EAST WEST BANCORP INC EWBC

East West Bancorp's end-of-period deposits grew by $1.2 billion across over 700,000 customer accounts, with demand deposits contributing $875 million. The DDA mix increased to 26% of total deposits, up from 24% year-over-year, driven by successful small business checking campaigns and positive flows from tariff refunds. The bank continues its strategic shift away from CDs, wholesale, and public funds to emphasize core DDA, which has helped reduce period-end deposit costs by 6 basis points and interest-bearing deposit costs by 49 basis points over the past year.

The loan portfolio expanded 7% year-over-year, reaching new record levels. Residential mortgage was a standout with over $300 million of net growth, maintaining a conservative 52% average portfolio LTV. C&I lending balances also increased by over $300 million in Q2, with notable growth in financial services, equipment finance, lessors, manufacturers, and wholesalers. C&I loans are up 11% year-over-year, representing over $2 billion of net growth, and now constitute 34% of total loans, while CRE stands at 37%.

Quarterly net interest income (NII) grew to a record $685 million, reflecting balance sheet growth and an improving mix shift. The net interest margin (NIM) came in at 3.43%, up 8 basis points year-over-year, despite one less day in the quarter. Management expects the margin to hold relatively stable in a flat rate environment, focusing on NII growth through balance sheet expansion. The bank's ability to manage deposit costs has been a key driver of NII performance.

Quarterly fee income grew 19% year-over-year to $96 million. Wealth management fees were a significant contributor, up 71% year-over-year over the first six months of 2026. The bank is actively investing in people, platforms, and talent to further build out its wealth management business, seeing continued growth opportunities. Loan and deposit-related fees also increased 14% year-over-year, supporting the expectation for double-digit year-over-year growth in total fee income for 2026.

Asset quality metrics remained broadly stable, with nonperforming assets seeing a slight uptick of 3 basis points to 29 basis points. Net charge-offs were 19 basis points ($27 million) in Q2, compared to 9 basis points ($12 million) in Q1. The allowance for credit losses increased by $6 million to $842 million, or 1.43% of total loans, reflecting loan growth and portfolio mix shift. East West maintains a robust CET1 ratio of 15.4% and a tangible common equity ratio of 10.4%, placing it among the best-capitalized banks.

Total operating noninterest expenses were $268 million for the second quarter. The Q2 efficiency ratio was 36.7%, consistent with prior periods, and the operating noninterest expense to average assets ratio remained flat at 1.29%. While comp and benefits costs were flat quarter-over-quarter, an uptick in other expense categories was noted due to investments in people and platforms. Management expects comp and benefits to moderate in the second half, supporting the narrowed full-year expense growth guidance of 8% to 9%.