East West Bancorp at Morgan Stanley Conference: Strategic Growth Amid Uncertainty

On Tuesday, 10 June 2025, East West Bancorp (NASDAQ:EWBC) participated in the Morgan Stanley US Financials Conference 2025, providing insights into its strategic direction and financial performance. The bank’s leadership highlighted its proactive client strategies and steady growth, tempered by cautious optimism in the face of economic uncertainties.

Key Takeaways

• East West Bancorp expects revenue and NII growth to exceed initial guidance.
• The bank is expanding into new markets, including Dallas and New York.
• Clients are diversifying supply chains, minimizing tariff impacts.
• The bank maintains a strong capital position with a CET1 ratio of 14.3%.
• Opportunistic share buybacks remain a strategic consideration.

Financial Results

• Revised Guidance: East West Bancorp anticipates revenue and NII growth at or above the higher end of the initial 4% to 6% range.
• Loan and Deposit Growth: Both metrics have seen modest quarter-over-quarter increases.
• Deposit Repricing: The first quarter repricing significantly boosted NII.
• Capital Strength: The bank’s CET1 ratio stands at 14.3%, surpassing peers.

Operational Updates

• Tariff Preparedness: Clients have effectively managed tariff impacts over nine years by diversifying supply chains and relocating production to Southeast Asia, Mexico, and the US.
• Market Expansion: East West Bancorp is focusing on growth in key markets such as Dallas, Houston, Atlanta, New York, Boston, Seattle, and Las Vegas.
• Commercial Real Estate (CRE): The bank is cautiously balancing CRE growth to manage asset concentration.

Future Outlook

• Loan Growth: Maintained at 4% to 6%, with potential adjustments based on economic conditions.
• Asset Sensitivity: Plans to reduce asset sensitivity in anticipation of possible Fed rate cuts.
• Fee Growth: Targeting robust fee growth through treasury deposit services and FX solutions.
• Targeted Growth: Emphasis on organic growth in New York and Texas markets.

Q&A Highlights

• Tariff Impact: Minimal adverse effects on the C&I book, impacting only 1%.
• Private Credit: Viewed as a partnership opportunity rather than competition.
• NDFI Loans: Increasing exposure, notably in private equity and solar sectors.
• Residential Mortgage: Stability in growth with consistent volume each quarter.
• Capital Return: Share buybacks remain a strategic option based on market conditions.

For further details, readers are encouraged to refer to the full transcript.

Full transcript - Morgan Stanley US Financials Conference 2025:

Ivan, Analyst, Morgan Stanley: All right, up next we have East West Bank. Before we start, I’m going to read a disclosure. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. Taking of photographs and use of recording devices is not allowed. If you have any questions, please reach out to your MS sales representative.

And with that out of the way, I’m delighted to have with us today Chris DelMoral Niles, Chief Financial Officer of East West. Chris, welcome to the conference.

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Madam, thanks for having us. Glad to be here. So great for all those who stayed after the great presenter who preceded us.

Ivan, Analyst, Morgan Stanley: Well, have a lot of interesting stuff to discuss. So let’s get right into it. Chris, would love to start with an update on what you’re hearing from clients. We’ve heard a lot of chatter about tariffs, but you’ve also noted before that East West clients have been dealing with tariffs for eight years now. What are you hearing from clients and how has it changed since April?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Yeah, so the good news is what we’re hearing is fairly consistent. They have been thinking about this for a long time. They are in their ninth year of assessing how they grapple with the changing context of tariffs, the context of trade dynamics, they are ahead of these things. And what’s reassuring is clearly they did not wait to see what happened post the election. They immediately took action to position themselves for what could happen and were proactive in that good regard.

And what I would say is our takeaway possibly from April is they did not hesitate to look at the pause as something to be leaned into. And if anything, activity that we expected to continue to ebb in fact stabilized or stayed consistent as we moved through April, which perhaps was better than anticipated. And so activity levels were modestly better and we didn’t see normal downward dynamics and that’s helped give it a nice base for the second quarter. Now there’s a lot of stuff still out there and there’s a lot of uncertainty in the future ahead and the pause does expire here in July and we don’t know what the next six months hold. So it’s too early to declare any sort of clarity, but at least for the current environment, our customers aren’t waiting for that clarity.

They are each day making moves that they think position them to be better in place to deal with whatever uncertainty comes. And to a certain extent, I think that’s part of Dominic’s mindset as well. We are not going to out guess, outsmart the various folks that are sort of gaining different scenarios. What we have to do is be nimble and ready to deal with whatever punches come and deal with whatever changes happen as best we can to support the needs of our customers. They are out there to a certain extent making decisions already.

They’re not waiting. And our ability to be there to support them as they make their decisions and what’s best for their own organizations, their own customers, their own supply chains, their own processes, that’s where we add value. And that value continues to apparently have demand. And we’re delighted that they’re working with us as they work through these times.

Ivan, Analyst, Morgan Stanley: So is there like a broader summary or maybe some anecdotal evidence that you’re hearing from customers? Because as I think about the difference between what happened this time and what happened about eight years ago, is the application of tariffs beyond just China. So what kinds of decisions are customers making, whether they may have moved their businesses elsewhere in Southeast Asia. Now we’re worried about some reciprocal tariffs there. So how are they thinking about this evolving landscape?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: So they’ve been thinking about it. And as you rightly pointed out, many of them earlier on took opportunities to diversify their supply chains and move some production outside to other areas. Some moved it even to Mexico. And frankly, some moved it even to The States. And so all of that has happened.

Many of them apparently took the opportunity to either go to their buyers or to their own warehouse folks and say, we’re going to ship inventory over. In some cases, negotiated by the next six months of inventory, I’ll give you a discount. And they then sold that on and delivered it. In some cases, they just picked everything up off the factory floor and shipped it to a warehouse somewhere in Riverside. That’s fine.

Either way, they got it here and that happened already. They then looked at the pause and I think we’re seeing different things happen. But some are rethinking what does this really mean for us in the long term? I think one of the important things to keep in mind though is that our customers, whether they’re generation, generation, generation, or still an importer today that’s based somewhere else that’s selling goods into The US, they all make their money here, which is to say their payment is coming to them from their business and activities and sales, whether that’s because they collect rents on their multifamily properties in San Gabriel Valley, whether that’s because they sell food across California, whether that’s because they’re selling something through Costco in the frozen food aisle, or whether that’s because they’re importing things that Walmart and Amazon customers are buying off the shelves or off the online storefronts. They’re all making their money here.

And so it has a very interesting dynamic where we’re really tied to the broader US consumer demand base and that really hasn’t cracked. And so we see the employment dynamics in Southern California, they’re positive. We see the general economic output and it still seems like it’s holding. And so as long as that’s holding, think we’re well positioned and there’ll be ongoing need to support our customers across that entire panoply of services and product lines. And I think that’s working so far.

Ivan, Analyst, Morgan Stanley: So as they make that incremental dollar here in The US, with the higher level of uncertainty, what are they doing with that incremental dollar? I think last time you mentioned that you actually saw people hold more deposits here in The US when that happened. Is that happening now?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Yeah, so deposits are up modestly quarter over quarter and loans are up modestly quarter over quarter. And I think we’re in line with our guidance and expectations, but we continue to see positive dynamics on both those fronts.

Ivan, Analyst, Morgan Stanley: All right, perfect. I do want to get into some of the near term guide, but just before that, I think a great point that Dominic made on the earnings call was that East West has the experience, the expertise and the balance sheet to help clients navigate what will be an increasingly complex environment. And that can actually help bring more customers to the bank.

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Yes. And I’ve seen that now and sort of how that’s played out. So I missed March madness, March of twenty twenty three here, but I heard the anecdotes. And as we saw during the first quarter, we were aggressively pricing deposits down. And one of our concerns would be that the pricing downward would result in a negative flow cycle of additional deposits.

And in fact, people were able to go to their customers, yeah, we’re pricing down, but that’s because we’re still one of the strongest banks in the country and we just don’t need it the same way maybe others do. So yeah, if someone’s bidding for your deposit at a much higher level, maybe they just need it a lot more than we do. And in a weird way that messaging resulted in people saying, well maybe I’ll just be where it is then even at a lower price. And I think that’s a positive dynamic. And that’s evidence of the fact that there is an element of this conversation for various subsets of customers.

It’s not ultimately about the price. It’s about do they feel comfortable? Do they like service they get? Do they feel like getting a fair return on whatever their investment and or deposit or lending relationship is? And are they comforted by the fact that we’ve got the capital to be one of the strongest and safest banks in the country?

And the answer apparently to that is yes.

Ivan, Analyst, Morgan Stanley: And that’s what drives longer term growth in business. Perfect. All right, great. So maybe you alluded to the guidance. You pointed to above the higher end of the NII guide, the higher end of the revenue guide.

Can you talk about give us a little bit more color there?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Sure. Look, I think we started the year with a certain outlook around 4% to 6% both in the balance sheet growth and the NII growth. I think at the end of the year, we could have assumed and certainly the forwards assumed there would be various rate actions starting as soon as June. We’re sitting here at June 10 and it does not feel like a rate action is forthcoming here at this June meeting. None have happened so far.

We know what the five months of loan growth and deposit growth have trended and they’ve trended overall positive. Therefore, the year is kind of half baked and based on that it doesn’t feel like the low end that we had out there the 4% made sense to reiterate. And the reality is we’re trending at that 6% better. And we think that’s a reasonable level for growth in this current environment, but also in recognition that a lot can change, right? So yes, the five months have come along nicely.

The next seven months or six and a half months, things could still change. And so we’re not in any way waving the flag of clarity because the reality is we all know there’s a lot of uncertainty, But it does feel better than we would have feared and certainly not in line with the low end of what we had out there before. So we felt it was appropriate to revise.

Ivan, Analyst, Morgan Stanley: Right. And you were saying that things are trending in the right direction. It’s not just the fact that rates might be higher for longer. And I know that the balance sheet is more asset sensitive, but it’s also the loans and deposits coming in slightly better than what you expected. Yes, we would have expected sort

Chris DelMoral Niles, Chief Financial Officer, East West Bank: of a normal fluctuation in our activity levels and things pay down early in the quarter and then ramp up and pay down and ramp up. And we just didn’t see the level of pay down and we didn’t see the level of deposit outflow that we might have expected to see. And so that stability gives us comfort that things are holding together well and better than we would have expected earlier.

Ivan, Analyst, Morgan Stanley: Got it. And I know you kept the loan growth guide at 4% to 6%. What is part of that to do with the uncertainties that things are trending in the right direction, but there’s lots

Chris DelMoral Niles, Chief Financial Officer, East West Bank: lots that could change. And when the ninety day pause expires, we’ll see what happens next. A lot could change. There’s the expectation that the economy today remains reasonable, but I also just listened to Mark Zandi’s preview of his mid June forecast and perhaps I’m more sanguine than he is, right? So maybe there’s differences of opinion about what could happen in the next six months.

And if we take an appropriately cautious outlook, then there’s no reason to change that outlook today on loan growth because I think that’s a reasonable level. But clearly, we’re trending better than that on some other measures.

Ivan, Analyst, Morgan Stanley: All right, perfect. And then as you think about NII for the year, so you’re looking for NII expansion through this year, even if we get more rate cuts, which is seeming more unlikely. Can you take us some through some of the drivers behind that NII growth that you see for the year?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Yes. So I think the deposit repricing that we affected in Q1 had a material positive that will have a continuing positive dynamic. I think we were apprehensive that that repricing would result in some different dynamics in Q2 that hasn’t happened. So that’s a positive. We were also apprehensive that if rates remained elevated, there would be a continued outward migration from the non interest bearing into other interest bearing products.

That’s sort of that mix shift that hasn’t happened. So the mix is relatively stable. And so those things didn’t happen on the deposit side. And on the loan side, as you mentioned, rates will they’ve been higher for longer. And so that means we haven’t seen the downdraft in C and I the way we thought we might.

But also we’ve seen the continuous rollover of both mortgages, residential mortgages, commercial real estate, smaller, but also important books and the mortgage backed securities portfolio, all from lower rates into current higher rate new production. And so across the board, all of the fixed rate assets that we have on the balance sheet as they come due, they’re actually repricing modestly higher, not huge, right? Because the CRE books in the high fives and it’s repricing in sorry, the CRE books high fives pricing into 6.25, 6.5. And the residential books also high fives repricing in at 6.25, 6.3 eights, right? And so it’s not huge, but it’s also not negative.

And so that’s a positive.

Ivan, Analyst, Morgan Stanley: All right. And as you think about the asset sensitivity of the balance sheet, would you consider moving more towards neutral over the next few quarters or next few years?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: The bias would seem to be towards a downward momentum in Fed funds over some horizon. And so the answer is, yeah, we probably don’t need to become more asset sensitive. And we, in fact, if you look at our disclosure measures of asset sensitivity, have been drifting from relatively asset sensitive downward. Now, one of those dynamics is also because at one point in time, this bank was 40% DDA, and you’ve drifted towards 25%, you inherently become less asset sensitive, right? You have less zero rate But dynamics run out, right?

But we would anticipate that we’ll continue to dial back our asset sensitivity modestly in the current environment.

Ivan, Analyst, Morgan Stanley: Got it. The environment will shift

Chris DelMoral Niles, Chief Financial Officer, East West Bank: and we’ll reevaluate that. But we went from last year, we just saw value even though we knew or anticipated rates would drop and they did. But we knew that we saw value in the floating rate Ginnie Mae floaters, for example, in the investment portfolio. This year, we’ve been more balanced than our purchases, right? So we’re buying both fixed and floaters because we recognize that if they drop now, given current levels, given that the forwards aren’t priced so dramatically lower, actually the fixed rate product is similar total return profile and maybe that makes sense for us.

Ivan, Analyst, Morgan Stanley: I think you said at earnings you were more interested in that longer duration fixed rate product. Rates are even higher now maybe than where they were at earnings. Clearly there is that helping you on the NII side. All right, perfect. Great.

So maybe switching over to loan growth. Can you talk a little bit about the commercial side of the business? I know you’re more focused on the C and I side. Which areas within C and I you’re seeing the most growth in? Which areas are you most focused on?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: So I think we’re thinking about the C and I book. Clearly, we’re seeing growth in things like entertainment and things like inventory buildup in general finance. We’re seeing things in some of the alternative power, be it solar farms, wind power, things are all moving in the right direction. And all of those are good growth areas for us and will likely continue to be. We’ve hired people on those things.

We’re continuing to invest in capabilities to support those areas and it’s working right now. From a, where do we see things, I mean, that probably answers the question.

Ivan, Analyst, Morgan Stanley: Yeah, that’s fair. So any other areas where you’re seeing maybe a change in demand at the margin, whether it’s like trade finance or any of the other businesses?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: I think we saw a nice pickup in some of that activity in Q4, trade finance in particular. We saw paydowns in Q1. We’ve seen stability, perhaps more stability than we anticipated in Q2. I don’t know that I would call it an acceleration, but it’s stability. And I think that given that there’s no Christmas in July, that stability is interesting on the one hand, but also obviously welcome to the balance sheet.

Ivan, Analyst, Morgan Stanley: Right. Perfect. And then while we’re on the subject of loan growth, can you talk a little bit about how East West is positioned for the growth in private credit? Clearly, you guys compete with them. Do you partner with them?

How do you see that relationship?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: I think of it more as a partnership. I don’t know that we’re competing on a lot of fronts. And so I think the credit profile for most of what’s private credit is usually outside of our core appetite box. And again, not to say that there’s no overlap, but it’s mostly I think beyond what we’re you’re only

Ivan, Analyst, Morgan Stanley: doing. I think one of

Chris DelMoral Niles, Chief Financial Officer, East West Bank: the dynamics about our bank is for a variety of reasons, our customers, whether they’re residential customers, commercial real estate customers, or C and I customers tend to approach their business activities with less leverage than other customer bases for a variety of reasons. But because of that, we don’t therefore tend to compete in those higher LTV, higher leverage to cash flow type of opportunities that perhaps some of the private credit has gravitated towards. And so I don’t know that I see them the way perhaps some others do. And we’re not as active in the capital markets stuff that has some of those profiles. So we like covenants.

And we like conditions and terms and reporting. And those aren’t things that are attractive when someone lines up a package that has none of that. And so it’s not very competitive from that perspective. And we like to get paid. And so we put those together, they’ll go someplace else where they don’t have to jump over those hurdles if the rates are close.

And so we appreciate that. But we do partner with some of those firms. And we are willing to do things at the edge where we’re financing part of a fund someplace or something like that. And that’s part of the private equity slash nav slash other stuff. We’ll do a sliver of that because there’s some of those groups that we like, and we’re happy to partner with them.

Ivan, Analyst, Morgan Stanley: So something that’s getting increased focus is NDFI loans. And I know there’s more disclosure out there now. Can you talk a little bit about your exposure there and how that’s been growing recently?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Yeah, so we have been increasing the overall exposure. I think for some sectors NDFI is very REIT or mortgage warehouse specific. Ours is less so. Obviously, we have the private equity portfolio work that we’ve done in that. Often a good portion of that shows up in NDFI, and you can see that from our call report breakouts.

It has been growing. Some of the stuff that we’ve done in solar, for example, is rooftop solar and that shows up as consumer NDFI. Okay. And so that happens. And I think there’s stuff like that that’s out there, right?

So you want solar panels on your roof, your contractor or salesperson says, yes, we can provide them for you and we’ll go through financing in the background and we’ll do it on these terms. And they will get part of their funding from a warehouse line essentially with us right in the background. And so from our perspective, we have the likelihood that the consumer will likely pay because they probably want lights on in their house. We have the likelihood that the intermediary will support that. And by the way, we’re advancing a fraction of the total payment.

So it’s likely that between that and the basket of other consumers, default risk is fairly low. But that shows up as NDFI because we’re financing someone who’s not a bank who’s in turn financing the customer.

Ivan, Analyst, Morgan Stanley: Got it. So the actual exposure is a lot lower than what we actually see in the disclosure?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Yeah, from our perspective.

Ivan, Analyst, Morgan Stanley: Got it. The other piece I wanted to chat on loan growth was resi mortgage growth. That’s always been a standout for the bank and it’s held up well through even the rate hike cycle and the higher long end of the curve. What are you seeing there as the ten year remains volatile right now?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Surprising stability. And so the reality is we’ve been producing a relatively steady drumbeat of around 200,000,000 net new volume to the balance sheet quarter after quarter. That seems to be holding relatively stable and steady. And the pipelines, which obviously, as we sit here in June, are for Q3, seem to be consistent, right? So as we sit here today despite the volatility, despite the headlines, despite Liberation Day and noise and other dynamics, it didn’t change the fundamental desire to aspire to achieve the American dream of homeownership and that continues to be something that we’re able to help those customers with and we continue to provide that on a fairly consistent basis.

Ivan, Analyst, Morgan Stanley: Great. And maybe to round off the conversation on loans. On commercial real estate, I know you’re focused on growing the CRE book a little slower than the rest of the book to reduce the total concentration in that asset class. Can you talk a little bit more about the strategy there and what you’re doing right now?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Yes. I think Dominic has articulated the profile that he thinks makes sense as we think about growing to be $100,000,000,000 plus bank. And as we get there, in his articulation of it, we should be closer to a a a a residential, a CRE and a C and I. And as you look at that mix, today relative to that self described vision of that balance, were a little bit long in the CRE exposure at roughly 38%. And he’d like to see that balanced out.

And the way he’d like to see that balanced out is by growing the C and I and the mortgage portfolios at a slightly faster clip than the CRE portfolio while still growing all three over time. And so yes, we’ll continue to grow all three. Yes, there’ll be incremental growth in CRE. I think you’d like to reserve that CRE growth for our most consistent, most profitable relationship customers. And so we haven’t been taking on new customers.

And what we’ve observed in the last couple of years is there hasn’t been a tremendous upswell of demand from our existing customers to help them with new projects and new opportunities. Now pause there because I think we were having a conversation just last week where it’s come up through the ranks and RM channels and the team leader channels that actually there’s some folks that are now kicking the tires on properties in places like Chicago and San Francisco, which we weren’t doing anything new. And suddenly there’s percolating, would you guys think about this if I did this, etcetera, conversations happening that I haven’t heard about for the last eighteen months I’ve been here and weren’t happening before I got here to some extent. And now those conversations are starting. And so I think there’s an interesting level of there’s some interest at some levels in some markets and we’ll see how

Ivan, Analyst, Morgan Stanley: that plays out. And that goes back to the point that you have the balance sheet, you have the capital to be there for your clients and you’re willing to do that as long as there’s good opportunity. Absolutely. Okay, perfect. So two things I wanted to focus on that’s fairly unique to East West.

One is a better efficiency ratio than peers and then the one is more consistent growth over time. So the one on the efficiency ratio, you have a significantly better efficiency ratio than peers. Can you remind us what drives this consistent performance?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Sure. I think there’s two or three key things. One is a fairly simple and straightforward business model. We don’t try to be all things to all people. We’re going to be very good at executing for our core customers in our core markets where they expect us to be with plain vanilla products that they utilize.

Utilize. We’re not trying to be uber complex and we’re not trying to be the supermarket with all of the offerings. We’re trying to be the tailored delivery of the goods that we know that we can deliver at the best possible solution for our customers at a very competitive price. And that seems to work well for us. The thing is speaking to that same customer set, at least on the deposit gathering, which I think is part of the cost structure for many banks, we are able to focus.

I think I heard the prior speaker here comment they could have considered opening a branch in every capital across Europe. That’s not going to be East West, right? We’re going to be focused on being where our customers expect to find us and being there to help them in places that are in ways that are exactly what they need and not trying to be there to service needs that they might need, but really trying to be there for the things that we know they need and that we can deliver against. And I think that means we can be very targeted in our approach to branching. We can be very targeted in our approach to outreach, while continuing to diversify the sophistication of our bankers broadly and the verticals and industries covered, but with a focus on making sure we’re delivering simple, straightforward solutions in each of those coverage markets.

Ivan, Analyst, Morgan Stanley: So what does that mean in terms of the areas that you’re most focused on for growth and the areas that you’re investing most in for the next two to three years?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Yes. So we have invested in over time substantial retail presence and depth in places like Southern California, San Francisco. We have invested more recently and through expansion into places like Dallas, Houston, Atlanta, New York, Boston, Seattle, Las Vegas. All of those markets probably are ripe for expansion. And we can consider how we would best approach those.

On the other hand, we need to find the right people and the right talent to help us drive those expansion strategies and that sometimes rests in the harder part. And so I think our focus is on making sure we find the right people so they can bring in the right talent, we can create the right expansion strategies to drive that. But it’s not because there’s lack of opportunity. It’s simply we need to find the right talent that can help energize that in an East West efficient manner, right? I don’t know that Dominic is a believer in if we build it, they will come.

So we’re not just going to go sprinkle branches about and hope that we attract the right branch manager and hope that we attract the right relationship managers and that will attract the right magical set of customers. I think he thinks about it a little differently. But I think that we have a very targeted focused approach. We identify key people and we can bring those people together into an environment where we know they can be positioned for success. He’s more than happy to invest for success.

Ivan, Analyst, Morgan Stanley: So two follow ups on that. One is in these new markets, Chicago, Atlanta, Dallas, Houston, that For the record, I

Chris DelMoral Niles, Chief Financial Officer, East West Bank: don’t think it’s at Chicago. We only have a

Ivan, Analyst, Morgan Stanley: loan direction office, but Chicago is an interesting market as well. Yes.

Chris DelMoral Niles, Chief Financial Officer, East West Bank: All right.

Ivan, Analyst, Morgan Stanley: Perfect. So in these new markets, how do you think about the TAM in these new markets relative to California? Sure. And it’s clearly, the East West brand is known best in California. So when you’re expanding in these different regions, how are you thinking about the investments you’re making and the ROI on those investments?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Yes. So from a total addressable market perspective, California is a great market. By the way, so is New York, right? And so from our perspective, that’s an opportunity that we also need to think about and focus on. And we’d love to find the right way to create a larger market presence, whether that’s further or deeper into Long Island, whether that’s over to New Jersey, there’s opportunities set here for us and we know and there’s addressable markets that we know we’re not addressing that we know we could make more investments on.

I spent part of Monday with our Head of Commercial and we were looking at commercial office space because frankly, we probably need to grow our overall profile and relationship bankers. And we’ve and typical East West Way fully maximize our existing office space. And so we’re thinking about what does that mean? And how does that play out? And how do we get the right answer to grow?

Because the focus is on growth. And we know there’s growth opportunities here in New York. Similarly, we’ll look at growth opportunities in Texas because that is a growing market. And there’s growth not only in the cities that we are, but perhaps in other cities. And I think we’ll look at all those and find the right way forward.

But yes, there’s clearly addressable market opportunities where in California, we know we are the lion’s share in our focus markets and we’re not in some other markets and we could certainly capitalize on that. And it helps that there’s in some places, some of folks that have historically been sort of legacy competitors are pulling back. So whether it’s a foreign bank or a domestic bank, if they’re pulling back and they’re creating opportunity for us, we’re not going to hesitate to invite people to coffee and have good conversations about what the future might hold.

Ivan, Analyst, Morgan Stanley: Is the best way to grow these regions organically?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Yes.

Ivan, Analyst, Morgan Stanley: All right. The other piece is on the fees side. You and I were talking offline about the payments business and any other areas where you want to be investing. Can you talk a little bit more about where you want to invest for the next two to three years and how you’re going to get that strong fee growth that you’ve been that you are looking for and you are getting currently?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Yes. So we’ve been very active on core treasury deposit services. And I think the other speaker was here. And frankly, I was a treasurer at a Fortune 500 company. And I know firsthand the pains of moving money internationally, etcetera.

So I was pleasantly surprised when I walked in that, yes, East West has always done instantaneous simultaneous book transfers within its own operations. So if you want money in Hong Kong, snap your fingers, you have money in Hong Kong or vice versa, right? And I think that’s, I guess, different than some other institutions. That’s great that we can do that. And we I know that we’re working on plans to accelerate those payment streams and expand that to our Chinese subs as well and expand that to other areas.

And so I think we recognize that we can leverage those capabilities in ways that perhaps we haven’t before and we’ll do so in the future. But I think that just tells us that our core payment processing capability is fairly competitive and it’s part of the reason why we’ve been as successful as we have been. Got it. And when I think about the fee growth opportunities, it is one of the core drivers, right? I think about our ability to continuously expand our core deposit services, what we call corporate treasury solutions.

And those are working today. They’re growing nicely. And we’re seeing better traction inroads. When I think about the solutions we’re providing in FX, we’re investing in new platforms and systems. Those, as we expect, will help us in the future.

They’re sort of still in the process of rolling out or being completed for development. But we can see a path where we’ll have greater capability in the year ahead. And even with the capabilities we have today, we’re generating nice growth. So there’s even better opportunities ahead.

Ivan, Analyst, Morgan Stanley: All right, perfect. I wanted to end with a couple of questions, one on credit and one on capital. On credit, I think in mid April, spoke about the fact that you had already had conversations with 500 commercial clients. You spoke about only 1% of the C and I book having potential adverse effects from tariffs. Can you talk a little bit about what you’re seeing on the credit side?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Yeah. So I don’t know that there’s a particular shift in anything from the tariff side of that. But in general, for us is tied to the broader macroeconomic dynamics. And the broader macroeconomics are seemingly holding together. And so I don’t know that I see credit as having deteriorated.

And as I sit here today, I think we’re all apprehensive. But, I think the reality is the American consumer is alive and well and continue to support a lot of activity.

Ivan, Analyst, Morgan Stanley: Right. And you’re not seeing any stress there from the consumer side. There’s been some anecdotes of more pressure on maybe the subprime side or anywhere else. You’re not really seeing that.

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Yes, we don’t play in the consumer direct in any meaningful way. And where we do, which might be some of this NDFI stuff, we’re at least one or two intermediaries removed. And so we feel like that’s a lower risk approach.

Ivan, Analyst, Morgan Stanley: Got it. All right, perfect. And then to end on capital, CET1 ratio of 14.3%, so well above peers. You opportunistically leaned in on buybacks in the first quarter. Should we expect that you continue that strategy?

The stock was lower in the first half of this quarter. How should we think about the capital return side of things?

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Yes. We’re pretty careful about making sure we don’t step over blackout periods, etcetera. So a lot of the period of time when the stock was lower was in a period before our earnings call. And so we didn’t really have the opportunity to step in the way we would have liked to. We’ll think about it.

There’s other strategies that might address that, but we didn’t. The pluses and minuses of being opportunistic is we don’t have programmatic things out there that would work in those environments. On the other hand, it’s fair to say we haven’t leaned in, in Q2 the way we did. We’ve been far more standoffish on that, in part because in the period of time it was open, it was above the levels we were buying back in Q1. And yet the environment and rhetoric led us to surmise there could be other opportunities or windows.

So we have not been as active, but we remain vigilant and we’ll be remaining opportunistic. Right. That’s perfect.

Ivan, Analyst, Morgan Stanley: Chris, we’re out of time. Thank you so much for joining us.

Chris DelMoral Niles, Chief Financial Officer, East West Bank: Thank you, Ivan. Appreciate it. Thanks.

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