Participants

Adrienne Atkinson; Director, Investor Relations; East West Bancorp Inc

Dominic Ng; Chairman of the Board, Chief Executive Officer of the Company and the Bank; East West Bancorp Inc

Christopher Del Moral-Niles; Chief Financial Officer, Executive Vice President; East West Bancorp Inc

Irene Oh; Chief Risk Officer; East West Bancorp Inc

Casey Haire; Analyst; Autonomous Research

Ebrahim Poonawala; Analyst; BofA Global Research

Manan Gosalia; Analyst; Morgan Stanley

Timur Braziler; Analyst; Wells Fargo Securities, LLC

Benjamin Gerlinger; Analyst; Citi

Matthew Clark; Analyst; Piper Sandler Companies

Gary Tenner; Analyst; D.A. Davidson & Company

Jared Shaw; Analyst; Barclays

Christopher McGratty; Analyst; Keefe, Bruyette & Woods North America

Presentation

Operator

Hello and welcome to the East West Bancorp's first-quarter 2025 earnings conference 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 first-quarter 2025 financial results. With me are Dominic Ng, our 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 slides referenced during this call is available on our Investor Relations site. Management may make projections or other forward-looking statements, which may differ materially from the actual results due to a number of risks and uncertainties.
Management may discuss non-GAAP financial measures. For a more detailed description of the risk factors and the reconciliation of GAAP to non-GAAP financial measures, please refer to our filings with the Securities and Exchange Commission, including the Form 8-K filed today.
I will now turn the call over to Dominic.

Dominic Ng

Thank you, Adrienne. Good afternoon and thank you for joining us for our first-quarter earnings call.
I'm pleased to report strong first-quarter results. We continue to grow the bank and report another quarter of record revenue. Loan growth was solid. We grew end-of-period loans 1% quarter over quarter to a new record level of $54 billion. Our relationship-driven business model helped support continue residential mortgage and commercial real estate lending.
On the deposit side, we execute another successful Lunar New Year CD campaign and further optimize our pricing this quarter while continuing to add customers. We also deliver another record quarter of fee income. Fees were up 8%, driven by strong customer activity across the board. We continue to see opportunity to grow and diversify our fee revenues.
Asset quality has remained solid and credit is performing as expected. First-quarter annualized net charge-offs total 12 basis points or $15 million. Our nonperforming assets ratio decreased two basis points from the end of Q4 to 24 basis points at quarter end. Given the recent increase in economic uncertainty, we bolstered our allowance levels, bringing our total allowance for loans to 1.35%.
The strength of our diversified balance sheet continued to show this quarter, allowing East West to continue to deliver top-tier returns. We delivered near 16% return on tangible common equity and a 1.6% return on average assets while growing intangible book value per share 3% quarter over quarter and 15% year over year. (sic – see press release, "14% year-over-year")
Now, before I hand the call over to Chris, I'd like to take a moment and talk about the current economic environment.
Tariffs are not new for East West our customers. We have been taking tariff into consideration since 2017. Many of our clients decided to diversify their supply chains way back then and accelerated those efforts during COVID-19 pandemic.
Since that time, we have seen our customers increase investments in the U.S. and other markets. All the while, East West engaged with our customers and continue to grow. Over the past six months, we have seen our customers reposition themselves for a range of potential outcomes. In the past several weeks, our teams have spent a lot of time with our customers talking about their business plans. They are proving to be a forward-thinking, nimble, and mostly staying ahead of the curve.
Our experience has taught us to confront challenges from a position of strength. We enter the second quarter with a diversified balance sheet, a granular and strong consumer and commercial banking network, top-tier profitability, best-in-class operating efficiency, and amongst the highest levels of capital in the banking industry. We have the capital and balance sheet flexibility to take care of our customers in any environment and are well-positioned to capitalize on any opportunities ahead.
I will now turn the call over to Chris to provide more details on our first-quarter financial performance. Chris.

Christopher Del Moral-Niles

Thank you, Dominic.
Let me start with loan growth on slide 4. We added over $0.5 billion of loans for the balance sheet in Q1. Demand for residential mortgage proved durable and new originations continue to be accretive to yields. Even with the current elevated rates, we continue to see steady mortgage origination activity in Q1 and have a strong pipeline going into the second quarter.
As Dominic mentioned, we also grew commercial real estate balances this past quarter as we continue to support our long-standing relationship clients and select multifamily projects. C&I balances also grew modestly in Q1, likely reflecting the pull-forward activity we saw in Q4. Overall, we are encouraged by the lending trends we have seen so far even into April.
Moving on to slide 5. We strategically optimized our deposit pricing strategy this quarter to lower our overall funding costs. We successfully retained our Lunar New Year CD balances and incrementally captured some additional CD market share even at much lower pricing.
Average DDA balances, money market balances, and time balances all grew quarter over quarter. We continue to expect customer deposit growth will fund all of our loan growth this year. Overall, we're encouraged by the deposit trends we have seen this year, even into April.
Slide 6 covers our net interest income. We grew quarterly dollar net interest income for $600 million, up $12 million from Q4, despite two fewer days in the quarter. Similarly, we grew our net interest margin by 11 basis points from Q4 to 3.35% in the first quarter, primarily by decreasing our end-of-period interest-bearing deposit costs by 13 basis points and partly due to the accounts. In both cases, dollar NII and margin were also assisted by the expiration of some of our legacy hedges.
Looking back to the start of the cutting cycle, we have decreased interest bearing deposit costs by 62 basis points, successfully seeing our 50% data guide, which we've shared in prior quarters. We continue to expect net interest income expansion as we go through the balance of the year.
Moving on to fees on Slide 7. As Dominic mentioned, fee income grew 8% from Q4 to another record level, with growth in four of our five major fee categories. We will remain focused on driving growth in our fee categories and further diversifying our revenue streams. We are encouraged by the pace of growth in fee revenue so far this year.
Turning to expenses on Slide 8. East West continue to deliver industry-leading efficiency while investing for future growth. The Q1 efficiency ratio was 36.4%. Total operating expense was $236 million for the first quarter, including seasonally higher payroll-related costs. Overall, we continue to expect expenses will be in line with our guidance for the year.
Now, I'll hand the call over to Irene for comments on credit and capital. Irene.

Irene Oh

Thank you, Chris, and good afternoon to all on the call.
As you can see on slide 9, our asset quality metrics continue to broadly outperform the industry with quarterly net charge-offs, non-accrual loans, and non-performing assets metrics all improving. We recorded net charge-offs of just 12 basis points in the first quarter of $15 million, compared to 48 basis points in the fourth quarter or $64 million. Quarter-over-quarter, non-performing assets decreased by 2 basis points to 24 basis points of total assets as of March 31, 2025.
The criticized loans ratio increased during the quarter to 2.3% of loans. The special mention loans ratio increased 8 basis points quarter over quarter, while the classified loans ratio decreased -- increased excuse me, 3 basis points to 1.38%. We recorded a lower provision for credit losses of $49 million in the first quarter, compared with $70 million for the fourth quarter of 2024. We remain vigilant and proactive in managing our credit risk.
Turning to slide 10, the allowance for credit losses increased by $33 million to $735 million or 1.35% of total loans as of March 31, 2025. We utilize a multi-scenario methodology for the allowance and the increase in the quarter was largely driven by an increase in downsides in our [waitings] given the economic uncertainty in early April 2025. We believe we are adequately reserved for the content of our loan portfolio given the current economic outlooks.
Turning to slide 11. As Dominic mentioned, our strong capital levels allow us to operate from a position of strength and support our customers in any economic environment. All of East-West regulatory capital ratios remain well in excess of regulatory requirements for well-capitalized institutions, a lot about regional and national bank averages. East West CET1 capital ratio stands at a robust 14.3%, while the tangible common equity ratio rose to 9.9%. These capital levels place us among the best capitalized banks in the industry.
In the first quarter, East West repurchased approximately 920,000 shares of common stock for $85 million. We currently have $244 million of repurchase authorization that remains available for future buybacks. East West also distributed $85 million to shareholders via our quarterly dividends. East West second-quarter 2025 dividends will be payable on May 16, 2025, stockholders of record on May 2, 2025.
I will now turn the call back to Chris for additional outlook. Chris.

Christopher Del Moral-Niles

Thank you, Irene.
On slide 12, we are reiterating our full-year guidance. We're also providing some additional detail on tax items. Amortization of tax credit and CRA investment expenses are expected to be within the range of $70 million to $80 million this year. We continue to expect our full-year 2025 effective tax rate to be below 23%.
With that, I'll now open the call to questions. Operator.

Question and Answer Session

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions)
Casey Haire, Autonomous.

Casey Haire

Yes, thanks. Good afternoon, everyone.
So I guess first question, why is the NII guide now moving higher? Sounds like a loan pipelines are in good shape and near-miss often. At this current run rate, you're right at the middle of the guide level.

Dominic Ng

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

Casey Haire

Okay. So Chris, so deposit beta, as you pointed out, was well out of your 50% expected (technical difficulty). For you, what is -- can you sustain that at this level or is that normalized lower?

Christopher Del Moral-Niles

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

Operator

Ebrahim Poonawala, Bank of America.

Dominic Ng

Good afternoon, Ebi. Ebrahim, you might be on mute.

Ebrahim Poonawala

Hi, can you hear me?

Dominic Ng

Yeah, there you go.

Ebrahim Poonawala

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

Dominic Ng

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

Ebrahim Poonawala

Got it. And I guess maybe just one big-picture question. Maybe, Dominic, for you on client activity. So you've talked about the experience you all have had since 2018. It feels the rhetoric, the pushback between U.S. and China is a lot more sort of elevated this time around.
And I'm just wondering when you think about your customers, their ability to withstand this, like do think the risks are larger today than what we were faced in 2018, 2019? And have you seen any deceleration or the pickup in activity ahead of these kind have concerns?

Dominic Ng

Well, I think in terms of our clients prospective who have business that may have a direct sort of -- may would actually be impacted by directly by tariff, I would say that back in 2017, it would be a little bit more challenging for them because it will be the first time they really went through this, sort of like a surprise with tariff.
And then most of them would not as necessary as well-prepared. It took them a few years to get themselves in a position that will be able to figure out how to do with the supply chain. I think, in a way, COVID-19 actually accelerate many of their desires to make sure they have a multiple alternative way to continue to do business in terms as either they are importer of goods from Asian region.
So today, the tariff rate is a particular for China, it's very high, and even for other countries potentially can be high. But I guess all of that will be subject to negotiations. So we at East West Bank trying not to put too much time focusing on the speculation about what the outcome of what we've done back then in 2017, 2018. And we're pretty much just focusing on working with our client one customer at that time, helping these clients that have the right exposure and getting them through.
And fortunately for us, in fact, as we had set at numerous times in our earnings call, our trade finance portfolio did not suffer any losses during those period of time. And so today, very much the similar way, we're still at the size at East West Bank that we can actually engage with our customers one at a time.
In fact, so far, we have already talked to over 500 commercial clients and that have sort of exposure due to the newly proposed tariff. And we feel pretty good with the discussions with these clients and everyone have a different way to manage it. Some of them actually have already slipped substantial amount of their manufacturing base to either other countries or even some of them in the United States for the last few years.
There are some that are just holding back shipments for now and then to see how it goes. And then there are others who have passed the cost, were very much comfortable passing the costs ultimately to the consumers in U.S. And then there are others who actually their products are exempted from the punitive tariffs rates that are currently being proposed.
So many of them are all different scenarios, but we talk to each and every one of these customers and work with them to make sure everybody is in good shape. So as of today, what we notice is that for clients, the commercial clients that have significant potential adverse impact due to tariffs, and they equate to about 1% of our total C&I loan balance portfolio.
So we feel pretty good where we are today. And in terms of potential credit loss as of today, we don't see any at this moment. But we continue to work with our clients on a day-to-day basis, continue to help them through. And we feel that actually, this exercise not only is great for credit risk management for East West Bank, but more importantly, that's how we help build loyalty with our C&I customers.
And, more importantly, I do want to point out that through this process, the likelihood we're going to end up gaining more business from other banks because there are other banks who actually are not as familiar with how they manage the tariffs situation that may potentially trigger disappointment from some of the high-quality clients. So we feel that we may have opportunity going forward in that regard.

Ebrahim Poonawala

Got it. Thanks for the color, Dominic.

Dominic Ng

Thank you.

Operator

Manan Gosalia, Morgan Stanley.

Manan Gosalia

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

Dominic Ng

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

Manan Gosalia

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

Dominic Ng

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

Manan Gosalia

I appreciate that. Thanks so much.

Dominic Ng

Thank you.

Operator

Timur Braziler, Wells Fargo.

Timur Braziler

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

Dominic Ng

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

Timur Braziler

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

Irene Oh

Yes, good question. So the increase in allowance for us was largely based on our increasing the waiting for the downsides. Now, as I said in the prepared remarks, we use a multi scenario for calculating the allowance.
And yes, we haven't closed the books yet in early April. So with kind of the fact pattern that was out there and the market disturbances with the tariffs, we increased the downside scenario. But impact of that was multifold side while we highlighted there for the reserves of the C&I and increase of 7 basis points or $37 million per C&I was a result of that.

Timur Braziler

Great. Thank you.

Operator

Ben Gerlinger, Citi.

Benjamin Gerlinger

Thanks, good afternoon. Appreciate it. Would you take a minute and talk about expenses. I know you, guys, you have a guide of 7 and 9 over 1Q as per your deminimis total change. Just trying to think about how to look at the remainder of the year, the nine months lead-time investments might hit or we should expect for 2Q, 3Qor 4Q?

Dominic Ng

Yes, I think we're still comfortable with the overall guide for expenses for the year. We continue to invest in cyber and technology and enterprise risk and in growing the infrastructure to be a better and stronger bank for our customers. And all of those continue apace. Some will come into play in Q2 and Q3 as technology gets implemented in place in service.

Benjamin Gerlinger

Got you. That's helpful.
And I know you kind of think holistically acquired kind of in a vacuum here, no rate cuts. First quarter had the impact of lowering CD pricing and deposit costs overall. And you also have partial headwind from your derivatives or swaps. When you think about the 2Q, it should naturally work higher, day count included, then you layer in a cut in the middle of the year, that's the headwind? Was that what you're trying to convey, Chris?

Christopher Del Moral-Niles

Yes, I think we naturally expect the balance sheet continue to grow, that will be a positive. The positive from the derivatives that expired have already been recognized. The CD repricing opportunity in a flat rate environment will dissipate towards zero and will be offsetting the balance sheet volume growth will be potentially the risk of a slower growth on one hand then perhaps our expectations, given just how economy might flow, might have there and the potential for write-ups, which at least at March 31 there were two rate cuts baked in. And we have previously said each rate cut is worth $2 million per month. So that's a negative to offset essentially deposit balance sheet volumes of effect. Million per rate cut per month.

Benjamin Gerlinger

Right. Got it. Thank you.

Operator

Matthew Clark, Piper Sandler.

Matthew Clark

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

Dominic Ng

Yes, we have about $10 billion coming due in the next quarter here, Q2, and about $8 billion in third quarter. Rate-wise, most of the things that will stay in the third quarter rollover have just been repriced now, right. So essentially, the stuff that come on the third quarter is all going to be in the low fours, 4 to 4.08, a little bit at 4.18 range. And so the incremental benefit in a flat rate context, 18 basis points. If we see we wanted to rate cut by then, it'll get better.
And then with regard to stuff that rollover here in Q2, it's tough. But generally, we put on the books in December or January that will come due in ordinary course. And that's going to be sort of in the low four's fourth and a quarter areas process.

Matthew Clark

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

Irene Oh

Yes. You know, the increase there was pretty broad based. Some related to, and no concentration, it really honestly from a customer perspective, our relative to the portfolio in the geography, the areas where we had to kind of downgrade to our industrial and largely retail and some of them in our other categories as well, which is broad base. Nothing we saw our thought or saw was systemic at this point.

Matthew Clark

Okay. Thanks for the color.

Operator

Gary Tenner, D.A. Davidson.

Gary Tenner

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

Dominic Ng

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

Gary Tenner

Okay. So that's already kind of embedded in some of the C&I activity in first quarter. Sounds like?

Christopher Del Moral-Niles

Yes, as I mentioned, Gary, we may have been part of that actually in the fourth quarter as well, so that will pull forward of activity. So we probably saw some moving to Q4, some of it here in Q1. And, as Dominic mentioned, we don't expect to see a buildup on the C&I side, at least, of materiality related to that activity at this time.

Gary Tenner

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

Dominic Ng

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

Gary Tenner

Thank you.

Operator

Jared Shaw, Barclays.

Jared Shaw

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

Dominic Ng

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

Jared Shaw

Okay, all right thanks. And then on the hedge strategy, can you maybe give us an update on what the expected sort of volume or appetite is going forward? And then what's the blended risk fixed rate on the existing swap book after that $1 billion rolled off in first quarter.

Christopher Del Moral-Niles

So we've got a lot better. I don't know if we have a blended rate at our fingertips. The next relevant trade that will impact the portfolio is around about $500 million of forward starting swaps, just under 4% that we'll receive fixed on starting in Q3. And for the extent we see breakout in Q3 will place to be in the money on those and access our $500 million early in Q3 and another $500 million later. So that will be a total of $1 billion over the back half of 2025. Again, both with the receive fixed rate at around 4%.

Jared Shaw

Great. Thank you.

Operator

Chris McGratty, KBW.

Christopher McGratty

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

Christopher Del Moral-Niles

So during the first quarter, we continue to mostly by Ginnie Mae floaters, although we did begin to layer in some fixed rate Ginnie Maes. Our focus is all on purchasing HQLA Level 1 securities. So far, in Ginnie Mae's has been sort of exclusively the focus.
Our duration at the end of the quarter basically ended up at around three, and that's a blend of the floaters, which obviously are less than one and the legacy portfolio net fixed that we had and the HFS, the whole portfolio comes out to about three. But again, providing mostly floaters at the short end, we're adding less than one stuff, although incrementally and today, we do see value in the fixed side of the equation at levels above 5.5%.

Christopher McGratty

Okay, great. And then just a clarifying comment. The tariff exposure, you talked about reviewing happen -- 500 million or 500 customers. Was that 1% of the C&I that was a statistic? I missed that before that you were margin a little bit closer.

Christopher Del Moral-Niles

Yes, 1% of the C&I outstanding balances is the portion of the customers that are we know that we're actively engaged, which is why we engage with them and those are the outstanding balances. Again, we're not seeing any of those aren't necessarily a risk, but we know they're actively engaged. There will be impacted to some makes sense.

Christopher McGratty

Great. Thanks, Chris.

Operator

Gary Tenner, D.A. Davidson.

Gary Tenner

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

Dominic Ng

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

Gary Tenner

Appreciate it.

Operator

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

Dominic Ng

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

Operator

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