East West Bancorp, Inc. (EWBC) Earnings & Analysis

Latest quarter

East West Bancorp reported Q2 FY2026 revenue of $1.2 billion, compared with $1.1 billion a year earlier, and diluted earnings per share of $2.63, compared with $2.24. Separately, for the quarter to September, the company’s adjusted EPS of $2.76 exceeded the consensus of $2.69, while revenue of $822.8 million exceeded the consensus of $810.4 million.

The filing attributed the year-over-year increase in second-quarter net income to higher net interest income, increased noninterest income and a lower provision for credit losses, partly offset by higher noninterest expense. Net interest income before the provision for credit losses rose to $685 million, while the net interest margin was 3.43%; the company cited lower interest-bearing deposit costs and higher average loan and securities balances.

The filing reported higher Commercial Banking segment net income, partly because of a lower provision for credit losses, while Consumer and Business Banking segment net income fell as compensation and credit-loss provisions rose. East West reported an operating margin of 39.4%, compared with 35.1% a year earlier, and free cash flow of $587.9 million, compared with $276.6 million.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Dominic Ng said demand deposits accounted for more than two-thirds of the quarter’s deposit growth, and that a focus on customer solutions helped increase noninterest-bearing deposits. He said residential mortgages and commercial and industrial lending contributed to loan growth and further diversified the portfolio.

CFO Chris Del Moral-Niles said average demand deposits benefited from small-business checking campaigns and tariff-refund flows. He said East West continued to move away from certificates of deposit, wholesale deposits and public funds toward core demand deposits, helping it manage deposit costs and support its margin. In the Q&A, Ng said retail bankers’ efforts to win small-business checking accounts had contributed to noninterest-bearing deposit growth.

On lending, Del Moral-Niles said residential mortgages and commercial and industrial loans each grew by over $300 million in the second quarter. He said commercial growth came from financial services, equipment finance, lessors, manufacturers and wholesalers, while expected paydowns limited growth in loans to non-depository financial institutions. He also said East West was investing in people and platforms to sustain growth.

Discussing margin and deposit competition, Del Moral-Niles said he expected the margin to remain relatively stable in a stable federal funds rate environment, with balance-sheet growth supporting net interest income. He said loan pricing had experienced some compression and that the bank was considering competition as it repriced certificates of deposit in Q3. He said the bank was pricing to retain those deposits rather than expand the balance, but had not decided how it would price upcoming maturities.

On tariff-related deposits, Del Moral-Niles estimated that $200 million to $250 million of the period-end balance reflected net excess inflows, most of which had already left. He said further inflows under the refund programs were likely to continue into August.

Guidance

Del Moral-Niles said East West updated its full-year loan growth guidance to 6%-8% by year end. He said the company now expects full-year net interest income growth of 7%-9%, compared with its previous range of 6%-8%. He also said East West narrowed its full-year expense growth guidance to 8%-9% versus last year and was assuming flat federal funds rates through year-end.