East West Bancorp (EWBC) 20 Jul 232023 Q2 Earnings call transcript

Good morning, and welcome to the East West Bancorp Second Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded.

I would now like to turn the conference over to Diana Trinh, Vice President and Investor Relations Officer. ahead. go Please

Good us Anthony. West thank everyone, you, second Thank review morning, the joining to XXXX. East financial for quarter you, and results Bancorp's of

and Chairman Joining on Dominic recorded this deck on Investor and for available This and Relations Irene available being Oh, our be call site. on Chief call me is is Chief Ng, Investor referenced Executive replay are will website. Officer. Financial slide Officer; Relations our The

statements which of Management differ projections and may other forward-looking due measures. number make the from a management financial results risks may actual non-GAAP or materially uncertainties, may to discuss and

For a and including the financial risk non-GAAP measures, and more please today. Form refer X-K Exchange a Commission, filed filings the Securities factors reconciliation to of the to description detailed GAAP our of with

over I now the will turn Dominic. to call

X you, improved Thank for results will the you, year efficiency review everyone, of call. all pretax and morning, pre-provision results, joining ago. profitability, revenue, a us Slide our and Good financial I morning, our earnings we reported begin of earnings Diana. our solid from presentation. This thank for with

prior both Second XX% earnings per were and quarter and of diluted net of $X.XX from XXXX million share income $XXX year the period. up

both grew for annualized to deposits For deposits $XX.X and the X% second billion loans. for and quarter, loans linked quarter $XX.X billion

consistent high throughout various performance market maintaining been interest financial while capital ratios. The our hallmark has East for and cycles, West rate

profitability Our continue levels be and return to industry-leading.

X.X% common equity. For on assets, tangible quarter, average the average second we XX% returned on

outstanding in the quality and the points of was X.XX% from healthy first continued with margin margin X charge-offs asset of basis interest Net environment net annualized. quarter although to be down current a

a sheet. of summary Slide balance presents X our

from XXXX, of XX. billion reached March or total annualized X% an increase As $XX.X of $XXX million XX impacted June loans

industrial commercial loan a residential annualized was in and average offset quarter. quarter average by partially Second growth decrease in estate loans. mortgage from real was and X% first Growth the commercial loans average

deposits increase XX. of or June XX, but year were Total an from first as March Second quarter were from The average the XXXX, million annualized million deposits $XXX ago annualized quarter. $XXX from down of quarter billion or X% $XX.X the X% up

quarter, by time in average checking other and During deposit decline environment. interest-bearing the a reflect rate offset higher customers yields were categories, deposits in growth which second rising interest in seeking

loan-to-deposit type Our deposits of deposit were deposit of is demand XX%. as by and deposit our book total diversified ratio well noninterest-bearing June XX, XX% was and

X. to Turning Slide

strength all our the on regional our ratios of shown continued capital capital ratios due of to West this earnings. be East to banks. As slide, expanded among the quarter-over-quarter for highest

our pro XX. The Also takeaway Including to investment as these marks items, capital of improved on forma capital key is June this as The our losses of of very allowance common capital not already the and June X.XX% tangible loan adjusting is slide, included show that security capital XX. calculation very equity ratios pro forma solid for strong. ratios.

quarterly Board on August be common Quarter-over-quarter, $X.XX share third XXXX share East declared our The common tangible dividends record to X, of of August XXXX. quarter for West's Directors Company's dividend X%. will value book increased per on XXXX XX, stockholders payable stock. the have of per

discussion beginning Slide loan of a with X. to on our Moving portfolio,

up loans from the C&I As of by quarter year-over-year. annualized June $XX prior up XX, $XX.X X% million X% XXXX, and or outstanding were billion, end

XX. of by portfolio Greater well $X.X quarter As linked to and continues our XX% diversified loans as industry China June be annualized billion C&I slide, shown on this to sector. decreased

originate amortized is and LTV Further, loan-to-value XX%. seasoned a The real the typically estate our X our X for by XX years. with customer we a CRE and Slide estate to geography which commercial diversified loans maturity average portfolio, of a real base and X details low is portfolio commercial type. of show well property Also, final have we portfolio.

XX, X% matures and another second of the the XXXX. in X% XXXX June only half only CRE of portfolio income-producing of As matures in

Total CRE June cash quality March up XXXX, commercial XX annualized managing We decreased from loans with to proactive X.X% for June grew March up total loans in vigilant year-over-year. loan of loans to from X.X% to X.X% payoffs. portfolio our of Credit risk. billion for very as as real remain XX, Criticized XX and $XX.X XX% as and our due and upgrades loans remains improved XX of credit estate loan CRE strong. flows

retail on Slide the CRE, estate on commercial provided and attention Given have loans we and XX. our X real office about details more

is on commercial our see can large few with you Slide very office lots. X, portfolio As granular, real estate

of size We is have is only loan greater The XX CRE by XX% of The to downtowns size, primarily than our only different CRE loan-to-value which the low the in and six portfolio weighted consistently office loans we our is central low geography average in markets office million in districts office of loan-to-value well lend exposure business XX% segments. that loans. across the the portfolio with limited in. is diversified are

see granular loans. commercial can few is real with you that portfolio our large XX, retail Slide estate On also very

across reflects average only geography are and of CRE portfolio greater long-sized The low only a loan-to-value branch XX% of loan-to-value is loans XX is than that well the portfolio eight million X% our low which largely network. consistently our segments. retail have diversified loans. different The is is our also the footprint CRE We size, and weighted retail by

consists details our equity provide regarding we of of XX, lines mortgages Slide which residential single-family credit. home and portfolio, mortgage In

June of totaled $XX.X XX, up highlight I would lien Our Residential residential to loans positions that as June primarily quarter mortgage XX% loans and at linked are mortgage XX, billion as in annualized branch originated commitments our XXXX. of first of through XX% year-over-year. XX% up were our HELOC network. like

by out mix breaks commercial deposit for Slide segment by further our deposits. XX and industry

of totaled deposits linked as and an June XX, of Our X% billion $XX.X X% XXXX, annualized quarter year-over-year. increase

XXX,XXX. West June East of size deposit as accounts XX, and at is commercial average deposit XXX,XXX over have our We approximately account

XX% size deposits an retail our have average totaled and consumer approximately of Our of $XX,XXX. deposits branch-based

sectors Our diversified industry. depositors, have by concentration. are commercial deposits do well not We of significant all

to over discussion call for a and Irene income the detailed turn our more now Irene? will quality asset I statement. of

and all Thank good you, morning to call. on Dominic, the

Slide quality Turning asset remains of XX. portfolio our The strong. to

the During points, million XX charge-offs, came or we X $X.X recorded from primarily of higher charge-offs offset gross modest second Quarter-over-quarter, improved point by criticized charge-offs first the the basis net XX%, C&I basis ratio criticized in increase a The basis partially loans quarter, X increase and points. net from improved recoveries. higher of quarter.

the of stable In asset modestly loan reflecting from the XX, our quality assets of Nonperforming points to basis assets XX growth, current XX of metrics. as total XX increased points June as basis we March quarter, of losses provision with increasing loan in the $XXX allowance for $XX outlook, second the for a macroeconomic recorded compared million million. credit for quarter $XX to losses first million

out our investments of of price effective on be we amortization currently for of tax anticipate year for the And quarter Slide reflecting approximately to this the fluctuate And detailed tax tax the now rate statement weighted the On investments approximately closed. starting full of the will on XX%. tax that will for be as third when the We million. investments XXXX, timing quarter-over-quarter, $XX tax the amortization income XX. slide, specifics the discussion and effective rate

XX. to Turning Slide

quarter. income basis compassed margin points by the Second net Net a of interest quarter XX decrease interest $XXX of quarter-over-quarter. million, XXXX was X.XX% first X.X% from

waterfall mix this this chart largely As impact costs from deposit expanding and you on see can higher slide, yields. of due offset partially the interest-bearing the by was deposit to the shift, asset

XX. Slide to Turning

points XX was loan The an second average basis of X.XX% yield quarter-over-quarter. increase quarter

of As March of each June was rate as we XX, prime our X.XX% loan XXXX, also due and XX% of On the for X.XX% portfolio XX. slide, of last rate this was loans coupon present linked rate loan total, the XX% linked yields variable the with quarters. spot XX% coupon as major spot of SOFR. compared In to five to including our portfolio for

XX. were years, rates we pass a several the to the against of our CRE use through rising many continue Over help last of customers to and low, and extent, hedge rates C&I book swaps, lesser while as rate loans clients the of June service the protected fixed are synthetically collars, XX% of or rising rate higher rate a and total fixed and These costs environment. CRE debt against

XX. to Turning Slide

for XX XXX the points cost basis from first average was the up deposits quarter second points, of basis quarter. Our

on point our increase same basis XXX equivalent basis XX, was a In June as the rate deposits been period. time Fed beta over the to the on the spot to XX% total of target XXX points relative in funds comparison, Our XX% loans has XX, rate cumulative cumulative XXXX. December beta since

all was fee to in income second the growth on Slide was reflecting million, during quarter the $XX fee million. noninterest quarter. income income income categories Moving Total $XX XX. Fee across on

reflecting $X from higher of income Act $X For the the second Reinvestment quarter, first largely million million up from other quarter Community investments. was investment income

XX. Slide to Moving

of million, adjusted a second expense tax excluding Second and quarter, credits the was expense in quarter amortization sequentially. noninterest $XXX modest $XXX C&I, X% noninterest million the up was

second employee expense higher seasonal million compensation $X cost due The to by first quarter a was and in lower quarter. the benefits

XX.X% adjusted first quarter. with The second compared ratio in was the XX.X% quarter efficiency

in second quarter and Our adjusted pretax the was pretax ROA pre-provision was income X.XX%. an pre-provision $XXX million our industry-leading

Slide the that, XXXX full I outlook updated on with will review of XX. And our year for now

is range the interest rate results, in X%, assumptions X.XX%. with target for Year-over-year, For prior which the to June points curve assumes XX range funds October full full of as growth unchanged to year rate we the in interest year-end in Underpinning compared year-over-year from expect net XX, year XXXX basis to rate net XX%. of interest XXXX our of our hike Fed one XX% funds income of of growth X% loan the the outlook. Fed a income

our the Adjusted and expense in XX% and operating expect to X% expense positive of leverage result in outlook revenue year-over-year. noninterest to range growth we

for for year the for to to driven in and credit, the outlook. $XXX provision of credit largely a of in macroeconomic by will range loan report we terms losses XXXX, million. In full changes credit losses currently Provisions be growth for $XXX XXXX the expect million

limited quality manageable. asset from are losses excellent, believe problem we is Today, any loans the very and and potential

approximately we will tax and effective excluding million of light based rate the full $XXX for the investment that approximately investments, tax million rate Finally, credit estimated of our amortization be and related an XX% year. year expect tax on full $XXX for

back remarks. With turn for call now closing Dominic the that, to I will

the deposit we In although financial Irene. with Income our competition. and decreased interest performance closing, given you, core pleased strong earnings, Thank net consistent are

strong. well resilient with healthy. revenue very operate deliver we profitability earnings pretax are is high remains sheet profitability. balance Our and and The and business and capital our strong East to diversified levels, West and positioned pre-provision We is model growth

I Operator? to open call questions. would the now

first with Bank Instructions] come will Our question Ebrahim America. of [Operator from Poonawala

go may ahead. You now

NII. First you Irene, on question, for

year. step stabilizes in implies in guidance per of So, your down deposit terminal being of right, the back it it half NII NII around have assumptions leads at at If quarter lower what the that your the I And X.XX% was betas, the NIB decent a NII second quarter. about us to XX%? guide mix XX% give the versus One, underpinning guide? end your

question. Great Yes.

when And have We're all, stand off although quarter. new second customer look bringing with the placed that, lay deposits. at some growing, the balance What's increase did of where through is to keep the that we cost First we the on higher-cost the positive, of today, we after right? disruption. have on opportunity of -- the positive deposits these we -- deposit in mid-March competition, we the sheet deposits we what's broker

deposits. since share customer at X.XX% about lower laid a I'll we've replaced that with and $XXX little million just And have over cost off June XX,

of momentum think is stabilize. the underpinning we here, drivers is one So, will that for and NII the why

expectation Fed as increase a will side course, little will on rates next Of help week. is That yield the the well. that the bit

going the there to think I then, how of side, And deposit around be the do where I were are bit the as how min/max customer that course successful we'll little successful a and as over the be guidance, growing mentioned, in we is of course, the range loan of but on deposits a momentum lot as also is far those the the positive year. we And growth. -- the are, on of

do the NIB stabilize, And to balances where Irene? you expect

Yes.

I'm the from that share quarter I'll June is sorry. will and little that XX% Yes. So bit. XX, were yesterday. of right at decrease we're as a now, has been expectation we level DDA, my it And positive, date also

clarify. to just So

perspective XX%. So as deposits X.XX%, days and June days of as as XX, that was now M&S two June for is just XX%. it's XX, spot DDA the another X.XX%. of two ago, then rate ago, And of

fact spike around the at And is a Bank maintaining deposit it are steady. and close Quite actually even look stable caused pretty frankly, Silicon back April. X.XX%. the to even we March, relatively which situation well, the So, deposit you -- we if in rate in Valley very rate reflect in was June, if was and May the just

be we do we and it of need cautious tool much a that we certain own prudent, because come we on in. try -- to extent, our not And did deposit kind to extraordinarily to wanted and and

deposit have forth. up very of ratio so have the loan-to-deposit actually not did. deposit, but deposits broker outflow good we showing We in and less some worrying could about and We just brought

we once much commercial April, more with and And by going we so retail all some that, can things stabilizing, are we stabilized we deposits to off decided should momentum we institutional situation able So that to deposit. replacing forward. high-cost of just we and be money existing forward. that and stabilized saw now that move new customer think confidence deposits, a the clients it it after ease us in And whatnot, customer because can together give the

one I Dominic, capital. it. if more Got just around And may,

So reported given at peer lot market right Are in? capital businesses. certain are lot is we excess building the macro you growth way are, a Talk where are look to terms of have have lending now? growth too how share Or in exiting banks you for a leaning you opportunities capital, of of opportunities? to just uncertain looking and us your

my you It macroeconomic that like is question, know it in said of answer exactly is think that anyone the that have on I your they mean I here The just question. Yes, going should situation, been I uncertain. is spike By don't arrived. the kind what's recession future like the said it uncertain. know. thought thought We really didn't. I I actually that, with has recession the it rate already mean themselves. kidding now, but

out soft landing. be may And turn great, they not. to it So, would that a be but

on. decades, been of environment be there. customers, So, never environment high competitive are that market as But bet the out is some something quite price, at the is is bankers them of frankly, venture to good good as And meantime, them they we go not they certainly reason competing been ideal today. net today, for are very we good very When environment with at worth -- some mortgages for whatever for can it market PE, decide on. to the economic in that say has some able at and, making I capital, compete not neighborhood neighbor, we've

competition like size, engagement being we So, have with our to continue senior to and our just of less so with with able have sort much management clients.

market be position We are to in I've a very good West macroeconomic sweet clear. spot. East today. never a better not is certainly than are From perspective, the environment in a we seen But

So to do making another kinds is I crazy return -- to are and on want do when to back why and XX% now reflect you right which perspective, of try equity, stuff? go then of all

order big have in out and not so right to like to with a who explore time we relationship go us, the earnings So, other and we trying market. we to kind customer there make we some of necessary from and welcoming at them. prudently, are not customers where But we now. hirings other there go are we group one to banks it watching then advantage forth. are out because make then when here doing We're want and taking and of of there a That's there's certain that are

portfolio, We a have deposit that's portfolio, very diversified and very diversified loan good.

I'm metrics. coming still we and prospect what we we make is, And really I'm disciplined in, certain but are but metrics or in two East about our sure how quarters, next And -- good we'll Bank any feel we opportunity credit much next grow. be it's the is there's with that to if the And that West that's in entertain. three XXX% sure opportunity will stay certainly going -- that two that not years, there to good. pricing

Our next Jared with Shaw Wells question come Securities. will from Fargo

now may You go ahead.

with on sticking the Yes, capital theme.

expect capital the deposits How What cash will down and at continue to BTFP soon, high high run capital the you a into As ratio year-end, can that year? management broker capital? and paid only off we too if the is be XX% else flow payout for go grow. assuming

too a need buying stock return generate because with they to obviously and today, I obvious is volatility -- of or it that if capital the very to that, that's is lot high I macroeconomic have that how do these can based they way high industry-leading the many is banks ROE. what of that We kind a we is high we on see ratio, again, there's -- think EPS The -- we well, still required, what comparison we out there need environment. do.

we So So we for friendly. right? in have that that shareholders our therefore, dividend is this also of, year, do shareholders after we obviously standpoint, urgently light year something to but are not have increase from

we very just so absolutely not enough -- and ratio that So not There done point, terms horizon before, we much reason high. economic there's it -- capital the we that scenario. outlook. we be going we consider then growth, will that risk it a feel would earnings, come buyback in for done think in We've for And to is getting in too that. that again. the much in it's market, do possible to of is the really We've

a buyback and for better in is acquisitions we downward forth. to recession or money much that that long for not spend want industries spiral capital economic keep market, this kind coming economic on and having This that environment, may excess and so better strike anything the affect aggressive the in the opportunity. certain don't out major for much don't a wants the available potential create the conditions uncertain opportunity to of on whether know how cause will high But or we there may be rate to Fed a how

run we kind run our basis. we bank don't sustainable on the bank a as our all, after of quarter-to-quarter long-term Because basis,

year look earnings to last three and that. growth, and For been at after always do we record year quarters, I've of we after to year the sustainable want are able be here, you

even just if still still in We're we have infrastructure. do we're that, make And deposit like to constantly enterprise decade. continue ability we make our we like in so the investing environment way investment. our the management platform you have the the risk that quarter, last And challenging to in the sustain to past for done to investing sure long-term growth like a have

So, kind If like and sense, it do makeup. way. strategy very the simple, of the makes a we'll it's actually, just on simple very it right

looking And follow-up the just growth still Okay. some coming just of single-family the anymore? and great seeing strong Are is in? base that? I is country? one What capital coming existing customer guess at base customer potential integration there. U.S. maybe the Is it in additional the you Or the this residential, into the dynamics are already driving existing

U.S. become branch to fact which people and our It's combination. is over bigger stronger, we, networks The brand. always coming brand and There's the then a all our immigrants place has recognize the

and our in to the to East coming customer so West know decision the a Asian-American manner. banking because retail more that footprint can they approve more the Bank community West of get in East And make from timely credit that to they

both the manner are from strong on also outreach We'll to the so a a have fund momentum loans far. us very and close continue services to and within allow broad that footprint loans, branch the timing

people I not we this buying me economic are buying with homes surprised that report in fact, Again, It's guess just the a that the people expect East from buying not statistics particularly see West, would this people I still rising by homes. at country, way, but are like bit. still throughout the also rate little homes. different just, that, the

benefits. the we're the fair getting So, of share just

will Dave Compass next come question with Rochester Our Point. from

go now may ahead. You

a hike hike up you off the On but hike July, uplift this the have I right And would your in guidance guidance your you're better in to from not situation July was the here, guys in margin, bat rate margin? October you assuming you expect obviously reiterate, to curious mentioned an get in be helpful. a be versus hike right? the just coming just much how that

correct. That's right. That's

loans I on you expectations I helps of XX. the hike, say moved variable from rate then. I let think that since it don't that have. based me The front see our forward to you we lift just it June guidance the don't have I day, is bit as clarify in of think market given -- Certainly, certainly, a but curve number, the rate little

being assumption rates I conservative also elevated say increase time, do beta -- the the of from they given not that for this rates on even in still before point current not environment, that of kind may the hike we're rate expectation with I decrease. deposit if a period time think

on underpinning So and that's guidance. our kind NII NIM of also

the of kind share earlier. comments also my I'd continuation of

quarter-to-date. about So about off or -- we laid million $XXX so

we $X.X the is billion And very of cost higher year. seeing course deposits pipelines as and of about half deposit far achievable that second plan that's what $X.XX with of the the billion Our over think broker on will the the run off. front, we're as

just sort Got that your Is you that part Is on the cake? from are that? Or it. icing guidance? of including excluded

That's range that included, around data. we're about modeling how that around but

And you cost that pursue? Yes. save see could could increase on you guide, That's guide? would the talk opportunities any prior that expense just my your drivers great And if potential versus great. if for the be guys in it you about follow-up the

Yes. question. Great

expense of that look remainder of of couple I the are kind what also do growth. sentiment think we've year to than need lot the that when That's and sustain to certainly, we the actual the the we a reflection far, the start a expenses, year-to-date, of look things at expenses April. incurred the the at part different investments at the -- our things. were on and just they guidance, from around the certainly of and and we mid are are things, what One, prior results when us increase guidance the the

perspective. frontline, grow, Dom a As about, are had talked also opportunities we back from see management office risk to to continuing

unusual in we -- but the that. over are year-over-year. up hiring really Nothing headcount those are near drivers the So is real is term, around

the I environment think certainly, to I reduce, think changes. drivers

are time, there we expect levers Now at there point I this don't as well. in Dave. some But think that,

Gosalia Our Stanley. with next Morgan come Manan will from question

may ahead. You now go

just and you're I resi? footprint either your to -- that side, the strong what growth on new in Are Silicon Republic or in there in seeing your footprint? in from get gains deposit sense seeing on of the any you're both Valley especially business legacy in the wanted getting customer you're a of terms loan Bank customers gains that First given

getting some. are We

We I those bring people are -- pursuing like happened and to new bankers kind to homes. said, like are HSBC obviously, a of mean, institutions, not I of of seeking selective. a we that JPMorgan, are there not this things. do are team lot And like bunch whole going what of over A aggressively the lot very we

in coming without to there mean, us. without being So doubt, many inquiries California, a I are

we in And right for our with and them we mindset just of model, the -- the on. thing that so same then customers. fit into people we And find fit right right with type what then bring cultural the

We personally for referring sales clients and looking have customers. home. for we who from a were customers our our new these banks, I sell to Well, friends they're have just more inquiries

lot XX%, commitment with some of -- We So busy a but we're taken and noticed took booked. to accounts, outstanding many that balance do up same while drawdown deposit X%. flowing. it's deposit. for to on the but I and And going getting start a gone look little a if a but up getting mean you of those. loans little thing opened C&I, start commitment, at of them in it's of take we operating while We you very those to discussion lot

quarter hurry not trying doing not done. three We're quarter we're we're again, line, we finish then business. two that it's have quarters like one long-term because, to or a in and And up or running

they start on existing experience. our neglecting making we this these And up And overwhelmed get also we increase ending for sure right customers. to surge just want that so new then get the clients, of the and gradually taking don't

to also to our further addition upgrading in enterprise of wanted continue then and -- and journey risk that, our we management. enhancing whole So

sort and this from just take are aside of over, other stop care then so, and we all fundamental customers banks, increase care to there business need migrate that wanted I cannot be put And of. work like sale of these from to the we because taking

get all in all would of the customers, we'll slowly also more of some from the these at who fall the some I the that also just So have looking way, clients all, of these be have to their we're not that don't because same doing like many banks. challenges only expect And other or East sort to banks these gradual gradually, of By that time. regional have going be high to much They are looking worry at going about stopped that future. of West customers have at are banks a the likelihood.

in with the strong going general, in always These to have don't ones And soft. that, banks out, gel of the put are well in, very numbers get out high and capital and year year always ratio. And be out regulators.

want So keep that therefore, we to way. it

then and right? excited So in be want get all about where So go are. and don't like That good, to we or something gel get crazy we ourselves opportunity wouldn't back that's that. this

this do guess your of moved expense industry a in some to need expenses asset whole I as sees overall, impact up to to I invest there guide your bank in size? the also but is terms you investments in in then, if think opportunity investing And related from continue given more as environment? that, business, due know seeing into mainly and driving the regulation, talk you you slightly. guess else even next should the I how an about Is maybe you business, you're that of And year it going about we revision? Can there's anything there what's

we less less billion. are billion, far than than $XXX $XXX Well,

just threshold. first around be is $XX so We of that X/X, are billion this about exact therefore, to X/X and

to now, beyond we that a right we at $XXX sure from make the regulators. going it's while think about if a and if do minimal requirement Also, always billion, need take do looking to organic we're even to whatever So get above growth, to we are the it, required to $XXX you that billion. that

threshold. And struggling ratio, once do adding the of they here way it. may much are because all really item there here not really our and with about ratio so at you low not with they capital is potential capital banks meet get it's a proposal an then start the one making the because and regulatory lot issue new We're

we're So on folks to one then reminding they the way get wanted I difference, that but actually other the or size. call a the only keep X/X

to So, worry. we're qualified not

the back meantime, increase the of mid-April, guidance mentioned in the Bank, the expenses, and we to as that Republic we expect after Signature earnings getting much start to a at of in happen. -- guidance and as So of of the first -- didn't it's in midst First situation, drop that when opportunity we company, recession all slight Bank probably the point right? But of grow expect will Valley because the kind in Irene did the earlier of putting Silicon rates going April as to this increase be quarter that

looking in in higher we the So April. bit. parents little us. demand talking right they that well, somewhat there But kind saw by or our fit it's banks start they the rate. was of also maybe and not March these it customer saw in very happen, And the of are fact, customers for not that, deposit coming. new And much to increase Because to May once those into only a acquire much start that, It so subside. was did so, of trouble, bands some and got it's at from addition stabilized, stabilized and

of of need stay to all bankers. we is continue to to at we we hiring appropriate invest the whatever looking start talented that, it some that we start And feel vigilant it is appropriate that When invest. to

overinvesting. a see overinvest. invests talent from not are at are our and they We we an West to East We them and operational never But whether there always out incrementally absolutely bring into culture from infrastructure fit terms on. of hiring. looking in technology,

leverage why but don't concerned is we then over comfortable And that. X% still And expenses. well, way get positive feel would wait, you not all that do sometime affect we X% we a have offering about, our doing therefore, you about because or We today. should -- wait, get of that

other, we're to way be growth. one expense bigger revenue the because So than growth money or going still making still more the is

very on that very with what of So, ratio right industry. high do to equity in is light thing return compared we feel this the our confident the

what's continue to keep right, what's just doing Let's bank. the good for

Right.

sounds to a growth it from mindset even So, the $XXX well like below ask expense more the anything investment rather regulators is might spend that do. billion than coming banks and

So, I appreciate that.

question from Truist. with Brandon Our next come King will

You may ahead. now go

Yes.

stands criticized out So, actually loans opposite I declined your peers it quarter-over-quarter amongst seeing and are effect. noticed have

you're if could on seeing please you elaborate driving your with what So, effect? to customers that that's

been do potential What West It's regular doing part. we've Bank. East see years. we five, -- about by we years portfolio loan nothing of loan scary seen actually, Well, is a concerned that's That's six that the for CRE been years and we've review. part I've this ago. been

vigilance and we the quality the well, -- portfolio, loan-by-loan for asset so we guess, pretty do because review, I high we same do C&I. thing have And we from our and did continue

pandemic, mean, wow, we I going with thought just we to -- started, it's be tariffs got tariffs. -- we start with earlier. we to back even the And I that said, let's you the get We

hard. Our to be trade going portfolio finance getting is hit

one. monitoring Let's one just manage really very one. one by really, closely. We review closely, this knew by We credit

discussion We with clients. have

becomes loss mobile business. tariffs the just do that, we a to what and at And then thing. them through day, end day-to-day Ask get the the to becomes then didn't take of right any now

fine. And we day, lose of point. manner, we payment rent then And take kind paying our of any tenants the clients the with can the their not pandemic. we're rate thought, then all of shutdown when said spike get lot a at as then didn't a taking no there's to to loss. lot and in at And of we centers are and interest these in and pay some way apartments. hotels money. rate this today, aggressive they're doing But losses of end very wow, then strip We this very, interest through this going We're going

have to Brandon, them in that, clients which I low our the lot for property. to and very clients of then lot incentive liquidity have give it addition we helps a when Well, to more have And personal stay many think, of a on loan guarantee. value,

side. All help commercial estate portfolio these characteristics in the of to strong keep real this

part I only Loans maturing if XXXX, like my in be XXXX, for script about of I Brandon, of another then then you. only that our and ask, as you think mature that in the of as And loans mentioned, X%. talked remainder X% sort we of XXXX, will there's CRE

we coming will the for XX next XX% our months, have loans altogether, due. of So

very We worry that just a a -- concerned. lot not that to we portfolio whole about. banks that this downtown big cause building need we to cause happen have stable in don't So, have high-rise us other there's

of all helps. it's think that I So, that

criticized asset in ratio. improved the of Now terms

to probably because to we when getting the have back track. loans back see we pandemic, prudent mean, really we've -- could Do again, normal and a good to have have better, make things These been operates. pandemic, wanted a wanted upgraded them we then they -- sustainable We them upgrade. sure better conservative. on how cash of didn't a six, and upgrade if nine I the from we We get back. that to months bit getting it to things give time downgraded because ago, we more immediate when and during Some flow do, business little after

been It we of. three perform that. care these that earlier It's certain some ago are little that two loans should credit upgraded -- is timing ago, I suddenly, of better, So there not and to maybe a degree, have today, months just say, a these like took or a would of months difference. upgrades bit even like some,

a that can from reduce I that ratio. having couple also that's in there, that's criticized we help the will other it the And months. here are loan there help find think reason. credit here the Now all, of then some all this and the two to and way notes last thing a -- off be and challenges, pay And declines

that down customers. there noticed year? wondering then, new the I the ticked from great know I see color. half front what and C&I lines But And just really back towards continuing utilization you That's been on a bit I'm the anticipating And you're of in some deleveraging there's quarter. the

the yes. of half year, Second

mentioned. think The a you now. environment little I candidly, bit, just was right C&I, down kind quite the Brandon, tick as So utilization of did

certain up. As share, that, Now as are and I only a would would look the there's a when extent, though, half talk though, right? I can mentioned, do share, our when the client look Dominic acquisition we to the the so with much we we leaders, for second team year, is it of we pipelines, new where positive. and expectation something increasingly to at is commitments

That's that that areas something is expecting the say half year. that would certainly of say from where substantially rate current said, I would that from. that necessarily and not pretty coming of environment, I we for of With given concentrations also It's that, second in this growth utilization will increase we're have specific the or broad-based. factored point. kind no the But

Clark will next Our Sandler. question come with from Matthew Piper

may go ahead. now You

then it? June, cycle monthly of was shake you had day? is a close beta to the out a basis. on the beta there where margin, take but -- on And NIM loop XXs the for the low what the the targeting us spot in think Just can end you think give previously you deposit sense might we'll if I were you at Irene,

Yes.

So the NIM, deposits NIM the Also, in I'm X.XX%. July, same. spot close sorry. the up not sorry. June I I'll the as share now of right. the in end monthly same was it's I'm the still until month

think will modestly we NIM it that to flatten out from is the the still but the for with that expect and drivers second improve. I decrease NII about, we're talking that quarter, expectation

can Hollywood Got and how to you in X% protect media might of and structure the impact to know then only place have it's that portfolio of it. might And shutdown portfolio, what the speak you just the on in I entertainment yourselves? loans. terms But

Yes. production, From booked actually, have we entertainment a draw growth not lot don't origination like there's -- we loans. point of a concern. of But down. any going if credit view strike, a risk you're to from perspective, volume but loan But production content on a

will drawdown long. that then going that time, of it's credit loans we that period we So like have quality not to have not and it's would have, of sustained strike extended an any kind hope But some too doesn't last to we issues. have if may for the

the have slowing production diversified content beauty why loan that a a little that's financing very portfolio of bit. down So, we and is this entertainment its

to we're -- new these offset loans clients officers work portfolio. any All to get have all on issue. the get gains to to slowdown continue funded of those Some the is our in going not be It's all, going just others have it in to it make back up. the balance lending get and on particular side. But to entertainment looked outstanding it's credit at all to I the that just to coming quality prospective that

that entertainment. X% to a that entertainment. we loans do Page media at to the highlight highlight are mention, I want in -- of X, we look want our media Again, is and you there's I if chart,

do not the some of forces. strikes. the the are Hollywood we video things. These games building they media, that portfolio and affected of So, ones part also digital They're have a other by good decent then are and sized of labor not

different. very it's So

makes up combination to So that it's X%. a

what sizable reflected So, not we X. as as on Page it's here

I'll Matthew's I just question answered incorrectly. add, And

So monthly the as for June far answer the as was NIM X.XX%.

from Tenner DA Our next Davidson. Gary with question come will

ahead. may go You now

Irene, your basically brokered we $X.X $X.X of year. that as then the runoff should rest half top you of or loan back the by of balance thinking Is and plus side half that replaced of kind the sheet? equal customer I the your the that know deposits way growth deposit an of we're be additional guidance. the about thinking of sheet, about don't year. wanted to of being give growth about minus kind revisit to in planned billion the on think of I the kind growth back comments of billion But balance

plan. Gary, the is that

pretty be it new must I then in? moved June of -- the part $XXX What's very are so and kind question, close so it rate that doesn't like it off it XX sounds customer because million the like of to replaced by roll you've kind the cost that sound And deposits. Okay. of that's that Is the spot much? deposits the of the coming guess, far or incremental customer July or marginal second in is

great kind that's marginal the a Yes. there incremental little is Well, of increase assets The customers, deposits, I is new bit a happening. -- new question. think new CI that actually that

Some of migration of little on especially the been CDs, seen side. to bit higher has environment a consumer with that rate the that we've

more in CD oriented? is coming The mix

Well, let consumer me and the side, clarify.

but that the to side, on acquisitions, the total, be the is dollar-wise customer rates. oriented lower and growth think in with something overall, side. especially has pressure a continues generally, is But on that consumer commercial commercial been new that I CDs, margin

given impact multi-quarter play of I on then week, over and catch-up much you moderates delta, think to one the question catch out? the couple next we've one in after rates. hikes And this any deposit a lag pretty In the additional last of rapid. being is that no hike Or guess where has more week on beta of that of have the last long kind Fed the there might that the after Fed's of Historically, had sense scenario hike and nature? that's where do or you stops kind shorter significantly quarters, amount third been deposit assuming last Is and after Okay. raising quarter your pricing. quarter, is fourth sense incredibly next how up some kind of the the that of the

But I modeling Yes. cost right, somewhat honestly, good Gary, as elevated mean, out, that will assumptions a your we're around as lag, is are remain of the be kind period as of a there that. will right, deposit time. as guess realistically, our mine, for it

But examples out with dramatically guidance deposit say, been to year, changed as assuming the recent let's our race go in modeling of with able we of well. rest we're lower as and were kind the history different relative have for where pandemic dramatically the we're there not well, the costs and that. as Now in

it's certainly more so that go lag the following perhaps other height costs suggesting No, the Yes. Fed shorter is past. direction, than but I'm back that been not the the deposit

the spike point, higher heighten mean, mean March news think environment is weeks' Silicon then sets, of at attention starts I Yes. then caused I three the that one I in to asking and Valley industry, moving X, on rate? it sort a And the this of dramatic point, of rate look of entire consumer time that, change the a big banking this At the at logically, if you X, this it's I retail looking that or the everybody caused the some -- customers rate that March at fact deposit because either two for for would Bank interest commercial or big like out rate. surge expect

dramatically. subsided has that obviously, And

competition and along one really and high their putting attract have move to competition So don't that's there also But up banks the somewhat little out then same to the to a rate. we prudent difference the bit because rate put assume that to case, we that of go is, no stabilized. crazy be other going I by And in all going more make another see points a terms has basis is banking out have And when direction. that higher then the would when XX much in now to the the deposits. industries

question Chris will McGratty Our next come from with KBW.

go may You ahead. now

Great.

forward and curve a one Just get the from one, guide. the change two how just additional TRIM or react? year, next we think margin. you margin two cuts may to comment you was quick make the can hike The the on Irene, about out quarter-on-quarter a reason cuts for If the plays

great Yes, question.

give today. all, that's we're and for planning guidance I do that to January, not we something of in XXXX will think, first

nature the to fortunate something book, income happen, loans also AOCI, much on that and something, preserve Given the Chris, and of year, on is This on be hedges tough our But and frankly. that as certainly, as if as cuts were putting as interest be do around been income prior that we loan the periods. variable rate to swaps net that's disciplined impact tried the in I and interest to that think quite will that the far to the of interest income possible. we've loans

Our Preston UBS. next question will with come from Brody

now may ahead. go You

to would that had wanted kind or huge that this, in a forward, probably thoughts I quarterly income it's of know wanted and core was driver XX% Irene, forward good change out? of if items going thought any I results, just modelable kind would call rate this just you shake I a thought if it run ask you I to moving but if you not fee -- of around where

transaction the a that I the great that's the commercial, growth volume, that been surprise are again, been board, amount, management, been And there, for great. volume, fees little across have been we've is quarter-over-quarter, great growth in seen also in Yes, has account From which question. wealth the positive. And saying the IRC consumer, SWAT a that all fact, bit quite fees something even notional volumes as deposit for that rate fact, and us teams, FX think increasing. on not has low

a the factor normalized. there And a do when as well. mark-to-market and higher I'll movement at just of little the I the share tenure, that with played With momentum pipeline total of looks look than the kind is fee that the little we good. year bit a maybe think income, with is think that the said, in and that pretty this also But certainly, is great. the quarter rest I that

clients, new that that positive. and is something very acquiring are We is

look portfolio? And yields that's I maybe else, current the could rate the fixed you on what know at loan is months? I of I would everything dollar what's CRE Could But book, rate and it. when guess, like good that those And chunk bifurcate be fixed helpful? it next look it the loan do XX single-family the over Got if on the a the what amount repricing just resi. ask that loans? between just, you

Yes.

of the up. have a of loans, $XXX average, maturing it's about we But fixed talking and million next kind hybrid weighted you over XX on X.XX% interest of then move expect a fixed average to single if approximately different break So, and And per little down, repricing. that or family months, we CRE we're rate category. that probably

you the loans? yields what new look And like for origination already it. mention would those Got did

maturity this clarify, and some of are this to step of is up. some that to is going Yes, hybrids

at So Generally new speaking, family, And is look at been about but I think is look blended, the points. environment, the originations, a with said, X.X%. been these a lot mortgage for But rate of up, prices CRE And maybe originations. X% concern a step in new for we locked and X.X%. we hybrid outer process sheet for especially cap it's the rate started the if ago, variable the current single you there current XX-year been hybrid a single current X% noted, if on fixed that. have about the as the in C&I flat. the has family, while that and they and

I know Got duration the ask, to do rate it. in calculation that your is then what to conditional assuming you're And have and duration effective did portfolio prepayment you AFS the want is? of what

the bit, little a quarter-over-quarter more honestly, just Yes. of duration The change. effective the slightly around has tenure reduced

of So, at we're prepayments generally, can CPR, right get probably The the that I the X.XX% you slowed I also modestly. and now, specifics we look think the mean, MBS down CMBS, dramatically. the if later. I have

at catch-up side to a earlier about they're move. stabilize at and you think already because in speak just in maybe of lot retail the down Okay. my it just got June shift some NIBs. and beta last mix point? this me mix then I and Because beta -- shift out acceleration mix between clients that a you of those And this run the more maybe Great. hoping like catch-up was differentiated have hoping help cycle? maybe little gotten mix maybe that commercial steady of have But that I the baseline customers that? slower and thought And would we a had to and done question you've I on least was was brokered how I you're to at and the bit improvement and point on if sounds retail guess could the bifurcation I are between and going you there's then commercial the maybe in here, guess was kind that customers the just could

Yes.

that I would that have we is think that's probably exactly great say right. you're what right, you're seen a question. I

have, of side, And earlier that impact. nature the of the the On customers part there consumer it the was commercial we is was that side, Brody. on a lagging

still are with today, accounts. West. thousands have X.XX%, is That is of We balances consumer customers, checking billion our of primary many, the account $X of DDA as personal many at -- East out checking

their trouble in Now that growing moving environment, CDs. clients customers as had excess to current candidly this quite and liquidity are we've

So about betas up quite things that one deposit in second of on the and consumer the that quarter shift the quarter was pivot there this is mix a the bit a overall the although little until consumer second after lag but and $X with environment, CDs the we that where The tough quite stable XX. betas balances to stable, increase with from current which on remaining consumer did to in point. billion do, candidly growth, that

quite think commercial continue on if the I opportunities side honestly, the this the at time, time on with towards over in point see growth in look we side. that perhaps future, commercial the the And to we

to a the certain of moderate, alerted or extent, environment haven't to to going consumer think I because this you been right, not time. at probably you're if in point kind will rate interest

to clients. So, new side, on but as consumer migration commercial that we the we're continue well side as onboard the seeing not continual

will help I well. that think as

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

you our in concludes all today thank October. are very today, we Bye-bye. with you all our forward for call and to looking speak much. and thank joining you Well, That call again

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

disconnect. may You now