East West Bancorp is planning for the hit that lower interest rates will take on its asset-sensitive balance sheet, and Wall Street is betting that the bank's preparations will be enough to propel it to the other side of the headwinds.

The Pasadena, California-based company is dealing with the classic net interest margin pickle of a mismatch in the repricing of its loan yields and deposit prices.

Still, analysts were bullish on the bank's prospects after it beat expectations in its third-quarter results, announced Tuesday. The $74 billion-asset bank's stock price was up 7.1% Wednesday, trading at $96.80 by 1:30 p.m. Eastern time.

East West reported earnings per share of $2.16 in the third quarter, above analyst consensus estimates of $2.07.

East West, which focuses on the Asian American banking market, grew its total deposits 12% from a year prior to $61.7 billion, aided by a major Lunar New Year certificate of deposit campaign earlier this year. CD deposits made up about 38% of total deposits as of the end of the third quarter.

Chief Financial Officer Christopher Del Moral-Niles said on the company's earnings call that the bank has seen solid retention of those deposits, even as it's rolled down CD pricing by 100 basis points since the first quarter — double the Federal Reserve's 50 basis-point rate cut thus far.

The steady repricing will "continue to feed positively," the CFO said. "Our timing was: Bring them in early, roll down the curve as the Fed moves, and that seems to be working in our favor right now."

Still, the bank's elevated cost of deposits has cramped its net interest margin, which was 3.24% in the third quarter, compared with 3.48% in the third quarter of 2023.

Though East West is paying less interest to people who park their cash at the bank, tepid loan growth is leaving it to lean on its securities portfolio as a buttress for net interest income.

Loan growth has been "slower than we might have otherwise desired," per Del Moral-Niles. Increased income from both loans and the bank's securities portfolio helped deliver roughly flat year-over-year net interest income, at $573 million — well above the consensus analyst estimate of $560.4 million.

Due to the adverse trends on loan growth and deposit costs in 2024, the bank is projecting a full-year decline of 3%-4% in net interest income.

If the Fed continues to cut rates, as expected, it will drag on the revenue East West collects from loans, though balance sheet growth would offset some of the impact.