East West Bancorp released its second-quarter 2026 earnings, posting record total revenue and net interest income levels. The results reflected strong performance across both deposits and loans, with management attributing the gains to strategic shifts in business focus.
Deposit growth reached 8% on a year-over-year basis, driven largely by a strategic movement toward core relationship banking. Non-interest-bearing deposits increased 19% year-over-year, fueled by small business checking campaigns and retail-to-commercial account conversions. Management noted that approximately $200 million to $250 million of the period-end deposit growth was tied to temporary tariff refund programs, most of which exited shortly after quarter-end. Loan growth expanded 7% year-over-year, reflecting intentional portfolio diversification into residential mortgage and commercial real estate sectors to reduce concentration in commercial real estate lending.
The bank maintained an efficiency ratio of 36.7%, described as industry-leading, supported by disciplined expense management while investing in growth initiatives. Credit quality remained stable with non-performing assets at 29 basis points. However, net charge-offs rose to 19 basis points from 9 basis points in the prior quarter, though management reaffirmed full-year guidance of 15-25 basis points. Management signaled deposit costs had declined 49 basis points over the past year compared to 75 basis points of Federal Reserve rate cuts.
Looking ahead, the company upgraded full-year loan growth guidance to a range of 6%-8% based on strong first-half performance and a robust third-quarter pipeline. Net interest income growth expectations were raised to 7%-9% for the full year, assuming a flat Federal funds environment through year-end. The bank expects the net interest margin to remain relatively stable, with balance sheet growth serving as the primary driver for net interest income expansion. Full-year expense growth guidance was narrowed to 8%-9%, with compensation costs expected to moderate in the second half of the year. The bank maintained a Common Equity Tier 1 ratio of 15.4% and signaled a neutral but opportunistic approach to capital allocation, weighing share buybacks against potential acquisitions in wealth management or Asian-American banking.
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