What East West Bancorp (EWBC) Said on Its Q3 Earnings Call

Key Points

• Record third-quarter results: East West Bancorp reported record revenue, net interest income, pre-tax pre-provision income and diluted EPS, supported by more than $1.4 billion in net deposit growth, record loans and deposits, and a 6-basis-point expansion in net interest margin.
• Raised earnings outlook: Management increased its full-year net interest income growth forecast to 9%–10%, while expecting fourth-quarter margins to remain broadly stable. Loan growth is tracking the 6%–8% annual target, led by residential mortgages and multifamily lending.
• Credit and capital remain strong: Net charge-offs declined to 15 basis points, prompting management to narrow its full-year charge-off forecast to 15–20 basis points. The bank ended the quarter with a 15.4% common equity Tier 1 ratio and retained flexibility for dividends, buybacks and acquisitions.

East West Bancorp NASDAQ: EWBC reported record revenue, net interest income, pre-tax pre-provision income and diluted earnings per share for the third quarter of 2026, supported by deposit growth, expanding net interest margin and continued loan growth.

Chairman and Chief Executive Officer Dominic Ng said the company generated more than $1.4 billion in net deposit growth during the quarter, with notable inflows into money market accounts. Deposits and loans both reached record levels, while the company’s average deposit cost declined by 2 basis points despite the growth in balances.

“Deposit growth continued to be a key driver of our performance,” Ng said. He added that asset quality remained within management’s expectations, with charge-offs, non-performing assets and criticized loans remaining controlled.

Higher NII Outlook and Stable Margin Expectations

Chief Financial Officer Chris Del Moral-Niles said net interest margin expanded 6 basis points from the second quarter, as positive asset repricing and flat liability costs lifted net interest income to a record level. Average total deposit costs and total funding costs each declined by 2 basis points sequentially.

For the first nine months of 2026, net interest income increased 9.5% from a year earlier. Management raised its full-year outlook and now expects net interest income growth of 9% to 10%, assuming short-term interest rates remain at current levels through year-end.

Del Moral-Niles said a further 25-basis-point rate increase would be worth roughly $2.5 million per month to net interest income, with an estimated lag of about 45 days. The company remains asset-sensitive and expects higher rates to support net interest income growth, although additional rate hikes could eventually contribute to higher deposit costs.

Management expects fourth-quarter net interest margin to remain broadly stable, though Del Moral-Niles said it could expand depending on rate movements and deposit pricing. East West has approximately $15 billion in certificates of deposit scheduled to mature during the fourth quarter. The company said its current six-month, nine-month and 12-month CD specials were priced at 3.65%, 3.78% and 3.88%, respectively.

Loan Growth Led by Residential Mortgages and Multifamily Lending

Loans increased 7% from a year earlier, consistent with East West’s full-year loan growth guidance of 6% to 8%. Residential mortgage lending was the largest contributor during the quarter, producing nearly $400 million in net growth. Management said it expects residential mortgages to remain an important driver because of a strong pipeline.

Multifamily lending also posted strong growth, reflecting housing demand in the bank’s core markets. Commercial real estate growth was led by long-standing clients reentering the market, including purchases at discounted levels.

Commercial and industrial balances declined modestly from the second quarter, primarily due to lower non-depository financial institution borrowing in consumer credit, mortgage credit and other categories. Del Moral-Niles said core bilateral C&I lending nevertheless rose by more than $200 million and was broad-based across industries. Total commitments increased, though utilization declined slightly from the prior quarter, according to Chief Risk Officer Irene Oh.

Credit Performance Remains Solid, Charge-Off Guidance Reduced

Third-quarter net charge-offs fell to $22 million, or 15 basis points, from $27 million, or 19 basis points, in the second quarter. Year-to-date annualized net charge-offs were 14 basis points. In light of the year-to-date performance, management narrowed its full-year net charge-off forecast to 15 to 20 basis points.

Non-performing assets rose by 1 basis point from the prior quarter to 30 basis points as of Sept. 30. The company recorded a $45 million provision for credit losses, compared with $33 million in the second quarter. Its allowance for credit losses increased by $23 million to $865 million, equal to 1.45% of total loans.

Oh said increases in criticized C&I loans were not concentrated in a single industry or asset category. She attributed the movement partly to fewer upgrades offsetting downgrades during the quarter. The company also took possession of certain nonperforming properties through foreclosure and deeds in lieu, creating an increase in other real estate owned. Oh said the properties were geographically and by asset type dispersed, with some already subject to letters of intent.

Management acknowledged that interest rates remaining higher for longer could increase credit pressure across the banking industry, but Oh said East West’s underwriting discipline, low loan-to-value ratios and collateral positions have supported performance.

Fee Growth, Expense Discipline and Capital Flexibility

Fee income rose 11% year over year during the first nine months of 2026, driven by wealth management, deposit-related fees and foreign exchange income. East West continues to expect fee income growth of more than 10% for the full year.

The company’s Asia payments program is active for Hong Kong-based business, with increases in transaction counts, wire volumes and dollar volumes, Del Moral-Niles said. Its mainland China program is now live, although transaction volumes remain modest. Management expects activity there to build through the fourth quarter and the first quarter of 2027.

Wealth management fees declined by $4 million sequentially, reflecting lower structured-product sales. However, management said it continues to add personnel and formally launched a registered investment advisory entity during the third quarter as it builds its wealth-management capabilities.

Total operating non-interest expense declined during the quarter, aided by lower other operating costs and lower compensation and benefits expense. The efficiency ratio improved to 34.4%, while operating non-interest expense as a percentage of average assets declined 8 basis points to 1.21%.

Computer- and software-related costs increased 21% year over year as East West continued technology investment. Del Moral-Niles said the bank’s artificial intelligence pilot programs have focused on efficiency and faster evaluation processes rather than revenue generation. Ng described the bank as an “early follower” in AI, saying the company would adopt proven applications while maintaining its focus on relationship banking and cross-border services.

East West ended the quarter with a common equity Tier 1 ratio of 15.4% and a tangible common equity ratio of 10%. The company declared a fourth-quarter dividend of $0.80 per share and had $117 million remaining under its share repurchase authorization. Management said organic growth remains its primary capital priority, while retaining flexibility for repurchases and disciplined acquisition opportunities.

About East West Bancorp (NASDAQ:EWBC)

East West Bancorp, Inc is the parent company of East West Bank, a full-service commercial bank headquartered in Pasadena, California. The bank serves businesses, professionals, consumers and institutions through a range of deposit, lending and financial services.

Its products and services include commercial and industrial loans, commercial real estate financing, residential and consumer lending, checking and savings accounts, treasury management, international banking, wealth management and foreign-exchange services.

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