, if a participant’s account is less
than $1,000 and a distribution election has not been made, the
distribution is made as a lump-sum payment in cash. If the Plan
participant’s vested account is greater than $1,000 but does not
exceed $5,000, and a distribution election has not been made, the
Plan will automatically roll over the Plan participant’s
distribution into an IRA designated under the Plan. If the value of
the Plan participant’s vested account does not exceed $5,000 and a
distribution election has been made, the distribution will be made
in the form of a lump-sum payment in cash. However, if the value of
the Plan participant’s vested account is in excess of $5,000, the
Plan participant may elect to (1) receive a lump-sum distribution
in cash; or (2) receive installments over a period of not more than
the participant’s assumed life expectancy (or the assumed life
expectancies of the participant and the participant’s beneficiary).
In addition, the Plan allows for withdrawals for employees over 59
½ years of age and hardship distributions if certain criteria are
met. As of December 31, 2021 and 2020, there were no amounts owed
to terminated participants who had elected to withdraw their
benefits.
Forfeiture Accounts —
If a participant terminates employment before being fully vested in
the employer matching contributions, the non-vested portion of the
terminated participant’s account balance remains in the Plan’s
forfeiture account. Forfeiture accounts are
used to pay certain plan expenses and reduce future employer
contributions. Forfeitures of $1,204,094 were used to reduce
employer contributions during the year ended December 31, 2021. No
plan expenses were paid with funds from the forfeiture accounts
during the year ended December 31, 2021. The unallocated forfeiture
accounts outstanding were $88,196 and $42,489 as of December 31,
2021 and 2020, respectively.
Participant Accounts —
Each Plan participant’s account is credited with the participant’s
contributions, employer matching contributions, the Plan’s earnings
or losses, and rollovers from former employers’ tax-qualified
retirement plans or IRAs, if applicable. Allocations of earnings or
losses are based on the Plan participant’s account balances as
defined in the Plan document.
Notes Receivable from Participants —
Active participants in the Plan are eligible for loans under the
Plan. A participant may request a direct rollover of a loan to
another tax-qualified plan that agrees to accept such direct
rollover. A participant may not engage in a direct rollover of a
loan to the extent the participant has already received a deemed
distribution with respect to such loan. The Plan also accepts
direct rollover of loans from tax-qualified retirement plans of the
participant’s former employers. Plan participants may borrow from
their 401(k) account a minimum of $1,000 and can have only one loan
outstanding from the Plan. The maximum loan that may be obtained is
the lesser of (1) 50% of the Plan participant’s vested account
balance; or (2) $50,000 reduced by the excess (if any) of (A) the
highest outstanding loan balance made to the Plan participant
during the 12-month period preceding the date on which the new loan
is made, over (B) the outstanding loan balances from the Plan to
the participant on the date on which the new loan is made. Loan
transactions are treated as transfers to (from) the investment fund
from (to) the participant loan fund. The maximum allowed terms of a
general purpose loan and a loan used to finance a primary residence
are 5 and 20 years, respectively. The loans are secured by the
vested balances in the Plan participants’ accounts. When the loan
is issued, the interest rate is set at 1% above the prime rate
reported by the Board of Governors of the Federal Reserve System as
of the last business day of the previous calendar quarter and
remains fixed for the entire term of the loan. Principal and
interest are repaid through payroll deductions from the
participants’ salaries.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting —
The accompanying financial statements have been prepared using the
accrual basis of accounting in accordance with U.S. Generally
Accepted Accounting Principles (“GAAP”).
Investments Valuation and Income Recognition —
The Plan’s investments, except for those in a traditional fully
benefit-responsive investment contract, are reported at fair value.
Investments in a traditional fully benefit-responsive investment
contract held by a defined contribution plan are reported at
contract value. Contract value is the amount participants would
receive if they were to initiate permitted transactions under the
terms of the Plan, which is the more relevant measurement. For
additional information on fair and contract values, see
Note 3
— Fair Value Measurements
and
Note 4
—
Investment in a Fully Benefit-Responsive Investment Contract, at
Contract Value
to the Financial Statements in this Annual Report on Form 11-K
(“this Form 11-K”).
Net appreciation in fair value of investments
on
the Statement of Changes in Net Assets Available for Benefits
includes realized gains (losses) on investments bought or
sold,
as well as unrealized gains (losses) on investments held at the end
of the year. Realized gains (losses) on the investments are
recorded as the difference between the proceeds received and the
cost of investments. Unrealized appreciation or depreciation
represents the difference between the fair value of investments
held at the end and the beginning of the Plan year (or the cost of
the investments on the purchase date if acquired during the Plan
year). Purchases and sales of securities are recorded on a
trade-date basis. Interest income is recorded on an accrual basis.
Dividends are recorded on the ex-dividend date.
Use of Estimates —
The preparation of financial statements in accordance with U.S.
GAAP requires management to make estimates and assumptions that
affect the amounts reported in the financial statements,
accompanying notes and supplemental schedule, and disclosures of
contingent assets and liabilities. Actual results could materially
differ from those estimates and assumptions.
Administrative Expenses —
Investment transaction expenses are offset against the related
investment income. Other administrative and non-investment expenses
of the Plan are either paid by the Plan Sponsor, which is a
party-in-interest, or through the Plan expense
account. Expenses paid by the Plan Sponsor, which are not
reflected in the accompanying financial statements, constitute
exempt party-in-interest transactions under ERISA. Expenses paid
through the Plan expense account are included in
Administrative expenses
on the Statement of Changes in Net Assets Available for
Benefits.
Payment of Benefits
— Benefits are recorded when paid.
Notes Receivable from Participants
—
Notes receivable from participants
on the Statements of Net Assets Available for Benefits are reported
at their unpaid principal and accrued interest balances, with no
allowance for credit losses recorded. Interest income is recorded
on an accrual basis. Repayments of principal and interest are
received through payroll deductions and the notes receivable are
collateralized by the participants’ account balances. If a
participant fails to make loan repayments more than 90 days after
the scheduled due date, the note receivable is deemed to be in
default. The participant may pay any missed loan payments before
the applicable grace period expires or repay the loan in full. If a
distribution is available under the Plan, the participant may
request a distribution to pay the loan. If none of these options
are exercised, the Plan Sponsor will offset the outstanding loan
amount against the vested account balances and treat the amount as
a distribution.
NOTE 3 — FAIR VALUE MEASUREMENTS
Accounting Standard Codification Topic 820,
Fair Value Measurements,
defines fair value as the price that would be received to sell an
asset or the price that would be paid to transfer a liability in an
orderly transaction between market participants at the measurement
date. In determining the fair value of financial instruments, the
Plan uses various methods including market and income approaches.
Based on these approaches, the Plan utilizes certain assumptions
that market participants would use in pricing an asset or a
liability. These inputs can be readily observable, market
corroborated or generally unobservable. The Plan utilizes valuation
techniques that maximize the use of observable inputs and minimize
the use of unobservable inputs. The fair value hierarchy described
below is based on the quality and reliability of the information
used to determine fair value. The fair value hierarchy gives the
highest priority to quoted prices available in active markets and
the lowest priority to prices derived from data lacking
transparency. The fair value of the Plan’s assets and liabilities
is classified and disclosed in one of the following three
categories:
•Level
1 — Valuation is based on quoted prices for identical instruments
traded in active markets.
•Level
2 — Valuation is based on quoted prices for similar instruments
traded in active markets; quoted prices for identical or similar
instruments traded in markets that are not active; and
model-derived valuations whose inputs are observable and can be
corroborated by market data.
•Level
3 — Valuation is based on significant unobservable inputs for
determining the fair value of assets or liabilities. These
significant unobservable inputs reflect assumptions that market
participants may use in pricing the assets or
liabilities.
The classification of assets and liabilities within the hierarchy
is based on whether inputs to the valuation methodology used are
observable or unobservable and the significance of those inputs in
the fair value measurement. The Plan’s assets and liabilities are
classified in their entirety based on the lowest level of input
that is significant to their fair value measurements.
The following tables categorize the Plan’s investments that were
measured at fair value on a recurring basis as of December 31,
2021 and 2020:
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Investments
Measured at Fair Value on a Recurring Basis
as of December 31, 2021 |
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Fair Value
Measurements |
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Quoted Prices in
Active Markets for
Identical Assets
(Level 1) |
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Significant Other Observable Inputs
(Level 2) |
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Significant
Unobservable Inputs
(Level 3) |
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Common stock |
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$ |
61,312,072 |
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$ |
61,312,072 |
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$ |
— |
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$ |
— |
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Mutual funds |
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361,091,010 |
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361,091,010 |
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— |
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— |
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Total investments measured at fair value |
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$ |
422,403,082 |
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$ |
422,403,082 |
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$ |
— |
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$ |
— |
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Investments Measured at Fair Value on a Recurring Basis
as of December 31, 2020 |
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Fair Value
Measurements |
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Quoted Prices in
Active Markets for
Identical Assets
(Level 1) |
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Significant Other
Observable Inputs
(Level 2) |
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Significant
Unobservable Inputs
(Level 3) |
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Common stock |
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$ |
43,405,426 |
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$ |
43,405,426 |
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$ |
— |
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$ |
— |
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Mutual funds |
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291,215,952 |
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291,215,952 |
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— |
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— |
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Total investments measured at fair value |
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$ |
334,621,378 |
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$ |
334,621,378 |
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$ |
— |
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$ |
— |
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Common Stock
— East West’s common stock held in the participants’ accounts is
valued at the closing price on the last business day of the Plan
year on the Nasdaq Global Select Market where individual securities
are traded. This is classified in Level 1 of the fair value
hierarchy.
Mutual Funds
— Mutual funds are valued at the last reported closing price on the
last business day of the Plan year on a recognized securities
exchange. They are classified in Level 1 of the fair value
hierarchy.
The valuation methodologies described above may produce a fair
value calculation that may not be indicative of net realizable
value or reflective of future fair value. Furthermore, while the
Plan’s valuation methods are appropriate and consistent with other
market participants, the use of different methodologies or
assumptions to determine the fair value of certain financial
instruments could result in a different fair value measurement on
the reporting date.
NOTE 4 — INVESTMENT IN A FULLY BENEFIT-RESPONSIVE INVESTMENT
CONTRACT, AT CONTRACT
VALUE
The Plan offers a stable value fund investment option, the GIF. The
GIF is a traditional fully benefit-responsive guaranteed investment
contract with the issuer, PRIAC, which invests in public bonds,
commercial mortgages and private placement bonds. PRIAC maintains
the contributions in a general account. Under the GIF, participants
may direct permitted withdrawals or transfers of all or a portion
of their account balance at contract value within reasonable time
frames. Contract value represents contributions made to the
contract, plus earnings at guaranteed crediting rates, less
withdrawals and fees. The contract is effected directly between the
Plan Sponsor and PRIAC. The repayment of principal and interest
credited to Plan participants is a financial obligation of PRIAC.
Accordingly, the GIF is considered to be a fully benefit-responsive
investment contract. As of December 31, 2021 and 2020, the GIF
totaled $78,843,590 and $72,522,145, respectively.
The Plan’s ability to receive amounts due is dependent on PRIAC’s
ability to meet its financial obligations, which may be affected by
future economic and regulatory developments.
Generally, there are no probable events known to the Plan that
would limit its ability to transact at contract value with PRIAC
nor with the participants. In addition, there are no events that
allow PRIAC to terminate the contract with the Plan and settle at
an amount different from contract value.
NOTE 5
—
PARTY-IN-INTEREST AND RELATED PARTY TRANSACTIONS
A party-in-interest is defined under the Department of Labor
regulations as any fiduciary (including, but not limited to, any
administrator, officer, trustee or custodian), counsel or employee
of the Plan, any party rendering services to the Plan, the employer
and certain others. The Plan holds a guaranteed investment contract
managed by PRIAC, which is a custodian of the Plan. Accordingly,
the Plan’s payment of custodian fees to PRIAC qualifies as a
party-in-interest transaction. Notes receivable from participants
also reflect party-in-interest transactions. Certain administrative
functions are performed by officers or employees of the Plan
Sponsor. No such officers or employees received compensation from
the Plan during the year ended December 31, 2021.
The Plan held 779,259 and 855,954 shares of East West common stock
with a fair value of $61,312,072 and $43,405,426 as of
December 31, 2021 and 2020, respectively. During the year
ended December 31, 2021, the Plan received dividend income of
$1,052,281 from this common stock. Sales and net realized gains of
East West’s common stock in 2021 were $12,805,603 and $5,345,504,
respectively, while purchases of East West’s common stock amounted
to $7,114,600. These transactions qualify as party-in-interest
transactions.
NOTE 6
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PLAN TERMINATION
Although the Bank has not expressed any intent to do so, it has the
right under the Plan to discontinue its contributions at any time
and to terminate the Plan subject to the provisions of ERISA. In
the event of the Plan’s termination, the total amounts credited to
the accounts of each participant become fully vested and no further
allocations shall be made. The Bank could direct the distribution
of their participant accounts in a manner permitted by the Plan as
soon as practicable.
NOTE 7
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FEDERAL INCOME TAX STATUS
The Internal Revenue Service (“IRS”) issued an opinion letter dated
April 29, 2014, indicating that the prototype adopted by the Plan,
as then designed, was in compliance with applicable sections of the
Internal Revenue Code (“IRC”). The Plan has been amended subsequent
to this opinion letter. However, the Plan Sponsor believes that the
Plan is designed, and is currently being operated, in compliance
with the applicable requirements of the IRC. Therefore, the Plan
Sponsor believes that the Plan is qualified, and the related Trust
is tax-exempt. Accordingly, no provision for income taxes has been
included in the Plan’s financial statements.
U.S. GAAP requires Plan management to evaluate tax positions taken
by the plan and recognize a tax liability (or tax asset) if the
Plan has taken an uncertain position that more likely than not
would not be sustained upon examination by the IRS. The Plan
administrator analyzed the tax positions taken by the Plan and
concluded that, as of December 31, 2021 and 2020, there were
no uncertain positions taken or expected to be taken that would
require recognition of a tax liability (or tax asset) or disclosure
in the financial statements. The Plan is subject to routine audits
by tax jurisdictions; however, there are currently no audits for
any tax periods in progress.
NOTE 8 — RISKS AND UNCERTAINTIES
The Plan utilizes various investment instruments, including mutual
funds that invest in the securities of companies located in foreign
countries. Investment securities, in general, are exposed to
various risks, such as interest rate, credit and overall market
volatility. In addition, securities of foreign companies are
subject to risks and considerations not typically associated with
the securities of U.S. companies. These risks include foreign
exchange risks, less reliable information about issuers, different
securities transaction clearance and settlement practices, and
possible adverse political and economic developments. In addition,
securities of foreign companies and their markets may be less
liquid and subject to more volatility than securities of U.S.
companies. Due to the level of risk associated with certain
investment securities, it is reasonable to expect that changes in
the values of investment securities will occur in the near term,
and that such changes could materially affect the participants’
account balances and the net assets available for
benefits.
Included in investments were units of the GIF totaling $78,843,590
and $72,522,145, or 16% and 18% of the Plan’s total investments, as
of December 31, 2021 and 2020, respectively. Refer to
Note 4
—
Investment in a Fully Benefit-Responsive Investment Contract, at
Contract Value
to the Financial Statements in this Form 11-K for further
investment information. Risks arise when entering into any
investment contract due to the potential inability of the issuer to
meet the terms of the contract. In addition, security-backed
contracts have the risk of default or the lack of liquidity of the
underlying portfolio assets. As of December 31, 2021 and 2020,
PRIAC was assigned a claims-paying rating of “AA-” by Standard and
Poor’s. According to Standard and Poor’s publications, an insurer
rated “AA-” has very strong financial security characteristics.
Investments also included shares of East West’s common stock
amounting to $61,312,072 and $43,405,426, or 12% and 11% of the
Plan’s total investments, as of December 31, 2021 and 2020,
respectively. A significant decline in the market value of East
West’s common stock could materially affect the net assets
available for benefits.
The macroeconomic impacts stemming from the conflict in Ukraine and
the potential economic impact and duration of the COVID-19
pandemic, as well as their impacts to the future market of the
Plan’s investments remain uncertain.
NOTE 9
—
SUBSEQUENT EVENTS
Effective January 1, 2022, the Plan was restated onto a Prototype
plan document sponsored by Prudential Financial Inc. The Prototype
plan document received an opinion letter from the IRS dated
December 4, 2020, stating that the Prototype plan document, as
designed, is in compliance with applicable sections of the IRC. As
a result of the restatement, there were no changes to significant
provisions of the Plan.
In April 2022, Empower Retirement, LLC acquired the full service
retirement business of Prudential Financial, Inc. The acquisition
has not affected the Plan as of the date the Financial Statements
in this Form 11-K were available to be issued.
SUPPLEMENTAL SCHEDULE
EAST WEST BANK EMPLOYEES 401(k) SAVINGS PLAN
EIN 95-2795851 Plan
Number: 001 Form Number: 5500
SCHEDULE H, LINE 4i — SCHEDULE OF ASSETS (HELD AT END OF YEAR) AS
OF DECEMBER 31, 2021
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(a) |
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(b) Identity of Issuer, Borrower, Lessor,
or Similar Party |
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(c) Description of Investment, Including Maturity Date, Rate of
Interest, Collateral,
Par, or Maturity Value |
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(d) Cost |
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(e) Current Value |
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* |
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Prudential Guaranteed Income Fund |
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Fully benefit-responsive investment contract - 2,498,066
units
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** |
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$ |
78,843,590 |
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American Funds EuroPacific Growth Fund R-6 |
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Mutual fund - 685,913 shares
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** |
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44,399,137 |
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American Funds Fundamental Investors R-6 |
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Mutual fund - 260,370 shares
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** |
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19,777,685 |
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American Funds Washington Mutual Investors Fund R-6 |
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Mutual fund - 333,690 shares
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** |
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20,191,556 |
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DFA U.S. Targeted Value Portfolio |
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Mutual fund - 192,865 shares
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** |
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5,824,516 |
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Dodge & Cox Funds Income Fund |
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Mutual fund - 617,916 shares
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** |
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8,687,895 |
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Franklin Small Cap Growth Fund R6 |
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Mutual fund - 474,610 shares
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** |
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12,596,137 |
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Metropolitan West Total Return Bond Fund Plan |
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Mutual fund - 1,698,973 shares
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** |
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17,380,494 |
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MFS Growth Fund R6 |
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Mutual fund - 344,318 shares
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** |
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67,348,582 |
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MFS Mid Cap Value Fund R6 |
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Mutual fund - 428,062 shares
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** |
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13,882,064 |
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MFS Total Return Fund R4 |
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Mutual fund - 705,646 shares
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** |
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15,178,452 |
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MFS Value Fund R4 |
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Mutual fund - 189,791 shares
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** |
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10,313,244 |
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T. Rowe Price Mid-Cap Growth Fund I |
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Mutual fund - 162,281 shares
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** |
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19,053,461 |
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Vanguard Institutional Index Fund Institutional |
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Mutual fund - 159,533 shares
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** |
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64,736,827 |
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Vanguard Mid-Cap Index Fund Institutional |
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Mutual fund - 345,306 shares
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** |
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24,064,385 |
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Vanguard Small-Cap Index Fund Institutional |
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Mutual fund - 162,944 shares
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** |
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17,656,575 |
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* |
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East West Bancorp, Inc. |
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Common stock - 779,259 shares
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** |
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61,312,072 |
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Total investments |
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501,246,672 |
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* |
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Loans to participants |
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Participant loans (maturing between 2022 and 2041 with interest
rates of 4.25% to 9.25% collateralized by participants’ account
balances)
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** |
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3,814,047 |
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Total assets |
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$ |
505,060,719 |
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* |
Party-in-interest, as defined by ERISA. |
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** |
The cost of participant-directed investments is not required to be
disclosed. |
SIGNATURE
The Plan.
Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee
benefit plan) have duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly
authorized.
Date: June 24, 2022
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EAST WEST BANK EMPLOYEES 401(k) SAVINGS PLAN |
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By |
/s/ SHARON CHEUNG |
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Sharon Cheung |
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Senior Vice President and Controller |
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EXHIBIT INDEX
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Exhibit No. |
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Exhibit Description |
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Consent of Independent Registered Public Accounting
Firm. |
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