Good day. Welcome to the East West Bancorp's first quarter 2024 earnings call. All participants are in a listen-only mode. Should you need any assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there'll be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Adrienne Atkinson, Director of Investor Relations. Please go ahead. Thank you, Operator. Good afternoon, and thank you, everyone, for joining us to review East West Bancorp's first quarter 2024 financial results. With me are Dominic Ng, Chairman and Chief Executive Officer, Christopher Del Moral-Niles, Chief Financial Officer, and Irene Oh, Chief Risk Officer. This call is being recorded and will be available for replay on our Investor Relations website. The slide deck referenced during this call is available on our site. Management may make projections or other forward-looking statements which may differ materially from the actual results due to a number of risks and uncertainties. Management may discuss non-GAAP financial measures. For a more detailed description of the risk factors and the reconciliation of GAAP-to-non-GAAP financial measures, please refer to our filings with the Securities and Exchange Commission, including the Form 8-K filed today. I will now turn the call over to Dominic. Thank you, Adrienne. Good afternoon, and thank you for joining us for our first quarter earnings call. I'm pleased to report first quarter results that laid a strong foundation for 2024. First quarter 2024 net income was $285 million, or $2.03 per diluted share. Excluding the FDIC charge, first quarter adjusted earnings per share was $2.08, up 3% from the fourth quarter. We grew average assets during the quarter, with average loans up 1%. We continue to grow residential mortgage driven by our differentiated mortgage product. Average C&I balances were higher and commercial real estate loans remained flat. We grew average deposits by $2 billion to a new record level, reflecting the success of our branch-based Lunar New Year CD campaign. During the quarter, we paid off $4.5 billion of BTFP while reducing our total borrowings by $1 billion. We also took an opportunity to invest excess cash into Ginnie Mae floating-rate securities. Our asset quality remains solid, and credit is performing as expected. First quarter annualized net charge-offs were up by two basis points to 17 basis points. The non-performing assets ratio was 23 basis points at quarter end. We continue to proactively manage our credit risk. We added 10% to our commercial real estate loan allowances, bringing our total allowance for loan losses to 1.29%. These efforts continue to drive shareholder value, with an 18% return on tangible common equity and a 1.6% return on average assets. Tangible book value per share also grew 2% quarter-over-quarter and 14% year-over-year. Our first quarter results speak to the strength of our diversified business model and our conservatively managed balance sheet. Looking forward, we remain focused on serving our customers and growing relationships, and are well-positioned to outperform the industry in 2024 and beyond. I will now turn the call over to Chris to provide more details on our first quarter financial performance. Chris. Thank you, Dominic. Turning to loans on slide four, let me comment on the trends in each of our major lending categories. First, demand for residential mortgage proved relatively durable despite seasonal slowdowns. Even with the generally elevated rate environment, we continue to add residential mortgage loans in Q1, and we are pleased to see both our residential and home equity pipelines strengthening going into the second quarter. Second, average C&I balances grew 2%, driven in part by an uptick of utilization we saw at the end of the fourth quarter. On a period-end basis, balances declined, but that was really driven primarily by decreases in capital call line usage and drops in our Hong Kong portfolio. Based on our current pipeline, we expect C&I growth to pick up in Q2. Third, average CRE balances remain flat, while period-end CRE balances were down for the quarter. We continue to work with our longstanding relationship clients, but we are targeting only modest CRE growth for 2024. Slide five summarizes trends in our securities portfolio. During the first quarter, we took steps to enhance our liquidity profile by putting our cash to work in high-quality liquid assets. We added short-duration Ginnie Mae floaters at a rate of SOFR plus 115, much of which settled towards the end of the quarter. With the purchase of these securities, the book yield of our portfolio rose 67 basis points to 3.61 at quarter end. Our cash and securities portfolio rose to 23% of total assets, a level of on-balance sheet liquidity we see as appropriate at our current size. Moving on to deposits on slide six, as Dominic mentioned, we grew deposits to record levels this quarter, with average growth of 4%, or $2 billion, and nearly $2.5 billion on a period-end basis. We saw growth in retail, commercial, and across all geographies. This growth reflects the focus and dedication of our bankers and the loyalty and resilience of our broad-based customer base. Looking forward, we continue to focus on adding granular consumer and business deposits. During the quarter, we also put up $3.5 billion of floating-rate Federal Home Loan Bank advances at a cost of SOFR plus approximately 20 basis points. These advances have a laddered maturity schedule, with $1.5 billion maturing in the next 12 months and the balance over 2025. Slide seven covers our net interest income trends. Q1 net interest income was $565 million, while our net interest margin was 3.34%. The margin compressed more than expected as we decided to extend and upsize our CD campaign. Time deposits counted for much of the NIM impact of 14 basis points. We expect further NIM compression in Q2 as deposit mix shift continues in this higher-for-longer environment. Nonetheless, as we move through the year, we expect an acceleration of asset growth will lead to more NIM stability and a bottoming of the NIM later in the second half of the year. Now I'll hand the call over to Irene to talk about asset quality. Thank you, Chris, and good afternoon to all on the call. As you can see from slide eight, the asset quality of our portfolio continues to broadly outperform the industry, but with credit beginning to normalize. As Dominic mentioned, we recorded net charges of 17 basis points in the first quarter, or $23 million. quarter-over-quarter, non-performing assets rose by seven basis points to 23 basis points of total assets. The increase in commercial real estate was driven by two credits, one construction and one office property. Nonetheless, the absolute levels remain relatively low. The criticized loans ratio increased during the quarter to 2.3% of loans. The special mention loans ratio also increased 28 basis points quarter-over-quarter to 1.05% of loans, and the classified loans ratio increased 15 basis points to 1.25%. We recorded a lower provision for credit losses of $25 million in the first quarter compared with $37 million for the fourth quarter, given the resilient economic environment and current CFO outlook. We remain vigilant and proactive in managing our credit risks. As we look forward, we continue to expect quarterly net charge-offs to be in the range of 15-25 basis points. Turning to slide nine, the total allowance for loan losses increased $1 million quarter-over-quarter, primarily reflecting a $21 million increase in our allowance for loan losses for commercial real estate loans. Specifically, we increased the reserve for office by $6 million, bringing the coverage ratio to 273 basis points for office loans. We believe we are adequately reserved for the content of our loan portfolio given the current economic outlook. Turning to slide 10, all of East West's regulatory capital ratios remain well in excess of regulatory requirements for well-capitalized institutions and well above regional and national bank averages. East West's common equity tier 1 capital ratio stands at a robust 13.5%, while the tangible common equity ratio stayed relatively flat at 9.3%. These capital levels place us among the most well-capitalized banks in the industry. East West repurchased 1.2 million shares of common stock during the first quarter for approximately $82 million at just under $70 a share. We currently had $89 million of repurchase authorization that remains available for future buybacks. East West also redeemed $117 million of trust-preferred securities in the first quarter. East West's second quarter 2024 dividends will be payable on May 17, 2024, to stockholders of record on May 3, 2024. I will now turn the call back to Chris to share our outlook for the 2024 full year. Chris. Thank you, Irene. Our full-year outlook has shifted slightly. Let me highlight your changes. We now assume a resilient first half with the economy beginning to soften later in the year. We now expect rate cuts to begin in Q3. We expect loan growth to pick up in the second quarter and for end-of-year loan growth to still be in the range of 3%-5%, buoyed by continued strength in our residential mortgage and a growing C&I portfolio. Given fewer expected rate cuts, we're raising our net interest income guidance and now only expect a decline in the range of 2%-4%, up from our prior guidance. With that, I will now open the call to questions. Operator. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up the handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. If you could please limit to one question and one follow-up question, please rejoin the queue if you have any further questions. Your first question comes from Jared Shaw with Barclays. Please go ahead. Hey, good afternoon, everybody. Good afternoon, Jared. Just looking at margin and NII, I guess what's holding you back from being more optimistic there? You're seeing loan growth. You have the tailwind from securities. Is that just all being absorbed by higher expected deposit costs? Maybe just walk us through some of that would be great. Sure. So for the record, we are raising our NII guidance for the year, and so I think we are a little more optimistic here as we move into the rest of the year. That having been said, yes, we expect more deposit mix migration if we stay in a higher-for-longer environment, and that seems to be what we're sort of on pace for here for the second quarter. So we'll give some of that up in the deposit mix and the cost of deposits. And I would also remind you that late in March, we refinanced the BTFP, and that had been at a very attractive level. And we obviously replaced that largely with the CD campaign balances, but those are at a higher cost. So there's an inherent drag from that refinancing that's just baked in. The Federal Home Loan Bank advances are also at a slightly higher cost, of course. Okay. Okay. Thanks for that. I guess as my follow-up, just looking at capital, even with the buyback and the redemption of the trust preferred, we're still seeing CET1 grow higher. How should we be thinking about sort of upper limits of capital? Where do you feel comfortable with the upper limits of capital? And would the buyback be the primary way to limit or control that given the loan growth expectation? We've commented that we thought TCE was a relevant measure for us to focus in on, and we're focused in on maintaining that and no longer warehousing additional capital. So we'll be proactive in all the actions. Obviously, we announced a dividend again today. We still have some authorization, and we'll continue to, of course, use our balance sheet to support our customers and grow our balance sheet to optimize capital. The next question comes from Casey Haire with Jefferies. Please go ahead. Yeah. Hi. Thanks. Good afternoon. So another follow-up on the margin. So Chris, if I'm understanding you correctly, you do expect more negative mix shift on the funding side. I get the BTFP and the borrowings, but what about DDA mix? What does your guide assume in terms of how much more attrition there? Look, we're still at 25% even as we sit here today, April 19th, 20th. So we feel comfortable that that number has come down reasonable, and it'll probably bottom somewhere in the mid-20s area, which we might be close to. I think it's a function of how we see the outlook shift as we move later into the quarter. Our expectation previously had been that when the Fed started to lower rates, we would see that deposit migration ease. The Fed hasn't started to lower rates yet, so that is continuing sort of month-over-month as we move through, and it's somewhat outlook-dependent. Gotcha. Okay. And then just switching to credit, I guess, Irene, for you, you guys are sticking with your guidance on loss rates despite some decent migration trends. We've seen that from other banks. Just wondering what gives you the confidence to keep a rather benign loss guide given these migration trends? Yeah. Great question. I think when we look at it at a granular level, loan by loan, loan reviews that we're doing, we're very comfortable as far as the reserving that we are doing, the grounds-up kind of analysis of the portfolio, and all the charge-offs and our guidance. I think, quite honestly, it is, in my mind, kind of a wide range if you look at it quarter by quarter, but reflects kind of our views and our understanding of the portfolio today. Right. The The next question comes from Dave Rochester with Compass Point. Please go ahead. Hey. Good afternoon, guys. Just back on capital, should we just assume that you'd mentioned, I think, the TCE ratio or CET1 ratio sort of flatlines from here since you're focused on those going forward? And whatever you guys need to do in buybacks to sort of solve for that, we should just expect to see some kind of a quarterly buyback going forward? I think we're going to obviously use our balance sheet to support our customers, and lending growth will still be the primary use of capital, and that will continue to be the case. To the extent lending growth perhaps is a little softer, maybe as it was in Q1, we might add securities, and that can also manage that number. We'll continue to pay a strong dividend, and buybacks is always sort of our last choice, but one that we have the flexibility to opportunistically call upon when we see the right environment. All right. Appreciate that. And then just as a follow-up, what's the impact of a rate cut now on your NII? I know you'd mentioned something like $1.5 million-$2 million a month last quarter. Does that range still work? And I know you mentioned NIM bottoming in the second half of the year. If you had to guess, is that 3Q or 4Q? And what's the timing of NII bottoming? Does it coincide with that, or could that actually bottom a little bit sooner because of growth? Thanks. So yes, I believe both the third and the fourth quarter are in the second half, and I believe it'll bottom somewhere in the second half. With regard to sort of NII, we do think it follows that same trend and also similarly on a dollar basis, likely comes back stronger towards the end of the year. And our actual NII sensitivity has increased in part because we added cumulatively over $2 billion of floating-rate securities, and that just introduces a little more sensitivity. And so it's closer to $3 million per cut as we look forward now. The next question comes from Ben Gerlinger with Citi. Please go ahead. Hi. Good afternoon. Good afternoon, Ben. I was curious. It was obviously a big quarter on deposit growth, largely due to the special you ran. I was curious, are you seeing any other deposit trends just outside of that Lunar New Year special? Anything we might see kind of extrapolating what you've seen now into 2Q or possibly the rest of the year? I think broadly speaking, we were pleased to see commercial, consumer, and our overseas customers all contribute to the growth in the broad spectrum of deposits. From a product side, we saw growth in interest-bearing checking, money market, and time deposits. So essentially, as long as there's some yield, customers are willing to reallocate their portfolio and see the balances. Obviously, the downside to that is we saw shrinkage in the non-interest-bearing DDA, and I think that's the fundamental migration that we're all zeroed in on and trying to make sure we understand how that continues to evolve in this higher-for-longer context. Gotcha. That's helpful. And then I know on the guidance, this question's a bit nuanced. So it says picking up loan growth in Q2. And I hate to ask, but is it fair to think that average balance sheet is pretty minimal and it's more kind of a late June, or do you think it ramps throughout the entire quarter? We see evidence of positive trends in our pipelines, and so we think we'll see positive trends pick up here in Q2. The next question comes from Manan Gosalia with Morgan Stanley. Please go ahead. Hi. Good afternoon. Can you talk about the drivers for loan growth from here? I know you'd note that it should pick up in 2Q. And then in your broader macro outlook, you called out a resilient first half with a softening economy in the second half. Can you talk about why you're expecting the economy to soften in the second half? And if it doesn't, is there some upside to those loan growth numbers? Sure. So I think we're following our cues from the Fed, and the Fed has said that they're proactively trying to engineer a softer landing, and so that seems to be baked into the forward curve. And given that context, that's the environment that we're assuming. The reason we're confident we'll see loan growth pick up is really driven by our own interactions with our customers and the pipelines that we see. So we expect to see C&I growth happen because we have term sheets and conversations that would lead us to expect that those are going to close. We expect to see residential come through because we know those loans are in the pipeline. They're already there, and they're just in the process of moving through to close. And so we'll see residential growth. We'll see C&I growth. And again, we're not focused on CRE growth, but we may see some of that too. Got it. And maybe a follow-up on the question on criticized assets. I know it's similar to what we've seen at peers, but I guess one point of difference is that you did also have the criticized assets and the CRE book rise, which we haven't seen at many peers. So I was wondering if you can just shed some light overall. Was this a deep dive that you did? How comfortable are you with those credits? And why not move the loan loss reserve up a little bit more given this higher level of criticized assets? Yeah. Great question. So with the criticized assets movement for commercial real estate, I would say it's pretty broad-based. There isn't one sector, industry, or geography that we are more concerned about. And maybe more importantly, we do not believe we have concentrations of risk areas we're very concerned with. On the calculation and the allowance calculation, as you know, there are some confines as far as the CECL model. And we've disclosed this in the past as far as the fact that for CECL for us, we use a multi-scenario approach. So I think that gives me comfort as far as it's a little bit more heavily weighted to a downside scenario. With that said, I think with things that are feasible for us with the qualitative and the quantitative reserve, now that's something on the qualitative side. We want to make sure that we continue to add if appropriate, and that's what you've seen a little bit happen in this quarter. The next question comes from Brandon King with Truist. Please go ahead. Hey. Good afternoon. I noticed there was a healthy pickup in loan yields in the quarter, so I was wondering if that's a reasonable pace to expect over the next few quarters and if there's anything to call out there? No. I think obviously our residential mortgages are coming on at a higher rate than the portfolio, and that's additive. Broadly speaking, our commercial yields and the new loan volume pricing is roughly in line with where it's been, and there's not a material uptake. Okay. And then for CDs, when you look at your repricing and maturity schedule, at what point are CDs rolling over to maybe a stable rate, and if when or if that kind of turns into a tailwind maybe in the back half of this year? Yeah. So we'll see $4 billion-$5 billion of CDs roll over each quarter over the next couple of quarters. Obviously, we just put on the $2.5 billion of the Lunar CD special, and that will come off in the third quarter. So the third quarter is the heavy quarter, and we're anticipating that there might be some rate movements that happen in the third quarter, and that will play into that. The next question comes from Ebrahim Poonawala with Bank of America. Please go ahead. Hey. Good afternoon. Good afternoon. I guess just a follow-up on credit. On slide 19, I think where you disclose 47% of CRE customers have derivative contracts, I guess hedging them against higher rates. Just talk to us in terms of the deep dive or the portfolio reviews that you've done. If we are in a higher-for-longer over the next two years, how much risk within that CRE book increases as these derivative contracts, I'm assuming at some point, roll off? And just how you've assessed that in terms of the potential risk exposure tied to this book. Thank you. Sure, EB. So the good news is most of our customers put on swaps to the maturity of their loan, and so there really isn't a significant inter-maturity rate rollover risk on the vast majority of them. So that risk for us is highly contained, and that's by design and the way we market the solution to our customers. We have been steadily growing the fixed-rate portfolio, the other side of that chart, and the combination means that as we think about the future, we're locking in more and more fixed-rate as we move towards the expectation that there might be a downdraft in rates in the future. And the swaps that we put on to hedge our balance sheet have all been received fixed forwards. And so to the extent that in 2025, we're staring at inherently a lower-rate environment than today, we think that combination of factors will all play into our benefit. Our customers who have locked in will be perfectly fine, continue to be perfectly fine through maturity. And our balance sheet, we will be more fixed and receiving more fixed in what we expect to be a declining-rate outlook, which we think is to our benefit and our shareholders' benefit. Just because of perspective, Chris, in terms of when these loans are coming up for maturity, what's happening? Are they refinancing into another sort of fixed-rate loan on the balance sheet, or how many of these are moving out, getting refinanced by insurance companies, etc.? I think we see the gamut of activity. The good news is there's a high history here of relatively low LTV lending, and so there's plenty of equity for these guys to always find another outlet, if not with us. The next question comes from Chris McGratty with KBW. Please go ahead. Oh, great. Thanks. Chris, going back to the comments on the HQLA, you referenced you're about where you need to be. If you kind of zoom out, is that the comment more about the size of the balance sheet today, or kind of do you think where you need to be for when you cross 100? No. I'm only commenting on where we are for the current institution. Keep in mind we're only 70. It's a pretty long way from 100. No, I get it. Okay. But in terms of, I guess, asking the capital question a little bit differently, you commented about buybacks, but should we be thinking about perhaps more liquidity but at a lower NIM producing higher NII? Is kind of a dynamic in what you're doing to the balance sheet right now? That will be the implication of what we did in the first quarter, for sure, and that will play itself out. But we're optimistic that we'll see loan growth pick up in the second quarter and continue to drive towards the loan guidance that we've laid out, and we think that will contribute to, again, helping the NIM bounce back later in the year while still growing NII. Once again, if you have a question, please press star then one. Your next question comes from Samuel Varga with UBS. Please go ahead. Good afternoon. Good afternoon. I just wanted to follow up on the loan growth funding question, I guess, understanding the sort of backdrop of the HQLA build. How much of a willingness do you have to actually use some of the cash to fund the loan growth? Sure. So the investment portfolio will throw off $450 million per quarter of net proceeds, and so we think that is part of how we could fund some of the growth as we look forward. Okay. Thank you. Then in terms of just the trade-off between putting on the CDs at very competitive rates versus FHLB, is that going to be a simple always CD preference, or how do you think about that sort of funding mix? Yeah. Look, I think we obviously know the FHLB is there for us. We clearly would rather pay at the margin, our customers, a better rate than borrow from a wholesale institution, and we think that is both a better economic outcome and a better outcome for the franchise and the value that we create for our customers. So there is a preference there, but I think we'll look to optimize our cost funding in the ordinary course and do incrementally the right thing as we move forward. Maybe just I'll add one thing. The funds we put on is variable rate, so that also was a part of the analysis for us. Your next question is a follow-up question from Abraham Thrinoala with Bank of America. Please go ahead. Hey. Good afternoon again. EB, you cut out. Yeah. We cannot hear you. Hi. Can you hear me now? We can hear you now. Go ahead. Yeah. Just wanted to understand, given East West capital positioning, the market disruption, just talk to us in terms of investment and banker hiring. How fertile is it to attract talent and maybe move market share in a world where overall growth may be slow? Thank you. The question on investment in talent? Yeah. Yeah. I think that we're always on the lookout, in fact, for new talent to join the organization. And frankly, with what happened 12 months ago, there was a lot of disruption in the market. And so we do feel that there are plenty of talents out there in the market that are possibly looking for new homes, but we've been very, very selective because it's not every banker that fit into the East West Bank culture. It's not every banker that actually liked to do the things that we do. And oftentimes, if you look at it, is that there are a lot of banks out there that have bankers that habitually do much bigger loans, and that doesn't fit into our diversification strategy. And so we are going to continue to be very selective and choosy in terms of making sure we find the right fit. When we do find the right fit, we'll be delighted to welcome them to be part of the East West Bank family. This is something that we're not going to be rushing to it. I do notice that there are other banks who may be all looking into getting a big group of talents from specific banks that are having some turmoil. We don't necessarily feel that that is going to be actually an attractive strategy for East West Bank. We have been able to grow organically pretty nicely for the last almost 10 years now. We have not made an acquisition since January of 2014, and even that was a very small acquisition. Most of our growth for the last 10 years has been through organic direction. We like that approach, and we think that bringing the right talents, understanding the East West specific value proposition, and understanding the importance of a balance between risk management and also growth, and those are the people that fit into us well, and then we will continue to identify these types of talents and bring them on. That's great, color. Thanks, Dominic. Thanks again. Bye. Thank you. Thank you. This concludes our question and answers session. I would like to turn the conference back to closing remarks. Well, again, thank you for joining our earnings call today, and we're looking forward to speaking to you in July. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.