
Advanced Micro Devices Inc
NASDAQ:AMD

Advanced Micro Devices Inc





In the dynamic world of semiconductor manufacturing, Advanced Micro Devices, Inc. (AMD) stands as a formidable player, innovating relentlessly in the high-tech landscape. Founded in 1969, AMD has steadily carved out a prominent position in the marketplace by delivering cutting-edge microprocessors, graphics processing units (GPUs), and related technologies. The company's journey can be likened to a strategic chess game, where each move is meticulously planned to outwit larger rivals like Intel and NVIDIA. The core of AMD's business revolves around designing and selling advanced computer processors and graphics technologies used in everything from laptops and gaming consoles to servers and workstations. By leveraging its state-of-the-art architecture, notably the "Zen" core, AMD has managed to capture market share and redefine performance standards across various computing platforms.
Under the leadership of CEO Dr. Lisa Su, AMD has shifted its focus towards high-performance computing and visualization. This pivot has been instrumental in the company's recent revenue growth. Their business model primarily hinges on licensing intellectual properties and selling integrated circuits to computer manufacturers and data centers, which are increasingly pivotal in today’s cloud-centric environment. AMD's revenue streams are primarily derived from two segments: Computing and Graphics, and Enterprise, Embedded, and Semi-Custom. The former focuses on consumer products such as PCs and graphics cards, while the latter abstracts the lucrative server and embedded solutions space. This dual-segment strategy not only diversifies AMD's offerings but also insulates it from the volatility sometimes observed in the consumer electronics market, allowing it to thrive even as macroeconomic challenges persist.
Earnings Calls
Atrium Mortgage demonstrated solid performance in Q3, reporting an EPS of $0.26, consistent with Q2 and up from $0.25 last year. YTD EPS reached $0.79, the second-best in its history. The mortgage portfolio grew to a record $926.3 million from $908 million. A robust loan repayment of approximately $150 million is expected in Q4, following a drop in Stage 2 and 3 loans by 18%. As a result, Atrium increased its monthly dividend by 3.3% to an annualized rate of $0.93. The average mortgage rate dropped from 10.93% to 10.52%, aligning with recent interest rate cuts, although market conditions remain uncertain.
Management

Dr. Lisa T. Su is a prominent business executive and electrical engineer, currently serving as the Chair, President, and CEO of Advanced Micro Devices, Inc. (AMD). She was born on November 7, 1969, in Tainan, Taiwan, and moved to the United States in her childhood. Dr. Su earned her bachelor's, master's, and doctoral degrees in electrical engineering from the Massachusetts Institute of Technology (MIT). Throughout her career, she has been recognized for her technical acumen and leadership skills. Before joining AMD, she worked at various technology companies, including Texas Instruments, IBM, and Freescale Semiconductor. Since joining AMD in 2012 as Senior Vice President and General Manager, Dr. Su has played a crucial role in reviving the company by focusing on high-performance products. She became the President and CEO in 2014 and is credited with leading AMD through a period of significant growth and transformation. Her leadership has helped AMD develop and release competitive products in the CPU and GPU markets, challenging industry leaders and significantly increasing the company's revenue and market share. Dr. Su's contributions have earned her numerous accolades, including being named one of the "World’s Greatest Leaders" by Fortune magazine and one of the "Most Powerful Women in Business." She is also a fellow of the Institute of Electrical and Electronics Engineers (IEEE) and a member of the National Academy of Engineering. Her strategic foresight and commitment to innovation continue to shape AMD's future as a leader in technology.

Jean X. Hu, Ph.D., is a prominent figure in the technology and semiconductor industry, currently serving as the Chief Financial Officer (CFO) of Advanced Micro Devices, Inc. (AMD). She joined AMD in 2023, bringing with her extensive experience in financial management and strategic planning within the tech sector. Before her role at AMD, Dr. Hu was the CFO of Marvell Technology, where she played a crucial role in driving the company’s financial strategy and contributing to its growth. Her leadership in finance extends over two decades, with significant tenures at other prominent technology firms such as QLogic, where she also held the position of CFO and served as interim CEO. Dr. Jean Hu holds a Ph.D. in Economics from Claremont Graduate University, showcasing her strong academic background, which underpins her analytical and strategic approach to finance and corporate management. At AMD, she is integral in overseeing the company’s financial initiatives, supporting its long-term growth objectives, and enhancing shareholder value. Her expertise is particularly valuable as AMD continues to expand its influence in the semiconductor industry through innovation and strategic acquisitions.

Forrest E. Norrod is a prominent executive in the semiconductor industry, currently serving as Senior Vice President and General Manager of the Data Center Solutions Group at Advanced Micro Devices, Inc. (AMD). In this role, he oversees the company’s data center products, which include the EPYC line of processors aimed at enterprise and cloud computing applications, as well as the development of next-generation server and data center solutions. Norrod joined AMD in 2014 and has played a critical role in expanding AMD's presence and competitiveness in the data center market, which has been traditionally dominated by other industry giants. His leadership has been instrumental in driving the architecture and strategy of AMD’s server technologies, focusing on performance, power efficiency, and total cost of ownership to meet the demands of modern data centers. Before joining AMD, Norrod had an extensive career at Dell, where he held several leadership positions. Most notably, he served as Vice President and General Manager of Dell’s Server Solutions, where he was responsible for directing the business and engineering operations for its server products. This experience provided him with a deep understanding of the server market and has significantly contributed to his success at AMD. Norrod's educational background includes a Bachelor’s degree in Electrical Engineering from Virginia Tech and a Master’s degree in Electrical Engineering from Stanford University. His strong technical expertise and strategic vision have significantly influenced the innovations and growth of AMD's data center business.

Philip Guido is the Executive Vice President and Chief Commercial Officer at Advanced Micro Devices, Inc. (AMD). In his role, he is responsible for developing and executing the company’s commercial strategies and ensuring alignment with its overall business objectives. He oversees the global sales organization, customer and channel partnerships, and drives initiatives that enhance customer engagement and experience. Prior to joining AMD, Guido had a distinguished career at IBM, where he operated in various senior positions and played a significant role in transforming IBM’s business units and advancing innovative solutions. His extensive experience in technology sales, business development, and executive leadership makes him a key asset to AMD's executive team. Guido holds a degree in mechanical engineering and management from Rensselaer Polytechnic Institute. His career is marked by a commitment to strategic growth, team cultivation, and a customer-centric approach, further cementing his reputation as a leader in the technology industry.

Keivan Keshvari is a prominent figure in the technology industry, particularly known for his role at Advanced Micro Devices, Inc. (AMD). At AMD, he serves as the Senior Vice President of Global Operations. In this capacity, Keshvari oversees the company’s global manufacturing and supply chain operations, ensuring seamless execution and delivery of AMD’s innovative products to the market. His leadership plays a crucial role in maintaining AMD’s competitive edge in the semiconductor industry. Keshvari brings a wealth of experience to his role, with a strong background in operations, manufacturing, and supply chain management. His strategic vision and operational expertise have been instrumental in optimizing AMD's production capabilities, enhancing efficiency, and supporting the company's growth objectives.
Philip Matthew Carter is an executive at Advanced Micro Devices Inc. (AMD), a leading global semiconductor company known for developing computer processors and related technologies for both consumer and enterprise markets. At AMD, he has held various significant leadership roles where he contributed to driving the company's strategic initiatives and growth. Carter has been instrumental in leading teams that focus on innovation, product development, and enhancing AMD's position in the highly competitive semiconductor industry. His leadership skills and experience in technology development and business strategy have played a crucial role in expanding AMD's product portfolio and market reach. Throughout his career, Carter has been known for his focus on fostering a culture of collaboration and innovation, ensuring that AMD remains at the forefront of technological advancements. His work not only helps in developing cutting-edge products but also in establishing strategic partnerships and alliances that align with the company's long-term goals. Philip Matthew Carter's contributions are recognized within the industry, highlighting his expertise in driving transformational changes and delivering value to stakeholders.

Mark D. Papermaster is an accomplished technology executive known for his role at Advanced Micro Devices, Inc. (AMD), where he serves as the Chief Technology Officer and Executive Vice President. At AMD, Papermaster is responsible for overseeing the company’s engineering, research and development, and technology strategy. His leadership focuses on driving innovation and advancing AMD's semiconductor technologies, which play a critical role in the company's competitiveness in the CPUs, graphics, and adaptive computing fields. Before joining AMD in 2011, Mark Papermaster held significant positions at several other leading technology companies. He worked at Cisco Systems, where he was a Vice President and spearheaded the company's silicon engineering group. Earlier in his career, Papermaster spent over two decades at IBM, where he contributed to the development of numerous pioneering products and eventually served as Vice President of the blade server division. Papermaster also had a notable tenure as a Senior Vice President of Devices Hardware Engineering at Apple Inc., where he was involved in the development of the iPhone and iPod hardware engineering teams. With a Bachelor’s degree in Electrical Engineering from the University of Texas at Austin and a Master’s degree in Electrical Engineering from the University of Vermont, Papermaster has a solid academic background complementing his extensive industry experience. His visionary approach and technical expertise have been instrumental in pushing forward AMD's growth and innovation in the semiconductor industry.

Mitchell J. Haws is the Vice President of Investor Relations at Advanced Micro Devices, Inc. (AMD), a position in which he plays a crucial role in communicating the company's financial strategies and performance to investors, analysts, and other stakeholders. With extensive experience in finance, Haws is responsible for managing AMD's interactions with the investment community and providing insights to support the company's growth initiatives. His leadership is pivotal in ensuring transparent and effective communication between AMD and its shareholders, contributing to the company's reputation in the financial markets. Prior to his role at AMD, Haws accrued valuable experience in investor relations and corporate finance, further enhancing his ability to drive AMD's strategic financial objectives.

Ava M. Hahn, J.D., is an accomplished executive at Advanced Micro Devices, Inc. (AMD), serving in the role of Senior Vice President, General Counsel, and Corporate Secretary. In her capacity as General Counsel, she oversees the company’s global legal matters, including corporate governance, compliance, intellectual property, and securities. Possessing a strong background in law, Ms. Hahn provides strategic guidance on various legal and business issues aligned with AMD's operations and growth objectives. Before joining AMD, she held significant legal positions at several major companies, enhancing her extensive expertise in corporate law and governance. Her educational background includes a Juris Doctor degree, which has been foundational in her ability to navigate complex legal landscapes and contribute to AMD’s leadership team effectively. Ms. Hahn's role at AMD highlights her capability in managing legal challenges and supporting the company’s innovative initiatives, demonstrating her influence and leadership in the technology sector.
Welcome to the Atrium Mortgage Investment Corporation's Third Quarter Results Conference Call. [Operator Instructions] A reminder that this conference is being recorded, Thursday, November 14, 2024. Certain statements will be made during this phone call that may be forward-looking statements.
Although Atrium believes that such statements are based upon reasonable assumptions, actual results may differ materially. Forward-looking statements are based on the beliefs, estimates and opinions of Atrium's management on the date the statements are made. Atrium undertakes no obligation to update these forward-looking statements in the event that management's beliefs, estimates, opinions and other factors change.
I would now like to turn the conference over to your host, Robert Goodall, CEO of Atrium. Mr. Goodall, please go ahead.
Thank you, and thank you for calling in today. Our CFO, John Ahmad, will start by talking about our financial results, and then I'll speak about our performance from an operational and portfolio perspective. John?
Thanks, Rob. The business continued to produce strong results for shareholders over the quarter. EPS was $0.26 for Q3, which is above $0.25 in the prior year and consistent with Q2. Overall, Atrium has produced year-to-date earnings per share of $0.79, which is down from the prior year, but when put into a historical context, our year-to-date 9-month performance is the second best reported in our company's history.
We are also pacing well ahead of declared dividends of [ $0.675 ] so far this year, which is based on an annual rate of $0.90. Our steady results and improving credit risk profile, which we'll touch upon later, has reported a 3.3% increase in our monthly dividend beginning next month to an annualized rate of $0.93 per common share. At year-end, our quarter end, our mortgage portfolio reached a record $926.3 million, which is up from $907.8 million in Q2 and $893.6 million at the beginning of the year. This is a record for Atrium. While growth is not our main focus at this time, the business continued to successfully execute its strategic plan of focusing on lower-risk sectors with disciplined underwriting. In particular, single-family loans continue to be a strong focus of the business, represented 43% of total principal advances in the quarter.
Real estate market activity continued to remain slow as both capital for investment and consumers both remain cautious given uncertain market conditions. Principal advances were $58.2 million over the quarter and repayments were $42.3 million, both measures being below historical levels. The rate on the mortgage portfolio did come down from 10.93% to 10.52% during the quarter.
This was largely driven by the fact that the Bank of Canada had two 25 bed rate decreases during the quarter, but we've also continued to focus on lower risk profile loans as well. Even though the portfolio rate came down, the rate on our credit facility also came down. Credit facility is priced off prime in the market for short-term core loans.
The weighted average rate on our credit facility came down to 6.96% over the quarter compared to 7.33% in Q2 and 7.48% in the prior year. In terms of funding, we continue to employ a low leverage balance sheet with shareholder capital representing 54.6% of total funding sources. Credit facility currently has a limit of $340 million. We took advantage of that excess capacity to pay off our $25.3 million convertible debenture on the first business day of the quarter since it matured on June 30, fell on a non-business day. Subsequent to quarter end, we also successfully completed an oversubscribed bought deal share offering in public markets on October 4.
Including the over-allotment option exercised on October 25, total gross proceeds of $28.8 million used to repay our credit facility. Accessing the capital markets to shore up our capital base helps solidify our funding capacity and liquidity sources, which remains important given market conditions and provide funding optionality for the business in the event that the market for convertible debentures is not optimal in the near future. Provision of $3.5 million booked this quarter reflects increased credit risk in the mortgage book, although our credit risk profile overall is showing signs of improvement. Q3 provision has decreased quarter-over-quarter and year-over-year.
And the percentage of mortgages in stages 2 and 3 have also increased from 17.8% at the beginning of the year, 14.8% in Q2 and is now at 14.0% at Q3. We continue to make significant progress in terms of resolving loans and default, but still making prudent provisions where necessary without sacrificing our steady returns to shareholders.
Overall allowance represented 323 bps at quarter end [indiscernible] and up from 253 bps at the beginning of the year. Stage 1 general reserve represented 98 bps of the total and remains elevated due to a soft, but improving macroeconomic outlook. Overall, this was another solid quarter for Atrium.
We continue to maintain our high-quality portfolio despite slow market conditions by focusing on our preferred lower risk sectors. Continue to make progress in terms of managing credit risk through prudent provisioning, resolving loans and defaults and we further solidified our balance sheet with a successful equity offering just after quarter end.
It reflects the resiliency of our business model as we have been successfully navigating headwinds in the gross market. We also believe lower interest rates and inflation will promote better market conditions going forward, albeit slowly.
This will help support a modest increase in our -- that being said, we will continue to tread cautiously from both the financial and credit risk management perspective as we move forward.
Rob, I'll pass it back to you for portfolio and business updates.
We had another strong quarter. Atrium generated basic earnings per share in Q3 of $0.26 for the first 9 months of 2024. Earnings per share of $0.79 is the second strongest result in our 12-year history as a public company.
We increased our loan loss provision in Q3 by $3.5 million versus $4.4 million last quarter. Quarterly provisions are gradually reducing as we deal with our Stage 2 and Stage 3 loans. As you all know, we have always been proactive in making loan loss provisions, which will protect future earnings. Overall, the portfolio increased from $908 million last quarter to a record $926 million in Q3. Single-family and commercial sectors have been gradually increasing over the course of 2024, which is consistent with our business plan.
Atrium's average mortgage rate dropped from 10.93% last quarter to 10.52% in Q3, mostly due to [ 225 ] basis point reductions in the prime rate of interest on July 24 and September 4, respectively. Total of high ratio loans, that is loans over 75% loan to value was $90.1 million, equal to 9.7% of the total portfolio in Q3.
This total is down $5.1 million from Q2 when the balance was $95.2 million. And the good news is that since the end of Q3, over 50% of that total has been repaid.
In Q3, the average loan to value of the portfolio dropped slightly to 64.1% which continues to be within our desired range. Atrium's percentage of first mortgages in Q3 increased to a record 97.3%. Construction loans were virtually unchanged at only 4.7% of the total mortgage portfolio. As construction costs have recently stabilized and short-term interest rates have dropped, we're becoming more open to underwriting construction loans although it will not be a major part of our portfolio.
Currently after the end of Q3, Atrium completed a highly successful common share offering for total proceeds of $25 million to further support the growth and liquidity of our business. In late October, the investment dealers also exercised their option to a 15% overallotment totaling $3.75 million, which closed on October 25. We're gratified by the overwhelming investor demand for this offering. Turning to defaults. In Q3, the total of Stage 2 and 3 loans dropped by $5 million to $129.7 million. In fact, our combined Stage 2 and 3 loans have dropped over 18% from $159 million just 2 quarters ago.
There was a lot of progress in dealing with commercial loans in default during the quarter, as you will hear. I'll briefly describe each of the loans. First is the Markham townhouse site that was once owned by State View homes. A $1.5 million balance, which was [indiscernible] by the receiver was fully released during the quarter.
Second loan is in North Vancouver and totaled $51 million. We've been speaking about this loan for several quarters. This is the 4.5-acre site fully approved for multi-residential buildings with a GFA of 300,000 feet.
The loan was repaid shortly after quarter end, and resulted in a reduced loss of $2.1 million. As a result, we had a net recovery of over $4 million. The next loan is a condo inventory loan in Vancouver totaling $12.9 million. This loan is secured by 12 newly completed residential units, and we also have an assignment of a $10.5 million first mortgage on a parcel of land last appraised at $29 million. We estimate Atrium's overall loan-to-value at just 53% and definitely do not expect to incur a loss. Commitment letter from a nonbank lender has been received, which is scheduled to repay the loan in full.
We are advised this should occur before the end of November. We have the legal right to list the condo units for sale if this refinancing falls apart. The last 3 loans are located in Greater Vancouver totaled $34.5 million and are connected to a single sponsor. There were 4 loans last quarter a one $4 million loan was repaid in Q3 through the sale of the property and another $11 million loan was repaid just last night.
So we're down to 2 loans totaling $22.8 million. In Q3, we got the legal right to list the 2 properties for sale. So we made a lot of progress on this file and believe that we have adequate loan loss provisions in place for the final 2 loans.
As mentioned earlier, we increased Atrium's loan loss reserve in Q3 by $3.5 million versus $4.4 million last quarter. Atrium's loan loss reserve totals a very healthy $29.9 million equal to 323 basis points on the overall mortgage portfolio. This is up from 203 basis points 1 year ago. It's worth noting that we continue to have a large general reserve on our highest quality stage 1 loans.
Strongly believe that we have adequate provisions in place which will protect profits for the future. And that statement is backed up by the net recoveries on the 2 problem loans, which were repaid this quarter. I expect an unusually large number of loan repayments in Q4 in part due to the repayment of the aforementioned loans and default.
As a result, we expect that Atrium's portfolio will decline in Q4. While we would ideally like our mortgage portfolio to always grow from quarter-to-quarter, loan portfolio -- loan turnover in the portfolio is an indication of a healthy portfolio, especially in the depressed market conditions that we are experiencing today.
My economic commentaries is as follows: The economic news in Canada was uninspiring in Q3. Canada's third quarter GDP is tracking at less than 1.5% which is below the Bank of Canada's forecast of 2.8%. The unemployment rate ended the quarter at 6.5% after hitting a 7-year high of 6.6% in August. Thankfully, CPI in Canada dropped from 2.7% in June to just 1.6% by September. As a result, the Bank of Canada reduced its policy rate in late October by 50 basis points to 3.75% and the consensus among economists is for another 25 to 50 basis point cut on December 11.
Most economists now forecast the Bank of Canada rate at 2.5% by the end of 2025. Lastly, during Q3, the Federal government announced an abrupt change in the immigration policy in late October. Number of permanent residents will drop from 485,000 this year to 395,000 in '25, 380,000 in '26 and 365,000 in 2027.
The Feds also intend to reduce temporary residents from 7.3% of the population to 5% by the end of 2026. This policy change could have a negative effect on both the growth of the overall economy and the real estate sector. By contrast, the U.S. economy is doing very well. Their economy grew at 2.8% in Q3, and the unemployment rate is only 4.1%.
Inflation has also accrued to 2.1%. The election of Donald Trump presents a more uncertain future for Canada, increased tariffs, renegotiation of the free trade agreement and a drop in the Canadian dollar are examples. Turning to the commercial real estate markets. It appears as though cap rates have topped out or at least they did so in Q3. According to CBRE, momentum is starting to build in the commercial real estate investment markets fueled mainly by a decline in bond yields. In the GTA and Vancouver, there was virtually no change to cap rates for the apartment, industrial and office sectors.
Industrial market slowed in Q3 with a national availability rate reaching a respectable -- a still respectable 4.4%. In Toronto, the availability rate rose to 4.2% and in Vancouver it rose to 4.1%. The office market in Canada began to stabilize in Q3.
Vancouver remained the tightest market in Canada with an 11.8% vacancy rate downtown and a suburban vacancy rate of 10%. In Toronto, the downtown vacancy rate was more elevated at 18.2%, while the suburban vacancy rate was 20.7%. Fortunately, the construction pipeline and the GTA now down to 3.1 million square feet, representing only 1.8% of total inventory.
Looking at the residential and multi-residential real estate markets and first looking at resales, the resale market had been slow for many months. But based on the sales results in October, it may finally be showing early signs of recovery spurred on by lower rates. In the GTA, October resales were up 14% on a monthly basis and 44% compared to the same month last year. New listings fell by 6.8% on a monthly basis, but are up 4.3% year-over-year. And the home price index in the GTA was up 0.1% on a monthly basis and down 3.3% on a year-over-year basis.
In Metro Vancouver, resales in October were also up 32% compared to last year. October sales were only 5.5% below the 10-year seasonal average after several months of being 20% to 25% below the seasonal average. New listings were up 17% on a year-over-year basis, and the home price index in Metro Vancouver was down 1.9% year-over-year and 0.6% compared to last month.
Turning to new home sales. The new home market remained very slow. There were 7,700 new home sales in the GTA from January to September of this year, representing a decrease of 48% compared to 2023. The number of high-rise and low-rise sales both declined year-over-year with high-rise sales falling more significantly. On a month-to-month basis, the benchmark price dropped by 2.1% to low rise and 0.6% for high rise.
In Vancouver, the Q3 figures are not yet available, but in Q2, Metro Vancouver's new multifamily home sales increased by 14% from the previous quarter, but decreased 13% on a year-over-year basis. Total of 46 projects were launched in the second quarter, introducing 4,545 new units of inventory with a respectable 38% reported as presold by quarter end.
To summarize, residential resales appear to have turned the corner and should gradually improve as interest rates drop, but the new home market remains fairly weak, particularly in the GTA and will take longer to recover. Fortunately, all levels of government appear committed to increasing affordability to assist with new home supply. Most recently, the Fed increased the cap for CMHC insured mortgages from $1 million to $1.5 million, and they extended the amortization period for new homes to 30 years.
We expect more municipal and provincial incentives to come over the next year. To conclude despite ongoing challenges in the real estate market, Atrium has continued to produce superior results for our shareholders. Our year-to-date earnings of $0.79 represents the second best 9-month result in our history. And our conservative 85% dividend payout ratio bodes well for the prospect of another sizable special dividend at year-end.
We have accomplished those results while maintaining our disciplined underwriting with 97% of the portfolio composed of first mortgages and 90% with a loan-to-value of less than 75%. In Q3 and the early part of Q4, we made substantial progress on the repayment of several Stage 2 and Stage 3 loans, which was the culmination of several work -- several months of hard work.
As a result, we expect that Stage 2 and Stage 3 loans as a percentage of the portfolio will drop sharply when we release our 2024 year-end results in February. Needless to say, we're comfortable with our current level of loan loss provisioning. Atrium has consistently outperformed its peers during market downturns when the benefits of our conservative underwriting are most apparent. Based on our consistently strong quarterly results over the last several years and recent improvements in our borrowing base, I am pleased to announce a 3.3% increase in our dividend from an annual rate of $0.90 on to $0.93 per share.
That's all for our presentation, but we'll be pleased to take any questions from the listeners.
[Operator Instructions] First question is SID Rajeev from Fundamental Research Corp.
The increase in focus on single-family and commercial mortgages. Is this a long-term trend or a temporary decision to align with market conditions.
It's a more long-term plan, but it also is a lower-risk type of sector, in fact, each are -- so we're particularly focused on it now. Single-family is a lower risk, lower return sector, single-family mortgages. So there's a limit to how large we'll get on it, but we have quite a bit of room where we are now.
Yes. So as you were saying, single-family is already one of the toughest markets, I guess, competitive. Your average lending rates decrease over time. And it is a relatively new segment for you. Which segment within single family, do you focus? Is it the higher end detached homes, condos or?
It's a mix of all of them. We're more concerned with liquidity, so we tend to focus on the major geographic areas. So we focus on the GTA, London, Ottawa, Cambridge, Kitchener, Waterloo, Hamilton. We don't tend to go to the smaller towns or rural areas because there's less liquidity, but our average loan would be -- I think it's about $600,000 to $700,000 or $600,000 to $750,000. So we're not going for jumbo loans or anything like that. In fact, it's a pretty affordable mix given the cities that we're focused on. .
Yes. And in terms of Stage 2 and 3 they totaled $130 million at the end of Q3. Are you open to giving some guidance on what this figure will be by the end of 2024.
No. But what we can tell you is at least $62 million, right, John, has come off already since -- and when I say come off and repaid since the end of Q3.
So that means we are going to see a significant decrease in loan loss provisions, at least in Q4 compared to Q3.
Likely.
[Operator Instructions] The next question is Graham Ryding from TD Securities.
Maybe I could start with the repayments that you're expecting in Q4. Can you quantify that? Is that the $62 million that you just referred to? Or do you have visibility on repayments beyond that? .
We've -- we track it to the extent we can for the entire portfolio. And it's as much as $150 million. So it's a big number. It was a small number in Q3, and it's a big number in Q4. .
Got it. Okay. But that's a gross number, right? Like you're obviously going to try to develop some originations to offset that in the quarter. .
Yes. My guess is it will take a few quarters to catch back up. Like that's a big number for us.
Yes. Okay. Understood. You mentioned a recovery of $4 million one of the arrears that you're able to work out or get repaid on -- are we going to expect that to be released back into earnings? Or -- is it still so much fluid in terms of how you're going to treat those ACLs on your balance sheet?
So we were fairly conservative this quarter. So we reallocated a lot of those net recoveries to other loans. So we're feeling very comfortable with how we provision. I guess that -- yes, I mean, that's what I'll say. I mean, we ended up at 3.5% -- was at 3.5% versus 4.4%. So it is coming down. We only had one new loan going to enter Stage 2 or 3 this quarter, and it was a small loan. So hopefully, that will be the same going forward.
Okay. But you were suggesting that there's a $4 million recovery happen?
Yes. And we knew those were coming before the end of the quarter. So that would have gone straight into probably Q3's results because they were firm deal. Just to clarify, that's not $4 million, it's $400,000, the $4 million, $4 million of net recoveries on provision what we have. That's what [indiscernible]. We reallocated it to be.
Understood. Okay. And then just how about your -- with these sort of regulatory changes around longer amortization periods for new purchases, what are you hearing from your sort of developer clients? Is this -- is this material? Or is there still more that needs to play out to get activity going on that front in terms of sort of lower rates on the construction cost coming down? Or maybe just some color on the mood from your client base.
Yes, it's still the latter. It's still a weak market, particularly in the GTA. It was actually compressed with the number of launches in Vancouver, 46 launches and 38% or 39% resales by the end of the quarter on those launches. Those are pretty decent numbers. And the GTA, it's a lot slower, but what's interesting is construction costs are coming down in the GTA and not coming down in Vancouver, and that's a reflection of the weaker market in the GTA.
So the lower industry and the lower construction costs, which I've always talked about is 2 things we need to revive the new home market. Those are starting to happen. And hopefully, the other thing that we need, which is a stronger resale market, hopefully, October is the first sign of that. Because I don't think anyone was expecting October resales to be as good as they were. 32% higher in Vancouver, 44% higher in Toronto.
I didn't hear anybody imagining those types of numbers. So hopefully, that's the first sign, but our view is the high-rise market in the GTA will have another tough year in 2025 and then probably start to recover. Economist always say, and I'm sure you've heard this a million times as well, but it takes 1 to 2 years for lower interest rates to sort of galvanize consumers to be more aggressive in their spending at it.
[Operator Instructions] There are no other questions at this time. I will now give the call back to Mr. Robert Goodall for closing statements. .
Okay. Thank you, and thanks for those attending the conference call. I hope you're pleased with the results and the increase in our dividend, which has been the first one in a while, I know we're really pleased with how the quarter went in many respects, not just the earnings, but the rather dramatic improvement in loan quality as well. For existing shareholders, thank you for your continued support. Have a good day.
Thank you all for participating. This conference call has now concluded. Please hang up.