East West Bancorp Posts Record Q3 Profit, Lifts NII Growth Outlook

East West Bancorp, Inc. (Nasdaq: EWBC) reported record third-quarter 2026 net income and revenue, supported by deposit and loan growth, higher net interest income and a wider net interest margin. The bank also increased its full-year net interest income growth expectation to 9% to 10%, from 8% to 9%, while narrowing several other guidance ranges.

Net income reached $382 million, or $2.76 per diluted share, compared with $368.4 million a year earlier and $363.7 million in the second quarter. Revenue rose to a quarterly record of $823 million. For the first nine months of 2026, revenue increased 10% year over year, while net income and diluted earnings per share each rose 14%.

Deposit growth supports record net interest income

End-of-period deposits increased more than 7% from a year earlier, reflecting growth across deposit categories. Average deposits were $70.3 billion, up from $66.2 billion in the third quarter of 2025. On a sequential basis, end-of-period deposits grew by $1.4 billion, including a $675 million increase in noninterest-bearing demand deposits.

Net interest income rose to a record $719 million, up $34 million from the second quarter and $41 million from a year earlier. The net interest margin expanded six basis points sequentially to 3.49%.

East West attributed the quarterly improvement to lower average deposit costs and asset repricing. The average cost of total deposits declined two basis points from the previous quarter to 2.08%, while the average yield on interest-earning assets increased four basis points to 5.45%, supported by higher loan and securities yields.

Management expects the net interest margin to remain broadly stable in the fourth quarter. The bank also said $4 billion of active cash-flow hedges provide incremental protection in a declining-rate environment.

Loans expand as residential and multifamily balances rise

End-of-period loans grew 7% year over year to $59.7 billion. Average loans increased to $58.9 billion from $55.2 billion a year earlier.

Sequential end-of-period loan growth totaled $747 million, led by a $397 million increase in residential mortgages and other consumer loans and a $278 million increase in multifamily loans. Commercial real estate loans excluding multifamily rose by $148 million, while commercial and industrial loans declined by $76 million.

The portfolio remained diversified, with commercial real estate accounting for 37% of total loans, commercial and industrial lending representing 33%, and residential mortgages and other consumer loans comprising 30%.

Residential mortgage balances reached $17.8 billion, up 2% sequentially and 7% year over year. Third-quarter originations totaled $1.2 billion. The residential portfolio had an average combined loan-to-value ratio of 51% and an average loan size of $444,000.

Commercial real estate loans totaled $22.1 billion, with a weighted-average loan-to-value ratio of 49% and an average loan size of $3 million. Office loans totaled about $2.5 billion and had a weighted-average loan-to-value ratio of 54%.

Fee income and expenses

Fee income, excluding specified mark-to-market and investment-related items, was $93 million, compared with $96 million in the second quarter and $92 million a year earlier. Deposit-related fees and foreign-exchange income increased by a combined $4 million sequentially. For the first nine months of 2026, fee income rose 11% year over year to $288 million.

Operating noninterest expense, excluding amortization of tax-credit and Community Reinvestment Act investments, declined by $9 million sequentially to $259 million. The efficiency ratio improved to 34.4% from 36.7% in the second quarter and 35.6% a year earlier, even as the company continued investing in employees and technology platforms.

Credit metrics remain contained, though nonperforming assets edge higher

The provision for credit losses was $45 million, up from $33 million in the second quarter. Net charge-offs totaled $22 million, equal to an annualized 0.15% of average loans, compared with 0.19% in the prior quarter. The year-to-date net charge-off ratio was 0.14%.

Nonperforming assets represented 0.30% of total assets, up from 0.29% in June and 0.25% a year earlier. Criticized loans increased to 2.27% of loans held for investment from 2.18% in the previous quarter.

The allowance for loan losses rose by $23 million sequentially to $865 million, or 1.45% of loans held for investment. The allowance included $491 million for commercial and industrial loans and $299 million for commercial real estate loans.

East West ended the quarter with a preliminary Common Equity Tier 1 ratio of 15.4% and a non-GAAP tangible common equity ratio of 10.0%. Cash and securities represented 27% of assets. The board declared a fourth-quarter dividend of $0.80 per share, while $117 million remained under the company’s share-repurchase authorization.

Full-year outlook

East West continues to expect end-of-period loans to grow 6% to 8% in 2026. It projects operating noninterest expense growth of 8% to 9% and an effective tax rate of 22% to 23%, based on an assumption of flat interest rates.

The bank narrowed its expected net charge-off range to 15 to 20 basis points from 15 to 25 basis points. It also narrowed its forecast for amortization of tax-credit and CRA investments to $90 million to $95 million from $85 million to $95 million.

The company cautioned that its outlook relies on assumptions and estimates that are inherently uncertain. Actual results may differ because of credit conditions, interest-rate movements and other risks described in its regulatory filings.