EAST WEST BANCORP INC Q4 FY2025 earnings call

• 2025 was a record-breaking year with revenue, net interest income, fees, non-interest income, earnings per share, loans, and deposits all reaching record levels.
• Grew end-of-period deposits 6% YoY with traction in non-interest-bearing and time deposits; loans grew 6% YoY led by C&I and residential mortgage lending.
• 2025 fee income was record-breaking, driven by consistent sales execution across fee-based businesses.
• Fourth quarter efficiency ratio was 34.5%, with total operating non-expense growing 7.5% in 2025 and expected to grow 7-9% in 2026.
• Asset quality metrics outperformed the industry, with net charge-offs low and non-performing assets stable.
• Board declared a $0.20 increase to the quarterly dividend to $0.80 per share.

Deposits: End-of-period deposits grew 6% year-over-year with significant traction in non-interest-bearing and time deposits. Loans: End-of-period loans grew 6% year-over-year, led by C&I and residential mortgage lending. Net Interest Income: Fourth quarter net interest income was $658 million, with period-end cost of deposits down 23 basis points quarter over quarter. Fees: Fee income grew by a robust 12% in 2025, driven by wealth management, derivatives, foreign exchange, deposit fees, and lending fees. Expenses: Fourth quarter efficiency ratio was 34.5%, total operating non-expense grew 7.5% in 2025, and is expected to grow 7-9% in 2026. Asset Quality: Recorded net charge-offs of 8 basis points in the fourth quarter and 11 basis points for the full year 2025; non-performing assets remained broadly stable at 26 basis points of total assets, and criticized loans declined quarter over quarter.

• Loan growth expected to be in the range of 5% to 7% in 2026, driven by C&I and residential mortgage lending.
• Net interest income expected to grow 5% to 7% in 2026, aligned with balance sheet growth.
• Fee income aspires to grow faster than overall balance sheet growth.
• Total operating expenses expected to increase 7-9% in 2026, driven by headcount additions, IT-related expenditures, etc.
• Full-year net charge-offs projected in the range of 20 to 30 basis points in 2026, and effective tax rate expected to land between 22-23%.

• Uncertain economic conditions that could impact loan growth and credit quality.
• Interest rate fluctuations that may affect net interest income and hedge positions.
• Regulatory changes that could impact capital requirements and compliance costs.

Q: On loan growth, why the guidance?

A: Acknowledge seasonal trends and market uncertainty, but emphasize East West Bancorp, Inc. will outperform peers regardless.

Q: On expense growth, where is spending concentrated?

A: Technology, consulting, and hiring in areas like wealth, commercial banking, technology, and risk management.

Q: On fee growth outlook, any concerns about slowing?

A: Aspire to continue double-digit fee growth, with a 10% CAGR in fees over four years and focus on sustained growth.

Q: On credit charge-offs guidance increase, what's driving it?

A: No systemic issues, but individual credits may turn, and the allowance reflects prudent modeling.

Q: On net interest margin positioning, what's the outlook?

A: Broadly asset-sensitive bank, with balance sheet growth expected to offset rate effects, and near-term liability sensitivity providing near-term benefit.