Brandon King: Got it. So, feel pretty comfortable where you’re at, is a fair way to say it?
Christopher Del Moral-Niles: Absolutely.
Brandon King: Okay. Thanks for taking my questions.
Christopher Del Moral-Niles: Thank you.
Operator: The next question comes from Brody Preston with UBS. Please go ahead.
Brody Preston: Hi, good afternoon, everyone. I just wanted to follow-up on a couple of things real quick on the NII. The cash flow hedges, are there any maturities through 2025 on the swaps that we need to be aware of? And then, you said earlier that you expected a 0.5 deposit beta on the way down. Just wanted to clarify if you that was 50% interest-bearing deposit beta on the way down through 4Q ’24. Is that a correct interpretation?
Christopher Del Moral-Niles: Yeah, we will save at least half of every move in the Fed funds rate that the Fed engineers in the form of the reduced deposit costs collectively across our deposit base on the interest-bearing deposits. With regard to cash flow hedges, there really are no material maturities in 2024. However, two of our earliest or oldest trades will actually mature early in ’25, and they are two of the lowest strike points. So, it gets better as we move into ’25.
Brody Preston: Okay. Do you happen to have the dollar amount of those two hedges?
Christopher Del Moral-Niles: Yeah. Those two hedges are both underwater at $2 billion. And so, they’re currently part of the drag. And as we move through 2024, obviously, as rates decline, they incrementally improve as well. But when they go away, there’ll be probably a net pickup in 2025 in the first quarter.
Brody Preston: Okay. And then, Chris, my last one, I just wanted to clarify on the tax stuff. We’ve seen a couple of other banks I think adopt that this earning season where I think effectively, the amortization almost went to zero, and it’s going to show up in a higher tax rate. Just wanted to ask if you guys adopted that treatment, should we expect something similar? And if so, I know that you guys have some lumpy amortization. So, would that kind of introduce quarter-to-quarter kind of peaks and valleys in the tax rate itself?
Christopher Del Moral-Niles: Yeah. So, our goal in adopting PAM will be to dampen out the volatility that you’ve seen to introduce a greater level of stability and it will help us on certain of the tax credits. However, on those tax credits such as the energy tax credits that we placed in a service on as project completed basis, that level of volatility from when the projects get placed in service will continue to be with us and will continue to flow as amortization in sort of above the line. So, we will not go to zero. It will be dampened and reduced and it will be both a function of how much we do in the different types of credits and how we moderate that activity as we think about making this a less volatile component of our expense room moving forward. But our goal is to make less of a talking point and more of a steady state number for you guys.
Brody Preston: Awesome. I appreciate it. Thank you.
Operator: The next question comes from Timur Braziler with Wells Fargo. Please go ahead.
Timur Braziler: Hi, good afternoon. How should we think about the interplay of lower interest rates in your residential product? Is that — seems pretty rate agnostic. Does demand actually pick up as rates fall? And then just maybe talk more broadly what factors impact that line item most?
Dominic Ng: Yeah. Well, I think it’s a relatively unique product that really cater to our core Asian-American customers. And we always think that the rate is not anywhere like a sensitive like these traditional Fannie Mae, Freddie Mac type of products. So, we feel pretty good about — even when rates start going down, the rate reduction from our home mortgages would not be going in the same proportionally higher pace like the normal products in the market.
Timur Braziler: Got it. Okay. And then looking at your multifamily portfolio, can you provide the composition geographically there and more specifically what portion is in New York City and what portion of that is rent regulated?
Irene Oh: Yeah. So, we have of our $5 billion multifamily portfolio, the vast majority is in California and also in Southern California, in our backyard where a lot of our presence is, Pasadena, San Gabriel Valley, those areas are the largest sector. In New York, entire State of New York, we have under $300 million and there is no rent regulated exposure.
Timur Braziler: Okay. Great. Thank you.
Operator: And we have a follow-up from Ebrahim H. Poonawala with Bank of America. Please go ahead.
Ebrahim H. Poonawala: Thank you. Just another question in terms of when we think about deposit liquidity, loan to deposit ratio around 93%. Just structurally, do you expect the bank will operate with a 90% plus loan to deposit ratio more or less, or do you see that as resetting lower? And on the asset side, do you expect East West to run with the larger securities book, more HQLA securities, et cetera, even though you fall well below the $100 billion threshold that the Fed has kind of identified as the dividing line? Thank you.
Christopher Del Moral-Niles: I think broadly the answers are yes and yes. Yes, we expect to operate in sort of the lower 90%s from a loan to deposit ratio. We think that’s a comfortable place to be. And over time, yes, it’s likely our portfolio will migrate to be more HQLA like in profile.
Ebrahim H. Poonawala: Got it. Thanks for all the yeses.
Christopher Del Moral-Niles: My pleasure. Always happy to say yes to Ebrahim.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Dominic Ng for any closing remarks.
