Q1 2025 East West Bancorp Inc Earnings Call
Hello and welcome to the East West Bancorp's first quarter 2025 earning conference calls. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one Please note, this event is being recorded to be recorded.
I would now like to turn the conference over to Adrienne Atkins, Director of Investor Relations. Please go ahead.
Adrienne Atkins: Thank you, Operator. Good afternoon, and thank you everyone for joining us to review East West Bancorp's first quarter 2025 financial results.
Adrienne Atkins: With me are Dominic Ng, Chairman and Chief Executive Officer, Christo Moral Niles, Chief Financial Officer, and Irene Oh, Chief Risk Officer [inaudible]
Adrienne Atkins: This call is being recorded and will be available to reply on our investor relations website.
Adrienne Atkins: The slide deck reference during this call is available on our Investur Relations site.
Adrienne Atkins: Management may make projections or other forward-looking statements, which may differ materially from the actual results due to a number of risks and uncertainties.
Manage, but May discuss, non-GAAP financial measures. [inaudible]
Adrienne Atkins: For a more detailed description of the risk factors and the reconciliation of gap to non-GAAP financial measures, please refer to our filings with the Securities and Exchange Commission, including the form 8K file today. I will now turn the call over to Dominic.
Dominic Ng: Thank you, Adrienne. Good afternoon, and thank you for joining us for our first quarter earnings call.
I'm pleased to report strong first quarter results . . .
Dominic Ng: We continue to grow the bank and report it another quarter of record revenue.
Longrose was solid [inaudible]
Dominic Ng: We grew in a period long 1% quarter of a quarter to a new record level of $54 billion.
A relationship-driven business model helped support it.
Continue residential mortgage and commerce over the state lending
Dominic Ng: On the deposit side, we execute another successful Lunar New Year CD campaign and further optimize outpricing this quarter while continuing to add customers.
We also deliver another record quarter of sea income [inaudible]
These were up 8% [inaudible]
Driven by strong customer activity across the board [inaudible]
Dominic Ng: We continue to see opportunity to grow and diversify our fee revenues.
Asset quality has remained solid and
Dominic Ng: First Quarter Analyze Net Charge Offs, Total, 12 Faces Point, or 15 Million [inaudible]
Dominic Ng: The non-performing assets ratio decreased to basis point from the end of Q4 to 24 basis point at quarter end [inaudible]
Dominic Ng: Given the recent increases, increase in economic uncertainty, we've both shared our allowance levels.
Bringing out total allowance for loan loss to 1.35% [inaudible]
Dominic Ng: The strength of our diversified balance she continued to show this call.
allowing East West to continue to deliver top-tier returns
Dominic Ng: We deliver a near 16% return on tangible common equity and a 1.6% return on average assets.
Dominic Ng: While growing tangible book value per share, 3% quarter over quarter and 15% year over year.
Dominic Ng: Now, before I hand a call over to Chris, I'd like to take a moment to talk about the current economic environment.
tariffs are not new for East West or our customers [inaudible]
We have been taking tariffs into consideration since 2017
Dominic Ng: Many of our clients decided to diversify their supply chains way back then and the solidarity at those efforts during COVID-19 pandemic.
Dominic Ng: Since that time, we have seen our customers increase investments in the US and other markets.
Dominic Ng: All the while, East West engaged with our customers and continued to grow [inaudible]
Dominic Ng: Over the past six months, we have seen our customers reposition themselves for range of potential outcomes.
Dominic Ng: In the past several weeks, our teams have spent a lot of time with our customers talking about their business plans [inaudible]
Dominic Ng: They are proving to be forward-thinking, nimble, and are mostly staying ahead of the curse.
Dominic Ng: Our experience has taught us to confront challenges from a position of strength [inaudible]
We enter the second quarter with a diversified balance sheet.
A granular and strong consumer and commercial banking network.
Top tier profitability [inaudible]
Dominic Ng: Best in class, operating efficiency, and amounts to highest levels of capital in the banking industry.
Dominic Ng: We have the capital and balance its flexibility to take care of our customers in any environment.
and are well positioned to capitalize on any opportunities ahead.
Dominic Ng: I will now try to call over to Chris to provide more details on our first quarter financial performance. Chris, thank you, Dominic. Let me start with long growth on slide four. We had over half a billion of loans for the balance sheet in 21. [inaudible]
Dominic Ng: The man for residential mortgage proved durable and new originations continue to be
Dominic Ng: Even with the current elevated rates, we continue to see steady mortgage registration activity in Q1 and have a strong pipeline going into the second quarter.
Dominic Ng: As Dominic mentioned, we also grew commercial real estate balances this past quarter as we continue to support our long-standing relationship clients and select multi-family projects.
C&I Balances, also a good modesty in Q1. [inaudible]
Lightly reflecting the pull forward activity we saw off the Q4.
Dominic Ng: Overall, we are encouraged by the lending trends we have seen so far, even into April .
Dominic Ng: Moving on to slide five, we strategically optimize our deposit pricing strategy to lower our overall funding costs.
Dominic Ng: We successfully retained our Lunar New Year CD Bouncers and incrementally captured some additional CD market share, even at much lower pricey [inaudible]
Dominic Ng: Average DDA balances, money market balances, and time balances, all group order of a quarter. We continue to expect customer deposit growth, we'll fund all of our long growth this year.
Dominic Ng: Overall, we're encouraged by the deposit trends we have seen this year, even in-table.
Slide six covers are net interest income. [inaudible]
Dominic Ng: We grew quarterly dollar-engined income to 600 million, up 12 million from Q4 despite two fewer days in the quarter [inaudible]
Dominic Ng: Similarly, we grew our net interest margin by 11 basis points from Q4 to 3.35% in the first work, primarily by decreasing our end-of-period interest bearing deposit costs by 13 basis points. This is the end-of-period interest bearing deposit costs by 13 basis points from Q4 to 3.35% in the first work.
and partly due to day counts.
Dominic Ng: In both cases, Dollar and I.I., and Margin were also assisted by the exploration of some of our legacy hedges
Dominic Ng: Looking back to the start of the cutting cycle, we have decreased intersparing deposit cost by 62 basis points, successfully seeing our 50% data guide, which we've shared in prior quarters.
Dominic Ng: We continue to expect netive income expansion as we go through the battle for the year.
Dominic Ng: Moving on to fees on slide seven, as Dominic mentioned, fee income grew 8% from Q4 to another record level, with growth in four of our five major fee categories.
Dominic Ng: We will remain focused on driving growth in our fee categories and further diversifying our revenue streams. We are encouraged by the pace of growth and fee revenues so far this year.
Dominic Ng: Turning to expenses on slide 8, East West continued to deliver industry inefficiency while investing for future growth. The Q1 efficiency ratio was 36.4% The Q1 efficiency ratio was 36.4%
Dominic Ng: Total operating non-existence was 236 million for the first quarter, including seasonally higher pay
Dominic Ng: Overall, we continue to accept expensive will be in line with our guidance for the year.
Dominic Ng: Now I'll hand the collar with Irene for comments on credit and capital Irene [inaudible]
Irene Oh: Thank you, Krebs, and good afternoon to all of the calls. As you can see on slide 9, our after-calling metrics continue to broadly outperform the industry, with quarterly net charge-offs, Non-Apple loans, and non-performing assets, metrics, all-improving.
Irene Oh: Re-recorded net charge-offs of just 12 basis points in the first quarter or 15 million compared to 48 basis points in the fourth quarter or 64 million Quarter of a quarter, non-performing assets decreased by two basis points to 24 basis points of total assets
as of March 31st, 2025.
Irene Oh: The criticized loans ratio increased during the quarter to 2.3% of loans [inaudible]
Irene Oh: The special mention loans ratio increased eight basis points, quarter over quarter, or the class by loans ratio decreased, increased, excuse me, three basis points to one thirty eight [inaudible]
Irene Oh: We recorded a lower provision for credit losses of 49 million in the first quarter, compared with 70 million for the fourth quarter of 2024. We remain vigilant and proactive in managing our credit threats.
Turning to Slide Ten
Irene Oh: The allowance for credit losses increased $33 billion to $735 billion, or 1.35% of total loans as of March 31st, 2025. We utilized a multi-scenario methodology for the allowance and the increase in the quarter was largely driven by an increase in downside scenario waiting.
Irene Oh: Given the economic uncertainty in early April , 2025, we believe we are adequately reserved for the content of our loan portfolio given the current economic outlook.
Dominic Ng: Turning to slide 11, as Dominic mentioned, are strong capital levels allow us to operate from a position of strength and support our customers in any economic environment.
Dominic Ng: All of East West regulatory and top of the ratios remain well in excess of regulatory requirements for well capitalized institutions and well above regional and national bank averages.
Dominic Ng: East Wells, CET-1 capital ratio stands as a robust 14.3% while the tangible common equity ratio rose to 9.9%.
Dominic Ng: These capital levels place us amongst the best capitalized banks in the industry [inaudible]
Dominic Ng: In the first quarter, East West repurchased approximately 920,000 shares of common stock for 85 million.
Dominic Ng: We currently have 244 million of repurchased authorizations that remain available for future
East West also distributed 85 million to shareholders via quarterly dividends [inaudible]
Dominic Ng: East West Second Quarter, 2025 dividends will be payable on May 16th, 2025 to stockholders of record on May 2nd, 2025. I will now turn the call back to Christopher to show our outlook, Chris. I will now turn the call back to Christopher to show our outlook, Chris. I will now turn the call back to Christopher to show our outlook, Chris.
Chris: Thank you, Irene. On Slide 12, we are re-interreading our folder guts.
We're also providing some additional detail on tax items [inaudible]
Chris: Amonization has tax credit and CR-A investment expenses, a lot expected to be within the range of $70 to $80 million a year. We continue to expect our full year 2025 effective tax rate to be below 23%.
Chris: With that, I will now open the call to questions operator operator.
Speaker Change: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your hand before pressing the keys. To a drier question, you may press star then two.
Speaker Change: Today we ask that analysts please limit themselves to one question and one follow-up. You may then rejoin the queue at any time for additional follow-up questions.
Speaker Change: At this time, Google paused momentarily to assemble our roster [inaudible]
Speaker Change: Today's first question comes from Casey Haire with Autonomous, please go ahead [inaudible]
Casey Hare: Yeah, thanks. Good afternoon, everyone. So, I guess first question, why, why is the N.I.I. God?
Casey Hare: I'm not moving higher. Sounds like lone pipelines are in good shape and you miss up. At this current runway, you're right at the middle of the guide level.
Casey Hare: Sure, and to be honest, we could probably think about that a little bit harder, but the reality is there's a couple of rate cuts baked into the March 31st curve, and since then, probably the outlook is dimmed a little further for three to four cuts. So as we sit here today, we think the current guidance is appropriate and we're comfortable.
Speaker Change: Okay. And then, so, Chris, the deposit beta, as you pointed out, was well ahead of you, whether you were 50% expect didn't cut it.
Casey Hare: Are you, what is, can you sustain that at this level, or is that, is that normalized lower? [inaudible]
Oh, Christopher Moral, Dominic Ng, Adrienne Atkinson
Casey Hare: Yeah, Casey, I think what we're told folks is we've been benefiting from rolling down the hill, particularly with the repricing of our CDs. And so as the forward curve starts to flatten out that positive momentum will start to slow a bit. Nonetheless, we think we'll be above the 50% guide we've given you. Thank you.
Oh, Christopher Moral, Dominic Ng, Adrienne Atkinson
Thank you
Speaker Change: The next question comes from Ebrahim Poonawala with Bank of America. Please go ahead.
Good afternoon, Andy B.
Ibrahim, you might be on mute.
Hi, can you hear me?
Again, there we go. Okay. So on Capitol, I think you brought back.
Speaker Change: In the first quarter at an average price of from in the 90s, given the pullback that we've seen in stocks, I appreciate the macros uncertain just talk to us in terms of [inaudible]
Speaker Change: How much of a ramp up can we see in terms of capital return and buybacks if the cell of continues? Or does the macro make you a little bit more cautious and stay on the sidelines and sit with the excess capital for now? [inaudible]
Speaker Change: So, if I look back over the last six quarter, we purchased $310 million with a stock and an average price of around $72 million.
Speaker Change: So we clearly think the price has value still below where we buy it in Q4 and in Q1 and we'll continue to look at it. But as you know, Ebrahim, we continue to want to position the bank to always be in a position of strength. [inaudible]
Irene Oh: to be in the best position to service and support our customers and to have the flexibility to do as well for shareholders and all environments. So we'll continue to be opportunistic, but as Irene mentioned, we have 244 million available and all the flexibility to consider what's best for our shareholders.
Speaker Change: Got it. And I guess maybe just one big picture question, maybe Dominic for you on client activity. So you've talked about the experience you all have had since 2018.
Irene Oh: It feels the rhetoric, the pushback between US and China is a lot more sort of elevated this time around and I'm just wondering when you think about
Irene Oh: Your customers, their ability to withstand this, like do you think the risks are larger today than what we were faced in 2018-19? And
Irene Oh: Have you seen any deceleration or a pickup in activity ahead of these tariff concerns?
Irene Oh: Well, I think in terms of our clients' perspective who have...
Business that may have a direct
Irene Oh: sort of may would actually be impacted directly by Terrell.
Irene Oh: I would say that back in 2017, it would be a little bit more challenging for them because it would be the first time they really went through this sort of like a...
Surprise with Terror [inaudible]
And so, and then.
Most of them were not as necessary as well prepared [inaudible]
Irene Oh: It took them a few years to get themselves in a position that be able to figure out how to deal with the supply chain. I think in a way, COVID-19 actually accelerate.
Many of their desires to make sure they have a...
Motable Alternative Way
Irene Oh: to continue to do business in terms as either they are imported, you know, of goods from Asia region. So today, well, the tax-
The tariff rate is-
Irene Oh: Particularly for China, very high, and then even for other countries, potentially can be high.
Irene Oh: But I guess all of that will be subject to negotiation.
Irene Oh: So we at East West Bank try not to for too much time focusing on this speculation about what the outcome of what we've done back then.
Irene Oh: You know, in 2017-18 and we pretty much just focusing on working with our client when customer at a time helping these clients that have direct exposure and getting them through. [inaudible]
Irene Oh: And fortunately for us, in fact, as we have said at numerous times in an earnings call that our trade finance portfolio did not suffer any losses.
Irene Oh: during those period of time. And so today, very much to some of the way, we...
Irene Oh: We see at the size at East West Bank that we can actually engage with our customers one at a time.
Irene Oh: In fact, so far we have already talked to over 500 commercial clients and that have sort of exposure due to the newly proposed tariff and we feel pretty good. [inaudible]
Irene Oh: with the discussions with these clients that everyone have a different way to manage it. Some of them actually...
have already served [inaudible]
Irene Oh: Substantial amount of their manufacturing base to either other countries or even some of them in the United States for the last few years There are some that are just holding back shipment for now and then to see how it goes and then there are others who are passing the cost will very much comfortable passing the cost ultimately to the consumers and then to see how it goes and then there are others who are passing the cost will very much
in the U.S. And then there are others that...
who actually, their products are exempted. [inaudible]
from the punitive carrot rates. [inaudible]
Irene Oh: that are currently being proposed. So many of them are all different scenarios, but we talk to each and every one of these customers and work with them to make sure everybody's in good shape. So as of today, what we notice is that for clients
Irene Oh: There are commercial clients that have significant potential adverse impact due to terror, and they equate to about 1% of our total CNI balance before you.
So we feel pretty good what we are today [inaudible]
Irene Oh: And in terms of potential credit laws, as of today, we don't see any [inaudible]
Irene Oh: At this moment, but we continue to work with our clients on a day-to-day basis, continue to help them through and we feel that actually this exercise not only is great for credit risk management for East West Bancorp
Irene Oh: But more importantly, that's how we help build loyalty with our CNI customers.
Irene Oh: And more importantly, I do want to point out that through this process their likelihood we're going to end up gaining more business [inaudible]
Irene Oh: from other banks, because there are other banks who actually are not as familiar how to manage.
Irene Oh: the tariff situation that may potentially trigger disappointment from some of their, you know, high quality clients. So we feel that we may have opportunity going forward in that regard.
Gaurav, thanks for the color dominant. Thanks.
Thank you [inaudible]
Speaker Change: The next question comes from Manan Gosalia with Morgan Stanley , please go ahead [inaudible]
Hi, good afternoon. Dominic, if you can…
Comment on what you just said.
Speaker Change: Does that imply that it's a bigger opportunity for bringing in more clients, getting higher long growth, getting more deposits as soon as this year? Or is that more of a longer term opportunity in your mind?
Speaker Change: I looked at everything more of a longer term perspective, in terms of the current environment is that that
Speaker Change: There are uncertainty out there. So whatever that I project or predicted, I think that sometimes in a few days things change, right? We saw the volatility of the stock market and whatnot. So our position is at number one. [inaudible]
We want to make sure that
Speaker Change: We are in a position of strength. That's why we're very proud that our tangible capital ratios approach ten percent [inaudible]
Speaker Change: And we are planning a liquidity. And so as far as we're in this position
We feel very confident within our control.
We have plenty of, you know, flexibility and authority.
Speaker Change: and very focused like Downsheet that can work with anybody. Now, how would that end up, you know, getting more customers to us this year versus a year from now, two years from now? It all depends on how. [inaudible]
Speaker Change: Everything plays out in the economic environment in the next six to nine months and that is something that somewhat beyond my control.
Speaker Change: God, you're saying that East West has, the Capitol has a balance sheet to work with clients.
Speaker Change: And at the same time, there is an elevated level of risk for the US economy as a whole as well What would God you to pull back on?
on long growth in this environment.
Speaker Change: I'm multiple scenario. I mean, what causes to pull back, say, well, because economic condition, if it dramatically
Go.
Speaker Change: Downward, you know, obviously, you know, there are not going to be that much demand and will be proven and not to even engage with clients to talk about a fantasizing growth strategy, but in fact, if it's going to a recession. So, but all of that. These are what I wouldn't call. I. [inaudible]
Speaker Change: A substantial heightened risk at this point, I would just say that there are uncertainty [inaudible]
because
Speaker Change: No one would know what's going to happen in the next few months. And then that is something that we would just have to wait and see how things turn out. And it's just uncertainty. And that's why the best thing to deal with uncertainty is to be financially small. You know, if you look at it. [inaudible]
The past [inaudible]
3 out of 5 years
We had, you know, from...
You know, Calvin? [inaudible]
Speaker Change: to the regional bank, Silicon Valley bank, you know, crisis, and then to now, you know, this sort of like potential tariffs impact to economy.
Three out of five years. [inaudible]
Speaker Change: We felt really good about our strong capital ratio because we position ourselves [inaudible]
as a very, very strong financial institution.
Speaker Change: We give tremendous confidence to both our commercial and our retail customers [inaudible]
Speaker Change: So that they do not feel panic worrying about East West Bancorp
and that automatically help us down the road.
Speaker Change: getting organic growth momentum. So we'll see how this all plays out, but I feel good about our financial positioning and so but whether how the economic will go up or down or sideways. Thank you very much.
S.B.R. My pay rate. So,
I appreciate that. Thanks so much.
Thank you.
Timor Braziler: The next question comes from Timor Braziler with Wells Fargo. Please go ahead.
Hi, good afternoon.
Speaker Change: East West Expertise, maybe becomes more coveted as complexity starts to increase in cross-border trade versus maybe some of those fees at risk if cross-border activity actually does so.
Speaker Change: So a small portion of the commercial deposit related fees are cross-border, but the reality is the lending fees are domestic, the wealth management fees are domestic, and the derivative activity is tied to our domestic customers. So it's really just the, you know, an FX fees and, you know, obviously the FX user.
Speaker Change: Okay, and then maybe one for Irene, just can you talk us through the Allowance build, the rationale on the CNI side, if there are any specific segments where maybe that allowance was more so applied. And then on CRE, I guess I was a little bit surprised to see that allowance take down quarter and quarter, even though classified for up sequentially.
Yeah, good question. So the increase in the law and
Speaker Change: Braz was largely based on our increasing the waiting for the downsides scenario. As I said in the pair of remarks, we use a multi-scenario for calculating the allowance.
Speaker Change: And we hadn't closed the books yet in early April , so with the fact pattern that was out there and the market disturbance with the tariffs, we increased the downside scenario. The impact of that was multiple. But what we highlighted there for the reserves of the C&I and the increase of seven basis points or 37 million for C&I was a result of that. [inaudible]
Great. Thank you.
Speaker Change: The next question is from Ben Gerlinger with City. Please go ahead Thank you for your time.
Ben Gerlinger: Thanks, good afternoon, appreciate it. We've been taking a minute and you're talking about it.
Ben Gerlinger: Expenses, and then you guys, you have a guide of seven and nine, I think like one queue over one queue bus here is pretty diminishing total change. Just kind of think about how to look at the remainder of the year, the nine months and anytime investments might hit or we should expect from two, three or four queue.
Ben Gerlinger: a better and stronger bank for our customers. And all of those investments continue pace. Some will come in to play in Q2 and Q3 as technology gets implemented in place in service.
Got to the top. And then then we just kind of think [inaudible]
Ben Gerlinger: Holistically, if we're kind of in a vacuum here, no rate cuts, like the first quarter had the impact of lowering
Ben Gerlinger: CD pricing, and the public cost overall, and you also have partial headwind reprieve.
Ben Gerlinger: from the derivatives of our swaps, I should say. But what do you think about it? It's kind of the two P.U.
Speaker Change: It should naturally work higher, they count included, and then if you layer in a cut in the middle of the year, that's the headwind, is that what you're trying to convey at Christmas? [inaudible]
Chris: Yeah, so I think we naturally expect the bounty continued to grow, that will be a positive [inaudible]
Chris: The positive from the derivatives that expired have already been recognized.
Chris: The CD repricing opportunity in a flat rate environment will dissipate towards zero.
and we'll be offsetting the balance sheet.
volume growth
Chris: will be potentially the risk of a slower growth on one hand than perhaps there are expectations given just how the economy might slow and later out of the year. And the potential for rate cuts, which at least at March 31st, there were two rate cuts baked in, and we've previously said each rate cut is worth two million dollars. [inaudible]
Chris: Per month, so that's the negative to offset, essentially the positive balance sheet volume's
Two million per week per month.
Right, got it. Thank you
Speaker Change: The next question is from Matthew Clark with Piper Sandler, please go ahead [inaudible]
Good afternoon, everyone. Thanks for the questions.
Speaker Change: Hey, just on the on the deposit cost side, it looked like the spot rates at 330, just four basis points below the average in the quarter.
Speaker Change: Do you just remind us what you have in the way of CDs coming do in 2Q, maybe even 3Q, and kind of that differential and rate before it drift to 0.
Speaker Change: Yeah, we have about 10 billion coming due, you know, in the next quarter here's QQ, and about 8 billion in third quarter [inaudible]
rate-wise.
Speaker Change: Most of the things that will save the third quarter will over have just been reprised now, right? So essentially the stuff that's coming on in the third quarter is all going to be in the low fours, four to four or eight.
Speaker Change: A little bit at 40 teams at a range. So the incremental benefit in a flat rate context, we, you know,
Speaker Change: Eighth, the 18 basis points. Of course, if we see one or two ray cut by then, it'll get better
Speaker Change: And then with regard to, you know, stuff that we're all over here in Q2, it's stuff that generally we put on the books in December or January , that will come do, you know, an ordinary course, and that's going to be sort of in the low force.
Got it, okay [inaudible]
Speaker Change: Thank you. And then just on the uptick and criticize, commercial real estate ex multi-family, I think from one from 308 to 376.
Speaker Change: Can you just give us a sense for the types of properties that drill that increase and your plans there?
Speaker Change: Yeah, you know, the increase there was pretty broad-based. Some related to and know...
Speaker Change: Concentration, really honestly, from a customer perspective, or really relative to the portfolio, through the geography, the areas where we had the kind of language were industrial and largely retail and some of them are other categories as well which is broad base.
Nothing we saw or thought was systemic at this point. [inaudible]
Okay, thanks for the call.
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Speaker Change: The next question comes from Gary Tenner with VA Davidson. Please go ahead.
Thanks, good afternoon.
Gary Tenner: Dominic, I appreciate your comments earlier on the tariff, wondering if, as it relates to the trade finance business, have you or do you expect to see sort of an earlier year level of activity there as any of your customers kind of pull and supplies or inventory earlier than they might typically do? Have you seen any of that yet?
That's already happened. I mean, customers that react to-
The
Gary Tenner: sort of like a potential tariffs that may be coming to place. Pretty much, I think, I start stalking and putting more inventory in place early on. So I look at it right now, it's that I don't
Gary Tenner: in the next two to three months there will be any more balance of increases because...
Gary Tenner: I hope right now it's going to be a kind of worst case scenario, so I mean. [inaudible]
Gary Tenner: It doesn't make sense for any of the importers to start, you know, part of more inventory at this stage.
Gary Tenner: Okay, so that's already kind of embedded in some of the C&I.
Activity in the first quarter sounds like [inaudible]
Gary Tenner: We may have seen part of that actually in the fourth quarter as well, so there's a full forward of activity, so we probably saw some of it in Q4, some of it here in Q1, and Dominic mentions, we don't expect if he had built up on the C&I side at least.
of materiality related to that activity at this time. [inaudible]
Gary Tenner: Got it. Okay, makes sense. And then second question I had was just on the wealth management fee income, the, you know, year-over-year,
Gary Tenner: I think in the slide that just notes higher customer activity, but the sequential quarter number is so strong. I'm just wondering if there was anything in there that did impact the quarter that may not.
We recur here in the second quarter.
Gary Tenner: I think there was a lot of volatility in the quarter and so customers came and asked for advice and we were happy to provide it and the reality was this is a combination of putting money to work into fixed income products, putting money to work into insurance products, putting money to work just in
Gary Tenner: Allicating some to insurance policies and putting somebody to work in structured notes and other activities along with the normal ordinary course. [inaudible]
Investments in the Marketcept
Gary Tenner: We use these border customs with. So we really was across the board and on many fronts.
Gary Tenner: But in response to some very active conversations which create opportunity to reposition some things.
Thank you.
Jared Shaw: The next question comes from Jared Shaw with Barclays, please go ahead [inaudible]
Hey, good morning, good afternoon [inaudible]
Jared Shaw: Maybe following up on the World Management question, what's the broader strategy for growing that line? Is there an opportunity?
Jared Shaw: for M&A to come in and play a part in growing wealth management, or is it really just going to be continual blocking and tackling and growing customers one at a time?
Jared Shaw: Well, we have been successful at the block-in tackling during customers one of the time, which I think is a hallmark of East West capabilities.
Jared Shaw: But in addition to that as the role, we made investment in the rally in the back in 2003 and we would selectively look at opportunities to continue to expand our capability for our customers and offer a broader set. [inaudible]
Jared Shaw: of both products and services and solutions because we think there's incremental demand within our customer base, within our core domestic customer base for those services and solutions that will continue to sort of tap into with each quarter of that passes, and we know we can do more. [inaudible]
Speaker Change: Okay, all right, thanks. And then on the, on the hedge strategy, can you maybe give us an update on
What the expected sort of... [inaudible]
Speaker Change: received fixed rate on the existing swap book after that $1,000,000 rolled off in first quarter.
Speaker Change: There's got a lot better. I don't know that I have the blended right if I fingertips the next sort of relevant
Speaker Change: I'd trade that will impact the portfolio is there about 500 million of forward starting swaps just under 4% that will receive fixed on starting Q3 and so to the extent we see rate-cut in Q3 will of course be in the money on those.
Speaker Change: Actually, sorry, 500 early and Q3 and then another 500 million later, so there'll be a total of a billion over the back half of 2025. Again, both with the received fixed rate at around 4%.
Great, thank you [inaudible]
Thank you.
Speaker Change: The next question comes from Chris McGratty with KBW, so you go ahead [inaudible]
Speaker Change: Great, thanks. Chris, just on the security purchases in the liquidity management, can you elaborate on what you bought in the quarter yield duration and expectations for kind of the mix between cash and bonds going forward?
Speaker Change: So during the first quarter, we continue to mostly buy Ginnymaid floaters, although we did begin to layer in some fixed rate Ginnymaid. Our focus is all on purchasing HQLA level one securities. [inaudible]
Speaker Change: So far, Ingenie Maze has been sort of exclusively the focus. Our duration at the end of the quarter basically ended up at around three, and that's a blend of the floaters, which obviously are
Speaker Change: less than one, and the legacy portfolio of fixed that we had in the HFS, the whole portfolio comes out to about three. But again, for buying mostly floors at the short end, we're adding less than one stuff, although incrementally and today, we do see value in the fixed. [inaudible]
Speaker Change: side of the equation at levels above five and a half percent .
Speaker Change: Great, great. And then just a clarifying comment, the tariff exposure, thank you, you talked about reviewing, you know, 500, 500 customers. Was it 1% of the CNI that was a statistic? I missed that before that you were watching a little bit closer.
Yes, 1% of the C&I outstanding balances.
Speaker Change: is the portion of the customers that are we know that we're actively engaged, which is why we engage with them. And those are the outstanding balances. Again, we're not saying any of those are necessarily at risk, but we know they're actively engaged. They'll be impacted to some extent. [inaudible]
Great, thanks, Chris [inaudible]
[inaudible]
Speaker Change: The next question is a follow-up from Gary Tenner with DA Davidson. Please go ahead
Gary Tenner: Hi, thanks for the follow-up question. I just wanted to ask about the FHLB advances at 3.5 billion.
Gary Tenner: You know, kind of expectations for, I know there's some maturities there this year. Would you expect to just continue to roll those? Or do you have a different approach in mind as it relates to paying down that liquidity? [inaudible]
Gary Tenner: We're funding. I think we'll continue to look at the federal home bank advances as a flexible component of our overall balance sheet. Should the extent that there's an opportunity to pay those down with excess deposits. Let's move on to the next slide.
Gary Tenner: Happy to do so from time to time, to the extent as often you put the money to work in securities that has a better profile for us and better return to our shareholders. We've been doing that essentially over the course of last year. I think we'll continue to reevaluate that as we move through the year. [inaudible]
Appreciate it.
Thank you.
Speaker Change: Thank you. This concludes our question and answer session. I will now turn the call back over to management for any closing remarks.
Speaker Change: Thank you, thank you for joining us on today's call and we are looking forward to speaking with you again in July
Bye-bye
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
Goodbye.