East West Bancorp, Inc. (EWBC) Earnings Call Transcript & Summary

All right. I think this is on. We're going. All right. Cool. Well, thank you, everybody, for joining us. Really happy to have East West Bancorp here. And relatively new CFO, Chris Del Moral-Niles, hopefully, I didn't mispronounce anything there. Chris, thank you very much for coming. Appreciate you making the trip.

Appreciate it having us.

Just want to remind everybody that you can submit questions to me via the QR code at your table. They'll come through this iPad. So feel free throughout the presentation to go ahead and submit those questions.

But we'll kick it off here. Chris, as I mentioned, you recently joined as CFO. You came out of retirement job. So maybe you could start us off by letting everybody know what it was that attracted you to the East West.

Sure. I mean I think East West has a number of things going for it. But in my particular case, in context, it was really about the performance, the people and the purpose. So obviously, the performance of East West has been stellar. It has a number of structural advantages that contribute to that, and maybe we'll talk about that as we go through today, but the ability to be part of a great team and learn from essentially what I saw as a lifelong banker, be part of a team that has demonstrated the ability to grow through cycles and ability to perform at the highest levels was very attractive to me. The people was another piece of it. The reality is I've known and respected, I mean for more than a decade as of peers, CFOs in different seats. I think the ability to work with them was great. I also thought I didn't know Dominic. I knew of Dominic and I understood that he was somebody that could learn and grow under and that was very effective. I sort of had thought retirement meant I didn't need to think about learning and growing, but the opportunity to come and work with Dominic and be part of that was very attractive to me. And really the purpose, it's interesting as someone who grew up in California, I grew up sort of in the shadow of understanding the legacy of APG and Eni and the role that Bank of America played or the days of Bank of Italy in financing the immigrant growth of San Francisco. And making California possible for a whole generation of immigrants and growing prosperity for those that came afterwards. And to a large extent, East West has done that over the last 50 years for its immigrant population. And to be part of that and be part of making that American dream a reality for so many is very, very attractive to me.

Got it. Now East West has grown and diversified a lot since the GFC and especially since its founding in the late '90s. But underpinning the franchise at its core is the premier Asian-American bank in the country. And so what kind of competitive advantage does that community base give you?

It's a durable advantage in a number of ways. It's a community that needs something like East West. It's a community that wants a partner that can help them bridge from their business communities to the broader business communities. It's a community that has a culture of entrepreneurship that has worked really well for us growing, our small business and commercial banking business. It's a community that has a very high savings rate, which has contributed to our generally strong deposit and very granular deposit base. And it's collectively a very loyal customer base. And we have learned that in Spades. I wasn't there, but we saw it in Spades in the numbers that happened through last year. And so yes, the market had a disruption last March. Yes, there were outflows and East West recovered all of those outflows and then some over the back half of the year. And not only that, as we sit here today, we're on pace for our third consecutive quarter of net deposit growth above $1 billion from granular low-cost household savings. And it's a testament to the resiliency of that customer base, the loyalty of that customer base and the special place that East West plays in the marketplace, and it's all good.

Got it. the deposit growth that you just mentioned, how much of that is coming from the LUNAR special that you all do during the Lunar New Year.

Substantially, all of it.

Substantially all of it.

But I look at that and say, hey, the H8 data came out again and it's down for the industry, it's down for the regional banks. It's down to the top 25, and East West is going to grow over $1 billion of core granular low-cost deposits or market price deposits in this particular case because of [indiscernible] arguably is a market price instrument. But the retention rate on that has historically been north of 80%. And so really, it's a customer acquisition vehicle, which we think will pay dividends in years to come.

Got it. Now I think you had recently spoken maybe about how some of the CRE and C&I loan growth has been a little bit slower to start this quarter. And so maybe you could remind us why that's occurring. But just with the strong deposit growth that you're seeing, what are you going to do with those from a uses perspective.

So 96% of our loan portfolio is U.S. domestic-focused. And so we're not immune from the broader economy or the HA dynamics. So the entire industry is seeing negative loan growth quarter-to-date, we're slow, right? So we called for a 3% to 5% growth. First quarter is going to be south of that. And we'll see how the quarter plays out. But we'll see consistent residential growth because residential growth is still something that happens. We have a fairly unique product offering that resonates regardless of where rates are. And so if you're putting 50% down sort of by definition, you're, call it, half as rate sensitive as others are. And so it continues to be a product that sells in all rate cycles. And so that product continues to work for us, and we'll add volume and balances in that area. CRE, we are being very thoughtful about. The reality is there's just not a lot of buy-sell activity. And so the absolute transaction volume we see is diminished and there's less things to finance. And C&I probably has a little bit of other cycles going on. People are sort of looking forward to what the year has to hold and they're not necessarily being very aggressive about putting on new borrowings right here early in the year, but we'll see that come along as we move through the course of the year. So those are the drivers of essentially what we're seeing. And in general, we would expect first quarter to be slow, but we're still confident we'll hit the 3% to 5% for the year.

Okay. I guess maybe when I think about East West over the next 5 years, 6 years, whatever it is, there's -- just with the natural growth of the franchise, there's a pathway within that time frame to being a $100 billion institution that's kind of been a focal point for investors of late, just given some of the volatility around that threshold for some other banks. How do you guys think about that $100 billion line in the sand, preparing for that. And I ask especially because 1 of the hallmarks of East West is it's very low efficiency ratio. I guess what investments do you need to make in the franchise to kind of prepare to be a Category IV bank?

Sure. So let me take a couple of pieces of that. Let me start with the last part -- or part of the last phrase. I think sometimes it's misunderstood that East West efficiency comes from a lack of investments or a lack of spending in some way that is detrimental or harmful to its growth. And the reality is it's more of a structural advantage. So back to the dynamics about our deposit base, we have an extremely efficient branch network. Our branches are where our most attractive markets fit. And so unlike others, we don't have to sort of have branches on every corner, in every state, in every county. We can actually focus in on core markets where our brand resonates where our customers know us by word of mouth, where our marketing spend can be close to 0, and we can still attract a tremendous amount of interest originations and activity because our brand and our reputation resonate throughout the community. That is priceless, and that contributes to a lower operating structure. The second, as I mentioned earlier, our customers tend to have a higher savings rate. And so each customer captured tends to come with more deposits per account than typical. The result of that is for the same dollar balances, I have fewer statements to print, fewer checks to run through the system, fewer transactions overall and end up with a lower operating costs. So we have both lower acquisition -- customer acquisition costs and lower operating costs. There's a sort of question flood there about how the CFPB will think about overdraft fees, et cetera. East West is a bank where $70 billion generates less than $1 million of overdraft. Why? Our customers carry balances. If we tell them to hold the $10,000 minimum to avoid fees, the customer base is highly fee resistant. They'll hold $30,000 instead. That's a unique proposition I've never encountered previously in banking. And the dynamic is such that it drives a lower cost right? So the cost isn't because we're not investing. In fact, we have great investment profile. We have a stated technology cost, if you look to our investment materials, call it, $44 million. The reality is that's the external vendor costs you add in what we spend on internal development because to a certain extent, we customize the front end for all of our customers because they need to be in multiple languages. They need to be out there accessible to them in ways that work and resonate in the communities. We spent well over $100 million on technology. So it's not that we're not spending. It's just that we're very targeted and focused and we don't spend the same way on some things like marketing and occupancy that others do. Cycling back to how to think about $100 billion. The reality is Dominic's pretty clear that bigger isn't necessarily better, better is better. And his goal is to return better returns to shareholders than his universe of bank peers. And he thinks he's done that historically and his mandate to me is Chris, make sure we continue that going forward. And so the focus is not on getting bigger but on delivering the best returns in the industry. And Dominic had a history of doing that for the last 30 years, and it's resonating pretty well.

Got it. Maybe if I could ask on the NII guidance. I think it was predicated on 6 cuts at the time, if I remember correctly, and I think you said on the earnings call that it's like $1.5 million per month what that means NII. So with the shifts in the forward curve, it's fair just to kind of say, okay.

Yes, there's not a cut in April, then May will probably be $1.5 million better than our guide. And if there's not a second cut later, then you could stack that and say, okay, you're probably $3 million better of the guide at some point in the summer, -- and if there's not a third cut later, you have $4.5 million better than the guide at some point further and further into the summer.

Got it. I guess maybe if we if we could run through a hypothetical formula like say that there's no rate cuts through the election. And then post election, we actually have to start hiking rates again. How does the balance sheet respond? I know you have hedges in place and you recently put on a couple. And how does the deposit beta respond? Is there an opportunity to maybe restart that lag cycle just given that there would have been a long time between the last hike and then that kind of like, are you able to start lagging deposit betas again?

Yes. I think what we've seen here over the last 3 months in particular is we've actually seen many folks cut rates, right? So we can think of some of the largest banks that were out there offering rates north of 5.5%, cut rates down below 5% for a number of CD and other type products. And so what we're looking at is a world where there has been adjustments downward in anticipation of the lower late. If that doesn't happen, what we said is, look, think about our first quarter. Our first quarter is going to be margin compressed because rates are flat on the asset side, deposits are still incrementally moving out of low-cost products into higher-cost products for us. That compression is going to go on until there's a further leg downward. To your question is, will we be able to lag if there's a further rate move upward later in the year, I think the reality is there will be some degree of funding that we'll need and we'll find ourselves paying for it. And I say that because one of the dynamics that we face specifically is we borrowed $4.5 billion from the BCFP program last year. And your earlier question, you asked what we do with the excess deposits, in the short run, we'll pay off the BCFP to a certain extent. And so we borrowed $4.5 billion. We'll pay down the portion here in the first quarter. and then we'll borrow the difference probably from the Federal Home Loan Bank or somewhere else and then we'll roll forward. But as we continue to grow deposits, which we expect we'll be able to do, we'll continue to manage that down. That having been said, we'll have a constant need for funding throughout the course of the year. And so to the extent there's a market opportunity to attract further deposits. We're going to be very incented to stay sort of on our best foot forward and continue to grow deposits. We also think it's just best business practice to be increasing our share of granular household deposits, and that's the focus for us.

Could you remind me what the cost is on the BTFP funds that you have?

Yes. It was at [ 437 ] which when you could leave at the Fed at [ 530 ] something was not bad, but if that goes away, which it will in March, then that's [indiscernible] just comes off the top.

Got it. We do have a question from the audience that came in. Did the failure to be result in any changes to your deposit base structure over the course of the last year?

Yes. I think what we saw in the throes of March was a degree of corporate balance reallocation. People largely took a look at their balance and said, do I need to keep $30 million of corporate balances? No, okay, what options do you offer? Is there a suite program that can push us to a money market fund or something else and still work with you, East West, but just move it somebody else or in some cases, they move some money. What was interesting about that is, I think it highlighted for us and for everybody in the industry that large balance accounts at a certain level are inherently risky and that the focus has to be on granular household accounts at one level and to a lesser extent, but also very much important on commercial operating accounts, where you know the transaction activity is so sticky it can't move. It's the payroll account, it's the AP account. It's the things that are integrated into their -- either whether it's QuickBooks is a very small spend or their ERP systems at the higher end in such a way that it's not going to move and that's not going to be sort of structurally defined terms for most entities that are $100 million balance. So those aren't as valuable as you perceive them to be and you need to be focused on those $5 million, $10 million corporate accounts because those are probably a lot stickier for a whole host of reasons, and we saw that. And so the reality is it drove home. Yes, we need to grow on the commercial side. Let's grow that the right way. Yes, we need to continue to on the household side, let's grow that every way we can.

Got it. Maybe if I could just follow up on that. Just given the failures of SVB and First Republic and Signature, all of them had pretty large West Coast operations, of course. How have you all benefited from some of that disruption? And is there any specific verticals either in the loan or the deposit side where you've seen more success in the wake of those failures?

Yes. So I think we've had more opportunity than we've probably enjoyed ever before on a relative basis. So it certainly was the case that for a number of verticals. They were true competitors there in those entities that the playing field has shifted. And we've gone from being a competitor that might have been the second or third participants in the process to sort of the port of first call, which is wonderful. I think one of the dynamics is we also recognize that if there's way more demand in certain sectors that we really think we want to have, right? So there's a lot of commercial real estate folks that would want a second or third bank to sort of work with. At the moment, we think we've done a good amount of penetration in the areas and sectors that we have an interest in, and we're really focused on meeting the needs of our existing customers, not necessarily taking on all the new ones that have fallen out from others. Similarly, in private equity, we have a pretty good presence in exposure, and I think we found the right niche for us, and we're really not interested in the larger, more volatile capital call lines than some other things that some of these other banks had in their portfolio. And so while they've come and call on us and we've engaged in those dialogues, we haven't stretched to take on more volatility because we just don't think that's the right thing to do. ever, but in general, and specifically right now is not the time to take on more volatile type exposure. And so as we look at the economy, we're a little thoughtful about what the mix is that we're bringing on, and we want to bring on a diversified mix. And so we have the opportunity fairly rarely, but soon have opportunity now to be very selective, and we've been very selective, and that's worked really well for us so far.

Got it.

We would also note there's disruption. There's been disruption for a variety of reasons that MUFG Union Bank at Bank of the West, which is now U.S. Bank. And there's been a little bit of disruption at City National. And all of that has resulted in a number of opportunities for folks to rethink their careers. And we've had the opportunity to pick up some really great hires. And that's probably the enduring benefit of what we're seeing in the California landscape disruption right now is we're emerging both as I think as Dominic put it in an interview last year, one of the last man standing. On one hand is the second largest bank in California, but also we're emerging as one of the most consistent players. And that's changing the dynamics from East West as a place where you would consider after you consider some other really established brands and presences to actually one of the most established brands and presences in the market.

Got it. I think on the fourth quarter earnings call, you mentioned that you had added 40,000 new deposit accounts over the course of the last year. I guess how much of that came post SVB, Signature, all those things? And is there anything specific kind of driving that success because that's a lot of deposit accounts.

Yes. So certainly, something approaching 3/4 of it came after that. And look, I think part of it is consistency, staying power, consistent presence in the market, all contribute to that. It was our 50th year anniversary. We had a lot of things sort of talking about our 50 years of strength. People notice. I think we've been 25 years on NASDAQ. And it's pointed out to us just the other day, NASDAQ's had a great track record over the last 25 years. It turns out East West track record over the last 25 years has been even better than NASDAQ as an index, which is kind of stunning on one level when you think about all the other constituents in NASDAQ. But it speaks to the fact that the franchise has grown with the community that serves and has become an even more important part of them, which is just accruing for the benefits.

Got it. Maybe if I could switch topics and then maybe kind of try to drill down into the CRE office portfolio a little bit. I was hoping maybe you could provide us with a little bit of an overview as to how much of that is kind of due to reprice or mature over the course of the next year. And there's been a number of kind of headlines around San Francisco, L.A., West Coast markets where vacancy rates are up a little bit. How are kind of vacancy rates evolving in your kind of -- the core of your office portfolio?

Sure. So speaking just to office, and I'll look to Adrienne to make sure I got right numbers. I think 12% of the loans that are going to reprice or reset over the next year. So that's just on the office subset, right? That's, again, like 4% of our loan book, right? And then within that, to the point that you're raising, I think we've seen a fair degree of vacancy factors impact places like downtown business district or Downtown L.A. The reality is our portfolio isn't there, right? So our portfolio -- yes, we have a few loans in those central business districts, a few loans, right? But if you think about the landscape of Downtown L.A., the landscape of San Francisco, you think about sort of high-rise office towers. We've gone through the loan book -- our highest high-rise is a 13-story building, half of which is actually a parking lot. And so the reality is, we don't traffic in the same type of downtown high-rise office that is most problematic. And we're not seeing the level of vacancies that have risen to a level that would give us any pause at this point in time. Most of our office products, average loan size is $4 million, is out in the suburban landscape, sprinkled across the entire Southern California Basin or the Bay Area at large. And it's just not seeing the same type of dynamics as people who have to commute across the bridge or through an hour of traffic to get into Downtown. It's just a different dynamic. And that dynamic is one that has lent itself for small business owners to encourage their folks to come in and have them come in because they're not commuting an hour, right? And that's contributed to those valuations staying. Those properties staying more occupied and more used, and therefore, the valuation is staying higher, and therefore, not the issues that you're seeing in the downtown office lenders portfolios because we're just not that.

Got it. Maybe just on the reserve for CRE overall. One of the concerns that I think a number of people have had coming out of what happened with like New York community on their fourth quarter call was a big step-up in kind of CRE reserves. And there's this concern, I think that maybe there's grown regulatory pressure to increase reserves as it relates to CRE, especially in the SMIDs because when you compare mid-cap banks to larger cap banks, there's a big difference in the level of CRE reserves on a percentage basis between those two groups. How do you kind of see the CRE reserve evolving over the course of the next year or so? And are there any kind of pressures behind the scenes to kind of move that higher?

So obviously, in doing our CECL calculation at year-end, we took into consideration what we thought was a reasonable outlook for 2024, given a soft landing given, therefore, a slower economy and our modeling and our reserves at year-end reflect that outlook. So I think the givens are there. I think you raised an interesting question earlier. So let me first go that and come back to your part of your question. So as I look at the year ahead, what we said is, look, we had 9 basis points of net charge-offs last year. That's a great year. That's probably also unsustainably good. We saw 15 basis points in the fourth quarter. What we've called for, for 2024 is probably 15 basis points of charge-offs as a reasonable start point for the year, moving towards maybe 25 basis points towards the end of the year, assuming the economy unfolds in the way we expected. What could be different, it's an area you painted earlier, right, where rates don't come down, where rates stay unduly high throughout the entirety of the year or a good portion of it. That will cause some further stress in some areas for some real estate owners. And so to the extent rates stay high, we think there'll be not a lot of transaction activity that, that will cause those that have to sell for some reason sort of go to a market that's not as favorable to them. And that when those transactions happen, they'll have a lower price points than some people have prepared for. And that dynamic will unfold if rates stay elevated throughout the course of the year. If rates come down 100 basis points, we think that's a softer landing scenario, and that's a softer credit impact scenario. So we have modeled for the softer landing, the softer credit. Could things get worse if rates stay higher, yes, probably for some and what could that mean? That could mean some further recalibration of our CECL reserves, but as we sit here today, we have no reason to believe, a, that's going to stay elevated throughout the entirety of the year. That's certainly not what the market seems to be projecting; and b, we're not seeing evidence of that stress come through our portfolios today. Obviously, there's anecdotal situations, one-offs. But I can't look across any portfolio and say, "Oh, yes, this asset class is clearly tipping over. It's just not happening.

Got it. And so I guess it sounds like under the current kind of assumptions, then we should expect provisioning to be enough to cover net charge-offs plus any incremental loan growth. So not expecting a big variation in the overall level of reserve.

Yes. And I think the net charge-off guidance we have obviously is coming up a little bit from the unsustainably low levels of last year, but I don't think 25 basis points even if we got to that towards the end of the year, out of line for a mid-cap regional bank.

Got it. I noticed that your criticized CRE and C&I loans actually declined quarter-over-quarter. Several peers kind of saw increases in these metrics and did throughout all of last year. I guess what drove the quarter-over-quarter decline? And would you expect that to kind of continue going forward?

I don't know that I expect it to continuously improve, right? 9 basis points was an unusually good outcome for last year of charge-offs and a declining ratio was a pretty good outcome, speaking to the strength of the core portfolio. If the economy weakens, we could see a variety of things, move that a little bit higher. But I think the good news is we didn't see it at year-end, which is why the portfolio actually improves. We went through very careful at year-end for a variety of reasons. One, was my first year end. I want to make sure I understood how everything worked. Two, we all know we're signing the 10-K for the full year, and that's sort of important to make sure we get it right at year-end. And when we went through sort of loan by loan reviews with the credit folks, it made sense that a number of things should be upgraded. So if they've been performing, they've been paying. They are current. They got a guarantor. It was hard to argue that other factors should weigh them down and we took that consideration. The level of current pay is really, really high. And so it's a good time to look at the portfolio very carefully, and there wasn't a lot of bad news to see there.

Got it. I'd remind everybody again that you can submit the questions to the iPad via the QR code. And I think we also have free mics available if you don't feel like submitting them through the QR code, you just need to raise your and somebody who will bring you a microphone. So if you do want to ask a question, please feel free because we do want this to be interactive. So we wait to see if there are any questions. One of the unique things about the bank, as we talked about, is this focus on the Asian-American community, but that also results in you having kind of cross-border kind of exposure to China and depending on who wins the presidency in November, it could mean different things for tariffs and all that kind of stuff. So I guess how have clients -- how your conversations with clients that are exposed to China kind of progressed so far this year? Is there any contingency planning occurring when you think about the potential for a more volatile relationship between the U.S. and China?

Yes. And I think it's interesting. I think Dominic has a very long-term view, which I have come to appreciate in a number of ways. But one's of them is if you sort of look at the last 25, 30 years, which Dominic's been the CEO for that entire time, it's arguable that tensions have certainly only ratcheted up over that whole time frame. And arguably, it's been very concentrated in the last 10 years, that ratcheting up we had a tariff in position under the Trump presidency and administration. And curiously enough, East West only grew faster and grew deposits even more. So what does that tell you, right? It tells you a number of things. One, it tells us that as long as consumers are going to buy things off the shelf set Costco, Home Depot, Walmart and as long as those goods are still being imported from someplace in Asia, we will have an important role to play in that cross -- financing that cross-boarder trade and growth. And as long as those economies are growing at faster clips than the U.S. economy, which collectively they continue to do. And even if rates come down from higher levels to lower levels in China, no one's talking about them coming to below U.S. levels of growth or in Vietnam or in Malaysia or anywhere else, we will participate in that growth in a slightly better way than if we were just 100% domestically focused. And so we are participating in the broad cross-border financing of American consumers digestion of products produced in Asia, that does not feel like it's going away. And as long as we're in that, and we're playing that the right way, which is financing the goods on their way over here and their distribution and sale here, which is what we do, it's going to work out just fine. And interestingly, even when tariffs were imposed and even when tensions were heightened, and even when the looms were shut down or et cetera, deposits grew and our business continues to grow.

Got it. Do you have any -- I guess, are there any specific industries where maybe you have more of a concentration as we think about the China exposure?

Not in China per se. I mean, I think it's -- I could talk about a handful of lamp manufacturers that sell products to Home Depot and Walmart or monitors and screen for manufacturers or plumbing supply manufacturers or outdoor [ patio -- ] cushions and pillows or mattress pads and blankets and sheets, but it's that stuff, times 50 more categories, it's been interesting sitting on the C&I meetings sort of go through what we're approving and it's the entire gamut of everything you walk into your retailer of choice if it's being shipped here and sold here at a retailer, we probably have somebody in the customer base that's very active as one of the top 5 retailers making that. And oftentimes, it's been a different brand than you would expect, but it's made at some factory in some place in Shenzhen, and we're happy to finance that ultimate landing at your retailer of choice. And it's an interesting business model on that front. And as those companies -- and sometimes it's the distributors, sometimes it's the company directly as they grow and prosper and the supply chain is challenged, they decide at some point they need to buy a warehouse and more often than not, that's somewhere, not too far from the port of L.A. or the Port of Seattle, to less extent, the Port of Oakland. And we're happy to finance those warehouses as well. And that's the nature of some of our activity.

Got it. I did also -- well, we only have 5 minutes left, but I did want to talk about capital returns. I think in the most recently published deck, I think it was 1.2 million shares bought back quarter-to-date. It sounds like you want to continue to be opportunistic. But you also said that you don't want a warehouse capital. And so I think that there's perhaps a difference between maybe being opportunistic and not wanting the warehouse capital when I think about it? Like are you more price-agnostic than you have been in the past? Do you want to just maintain the same levels of capital? Like how do we think about persistent shareholder like returning capital to shareholders if you don't want to warehouse capital.

Yes. So Dominic's first mandate to me is make sure we continue to deliver best-in-class returns. And so I will do everything in my power to make sure we're delivering best in class returns. And he's got a great track record of focusing on and delivering a very high tier return on tangible common equity. He does that despite carrying one of the highest tangible common equity ratios in the industry. And so it's a wonderful outcome where we see delivering very high returns on a very strong and very TCE intensive capital structure. So as long as we're doing that, we think that's a pretty good outcome for shareholders, and that's been beneficial to those that have invested over a long horizon with Dominic. What are the other things you can do? You can obviously pay a competitive dividend. I think dividends have been raised pretty meaningfully, 15% here in the last year, but 20%, I think, for the prior 2 years before that. So paying a strong dividend is an important part of the overall equation. And I think we'll continue to look at that dividend policy on an annual basis. But yes, there's no reason to warehouse capital. And what we have seen is Dominic historically has grown the bank at a reasonable clip, but you don't really want to grow the bank unduly into a potentially softening economy. And so the reality is we knew 2024 was set up to be a year where we thought things would be slower. -- we're seeing that play out. And in that environment, there's certainly excess capital to be put at work. And if you don't want a warehouse capital, you're not growing the balance sheet, then share repurchase of natural outlet. And you've seen that here in the fourth quarter of last year and the first quarter of this year, and we still have capacity to do more, and we'll be thoughtful about it. But we will also be opportunistic. And so I think if you go back and do the math, we were very opportunistic on what we bought back in the fourth quarter that looks really attractive in the rearview mirror. And I feel pretty good about what we bought in the first quarter as well. There was a week or so after NYCB where some stocks took a little bit of a drop, and it was great to be in that week.

Got it. So it sounds like you continue to focus on increasing the dividend, continue to deploy capital via the buyback.

But if there's growth opportunities that we can meaningfully and directly fund with core deposits, we'll obviously allocate our balance sheet, first and foremost, to help our customers, which is what we've done and what Dominic has done for the last 30-odd years.

Got it. I don't think I see any questions from the audience. So I'll ask you one last closing question, Chris, if you just wanted to leave everybody here with kind of one succinct message as to why they should invest their capital in East West, what would it be?

Yes. If we think about the asset side of most banks, it's a fairly competitive landscape. We all buy very similar securities. And with the current guidance from regulators, we're all going to be buying the same [ KLA ] type securities. We all made fairly similar loans and nobody wants to be overly concentrated. So we're all going to end up, hopefully, with a well-diversified portfolio. So the opportunity to differentiate on the asset side is inherently one of taking a risk that others aren't willing to or finding something new. On the liability side is really sort of where, to some extent, the real assets of the bank are. It's the core deposit liabilities and your ability to gather core deposits at a below-market funding level cost is the durable advantage that a core commercial bank has to offer and the ability of East West to do that at a lower structural cost point than almost anybody is a durable, sustained advantage that will be with it through its entire cycle. And in a zero rate environment, maybe that didn't sort of spill out obviously, but in a higher rate environment, it should be very, very apparent. And in even a medium rate environment, it will be a defining differentiating value that will continue to drive a stronger margin and stronger returns than others, even at our scale.

Got it. Well, thank you very much, and thank you, everyone, for attending. I appreciate it.

Thank you. Thank you.