East West Bancorp (EWBC) Cuộc họp công bố kết quả kinh doanh Quý 3/2026: Nâng triển vọng thu nhập lãi thuần (NII)

Thông tin chính

• East West Bancorp đã báo cáo doanh thu, thu nhập lãi thuần, lợi nhuận trước thuế trước dự phòng và lãi cơ bản trên cổ phiếu đã pha loãng đạt mức kỷ lục trong quý 3/2026, nhờ sự tăng trưởng của bảng cân đối kế toán và chi phí vốn được kiểm soát.
• Tiền gửi tăng hơn 1,4 tỷ USD lên mức kỷ lục. Tiền gửi không tính lãi bình quân tăng 16% so với cùng kỳ năm ngoái và chiếm hơn 26% tổng tiền gửi vào cuối quý.
• Dư nợ cho vay tăng 7% so với cùng kỳ năm ngoái, nằm trong phạm vi dự báo cả năm từ 6%–8% của ban lãnh đạo. Cho vay thế chấp nhà ở đóng góp gần 400 triệu USD vào mức tăng trưởng ròng, trong khi cho vay bất động sản nhiều hộ gia đình cũng mở rộng.
• Biên lãi thuần tăng 6 điểm cơ bản so với quý trước. Ban lãnh đạo đã nâng triển vọng tăng trưởng thu nhập lãi thuần cả năm lên 9%–10%, với giả định lãi suất ngắn hạn duy trì không đổi cho đến hết tháng 12.
• Chất lượng tín dụng tiếp tục được kiểm soát: tỷ lệ xóa nợ ròng hàng quý giảm xuống 15 điểm cơ bản từ mức 19 điểm cơ bản, trong khi ban lãnh đạo thu hẹp phạm vi dự báo xóa nợ ròng cả năm xuống còn 15–20 điểm cơ bản.
• Vốn duy trì ở mức cao hơn yêu cầu quản lý, với tỷ lệ vốn cổ phần phổ thông cấp 1 đạt 15,4% và tỷ lệ vốn cổ phần phổ thông hữu hình đạt 10%. Công ty đã công bố cổ tức quý 4/2026 là 0,80 USD mỗi cổ phiếu.

Dữ liệu tài chính chính

Kết quả hoạt động kinh doanh

Tăng trưởng tiền gửi diễn ra trên diện rộng. Ban lãnh đạo cho rằng sự gia tăng số dư tiền gửi không tính lãi là nhờ chiến lược tiếp cận khách hàng thông qua chi nhánh, đặc biệt là các doanh nghiệp nhỏ. Hơn một phần tư mức tăng trưởng tiền gửi ròng bình quân trong khoảng 18 tháng qua đến từ tiền gửi thanh toán tăng thêm.

Tăng trưởng cho vay tập trung vào các danh mục liên quan đến nhà ở. Cho vay thế chấp nhà ở tạo ra mức tăng trưởng ròng gần 400 triệu USD, trong khi cho vay bất động sản nhiều hộ gia đình hưởng lợi từ nhu cầu nhà ở tại các thị trường trọng điểm của ngân hàng. Tăng trưởng bất động sản thương mại bao gồm hoạt động từ các khách hàng lâu năm mua bất động sản, đôi khi ở mức giá chiết khấu.

Dư nợ cho vay thương mại và công nghiệp (C&I) giảm nhẹ so với Q2, chủ yếu do giảm dư nợ đối với các tổ chức tài chính không nhận tiền gửi. Mặc dù vậy, cho vay C&I song phương cốt lõi vẫn tăng hơn 200 triệu USD, với hoạt động phân bổ trên nhiều ngành công nghiệp thay vì tập trung vào một lĩnh vực.

Thu nhập từ phí tăng 11% trong 9 tháng đầu năm. Quản lý tài sản, phí liên quan đến tiền gửi và kinh doanh ngoại hối là những động lực chính. Hoạt động thanh toán tại Hồng Kông ghi nhận số lượng giao dịch và giá trị giao dịch bằng USD cao hơn. Chương trình thanh toán tại Trung Quốc đại lục đã đi vào hoạt động, nhưng ban lãnh đạo cho biết sản lượng vẫn ở mức khiêm tốn và dự kiến sẽ phát triển trong Q4/2026 và Q1/2027.

Phí quản lý tài sản giảm so với quý trước do doanh số bán trái phiếu cấu trúc giảm từ mức cao vào đầu năm. Công ty đã ra mắt một cố vấn đầu tư đăng ký (RIA) trong Q3 và đang xây dựng đội ngũ một cách tự nhiên.

Định hướng của Ban lãnh đạo

• Thu nhập lãi thuần: Ban lãnh đạo hiện kỳ vọng tăng trưởng cả năm 2026 đạt 9%–10%. Triển vọng này giả định lãi suất ngắn hạn duy trì ở mức hiện tại cho đến cuối năm.
• Cho vay: Dự báo tăng trưởng cả năm vẫn duy trì ở mức 6%–8%.
• Thu nhập từ phí: Ban lãnh đạo tiếp tục kỳ vọng mức tăng trưởng hơn 10% cho năm 2026.
• Chi phí hoạt động: Mức tăng trưởng từ đầu năm đến nay là 8%, và ban lãnh đạo tiếp tục hài lòng với dự báo chi phí cả năm của mình.
• Xóa nợ ròng: Phạm vi dự báo cả năm đã được thu hẹp xuống 15–20 điểm cơ bản sau khi tỷ lệ xóa nợ trong 9 tháng đầu năm thấp hơn dự kiến.
• Biên lãi thuần Q4: Ban lãnh đạo kỳ vọng biên lãi thuần sẽ tiếp tục ổn định so với Q3, mặc dù thừa nhận rằng việc tăng lãi suất thêm có thể hỗ trợ mở rộng biên lãi thuần.

Rủi ro và các yếu tố cần theo dõi

Ban lãnh đạo cho biết môi trường lãi suất cao kéo dài sẽ làm tăng áp lực tín dụng trên toàn ngành ngân hàng. East West Bancorp đã dẫn chứng việc thẩm định bảo đảm kỷ luật, tỷ lệ cho vay trên giá trị tài sản (LTV) thấp và chất lượng tài sản thế chấp là các yếu tố giảm thiểu rủi ro.

Các khoản vay C&I bị phê bình tăng nhẹ ở cả danh mục cần lưu ý và dưới tiêu chuẩn. Ban lãnh đạo không nhận thấy sự tập trung vào một lĩnh vực cụ thể nào và cho biết số lượng khoản vay được nâng hạng ít hơn đã bù trừ cho một số khoản vay bị hạ hạng trong quý.

Chi phí tiền gửi Q4 sẽ phụ thuộc một phần vào việc định giá lại khoảng 15 tỷ USD chứng chỉ tiền gửi đáo hạn. Ban lãnh đạo đã đưa việc định giá lại này vào kỳ vọng về biên lãi thuần hàng quý về cơ bản ổn định.

Tài sản gán nợ khác (OREO) tăng sau khi một số khoản nợ xấu bước vào giai đoạn tịch thu tài sản thế chấp. Các tài sản này rải rác ở nhiều danh mục bao gồm nhà kính, văn phòng, bất động sản bán lẻ và đất trống, không ghi nhận sự tập trung lớn vào bất kỳ danh mục nào.

Tóm tắt phần Hỏi & Đáp với chuyên gia phân tích

• Độ nhạy với lãi suất: Ban lãnh đạo mô tả bảng cân đối kế toán có độ nhạy theo tài sản. Mức tăng lãi suất 25 điểm cơ bản ước tính sẽ đóng góp thêm khoảng 2,5 triệu USD thu nhập lãi thuần hàng tháng sau thời gian độ trễ ước tính là 45 ngày.
• Nguồn vốn tiền gửi: Dòng tiền gửi thanh toán và thị trường tiền tệ dồi dào đã làm giảm nhu cầu huy động vốn bán buôn, đóng góp vào kết quả biên lãi thuần Q3 tốt hơn dự kiến.
• Định giá khoản vay thương mại mới: Ban lãnh đạo cho biết các khoản vay thương mại mới nhìn chung dựa trên lãi suất SOFR và được định giá khoảng SOFR cộng thêm 225–250 điểm cơ bản.
• Phân bổ vốn: Tăng trưởng tự thân vẫn là ưu tiên hàng đầu. Ban lãnh đạo cũng đề cập đến cổ tức, mua lại cổ phiếu khi có cơ hội và các cơ hội M&A kỷ luật là những phương án sử dụng vốn tiềm năng. East West còn 117 triệu USD hạn mức mua lại cổ phiếu vào cuối quý.
• Đầu tư vào AI: Chi phí máy tính và phần mềm tăng 21% so với cùng kỳ năm ngoái. Các chương trình thử nghiệm AI hiện tại tập trung chủ yếu vào hiệu quả và đẩy nhanh quy trình đánh giá, trong khi ban lãnh đạo mô tả ngân hàng là đơn vị tiếp cận sớm thay vì là nhà tiên phong về công nghệ.
• Nghiệp vụ ngân hàng xuyên biên giới: Ban lãnh đạo cho biết khách hàng đã thích nghi với thuế quan và sự bất ổn địa chính trị. Ngân hàng tiếp tục ưu tiên mở rộng tự thân các dịch vụ ngân hàng quan hệ và năng lực xuyên biên giới.

Toàn văn Biên bản Cuộc họp Báo cáo Kết quả Kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Good afternoon, and welcome to East West Bancorp's Third Quarter 2026 Earnings Call.

[Operator Instructions] 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.

Adrienne Atkinson

Thank you, operator. Good afternoon, and thank you, everyone, for joining us to review East West Bancorp's Third Quarter 2026 Financial Results.

With me are Dominic Ng, Chairman and Chief Executive Officer; Christopher Del Moral-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 a 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 Ng

Thank you, Adrian. Good afternoon. and welcome to all who have joined the call. East West was delivered another quarter of strong performance, gathering, generating record revenue. Net interest income, record pretax pre-provision income and record diluted earnings per share. These results reflect the value of our customers' relationships the resilience of our business model. Deposits reached new record levels with over $1.4 billion of net deposit growth price inflows money market deposits. Product growth continued to be a key driver of our performance.

Notably, we reduced our average deposit cost in the third quarter by 2 basis points even as we grew balances to record levels. Deposit costs have been well controlled in the first 2 weeks of the fourth quarter. Loans also hit records this quarter with prudent growth led by residential and multifamily lending. This balance sheet growth contributed to record net interest income. Net interest income is up 9.5% year-over-year for the 9 months through September, which leads us to raise our full year guidance today.

Importantly, asset quality remained solid. Charge-offs, nonperforming assets and criticized loans remain well controlled and within our expectations, reflecting the quality of our portfolio and our disciplined approach to risk management. Given our lower-than-expected year-to-date net charge-offs, we are also updating our net charge-off guidance lower for the year. This was continues to operate from a position of strength, diversified business model, conservatively managed balance sheet industry-leading profitability allowed us to deliver an over 17% return on average tangible common equity while maintaining a greater tangible common equity ratio.

With that, let me turn the call over to Chris for a more detailed review of our financial results. Chris?

Christopher Del Moral-Niles

Thank you, Dominic, and good afternoon to everyone on the call. Turning to Slide 4, we have more details on our deposits. We enjoyed a broad-based deposit growth quarter. We're particularly encouraged by the strong money market deposit growth that Dominic just mentioned. Average noninterest-bearing deposits increased 16% year-over-year, and our focus on small business checking accounts also continue to bear fruit. Noninterest-bearing demand deposits continue to represent over 26% of our total deposits at quarter end, providing an important source of stable funding and supporting our ability to effectively manage our deposit costs.

Turning to Slide 5, some highlights on loans. Loans grew 7% year-over-year, consistent with our 6% to 8% full year 2026 guidance. As we previously communicated, residential mortgage came in as this quarter stands out with nearly $400 million of net growth. We continue to expect residential mortgage to be a key contributor to our growth given our robust current pipeline. Multifamily lending also had a strong quarter, reflecting continued broad-based housing demand in our core markets. CRE growth this quarter was led by our long-standing real estate clients getting back into the market sometimes at discounted levels. C&I balances declined modestly from the second quarter, largely reflecting reductions in non-depository financials and borrowings in business credit mortgage credit and other NBFI categories.

Switching to NII and margin on Slide 6. Our net interest margin expanded by 6 basis points quarter-over-quarter as positive asset repricing and flat liability costs drove NII to record levels. We note that both average total deposit cost and total cost of funds declined basis points quarter-over-quarter. Given September's rate hike and our strong third quarter performance, we now expect full year NII growth of 9% to 10%, and the guidance assumes that short-term rates remain at current levels through the end of the year, so flat rates through December.

Moving on to fees on Slide 7. For the first 9 months of 2026, fee income has increased 11% year-over-year, supported by strong year-to-date growth in Wealth Management, deposit-related fees and foreign exchange income. We continue to expect full year fee income to grow by more than 10% for all of 2026.

Looking at expenses on Slide 8. total operating noninterest expense declined for the quarter. The decline was primarily driven by lower other operating costs and lower comp and employee benefits expense. As a result, East West delivered another quarter of industry-leading efficiency. The Q3 efficiency ratio improved to 34.4% in while operating non-expense as a percentage of average assets declined 8 basis points to 1.21%, both of these are industry-leading metrics. Year-to-date growth in operating noninterest expense is 8%, in line with our guidance, and we remain comfortable with our overall full year expense guidance.

I'll now hand the call over to Irene for comments on credit and capital.

Irene Oh

Thanks Chris, and good afternoon to all on the call. As you can see on Slide 9, credit performance remained resilient in the third quarter. Net charge-offs declined to 15 basis points or $22 million in the third quarter compared to 19 basis points in the second quarter to $27 million. Year-to-date, annualized net charge-offs were 14 basis points.

Given our performance through the first 9 months of the year and our current visibility, we have narrowed our prior guidance for net charge-offs and now expect full year charge-offs to be 15 to 20 basis points.

Quarter-over-quarter, nonperforming assets saw a slight uptick of 1 basis point to 30 basis points as of September 30, 2026. We recorded a provision for credit losses of $45 million in the third quarter compared with $33 million for the second quarter. Overall, credit performance remained solid. We continue to manage credit risk with vigilance and discipline.

Turning to Slide 10. The allowance for credit losses increased $23 million to $865 million or 1.45% of total loans as of September 30, reflecting quarter-over-quarter loan growth and portfolio mix shift. Our allowance coverage ratio increased 2 basis point from the prior quarter, remains at a healthy level relative to the risk of the portfolio.

Turning to Slide 11. East West capital position remains a significant source of strength and strategic flexibility. All regulatory ratios remain well in excess of regulatory requirements for well-capitalized institutions and continue to compare favorably to both regional and national banks. At quarter end, our common equity Tier 1 ratio was 15.4%, while a tangible common equity ratio with 10%. These levels support current and future balance sheet growth. East West ended the quarter with $117 million in repurchase authorization that remains available for future buybacks and declared a fourth quarter 2026 dividend of $0.80 per share.

I'll now turn the call back to Chris.

Thank you, Irene. So to recap, we've updated 3 elements of our guidance today, each of which is reflected on Slide 12. Number one, we're increasing our NII outlook assuming flat rates. Two, we're reducing our full year net charge-off range; and three, we're narrowing our expectation for the amortization of tax credits and CRA investments, all of which reflected again on Slide 12.

With that, we'll now open the call to questions. Operator?

Operator

[Operator Instructions] The first question comes from Casey Haire at Autonomous Research.

Phần hỏi đáp

Casey Haire

Yes. Great. Chris, I wanted to touch on the deposit beta and the shoe leather strategy, which has obviously got pretty good momentum here. When I look at you guys, your cumulative beta on the last up cycle, if on an IBD basis, it was it 72. With the fuel other strategy working, is there an opportunity to come in below that this go around with the Fed hiking.

Christopher Del Moral-Niles

I think what we've said before, I would stand by, which is higher rates overall will be get more customer attention to how much their opportunity costs actually cost them. So will I tell you that I expect to do better. The reality is as we were at once upon a time at 40%, we came down into the low 20s. We're continuing to work our way up. We're continuing to build on that. But I'm not sure I've changed economics of deposit math. And so the reality is, we continue to make progress. We continue to build the DDA book but if rates go materially higher, we'll still see some bleed off.

On the other hand, as we've shown already, even with Lloyd's ticking down just a little bit, we'll probably see continued improvement in DDA over time.

Casey Haire

Got you. Okay. Great. And then I guess just switching to the loan side of things, can you just give us a flavor of where new money loan yields are just across your products versus the third quarter rate.

Christopher Del Moral-Niles

I look at the broad cross-section of our commercial loans, they're generally SOFR-based and we're generally somewhere between SOF $225 million and $250 million. obviously, C&I and CRE sometimes trade places in that range, but that's the right range to focus on.

Operator

The next question is from Ryan Kenny at Morgan Stanley.

Ryan Kenny

So you mentioned no hike in the guidance. And so if we were to get a hike at some point this year, would that potentially push you more towards the high end of the range?

Christopher Del Moral-Niles

That's correct. And I think what we've quantified before is that we believe a 25 basis point hike is worth $2.5 million per month with a bit of a lag we've usually put that lag at about 45 days. But to the extent that the forwards are pricing in hike, it may come through a little sooner, which we certainly observed in the September hike.

Ryan Kenny

And then separately, in the deck, it shows that the criticized loans and nonperforming assets ticked up a little bit sequentially. And so I just wondering if you could give any color on what drove that?

Irene Oh

Yes. If you look at the details and we show a little bit more on the slides. The increases did cover C&I in those categories, not 1 area or you not 1 area or a we're most concerned about, but both special mints and substandard ticked up a little.

Operator

The next question is from David Rochester at Cantor.

David Rochester

I wanted to start on your outlook for the 4Q NIM to be broadly stable versus 3Q. Just given the September hike, I know things may have started a little bit for you earlier the benefit of the third quarter, but if the same thing happens with the potential December hike. I think that you would have some extra lift there that could get you a little bit higher on the NIM. So I'm wondering what are some of the offsets that you're thinking about? Is it just deposit costs start to move? Or is there something else going on?

Christopher Del Moral-Niles

It's a combination of could deposit cost ship into that, which we thankfully haven't seen here through the first couple of weeks of October, as Dominic mentioned. But again, it's early, and we could see that. And certainly, if there's a recurring pattern of additional hikes, we would expect to see some of that catch up into our numbers. But we're still fundamentally asset-sensitive, Dave. So to your broad question and then following up on Ryan's comment, yes, I think if we saw higher rates, we would expect NII to grow.

David Rochester

Yes. I would think that the margin could maybe expand a little bit then in 4Q. Is that fair?

Christopher Del Moral-Niles

Based on what we're seeing right now, we think the margin holds broadly consistent, but it could expand.

David Rochester

Okay. And my follow-up question on the FX line, I was wondering if the fee growth were related to the rollout of the new platform to the Mainland China customers this quarter. And if you just talk about where you are in that rollout and any early reports on how that's going, that would be great.

Christopher Del Moral-Niles

Yes. So our full program, our Asia payments program is in effect for all of our Hong Kong-based activity and we are largely seeing upticks both in number of transactions, individual wires counts and dollar volumes. So that's working for us. Those wire fees are largely reflected in the commercial deposit-related fees. Foreign exchange activity really has just been driven by other customer transactions and other customer activity, some hedging activity and some notable spot transaction activity that we saw throughout the quarter.

With regard to our Mainland China program, that is now live, but transaction volumes are still modest, but we expect that to kick in as we roll through the fourth quarter and into the first quarter of next year.

Operator

The next question is from Bernard Von Gizycki at Deutsche Bank. I'm sorry if I mispronounced your name.

Bernard Von Gizycki

Just on my first question, maybe on the Wealth Management fees. I know that ticked down $4 million linked quarter. And I know that was on lower activity, but just any other color you can provide in that line item and expectations, maybe how the quarter just started? .

Christopher Del Moral-Niles

We've had really strong results early the year in our structured product sales. predominantly structured notes, and those had provided some nice lift, particularly in the first quarter, stepped down a bit in the second quarter and unfortunately, stepped down a little bit more in the third quarter. That having been said, many other aspects of the business continue to sort of move in the right direction. And we've continued to hire folks that we expect will help us build those volumes as we look into the fourth quarter and 2027.

Bernard Von Gizycki

And then just a follow-up on the current quarter NIM, expectations are coming in, I think, flat as well, and it increased 6 basis points. Just kind of curious like what drove the better performance than previously expected? I just want to understand the puts and takes in the quarter.

Christopher Del Moral-Niles

Yes. I think the reality is we were able to contain deposit costs much more effectively than we anticipated. And the net inflows, both of DDA and money markets, allowed us not to have to grow our wholesale levels, which we didn't have to pay any cost for the incremental asset growth that we saw during the quarter, which was a net positive.

Operator

The next question is from David Chiaverini at Jefferies.

David Chiaverini

On the noninterest-bearing deposit mix, clearly holding in very strongly here in the third quarter. Should we expect the DDA growth momentum to continue and remain as what's driving the strong growth?

Christopher Del Moral-Niles

Sure. And so I think we referred to this previously as sort of our shoe leather strategy, which is we've asked each of our branch managers, assistant branch managers, commercial relationship managers, to go pound the pavement and walk up and down, whether it's Main Street, Broadway, Valley Boulevard, whatever the most significant thorough fare for their customers is within their neighborhood, more than once to make sure they've knocked on each door to make sure we've had the opportunity to make our inroads. And that outreach and calling and visiting our customers at their offices at their shop at their restaurant has just resulted in a flow of activity that thankfully has helped us maintain and grow these balances over the last 1.5 years and continues to bear additional fruits in that deposit accounts opened last year are actually growing in total balances year-over-year.

And so that has been a wonderful strategy that's worked really well. and continues to help us grow our DDA balances. At this point in time, certainly more than $1 out of $4 of net deposits on average has come to us in incremental DDA and continue to be the primary source of net growth across the bank as we look at the last 1.5 years or so and something that we're very proud of. I'm very thankful for the team that put the effort in to make those calls on their various customers up and down all the different avenues.

David Chiaverini

Great. And in terms of the CDs that were renewed in August from the Lunar New Year, did those mostly renew into new 6-month CDs? Or did they go out further with term?

Christopher Del Moral-Niles

Actually, we offered both a special 9- and 12-month term, and so we got a mix across all 3 of those. Thankfully, as you can notice on Page 11 in the tables, the net cost of that program that was still a net reduction in our total time lease costs came down by 3 basis points. over quarter. And so even despite the fact that we extended. We extended into a lower total cost blend than what we started with, which was a welcome benefit. I would also note that we've got $15 billion rolling off during the fourth quarter of CDs. But our second quarter specials were not particularly aggressively priced that we have both a positive opportunity because the repricing benchmark will be low and a risk of there's some volume there.

So back to Rochester's question, what are some of the puts and takes the CD repricing will be an important part of what happens for us in Q4, but we've taken that into consideration and broadly expect stable NIM through the quarter.

Operator

Next question is from Timur Braziler at [ Wells Fargo.]

Unknown Analyst

Maybe dovetailing on that last question. Just any early thoughts around how aggressive these loss might be this go around for the Chinese lunar CD specials, just in light of how strong other loan growth or other deposit growth has been.

Christopher Del Moral-Niles

I think we'll give guidance for 2027 in 2027. But as we said today, we're very comforted by the recent trends we've seen in CD repricing. And our current C specials, we think, are at appropriate levels to retain the balances that we have today.

Unknown Analyst

Okay. Fair enough. And then maybe on capital, you guys have maybe been a little bit more focused on TCE. Just any evolution of thoughts on excess capital here, given the linked-quarter reduction, albeit still at a high level of 10%? And then maybe what, if any, impact does that have on capital priorities, primarily your appetite for revenue?

Christopher Del Moral-Niles

I think our capital priorities are outlined and Irene kind of commented on them, but organic growth continues to be priority 1 for the bank at 10% tangible common equity, which is a level Dominic has previously common at a level that we're very comfortable with. We think that we have the flexibility to meet all of the organic growth opportunities present to us from our current customers, pay a competitive dividend and still have flexibility to be thoughtful about perhaps disciplined inorganic opportunities and opportunistic share repurchase. And I think that's the right framework from which we sort of look at the landscape from a position of strength with the capital to do the things that we need to for our customers and the flexibility to do the things that we might want to do should they be the right things to do and consider for the price and the value and the timing and the opportunity when they come forward.

Dominic, anything you would add to that?

Dominic Ng

No.

Operator

The next question is from Janet Lee at TD Cowen.

Sun Young Lee

Could you give us some puts and takes around the C&I growth. I understand that the decline was really driven by the lower MDI. How about on the core C&I side and the outlook there on the growth front going forward?

Christopher Del Moral-Niles

Yes. So clearly, I think if you look back to the MBFI slides, you'll see that the reduction in consumer credit and mortgage credit added up to over $300 million. So obviously, that means the core side had a positive well over $200 million. That was a pretty diverse mix of businesses and opportunity that made up the positives on the core bilateral C&I. We continue to expect more core bilateral C&I business to land in the fourth quarter. and we continue to be pursuing that through all avenues. But as I read mentioned on the credit side, there was a particular concentration. We haven't seen a particular sector or industry that has emerged as a growth driver. It's been a broad-based cross-section of commercial lending activity.

Irene Oh

I'll also add to total commitments are updated, but utilizations are a little bit down over quarter.

Sun Young Lee

Got it. And the NPLs were down quarter-over-quarter in dollar terms, but the criticized ratio on the C&I front up a bit. And so as the allowance for loan losses for the C&I segment. Could you explain what drove the criticized levels in the quarter?

Irene Oh

Yes. And I think someone else asked this earlier. [ Goldstar ] special mention and the substandard loans for C&I increased a little bit. If you look at the details, there wasn't necessarily just 1 sector or are in specific I would say maybe to the quarter a little bit, we have less upgrades to offset some of the downgrades. And we will look at the details. We're comfortable we'll be able to help our clients work through this.

Operator

Next question is from Chris McGratty at KBW.

Christopher McGratty

Great. A lot of questions about the components of fee income. I think Chris, in your prepared remarks, you talked about double-digit growth for the year. I guess stepping back, this has been a focus of the bank for several years. I guess we're in the build out of the fee income capabilities are you maybe an inning? And then can you accelerate it organically? Is that something inorganically that's an option? Any color would be great.

Christopher Del Moral-Niles

I think we're still very much in the early innings. While we appreciate the commercial bank has been building out. I think we're still building the capability to provide a broad session of services, payment services, investment solutions and services, foreign exchange solutions and services to a wider range of our clients. And so while we recognize we've made great progress, and we're very pleased by the double-digit growth. We also know we're just scratching the surface of what's possible, and we've got to be early given the opportunities we see ahead.

Christopher McGratty

Okay. Great. And then the second question would be on expenses. You guys have a track record of setting the bar on expenses and not moving it throughout the year. Within that, can you just speak for a moment on current AI strategies, tech spend, any early wins from those investments?

Christopher Del Moral-Niles

Sure. I think the reality is our computer and software related expenses are up 21% year-over-year, which would be perhaps a high number and a shocky number. But I would note that, again, our total expenses are exactly in line with our guidance. And so it was part of the plan to continue to grow those. Where we've seen pilot initiatives in our AI development efforts internally, they've been focused on efficiency and speed of evaluation of things, so more on cost saving oriented activities, and we haven't quite found the right use case yet that boost revenue, but we'll continue to I think, pilot some initiatives that we think will help us contain costs and we'll be looking for the right revenue opportunities when they present themselves.

Dominic Ng

Chris, we are kind of -- when it comes to AI, we are early followers. So if someone has some great idea, they actually worked great, we are more than happy to follow. But then we wouldn't think that East West Banc, which are great on relationship banking, grid in cross-border banking. Those are where we differentiate ourselves from all our other peer banks. And that's why we have these very high return on equity, even when we have very high tangible common equity ratio. But folks like that don't suddenly get very nerdy and then become an AI expert.

So the -- so the reality check is that we will be much better off to pay attention to what all the other folks are doing, either in the banking industry or even in the fintech world, and we are paying attention to it. And whenever someone can actually come with something right, we'd be happy to follow. We wouldn't want it to be that pioneer to spend a lot of tokens. And just for the sake of saying that we the first to come up with this first come that, that's not an area that we feel that easily claim to be championed. We claim championship in relationship banking and cross-border banking, that's what we want to continue to spend more of our to -- and I do feel that we have tremendous respect with what AI can do to help the bank.

We think there will be plenty of opportunities we also respectfully making sure that there are risk involved right now. And right now, the landscape is somewhat chaotic in that standpoint. So we want to be prudent and make sure that if someone want to be heroin, make sure they are not us. And then our position is that where we see that the back feels clear that there is something great, we'll go ahead and snap it.

Operator

The next question is from Ebrahim Poonawala at Bank of America.

Ebrahim Poonawala

Two questions. First, just around credit, more in terms of forward-looking, we saw its gap up a fair bit during the third quarter. Just remind us like how you think or how we should think about the risk of incremental pressure, both in terms of as we think about your commercial real estate book or on the C&I side, does that mean much and especially if rates go up even further, does that in any meaningful way increase the credit risk as you look through your portfolio?

Christopher Del Moral-Niles

Clearly rates higher for a far longer extended period of time will put more pressure on more customers. So we take that as a given. That having been said, Irene, I don't know if you want to comment on sort of where we are I would note that at 30 basis points of NPA, it's really not that much of a change from where we were last quarter or frankly, from a year ago.

Irene Oh

I think, EB, Chris' point is correct, higher, higher for longer, does increase credit risk, not only for East West Bank for every bank. With that said, if you look at our loan book, we have been disciplined in our underwriting, low loan to values. These are things that help in this period of time when rates have gone up or the last several years where there's been concerned about 1 asset class or another. Overall, we've done really well, better than I expected, honestly. And I think that's a testament to the underwriting, the credit quality and the collateral that we have as loan. So relative to others, I expect them will now be fine.

Ebrahim Poonawala

Got it. And I guess just a separate question. Dominic, you mentioned about 1 of your areas your champion is cross-border, just give us the latest on kind of where those cross-border flows are given the U.S.-China relationship stand. Just what are the drivers as you think about what's driving activity, any difference today than 5 to 10 years ago? And maybe just broadly, like what's -- how would you assess customer sentiment and resilience to all the macro noise and geopolitics?

Dominic Ng

Well, I think if we compare with, let's say, 5, 7 years ago, obviously, if you look back -- we -- our cross-border customers obviously has quite a bit of back then, quite a bit of anxiety concerned about tariffs because that was something relatively new that U.S. imposed across the board. And many people were just trying to figure out how to adapt to it. And then on top of it, what would be the consumer sentiments and how can you pass through the cost to the consumer? Or is it that you have to just go halfway in between. There are many sort of issues that each and everyone of these companies, by the way, is not just a cross-border issue. In fact, all business in U.S. pretty much have to deal with that challenge.

But as we look at it today, tariffs like just a very day-to-day common thing. I guess, everybody gets so used to it. They may not like it, but they get used to it. and everybody at just adapt and then moved on. And so I looked at it as a quite frankly, even that if you look at today, that U.S.-China relationship appear to be getting better, the Trump administration are working with China to maybe find some of the better way to reduce tariffs and whatnot. But frankly, many of the business don't really pay that much attention to it anymore in a way because people just get used to it.

With East West Bank, we -- our position is that in good time and bad times, East West still out there, offering our best is banking services to our clients. And we stay on top of what's been happening in the geopolitical issue and we do the best we can to provide best support for our clients. So with that, I -- and then you can look at our results for the past 10 years since the first Trump administration, what you see is that year in year out, to continue to outperform all the other banks , the geopolitical tension was a lot more worse. Some years, it seems to be better, performance has been steady. And even when we have record earnings after record earnings, they are just site than the year before. And because we manage our business pretty rigorously.

We don't ever want to get ourselves or in terms of going into the edges and committed too much risk and then eventually end up paying for it. So our position is that on a prudent relatively conservative balance sheet, make sure we have ample capital. We continue to focus on organic growth while always with our eyes open for any kind of potential opportunistic and strategically viable M&A opportunity, reality is that because we spend so much time focusing on the organic business growth and making sure we have better products, we have better capability and whatnot.

And relatively speaking, it makes the M&A opportunity, less likely because we continue to be able to find way to grow organically. Everything is an opportunity cost. Why would I want to go out and buy another bank and deal with their problems, unless, I mean, the buying that I cannot grow, which is never the case at East West. So that's why it's just not something that suddenly we went quite dormant when it comes to M&A work. It's just that relatively speaking, we just haven't had found anything that we feel that the opportunity cost justify it.

And so in short, I would say that from a cross-border banking business right now, we continue to build better capability, and we continue to see more opportunities. This universe is big, and it's going to take us that case up they get the case in order to get sort of like feel like over saturate.

Operator

The next question is from Jared Shaw at Barclays.

Jared David Shaw

A lot of questions asked. But I guess do you know what the -- was there any measurable impact on tariff refunds on deposit growth or DDA growth in the quarter?

Christopher Del Moral-Niles

It was a small positive. We've had over $1 billion of total deposit refunds flow through the bank. Most of that came in the second quarter, but we had some forward into the third quarter. The on balance sheet portion that we would say is related to sort of same customer, same account is less than $200 million in the quarter end number. And there's probably a similar amount that's migrated on to a money market or other savings vehicle, but it's a small number. Most of the numbers -- most of the refunds came through were then passed through to either underlying buyer seller or someone else in the chain, and so they went out.

But again, a couple of hundred million said on the books, and they're still those have also been here for 30 to 120 days, and we don't know that there's a reason they're going to leave us, but we would expect some of that will stick for the long haul, and it's been a plus.

Jared David Shaw

Okay. And then I guess just on the credit side, there was an increase in OREO. Any color on what was driving that and what your expectations are for disposition timing and potentially any additional loss on that?

Christopher Del Moral-Niles

Well, the good news is CRE NPLs came down. Go ahead, Irene.

Irene Oh

So now I got our math or arithmetic care sorted out. So we did have some loans that we foreclosed on that were nonperforming, and we did also have some deal that we took in the quarter. We're working through it, right? The volume, the numbers aren't to a level where we're super concerned at this point. But certainly, our team is working hard as far as some of these properties. Geographically, it's dispersed asset type, it is as well. We have for working thermal.

Jared David Shaw

So no big concentration is more granular?

Irene Oh

Yes. I mean certainly, if you look where we're at, there are asset classes that it all of our real estate balances why, single-family is smaller, larger ones are CRE category rise, right? We have REOs that are in the categories greenhouses, office, retail and also some 1 they can land. But overall, we're moving through these, some of them have LOIs, and we hope to see some resolution very soon.

Operator

Next question is from Benjamin Gerlinger at Citi.

Benjamin Gerlinger

Just wanted kind of higher level. You guys have kind of alluded to like adding something within fee income, whether it be kind of a bigger wealth management offering or trust or something like that. But -- and Dominic, when you just talked about like being there for your clients across pretty much every spectrum? Is there other areas where East West might be potentially naked in the offering where there's nothing to really add -- or are you just really bolstering current offerings right now? I'm just thinking inorganic potential is down the road?

Dominic Ng

I think broadly speaking, we focused on a good portion of our attention on the corporate development front, looking for the right bolt-on or add-on on our wealth management. And to a large extent, didn't obviously find the right opportunity. And so we did -- during the third quarter, formerly launched our registered investment advisory entity, -- and we are in the process of building organically out the team to further those efforts. And so at this point in time, there's nothing there. However, we'll continue to look for the way to further diversify grow our fee revenues over time and that -- the focus as we move forward.

Benjamin Gerlinger

Got it. And the tailoring rules change $100 billion. I'm not necessarily looking for like an acquisition-type answer, but like is there anything on the balance sheet, whether it be ACLA, approach to securities or anything on that end that but you might tweak the current operations?

Christopher Del Moral-Niles

As we sit here today, I think we have built an HQLA oriented investment portfolio that would be appropriate and suitable should we be subject to those rules as they get finalized, we expect somewhere in the next 3 to 6 months. But if they -- if the rules don't change, we are on a path to be appropriately positioned to successfully grow into them. And if the rules do change, then we'll have even more flexibility.

Operator

The next question is from David Smith at Truist Securities.

David Smith

Just as we think about the range of outcomes for NII in the fourth quarter, you're pointing to an expectation of a flat margin and the loan growth outlook suggests somewhere between $0.5 billion and $1.5 billion of additional loan growth in the fourth quarter. So from the midpoint of your full year guidance, we have NII about flat in the fourth quarter versus the third quarter. So I guess, with a flat margin and balance sheet growth, why wouldn't you be towards the upper end of your NI range?

Christopher Del Moral-Niles

I like your math.

Operator

The next question comes from Matthew Clark at Piper Sandler.

Matthew Clark

Just wanted to touch on deposit costs a little further. If you had the spot rate at the end of September. And then also the $15 billion of CDs that are maturing, just kind of the roll-off and roll-on rates that you expect?

Christopher Del Moral-Niles

Sure. So on the $15 billion -- most of that, again, was priced about 6 months ago, the end of period costs answer the question. So the first 1 is, right now, the current month, 6-month CD special is at [ $365 million. ] The 9 months is at [ $378 million, ] and the 12 months is [ $388 million. ] Now a portion of the $15 billion, of course, it doesn't all come on at special rates. So people that will roll over existing programs at lower rates. So you think about the blend. But the blended rate that we're offering here in the fourth quarter on the 6-month offering is actually very much in line with what we were offering in the second quarter. So as we sit here today, it's relatively flat, assuming there's a similar reinvestment profile of the underlying fees, which would be a good outcome.

With regard to the second part of your question, our total interest-bearing deposit cost at quarter end was [ $283 million, ] that compares to an average of $281 million on average for the full third quarter. And we haven't really seen that move as we sit here. If anything, it's probably stayed flat to gotten a little bit better as we move into the fourth quarter.

Matthew Clark

Okay. Great. And then just back to the capital return, knowing you guys have a ton of capital and accumulating capital. Can you just remind us of your targeted dividend payout ratio as earnings continue to grow?

Christopher Del Moral-Niles

We haven't targeted a specific ratio. I think we raised the dividend by 1/3 last year. We're at $0.80. We reiterated and declared a $0.80 dividend today for our shareholders in the fourth quarter. And we're committed to look at that and revisit that at least annually, and so we will do so in the ordinary course.

Operator

At this time, we show no further questions, and that concludes our question-and-answer session. I would like to turn the conference back over to Dominic Ng in for any closing remarks.

Dominic Ng

Thank you. Well, before we conclude, I would like to thank our employees for their hard work and commitment to serving our customers. We are encouraged by the momentum we are seeing across our core businesses and confident in our ability to execute on the opportunities ahead.

Thank you for joining us today, and we appreciate your continued interest in East West and looking forward to speaking with you again next quarter. Bye.

Operator

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