East West Bancorp (NASDAQ:EWBC) Chief Financial Officer Chris Niles said the company has seen a “relatively smooth start” to 2026, with both loan and deposit trends coming in line with expectations and remaining in positive territory. Speaking at an investor event, Niles said the bank entered the year with a slightly more optimistic outlook than last year, reflecting what he described as constructive customer sentiment across commercial and industrial (C&I), consumer and small business, and—more modestly—commercial real estate (CRE).
Loan growth outlook and portfolio mix
Niles said the bank’s 2026 guidance calls for 5% to 7% loan growth, up from the 4% to 6% range guided for the prior year. He emphasized that early results support the trajectory, noting that January is often a period when lending and deposits pull back, but that the bank has not seen the usual seasonal softness so far.
CRE credit conditions and market activity
Addressing CRE credit quality, Niles said that stress has eased compared with roughly 18 months ago, pointing to earlier comments from CEO Dominic Ng that 150 basis points of rate cuts would help alleviate pressure. Niles said the bank has seen both rate cuts and a reduction in stress, though he noted some areas remain challenged, citing San Francisco hotels as one example where pricing has not fully recovered.
He said refinancing has become more feasible in several markets as conditions have “begun to clear at reasonable levels,” and suggested additional rate cuts later in the year could further improve the environment. At the same time, he said East West remains mindful of its exposures and is reserving accordingly, while also guiding for a slightly higher net charge-off level as transaction volumes increase.
C&I strategy: vertical expertise and customer investment
Niles described C&I momentum as broad-based and said the bank has been expanding from a primarily regional, relationship-based model toward a more “expertise-driven” approach. He highlighted new banker hires in specialized verticals including:
- Charter schools
- ESOP (employee stock ownership plan) finance
- Aerospace
He said these areas are “right in our backyard” in California and require industry-specific knowledge—from charter school funding mechanics to defense contracting payment processes and ESOP tax rules. Niles also said clients are actively discussing and acting on bonus depreciation incentives, citing a recent customer dinner where the policy was described as accelerating investment timelines.
On supply-chain strategy, Niles said customers may maintain overseas manufacturing while expanding U.S.-based warehousing, manufacturing, sales, or distribution. He emphasized that many buyers prefer paying in U.S. dollars into a U.S. bank account, which supports East West’s role in customer cash flows regardless of where orders are ultimately booked.
Deposits, pricing, and net interest income assumptions
Niles said East West expects to largely fund loan growth through deposit growth, as it has in recent years. However, he characterized the deposit market as tightening, pointing to competitive promotional activity such as “Lunar CD” specials among Asian community banks. He noted East West launched a six-month CD at 3.73% and expects competitors to offer slightly higher rates.
He also cited brokered CD pricing as an indicator that funding costs are not reflecting anticipated rate cuts, suggesting some market participants may be preparing for loan demand and willing to pay for funding.
For profitability, Niles said the bank’s outlook ties together 5% to 7% loan growth and 5% to 7% net interest income (NII) growth, with an implicit assumption that spreads and margins remain “flat-ish” as back-book repricing offsets rate cuts implied by forward markets. He said risks include more aggressive Fed cuts that could pressure NII, while fewer cuts could support higher net interest margin.
Liquidity, capital priorities, and expense investments
Niles said East West has shifted securities purchases toward fixed-rate assets, citing Ginnie Mae mortgage products yielding north of 5% as an attractive use of liquidity. He also described the bank’s liquidity positioning, including participation in the Federal Reserve’s standing repo facility supported by collateral, and said capital and liquidity “have never been stronger.”
On capital deployment, he said management is evaluating a range of uses, from maintaining “dry powder” to investments with quick paybacks. Regarding expenses, Niles said the bank’s four-year expense CAGR has been around 10%, while the current outlook calls for 7% to 9% expense growth. He said investment priorities are centered on:
- People (front-line relationship and vertical expertise)
- Technology, including cyber defense
- Additional retail staffing to support small business growth initiatives
Niles also discussed product and technology enhancements for cross-border customers, including improving multi-currency visibility and payments—using the Hong Kong dollar as an example—and said East West is working toward faster, more seamless international transaction capabilities.
In discussing the bank’s Greater China strategy, Niles said East West’s customers abroad are primarily oriented toward serving U.S. demand, and he positioned the bank as a differentiated U.S. banking option for cross-border activity, particularly for small and midsize enterprises.
Finally, Niles said fee income growth has been supported by wealth management, deposit-related fees such as wires and transfers, and foreign exchange. He added that more disruptive environments can drive higher transaction activity, which can translate into increased fee generation.
About East West Bancorp (NASDAQ:EWBC)
East West Bancorp, Inc is a bank holding company and the parent of East West Bank, one of the largest independent banks headquartered in Southern California. As a full-service commercial bank, it provides a broad range of financial products and services to business and individual customers, including commercial and residential real estate lending, working capital lines of credit, trade finance, and deposit and treasury management services. The company caters to both large and middle-market businesses, leveraging its expertise to serve clients engaged in cross-border trade and investment between the United States and Greater China.
Founded in Los Angeles in the early 1970s, East West Bank has grown steadily through organic expansion and strategic branch openings.
