East West Bancorp Beats Q2 Estimates

East West Bancorp (EWBC 0.10%), a leading U.S.-based commercial bank known for its cross-border strengths between the U.S. and Asia, reported financial results for the second quarter of 2025 on July 22, 2025. The company's core earnings topped consensus: adjusted EPS reached $2.28, beating analyst estimates of $2.25, while revenue was $703 million—just above the $702.93 million non-GAAP estimate and setting a new high for the company. Both loans and deposits grew to record levels. Overall, the quarter reflected robust loan and deposit growth, enhanced capital strength, and continuing asset quality improvements, offsetting some fee income declines and market uncertainties.

Source: East West Bancorp. Note: Analyst estimates for the quarter provided by FactSet.

Company Overview and Market Focus

East West Bancorp operates a banking franchise focused on both commercial and consumer clients, with a notable specialty in cross-border banking—especially trade finance and relationship services bridging the U.S. and Asia. Based in Southern California, it has over 110 locations in the United States and Asia, serving a wide demographic that includes a deep focus on the Asian American community.

The company’s recent strategic focus has centered on four main areas: leveraging its dual-country presence to enable cross-border capabilities, expanding its digital banking services, maintaining leading operating efficiency, and adhering to strict regulatory compliance. Its ability to facilitate U.S.-Asia business flows, paired with cultural and language expertise, draws a distinctive client base. Key success factors include prudent risk management, operational efficiency—shown by an efficiency ratio of 36.4% in Q2 2025—and balance sheet strength.

Quarter Highlights and Detailed Performance

The quarter delivered growth in loans and deposits, along with record net interest income. Loans reached $55.0 billion as of June 30, 2025, up 4.2% year-over-year, and deposits climbed to $65.0 billion as of Q2 2025, up 8.4% year-over-year. The loan-to-deposit ratio dropped to 84.5%, signaling greater balance sheet liquidity and a more stable funding base. Noninterest-bearing deposits totaled $15.47 billion, about 24% of all deposits, which helps keep funding costs in check.

Net interest income—the revenue banks earn from lending minus what they pay for funding—set a new high at $617 million for the period. The net interest margin, which expresses this income as a percent of assets, held steady at 3.35%. Average loan yields were 6.4%, while the cost of funding was 2.63%. Management stressed discipline on deposit pricing, with the average deposit cost ticked down further.

Fee income, which includes product lines like foreign exchange, wealth management, deposit-related charges, and lending fees, softened sequentially but improved year over year. Fee income was $80.5 million, down 8.9% from the prior quarter but up 5.1% from a year earlier. Sequential drops came mainly from reduced activity in foreign exchange transactions (down 13.4% quarter-over-quarter), wealth management fees (down 21.6%), and customer derivative income (down 34.2%). Some categories experienced a pullback due to volatility. Lending and loan servicing fees also eased, while deposit-related fees remained stable.

On expenses, Noninterest expenses totaled $256 million, a rise of 8.5% from the previous year. However, total operating noninterest expense excluding tax credits and community reinvestment initiatives fell by 2.8% compared to the previous quarter. Compensation and employee costs were $145 million, up from one year ago but down slightly on a sequential basis. The company maintained its strong efficiency ratio.

Nonperforming assets dropped to $172 million, or just 0.22% of total assets, a decline from both last quarter and the same period last year. The criticized loan ratio improved sequentially to 2.15%. Net charge-offs, or loans unlikely to be recovered, remained low at 0.11% annualized. The allowance for loan losses increased to $760 million—1.38% of total loans—as management adjusted for a shifting economic outlook. A one-time $6 million tax charge linked to a California apportionment rule change affected the tax line, but the adjusted effective tax rate improved to 21.3% from 25.8% last quarter.

Capital strength continued as a theme. The Common Equity Tier 1 (CET1) ratio, which measures core equity capital as a proportion of assets, was 14.51%. The tangible common equity ratio (non-GAAP) increased to 9.95%. Book value per share climbed to $59.51, up 14% year over year, and tangible book value per share (non-GAAP) reached $56.10, up 15%. These ratios are well above minimum regulatory thresholds. The return on average tangible common equity stood at 16.39% (adjusted: 16.69%), and the efficiency ratio remained at 36.4%.

The board maintained the company’s quarterly dividend at $0.60 per share. Share repurchase activity was modest—$2 million worth of shares were bought back, leaving $241 million available in the repurchase program.

No changes to forward dividend or capital return policy were announced.

Looking Ahead

Management did not issue updated formal financial guidance for the year or next quarter. In previous discussions, executives confirmed that deposit growth is expected to fund stated loan growth for 2025. This reflects continued investment in technology, digital banking platforms, and cybersecurity.

For investors, close attention in future periods should focus on several main themes: margin stability (as the benefit from falling deposit costs fades), fee income—especially beyond lending and deposit-related activities—and credit quality in commercial real estate loans. No explicit forward earnings or margin guidance was provided by management for the quarter or the remainder of fiscal 2025.

Note: Revenue and net income are presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.