What changed in EAST WEST BANCORP INC's 10-K — 2022 vs 2023

Item 1. Business — Supervision and Regulation — Regulatory Capital Requirements and Regulatory Capital-Related Development in this Form 10-K for additional details.

The Company adopted Accounting Standards Update (“ASU”) 2016-13 on January 1, 2020, which requires the measurement of the allowance for credit losses to be based on management’s best estimate of lifetime expected credit losses inherent in the Company’s relevant financial assets.

The Company has elected the phase-in option provided by a final rule that delays an estimate of the CECL effect on regulatory capital for two years and phases in the impact over three years.

The rule permits certain banking organizations to exclude from regulatory capital the initial adoption impact of CECL, plus 25% of the cumulative changes in the allowance for credit losses under CECL for each period until December 31, 2021, followed by a three-year phase-out period in which the aggregate benefit is reduced by 25% in 2022, 50% in 2023 and 75% in 2024.

Accordingly, our capital ratios as of December 31, 2022 reflect a delay of 75% of the estimated impact of CECL on regulatory capital.

The following table presents the Company’s and the Bank’s capital ratios as of December 31, 2022 and 2021 under the Basel III Capital Rules, and those required by regulatory agencies for capital adequacy and well-capitalized classification purposes: Basel III Capital Rules December 31, 2022 December 31, 2021 Company East West Bank Company East West Bank Minimum Regulatory Requirements Minimum Regulatory Requirements including Capital Conservation Buffer Well- Capitalized Requirements Risk-based capital ratios: CET 1 capital 12.7 % 12.5 % 12.8 % 12.3 % 4.5 % 7.0 % 6.5 % Tier 1 capital (1) 12.7 % 12.5 % 12.8 % 12.3 % 6.0 % 8.5 % 8.0 % Total capital 14.0 % 13.5 % 14.1 % 13.2 % 8.0 % 10.5 % 10.0 % Tier 1 leverage (1) 9.8 % 9.7 % 9.0 % 8.6 % 4.0 % 4.0 % 5.0 % (1) The Tier 1 leverage well-capitalized requirement applies only to the Bank since there is no Tier 1 leverage ratio component in the definition of a well-capitalized bank holding company.

The minimum Tier 1 risk-based capital ratio requirement for the Company to be considered well-capitalized is 6%. The Company is committed to maintaining strong capital levels to assure the Company’s investors, customers and regulators that the Company and the Bank are financially sound.

As of both December 31, 2022 and 2021, the Company and the Bank continued to exceed all “well-capitalized” capital requirements and the required minimum capital requirements under the Basel III Capital Rules. Total risk-weighted assets were $50.04 billion as of December 31, 2022, an increase of $6.45 billion or 15% from $43.59 billion as of December 31, 2021.

The increase in risk-weighted assets was primarily due to loan growth. Risk Management Overview In the normal course of conducting its business, the Company is exposed to a variety of risks, some of which are inherent to the financial services industry and others of which are more specific to the Company’s business.

The Company operates under a Board-approved ERM framework, which outlines the company-wide approach to risk management and oversight, and describes the structures and practices employed to manage the current and emerging risks inherent to the Company. The Company’s ERM program incorporates risk management throughout the organization in identifying, managing, monitoring and reporting risks.

It identifies the Company’s major risk categories as: credit, liquidity, capital, market, operational, compliance, legal, strategic and reputational. 57 The Risk Oversight Committee of the Board of Directors monitors the ERM program through established risk categories and provides oversight of the Company’s risk appetite and control environment.

The Risk Oversight Committee provides focused oversight of the Company’s identified enterprise risk categories on behalf of the full Board of Directors. Under the direction of the Risk Oversight Committee, management committees apply targeted strategies to reduce the risks to which the Company’s operations are exposed.

The Company’s ERM program is executed along the three lines of defense model, which provides for a consistent and standardized risk management control environment across the enterprise. The first line of defense is comprised of production, operational, and support units.

The second line of defense is comprised of various risk management and control functions charged with monitoring and managing specific major risk categories and/or risk subcategories. The third line of defense is comprised of the Internal Audit function and Independent Asset Review (“IAR”).

Internal Audit and IAR provide assurance and evaluate the effectiveness of risk management, control and governance processes as established by the Company. Reporting directly to the Board’s Audit Committee, Internal Audit maintains organizational independence and objectivity. Further discussion and analysis of the primary risk areas are detailed in the following subsections of Risk Management.

Credit Risk Management Credit risk is the risk that a borrower or a counterparty will fail to perform according to the terms and conditions of a loan or investment and expose the Company to loss. Credit risk exists with many of the Company’s assets and exposures such as loans, debt securities and certain derivatives.

The majority of the Company’s credit risk is associated with lending activities. The Risk Oversight Committee has primary oversight responsibility for identified enterprise risk categories including credit risk.

The Risk Oversight Committee monitors management’s assessment of asset quality, credit risk trends, credit quality administration, underwriting standards, and portfolio credit risk management strategies and processes, such as diversification and concentration limits, all of which enable management to control credit risk. At the management level, the Credit Risk Management Committee has primary oversight responsibility for credit risk.

The Senior Credit Supervision function manages credit policy for the line of business transactional credit risk, assuring that all exposure is risk-rated according to the requirements of the credit risk rating policy. The Senior Credit Supervision function evaluates and reports the overall credit risk exposure to senior management and the Risk Oversight Committee.

Reporting directly to the Board’s Risk Oversight Committee, the IAR function provides additional support to the Company’s strong credit risk management culture by providing an independent and objective assessment of underwriting and documentation quality. A key focus of our credit risk management is adherence to a well-controlled underwriting process.

The Company assesses the overall credit quality performance of the loans held-for-investment portfolio through an integrated analysis of specific performance ratios. This approach forms the basis of the discussion in the sections immediately following: Nonperforming Assets, Troubled Debt Restructurings (“TDRs”) and Allowance for Credit Losses.

Credit Quality The Company utilizes a credit risk rating system to assist in monitoring credit quality. Loans are evaluated using the Company’s internal credit risk rating of 1 through 10.

For more information on the Company’s credit quality indicators and internal credit risk ratings, refer to Note 6 — Loans Receivable and Allowance for Credit Losses to the Consolidated Financial Statements in this Form 10-K.

The following table presents the Company’s criticized loans as of December 31, 2022 and 2021: December 31, Change ($ in thousands) 2022 2021 $ % Criticized loans: Special mention loans $ 468,471 $ 384,694 $ 83,777 22 % Classified loans 427,509 448,362 (20,853) (5) % Total criticized loans $ 895,980 $ 833,056 $ 62,924 8 % Special mention loans to loans held-for-investment 0.97 % 0.92 % Classified loans to loans held-for-investment 0.89 % 1.08 % Criticized loans to loans held-for-investment 1.86 % 2.00 % 58 Nonperforming Assets Nonperforming assets are comprised of nonaccrual loans, other real estate owned (“OREO”), and other nonperforming assets.

Other nonperforming assets and OREO are repossessed assets and properties, respectively, acquired through foreclosure, or through full or partial satisfaction of loans held-for-investment. Nonperforming assets were $99.8 million or 0.16% of total assets as of December 31, 2022, a decrease of $3.7 million or 4%, compared with $103.5 million or 0.17% of total assets as of December 31, 2021.

The following table presents nonperforming assets information as of December 31, 2022 and 2021: December 31, Change ($ in thousands) 2022 2021 $ % Commercial: C&I $ 50,428 $ 59,023 $ (8,595) (15) % CRE: CRE 23,244 9,498 13,746 145 % Multifamily residential 169 444 (275) (62) % Total CRE 23,413 9,942 13,471 135 % Consumer: Residential mortgage: Single-family residential 14,240 15,720 (1,480) (9) % HELOCs 11,346 8,444 2,902 34 % Total residential mortgage 25,586 24,164 1,422 6 % Other consumer 99 52 47 90 % Total nonaccrual loans 99,526 93,181 6,345 7 % OREO, net 270 363 (93) (26) % Other nonperforming assets — 9,938 (9,938) (100) % Total nonperforming assets $ 99,796 $ 103,482 $ (3,686) (4) % Nonperforming assets to total assets 0.16 % 0.17 % Nonaccrual loans to loans held-for-investment 0.21 % 0.22 % Allowance for loan losses to nonaccrual loans 598.48 % 581.21 % TDRs included in nonperforming loans $ 43,805 $ 30,383 Loans are generally placed on nonaccrual status when they become 90 days past due or when the full collection of principal or interest becomes uncertain regardless of the length of past due status.

Collectability is generally assessed based on economic and business conditions, the borrower’s financial condition and the adequacy of collateral, if any. For additional details regarding the Company’s nonaccrual loan policy, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Loans Held-for-Investment to the Consolidated Financial Statements in this Form 10-K.

Nonaccrual loans were $99.5 million as of December 31, 2022, an increase of $6.3 million or 7% from $93.2 million as of December 31, 2021. This increase was predominantly due to an increase in CRE nonaccrual loans, partially offset by charge-offs and paydowns of commercial loans.

As of December 31, 2022, $68.3 million or 69% of nonaccrual loans were less than 90 days delinquent.

In comparison, $54.2 million or 58% of nonaccrual loans were less than 90 days delinquent as of December 31, 2021. 59 The following table presents the accruing loans past due by portfolio segment as of December 31, 2022 and 2021: Total Accruing Past Due Loans (1) Change Percentage of Total Loans Outstanding December 31, December 31, ($ in thousands) 2022 2021 $ % 2022 2021 Commercial: C&I $ 9,355 $ 11,069 $ (1,714) (15) % 0.06 % 0.08 % CRE: CRE 14,185 3,722 10,463 281 % 0.10 % 0.03 % Multifamily residential 1,000 5,342 (4,342) (81) % 0.02 % 0.15 % Total CRE 15,185 9,064 6,121 68 % 0.08 % 0.06 % Total commercial 24,540 20,133 4,407 22 % 0.07 % 0.07 % Consumer: Residential mortgage: Single-family residential 25,653 18,760 6,893 37 % 0.23 % 0.21 % HELOCs 8,786 5,854 2,932 50 % 0.41 % 0.27 % Total residential mortgage 34,439 24,614 9,825 40 % 0.26 % 0.22 % Other consumer 3,192 108 3,084 NM 4.18 % 0.08 % Total consumer 37,631 24,722 12,909 52 % 0.28 % 0.22 % Total $ 62,171 $ 44,855 $ 17,316 39 % 0.13 % 0.11 % NM — Not meaningful.

(1) There were no accruing loans past due 90 days or more as of both December 31, 2022 and 2021.

Troubled Debt Restructurings TDRs are loans for which contractual terms have been modified by the Company for economic or legal reasons related to a borrower’s financial difficulties, and for which a concession to the borrower was granted that the Company would not otherwise consider.

The Company’s loan modifications are handled on a case-by-case basis and are negotiated to achieve mutually agreeable terms that maximize loan collectability and meet the borrower’s financial needs. A modification typically may include rate reduction, principal forgiveness, extension of loan terms, and delay of payment, and is intended to minimize economic loss and to avoid foreclosure or repossession of collateral.

At the time of restructuring, if a portion of the loan is deemed to be uncollectible, a charge-off may be recorded. Alternatively, if a charge-off has already been recorded in a previous period then no charge-off is required at the time of modification.

The following table presents the performing and nonperforming TDRs by loan portfolio segments as of December 31, 2022 and 2021. The allowance for loan losses for total TDRs was $17.7 million as of December 31, 2022, and $4.8 million as of December 31, 2021.

December 31, 2022 2021 ($ in thousands) Performing TDRs Nonperforming TDRs Total Performing TDRs Nonperforming TDRs Total Commercial: C&I $ 43,453 $ 42,683 $ 86,136 $ 77,256 $ 28,239 $ 105,495 CRE: CRE 22,596 — 22,596 23,379 — 23,379 Multifamily residential 2,834 169 3,003 4,042 197 4,239 Total CRE 25,430 169 25,599 27,421 197 27,618 Consumer: Residential mortgage: Single-family residential 4,805 — 4,805 6,585 1,102 7,687 HELOCs 2,222 953 3,175 2,553 845 3,398 Total residential mortgage 7,027 953 7,980 9,138 1,947 11,085 Total TDRs $ 75,910 $ 43,805 $ 119,715 $ 113,815 $ 30,383 $ 144,198 60 Performing TDRs were $75.9 million as of December 31, 2022, a decrease of $37.9 million or 33% from $113.8 million as of December 31, 2021.

This decrease reflected payoffs and paydowns of performing C&I, single-family residential and multifamily residential TDR loans, partially offset by one newly designated performing C&I TDR loan. Over 93% and 94% of the performing TDR loans were current as of December 31, 2022 and 2021, respectively.

Nonperforming TDRs were $43.8 million as of December 31, 2022, an increase of $13.4 million or 44% from $30.4 million as of December 31, 2021. This increase primarily reflected newly designated nonperforming C&I TDR loans, partially offset by payoffs and paydowns of nonperforming C&I TDR loans.

Existing TDRs that were subsequently modified in response to the COVID-19 pandemic continue to be classified as TDRs. Customers who require further assistance upon exiting from the COVID-19 deferral programs may receive further modifications which may be classified as TDRs.

As of December 31, 2022, there were no TDRs that were modified in response to the COVID-19 pandemic, and the amount of TDRs that were modified in response to the COVID-19 pandemic were insignificant as of December 31, 2021.

Item 1A. Risk Factors — Risks Related to Geopolitical Uncertainties in this Form 10-K. Commercial — Commercial Real Estate Loans. The Company focuses on providing financing to experienced real estate investors and developers who have moderate levels of leverage, many of whom are long-time customers of the Bank.

CRE loans totaled $13.86 billion as of December 31, 2022, compared with $12.16 billion as of December 31, 2021, and accounted for 29% of total loans held-for-investment as of both dates. Interest rates on CRE loans may be fixed, variable or hybrid.

As of December 31, 2022, 65% of our CRE portfolio was variable rate, of which 47% had customer-level interest rate derivative contracts in place. These are hedging contracts offered by the Company to help our customers manage their interest rate risk while the Bank’s own exposure remained variable rate.

In comparison, as of December 31, 2021, 75% of our CRE portfolio was variable rate, of which 52% had customer-level interest rate derivative contracts in place. Loans are underwritten with conservative standards for cash flows, debt service coverage and LTV. Owner-occupied properties comprised 20% of the CRE loans as of both December 31, 2022 and 2021.

The remainder were non-owner-occupied properties, where 50% or more of the debt service for the loan is typically provided by rental income from an unaffiliated third party. 50 Commercial — Multifamily Residential Loans. The multifamily residential loan portfolio is largely comprised of loans secured by residential properties with five or more units.

Multifamily residential loans totaled $4.57 billion as of December 31, 2022, compared with $3.68 billion as of December 31, 2021, and accounted for 9% of total loans held-for-investment as of both dates.

The Company offers a variety of first lien mortgages, including fixed- and variable-rate loans, as well as hybrid loans with interest rates that adjust annually after an initial fixed rate period of three to ten years.

As of December 31, 2022, 57% of our multifamily residential portfolio was variable rate, of which 34% had customer-level interest rate derivative contracts in place. These are hedging contracts offered by the Company to help our customers manage their interest rate risk while the Bank’s own exposure remained variable rate.

In comparison, as of December 31, 2021, 66% of our multifamily residential portfolio was variable rate, of which 39% had customer-level interest rate derivative contracts in place. Commercial — Construction and Land Loans. Construction and land loans provide financing for a portfolio of projects diversified by real estate property type.

Construction and land loans totaled $638.4 million as of December 31, 2022, compared with $346.5 million as of December 31, 2021, and accounted for 1% of total loans held-for-investment as of both dates.

Construction loan exposure was made up of $536.8 million in loans outstanding, plus $611.4 million in unfunded commitments, as of December 31, 2022, compared with $297.9 million in loans outstanding, plus $361.2 million in unfunded commitments as of December 31, 2021. Land loans totaled $101.7 million as of December 31, 2022, compared with $48.6 million as of December 31, 2021.

Consumer The following tables summarize the Company’s single-family residential and HELOC loan portfolios by geography as of December 31, 2022 and 2021: December 31, 2022 ($ in thousands) Single-Family Residential % HELOCs % Total Residential Mortgage % Geographic markets: Southern California $ 4,142,623 $ 959,632 $ 5,102,255 Northern California 1,294,721 492,921 1,787,642 California 5,437,344 48 % 1,452,553 68 % 6,889,897 52 % New York 3,964,779 35 % 286,285 14 % 4,251,064 32 % Washington 632,892 6 % 236,434 11 % 869,326 7 % Massachusetts 299,051 3 % 85,590 4 % 384,641 3 % Georgia 303,615 3 % 21,493 1 % 325,108 2 % Texas 316,771 3 % — — % 316,771 2 % Nevada 253,702 2 % 40,300 2 % 294,002 2 % Other markets 14,873 0 % — — % 14,873 0 % Total $ 11,223,027 100 % $ 2,122,655 100 % $ 13,345,682 100 % Lien priority: First mortgage $ 11,223,027 100 % $ 1,770,741 83 % $ 12,993,768 97 % Junior lien mortgage — — % 351,914 17 % 351,914 3 % Total $ 11,223,027 100 % $ 2,122,655 100 % $ 13,345,682 100 % 51 December 31, 2021 ($ in thousands) Single-Family Residential % HELOCs % Total Residential Mortgage % Geographic markets: Southern California $ 3,520,010 $ 971,731 $ 4,491,741 Northern California 1,024,564 506,310 1,530,874 California 4,544,574 49 % 1,478,041 68 % 6,022,615 54 % New York 3,102,129 34 % 292,540 14 % 3,394,669 30 % Washington 526,721 6 % 230,294 11 % 757,015 7 % Massachusetts 258,372 3 % 75,815 4 % 334,187 3 % Georgia 279,328 3 % 25,208 1 % 304,536 3 % Texas 230,402 3 % — — % 230,402 2 % Nevada 145,336 2 % 42,923 2 % 188,259 2 % Other markets 6,840 — % — — % 6,840 (1 %) Total $ 9,093,702 100 % $ 2,144,821 100 % $ 11,238,523 100 % Lien priority: First mortgage $ 9,093,702 100 % $ 1,872,440 87 % $ 10,966,142 98 % Junior lien mortgage — — % 272,381 13 % 272,381 2 % Total $ 9,093,702 100 % $ 2,144,821 100 % $ 11,238,523 100 % Consumer — Single-Family Residential Loans.

Single-family residential loans totaled $11.22 billion or 23% of total loans held-for-investment as of December 31, 2022, compared with $9.09 billion or 22% of total loans held-for-investment as of December 31, 2021. Year-over-year, single-family residential loans increased $2.13 billion or 23%, primarily driven by growth in mortgages on residential properties in California and New York.

The Company was in a first lien position for all of its single-family residential loans as of both December 31, 2022 and 2021. Many of these loans are reduced documentation loans, for which a substantial down payment is required, resulting in a low LTV ratio at origination, typically 65% or less.

The weighted-average LTV ratio was 53% and 52% as of December 31, 2022 and 2021, respectively. These loans have historically experienced low delinquency and loss rates.

The Company offers a variety of single-family residential first lien mortgage loan programs, including fixed- and variable-rate loans, as well as hybrid loans with interest rates that adjust on a regular basis, typically annually, after an initial fixed rate period. Consumer — Home Equity Lines of Credit.

Total HELOC commitments were $3.38 billion as of December 31, 2022, which grew by $883.8 million or 35% from $2.49 billion as of December 31, 2021. Unfunded HELOC commitments are unconditionally cancellable.

HELOCs outstanding totaled $2.12 billion as of December 31, 2022, compared with $2.14 billion as of December 31, 2021, and accounted for 5% of total loans held-for-investment as of both dates. Year-over-year, HELOCs outstanding decreased $22.2 million, or 1%.

The Company was in a first lien position for 83% and 87% of total outstanding HELOCs as of December 31, 2022 and 2021, respectively. Many of these loans are reduced documentation loans, for which a substantial down payment is required, resulting in a low LTV ratio at origination, typically 65% or less.

The weighted-average LTV ratio was 49% on HELOC commitments as of both December 31, 2022 and 2021. These loans have historically experienced low delinquency and loss rates. Substantially all of the Company’s HELOCs were variable-rate loans as of both December 31, 2022 and 2021.

All originated commercial and consumer loans are subject to the Company’s conservative underwriting guidelines and loan origination standards. Management believes that the Company’s underwriting criteria and procedures adequately consider the unique risks associated with these products.

The Company conducts a variety of quality control procedures and periodic audits, including the review of lending and legal requirements, to ensure that the Company is in compliance with these requirements. 52 The following table presents the contractual loan maturities by loan category and the contractual distribution of loans to changes in interest rates as of December 31, 2022: ($ in thousands) Due within one year Due after one year through five years Due after five years through fifteen years Due after fifteen years Total Commercial: C&I $ 5,889,346 $ 8,825,958 $ 828,352 $ 167,439 $ 15,711,095 CRE: CRE 1,022,939 6,128,850 6,557,379 148,702 13,857,870 Multifamily residential 82,080 1,157,918 1,509,452 1,823,618 4,573,068 Construction and land 336,858 256,747 34,258 10,557 638,420 Total CRE 1,441,877 7,543,515 8,101,089 1,982,877 19,069,358 Total commercial 7,331,223 16,369,473 8,929,441 2,150,316 34,780,453 Consumer: Residential mortgage: Single-family residential 2,675 10,325 1,457,034 9,752,993 11,223,027 HELOCs 1 1,228 126,014 1,995,412 2,122,655 Total residential mortgage 2,676 11,553 1,583,048 11,748,405 13,345,682 Other consumer 44,506 23,569 8,220 — 76,295 Total consumer 47,182 35,122 1,591,268 11,748,405 13,421,977 Total loans held-for-investment $ 7,378,405 $ 16,404,595 $ 10,520,709 $ 13,898,721 $ 48,202,430 Distribution of loans to changes in interest rates: Variable-rate loans $ 5,708,559 $ 13,841,207 $ 5,314,139 $ 4,806,258 $ 29,670,163 Fixed-rate loans 1,665,224 2,325,090 2,745,467 3,312,974 10,048,755 Hybrid adjustable-rate loans 4,622 238,298 2,461,103 5,779,489 8,483,512 Total loans held-for-investment $ 7,378,405 $ 16,404,595 $ 10,520,709 $ 13,898,721 $ 48,202,430 53 Foreign Outstandings The Company’s overseas offices, which include the branch in Hong Kong and the subsidiary bank in China, are subject to the general risks inherent in conducting business in foreign countries, such as regulatory, economic and political uncertainties.

As such, the Company’s international operation risk exposure is largely concentrated in China and Hong Kong. In addition, the Company’s financial assets held in the Hong Kong branch and the subsidiary bank in China may be affected by fluctuations in currency exchange rates or other factors.

The following table presents the major financial assets held in the Company’s overseas offices as of December 31, 2022 and 2021: December 31, 2022 2021 ($ in thousands) Amount % of Total Consolidated Assets Amount % of Total Consolidated Assets Hong Kong branch: Cash and cash equivalents $ 911,784 1 % $ 831,283 1 % Interest-bearing deposits with banks $ 28,772 0 % $ — — % AFS debt securities (1) $ 281,804 0 % $ 242,926 0 % Loans held-for-investment (2) $ 968,450 2 % $ 849,573 1 % Total assets $ 2,212,606 3 % $ 1,933,164 3 % Subsidiary bank in China: Cash and cash equivalents $ 556,656 1 % $ 543,134 1 % Interest-bearing deposits with banks $ — — % $ 51,243 0 % AFS debt securities (3) $ 122,053 0 % $ 141,404 0 % Loans held-for-investment (2) $ 1,170,437 2 % $ 984,591 2 % Total assets $ 1,836,811 3 % $ 1,709,640 3 % (1) Comprised of U.S.

Treasury securities and foreign government bonds as of both December 31, 2022 and 2021. (2) Primarily comprised of C&I loans as of both December 31, 2022 and 2021. (3) Comprised of foreign government bonds as of both December 31, 2022 and 2021.

The following table presents the total revenue generated by the Company’s overseas offices in 2022, 2021 and 2020: Year Ended December 31, 2022 2021 2020 ($ in thousands) Amount % of Total Consolidated Revenue Amount % of Total Consolidated Revenue Amount % of Total Consolidated Revenue Hong Kong Branch: Total revenue $ 47,644 2 % $ 25,221 1 % $ 22,947 1 % Subsidiary Bank in China: Total revenue $ 38,022 2 % $ 27,252 1 % $ 20,178 1 % Capital The Company maintains a strong capital base to support its anticipated asset growth, operating needs, and credit risks, and to ensure that the Company and the Bank are in compliance with all regulatory capital guidelines.

The Company engages in regular capital planning processes on at least an annual basis to optimize the use of available capital and to appropriately plan for future capital needs, allocating capital to existing and future business activities. Furthermore, the Company conducts capital stress tests as part of its capital planning process.

The stress tests enable the Company to assess the impact of adverse changes in the economy and interest rates on its capital base. On March 3, 2020, the Company’s Board of Directors authorized the repurchase of $500.0 million of the Company’s common stock.

During the second quarter of 2022, the Company repurchased $100.0 million of common stock or 1,385,517 shares, at an average price of $72.17 per share. The Company did not repurchase any shares during 2021.

The total remaining available capital authorized for repurchase as of December 31, 2022 was $254.0 million. 54 The Company’s stockholders’ equity was $5.98 billion as of December 31, 2022, an increase of $147.4 million or 3% from $5.84 billion as of December 31, 2021.

The increase in the Company’s stockholders’ equity was primarily due to 2022 net income of $1.13 billion, partially offset by a negative change in AOCI of $675.2 million, cash dividends declared of $229.2 million, and common stock repurchases of $100.0 million. The negative change in AOCI was primarily due to increased unrealized losses in AFS debt securities.

For other factors that contributed to the changes in stockholders’ equity, refer to Item 8. Financial Statements — Consolidated Statement of Changes in Stockholders’ Equity in this Form 10-K.

Book value was $42.46 per common share as of December 31, 2022, an increase of 3% from $41.13 per common share as of December 31, 2021, primarily due to the factors described above. Tangible equity per common share was $39.10 as of December 31, 2022, compared with $37.79 as of December 31, 2021.

For additional details, see the reconciliation of non-GAAP measures presented under Item 7. MD&A — Reconciliation of GAAP to Non-GAAP Financial Measures in this Form 10-K. The Company paid a cash dividend of $1.60 per common share in 2022, compared with $1.32 per common share in 2021, an increase of 21%.

In January 2023, the Company’s Board of Directors declared a first quarter 2023 cash dividend of $0.48 per common share, which represents a 20% increase or eight cents per common share, from the previous quarterly cash dividend of $0.40 per common share. The dividend was paid on February 21, 2023, to stockholders of record as of February 6, 2023.

Deposits and Other Sources of Funding Deposits are the Company’s primary source of funding, the cost of which has a significant impact on the Company’s net interest income and net interest margin. Additional funding may be provided by short- and long-term borrowings, and long-term debt. See Item 7.

MD&A — Risk Management — Liquidity Risk Management — Liquidity in this Form 10-K for a discussion of the Company’s liquidity management.

The following table summarizes the Company’s sources of funds as of December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Change ($ in thousands) Amount % Amount % $ % Deposits: Noninterest-bearing demand $ 21,051,090 38 % $ 22,845,464 43 % $ (1,794,374) (8) % Interest-bearing checking 6,672,165 12 % 6,524,721 12 % 147,444 2 % Money market 12,265,024 22 % 13,130,300 25 % (865,276) (7) % Savings 2,649,037 4 % 2,888,065 5 % (239,028) (8) % Time deposits 13,330,533 24 % 7,961,982 15 % 5,368,551 67 % Total deposits $ 55,967,849 100 % $ 53,350,532 100 % $ 2,617,317 5 % Other Funds: FHLB advances $ — — % $ 249,331 36 % $ (249,331) (100) % Repurchase agreements 300,000 67 % 300,000 43 % — — % Long-term debt 147,950 33 % 147,658 21 % 292 0 % Total other funds $ 447,950 100 % $ 696,989 100 % $ (249,039) (36) % Total sources of funds $ 56,415,799 $ 54,047,521 $ 2,368,278 4 % Deposits The Company offers a wide variety of deposit products to consumer and commercial customers.

To provide a stable and low-cost source of funding and liquidity, the Company’s strategy is to grow and retain relationship-based deposits. Total deposits reached $55.97 billion as of December 31, 2022, an increase of $2.62 billion or 5% from $53.35 billion as of December 31, 2021.

Deposit growth was driven by time deposits, which increased $5.37 billion or 67% year-over-year, partially offset by decreases in noninterest-bearing demand and money market deposits. The balance shift to time deposits was largely driven by continued increases in benchmark interest rates and a successful branch-based CD campaign.