East West Bancorp, Inc.

Good day and welcome to the East West Bancorp's fourth quarter 2025 earnings call. All participants will be in a listen-only mode. Should you need assistance, please single 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 on a touch-tone phone. 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 EastWest Bancorp's fourth quarter and full year 2025 financial results. With me are Dominic Ng, Chairman and Chief Executive Officer, Christelle Morrell-Niles, Chief Financial Officer, and Irene Oh, our Chief Risk Officer. This call is being recorded and will be available for replay on our investor relations website. The slide deck reference 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 8-K filed today. I will now turn the call over to Dominic.

Dominic Rao Thank you, Adrienne. 2025 was another record-breaking year for EastWest. Our highlights include new full-year record levels for multiple categories, including revenue, net interest income, fees, non-interest income, earnings per share, loans, and deposits. Again, every one of the above-mentioned categories reached record level. The strength of our financial results reflects how our business model is designed to deliver meaningful values to clients, especially during periods of uncertainty when our ability to navigate challenging landscapes matters most. We grew end-of-period deposit by 6 percent year-over-year with significant traction in both non-interest bearing and time deposits. We also grew end-of-period loans by 6 percent with growth in CNI and residential mortgage lending leading the way. 2025 was also another consecutive year of record fee income driven in part by consistent sales execution across all of our fee-based businesses. This balance sheet growth, combined with our fee income growth and ability to grow our customer base, have collectively strengthened the durability of our business model and delivered substantial returns for shareholders. As a result, in 2025, We reported tangible book value per share growth of 17 percent and generated a 17 percent return on tangible common equity. I'm also pleased to announce our board declared a 20-cent increase to the quarterly dividend up to 80 cents per share, or 33 percent. We remain committed to disciplined capital management and the delivery of top-tier returns for shareholders via prudent growth, moving efficiency, and robust risk management. Now, let me turn it to Chris for more details on the balance sheet and income statement.

Thank you, Dominic. Let me start with deposits on slide four. EastWest continued to differentiate itself via core deposit growth in 2025. This deposit growth allowed us to fund our full-year loan growth while also bolstering our balance sheet liquidity. In 2025, we prioritize deposit growth through a dedicated business checking campaign that delivered strong results. We plan to maintain this focus strategy in 2026 to further expand our deposit base. During the fourth quarter, DDA levels improved by 1% to 25% of total deposits and inflection points. In 2026, we expect continued strong core customer deposit growth. Turning to loans on slide five, EastWest grew end-of-period loans in line with our prior guidance and total average loans by 4 percent for the year, also within our guidance range, led by CNI growth. CNI growth in Q4 was driven primarily by new relationships and with encouraging growth across many sectors. Our pipeline suggests that C&I will continue to lead our growth in lending for 2026. Residential mortgage also had a good quarter in the fourth quarter, and the pipelines there remain full going into the first quarter. We expect residential mortgage to be a consistent contributor to our growth at its current pace. Looking ahead, we expect total loan growth to be in the range of 5 to 7 percent for the year. driven by continued strength in C&I and residential mortgage production, leading to an increasingly diversified and balanced loan portfolio. Switching now to net interest income and margin trends on slide six. Fourth quarter net interest income was $658 million, reflecting the benefit of our short-term liability sensitivity over the near term in a quarter with two interest rate cuts balance sheet growth, and favorable deposit mix shifts. We continue to proactively reduce our deposit costs, driving period and cost of deposits down a further 23 basis points quarter over quarter. Looking back to the start of this cutting cycle, we have lowered our interest-bearing deposit costs by 105 basis points against a backdrop of 175 basis points of Fed cuts in their target rates. achieving a down cycle beta of 0.6, while growing our total deposit base by nearly $4 billion over the course of the year. Looking ahead to 2026, we expect net interest income growth to be in the range of 5% to 7%, aligned with and driven by our expected balance sheet growth, outweighing our modestly otherwise asset-sensitive position. Our outlook assumes three cuts of 75 basis points occurring over the course of 2026, resulting in a gradually steepening yield curve as implied by the year-end forwards. Moving on to fees on slide seven. In 2025, fee income grew by a robust 12%. As Dominic mentioned, we achieved record fee income levels in 2025. Our performance over the past year was driven by sustained quality execution across wealth management, derivatives, foreign exchange, deposit fees, and lending fees. Our continued investments in our global treasury group have yielded strong traction in treasury management activity. Wealth management fee growth over the past year was supported by the hires of financial consultants and licensed bankers to capitalize on opportunities in the marketplace. Ongoing hiring is further reflected in our 2026 outlooks, along with incremental fees and some expense growth. EastWest has been consistently growing fee income at double digits, and we remain focused on driving similar growth as we look into 2026. Now, let me turn to expenses on slide eight. EastWest continues to deliver industry-leading efficiency fourth quarter efficiency ratio was 34.5 percent. In 2025, total operating non-expense grew 7.5 percent as we invested in the expertise, systems, and technology necessary to support our continued and ongoing growth. As we look forward to 2026, total operating non-expense is expected to grow in the range of 7 to 9 percent as we continue to further our investments in the strategic priorities which continue to develop the pace. With that, let me turn the call over to Irene.

Thank you, Chris, and good afternoon to all on the call. On slide nine, you can see our asset quality metrics. We continue to broadly outperform the industry. We recorded net charge-offs of eight basis points, or 12 million, in the fourth quarter, and 11 basis points, or 16 million, for the full year of 2025. We recorded a provision for credit losses of $30 million for the fourth quarter, compared with $36 million for the third quarter. Non-performing assets remained broadly stable at 26 basis points of total assets as of December 31st, 2025. Criticized loans declined quarter-over-quarter to 2.01% compared with 2.14% as of September 30th, 2025. reflecting declines in criticized loans for really all major loan categories. The absolute level of problem loans continues to remain at low levels that we believe are very manageable. We continue to be vigilant and proactive in managing any credit risk. Currently, we are projecting that full-year 2026 net charge-offs will be in the range of 20 to 30 basis points. As seen on slide 10, we increased the allowance for credit losses during the fourth quarter from $791 million to $810 million, or maintaining the 1.42%. We believe our loan portfolio is appropriately reserved as of December 31, 2025. Turning to slide 11. East-West regulatory capital ratios remain well in excess of regulatory requirements for well-capitalized institutions and well above regional bank averages. East-West common equity Tier 1 capital ratio stands at a robust 15.1%, while our tangible common equity ratio stands at 10.5%. Our Board of Directors has declared a first quarter of 2026 common stock dividend of $80 80 cents per share, a 33% increase to the dividend. The dividend will be payable on February 17th to stockholders of record on February 2nd. I'll now turn it back to Chris to share a few comments on our outlook for the full year.

Chris? Thank you, Erin. With respect to our guidance, as I previously mentioned, our outlook assumes modest economic growth and about 50 basis points of great cuts as implied by the year-end yield curve. We expect end-of-period loan growth to be in the range of 5% to 7% with continued relative strength in both C&I and residential mortgage lending. We expect net interest income to grow in the range of 5% to 7% also, driven by the above-referenced balance sheet growth. We aspire to grow fee income at a faster pace than the overall balance sheet growth. Operating expenses are expected to increase in the range of 7 to 9 percent year-over-year, driven primarily by headcount additions, IT-related expenditures, and partially offset by expected lower deposit account costs. We expect full year net charge-offs, as Irene mentioned, in the range of 20 to 30 basis points, and our effective tax rate to land between 22 and 23 percent. With that, I'll now open the call up for questions.

Operator? Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speaker phone, please pick up your 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 2. Please limit yourself to one question and one follow-up. For any additional questions, you may re-enter the queue. And your first question today will come from Ibrahim Poonawalla with Bank of America. Please go ahead.

Good afternoon, EB.

Good afternoon. So I guess first question, just in terms of loan growth, I guess the guidance makes sense. When we look at year over year, I think the expectation is 2026 growth could be better for the economy, for the industry on lending than 25. When we think about East-West, I would think you should do much better in terms of loan growth this year versus last. Is there a reason why...

missing something or are you deliberately trying to manage the pace of growth when you think about just the overall balance sheet let me take a first stab at that since I see Dominic smiling across the table I'll let him chime in as well I think we had a really strong fourth quarter and we saw a really great traction in CNI in particular in the fourth quarter the reality as we know that's somewhat seasonal and we We saw a really nice fourth quarter last year, and then we saw a soft first half to some extent this year, 2025. And so we want to make sure we're thinking about the trends that we're seeing, the customer activity that we expect, and our reporting forward numbers that we know we can hit with good reason. So I think there's a bit of recognizing the pattern that we saw last year and understanding that might repeat itself in 2026, even though I think you're right, things are set up to be a little more or a little less erratic perhaps in 2026 than they were in 2025. Dominic?

Well, let's all reflect back in year 2025. I would think that during the first quarter, not a whole lot of people would expect that this year turned out to be such a pretty good year because there was a lot of volatility of what the economy is going to be like and what are the changes that may be happening. but it all worked out fine. In 2026, right now, it's looking pretty good. You are absolutely right that there should be momentum that makes us even having a stronger loan growth opportunity for the remainder of the year. However, we just never know exactly what's going to happen throughout the year due to whatever changes that may come. My view is very simple. Good time, bad time. East-West always outperform the others. So, if things going really well, if you see that maybe the average is actually as a growth percentage higher than our outlook, then the likelihood East-West actually doing better than what we projected here is very high. On the other hand, you know, the economy didn't turn out to be what we expected, and we probably may not even be able to get to this number, but rest assured, we're going to be doing better than our peers. So I'm much more focusing on making sure that we stay as a high-performing bank, and relatively speaking, compared with whether with our peers or the entire banking industry, and that's something sort of is a given from an east-west bank position in terms of what we wanted to do and what we want to achieve. But in terms of projecting economy, sometimes hard for us to do.

That's helpful and makes sense. I guess maybe another question, just when you look at the expense growth number, Just to remind us, I know you're building out sort of the asset management and fee capabilities, but when you think about the top two or three areas where the bank is spending today, is it hiring, opening new branches, compliance and tech? Give us a sense of where these investments are going and how we should think about those driving future growth.

Sure. We are certainly budgeting a higher degree of expense growth in technology writ large, but specifically data processing, software, computer expenses. Along with that, we have a higher level of growth in some consulting costs, and that's the largest growth category. But along with that, as you correctly mentioned, we're hiring, and we're hiring for wealth, and we're hiring for commercial banking, and we're hiring for technology, and we're hiring for risk management. And all of those areas will be the second sort of biggest bucket. And of course, comp is our biggest bucket overall. But if I draw your attention to slide 80, Ibrahim, and you'll look at the last four years, I think EastWest has put up a pretty strong track record over the last four years. And alongside that very strong earnings and balance sheet track record has come a 10% CAGR in expenses. But I don't think our shareholders mind because all of those expenses have gone to support even stronger total returns.

Got it. Thank you. The next question will come from Dave Rochester with Cantor Fitzgerald. Please go ahead.

Afternoon, Dave. How you doing? Just wanted to touch base on the fee income trends for 26. I know you mentioned those would grow faster than that 5% to 7% for the balance sheet. Last year you did something around 12% growth. Is there any reason why that should slow this year, given the investments in the business you're making? You're launching the FX platform. You just talked about wealth and other things. It seems like that should all, you know, help the growth rate this year, maybe even boost it a little bit versus last year. Just wanted to get your thoughts on all that.

Yep, and that's why I think I try to say, and maybe I didn't come across clearly, we aspire to continuing the double-digit trajectory. I think if you look at page seven, the four-year CAGR there has been 10%, and we would like to aspire to continue to deliver that type of revenue growth on the fee income side.

Great.

And then just on the loan growth, I think you mentioned recently seeing some of your CRE customers getting more interested and getting more active, and you actually grew that fairly decently this year in the single-digit range, which is probably stronger than what you thought this time last year. Do you think there's an opportunity to grow more in CRE this year?

I think I'll jump in for Dominic. I think what he said on a call about a year and a quarter ago, a year and a half ago, was if we saw rates come down into the sort of short end with a low to mid-three handle, we would probably start to see traction pick up in commercial real estate. We're approaching that level essentially now and expect to hit that lower bound over the course of this year. So, our broad expectation is, yes, we'll see pickup overall in commercial real estate. But with that, what I think Dominic has emphasized to the team is where we are picking Our partners is with folks that we have established long-term business relationships with, where we know they're savvy operators, and we know they're looking at the markets with the benefit of years and years of experience, and we think that'll be the right place for us to play.

The market is there for us, but EastWest has a very, very strong discipline of our overall asset liability management, and also concentration allocation, et cetera. So what we looked at is that at this moment, while we are in a very, very comfortable position with our CRE concentration, we're nowhere even remotely close to the level that we need to have high alert. However, we always understand that The ideal situation for the bank to have high-quality growth is have a very balanced growth from multiple categories, which is CNI, CRE, residential mortgages, all growing in balance. So in that standpoint, on one hand, I expect that there's a good likelihood the market will be there for us to originate a lot more CRE loans. We tend to be a little bit more selective. and making sure that we put our allocation primary to our long-term sustainable clientele. So with that, you know, we are not out there aggressively chasing just growing loans for the sake of growing loans.

Yeah, appreciate that. Maybe just one last one. On the TCE ratio, and we've talked about this a lot, just in terms of where it is now, you're 10.5%. continues to grow. You had a very nice dividend increase there. So I know that cuts into it a little bit, but it still seems like returns and your expected balance sheet growth could ultimately end up pushing that to 11% and beyond. What are your thoughts on allowing that to continue to grow? And is there any new range that we should look for as to how you're thinking about where that should trend? Thanks.

As pointed out on our guidance page on slide 12, we remain committed to delivering top quartile returns. alongside best-in-class efficiency, and we think our capital levels are part of what attracts customers to EastWest and allows us to deliver the timely, effective service that we offer our clients in a way that banks can't. We think that capital supports that initiative, and we're very proud of having one of the strongest levels of capital of any bank in the industry, which we think will sustain us particularly if there's continued volatility or uncertain times ahead.

All right, great. Thanks, guys.

The next question will come from Casey Hare with Autonomous Research. Please go ahead. Hey, Casey. Good afternoon.

Thanks. Yeah, good afternoon, guys. Happy New Year. So I had a question on deposit costs. So the 60% deposit beta. Just wanted some color on where you think that can trend throughout 26.

Well, I think we've been very disciplined about reacting very quickly to changes in market rates, but specifically to Fed rates. And so I think we've got that process very well oiled now and moves very efficiently. So we'll continue to make those changes. But obviously, as rates continue to grind lower, our incremental ability to do that

at higher levels becomes more challenging so what we've guided is we're very comfortable that we our betas will exceed 0.5 and we're very happy to deliver 0.6 so far gotcha okay um and then irene uh question for you on the credit so the the charge off guide um for 26 bumped up a little bit it um just wondering what's driving that you know there was Very little migration. NPA is very low. It feels pretty good. I'm just wondering why maybe 25 was just a very good year. I'm just wondering what you're seeing to bump up the charge-off guide for 26.

Yeah, great question. So if you look at charge-offs for the quarter and then for the full year, they're at the absolute level. They're, you know, pretty low, right? And, you know, even if you compare to last year, we are at 26 basis points, 11 basis points, 26 basis points. Historically, these are low levels. With the guidance for 2026, although the absolute levels of credit, the metrics are all in great shape, quite honestly, there are and there are no systemic issues that we see. From time to time, individual credits can turn, and the charge-off guidance simply reflects that.

Gotcha. Thank you.

The next question comes from David Chiaverini with Jefferies. Please go ahead.

Good afternoon, David. Hi. How's it going, Chris? Thanks for taking the question. So I wanted to ask about the net interest margin, the outlook there. You mentioned about how the near-term liability sensitivity has benefited you. How should we think about your positioning as we kind of get into 2026?

Sure. We broadly remain an overall asset-sensitive bank. That hasn't been said. We've been focused on growing dollar NII, and we believe we'll offset the expected downdraft effects of declining rates with balance sheet growth over the course of the year. That should allow us to deliver a growing dollar NII as we look over the course of the year. Supported by what we think will be continued consistent deposit repricing activity.

Great, thanks for that. And on the deposit side, you mentioned about, and we saw in the numbers, the non-interest-bearing deposit growth was strong in the fourth quarter. Can you talk about what drove that and if that could be sustainable in coming quarters?

Yeah, so a shout-out to our retail team in particular, but also to our commercial team. There was an increased emphasis and focus on driving growth core commercial DDA balance activity throughout the year, starting really towards the end of the first quarter and continuing over the subsequent three quarters with outstanding results here accumulating in the fourth quarter. And so that focus on that driving business checking account relationships continued to build momentum and steam both in our retail channels and our commercial relationship manager channels. over the course of the year and drove the result that you're seeing. We have and continue to drive a focus on that, and that will be a key priority for 2026. And we think it will be something that will deliver additional value, particularly in a declining rate context.

Great. Thank you.

The next question will come from Bernard Von Gezicki with Deutsche Bank. Please go ahead.

Hey, good afternoon. So just on, you know, you've been dynamically hedging for that look in rates and materially reduced the cash hedge headwinds. What was the headwind in 4-year-25 and what are you expecting in 4-year-26?

The headwind for the quarter was $2 million. Keep in mind rates came down over the course of the year. So we started at, it was more than $20 million at one point in time per quarter, and it came down to $2 million in the fourth quarter. And I think what we have indicated previously was Essentially, the hedges we have on today are in the money today. And so we are now in a position where we expect to have those be tailwinds as we look forward into 2026, in addition to the fact that we expect more rate cuts to come. We've got about a billion dollars of receivables swap at roughly like a 370, 380 level, and those are in the money today.

Brandon, just as a follow-up, as you get closer to the $100 billion asset threshold for Category 4, where are you in your progress to fulfill the requirements with processes and expenses needed, and how does that change in the threshold increase as regulators have been pointing to? Sure.

We've been focused on making the investments in the technology and the staffing we need to be successful for our customers today, and we always looked at $100 billion as being somewhere down the road. And so the investments that we're making, the expenses that we're talking about, the computer software, the consulting services, the data processing solutions, the ERM efforts, those are all to maximize the opportunity we see to work with our clients today and deliver value. And so we don't think there's anything about that that changes over the near term, certainly 2026, but we look forward to what we expect will be some reconsideration of those thresholds. And we look forward to the opportunity to continue to grow and meet the needs of our customers over the long term.

Great. Thanks for taking my questions.

The next question will come from David Smith with Truist Securities. Please go ahead.

Hi.

Good afternoon.

Hi. Fee growth, I know that you all have been opportunistic at times in recent years about pursuing some inorganic tuck-in deals to bolster different parts of the fee growth engine. I'm just wondering, given how strong capital levels are today, are there any areas where you're contemplating some sort of partnership or other kind of inorganic deal to boost fee growth? Where might that come from? What areas are of interest to you right now? Thank you.

Embedded in our projected expense trends is hiring and organic growth that will support and supplement our fee expectations as it's laid out. But in addition to that, yes, we have looked and continue to look for opportunities that are inorganic to bolster that growth and supplement that so that we have a better reach of either services, platforms, geographies, or talent to deliver even more value to our customers, and we'll continue to look for those opportunities. And as you correctly point out, capital is not the constraint, but as I think for those of you that have been around the story for long, the constraint really is Irene and Dominic's sense of where value is and the relative cost of buy versus build. And when you're building and delivering 10% organic, It's a high bar for something that makes sense that you have to go spend a big premium for, and so I think we'll be very thoughtful about that. But we have the flexibility. We have the optionality. We have the capital. We're attracting the hires, and we're growing the fees all at the same time.

Thank you. And just specifically then, I wonder if you could give us an update on any plans on how blockchain or cryptocurrency might fit into your business, helping clients with cross-border money movements or anything along those lines?

I think at this point in the United States, when it comes to blockchain, that clearly can expedite, you know, payment, trade and so forth, we really haven't seen, you know, from banks and clients because it's not like something that we can just do on our own without some sort of like collaboration with another corresponding bank and so forth. I think at this point it's still a little bit too early and we'll continue to watching and the progress on these technology and We'll just, you know, we'll adjust accordingly. And that's something that what you saw was all we do, which is while being prudent, but stay agile.

Thank you. The next question will come from Gary Tenner with DA Davidson. Please go ahead.

Hey, guys. This is Amal Hassan on for Gary.

Good afternoon.

The strong loan growth across all segments this quarter was really nice to see. What are you seeing in terms of general sentiment out there? Are the GDP numbers translating into client sentiments?

I think it's been interesting here seeing the volatility in the marketplace and recognizing that while the economy obviously impacts everything about banking, what's perhaps very clear about East-West is What impacts East-West is how we work with each of our clients. And so while the economy is a great backdrop for continued positive momentum in some sectors, the credit for our loan growth and the credit for our progress and the credit for our fee growth comes down to RMs working with individual clients, delivering individual solutions to help them nimbly and agilely navigate the landscape that we've seen over the course of the last year. And so to Dominic's earlier comments, while the economy matters, what matters more is that we're working really closely with our clients to stay one step ahead of the competition and meet their needs.

All right. That is fair. And I heard you talk about hiring this year. Is there any sort of numbers you can give around in terms of hiring goals this year? like revenue through users or anything?

Well, I think I would draw you back to page eight, and I would just note that, you know, year over year, our expense guidance is 7% to 9%. But if you look at year over year, 2025, we grew compensation by 12%. Obviously, the focus on our growth is hiring talented people that can help drive our business in the right direction. And that continues to be a focus.

All right. Thank you for taking my questions. The next question will come from Janet Lee with TD Cowan. Please go ahead. Good afternoon, Janet.

Good afternoon. Apologies if this is covered already. In terms of your hiring plans, I guess that's part of the expansion of your business plan. Is there any plan to more aggressively move to other cities or other port cities other than California?

I think we continuously look at opportunities to diversify our branch network in positive ways. We continue to look for the right people and the right talent to help us drive that. And I think we'll be talent driven more than putting pins on a map driven. So far that's worked really well and allowed us to focus on making sure we concentrate our presence in places where people expect us to be with talent that can meet those needs. And that'll continue to be a driving focus for us. But we see other markets for growth. We know there are pockets of opportunity for us. And we are looking at both organic and inorganic ways we could tap into those.

I think on the commercial banking side, we made some, you know, in fact, it's not just last year. I think for the last several years, we made quite a few hires in Texas and New York. And so we'll continue. to look at these other regions that we already have a presence and to look at opportunities to grow it even further.

Got it. Thanks for the color. And for your allowance for loan loss, the reserve rate ratio, it has gone up quite a bit over the past three years while your credit trends have obviously been very resilient. And I think credit size levels have also been going down. At what point would you be comfortable, kind of environment, would that be where, you know, you feel more comfortable maybe lowering down reserve levels a bit? Because it really doesn't look like the underlying credit warrant.

Senator, I will point out that it's completely flat on a percentage basis, quarter over quarter.

As you know, right, with the CECL allowance model, and the methodology that we and other organizations also have to use. A lot of it is based on kind of the assumptions and the macroeconomic factors. We use a multi-scenario model and continue to. Honestly, that's going to be the largest driver of where the allowance is going, like the modeling and understanding about what's happening. Quarter over quarter, you know, there wasn't really that much change. We use Moody's models as those those scenarios, and there hasn't been that much change, but I think it is a little bit, your comments are fair. Maybe there is a little bit kind of a forecast of this versus where the charge-offs and the credit quality is, because as you noted, it continues to be very strong. I would also say the allowance is kind of like capital, right? It's an extra cushion for us and buffer for us in general.

Got it. Thank you.

As we said, the allowance is perfectly appropriate at year end.

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

Hi, this is John Rau. I'm for Jared. Hey, John. Good afternoon. Good afternoon. Most of my questions have been asked and answered, but just thinking about the rate sensitivity positioning. It looks like the floating rate portion of securities has been going down the last few quarters. Is there any target level for that, or has it just been what you've been adding has been more fixed rate lately?

We've seen more relative value in the fixed rate side, and given the anticipation of a few more rate cuts coming, it seems to be prudent to sort of lean on that side of the securities purchases, and it's worked out for us so far.

Okay, great. Thanks for that. And then just on lending spreads overall, how have those been trending? I know you're pretty selective on the client base that you work with, but just overall competitive levels and pricing trends in your market?

Yeah, broadly speaking, we've seen some compression. And so if you'd asked us, you know, Where would that be? Over the course of the last year, we probably saw things broadly compressed, approaching something on the order of about a quarter of a percentage point. Don't know where that's going from here, but we think we've seen a lot of that competitive pressure come to fore, and we're working with it. It seems to be holding, at least relative to the term sheets we're sending out now, somewhat comparable to what we saw in the fourth quarter. So I can't tell you there's been incremental compression over the last 30, 60 days, but clearly it's been compressing relative to what it was a year ago. Okay, great. Thank you.

The next question will come from Chris McGrady with KBW. Please go ahead. Good afternoon, Chris.

Hey, good afternoon. This is Chris O'Connell filling in for Chris McGrady. All right. It's still a Chris. It's okay. Yeah, exactly. um we're just hoping to circle back to the capital discussion you know obviously you guys remained in uh you know a very strong position and uh you know had a big increase in the dividend this quarter um you know but capital levels continued to grow um and you know the buyback was you know a little bit lighter than the last quarter just just was hoping to get thoughts around kind of, you know, the pace of buyback and, you know, opportunistically using it going forward.

Yeah, our buyback will be always opportunistic. So from our perspective is that when the price is right, we do more. And we always then able to do buyback in an opportunistic way that create a lot more value for our shareholders, and we'll continue to do that practice. Because there's no urgency for us to have to do anything, simply because, you know, as you just noticed that we just announced this return of tangible common equity at 17%. And so at this kind of capital level, and we also, by the way, you know, by making this meaningful size increase of dividends, So we are doing what we need to do, but we also always look at the potential opportunity out there, whether it's a market that allows meaningful organic growth or a market that allows some unusual, great fit, inorganic growth opportunities. And we look at it as that It's just very, very good in that position that we have all these flexibility that we can pull trigger at the right time in the right way. So that's why we are not in any kind of sort of urgent situation that we have to sort of like announced some big buyback and so forth because we really are not in that kind of position. like many others.

Got it. Thank you. And then I was hoping to just dive into the commentary on the margin, you know, the near-term liability sensitivity versus, you know, the, you know, broader asset sensitive position. I think you had talked a little bit about, you know, last quarter about the near-term liability-sensitive position just, you know, being kind of a timing issue, you know, with the pace of deposit rate repricing. It gets set up into the early part of the year. You know, does that imply, given, you know, the rate movement this quarter, that you know, that the margin could head in a similar upward direction kind of early next year and then kind of, you know, trend down, you know, modestly after that?

I think we've seen some of the benefit already of the December rate cut and the December numbers. Some of it will continue to bleed through into January, but I don't think anyone's really expecting much more to happen this quarter. So, you know, we'll probably balance and wash itself out in Q1. And then when we see the next rate cut, we would assume we'll see an immediate lift in that next 30 to 45-day period and then sort of revert back to the broad asset-sensitive profile. So, again, we think the reality is over the course of 60 days, you know, lag, it's probably $2 million a month for 25 basis point cut as a negative impact. But the reality is in that first 30 to 45 days, it ends up being a short-term positive.

Great.

Very helpful.

That's all I had. Thank you.

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

I just want to say thank you for all of you joining our call today, and we are looking forward to speaking with you in April. Thank you.

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