East West Bancorp, Inc.

Hello and welcome to the EastWest Bancorp's first quarter 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one. Please note, this event is being recorded. I would now like to turn the conference over to Adrienne Atkins, Director of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, and thank you, everyone, for joining us to review EastWest Bank Corp's first quarter 2025 financial results. With me are Dominic Ng, Chairman and Chief Executive Officer, Christo Morrell-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 investor relations 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 8K 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 strong first quarter results. We continue to grow the bank and reported another quarter of record revenue. Loan growth was solid. We grew end of period loans 1% quarter over quarter to a new record level of $54 billion. Our relationship-driven business model helped support continued residential mortgage and commercial real estate lending. On the deposit side, we executed another successful Lunar New Year CD campaign and further optimized our pricing this quarter while continuing to add customers. We also delivered another record quarter of fee income Fees were up 8%, driven by strong customer activity across the board. We continue to see opportunity to grow and diversify our fee revenues. Asset quality has remained solid, and credit is performing as expected. First quarter analyzed net charge-offs total 12 basis point, or 15 million. The non-performing assets ratio decreased two basis points from the end of Q4 to 24 basis points at quarter end. Given the recent increase in economic uncertainty, we bolstered our allowance levels, bringing our total allowance for loan losses to 1.35%. The strength of our diversified balance sheet continue to show this quarter. allowing EastWest to continue to deliver top-tier returns. We deliver a near 16% return on tangible common equity and a 1.6% return on average assets, while growing tangible book value per share 3% quarter-over-quarter and 15% year-over-year. Now, before I hand the call over to Chris, I'd like to take a moment to talk about the current economic environment. Tariffs are not new for EastWest or our customers. We have been taking tariffs into consideration since 2017. Many of our clients decided to diversify their supply chains way back then and accelerated those efforts during COVID-19 pandemic. Since that time, we have seen our customers increase their investments in the US and other markets. All the while, EastWest engaged with our customers and continued to grow. Over the past six months, we have seen our customers reposition themselves for a range of potential outcomes. In the past several weeks, our teams have spent a lot of time with our customers talking about their business plans. They are proving to be forward-thinking, nimble, and are mostly staying ahead of the curve. Our experience has taught us to confront challenges From a position of strength, we enter the second quarter with a diversified balance sheet, a granular and strong consumer and commercial banking network, top tier profitability, best in class operating efficiency, and amounts to highest levels of capital in the banking industry. We have the capital and balance sheet flexibility to take care of our customers in any environment and are well positioned to capitalize on any opportunities ahead. I will now turn the call over to Chris to provide more details on our first quarter financial performance. Chris?

Thank you, Dominic. Let me start with loan growth on slide four. We added over half a billion of loans to the balance sheet in Q1. Demand for residential mortgage proved durable, and new originations continue to be accretive to yields. Even with the current elevated rates, we continue to see steady mortgage appreciation activity in Q1 and have a strong pipeline going into the second quarter. As Dominic mentioned, we also grew commercial real estate balances this past quarter as we continue to support our longstanding relationship clients and select multifamily projects. C&I balances also grew modestly in Q1, likely reflecting the pull forward activity we saw in Q4. Overall, we are encouraged by the lending trends we have seen so far, even into April. Moving on to slide five, we strategically optimized our deposit pricing strategy this quarter to lower our overall funding costs. We successfully retained our Lunar New Year CD balances and incrementally captured some additional CD market share, even at much lower pricing. Average DDA balances, money market balances, and time balances all grew quarter-by-quarter. We continue to expect customer deposit growth will fund all of our loan growth this year. Overall, we're encouraged by the deposit trends we have seen this year, even into April. Slide six covers our net interest income. We grew quarterly dollar net interest income to $600 million, up $12 million from Q4, despite two fewer days in the quarter. Similarly, we grew our net interest margin by 11 basis points from Q4 to 3.35% in the first quarter, primarily by decreasing our end-of-period interest-bearing deposit costs by 13 basis points and partly due to day counts. In both cases, dollar NII and margin were also assisted by the expiration of some of our legacy hedges. Looking back to the start of the cutting cycle, we have decreased interest-bearing deposit costs by 62 basis points, successfully exceeding our 50% beta guide, which we've shared in prior quarters. We continue to expect net interest income expansion as we go through the balance of the year. Moving on to fees on slide seven, as Dominic mentioned, fee income grew 8% from Q4 to another record level, with growth in four of our five major fee categories. We will remain focused on driving growth in our fee categories and further diversifying our revenue streams. We are encouraged by the pace of growth in fee revenues so far this year. Turning to expenses on slide eight, EastWest continued to deliver industry-leading efficiency while investing for future growth. The Q1 efficiency ratio was 36.4%. Total operating non-expense was $236 million for the first quarter, including seasonally higher payroll-related costs. Overall, we continue to expect expenses will be in line with our guidance for the year. Now, I'll hand the call over to Irene for comments on credit and capital. Irene?

Thank you, Chris, and good afternoon to all on the call. As you can see on slide nine, our asset quality metrics continue to broadly outperform the industry. With quarterly net charge-offs, non-actual loans, and non-performing assets metrics all improving. We recorded net charge-offs of just 12 basis points in the first quarter, or 15 million, compared to 48 basis points in the fourth quarter, or 64 million. Quarter over quarter, non-performing assets decreased by two basis points to 24 basis points of total assets as of March 31, 2025. The criticized loans ratio increased during the quarter to 2.3% of loans. The special mentioned loans ratio increased eight basis points quarter over quarter, while the classified loans ratio decreased, increased, excuse me, three basis points to 138. We recorded a lower provision for credit losses of 49 million in the first quarter, compared with 70 million for the fourth quarter of 2024. We remain vigilant and proactive in managing our credit risk. Turning to slide 10, the allowance for credit losses increased $33 billion to $735 billion, or 1.35% of total loans as of March 31st, 2025. We utilized a multi-scenario methodology for the allowance, and the increase in the quarter was largely driven by an increase in downside scenario weightings given the economic uncertainty in early April 2025. We believe we are adequately reserved for the content of our loan portfolio, given the current economic outlook. Turning to slide 11, as Dominic mentioned, our strong capital levels allow us to operate from a position of strength and support our customers in any economic environment. All of East-West regulatory capital ratios remain well in excess of regulatory requirements for well-capitalized institutions, and well above regional and national bank averages. East-West CET1 capital ratios stand at a robust 14.3%, while the tangible common equity ratio rose to 9.9%. These capital levels place us amongst the best capitalized banks in the industry. In the first quarter, East-West repurchased approximately 920,000 shares of common stock for $85 million. We currently have 244 million of repurchase authorization that remains available for future buybacks. EastWest also distributed 85 million to shareholders via quarterly dividends. EastWest second quarter 2025 dividends will be payable on May 16th, 2025 to stockholders of record on May 2nd, 2025. I will now turn the call back to Chris to share our outlook.

Chris? Thank you, Irene. On slide 12, we are reiterating our full-year guidance. We're also providing some additional detail on tax items. Amortization of tax credit and CRA investment expense is now expected to be within the range of $70 to $80 million this year. We continue to expect our full-year 2025 effective tax rate to be below 23%. 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 your handset before pressing the keys. To withdraw your question, you may press star then do. Today we ask that analysts please limit themselves to one question and one follow-up. You may then rejoin the queue at any time for additional follow-up questions. At this time, we will pause momentarily to assemble our roster. Today's first question comes from Casey Hare with Autonomous. Please go ahead.

Yeah, thanks. Good afternoon, everyone. So I guess first question, why is the NII guide not moving higher? It sounds like loan pipelines are in good shape and NIM is up. And at this current runway, you're right at the middle of the guide level.

Sure. And to be honest, we could probably think about that a little bit harder. But the reality is there's a couple of rate cuts baked into the March 31st curve. And since then, probably the outlook has dimmed a little further for three to four cuts. So as we sit here today, we think the current guidance is appropriate and we're comfortable.

Okay. And then, so, Chris, the deposit beta, as you pointed out, was well ahead of what we were 50% expecting today. Can you sustain that at this level, or is that normalized lower?

Yeah, Casey, I think what we've told folks is we've been benefiting from rolling down the hill, particularly with the repricing of our CDs. And so as the forward curve starts to flatten out, that positive momentum will start to slow a bit. Nonetheless, we think we'll be above the 50% guide we've given you.

Thank you.

The next question comes from Abraham Funawala with Bank of America. Please go ahead.

Good afternoon, EB. Abraham, you might be on mute.

Hi, can you hear me?

Yes, we can.

There we go. Okay. So on capital, I think you brought back in the first quarter at an average price of, I mean, the 90s. Given the pullback that we've seen in stocks, I appreciate the macro's uncertain. Just talk to us in terms of how much of a ramp-up can we see in terms of capital return and buybacks if the sell-off continues, or does the macro make you a little bit more cautious and stay on the sidelines and sit with the excess capital for now?

So if I look back over the last six quarters, we've purchased $310 million worth of stock at an average price of around 72. So we clearly think the price has value still below where we bought it in Q4 and in Q1, and we'll continue to look at it. But as you know, Ibrahim, we continue to want to position the bank to always be in a position of strength, to be in the best position to service and support our customers, and to have the flexibility to do what's right for shareholders in all environments. So we'll continue to be opportunistic. But as Irene mentioned, we have $244 million available and all the flexibility to consider what's best for our shareholders.

Got it. And I guess maybe just one big picture question, maybe, Dominic, for you on client activity. So you've talked about the experience we all have had since 2018. It feels the rhetoric, the pushback between U.S. and China – is a lot more sort of elevated this time around. And I'm just wondering when you think about your customers, their ability to withstand this, like, do you think the risks are larger today than what we were faced in 2018-19? And have you seen any deceleration or a pickup in activity ahead of these tariff concerns?

Well, I think in terms of the client's perspective who have business that may have a direct sort of may would actually be impacted by directly by tariff. I would say that back in 2017, it would be a little bit more challenging for them because it will be the first time they really went through this sort of like surprise with tariff. And so, and then most of them were not as necessary as well prepared. It took them a few years to get themselves in a position that be able to figure out how to deal with the supply chain. I think in a way COVID-19 actually accelerate many of their desires to make sure they have a multiple alternative way to continue to do business in terms as either they are importer, you know, of goods from Asia region. So today, well, the tax, the tariff rate is particular for China. It's very high. And then even for other countries, potentially can be high. But I guess all of that will be subject to negotiations. So we at EastWest Bank try not to put too much time focusing on the speculation about what the outcome. What we've done back then, you know, in 2017, 18, and we pretty much just focusing on working with our client, one customer at a time, helping these clients that have direct exposure and getting them through. And fortunately for us, in fact, as we have said it numerous time in an earnings call that our trade finance portfolio did not suffer any losses during those period of time. And so today, very much the similar way, we see at the size at East West Bank that we can actually engage with our customers one at a time. In fact, so far, we have already talked to over 500 commercial clients that have sort of exposure due to the newly proposed tariff. And we felt pretty good with the discussions with these clients that everyone have a different way to manage it. Some of them actually have already served substantial amount of their manufacturing base to either other countries or even some of them in the United States for the last few years. There are some that are just holding back shipment for now and then to see how it goes and then there are others who pass the cost who very much comfortable passing the cost ultimately to the consumers of In the US and then there are others that Who actually? Their products are exempted from the primitive tariff rates that are currently being proposed. So I Many of them have all different scenarios, but we talk to each and every one of these customers and work with them to make sure everybody's in good shape. So as of today, what we've noticed is that for clients, they're commercial clients that have significant potential adverse impact due to tariff, and they equate to about 1% of our total CNI loan balance portfolio. So we feel pretty good where we are today. And in terms of potential credit loss as of today, we don't see any at this moment. But we continue to work with our clients on a day-to-day basis, continue to help them through. And we feel that actually this exercise not only is great for credit risk management for East West Bank, but more importantly, that's how we help build loyalty with our CNI customers. And more importantly, I do want to point out that Through this process, there are likelihood we're going to end up gaining more business from other banks because there are other banks who actually are not as familiar how they manage the tariff situation that may potentially trigger disappointment from some of their, you know, high-quality clients. So we feel that we may have opportunity going forward in that regard.

Got it. Thanks for the call, Dominic. Thank you.

The next question comes from Manan Gosalia with Morgan Stanley. Please go ahead.

Hi, good afternoon. Dominic, if you can comment on what you just said. As you work with clients, as it drives a bigger opportunity for EastWest, does that imply that it's a bigger opportunity for clients bringing in more clients, getting higher loan growth, getting more deposits as soon as this year, or is that more of a longer-term opportunity in your mind?

I look at everything from more of a longer-term perspective in terms of the current environment is that there are uncertainty out there. So whatever that I project or predicted, I think that – Sometimes in a few days, things change, right? We saw the volatility of the stock market and whatnot. So our position is that number one, we want to make sure that we are in a position of strength. That's why we're very proud that our tangible capital ratios approach 10%. And we have plenty of liquidity. And so as long as we're in this position, we feel very confident within our control. We have plenty of, you know, flexibility and very fortress-like balance sheet that can work with anybody. Now, how would that end up either getting more customers to us this year versus a year from now, two years from now? It all depends on how everything plays out in the economic environment in the next six to nine months. And that is something that somewhat beyond my control.

Got it. You're saying that East West has the capital, has a balance sheet to work with clients. And at the same time, there is an elevated level of risk for the U.S. economy as a whole as well. What would cause you to pull back on on loan growth in this environment?

A multiple scenario. I mean, what caused us to pull back said, well, because economic condition, if it dramatically go downward, you know, obviously, you know, there are not going to be that much demand and will be proven and not to even engage with clients to talk about a fantasizing growth strategy when, in fact, if it's going to a recession. But all of that, these are what I wouldn't call a substantial heightened risk at this point. I would just say that there are uncertainty because no one really knows what's going to happen in the next few months. And then that is something that we would just have to wait and see how things turn out. And it's just uncertainty. And that's why the best thing to deal with uncertainty is to be financially strong. You know, if you look at it, the past three out of five years, we had, you know, from, you know, COVID to the regional bank, Silicon Valley Bank, you know, crisis. And then to now, you know, this sort of like potential tariffs impact to economy, three out of five years. We felt really good about our strong capital ratio because we positioned ourselves as a very, very strong financial institution. We give tremendous confidence to both our commercial and our retail customers so that they do not feel panic worrying about East West Bank. And that automatically helped us down the road getting organic growth momentum. So we'll see how this all plays out, you know, but I feel good about our financial positioning. And so, but whether how the economic will go up or down or sideways, that's beyond my pay rate.

I appreciate that. Thanks so much. Thank you.

The next question comes from Timor-Brazil with Wells Fargo. Please go ahead.

Hi, good afternoon. I'm wondering just on the fee income side, how much of the broader fee income is somehow generated one way or another through cross-border trade? And then just maybe following up on the conversation we're just having, how would you balance the view that East-West expertise maybe becomes more coveted as complexity starts to increase in cross-border trade versus maybe some of those fees at risk if cross-border activity actually does slow down?

So a small portion of the commercial deposit-related fees are cross-border, but the reality is the lending fees are domestic, the wealth management fees are domestic, and the derivative activity is tied to our domestic customers. So it's really just the, you know, and FX fees. And, you know, obviously the FX fees are, you could almost say by definition cross-border related, but, you know, everyone has a little bit of them, so they're not specific to East West. But, you know, I think it's just really, a portion of the commercial fees and the FX fees that are tied in some way to cross-border activity.

Okay. And then maybe one for Irene. Can you talk us through the allowance build, the rationale on the C&I side, if there are any specific segments where maybe that allowance was more so applied? And then on CRE, I guess I was a little bit surprised to see that allowance take down quarter on quarter, even though classifieds were up sequentially.

Yeah, good question. So the increase in the allowance for us was largely based on our increasing the waiting for the downside scenario. As I said in the prepared remarks, we use a multi-scenario for calculating the allowance. And we hadn't closed the books yet in early April, so with kind of the fact pattern that was out there and the market disturbance with the tariffs, we increased the downside scenario. The impact of that was multiple, but what we highlighted there for the reserves of the CNI and the increase of seven basis points or 37 million for CNI was a result of that.

Great. Thank you.

The next question is from Ben Gerlinger with Citi. Please go ahead.

Hi. Good afternoon. Appreciate it. If we could take a minute here to talk about expenses. I know you guys You have a guide of seven and nine. It seems like one Q over one Q last year is pretty de minimis in total change. Just trying to think about how to look at the remainder of the year, the nine months, and any time investments might hit or what we should expect for two, three, or four Q. Yeah, look, I think we're still comfortable with the overall guide for expenses for the year.

We continue to invest in cyber and technology and and enterprise risk and in growing the infrastructure to be a better and stronger bank for our customers. And all of those investments continue to pace. Some will come into play in Q2 and Q3 as technology gets implemented and placed in service.

Gotcha, that's so cool. And then when you just kind of think holistically if we're kind of in a vacuum here and no rate cuts, like first quarter had the impact of lowering CD pricing and deposit costs overall. Then you also had partial headwind reprieve from your derivative or swap, I should say. But when you think about kind of the two Q, it should naturally work higher, day count included. And then if you layer in a cut, in the middle of the year, like that's the headwind? Is that what you're trying to convey, Chris?

Yeah, so I think we naturally expect the balance sheet to continue to grow. That will be a positive. The positive from the derivatives that expired have already been recognized. The CD repricing opportunity in a flat rate environment will dissipate towards zero. And what will be offsetting the balance sheet volume growth will be Potentially, the risk of, A, slower growth on one hand than perhaps our expectations, given just how the economy might slow later out of the year, and the potential for rate cuts, which at least at March 31st, there were two rate cuts baked in. And we've previously said each rate cut is worth $2 million per month. So that's the negative to offset, essentially, the positive balance sheet volumes that we expect.

$2 million per rate cut per month. Right, got it. Thank you.

The next question is from Matthew Clark with Piper Sandler. Please go ahead.

Hey, good afternoon, everyone. Thanks for the questions. Hey, just on the deposit cost side, it looked like the spot rates at 330, just four basis points below the average in the quarter. Can you just remind us what you have in the way of CDs coming due in 2Q? maybe even 3Q and kind of that differential in rate before it drifts to zero?

Yeah, we have about $10 billion coming due in the next quarter here, Q2, and about $8 billion in third quarter. Rate-wise, most of the things that will stay in the third quarter rollover have just been repriced now, right? So essentially the stuff that's coming on in the third quarter is all going to be in the low fours, 4 to 408, a little bit at 418 kind of range. So the incremental benefit in a flat rate context will be, you know, eight to 18 basis points. Of course, if we see one or two rate cuts by then, it'll get better. And then with regard to, you know, stuff that we'll roll over here in Q2, it's stuff that generally we put on the books in December or January that will come due, you know, in an ordinary course, and that's going to be sort of in the low force, four and a quarter area, roughly.

Got it. Okay. Thank you. And then just on the uptick in criticized commercial real estate X multifamily, I think, went from 308 to 376. Can you just give us a sense for the types of properties that drove that increase and your plans there?

Yeah. You know, the increase there was pretty broad-based, some related to a no – Concentration, really honestly, from a customer perspective or really relative to the portfolio, assuming geography, the areas where we had the kind of downgrades were industrial and largely retail, and then some of them are other category as well, which is broad-based. Nothing we saw or thought was systemic at this point.

Okay. Thanks for the comment.

The next question comes from Gary Tenner with VA Davidson. Please go ahead.

Thanks. Good afternoon. Dominic, I appreciate your comments earlier on the tariffs. Wondering if, as it relates to the trade finance business, have you or do you expect to see sort of an earlier year level of activity there as any of your customers kind of pull in supplies or inventory earlier than they might typically do? Have you seen any of that yet?

That's already happened. I mean, customers that react to the sort of like potential tariffs that may be coming into place, pretty much I think stocking and putting more inventory in place early on. So I looked at it right now is that I don't anticipate In the next two to three months, there will be any more balances increases because I hope right now it's going to be the kind of worst case scenario. So, I mean, it doesn't make sense for any of the importers to start, you know, power up more inventory at this stage.

Okay, so that's already kind of embedded in some of the CNI activity in the first quarter, sounds like.

Yeah, as I mentioned, Gary, we may have seen part of that actually in the fourth quarter as well. So there was a pull forward of activity. So we probably saw some of it in Q4, some of it here in Q1. And as Dominic mentioned, you know, we don't expect to see a buildup on the CNI side at least of materiality related to that activity at this time.

Got it. Okay. Makes sense. And then the second question I had was just on the wealth management fee income, the, you know, year-over-year and sequential quarter increase. Pretty significant. Was that, I think in the slide deck, it just notes higher customer activity. But the sequential quarter number is so strong, I'm just wondering if there was anything in there that did impact the quarter that may not recur here in the second quarter.

I think there was a lot of volatility in the quarter. And so customers came and asked for advice, and we were happy to provide it. And the reality was it was a combination of putting money to work, into fixed income products, putting money to work into insurance products, putting money to work just in allocating some to insurance policies and putting some money to work in structured notes and other activities, along with the normal ordinary course investments in the markets that we usually support our customers with. So it really was across the board and on many fronts, but in response to some very active conversations, which create opportunity to reposition some things.

Thank you.

The next question comes from Jared Shaw with Barclays. Please go ahead.

Hey, good morning. Good afternoon. Hi, Jared. Maybe following up on the wealth management question, what's the broader strategy for growing that line? Is there an opportunity? for M&A to come in and play a part in growing wealth management, or is it really just going to be continual blocking and tackling and growing customers one at a time?

Well, we have been successful at the blocking and tackling and growing customers one at a time, which I think is a hallmark of EastWest's capabilities. But in addition to that, as you're aware, we made an investment in Ralliant back in 2023, and we would selectively look at opportunities to continue to expand our capability for our customers and offer a broader set of both products and services and solutions because we think there's incremental demand within our customer base, within our core domestic customer base for those services and solutions that we'll continue to sort of tap into with each quarter that passes, and we know we can do more.

Okay. All right. Thanks. And then on the hedge strategy, can you – maybe give us an update on what the expected sort of volume or appetite is going forward and what's the blended received fixed rate on the existing swap book after that billion dollars rolled off in first quarter?

It got a lot better. I don't know that I have the blended right at my fingertips, but the next sort of relevant trade that will impact the portfolio is we've had about $500 million of forward starting swaps, just under 4% that we'll receive fixed on starting in Q3. And so to the extent we see rate cut in Q3, we'll of course be in the money on those. And actually, I'm sorry, early in Q3 and then another $500 million later. So there'll be a total of $1 billion over the back half of 2025. Again, both with the received fixed rate at around 4%. Great.

Thank you.

The next question comes from Chris McGrady with KBW. Please go ahead.

Oh, great. Thanks. Chris, just on the securities purchases and the liquidity management, can you just elaborate on what you bought in the quarter, yield, duration, and expectations for kind of the mix between cash and bonds going forward?

Sure. So during the first quarter, we continued to mostly buy Ginnie Mae floaters, although we did begin to layer in some fixed-rate Ginnie Mae's. Our focus is all on purchasing HQLA level one securities. So far, IngenieMaze has been sort of exclusively the focus. Our duration at the end of the quarter basically ended up at around three, and that's a blend of the floaters, which obviously are less than one, and the legacy portfolio fix that we had, and the HFS. The whole portfolio comes out to about three. But again, if we're buying mostly floaters at the short end, we're adding less than one stuff Although incrementally and today, we do see value in the fixed side of the equation at levels above 5.5%. Okay, great.

And then just a clarifying comment, the tariff exposure, I think you talked about reviewing 500 customers. Was it 1% of the CNI that was a statistic? I missed that before that you were watching a little bit closer.

Yes, 1% of the C&I outstanding balances is the portion of the customers that we know that we're actively engaged, which is why we engage with them, and those are the outstanding balances. Again, we're not saying any of those are necessarily at risk, but we know they're actively engaged and they'll be impacted to some extent.

Great. Thanks, Chris.

The next question is a follow-up from Gary Tenner with DA Davidson. Steve, go ahead.

Hi, thanks for the follow-up question. I just wanted to ask about the FHLB advances, the $3.5 billion kind of expectations for, I know there's some maturities there this year. Would you expect to just continue to roll those, or do you have a different approach in mind as it relates to paying down that liquidity or funding?

I think we'll continue to look at the federal home loan bank advances as a a flexible component of our overall balance sheet to the extent that there's an opportunity to pay those down with excess deposits. Happy to do so from time to time to the extent there's an opportunity to put the money to work in securities that has a better profile for us and better return to our shareholders. We've been doing that essentially over the course of last year, and I think we'll continue to reevaluate that as we move through the year.

Appreciate it.

Thank you. This concludes our question and answer session. I will now turn the call back over to management for any closing remarks.

Thank you. Thank you for joining us on today's call, and we are looking forward to speaking with you again in July. Bye-bye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.