Tariff Tailwinds and Record Deposits: East West Lifts the Bar
A strong Q2, boosted by tariff-related DDA inflows and a wealth management boom, prompts guidance hikes.
EWBC · Earnings Call · 2026-07-21
East West Bancorp is proving that a regional bank can still surprise on the upside. The company reported record total revenue, net interest income and non-interest income in Q2 2026, driven by record deposits and loans. Management raised full-year loan growth guidance to 6-8% from 5-7%, and net interest income guidance to 7-9% from 6-8%. The stock is up 12.5% over the past 90 days, and while it sits just 4.9% below its August high, the fundamental story is one of consistent delivery.
The DDA Engine and the Tariff Tailwind
The most striking number on the call was the surge in demand deposits. CFO Chris Del Moral-Niles noted that "Demand deposits were up $875 million during the quarter, which accounted for the lion's share of the growth." This continued a Small business checking campaign that has been running for over a year. But the quarter also carried a distinct catalyst: tariff refunds. Del Moral-Niles attributed part of the DDA growth to "positive flows from tariff refunds across hundreds of our accounts." This is a classic example of a tariff benefit that is also a market-wide theme — Net tariff refunds a prominent global keyword in the most recent period.
Yet the timing matters. Management estimated that $200-250 million of the period-end balance came from net excess tariff-related inflows, but cautioned that the majority had already flowed out. As he put it, "We would tell you that of the $200, $250 that was there at quarter end, most of it has already gone back to wherever it needed to go." This transient nature is a reminder that the core strength remains the day-to-day deposit franchise, not the one-time refunds. That durability is exactly what previous calls have highlighted; in April, Del Moral-Niles boasted, "it's doubly impressive from our perspective that our teams are able to go out there and win non-interest-bearing DDA money in an environment where rates aren't expected to come down anytime soon."
Raised Guidance and a Grinding Margin
The operational leverage was enough to prompt a second upward revision to NII guidance. Del Moral-Niles explained, "the combination of the fact that deposit growth and loan growth continue to come in perhaps better than we would've expected earlier in the year is a positive." Net interest income rose to a record $685 million, and the bank's NIM held at 3.43%, up 8bp year-over-year. Net interest income rose to a record $685 million, and the bank's NIM held at 3.43%, up 8bp year-over-year.
But the easy CD repricing is over. On the prior quarter's call, Del Moral-Niles had noted "we think our ability to march down or roll down the next wave of CDs that sort of run its course to a large extent." This quarter, he reiterated that competition is firming, with $13 billion of CDs slated for repricing in Q3 at 3.60% for six months and 3.75% for twelve months, and they may need to get more competitive later. The bank is betting that continued DDA growth will offset some of that pressure.
Wealth Management and a Strong Capital Cushion
The second pillar of the story is fee income. Del Moral-Niles highlighted that "wealth management fees... are up 71% year-over-year for the first six months," lifting total fees up 15% and keeping the double-digit growth target in sight. Wealth management has been an investment priority, and the results are starting to show. The bank also maintains a fortress balance sheet, with a TCE ratio above 10% and CET1 at 15.4%, giving it room to be opportunistic on buybacks and potential M&A. While there's no deal on the table, management made clear it would be attracted to the right wealth-oriented platform.
The message is one of discipline: a Small business campaign driving core DDA, a tariff-driven tailwind that is fading but being replaced by ongoing refund programs, and a fee engine that is compounding. The raised guidance is a vote of confidence, but the market is already near highs. The transient nature of tariff deposits and the looming CD repricing are the watch items for the back half.