[Management View]
East West Bancorp (EWBC) reported record net interest income and revenue in Q2 2025, driven by strong loan and deposit growth, improved asset quality, and disciplined expense management. Key metrics include a 2% QoQ increase in average loan balances and deposits, a 14.5% CET1 ratio, and a 36.4% efficiency ratio. The company continues to focus on customer relationships and strategic investments in talent and digital infrastructure.

[Outlook]
Management expects full-year end-of-period loan growth between 4% to 6% and net interest income growth above 7%. The effective tax rate is projected at approximately 23%, with subsequent quarters likely closer to 22%. Future expense growth will be driven by investments in talent, digital infrastructure, compliance, and fraud prevention.

[Financial Performance]
- Quarterly Revenue: Record revenue in Q2 2025.
- Net Interest Income: $617 million, up $17 million sequentially.
- Loan Growth: Average loan balances rose by $940 million (2% QoQ).
- Deposit Growth: Total average deposits grew 2% QoQ.
- Fee Income: $81 million, third-highest quarterly result in company history.
- Efficiency Ratio: 36.4% in Q2.
- Non-Interest Expense: $230 million in Q2.
- Asset Quality: Non-performing assets decreased to 22 basis points of total assets.
- Loan Loss Provision: $45 million in Q2.
- Capital Ratios: CET1 ratio at 14.5%, tangible common equity ratio at 10%.

[Q&A Highlights]
Question 1: How are you managing deposit costs and loan yields going forward?
Answer: We are continuously optimizing deposit costs and expect to maintain the margin within a reasonable range through Q3, regardless of rate cuts.

Question 2: Can you provide more color on the reserve build in C&I despite favorable migration?
Answer: The reserve build is driven by the CECL model and the economic outlook, not specific issues within the C&I book.

Question 3: What is the impact of recent legislative changes on the renewable energy tax credits business?
Answer: Existing investments and loan commitments are unimpacted, but future strategies are being evaluated. We are exploring offsets to potential tax rate increases.

Question 4: Can you discuss client sentiment and investment pace in light of tariff uncertainties?
Answer: Client sentiment is improving, with more certainty around tariffs. Our diversified loan portfolio and experienced customers mitigate the impact of tariffs.

Question 5: How do you see deposit costs moving through the rest of the year?
Answer: We expect deposit costs to decrease gradually, reflecting the slower pacing of Fed rate cuts.

Question 6: What are the drivers of expected expense growth in the second half of the year?
Answer: Investments in talent, digital infrastructure, compliance, and fraud prevention are driving expense growth.

Question 7: Is the single-family residential line item at risk due to migration trends?
Answer: Demand for homeownership remains strong, and we expect continued growth in this area.

Question 8: How sustainable is the current fee income level given tariff uncertainties?
Answer: Fee income has been steady, and we expect it to remain a solid contributor.

Question 9: Why was the share repurchase amount light in Q2?
Answer: Timing and blackout periods related to earnings preparation affected the repurchase amount.

Question 10: Are there any plans to optimize the balance sheet further?
Answer: We continue to optimize deposits, the investment portfolio, and C&I growth.

Question 11: What are the plans for capital deployment beyond share repurchases?
Answer: We aim to deliver top quartile returns and are exploring opportunities to build out fee income capabilities and potential acquisitions.

Question 12: Is there any selective slowing in commercial real estate growth?
Answer: We are focusing on balanced growth across single-family, C&I, and CRE, with a particular emphasis on C&I and single-family.

[Sentiment Analysis]
The tone of the analysts was inquisitive and focused on understanding the sustainability of growth and strategic initiatives. Management was confident and provided detailed responses, emphasizing their strategic focus and robust financial position.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 | YoY Change |
|----------------------------|---------------|---------------|--------------|
| Net Interest Income | $617 million | $600 million | +2.8% |
| Average Loan Balances | +$940 million | +$920 million | +2% QoQ |
| Total Average Deposits | +2% QoQ | +2% QoQ | +2% QoQ |
| Fee Income | $81 million | $85 million | -4.7% |
| Efficiency Ratio | 36.4% | 36.5% | -0.1% |
| Non-Interest Expense | $230 million | $230 million | 0% |
| Non-Performing Assets | 22 bps | 24 bps | -2 bps |
| CET1 Ratio | 14.5% | 14.3% | +0.2% |

[Risks and Concerns]
- Economic Outlook: Changes in the economic outlook could impact loan performance and reserve requirements.
- Regulatory Changes: Legislative changes affecting tax credits and compliance costs.
- Market Uncertainty: Tariff uncertainties and their impact on client sentiment and investment.

[Final Takeaway]
East West Bancorp delivered a strong Q2 2025 performance with record revenue and net interest income, driven by robust loan and deposit growth. The company maintains a strong capital position and continues to invest in strategic growth areas. Management's outlook remains positive, with expectations for continued growth in net interest income and disciplined expense management. Investors should monitor economic and regulatory developments that could impact future performance.