Cross-border banking company East West Bancorp (NASDAQ: EWBC) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 18.4% year on year to $778 million. Its GAAP profit of $2.65 per share was 12.3% above analysts’ consensus estimates.

Is now the time to buy EWBC? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

East West Bank’s third quarter results received a positive market reaction, driven by robust deposit growth and expanding fee revenues. Management attributed the quarter’s momentum to broad-based inflows from household, small business, and commercial clients, which supported loan growth and optimized funding costs. CEO Dominic Ng highlighted that “deposit-led growth funded our entire loan growth, allowing us to further optimize our funding mix and contributing to improved liquidity.” Notably, management cited strong performance in wealth management and fee-based businesses, alongside resilient asset quality and disciplined risk management, as key contributors to the bank’s results.

Looking ahead, East West Bank’s management expects continued deposit growth and stable asset quality to underpin future performance, even as interest rate cuts are anticipated. CFO Chris Del Moral-Niles explained the bank’s strategy of repricing deposits immediately following Federal Reserve actions, which is expected to provide a modest near-term benefit to net interest income. However, management remains cautious about economic uncertainties and the pace of loan demand recovery, with Del Moral-Niles noting, “We’re highlighting some uncertainty in the outlook and some uncertainty in the economy, and it will clearly be a function of how those uncertainties unfold over the course of 2026.”

Key Insights from Management’s Remarks

Management emphasized that broad-based deposit inflows, strong fee income, and controlled expenses drove the quarter’s results, while stable asset quality supported their outlook.

• Deposit-led growth: The bank’s deposit inflows were driven by increases across household, small business, and commercial segments, enabling full funding of loan growth and a shift to a more granular and lower-cost deposit mix.

• Wealth management expansion: Management highlighted continued growth in wealth management, supported by new hires and deeper client penetration. This segment saw notable expansion in fee income, reflecting increasing customer engagement and new product development.

• Resilient asset quality: Chief Risk Officer Irene Oh pointed to low levels of nonperforming assets and net charge-offs, with criticized loans declining, particularly in commercial real estate and residential mortgages. The allowance for credit losses was increased modestly to address broader economic uncertainty.

• Expense discipline alongside growth: Operating expenses were carefully managed even as the bank invested in growth initiatives, including a one-time compensation charge related to equity awards for retirement-eligible employees. The efficiency ratio remained competitive while supporting future expansion.

• Capital strength and buybacks: The bank maintained regulatory capital ratios well above required levels and continued opportunistic share repurchases, with $216 million remaining authorized. Management reiterated their focus on maintaining a strong capital position to support both growth and shareholder returns.

Drivers of Future Performance

East West Bank expects further deposit growth, steady fee income, and resilient credit metrics to drive performance, while monitoring economic headwinds and interest rate changes.

• Interest rate sensitivity: Management explained that immediate repricing of deposits following Federal Reserve cuts provides a short-term boost to net interest income, but future loan repricing may offset these gains. The bank’s liability sensitivity means results will depend on the pace and extent of further rate cuts.

• Deposit mix and loan demand: Continued growth in noninterest-bearing deposits is expected, particularly from consumer and small business clients. However, management acknowledged that broader loan demand recovery may require additional interest rate declines and improved economic clarity.

• Credit and expense control: The bank plans to maintain its disciplined approach to credit risk and operating expenses, anticipating stable asset quality and ongoing investment in fee-generating businesses. Management noted that any increase in expense growth would be tied to sustainable expansion of recurring revenue streams.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the pace and composition of deposit growth, particularly among consumer and business clients; (2) sustained expansion of wealth management and fee-based revenues; and (3) credit quality trends, especially in commercial real estate and multifamily segments. Additionally, we will track the timing and adoption of new payment and FX platform capabilities, as well as the impact of potential interest rate changes on both funding costs and loan demand.

East West Bank currently trades at $100.80, up from $98.83 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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