Q1 2021 Cathay General Bancorp Earnings Call
At $10 1 million commercial real estate loans in northern California that was placed on non accrual during the first quarter of 2021.
The latter of which is in the process of being refinanced by another lender.
Our total oil and gas loan portfolio as of March 31, 2021 was $120 million and this $18 8 million was the only loan greatest sub standard.
Please see page 11 of our earnings presentation.
As permitted under the Coronavirus aid relief and economic Securities Act the cares Act.
As extended by the consolidated Appropriations Act of 2021, the company has chosen to adopt the current expected credit losses methodology for estimating credit losses as of January one 2021 of.
The adoption of <unk> on January one 2021 increased the allowance for loan losses by $13 9 million and the and the reserve for unfunded loan commitments by <unk> 5 million.
We recognized the reversal for credit loss of $13 6 million in the first quarter of 2021 as compared to a $5 million reversal of provision for loan losses in the fourth quarter of 2020.
The reversal of for credit losses of $13 6 million reflected the improvement in the economic forecast made in March 2021, compared to the forecast meeting December 2020 by the economic forecasts are using our <unk> process.
Turning to slide 12, total average deposits increased by $259 million or one 6% during the first quarter of 2021.
Average time deposit decreased by $283 million or for 2% due mainly to the run off of.
Broker Cds.
With that I'll turn the floor over to our executive Vice President and our Chief Financial Officer Heng Chen to discuss the first quarter 2021 financial results in more detail. Thank.
Thank you Chang and good afternoon, everyone for the first quarter of 2021 net income increased by $2 5 million or three 5% to 70 to $73 4 million compared to the fourth quarter of 2020.
The increase was primarily attributable to the reversal of <unk>.
Provision for credit losses, and higher and higher net interest income.
Our net interest margin was three 2%.
In the first quarter of 2021 as compared to three 2% for the fourth quarter of 2020.
There were $2 7 billion of loans at the floor rate as of March 31, 2021.
In the first quarter of 2021.
Recoveries from prepayment penalties.
The two basis points.
To the net interest margin as compared of four basis points for the fourth quarter of 2020.
Approximately $1 2 billion and $1 6 billion of Cds.
We will mature during the second and third quarters of 2021.
With average rates of <unk>.
6% to 8% and 84% respectively.
We are targeting renewing retail Cds and the 40 to 50 basis point range.
Given the results of the first quarter of.
2021.
We are increasing our expectations of our net interest margin for 2021.
Five basis points.
To be between three point too low.
233.
Non interest income during the first quarter of 2021 increased by four.
For 2 million to $10 $10 million when compared to the first quarter of 2020, primarily due to losses of equity securities.
Non interest expense increased by $6 2 million of nine 6% to $71 four.
$4 million in the first quarter of 2021.
When compared to $65 2 million in the same quarter a year ago.
There was a gain on sale of other real estate owned of $4 5 million during the first quarter of 2020.
Excluding the other real estate owned gain non interest expense only increased by $2 1 million or 3%.
The comparing first quarter of 2021, the first quarter of 2020.
The increase was primarily due to $1 8 million in higher salary and benefit expense.
And $1 million and higher marketing expense.
From a donation to the stock <unk>.
John Payne.
Offset by a decrease of $2 3 million.
And the amortization.
In the lower.
Low housing.
Low income housing and solar tax credit funds.
The effective tax rate for.
For the first quarter of 2021 was 21, 9% from.
Periods of 12, 7% for the fourth quarter of 2020.
We expect the full year 2021, the effective tax rate to be between 21, 5% and 22, 5%.
So the tax credit amortization was $5 million in the first quarter of 2021.
And this is expected to be $3 million in the second quarter of 2021.
And non thereafter.
For the second half of 2021.
As of March 31, 2021, our tier one leverage capital ratio increased to 11, 6% as compared to $10, 94% as of December 31, 2020, our tier one.
The space capital ratio increase for key 94%.
From 13, 5% by 2% as of December 31, 2020.
Total risk base cash.
Capital ratio increased to $15, 84% from.
From $15 four of 5% as of December 31, 2020.
In April 2021, we announced a $75 million share repurchase program.
Thank you Heng, we will now proceed to the question and answer portion of the call.
Ladies and gentlemen, we have a question at this time. Please press the one key on your Touchtone telephone.
Could you please limit yourself to a question of follow up questions. You May dam returns for the Q, maybe a question for Anthony wished for movie start from Mchugh is part of the Apache.
Any background noise, we ask that you. Please place yourself on mute what's your question at this day.
One moment please.
Our first question comes from Matthew Clark of Piper Sandler Your line is open.
Hey, good afternoon.
Yes.
Maybe just first on the Ameren.
Amortization going forward any guide on the low income housing the amortization as well.
It should be constant.
Alright.
I think for.
Sure.
We're guiding to the bus.
Bob.
The $6 6 million per quarter.
So so that it should be the same for.
For the rest of the year.
Okay great.
And then the contribution from PPP and net interest income this quarter and I guess, how much do you have left including round two.
A total of $9 9 million at the end of March.
Okay, and you have the contribution in <unk>.
While the.
I think I've mentioned the EMI.
It was.
If you did that's okay I can the Quebec.
Yes.
Yeah.
Well thanks.
All of card utilization.
Okay, and then just the.
Just one more from me if I may.
On the the level of the reserve.
How low are you willing to go and kind of of post Cecil World I mean, I assume youll continue.
Moving to grow into these reserves, but.
What's the kind of your minimum threshold that you are willing to run the bank debt.
Uh huh.
It's for a formula driven.
Matthew and the.
So we don't know what the <unk>.
Answer is I think undersea so the.
Of the quantitative portion is.
Most of the reserves so the seasonal reserve when times are for a good could be lower revenue the incurred loss model.
And then we got the April Moody's forecast.
And act.
For example, the forecast of unemployment is already better.
For the rest of the year than what they are forecasting in March.
So those.
There is a tendency for for lower.
For a lower reserve.
Got it okay. Thank you.
Yes.
Thank you. Our next question comes from Chris Mcgratty of <unk>. Your line is open.
Great Hey, good afternoon.
I'm interested in an update on how you guys are thinking about.
The core loan growth from here, excluding the impact of PPP and whether based on your revised.
Higher margin outlook.
The expectation for net interest income over the balance of the year.
As far as sort of loan growth and excluding PPP, we had a number of borrowers that paydown of paid all of the borrowings during the first quarter. So as the economy recovers and the consumer demand increases we believe that the loan demands will increase accordingly, so as such we still expect that the loan growth for the full year of 2021 is going to be between 3% to 5%.
Part of that also we believe that mortgage pay also will start to slow as the interest rates continue to rise.
Okay.
Yes, Chris could you repeat the second part of that question I think that was for me.
I guess I'm, just trying to figure out what your expectation is for.
Cash and securities and how that contributes to net interest income growth, whether you expect deposit retention to be.
Tires youre going to continue to run off from non core deposits.
Yes, we have the limit the amount of brokered Cds that.
That will mature.
For the rest of the year.
The.
There's a couple of hundred million dollars in the fourth quarter.
It's it's the.
About $150 million per quarter, but one of the things is.
We.
We held off on buying much in the way of mortgage backed securities.
Because.
Certainly in March it looked like the.
The.
The longer term for interest rates, where really the Lego golar for a much and.
So in the second quarter, we expect to.
We have started.
By NPS.
And so that will use up some of our excess of quality and will continue debt.
By.
The $150 million or so of MBS.
Each quarter.
That our securities portfolio will begin to decline.
From moderate over the years, yes.
Yeah.
Great. Thanks, a lot of it.
Sure.
Thank you our net.
Next question comes from Gary Tenner of D. A Davidson your line is open.
Thanks, Good afternoon.
I just wanted to ask.
I think last quarter. You said you are holding off for any additional investments in the solar tax credits due to uncertainty over over the kind of the tax outlook with the by the administration.
If you were to not invest at all and.
The <unk> amortization in 2022 for the full year.
Or do you think that that would result in your effective tax rate for your out assuming at this point no changes in the corporate tax rate.
How do you look at more out of the EPS impact, it's about five or six of share, but our plan is to.
Go back into that market in the fourth quarter for for Q1 funding.
Okay.
Thank you and then.
Just one more question on PPP could you give us the average PPP loans outstanding for the quarter.
We'll have to get back to you on that Gary.
Yes. It was in February of March.
And the forgiveness was.
For the.
For the linear but.
I'll call you on that.
Okay.
Okay.
Great. Thank you very much sure.
Thank you. Our next question comes from David <unk> of Wedbush Securities. Your line is open.
For you starting.
With a follow up on the Securities purchases, you mentioned of $150 million per quarter. I was curious how much cash is coming back to you per quarter.
I'm wondering how much net growth in the securities portfolio, we should expect.
It's about.
I would say.
Mds is about $75 million per quarter.
Okay.
What are your thoughts about kind of accelerating the the purchases it does seem like the.
Of the balance sheet has.
Plenty of excess liquidity to perhaps be a little bit more aggressive in.
The early.
Next few months and then kind of slow. It later or are you kind of viewing it from an interest rate standpoint that you don't want to go.
Go too fast in case interest rates move up and you want to kind of dollar cost average and can you give any comments related to that.
We're in the latter category.
We've been for conservative on the amortization of the PPP fees.
So on this round two.
We're.
Amortizing.
The loans under 150000.
Well, we're amortizing for the fees of over 18 months.
For the ones that are over 150000, we're amortizing of well over five years of contractual so I think there is going to be more more forgiveness.
In the second half of the year from <unk>.
Round two PPP.
Got it thanks for that and then.
Your capital ratios are pretty strong here.
And you mentioned about the $75 million buyback authorization can you talk about your appetite.
And sort of timeframe of of putting that to work.
First were going up.
Buyback stock that's issued for.
For our shoes.
And forgive them reinvestment and then.
If.
If there.
There is the lot of volatility for bank stocks. So during periods of weakness, we would we would look to buybacks of them depending on the on the price.
Got it makes sense, thanks very much.
Thank you.
Thank you again ask the question. Please press Star then one on you touched on the telephone.
Our next question comes from Matthew Clark of Piper Sandler Your line is open.
Yes.
Yes.
Yeah.
Just had a question on that other fee income increase I think it was up $1 million.
On a core basis, not the wealth management piece, but the the other fee income just wondering if that's sustainable.
Sustainable or non fat.
It's a one time.
The gain Matthew we have a investment in the CRA fund.
And so.
That gain at Watson low income housing anyways.
We.
We were able to realize the gain in the first quarter and so we book that in other income.
Okay.
Okay, and then any updated thoughts on just your core expense outlook, excluding the amortization and any other noise.
Tom.
For last year for this year.
Well.
We continue to actively manage that.
Well.
We have two branches that we're closing in June.
So there'll be some expense savings there.
And then.
We continue not to replace.
Officers on the SaaS side.
What we can and then.
<unk>.
Because of our.
Income for the first quarter is higher than we had budget a certain amount for a loan loss provision this year.
Given the negative Q1 provision in the.
Likelihood of for a low provisions for the rest of year were going to have.
A couple of million of higher bonus accruals throughout the year so of that.
That's kind of be.
That's what we see.
Okay, great. Thank you.
Thank you.
Thank you also of note credit questions at this time at the turn the call back over to management for any closing remarks.
I want to thank everyone for joining us on our call as we slowly return to normal from the from the pandemic. We look forward to speaking with you at our next quarterly earnings release call.
Thank you for your participation and all of that.
Thank you for joining the call today ex.
Ladies and gentlemen, thank you for participating in the today's conference. This concludes the presentation. You may now disconnect have a great day.
Yes.
Yeah.
Okay.
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Okay.
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Good afternoon, ladies and gentlemen was of the Cathay General Bancorp first quarter 2021 of our New conference call. My name is Valerie and I'll be your coordinator for today at this time opposite sort of thought of it looks a lot of that part of the prepared remarks, there will be a quick summary of the session if you'd like to participate in the portion of the call. Please press star followed by.
One of it any time during the conference.
If it just doesn't need of any time during the call. Please press star followed by the Bureau of coordinator will be happy to assist you.
Today's call is being recorded and will be available for replay at www Dot Cathay General Bancorp backhaul.
Now, let's turn the call over to Georgia Lo Investor Relations of our cafes Bancorp.
Thank you Valerie and good afternoon here to discuss the financial results today are Mr. Chengdu, Our president and Chief Executive Officer, and Mr. Heng, Chen our executive Vice President and Chief Financial Officer before we begin we wish to remind you that the speakers on this call may make forward looking statements within the meaning of the applicable provisions of the private sick.
<unk> Litigation Reform Act of 1995 concerning future results and events and that these statements are subject to certain risks and uncertainties that could cause actual results to differ materially.
The results and uncertainties are further described in the company's annual report on form 10-K for the year ended December 31, 2020 and item one day in particular, and then all of the reports and filings with the Securities and Exchange Commission from time to time as such we caution you not to place undue reliance on such forward looking statements any forward looking for.
Statements makes the only as of the date on which it is made and except as required by law. We undertake no obligation to update or review any forward looking statements to reflect future circumstances developments or events or the occurrence of unanticipated events. This afternoon, Cathay General Bancorp issued the earnings release outlining its first quarter 2000.
'twenty one results to obtain a copy of our earnings release as well as our first quarter earnings presentation. Please visit our website at Www Dot Cathay General Bancorp Dotcom after comments by management today, We will open up this call for questions I will now turn the call over to our President and Chief Executive Officer, Mr. Chengdu.
Thank you, Georgia and good afternoon, everyone.
Welcome to our 2021 first quarter earnings conference call.
While we acknowledge our first quarter operating results our commitment and focus today is on continuing to support our clients team members and communities during the COVID-19 pandemic.
This afternoon, we reported net income of $73 4 million for the first quarter of 2021, a three five per cent increase as compared to a net income of $70 9 million for the fourth quarter of 2020.
The earnings per share increased 55, 9% to 92 cents per share for the first quarter of 2021 compared to 59 per share for the same quarter a year ago.
In the first quarter of 2021 of gross loans increased by $7 5 million to $15 7 billion.
The increase in loans for the fourth quarter of 2021 was primarily driven by an increase of $93 5 million or 39% and paycheck protection program loans.
During the first quarter of 2021 were originated $142 4 million of PPP loans and $48 $3 million of PPP loans were for Kevin.
As of March 31st 2021, $36 $2 million of PPP loans have been submitted to the government for forgiveness review.
As of March 31, 2021, our deferred PPP loan fees were $9 9 million.
We continue to monitor all commercial real estate loans, turning to slide seven of our earnings presentation as of <unk>.
March 31st 2021, the weighted average loan to value of our CRE loans was 51 per cent.
As of March 31st 2021, CRE loans with an aggregate balance of $56 million or approximately 0.7% of our CRE loan portfolio remain on loan modifications to provide relief on the payment terms.
As of March 31st 2021, our retail loan portfolio comprises 32, 3% of our total commercial real estate loan portfolio and 11% of our total loan portfolio.
The majority 61% of the $1 73 billion in retail loans are secured by neighborhood mixed use or strip centers and only 10% of secured by shopping centers.
No retail CRE loans still under loan modifications as of March 30 for 2021 now total loan modifications as of March 31st 2021 for all loan categories, what's left of 1% of of.
Total loans.
For the first quarter of 2021.
We reported net charge offs of $7 8 million compared to net charge offs of $7 6 million in the fourth quarter of 2020.
Our first quarter charge offs included two commercial loan charge offs totaling $7 8 million from our Hong Kong office.
Non accrual loans increased by $26 8 million to $94 4 million or 39, 5% of period end loans as compared to the end of the fourth quarter of 2020.
The increase was primarily due to <unk>.
The $18 8 million of oil and gas loan that was placed on non accrual one of an additional secondary financing sell through and a $10 1 million commercial real estate loan in northern California that was placed on non accrual during the first quarter of 2021.
So a lot of which is in the process of being refinanced by another lender.
Our total oil and gas loan portfolio as of March 31st 2021 was $120 million and this $18 8 million was the only long wait of sub standard.
Please see page 11 of our earnings presentation.
As permitted under the Coronavirus aid relief and economic Securities Act, the cares Act and as extended by the consolidated Appropriations Act of 2021. The company has chosen to adopt the current expected credit losses methodology for estimating credit losses as of January for Us 2021 the.
Option of Stifel on January 1st 2021 increased the allowance for loan losses by $13 9 million and the and the reserve for unfunded loan commitments by <unk> 5 million.
We recognize the reversal for credit loss of $13 6 million in the first quarter of 2021 as compared to a <unk> 5 million of reversal of provision for loan losses in the fourth quarter of 2020.
The reversal of for credit losses of $13 6 million reflected the improvement in the economic forecast made in March 2021, compared to the forecast made in December 2020 by the.
Economic forecasts are using our <unk> process.
Turning to slide 12, total average deposits increased by 259 million or one 6% during the first quarter of 2021.
Average time deposits decreased by 283 million or for 2% due mainly to the run off of.
Broker Cds.
With that I'll turn the floor over to our executive Vice President and our Chief Financial Officer. Thank Shang to discuss the first quarter 2021 of financial results in more detail.
Chang and good afternoon, everyone for the.
The first quarter of 2021 net income increased by $2 5 million of three 5% to 70 to $73 4 million.
For the fourth quarter of 2020 the.
The increase was primarily attributable to the reversal of provision for credit losses, and higher and higher net interest income.
Our net interest margin was three 2% in the first quarter of 2021.
As compared to three 2% for the fourth quarter of 2020.
There were $2 7 billion of loans at the floor rate as of March 31, 2021 and the.
The first quarter of 2021.
Interest recoveries from prepayment penalties.
The two basis points to the net interest margin as compared to four basis points for the fourth quarter of 'twenty 'twenty.
Approximately $1 2 billion and $1 6 billion of Cds.
Will mature during the second and third quarters of 2021.
With average rates of <unk>.
Six 8% and point of eight 4% respectively.
We are targeting renewing the retail Cds and the 40 to 50 basis points range.
Given the results of the first quarter of.
2021.
We are increasing our expectations of our net interest margin for 2021.
Five basis points.
To be between three point too low.
233.
Non interest income during the first quarter of 2021 increased by.
For 2 million to $10 $10 million.
Compared to the first quarter of 2020.
Primarily due to losses of equity securities.
Non interest expense increased by $6 2 million of <unk>.
The nine 6% to $71 four.
$4 million in the first quarter of 2021.
When compared to $65 2 million in the.
Same quarter a year ago.
There was a gain on sale of other real estate owned of $4 5 million during the first quarter of 2020.
Excluding the other real estate owned game.
Non interest expense only increased by $2 1 million of 3%.
The comparing first quarter of 2021, the first quarter of 2020.
The increase was primarily due to $1 8 million in higher salary and benefit expense.
And $1 million and higher marketing expense for.
From a donation to the stock Asian campaign.
Of that by a decrease of $2 3 million.
And amortization.
And the lower.
The low housing.
Low income housing and solar tax credit funds the.
Effective tax rate.
For the first quarter 2021 was 21, 9% from.
Imperative of 12, 7% for the fourth quarter of 2020.
We expect the full year 2021, the effective tax rate to be between 21, 5% and 22, 5%.
So the tax credit amortization was $5 million in the first quarter of 2021.
And this is expected to be $3 million in the second quarter of 2021.
And non thereafter.
For the second half of 2021.
As of March 31, 2021, our tier one leverage capital ratio increased to 11, 6% as compared to $10, 94% as of December 31 2020.
Tier one.
The space capital ratio increased to 94%.
From 13, 5% five 2% as of December 31, 2020.
Total risk base.
Capital ratio increased to $15, 84%.
From $15 four of 5% as of December 31, 2020.
In April 2021, we announced a $75 million share repurchase program.
We will now proceed to the question and answer the portion of the call.
Ladies and Dallas, we have a question at this time. Please press the one key on your Touchtone telephone.
Could you please limit yourself to a question of follow up questions do they then returns for the Q, maybe a question for Anthony wished for movie start from the Q is part of the parakeet where for.
For any background noise, we ask that you. Please place yourself on mute. What's your question goes to the state.
One moment please.
Our first question comes from Matthew Clark of Piper Sandler Your line is open.
Hey, good afternoon.
Yes.
Maybe just first on the amarin.
Amortization going forward any guide on the low income housing the amortization as well.
It should be constant.
Hi.
Thank for.
Uh huh.
We're guiding to the bus.
Yeah.
Bob.
Uh huh.
$6 6 million per quarter.
So so that it should be the same for.
For the rest of the year.
Okay great.
And then the contribution from PPP and net interest income this quarter and I guess, how much do you have left including round two.
The total of $9 9 million.
The end of March.
Okay and do you have the contribution in <unk>.
Well the.
I think I've mentioned the in my.
It was.
If you did that's okay I can go bad.
Yes.
Okay.
Sure.
Okay.
Of course with it.
Okay, and then just the <unk>.
Just one more for me if I may.
On the the level of the reserve.
How low are you willing to go and kind of of post Cecil World I mean, I assume you'll continue to grow into these reserves, but what's the kind of your minimum threshold that you are willing to run the bank debt.
Uh huh.
For a formula driven.
Matthew and the.
So we don't know what the answer is I think under Cecil the.
Of.
The quantitative portion is.
Most of the reserves so the seasonal reserve when times are for a good could be lower as of the incurred loss model.
And then we.
We got the April Moody's forecast.
And at <unk>.
For example of their forecasts of unemployment is already better.
For the rest of the year than what they are forecasting in March.
So so those years of <unk>.
Tendencies for for lower for.
For a lower reserve.
Got it okay. Thank you.
Yes.
Thank you. Our next question comes from Chris Mcgratty of Kb Debbie Your line is open.
Great good afternoon.
I'm interested in an update on how you guys are thinking about the <unk>.
Loan growth from here, excluding the impact of PPP and whether based on your revised.
Higher margin outlook.
The expectation for net interest income over the balance of the year.
As far as sort of loan growth and excluding PPP, we had a number of borrowers that pay down of paid all of the borrowings during the first quarter. So as the economy recovers and the consumer demand increases we believe that the loan demands will increase accordingly, so as such we still expect that the loan book for the full year of 2021 is going to be between 3% to 5%.
Part of that also we believe the mortgage pay also will start to slow as the interest rates continue to rise.
Yes, Chris could you repeat the second part of that question I think that was for me.
I guess I'm, just trying to figure out what your expectation is for.
Cash and securities and how that contributes to net interest income growth, whether you expect deposit retention to be.
Hi are you going to continue to run off from non core deposits.
Yes, we have the limit of the amount of brokered Cds that.
That will mature.
For the rest of the year.
There's a couple of hundred millions of them in the fourth quarter.
It's.
It's about $150 million per quarter, but one of the things is.
We.
We held off on buying much in the way of mortgage backed securities.
The press.
Certainly in March it looks like the.
The.
The longer term interest rates were really kind of go go off pretty much and.
So in the second quarter, we expect to.
Have started.
By NPS.
And so that will use up some of our excess of quantity and we will continue to buy.
Bye bye.
Third $50 million or so of MBS each quarter.
Of that our securities portfolio of begin to decline.
From Margaret.
Yes.
Great. Thanks, a lot.
Sure.
Thank you. Our next question comes from Gary Tenner of D. A Davidson your line is open.
Thanks, Good afternoon.
I just wanted to ask.
I think last quarter, you said you were holding off of any additional investments in the solar tax credits due to uncertainty over.
Over the kind of the tax outlook with the following administration.
If you were to not invest at all and have share amortization in 2022 for the full year.
Where do you think that that would result in your effective tax rate of your out assuming at this point no changes in the core protect share it.
Uh huh.
How do you look at more out of the EPS impact, it's about five or six cents per share, but our plan is to.
Go back into that market in the fourth quarter for for Q1 funding.
Okay.
Thank you and then.
Just one more question on PPP could you give us the average PPP loans outstanding for the quarter.
We'll have to get back to you on that Gary.
Yes. It was in February of March.
And the forgiveness was.
What are the.
Part of the linear but.
I'll call you on that.
Okay.
Okay.
Great. Thank you very much sure.
Thank you. Our next question comes from David <unk> for any of Wedbush Securities. Your line is open.
For you starting.
With a follow up on the Securities purchases, you mentioned of $150 million per quarter. I was curious how much cash is coming back to you per quarter.
I'm wondering how much net growth in the securities portfolio, we should expect.
It's about.
I would I would say.
MBS, it's about $75 million of quarter.
Okay, and what are you what.
What are your thoughts about kind of accelerating the the purchases it does seem like the.
Of the balance sheet has.
Plenty of excess liquidity to perhaps be a little bit more aggressive in.
The early.
Next few months and then kind of slow. It later or are you kind of viewing it from an interest rate standpoint that you don't want to go.
Go too fast in case interest rates move up and hit you on a kind of dollar cost average and can you give any comments related to the yeah.
We're in the latter category.
<unk> been true conservative on the amortization of the PPP fees.
So on this round two.
We're.
Amortizing.
The the loans under 150000.
Well, we're amortizing for fees over 18 months.
And.
For the ones that are over 150000, we're amortizing of well over five years of contractual rate. So I think there's going to be more more forgiveness.
In the second half of the year from <unk>.
The two PPP.
Got it thanks for that and then.
Your capital ratios are pretty strong here.
And you mentioned about the $75 million buyback authorization can you talk about your appetite.
And sort of timeframe of of putting that to work.
For.
We're going up.
Buyback stock that's issued for.
For our shoes.
And for Gibson and reinvestment and then.
Yes.
Yeah, there's a lot of volatility for bank stocks so true.
The increase of weakness, we would we would look to buybacks of them depending on the on the price.
Got it makes sense, thanks very much.
Thank you.
Thank you again ask the question. Please press Star then one on your touch tone telephone.
Our next question comes from Matthew Clark of Piper Sandler Your line is open.
Yes.
Just had a question on that other fee income increase I think it was up $1 million.
On a core basis, not the wealth management piece, but the the other fee income just wondering if that's.
Stable or not.
It's the one time.
The gain Matthew we have a investment in the CRE fund.
And so.
Raj.
Ex that gain it watson's low income housing anyways.
<unk>.
We.
We were able to realize the gain.
First quarter and so we book that in other income.
Okay.
Okay, and then any updated thoughts on just your core.
The expense outlook, excluding the amortization and any other noise.
From the last year for this year.
Well.
We continue to.
Actively manage that.
Uh huh.
We have two branches that we're closing in June.
So there'll be some.
Expense saves.
And then.
We continue not to replace.
Uh huh.
Officers on the staff side.
What we can and then.
Because of our.
Income for the first quarter is higher than we had budget a certain amount of loan loss provisions this year.
And.
Given the negative Q1 provision in the us.
Likelihood of for a low provisions for the rest of year were going to have.
A couple of million dollars of higher bonus accruals throughout the year, so all of that.
That's kind of be.
That's that's what we see.
Yeah.
Okay, great. Thank you.
Yes. Thank you.
Yeah.
Thank you I'm showing no credit questions at this time at the turn the call back over to management for any closing remarks.
I want to thank everyone for joining us on our call as we slowly return to normal from the financing from the pandemic. We look forward to speaking with you at our next quarterly earnings release call.
Thank you for your participation of about.
Thank you joining the call today.
Ladies and gentlemen, thank you for participating in the today's conference. This concludes the presentation. You may now disconnect have a great day.