East West Bancorp — Financial Results
Net Income Rose 14% to $1.3 Billion, Driven by Higher Interest Earnings
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Net income | $1.33B | $1.17B | +14% |
| Diluted EPS | $9.52 | $8.33 | +14% |
| Return on assets (ROA) | 1.70% | 1.60% | +10 bps |
| Net interest margin | 3.41% | 3.27% | +14 bps |
East West Bancorp had a strong 2025, with net income growing $160 million year-over-year. The main driver was net interest income (the profit a bank earns on loans minus what it pays depositors), which rose 12% to $2.6 billion as the bank successfully cut deposit funding costs faster than its loan yields fell. The efficiency ratio (expenses as a share of revenue) improved to 35.69%, meaning the bank spent about 36 cents to generate each dollar of revenue — an unusually lean figure for a bank.
Deposit Costs Fell Sharply, Boosting the Core Profit Engine
| 2025 | 2024 | |
|---|---|---|
| Average cost of deposits | 2.46% | 2.88% |
| Average cost of interest-bearing deposits | 3.24% | 3.83% |
| Average loan yield | 6.40% | 6.67% |
The Federal Reserve cut rates in late 2024 and into 2025, and East West passed those cuts through to depositors faster than its loan yields declined. The average cost of interest-bearing deposits dropped 59 basis points (a basis point is one-hundredth of a percent), while the average loan yield only fell 27 basis points. This widening gap — known as the net interest spread — is what pushed the margin higher and drove the bulk of earnings growth.
Loan and Deposit Growth Was Solid and Balanced
| Dec 2025 | Dec 2024 | Change | |
|---|---|---|---|
| Total loans | $56.9B | $53.7B | +6% |
| Total deposits | $67.1B | $63.2B | +6% |
Loans grew $3.2 billion, spread across commercial, real estate, and residential mortgage categories. Deposits kept pace, growing $3.9 billion, with both noninterest-bearing demand deposits (free money for the bank) and time deposits contributing. The loan-to-deposit ratio held steady at 85%, indicating the bank is not stretching its funding base to chase growth.
Credit Quality Held Up Well Despite Some CRE Pressure
| Metric | Dec 2025 | Dec 2024 |
|---|---|---|
| Net charge-offs / avg loans | 0.11% | 0.26% |
| Nonperforming assets / total assets | 0.26% | 0.26% |
| Criticized loans / loans held-for-investment | 2.01% | 2.18% |
Net charge-offs (loans written off as unrecoverable) fell by more than half to just 0.11% of loans — a very low level. Overall criticized loans (a regulatory category for loans showing signs of stress) actually declined 3%. The one area to watch is commercial real estate (CRE), where nonaccrual loans jumped notably, and past-due residential mortgages also ticked up. These remain small in absolute terms but are worth monitoring given the uncertain economic backdrop.
Capital Position Strengthened; Dividend Raised 33%
Stockholders' equity grew 15% to $8.9 billion, and book value per share rose from $55.79 to $64.68. The bank's CET1 capital ratio (a core regulatory measure of financial strength) improved to 15.1%, well above the 7% minimum required including buffers. In January 2026, the board raised the quarterly dividend by 33% to $0.80 per share, a meaningful signal of management confidence in the earnings outlook.
Tax Rate Jumped, Partially Clipping Earnings Growth
Income tax expense rose 27% to $400 million, pushing the effective tax rate from 21.3% to 23.2%. About $84 million of the increase came from higher pre-tax profits, but there was also a one-time charge from revaluing deferred tax assets (future tax benefits on the balance sheet) due to California adopting a new method for calculating state taxes. This is largely a one-time accounting adjustment rather than an ongoing cash drag.