East West Bancorp, Inc Q1 2026 Earnings Call Transcript

Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.

East West Bancorp, Inc (NASDAQ: EWBC) Q1 2026 Earnings Call dated Apr. 21, 2026

Presentation

Operator

Sa. Sa. Good day and welcome to the East West Bancorp’s first quarter 2026 earnings call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Adrienne Atkinson, Director of Investor Relations.

Please go ahead.

Adrienne Atkinson — Director of Investor Relations

Thank you Operator. Good afternoon and thank you everyone for joining us to review East West Bancorp’s first quarter 2026 financial results. With me are Dominic Ng, Chairman and Chief Executive Officer Chris Delmiral Niles, Chief Financial Officer and Irene oh, our Chief Risk Officer. This call is being recorded and will be available for replay on our investor relations website. The slide deck referenced during this call is available on our investor relations site. Management may make projections or other forward looking statements which may differ materially from the actual results due to a number of risks and uncertainties.

Management may discuss non GAAP financial measures. For a more detailed description of the risk factors and a reconciliation of GAAP to non GAAP financial measures, please refer to our filings with the securities and Exchange Commission including the Form 8K filed today. I will now turn the call over to Dominic.

Dominic Ng — Chairman and Chief Executive Officer

Thank you Adrian. Good afternoon and thank you for joining us for our first quarter earnings call. I’m pleased to report that east west 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 non interest bearing deposits was particularly strong this quarter up nearly 800 million driven by our continued focus on on providing solutions to retail and small business customers.

We also delivered 7% year over year loan growth. CNI loans increased by more than 900 million quarter over quarter driven by a 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. With a tangible capital 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

Chris Delmiral Niles — Chief Financial Officer

Thanks Dominic. Let’s start with deposit growth on slide 4. Our end of period deposits grew by 1.8 billion quarter over quarter average GDA growth was up 12% year over year and nearly half a billion 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 CNI portfolio and CNI was the primary driver of growth in Q1.

Most of the increase was driven by net line draws from existing customers while utilization picked up across a range of industries. As Dominic mentioned, capital call related borrowing made up the lion’s share of of the first quarter’s net growth. The quarter’s net draws on capital call lines reflected broad based increases in M and 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 the full year loan growth to be in the range of 5 to 7%.

Now turning to 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. CNI 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 provided incremental disclosure 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 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 and business credit borrowers.

I’ll now turn to net interest income and margin discussion 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 continues to deliver industry leading efficiency while investing for future growth. The Q1 efficiency ratio was 36.2%. Total operating non interest expense was 258 million for the first quarter and included seasonally higher payroll related costs, some increased stock based compensation costs and higher incentive comps 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 — Chief Risk Officer

Thank you Chris Good afternoon to all on the call. As you can see on Slide 11, our asset quality metrics held stable and continued to broadly outperform the industry quarter over quarter. Nonperforming assets remained stable at 26 basis points as of March 31, 2026. We recorded net charge offs of just 9 basis points in the first quarter of 2026, 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 regulatory capital ratios remain well in excess of regulatory requirements for well capitalized institutions and well above regional and national bank averages.

East west 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 repurchased approximately 938,000 shares of common stock during the first quarter for 98 million. We currently have 117 million of repurchase authorization that remains available for future buybacks. East west also distributed approximately 111 million to shareholders via quarterly dividends.

East West’s second quarter 2026 dividend will be payable on May 18, 2026 to stockholders of record on May 4, 20, 2026. I will now turn it back to Chris to share our outlook.

Chris Delmiral Niles — Chief Financial Officer

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

Question & Answers

Operator

Thank you. We will now begin the question and answer session. To ask a question, you may press Star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star then two. Please limit yourself to one question and one follow up. If you have any additional questions, you may rejoin the queue. And the first question will come from Ibrahim Poonawalla with Bank of America.

Please go ahead.

Ibrahim Poonawalla

Good afternoon.

Unidentified Participant

I guess

Ibrahim Poonawalla

Maybe the first question just given the capital proposals that were put out by the Fed last month, I’m wondering if you can quantify what impact you expect to your capital ratios. And yes, I guess as first just what’s the impact that you expect for what are really strong capital levels and where is this headed if the proposal becomes final rule?

Chris Delmiral Niles — Chief Financial Officer

Yeah, we’re happy to cover that for you. The risk weighted asset adjustment from what’s been put out there is Basel 3 endgame and 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 1.6 to 1.8% increase in our various respective regulatory capital ratios.

Ibrahim Poonawalla

Are you going to use all that excess capital to start another bank? But

Chris Delmiral Niles — Chief Financial Officer

Dominic is very opportunistic and I think we are very comfortable maintaining very strong capital levels. And having more capital has never served this bank badly.

Irene oh — Chief Risk Officer

We’re going to use that capital to grow organically.

Ibrahim Poonawalla

That’s the best answer. So I hope you do. And maybe I guess moving to the P and L strong deposit growth wanted to get on the private capital call line lending, lots of focus on just private equity in that space. One, it didn’t sound like that any of that drawdowns on capital call line lending was stressed. It felt like there was more activity that drove that, if you can confirm that. And why are we not seeing more diversified C and I growth pick up given just the broader momentum? I understand the macro volatility, but are you seeing at least green shoots of other areas where CNI is picking up?

Chris Delmiral Niles — Chief Financial Officer

Well, sure. So EB I think 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. And of course there was a component that wasn’t capital call lines which was well over 300 million. And that was all encouraging evidence of continued activity across a range of industries. So we saw activity in food distribution, we saw some cross border, we saw commercial real estate, we saw a lot of areas that had positive momentum and continue to have positive momentum going into Q2.

Irene oh — Chief Risk Officer

And maybe I’ll just add to clarify, as a clarifying point, none of the drawdowns that we saw in the quarter were for anything to show stress opportunistically really is the timing of it. And I think as Chris alluded to some of those, you know there’s a timing component of this. Right. Some of those did pay off in early part of the second quarter. Normal activity.

Ibrahim Poonawalla

Got it. Thank you.

Operator

The next question will come from Dave Rochester with Kantor Fitzgerald. Please go ahead.

Dave Rochester

Hey, good afternoon guys.

Chris Delmiral Niles — Chief Financial Officer

Afternoon, Dave.

Dave Rochester

Just wanted to ask about the deposit growth. Very solid this quarter. Can you just give an update on the competitive environment there? Do you find yourself having an easier time growing core deposits? I mean normally this is a softer quarter for that. For most banks the DDA trends looked really good. How do you feel about that going into 2Q and the rest of the year, especially on the DDA side? Thanks.

Chris Delmiral Niles — Chief Financial Officer

I think the DDA growth that you saw has been the result of a now more than years long campaign to really deepen our connection with retail small business customers across our footprint that’s been successful and continued to bear fruit into Q1 26. We’re not letting up on that strategy. That campaign has been working arguably better than we expected here, going after it for more than a year, but in a way that we are continuing to devote more time and effort to to make sure we nurture it even more.

The landscape for deposits, however, is not easy. It is a very competitive landscape. And from a pricing perspective, the fact that we move from an outlook with multiple cuts in it to an outlook with no cuts means that deposit pricing pressure is real and coming upon us. And so the reality is it’s doubly impressive from our perspective that our teams are able to go out there and win non interested bearing DEA money in an environment where rates aren’t 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 really paid off here in the first quarter.

But no, I don’t think pricing is going to get any easier and I don’t think competition is going to get any easier.

Dave Rochester

All right, I appreciate that. Just a follow up on wealth management and you talked about staying close to the customer and that helping you guys out this quarter, it was a really big number this quarter. Can you just talk about how you see that trending moving forward? If you’ve added new people that are helping boost that number, if you’ve got new products, anything else that can help us figure this out going forward. Thanks.

Chris Delmiral Niles — Chief Financial Officer

There was a fair amount of volatility in Q1. And some of our clients decided that some structured notes were a good thing. And we added some notable volume and structured notes. We also added some annuities during the quarter as people moved out of equities at record highs into annuity products. But we also added people new late in the quarter so they don’t add a big impact to the Q1 numbers. But we expect they’ll continue to support continued growth in wealth management as we roll through the rest of the year.

Dave Rochester

All right, great. Thanks. And nice buyback.

Chris Delmiral Niles — Chief Financial Officer

Thank you.

Operator

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

Chris Delmiral Niles — Chief Financial Officer

Hey,

Jared Shaw

Good afternoon. Hey, thanks. I guess, sticking on the deposit theme, with the good growth that you’re seeing in the mix shift, how should we think about sort of the trend of deposit pricing costs in a flat environment? I mean, do you think you’re still going to be able to continue to march that lower as we go forward?

Chris Delmiral Niles — Chief Financial Officer

I think, Jared, in some prior calls or meetings, I had alluded to the fact that we have been benefiting from rolling down the hill and, and that there would come a point in time where the hill would stop to be so steep and flatten out. And I think we’ve hit that point now. So. No, my comments earlier that I don’t think deposit pricing is going to get easier alludes to the fact that I think our ability to march down or roll down the next wave of CDs has sort of run its course to a large extent. That having been said, I’ll just remind you all, we are asset sensitive, which is why when we’re changing our guidance from cuts to a flat rate environment, we’re also upping our NII guidance because higher for longer is net better for East West Bank.

Jared Shaw

Okay, that’s a good color. Thanks. And then any color, maybe. Irene, on the growth in resi non performers, are you seeing any areas of stress there? Maybe from tech worker disruption, from AI or anything that you’re spending a little more time looking at?

Irene oh — Chief Risk Officer

Yeah, that’s a great question. You know, we have seen a little bit increases in that. Ultimately though, there isn’t anything that we view as systemic. It really is customer by customer, loan by loan. And ultimately for us, given the low loan to values we underwrite it, we don’t see a lot of loss content there.

Jared Shaw

Okay, thank you.

Operator

The next question will come from Casey Hare with Autonomous Research. Please go ahead.

Irene oh — Chief Risk Officer

Afternoon, Casey.

Casey Hare

Thanks. Good afternoon, everyone. Wanted to touch on loan growth. Apologies if I missed this, but so the guide of five to seven off of a quarter where you’re growing at 8% annualized and pipeline sound pretty constructive. Kind of a recurring question with you guys, but why is that a little conservative or what are we missing here?

Chris Delmiral Niles — Chief Financial Officer

I would point you to page nine of our press release tables which says that from March 31st of last year to March 31st this year, we grew by exactly 7.0% on total loans. So that felt like it was in the range of 5 to 7 and warranted holding the range.

Casey Hare

Okay, yeah. I mean last year was a much different. I mean we had the tariff and obviously the macro is. Okay, I get it. All right. Just moving back to the capital discussion, Irene, I heard you say you’re going to grow organically. I’ve also heard you guys talk about some M and A aspirations on the east coast where you know, you know, there’s pockets of Chinese American populations that would fit well with the strategy here. Just some updated thoughts around that. And you know, just given the excess capital under the Basel III proposal, what, you know, 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 — Chief Risk Officer

Well, I’ll start and maybe Dominic and Chris can chime in afterwards. We have a kind of hierarchy. Organic, right. Organic growth is our priority and we’ve been able to show for many, many years the ability to grow our franchise through organic growth. Although as you know, we have a history many years ago also of being able to do success well priced strategic acquisitions as well. So organic growth is our number one priority I think certainly when it’s opportunistic stock buybacks, you know what the return is and then also acquisitions well priced strategic makes sense for the franchise.

Something that ultimately has to be a better return than our ability to grow organically.

Chris Delmiral Niles — Chief Financial Officer

And we complement that of course with a regular dividend and we review the dividend at least annually and dividend is our second go to after organic growth. And it’s where we have most recently increased our dividends, you’ll recall, in the first quarter by a third. And we’ll continue to look at that to make sure it remains competitive. And then as Irene mentioned, 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

Great, thank you. The next question will come from Manan Ghasalia with Morgan Stanley. Please go ahead.

Chris Delmiral Niles — Chief Financial Officer

Hey, good

Manan Ghasalia

Afternoon. On the deposit growth side, question is do you typically see some sort of flight to safety from Clients, you know, clients just holding more liquidity at times when there’s elevated geopolitical risk. And I guess the question is, did you see any of that this quarter? You know, I’m just trying to assess how much of the strength in DDA growth is seasonal or idiosyncratic versus how much of that, you know, do you see it? Do you see this as a new base to grow off of?

Chris Delmiral Niles — Chief Financial Officer

Clearly, East west bank over the last 15 years has been the beneficiary of 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 east west benefit and continues to be. And it does feel like whenever there’s an errant headline, we see more opportunities, engage with more customers and have been successful gathering more deposits.

So we like the positioning that we have. It apparently pays dividends to be the best capitalized bank in the industry and one of the most profitable banks in the industry and for everybody to recognize that and trust us in that way. And so I think we are well positioned and I don’t think it’s temporary. But yes, we do see flows come in and out and tax flows do happen on April 15th and we saw some of those flow out. But we feel good about the base that we built and the year over year growth in deposits that we’ve been seeing for almost 15 straight years.

Manan Ghasalia

Right, perfect. And then you guys give the CNI loan yields at the back and not a surprise to see that edge down slightly. Is that all just rate related or is there anything that comes there from mix shift maybe to capital call or investment grade clients? Or is there anything you’re seeing in terms of competition impacting spreads?

Chris Delmiral Niles — Chief Financial Officer

I think we have seen competition broadly impact spreads over the course of the last year. We also provide the net interest margin tables on pages 10 and 11 of the Press release. And what you’ll see there is a broad repricing downward because most of our portfolio is floating rate. And that just comes through as those naturally move forward with the rate cuts that we saw last year, including the ones that happened in December. But as we’ve mentioned, our resets here sometimes don’t kick in for about 45 days late.

So we saw still repricing impact in Q1 related to the December rate cuts.

Manan Ghasalia

Very helpful, thank you.

Operator

The next question will come from Bernard Von Gazicki with Deutsche Bank. Please go ahead.

Chris Delmiral Niles — Chief Financial Officer

Good afternoon, Bernard.

Bernard Von Gazicki

Hey, good afternoon, Chris. You know you mentioned the checking account growth led to pricing the Lunar New Year CD campaign more conservatively this year, allowing you to focus on CD retention. Can you just remind us how much CD is rolled off during the quarter? How much was retained? Any color on expected improvement in pricing from rolling forward CDs in 2Q.

Chris Delmiral Niles — Chief Financial Officer

Yeah, so 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. And then from a pricing perspective, as I mentioned earlier, we’ve been benefiting from rolling downhill, but we sort of flattened out that roll. And as we sit here today, I’m not sure incremental new CDs will be necessarily repricing with much of a benefit as we roll into Q2 and Q3. We’re currently pricing our CD special at $360, which is so not going to necessarily move the needle a lot on our CD pricing.

Bernard Von Gazicki

Okay, and just as my follow up, I think in last quarter you mentioned the impact from hedging. Impact. There was a headwind of about 2 million. What was it this quarter? Any expectations for full year you can provide?

Chris Delmiral Niles — Chief Financial Officer

Yes, abruptly flat. And all those hedges today are in the money looking forward, given the backup and rate that we’re still in the money on. All the mark to market value of all the trades is positive. So they’re going to add value moving forward.

Bernard Von Gazicki

Okay, great. Thanks for taking my questions.

Operator

The next question will come from David Chiavarini with Jefferies. Please go ahead.

David Chiavarini

Hi,

Unidentified Participant

Thanks for taking. Hi, how’s it going? Thanks for taking the question on the NII outlook. So you raised it, you know, 6 to 8%, from 5% to 7%. You alluded to higher for longer being good for East West. 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?

Chris Delmiral Niles — Chief Financial Officer

We would attribute the guide increase exclusively to the change in the rate outlook. And as I noted earlier, we’re not raising our loan guidance at this point in time. So that’s still baked in there at 5 to 7%.

Unidentified Participant

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?

Chris Delmiral Niles — Chief Financial Officer

We’re thinking about the margin and $NII as moving higher. They’ll probably both track at least flat to positive.

Unidentified Participant

So the NIM flat to positive from here.

Chris Delmiral Niles — Chief Financial Officer

Correct. Even though, and this sort of alludes to the question I answered earlier. Even though there’s incremental deposit pressure, the fact that loans will be yielding higher for longer this year means it will still end up with a better net interest income and likely slightly better than interest margin than we were previously projecting.

Unidentified Participant

Very

Jared Shaw

Helpful, thank you.

Chris Delmiral Niles — Chief Financial Officer

I would remind you though that the first quarter has fewer days. So don’t index off of the Q1 number. Index off of the day count, adjusted number.

Unidentified Participant

Got it. Thank you.

Operator

The next question will come from Chris McGrady with KBW. Please go ahead.

Chris Delmiral Niles — Chief Financial Officer

Afternoon, Chris.

Chris McGrady

Hey, Chris. Good morning, everybody. Or good afternoon everybody. Long day. The tweak in the credit guidance is a tweak, but I think it’s a fairly important vote of confidence or statement. Can you unpack what drove you to change the charge off guide after one quarter?

Irene oh — Chief Risk Officer

Yeah, that’s it’s simply put right. When we look at the portfolio and look at kind of what we’re seeing, this is our view as far as at least today where we think the debt charge was going to be.

Chris McGrady

Okay. So good visibility on the outlook. Okay. And then within the 7 to 9 expense growth, I’m wondering if you could parse out run the bank versus invest in the bank and how over time this level of growth, I think this was a similar guide you gave last year at the beginning of the year, how AI might influence that over the medium term.

Chris Delmiral Niles — Chief Financial Officer

In the short to medium term, AI is a cost because we all have to run to figure out how we’re going to combat Mythos and everything else that the market is throwing at us. And so the reality is we’re spending time to make sure we’re as we have been for the last year, investing in our cyber defense, investing in our monitoring tools, investing in our daily operating capability to make sure we’re as resilient as possible. And those are investments that I’ll highlight are not regulatory driven. They’re investments that are driving us to be the best bank we can be every day for our customers.

And we’re going to continue to make those investments every day. And that’s why we continue to believe 7 to 9% expense growth is the right level while delivering the best efficiency ratio in the industry.

Chris McGrady

Exactly. Okay, great. Thank you.

Operator

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

David Smith

Good afternoon.

Chris Delmiral Niles — Chief Financial Officer

Good afternoon.

David Smith

I was wondering if you’d give us any updates on how you’re looking at blockchain or stablecoins as you look at ways to you know better. Better help your clients with international business needs, transfer money more efficiently. Thank you.

Chris Delmiral Niles — Chief Financial Officer

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 stablecoin and we’re monitoring those continued conversations, development new products and new solutions. We have put some projects sort of into the hopper that we think we’ll be able to deliver at the appropriate time when there’s a little more market acceptance to those. And we’ve been working with one or two clients on select opportunities to be supporting them on a back office basis.

And so we’ll continue to be active around the space, but have not yet rolled anything out to customers.

David Chiavarini

Are tokenized deposits part of that potentially or anything there?

Chris Delmiral Niles — Chief Financial Officer

We have explored those. We have not yet rolled out or put something like that on the shelf. But that’s one of the things that we looked at in concert with I think some larger industry vendors that have proposed solutions and we’re trying to figure out if we want to use those or something different. So we’re just exploring that and monitoring those developing cycles.

David Chiavarini

Thank you.

Operator

The next question will come from Janet Lee with TD Cowan. Please go ahead.

Chris Delmiral Niles — Chief Financial Officer

Good afternoon, Janet.

Janet Lee

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

Chris Delmiral Niles — Chief Financial Officer

Janet, I would note that on page three of our financial highlights, we led with deposit led growth as the story. And so we continue to see deposit led growth as the story and continue to expect deposits to help us grow, drive a better funding mix, a better liquidity profile and more reservoir of dollars available to meet our clients needs as borrowers over time? But yes, it’s been a deposit led story.

Janet Lee

Okay, thank you. And maybe I’m missing something here, but if you were able to keep your net interest margin flat to modestly improving versus the first quarter, I guess excluding the day count impact and then loans growing at six and a half to. Sorry, what was your loan growth guide? Loan growth in the 5 to 7%, your NII, what would be the puts and takes around you getting to that lower end versus the high end? It looks like you’re tracking at least at the higher end and potentially better or

Chris Delmiral Niles — Chief Financial Officer

I think some of those things are true. But the other things that we’ve talked about are that 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 lower, then probably there’s 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.

And we factor that into our models for 2026.

Janet Lee

Got it. Thank

Operator

You. The next question will come from Timur Brasilier with ubs. Please go ahead.

Chris Delmiral Niles — Chief Financial Officer

Hey, Timur, good afternoon.

Timur Brasilier

Hey, good afternoon everyone. Chris, just circling back on the loan growth, maybe specifically for the coming quarter. Appreciate the comment that some of the capital call lines that already paid down, that’s going to be offset with improvement in the mortgage warehouse business, I guess NET NET in 2Q. Are you still expecting expecting those loan balances to grow and are we still thinking that 1Q is kind of seasonally softer for some of the traditional commercial business lines?

Chris Delmiral Niles — Chief Financial Officer

So unpack that question again because you said something about warehouse and we don’t do a lot of warehouse. So repeat your question for me, Seymour. Sorry.

Timur Brasilier

Yeah, just the puts and takes on some of the lines being paid down in 1Q versus the growth that you’re expecting in the second quarter and whether or not that’s going to net positive balances in 2Q and then just the seasonality on some of the commercial pieces.

Chris Delmiral Niles — Chief Financial Officer

Sure. So on the private equity capital call line activity that we saw in Q1 Irene mentioned and I mentioned we’d already seen some of that payoff here in April, and we probably expect more than a third of this pay off, frankly, in the ordinary course during the ordinary second quarter. So that uptick that we saw should be in the ordinary course paid down to some extent. However, we continue to see continued activity in private equity and in mortgage private capital, and those two areas may therefore offset those pay downs and allow us to deliver additional growth in Q2 as we sit here today.

We would expect that. And

Timur Brasilier

Then

Chris Delmiral Niles — Chief Financial Officer

Too much seasonality per se in the other areas of our commercial business.

Timur Brasilier

Got it. And then one on credit ACL has been building over the last couple of quarters. I think you guys called out some mix shift here in the first quarter. Just give us a sense of where you are likely in that ACL build and should we expect that to start settling out and being utilized here at some point, or is that going to remain fairly conservative in holding up at these current levels.

Chris Delmiral Niles — Chief Financial Officer

I think the bank has traditionally approached ACL as being making sure it was appropriate and perhaps on the margin making sure it was modestly conservative. I think we continue to do so from from a build perspective. It was two basis points for the quarter. I’ll defer to Irene on specific comments around the portfolio, but I think the reality is with our visibility that we do have in the charge offs, we feel pretty good about where we stand. Irene

Irene oh — Chief Risk Officer

Yeah, maybe I’ll just add just a little bit on the technical side of it. We do use a multi scenario model for calculating our allowance and as of March 31st the downside scenario did change quite substantially from what it was at year end. That certainly was one of the factors.

Timur Brasilier

Great. Thank you.

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 — Chairman and Chief Executive Officer

Well, 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 everyone your time and interest and looking 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. Sam. Sa. It.