EWBC Q4 Deep Dive: Deposit Growth and Fee Expansion Anchor Guidance for 2026

Cross-border banking company East West Bancorp (NASDAQ:EWBC) beat Wall Street’s revenue expectations in Q4 CY2025, with sales up 11.7% year on year to $754.9 million. Its non-GAAP profit of $2.52 per share was 0.8% above analysts’ consensus estimates.

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StockStory’s Take

East West Bank’s fourth quarter results came in above Wall Street’s revenue and non-GAAP profit expectations, as management credited strong deposit inflows and fee income expansion for the company’s performance. CEO Dominic Ng emphasized the importance of disciplined loan and deposit growth, highlighting growth in both C&I and residential mortgage lending. Fee income growth was supported by increased wealth management activity and investments in the global treasury group. Management noted, “We grew end-of-period deposits by 6% year-over-year with significant traction in both non-interest-bearing and time deposits,” underscoring the bank’s ability to attract core customers even as the broader industry faces volatility.

Looking ahead, management’s guidance is shaped by expectations for continued loan and fee income growth, supported by investments in technology, hiring, and expanding service offerings. CFO Christopher Del Moral-Niles stated that East West Bank is focused on balancing asset growth with proactive risk management, and expects “net interest income growth to be in the range of 5% to 7% aligned with and driven by our expected balance sheet growth.” The company plans to maintain its deposit growth strategy and sees ongoing hiring and technology upgrades as key to supporting both core banking and fee-based businesses.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to core deposit growth, fee income gains, and ongoing investments in talent and technology, while also emphasizing a cautious approach to loan growth as economic uncertainty persists.

• Core deposit momentum: Deposit inflows were driven by a dedicated business checking campaign and increased focus on commercial and retail relationships. Management pointed to a 1% quarterly improvement in non-interest-bearing deposits, with further growth expected as a priority in 2026.
• Balanced loan portfolio: Growth in commercial & industrial (C&I) and residential mortgage lending led overall loan expansion. Management highlighted that C&I growth was supported by new client relationships, while residential mortgage pipelines remain strong, positioning the bank well for continued lending activity.
• Fee income expansion: Fee-based revenue was propelled by wealth management, derivatives, foreign exchange, and treasury services. Ongoing hires of financial consultants and investment in treasury management drove double-digit growth in this area, with management aiming for continued double-digit fee income growth.
• Efficiency and expense discipline: The efficiency ratio remained strong at 34.5% due to cost controls and targeted investment. Operating expenses grew 7.5%, mainly from hiring in key business lines and technology upgrades, but were offset by gains in productivity and balance sheet scale.
• Credit quality and capital strength: Asset quality metrics outperformed industry averages, with low net charge-offs and stable non-performing assets. Management underscored the bank’s robust capital ratios—well above regulatory minimums—and a 33% dividend increase as evidence of strong capital management.

Drivers of Future Performance

Management’s outlook for 2026 centers on sustaining balance sheet growth, expanding fee-based businesses, and managing risk amid changing interest rates and economic uncertainty.

• Loan and deposit growth focus: The company expects to achieve 5% to 7% loan and deposit growth, led by ongoing strength in C&I and residential mortgages. This is supported by targeted hiring, branch expansion in select markets, and a continued push to deepen commercial relationships.
• Fee income acceleration: Management aims to outpace balance sheet growth in fee income, leveraging investments in wealth management, treasury, and foreign exchange services. The aspiration is to maintain double-digit fee growth, with inorganic opportunities considered if they provide clear value.
• Expense and risk management: Operating expenses are expected to rise 7% to 9% as the company invests in technology, compliance, and talent. Management is also closely monitoring credit quality, projecting net charge-offs to remain low even as overall lending expands, and maintaining capital buffers to absorb potential volatility.

Catalysts in Upcoming Quarters

Going forward, the StockStory team will monitor (1) sustained momentum in commercial deposit and loan growth, (2) the trajectory of fee income as new hires and digital platforms ramp, and (3) the impact of rising operating expenses on efficiency ratios. We will also watch for signs of credit quality trends and whether management’s disciplined approach to expansion continues to differentiate East West Bank from peers.

East West Bank currently trades at $114.55, in line with $115.30 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

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