Q3 2023 East West Bancorp Inc Earnings Call

October 19, 2023

Speaker 1: Good day everyone and welcome to the East West Bank Orb's third quarter 2023 earnings conference call. All participants will be in a listen-only mode. Should you need assistance please signal a conference specialist by pressing star then...

Good day, everyone and welcome to the East West Bancorp's third quarter 2020 P earnings Conference call.

Then we'll be in a listen only mode.

Need assistance. Please signal a conference specialist by pressing Star then deal.

Speaker 1: After today's presentation, there will be an opportunity to ask questions.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone.

Speaker 1: To ask a question, you may press star, then one on your touch tone phone. To withdraw your question, please press star, 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.

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Now I'd like to turn the conference over to Adrian Atkinson Director of Investor Relations. Please go ahead.

Speaker 2: Thank you, operator. Good morning, and thank you everyone for joining us to review East West Bancorp's third quarter 2023 financial results. With me are Dominic Ng, Chairman and Chief Executive Officer, Christopher Del Moro-Niles, our new Chief Financial Officer, and Irene Oh, Chief Risk Officer. This call is being recorded and will be available for replay on our Investor Relations website.

Thank you operator, good morning, and thank you everyone for joining us to review East West Bancorp third quarter 2023 financial results.

With me are Dominic <unk>, Chairman and Chief Executive Officer, Christopher Don Morel, now, our new 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.

Speaker 2: 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 actual results due to a number of risks and uncertainties. Management may discuss......

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 actual results due to a number of risks and uncertainties.

Management may discuss non-GAAP financial measures.

Speaker 2: For a more detailed description of the risk factors and a reconciliation of gaps 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.

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 connections, including the form 8-K filed today.

I'll now turn the call over to Dominic.

Thank you Adrian.

Good morning.

Speaker 3: And thank you everyone for joining us for our earnings call.

And thank you everyone for joining us for our earnings call.

Speaker 3: Before we start, I would like to welcome Adrian and Chris.

Before we start I would like to welcome Chris.

Speaker 3: I would also like to congratulate Irene on assuming the role of Chief Risk Officer and thank her for her service as CFO and help in ensuring a safe and healthy life.

I would also like to congratulate I read on assuming the role of Chief risk officer, and thank him for his service as CFO .

And help in ensuring a smooth transition.

Speaker 3: Their leadership will be integral in advancing the company's growth strategy and risk capability.

Their leadership will be integral in advancing the company's growth strategy.

This capability.

Speaker 3: I will now begin the review of our financial results with slide 3 of our presentation. This morning we reported

I will now begin the review of our financial results.

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Presentation.

This morning, we reported strong results.

Speaker 3: Third quarter, 2023, net income was $288 million.

Third quarter 2023, net income was 288 million.

Speaker 3: and diluted earning per share was $2.02.

Diluted earning per share was $2 two set.

Speaker 3: driven by a record level of quarterly revenue and net interest income.

Driven by a record level of quarterly revenue and net interest income.

Speaker 3: Our continued customer focus and diversified growth strategy allowed East West to grow loans from the product quarter and add significant customer deposits.

Our continued customer focus and diversified growth strategy allowed east west to grow loans.

From the prior quarter.

And significant customer deposits.

Speaker 3: We kept expenses well controlled, generated quarterly positive operating leverage and grew tangible book value.

We kept expenses well controlled.

Generated quarterly positive operating leverage and grew tangible book value.

Speaker 3: We also maintained broadly stable asset quality and continue to proactively manage our predators.

We also maintained a broadly stable asset quality and continuing to proactively manage our pressure.

Slide four presents a summary of our balance sheet position that is strong.

Speaker 3: Slide 4 presents a summary of our balance sheet position that is strong, well diversified,

Diversified.

And efficient.

You can see that we grew the customer deposits by $1 billion drop the price too right.

Speaker 3: You can see that we grew the customer deposits by $1 billion from the prior period.

Speaker 3: with notable growth in both our consumer and commercial balance.

With notable growth in both our consumer and commercial balances.

Speaker 3: These customer deposits largely fund the discordous long growth.

These customer deposits largely funded this quarter's loan growth.

Speaker 3: allowing us to use excess cash to pay down maturing wholesale deposit.

Allowing us to use excess cash.

We paid down maturing wholesale deposits.

Speaker 3: We're also pleased with the mix of our long growth, where nearly half the growth came from low-risk residential workers.

We're also pleased with the mix of our loan growth.

Nearly half the growth came from low risk residential mortgages.

Speaker 3: In the third quarter, we generated industry leading returns on our capital.

In the third quarter, we generated industry, leading returns on our capital.

Speaker 3: We continue to maintain strong capital ratios, which are now the highest for regional banks.

We continue to maintain strong capital ratios, which are now the highest for regional banks.

Speaker 3: His West is on track for another year of record earnings in 2023.

East West is on track for another year of record earnings in 2023.

Speaker 3: We are looking forward to starting 2024 from a position of strength.

And we're looking forward to starting 2024 from a position of strength.

Given our earnings stability solid credit performance and strong capital levels.

Speaker 3: Given our own instability, solid credit performance and strong capital levels.

Speaker 3: Our Board of Directors has approved the resumption of our Sherry Repurchase Program in the fourth floor.

Our board of directors has approved the Resubmission.

Sure.

Purchase program in the fourth quarter.

I would now turn the call over to Irene for a more detailed discussion of our portfolio and asset quality.

Speaker 3: I will now turn the card over to Irene for a more detailed discussion of her portfolio and asset quality.

I read.

Speaker 4: Thank you Dominic and good morning to all on the call. I'll start with the discussion of our local folks.

Thank you Dominic and good morning to all on the call I'll start with a discussion of our loan portfolio.

Speaker 4: Slide 5 provides detail on our overall loan box. Each west loans are largely balanced by type of cloth, residential mortgage, commercial real estate, and C&I. Within C&I, our exposures are also well diversified by industry.

<unk> provides detail on our overall loan book East West loan are largely balanced by type of clot residential mortgage commercial real estate and C&I within C&I. Our exposures are also well diversified by industry.

Speaker 4: our greater China exposures remain limited at roughly 4% of total loans and nearly all are C&I loans.

Our greater China exposures remain limited and roughly what percent of total loans and nearly all our C&I loan also well diversified by industry.

Speaker 4: Slide 6 shows the details of our commercial real estate portfolio. It is important to note that each West portfolio remains well-versified by geography and property ties. When comparing our portfolio to the FFIC commercial real estate compensation guidelines, we have consistently been below the guidelines since the end of 2009.

Slide six shows the detail of our commercial real estate portfolio. It is important to note that east west portfolio remains well diversified by geography and property type.

Comparing our portfolio to the commercial real estate concentration guidelines.

We have consistently been below the guidelines since the end of 2009.

Speaker 5: Flight 7 provides additional detail on commercial live.

Slide seven provides additional detail on commercial.

Speaker 4: As you see, the portfolio is very granular with an average loan size of $3 million. The weighted average loan-to-value for the portfolio was a low 51% and the portfolio

As you see the portfolio is very granular with the average loan size of 3 million.

The weighted average loan to value for the portfolio was a low 51%.

Speaker 4: Viewer, then 25% of our commercial real estate loans have a low to value of 60% or over. In the appendix, we have shared similar trends of low average, low sizes and LCDs within our office and retail commercial real estate portfolio.

Fewer than 25% of our commercial real estate loan.

On a loan to value of 60% or over in the appendix. We have shared similar trends a low average loan sizes and LTV within our office and retail commercial real estate portfolio.

Speaker 4: Many of our commercial real estate borrowers have had long standing relationships with our banks, and a large portion of our loans are full recourse with personal guarantees.

Many of them are commercial real estate borrowers have had long standing relationships with our bank and a large portion of our loans are full recourse with personal guarantee.

Speaker 4: As a reminder, we typically originate amortizing loans with the maturity of seven to ten years. We also have low risk from near-term maturity. Out of quarter-end, only 8% of the income producing commercial real estate portfolio matures in the fourth quarter of 2023 and for all of 2020.

As a reminder, we typically originate amortizing loans with the maturity of seven to 10 years. We also have low risk from near term maturity as of quarter end will be.

8% of the income producing commercial real estate portfolio matures in the fourth quarter of 2023 and for all of 2024.

Speaker 4: On slide 8, we provide detail on our residential mortgage portfolio, which is made up largely of single-family mortgages and also home equity lines of credit.

On slide eight we provide detail on our residential mortgage portfolio, which is made up largely of single family movie get and also home equity lines of credit.

Speaker 4: Like commercial oil estate, our residential mortgage portfolio is well diversified by geography and crime.

Like commercial real estate, our residential mortgage portfolio is well diversified by geography and property the average loan to value for our residential mortgage portfolio is also quite low at 51% with close to 90% of our portfolio before at 60% below 60%.

Speaker 4: The average low due value for residential mortgage portfolio is also quite low. 51% would cost 90% of our portfolio before a 60% below a 60% LTV. As you can see on the slide in our distribution behind geography, our residential mortgage loans are overwhelmingly infallible with the primary source of origination coming through our brand now.

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As you can see on the slide and our distribution behind geography.

Residential mortgage loans are overwhelmingly in Brooklyn, with a primary source of originations coming through our branch network.

Speaker 4: Presidential mortgage has proven to be a resilient source of low growth for us, growing 3% from the second quarter. I would also like to highlight that over 80% of our H.O.A. commitment, we are in first-line position.

So mortgage has proven to be a a young as a source of loan growth for a growing 3% from the dot deepwater I would also like to highlight that over 80% of our HELOC commitment. We are in first lien position.

Speaker 4: Turning to slide 9, the asset quality of our portfolio remains broadly stable. During the third quarter, we reported net charge of 18 million or 14 basis points, an increase from net charge of six basis points in the second quarter.

Turning to slide nine the asset quality of our portfolio remained broadly stable during the third quarter. We reported net charge offs of 18 million or 14 basis points, an increase from net charge offs of six basis points in the second quarter quarter over quarter nonperforming.

Speaker 4: Quarter of a quarter, non-performing assets as of September 30th, decrease modestly to 104 million or 15 basis points of total assets, from 17 basis points as of June 30th.

Assets as of September 30th decreased modestly to 104 million or 15 basis points.

Alaska from 17 basis points as of June 30.

Speaker 5: The criticized loan ratio increased 38 basis points from June 30th to 2.01% of loans held for us.

The criticized loan ratio increased 38 basis points from June 32 point or 1% of loans held for investment.

Speaker 5: The special mention loans ratio increased 27 basis points, 29 basis points, excuse me, quarter of a quarter to 95% of loans, health burn, backman, out of September 30th. And the classified loans ratio increased nine basis points to 106% as credit continues to normal.

Special mention loans ratio increased 27 basis points 29 basis points excuse me quarter over quarter to 95% of loans held for investment as of September 30th and the classified loans ratio increased nine basis points to 106% as credit continues to normalize.

Speaker 4: The increases were driven primarily by C&I, as some borrowers are being impacted by higher rates and...

The increases were driven primarily by C&I and some borrowers are being impacted by higher rates and inflation.

There were no industry or sector trends for the increase in criticized C&I loans and also no geographic geographic trends to highlight in the slight uptick in commercial real estate criticized well.

Speaker 4: There will no industry or sector trends for this increase in put aside the myelons. And also, no geographic trends, the highlight and the flight update in commercial real estate could modify and change and recognize to improve your's are

Speaker 4: We remain vigilant and proactive in monitoring and managing our credit.

We remain vigilant and proactive in monitoring and managing our credit risk.

Speaker 4: We recorded a provision for credit losses of 42 million in the third quarter, compared with 26 million for the second quarter, building the allowance for low losses ratio one basis point to 1.29.

We recorded a provision for credit losses of $42 million in the third quarter compared with $26 million for the second quarter building the allowance for loan losses ratio one basis point to 120 <unk>.

Speaker 4: turning to slide 10 as shown on the slide, all of our capital ratios expanded quarter of a quarter due to the strength of our...

Turning to slide 10 as shown on this slide all of our capital ratios expanded quarter over quarter due to the strength of our earnings.

Speaker 4: If adjustments were made for <expletive> and HPM security mark and the amount from the losses that is not already reflected in equity, our capital ratios would still be very...

If adjustments were made for <unk> and HTM security, Mark and the allowance for loan losses that is not already reflected in equity.

Capital ratios would still be very strong tangible common equity grew to nine 3% as of September 30th quarter.

Speaker 4: Tangible common equity grew to 9.03% out of September .

Speaker 4: Quarter of a quarter are tangible both value per share increased 2%. Year over year, tangible both value per share increased 18%. E-Swap's border directors have declared fourth quarter of 2023 dividends for the company's common stock. The four-lay common stock dividend of 48 cents per share will be payable on November 15, 2023, to stockle the urge of record on November 1, 2021.

Quarter over quarter, our tangible book value per share increased 2% year over year tangible book value per share increased 18% East West Board of directors has declared fourth quarter 2023 dividend for the company's common stock the poorly common stock dividend <unk> 48 per share.

We will be payable on November 15, 2023 to stockholders of record answer.

Number one 2003.

Speaker 4: We currently have 254 million of repurchase authorization that remain available for future buy-back.

We currently have $254 million of repurchase authorization that remains available for future buybacks, although we did not repurchase any shares during the third quarter of 2023 as announced in our earnings release, we intend to resume repurchases in the fourth quarter.

Speaker 6: Although we did not repurchase any shares during the third quarter of 2023, as announced in our earnings release, we intend to resume repurchases in the fourth quarter. On now, turn the call over to Chris for more detailed discussion of the drivers of our income statement and outlook. Chris? Thank you, Irene, and good morning to all. I will start with a discussion of our deposit strengths and then review the key drivers of net interest income and net interest markets.

Now I'll turn the call over to Chris for a more detailed discussion of the drivers of our income statement and outlook.

Thank you Irene and good morning to all I will start with a discussion of our deposit stream and then review the key drivers of net interest income and net interest margin.

Speaker 6: Slide 11 highlights our deposit nits by segments, customer type and stores.

Slide 11 highlights our deposit mix by segment customer type and stores.

Speaker 6: In the third quarter, we blew both commercial and consumer deposit bounces.

In the third quarter, we grew both commercial and consumer deposit balances.

Speaker 6: Increase the number of customer accounts and reduce higher cost both field deposits. Year over year, we have successfully grown deposits across our client section.

Increase the number of customer accounts and reduce higher cost wholesale deposits year over year, we have successfully grown deposits across our client sectors.

Speaker 6: Our commercial deposits remain well diversified by industry and our consumer deposits are fairly granular.

Our commercial deposits remained well diversified by industry and our consumer deposits are fairly granular.

Speaker 6: Turning to the balance sheet on slide 12, third quarter average loans grew 2% sequentially, driven by growth in all major categories.

Turning to the balance sheet on slide 12 third quarter average loans grew 2% sequentially driven by growth in all major categories.

Speaker 6: Third quarter average deposit of $55.2 billion increased $900 million or 2% from the second quarter.

Third quarter average deposit of $55 2 billion increased $900 million or 2% from the second quarter.

Speaker 6: During the third quarter, growth and average money market and time deposits was offset by the clients and other deposits categories.

During the third quarter growth in average money market and time deposits was offset by declines in other deposit categories.

Speaker 6: largely reflecting customers optimizing their yield in a higher interest rate environment.

Largely reflecting customers optimizing their deal and a higher interest rate environment.

Speaker 6: Our average loan bit deposit ratio was 90% during the third quarter, an average non-disparing demand deposit made up 30% of average deposits for the period.

Our average loan to deposit ratio was 90% during the third quarter and average non interest bearing demand deposits made up 30% of average deposits for the period.

Speaker 6: Turning to the NIM on slide 13, third quarter 2023, net interest income was 571 million. Sorry, a new third quarter record for East West.

Turning to the NIM on Slide 13 third quarter 2023, net interest income was 57 571 million I'm, sorry, a new third quarter record for East West.

Speaker 6: Medin just margin was 348, which compressed by 7 basis points quarter to quarter.

Net interest margin was $3 48, which compressed by seven basis points quarter over quarter. As you can see from the waterfall chart on this slide NIM compression was largely due to the impact of higher interest bearing deposit costs and the deposit mix shift to higher cost customer deposit categories, partially offset by the law.

Speaker 6: As you can see in the water fall chart on this slide, MIM compression was largely due to the impact of higher interfering to positive cost and the positive mix shift to higher cost customer to positive category.

Speaker 6: partially off that by the lower hole failure positive and I alone

Lower wholesale deposits.

And higher loan volumes.

Speaker 6: Turning to slide 14, the third quarter of average loan yield increased by 18 basis points quarter to quarter. And the spot coupon rate on our loan was 6.62% at quarter end compared with 6.45 at June 30.

Turning to slide 14, the third quarter average loan yield increased by 18 basis points quarter over quarter and the spot coupon rate on our loan was 662% at quarter end compared with $6 45 at June 30.

Unknown Executive: Good day everyone and welcome to the East West Bancorp's third quarter 2023 earnings conference call. All participants will be in a listen only mode. Should you need assistance please signal a conference specialist by pressing star and zero.

Operator: Good day everyone and welcome to the East West Bancorp's third quarter 2023 earnings conference call. All participants will be in a listen only mode. Should you need assistance please signal a conference specialist by pressing star and zero.

Speaker 6: In total, nearly 60% of our long portfolio was variable rate at September 30th. With a fairly balanced split between prime rate and so-for-linked loans.

In total nearly 60% of our loan portfolio was variable rate at September 30, with a fairly balanced split between prime rate and sopra linked loans.

Unknown Executive: After today's presentation there will be an opportunity to ask questions. To ask a question you may press star then one on your touch control to withdraw your question please press star then to please note this event is being recorded.

Operator: After today's presentation there will be an opportunity to ask questions. To ask a question you may press star then one on your touch control to withdraw your question please press star then to please note this event is being recorded.

Speaker 6: Over the last several years, while rates were low, we continue to help many of our CRE and also some CNI customers hedge against rising rate risk through the use of swaps, caps, and collars.

Over the last several years, while rates were low we continue to help many of our CRE and also some C&I customers hedge against rising rate risk through the use of swaps caps and collars.

Adrienne Atkinson: I would now like to turn the conference over to Adrienne Atkinson director of investor relations. Please go ahead. Thank you operator.

Speaker 6: as a result on the customer side, nearly two-thirds of the total CRE book was fixed rate to them at September 30. These clients are partially protected against the rising debt service costs and the payment shocks from the higher rate environment over the near-term.

As a result on the customer side nearly two thirds of the total CRE book was fixed rates to them at September 30. These clients are partially protected against the rising debt service costs and the payment shocks from the higher rate environment over the near term.

Adrienne Atkinson: Good morning and thank you everyone for joining us to review East West Bancorp's third quarter 2023 financial results. Whitney are Dominic Ng, Chairman and Chief Executive Officer, Christopher Don Moral Niles, our new Chief Financial Officer, and Irene Oh, Chief Risk Officer. This call is being recorded and will be available for reply on our investor relations website. The slide deck reference during this call is available on our investor relations site. Management may make projections or other forward looking statements which may differ materially from actual results due to a number of risks and uncertainties.

Yeah.

Speaker 6: Turning this slide 15, our average constant positive for the third quarter was 243 basis points, a 31 basis points from the second.

Turning to slide 15, our average cost of deposits for the third quarter was 243 basis points.

Up 31 basis points from the second quarter, our spot rate on total deposits was 248 basis points as of September 30, reflecting a 46% cumulative beta relative to the change in fed funds since December 21.

Speaker 6: Our spot rate on total deposits was 248 basis points as of September 30th, reflecting the 46% cumulative beta relative to the change in size from since December 21. In comparison, the cumulative beta on our loans has been 61% over the same period.

Adrienne Atkinson: Management may discuss non-gap financial measures for a more detailed description of the risk factors and the reconciliation gap to non-gap financial measures. Please refer to our filings with the Securities and Exchange Commission, including the form 8K file today.

In comparison, the cumulative beta on our loan has been 61% over the same period.

Speaker 6: We were pleased with our ability to manage the posit costs during the quarter. We paid down 1.6 billion of higher cost for the posit.

We were pleased with our ability to manage deposit costs during the quarter, we paid down $1 6 billion of higher cost wholesale deposits.

Dominic Ng: I will now turn the call over to Dominic. Thank you Adrienne. Good morning and thank you everyone for joining us for our earnings call. Before we start I would like to welcome Adrienne and Chris.

Dominic Ng: I will now turn the call over to Dominic. Thank you Adrienne.

Speaker 6: and replace much of that with lower cost, customer's funds.

And replace much of that with lower cost customer funds.

Dominic Ng: Good morning and thank you everyone for joining us for our earnings call. Before we start I would like to welcome Adrienne and Chris. I would also like to congratulate Irene on assuming the role of Chief Risk Officer and thank her for her service as CFO and help in ensuring a smooth transition. Their leadership will be in a row in advancing the company's growth strategy and risk capabilities.

Speaker 6: Moving on to non-existent income on slide 16, total non-existent income in the quarter was 77 million. For the third quarter, interest rate contracts and other derivatives income of 11 million increased to 4 million from the second quarter, primarily reflecting changes in market valuation.

Moving on to noninterest income on slide 16, total noninterest income in the quarter was $77 million for the third quarter interest rate contracts and other derivatives income of $11 million increased $4 million from the second quarter, primarily reflecting changes in market valuations.

Dominic Ng: I would also like to congratulate Irene on assuming the role of Chief Risk Officer and thank her for her service as CFO and help in ensuring a smooth transition. Their leadership will be in a row in advancing the company's growth strategy and risk capabilities. I would now begin the review of our financial results with slide 3 of our presentation. This morning we reported strong results. So a quarter 2023 net income was 288 million and diluted earnings per share was $2.2.

Speaker 6: Other investment income of 2 million was down a bit quarter to quarter, reflecting higher valuation marks on CRA investments recognized during the second quarter. Our fee income for-

Other investment income of $2 million was down a bit quarter over quarter.

Reflecting higher valuation marks on CRA investments recognized during the second quarter.

Dominic Ng: I would now begin the review of our financial results with slide 3 of our presentation. This morning we reported strong results. So a quarter 2023 net income was 288 million and diluted earnings per share was $2.2. Driven by a record level of quarterly revenue and net interest income. I will continue customer focus and diversify growth strategy allowed east-west to grow loans from the prior quarter and add significant customer deposits. We kept expenses well controlled, generated quarterly positive operating leverage and grew tangible value. We also maintained broadly stable asset quality and continued to proactively manage our preface.

Our fee income for the period was $67 million.

Moving on to Slide 17 third quarter noninterest expense was 252, million% to 4% decrease quarter over quarter.

Speaker 6: Moving on to slide 17, third quarter non-injured expense was 250,000,000, a 4% decrease quarter of record.

Speaker 6: Exploiting amortization of tax credits and CDI, adjusted non-intrigence was 202 in the third quarter, down over 3 million or down 2% sequential.

Excluding amortization of tax credits and CDI adjusted noninterest expense was $2 two in the third quarter down over $3 million or down 2% sequentially.

Dominic Ng: Driven by a record level of quarterly revenue and net interest income. I will continue customer focus and diversify growth strategy allowed east-west to grow loans from the prior quarter and add significant customer deposits. We kept expenses well controlled, generated quarterly positive operating leverage and grew tangible value. We also maintained broadly stable asset quality and continued to proactively manage our preface. Slide 4 presents a summary of our balance sheet position that is strong, well diversified and efficient.

Speaker 6: This was driven by decreases in several categories, including lower consulting costs, lower loan-related expense, lower comp and benefit expense, and lower occupancy.

This was driven by decreases in several categories, including lower consulting costs lower loan related expense lower comp and benefits expense and lower occupancy expense.

Speaker 6: The third quarter adjusted efficiency ratio was 31.2% compared with 31.8 in the prior quarter. We are pleased with our ability to consistently deliver industry leading efficiency.

Third quarter adjusted efficiency ratio was 31, 2%.

Impaired with 31 eight in the prior quarter, we are pleased with our ability to consistently deliver industry leading efficiency.

Speaker 6: And with that, I'll now review our updated outlook for the full year on Friday 18th.

With that I will now review our updated outlook for the full year on slide 18.

Dominic Ng: Slide 4 presents a summary of our balance sheet position that is strong, well diversified and efficient. You can see that we grew the customer deposits by $1 billion from the prior period, with notable growth in both our consumer and commercial balances. These customer deposits largely funded this quarter's long growth, allowing us to use excess cash to pay down maturing wholesale deposits. We're also pleased with the mix of our long growth, where nearly half the growth came from low risk residential mortgages.

Speaker 6: For the full year, we are reaffirming our prior guidance for the end of period loans.

For the full year, we are reaffirming our prior guidance for the end of period loans.

Net interest income.

Dominic Ng: You can see that we grew the customer deposits by $1 billion from the prior period, with notable growth in both our consumer and commercial balances. These customer deposits largely funded this quarter's long growth, allowing us to use excess cash to pay down maturing wholesale deposits. We're also pleased with the mix of our long growth, where nearly half the growth came from low risk residential mortgages. In the third quarter, we generated industry leading returns on our capital. We continue to maintain strong capital ratios, which are now the highest for regional banks.

Speaker 6: adjusted non-interference and credit eyebrows.

Adjusted noninterest expense.

And credit items.

Speaker 6: Regarding tax items, we now expect our effective tax rate for the full year will be between 19 to 20%. Based on about 185 million of tax credit in the...

Regarding tax items, we now expect our effective tax rate for the full year will be between 19% to 20% based on about $185 million of tax credit investments.

Speaker 6: We currently anticipate that for the fourth quarter, the amortization of tax rate investments will be approximately 45 million.

We currently anticipate that for the fourth quarter, the amortization of tax credit investment will be approximately $45 million.

Speaker 6: With that, I'll now turn the call back to Dominic for his closing remarks.

With that I'll now turn the call back to Dominic for his closing remarks.

Thank you Chris.

Speaker 3: In closing, we are looking forward to finishing 2023 on a high note.

In closing we are looking forward to finishing 2023 on a high note.

Dominic Ng: In the third quarter, we generated industry leading returns on our capital. We continue to maintain strong capital ratios, which are now the highest for regional banks. East West is on track for another year of earnings in 2023, and we're looking forward to starting 2024 from a position of strength.

Speaker 3: Our revenue, net interest income and profitability measures remain high.

Revenue net interest income and profitability measures remain high.

Speaker 3: The East West Business Model is resilient and diversified, and our balance sheet has positioned us well to continue to focus on our customers.

The east West business model.

In diversified and our balance sheet has positioned us well to continue to focus on our customers.

Dominic Ng: East West is on track for another year of earnings in 2023, and we're looking forward to starting 2024 from a position of strength.

Speaker 3: I want to thank our associates for all their hard work last quarter, which was reflected in our strong performance. I will now open the call to questions.

I want to thank our associates for all of their hard work last quarter.

Dominic Ng: Given our earnings stability, solid credit performance and strong capital levels, our board of directors has approved the resumption of our share repurchase program in the fourth quarter.

Irene Oh: Given our earnings stability, solid credit performance and strong capital levels, our board of directors has approved the resumption of our share repurchase program in the fourth quarter. I would now turn the call over to Irene for a more detailed discussion of our portfolio and asset quality. Irene. Thank you, Dominic, and good morning to all on the call. I'll start with a discussion of our loan portfolio. Slide five provides detail on our overall loan bond.

Which was reflected in our strong performance.

I will now open the call to questions operator.

We will now begin the question and answer session.

Speaker 1: We will now begin the question and answer session. To ask a question you may press star then one on your touch tone tone. If you are using a speaker phone, please take up your hands before pressing the...

Ask a question you May press Star then one on your Touchtone phone.

Irene Oh: I would now turn the call over to Irene for a more detailed discussion of our portfolio and asset quality.

If you are using a speakerphone please pick up your handset before pressing.

Speaker 1: If at any time your question has been addressed and you would like to withdraw your question, please press start and...

If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Irene Oh: Irene. Thank you, Dominic, and good morning to all on the call. I'll start with a discussion of our loan portfolio. Slide five provides detail on our overall loan bond. East West loans are largely balanced by type across residential mortgage, commercial real estate, and C&I. Within C&I, our exposures are also well diversified by industry. Our greater China exposures remain limited at roughly 4% of total loans, and nearly all our C&I loans also well diversified by industry.

Speaker 1: In the interest of time, please limit yourself to one question and one follow-up.

In the interest of time, please limit yourself to one question and one follow up.

Speaker 7: At this time we will pause momentarily to assemble our roster.

At this time, we will pause momentarily to assemble our roster.

Irene Oh: East West loans are largely balanced by type across residential mortgage, commercial real estate, and C&I. Within C&I, our exposures are also well diversified by industry. Our greater China exposures remain limited at roughly 4% of total loans, and nearly all our C&I loans also well diversified by industry.

Yeah.

Our first question comes from Casey Haire with.

Speaker 8: Yeah, yeah, thanks. Good morning everyone and welcome back Chris.

Yeah. Thanks, Good morning, everyone and welcome back Chris.

Speaker 8: Yeah, first question for you, Chris. Just on the NII.

First question for you, Chris just on the on the NII.

The.

Speaker 8: Curious about the cash position and working down those wholesale deposits going forward can you know how much more can you lean into the cash position that the retire the rest of those help wholesale deposit.

Curious about the cash position and working down those wholesale deposits are going forward can you know how much more can you lean into the cash position to retire the rest of those wholesale deposits.

Irene Oh: Slide six shows the detail of our commercial real estate portfolio. It is important to note that East West portfolio remains well diversified by geography and property ties. When comparing our portfolio to the FFIC commercial real estate compensation guidelines, we have consistently been below the guidelines since the end of 2009. Slide seven provides additional detail on commercial real estate. As you see, the portfolio is very granular with the average loan size of 3 million.

Speaker 6: As I re-immented on the last call, it was our intention to pay down up to 1.75 billion by year end. And we've obviously chopped a lot of that wood here in the third quarter with 1.6 billion paid off. So there's a little bit that we had planned that's maturing that we're going to take care of as we go forward. And they will continue to evaluate the optimal level of cash as we move into next year's planning.

Sure as Irene mentioned on the last call. It was our intention to pay down up to $1 75 billion by year end and we've obviously talked a lot of that was here in the third quarter with one point.

Irene Oh: Slide seven provides additional detail on commercial real estate. As you see, the portfolio is very granular with the average loan size of 3 million. The weighted average loan to value for the portfolio was a low 51%. Fewer than 25% of our commercial real estate loans have a low to value of 60% or over.

Billion paid off so there's a little bit that we had planned debt maturing that we're going to take care of as we go forward and they will continue to evaluate the optimal level of cash as we move into next year's planning.

Irene Oh: The weighted average loan to value for the portfolio was a low 51%. Fewer than 25% of our commercial real estate loans have a low to value of 60% or over. In the appendix, we have shared similar trends of low average loan sizes and LCDs within our office and retail commercial real estate portfolio. Many of our commercial real estate borrowers have had long standing relationships with our banks and a large portion of our loans are full recourse with personal guarantee.

Got it okay and just.

Speaker 8: As my follow up on the buyback resumption, just curious, how aggressive you might be with that. I know you have the...

My follow up on the on the buyback resumption just curious how.

How aggressive you might be with that I know you have the 250.

Irene Oh: In the appendix, we have shared similar trends of low average loan sizes and LCDs within our office and retail commercial real estate portfolio. Many of our commercial real estate borrowers have had long standing relationships with our banks and a large portion of our loans are full recourse with personal guarantee. As a reminder, we typically originate amortizing loans with the maturity of 7 to 10 years. We also have low risk from near-term maturity. Out of quarter-end, only 8% of the income-producing commercial real estate portfolio, the chores, in the fourth quarter of 2023 and for all of 2024.

Speaker 9: million authorization, but are you looking to manage to a

Million authorization, but you know are you looking to manage to a specific CET one ratio or payout ratio just trying to get a sense of how aggressive you might be on the buyback with the socket obviously.

Speaker 9: CT1 ratio or payout ratio just trying to get a sense of how aggressive you might be on the on the buyback with the socket obviously.

Devaluation.

Speaker 3: I don't know, I would use the word aggressive. I think we're always opportunistic.

I don't know I would use the word aggressive I think were always opportunistic.

Irene Oh: As a reminder, we typically originate amortizing loans with the maturity of 7 to 10 years. We also have low risk from near-term maturity. Out of quarter-end, only 8% of the income-producing commercial real estate portfolio, the chores, in the fourth quarter of 2023 and for all of 2024.

Speaker 3: We have 215,4 million left to go that already been authorized.

We have 215 4 million left to go that already been authorized and so.

Speaker 10: I think, you know, obviously price pretty good. And so we will proceed. And so I will leave it at that.

Hi.

Obviously price pretty good and so we will proceed.

Irene Oh: On slide 8, we provide detail on our residential mortgage portfolio, which is made up largely of single family mortgage and also home equity lines of credit. Like commercial real estate, our residential mortgage portfolio is well diversified by geography and property. The average loan to value for our residential mortgage portfolio is also quite low.

So I will leave it at that.

Okay.

Speaker 7: Our next question comes from Brandon King with true security. Please go ahead.

Our next question comes from Brandon King with <unk> Securities. Please go ahead.

Hey, good morning.

Good morning, Brandon.

Speaker 11: And so I wanted to get more context in regards to net interest margin trends, potentially being in a higher, for longer rate environment. When do you think we could see some stabilization or potential bias?

So I wanted to give more context in regards to net interest margin trend.

It seems to be being in the higher for longer rate environment.

When do you think we could see some stabilization or a potential bottoming.

Speaker 6: I think we expect generally continued modest compression given the current rate outlook and given our expectations that there's potentially another predaction towards your end.

Well I think we expect generally continued modest compression given the current rate outlook and given our expectation that there's potentially another fed action towards year end.

Irene Oh: There are a 60% below a 60% LTV. As you can see on the slide in our distribution behind geography, our residential mortgage loans are overwhelmingly in preference with the primary source of originations coming through our branch network. Residential mortgage has proven to be a resilient source of loan growth for us growing 3% from the second quarter. I would also like to highlight that over 80% of our heal-up commitments we are in first lean position.

Speaker 6: In the medium term, of course, we're managing more towards dollar NII.

In the medium term of course, we're managing more towards dollar NII.

Speaker 6: And in the long term, obviously our largest risk is actually to rapidly declining rates that we're taking proactive measures to make sure we're positioned for the long term. Good.

And in the long term, obviously, our largest risk is actually do rapidly declining rates. So we're taking proactive measures to make sure we're positioned for the long term.

Okay.

And.

Speaker 11: And doing that next year is going to be more challenging from the revenue standpoint. What are you thinking about in terms of managing or...

Irene Oh: Turning to slide 9, the asset quality of our portfolio remains broadly stable. During the third quarter, we recorded net charge of 18 million or 14 basis points, an increase from net charge of 6 basis points in the second quarter. Quarter of a quarter, non-performing assets as of September 30 decreased modestly to 104 million or 15 basis points of total assets from 17 basis points as of June 30. The criticized loan ratio increased 38 basis points from June 30 to 2.01 percent of loans held for investments.

Doing that next year is going to be more challenging from a revenue standpoint.

What are you thinking about in terms of managing or.

Speaker 11: maintaining a positive operating leverage from a gore to expense.

Maintaining positive operating leverage in regards to your expense base.

Speaker 6: I think it's a little early for us to give you 2024 guidance. We typically do that January call and we'll be happy to follow up them.

I think it's a little early for us to give you 2024 guidance. We typically do that January call and we'll be happy to follow up there.

Speaker 1: Our next question comes from Project Preston with UBS. Please go ahead.

Our next question comes from Patrick Preston with UBS. Please go ahead.

I'm not sure I'm using my full name I like it.

Speaker 12: using my full name. I like it.

Yes.

Speaker 12: You know, I want to ask maybe a more pointed question on the Viara Act now, Max. So you get 254 million ev authorization. Capital's obviously robust. The stock is cheap and well below where you bought it back in the past. And you had $220 million left over after paying the dividend at an end coming to free queue alone. So would you consider using the full amount in the fourth quarter?

I wanted to ask maybe a more pointed question on the buyback Dominic So you've got $254 million of authorization capital is obviously robust the stock is cheap and well below where you bought it back in the past and you had $220 million left over after paying the dividend out of net income and <unk> alone. So what.

Irene Oh: The special mention loans ratio increased 27 basis points, 29 basis points, excuse me, quarter of a quarter to 95 percent of loans held for investments as of September 30. And the classified loans ratio increased 9 basis points to 106 percent as credit continues to normalize. The increases were driven primarily by C&I as some borrowers are being impacted by higher rates and inflation. There will no industry or sector trends for this increase in criticized C&I loans. And also, no geographic trends to highlight in the slide updates in commercial real estate criticized loans.

Are you considering using the full amount in the fourth quarter.

Speaker 10: Well, as I said earlier, you know, we are well, we are opportunistic and so we don't really have any specific sort of like out.

Well as I said earlier.

Well, we are opportunistic and so we don't really have any specific.

Sort of like.

Speaker 10: direction that we have to be doing it in a one quarter or not. And we'll see how, you know, what the prices and how things go. And one thing you can be rest assured, East West Bank always show this friendly. And, you know, we always do the right thing at the right time. And whatever that makes sense.

Direction, we have to be doing it.

One quarter or not and we will see how you know what the prizes and how things go and one thing you can be rest assured east west banks always shareholder friendly and we always do the right thing at the right time.

Irene Oh: There will no industry or sector trends for this increase in criticized C&I loans. And also, no geographic trends to highlight in the slide updates in commercial real estate criticized loans. We remain vigilant and proactive in monitoring and managing our credit risk.

Irene Oh: We remain vigilant and proactive in monitoring and managing our credit risk. We recorded a provision for credit losses of 42 million in the third quarter, compared with 26 million for the second quarter, building the allowance for low losses ratio, one basis point to 129. Turning to slide 10, as shown on the slide, all of our capital ratios expanded quarter of a quarter due to the strength of our earnings. If adjustments were made for AFS and HTM security mark and the amounts from the losses that is not already reflected in equity, our capital ratios would still be very strong. Tangible common equity grew to 9.03 percent out of September 30. Quarter of a quarter are tangible value per share increased 2 percent. Year over year, tangible value per share increased 18 percent.

And whatever that makes sense.

That.

Speaker 10: or do, well, we'll call our calling to what we say is the best.

Irene Oh: We recorded a provision for credit losses of 42 million in the third quarter, compared with 26 million for the second quarter, building the allowance for low losses ratio, one basis point to 129.

Oh Dude, we'll go according to what we think is the best.

Speaker 12: Got it. Okay. And then I did have a follow up as a multi part kind of question. Wanted to ask how much of the bank's loan portfolio was snics and of that, what amount is the bank the lead under right around? And then also, I don't know, Chris or Irene would have this, you know, do you happen to have what the reserve on the office portfolio is?

Got it Okay, and then I did have a follow up it's a multipart question wanted to ask how much of the bank's loan portfolio with snacks and of that what amount is the bank will lead underwriter on and then also I don't I don't know if Chris or.

Irene Oh: Turning to slide 10, as shown on the slide, all of our capital ratios expanded quarter of a quarter due to the strength of our earnings. If adjustments were made for AFS and HTM security mark and the amounts from the losses that is not already reflected in equity, our capital ratios would still be very strong. Tangible common equity grew to 9.03 percent out of September 30.

Irene would have this do you happen to have what the reserve on the office portfolio is.

Speaker 4: Yeah, Brody. So as of 930, we held 2.4 billion of SNFs that we have purchased for mothers. As of 930, we're also the lead on 900 million SNFs indication, 300 of which we've participated out to others. And I think your next question, although you've squeezed in three questions, Brody, I want to comment on that on office. So we increase the reserve for office.

Yeah, Ronny so as of 930.

We held $2 1 billion.

And that we have purchased for matters as of 930, and we're also the lead on $900 million syndication 300 of which we participated out to others and I think your next question.

Irene Oh: Quarter of a quarter are tangible value per share increased 2 percent. Year over year, tangible value per share increased 18 percent.

Please send three questions Brody I wanted to comment on that on offense. So we increased the reserve for Arthur.

Irene Oh: E-Swap's border directors have declared fourth quarter of 2023 dividends for the company's common stock. The poorly common stock dividend 48 cents per share will be payable on November 15, 2023 to stockle third of record on November 1, 2000. We currently have 254 million repurchased authorization that remained available for future by that.

Speaker 13: Total reserve for office was 230 out of 930, or from 190 out of 630. And I'll just share that half of that continues to be qualitative factors versus quantitative reserve that we need to follow the appropriate portfolio. And I'll just share that half of that continues to be qualitative.

<unk> for office with June 30, as of 930 or from 190 as of 630 and I'll just share that half of that continues to be qualitative factors versus quantitative reserve that we need.

Athlete as we look at our portfolio and the economic outlook and our portfolio credit quality.

Irene Oh: Although we did not repurchase any shares during the third quarter of 2023, as announced in our earnings release, we intend to resume repurchases in the fourth quarter.

Speaker 4: So we continue to monitor this and make sure that our reserve is building as we spend years appropriate given the environment.

So we continue to monitor that and make sure that our reserve is building as we think is appropriate given the environment.

Okay.

Christopher Moral: On now, turn the call over to Chris for more detailed discussion of the drivers of our income statement and outlook, Chris.

Christopher Moral: On now, turn the call over to Chris for more detailed discussion of the drivers of our income statement and outlook, Chris. Thank you, Irene, and good morning to all. I will start with a discussion of our deposit strength and then review the key drivers of net interest income and net interest margin.

Our next question comes from Ebrahim <unk> with Bank of America. Please go ahead.

Speaker 7: So next question comes from Ibrahim Puna, Valar with Bank of America. Please go ahead.

Christopher Moral: Thank you, Irene, and good morning to all. I will start with a discussion of our deposit strength and then review the key drivers of net interest income and net interest margin. Slide 11, highlight our deposit mix by segments, customer type, and source. In the third quarter, we move both commercial and consumer deposit balances, increase the number of customer accounts, and reduce higher cost, both failed deposits. Year over year, we have successfully grown deposits across our client sectors.

Yes.

Okay.

Good morning.

Speaker 14: I guess maybe Dominic for you, so as we think about, you have a lot of excess capital, a lot of banking peers are pulling back. Just give us a sense of customer demand as we think about lending on the commercial side and how you are approaching, are you pulling back in certain areas. Just give us a sense of the growth opportunity, be it market share driven or just customer demand driven that you are seeing today.

Good mortgage maybe.

Dominic for you. So as you think about you have a lot of excess capital.

Christopher Moral: Slide 11, highlight our deposit mix by segments, customer type, and source. In the third quarter, we move both commercial and consumer deposit balances, increase the number of customer accounts, and reduce higher cost, both failed deposits. Year over year, we have successfully grown deposits across our client sectors. Our commercial deposits remain well diversified by industry, and our consumer deposits are fairly granular.

A lot of banking peers are pulling back.

Just give us a sense of.

Customer demand if you think about lending on the commercial side and how you're approaching or are you pulling back in certain areas just give us a sense of the growth opportunity I'll beat market share driven or just customer demand given that youre seeing today.

Speaker 10: Well, our priority has been mainly focusing on taking good care of our customers.

Well, our priority has been mainly focusing on taking good care of our customers.

Christopher Moral: Our commercial deposits remain well diversified by industry, and our consumer deposits are fairly granular. Turning to the balance sheet on slide 12, third quarter average loans grew 2% sequentially driven by growth in all major categories. Third quarter average deposits of $55.2 billion increased $900 million, or 2% from the second quarter. During the third quarter, growth in average money market and time deposits was offset by the clients and other deposit categories, largely reflecting customers optimizing their yield in a higher interest rate environment.

Speaker 10: As you can see, actually, back in March, some of our other formal competitors were really hurting their customer in a big way. So one of the things that East West offers is stability and consistency. So.

You can see actually back in March.

Christopher Moral: Turning to the balance sheet on slide 12, third quarter average loans grew 2% sequentially driven by growth in all major categories. Third quarter average deposits of $55.2 billion increased $900 million, or 2% from the second quarter. During the third quarter, growth in average money market and time deposits was offset by the clients and other deposit categories, largely reflecting customers optimizing their yield in a higher interest rate environment. Our average loaned deposit ratio was 90% during the third quarter, and average non-interferring demand deposits made up 30% of average deposits for the period.

Some of the other formal competitors.

Hurting their customer in a big way so one of the things that east west offer a state ability and consistency.

We have.

Speaker 10: Frankly, some really good commercial witness day clients that year in and year out have been banking with us for decades, that went through cycles.

Frankly, some good good.

Commercial real estate clients that adherence and Youre out had been banking with us for decades.

Went through cycles.

Speaker 10: of various economic conditions and actually have done really well. In fact, whenever there is a down cycle, they tend to do better.

Various economic conditions and.

Christopher Moral: Our average loaned deposit ratio was 90% during the third quarter, and average non-interferring demand deposits made up 30% of average deposits for the period. Turning to the NIM on slide 13, third quarter 2023 net interest income was $571 million, sorry, a new third quarter record for East West. Net interest margin was 348, which compressed by 7 basis points quarter to quarter. As you can see from the water fall chart on this slide, NIM compression was largely due to the impact of higher interest bearing deposit costs and the deposit mixed shift to higher cost customer deposit categories, partially offset by the lower wholesale deposits and higher loan bonds.

Actually have done really well in fact whenever there is a down cycle they tend to do better.

Speaker 10: And when there are customers like that, that find really great opportunities, we step up.

And when there are customers like that define Julie great opportunities, we step up.

Christopher Moral: Turning to the NIM on slide 13, third quarter 2023 net interest income was $571 million, sorry, a new third quarter record for East West. Net interest margin was 348, which compressed by 7 basis points quarter to quarter. As you can see from the water fall chart on this slide, NIM compression was largely due to the impact of higher interest bearing deposit costs and the deposit mixed shift to higher cost customer deposit categories, partially offset by the lower wholesale deposits and higher loan bonds.

Speaker 10: and take good care of them and make sure they get the financing.

And Tim good care of them and make sure they get the financing neat, but we're not.

Speaker 10: But we're not there chasing down every other customers who are fleeting other banks and things like that. So obviously, as we all know, the interest rate is a relatively high level. And there are not that many great views out there. And also on the CNI side, many of our very strong customers are not out there making substantial investments. So in the same point of where are we today, is that we've got plenty of capital to be deployed.

Chasing down every other customers, who are fleeting other banks and things like that so obviously, yes, we all know to interest rate is relatively high.

Level and there are not that many good deals out there and also on the C&I side, many of our very strong customers.

Out out there, making substantial investments so in that standpoint.

Where are we today, we've got plenty of capital to be deployed.

Speaker 10: We are able to continue to take very good care of our customers for their needs.

We are able to continue to take very good care of our customers for their needs.

Christopher Moral: Turning to slide 14, the third quarter average loan yield increased by 18 basis points quarter to quarter. In the spot coupon rate on our loans was 6.62% at quarter end compared with 6.45% at June 30. In total, nearly 60% of our loan portfolio was variable rate at September 30. With a fairly balanced split between prime rate and so-for-link loans. Over the last several years, while rates were low, we continued to help many of our CRE and also some C&I customers hedge against rising rate risk through the use of swaps, caps, and collars.

Speaker 10: But on the other hand, our customers are not out there making very aggressive, you know, purchases or acquisitions.

But on the other hand, our customers are not out there, making very aggressive.

Purchases.

Acquisitions, all that require a whole lot of additional line increase and so forth so with that I think.

Speaker 15: that require a whole lot of additional line increase and so forth. So with that, I think that what I would say that the growth is relatively somewhat stable, and I don't expect something dramatic, just because of the market disruption that happened back in March. But secondly, I do.

I would say that the growth is relatively.

Somewhat stable and I don't expect something dramatic just because the market disruption that happened back in March the secondly, I due to that.

Christopher Moral: As a result, on the customer side, nearly two-thirds of the total CRE book was fixed rate to them at September 30. These clients are partially protected against the rising debt service costs and the payment shocks from the higher rate environment over the near future. Turning to slide 15, our average positive positive for the third quarter was 243 basis points, up 31 basis points from the second quarter. Our spot rate on total deposits was 248 basis points as of September 30th, reflecting the 46 percent cumulative beta relative to the change in size fund since December 21.

Speaker 15: We are getting more increase from customers from other banks.

We are getting more inquiries from customers from other banks.

Speaker 15: from either banks of doubt or banks that currently are not doing well, their customers are making increased e-sweb.

Thanks.

All banks that currently are not doing well there are customers are making in creative east west.

Speaker 15: We are prudently taking these new customers one at a time. We don't want it to just quickly and then start bringing too many on and then just causing indigestion for ourselves. So we are just prudently taking them on one at a time and then we see that in the next few years, in general, the market.

Prudently, taking these new customer one at a time.

Wanted to just quickly at net start up.

Bringing too many on and then just causing.

In digestion for ourselves. So we are just prudently taking them on one at a time and we feel that in the next few years in general the market.

Christopher Moral: Turning to slide 15, our average positive positive for the third quarter was 243 basis points, up 31 basis points from the second quarter. Our spot rate on total deposits was 248 basis points as of September 30th, reflecting the 46 percent cumulative beta relative to the change in size fund since December 21. In comparison, the cumulative beta on our loans has been 61 percent over the same period.

It's somewhat more favorable.

Speaker 15: to East West, simply because of the current competitive lens.

To east West simply because of the currency.

Competitive landscape.

No no that was good color things don't make and maybe just one maybe Chris for you.

Speaker 14: That was good color things down there. And maybe just one may be Chris for you. An apologies if I missed it, but the special mention known we thought that take out 95 bits was 66. What's guiding that? It is just your own internal portfolio review. Or are there certain areas within the commercial book where you sing some songs?

Christopher Moral: In comparison, the cumulative beta on our loans has been 61 percent over the same period. We were pleased with our ability to manage the positive costs during the quarter. We paid down 1.6 billion of higher cost hotel deposits and replaced much of that with lower cost customer funds.

And apologies if I missed it, but especially mentioned known who saw that pick up 90, 550, 460, <unk>, what's driving that.

Christopher Moral: We were pleased with our ability to manage the positive costs during the quarter. We paid down 1.6 billion of higher cost hotel deposits and replaced much of that with lower cost customer funds.

It is just yet on the NIM total portfolio to deal or are there certain areas within the commercial book, but you're seeing some softness.

Speaker 6: I'll let our chief risk officer address that one.

I'll, let our chief risk officer address that one thank you Pat.

Speaker 4: So, Abraham, when we look at that, you know, honestly, there really aren't any drivers one way or another or sector. It is really pretty broadsays. As I mentioned in the premier of remarks, you know, we continue to monitor the portfolio very carefully and as appropriate, you have been kind of where we start, we do expect that. So there will be some kind of increases in the classified and the clear-spice asset ratios given the very, very low basis those are at all. I am proud so that you can asked me telling me what the real Schoen Frauen wrote last year and then continued with suicide.

Christopher Moral: Moving on to non-existent income on slide 16, total non-existent income in the quarter was 77 million. For the third quarter, interest rate contracts and other derivatives income of 11 million increased 4 million from the second quarter, primarily reflecting changes in market valuations. Other invested income of 2 million was down a bit quarter to quarter, reflecting higher valuation marks on CRA investments recognized during the second quarter. Our fee income for the period was 67 million.

When we look at that honestly, there really aren't any drivers one way or another our sector. It is really pretty broad based.

I mentioned in the prepared prepared remark.

Continue to monitor the portfolio very carefully and as appropriate given kind of where rates are and we do expect that there'll be some kind of increase in the classified and criticized asset ratio given the very very low basis. Those are at all Mike.

Christopher Moral: Our fee income for the period was 67 million.

Speaker 1: Our next question comes from Dave Rochester with Compass Point. Taste Go ahead.

Our next question comes from Dave Rochester, with Compass point. Please go ahead.

Christopher Moral: Moving on to slide 17, third quarter non-existence was 250 million, a 4 percent decrease quarter of a quarter. Excluding amridation of tax credits and CDI, adjusted non-existence was 202 in the third quarter, down over 3 million or down 2 percent sequentially. This was driven by decreases in several categories, including lower consulting costs, lower loan-related expense, lower comp and benefit expense, and lower occupancy expense. The third quarter adjusted efficiency ratio was 31.2 percent compared with 31.8 in the prior quarter.

Speaker 16: Hey, good morning everyone and Irene and Chris can grasp on the new roles.

Yes.

Hey, good morning, everyone in Iran, and Chris Congrats on the new roles.

Okay.

Speaker 16: I know you mentioned it's early, a little early on the expense front for next year, but just a bigger picture. Is there anything we need to watch out for and you big ticket items, either on the regulatory side or systems upgrades or anything like that that would potentially keep that expense growth rate elevated next year?

I know you mentioned, it's a little early on the expense front for for next year, but just bigger picture is there anything we need to watch out for any big ticket items, either on the regulatory side, our systems upgrades or anything like that that would potentially keep that expense growth rate elevated next year.

Speaker 4: I don't think so, Dave. I mean, obviously we have the special assassin and the FDIC special assassin, but not a wound pack everyone in the industry, but nothing for good.

Yes, I don't think so Dave I mean, obviously, we have a special assessment the FDIC special assessment that'll impact everyone in the industry, but nothing particular.

Christopher Moral: The third quarter adjusted efficiency ratio was 31.2 percent compared with 31.8 in the prior quarter. We are pleased with our ability to consistently deliver industry-leading efficiency.

Speaker 16: Okay, great. And then as a follow up on the margin.

Okay great.

Christopher Moral: We are pleased with our ability to consistently deliver industry-leading efficiency.

Then as a follow up on the margin first it sounded like you mentioned, maybe seeing a little bit of NIM pressure near term correct me if I'm wrong, but you guys also highlighted a pretty big deceleration in the increase in deposit costs with the spot.

Speaker 16: For instance, I don't like you mentioned, maybe seeing a little bit of an impression near term, correctly if I'm wrong. But you guys also highlighted a pretty big deceleration and the increase in deposit costs with the spot barely up from the quarter average.

Christopher Moral: And with that, I'll now review our updated outlook for the full year on slide 18. For the full year, we are reaffirming our prior guidance for the end of period loans, net interest income, adjusted non-existence and credit items. Regarding tax items, we now expect our effective tax rate for the full year will be between 19 to 20 percent based on about 185 million of tax credit investments. We currently anticipate that for the fourth quarter, the amridation of tax credit investments will be approximately 45 million.

Barely up from the quarter average.

Speaker 16: So just wondering, you know, absent any fed rate changes, could you actually see them stabilized in your term? And so continue to benefit from earning assets repricing higher. And, you know, are you seeing that potentially drives and then stabilization and growth into 2024?

So just wondering you know absent any fed rate changes could you actually seen them stabilize near term and it will continue to benefit from earning assets repricing higher.

Are you seeing that potentially drives the NIM stabilization and growth.

Into 2024.

Christopher Moral: We currently anticipate that for the fourth quarter, the amridation of tax credit investments will be approximately 45 million.

Speaker 6: As I look to the fourth quarter, I certainly see the mix should we be able to continue the deposit growth from our customers that were seen as providing some lift to that compression risk.

As I look to the fourth quarter I, certainly see the mix should we be able to continue the deposit growth from our customers that were seen as providing some lift to that compression risk.

Dominic Ng: With that, I'll now turn the call back to Dominic for his closing remarks. Thank you, Chris. In closing, we are looking forward to finishing 2023 on a high note. Our revenue, net interest income and profitability measures remain high. The East West Business Model is resilient and diversified, and our balance sheet has positioned us well to continue to focus on our customers.

Speaker 6: That haven't been said if there's another fed hike, there'll probably be some repriving of existing deposits that'll work against us. So those are the dynamics that are at play, but I think you've captured the spirit of remarks well.

It hasn't been said if theres another fed hike there'll probably be some repricing of existing deposits that will work against us. So those are the dynamics that are at play, but I think you've captured the spirit our remarks well.

Great. Thanks, guys.

Speaker 4: Maybe I'll just add, I mean, if you look at the third quarter and the trajectory of the NIMS and this helps kind of inform our thoughts around this. So NIMS from July was 3.45 and then for August and September , we scouted a little bit of better, 350 for both quarters, so months, months, excuse me. So that helps us kind of pray where we're at and why we're comfortable with the stabilization as we move.

Maybe I'll just add I mean, if you look at the third quarter and the trajectory of the NIM and help kind of inform our thoughts around that so NIM for July was $3 45, and then four.

Dominic Ng: I want to thank our associates for all their hard work last quarter, which was reflected in our strong performance.

August and September we got a little bit of better deeper both quarter. So months excuse me so that helps us kind of frame, where we're at and why we are comfortable with the stabilization as we move forward.

Unknown Executive: I will now open the call to questions, operator. We will now begin the question and answer session. To ask a question you may press star then one on your touchtone tone. If you are using a speaker phone, please pick up your hands 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. In the interest of time, please limit yourself to one question and one follow up.

Operator: I will now open the call to questions, operator. We will now begin the question and answer session. To ask a question you may press star then one on your touchtone tone. If you are using a speaker phone, please pick up your hands 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. In the interest of time, please limit yourself to one question and one follow up.

Speaker 7: The next question comes from Manangosalia with Morgan Sandi. Please go ahead.

The next question comes from Manan <unk> with Morgan Stanley . Please go ahead.

Hi, good morning.

Speaker 3: I wanted to ask about just a little bit more color on the funding side. It looks like you're getting some nice loan growth and in a chance like you're gonna continue to lean in here. Yeah, I think you noted that a lot, more pure deposit growth is coming from money market and time deposits. Is that where you're gonna be focused on bringing in new funding to fund the loan?

Good morning.

Wanted to ask about.

Just a little bit more color on the funding side it looks like Youre getting some nice loan growth and it sounds like you're going to continue to lean in here.

Unknown Executive: At this time we will pause momentarily to assemble a rock.

Operator: At this time we will pause momentarily to assemble a rock.

Yes, I think you noted that market.

Mark your deposit growth this quarter is coming from money market and time deposits is that where youre going to be focused on bringing in the <unk>.

Casey Haire: Our first question comes from Casey Haire with... Yeah, thanks.

Funding to fund the launch.

Christopher Moral: Good morning everyone, and welcome back Chris. Yeah, first question for you, Chris, just on the NII. The curious about the cash position and working down those wholesale deposits going forward. Can you say yes? How much more can you lean into the cash position to retire the rest of those wholesale deposits? Sure. As I mentioned on the last call, it was our intention to pay down up to 1.75 billion by year end.

Speaker 6: I think we're going to be looking across the board, and frankly, we've seen success across the board. In fact, on the consumer side, we're expecting to grow the positive driven by some initiatives we have internally with business checking accounts on small and medium sizes, as well as consumers, as well as a further push to better integrate our new mortgage customers into our checking e-field system. So I think we'll see consumer lifts that won't necessarily be at the higher end cost.

I think we're gonna be looking across the board and frankly, we've seen success across the board in fact on the consumer side.

<unk> grown deposits driven by some initiatives, we have internally with business checking accounts on small and medium sized businesses as well as consumers as well as a further push to better integrate our new mortgage customers into our checking ecosystem, but I think we will see consumer lift that won't necessarily be at the higher end car.

Speaker 6: But we're also expecting to grow commercial balances. And as Dominic alluded to, there have been opportunities for us to be selective and proactive with new customers to the bank. And we're obviously prioritizing new customers that come with significant deposits at the right price point.

But we're also expecting to grow commercial balances and as Dominic alluded to there have been opportunities for us to be selective and proactive with new customers to the bank and we're obviously prioritizing new customers that come with significant deposits at the right price point.

Christopher Moral: And we've obviously talked a lot of that wood here in the third quarter with 1.6 billion paid off. So there's a little bit that we had planned that's maturing that we're going to take care of as we go forward. And they will continue to evaluate the optimal level of cash as we move into next year's planning. Got it. Okay. And just as my follow up on the buyback resumption, just curious how aggressive you might be with that.

Yeah.

So maybe on that.

Speaker 15: I also want to add that for, you know, our commercial clients, a new commercial clients we brought in, that have primary offering accounts that transfer over the East West Bank, it's gonna take some time to set up the cash management online banking and whatnot. And in order to have a fully operated, it's gonna take a few months. So therefore, those gonna be a gradual increase when it comes to the non-interest.

I also wanted to add that.

Yes.

Our commercial clients, a new commercial clients, we brought in that half.

Primary operating account transfer.

Christopher Moral: I know you have the 255 million authorization. But, you know, are you looking to manage to a specific CT1 ratio or payout ratio just trying to get a sense of how aggressive you might be on the buyback with the stock at obviously attractive valuation? I don't know. I would use the word aggressive. I think we're always opportunistic. We have 254 millions left to go that already been authorized. And so I think, you know, obviously price pretty good. And so we will proceed. And so I will leave it at that.

Transfer over to East West Bank is going to take some time to set up key cash management.

Online banking and whatnot and then in order to have a fully operator is going to take a few months. So therefore, those going to be a gradual increase that when it comes to the non.

Noninterest bearing deposits.

Yes.

Speaker 17: Got it again. And then maybe just focus on the CDs and time deposits. It looks like you're seeing some good traction there. And I think I can see online that you're offering about a four and a half percent rate. I guess it is slightly below market given where other banks are. Can you talk about how you're able to do that? Is it because of the longer relationships you have with your depositors? Is it relationship pricing elsewhere in the services you offer?

Got it Okay, and then maybe just to focus on the.

Cds and time deposits.

Looks like you're seeing some good traction there I think I can see online that you're offering about a florida off the sand right.

I guess it is slightly below market, given where other banks are.

Can you talk about how you were able to do that is it because just the longer relationships you have with your deposit does is it relationship pricing elsewhere in the services you offer.

Brandon King: Our next question comes from Brandon King with security. Please go ahead. Hey, good morning. Good morning, Brandon. And so I wanted to get more context in regards to net interest margin trends, potentially being in the higher for longer rate environment.

Speaker 6: I think we've had success both with our rack rate rates which you're referring to and also on selected new opportunities we're able to look at exceptions and opportunities to bring folks in on an individualized basis. And I think that's one of the hallmarks of East West is they're able to look at the entire relationship.

I think we've had success both with our rack rate rates, what you're referring to and also on selected new opportunities, we're able to look at exceptions and opportunities to bring folks in.

On an individualized basis, and I think that's one of the hallmarks of east West is they're able to look at the entire relationship and make appropriate business judgments to move forward on individual opportunities and that's been part of what's giving them their low cost base. They have today and allowed us to continue to attract the right customers with the right relationship.

Brandon King: When do you think we could see some stabilization or potential bottoming? Well, I think we expect generally continued modest compression given the current rate outlook and given our expectations that there's potentially another red action towards your end. In the medium term, of course, we're managing more towards dollar NII and in the long term, obviously, our largest risk is actually to rapidly declining rate. So we're taking proactive measures to make sure we're positioned for the long term. Okay.

Christopher Moral: When do you think we could see some stabilization or potential bottoming? Well, I think we expect generally continued modest compression given the current rate outlook and given our expectations that there's potentially another red action towards your end. In the medium term, of course, we're managing more towards dollar NII and in the long term, obviously, our largest risk is actually to rapidly declining rate. So we're taking proactive measures to make sure we're positioned for the long term. Okay.

Speaker 6: and make appropriate business judgments to move forward on individual opportunities. And that's been part of what's given them their low cost base they have today. And a lot of us continue to track the right customers with the right relationship going forward.

<unk> going forward.

Speaker 18: Our next question comes from Matthew Clark with Piper Sandler. Please go ahead.

Our next question comes from Matthew Clark with Piper Sandler. Please go ahead.

Hey, good morning, everyone.

Speaker 19: The first one for me, just on deposit, your deposit cost outlook, kind of beyond the fourth quarter. If the forward curve plays itself out, how quickly do you think you might be able to start cutting deposit costs?

First one for me just on deposit your deposit cost outlook I'm kind of beyond.

The fourth quarter.

Christopher Moral: And doing that next year is going to be more challenging from the revenue standpoint. What are you thinking about in terms of managing or maintaining a positive operating leverage from a positive expense base? I think it's a little early for us to give you 2024 guidance.

If the forward curve plays itself out I guess, how quickly do you think you might be able to start cutting deposit costs.

Speaker 6: which will be a bit of a lag over the near term, but as soon as the Fed starts moving, I think it'll be a function of how fast the Fed starts moving. So when race fell precipitously and rapidly in 20, the bank reacts is pretty well, and obviously it'll be a function of how and why the Fed moves as to how we'll react and lag on the next turn.

So theres going to be a bit of a lag over the near term, but as soon as the fed starts moving I think it'll be a function of how fast the fed starts moving so when.

Rates fell precipitously and rapidly in 'twenty, the bank reacted pretty well and obviously it'll be a function of how and why that that news as to how we'll react in lag.

Christopher Moral: We typically do that January call and we'll be happy to follow up them.

Broderick Preston: Our next question comes from Project Preston with UBS. Please go ahead. I'm not using using my full name, I like it. You know, I want to ask a maybe a more pointed question on the buyback now, so you get $254 million in authorization. Capitals obviously robust. The stock is cheap and well below where you bought it back in the past. And you had $220 million left over after paying the dividend, had an income and to free queue alone.

Next turn here.

Speaker 19: Okay, okay. And then on Office CRE, one of your competitors had a couple of new non-performers on the suburban side of office. Are you seeing any performance differences within your office portfolio as it relates to suburban versus central business district?

Okay, Okay, and then on.

Office CRE one of your competitors had a couple of.

New non performers on the suburban side of office are you seen any.

Performance differences within your office portfolio as it relates to suburban versus central business District.

Yeah.

Broderick Preston: So would you consider using the full amount in the fourth quarter? Well, as I said earlier, you know, we're well, we're opportunistic and so we don't really have any specific sort of like a direction that we have to be doing it in a one quarter or not. And we'll see how, you know, what the prices and how things go. And one thing you can be rest assured. East West banks always show this friendly and you know, we always do the right thing at the right time. And whatever that makes sense, we'll do, we'll go according to what we think is the best. Got it. Okay.

Christopher Moral: So would you consider using the full amount in the fourth quarter? Well, as I said earlier, you know, we're well, we're opportunistic and so we don't really have any specific sort of like a direction that we have to be doing it in a one quarter or not. And we'll see how, you know, what the prices and how things go. And one thing you can be rest assured. East West banks always show this friendly and you know, we always do the right thing at the right time. And whatever that makes sense, we'll do, we'll go according to what we think is the best. Got it. Okay.

Speaker 4: Yeah, you know, Matthew, we actually don't have much exposure at all for any kind of central business district quite honestly. And you can see that reflected really with the loan sizes, right? As far as the size of the loans, if it's granular, they're smaller, they're smaller properties. So based on that, I would say the most of our is really more kind of suburban or non-kind of CBD.

Yes.

Matthew we actually don't have much exposure at all for any kind of central business district quite honestly and you can see that reflected really with the loan side, that's right as far as the size of the loan it's granular for a smaller and smaller properties. So based on that I would say that.

The model is really more kind of suburban non non CBD.

Speaker 4: With that said, I would say as we continue to come through the portfolio, you know, although there are loads that we are working out with clients overall, we're comfortable with the grades, we're comfortable with the strategies, and there's no major difference that we're seeing when a sector or region deals.

With that said I would say as we continue to come to the portfolio.

Although there are loans that we are working out with clients overall, we're comfortable with the grades were comfortable with the strategy and there was no major difference that we're seeing one sector or region geographically.

Broderick Preston: And then I didn't have a follow up as a multi part kind of question. Wanted to ask how much of the bank's loan portfolio was snacks and of that, what amount is the bank the lead underwriter on. And then also, I don't know if Chris or Irene would have this, you know, do you happen to have what the reserve on the office portfolio is? Yeah, Brody. So as of 930, we held 2.4 billion that we have purchased from others.

Irene Oh: And then I didn't have a follow up as a multi part kind of question. Wanted to ask how much of the bank's loan portfolio was snacks and of that, what amount is the bank the lead underwriter on. And then also, I don't know if Chris or Irene would have this, you know, do you happen to have what the reserve on the office portfolio is? Yeah, Brody. So as of 930, we held 2.4 billion that we have purchased from others.

Our next question comes from Timur <unk> with Wells Fargo. Please go ahead.

Speaker 1: Our next question comes from Timor Breziler with Les Fargo. Please go ahead.

Hi, good morning.

Speaker 20: Two big picture questions for me, maybe for Dominic, just on the timing of the buyback. I mean, how much of that is symbolic in nature? It's a question that seems like you get every single conference call, and I'm just wondering announcing it here. How much does that speak to your confidence in navigating the current critical?

Two big picture questions for me, maybe for Dominic just on the timing of the buyback I mean, how much of that is symbolic in nature. It's a question that it seems like you get every single conference call and I'm, just wondering announcing it here how much does that speak to your confidence in navigating the current credit cycle.

Broderick Preston: As of 930, we're also the lead on 900 million syndication, 300 of which we've participated out to others. And I think your next question, although you squeeze in three questions, Brody, I want to comment on that on office. So we increase the reserve for office. Total reserve for office was 230 as of 930, or from 190 as of 630. And I'll just share that half of that continues to be qualitative factors versus quantitative reserve that we need for the, as we look at the portfolio and the economic outlook and the portfolio credit quality. So we continue to monitor this and make sure that our reserve is building as we think is appropriate given the environment.

Irene Oh: As of 930, we're also the lead on 900 million syndication, 300 of which we've participated out to others. And I think your next question, although you squeeze in three questions, Brody, I want to comment on that on office. So we increase the reserve for office. Total reserve for office was 230 as of 930, or from 190 as of 630. And I'll just share that half of that continues to be qualitative factors versus quantitative reserve that we need for the, as we look at the portfolio and the economic outlook and the portfolio credit quality. So we continue to monitor this and make sure that our reserve is building as we think is appropriate given the environment.

Uh huh.

Speaker 19: I don't quite...

I don't quite.

Sure.

Speaker 21: Irene and Chris Tuchier, the question I didn't quite exactly heard it. Yeah, maybe I'll start.

Irina interested to hear the question I didn't quite exactly.

Maybe I'll start.

Speaker 4: to answer your question. Look, I mean, I think as we look at

To answer your question look I mean, I think as we look at the uses of capital highest and best.

Speaker 4: The use of capital, highest and best is the capital. Also, the growth of the capital, the confidence that we have the capital continue to grow, not just quarter by quarter, but if we look mostly here, this is part of our thought, since quite kindly, just where the capital level are at. So I think it answered your question. Yes, we do think it is a commentary on kind of the strength of where we see the franchises and what will happen with our capital.

Our capital and also the growth of the capital the confidence that we have the capital continue to grow not just quarter by quarter, but if we look multiyear. Yes. This is part of our thoughts and quite candidly just where the capital levels are at so I think in answer to your question. Yeah. We do think it is.

Commentary on kind of the strength of where we see the franchises.

And with our capital level.

Speaker 20: Okay, that's great. And then maybe just talk to the recent management changes and how that relates to your thinking on succession planning.

Okay. That's great and then maybe just talk to the recent management changes and how that relates to your thinking on succession planning.

Ebrahim Poonawala: Our next question comes from Ebrahim Poonawala with Bank of America, please go ahead Good morning I guess maybe Dominic for you so as we think about you have a lot of excess capital, a lot of banking peers are pulling back, just give us a sense of customer demand as we think about lending on the commercial side and how you are approaching are you pulling back in certain areas, just give us a sense of the growth opportunity, our beat market share driven or just customer demand driven that you are seeing today Well our priority has been mainly focusing on taking good care of our customers, now as you can see you know actually back in March some of our other formal competitors you know were really hurting their customer in a big way so one of the things that East West offers is stability and consistency, so we have frankly some really good commercial real estate clients that year in and year out have been banking with us for decades, that went through cycles of various economic conditions and actually have done really well in fact whenever there is a down cycle they tend to do better and when there are customers like that they find really great opportunities, we step up and take good care of them and make sure they get the financing needs but we are not there chasing down every other customers who are fleeting other banks and things like that, so obviously as we all know the interest rate is relatively high level and there are not that many great deals out there and also on the CNI side many of our very strong customers are not out there making substantial investments so in the same point of where are we today that we got plenty of capital to be deployed, we are able to continue to take very good care of our customers for their needs but on the other hand our customers are not out there making very aggressive you know purchases or acquisitions that require a whole lot of additional line increase and so forth so with that I think that what I would say that the growth is relatively somewhat stable and I don't expect something dramatic just because of the market disruption that happened back in March but secondly I do to you that we are getting more increase from customers from other banks, from you know banks have felt or banks that currently are not doing well, their customers are making increase or e-swears, we are prudently taking these new customers one at a time we don't want it to just quickly and then start bringing too many on and then just causing you know indigestion for ourselves so we are just prudently taking them on one at a time and then we see that in the next few years in general the market is somewhat more favorable to East West, simply because of the current competitive landscape.

Dominic Ng: Our next question comes from Ebrahim Poonawala with Bank of America, please go ahead Good morning I guess maybe Dominic for you so as we think about you have a lot of excess capital, a lot of banking peers are pulling back, just give us a sense of customer demand as we think about lending on the commercial side and how you are approaching are you pulling back in certain areas, just give us a sense of the growth opportunity, our beat market share driven or just customer demand driven that you are seeing today Well our priority has been mainly focusing on taking good care of our customers, now as you can see you know actually back in March some of our other formal competitors you know were really hurting their customer in a big way so one of the things that East West offers is stability and consistency, so we have frankly some really good commercial real estate clients that year in and year out have been banking with us for decades, that went through cycles of various economic conditions and actually have done really well in fact whenever there is a down cycle they tend to do better and when there are customers like that they find really great opportunities, we step up and take good care of them and make sure they get the financing needs but we are not there chasing down every other customers who are fleeting other banks and things like that, so obviously as we all know the interest rate is relatively high level and there are not that many great deals out there and also on the CNI side many of our very strong customers are not out there making substantial investments so in the same point of where are we today that we got plenty of capital to be deployed, we are able to continue to take very good care of our customers for their needs but on the other hand our customers are not out there making very aggressive you know purchases or acquisitions that require a whole lot of additional line increase and so forth so with that I think that what I would say that the growth is relatively somewhat stable and I don't expect something dramatic just because of the market disruption that happened back in March but secondly I do to you that we are getting more increase from customers from other banks, from you know banks have felt or banks that currently are not doing well, their customers are making increase or e-swears, we are prudently taking these new customers one at a time we don't want it to just quickly and then start bringing too many on and then just causing you know indigestion for ourselves so we are just prudently taking them on one at a time and then we see that in the next few years in general the market is somewhat more favorable to East West, simply because of the current competitive landscape.

Speaker 15: Oh, that in fact, I think this is always at the east-west.

Oh.

In fact I think this is.

Always at East West banks.

Speaker 15: sort of like a long-term plan, leadership development, succession planning, and we're very pleased, in fact, that we're able to get Chris to join us in the CFO positions, and which allow us to get Irene to rotate to a very important position to be our chief risk officer.

Sort of like long term plan.

On leadership development and succession planning.

And you know we are very pleased in fact that.

We are able to get Chris to join us in the CFO position.

Which allow us to.

Get Irene to rotate to a very important position to be our chief risk officer.

Speaker 10: We feel that as our organization can change a grow.

We feel that our organization continues to grow.

Speaker 15: You know, it's going to be very important for us to make sure that we have very, very solid and strong leadership.

Going to be very important for us to make sure that we have some very daily.

Solid and strong leadership, both in the finance area and also in the risk area. We can think of any better person that can fill that chief risk officer job going forward and Irene and also thank goodness, Chris came in and shortly and Aflac has been wounded.

Speaker 15: both in the finance area and also in the risk area. We can't think of any better person that can feel that chief risk officer job going forward than Irene and also thank goodness Chris came in and shortly and act like he's been moonlighting at East West for years.

Lighting at East West will use so this had been all working out pretty good for us because.

Speaker 15: So this has been all working out pretty good for us because I think we strengthened our...

I think we strengthen our.

Speaker 15: Executive Leadership Death at East West, and this is gonna be planning good for us for many years to go.

Executive leadership.

At East West and it's going to be plenty good for us for many years to go.

Yeah.

Speaker 18: Our next question comes from Gary Denner with DE David Sonsiska.

Our next question comes from Gary Tenner with D. A Davidson. Please go ahead.

Thanks, Good morning.

Speaker 22: Thanks, good morning. Good morning. As it relates, first to your comments about kind of planning, longer term. I'm wondering if there were any additions to the interest rate swap book, which I think is $5 billion as of June 30, because the quick map, which like the headwind there was maybe $10 or $12 million higher or quarter over quarter versus the second quarter. So thinking about that, I'll view that going forward.

Alright.

As it relates first to your comments about kind of planning longer term I'm wondering if there are any additions to the interest rate swap book, which I think is $5 billion as of June 30, due to the quick map, which like the headwind there was maybe 10 or $12 million higher quarter over quarter versus the second quarter. So thinking about that what that will do that going forward.

Speaker 6: Sure, yeah, we did add a total of 750 for the quarter, 250 of which Irene had mentioned on the last earning fall. Another 500 that came after that. And we've done a further 250 just for transparency here in the fourth quarter.

Sure, Yes, we did add a total of 750 for the quarter $2 50 of which Irene had mentioned on our last earnings call. Another 500 that came after that and we've done a further $2 50, just for transparency here in the fourth quarter to.

Speaker 6: to your board start date. Yeah, with a forward start. So we're looking at essentially protecting against that downside risk as a previous caller alluded to. The risk that the Fed moves precipitously downward, we're sort of protecting ourselves against that profile.

Starting with <unk>.

A forward start so we're looking at essentially protected against that downside risks.

The previous caller alluded to.

Or is that the fed moves precipitously downward, we're sort of protecting ourselves against that profile. The total cost collectively of all of the swaps for the quarter was $24 million, which is to say our income would have been $24 million higher had we not put those in place, but we think that's prudent and appropriate protection.

Speaker 6: The total cost collectively of all of the swaps for the quarter was 24 million, which is a day our income would have been $24 million higher as we not put those in place, but we think that's prudence and appropriate protection going forward. That's costing us currently or costs us in the quarter 14 basis points to the NIM, but we think that they reasonable price to pay for that long-term insurance that we're putting in place.

Going forward, that's costing US currently your cost us in the quarter 14 basis points to the NIM, but we think that's a reasonable price to pay for that long term insurance that we're putting in place.

Speaker 22: Right, I appreciate that. And just remind me, in your loneal slide, that's just 41% fixed and hybrid and fixed, is that adjusted for the swaps or adjusted is a little over?

Alright, I appreciate that and just remind me in your.

Our loan yield slide.

That shows 41% fixed and hybrid and fixed is that adjusted for the swaps or adjusted is a little over 50%.

Speaker 6: It is not a W. The 14 514 numbers are the actual underlying loan and the swap are an overlay to that.

It is not in the 14 514 numbers are the actual underlying loan and the swaps are an overlay to that.

Speaker 6: And again, keep in mind that some of the swaps that I re-enmentioned the most recent ones have all been forward starting. So there's a bit of a lag there before they'll take effect, but there's obviously...

And again keep in mind that some of the swaps as Irene mentioned the most recent ones have all been forward, starting so theres a bit of a lag there before the big effect, but there's obviously.

A component.

Speaker 18: Next question comes from Chris Negratty with KBWP's Grants.

Our next question comes from Chris Mcgratty with <unk>. Please go ahead.

Speaker 22: Great. Maybe for the team, you talked about capital, the news of capital a lot. The buybacks seemingly, I think the market likes that. What about an appetite to reposition a portion of the bond portfolio given the move in reverse?

Great.

Maybe for the team.

You talked about capital use of capital a lot the buybacks seemingly I think the market likes that one.

Irene Oh: I'll let our chief risk officer address that one. Thank you, Chris. When we look at that, honestly, there really aren't any drivers one way or another or sector. It is really pretty broad base. As I mentioned in the premier of remarks, we continue to monitor the portfolio very carefully and as appropriate, given kind of where we start, we do expect that. There will be some kind of increases in the classified and the clear slides asset ratios, given the very, very low bases those are at all nights at.

About an appetite to reposition a portion of the bond portfolio.

Given the move in rates.

Speaker 6: I think we're always looking at the right portfolio strategies. And I think we're going to be looking at our cash positions, our portfolio strategies, and our growth dynamics as we look here at the fourth quarter going into planning for next year. And we'll take all of that into consideration. And I think as Dominica said, we're shareholder friendly. We'll do the right thing. But we'll be very thoughtful about what that right thing should be. Take all expenses to put it active. FIFA played make some contact ideas very well.

But I think we're always looking at the right portfolio strategies and I think we're going to be looking at our cash positions our portfolio strategies and our growth dynamics as we look.

The fourth quarter going into planning for next year, and we will take all of that into consideration and I think as Dominic said, we're shareholder friendly and we'll do the right thing, but we'll be very thoughtful about what that right thing should be.

Okay, great. Thanks, Chris and then.

David Rochester: Our next question comes from Dave Rochester with Compost Point. Please go ahead. Hey, good morning everyone and Irene and Chris can grasp on the new roles. I know you mentioned earlier on the expense front for next year, but just a bigger picture. Is there anything we need to watch out for any big ticket items, either on the regulatory side or systems upgrades or anything like that that would potentially keep that expense growth rate elevated next year. Yeah, I don't think so, Dave. I mean, obviously we have the special assets and the FDIC special assets, but that will impact everyone in the industry.

Speaker 23: A lot of questions about office and maybe by the market, but Dominic.

A lot of questions about office, maybe by the market, but Dominic.

David Rochester: But nothing particular. Okay, great.

Speaker 23: Do you think that's where we should be focusing? I mean, we've seen some CNI credits from each time your peers go sideways this quarter. I guess if you were to kind of stack rank where you're most worried about credit going into the next year, what would you, ooh.

Do you think that's where the we should be focusing I mean, we've seen some C&I credits for me some of your peers go sideways this quarter.

I guess, if you were to kind of stack rank, where you're most worried about credit going into next year like what would you what would you say.

Speaker 15: Right now I'm not too concerned about much anything, frankly. I'm a credit perspective. We actually, in putting a shape, you know, I mean, we do have a slight picked up in terms of charge off, but that's really comparing relatively, I mean, almost like a...

Right now I'm not too concerned about much anything frankly, I'm a credit person.

<unk>, we actually put.

Pretty good shape.

I mean, we do have us slight picked up in terms of charge offs, but that's really compared with relatively.

Most like.

Speaker 10: no charge of at all for the last few quarters. So I think that we just kind of normalize at this point. At this stage, I really, I mean, if I look at the overall credit portfolio, I really haven't seen much that, that, uh,

No charge offs at all for the last few quarters. So I think that we just kind of normalized at this point at.

David Rochester: And then as a follow up on the margin. Chris, it sounded like you mentioned maybe seeing a little bit of an impression in your term. Correct me if I'm wrong, but you guys also highlighted a pretty big deceleration and the increase in deposit costs with the spot barely up. From the quarter average. So just wondering, you know, absent any fed rate changes. Could you actually see them stabilized in your term, since you'll continue to benefit from earning assets, repricing higher. And, you know, are you seeing that potentially drives and then stabilization and growth into 2024?

Christopher Moral: And then as a follow up on the margin. Chris, it sounded like you mentioned maybe seeing a little bit of an impression in your term. Correct me if I'm wrong, but you guys also highlighted a pretty big deceleration and the increase in deposit costs with the spot barely up. From the quarter average. So just wondering, you know, absent any fed rate changes. Could you actually see them stabilized in your term, since you'll continue to benefit from earning assets, repricing higher.

At this stage I agree I mean, if I look at the overall credit portfolio I really haven't seen much.

<unk>.

Speaker 15: that I would say really got me concerned. I mean, I will reflect back, you know, five years ago, six years ago, I mean, it's all in gas portfolio that we have.

That I would say beauty got any concern I mean I would reflect back.

Five years ago six years ago.

Oil and gas portfolio that we had was not very good.

Speaker 15: was not very good. And so we had a little bit of charge off, but you know the nice thing about having a very diverse portfolio that we have.

And so we've had a little bit of charge offs, but the nice thing about having a very diverse portfolio that we have.

Christopher Moral: And, you know, are you seeing that potentially drives and then stabilization and growth into 2024? As they look to the fourth quarter, I certainly see the mix. Should we be able to continue the deposit growth from our customers that we're seeing as providing some lift to that compression risk. That haven't been said, if there's another fed hype, there'll probably be some repricing and existing deposits that will work against us. So those are the dynamic that are at play, but I think you capture the spirit of remarks well.

Speaker 15: is that despite the fact that we have some challenges with our oil and gas portfolio, the factors with you and American record earnings simply because everything else we're doing so.

Is that despite the fact that we have some challenges with our oil and gas portfolio.

David Rochester: As they look to the fourth quarter, I certainly see the mix. Should we be able to continue the deposit growth from our customers that we're seeing as providing some lift to that compression risk. That haven't been said, if there's another fed hype, there'll probably be some repricing and existing deposits that will work against us. So those are the dynamic that are at play, but I think you capture the spirit of remarks well. Great. Thanks. Yes.

The fact is we still add them they can record earnings simply because.

Everything else, we're doing so well so.

Speaker 10: So that one particular industry couldn't hurt as much. So when I look at CRE right now, office building, a lot of people have their eyes on it and I'm pretty sure at some point, you know, we may take a hit here and there. It's just that overall portfolio is not big enough. The size of these portfolio, the size of loan.

That one particular industry couldnt hurt as much so when I look at <unk> right. Now also students a lot of people have their eyes on it and I am pretty sure at some point, we may take a hit here and there.

<unk> overall portfolio is not big enough to size of this portfolio.

David Rochester: Maybe I'll just add, I mean, if you look at the third quarter and the trajectory of the men and this helps kind of inform our thoughts around this. The name for July was 345. And then for August and September, we each got a little bit better, 350 for both quarters, so months, excuse me. So that helps us kind of frame where we're at and why we're comfortable with the stabilization as we move.

Christopher Moral: Great. Thanks. Yes. Maybe I'll just add, I mean, if you look at the third quarter and the trajectory of the men and this helps kind of inform our thoughts around this. The name for July was 345. And then for August and September, we each got a little bit better, 350 for both quarters, so months, excuse me. So that helps us kind of frame where we're at and why we're comfortable with the stabilization as we move.

Size of loans.

Speaker 15: The average size, as you can see, is so small, and the LTV is so low, and so therefore, at the end of the day, and the earnings for everything else is so high. And I think that, or in all, we should be increasing. So at this stage right now, I'm still not concerned. And now I would tell you though, I always expect that by the second quarter, the third quarter, we'll be going through recession. And then. That's you. Is the 14 year old or whether it's?

The average size as you can see so small and the LTV is so low and so therefore at the end of the day and the earnings. So everything else is so high and I think that all in all we should be in good shape. So at this stage right now I'm still not concerned.

I would tell you though.

I always expect.

By the second quarter to third quarter will be go through recession.

That's what I expected.

Manan Gosalia: The next question comes from Manan Gosalia with Morgan Stanley, please go ahead Hi, good morning. I wanted to ask about just a little bit more color on the funding side. It looks like you're getting some nice long growth. And you know, sounds like you're going to continue to lean in here. Yeah, I think you noted that a lot more care to pause a grow. So this quarter is coming from money market and time deposits.

Speaker 15: a year, a year and a half ago. It didn't turn out. And would it be like six months or now? Or is that actually we're exactly in the soft lending? Who knows? But the way I looked at it is it doesn't really matter whether it's a recession in soft lending. Our position is that East West will continue to stay true to our philosophy, which is having a varied, diverse portfolio and having a strong customer base. And up.

A year year and a half ago.

Again, it Didnt turn out and would it be like six months from now or is that actually we are exactly in the soft lending.

But the way I looked at it is that it doesn't really matter what does a recession is soft lending our position is that east west will continue to stay true to our philosophy, which is having a very diverse.

Portfolio and having.

A strong customer base.

Manan Gosalia: Is that where you're going to be focused on bringing in new funding to fund the loans? I think we're going to be looking across the board. And frankly, we've seen success across the board. In fact, on the consumer side, we're expecting to grow deposits driven by some initiatives we have internally with business checking accounts on small and medium businesses as well as consumers as well as a further push to better integrate our new mortgage customers into our checking ecosystem.

And.

Speaker 15: And this is how we make sure that we are at the end of the day, relatively speaking, we always end up doing that at the end of the day.

This is how we make sure that we at the end of the day relatively speaking, we always end up doing better at the end of <unk>.

This concludes our question and answer session I would like to turn the conference back over to Dominic <unk> for any closing remarks.

Speaker 18: This concludes our question and answer session. I would like to turn the conference back over to Dominic King.

Speaker 15: Well, I just want to thank everyone for listening to our call today and I'm looking forward to talking to all of you again in January .

Well I just want to thank everyone for listening to our call today and I am looking forward to talking to all of you again.

Manan Gosalia: So I think we'll see consumer lifts that won't necessarily be at the higher end cost, but we're also expecting to grow commercial balances. And as Dominic alluded to, there have been opportunities for us to be selective and proactive with new customers to the bank. And we're obviously prioritizing new customers that come with significant deposits at the right price point.

In January .

Jim.

Speaker 18: The conference has now concluded. Thank you for attending today's presentation. You may all love this.

The conference has now concluded. Thank you for attending today's presentation you may all now disconnect.

Manan Gosalia: Just maybe on that. I also want to add that for, you know, our commercial clients, the new commercial clients we brought in that have primary offering accounts that transfer over the eastward bank is going to take some time to set up the cash management online banking and whatnot. And in order to have a fully operated is going to take a few months. So therefore, those are going to be a gradual increase when it comes to the non-interest bearing deposits. Got it again.

Dominic Ng: Just maybe on that. I also want to add that for, you know, our commercial clients, the new commercial clients we brought in that have primary offering accounts that transfer over the eastward bank is going to take some time to set up the cash management online banking and whatnot. And in order to have a fully operated is going to take a few months. So therefore, those are going to be a gradual increase when it comes to the non-interest bearing deposits. Got it again.

Manan Gosalia: And then maybe just focus on the CDs and time deposits. It looks like you're seeing some good traction there. You know, I think I can see online that you're offering about a four and a half percent rate. I guess it is slightly below market, given where other banks are. Can you talk about how you're able to do that? Is it because of the longer relationships you have with your depositors? Is it relationship pricing elsewhere in the services you offer?

Christopher Moral: And then maybe just focus on the CDs and time deposits. It looks like you're seeing some good traction there. You know, I think I can see online that you're offering about a four and a half percent rate. I guess it is slightly below market, given where other banks are. Can you talk about how you're able to do that? Is it because of the longer relationships you have with your depositors? Is it relationship pricing elsewhere in the services you offer?

Manan Gosalia: I think we've had success both with our rack rate rates, which you're referring to and also on selected new opportunities were able to look at exceptions and opportunities to bring folks in on an individualized basis. And I think that's one of the hallmarks of east west is they're able to look at the entire relationship and make appropriate business judgments to move forward on individual opportunities. And that's been part of what given them their low cost base they have today and a lot of continue to track the right customers with the right relationship going forward.

Christopher Moral: I think we've had success both with our rack rate rates, which you're referring to and also on selected new opportunities were able to look at exceptions and opportunities to bring folks in on an individualized basis. And I think that's one of the hallmarks of east west is they're able to look at the entire relationship and make appropriate business judgments to move forward on individual opportunities. And that's been part of what given them their low cost base they have today and a lot of continue to track the right customers with the right relationship going forward.

Matthew Clark: Our next question comes from Matthew Clark with Piper's family. Please go ahead.

Matthew Clark: Hey, good morning everyone. The first one for me just on deposit your deposit cost outlook can be on the fourth quarter. If the forward curve plays itself out, I guess how quickly do you think you might be able to start cutting deposit costs? So there's going to be a bit of a lag over the near term, but as soon as the Fed starts moving, I think it'll be a function of how fast the Fed starts moving.

Matthew Clark: So when race fell precipitously and rapidly in 20, the bank reacts is pretty well. And obviously, it'll be a function of how and why the Fed moves as to how we'll react and lag on the next turn here.

Matthew Clark: Okay, okay, and then on office theory, one of your competitors had a couple of new non performers on the suburban side of office. Are you seeing any, you know, performance differences within your office portfolio as it relates to suburban versus central business district. Yeah, you know, Matthew, we actually don't have much exposure at all for any kind of central business district, quite honestly, and you can see that reflected really with the loan sizes, right, as far as the size of the loans, if it's granular, they're smaller, they're smaller properties.

Irene Oh: Okay, okay, and then on office theory, one of your competitors had a couple of new non performers on the suburban side of office. Are you seeing any, you know, performance differences within your office portfolio as it relates to suburban versus central business district. Yeah, you know, Matthew, we actually don't have much exposure at all for any kind of central business district, quite honestly, and you can see that reflected really with the loan sizes, right, as far as the size of the loans, if it's granular, they're smaller, they're smaller properties.

So based on that, I would say the most of ours is really more kind of suburban or non kind of CDD. With that said, I would say as we continue to come through the portfolio, you know, although there are loans that we are working out with clients overall were comfortable with the grades, was comfortable with the strategies, and there's no major difference that we're seeing when it's sector or region geographically.

Irene Oh: So based on that, I would say the most of ours is really more kind of suburban or non kind of CDD. With that said, I would say as we continue to come through the portfolio, you know, although there are loans that we are working out with clients overall were comfortable with the grades, was comfortable with the strategies, and there's no major difference that we're seeing when it's sector or region geographically.

Timur Braziler: Our next question comes from Timor Braziler with Fargo, please go ahead. Hi, good morning, two big picture questions for me, maybe for Dominic, just on the timing of the buyback, I mean, how much of that is symbolic in nature, it's a question that it seems like you get every single conference call and I'm just wondering announcing it here, how much does that speak to your confidence in navigating the current critical. I don't quite, Irene and Chris, did you hear the question? I didn't quite exactly heard it.

Dominic Ng: Maybe I'll start to answer your question. Look, I mean, I think as we look at the use of capital, highest and best is the capital. Also, the growth of the capital, the confidence that we have the capital continue to grow, not just quarter by quarter, but if we look mostly here, this is part of our thoughts and quite kindly, just where the capital levels are at. So I think in answer to your question, yes, we do think it is a commentary on kind of strength where we see the franchises and what will happen with our capital level.

Dominic Ng: Okay, that's great.

Dominic Ng: And then maybe just talk to the recent management changes and how that relates to your thinking on succession planning. Oh, that in fact, I think this is always at the East West Bank's sort of like long-term plan, leadership development, succession planning. And you know, we're very pleased in fact that we're able to get Chris to join us in the CFO positions and which allow us to get Irene to rotate through a very important position to be our chief risk officer.

Dominic Ng: We feel that as our organization continue to grow, you know, it's going to be very important for us to make sure that we have very, very solid and strong leadership, both in the finance area and also in the risk area. We can't think of any better person that can feel that chief risk officer job going forward than Irene. And also thank goodness Chris came in and shortly an act like he's been moonlighting at East West for years. So this has been all working out fully good for us because I think we strengthened our... Executive, Leadership, Death at East West, and it's going to be planning good for us for many years to go.

Gary Tenner: Our next question comes from Gary Tenner with DE Davidson. Please go ahead. Thanks, good morning.

Christopher Moral: As relates first to your comments about kind of planning longer term, wondering if there are any additions to the interest rate swap book, which I think was 5 billion as of 30 because the quick math looks like the headwind there was maybe 10 or 12 million higher quarter of a quarter versus the second quarter. So thinking about that, I'll be back on for sure. Yeah, we did add a total of 750 for the quarter 250 of which Irene had mentioned on the last earning fall, another 500 that came after that.

Christopher Moral: And we've done a further 250 just for transparency here in the fourth quarter. To start with. Yeah, with a forward start. So we're looking at essentially protecting against that downside risk as a previous caller alluded to the risk that the fed moves precipitously downward. We're sort of protecting ourselves against that profile. The total cost collectively of all of the slots for the quarter was 24 million, which is to say our income would have been $24 million higher.

Christopher Moral: Have we not put those in place, but we think that's prudent and appropriate protection going forward. That's costing us currently or cost us in the quarter 14 basis points to the name, but we think that they read more price to pay for that long term insurance that we're putting in place. Yeah, I appreciate that. And just remind me in your loan you'll slide that's that's just 41% fixed and hybrid and fixed.

Christopher Moral: Is that adjusted for the swaps or adjusted is a little over 50%? It is not a job there. Yeah, the 14 514 numbers are the actual underlying loan and the swap earn overlay to that. And again, keep in mind that some of the swap that Irene mentioned, the more recent ones have all been forward starting. So there's a bit of a lag there before they'll take effect, but there's obviously a component.

Christopher Moral: Next question comes from Chris McGrady with KVW. Please go ahead. Great. Maybe for for the team, you talked about capital, music capital a lot. The buybacks seemingly, I think the market likes that. What about an appetite to to reposition a portion of the bond portfolio given the moving rates? I think we're always looking at the right portfolio strategies. And I think we're going to be looking at our cash positions, our portfolio strategies, and our growth dynamics as you look here at the fourth quarter going into planning for next year. And we'll take all of that into consideration. And I think as Dominic has said, we're shareholder friendly, we'll do the right thing, but you know, we'll be very thoughtful about what that right thing should be.

Christopher Moral: Okay, great. Thanks, Chris.

Dominic Ng: And then a lot of questions about office and maybe by the market, but Dominic, do you think that's where we should be focusing? I mean, we've seen some CNI credits from each time your peers go sideways this quarter. I guess if you were to kind of stack rank where you're most worried about credit going into the next year, what would you do? Right now, I'm not too concerned about much anything, frankly, I'm a credit perspective.

Dominic Ng: We actually, in pretty good shape, you know, I mean, we do have a slight picked up in terms of charge-off, but that's really comparing relatively, I mean almost like no charge-off at all for the last few quarters, so I think that we just kind of normalize at this point. And at this stage, I really, I mean, if I look at the overall credit portfolio, I really haven't seen much that I would say really gotten me concerned.

Dominic Ng: I mean, I would reflect back, you know, five years ago, six years ago, I mean, these oil and gas portfolio that we had was not very good. And so we had a little bit of charge-off, but you know, the nice thing about having a very diverse portfolio that we have is that despite the fact that we had some challenges with our oil and gas portfolio, the fact is we still end up making record earnings simply because everything else was doing so well.

Dominic Ng: So that one particular industry couldn't hurt us much. So when I look at CRE right now, office building, a lot of people have their eyes on it, and I'm pretty sure at some point, you know, we may take a hit here and there. It's just that overall portfolio is not big enough, the size of these portfolios, not the size of loans. The average size, as you can see, is so small and the LTV is so low.

Dominic Ng: And so therefore, at the end of the day, and the earnings for everything else is so high. And I think that all in all, we should be appreciate. So at this stage right now, I'm still not concerned.

Dominic Ng: And now I would tell you though, I always expected by the second quarter, the third quarter, we'll be going through recession. That's what I expected a year, a year and a half ago. It didn't turn out. And would it be like six months on now? Or is that actually we're exactly in the soft landing? Who knows? But the way I looked at it, it doesn't really matter whether it's a recession or soft landing.

Dominic Ng: Our position is that East West will continue to stay true to our philosophy, which is having a very diverse portfolio and having a strong customer base. And this is how we make sure that we at the end of the day, relatively speaking, we always end up doing that at the end of the day.

Operator: This concludes our question and answer session.

Dominic Ng: I would like to turn the conference back over to Dominiken for any closing remarks. Well, I just want to thank everyone for listening to our call today, and I'm looking forward to talking to all of you again in January. Thank you.

Operator: The conference has now concluded.

Operator: Thank you for attending today's presentation.

Operator: You may all love us.

Q3 2023 East West Bancorp Inc Earnings Call

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