East West Bancorp (NASDAQ:EWBC) reported first-quarter financial results on Tuesday. The transcript from the company’s first-quarter earnings call has been provided below.
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Summary
East West Bancorp reported a record quarter for loans, deposits, and fee income, with total deposits growing 9% year over year and non-interest-bearing deposits increasing by $800 million.
The company experienced 7% year-over-year loan growth, driven primarily by an increase in commercial and industrial (C&I) loans and higher line utilization.
East West Bancorp’s net interest income increased to $671 million, with a focus on reducing deposit costs and maintaining a strong capital position with a tangible capital ratio of 10.3%.
Management highlighted a strong performance in wealth management, contributing to a 12% year-over-year increase in fee income.
Future guidance includes a revised net interest income growth of 6-8% for 2026 and maintaining a loan growth guidance of 5-7%, with an expectation of continued pressure on deposit pricing.
Full Transcript
OPERATOR
Good day and welcome to the East West Bancorp’s first quarter 2026 earnings call. All participants will be in a listen only mode.. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation there will be an opportunity to ask questions. To ask a question you may press star, then one on a touchtone phone. To withdraw your question please press Star and then two. Please note this event is being recorded. I would now like to turn the conference over to Adrian Atkinson, Director of Investor Relations. Please go ahead.
Adrian Atkinson (Director of Investor Relations)
Thank you operator. Good afternoon and thank you everyone for joining us to review East West Bancorp’s first quarter 2026 financial results. With me are Dominic Ng, Chairman and Chief Executive Officer Chris Del Moral-Niles, Chief Financial Officer and Irene Oh, our Chief Risk Officer. This call is being recorded and will be available for replay on our investor relations website. The slide deck referenced during this call is available on our investor relations site. Management may make projections or other forward looking statements which may differ materially from the actual results due to a number of risks and uncertainties. Management may discuss non GAAP financial measures. For a more detailed description of the risk factors and a reconciliation of GAAP to non GAAP financial measures, please refer to our filings with the securities and Exchange Commission including the Form 8-K filed today. I will now turn the call over to Dominic.
Dominic Ng (Chairman and Chief Executive Officer)
Thank you Adrian Good afternoon and thank you for joining us for our first quarter earnings call. I’m pleased to report that East West had another record quarter for loans, deposits and fee income. Our consumer and commercial depositors continue to place their trust in us, helping grow total deposits by 9% year over year. Growth in non interest bearing deposits was particularly strong this quarter up nearly 800 million driven by our continued focus on providing solutions to retail and small business customers. We also delivered 7% year over year loan growth. C&I loans increased by more than 900 million quarter over quarter driven by a higher line utilization particularly among capital call borrowers. We also achieved a record quarter of fee income growing 12% year over year. We saw strong momentum in wealth management this quarter as we stayed closely engaged with clients. We continue to see opportunity to grow and diversify our fee revenues over time. Credit performance remains stable. Net charge offs and nonperforming assets were low in absolute terms consistent with our expectations and reflecting our disciplined approach to risk management. Our capital position remains a key advantage for East West. With a tangible capital ratio of 10.3%. We maintained this capital level while growing our balance sheet, increasing our dividend and opportunistically repurchasing shares. We continue to be focused on being disciplined stewards of our customers trust and our shareholders capital. I will now turn the call over to Chris to provide more details on our first quarter financial performance.
Chris Del Moral-Niles
Chris thanks Dominic. Let’s start with deposit growth on slide 4. Our end of period deposits grew by 1.8 billion quarter over quarter average DDA growth was up 12% year over year and nearly half a billion on an average basis. This checking account growth led us to price our Lunar New Year CD campaign more conservatively this year, allowing us to focus on CD balance retention and drive a better mix of deposit costs for the quarter and going into the rest of 2026. Money market deposits were also up 9% year over year as we continue to further diversify away from CDs and other higher cost deposits turning to loans on slide 5 as we have emphasized before, our focus has been and continues to be on growing Our C&I portfolio and CNI was the primary driver of growth in Q1. Most of the increase was driven by net line draws from existing customers while utilization ticked up across a range of industries. As Dominic mentioned, capital call related borrowing made up the lion’s share of the first quarter’s net growth. The quarter’s net draws on capital call lines reflected broad based increases in M and M&A and real estate property acquisitions across the quarter. While some of these lines have already been paid down here in the second quarter, private equity markets and real estate markets remain active and we expect to continue to participate in this activity during the remainder of the year. Residential Mortgage experienced a seasonally slower Q1 than we expected, but our pipelines have grown and continue to grow into Q2 and and we expect residential mortgage to be a consistent contributor to our overall loan growth during the year. We also grew commercial real estate balances this quarter. Our priority continues to be on supporting our long standing real estate relationship clients. Given the level of net growth we saw in the first quarter and the pipelines we see going into Q2, we are comfortable reiterating our guidance for the full year loan growth to be in the range of 5 to 7%. Now turning to 6, our loan portfolio remains well diversified with over 70% of our loans to commercial customers across a broad range of industries and commercial real estate asset types. CNI now represents 34% of our total loans reflecting the results of our focus and emphasis on balanced growth across our balance sheet. Our CRE portfolio remains diversified by a number of product types with an emphasis on multifamily retail and industrial projects. As we look ahead, we remain focused on growing the portfolio in a disciplined way that enhances diversification and remains aligned with our overall risk Appetite. Turning to Slide 7, we provided incremental disclosure on our Non-Deposit Financial Institution (NDFI) portfolio. Growth in this portfolio this quarter has been driven primarily by capital call lines. Our Non-Deposit Financial Institution (NDFI) portfolio is granular with diversification across industry and category types. 99.99% of our Non-Deposit Financial Institution (NDFI) loans are current and in the past decade there have been virtually no net charge offs in this portfolio. Approximately 30% of this portfolio is made up of capital call lines. Capital call is not a regulatory classification and our capital call loans are spread across a range of private equity, mortgage credit and business credit borrowers. I’ll now turn to net interest income and margin discussion on Slide 8 Quarterly dollar net interest income increased to 671 million reflecting our ability to grow our balance sheet while overcoming the headwinds of rate cuts in Q4 and two fewer days in Q1. Our short term liability sensitivity on deposit pricing dynamics and our positive deposit remixing during the quarter allowed us to continue to reduce our deposit costs driving period end costs down a further 6 basis points quarter over quarter. Looking back to the start of the cutting cycle, we have decreased interest bearing deposit costs by 111 basis points points comfortably exceeding our 50% beta guidance shared in prior periods. Moving on to fees on Slide 9, fee income grew 12% year over year to a new record $99 million for the quarter with significant growth in wealth management fees driven by structured note and annuity sales and deposit related fees driven by higher customer activity. We will remain focused on driving this growth and further diversifying our revenue overall and are quite encouraged by the pace of growth in fee revenues so far this year. We continue to aspire to deliver double digit year over year growth in fee income in 2026. Now turning to expenses on slide 10, East west continues to deliver industry leading efficiency or while investing for future growth. The Q1 efficiency ratio was 36.2%. Total operating non interest expense was 258 million for the first quarter and included seasonally higher payroll related costs, some increased stock based compensation costs and higher incentive comps reflecting increased commissions for our wealth management activity. Nonetheless, overall we continue to expect expenses will come in line with our guidance for the year. Now let me hand the call over to Irene for comments on credit and capital.
Irene Oh (Chief Risk Officer)
Thank you Chris Good afternoon to all on the call. As you can see on Slide 11, our asset quality metrics held stable and continue to broadly outperform the industry quarter over quarter. Non performing assets remained stable at 26 basis points as of March 31, 2026. We recorded net charge offs of just 9 basis points in the first quarter of 2026 or 12 million compared to 8 basis points in the fourth quarter. We recorded a higher provision for credit losses of 36 million in the first quarter compared with 30 million for the fourth quarter. We remain vigilant and proactive in managing our credit risk. Turning to Slide 12, the allowance for credit losses increased 26 million to 836 million or 1.44% of total loans as of March 31, reflecting quarter over quarter loan growth and the portfolio mix shift. We believe we are adequately reserved for the content of our loan portfolio given the current economic outlook. Turning to slide 13, all of east west regulatory capital ratios remain well in excess of regulatory requirements, requirements for well capitalized institutions and well above regional and national bank averages. East west common equity tier 1 capital ratio stands at a robust 15.1% while the tangible common equity ratio now sits at 10.3%. These capital levels continue to place us amongst the best capitalized banks in the industry in the first quarter. East west repurchased approximately 938,000 shares of common stock during the first quarter for 98 million. We currently have 117 million of repurchase authorization that remains available for future buybacks. East west also distributed approximately 111 million to shareholders via quarterly dividends. East West’s second quarter 2026 dividend will be payable on May 18, 2026 to stockholders of record on May 4, 2026. I will now turn it back to Chris to share our outlook.
Chris Del Moral-Niles
Thank you, Irene. We’ve assumed the forward curve as of March 31, which models no rate cuts and therefore we’re updating our full year 2026 net interest income guidance to grow between 6 to 8% up from our prior expectations of growth between 5 and 7%. We’re also updating our net charge offs and now projected to fall between 15 and 25 basis points for the full year. With that, we’ll be happy to open the call for questions. Operator thank you.
OPERATOR
We will now begin the question and answer session. To ask a question, you may press Star …
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