Bank of America Merrill Lynch 2015 Banking and Financial Services Conference

Nov 18, 2015

Good morning, everyone, and welcome to day two of the Bank of America Financial Services Conference. To kick off the day today, with us, we have with us East West Bancorp. East West is undoubtedly one of the most exciting growth stories in the bank space. Not only is East West a leading bank in terms of catering to the Asian-American community in the United States, but they have successfully picked up increasing market share of U.S.-China cross-border activity over the last few years. Not surprisingly, the stock has come under a little bit of pressure since concerns around the Chinese economy have become more widespread since the summer. To tell us how to think about the bank in a backdrop of a slowing Chinese economy and potentially higher interest rates, we have with us CFO Irene Oh. Thank you very much, Irene, for being with us. I think before I open it up to you, I would like to have an audience polling question to get things started. If you can have it up on the screen, please. For those on the webcast, I will just read the question. How does East West's exposure to China impact your investment thesis on the stock? One, it makes me cautious as the slowdown in China could be worse than expected. Two, view it as a positive as it should help drive above average loan growth. Three, not too worried given East West growth is far more tied to the U.S. economy. All right, so I think that should please you in terms of a response. So 80% of the audience selected not too worried given East West growth is far more tied to the U.S. economy. With 20% selecting makes me more cautious and no one selecting being more positive because of above average loan growth. Any thoughts on that? It is consistent with how you have sort of tried to message the stock and talked about your growth outlook? That is definitely the case. I guess whoever it was, the one person who answered number one, maybe we can talk after the presentation as well. But with that Okay. Yeah. Great. Well, first I'd like to thank Ebrahim and Bank of America Merrill for inviting us to present at this conference. I know it's a little bit early here. Bear with me. I think I'm a little bit under the weather, so my voice is coming a little bit in and out. So we'll get started. First slide is our safe harbor statement. I'll just give everyone a moment to look at that. Next slide. East West Bank today. East West Bank is $31.1 billion in total assets. That's as the end of September. Headquartered in Pasadena, California. We are now the largest independent bank headquartered in Southern California, and we have a focus on U.S. and Greater China markets. We have locations both in the U.S. and in Greater China, and that's something that differentiates us from many other banks of our size. For the last five consecutive years, we have been ranked in the top 15 of the 100 best banks in America by Forbes magazine. As I mentioned, we have locations both in the U.S. and in Greater China. 130 locations in total, and five of those being full service branches in Greater China, in mainland China, and also in Hong Kong. As the end of September, we had approximately 2,800 employees worldwide. Next slide gives a little bit of a breakdown of the major milestones we've achieved since our founding in 1973. East West started in Chinatown in Los Angeles in 1973, so we have long history and roots in the Chinese-American community. We were the first S&L, savings and loan, that was started serving the Chinese-American community in Chinatown in Los Angeles. In the '80s and '90s, we continued to grow both organically and through small acquisitions of Chinese-American banks and also mainstream banks. In 1995, we converted to a state charter commercial bank. After the Asian crisis, East West Bank previously had been owned by an Indonesian-Chinese family, and after the Asian crisis, this family needed U.S. dollars, so they needed to sell the bank. In 1998, through a management-led buyout by current management, including Chairman and CEO Dominic Ng and our President and Chief Operating Officer, Julia Gouw, the bank went public in February of 1999. So over the course of the last 15 years or so, I'd say if you look at what has happened, critical points for the bank have included the acquisition of United Commercial Bank in 2009. Through an FDIC-assisted transaction, we purchased one of our major competitors, United Commercial Bank. With that, we also acquired the banking license in mainland China. In 2007, UCB had purchased a bank called Business Development Bank in mainland China. Through a separate bid with the FDIC, we actually acquired that banking license as well in 2009. Over the last couple years, we have continued to grow organically and through acquisition. We have gone into different kind of open new branches, including in the state of Nevada in Las Vegas. Prior to this, it was difficult to obtain a banking charter in Nevada, but with Dodd-Frank, it made it a little bit easier, the interstate banking. Los Angeles and Las Vegas are very close to each other. It's a short drive. A lot of our customers had expanded to Nevada, to Las Vegas. Taxes are a little bit more favorable in the state of Nevada than they are in California, so there are many people who do that. We had grown a loan portfolio in Las Vegas, Nevada area, but we had not been able to get any deposits without the banking license there. So de novo, we opened in 2013, and that branch has grown quite nicely, mainly because of our existing customer base, was able to support us and provide the funding. In 2014, we did a small acquisition, Houston-based Metro Bank. Then also in the last quarter of 2014, we expanded in Greater China, opening a sub-branch in Shanghai, in the Shanghai Free Trade Zone, and then also converting our representative office in Shenzhen to a full service branch as well. Next slide shows a breakdown of our distribution channel in the U.S. and Greater China. This was before the RBC City National acquisition closed earlier this month. So a little update would be that we are the largest bank headquartered in Southern California, not the second largest, with 91 branches in California. I've got to laugh here. My vision is going. I can barely see this here. I don't think it's necessarily the screen. I think it's me. I think I need reading glasses here. Okay. So, making the U.S.-Greater China connection. I just celebrated my 11th year at the bank, and I think with that, maybe an anniversary gift I'm going to need are bifocals. It's the font. East West Bank is focused on the U.S. and Greater China markets. In the U.S., we have a long history within the Chinese American community from a retail perspective. But even before the acquisition of UCB was transformational for us, we had a focus on the mainstream business as well. I would say even before the credit crisis, and now as well, probably 70%-30% would be the mix as far as in our commercial portfolio, mainstream versus Chinese American. If you look at retail from a retail deposit perspective, retail lending as well, single-family loans, multifamily to a certain extent, I would say that is flipped, where retail Chinese American versus mainstream is probably closer to 80%/20%, with 80% being Chinese American and 20% being non-Chinese American. We believe that in this market, there is a lot of untapped potential, even for a bank of our size, because it is such a large market, and the percentage share that we have is so little. Right now, I would say with what is happening in China, maybe it makes sense to spend a few more minutes kind of explaining our strategy and our thoughts in this area. We are ultimately very much focused on improving our capabilities cross-border-wise. I would say at this point, it is still very much largely U.S.-centric. We have U.S. customers who are looking to import. They import from China. They are expanding their presence in China as far as manufacturing in China. Lots of our customers may be headquartered in the U.S. but have manufacturing in China, and then also may be trading out of Hong Kong as well. Since we have locations in all of those locations, we feel that we are able to be able to service them better, with one global RM servicing all their needs in various countries. Additionally, there continues to be greater direct foreign investment by Chinese in America, buying companies, expanding de novo, and we feel that we are able to service them maybe a little bit better than, let us say, a mainstream bank as well. Turning to the next slide, gives you a rundown of the ranking of East West Bank by total assets and market cap. We are 29th as far as I think this was maybe a couple of weeks ago, with total assets were as of 9/30, but the market cap was a couple of weeks ago. I cannot read it, so you will have to let me know. Looks like 1,030. Total assets, we are ranked 29th, but market cap at 25th, and I think probably that number, if you look at it from close of yesterday, we inched up a little bit higher, maybe $5.9 billion or so. Next slide, I am going to give you a couple of highlights from the third quarter. This I am going to have to walk over because this is really impossible. Net income of $94 million in the third quarter, up 2% year over year, and EPS $0.65, also up 2% year over year. In the third quarter, we had what I would characterize as very strong organic growth on the loan side, and then also incredible growth on the deposit side of 4% and 5% quarter over quarter. I think that 16%-20% annualized growth rate is not something that we expect will happen every quarter. Certainly, I think for us, particularly on the C&I lending side, but also CRE, we did have a lot of loans that were closed, funded, booked in the third quarter. We have communicated probably 8%-10% kind of loan growth is something that we feel is sustainable over a longer period of time, particularly for a bank of our size at this point. With that growth in the loans and deposits, the total assets also grew, a little bit less, actually, if you look at from a year-to-year perspective of 9% versus the deposits. At East West, we are focused on ensuring that we have sustainable balance sheet growth that is also supported by strong return. In the third quarter, we have a return on asset of 1.22% and a return on equity of 12.23. We have had return levels higher than our peers in the recent past, but also in the longer period as well. Recently, I think above 10% is not bad for banks, and so that is something that we have tried to achieve and we want to ensure, and this is something that we talk about at the organization and believe in. It really isn't just about balance sheet growth. We want to make sure that profitability is there for every loan, for every deposit, for every customer relationship. In the third quarter, net interest margin from a GAAP perspective was 332. We show a non-GAAP number as well in our press release and talk about that, adjusted for FDIC accretion items, and that was about 328. Cost of deposit, 28 basis points. Been roughly 28 basis points, 29 basis points for the last several quarters. Our last comment would be on the efficiency ratio. About 40% in the third quarter, roughly where it's been over the course of the last few quarters. Next slide gives a little bit more detail and historic perspective about our net interest income and margin. You can see in the chart with the blue line that with the exception of the first quarter of 2015, we had a little bit unusually high accretion income, that our margin is kind of slipping downward. This is something that we have communicated that until the rate environment changes, that we felt would happen. Loans are repricing downward, the mix of the portfolio is changing, and then with that, we are also very much focused on not taking on too much duration risk. Most of our loans are variable rate, tied to prime or LIBOR. On the security side as well, for the investments available for sale, cash repos or liquid assets, we kept that relatively short at about a two and a half year duration. Although the margin has been falling, and then, oh, the accretion income. Since the UCB acquisition, we have had a lot of accounting accretion income that has helped bolster our revenue. Simply put, the actual expected losses on that portfolio were less than either we or the FDIC assumed them to be. With that, the additional discount has been accreted in through interest income. Probably have about $90 million left at the end of September to be accreted over the life of the loan. That has also been something that has supported our net interest income in this period of time when the rate environment has been challenging for all banks. Although the margin has fallen, we have been able to increase our adjusted net interest income, and that has come from the loan growth that we have had, which compared to many of our peers has been pretty strong. Next slide. A recap of last 10 years, the growth that we've had. Total assets, stockholders' equity, loans, and deposits all growing at growth rates of 13%-16%. 2014 was the fifth consecutive year of record earnings for East West Bank. I would say that barring any kind of unforeseen consequences and actions that could happen, but I think the likelihood is that 2015 will also be a record year for East West Bank. Next slide. Same slide as before, but really just showing it from the perspective of earnings per share. From an EPS perspective, it's a sixth consecutive year of growth for East West in 2014, and as I mentioned, I think 2015 will probably end up the same way. I had mentioned this earlier, but overall, East West Bank does have a strong history of efficiency. Over the last few years, I'd say a lot of that, the efficiency ratio, there's a numerator and a denominator. A lot of the reason for the strong efficiency ratio has been from the revenue side with the additional accretion and loan growth that has very much supported the revenue that we've had and the efficiency ratio. But historically, I think East West Bank has always, if you go back and look over many years, we have had a strong efficiency ratio, low operating costs, and tightly managing those costs. Part of that has to do with the mix of the loan portfolio that we have and the customer segments. Some of our CRE single-family loan portfolio are very low cost to manage, and that has been part of the legacy as well for East West Bank. But I think it also is something attributable just because we do have that focus on return levels and making sure that things are balanced. Next slide gives a snapshot of the loan portfolio. As I had mentioned earlier, CRE single family, those are large segments of the loan portfolio for us. Consumer, I'll add, is largely HELOC for us. We have very small portfolio outside of HELOC in autos or personal loans as well. If you look at the donut on the bottom right, you'll see as of the end of September, C&I, commercial industrial loans, were 37% of the total mix. Commercial Income-producing CRE was 31%, and then single-family consumer kind of rounded it out at 21%. Overall, we feel that a mix of about one-third, one-third, one-third C&I commercial real estate, which includes multifamily under the FFIEC definition, and then also consumer single family would be the ideal mix for East West Bank. We're a little bit under that on the consumer single-family side, and that is largely because over the course of 2015, we have done some loan sales of the single-family loan portfolio that we originated. Next slide shows a little bit of a breakdown of our commercial real estate portfolio. If you look at the top donut, you see that we have good distribution amongst different types of commercial real estate. We want to make sure that we have no concentrations in one geography, one region, one type of asset class. Also within commercial real estate, there are specifically set kind of goals that we have internally, and limits as well, to make sure that we don't have too much concentration in one asset class, one category, one geographically. East West Bank has always been a low loan-to-value real estate lender. With the bottom donut there, you see that our average loan-to-value is 54%, with the average loan size of $1 million as of the end of September. Looking at the distribution there, you can see that we have very few loans where the average loan-to-value is over 75%. We have seen historically with that low loan-to-value, what we have seen is obviously higher debt service coverage ratios. With the credit crisis as well, what we saw is that with our customers, they had the ability to withstand a decrease in valuations, maybe even in cash flow because the debt service was lower. Naturally, I think if you focus on low loan-to-value customers, what we have seen is that generally speaking, these are real estate investors or small businesses, family-owned, where generally they're less levered in their lives. So we saw very little losses from the income-producing commercial real estate portfolio in the credit crisis. Next slide gives a breakdown of our deposits. As I mentioned, in the third quarter, we had tremendous deposit growth. Sometimes what happens for some of our customers, at various times, with just their normal operations, deposit balances can ebb or flow. I would say third quarter was a little bit higher. That is something that East West Bank, actually, if you look at our deposit mix, there has been a tremendous change in our funding over the course of the last few years. I think with the focus on loan growth and revenue-producing areas, and the low interest rate environment, of course, of the last several years, that is something that isn't discussed that much. But if you look at East West Bank before the credit crisis, really our funding source was more 65% CDs, maybe 35% all other deposits, something around that nature. We've really been able to transform that. As of the end of September, we had 31% non-interest-bearing demand deposits, largely corporate kind of commercial customers. Then a money market interest-bearing savings, also large category CDs, only 25% of our total funding. The retail CDs I'll mention is something, it is a core funding source for us. A lot of our customers, Chinese Americans, like to have savings in CDs, something secure versus, let's say, the stock market. But what we very much felt was important was that as we were diversifying our loan portfolio over the course of the last several years, that the funding keep up with that, and that it's very, very difficult to fund commercials and industrial loans with higher cost CDs because there's not enough spread. That is something we very much have had a focus on building out deposit capabilities, treasury management services, building out niche areas, specialty deposits that are lower cost, that are maybe a little bit more sticky. Then, we have talked about in our earnings calls as well, that in 2015, one of the major initiatives for East West Bank was building out and upgrading to a new commercial online deposit system. That is something very much we feel, well, it is not live yet, but very soon it will be live. That is something very much we feel that our corporate customers will appreciate as far as kind of increased capability that they will have and products and services that they have requested. Simply put, I think prior to this, although compared to banks of our size, our product set was on par, but many of the larger banks, they have moved to something that is easier for the customer, more customer-centric. One of the things that is very important to a lot of our customers is having single sign-on. With this new online banking platform, we will also have single sign-on for multiple platforms. That is something we are very excited about and so are our customers. Next slide gives a recap of the credit quality of the portfolio, not dissimilar to other banks in the country. Credit quality continues to be very good. If you look at the top two charts, non-accrual loans, non-performing assets, all at very low levels quarter-over-quarter. We have been able to have that low level of problem assets as we have continued to grow our allowance for loan losses. A lot of the reason for the growth, absolute dollar perspective, not from a ratio perspective, of the allowance has come from the loan originations. Sometimes people forget, even for past loans, you have to set aside allowance. That has really been the driver for the calculation over the last several quarters, as you see on the bottom right chart there, that the actual charge-offs history has been very low. Next slide gives a breakdown of our capital ratios. All of our capital ratios are well above the well-capitalized regulatory requirements. Over the course of the last few years, we have continued to increase our dividend, which has increased 400% or $0.64 a share since 2011, up to $0.80 on an annualized basis for 2015. Over the last five years, our stock has outperformed peers and other indices. East West Bank stock there is on the blue chart, and we have outperformed the S&P, also the NASDAQ Regional Bank Index, which we are a part of as well, and also the Dow Jones. Total shareowner return, the chart on the bottom right over the last five years has been 150%. For the remainder of 2015 and then also in 2016 and in future years, our focus is on helping our customers in their cross-border businesses and then also their personal needs between U.S. and Greater China. We feel that that is the area where we have the niche and there's the most opportunities for us to be successful and compete in the market. With doing that, we'll be able to continue to grow the balance sheet profitably. With the focus on our operations, efficiency, building out fee-based income and other areas to support our customers' needs, we feel that we'll be able to continue to generate strong return for our shareholders year after year. With that pretty much ends the prepared comments that I had for the presentation. I guess we can open it up to any questions from the field at this point in time. Sure. Let me check with the room. Any questions in the room? I guess I'll start out. I think you touched upon this a little bit in your prepared remarks, and I think it is a big factor in how folks are thinking about the stock. When we think about over the course of next several months or quarters, I think as we see negative headlines coming around the Chinese economy, how should folks think about two things in terms of what that means for credit outlook, provisioning, asset quality for the bank, and then what does that mean for this 8%-10% loan growth? Does a much weakened Chinese economy influence both those directly? If you could provide some color on that. Yeah. I think that certainly with the headline news coming from China over the summer, the RMB devaluation, this has been first and foremost in the minds of many investors. I think as I had mentioned earlier, really, although this is the area of focus for us, it really is very much U.S.-centric. I'd say the economic driver is for us and our growth opportunities is really much more U.S.-based and U.S. consumer demand and needs versus China. In Greater China, combining Hong Kong and our subsidiary bank in Greater China, we have about $1 billion in loans, $600 million or so of those being in Hong Kong and the remainder, 350, I think, in mainland China as of the end of September. This is really much more geared towards customers. Many of these loans are for cross-border customers that we have in the U.S. that also have banking needs in Greater China as well. Domestically in mainland China, we don't have much exposure as far as real estate, consumers in Greater China. That's also part of the reason why we feel comfortable because it is very much U.S.-centric in a lot of ways, that even though there may be some volatility from the stock market, from currency in mainland China and concerns about the growth, the GDP growth in Greater China, that we don't think that that will necessarily impact our 8%-10% growth opportunity that we see. I guess the one thing you've talked, I think Dominic's talked about this on the calls, there is a growth opportunity in terms of the businesses that you're catering to, even China, be it the services industry. I think you still see potential for growth there regardless of sort of a macro slowdown that the government is sort of trying to engineer there. That's right. One of the things that we have done over the last few years is look at where do we think there'll be most growth opportunity for U.S.-China trade. A lot of that has been in areas where there are needs in China. China, I think they're finalizing their next strategic plan, but they come out and they say, "Where are the areas of initiatives?" We decided, okay, what we need to do is build up strengths in these areas where we think just naturally in the U.S. there'll be more growth opportunities and there'll be more growth opportunities between U.S. and China. That have been areas such as clean technology, agriculture, aviation, all areas where there's strong needs or let's say, the government support in mainland China for these areas. What we have done over the course of the last few years, and continue to, is bring together small teams. Some of these we've had at the bank, let's say for technology, clean tech, those are areas where we had small teams for many years. But in certain areas, let's say aviation, entertainment, agriculture, over the course of the last few years, we've brought together small teams from larger banks and combined that knowledge, that specialized knowledge in these industries, with our Greater China knowledge. With doing that, we feel that we have created a value proposition for our customers with the specialized knowledge that we have, plus with Greater China being able to help customers as far as if they're interested in getting joint ventures or investors from mainland China, that is something that we can help them with. I think if you look at our growth trajectory from a loan side, really these kinds of specialized areas, combined with the Greater China capabilities that we have physically, and the fact that we can help our customers with their R&D needs in mainland China and then also in Hong Kong, has been really the driver for the growth that we've had in the loan portfolio. I think moving back sort of domestically, I think there's been some more concern around real estate prices and what a Fed increase or increase in rates implies for that. How are you I mean, California has obviously been a market where prices have moved up quite meaningfully over the last few years. How are you thinking about that as you think through in terms of your loan growth outlook, in terms of any areas that you're pulling back deliberately? Mm-hmm. I think that's a great question. I think we have certainly seen in the markets where we do business, California, New York, even Seattle and other markets that where we don't have as much focus, that real estate prices have increased. I think for us, we have continued to remain disciplined with the loan-to-value, which translates to a loan debt service. And also when we underwrite, we shock the portfolio pretty kind of expecting interest rates to increase to see what is the How much can that customer stand in that kind of interest rate environment. And overall, I think, quite frankly, just because of the loan to value, we feel that that is something our customers will be able to stand up to. I don't know if there are certain asset classes that we're shying away from because of credit quality risks at this point. Certainly, we want to make sure that we don't have too much concentration in asset classes such as hotel development, construction. Hotel construction is something that we're looking at because it really has been blowing up quite a bit as far as when we look at new prospects. Is this something that we want to start today given that there'll be no cash flow for X years? And where will the market be in a couple of years? So I'd say probably hotel construction is an area that we're looking at a little bit more carefully and not really excited about. On the single-family side as well, we are very low loan-to-value lender, 50%, 55% loan to value. So although real estate prices have increased quite a bit, we feel there's a lot of buffer even if the interest rate environment were to change. That's helpful. I guess you had on one of your slides, you talked about the efficiency ratio. You've done a good job in terms of keeping it below peers. I guess to that point, I think you've been investing in the platform. The bank's obviously grown rapidly. And I guess in your recent 10-Q disclosure, you talked about there's more work to do on BSA, AML. I was just wondering if you could sort of provide more color on sort of what led to, in terms of what are the requirements that you need to meet from the regulators over the next year? What's the goalpost that investors should be looking- Sure at as far as that's concerned? Sure. I appreciate that those two areas are efficiency ratio and then also the recent kind of announcement that we had in our 10-Q, and then subsequently with FRB as far as the written order related to BSA. I can appreciate how those would be put in the same context. But in my mind, they are somewhat different. I think that we have been working with our primary regulator, the FRB, for over a year now. Since they communicated to us they had concerns about our BSA program. Ultimately, I think it is something where they, in the fall of last year, in the last safety and soundness examination, they indicated that the program that we were using, the software that we're using for BSA, they felt that it was not at the level acceptable for a bank of our size. This did, I'll be frank, come as a little bit of a shock to us, a little surprise, given that we have had nothing less than satisfactory safety and soundness examination for BSA, AML. Nonetheless, certainly this is something that there is increased regulatory scrutiny on, and that we are committed to ensuring that we meet the expectations of our regulators. I'll just share, right now, based on our estimate, what we think is that on an annual basis, and some of this is already in the run rate of the expense in 2015 that we've already incurred, on an annual basis probably increase staffing in the BSA area, largely will contribute to kind of ongoing costs of about $3 million per year. One-time costs for consultants that we're bringing in to make the improvements that we need to, and implementing multiple softwares for BSA, AML, and OFAC is probably going to be about $12 million. Approximately $5 million of that will probably be in 2015. But I'd say half of that already being incurred as of September. And just going back to the $2 million in the run rate, a good chunk of that's also in the third quarter run rate and your guidance as you've given for the entire- That's correct. As I had mentioned, we have been ramping up and making the improvements to our BSA program for over a year now. So over the course of the last 14, 15 months, we have been hiring and expanding the team for BSA. Is there a deadline by end of next year or early 2017 when this could be addressed, and the regulators would sign off, and we'd be out of the order? No. I don't think I can speak for the FRB in this matter, but we have an internal timeline, and we feel by end of next year, it will require multiple kind of softwares and testing. But we feel by the end of next year, under the new software, the new programs will be up and running. Certainly the FRB will, and our other regulator, too, the California Department of Business Oversight, will have to come in and make sure that they feel that we have met all the requirements under the written order. So I don't know exactly what that timeframe would be, but I think at this point the likelihood of that being lifted in 2016 is pretty low given the timeline. So maybe probably closer to, I think, 2017 would be the earliest timeframe. Just for the benefit, it does not seem like that restricts you from a business standpoint in any which way, be it your strategy on dividend or capital payout or just growth. That is correct. The written agreement is really for BSA, AML. From a capital, from an organic growth perspective, from a dividend perspective, there are no restrictions. There are restrictions on expansionary activities such as acquisitions or opening new de novo branches. From that perspective, there is some restriction. That really is not part of our strategy on a short-term or a long-term basis as far as acquisition. I do not think there will be a real detriment in the next couple of years from that. Yes, sir. Just moving to my last question, just in terms of rates, I think there is some expectation that we may have a rate hike at the end of December. I guess, how impactful is if we just get, say, one rate hike and then no rate hike for a while, how impactful is that for your margin or earnings? How do you think about, say, if we end up with the Fed funds at 100 basis points by the end of next year, how quickly will be the pass-through of those higher rates to your deposit clients? I am sorry, the last point of that? The last point was how quickly do you think the deposit beta Right? What's going to be the lag in terms of will the first 50 or 100 will essentially benefit the margin far more, which has historically been the case? Or do you think that there will be a certain segment of your deposit base which will need to reprice relatively quickly in that rate cycle? Yeah. That's a great question. I think, well, obviously, if rates were to increase in December, I don't think there'd be much impact to us from an EPS perspective in the fourth quarter. But starting next year, certainly we'll see some positive impact. We are rate sensitive from the balance sheet perspective. If you look at our loan portfolio, we only have about $2 billion or so of fixed rate loans, and then another few billion of loans that are variable rate, but the fully indexed rate is below the floor. So I would characterize all of those as being relatively unchanged in an interest rate environment. But we also, aside from largely a variable rate loan portfolio, we also have $6 billion or so in liquidity as far as from investments, short-term repos, cash as well. Then we'll have some opportunity there to go out longer on the yield curve than we're currently doing. So I think we have a lot of levers on that side, and that if you're talking about a 100 basis point increase in the short-term rates, that will certainly help. As Ebrahim mentioned, I think the large unknown is really on the funding side. Certainly, I would say that for certain segments of our funding, our deposits, there's a strong correlation to increased rate environment and the rate that we'll have to pay. I think that's largely on the retail CDs. There's a strong correlation with that. This is why, actually, coming to this point, although it's taken a lot longer than we thought it would because we thought rates would go up years ago and we continued to be wrong. But nonetheless, kind of planning for this time has really been, and the fact that at the end of the day, the franchise value of a bank is largely low cost deposits is something that we have focused on from growing the commercial deposit segment. Looking at that, I think there'll be a lag a little bit. Exactly what will happen, I don't think anyone really knows. Every kind of rising rate environment is different from the last one. But certainly I think with the liquidity, with what kind of other market participants do, those will drive what happens to the funding. But we have focused on commercial operating accounts where certainly in this kind of low rate environment, maybe people are less concerned where they placed their money as far as because the rates are so low. So there will be a certain amount of attrition from that. But given our focus on trying to retain sticky deposits, operating accounts where they need it for their core businesses, we're very optimistic and hopeful that even though there'll be a correlation, it won't be too high and then we'll be able to have a lag there if rates increase. So, for now. I think with that, I think we're running out of time, so thank you very much. Thank you so much.