Q2 2025 East West Bancorp Inc Earnings Call
Operator: Second Quarter 2025 Earnings Conference. All participants will be in listen-only mode. If you need assistance, call 1-866-333-4243. 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 1 on your telephone keypad. Draw your question. Press Star then 2. Please note, this event is being recorded.
Good afternoon and welcome to the East West Bank. Corp. Second quarter 2025 earnings conference call.
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 1 on your telephone keypad,
To withdraw your question. Please. Press star. Then 2
Adrienne Atkinson: I would now like to turn the conference over to Adrienne Atkinson, Director of Investor Relations. Please go ahead. Thank you, Operator. Good afternoon, and thank you, everyone, for joining us to review East West Bancorp's second quarter 2025 financial results.
Please note this event is being recorded.
Speaker Change: I would now like to turn the conference over to Adrienne Atkinson, director of investor relations. Please go ahead.
Dominic Ng: With me are Dominic Ng, Chairman and Chief Executive Officer, Chris Del Moral-Niles, Chief Financial Officer, and Irene Oh, Chief Risk Officer.
Thank you, operator. Good afternoon and thank you everyone for joining us, to review, East West Bank. Corpse second, quarter, 2025 Financial results.
Unknown Executive: call is being recorded and will be available for replay on our investor relations The slide deck referenced during this call is available on our investor relations website.
Dominic ing: With me are Dominic ing, chairman and chief executive officer, Chris Del moral Niles, 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.
Unknown Executive: Management may make projections or other forward looking which may differ materially from the actual results due to a number of risks and uncertainties. Management may discuss non-GAAP financial For a more detailed description of the risk factors and a reconciliation of GAAP to non-GAAP financial measures, please refer to our filings with the Securities and Exchange including the Form 8K filed today.
Dominic ing: The slide deck reference during this call is available on our investor relations site.
Dominic ing: From the actual results due to a number of risks and uncertainties.
Dominic ing: Management, may discuss non-gaap Financial measures.
Dominic Ng: I will now turn the call over to Dominic. Thank you, Adrienne. Good afternoon, and thank you for joining us for our second quarter earnings call. I'm pleased to report strong second quarter results. We continued to grow the bank and reported record quarterly revenue and net interest in Both loan and deposit growth were solid. average grove up 2% quarter-over-quarter in each. Our relationship-driven model continues to support consumer and commercial growth on both sides of the balance. This growth and another quarter of solid fee income fued a 16.7% adjusted return on tangible common equity. and a 1.6% return on average asset.
For a more detailed description of the risk factors and a Reconciliation of gaap to non-gaap financial measures. Please refer to our filings with the Securities and Exchange Commission, including the Form 8K file today.
Dominic ing: I will now turn the call over to Dominic.
Dominic ing: Thank you, Adrian.
Dominic ing: Uh, good afternoon and thank you for joining us for our second quarter earnings call.
Dominic ing: I'm pleased to report strong second quarter results.
We continue to grow the bank and reported record, quarterly revenue and net interest income.
Dominic ing: Both long and deposit growth were solid.
Dominic ing: With average growth up.
Dominic ing: 2% quarter over quarter in each.
Dominic ing: Our relationship driven model continue to support consumer and Commercial growth on both sides of the balance sheet.
This growth and another quarter of solids income. Feud a 16.7% adjusted return on tangible, common equity.
Dominic ing: And a 1.6% return on average assets.
Dominic Ng: Asset quality has remained resilient and credit is performing as expected. Both criticized and non-performing loans decreased from the end of first quarter. We continue to focus on using our capital to support customers and capitalize on any market opportunities that arise. When approximately 10% tangible common equity, we are operating from a position of strength.
Dominic ing: Asset, quality has remained resilient and credit is performing as expected.
Dominic ing: Both criticized and non-performing Loans decreased from the end of first quarter.
Dominic ing: We continue to focus on using our Capital to support customers.
Dominic ing: And capitalized.
Dominic ing: On any Market opportunities that arise.
Dominic ing: When approximately 10% tangible common equity.
Dominic ing: We are operating from a position of strength.
Dominic Ng: Lastly, I am pleased to announce that East West Bank has once again been ranked by Bank Director Magazine as the number one performing bank above $50 billion in assets. This is the third consecutive year we have earned a top spot. and it's our fourth title in the past five years. This achievement is a testament to the steady execution of our associates and our ongoing customer folks.
Dominic ing: Lastly, I am pleased to announce that East West Bank has once again. Been ranked by Bank director magazine.
Dominic ing: As the number 1, performing Bank above 50 billion in assets.
This is the third consecutive year. We have earned a top spot.
Dominic ing: And it's our fourth title in the past 5 years.
Dominic ing: This achievement is a testament to the steady execution of our Associates.
And our ongoing customer focus.
Chris Del Moral-Niles: I will now turn the call over to Chris to provide more details on our second quarter financial performance. Thank you, Dominic. Let me start with a recap on our deposits. As Dominic mentioned, total average deposits grew 2% quarter of a quarter, while end of period deposits grew 3%. We were particularly encouraged by the strong growth in non-interest bearing deposits this quarter. We also saw growth in interest-bearing checking, money market, and time deposit balances, rounding out another great deposit-led quarter. We saw notable growth in our commercial deposit segment, complemented by continued growth in our consumer and business banking balances, underscoring the value of our strong customer relationships across the board.
Dominic ing: I will now turn the call over to Chris to provide more details on our second quarter financial performance.
Dominic ing: Chris, thank you Dominic. Let me start with a recap on our deposits as Dominic mentioned, total average deposits grew 2% quarter of a quarter while end of period, deposits, grew 3%.
Dominic ing: We were particularly encouraged by the strong growth in non-interest bearing deposit. This quarter, we also saw growth in interest bearing checking money market and time. Deposit balances rounding out another great deposit Le order.
Dominic ing: We saw a notable growth in our commercial deposit segment.
Chris Del Moral-Niles: We continue to expect each customer deposit will fund our loan growth this year.
Dominic ing: Complemented by continued growth and our consumer and business banking, balances underscoring, the value of our strong customer relationships across the board. We continue to expect any customer deposits will fund, our long growth this year.
Chris Del Moral-Niles: Turning to Turning to loans on slide 5, our average loan balances were up $940 million quarter over quarter. CNI lending was the largest contributor, with new originations coming from a broad range of industries, while utilization remained broadly stable quarter over quarter. Three weeks into this quarter, our pipelines remain active and we expect to continue growing CNI throughout this quarter. Demand for residential mortgage products also proved relatively durable, and at current rates, we continue to see a strong pipeline into Q3. We would expect residential mortgage to contribute a similar or higher volume to the balance sheet in Q3.
Dominic ing: turning to,
Dominic ing: Starting to loans on slide 5, our average loan balances were up 940 million quarter recorder.
Dominic ing: Cnil lending was the largest contributor with low. With new originations coming from a broad range of Industries. While utilization remained, broadly stable order of a quarter.
3 weeks into this quarter, our pipelines remain active and we expect to continue growing cni. Throughout this quarter.
Demand for Residential Mortgage project products also proved relatively durable. And at current rates we continue to see a strong pipeline in the Q3.
Chris Del Moral-Niles: We also grew our commercial real estate balances modestly this quarter as we continue to support our long-standing CRE clients.
Dominic ing: We would expect Residential Mortgage to contribute, a similar, or higher volume to the balance sheet in Q3.
Dominic ing: We also grew our commercial real estate balances modestly this quarter as we continue to support our long longstanding CRA clients.
Chris Del Moral-Niles: Slide six covers our net interest income thread. We grew dollar net income to $617 million, up $17 million from Q1. Looking back to the start of the cutting cycle, we have decreased interest bearing deposit costs by 67 basis points, successfully exceeding our 50% beta guidance shared in prior quarters. We continue to expect dollar netted income growth as we progress throughout the year.
Slide 6 covers our net interest income trends.
Dominic ing: We grew dollar net income to 617 million up, 17 million from q1.
Dominic ing: looking back to the start of the cutting cycle, we have decreased interest bearing to cause it costs by 67 basis points successfully exceeding our 50% beta guidance shared in Prior quarters
Dominic ing: we can continue to expect dollar net income growth as we progress throughout the year,
Chris Del Moral-Niles: Moving on to fees on slide seven, we note that total non-interest income was $86 million in the second quarter, and fee income was $81 million, the third highest quarter for fees in East-West history. While these fees weren't as strong as the first quarter, which was a new record for us, we note that for the six months ended June 30th, total fee income has grown 14% as compared to the first six months of last year.
Chris Del Moral-Niles: The sustained execution on fee income levels reflects our ongoing focus on the products, services, and capabilities that will further diversify our revenue over time.
Dominic ing: The second quarter and fee income was 81 million. The third highest quarter for fees in east west history. While these fees weren't as strong as a first quarter, which was a new record for us. We note that for the sixth month. Ended June 30th total fee. Income has grown 14% as compared to the first 6 months of last year.
Dominic ing: The sustained execution on fee income levels, reflects our ongoing focus on the products services and capabilities.
Dominic ing: That will further diversify our Revenue over time.
Chris Del Moral-Niles: Turning to expenses on slide 8, East West continued to deliver industry-leading efficiency while investing for its future growth. The Q2 efficiency ratio was 36.4%. Total operating interest non-interest expense was $230 million for the second quarter. We continue to expect expenses will come in line with our guidance for the full year.
Dominic ing: Turning to expenses on slide, 8 East West continued to deliver industry-leading efficiency while investing for its future growth. The Q2 efficiency ratio was 36.4%,
Dominic ing: Total operating in non-interest expense was 230 million for the second quarter.
Dominic ing: We continue to expect expenses will come in line with our guidance for the full year.
Chris Del Moral-Niles: Regarding income tax expense, we note that second quarter income tax expense was $92 million with an effective tax rate of 22.9%. Second quarter income tax expense included $6 million of one-time expense related to California's adoption of a single-state, single-sales factor apportionment method, which became effective on June 30th. We continue to expect our full year effective tax rate to be approximately 23%. However, subsequent quarters will likely be under that and closer to 22%.
Dominic ing: Regarding income tax expense. We note that second quarter income tax expense was 92 million with an effective tax rate of 22.9%.
Dominic ing: Second quarter income tax. Expense included, 6 million of 1-time expense related to California's adoption of a single state, single sales factor of portion method, which became effective on June 30th.
Dominic ing: We continue to expect our full year effective tax rate.
Irene Oh: Now let me hand the call over to Irene for some comments on credit and capital. Thank you, Chris. And good afternoon to all on the call. As you can see on slide nine, our asset quality metrics continue to broadly outperform the industry with criticized non-accrual loans and non-performing asset metrics all improving. Non-approving assets decreased by 2 basis points quarter over quarter to 22 basis points of total assets as of June 30, 2025. The criticized loans ratio decreased during the quarter by 14 basis points to 2.15% of loans. The special mention ratio decreased 10 basis points quarter over quarter to 81 basis points of total loans, while the classified loans ratio decreased 4 basis points to 1.34%.
Dominic ing: To be approximately 23%. However subsequent quarters will likely be under that and closer to 22%. Now, let me hand the call over to Irene for some comments on credit and capital.
Irene: Thank you, Chris.
And good afternoon.
All on the call, as you can see on slide 9, our asset quality and that trucks continue to broadly outperform the industry with criticized, non-accrual loans and non-performing asset metrics all improving.
Non-approval assets decreased by 2 basis points. Corridor over a quarter to 22 basis points of total assets as of June 30th 2025.
Irene Oh: We recorded net charge-offs of 11 basis points in the second quarter, or $15 million, compared to 12 basis points in the first quarter, or also $15 million. We recorded a lower provision for credit losses of $45 million in the second quarter, compared with 49 percent, $49 million, excuse me, for the first quarter. We remain vigilant and proactive in managing our credit. According to slide 10, the allowance for credit losses increased $25 million to $760 million, or 1.38% of total loans as of June 30, 2025, considering changes to the economic outlook. We believe we are adequately reserved for the content of our loan portfolio given the current outlook.
Irene: The criticized loans ratio decreased during the quarter by 14 basis points to 2.15% of loans. The special mentioned ratio decreased 10 basis points quarter of a quarter to 81 basis points of total loans. While the classified loans, ratios decreased 4 basis points to 1.34%.
Irene: We record a net charge off of 11 basis points in the second quarter or 15 million compared to 12 basis points in the first quarter or also 15 million.
Irene: We recorded a lower provision for credit losses of 45 million in the second quarter compared with 49%, 49 million, excuse me for the first quarter.
Irene: We remain Vigilant and proactive in managing our credit risks.
According to slide 10, the allowance for credit losses, increased 25 million to 760 million, or 1.38% of total loans, as of June 30th 2025 considering changes to the economic Outlook.
Irene: We believe We Are adequately reserved for the content of our loan portfolio. Given the current Outlook
Irene Oh: Turning to slide 11. As Dominic mentioned, our strong capital levels allow us to operate from a position of strength and support our customers with All of East West's regulatory capital ratios remain well in excess of regulatory requirements for well-capitalized institutions and well above regional and national banks. East West Common Equity Tier One Capital Ratio rose nearly 20 basis points to a robust 14.5%, while the Tangible Common Equity Ratio rose to 10%.
Irene: turning to slide 11 as Dominic mentioned our strong Capital levels allow us to operate from a position of strength and support our customers with confidence.
All of east west regulatory Capital ratios remain well in excess of regulatory requirements for well, capitalized institutions and well above Regional National Bank peers.
Irene Oh: These capital ratios place us amongst the best capitalized banks in the industry. In the second quarter, East West repurchased approximately 26,000 shares of common stock for approximately $2 million. We currently have $241 million of repurchase authorization that remains available for future buyback.
Irene: East West common Equity, Tier 1 Capital ratio, Rose nearly 20 basis points to a robust 14.5% while the tangible. Common equity ratio Rose to 10% these Capital ratios. Place us amongst the best capitalized banks in the industry.
Irene Oh: East West third quarter 2025 dividends will be payable on August 15. 2025 to stockholders of record on August 4th, 2025.
Irene: In the second quarter East West repurchase, approximately 26,000 shares of common stock for approximately 2 million. We currently have 241 million of repurchase authorization that remains available for future BuyBacks.
Irene: East West third quarter 2025 dividends will be payable on August 15th.
Chris Del Moral-Niles: I will now turn it back to Chris to share our outlook. Thank you, Irene. We are making a few updates to our full year outlook. We are assuming forward curves as a quarter end, and we continue to expect full-year, end-of-period loan growth will fall in the range of 4% to 6%. However, regarding netted income and revenue trends, we see both trending above 7% for the full year. We're also adjusting our outlook on net charge-offs, and we now expect full-year net charge-offs to fall in the range between 15 and 25 basis points. As I mentioned earlier, we continue to expect our full-year tax rate to be about 23%, and we continue to expect amortization of our tax credits and CRA investment expense will fall in the range of $70 to $80 million.
Chris: 2025 the stockholders of Edward, a record on August, 4th, 2025. I will not turn it back to Chris to share our Outlook.
Chris: Chris, thank you Irene.
We are making a few updates to our full year outlook this time.
Chris: We are assuming forward curves as a quarter end.
Chris: However, regarding Ed's income and revenue Trends, we see both trending above 7% for the full year.
Chris: We're also adjusting our outlook on net charge offs and we now expect full year. Net charge offs to fall in the range between 15 and 25 basis points.
Operator: With that, let me turn the call over to the line for questions. Operator? We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To draw your question, please press star then 2.
As I mentioned earlier, we continue to expect a full year. Tax rate to be about 23% and we continue to expect amortization of our tax credits and CRA investment expense will fall in the range of 70 to 80 million.
Chris: With that, let me turn the call over to to uh the line for questions, operator.
Chris: We will now begin the question and answer session.
Chris: to ask a question, you may press star then 1 on your telephone keypad,
Operator: At this time, we will pause momentarily to assemble our roster.
Chris: If you are using a speaker-phone please pick up your handset before pressing the keys to withdraw your question. Please. Press star then 2
Chris: At this time, we will pause momentarily to assemble our roster.
Casey Haire: Our first question today is from Casey Haire with Autonomous, please go ahead. Good afternoon Casey. Good afternoon. How you doing? So first, first question, first question, just beyond the margin, you guys doing a great job holding the line on loan yields. And then obviously, the positive beta pushing, you know, above 60%. Just wondering your ability to sustain both of them going forward. Yeah, so I think we're, we're looking at deposit cost optimization on a continuous basis. And in fact, that'll probably be a continued focus for us here in Q3, whether or not we get a rate cut or not in September.
Speaker Change: Our first question today is from Casey hair with autonomous. Please go ahead.
Casey Hair: How you doing?
Speaker Change: So first first first question, just beyond uh the margin you guys doing a great job um holding the line on loan yields and then obviously the uh, deposit beta pushing, you know, above 60%. Um, just wondering your ability to to sustain both of them uh going forward.
Chris Del Moral-Niles: We think there's an opportunity for us to do some more work on that front and we'll continue to manage that. Obviously, we lowered our total deposit costs a few basis points this quarter, and we remain focused and diligent on that. On the asset repricing side, I think we continue to expect, I think there's always a bit of a day count effect from the first to the second quarter in mortgages and mortgage-backed securities. But beyond that, I think we continue to expect that those fixed-rate asset classes will have an opportunity to reprice positively. So we're optimistic that we'll be able to maintain the margin within a range of reasonableness through the third quarter.
Casey Haire: And obviously, we'll see how and when rate cuts come after that. Gotcha. Okay.
Speaker Change: Yeah, so I think we're we're looking at the positive cost optimization on a continuous basis and in fact that will probably be a continued Focus for us here in Q3 whether or not we get a rate cut or not in September, um, we think there's opportunity for us to do some more work on that front and we'll continue to manage that. Obviously, we lowered, our total deposit costs, a few basis points, uh, this quarter and uh, we remain focused and diligent on that on the asset repricing side. I think we continue to expect. Um I think there's always a bit of a day count effect from the first or the second quarter and mortgages and mortgage back Securities. But beyond that, I think we continue to expect that those fixed rate asset classes will have an opportunity to re price positively. So we're, we're optimistic that we'll be able to maintain, you know, the margin within a range of reasons, um, through the third quarter and obviously, we'll see how and when rate Cuts come after that,
Irene Oh: And then just wanted to touch on credit. You guys did build the reserve led by CNI looks like, despite favorable migration, and you took your charge off guide down. Just maybe a little color on what's going on there. What are you seeing in CNI? Or did you just change the weightings around? Just a little color on the reserve belt.
Speaker Change: Gotcha. Okay. Um, and then just wanted to touch on credit. Um, you guys did build the reserve led by cni. Looks like, um, despite favorable migration and you took your your charge off guy down, um, just maybe a little color on on, what's going on there. What, what are you seeing in TNI? Or did you just change the weightings around? Um, just a little color on. Those are built.
Irene Oh: Hi, this is Irene. I'll answer that. You know, it wasn't anything specific that we saw within the CNI book.
Manan Gosalia: I'll just kind of comment that it really has to do with the CECL model and the economic outlook and The next question is from Manan Gosalia with Morgan Stanley. Please go ahead.
Speaker Change: Hi. This is Irene. I'll answer that. You know it wasn't anything specific that we saw within the cni book. Uh I'll just kind of comment that it really has to do with the uh, Cecil model and the economic Outlook and forecast.
Speaker Change: The next question is from mananga selia with Morgan Stanley. Please go ahead.
Manan Gosalia: Hey, good afternoon. Good afternoon.
Chris Del Moral-Niles: So can you talk about the impact of the recent legislative changes on the Renewable Energy Tax Credits? Sure, we're taking a look at the renewable energy investments that we make, as well as the lending that we do. And obviously, that will have implications for the go forward. However, as we looked at all the projects we had already committed to, and all the ones that were in flight, they seem to fall in under the exemption or under the period of grace until the new rules kick in. So as we sit here today, all of the existing investments and all of the existing loan commitments are unimpacted, and we're rethinking about some of our go-forward tax credit investment strategies as we look down the road.
Mananga Selia: Hey, good afternoon.
Good afternoon now. So uh, can you talk about the impact of the recent legislative changes and the renewable energy tax credits business?
Mananga Selia: Sure, we're taking a look at the renewable energy, uh, Investments that we make, as well as the lending that we do. And obviously, that will have implications for the go forward. However, as we looked at all the projects, we had already committed to and all the ones that were in flight, they seemed to fall in under the exemption or under the
Mananga Selia: Period of Grace until uh, the new rules kick in. So as we sit here today, all of the existing Investments and all existing loan, commitments are unimportant and we're rethinking about some of our go forward. Tax credit investment strategies, as we look down the road.
Chris Del Moral-Niles: So presumably that means that all else equal, the tax rate would go up.
Chris Del Moral-Niles: Are there any offsets to that that we should be thinking about for next year? I think the good news is there's an army of consultants that have lots of ideas for us. So I think we're thinking through lots of them. I don't know that I would write off our ability to find something to offset those changes in the long run. Got it. Thank you.
Mananga Selia: So, presumably, that means that, um, all else equal the tax rate would go up. Are there any offsets to that? Uh, that we should be thinking about for next year?
Mananga Selia: I think the good news is, there's an army of Consultants that have lots of ideas for us. So, I think we're thinking through lots of them. I don't know that I would, um, write off our ability to find something to offset those changes in the long run.
Mananga Selia: Got it. Thank you.
Ebrahim Poonawala: The next question is from Ebrahim Poonawala with Bank of America. Please go ahead. Afternoon, Ebrahim. Hey, good afternoon. Were you trying to finish something, Chris? Go ahead. Okay. So I guess going back to one on the NII side, the 7% plus guidance, it implies low growth relative to where we've been in the first half or the second quarter. I'm just wondering, if we don't get rate cuts, and you hit your loan growth outlook, shouldn't we assume NII generally to sort of drift higher and track loan growth? Is that sort of the right way to think about direction and pace of NII growth relative to loan growth?
Speaker Change: The next question is from Ibrahim poonawalla with Bank of America. Please go ahead.
After anybody. Hey, good afternoon. Were you trying to finish something Chris?
Chris Del Moral-Niles: Yeah, so let me use the framework that you put forward. So yes, we are fundamentally asset sensitive. So yes, fewer rate cuts is better for us. And so the extent that rate cuts are slower, come later, or of a lesser magnitude, we will do better. You're also correct, it's a function of loan growth and asset growth. And, you know, thankfully, we've had great deposit growth, that's allowed us to continue to fund profitable loan growth. And to the extent that that continues at a good pace, that could be better. And so those are the two key factors that, you know, could lead that to be better.
Speaker Change: No, go ahead, go ahead. Okay so I I guess this going back to 1 on the knee side, the 7% plus uh guidance. It implies no growth relative to where we've been in the first half or the second quarter. I'm just wondering if we don't get rate cuts and you hit your loan growth Outlook shouldn't and I shouldn't be assumed knee generally to sort of drift higher and track loan growth is that sort of the right way to think, about Direction and pace of knee, growth relative to loan growth.
Yeah. So let me use the framework that you put forward. So yes, we are fundamentally asset sensitive. So yes fewer rate Cuts is better for us and so the extent that rate cuts are slower come later or of a lesser magnitude, we will do better.
Chris Del Moral-Niles: You know, I think Ebrahim and I would say it maybe slightly differently as well. I think we came out assuming this year that our NII growth would be in line with our overall asset or loan growth specifically in that four to six range. We raised that estimate when we went not from four to six, but the six plus back in June. And I think we're re-raising today as we go to seven plus. And to the extent, you know, rates are higher for longer or loan growth comes in better, there's still upside to that. And obviously, as Dominic would remind me, you know, part of my task is to, you know, make sure we're putting our best foot forward and doing the best we can.
Speaker Change: Uh, you're also correct. It's a function of long growth and asset growth. And um, you know, thankfully, we've had great deposit growth that's allowed us to continue to fund profitable long growth and to the extent that continues at a good Pace that could be better. And so those are the 2 key factors that, you know, could leave that to be better. Um, you know, I think Ibrahim I would say it maybe slightly differently as well. I think we came out assuming this year, that our knee growth would be in line with our overall asset or long growth specifically in that 4 to 6 range.
Ebrahim Poonawala: And so, you know, we'll continue doing that every day. Understood.
Speaker Change: We, uh, raise that estimate when we went not from 4 to 6, but the 6 Plus back in June. And I think we're re-raising today as we go to 7 plus. And, um, to the extent, you know, rates are higher for longer or long growth comes in better. There's still upside to that. And obviously, as Dominic would remind me, you know, part of my task is to, you know, make sure we're putting our best foot forward and doing the best we can. And so, you know, we'll continue doing that every day.
Dominic Ng: And I guess maybe just a separate question. It feels like industry wide, there's some momentum on loan growth. Obviously, your loan growth guidance implies a pickup in the back half.
Understood and I guess maybe just a separate question.
Dominic Ng: But maybe, Dominic, talk to us about this client sentiment around pace of investment picking up. I think there's some seasonality to lending for East West in the second half. And are we through the worst of like, the tariff noise in terms of the clients navigating that?
Dominic Ng: Or are there more structural changes that are happening this time, which was different than what happened in 2018-19? Thank you. I think the client sentiments are definitely getting better. Not that they love it, just that the fact is, they are... I think they are more comfortable with the fact that there will be terrorists. However, I think they have more certainty now than in the beginning of the year when everyone was confused about exactly what would happen. And I think that At this point, while there will be tariffs, there also will be, you know, pass-through to consumers to a certain extent.
Speaker Change: It's feels like industry. Why? There's some momentum on loan growth? Obviously your loan growth guidance, implies a pickup in the back half but maybe, uh, Dominic talk to us about this client sentiment around pace of investment picking up. I think, uh, there's some seasonality to lending for East West in the second half and are we through the worst of like the Tariff noise in terms of the client's navigating that, or are they more? Structural changes that are happening this time, which was different than what happened in 2018, 19, thank you.
Uh I think the client sentiments are definitely getting uh better.
Speaker Change: Uh, not that they love it. Just that the fact that they are
Speaker Change: I think they are more.
Comfortable with the fact that there will be terrorists.
Speaker Change: Uh, however uh, I think they have more certainty now.
Speaker Change: Than in the beginning of the year when everyone was confused about exactly what would happen. And I think that
Speaker Change: At this point.
Dominic Ng: And we also noticed that, as I indicated at the last call, quite a few imports were exempted from the tariff. So there are many, many products out there that are exempted. So then, sort of like each and every one of these businesses have different nuances to Some of them are able to pass through to the consumer. Some of them actually, you know, are exempted. And by and large, I would say the vast majority of the customers are feeling more comfortable. I do want to highlight that. Our East West Bank customers tend to be much more experienced and sophisticated in terms of dealing with tariffs because we got them going back in 2017.
Speaker Change: Um, while there will be terrorists. There are also will be, you know, um, passed through to Consumers, to a certain extent. And we also noticed that as I indicated at the last call, uh, quite a few, uh, import.
Speaker Change: Were Exempted from the tariffs. So there are many, many, uh, products out there that are Exempted. So then sort of like each and every 1 of these business have different nuances there.
Speaker Change: Some of them are able to pass through to Consumer. Some of them actually you know, are accepted and that by and large, I would say the vast majority of the customers are feeling more comfortable. I do want to highlight that
Dominic Ng: And so they've been having quite a bit of experience of dealing with the situation. So many of them even Prior to the current administration, they have already started sort of like working on different strategies. So they tend to be much more adept and agile to deal with the situation.
Uh, our East West Bank, customers tend to be much more experienced and sophisticated in terms of uh dealing with tariffs because we got them going back in 2017.
Speaker Change: And so they they've been having quite a bit of experience of dealing with the situation. So many of them, even
Dominic Ng: So all in all, I would say that from that standpoint for East West Bank, we'll be fine. The other thing I wanted to point out is that, you know, in terms of our loan portfolio, we have such a diversified portfolio. Lombar Polio. different industries, different product types. And the import-export business today is actually quite a small part of our because we have just diversified our overall portfolio so much. So the fact is, with or without tariff, the... the impact to our P&L. is somewhat more minimal than it used to be. And so at this stage, I would say right now, things are looking better.
Speaker Change: Prior to the current Administration, they have already started, uh don't like working on different strategy so they tend to be a much more Adept uh uh an agile to deal with the situation. So all in all, I would say that from that standpoint for East, West Bank will be fine. The other thing I want to point out is that, um,
Speaker Change: you know, in terms of
Speaker Change: uh, our loan portfolio, we have such a diversified
Speaker Change: Loan portfolio.
With different Industries, different product types. And the import export business today is actually quite a small part of our business.
Speaker Change: Both of those tariffs. They
Speaker Change: Uh, the impact to our p&l.
Speaker Change: Is somewhat now more minimal than it used to be.
Dominic Ng: The issue is that there's still uncertainty out there in the market. On one hand, the good news is that the tax reform is done and overall is more, relatively speaking, good for business. However, the tariff is still touching gold here and there. I mean, while it appears to be coming to more certainty, but things can change minute by minute. But we are watching it closely, been there, done that. So we are pretty confident about how to manage it.
Speaker Change: And uh so at this stage, I I would say right now things are looking better. Uh the issue is that there's still uncertainty out there. Um in the market on 1 hand the good news is that the tax reform is done and overall is more relatively speaking. It's for business
Speaker Change: um,
Speaker Change: However uh the Tariff is still, you know, touching go here. And there we we I mean while it appears to be coming to more certainty but things can change minute by minute. But we are we are watching it closely.
Speaker Change: Been there done that, but we are pretty confident about how to manage it.
Speaker Change: Good. Thank you.
Jared Shaw: The next question is from Jared Shaw with Barclays. Please go ahead. Hey, good afternoon, everybody. Afternoon. Maybe just on the on the deposit side, when we look at sort of the trends this quarter, looks like average cost was higher than both end of period for first quarter and second quarter.
Jared Shaw: The next question is from Jared. Shaw with Barclays. Please go ahead.
Chris Del Moral-Niles: Can you just sort of walk us through how, how that's moving and your thoughts on on how that's going to move through the rest of the year? So sorry, Jared, if I look at table eight, or sorry, table six, press release, average total deposit costs were down two basis points, total interest bearing deposit costs were down three basis points. So on a quarter over quarter basis, I think we're moving in the right direction. And if I'm looking at page six, in our deck, I would note that the end of period interest bearing deposit costs were down to 3.25%, which is a low point year relative to last quarter prior period.
Jared Shaw: Hey, good afternoon everybody, good afternoon. Um, maybe just uh on the on the deposit side when we look at sort of the trends this quarter uh looks like average cost was higher than both end of period for first quarter and second quarter.
Jared Shaw: Can you just sort of walk us through how, uh, how that's moving in, in your thoughts on, on how that's going to move to the rest of the year?
Chris Del Moral-Niles: So I think we're moving the deposit costs down.
Jared Shaw: So sorry Jared. Uh if I look at table 8 or sorry, Table 6 press release. Uh average total cost of costs are down 2 basis points. Total interest bearing deposit costs were down 3 basis points so on a quarter of a quarter basis, I think we're moving in the right direction and if I'm looking at Page 6 in Our Deck, I would note that the end of period interest bearing, deposit costs were down to 3.25%, which is a low Point here relative to last quarter or prior period. So I think we're moving the deposit cost down.
Chris Del Moral-Niles: Okay, and the pace of that you feel like is... You know that you'll be able to be consistent with that as we as we move forward given the forward curve. Well, I think if you look at page six, that might be a good graph. And I think I've described this in prior conversations, we have had the benefit that we have a good amount of CDs, and the CDs essentially price in the forward curve expectations. And so we actually get to lower the deposit cost as we approach future rate cuts. And so when you look at the step down that occurred late last year, that's because there were several cuts that occurred late last year.
Jared Shaw: Okay? And, and the pace of that you feel like is, uh,
Jared Shaw: You know, that you'll, you'll be able to be consistent with that as we as we move forward given the the forward curve.
Jared Shaw: Well, I think if you look at page 6 that might be a, a good graph. And I think I've described this in Prior conversations, we have had the benefit that we have a good amount of CDs and the CDs is essentially price in the forward curve expectations.
Chris Del Moral-Niles: And as we look at the slower pacing, the line is becoming gradually less steep with each step, it reflects the sort of slower pacing of Fed cuts that we've seen. So this year, you know, we're expecting potentially some rate cuts later in the year. To the extent we get something in September, you'll see a step down there, certainly at September period end, the extent we see further down in Q4, we'll see a little bit more in Q4. It probably won't be as steep as last year's when we saw 100 basis points, but, you know, it'll be a good move in the right direction.
Jared Shaw: And so we actually get to lower the deposit cost as we approach future rate cuts. And so when you look at the step down that occurs late last year, that's because there were several cuts that had occurred late last year. And as we look at the slower, pacing is the the grad. The line is becoming gradually less, uh, steep with each step. It's reflected.
Chris Del Moral-Niles: Okay, thanks.
Jared Shaw: The sort of slower pacing of bed cuts that we've seen. So this year, you know, we're, we're expecting, potentially somebody cuts later in the year to the extent, we get something in September. You'll see a step down there, certainly at September period. End the extent. We see further down Q4, we'll see a little bit more in Q4. Um, it probably won't be as steep as last year's when we saw 100 basis points but you know, it'll be a good, a good move in the right direction.
Chris Del Moral-Niles: And then this is a follow up on the on the core expenses. To get to the guidance that it really implies a step up in the second half of the year.
Chris Del Moral-Niles: Where, where are those investments coming from? And how much of that is tied to potentially the hundred billion dollar threshold? And if we see that Adjusted, would that impact the expense outlook? So I think what we've tried to communicate is that we are being very programmatic about finding the right people to bring in and hire and help us build the bank that's going to be as robust and resilient as we need it to be as we continue to grow in size. And to a certain extent, while the $100 billion is a real number today, the reality is there's depth and strength and resiliency to our total management functions that are going to require additional investments.
Speaker Change: Okay. Thanks. And then this is a follow up on the on the core expenses. Um, to get to the guidance that it really implies a step up in the second half of the year. Um, we're
Speaker Change: Where are those Investments coming from? Um and how much of that is tied to potentially the hundred billion dollar threshold. And if we see that
Speaker Change: Adjusted with that impact, the uh, the expense Outlook.
Chris Del Moral-Niles: And so when you look at our expense guidance, it fully reflects our expectation that we're going to continue to round out the team, continue to build our cyber capabilities, continue to build our online and mobile strengthening, continue to build our fraud capabilities, as well as all the things we do for regulatory, as well as develop new tools and solutions for our customers. And so all of that growth is still in process and in motion. And I expect you will see increasing line items because most of our expenditures is in comp and benefits. You'll see that continue to grow as we grow through the year and into the years ahead.
Speaker Change: Uh so I think what we've tried to communicate is that we are being very programmatic about finding the right people to bring in and higher and help us build the bank that's going to be as robust and resilient as it needs to be as we continue to grow in size and to a certain extent. While the 100 billion is a real number today, the reality is there's depth and strength, and resiliency to our total management functions that are going to require additional Investments. And so when you look at our expense guidance, it fully reflects our expectation that I want to continue to round out the team continued to build our
Speaker Change: Cyber capabilities, continue to build our online and mobile strengthening continue to build our fraud capabilities as well as all the things you need to do for regulatory as well as develop new tools and solutions for our customers. And so all of that growth is still in uh in process and in motion and I expect you will see increasing line items.
Chris Del Moral-Niles: We're focused on hiring to help us build the bank we want to be, and we're focused on then supporting those hires with the right systems and solutions to be as strong a bank as we can be, all in a very east-west efficient manner, of course, but our costs are going to go up.
Speaker Change: Because most of our expenditures is incompetent benefits, you'll see that continue to grow as we grow through the year and into the years ahead. Um, we're focused on hiring
Speaker Change: Tires with the right systems and solutions to be as strong a bank as we can, be all in a very East West efficient manner, of course. But our costs are going to go up.
Speaker Change: Great. Thank you.
Timur Braziler: And the next question is from, and please excuse any mispronunciation, Timur Braziler with Wells Fargo. Please go ahead. Afternoon, Timur. Good afternoon, guys. Appreciate your comments around SFR for the third quarter. I'm just wondering, maybe looking out a little bit, some of the noise regarding the Trump presidency. Do you think that line item is at risk in the longer term with just some of the migration trends? Or is it isolated enough or insulated enough? I should say that that growth rate really shouldn't change all that much. I think Irene pointed out to me a little over a year ago, shortly after I joined, that the American dream is alive and well, despite where rates are at, despite where sentiment is around anything else.
Speaker Change: And the next question is from, and please, excuse any mispronunciation Tim or Brazil with Wells, Fargo, please go ahead.
Speaker Change: Afternoon tumor.
Tim: Hi. Good afternoon, guys. Um, appreciate your comments around sfr. For the third quarter, I'm just wondering maybe looking at a little bit, some of the noise regarding the, the Trump presidency. Do you think that line item is that risk in the longer term, with just some of the, um, migration Trends? Or is it, uh, isolated enough for insulated enough? I should say that that growth rate really shouldn't change all that much.
Speaker Change: I think I Irene pointed out to me a little over a year ago, shortly after I joined the, the American dream is alive and well.
Dominic Ng: And so the reality is, is we see ourselves providing a solution that supports that dream of American homeownership, and that demand for the clients we serve is not flacking at all.
Speaker Change: Despite where rates are at despite where sentiment is around, um, anything else. And so the reality is is we we see ourselves providing a solution that supports the that dream of American Home Ownership and that demand, um, for the clients we serve is not slacking at all.
Timur Braziler: Okay, thanks for that.
Chris Del Moral-Niles: And then maybe another question just around some of the tariff uncertainty, your ability to Unknown Attendee, Manan Gosalia, Robert Terrell, Christopher McGratty, David Rochester, Christopher If I look at the graph that's out there on the income, on page seven in the deck, you know, three of the quarters have come in at a pretty solid 81-ish million, three of the last four quarters. So I'd say that's a pretty good run rate for us. And the reality is, is where we gave up fees was a little bit on the derivatives FX side of things, which are a little more transactional.
Speaker Change: Okay, thanks for that. And then maybe another question, just around some of the, the Tariff uncertainty. Um, your ability to sustain fee income here has been pretty impressive over these last 2 quarters. I'm just wondering, did you get any sense of? There's a, a pull forward that occurred earlier in the quarter or any type of broader cross-border trade disruption, within your fee, income lines. Or is this a good steady state to base future assumptions off of
Chris Del Moral-Niles: And, you know, some of the wealth stuff that was one time in nature, but our other fees are relatively steady and just steadily building. And so we continue to expect that to be a pretty steady contributor. Great.
Speaker Change: Yep. If if I look at the graph that's out there on the income on page 7 in the deck, you know 3 of the quarters have come in at a pretty solid 81, ish million uh 3 of The Last 4 quarters. So I'd say that's a pretty good run rate for us and the reality is, is, um, where we gave up fees was a little bit on the derivatives FX side of things, which are a little more transactional. Um, and, you know, some of the wealth stuff that was 1, time in nature, but our other fees are relatively steady and just steadily building. And so we can continue to expect that to be a, pretty steady contributor.
Chris Del Moral-Niles: Thanks, Chris.
Speaker Change: Great. Thanks. Chris.
Gary Tenner: The next question is from Gary Tenner with D.A. Davidson. Please go ahead. Thanks a lot. Hi, a lot of questions were asked, but just wanted to kind of follow up on the buyback, Chris, you had some comments on that in your prepared remarks, I think, the amount of buyback in the second quarter pretty light in terms of shares. And I'm wondering how much of that was you simply being kind of cautious in the wake of kind of the tariff announcements, because obviously, there was an opportunity to be repurchasing shares quite a bit lower than the stock's trading I Yeah, I think part of that might just be timing.
Speaker Change: The next question is from Gary tener with da Davidson, please go ahead.
Gary Tener: Uh, thanks a lot. Bye.
Uh, I don't have a questions. We're we're asked but just wanted to kind of follow up on the uh buyback. Uh, Chris you had some comments on that in your prepared remarks. I think um the amount of buyback in the second quarter, pretty light, in terms of shares. And I'm wondering how much of that was simply being kind of cautious in the wake of, kind of the Tariff announcements because obviously, there was an opportunity to be repurchasing shares quite a bit lower than the stocks trading now
Chris Del Moral-Niles: Gary, in the context of that, I'll say that we, the first couple of weeks of the quarter, which were the weeks immediately following Liberation Day, stocks took a bit of a swoon. And we generally, since we prepare our financials, don't buy back when we're in possession of our results, and we haven't publicly disclosed them. And so there's sort of a bit of a blackout window that we self-imposed just to be on the right side of any SEC questions later on. And so we weren't active in that period before the earnings call. And, you know, but the price action was there.
yeah, I think part of that might just be timing Gary in the context of that, I'll say that we the first couple of weeks of the quarter, which were the weeks immediately following Liberation day,
Gary Tener: Um, stock took a bit of a swoon.
Chris Del Moral-Niles: And so when we sort of came back active, we set price expectations, not able to forget that there had been a seven handle at one point in the quarter. And of course, we never saw that handle again. So, you know, I think we just sort of went through the quarter a bit trying to keep up with the market movement and never quite got ahead of it.
Gary Tener: And we generally since we prepare our financials, don't buy back when we're in possession of our results. Then we have them publicly disclose them. And so there's sort of a bit of a blackout window that we self-imposed just to be on the right side of uh, any SEC questions later on and so we weren't active in that period before the earnings call and um, you know, but that the price action was there. And so when we started came back active, we said price, expectations,
Chris Del Moral-Niles: I think we'll be thoughtful about where we're headed as we look at the back half of the year and continue, obviously, to things that we think that there's an appropriate level of repurchase. And obviously, we have the $241 million available to us at the right levels, but we'll continue to deploy it on an opportunistic basis. I appreciate the thoughts. Thank you.
Not able to forget that there had been a 7 handle at 1 point in the quarter. And of course, uh, we never saw that handle again. So, um, you know, I think we just sort of went through the quarter, uh, a bit trying to keep up with the market movement and never quite got ahead of it. Um, I think we'll be thoughtful about where we're headed as we look at the back half of the year and continue. Obviously to think that um there's a you know, an appropriate level of of repurchase and obviously we have the 241 million available to us um at the right levels but we'll continue to deploy it on an opportunistic basis.
Gary Tener: I appreciate the thoughts. Thank you.
Matthew Clark: The next question is from Matthew Clark with Piper Sandler. Please go ahead. Good afternoon. Yeah, good afternoon. First one for me, just on on the macro changes that you made with the CECL model, can you just speak to some of the assumptions you made and how they change just to give us a sense for? Conservatism that's built in around C&I in particular. So I think as Irene mentioned earlier in one of our responses, you know, I think it was macro driven. And as we think about it, we didn't necessarily change the weighting assumptions about recessionary outlook versus the core outlook, but the Moody's model itself did have some degradation.
Matthew Clark: The next question is from Matthew. Clark with Piper Sandler, please go ahead.
Matthew Clark: Good afternoon. Hey, good afternoon.
Matthew Clark: Um,
Matthew Clark: First 1 for me just on on the macro changes that you made with the Cecil model. Can you just speak to some of the assumptions you made and how they changed? Just to give us a sense for
The conservatism that's built in around, cni in particular.
Chris Del Moral-Niles: And so we factor that degradation into our core. It also factored into our other scenario that we do run. And that contributed, you know, a good portion of the net change. We also took some specific look at some of the C&I portfolios. And obviously we're constantly evaluating those and essentially grading and risk rating those. And that was also part and parcel. But obviously part of our risk rating takes into consideration the outlook. And so that's all baked in.
Irene Oh: Irene, would you care to add more to that? So I think that's a good summary. As a reminder, you know, I think many people use the same kind of Moody's models, but we also use multi scenarios. So I wanted to just kind of factor that in as well. So that is part of maybe just the conservatism you alluded to. Okay, great.
Matthew Clark: Mentioned earlier in 1 of our responses. You know, I think, um, it was macro driven and as we think about it, we didn't necessarily change the waiting assumptions about recessionary Outlook versus, uh, the core Outlook. But the Moody's model itself did have some degradation. And so, we factored that degradation into our core and also factored into our other scenario that we do run and that contributed, you know, a good portion of the net change. Um, we also took some specific look that some of the CI portfolios and obviously, we're constantly, uh, evaluating those and essentially grading and risk rating. Those, and that was also part and parcel, but obviously part of our risk rating takes into consideration the Outlook. And so that's all baked in Irene. Would you care to add more to that?
Irene: No, I think that's a good summary as a reminder, you know, I think uh many people use the same kind of Moody's models, but we also use multi- scenarios. So I wanted to just kind of factor that in as well. So that is part of maybe just the conservatism you alluded to
Irene Oh: And then Unknown Criticized Migration in Non-Multifamily CRE. Can you just speak to what asset classes, you know, within non-multifamily CRE drove that and kind of what the what the line of sight is. in that area.
Irene: Okay, great. And then
Irene: On the criticized.
Irene: Uh, migration in non multifamily, CRA can you just speak to what asset classes? You know, within non multi-family Theory, drove that and kind of what the what the line of sight is.
Irene Oh: Now, good question. About half were special mention, half were substandard, pretty evenly distributed there as far as the income-producing CREIT. From an asset class perspective, pretty broad-based as well. There were some loans that we downgraded because cash flow kind of shortfalls that we saw, reductions for some properties that were impacted after the fires, but others kind of broad-based. As we look at these loans, loan by loan, and the underlying collateral, you know, I would say at this point, I don't see these moving to non-accrual or something that will result in a charge-off at this point in time.
Irene: In in that area.
Irene Oh: But certainly, we're looking at the cash flows very carefully and ensuring that the grading is appropriate.
Irene: That's a good question. Uh, about half were special mentioned, half were substandards pretty evenly distributed there. Um, as far as the income producing create from an asset class perspective, pretty broad-based as well. Um, there were some loans that we downgraded because cash flow kind of short balls that we saw a reductions, uh, for some property that were impacted after the fires. Uh, but others kind of broad-based. As we look at these loans loan by loan and the underlying collateral. You know, I would say, at this point, I don't see these moving to non-accrual or, uh, something that will result in a charge off at this point in time. But certainly, we're looking at the cash flows, very carefully and ensuring that, and the grading is appropriate as well.
Irene Oh: Okay, great.
Speaker Change: Okay, great. Thank you.
Christopher McGratty: The next question is from Chris McGratty with KBW, please go ahead. Chris, question for you on the balance sheet. Your mid 80s loan to deposit ratio, a lot of capital.
Speaker Change: The next question is from Chris, McGrady with KBW. Please go ahead.
Chris McGrady: Good, thanks.
Chris Del Moral-Niles: Is there anything you you want to do to the balance sheet over the next several quarters that may not have been done yet? Well, I think we meet regularly with Irene and Dominic through the ALCO process, and we're always trying to optimize the balance sheet. I think we've made good strides towards that direction, but the reality is we know there's more on the deposits that can be optimized. And, you know, we know that there's a component of the investment portfolio that could be further optimized. And we continue to think about how we're going to grow the C&I book in particular so that's further optimized as a percentage of the total loans.
Speaker Change: Hey, Chris. Hey um, Chris a question for you on the balance sheet. Um, your mid 80s loan to deposit ratio. A lot of capital. Is there anything you you want to do to the balance sheet over the next several quarters? Um,
that maybe not have been, you know, done yet.
Chris Del Moral-Niles: And so, you know, those are all works in progress that we continue to sort of try and push in the right direction each day we come in. Great.
Speaker Change: Well, I think we we meet regularly with Irene and Dominic and through the ALCO process and we're always trying to optimize the balance sheet. Um I think we've made good strides towards that direction but the reality is we know there's more on the deposits that can be optimized. And you know, we know that there's a component of the Investment Portfolio that could be further optimized and we continue to think about how we're going to grow the cni book in particular. So that's for the optimized as a percentage of the total uh loans. And so those are all works in progress that we continue to sort of try and push in the right direction. Uh, each day we come in.
Chris Del Moral-Niles: And then on on capital.
Chris Del Moral-Niles: You know, I hesitate to even ask you a question, but you've got, you know, 10% TCE going to 11 probably and, you know, CET 1 to 15, it's a high class problem, but is there anything you want to do with your capital beyond what we've talked about over the medium term to either build out fee income capabilities, you know, portfolio acquisitions, anything like that? Thanks. Yeah, so I mean, I think in the long term, of course, our first goal, as we've always highlighted, is to deliver top quartile returns. And so as long as we're delivering 16, 17 type percent, quarter after quarter returns on tangible capital, we hope shareholders feel we're doing the right thing for them.
Speaker Change: Great. And then on on Capital, um,
Speaker Change: You know I hesitate to even ask the question but you've got you know, 10% dce going to 11 probably and you know C1 to 15. It's a high class problem but is there anything you want to do with your Capital beyond what we've talked about uh over the medium term to you know build out fee income capabilities, you know? Portfolio Acquisitions. Anything like that. Thanks.
Chris Del Moral-Niles: The second thing, of course, is we've said publicly, we have every intention to continue to build out a few businesses. And we continue to have conversations and ongoing dialogue with different providers about different services that we could offer our customers, about different solutions that we could sell, and about different ways of building out our fee income businesses to continue to grow. We think there's opportunity in many of them, and Dominic has encouraged us and directed us to make hires to bolster and grow a variety of those business lines here over the last six months. And we're continuously looking at not only hires, but also potentially purchase solutions and or even acquired solutions.
Speaker Change: Yeah, so I mean, I think in a long time, of course, our first goal is, we've always highlighted is to deliver top core child returns. And so, as long as we're delivering, 16 17 type percent quarter, after quarter Returns on tangible Capital, we hope shareholders feel, we're doing the right thing for them.
The second thing of course is we've said publicly we have every intention to continue to build out a few businesses and we continue to have conversations and ongoing dialogue with different providers about different services that we could offer our customers about different solutions that we could sell. And about different ways of building out our fee and business fee income businesses to continue to grow. We think there's opportunity in many of them and Dominic has uh, encouraged us and directed us to make hires to bolster and grow a variety of those business lines here over the last 6 months and we're continuously looking at not only hires but also potentially, you know, purchase Solutions and or even acquired Solutions
Chris Del Moral-Niles: All right, great. Thanks, Chris.
Speaker Change: All right, great. Thanks Chris.
Operator: Again, if you have a question, please press star then 1.
Andrew Terrell: The next question is from Andrew Terrell with Stevens. Please go ahead. If I could just go back to some of the the loan growth quickly that the single family and C&I, Chris, your comments sounded pretty optimistic on kind of third quarter setup.
Speaker Change: again, if you have a question, please press star then 1
Speaker Change: The next question is from Andrew Terrell with Stevens. Please. Go ahead.
Speaker Change: Hey, good afternoon.
Chris Del Moral-Niles: I'm curious just on commercial real estate, you know, any selective kind of slowing up the growth potential in that business that you guys are seeing right now, just either managed concentrations or, or maybe, basically competitive environment, just hoping to impact maybe a little bit of the the CRE business. Yeah, I mean, I think if I look at page seven of the press release, table two, you'll see that on a year over year basis, we've grown our single family book by five, almost 6% or CNI book by five, almost 6% and our CRE book by a little less than 2%.
Speaker Change: Hey, um, if I could just go back to some, of the, the loan growth quickly, the the single family and, and cni, Chris, your comments on it. Pretty optimistic on on, kind of the third quarter setup. I'm curious just on on Commercial Real Estate. Um, you know, any selected kind of slowing up the growth potential in that business, that that you guys are seeing right now, um, just to either manage concentrations, or or maybe, uh, based on the competitive environment, just open to unpack. Maybe a little bit of the the CRA business.
Chris Del Moral-Niles: And so if I think about hopefully the comment that I've been making at the last several quarterly earnings calls, and at the last several earnings presentations, if they focus on continuing to grow the bank overall, with a particular emphasis on growing our CNI and single family in a balanced manner to get towards the third, a third, a third balance that Dominic has encouraged the bank to sort of shoot for in the medium to long term, I think we're continuing to make progress on that. quarter after quarter, year after year. And I think this is another good quarter of balanced growth in the way we'd like to see it.
Speaker Change: Yeah, I mean, I think if I look at page 7 of the press release table 2, you'll see that on a year-over-year basis. We've grown our single family book by 5, almost 6%. Our cni book by 5 almost 6% and our CRA book by a little less than 2%. And so, if I think about hopefully, the comments that I've been making at the last several quarterly earnings calls, and at the last several earnings presentations, it's a focus on continuing to grow the bank overall.
Speaker Change: With a particular emphasis on growing our cni and single family in the balanced manner to get towards the third or third, or third balance, that Dominic has encouraged the bank to sort of shoot for in the medium to long term. And I think we're continuing to make progress on that.
Speaker Change: Quarter after quarter year after year. And I think this is another good quarter of balanced growth in the way we'd like to see it.
Unknown Executive: Okay, the rest of mine have already been addressed. Thanks for the question.
Speaker Change: Okay. Um, the rest of mine have already been addressed. Uh, thanks for the question.
Speaker Change: Thank you.
Dominic Ng: This concludes our question and answer session.
Dominic Ng: I would like to turn the conference back over to Dominic Ng for any closing remarks. Thank you. Once again, I would like to thank everyone on joining our call today. And we are looking forward to speaking with you in October.
Speaker Change: This concludes our question and answer session, I would like to turn to the conference back over to Dominic Inc for any closing remarks.
Speaker Change: Thank you. Once again. I would like to thank everyone on joining our call today.
Operator: Bye. The conference is now concluded. Thank you for attending today's presentation.
Speaker Change: And we are looking forward to speaking with you in October.
Speaker Change: Bye.
Operator: You may now disconnect.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect