East West Bancorp Q2 Earnings Call Highlights

Key Points

• East West Bancorp posted record Q2 2026 revenue, net interest income, and fee income, driven by growth in loans and deposits. Management also raised full-year net interest income guidance to 7% to 9% from 6% to 8%.
• Deposit growth was led by core demand accounts, with end-of-period deposits up 8% year over year and non-interest-bearing deposits up 19%. The bank said it is intentionally shifting away from CDs and wholesale funding to support margins and lower funding costs.
• Loan growth remained strong and credit quality stayed solid, with residential mortgage and C&I lending each adding more than $300 million in the quarter. East West also lifted its full-year loan growth guidance to 6% to 8% while keeping asset quality metrics and capital ratios well above regulatory minimums.

East West Bancorp NASDAQ: EWBC reported record second-quarter 2026 revenue, net interest income and non-interest income, supported by new highs in loans and deposits, executives said on the company’s earnings call.

Chairman and Chief Executive Officer Dominic Ng said end-of-period deposits grew 8% year over year, with strength across all deposit product categories. He said demand deposits accounted for more than two-thirds of the quarter’s total increase, while non-interest-bearing deposits rose 19% from a year earlier.

“A continued focus on providing solutions to our customers helped drive” the growth in non-interest-bearing deposits, Ng said.

End-of-period loans increased 7% year over year, with growth in residential mortgage and commercial-and-industrial lending helping further diversify the loan portfolio, Ng said. He added that credit quality remained strong, with non-performing assets, criticized loans and net charge-off levels “broadly stable.”

Deposits Shift Toward Core Demand Accounts

Chief Financial Officer Chris Del Moral-Niles said end-of-period deposits rose by $1.2 billion across more than 700,000 customer accounts during the quarter. Demand deposits increased $875 million, representing most of the growth. Average demand deposit accounts were up 15% year over year.

Del Moral-Niles attributed the increase to small business checking campaigns and positive flows from tariff refunds across hundreds of accounts. He said East West’s demand deposit mix rose to 26% of total deposits as the company emphasized core relationship growth and moved away from certificates of deposit, wholesale deposits and public funds deposits.

That shift helped support the net interest margin and control deposit costs, he said. Period-end deposit costs declined by six basis points in the quarter. Over the past year, interest-bearing deposit costs fell 49 basis points against a backdrop of 75 basis points of cuts in the federal funds target rate.

During the question-and-answer session, Del Moral-Niles estimated that roughly $200 million to $250 million of period-end balances reflected net excess tariff-related inflows. He said most of that amount had already moved out after quarter-end, though additional tariff deposits were still expected under refund programs into August.

Asked about upcoming CD maturities, Del Moral-Niles said $13 billion of CDs would roll off in the third quarter. He said the bank was proactively pricing at 3.60% for six-month CDs and 3.75% for 12-month CDs, while continuing to evaluate pricing as the quarter progresses.

Loan Growth Led by Residential Mortgage and C&I

East West reported more than $300 million of net growth in residential mortgage loans during the quarter. Del Moral-Niles said the company maintained a conservative underwriting approach, with an average portfolio loan-to-value ratio of 52% in its residential mortgage book.

C&I loan balances also increased by more than $300 million in the second quarter. Del Moral-Niles cited growth in lending to financial services, equipment finance and lessors, and manufacturers and wholesalers. Non-depository financial institution balances rose by only $24 million, reflecting expected paydowns in private equity loans and consumer credit portfolios.

Overall, C&I loans were up 11% year over year, representing more than $2 billion of net growth over that period. Given 7% loan growth in the first half of 2026 and the pipeline heading into the third quarter, East West raised its full-year end-of-period loan growth guidance to a range of 6% to 8%.

In response to an analyst question, Del Moral-Niles said the bank remains focused on moving toward a portfolio mix of roughly one-third C&I, one-third residential mortgage and one-third commercial real estate over time. He said C&I represented 34% of total loans, while commercial real estate stood at 37%, above the company’s long-term vision but still a portfolio with which management is “very comfortable.”

Net Interest Income Guidance Raised

Quarterly net interest income rose to a record $685 million. East West’s net interest margin was 3.43%, down in line with the effect of one fewer day in the quarter but up eight basis points from a year earlier.

Del Moral-Niles said the company now expects full-year net interest income growth of 7% to 9%, up from its prior guidance of 6% to 8%. The updated outlook assumes a flat federal funds rate through the end of the year.

Asked about margin trends in a flat rate environment, Del Moral-Niles said management expects the margin to remain “relatively stable.” He acknowledged some pressure on loan yields from mix and prior-quarter one-time items but said the company expects to drive stronger net interest income through balance sheet growth.

On rate sensitivity, Del Moral-Niles said East West is “modestly asset sensitive.” He said a 25-basis-point rate hike or cut would likely affect net interest income by about $2 million per month, with roughly a 45-day lag.

Fee Income and Expenses

Quarterly fee income increased 19% year over year to $96 million. Del Moral-Niles said total fee income declined by $3 million from the first quarter, largely reflecting record wealth management results in the prior period and a slight decline in some derivatives activity.

Loan- and deposit-related fees rose 14% year over year. Del Moral-Niles said East West remains on track to deliver double-digit year-over-year fee income growth in 2026. He also highlighted wealth management as a growth area, noting during the Q&A that wealth management fees were up 71% year over year for the first six months of the year, according to the company’s press release tables.

Total operating non-interest expenses were $268 million in the second quarter. Compensation and benefits costs were flat sequentially, and Del Moral-Niles said those costs are expected to moderate in the second half of the year. He cited deferred compensation expenses and changes related to vacation pay as factors affecting the quarter’s compensation line.

East West reported a second-quarter efficiency ratio of 36.7%, consistent with prior periods, and an operating non-interest expense to average asset ratio of 1.29%. The company narrowed its full-year expense growth guidance to 8% to 9% versus last year.

Credit and Capital Remain Strong

Chief Risk Officer Irene Oh said asset quality metrics remained broadly stable. Non-performing assets rose slightly by three basis points quarter over quarter to 29 basis points as of June 30, 2026. Net charge-offs were 19 basis points, or $27 million, compared with nine basis points, or $12 million, in the first quarter.

East West reaffirmed its full-year net charge-off guidance of 15 to 25 basis points. The company recorded a provision for credit losses of $33 million, compared with $36 million in the first quarter. The allowance for credit losses increased $6 million to $842 million, or 1.43% of total loans, reflecting loan growth and portfolio mix shift.

Oh said all regulatory capital ratios remained well above requirements for well-capitalized institutions. East West’s common equity Tier 1 capital ratio was 15.4%, and its tangible common equity ratio was 10.4%. The company had $117 million of repurchase authorization remaining and distributed about $111 million to shareholders through quarterly dividends.

Ng closed the call by thanking employees and said the company remains focused on creating long-term value.

About East West Bancorp (NASDAQ:EWBC)

East West Bancorp, Inc is a bank holding company and the parent of East West Bank, one of the largest independent banks headquartered in Southern California. As a full-service commercial bank, it provides a broad range of financial products and services to business and individual customers, including commercial and residential real estate lending, working capital lines of credit, trade finance, and deposit and treasury management services. The company caters to both large and middle-market businesses, leveraging its expertise to serve clients engaged in cross-border trade and investment between the United States and Greater China.

Founded in Los Angeles in the early 1970s, East West Bank has grown steadily through organic expansion and strategic branch openings.

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