Q3 2021 Cathay General Bancorp Earnings Call
All participants are in a listen only mode. Following the prepared remarks, and there will be a question and answer session. If you'd like to participate in this portion of the call. Please press star followed by the number one at any time during today's conference. If assistance is needed at any time during the call. Please press star followed by <unk>.
And then coordinator will be happy to assist you today's call is being recorded and will be available for replay at www Cathay General Bancorp dotcom.
Now I would like to turn the call over to Georgia, though Investor Relations of Cathay Bank Corp.
Thank you Katie and good afternoon here to discuss the financial results today are Mr. Chengdu, Our president and Chief Executive Officer, and Mr. Chang 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.
Evidence of the private Securities 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. These risks and uncertainties are further described in the Companys annual report on Form 10-K for the year ended December 31st 2020.
One eight and item one a in particular and in other 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 statements speak only as of the date on which it is made and except as required by law. We undertake no obligation to update or have you.
Any forward looking statements to reflect future circumstances developments or events or the occurrence of unanticipated events.
This afternoon, Cathay General Bancorp issued an earnings release outlining its third quarter 2021 results to obtain a copy of our earnings release as well as our third quarter earnings presentation. Please visit our website at Www Dot Cathay General Bancorp Dot com 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 third quarter earnings Conference call. This afternoon, we reported net income of $72 4 million for the third quarter of 2021.
A six 2% decrease as compared to a net income of $77 2 million for the second quarter of 2021.
Earnings per share increased 31% to 93 per share for the third quarter of 2021 compared to 71 per share for the same quarter a year ago.
In the third quarter of 2021, our gross loans, excluding PPP loans increased by $355 6 million to $15 8 billion, which represents an annualized growth rate of nine 1%.
The increase in loans for the third quarter of 2021 was primarily driven by increases of $73 8 million or 11, 2% annualized and commercial loans, excluding PPP loans, $220 4 million or 11, 6% annualized in commercial real estate loans.
$23 7 million or 14, 3%.
Annualized and real estate construction loans, and $41 1 million or 4% annualized and residential mortgage loans.
Our fourth quarter loan growth continues to be strong and will likely exceed that of the third quarter. The.
The overall loan growth for 2021 is expected to be close to 5%.
During the third quarter of 2021, $73 9 million of PPP loans were forgiven as.
As of September 32021, our deferred PPP loan fees were $3 8 million.
We continue to monitor all commercial real estate loans, turning to slide seven of our earnings presentation as of September 32021, the average loan to value of our CRE loans was 51%.
As of September 32021, our retail property alone portfolio comprises 22% of our total commercial real estate loan portfolio and 11% of our total loan portfolio the.
The majority 62% of the 174 billion in retail loans are secured by neighborhood in mixed use or strip centers and only 9% secured by shopping centers.
For the third quarter of 2021, we reported net charge offs of $2 3 million compared to net charge offs of $7 3 million in the second quarter of 2021.
Our third quarter charge offs included included a commercial loan charge off of $1 3 million from our Hong Kong office or non accrual loans were 0.43% of total loans as of September 32021 increased slightly by <unk> 9 million to $68 7 million as compared to the end of the second quarter of 2020.
One.
We recorded a provision for credit loss of $3 1 million in the third quarter of 2021 as compared to a 9 million reversal of provision for credit losses in the second quarter of 2021.
The provision for credit losses of $3 1 million and reflected the net charge offs of $2 3 million in provisions for the loan growth during the third quarter.
We expect the provision for credit losses in the fourth quarter as a result of the expected loan growth in the fourth quarter.
Turning to slide 12.
Total average deposits increased by $517 2 million or 12, 6% annualized during the third quarter of 2021, we.
We were especially pleased by the $233 million increase or 25, 6% annualized average demand deposits during the third quarter compared to the second quarter.
Average time deposit decreased by $152 6 million or 10, 1% annualized due mainly to the runoff of broker Cds.
We repurchased 942 613 shares of our stock at an average cost of $39 40.
Totaling $37 1 million in the third quarter of 2021.
There is $98 6 million remaining under our September 2020, 125 million stock buyback program.
We continue to work on the integration and conversion planning for a purchase of the 10 branches in select west coast loans and deposits from HSBC.
Transaction will broaden the reach of our northern and Southern California Branch Network. In addition to acquiring $1 billion in low cost deposits and $800 million in residential mortgages the.
The transaction is expected to be completed during the first quarter of 2022.
I will now turn the floor over to our executive Vice President and Chief Financial Officer Heng Chen to discuss the third quarter of 2021 financial results in more detail.
Thank you Chang and good afternoon, everyone.
Third quarter 2021.
Net income decreased by $4 8 million or six 2% to $72 4 million compared with the second quarter of 2021.
Decrease was primarily attributable to a provision for credit losses of $3 million in the third quarter of.
As compared to a 9 million reversal of provision for credit losses in the second quarter.
Our net interest margin was 322 in the third quarter of 2021.
This compares with $3 two 4% in the second quarter of 2021.
In the third quarter 2021 interest recoveries and prepayment penalties added four basis points because of the net interest margin as compared to three basis points for the second quarter of 2021.
There were $3 1 billion of loans at the floor rate as of September 30 of 2021.
Approximately $1 4 billion of our Cds mature.
During the fourth quarter of 2021, where the average rate.
0.6% to 8% we.
We are targeting renewing retail Cds in the 40 to 50 basis point range.
Given the results of the third quarter of 2021.
We continue to expect our net interest margin for 2021 to be between three two to three 3%.
Noninterest income during the third quarter of 2021 decreased by 360000 to $12 2 million when compared to the second quarter of 2021.
Primarily due to a onetime bully income of $1 2 million in the second quarter.
Noninterest expense increased by $2 5 million.
Our three 6% to $72 2 million in the third quarter 2021.
When compared to $69 7 million in the second quarter of 2021.
Increase was primarily due to an increase.
<unk>.
One 7 million in amortization and low income housing and solar tax credit funds include.
Including a $3 2 million catch up adjustment for 2020 loan come housing losses.
Resulting from where we've seen them.
2020 K ones.
And the increase.
And <unk> 7 million in salary and employee benefits mainly from higher bonus accruals.
The effective tax rate for the third quarter of 2021 was 19, 1% as compared to 22, 7% for the <unk>.
Second quarter of 2021.
The decrease in the effective tax rate.
Soldier from a $1 7 million catch up adjustment recorded in the third quarter of 2021.
For 2020 solar tax credits.
For us for higher 2020 solar tax credits.
Resulting from the receipt of 2021.
We expect the full year of 2021, the effective tax rate to be between 21, 5% and 22%.
Solar tax credit amortization was one 4 million in third quarter of 2021.
And it's expected to be $1 5 million in the fourth quarter of 2021.
As of September 32021.
Tier one leverage capital ratio decreased to $10 six 7% as COO.
Compared to 10, 5% as of June 32021.
Tier one.
Risk based capital ratio decrease.
$13 two 9%.
13, 77% as of Q3 of 2021.
Total risk based capital ratio decreased to.
The $14, 93% from $15 440.
Or 7% as of June 32021.
Thank you Heng, we will now proceed to the question and answer portion of the call.
Ladies and gentlemen, if you have a question at this time. Please press Star then the number one on your Touchtone telephone we ask that you. Please limit yourself to one question and one follow up question.
You may return to the queue. If you have questions has been answered and you Mr. Remove yourself from the queue. Please press star and denim Bertke.
To prevent any background noise, we ask you that debate.
Thank you for yourself on mute when asked a question. This data for our first question, we have Brandon King from JMP Securities Brendan Your line is Samsung.
Hey, good afternoon.
Hi, Brandon.
Hey, so our loan growth was pretty strong in the quarter are kind of ahead of guidance of 3% to 5%. How do you think that will shake out going into 2022. When do you think you're kind of on a sustainable trajectory when it comes along world, especially on the commercial side.
Okay.
So far we're looking at fourth quarter pipelines in fourth quarter pipelines are pretty strong. So I think we're kind of staying on our.
Sort of the target growth range in the 5% range for 2021 as far as 2022.
I think it really comes down to.
Lot has to do with sort of the economic recovery some of the shipping and freight delay cost cost and what's going on at the ports.
Our commercial growth C&I growth on the on the third quarter was pretty strong in the $73 million range.
We're talking to some of our clients. We believe that 2022 will hopefully show a strong growth as well but.
Not completely certain where some of that growth will come from and which segment whether that C&I side or the commercial real estate side, yes, well our brand of what will give.
Firmer guidance.
In January one.
The fourth quarter earnings, but I wanted to also add to that.
We think in 2020 to be residential mortgage loan portfolio will start to increase faster because with higher interest rates.
Think of prepayments on that portfolio it would be much lower so.
It will have a higher.
Our growth rate in.
2022.
But once more.
<unk> will update.
In January.
Okay.
Thanks for that and then on the liability side deposit repricing could you tell us where it gets a bit on running golf those broker deposits.
And what do you expect from the CD pricing.
The picture in <unk> and.
And potentially early.
<unk> 22.
Yeah, we have.
Uh huh.
Probably $200 million of wholesale deposits that we will be running off in the fourth quarter.
Of that $100 million will be.
We'll be sorry late.
In late December so we won't see the full four quarter effect.
In 'twenty in Q1, 2022, we'll probably have another $150 million.
Brokerage CD run off but.
As we get into 2022, if our loan growth.
Zooms.
To be stronger.
Then it has been in 2021.
We may even.
Start to have to renew some brokerage Cds and then lastly.
As interest rates are increasing.
Work on this we are buying more securities given that yields a more attractive.
So.
So I know that.
Those are some of the.
Yes.
The background on how we're thinking there.
Okay and for those broker deposits. If you do renew those what would be the delta in the cost based off of what.
We renewed it.
I'm doing this from memory.
Thank you.
That probably about.
50 basis points, and then we have a.
Brokered money market.
Yeah.
Deposit that's only one basis point I talked about that in the past. So that's that's going to mature in December.
Okay. Thanks for answering all my questions.
Thank you.
Our next question, we have David <unk> from Wedbush Securities. Your line is open.
Thanks for taking my questions. The first one.
It's on deposit growth how are you guys thinking about that.
Deposit flows here, it's been pretty decent.
For us we're seeing a accumulation of deposit balances from our customers. We're also kind of making a shift.
Away from Cds, and focusing more on business operating accounts as much as we can some of that CD balances may have transitioned over to money market balances.
As we've seen that in our reported results, but for the most part we're driving towards lower cost of deposits and lower cost of funds.
Great. Thanks for that and you mentioned about rough.
Roughly $100 million remaining on your buyback authorization I was curious about your your appetite for additional purchases from here.
I think we'll still be in the market.
Compared to our peers.
Our price to tangible book as well.
Somewhat lower.
And our capital levels are very strong so.
So.
Well.
We won't be in the market, but.
At some point, we may keep.
Keep her back on that depending on the stock price.
Yes that makes sense, thanks very much.
Thank you.
For our next question, we have Chris Mcgratty from K B W. Chris Your line is open.
Hey, good afternoon.
I'm wondering if you could repeat the numbers.
The branches I think it was I think you said $1 billion of deposits $8 50 of loans.
I'm wondering.
Associated expenses from that transaction and also just kind of help with the expense guidance.
Uh huh.
Yes.
Chris I think this we said that the.
Hs.
The HSBC deal Scott.
2% accretive.
In terms of expenses.
It's roughly.
Slightly over $10 million in the revenues in the low twenties.
But we're waiting to get.
All of this information is as of.
March 2021.
We're waiting for HSBC could give us.
Updated balances.
And then.
When we announced in January well, we'll probably we'll update that.
Okay and so those are those are annual numbers, the $10 million to $20 million, Okay, Yeah and then.
And then for your modeling theres going to be one time expenses.
Maybe in the $3 million I don't know how finely you do that.
Bobby.
No $2 million to $3 million.
And then we have the odd.
The day, one seasonal charge for those acquired loans.
You might want to use 50 basis points on.
And quite a bit of loan balance at spectrum.
Ultimately, we still think it's going to be.
2% accretive.
Okay, that's great.
And then maybe if I could my follow up.
<unk>.
The little bit of tax on the <unk>.
Solar and low income I think you said a million and a half for the solar what was the.
Low income that we should be modeling for next quarter.
Probably $7 million.
Okay.
Yes in Q3, we had this catch up adjustment as I mentioned of $3 2 million.
Q4, it's going to be $70 million.
Great. Thank you.
Yes. Thank you.
Again, ladies and gentlemen, if you have a question at this time. Please press Star then the number one on your Touchtone telephone.
Our next question, we have Jerry Kenney from D. A Davidson your line is open.
Hi, good afternoon.
Yeah.
I just wanted to actually clarify on the catch up adjustment you said the three tumor I thought I heard $2 2 million.
And then what was the associated tax impact on that catch up adjustment.
Can you repeat the question are you talking about the low income housing.
Yeah, the catch up adjustment on the amortization.
<unk> was at $3 two or 2.2.
It was three two.
Low income housing.
Okay and then the associated.
The tax impact because of the catch up.
There was none.
Okay.
We had a million six.
The tax benefit from the solar catch up.
Okay.
Okay.
Great.
And then just a follow up.
In terms of the core loan yields.
By my math down about 12 basis points to 4% or 401.
It simply just the kind of pulled down effect of.
New production yields being below.
Portfolio yields.
I think you'd highlighted the prepayment benefit which is.
Really unchanged versus last quarter.
Yes.
Uh huh.
You want to cover that Youre, asking about the origination yields versus the portfolio yield yes. Okay.
Yes effect upon yes, yes, yes, so for the residential mortgage originations third quarter were probably around 382% compared to a weighted average portfolio about $4 three.
On the commercial real estate you through origination we're at about 357%.
Compared to the weighted average portfolio at about four 3%.
And on the new C&I loans.
Our current originations are close to prime versus the weighted Q3 portfolio you're at about 361%.
Great. Thank you.
Yes.
At this time there are no questions in the queue.
For your participation and I will now turn back the call over to Cathay General Bancorp management for closing remarks.
I want to thank everyone for joining us on our call today, we look forward to speaking with you at our next quarterly earnings release call.
And ladies and gentlemen, thank you for your participation in today's conference. This concludes today's presentation you may now disconnect.
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Good afternoon, ladies and gentlemen, and welcome to Cathay General Bancorp's third quarter 2021 earnings conference call. My name is Sadie and I'll be your coordinator for today at this time all participants are in a listen only mode. Following the prepared remarks, there will be a question and answer session. If you will.
Like to participate in this portion of the call. Please press star followed by the number one at any time during today's conference.
Assistance just leave it at any time during the call. Please press star followed by Zero and then coordinator will be happy to assist you today's call is being recorded and will be available for replay at www Cathay General Bancorp dotcom.
Now I would like to turn the call over to Georgia, though Investor Relations of Cathay Bank Corp.
Thank you Katie and good afternoon here to discuss the financial results today are Mr. Chengdu, Our president and Chief Executive Officer, and Mr. Chang 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 Securities Litigation Reform Act of 1995.
<unk> future results and events and that these statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are further described in the company's annual report on Form 10-K for the year ended December 31st 2020, and one day.
Item one a in particular and in other 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 statements speaks 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 event or the occurrence of unanticipated events.
Afternoon, Cathay General Bancorp issued an earnings release outlining its third quarter 2021 results to obtain a copy of our earnings release as well as our third quarter earnings presentation. Please visit our website at Www Dot Cathay General Bancorp Dot com after comments by management today, we will open up this call for questions I will.
Now I'll turn the call over to our President and Chief Executive Officer, Mr. Chinese Thank.
Thank you, Georgia and good afternoon, everyone welcome to our 2021 third quarter earnings Conference call.
Afternoon, we reported net income of $72 4 million for the third quarter of 2021.
A six 2% decrease as compared to a net income of $77 2 million for the second quarter of 2021.
Earnings per share increased 31% to 93 per share for the third quarter of 2021 compared to 71 per share for the same quarter a year ago.
In the third quarter of 2021, our gross loans, excluding PPP loans increased by $355 6 million to $15 8 billion, which represents an annualized growth rate of nine 1%.
The increase in loans for the third quarter of 2021 was primarily driven by increases of $73 8 million or 11, 2% annualized and commercial loans, excluding PPP loans, $220 4 million or 11, 6% annualized and commercial real estate loans.
$23 7 million or 14, 3%.
Annualized and real estate construction loans, and $41 1 million or 4% annualized and residential mortgage loans.
Our fourth quarter loan growth continues to be strong and will likely exceed that of the third quarter. So.
The overall loan growth for 2021 is expected to be close to 5%.
During the third quarter of 2021, $73 9 million of PPP loans were forgiven as of September 32021, our deferred PPP loan fees were $3 8 million.
We continue to monitor our commercial real estate loans, turning to slide seven of our earnings presentation as of September 32021, the average loan to value of our CRE loans was 51%.
As of September 32021, our retail property loan portfolio comprises 22% of our total commercial real estate loan portfolio and 11% of our total loan portfolio the.
The majority 62% of the 174 billion in retail loans are secured by neighborhood in mixed use or strip centers and only 9% secured by shopping centers.
For the third quarter of 2021, we reported net charge offs of $2 3 million compared to net charge off of $7 3 million in the second quarter of 2021.
Our third quarter charge offs included included a commercial loan charge off of $1 3 million from our Hong Kong office or.
Non accrual loans were 0.43% of total loans as of September 32021 increased slightly by <unk> 9 million to $68 7 million as compared to the end of the second quarter of 2021.
We recorded a provision for credit loss of $3 1 million in the third quarter of 2021 as compared to a $9 million reversal of provision for credit losses in the second quarter of 2021 to.
The provision for credit losses of $3 1 million and reflected the net charge offs of $2 3 million in provisions for the loan growth during the third quarter.
We expect the provision for credit losses in the fourth quarter as a result of the expected loan growth in the fourth quarter.
Turning to slide 12, total average deposits increased by $517 2 million or 12, 6% annualized during the third quarter of 2021.
We were especially pleased by the $233 million increase or 25, 6% annualized average demand deposits during the third quarter compared to the second quarter.
Average time deposit decreased by $152 6 million or 10, 1% annualized due mainly to the run off of broker Cds.
We repurchased 942 613 shares of our stock at an average cost of $39 40.
Totaling $37 1 million in the third quarter of 2021.
There is $98 6 million remaining under our September 2020, 125 million stock buyback program.
We continue to work on the integration and conversion plan for our purchase of the 10 branches in select West coast loans and deposits from HSBC.
This transaction will broaden the reach of our northern and Southern California Branch Network. In addition to acquiring $1 billion in low cost deposits and $800 million in residential mortgages the.
The transaction is expected to be completed during the first quarter of 2022.
I will now turn the floor virtual executive Vice President and Chief Financial Officer, Heng Chen to discuss the third quarter 2021 financial results in more detail.
Thank you Chang and good afternoon, everyone for.
For the third quarter 2021.
Net income decreased by $4 8 million or six 2% to $72 4 million compared to the second quarter of 2021.
Decrease was primarily attributable to a provision for credit losses of $3 million in the third quarter as compared to a $9 million reversal of provision for credit losses in the second quarter.
Our net interest margin was 322 in the third quarter of 2021.
Compared to $3 two 4% in the second quarter of 2021.
In the third quarter 2021 interest recoveries and prepayment penalties added four basis points to the net interest margin as compared to three basis points for the second quarter of 2021.
There were $3 1 billion of loans at the floor rate as of September 32021.
<unk>, one 4 billion of our Cds mature during.
During the fourth quarter 2021, where the average rate.
0.68%.
Targeting renewing retail Cds in the 40 to 50 basis point range.
Given the results of the third quarter of 2021.
Continue to expect our net interest margin.
2021 to be between three two to three 3%.
Noninterest income during the third quarter of 2021 decreased by 360000.
$12 2 million when compared to the second quarter of 2021.
Primarily due to a onetime bully income of $1 2 million in the second quarter.
Noninterest expense increased by $2 5 million.
Our three 6% to $72 2 million in third quarter of 2021.
When compared to $69 7 million in the second quarter of 2021.
The increase was primarily due to an increase.
Oh.
$1 7 million in amortization.
In low income housing and solar tax credit funds.
Including a $3 2 million catch up adjustment for 2020 loan come housing losses, we.
We see resulting from the receipt of <unk>.
2020 K ones.
And the increase in.
And <unk> 7 million in salary and employee benefits.
Mainly from higher bonus accruals.
The effective tax rate for the third quarter of 2021 was 19, 1% as compared to 22, 7% for the second quarter of 2021.
The decrease in the effective tax rate.
From a $1 7 million catch up adjustment recorded in the third quarter of 2021.
For 2020 solar tax credits.
For us for higher 2020 solar tax credits, resulting from the receipt of 2021.
We expect the full year of 2021, the effective tax rate to be between 21, 5% and 22%.
Solar tax credit amortization was $1 4 million in third quarter of 2021.
And it's expected to be $1 5 million in the fourth quarter of 2021.
As of September 32021.
Tier one leverage capital ratio decreased to $10 six 7% as compared to 10, 5% as of June 32021.
Tier one.
Risk based capital ratio decreased to <unk>.
$13 two 9%.
13, 77% as of Q3 of 2021.
Our total risk based capital ratio decreased to <unk>.
<unk> thousand 14, 93% from $15 40.
Four 7% as of June 32021.
Thank you Heng, we will now proceed to the question and answer portion of the call.
Ladies and gentlemen, if you have a question at this time. Please press Star then the number one on your thoughts John telephone we ask that you. Please limit yourself to one question and one follow up question.
You may return to the queue. If you have questions has been answered and you Mr. Remove yourself from the queue. Please press star and then a breakeven.
To prevent any background noise, we ask you that debate.
Thank you for yourself on mute My question is for our first question, we have Brandon King from JMP Securities Brendan Your line is open.
Hey, good afternoon.
Hi, Brandon.
Hey, so our loan growth was pretty strong in the quarter kind of ahead of guidance of 3% to 5%. How do you think that will shake out going into 2022. When do you think you're kind of on a sustainable trajectory when it comes along world, especially on the commercial side.
Okay.
So far we're looking at fourth quarter pipelines in fourth quarter pipelines are pretty strong. So I think we're kind of staying on our.
Sort of the target growth range in the 5% range for 2021 as far as 2022.
I think it really comes down to.
A lot has to do with sort of the economic recovery some of the shipping and freight delay cost costing and what's going on at the ports.
I think our commercial growth C&I growth on the on the third quarter was pretty strong in the $73 million range.
We're in talking to some of our clients. We believe that 2022 will hopefully show a strong growth as well but.
Not completely certain where some of that growth will come from and which segment whether that C&I side or the commercial real estate side, yes, well our brand of what will give.
Firmer guidance.
In January when we report the fourth quarter earnings, but I wanted to also add.
We think in 2022.
The residential mortgage loan portfolio will start to increase faster because with higher interest rates.
We think the prepayments on that portfolio would be much lower.
It will have a higher.
Our growth rate in two.
2022.
But once more.
Well well update.
In January.
Okay.
Thanks for that and then on the liability side deposit repricing could you tell us they give us update on running golf those broker deposits.
And what do you expect from the CD pricing.
The picture in for Q.
And potentially early.
<unk> 22.
Yeah, we have.
Uh huh.
Probably $200 million of wholesale deposits that we will be running off in the fourth quarter.
Of that $100 million will be.
We'll be sorry late.
In late December so you won't see the full quarter effect.
In 'twenty in Q1, 2022, we'll probably have another $150 million.
Brokerage CD runoff.
But.
As we get into 2022, if our loan growth.
Zooms.
To be stronger.
Ben has been in 2021.
We may even.
Scott do you have to renew some brokerage Cds and then lastly.
As interest rates are increasing.
Regardless, we are buying more securities given that yields a more attractive.
So.
So I know that.
Those are some of the.
Yeah.
The background on how we're thinking there.
Okay and for those broker deposits. If you do renew those what would be the delta in the cost based off of what.
You renewed.
Okay.
In turn this from memory I think.
That property about.
50 basis points and then we have.
A brokered money market.
Yeah.
Deposits, that's only one basis point I talked about that in the past. So that's that's going to mature in December.
Okay. Thanks for answering my questions.
Thank you.
Our next question, we have David <unk> from Wedbush Securities. Your line is open.
Thanks for taking my questions. The first one.
It is on deposit growth how are you guys thinking about.
Deposit flows here, it's been pretty decent.
For us we're seeing a accumulation of deposit balances from our customers. We're also kind of making a shift.
Away from Cds, and focusing more on business operating accounts as much as we can some of that CD balances may have transitioned over to money market balances.
As we've seen that in our COO.
Total results, but for the most part we're driving towards lower cost of deposits and lower cost of funds.
Yes.
Great. Thanks for that and you mentioned about <unk>.
<unk> $100 million remaining on your buyback authorization I was curious about your your appetite for additional purchases from here.
Uh huh.
I think we'll still be in the market.
Compared to our peers.
Our price to tangible book as well.
Somewhat lower.
And our capital levels are very strong so.
So.
Well.
We won't be in the market, but.
At some point, we may keep.
Keep her back on that depending on the stock price.
Yes that makes sense, thanks very much.
Thank you.
For our next question, we have Chris Mcgratty from K B W. Chris Your line is open.
Hey, good afternoon.
I'm wondering if you could repeat the numbers.
For the branches I think it was I think you said $1 billion of deposits $8 50 of loans.
I'm wondering associated.
Expenses from that transaction and also just kind of help with that the expense guide.
Uh huh.
Yes.
Chris I think this we said that the Hs.
The HSBC deal Scott.
2% accretive.
In terms of expenses.
It's roughly.
Slightly over $10 million in the revenues in the low twenties.
But we're waiting to get.
All of this information is as of.
March 2021.
We're waiting for HSBC that give us.
Updated balances.
And then.
When we announced in January well, we'll probably we'll update that.
Yes.
Okay. So those are annual numbers, the $10 million to $20 million, Okay, Yeah and then.
And then for your modeling theres going to be one time expenses.
Maybe in the $3 million I don't know how finely you do that.
No $2 million to $3 million.
And then we have.
The day, one seasonal charge for those acquired loans.
You might want to use 50 basis points on.
And quite a bit loan balance expected.
Ultimately, we still think it's 32.
2% accretive.
Okay, that's great.
And then maybe if I could my follow up.
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The little bit of tax on the <unk>.
Solar and low income I think you said a million and a half for the solar.
Low income that we should be modeling for next quarter.
Probably $7 million.
Okay.
Yes in Q3, we had this catch up adjustment as I mentioned of $3 2 million.
In Q4, it's going to be $70 million.
Great. Thank you.
Yes. Thank you.
Again, ladies and gentlemen, if you have a question at this time. Please press Star then the number one on your Touchtone telephone.
For our next question, we have Jerry Kenney from D. A Davidson Jerry your line is open.
Hi, good afternoon.
I just wanted to actually clarify on the catch up adjustment you said the three tumor I thought I heard $2 2 million.
And then what was the associated tax impact on that cash flow progression.
Can you repeat the question are you talking about the low income housing.
Yeah, the catch up adjustment on the amortization.
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It was three two.
Low income housing.
Okay and then the associated.
The tax impact because of the catch up.
There was none.
Okay, and we had a million six.
The tax benefit from the solar <unk>.
Shop.
Okay.
Okay.
Right.
And then just follow up.
In terms of the core loan yields.
By my math down about 12 basis points to 4% or 401.
It is simply just the kind of pull down effect of new new production yields being below.
Portfolio yields.
I think you'd highlighted the prepayment benefit which is really unchanged.
Change versus last quarter.
Yeah.
Okay.
You want to cover that you asked me about the origination yields versus the portfolio yield yes, Gary.
Yes, effectively yes, yes, yes, so for the residential mortgage originations third quarter were probably around 382% compared to a weighted average portfolio about $4 three.
On the commercial real estate origination we're at about 357%.
Compared to the weighted average portfolio at about four 3%.
And on the new C&I loans.
Our current originations are closer playing versus the way to Q3 portfolio you're at about 361%.
Great. Thank you.
Yes.
At this time there are no questions in the queue.
For your participation and I will now turn back the call over to Cathay General Bancorp management for closing remarks.
I want to thank everyone for joining us on our call today, we look forward to speaking with you at our next quarterly earnings release call.
And ladies and gentlemen, thank you for your participation in today's conference. This concludes today's presentation. You may now disconnect good day.
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