East West Bancorp, Inc.

Q3 2021 Earnings Conference Call


spk_0: the day and welcome to east west bank corpse third quarter twenty twenty one financial results conference call all participants will be in a western only mode should you need assistance please signal a conference specialist best pressing star than zero after today's presentation there will be an opportunity to ask questions to ask a question you may press star than one on a touchstone phone to withdraw your question please press start than to please note that this event is being rico or did i would now like turn the converts over to juliana melissa director of investor relations please go ahead
spk_1: thank you can good morning and thank you everyone for joining us to review the financial results of a fledgling corp for the third quarter of twenty twenty one with me on this conference call today are dominic in the chairman and chief in the topic there their and irene oh or chief financial officer and would like to caution you that the course of the car and as the may make projections are other forward looking statements regarding events or future financial performance of the company within the meaning of the safe harbor provisions of the private security litigation reform act of nineteen ninety five eight forward looking statements may differ materially from the actual results to to a number of read and uncertainties for more do description of risk factors that could affect the companies operating without please refer to are filing for the securities and exchange commission including our annual report on form ten a for the year ended december thirty first twenty twenty in addition third the numbers represent call pertain to death in numbers please refer to the banks regulatory filings and okay filed today for the reconsideration of gap on get financial measures during the course of this call we will be referencing a flight deck that is available as part of the webcast and on the investor relations site as a reminder to date cause being recorded and will offer be available in replay format on investor relations website i will now turn the call over to dominic
spk_2: thank you juliana good morning
spk_3: thank you everyone for joining us florida call i will begin to review of our financial result with fly three or presentation this morning we reported third quarter two thousand and twenty one net income of two hundred twenty five million or one dollar fifty seven thousand for sure form organic down she growth drove a twenty one person and are large increase in revenue quarter or
spk_4: to fix four hundred sixty nine hundred
spk_3: the increase in revenue solidified would expand discipline drove pre tax free provision income group of twenty six percent annualized for the third quarter to three hundred and two million
spk_5: our pre tax provision probably go to raise you continues to be in the three leading and was two percent for the third quarter of two thousand and twenty one
spk_4: we recorder a negative ten million dollar provision for credit losses of course
spk_3: as a quality continue to improve nonperforming assets
spk_5: decrease quarter over quarter and that charge on remain low at the same time we maintain a healthy alone losses at
spk_3: on three percent of long as of september thirty two thousand and twenty one in some return track to have one point five percent on average efforts fifteen point seven percent on average equity and seventeen point two percent on average tangible equity for the third quarter of two thousand twenty one
spk_6: bly for present be summary of are bad option
spk_3: as of september thirty two thousand twenty one of them are total assets crossed sixty been and total loss reached record of forty point five billion excluding paycheck protection program loans total loans ten or eleven percent and analyze from june thirty two thousand and twenty one
spk_4: third quarter production and long whoa will well diversified across all our key loan portfolios of vienna
spk_5: to that your mortgage and commercial real estate
spk_2: you to date for the first nine months of two thousand and twenty one on don't tempt and analyzed excluding ppp
spk_3: for the full year of two thousand and twenty one we are increasing our long growth outlook to arrange of ten to eleven percent up from api range of nine to ten percent throughout two thousand twenty one long growth has been broad based across or out for years and cheat
spk_7: and at this and at this point
spk_3: we expect us will continue for two thousand and twenty two overall we anticipate that see a nylon growth will be the strongest based on continued good execution from our front line
spk_8: and rebounding economic backdrop
spk_4: in the third quarter deposit grow continue to be very strong as of september thirty two thousand and twenty one total deposits reached a record of fifty three point four billion up seven hundred seventy four million or fix to send analyze to form june thirty
spk_3: non interest bearing deposit grew one point four billion or twenty five percent annualized to a record twenty three point two billion as of september thirty linking up forty three three percent of total deposit a courtroom
spk_4: and up from thirty six percent a year
spk_5: turning to fly five you can feel strong capital ratios as of september thirty two thousand and twenty one we had a common equity tier one ratio of twelve twenty percent
spk_4: total capital ratio of fourteen point two percent which provide have a meeting with meaningful capacity for future group
spk_5: book value per share and tangible equity prussia would both have three percent quarter over quarter he's worth board of directors
spk_9: have declared
spk_4: fourth quarter two thousand and twenty one dividends for the company's common stock
spk_5: the common for cash dividend of thirty three son is payable on november fifteen two thousand and twenty one two stockholm's of record on november fourth two thousand twenty one
spk_4: moving on to a discussion of up of loan portfolio beginning was fly six
spk_5: he and i for outstanding excluding ppp were thirteen billion as of september thirty two thousand and twenty one an increase of twenty one percent annualized from june thirty total see and i commitments were eighteen point nine billion as of september thirty a sequential increase of twenty six percent annualized we achieved a strong rate of see and i grow despite a slight lower utilization rate which was sixty nine percent of a september thirty compared with seventy percent of june two
spk_6: on an average bases via nylons excluding pvpv grew by sixteen percent enter lived in the third quarter we expect to continue to see strong growth in fear nylon balances and commitments in the for for
spk_5: third quarter long drove with spread across london team and geography
spk_3: by industries we song storm that growth to quoted from technology private equity consumer good general manufacturing and hotel
spk_10: an entertainment
spk_5: it was indeed a well diversified quarter in terms of growth i would also highlight that the private equity growth do scored a well exemplified out cross border business
spk_3: rove came from clients domiciled in the united states hong kong and in mainland china a court accounting for four percent of our total long before you were one point seven billion of long domiciled in china subsidiary bank an hour hong kong branch
spk_4: ninety eight percent of those portfolio consists of the an idol well diversified well diversified by industry
spk_3: these loans or up from one point six billion as of june thirty flight seven and eight shows the details of our commercial little staple for which is well diversified by geography and property type and consists of low loan to value loans
spk_5: total commercial going to say long as we're thirteen point five million as of september thirty two thousand and twenty one up by four percent annualized from to thirty
spk_6: this corner we saw strongest growth by property type industrial cia and multifamily mortgage
spk_3: in fly nine we provide details regarding our residential mortgage before you which consists of single family mortgages
spk_11: and home equity line of credit
spk_3: residential mortgage loans were eleven billion as of september thirty two thousand and twenty one growing biden nine percent analyzed from june thirty
spk_5: during the third quarter real rigid native nine hundred eighty two millions of residential mortgage loans
spk_12: which was down from a record setting second quarter
spk_4: but but up by twenty percent from origination in a year ago so it
spk_5: i will now turn to call over to i read or more detailed discussion about half a cat had income statement i read
spk_13: thanks dominic i'll start with as a quality metric from flight ten overall i key alpha call the metrics continue to improve quarter of a quarter total criticized long to down sequentially by two percent to one billion or two point five percent of total long as of september thirtieth a twenty one year today criticized lump the by seventeen percent and the criticized loan ratio improved by sixty seven basis point from three point two percent of loaned as of december thirty first twenty twenty order of a quarter nonperforming athletes were down by twenty four percent to one hundred and seventy three million or twenty a base of point of total assets as of september thirtieth year to today nonperforming out the decreased by twenty six percent the nonperforming out that ratio improved by seventeen basis points from boy five basis points about that the third quarter improvement and what not performing out it with largely driven by commercial real estate and oil and gas revolution our oil and gas lumpur pull over continued to decrease and commitment are now below one billion as got previously or goal was to reduce commitment to this level this is about the right size for us on fly the love and we present the component of our allowance for low massive allow a total five hundred sixty million as of september thirtieth twenty twenty one one point for one percent of loans excluding ppp compared with five hundred eighty six million or one could be to as of june thirtieth the quarter of a quarter reduction in the alone largely were flop an improved macro economic forecast know charge off were essentially unchanged at thirteen and a half million in the third quarter compared with thirteen point three million in the second quarter than that charge awkward show with thirteen basis point of average loan analyzed for both a third in certain quarters during the third quarter we recorded a negative ten million provision for the credit loafers compared with a negative fifteen million provision in the second quarter currently weeks back to record and that the provision of approximately ten million for the fourth quarter similar to the corner and now moving on to discussion of our income statement on fly twelve the slide summarizes the key line item of the income statement which helped with got the more detail on the phone flood and on interest income included in interest rate contract and other derivative are marked mark get adjustments which were a positive two and a half
spk_14: million in the third quarter compared with a five million law firm the second quarter the the primarily relate to changes in the credit valuation adjustment on the slide c be a marks are included under the other line of non interest income amortization of tax credit than other investments increases quarter two thirty eight million compared with twenty seven million the second quarter reflecting the impact of investment that close during the third quarter for the fourth quarter we anticipate that the amortization of packed credit and other documents will be approximately thirty million
spk_15: the third quarter income tax expense with forty eight million and the effective tax rate would seventeen point five percent the year to date effective tax rate for the first nine month of twenty twenty one was sixteen percent and weeks back that the twenty twenty one for your effective tax rate will be approximately seventeen percent
spk_14: while now reviewed the key drivers are like net interest income and enters margin on flights thirteen to sixteen starting with the average balance sheet though quarter average low the forty billion grew by brew hundred thirty eight million or three percent linkohr and life and by one point one billion or twelve percent your life excluding ppp six hundred forty five million about ppp loans were forgiven by the f b a during the third quarter door quarter average deposit of fifty three point five billion or up by three point three billion or twenty six percent link quarter and alive led by growth a non interest bearing demand deposits which increased by three and a half billion with a strong deposit broke or average alone to deposit ratio with seventy five percent in the third quarter down from seventy nine percent in the second quarter albert early as globe and third quarter with lucked into strong the perfect world on average basis into spray cash deposits would they do two billion security increase by seven hundred eighty six million and reproaches agreement increased by two hundred fifty three million
spk_13: turning to fly forty third quarter two thousand twenty one that interest income of three hundred ninety six million with the highest quarterly net interest income and the history of be swept grown by twenty percent like were analyzed income related the ppp loan with the team million and the third quarter consisting of twelve million and bird bees and three million of interest and come out of september thirtieth we have thirteen and a half million a ppp different both the remaining to a quarter of a quarter the gap net interest margin contract contracted to stubbornly in the third quarter a decrease of five basis points from the prior quarter excluding ppp the third quarter adjusted net interest margin of to sixty four contracted by nine basis points the country
spk_14: as you can see from the waterfall chart on the slide the variability of our net interest margin comes from excess liquidity the quarter of a the decrease and the net interest margin for the third quarter with largely driven by the increase in average passionate interest bearing deposits with bank due to the strong average deposit rope the impact of the with a negative pen basis points the margin a margin had went from incremental lower app yield with offset by lower costs of interest bearing fun and a higher share of dd a valid don interest banks usually video in the department
spk_13: quarter of a quarter or robust net interest income growth came from logo and incremental purchases of security and repo agreement and for the full year we expect and i growth of turned eleven percent excluded the impact of ppp
spk_14: twenty two flights of team the third quarter average low yield was three sixty one and exploding then path ppp be adjusted lonely old with three fifty six down by to basis points from previous the eight in the second quarter of twenty twenty one turning the flight to see or average cost of the problems for the third quarter drop the twelve basis points an improvement of to basis points from the second quarter the spot raid on total deposits was eleven basis points as of september thirtieth also down by to basis points from june thirtieth or cough of the path of declined of maturing higher rate cds the price to current market rate and we lowered the wraith the paid another account the average cost of cds and the third quarter with thirty five basis points a drop of five basis points from the second quarter and the third quarter we originated a renewed by point three billion of domestic cds and a blended right
spk_13: of nightly basis points and a weighted average duration of one month over the course of twenty twenty one many of a higher price feeling of already we price down in the fourth quarter we have four point one billion of domestic see these maturing and a blended rate of twenty five basis points of which nine hundred million originated when deposit rates were higher but the blended wait
spk_14: of thirty seven basis points moving on to be and come on flight seventeen total non interest income and the third quarter with seventy three million an increase from sixty eight million in the second quarter customer driven fee income and that gave on sale of loan was sixty three billion essentially flat compared with the second quarter and up thirty one percent
spk_15: year over year quarter of a crow quarter of a quarter growth and deposit account be an interest rates swap revenue and that be alone fail games will offset by decreases in lending be and then wealth management have a year the growth and be income reflect you customer acquisition particularly for gts and up back
spk_14: beyond rebound and uncovered related trough beyond quarter to quarter volatility we are positive about the year over year trends and be income and momentum for future growth
spk_13: moving onto flight eighty third quarter noninterest expand was two hundred and five million excluding amortization of tax credits and other investments and pour the popular amortization adjust the not interested spent one hundred and sixty seven million in the third quarter an increase of five million or three percent sequentially the largest quarter of a potent change what other operating expenses which increase largely due to higher loan related expenses and charitable contribution the third quarter adjusted efficiency way show
spk_14: with thirty five point six percent compared with thirty six point three percent and the second quarter while achieving industry leaving efficiency we continue to make investments and people have nobody to expand our bacon capabilities and product offerings what that are now have you are updated for your outlook for twenty twenty one on
spk_16: flight nineteen
spk_14: we've updated our full year twenty twenty one outlook relative to a quarter to go for the for your of twenty twenty one compared with our full year twenty twenty result we expect year over year low growth excluding ppp and the range of and eleven percent up from the prior range of nine to ten euro year i just the net interest and come grow up excluding ppp in the range of tender loving person unchanged from a prior outlook or increased lung both outlook the good foundation for robust net interest grow that interest income growth and twenty twenty two even though it does not literally chef the four year twenty twenty one growth outlook adjusted not interested expense go exploding tax credit amortization of five percent unchanged from a prior outlook based on our macro economic forecasts and logo about look at this point we expect a book on negative provision for credit losses of ten million and the fourth quarter similar to what we recorded in the third quarter this is a change from a prior outlook of your provision expense and the second half of the year we currently expect that before your twenty twenty one that of tax rate will be approximately seventeen percent exploding the impact of tax credit and then we all thought anticipate that the amortization of pack court of another investments will be approximately thirty million for the fourth quarter this is the update from a prior outlook of a fifteen percent for your tax rate with that are now trying to call back over to dominic for closing remarks
spk_12: q idea and clothing this was another quarter of outstanding without what you worked
spk_2: and we expect a throng finish to two thousand and twenty one
spk_3: i would now open up the call to questions operator
spk_0: thank you we will now begin the question and answer session to ask a question press star than one on a touchstone phone if you're using a speaker phone please pick up your handset before pressing the keys if you'd like to withdraw your question please press star than to we ask that analysts please limit themselves to to question guns at this time we will pause momentarily to resemble our roster and the first question comes from abraham going to wallow with bank of america please go ahead
spk_17: good morning the morning they can i guess don't let go you mention the earth expectations was strong loan gotten into twenty twenty two given by fee and i just don't talk to us means you had pretty strong growth even this year you realize guidance of for the last three quarters as will take about two and the to
spk_2: what why a loan goes probably not gonna be some good in the meetings fifteenth of in the range give give us a sense of like what could be dead lift to that level of growth next year given the death of the in the see stalking pretty positively about the of pick up a lone demand and activity levels
spk_3: wow i mean at this point i wifi that the the trajectory is for two thousand and twenty two who will be somewhat similar to what we currently experiencing
spk_18: if you ot other states right now for us to provide guidance for two thousand and twenty two we always provide our two thousand and twenty two guidance in in our january fourth quarter call so but you know so far why look at the pipeline and a poor quarter know things are going to a good i'm in particularly in a p
spk_6: and i
spk_11: sector and a we feel that we will be able to continue to have that kind of growth based on what we share in our guidance
spk_19: two and the you had the tend to eleven percent you know how enjoy school
spk_17: got it and
spk_5: just type to that a a you you mentioned the loans into china shabaab from one point six to one point seven billion just remind us in terms of the strategy there other things that you're doing a bit differently today was two or three years ago that could lead to a lot more of a good contribution from the china sebo the next year he and going
spk_3: photo
spk_20: in terms of china are in fact i would say that overall east was bridge banking strategy you know we pride ourselves to be the financial bridge between eight and the west and are we've always look at
spk_21: our value proposition come from our knowledge and expertise of knowing dm directory
spk_3: change and
spk_4: had a bowl of us and china
spk_3: and because of that we can help business are like chinese business to do a business to do business more effectively and united states and vice versa
spk_6: so we actually are able to in fact for the last twelve months i would say that wouldn't benefit tremendously from continue to build new business in us
spk_22: that have cross border banking leads you see that are in now see and i
spk_6: long growth you see that in our some of us yeah human go and absolutely so ethics and treasury management the income growth
spk_7: so the cross border banking business or help us tremendously in the united states
spk_23: now the china hard and hong kong both hong kong and mainland china our strategy to have always been that because we have the knowledge because we also have the presence that will continue to feed good high quality
spk_24: the cross border business in us that is the main part now but in the meantime obviously we still growing in china what you'd notice is that the percentage grow
spk_3: ah of long in china
spk_6: maybe higher than us because the base small to be mind that we only come into one point seven billion is only four percent of our total law so if next year
spk_25: they'll grow you know in a percentage within their own region
spk_7: violets say fifteen twenty percent on that is not something that's surprising at all is something that given simply because that the is so low whoa we're not we're we're going to be comfortable to let it grow to whatever the size should be
spk_6: based on a neat
spk_3: but most important thing is that we are looking at high quality as a growth and clients that is hope
spk_6: and a have business that an expandable sustainable and profitable and because the base is small so we got plenty of room so but we're not out there are trying to aggressively low the china portfolio just to make sure that even out the push
spk_26: manage or anything like that is all based on what are deeply clients that we can actually do banking would and one will find one
spk_0: who walk with him and that's pretty much to our philosophy and so far we've been benetton benefiting from endlessly particularly in us up as cross border banking business
spk_27: understood thanks with that don't thank you
spk_28: thank you
spk_14: the next question comes from cancer be with morgan stanley please go ahead
spk_29: aren't great thanks
spk_13: i have to question so first of all key to establish think about how how did model out that credit valuation just an ashtray contract line an odyssey was greatest quarter but this one understand the sustainability thanks
spk_15: yeah i mean i think the and the be a adjustment is really a function all kind of assumptions around kind of the credit component other but also largely know what's happening where read that a pen year
spk_28: swap right in particular so honestly i think it's hard to model that point the point in particular but i think if you follow as far as what's happening what the tenure know that probably the largest indicator that helpful can
spk_14: and trying to understand what that mark gonna be a quarter over quarter god and he said okay and then i just as a second question your non interest bearing deposit growth just been standing think things up over seventeen percent sequentially this quarter you start her what's driving growth thanks
spk_29: now you know we're delighted where the girl that we have had in the path that across the board if you look at all for my retail branch of a consumer account for number of accounts and increase the customers have increase small business we've been very successful were kind of
spk_15: promotions and then also our product packages that we've created that really neat the need them are small but customers i think with that probably from a dollar a perspective the largest growth has con in us domestic a bright commercial
spk_30: how and i we've been very excited from the perspective of the investment that we've made the last several years for gps product capabilities and people you're really be able to utilize that didn't help our customers so the long and short of it is you know we're very excited about the growth the customers that we've onboard and and we think that that
spk_0: something that can continue realistic way i would say can now there is a certain amount of with kind of the stimulus that kind of the monetary policy there is a certain amount of excess deposit in the system where realistic about that as well but overall i think the trends are very positive that we think that
spk_31: we can continue the departed world momentum
spk_32: hi thank you
spk_31: the next question comes from dave rochester with compass point please go ahead
spk_6: eg more to go the morning
spk_7: back on the deposit commentary that all sounded great i was just curious if you think that momentum can effectively cover one group that you guys are expecting next year the you can find that long road with the cars or growth
spk_5: well we are currently at seventy five percent long to deposit racial so we got a lot of cushioned right
spk_33: a hooker as something that i think that is that the loan to deposit cushion that you know obviously the coughing some summer of the margin pressured by obviously we have such a strong hill that interest income you know role that you know our volume you know way overcome you know this module depression a compression slipped the the way i looked at a that we got plenty of room so that would not be a concern
spk_6: and for us for now and with to expect you to continue deposit growth simply because will continue to bring a new climbs i look at the pipeline close to and nine
spk_3: they're going to be new clients that would be booking mandate when they come in god
spk_33: that we provide you know a
spk_5: a long commitment to them it comes with operating accounts and and yo access to the quoted a for money market account and so so now i do want to chew up out mentioned that are it it ended up back in two thousand and twenty you know in the second half of
spk_31: last year that do to ppp we did we just did a quite a tremendous the great job and are generally not a good goodwill and brought in a lot of new clients and we were able to benefit from that and book lot of new customers and still continue to through that goodwill and get new
spk_34: clients with for oil so i would expect that in maybe in two thousand and twenty two may be that got new new new clients acquisition may not necessarily be as strong as the lash you're you're unhappy so simply because up it's somewhat unusual in two thousand and twenty before that ppp such
spk_5: we should but you know these good will sometimes out one customers got happy hotel five ten of their friends and then we'll continue to pick up business this will be something that i would expect that maybe is going to continue on to the next several years but in terms of the the velocity of grow may not necessarily be a strong from the sub deposit down so i sort of commercial deposit side
spk_3: and now i'm excess good and and maybe this up from i follow up switching to feed me mentioned seeing a lot of them and on there for future growth was just wondering if you've got a lot of contributing lives here where do you expect to see the strongest growth and i know it's republic difficult that how you think it about that
spk_35: pace of that growth going on
spk_6: i think that for we use you have you looked at these tip on line items you know like foreign exchange and
spk_4: audio cash management treasure management you know or the from the deposit side these other areas so we have tremendous growth because as we just mentioned about two things one is that the domestic commercial small middle sized businesses that are moving their banking relationship over to use where's
spk_6: dad generate a lot of fee income in our our treasure management ah
spk_36: line item
spk_5: ah the other one cross border business that i mentioned earlier would pick up a lot of new car passport or klein's again foreign exchange fees and also treasure management area that those are the two that i would say that
spk_33: mitt
spk_5: pretty much in the dish and to i mentioned above ppp and in terms of our the china situation actually more us bank may not be as
spk_6: we're excited about working would shy chinese subsidiary company in united states that we end up benefiting from it will also have a situation of internal technology improvements
spk_5: as we talked about the last two or three years we have continue to invest in upgrading our technology platform our system and our product offering so these product offerings particularly in the treasury management area
spk_3: have put us in your position that we have the ability to service much larger commercial clients with more complexity in terms of dare cash management needs so all of that have resulted in us having these kind of globe now
spk_37: are we think they will continue but in terms the pace volume you know and so called a little i think that will would need to take a look i mean at this point i might my sense is that
spk_0: if we do not continue to innovate and continue to provide come up with new products will probably still down but you know east west doesn't stop working and then just sit and wait for other business come in will continue in two thousand and twenty two to develop new product
spk_38: kinda dirty and looking to even he would your graphic area and start identify new prospect and through that will continue to upgrade our system to and provide even better products and through that hopefully we'll country to maintain some sort of momentum going for right all the power their like the next question comes from jared shot with wells fargo securities please go ahead
spk_39: i good morning thank you
spk_33: you're shifting back to to the growth outlook and the the optimism their a breakdown
spk_40: the the difference between i guess your expectation that customers increase the own optimism in that utilization rate search string back to normal versus the success you had with acquiring new customers
spk_3: are you are you expecting that twenty two
spk_41: normalization of of you was a canary i guess if not what's holding holding those concerns back
spk_6: well i think that utilization rate
spk_42: it would have a lot to do with how the us economy is going to be like in two thousand and twenty two as you as we share with you had our our we that that
spk_43: fact the
spk_44: utilization rate no amount of she and i dropped from seventy two sixty nine just slightly you know that the if you look at the long growth
spk_33: alesha night
spk_45: long thousand school was twenty one percent annualized but ten our commitment growth was higher it was a twenty six or twenty eight percent something around that range so we actually brought in more customers that we bought more new loans
spk_46: i just that haven't been fun that yet
spk_47: the what i looked at in two thousand and twenty two
spk_33: the i would expect that customer would actually increase the utilization
spk_48: that while i was expect that even for five months ago and then happen just keep coming down so so it's it's a matter of time as a matter of time i mean something that i wish i had to crystal ball to predict what the economy's going to be like to give applies the confidence to start
spk_38: our drawing up the line but as of today overall about a well diversified portfolio ah was many different industries somehow and average out to more or less the same and we'll see what it's going to be like in two thousand and twenty two i just like interest rate you know every year we wait
spk_13: poor little bit of a inc power hike hadn't happened but eventually something will happen so i would expect that know didn't like there's no way also a some point what's going to start rising
spk_15: it actually i'm just like all up your capital continues to grow and you look at the dividend payout ratio it's under twenty one percent
spk_49: you have the the buyback authorization out there what are your thoughts on
spk_0: capital management more broadly and then the that buyback more specifically know that the worst of the kobe viewers are are behind us
spk_50: yeah you know we are first and foremost you know our focus on returning the capital to shareholders if the form of strong organic go than the able to utilize that and the most optimal way it would you have the authorization outstanding been a while so honestly at this point we'd go back to the board with any action
spk_51: that we would take and that's not something that were a die waiting at this point in time quite frankly because of the growth that we have and optimism we have on the dividend side generally speaking on an annual basis you know that discussion with the board we evaluate and want to make sure that the dividend payout ratio and the yield are appropriate especially rather
spk_52: attempt to you know our expectations about the utilization of capital and then also a relative to their peers thank you
spk_15: you're welcome
spk_14: the next question comes from branding king with truest please go ahead
spk_52: really good morning
spk_53: good morning way
spk_15: so sorry bro don't mention industrial motor family been the source to the bad weather the loose know within two q what would the level pay down and a quarter compared to last quarter in how do you see their seek them out in fort you
spk_52: i
spk_53: generally we expect that the our theories top i think on the pricing we see that as far the lot of competition and out okay has been no clients were maybe we're not just competing on pricing structure overall as we look at the pipeline ah and you know what we expect and and we do think fourth quarter is gonna be a little better than third quarter and then all thought this point in time given the visibility that we have we also think that the payoff would decline lightly
spk_52: and ready mortgage was mostly again strong this quarter could you just might as well with the purchase and refinance makes in volume and is a certain regions to for me but in others when it comes to reverse mortgage and know a lot of education a thing
spk_14: mobile normalization for his resignation volumes
spk_15: you're branded i don't have a the zach staff but generally speaking at this point in time most of the loan that were originating or refinance and are purchase excuse me versus refinance or batch threat that change that happen for a period of time and prof you know i think in the market that were in and the markets that we have strong brand
spk_14: problem is you know most of these are referral the come into our branch network you know our our the volume of origination is predominantly in there it would have what the branch of you know california southern california another california and they're all the new york metro
spk_0: and the a and murphy with vision goggles with another big business like new fortune
spk_54: biography with essentially good a charge a level around
spk_55: i guess like second quarter oh looks like the network reserve to be around
spk_54: yeah and thirty or a little below one thirty that kind of a trap level or before your live now couldn't ago or even lower a twenty two
spk_55: now you know about a great question as you know the allowance calculation is largely driven on the macro economic outlook of course you know i think as we look at it and part of the reason neither were we felt that the negative part of it is driven by the macro economic outlook and allow them to
spk_54: road now i think that's why ultimately we had the book the negative provision on a goforth base of okay that that continues to drive that i think as a trough perspective you know and your numbers are not at all i think that not complex math there about one thirty or so or that is something i think that's within the realm of possibility in the whole third quarter and then if we look at twenty twenty two depending on the macro economic forecasts depending on what we're seeing in the portfolio and you think that number could come down from that level
spk_56: the next question comes from rock vendor really with via please go ahead
spk_57: question
spk_58: following up on the roof
spk_33: was
spk_59: but got the number correctly
spk_60: like you're rich originations there
spk_5: billion from a year ago
spk_55: that should really strong i'm wondering if that just wondering what's what's driving that because
spk_15: not saying that across the
spk_33: the board where
spk_61: year
spk_33: much closer
spk_6: are you talking about a year to date are you talking about just a quarter
spk_62: you're you're really
spk_6: but we won't be here oh okay
spk_63: oh
spk_54: sort sorry can you repeat a quick though you you're saying that that with have you today origination is about and about last year that you're wondering why so small exactly
spk_64: very very outside
spk_59: dread
spk_14: but we have a are you know a very unique product right of most of what were you know they can reduce dog ah but hi downpayment single family and he lock our product and i've been for our customer base that's something that very attractive for them if a while because i think we're looking at the combination of both them of amateurs rifai and he log and we have done and the
spk_29: very well actually not just for the last twelve months we are consistently done well with residential mortgage or will i would say for the love we have four years now granted you know everyone in the banking industry that in the mortgage business have done well because of the rate
spk_0: have come down and which benefit people to think about refinancing and with colbert more people purchasing homes and so to that extent our customers are no different than the market the only difference is that our customers can to pay anywhere forty fifty percent
spk_32: or more down payment
spk_65: but beyond that i'm in the other characteristics the smaller the same bicoastal overall market has been pretty strong and there's a lot of purchase and before going on okay as a follow up with like
spk_3: get comfortable in terms were rates we're deploying pretty aggressively into and us securities in the quarter
spk_2: any sense of where
spk_5: catch level good
spk_33: could the year now i the if rep a hard question to answer you know all can talk about what we get and the deliberate actions we talk in the third quarter your overall in the third quarter we knew that we'd have about three hundred billion of security
spk_7: call them return to we we deployed some of that also the ongoing analysis of passion to the pocket level that we had and then additionally about we said before and are prepared and part we had two hundred and fifty million ppp love that will deploy that cash as well so we took all that into consideration generally speaking the security
spk_33: that we get purchase now we wanted to be mindful what the duration which with a little bit lower than the existing duration or as it six thirty of a portfolio but just keeping in mind of being able to kind of we deploy nor exercise cash and to earning africa ah but maintaining kind of the duration that we think the appropriate given kind of work interest rates are golden that been focused that we've had in the fourth quarter you depending on the cash activity that we have the excess liquidity certainly this is something that we're evaluating as well but would really not extend into duration out further
spk_7: the next question comes from chris mcgrady with kbw please go ahead
spk_3: morning the morning
spk_6: the morning a lot of discussion on been quarterly called the sort of
spk_65: isn't about inflation and and court richard that you guys have done a really nice job over the years the cape cod contain and have a very large but i'm wondering the ability to hold that into the you're edited next year
spk_2: well we didn't hold back much know we have five percent growth inexpensive know which show
spk_0: for more painful in my view but then we we need to scramble wouldn't need to spend you know that is that up investing into the system
spk_66: ah continue to improve our products the entity and most importantly ah pay all people and recruiting you know on both new challenge and then promoting
spk_14: a towns with within and those are the things that we've been doing you're in and euro and will continue to do in two thousand and twenty two frankly i've you recall we were used to have you know maybe two to three percent a typo go
spk_29: year to your expenses increase and and we wrapped up to five percent
spk_66: and then and the guidance and so those are kind of things that we because of in anticipation inflation out there that we would be to us than will support you know and and and also depends on how of
spk_0: the economy goes and then the business go and and we will continue to spam prudently ah if we continue to grow even stronger that require more manpower we're not going to shy away from you know increasing their expenses
spk_67: to support the business because the revenue while we took care of itself you know so i was dope that it is that i wouldn't be too
spk_13: focus on the expand can only go up by certain percentage because of will spend prudently and wisely
spk_68: and whatever we spend is gonna add into more prompted more revenues and poor profitability and and allow us to have more sustainable growth and that pretty much as the philosophy of use west bank
spk_67: that great if i could followed it through town like get five percent already reflects
spk_69: wage pressure that might be evident in anything above it dominic would just would be correlated to the rabbit rabbit to grow stronger a disappointing know the five percent is what with projector for the end of the year you know and two thousand and twenty two obviously will provide additional guidance
spk_1: the next question comes from david cheer vini with wedbush securities please go ahead
spk_70: i think so wanted to ask about loan pricing you much about the competitiveness for c area was curious about how it looks on the sea and i sighed and then more broadly when i look at the average low in yield in the quarter at three point six one percent i was curious how that compares to new loan origination
spk_15: since more broadly you know david i can kind of give you some information as far as when the new loan yields are generally speaking out there are holding up okay you know if we look at of just go to of them for you single family we look at where we were we were at it you know up on an average of about four twenty four september few you look at sea are we including more hype and we were at about three fifty as far as blown yield holding steady really from where we were before and see and i and you origination know the rubble
spk_0: i'll bet up before yields of three forty or so and for new regulations and the third quarter
spk_3: great thanks very much
spk_71: again if you would like to ask a question please press star than one to join the queue
spk_0: the next question comes from clark right with the a davidson please go ahead

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