Dominic Ng - Chairman & CEO Julia Gouw - President & COO Irene Oh - Executive VP & CFO

Dave Rochester – Deutsche Bank Ebrahim Poonawala – Bank of America Merrill Lynch Aaron Deer – Sandler O'Neill & Partners Joe Morford – RBC Capital Markets Lana Chan - BMO Capital Markets Julianna Balicka – KBW

Good morning and thank you for joining us to review the financial results of East West Bancorp for the third quarter of 2014. Also participating this morning will be Dominic Ng, our Chairman and Chief Executive Officer; and Julia Gouw, our President and Chief Operating Officer.

We would like to caution you that during the course of the call, management may make projections or other forward-looking statements regarding events or future financial performance of the Company within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may differ materially from the actual results due to a number of risks and uncertainties.

For a more detailed description of factors that affect the Company's operating results, please refer to our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2013. Today's call is also being recorded and will be available in replay format at www.eastwestbank.com.

I'll now turn the call over to Dominic.

Thank you, Irene. Good morning.

And thank you all for joining us this morning for our earnings call. Yesterday afternoon, we were pleased to report our financial results for the third quarter of 2014.

For the third quarter, net income was $88.8 million or $0.62 per diluted share, compared to the same quarter a year ago, net income increased $15.6 million or 21% and earnings per diluted share increased by $0.09 or 17%. Quarter-over-quarter, we grew net income by $4.8 million or 6% and earnings per diluted share by $0.04 or 7%.

In line with our strong earnings for the quarter, we achieved strong profitability ratios as well. Return on assets was 1.25% and return on equity was 12.8% for the quarter.

In fact, the quarterly return on assets and return on equity ratios were an improvement from both the prior quarter and the prior year period. Our increased earnings and profitability were largely driven by the strength of our balance sheet and our robust growth in loans and core deposits.

Overall, we are pleased with the results for this quarter. Total loans and total deposits up both at the highest levels ever in the history of the bank at $21.2 billion and $23.8 billion respectively.

Total loans receivables increased $4 billion or 23% from a year ago. Our outstanding loan growth is well diversified.

We have achieved strong growth throughout the bank and in all loan categories. Our ongoing efforts to improve the quality of our deposits and our deposits mix continue to progress well.

As demonstrated by the solid deposit growth we continue to achieve. Total deposits increased $3.5 billion year-over-year to a record of $23.8 billion as of September 30, 2014.

Core deposits also reached record high, totaling $17.7 billion as of September 30, 2014. The third quarter of 2014 marks sixth consecutive quarter we have achieved net interest income growth despite the low interest rate environment.

Over the last few years, we have proven that despite a challenging economic and interest rate environment, we can continue to profitability and prudently grow both our balance sheet and market share. Our success in winning new customers and growing our business and market share is a direct result of our unique position as the bridge between east and the west.

We continue to build talent, expertise and infrastructure in serving our cross border customers that are doing business in the US and in Greater China. In Greater China, we have planning for the grand opening of our new branch in Shenzhen in November of this year.

Given the vast size and business opportunities in the US and Greater China cross border market, as we continue to build our capabilities, improve our operational excellence and to meet and exceed the needs of our customers, I am confident that we can capitalize on new growth opportunities and continue our success. With our acquisition of MetroCorp earlier this year in January and the full integration of people, processes and systems, we have made big progress in building the team and talent.

In fact, we have already made strong progress and deposit growth in Texas. Year-to-date, deposit in Texas have grown $125 million or 14%.

East West has proven its ability to generate healthy balance sheet growth, resulting in increased revenue and net interest income, combined with high credit quality and strong expense control, we have been able to achieve strong earnings growth and return levels that are better than many peer banks. Our goal at East West is to consistently be a high performing bank and provide long-term value to our shareholders.

As we demonstrated our ability to perform financially, quarter after quarter, year after year, we are confident that we are making great progress towards our goal. So in summary, based on strong results achieved in the third quarter and year-to-date, at this point, we expect that we will end 2014 as our fifth consecutive year of record earnings for East West.

With that I would now turn the call over to Julia to discuss more detailed of our key successes in third quarter and our expectations for the remainder of 2014.

Thank you, very much, Dominic. And good morning to everyone.

I would like to spend a few minutes to discuss the key drivers for our loan growth and net interest margin for the quarter. Additionally, I will review the guidance provided in the earnings release yesterday for the fourth quarter and the full year of 2014.

As Dominic noted, our total loan portfolio reached a new record high of $21.2 billion as of September 30, 2014, an increase of $694.9 million or 3% from the end of the last quarter. The growth in our loan portfolio was broad based.

We grew all non-covered loan categories by at least 2% during the quarter. In particular, our commercial and industrial loan growth continues to be outstanding.

Non-covered commercial and industrial loans increased $610.4 million or 9% to $7.3 billion during the quarter due to strong originations and fundings in the sectors of manufacturing, entertainment trade finance, and agriculture. On the consumer side, single family loan originations continue to be strong.

We originated 667 new single family loans totaling $316.8 million and a total of 649 home equity loans totaling $217 million in commitment. The growth of the single family loan portfolio to $3.5 billion is an increased of $156.1 million or 5% from the previous quarter.

Additionally, non-covered home equity loans have increased a $130.5 million or 13% quarter-to-quarter to $1.1 billion as of September 30, 2014. The credit quality of our non-covered consumer residential loans continued to be excellent.

As of September 30, 2014, we had $8.3 million in single family and home equity loans delinquent over 90 days out of total balance of $4.6 billion or a 90 days delinquent ratio of 18 basis points. In continuation of growth trends to the first three quarter of the year and for the remainder of 2014, we expect loan growth to be largely centered in the commercial and industrial loan.

Although we expect a loan growth in the non-covered portfolio to continue to be offset by the reduction in the covered portfolio, we project that we can grow the total loan portfolio by approximately $400 million to the last quarter of 2014. Additionally, we sold approximately $300 million of loans during the quarter, largely comprised of government guaranteed student loans at a net gain $7.7 million.

As the student loan portfolio is not a core business to East West, we expect to continue to sell off this portfolio in the coming quarters. Next, I would like to spend a few minutes discussing the net interest income and net interest margin for the third quarter of 2014, and our expectations for the rest of 2014.

Net interest income adjusted for the net impact of covered loan activity and amortization of the FDIC indemnification assets totaled $225.4 million for the third quarter of 2014, this was an increase of $7 million or 3% from $218.4 million in the second quarter of 2014 and an increase of $33 million or 17% from a $192.4 million for the third quarter of 2013. These figures take in to consideration of the net impact of the reduction to the FDIC indemnification asset due to covered loan activity and amortization of the FDIC indemnification asset of $31.6 million for the third quarter of 2014.

For the $8.1 million for the second quarter of 2014 and $61.9 million for the third quarter of 2013. The core net interest margin for the third quarter decreased modestly by five basis points to 3.41% compared to 3.46% for the second quarter of 2014.

The five basis points decrease in the net interest margin was due to the excess liquidity from the deposit growth during the quarter being deployed in short duration assets and the decrease in the investment securities deals. The yield on the non-covered loan stabilized during the third quarter and remained unchanged from the second quarter of 2014 at 4.21%.

Lastly, I would like to provide some additional color on our updated guidance for 2014. As in the past, in our earnings release yesterday, we provided guidance for the fourth quarter and full-year of 2014.

We estimate that the diluted earnings per share for the full-year of 2014 will range from $2.37 to $2.39, an increase of $0.27 to $0.29, or13% to 14% from $2.10 for the full year of 2013. And an increase of approximately 3% from our prior guidance.

This EPS guidance for the remainder of 2014 is based upon adjusted net interest margin of approximately 3.4%, total loan growth of approximately $400 million, provision for loan losses for non-covered loan of approximately $8 million, non-interest expense of approximately $140 million and the effective rate of 17.5%. Management currently estimate that fully diluted earnings per share for the fourth quarter of 2014 will range from $0.63 to $0.65 based upon the assumptions previously stated.

The increase in the fourth quarter guidance from our previously disclosed guidance is due to greater than estimated loan growth in the third quarter, resulting in a stronger adjusted net interest income, combined with the impact of the tax credit investment purchased in the third quarter of 2014. With that, I would now like to turn the call over to Irene to discuss our third quarter 2014 financial results in more depth.

Thank you, very much, Julia. And good morning to everyone.

I would like to discuss our financial result for the third quarter of 2014 in more detail, specifically on credit quality, the accounting for the covered loan, non-interest income and non-interest expense. Starting with credit quality, the total non-performing assets, excluding covered-assets-to-total-assets ratio continues to be under 1% as it has been for over four consecutive years with non-performing assets at $159.1 million or 56 basis points of total assets as of September 30, 2014.

For the third quarter of 2014, the Company reported a provision for loan losses for non-covered loan of $7.6 million compared to $8.9 million for the second quarter of 2014 and $4.5 million for the third quarter of 2013. Net charge-offs on non-covered loans totaled $5.4 million for the third quarter compared to $7.3 million in the second quarter of this year and $334,000 in the prior year quarter.

The Company also recorded a provision of $7.7 million for covered loan during the quarter due to charge off incurred on covered loan for which we expect reimbursement of 80% from the FDIC and accordingly have reported a receivable in the third quarter of 2014. East West continues to maintain a strong allowance for non-covered loan losses of $249.3 million or 1.29% of non-covered loans receivable as of September 30, 2014.

As of September 30, 2014, East West also has recorded an allowance for covered loan of $3.9 million. Further, net of other FDIC related items including the indemnification asset expected to be amortized and the future product liability, the future net pretax income estimated today to be accretive over the life of the loan is approximately $60 million as of September 30, 2014.

During the quarter, we recorded an expense of $6.3 million of additional clawback liability. Under the share loss agreement with the FDIC, if losses in the covered portfolio do not meet specific thresholds, the bank is required to pay the FDIC a calculated amount.

As of September 30, 2014, our total recorded liability to the FDIC for this clawback liability for both the UCB and WFIB acquisition was $96 million. Moving on to non-interest income, East West reported a non-interest income for the third quarter of 2014 of $10.3 million compared to non-interest losses of $14.9 million last quarter and $41.4 million for the third quarter of 2014.

Branch fees, letter of credit fees and foreign exchange income, loan fees and other operating income totaled $35.6 million in the third quarter of 2014, a $1.3 million increase from the previous quarter and a $7.7 million increase in the prior year period. This $1.3 million increase from the second quarter of 2014 was largely due to increases in fee income from letters of credit, customer and foreign exchange, and interest rate swap transactions.

Moving on to non-interest expense, non-interest expense for the third quarter of 2014 totaled $177 million, an increase of $49.1 million or 38% from the previous quarter, and an increase of $76.6 million or 76% from the third quarter of 2013. The increase in non-interest expense in the quarter of 2014 compared to last quarter was largely due to an increase in amortization expense from new affordable housing partnership and other tax credit investments entered into during the quarter and also an increase in legal expenses.

During the quarter, we purchased additional tax credit investments comprised primarily of historic and renewable energy tax credits which resulted in a higher amortization expense during the quarter and a reduction in the effective tax rate to 17.5% for the full-year of 2014, down from our previously estimated 29%. The impact of additional tax credits purchased to third quarter earnings was approximately $0.11 per diluted share.

The non-interest expense guidance for the fourth quarter of 2014 of $140 million also includes approximately $23 million of estimated amortization expense, affordable housing partnership and other tax credit investments. The increase in legal expense during the third quarter of 2014 was largely due to a litigation accrual of $28.8 million or $0.12 per diluted share from unfavorable jury verdict previously disclosed in 8-K filing.

The verdict is not final and if the final judgment is not favorably decided, the Company will appeal. Finally, as stated in the earnings announcement released yesterday, East West's Board of Directors has declared fourth quarter dividend on the common stock.

The common stock cash dividend of $0.18 is payable on or about November 17, 2014 to shareholders of record on November 3, 2014. I will now turn the call back to Dominic.

Thank you, Irene. I would now open the call to questions.

Hey, good morning, guys. Nice quarter.

I wanted to ask about the loan growth first. That obviously continues to be very strong for you guys.

I know you're sticking with the $400 million in growth guidance. But I was just wondering how the loan pipeline looks heading into 4Q, if you've seen similar levels of activity in the pipeline heading into this quarter as you had heading into 3Q.

Well, so far I think we see the pipeline is pretty good. But you know, as always we've always trying to be conservative.

We don't want to just go ahead and over estimate because in the pipeline until the loans get booked, we don't have a loan yet. So no matter how great the strong pipeline is, we always want to make sure that we don't over shoot.

So at this point right now we are pretty comfortable with the $400 million loan growth.

Okay, thanks for that. And then switching to your comments on Texas, you mentioned the deposit growth you've seen so far, it sounds pretty significant.

Can you just update us on the loan growth opportunities you see there as well as how much of a contributor you expect that market to be next year?

Was your question like the --

In terms of how much loan growth you think you could potentially get out of Texas?

Oh from Texas.

In terms of Texas, we actually as of today, we've been building up in terms of recruiting new talent in the commercial banking area. As you recall, our Metro Bank mainly focus on commercial real estate.

And so over 90% of the loan portfolio is in the commercial real estate and then various other real estate loans. And so our first priority is to help the Texas region to step up to originate more C&I loans so to try to get the loan portfolio to, in time gradually resemble the East West diverse portfolio.

So with that regard I think that we are making good progress in terms hiring some new people. We still have many more that we need to hire.

And in terms of system conversions all taking care of and so I think that I would expect in 2015, we should have some nice progress, even as of today if I look at 2014 fourth quarter I have seen some pretty good pipeline in the Texas region. But again, we don't want to just get too excited about pipeline because until these loans get booked, we don't know exactly what the end result is, but at this point right now I would say that I feel pretty confident that we are going to see some decent improvement in terms of not only just loan growth in Texas, but more importantly if that -- it's a different mix of loan growth which is what we are looking for.

And now but from the deposit standpoint, we are very fortunate that demand has been continually going strong. So we have no reason to believe that 2015, we will not have also another good strong deposit growth year

Okay, great. And then just on the expense front.

Can you just update us on how you are feeling about your status on BSA and any other Reg in compliance fronts generally? And if you think you will able to manage expense levels while handling any enhancement that you may need?

We at this time we don't expect dramatic increase in expenses, however, as we continue to grow obviously across the board, not just the front line but operation, in compliance, the cost will increase. However, we don't expect a big jump on the expenses.

Great. And then just one last on the tax rate.

Do any of the incremental strategies you employ in the third quarter carry into next year? And what do you think for tax rate in that amortization expense line?

Yes, Dave. So some of the tax credits we purchased will roll over to next year and the following years.

However, it won't be the same impact that we have in the current year. Right now based on our estimate, we are estimating that tax rate for 2015 year be about 28%, so that gives you an idea as far as what to project.

And then on the amortization expense line?

Yes. It's going to be a little bit confusing because starting next year as well we are going to change the new accounting for the (inaudible) which is below the line, factoring that in I think conservatively maybe a $10 million or so $9 million to $10 million a quarter probably what we are looking at.

Good morning, guys. I am sorry if I missed this but Dominic, I was wondering if you could give a little more color on obviously C&I growth was very strong this quarter, just in terms of sort of where the growth is coming from and just what the competitive landscape looks like and beyond your sort of quarterly growth outlook, how many lookout over the next two to four quarters, just your thought process around growth and different loan types so you are seeing this growth come from?

This quarter, the loan growth comes from all different directions. I mean we are very fortunate, if we look at, I mean this is a kind of ideal growth that I like to see.

If you ask me, I think 2015 I wish I can do exactly the same just like the third quarter. Let me share with you why because we have very strong C&I growth, actually C&I have the strongest growth which is what we wanted.

We also have decent momentum from commercial real estate and in addition to that in our single family and home equity line category, we also have some nice decent growth. So it is really growth coming from all different categories.

And I think that from our perspective, if we look at 2015, the growth will pretty much I think based on what the market would bear because as we've always seen so far in 2014 is that the banking industry getting more and more competitive, pricing getting lower and lower. So we actually did not have much expectations about growth in terms of -- from the commercial real estate area simply because there are too many players out there doing long-term fixed rate along with the hedging and pricing is very low.

And some of these pricing have gone so far down to the bare bone that we decided that it's not even profitable for us to pursue. So that I think if the trend continue assuming that if the economy is slowdown little bit and then the industry is not going to go up sooner then I think that we will be expecting their commercial real estate category will not have the type of growth that we will hope, that we will get.

But in terms of C&I, I am pretty confident that we will be able to do just fine. The reason is that we have a very unique value proposition.

We are the one and only bank sort of in a country to focus on having the expertise and helping companies in US and China working together. And clearly our industry specialization from hi-tech, clean tech, bio-tech, private equity, entertainment, agriculture, aviation, etcetera have allow us opportunities many of the other banks that would not be able to do because of our tack on special expertise, in terms of understanding how to do business between US and China.

And I think we naturally will always get clients they come to us first instead of the others and our capability of having the ability to do banking in the Chinese currency also makes us substantially more attractive as to banker, of course some of these organization who do need to open account in the Chinese currency in China. Only we open account in Hong Kong and so forth.

And I think with that I would expect that East West should have an above average growth compared with the -- compared with our peers who are more in the generic banking business in US. So I think with that in mind, I think we still expect 2015 that we will have some decent loan growth.

Now except in this real estate high, we will have to see how it all plays out. But frankly, we still even on the real estate side get some help because of our expertise in US and China.

Because with those folks that coming out from China to invest in real estate, that many of them also have a presence to come to East West first and clearly if I look at the single family mortgages growth that we have, many of those customers are first time buyers coming out from foreign country and investing in single family properties in US with the substantial high down payment. So we think that as long as that trend continues, we should be able to do fine.

Understood. Thanks for that color.

And on a separate topic, could you just remind us in terms of capital deployment priorities? Like should we think of any buybacks over there for a foreseeable future or is it just the idea to fund organic growth and also be opportunistic on M&A?

We first of all always have small philosophy that we want some cushion in our capital, and we've always leave money on the table. I mean we try not to over leverage.

And so with that in mind so that I mean I think that we have a pretty decent capital ratio at this point. And there is no point for us to aggressively to do buyback and then sort of like decrease the capital level because that would be not prudent according to the East West long-term philosophy.

And so based on that in terms of acquisition, for my view is that there not a whole lot of growing opportunity out there. But if we see one that is great.

We always ready to deploy. We have the people; we have the capacity that can do that.

However, there just not a whole lot of meaningful opportunity out there. So I would at this stage will say that acquisition, a meaningful acquisition in 2015 is probably not very unlikely.

Hi, good morning, everyone. So first question on the loan sales.

It sounds like you are going to continue to sell from the student loan balances, so I wondered if you could provide what those student loan balances were at September 30 and maybe kind of what's your expectations is for the pace of those sale.

So, Aaron, if you look at our balance sheet or the detailed that we provide on the loan receivable, all the loans that are held for sale $240 million or so are government guarantee to that loan and then additionally in held for investment portfolio, we probably have about $80 million or $90 million or so as Julia mentioned in the prepared remark this something that we expect to exit over the coming quarters. So I would also say that the sale of those would be over the next, in coming quarters, that's our plan right now.

Okay and then on the -- I saw that you did the resale agreement in the quarter. I am wondering if that's -- does that effectively extend the duration that lower the cost of the funding that offset and is there any other changes that where you are planning to make any other changes on the funding side that could impact the margin going forward?

Yes. Actually, it doesn't do either of those.

It's just netting, a master netting agreement because of the same counterparty. So it's really just optics on the balance sheet.

It's just an accounting to rule to net it as opposed to grossing it up with the investment and liability.

Okay. Are you looking to make any other changes on the funding side with -- obviously you have very strong deposit growth so I don't necessarily say the need for, so I just wanted to know if there is any plan to do other things along those lines?

Not at this time, yes. Some of the repos will start rolling off next year, so you will see some change there.

But nothing actively at this point.

And with the tax credit that you have added. How far off are you from hitting like the corporate alternative minimum tax rate?

Is that --

I don't think it's an issue.

Thanks, good morning, everyone. With the loss share for UCBH lapsing in November, can you just remind us one impact if any that may have on the reported margin?

Either here in the fourth quarter or in the first quarter of 2015 which will be the first full quarter without it?

So, Joe, we -- with the loss shares agreement with FDIC, so it will continue on before the fourth quarter. So aside from any kind of major change, I think our adjusted margin that the guidance that we gave and then also the way that we are accounting for and reporting that should not be that different from what we had in the third quarter.

Staring with the first quarter of next year, I would say there are two changes. One, as the year progress, the amount of accretion left on this covered loan is coming down, and then two, over the course of the last few year particularly more recently as it has been more clear that the actual loss content is low on the portfolio, we've been writing off the indemnification asset and as you know we have been offsetting that to show the adjusted margin.

So since we've already written off the FDIC indemnification asset, we won't have that offset, which is positive, which would improve the margin, but all in all there will be less accretion also in the future as well. So that's -- right now the additional kind of pretax income that we are estimating related to the covered loan is about $60 million, all-in.

$60 million, okay. And then I guess that was helpful.

The other question was guess you talked earlier about the Texas market. I just wondering if you could give us an update on how your business is evolving in the New York market place from historically where you were more thrift like to now also do more the commercial banking and do you have the team of lenders that you want to adequately serve their market?

New York actually is scoring well. In fact, we are hoping that Texas some day will be like New York in terms of the commercial banking capability.

We for the last five years, obviously the first sharing I mean in 2010, we really we just cleaning up the New York region, it was at the time when United Commercial Bank acquired was pretty much like a thrift in the all consumer retail branches business. And with loans mainly in construction lending.

We have changed that. And I think it took us a couple of years to turn around and because also by the way there was a lot of construction problem loan that we have to clean up.

So that was a distraction to ability to focus on growth. But I would say for the last two years where we've recruited some very, very good talented commercial bankers.

And they have developed a pretty good reputation so far in terms of generating good business and I would say New York this year have done a pretty good job in terms of growing both C&I loan growth and also the commercial deposits. So the deposit growth has been very strong.

And that the loan production has been very healthy. So I expect that New York region will continue to expand in 2015 and beyond.

Thanks, good morning. Couple of questions.

One on the deposit growth in Texas. Is the pricing in that market similar or different to your other market in California and New York?

Well, we have to keep in mind we at Metro Bank they were primarily in to ethnic, the Chinese American or the Asian American retail market. So that tends to be a bit more competitive because they are lot more many, a lot more CDs than traditional commercial bank.

So the rates were higher. We actually went in and substantially lower the rate and trying to have it to be in alignment with East West Bank rate.

And in addition to just dropping the rate which obviously results in some high rate CDs leading East West to go to other competitive Chinese American bank that all have a much higher rate. But in addition to substantially lower the rate, we also able to increase the deposit total.

What's the difference is that East West; we have built expertise in commercial deposits more complex in demand deposit, operating accounts for bigger institutions and businesses. And we were able to offer more complex product offerings of low cost commercial deposit.

So that's why we have a pretty good growth in the deposit on the commercial side in Texas.

I'll put it another way is like it's not like here come East West to Texas and then we offering high rate promotion so that we encourage our existing customers to put more money into their CD because the rates even better. In fact, quite a contrary.

We have some existing customers who complained and basically were disappointed that here come East West and then we instead of like giving them more goodies and then we drop the rate, and then some of them decided that they rather would go to other banks that offer higher rate. And there are banks out there who saw a golden opportunity to capitalize on East West dropping rate and then they are offering a higher rate and sold like -- attract these customers took over to the other side.

However, we weren't concerned about it because our view is that if customer always want higher rate in the market, eventually our margin will always be lower than the market, and then we'll always perform below the peer average. And that's not going to be consistent with East West Bank's philosophy that we always consistently performed in the top compared with our peers.

So what we did was as Julia mentioned, we offered substantially more product, we are going after much larger customers, commercial customers. And by going after larger commercial customers, who are used to getting low rate from the larger banks and then suddenly our rate is not look unattractive and our co capability in terms of product and so forth are strong.

But we have this sort of smaller bank relationship mentality that some of the major banks are not able to do. So that we are able to do bring in new customers to have substantial bigger size deposits to make up for the difference of the outflow of the high rate CD retail customers.

So that is really a mix-- in flow, out flow mix that add up to that $125 million of deposit or 14% growth of our total deposit balance in Texas.

Okay, thank you. Also just curious a little stability of the loan yield this quarter.

On the resi mortgage and the home equity, what kind of loan pricing are you getting on those or did you get on those in the third quarter?

On the average it has been stable about 4.5% on that single family and home equity. So it really helps into muscle loan yield.

If for the portfolio is 4.21% so we feel about for the time being it probably is going to be quite stable. And which is really good because last year, the last few years we continue to see decrease in the loan yield, but we hope that it stabilize at around this level.

Okay and just one last clarification. Just trying to understand in terms of the accretable yield or versus the kind of accretion that clawback liability expense that $6.3 million this quarter, does that go away next year?

No. That doesn't.

So the $6.3 million this quarter is actually expense line as of the end of September, we have $96 million that we have accrued, but just the way the calculation work, when we run different sensitivity analysis, in future even though it extend drawn on the payment is five years from now, when we run different sensitivity analysis, the impact of it and the increase in the clawback continue to be diminished, after this quarter, the next quarter the fourth quarter.

It should be significantly less you think.

Yes. Most of the factors that change the calculation are really kind of baked in.

But the losses up until now etcetera, so I can go into more detail with that, with you offline if you like but after the fourth quarter we expect there will be much less impact.

Good morning. To kind of continue on the deposit conversation.

One, in terms of the MMDA growth that you have this quarter which is very strong around good non-interest and deposit growth. Could you talk about some of the concentration or the verticals of deposits that you have and specifically to qualitative color behind the MMDA, their money market growth, how we should be thinking about that?

When eventually rates rise? How sensitive to rates those deposits will be and or to the velocity of real estate transaction or other such factors.

Well, the money market is the excess liquidity the companies are putting, they keep the operating account in the demand deposit but if they have excess liquidity because right now a lot of companies have a lot excess liquidity, so when it comes to interest rate, it won't go up, it may not be dollar to dollar with the market interest rate. But in money market will go up along with the market rate, and at that time it depends.

Some companies if they reinvest in other things, it may decrease their money market excess liquidity but some of them may continue to keep the excess liquidity, but for us like as I mentioned before, we really have built our capabilities on the commercial deposit service, commercial client and a big institution, in various industries where we do believe that we will continue to be able to grow that deposits. It would be different like new customers that we will be acquiring and continue to deepen our capabilities to serve many different specialty in deposit that we will be able to get in the future.

That makes sense. And in terms of the industries in which you have specialization, could you give us an example of ones where you have concentration and or more discernible verticals other than just probably C&I?

Yes. We built capabilities in fiduciary services deposits, trust account, property management, and escrow title.

So there are various municipalities, so there are a lot of commercial deposits out there within the different specialization and industry. So as we built our capabilities and penetrate deeper, so each industry we are able to get more and more because of our relationship, our service and our no how what the needs are in that industry.

And also they are industries that are relevant to the rich banking in terms of US, China related. They are -- for example, from the entertainment business and also from fund equity, venture capital and technology business area, these are the type of business that tend to have pretty significant deposits, a good example would be private equity fund and also like this hi-tech VCs and then also the technology companies, many of them have pretty decent size of liquidity which they use to keep in their money market account.

And in addition to that, studios that make television shows and movies, that we get collection accounts, I mean from the money coming from once that the movie is released. And so we continue to be able to enjoy deposit growth because the more business that we build in these arena, the more deposit we get.

And Juliana, I would add, Dominic and Julia both kind of share the different areas where we built expertise, but we don't have real concentration in one type of industry more so than other. It's pretty broad based and we have limited as far as how much we will take from each industry as well.

So I just wanted to share that with you. That we don't have a concentration issue.

Good point. Thank you very much for all that color.

And I have one more follow up then. In terms of your loan to deposit ratio, is there a loan to deposit ratio that you are comfortable operating at?

Or how do you see about loan and deposit growth in balance sheet leverage?

We are comfortable like between 90% to 95%, slightly below a 100%. I think that would be probably an ideal loan to deposit ratio for us.

Well, thank you. Well, again thank you for joining us today.

And I look forward to speaking to you in January. Good bye.