East West (EWBC) Q1 2026 Earnings Transcript

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Date

Tuesday, April 21, 2026 at 5 p.m. ET

Call participants

• Chairman and Chief Executive Officer — Dominic Ng
• Chief Financial Officer — Christopher Del Moral-Niles
• Chief Risk Officer — Irene Oh

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Takeaways

• Total deposits -- Increased by 9% year over year, with end-of-period balances rising by $1.8 billion sequentially.
• Noninterest-bearing deposit growth -- Rose by nearly $800 million, attributed to a continued focus on retail and small business customers.
• Money market deposits -- Up 9% year over year, supporting a shift away from higher-cost deposits.
• Loan growth -- Up 7% year over year, driven primarily by more than $900 million in commercial and industrial (C&I) loans quarter over quarter.
• Capital call lending -- Accounted for a majority of C&I growth, primarily due to net line draws for private equity and real estate transactions.
• Fee income -- Achieved a record $99 million for the quarter, reflecting 12% year-over-year growth; wealth management fees were notably higher from structured note and annuity sales.
• Efficiency ratio -- Reported at 36.2% for the quarter, described as industry-leading.
• Operating noninterest expense -- Totaled $258 million, with seasonally higher payroll and wealth management incentives cited.
• Net interest income -- Increased to $671 million, benefiting from deposit cost reductions of 6 basis points relative to the prior quarter.
• Deposit cost reduction -- Interest-bearing deposit costs have declined 111 basis points since the start of the rate-cutting cycle.
• Guidance: loan growth -- Full-year loan growth reaffirmed at 5%-7%.
• Guidance: net interest income -- Updated to 6%-8% full-year growth, up from a previous 5%-7% range, reflecting revised rate assumptions.
• NDFI portfolio performance -- 99.99% of non-depository financial institution (NDFI) loans are current, with negligible net charge-offs over a decade; 30% of the portfolio is capital call lines.
• Asset quality -- Nonperforming assets remained stable at 26 basis points of assets; net charge-offs registered at 9 basis points ($12 million), up modestly from 8 basis points last quarter.
• Provision for credit losses -- Increased to $36 million from $30 million sequentially, reflecting loan growth and portfolio mix.
• Allowance for credit losses -- Increased by $26 million to $836 million, or 1.44% of total loans.
• Common Equity Tier 1 ratio -- Reported at 15.1%, with tangible common equity ratio at 10.3%.
• Share repurchases -- Approximately 909,000 shares were repurchased for $98 million; $117 million remains authorized for future buybacks.
• Dividend -- $111 million returned to shareholders via dividend distribution.
• Expense guidance -- Management expects expenses to align with a 7%-9% growth rate for the full year.
• Deposit mix management -- $10 billion in CDs rolled over, but CDs net grew by $127 million as retention remained the goal; current CD special is priced at 3.60%.
• Net charge-off guidance -- Updated to a range of 15-25 basis points for the full year.
• Basel III impact -- CFO Del Moral-Niles stated, The risk-weighted asset adjustment from what has been put out there as Basel III endgame is roughly a $7 billion reduction in our current risk-weighted assets to our current balance sheet, and that would probably translate to something on the order of magnitude of a 1.6% to 1.8% increase in our various respective regulatory capital ratios.
• NIM outlook -- Management expects net interest margin to be "flat to positive" moving forward.
• Wealth management expansion -- New employees were added late in the quarter and are expected to drive further fee growth in subsequent quarters.

Summary

East West Bancorp (NASDAQ:EWBC) delivered record levels in loans, deposits, and fee income for the reported period, highlighting robust organic expansion across key segments. Management raised full-year net interest income guidance to 6%-8% as a direct response to a more favorable rate environment, while maintaining loan growth projections at 5%-7% and updating net charge-off expectations slightly higher. The tangible common equity and Common Equity Tier 1 capital ratios positioned the bank as a leader among peers, with a substantial increase in repurchase and dividend distributions. Notably, the risk-weighted asset recalibration under Basel III is projected to deliver a material 1.6%-1.8% boost to capital ratios. Operating costs are trending in line with guidance, and efficiency remained among the industry's best even as the firm invested in future growth.

• The NDFI loan portfolio, comprising 30% capital call lines, demonstrated near-universal current performance and negligible historical net charge-offs, supporting continued confidence in credit quality.
• Noninterest-bearing deposit momentum was attributed to targeted campaigns for retail and small business customers, enabling favorable deposit mix dynamics despite an increasingly competitive rate environment.
• Fee income acceleration was fueled by higher client activity in wealth management—particularly in structured notes and annuities—and is expected to remain a double-digit growth driver, aided further by recent staff expansion.
• Deposit growth outpaced loan growth, cementing the company's deposit-led funding and liquidity profile.
• Management stated strategic prioritization of organic growth, followed by shareholder returns and selective M&A, based on capital allocation discipline.
• Hedge mark-to-market values turned positive, indicating a potential earnings contribution from rates moving higher.
• Allowance for credit losses incorporated changes in portfolio mix and macro scenario weights, reflecting a conservative but data-driven approach to reserving.
• Expense growth expectations were reaffirmed with a 7%-9% annual range, attributable partly to continued technology and cyber investments.

Industry glossary

• NDFI: Non-Depository Financial Institution, referring to borrowers that are financial entities but not banks or credit unions, often including private equity, mortgage credit, and business credit firms.
• Capital call lines: Credit facilities extended to private equity or investment funds, which bridge the time between investment transactions and investor capital contributions.
• CD special: A time-limited certificate of deposit offering, typically featuring a promotional rate to attract or retain deposit balances.

Full Conference Call Transcript

Dominic Ng: Good afternoon, and thank you for joining us for our first quarter earnings call. I am pleased to report that East West Bancorp, Inc. had another record quarter for loans, deposits, and fee income. Our consumer and commercial depositors continue to place their trust in us, helping grow total deposits by 9% year over year. Growth in noninterest-bearing deposits was particularly strong this quarter, up nearly $800 million, driven by our continued focus on providing solutions to retail and small business customers. We also delivered 7% year-over-year loan growth. C&I loans increased by more than $900 million quarter over quarter, driven by higher line utilization, particularly among capital call borrowers.

We also achieved a record quarter of fee income, growing 12% year over year. We saw strong momentum in wealth management this quarter as we stayed closely engaged with clients. We continue to see opportunity to grow and diversify our fee revenues over time. Credit performance remained stable. Net charge-offs and nonperforming assets were low in absolute terms, consistent with our expectations and reflecting our disciplined approach to risk management. Our capital position remains a key advantage for East West Bancorp, Inc., with a tangible common equity ratio of 10.3%. We maintained this capital level while growing our balance sheet, increasing our dividend, and opportunistically repurchasing shares.

We continue to be focused on being disciplined stewards of our customers’ trust and our shareholders’ capital. I will now turn the call over to Chris to provide more details on our first quarter financial performance. Chris?

Christopher Del Moral-Niles: Thanks, Dominic. Let us start with deposit growth on Slide 4. Our end-of-period deposits grew by $1.8 billion quarter over quarter. Average DDA growth was up 12% year over year and nearly $500 million on an average basis. This checking account growth led us to price our Lunar New Year CD campaign more conservatively this year, allowing us to focus on CD balance retention and drive a better mix of deposit costs for the quarter and going into the rest of 2026. Money market deposits were also up 9% year over year as we continue to further diversify away from CDs and other higher-cost deposits.

Turning to loans on Slide 5, as we have emphasized before, our focus has been and continues to be on growing our C&I portfolio, and C&I was the primary driver of growth in Q1. Most of the increase was driven by net line draws from existing customers. While utilization ticked up across a range of industries, as Dominic mentioned, capital call-related borrowing made up the lion’s share of the first quarter’s net growth. The quarter’s net draws on capital call lines reflected broad-based increases in M&A and real estate property acquisitions across the quarter.

While some of these lines have already been paid down here in the second quarter, private equity markets and real estate markets remain active, and we expect to continue to participate in this activity during the remainder of the year. Residential mortgage experienced a seasonally slower Q1 than we expected, but our pipelines have grown and continue to grow into Q2, and we expect residential mortgage to be a consistent contributor to our overall loan growth during the year. We also grew commercial real estate balances this quarter. Our priority continues to be on supporting our long-standing real estate relationship clients.

Given the level of net growth we saw in the first quarter, and the pipelines we see going into Q2, we are comfortable reiterating our guidance for full-year loan growth to be in the range of 5% to 7%. Now turning to Slide 6, our loan portfolio remains well diversified with over 70% of our loans to commercial customers across a broad range of industries and commercial real estate asset types. C&I now represents 34% of our total loans, reflecting the results of our focus and emphasis on balanced growth across our balance sheet. Our CRE portfolio remains diversified by a number of product types, with an emphasis on multifamily, retail, and industrial projects.

As we look ahead, we remain focused on growing the portfolio in a disciplined way that enhances diversification and remains aligned with our overall risk appetite. Turning to Slide 7, we have provided incremental detail on our NDFI portfolio. Growth in this portfolio this quarter has been driven primarily by capital call lines. Our NDFI portfolio is granular with diversification across industry and category types. 99.99% of our NDFI loans are current, and over the past decade there have been virtually no net charge-offs in this portfolio. Approximately 30% of this portfolio is made up of capital call lines.

Capital call is not a regulatory classification and our capital call loans are spread across a range of private equity, mortgage credit, and business credit borrowers. I will now turn to net interest income and margin on Slide 8. Quarterly dollar net interest income increased to $671 million, reflecting our ability to grow our balance sheet while overcoming the headwinds of rate cuts in Q4 and two fewer days in Q1. Our short-term liability sensitivity on deposit pricing dynamics and our positive deposit remixing during the quarter allowed us to continue to reduce our deposit costs, driving period-end costs down a further 6 basis points quarter over quarter.

Looking back to the start of the cutting cycle, we have decreased interest-bearing deposit costs by 111 basis points, comfortably exceeding our 50% beta guidance shared in prior periods. Moving on to fees on Slide 9, fee income grew 12% year over year to a new record $99 million for the quarter, with significant growth in wealth management fees driven by structured note and annuity sales, and deposit-related fees driven by higher customer activity. We will remain focused on driving this growth and further diversifying our revenue overall, and are quite encouraged by the pace of growth in fee revenues so far this year. We continue to aspire to deliver double-digit year-over-year growth in fee income in 2026.

Now turning to expenses on Slide 10, East West Bancorp, Inc. continues to deliver industry-leading efficiency while investing for future growth. The Q1 efficiency ratio was 36.2%. Total operating noninterest expense was $258 million for the first quarter and included seasonally higher payroll-related costs, some increased stock-based compensation costs, and higher incentive comp reflecting increased commissions for our wealth management activity. Nonetheless, overall, we continue to expect expenses will come in line with our guidance for the year. Now let me hand the call over to Irene for comments on credit and capital.

Irene Oh: Thank you, Chris. Good afternoon to all on the call. As you can see on Slide 11, our asset quality metrics held stable and continue to broadly outperform the industry. Quarter over quarter, nonperforming assets remained stable at 26 basis points as of 03/31/2026. We recorded net charge-offs of just 9 basis points in the first quarter, or $12 million, compared to 8 basis points in the fourth quarter. We recorded a higher provision for credit losses of $36 million in the first quarter, compared with $30 million for the fourth quarter. We remain vigilant and proactive in managing our credit risk.

Turning to Slide 12, the allowance for credit losses increased $26 million to $836 million, or 1.44% of total loans as of March 31, reflecting quarter-over-quarter loan growth and the portfolio mix shift. We believe we are adequately reserved for the content of our loan portfolio given the current economic outlook. Turning to Slide 13, all of East West Bancorp, Inc.’s regulatory capital ratios remain well in excess of regulatory requirements for well-capitalized institutions and well above regional and national bank averages. East West Bancorp, Inc.’s Common Equity Tier 1 capital ratio stands at a robust 15.1%, while the tangible common equity ratio now sits at 10.3%.

These capital levels continue to place us amongst the best capitalized banks in the industry. In the first quarter, East West Bancorp, Inc. repurchased approximately 909 thousand shares of common stock for $98 million. We currently have $117 million of repurchase authorization that remains available for future buybacks. East West Bancorp, Inc. also distributed approximately $111 million to shareholders via the quarterly dividend. East West Bancorp, Inc.’s second quarter 2026 dividend will be payable on 05/18/2026 to stockholders of record on 05/04/2026. I will now turn it back to Chris to share our outlook.

Christopher Del Moral-Niles: Thank you, Irene. We have assumed the forward curve as of March 31, which models no rate cuts, and therefore we are updating our full-year 2026 net interest income guidance to grow between 6% to 8%, up from our prior expectations of growth between 5% to 7%. We are also updating our net charge-offs, now projected to fall between 15 and 25 basis points for the full year. With that, we will be happy to open the call for questions. Operator?

Operator: We will now open the call for questions. If you are using a speakerphone, please pick up your handset before pressing the keys. If you have any additional questions, you may rejoin the queue. The first question will come from Ebrahim Poonawala with Bank of America. Please go ahead.

Ebrahim Poonawala: Good afternoon. Just given the capital proposals that were put out by the Fed last month, I am wondering if you can quantify what impact you expect to your capital ratios. What is the impact that you expect for what are really strong capital levels, and where is this headed if the proposal becomes a final rule?

Christopher Del Moral-Niles: Yes, Eby, we are happy to cover that for you. The risk-weighted asset adjustment from what has been put out there as Basel III endgame is roughly a $7 billion reduction in our current risk-weighted assets to our current balance sheet, and that would probably translate to something on the order of magnitude of a 1.6% to 1.8% increase in our various respective regulatory capital ratios.

Ebrahim Poonawala: Are you going to use all that excess capital to start another bank? I know Dominic is very opportunistic.

Christopher Del Moral-Niles: I think we are very comfortable maintaining very strong capital levels, and having more capital has never served this bank badly.

Irene Oh: Eby, we are going to use that capital to grow organically.

Ebrahim Poonawala: That is the best answer, so I hope you do. Maybe moving to the P&L and strong deposit growth—on the private capital call line lending, there is lots of focus on private equity and that space. It did not sound like any of the drawdowns on capital call line lending were stressed; it felt like there was more activity that drove that. Can you confirm that? And why are we not seeing more diversified C&I growth pick up, given the broader momentum? Are you seeing green shoots of other areas where C&I is picking up?

Christopher Del Moral-Niles: Sure. On the capital call lines, it was pretty diversified. It was the lion’s share of the total growth, but it was across a range of industries, and that gives us comfort that things are happening out there and there are green shoots in general. Of course, there was a component that was not capital call lines—well over $300 million—and that was all encouraging evidence of continued activity across a range of industries. We saw activity in food distribution, some cross-border, and commercial real estate. We saw a lot of areas that had positive momentum and continue to have positive momentum going into Q2.

Irene Oh: Maybe I will just add to clarify your point. None of the drawdowns that we saw in the quarter were distressed. Opportunistically, it really is the timing of that, and as Chris alluded to, there is a timing component. Some of those did pay off in the early part of the second quarter—normal activity.

Operator: The next question will come from David Rochester with Cantor Fitzgerald. Please go ahead.

David Rochester: Hey, good afternoon, guys. I just wanted to ask about the deposit growth—very solid this quarter. Can you give an update on the competitive environment there? Did you find yourself having an easier time growing core deposits? Normally this is a softer quarter for that for most banks. The DDA trends look really good. How do you feel about that going into 2Q and the rest of the year, especially on the DDA side? Thanks.

Christopher Del Moral-Niles: I think the DDA growth that you saw has been the result of a now more-than-year-long campaign to really deepen our connection with retail and small business customers across our footprint. That has been successful and continues to bear fruit into Q1 2026. We are not letting up on that strategy. That campaign has been working arguably better than we expected, but we are continuing to devote more time and effort to make sure we nurture it even more. The landscape for deposits, however, is not easy. It is a very competitive landscape.

From a pricing perspective, the fact that we moved from an outlook with multiple cuts in it to an outlook with no cuts means that deposit pricing pressure is real and upon us. The reality is it is doubly impressive from our perspective that our teams are able to go out there and win noninterest-bearing DDAs in an environment where rates are not expected to come down anytime soon. So kudos to our retail team, kudos to our small business teams, kudos to all our commercial RMs out there working their customers to find opportunities for us to add value. It really paid off here in the first quarter.

But no, I do not think pricing is going to get any easier, and I do not think competition is going to get any easier.

David Rochester: Alright, appreciate that. Just a follow-up on wealth management—you talked about staying close to the customer and that helping you this quarter. It was a really big number this quarter. Can you talk about how you see that trending moving forward? Have you added new people that are helping boost that number? Do you have new products—anything else that can help figure this out going forward?

Christopher Del Moral-Niles: There was a fair amount of volatility in Q1, and some of our clients decided that some structured notes were a good thing. We added some notable volume in structured notes. We also added some annuities during the quarter as people moved out of equities at record highs into annuity products. We also added people late in the quarter, so they did not add a big impact to the Q1 numbers, but we expect they will continue to support continued growth in wealth management as we roll through the rest of the year.

Operator: The next question will come from Jared Shaw with Barclays. Please go ahead.

Jared Shaw: Good afternoon. Sticking on the deposit theme, with the good growth that you are seeing and the mix shift, how should we think about the trend of deposit pricing costs in a flat environment? Do you think you are still going to be able to continue to march that lower as we go forward?

Christopher Del Moral-Niles: Jared, in some prior calls or meetings, I had alluded to the fact that we have been benefiting from rolling down the hill, and that there would come a point in time where the hill would flatten out. I think we have hit that point now. So no—my comments earlier that I do not think deposit pricing is going to get easier allude to the fact that our ability to march down or roll down the next wave of CDs has run its course to a large extent.

That having been said, I will remind you we are asset sensitive, which is why, when we are changing our guidance from cuts to a flat rate environment, we are also upping our NII guidance because higher-for-longer is net better for East West Bancorp, Inc.

Jared Shaw: Okay, that is good color. And then any color, maybe Irene, on the growth in resi nonperformers? Are you seeing any areas of stress there—maybe from tech worker disruption from AI—or anything that you are spending a little more time looking at?

Irene Oh: That is a great question. We have seen a little bit of an increase. Ultimately, there is not anything that we view as systemic. It really is customer by customer, loan by loan. Given the low loan-to-values we underwrite, we do not see a lot of loss content there.

Operator: The next question will come from Casey Haire with Autonomous Research. Please go ahead.

Casey Haire: Good afternoon, everyone. I wanted to touch on loan growth. Apologies if I missed this, but the guide of 5% to 7% off of a quarter where you are growing at 8% annualized and pipelines sound pretty constructive—kind of a recurring question with you guys—but why keep that a little conservative, or what are we missing here?

Christopher Del Moral-Niles: I would point you to page 9 of our press release tables, which says that from March 31 to March 31, we grew by exactly 7.0% on total loans. That felt like it was in the range of 5% to 7% and warranted holding the range.

Casey Haire: Okay. Just moving back to the capital discussion, I have also heard you talk about some M&A aspirations on the East Coast where there are pockets of Chinese American populations that would fit well with the strategy. Any updated thoughts around that, and given the excess capital under the Basel III proposal, if you were to find an opportunity that you did like, what are some parameters around earn-back and tangible book value dilution?

Irene Oh: I will start, and maybe Dominic and Chris can chime in afterwards. We have a kind of hierarchy. Organic growth is our priority, and we have been able to show over many years the ability to grow our franchise through organic growth, although we also have a history many years ago of being successful with well-priced strategic acquisitions. Organic growth is our number one priority. Certainly when it is opportunistic, we look at stock buybacks and the return, and then also acquisitions that are well-priced, strategic, and make sense for the franchise—something that ultimately has to be a better return than our ability to grow organically.

Christopher Del Moral-Niles: We complement that, of course, with the regular dividend, and we review the dividend at least annually. The dividend is our second go-to after organic growth, and it is where we most recently increased our dividend—you will recall, in the first quarter by [inaudible]. We will continue to look at that to make sure it remains competitive. Then, as Irene mentioned, we follow up the organic growth with dividends and then inorganic opportunities at the right price, and then share buybacks perhaps in the future, opportunistically.

Operator: The next question will come from Manan Gosalia with Morgan Stanley. Please go ahead.

Manan Gosalia: Hey, good afternoon. On the deposit growth side—do you typically see some sort of flight to safety from clients, with clients holding more liquidity at times when there is elevated geopolitical risk? Did you see any of that this quarter? I am trying to assess how much of the strength in DDA growth is seasonal or idiosyncratic versus how much of that you see as a new base to grow off of.

Christopher Del Moral-Niles: Clearly, over the last 15 years, East West Bancorp, Inc. has been the beneficiary of being a very strong, well-capitalized, and highly liquid bank—of net deposit flows from our customers and increased balances from other banks in the region, from other banks in the country, and even some pockets outside. All of that has served to our benefit and continues to. It does feel like whenever there is an errant headline, we see more opportunities to engage with more customers and have been successful at gathering more deposits. We like the positioning that we have.

It apparently pays dividends to be one of the best capitalized and most profitable banks in the industry, and for everybody to recognize that and trust us in that way. I do not think it is temporary, but yes, we do see flows come in and out. Tax flows do happen on April 15, and we saw some of those flow out. But we feel good about the base that we have built and the year-over-year growth in deposits that we have been seeing for almost 15 straight years.

Manan Gosalia: And then you gave the C&I loan yields at the back—not a surprise to see that edge down slightly. Is that all just rate-related? Or is there anything from mix shift—maybe to capital call or investment-grade clients—or are you seeing competition impacting spreads?

Christopher Del Moral-Niles: I think we have seen competition broadly impact spreads over the course of the last year. We also provide the net interest margin table on pages 10 and 11 of the press release, and what you will see there is a broad repricing downward because most of our portfolio is floating rate. That just comes through as those naturally move forward following the rate cuts that we saw last year, including the ones that happened in December. But as we have mentioned, our resets sometimes do not kick in for about 45 days late, so we still saw repricing impact in Q1 related to the December rate cuts.

Operator: The next question will come from Bernard Von Gazzicchi with Deutsche Bank. Please go ahead.

Bernard Von Gazzicchi: Good afternoon. Chris, you mentioned the checking account growth led you to price the Lunar New Year CD campaign more conservatively this year, allowing you to focus on CD retention. Can you remind us how much CDs rolled off during the quarter, how much was retained, and any color on expected improvement in pricing from rolling forward CDs in 2Q?

Christopher Del Moral-Niles: We had a little over $10 billion roll over during Q1, and we net grew CDs, as presented on Slide 4, by $127 million. So we essentially priced for retention and achieved retention. From a pricing perspective, as I mentioned earlier, we have been benefiting from rolling downhill, but we have flattened out that roll. As we sit here today, I am not sure incremental new CDs will necessarily be repricing with much of a benefit as we roll into Q2 and Q3. We are currently pricing our CD special at 3.60%, which is not going to move the needle a lot on our CD price.

Bernard Von Gazzicchi: As my follow-up, I think last quarter you mentioned the impact from hedging was a headwind of about $2 million. What was it this quarter? Any expectations for the full year you can provide?

Christopher Del Moral-Niles: Roughly flat, and all those hedges today are in the money looking forward, given the backup in rates. The mark-to-market value of all the trades is positive, so they are going to add value moving forward.

Operator: Next question will come from David Chiaverini with Jefferies. Please go ahead.

David Chiaverini: Hi, thanks for taking the question. On the NII outlook—you raised it to 6% to 8% from 5% to 7%. You alluded to higher-for-longer being good for East West Bancorp, Inc. Was this the main contributor to raising the guide, or was the loan outlook also part of it? Can you unpack that a little bit?

Christopher Del Moral-Niles: We would attribute the guide increase exclusively to the change in the rate outlook. As I noted earlier, we are not raising our loan guidance at this point in time, so that is still baked in at 5% to 7%.

David Chiaverini: Got it. And on the net interest margin, how should we think about the outlook from here based on your commentary on the deposit front? Is a dip a reasonable way to think of it, or how should we think about the NIM going forward?

Christopher Del Moral-Niles: We are thinking about the margin and dollar NII as moving higher; they will probably both track at least flat to positive.

David Chiaverini: So the NIM flat to positive from here?

Christopher Del Moral-Niles: Correct. Even though there is incremental deposit pressure, the fact that loans will be yielding higher for longer this year means we will still end up with better net interest income and likely a slightly better net interest margin than we were previously projecting. I would remind you, though, that the first quarter has fewer days, so do not index off of the Q1 number—index off of the day-count-adjusted number.

Operator: The next question will come from Christopher McGratty with KBW. Please go ahead.

Christopher McGratty: Good afternoon, everybody. The tweak in the credit guidance is a tweak, but it is a fairly important vote of confidence. Could you unpack what drove you to change the charge-off guide after one quarter?

Irene Oh: Simply put, when we look at the portfolio and what we are seeing, this is our view as of today on where we think net charge-offs are going to be.

Christopher McGratty: Okay, so good visibility on the outlook. And then within the 7% to 9% expense growth, I am wondering if you could parse out run-the-bank versus invest-in-the-bank, and how over time—this was a similar guide you gave at the beginning of last year—how AI might influence that over the medium term?

Christopher Del Moral-Niles: In the short to medium term, AI is a cost, because we all have to run to figure out how we are going to combat missiles and everything else that the market is throwing at us. We are investing in our cyber defense, investing in our monitoring tools, and investing in our daily operating capability to make sure we are as resilient as possible. Those are investments that are not regulatory driven; they are investments that are driving us to be the best bank we can be every day for our customers.

We are going to continue to make those investments every day, and that is why we continue to believe 7% to 9% expense growth is the right level, while delivering the best efficiency ratio in the industry.

Operator: The next question will come from David Smith with Truist Securities. Please go ahead.

David Smith: Yes, good afternoon. I was wondering if you could give us any updates on how you are looking at blockchain or stablecoins as you look at ways to better help your clients with international business needs—transfer money more efficiently. Thank you.

Christopher Del Moral-Niles: We continue to see the vast majority of our customers wanting and continuing to transact in fiat currencies. But we do have customers that hold a variety of crypto and stablecoins, and we are monitoring those continued conversations, developments, new products, and new solutions. We have put projects into the hopper that we think we will be able to deliver at the appropriate time, when there is a little more market acceptance. We have been working with one or two clients on select opportunities to support them on a back-office basis. We will continue to be active around the space but have not yet rolled anything out to customers.

David Smith: Are tokenized deposits part of that potentially?

Christopher Del Moral-Niles: We have explored those. We have not yet rolled out or put something like that on the shelf, but that is one of the things that we have looked at in concert with some larger industry vendors that have proposed solutions, and we are trying to figure out if we want to use those or something different. We are exploring that and monitoring those development cycles.

Operator: The next question will come from Janet Leigh with TD Cowen. Please go ahead.

Janet Leigh: Good afternoon. In recent years, you were generally able to grow deposits at a pace that is modestly above loans. Is it fair to assume that your deposit growth for 2026 would be in line to above your loan growth guide for the year, especially given the strong results from the first quarter?

Christopher Del Moral-Niles: Janet, I would note that on page 3 of our financial highlights, we led with deposit-led growth as the story. We continue to see deposit-led growth as the story, and continue to expect deposits to help us drive a better funding mix, a better liquidity profile, and more reservoir of dollars available to meet our clients’ needs as borrowers over time. Yes, it has been a deposit-led story.

Janet Leigh: Thank you. Maybe I am missing something here, but if you were able to keep your net interest margin flat to modestly improving versus the first quarter, excluding the day-count impact, and loans growing at 5% to 7%, what would be the puts and takes around you getting to the lower end versus the high end? It looks like you are tracking at least at the higher end and potentially better.

Christopher Del Moral-Niles: I think some of those things are true, but deposit pricing pressure continues to build, and we would expect that to eat into some of the benefit that we might see from higher-for-longer as we move through the course of the year. If the economy is strong enough, or inflation levels are strong enough such that rates are not moving lower, then probably there is more net funding going on in the industry, and deposit pricing competition strengthens or becomes more rigid, or even increases, and makes that more costly. We factor that into our models for 2026.

Operator: The next question will come from Timur Braziler with UBS. Please go ahead.

Timur Braziler: Good afternoon, everyone. Chris, circling back on loan growth—specifically for the coming quarter—appreciate the comment that some of the capital call lines had already paid down. Is that going to be offset with improvement in other areas? Net-net in 2Q, are you still expecting loan balances to grow? And is 1Q seasonally softer for some of the traditional commercial business lines?

Christopher Del Moral-Niles: Unpack that question again, because you said something about warehouse, and we do not do a lot of warehouse. Could you repeat your question for me, Timur? Sorry.

Timur Braziler: Yes—just the puts and takes on some of the lines being paid down in 2Q versus the growth that you are expecting in the second quarter, and whether that is going to net positive balances in 2Q, and then the seasonality on some of the commercial pieces.

Christopher Del Moral-Niles: On the private equity capital call line activity that we saw in Q1, Irene and I mentioned we have already seen some of that pay off here in April, and we probably expect more than a third of it to pay off in the ordinary course during the second quarter. However, we continue to see activity in private equity and in mortgage private capital, and those two areas may offset those paydowns and allow us to deliver additional growth in Q2. As we sit here today, we would expect that. We do not see too much seasonality per se in the other areas of our commercial business.

Timur Braziler: Got it. And then one on credit—ACL has been building over the last couple of quarters. You called out some mix shift here in the first quarter. Give us a sense of where you are likely in that ACL build. Should we expect that to start settling out or being utilized at some point, or is that going to remain fairly conservative and hold at these current levels?

Christopher Del Moral-Niles: The bank has always approached ACL by making sure it was appropriate and, perhaps on the margin, modestly conservative. From a build perspective, it was 2 basis points for the quarter. With the visibility we have in the charge-offs, we feel pretty good about where we stand. Irene?

Irene Oh: Maybe I will add a little bit on the technical side. We use a multi-scenario model for calculating our allowance, and as of March 31, the downside scenario changed quite substantially from what it was at year end. That certainly was one of the factors.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Dominic Ng for any closing remarks.

Dominic Ng: Thank you to everyone for joining us today. I want to thank our team for their continued hard work and dedication, which continues to show in our results. We appreciate your time and interest and look forward to speaking with you again next quarter. Goodbye.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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