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spk09: Results today are Mr. Chang Liu, our President and Chief Executive Officer, and Mr. Hang 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 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 company's annual report on Form 10-K for the year ended December 31, 2020, item 1A 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 statement 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 events, or the occurrence of unanticipated events. This afternoon, Cafe 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.cafegeneralbancorp.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. Chang Liu.
spk11: 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 6.2% decrease as compared to a net income of $77.2 million for the second quarter of 2021. Diluted earnings per share increased 31% to $0.93 per share for the third quarter of 2021, compared to $0.71 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 9.1%. The increasing loans for the third quarter of 2021 was primarily driven by increases of 73.8 million or 11.2% annualized in commercial loans excluding PPP loans, 220.4 million or 11.6% annualized in commercial real estate loans, 23.7 million or 14.3% annualized in real estate construction loans. and 41.1 million were 4% annualized in residential mortgage loans. Our fourth quarter loan growth continues to be strong and will likely exceed that of the third quarter. 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 30th, 2021, 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 30th, 2021, the average loan-to-value of our CRE loans was 51%. As of September 30th, 2021, our retail property loan portfolio comprises 22% of our total commercial real estate loan portfolio and 11% of our total loan portfolio. The majority, 62% of the $1.74 billion in retail loans, is secured by neighborhood mixed-use or strip centers, and only 9% is 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 a commercial loan charge-off of $1.3 million from a Hong Kong office, Our non-accrual loans were 0.43% of total loans as of September 30, 2021, increased slightly by $0.9 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. The provision for credit losses of $3.1 million reflected the net charge-offs of $2.3 million and provisions for the loan growth during the third quarter. We expect a 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 in 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 2021 $125 million stock buyback program. We continue to work on the integration and conversion plan for our purchase of the 10 branches and 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 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, Peng Cheng, to discuss the third quarter 2021 financial results in more detail.
spk10: Thank you, Cheng, and good afternoon, everyone. For the third quarter of 2021, net income decreased by $4.8 million, or 6.2%, to $72.4 million compared to the second quarter of 2021. The 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 3.22 in the third quarter of 2021 as compared to 3.24 percent in the second quarter of 2021. In the third quarter of 2021, interest recoveries and pre-payment 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 loans at the floor rate as of September 30th, 2021. Approximately 1.4 billion of our CDs mature in the fourth quarter of 2021 with an average rate of 0.68%. 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 3.2 to 3.3 percent. Non-interest income during the third quarter of 2021 decreased by $360,000 to $12.2 million when compared to the second quarter of 2021, primarily due to a one-time BOE income of $1.2 million in the second quarter. Non-interest expense increased by 2.5 million or 3.6% to 72.2 million in the third quarter of 2021 when compared to 69.7 million in the second quarter of 2021. The increase was primarily due to an increase of 1.7 million in amortization in low-income housing and solar tax credit funds including a $3.2 million catch-up adjustment for 2020 low-income housing losses resulting from the receipt of 2020 K-1s and an increase in $0.7 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 effective tax rate resulted from a $1.7 million catch-up adjustment recorded in the third quarter of 2021 for 2020 solar tax credits. for higher 2020 solar tax credits resulting from the receipt of 2020 K-1s. We expect the full year of 2021 effective tax rate to be between 21.5 percent and 22 percent. Solar tax credit amortization was 1.4 million in the third quarter of 2021, and it's expected to be 1.5 million in the fourth quarter of 2021. As of September 30th, 2021, our Tier 1 leverage capital ratio decreased to 10.67% as compared to 10.85% as of June 30th, 2021. Our Tier 1 risk-based capital ratio decreased to 13.29% from 13.77% as of June 30th, 2021. And our total risk-based capital ratio decreased the 14.93% from 15.47% as of June 30th, 2021. Thank you, Hang.
spk11: We will now proceed to the question and answer portion of the call.
spk08: Ladies and gentlemen, if you have a question at this time, please press star then the number one on your touch-tone 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 have been answered and you wish to remove yourself from the queue. Please press star and the number key. To prevent any background noise, we ask you that you please place yourself on mute once a question has stated. For our first question, we have Brandon King from Tourist Securities. Brandon, your line is open.
spk14: Hey, good afternoon.
spk08: Hi, Brandon.
spk14: Hey, so long growth is 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? And do you think you're kind of on a sustainable trajectory when it comes to long growth, especially on the commercial side?
spk11: So far, we're looking at fourth quarter pipelines, and fourth quarter pipelines are pretty strong. So I think we're kind of staying on our you know, sort of the target growth range, you know, in the 5% range for 2021. As far as 2022, you know, 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 costs and what's going on at the ports. I think our commercial growth, C&I growth on the fourth, third quarter was pretty strong, 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, you know, which segment, whether that's CNI side or the commercial real estate side.
spk10: Yeah, well, Brandon, we'll give formal guidance in January when we report the fourth quarter earnings. But I want to also add that we think in 2022, the residential mortgage loan portfolio will start to increase faster because with higher interest rates, we think that pre payments on that portfolio will be much lower. So if it will have a higher growth rate in 2022. But once again, more what will will update in in January. Okay.
spk14: Thanks for that. And then on the liability side with deposit repricing, could you tell us a gift update on running off those broker deposits and what do you expect from a CDU pricing picture in 4Q and potentially early 1Q22? Yeah. We have probably 200 million of wholesale
spk10: deposits that we will be running off in the fourth quarter. Of that 100 million will be will be very late, you know, it'll be in late December, so you won't see the full full quarter effect. And in 20 in q1 2022, we'll probably have another 150 million of brokerage CD runoff. But you know, as we get into 2022, if our loan growth resumes to be stronger than it has been in 2021, we may even start to have to renew some broker CDs. And then lastly, as interest rates are increasing, we're going to, we are buying more securities given that the yields are more attractive. So anyway, those are some of the background on how we're thinking there.
spk14: Okay. And for those broker deposits, if you do renew those, what would be the delta in the cost based off of what they were paying and what you were renewing?
spk10: Okay. I'm doing this from memory. I think that probably about 50 basis points, and then we have a broker money market deposit. That's only one basis point. I talked about that in the past. So that's going to mature in December.
spk13: Okay. Thanks for answering all the questions. Thank you.
spk08: For our next question, we have David Chivary from Redbush Securities. David, your line is open.
spk05: Thanks for taking the questions. The first one is on deposit growth. How are you guys thinking about deposit flows here? It's been pretty decent.
spk11: For us, we're seeing 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 quarter reporting results. But for the most part, we're driving towards lower cost of deposits and lower cost of funds.
spk05: Great. Thanks for that. And you mentioned about roughly $100 million remaining on your buyback authorization. I was curious about your your appetite for additional purchases from here?
spk10: I think we'll still be in the market. You know, compared to our peers, our price to tangible book is somewhat lower. And our capital levels are very strong. So we'll continue We will be in the market, but at some point, you know, we may taper back on that, depending on the stock price.
spk04: Yep, that makes sense. Thanks very much. Yeah, thank you.
spk08: For our next question, we have Chris McGrathy from KBW. Chris, your line's open.
spk06: Hey, good afternoon. Hank, I was wondering if you could repeat the numbers for the branches. I think you said a billion of deposits, 850 of loans. I'm wondering associated expenses from that transaction and also just kind of a help with the expense guide on your term.
spk10: You know, Chris, I think this is, we said it, the HSBC deal is about 2% accretive. In terms of expenses, it's roughly slightly over $10 million, and the revenues are in the low 20s. But we're waiting to get all of this information as of March 2021, and we're waiting for HSPC to give us updated balances and then when we announce in January, we'll probably, we'll update that.
spk06: Okay. Okay. And so those are annual numbers, the $10 and $20 million. Okay.
spk10: Yeah. And then, you know, for your modeling, there's going to be one-time expenses, maybe in the $3.1 million. I don't know how finely you do that. That's probably, you know, $2 to $3 million. And then we have the... The day one CECL charge for those acquired loans, you might want to use 50 basis points on what the loan balance is. But ultimately, we still think it's going to be 2% of credo.
spk06: Okay, that's great. And then maybe if I could, my follow-up, the little bit of tax on the 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?
spk10: Probably $7 million. Okay. Yeah, in Q3, we had this catch-up adjustment, as I mentioned, of $3.2 million, but in Q4, it's going to be $7 million. Great. Thank you. Yeah, thank you.
spk08: Again, ladies and gentlemen, if you have a question at this time, please press star, then the number one on your touchstone telephone. For our next question, we have Jerry Tanner from DA Davidson. Jerry, your line is open.
spk03: Good afternoon. I just wanted to actually clarify on the catch-up adjustment. You said it was a 3.2 or I thought I heard 2.2 million. And then what was the associated tax impact on that catch-up adjustment?
spk10: Can you repeat the question? Are you talking about the low-income housing?
spk03: Yeah, the catch up adjustment on the on the amortization I, I had written down 2.2. Was it 3.2 or 2.2?
spk10: It was 3.2 on the low income housing.
spk03: Okay, and then the associated tax impact because of the catch up?
spk10: There was none. There was none.
spk02: Okay.
spk10: And we had a million six tax benefit from the solar catch-up.
spk12: Okay.
spk03: Okay. Great. And then just to follow up, in terms of the core loan yields, by my math, down about 12 basis points to 4% or 401. Simply just the kind of pull-down effect of new production yields being below portfolio yields? I think you'd highlighted the prepayment benefit, which was really unchanged versus last quarter.
spk10: Yeah, you know, we... You want to cover that?
spk11: You're asking about the origination yields versus the portfolio yields? Yeah. Gary?
spk02: Yeah, effectively, yes.
spk11: Yeah, yeah, yeah. So for the residential mortgage originations, third quarter, we're probably around 3.82% compared to the weighted average portfolio, about 4.03%. On the commercial real estate Q3 origination, we're at about 3.57% compared to the weighted average portfolio at about 4.23%. And on the new C&I loans, our current originations are close to prime versus the weighted Q3 portfolio yield at about 3.61%. Great. Thank you.
spk12: Of course.
spk08: At this time, there are no questions in the queue. Thank you for your participation. I will now turn back the call over to Cathay General Bancorp Management for closing remarks.
spk11: 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.
spk08: Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's presentation. You may now disconnect. Have a good day. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Bye. Good afternoon, ladies and gentlemen, and welcome to Cathay General Bank Corp's third quarter 2021 earnings conference call. My name is Sadie, and I'll be your coordinator for today. At this time, I'll put Spencer in a listen-only mode. Following the prepared remarks, there will be a question and answer session. If you would 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 zero and that coordinator will be happy to assist you. Today's call is being recorded and will be available for replay at www.cathegeneralbankcorp.com. Now I'd like to turn it over to Georgia Lowe, Investor Relations of Cathay Bank Corp.
spk09: Thank you, Sadie, and good afternoon. Here to discuss the financial results today are Mr. Chang Liu, our President and Chief Executive Officer, and Mr. Hang 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 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 company's annual report on Form 10-K for the year ended December 31, 2020, item 1A 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 statement 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 events, or the occurrence of unanticipated events. This afternoon, Cafe 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.cafegeneralbancorp.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. Chang Liu.
spk11: 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 6.2% decrease as compared to a net income of $77.2 million for the second quarter of 2021. Diluted earnings per share increased 31% to $0.93 per share for the third quarter of 2021, compared to $0.71 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 9.1%. The increase in loans for the third quarter of 2021 was primarily driven by increases of $73.8 million, or 11.2% annualized, in commercial loans excluding PPP loans, $220.4 million, or 11.6% annualized, in commercial real estate loans, $23.7 million, or 14.3% annualized, in real estate construction loans, and 41.1 million were 4% annualized in residential mortgage loans. Our fourth quarter loan growth continues to be strong and will likely exceed that of the third quarter. 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 30th, 2021, 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 30th, 2021, the average loan-to-value of our CRE loans was 51%. As of September 30th, 2021, our retail property loan portfolio comprises 22% of our total commercial real estate loan portfolio and 11% of our total loan portfolio. The majority, 62% of the $1.74 billion in retail loans, is secured by neighborhood mixed-use or strip centers, and only 9% is 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 a commercial loan charge-off of $1.3 million from a Hong Kong office, Our non-accrual loans were 0.43% of total loans as of September 30, 2021, increased slightly by $0.9 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. The provision for credit losses of 3.1 million reflected the net charge-offs of 2.3 million and provisions for the loan growth during the third quarter. We expect a 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 percent annualized during the third quarter of 2021. We were especially pleased by the $233 million increase or 25.6% annualized in 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 2021 $125 million stock buyback program. We continue to work on the integration and conversion plan for our purchase of the 10 branches and 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 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, Peng Cheng, to discuss the third quarter 2021 financial results in more detail.
spk10: Thank you, Cheng, and good afternoon, everyone. For the third quarter of 2021, net income decreased by $4.8 million, or 6.2%, to $72.4 million compared to the second quarter of 2021. The 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 3.22 in the third quarter of 2021 as compared to 3.24 percent in the second quarter of 2021. In the third quarter of 2021, interest recoveries and pre-payment 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 loans at the floor rate as of September 30th, 2021. Approximately 1.4 billion of our CDs mature in the fourth quarter of 2021 with an average rate of 0.68%. 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 3.2 to 3.3 percent. Non-interest income during the third quarter of 2021 decreased by $360,000 to $12.2 million when compared to the second quarter of 2021, primarily due to a one-time BOE income of $1.2 million in the second quarter. Non-interest expense increased by $2.5 million or 3.6% to $72.2 million in the third quarter of 2021 when compared to $69.7 million in the second quarter of 2021. The increase was primarily due to an increase of $1.7 million in amortization in low-income housing and solar tax credit funds including a $3.2 million catch-up adjustment for 2020 low-income housing losses resulting from the receipt of 2020 K-1s and an increase in $0.7 million in salary and employee benefits, mainly from higher bonus accruals. The effective tax rate for the third quarter of 2021 was 19.1 percent as compared to 22.7 percent for the second quarter of 2021. The decrease in effective tax rate resulted from a 1.7 million catch-up adjustment recorded in the third quarter of 2021 for 2020 solar tax credits. for higher 2020 solar tax credits resulting from the receipt of 2020 K-1s. We expect the full year of 2021 effective tax rate to be between 21.5% and 22%. Solar tax credit amortization was 1.4 million in the third quarter of 2021, and it's expected to be 1.5 million in the fourth quarter of 2021. As of September 30th, 2021, our Tier 1 leverage capital ratio decreased to 10.67% as compared to 10.85% as of June 30th, 2021. Our Tier 1 risk-based capital ratio decreased to 13.29% from 13.77% as of June 30th, 2021. And our total risk-based capital ratio decreased to 14.93% from 15.47% as of June 30th, 2021.
spk11: Thank you, Hank. We will now proceed to the question and answer portion of the call.
spk08: Ladies and gentlemen, if you have a question at this time, please press star then the number one on your touchstone 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 have been answered and you wish to remove yourself from the queue. Please press star and the number key. To prevent any background noise, we ask you that you please place yourself on mute once a question has stated. For our first question, we have Brandon King from Tourist Securities. Brandon, your line is open.
spk14: Hey, good afternoon. Hi, Brandon. Hey, so loan growth is 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? And do you think you're kind of on a sustainable trajectory when it comes to loan growth, especially on the commercial side?
spk11: So far, we're looking at fourth quarter pipelines, and fourth quarter pipelines are pretty strong. So I think we're kind of staying on our, you know, sort of the target growth range, you know, in the 5% range for 2021. As far as 2022, you know, 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 costs, and what's going on at the ports. I think our commercial growth, C&I growth on the fourth, third quarter was pretty strong, 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, you know, which segment, whether that's C&I side or the commercial real estate side.
spk10: Yeah, well, Brandon, we'll give formal guidance in January when we report the fourth quarter earnings. But I want to also add that 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 will be much lower. So it will have a higher growth rate in 2022. But once again, more, what we'll, we'll, we'll update in, uh, in, uh, in January. Okay.
spk14: Thanks for that. And then on the liability side with deposit repricing, could you tell us a gift update on running off those broker deposits and what do you expect from a CD pricing, uh, picture in four Q, uh, and potentially early, uh, one Q 22. Yeah.
spk10: We have probably 200 million of wholesale deposits that we will be running off in the fourth quarter of that 100 million will be will be very late, you know, it'll be in late December, so you won't see the full full quarter effect. And in 20 in q1 2022, we'll probably have another 150 million of broker CD runoff. But, you know, as we get into 2022, if our loan growth resumes to be stronger than it has been in 2021, we may even start to have to renew some broker CDs. And then lastly, As interest rates are increasing, we are buying more securities given that the yields are more attractive. So anyway, those are some of the background on how we're thinking there.
spk14: Okay, and for those broker deposits, if you do renew those, what would be the delta in the cost based off of what you were renewing?
spk10: I'm doing this from memory. I think that probably about 50 basis points, and then we have a broker money market deposit. That's only one basis point. I talked about that in the past. So that's going to mature in December.
spk13: Okay. Thanks, Mary. No more questions. Thank you.
spk08: For our next question, we have David Chivary from Redbush Accuracies. David, your line is open.
spk05: Thanks for taking the questions. The first one is on deposit growth. How are you guys thinking about deposit flows here? It's been pretty decent.
spk11: For us, we're seeing 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 core reporting results. But for the most part, we're driving towards lower cost of deposits and lower cost of funds.
spk05: Great, thanks for that. And you mentioned about roughly $100 million remaining on your buyback authorization. I was curious about your appetite for additional purchases from here.
spk10: I think we'll still be in the market. Compared to our peers, our price to tangible book is somewhat lower Capital levels are very strong, so we will be in the market, but at some point we may taper back on that depending on the stock price.
spk04: Yep, that makes sense. Thanks very much. Thank you.
spk08: For our next question, we have Chris McGrathy from KBW. Chris, your line's open.
spk06: Hey, good afternoon. Hank, I was wondering if you could repeat the numbers for the branches. I think you said a billion of deposits, 850 of loans. I'm wondering associated expenses from that transaction and also just kind of a help with the expense guide on your term.
spk10: You know... Chris, I think this is, we said it, the HSBC deal is about 2% accretive. In terms of expenses, it's roughly slightly over $10 million, and the revenues are in the low 20s. But we're waiting to get all of this information as of March 2021. And we're waiting for HSBC to give us updated balances. And then when we announce in January, we'll probably update that.
spk06: Okay. And so those are annual numbers, the $10 and $20 million?
spk10: Yeah. And then, you know, for your modeling, there's going to be one-time expenses, maybe in the I don't know how finally you do that. That's probably two to three million. And then we have the day one CECL charge for those acquired loans. You might want to use 50 basis points on what the loan balance is. But ultimately, we still think it's going to be 2% of credo.
spk06: Okay, that's great. And then maybe if I could, my follow-up, the little bit of tax on the 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?
spk10: Probably $7 million. Yeah, in Q3 we had this catch-up adjustment, as I mentioned, of $3.2 million, but in Q4 it's going to be $7 million. Great, thank you. Yeah, thank you.
spk08: Again, ladies and gentlemen, if you have a question at this time, please press star then the number one on your touchstone telephone. For our next question, we have Jerry Tanner from DA Davidson. Jerry, your line is open.
spk03: Good afternoon. I just wanted to actually clarify on the catch-up adjustment. You said it was a 3.2, or I thought I heard $2.2 million difference. And then what was the associated tax impact on that catch-up adjustment?
spk10: Can you repeat the question? Are you talking about the low-income housing?
spk03: Yeah, the catch-up adjustment on the amortization, I had written down 2.2. Was it 3.2 or 2.2? It was 3.2 on the low-income housing.
spk10: Okay, and then the associated... tax impact because of the catch-up? There was none.
spk02: There was none.
spk10: And we had a million six tax benefit from the solar catch-up.
spk12: Okay.
spk03: Okay. Great. And then just to follow up, in terms of the core loan yields, by my math, down about 12 basis points to 4% or 401, simply just the kind of pull-down effect of new production yields being below portfolio yields? I think you'd highlighted the prepayment benefit, which was really unchanged versus last quarter.
spk10: Yeah, you know, we... You want to cover that?
spk11: You're asking about the origination yields versus the portfolio yields? Yeah. Gary?
spk02: Yeah, effectively, yes.
spk11: Yeah, yeah, yeah. So for the residential mortgage originations, third quarter, we're probably around 3.82% compared to the weighted average portfolio, about 4.03%. On the commercial real estate Q3 origination, we're at about 3.57% compared to the weighted average portfolio at about 4.23%. And on the new C&I loans, our current originations are close to prime versus the weighted Q3 portfolio at about 3.61%.
spk12: Great. Thank you. Of course.
spk08: At this time, there are no questions in the queue. Thank you for your participation. I will now turn back the call over to Cathay General Bank Corp. Management for closing remarks.
spk11: 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.
spk08: 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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