EAST WEST BANCORP INC

The Company’s primary source of revenue is net interest income, which is the difference between interest income earned on interest-earning assets and interest expense paid on interest-bearing liabilities. Net interest margin is calculated as net interest income divided by average interest-earning assets. Net interest income and net interest margin are impacted by factors such as changes in the volume and composition of interest-earning assets and funding sources, market interest rates, the slope of the yield curve, the repricing characteristics and maturity profile of interest-earning assets and interest-bearing liabilities, the level of noninterest-bearing funding sources and asset quality.

Net interest income increased year-over-year for both the third quarter and first nine months of 2026, primarily reflecting higher average loan balances, lower funding costs on interest-bearing deposits, and higher average AFS debt securities balances. These increases were partially offset by lower yields on loans, interest-bearing cash and deposits with banks, and AFS debt securities. Net interest margin declined year-over-year in the third quarter of 2026, primarily due to lower asset yields, partially offset by the benefit of lower interest-bearing deposit funding costs. For the first nine months of 2026, net interest margin increased because the benefit of lower deposit funding costs exceeded the effect of lower asset yields.

Year-over-year comparisons of net interest income and net interest margin were also impacted by $32 million of discount accretion and interest recoveries recognized in the third quarter of 2025 related to the full payment on purchased credit-impaired and workout loans. Excluding the impact of the aforementioned discount accretion and interest recoveries, adjusted net interest income for the third quarter and first nine months of 2025 was $645 million and $1.9 billion, respectively, and adjusted net interest margin was 3.36% and 3.35%, respectively. Adjusted net interest income for the third quarter and first nine months of 2026 increased $74 million or 11%, and $212 million or 11%, respectively, while adjusted net interest margin increased 13 bps and 12 bps, respectively, over the same prior-year periods. Adjusted net interest income and adjusted net interest margin are non-GAAP financial measures. Refer to Item 2. MD&A — Reconciliation of GAAP to Non-GAAP Financial Measuresin this Form 10-Q for additional information.

Average interest-earning assets increased $5.6 billion or 7% to $81.8 billion for the third quarter of 2026, compared with $76.2 billion for the same period in 2025. For the first nine months of 2026, average interest-earning assets increased $5.7 billion or 8% to $80.0 billion from $74.3 billion for the same period in 2025. The increases in average interest-earning assets were primarily driven by loan growth and higher AFS debt securities balances.

The yield on average interest-earning assets was 5.45% for the third quarter of 2026, down 43 bps from the third quarter of 2025, and 5.45% for the first nine months of 2026, down 35 bps from the first nine months of 2025. The declines were primarily attributable to the impact of lower benchmark interest rates on the loan portfolio and other interest-earning assets.

Average loan yields of 6.05% and 6.06% for the third quarter and first nine months of 2026, respectively, decreased 56 bps and 41 bps from the corresponding 2025 periods. The decreases primarily reflected the impact of lower benchmark interest rates on variable-rate loans, which represent a majority of the loan portfolio. Excluding the $32 million of discount accretion and interest recoveries recognized in the third quarter of 2025, adjusted average loan yields for the third quarter and first nine months of 2025 were 6.38% and 6.39%, respectively. Approximately 61% and 59% of loans held-for-investment were variable-rate as of September 30, 2026 and 2025, respectively. Adjusted average loan yield is a non-GAAP financial measure. Refer to Item 2. MD&A — Reconciliation of GAAP to Non-GAAP Financial Measuresin this Form 10-Q for additional information.

Deposits remained the Company’s primary source of funding. Average deposits increased $4.1 billion or 6% to $70.3 billion for the third quarter of 2026, and $4.7 billion or 7% to $68.9 billion for the first nine months of 2026 compared with the corresponding 2025 periods. The increases were primarily driven by growth in demand and time deposits.

Average noninterest-bearing deposits increased $2.5 billion or 16% to $18.3 billion for the third quarter of 2026, from $15.8 billion for the third quarter of 2025, and increased $2.2 billion or 14% to $17.5 billion for the first nine months of 2026 compared with the corresponding 2025 period. Average noninterest-bearing deposits represented 26% and 25% of total average deposits for the third quarter and the first nine months of 2026, respectively, compared with 24% in the corresponding 2025 periods.

The average cost of deposits declined year-over-year to 2.08% for the third quarter and 2.10% for the first nine months of 2026. The average cost of interest-bearing deposits decreased 45 bps to 2.81% for the third quarter of 2026, and decreased 48 bps to 2.82% for the first nine months of 2026. These decreases primarily reflected lower benchmark interest rates and the Company’s continued focus on deposit pricing and funding mix optimization.

The average cost of funds, which includes deposits, Federal Home Loan Bank (“FHLB”) advances, securities sold under repurchase agreements (“repurchase agreements”), long-term debt, and short-term borrowings decreased 41 bps and 43 bps, year-over-year, to 2.17% and 2.19% for the third quarter and first nine months of 2026, respectively. The decreases were primarily driven by lower deposit funding costs.

The Company utilizes various tools to manage interest rate risk. Refer to the Interest Rate Risk Management section of Item 2. MD&A — Risk Management — Market Risk Managementin this Form 10-Q.

The following table presents the interest spread, net interest margin, average balances, interest income and expense, and the average yield/rate by asset and liability component for the third quarters of 2026 and 2025:

(2)Yields on tax-exempt securities and loans are not presented on a tax-equivalent basis.

(3)Includes $627 thousand of net discount accretion and $6 million of net premium amortization on AFS debt securities for the third quarters of 2026 and 2025, respectively.

(4)Includes $32 million of additional interest income from discount accretion and interest recoveries from the full payment on purchased credit-impaired and workout loans during the third quarter of 2025.

(5)Average balances include nonperforming loans and loans held-for-sale.

(6)Loans include the accretion of net deferred loan fees and amortization of net premiums, which totaled $10 million and $42 million for the third quarters of 2026 and 2025, respectively.

The following table presents the interest spread, net interest margin, average balances, interest income and expense, and the average yield/rate by asset and liability component for the first nine months of 2026 and 2025:

(2)Yields on tax-exempt securities and loans are not presented on a tax-equivalent basis.

(3)Includes the amortization of net premiums on AFS debt securities of $258 thousand and $23 million for the first nine months of 2026 and 2025, respectively.

(4)Includes $32 million of additional interest income from discount accretion and interest recoveries from the full payment on purchased credit-impaired and workout loans during the nine months ended September 30, 2025.

(5)Average balances include nonperforming loans and loans held-for-sale.

(6)Loans include the accretion of net deferred loan fees and amortization of net premiums, which totaled $29 million and $67 million for the first nine months of 2026 and 2025, respectively.

The following table summarizes the extent to which changes in (1) interest rates and (2) volume of average interest-earning assets and average interest-bearing liabilities affected the Company’s net interest income for the periods presented. The total change for each category of interest-earning assets and interest-bearing liabilities is segmented into changes attributable to variations in volume and yield/rate. Changes that are not solely due to either volume or yield/rate are allocated proportionally based on the absolute value of the change related to average volume and average yield/rate.