East West Bank achieves 99% time savings with Payoff Analysis

About East West Bank

East West Bank (EWBC), established in 1973, is headquartered in Pasadena, CA with total assets over $75 billion. They were founded as a federally chartered savings institution that served the immigrant Chinese American community. Led by CEO Dominic Ng, East West Bank is now a full-service commercial bank focusing on the U.S. and Asia markets. They are the leading bank serving the Asian market in the United States.

East West Bank’s Challenges

• Struggled to track payoffs in a timely and automated manner, resulting in approximately 40 hours per month spent aggregating data.  
• Used a manual process of data gathering and compilation to understand where payoffs were going.
• Lacked comprehensive insights on competitor activity as it related to payoffs.
• Relied on publicly available data on payoffs, sometimes only finding 1/3 of the necessary data.

A Unique Payoff Scenario

Gordon Cui, FVP, Mortgage Analysis and Portfolio Manager, spoke with us about East West Bank’s clients and their financial habits. He explained that many of the bank’s clients are non-US investors and buyers and are based in China or other Asian markets.

He said that it’s common for the bank’s clients to pay off mortgages quickly, with many payoffs well below the traditional 30 years.

“We are very unique. We don’t do the traditional Freddie, Fannie loans. We have a big portion of non-U.S. resident borrowers and investors,” he said. “A lot of our customers like to pay the loan off as soon as possible. On average, our customers pay off their loans in less than five years.”

Gordon said that he normally sees between 200 and 400 payoffs per month. His executive team sees these numbers and wants to understand where these clients are going afterward.

“Our senior management are always curious about what happened. Their first concern is, ‘are there any competitors targeting our customers?’ Compared to mainstream banks, larger banks, the runoff is kind of high. Gordon said. “The customer behavior is totally different.”

Gordon had theories, explaining that cultural differences and a unique customer base play a role in the high number of payoffs. But he needed data to prove his theories to management.

“Investors will purchase a home here and sell it the next day,” he elaborated. “Maybe they renovate it and sell for a higher price. So, a lot of our payoffs are due to home sales. Also, a big portion of our payoffs is [from mortgage holders] who have money from overseas or some investment equities, so they just pay off.”

East West’s Goal: Get Away from Manual

Prior to using Payoff Analysis, Gordon was using a manual process to track payoffs. This was as time-consuming as it was disjointed. Each month, Gordon spent roughly 40 hours manually chasing data across different publicly available websites to determine when payoffs occurred and where they went afterward.  

He’d recruit five to six employees each month – employees who already had their own tasks in different business units – to assist as well, when they had time. Each employee would take a couple hours per week – sometimes half a day –to research payoffs, entering their data into a spreadsheet.

Gordon acknowledged how spotty this process is. “We go to real estate websites, and we manually punch in the address. Sometimes, I think we get 1/3 of the data. Sometimes we get no data at all.”    

Gordon noted that while the initial data-collecting process is tedious, he still isn’t done even after he’s submitted his report. Since the data on many publicly available sites aren’t updated instantly, Gordon would spend an additional 10 hours per quarter spot-checking and updating payoff reports.

“A lot of times, we have to wait because the recording data is not immediately available,” Gordon explained. Sometimes I have to wait 90 days, 60 days...maybe one month, two months later to get the whole picture. I’m struggling with not having immediate data available.”

Gordon wanted a new way to report on payoffs: one that was highly accurate and saved time.

Solution Implemented

East West Bank selected Payoff Analysis on the Araya ™ platform to better understand their payoff stats.

Payoff Analysis allows mortgage lenders to track and analyze loans within their portfolio that have been paid off due to sales, refinancing, or other events. Payoff Analysis joins the portfolio of payoffs with Cotality data through our unique CLIP® ID.

Payoff Analysis provides:

• Custom match and append records for property status
• Identification of sold, paid off, or refinanced properties
• Insights into the lender capturing the loans
• Re-capture rate analysis

This solution makes it efficient for the lender to visualize data through dynamic dashboard and map views. This data can be exported with additional insights appended: most recent sale, refinance, mortgage, and release information, and more.

Implementation

Gordon explained that the implementation process for Payoff Analysis on the Araya platform was smooth – a welcome break from the time he had been spending to collect data manually.

“I have to say, it’s a very smooth, a very easy process,” he said. “[Cotality] sent me a template and I filled out the data in the required template format, then uploaded it. [It was] relatively easy.”

“I load the data into the portal, and it doesn’t matter if it’s 1,000 or 2,000 records. I get a result almost instantly,” he said.

Over 99% of Time Savings

Gordon has such impressive time savings, he no longer parses data per month – instead, he spends 30 minutes or so per quarter to run payoff data and another 30 minutes to compile the necessary reports. That’s a 99.17% increase in time savings for Gordon. Over the course of a year, he can save approximately 476 hours a year by eliminating manual payoff analysis.  

Further, he doesn’t have to spend the additional 10 hours per quarter tracking down updated data to complete his reports.

And he doesn’t have to pull time from other employees to research and compile payoff data. By freeing up these employees to go back to their regular responsibilities, East West Bank can save approximately 720 to 1,440 hours per year.

Data for Competitive Intel

Gordon stressed that his C-suite executives crave data, especially payoff data, to make solid business decisions.

“Finally, I got the peace of mind from my senior management,” he explains. “For example, let’s say I see we’re losing more customers to a competitor. Well, if that trend is going up, maybe double-digit next quarter, [that] may raise a question for our management. Maybe we study [our competitor’s] marketing program, or maybe [our customers’] financial needs have changed now. Maybe we offer more alternatives to our customers.”

Gordon explained how Payoff Analysis gives East West Bank a unique tipoff to their competitors early on.    Now, Gordon can see patterns sooner than later and do the appropriate research to better understand where payoffs are going. And it’s not always about rates.

He said if he sees higher numbers each quarter going to a competitor, it could be the result of a few things: a new program, a new sales manager, or something else. But Payoff Analysis gives him timely insight to alert management and make an action plan.

Looking Forward with Payoff Analysis

Gordon sees how Payoff Analysis can help shape strategy at East West Bank – and even surface data to prove that what they’re doing works. He described an instance where he reviewed payoff refinance loans in his dashboard. The total number of refinances initially looked low. When Gordon clicked into the data, he saw that East West Bank had retained about 40% of those refinance customers. While they had lost payoffs to other competitors, those numbers were only in the single digits per competitor.

“I really didn’t lose too much to my competitors. This is the result I expected to see, this is what my manager expected to see,” he explained. “There’s really nothing much we can do because we only lost single digits to our major competitors. We’re in very good shape.”

In this case, Gordon used timely, accurate payoff data to confirm that East West Bank is effectively retaining customers, and that their current outreach strategies are working.

Conclusion

East West Bank struggled to understand the outcome of their payoffs and used a manual system to do so. Payoff Analysis from Cotality provided East West Bank with a stronger picture of their payoffs while saving hours, even days.

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