Q1 2020 Earnings Call
First name David last name Brown.
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Welcome to the conference until they become friends, which I'd like to join.
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David Brown.
And the company I present.
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Thank you Mike.
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D.V. I D at A.I.E.R.A. Dot com.
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[laughter]. These forward looking statements were made on the basis current views and assumptions of management regarding future events performance actual results could differ materially from those expressed or implied in such forward looking statements as result of risks and uncertainties [laughter]. Therefore, the company claims the safe Harbor protection pertaining to forward looking statements contained in there.
Private Security Litigation Reform Act 1995, [laughter]. This call is being webcast and there'll be an audio replay available on the Investor Relations section of the company's holding company website located at access financial Dot Com for 30 days [laughter] details for this call were provided on the conference call announcement and in today's earnings press.
That's really at this time I'd like to turn the Paul over to Greg for his opening remarks. Thank you Johnny Good afternoon, everyone and thank you for joining us I'd like to welcome everyone to access financials conference call for the first quarter fiscal 2020 ended September Thirtyth 2019, I. Thank you for your interested access financial access securities and access bank.
Access announced record net income of 40.8 million for the fiscal first quarter ended September Thirtyth 2019 up 10.7% 36.8 million earned in the fiscal first quarter ended September Thirtyth 2018.
Earnings attributable to access is common stockholders for 40.7 million, our 66% per diluted share for the quarter ended September Thirtyth 2019, compared to 58 cents per diluted share for the quarter ended September Thirtyth 2018.
Excluding nonrecurring expenses non-GAAP adjusted earnings and earnings per share were 42 million at 68 cents, respectively for the quarter ended September Thirtyth 2019.
Other highlights for the first quarter include ending loans and leases increased by 402 million up 4.3% on a linked quarter basis or 17.1% annualized for the fourth quarter of 2019, and 13.1% year over year, excluding our mortgage warehouse, which fluctuates quarter to quarter and 57.9.
And our structured settlement sales this quarter ending loan balances increased 30, 369.7 million or 16.3% annualized from June 30 to September 30, total assets reached $11.8 billion at September 32019, up 600 million compared to June 32019.
And I have 2 billion for that first quarter and 2019 net interest margin was 3.77% for the quarter ended September 32019 up one basis point compared to 3.76% in last year's first quarter. Our bank only net interest margin was 3.83% in the first quarter fiscal 2024 basis.
Points from a corresponding period a year ago.
Noninterest income increased 30.2% year over year to $21.5 million due to the addition of fees from access clearing and higher gain on sale from structured settlement sales this quarter.
Capital levels remained strong with tier one leverage of 9.12 at the bank and 8.8% at the holding company, both well above our regulatory requirements return on equity was 14.85% for the first quarter 2020 compared to 14.98% in the corresponding period last year, reflecting the banks year over year end.
Recent capital levels, our credit quality remains strong with two basis points, a net charge offs and a nonperforming assets a total asset ratio of 54 basis points. This quarter, our allowance for loan loss represents a 105.9% coverage of our nonperforming loans and leases our efficiency ratio was 52.44% for the first core.
After of 2020 compared to 53.0% in the fourth quarter fiscal 2019, and 51.47% for the first quarter of fiscal 2019, our banking business segment efficiency ratio was 43.93% down slightly from 44.46% in the first quarter of fish.
Well 2019.
The primary driver revenue year over year increase in our reported efficiency ratio was the inclusion of the clearing and digital wealth management business and higher depreciation and amortization expenses related to software development and deposit acquisitions.
Security segment develops we believe we will obtain operating leverage in the security segment, we have made significant investments across our businesses and personnel technology marketing and infrastructure that will help strengthen our organization as well as increase the Max of fee income business and we expected over the next several years, we should be in a harvesting phase getting the.
Synergies and growth from these initiatives.
We originated approximately 1.8 billion of gross loans in the first quarter up 8.3% year over year originations for investments increased 8.3% year over year to 1.46 billion and originations for sale increased by 8.2% to 327.8 million ending loan balances increased by a.
3.1% year over year to $9.8 billion strong originations by our commercial specialty real estate commercial and multifamily lender finance and warehouse or partially offset by higher than average pay offs and our single family Jumbo mortgage and lender finance portfolios.
Our loan production for the first quarter ended September 32019 consisted of 164 million of single family agency eligible gain on sale production $245 million single family Jumbo portfolio production.
And 74 million of multifamily and other commercial real estate portfolio production.
858 million of Cnine production, resulting in Florida 20 million of net Cninety loan growth and 50 million of auto and consumer unsecured loan production.
For the first quarter 2020 origination statistics are as follows the average FICO for single family Agency eligible production was 746 with an average loan to value of 70%. The average FICO. The single family Jumbo production was 728 with an average loan to value ratio of 59.8%.
Average loan to value ratio the originated a multifamily loans was 59% and the average debt service coverage was 1.26, the average loan to value ratio in the originated small balance commercial real estate loans was 62.8% and the average debt service coverage was 1.42.
The average FICO the auto production was five.
SaaS 757.
At September Thirtyth 2019, the weighted average loan to value ratio of our entire portfolio of real estate loans was 56%. These loan to value ratios use origination date appraisals overcurrent amortized balances as of September 32019, 62% of our single family mortgages have loan to value ratios at or below 60%.
30% of loan to value ratios between 61 that 70%, 2% of loan to value ratios between 70, 175% approximately 5% between 75, an 80% at less than 1% have a greater than 80% loan to value ratio.
We have a well established track record of strong credit performance in our jumbo single family mortgage lending business with lifetime credit losses in our originated single family portfolio of three basis points. The loans originated given increased competition from private securitization of jumbo single family mortgages, we've created a new legal entity within our securities.
Subsidiary access Securities investments LLC in order to expand the type of jumbo single family lending products, we can originate and sell to generate fee income without compromising the credit standards. We have maintained in our jumbo single family mortgage portfolio.
We had approximately 2.2 billion of multifamily loans outstanding at September Thirtyth 2019, representing approximately 22% of our total loan book growth in our multifamily loan production has been solid the weighted average loan to value ratio of our multifamily loan book has 52% based on appraised value at the time of origination approximate.
65% of our multifamily loans are under 60%, 29% in between 60, and 70% and 4% or between 70 and 75 at less than 2% of our multifamily loans have a loan to value ratio above 75%.
The lifetime credit losses in our originated multifamily loan portfolio are less than one basis points of loan originations over the 18 years. We've originated multifamily loans are cnine lending business posted a strong quarter with record quarterly loan originations of $858 million and ending balances increasing by approximately 420 million.
We're continuing to see good demand from credit worthy bars for high quality projects in attractive markets in our lender financing commercial specialty real estate business, while the average size of our senior loans are larger than our single family in multifamily loans. We maintained the same rigorous underwriting standards and low loan to value principles that have served us well through prior credit cycles.
We have no credit losses on our lender finance or commercial specialty real estate loan books are leveraged loan to value ratios are cost ratios and our lender finance commercial specialty real estate and trestle loans remained in the 45% to 55% range.
Loan demand remains solid with the loan pipeline of 1.1 billion at September 32019, consisting of $437 million of single family Jumbo loans $123 million, a single family agency mortgages $190 million of multifamily income property loans and $389 million cnine loans with our diverse.
Next of lending products as we grow we expect our portfolio Max to move slightly away from single family lending and to see Eni lending in commercial real estate lending, although single family lending will remain an important part of the portfolio. While we anticipate strong originations across most lending categories, our average and ending loan balances will fluctuate from quarter to quarter based on.
The pace of prepayments switching to funding total deposits increased 3.1 billion or 51.6% year over year as we repositioned our balance sheet in anticipation of the transfer of deposits, we acquired from nationwide in the year ago period.
We had deposit growth across small business cash and treasury management specialty deposits, including access fiduciary services.
At September 32019, approximately 40% of our deposit balances were business and consumer checking 22% money market accounts, 4% IRA accounts, 5% savings accounts, and 3% prepaid accounts checking and savings deposits represent 74% of total deposits at September 32019.
Turning to 77% at September 32018.
Our security segment, which includes access clearing our securities Clarion custody business for producing broker dealers and independent days and access invest our direct to consumer digital wealth management continues to make good progress. We have added talented team members across sales and marketing risk management and operations and access clearing and.
Access invest since we closed the acquisitions in the first calendar quarter of 2019, we recently rebranded wise banyan to access and vast and re initiated low cost marketing of our premium digital wealth management service offering.
Securities lending revenue and margin lending revenue both increase this quarter, while average client cash balances declined as our independent broker dealer clients increased the risk tolerance and as rates for free cash balances declined we signed multi year clearing contracts with a few new correspondent firms and our sales pipeline remains strong we.
We also have a number of technology and product initiatives that will be introduced over the next three to 12 months, including integration of access invest inside of our Universal digital banking platform enhanced custodial capabilities and additional premium features for our digital wealth management product suites.
We made further progress growing and diversifying our commercial and specialty deposit businesses, we selectively added talented commercial bankers and our downtown La in Midtown Manhattan Office markets, where we already had a significant customer base and personnel presence. These strategic office locations will serve to attract new customers in these markets server.
Existing significant client base, a commercial customers and allow us to acquire talent that was not otherwise available in San Diego.
As we scale the bank to a 20 billion in larger institution, having a local presence in these two large metropolitan centers will help us expand our client and talent base.
Integration of access fiduciary services with the bank is complete and we are now moving forward to grow. This business. We have successfully added new chapter seven and non chapter seven trustees, and fiduciaries and hundreds of existing trustees of voluntarily move the deposit balances to access bank, we plan to integrate various banking functionality when our bankruptcy software.
In the medium term in order to reduce the time cost friction for our trustees case management and reporting requirements and expand the utilization of the software to other verticals.
Our capital ratios remained strong despite recent actions to deploy some of our excess capital into organic investments in share buybacks over the past few quarters, our tier one leverage ratio was 9.12% at the bank down from 9.21 at June 32019, the board approved a new $100 million share repurchase program in August .
We will continue to opportunistically deploy excess capital, where we see the best risk adjusted returns, whether it's for organic investment accretive M&A or share buybacks.
Earlier this month, we announced our agreement with HR block.
I'm sorry earlier this month, we renewed our agreement with HR block to be the exclusive provider of interest free refund advance loans to Asian, our blocks customers. During the program year ending June 32020 Act. So I will originate in fund all evasion, our blocks interest free refund advance loans to of tax preparation clients for the 2020 tax season this will be the.
Third year that access will be the exclusive provider of HR blocks refund advance loans.
Just one year renewal is separate from the seven year program management agreement entered into on August 30, Onest 2015, and filed with the Securities and Exchange Commission between access and affiliates of Asian, Our block, which provides that access will provide Asian, our block branded financial services products known as Emerald prepaid cards.
Refund transfers and Emerald advance lines and credit duration, our blocks retail and digital channels. The current terms of the program management agreement and on June 32022, and maybe terminated earlier by age in our block in the event that acts those no longer qualifies as exempt from the provisions of the Dodd Frank Act known as the.
Durbin Amendment as fully described in the filed agreement such provisions limit the level of interchange fees that may be charged by institutions with greater than $10 billion in total assets beginning July 1st of the following year in which the institution exceeds such size as of the December 30, Onest 2019 measurement date.
It's a total assets of access exceed $10 billion on December 30, Onest 2019, the Durbin Amendment would apply to us starting in July of 2020.
Our asset size remains greater than $10 billion as of December 30 Onest.
The.
Reduced direct and indirect interchange revenue would begin on July Onest 2020.
Although there are a number of options to reduce this loss of interchange revenue or potentially avoided for a period of time each option has a cost or other trade off associated with it. So it is not possible to predict whether we will be able to mitigate this potential interchange loss. If we are unable to agree.
To a solution with HR block that will alleviate the losses and our changed from the Emerald card program that is acceptable for both parties access has the right to avoid early termination of the program management agreement by compensating HR block for the loss of its actual interchange income we.
Estimate that such compensation will be approximately $25 million per year or approximately 18 cents on earnings per share based on current transaction volumes if no mitigating actions our program restructuring has taken.
The impact from reduced interchange fees are expected program mitigation related to non aged in our block prepaid been sponsors and our own checking accounts as approximately 4 million pre tax per year.
From a timing standpoint since the majority of the interchange fees from the Emerald card or generated during the tax season, we have most of calendar 2020 to come up with an executed solution. If one to be mutually agreed to to mitigate the majority of the compensation, we would have to page in our block after the 2022.
Tax season.
We have an established infrastructure and experienced team that has worked alongside HR block to deliver valuable financial services to millions of HR block customers over the past four years, we will continue to work with HR block to determine if a solutioning says that is mutually agreeable and announced an agreement if one is executed in the.
Meantime, given our ongoing discussions with nation, our block regarding this matter will not be able to discuss additional detail regarding our Asian, our block program management agreement until our negotiations conclude.
We're pleased with the progress we have made integrating our acquisitions and expanding our core consumer commercial and securities businesses.
We're excited about the abundant opportunities we have to provide a broader set of services to new and existing clients by providing them with a more robust set of tools and a better user experience you will hear more about our cross marketing personalization operational efficiencies and new product development initiatives at our Investor Day later this week hope to see many of you.
In San Diego This Thursday, now I'll turn the call over to Andy Who'll provide additional details on our financial results.
Thanks, Greg.
We have issued our press release the FCC Edgar portal is currently down.
We will continue to monitor acre to file our 10-Q as soon as possible.
In my comments I will highlight a few areas rather than go through every individual financial items.
As Greg indicated earlier earnings attributable to access common stockholders were 40.7 million or 66 cents per diluted share for the quarter ended September 32018, compared to 58 cents per diluted share for the quarter ended September 30 20.
18, and compared to 66 cents per diluted share for the quarter ended June 30 2019.
This quarter access net interest margin increased year over year, when comparing both the consolidated net interest margins and the banking business segment net interest margin.
The banking business segment net interest margin was 3.83% up four basis points from the quarter ended June 30 2018.
Since September 32018.
The federal reserve has begun to lower rates.
Our average loan and lease yield for the baking business segment was five point.
As per said for the first quarter ended September 32018.
Eight basis points year over year, and our average, earning asset yield was 5.39% up four basis points year over year.
The strong loan yields this quarter as well as the growth in our non interest, earning deposits, which increased 608 million on average balance basis year over year are the primary reasons for the four basis point increase in the baking business segment net interest margin.
As discussed last quarter. There are two primary reasons, we believe we can maintain our net interest margin.
First our loan originations in the resulting net loan growth has moved to the commercial loan book, which on average has higher loan rates that are consumer loan portfolio.
Second both our consumer loan book editor commercial loan book at relatively high loan rate floors for those loans that have adjustable rates.
We also believe we have the flexibility to reduce deposit rates and borrowing rates in the futures future quarters.
For these reasons, we remain positive about our banking business net interest margin.
Which we expect to maintain in a 3.8% to 4% range.
Annual basis, excluding the impact of HR block tax products.
Our provision for loan.
Loss for this quarter ended September 32018 was 2.7 million compared to <unk> point Sixmillion.
For the three months ended September 32018, and down from 2.8 billion for the quarter ended June 30 29.
The increase in the provision year over year is primarily the result of changes in loan growth changes in loan mix and loss recover recoveries, which were $1.1 million earlier in the prior years first quarter ended September 32018.
Overall low quality remains strong total delinquent loans for 60 basis points at September 32018 down from 73 basis points at June 32018.
The 90 day delinquent category also declined on a linked quarter basis.
To 41 basis points from 41 paces points at June 30, 2019 to 37 basis points at September 32018.
Non performing assets as a percent total assets were 54 basis points at September 32018 up from 50 basis points at June 32018.
Four basis point increase is primarily due to seven in half million net increase in nonperforming loans, which primarily consisted of 4.4 million in single family loans that remain well secured with low ltvs.
And a 4.1 factor 4.1 million factoring low.
The 4.1 million represents the entire balance due from one of our season factoring customers that we were advancing funds based on invoices from a fortune 500 company.
The repeat repayments stopped in September 2018, and onset September Thirtyth, we've provided a specific loan loss allowance for the entire amount.
We had classified the full receivable as doubtful based on our belief that the invoices are not valid.
We have not yet completed our investigation of sources where payment.
Moving to operating expenses, our efficiency ratio was 52.44% for the quarter ended Septemberthirty 2018 down from the 53% for the quarter ended June 32018.
The baking business segment efficiency ratio declined to 43.93% for the quarter ended June 32018 down from 44.46 for the quarter ended June 32018.
Favorably impacting the efficiency ratio. This quarter was a 1.4 million refund of FDIC insurance premiums based upon a standard program, where the FDIC periodically measures certain deposit insurance for the levels.
We may receive future refunds, but we cannot determine if or when such refunds will become available.
Stockholders' equity increased by 43.2 million to 1.116 billion at September 30, 20 to 28 team up from 1.073 billion at June 32018. The increase was primarily the result of net income.
For the three months ended Sept 30 ended September 32018 of 40.8 billion.
As Greg noted our tier one capital ratio was 8.76 for the holding company and 9.12% for the bank at September 32019.
With that I'll turn the call back over to John Eli.
Thanks, Andy operator were ready to take questions.
Thank you will now be conducting a question and answer session. If you like to ask a question. Please press star one on your telephone keypad companies and total indicate your line is in the first in Q.
I would start to if you would like to remove your question from the Q.
I, just didn't didn't speaker equipment, and maybe necessary to pick up your hands at the floor back to Mr. Steve.
No pull for questions.
And thank you. Our first question comes from the line of Scotland.
Plant. Please proceed.
Thanks, taking my question just with regard to prepayments Greg I think you mentioned the single family portfolio. So pretty high prepayments just wondering what you're seeing in the commercial real estate portfolio. We've seen other banks kind of call out the high level of non bank activity in commercial real estate seeing loans refinanced away.
Well, we certainly have not seen and an increase over the already high level, but we do have a lot of prepayments in our portfolio a lot of those learn loans do tend to be relatively short term. So theres a lot of movement. There, we just haven't seen that.
Pick up beyond what the level that it has been in prior quarters.
Single family has stabilized at this quarter. It's it's not it had a decline in average balances the prior quarter added side stabilize this quarter. So that may be mitigating a little bit I think sometimes when we have rate changes that that cycles.
Through the portfolio, a little bit, but yes, that's that's what we're seeing on those two areas right now.
Okay. Thanks, and then just on the operating expense outlook, you mentioned, you're making investments now the universal Universal Bank.
Yes, and harvesting those those I guess benefits of investment later on is there a timeframe for that I think you mentioned a couple of years was wondering if you could provide any more color detail around the other operating expense outlook.
Sure, So where we're attempting to do and I think it is working as we had a very significant ramp up at investment with respect to.
The ITC side, specifically on the on the coding and development teams to build our platforms. We've been generally trying and I think instead of cutting those teams. When we launched our initial platform we moved on to other strategic objectives. However.
That team cost is not substantially increasing in the way that it did when we went to develop all these different software systems. So what I do see is that at the expense base, we have relatively even within reason there'll be some movement at a margin of error level.
I believe we can deliver the strategic opportunities that we intend to deliver over this next year and those include the following.
Integrating the Axogens invest platform, so that it's accessible to the customers of both the bank and access invest in both ways.
Adding the free trading component through the access trading business and launching the banking software through to the clients.
Independent broker dealers that we service through access clearing and so our goal is to try to get all that done by June of 2020, and I believe we can roughly do that with essentially the existing teams on the t. side that exists there may be a few adds here in there but in general.
They won't be material or substantive so that's what I mean by.
And by the harvesting of those and there's been a lot of.
Effort put into that I also think we've spent.
Resources on developing our commercial banking teams those commercial banking teams I will be adding some commercial banking talent in different areas, but theres also as we've grown that business. Some of those teams are still ramping up and although they are being productive I believe they have an opportunity to.
Reach a fall level of productivity without having a disproportionate level of increase and personnel cost.
Okay, all right thanks very much.
Sure.
Thank you. Our next question comes from the line and Andrew Lee with Sandler O'neil. Please proceed.
Everyone.
Yes.
Can you just provide the dollar amount of deposits that have moved over from from epic So far.
Yes, that's approximately 500.
80 million roughly okay as you probably have in total.
Yes, so you probably have a two to 300 more left to come over is that right.
Correct, Okay, Gotcha and then.
In general just more thoughts on on the rates do you guys are currently paying for deposit.
If we can provide more clarity on what you can lower maybe on money market savings accounts than what you are maturing on on Cds and what the what the rates are on those and what's the repricing benefit you might have as the fed continues to lower rates.
Well, we've been talking about the guidance said, we're going to be able to provide on those we really wanted to focus it on a NIM level. We've done the work there's a lot of moving pieces with respect to those areas on clearly there's some opportunity on the savings side.
Checking account rates are on average relatively low.
Don't know how much opportunity there is there there's the convert lot of the commercial banking relationships have.
Have earnings credits associated with them. So there's some automatic linkage, but we think the best way to look at it from our perspective is to targeted NIM and.
The next to those we reaffirmed our guidance in the Threeeighty to four range, which means clearly we're going to.
Be having some repricing of deposits in that area and then it is important to remember too that as we we've done a I think we've done a very good job over the rate cycle, maintaining our net interest margin something that maybe not everybody or even growing it maybe not everybody expected. We also now with what we've done we have some.
We have sensitivity on the other side as well because we.
Our our access clearing deposits aren't all at the institution and they often reprice and their source of fee income to the bank as well so theres theres impacts both ways with respect to the rate declines right. Okay. That's helpful.
And then just here in <unk> and your second quarter. So.
Margin should benefit from the the Emerald advance.
The one of credit product is that correct.
Yes, correct to move I think you should go back and look at historic.
Quarters with respect to those products I think there will be essentially unchanged. There is no difference whatsoever with respect to what we did with HR block last year, and what we're going to do with them. This year, so it should whereas.
They are obviously HR block will have whenever tax season, it hasnt volumes will flow through but with respect to the products and the relative stability of what they do it should have a similar impact on us and there's not been a change of any of the underlying economics with respect to what we're doing.
This year with them than the prior year okay.
Thank you I'll step back.
Thank you.
Thank you. Our next question comes your line is Steve Moss with B. Riley FBR. Please proceed.
Good afternoon.
Fair enough on loan origination yields just wondering what were the origination yields for the quarter and then if you just go through the Crystal loans and what are you seeing per yields there and average life and so forth.
Sure. So all this I'm not going to go through every product, but the.
I think generally around that the single family loans are in a 5.1 range. The cressa loans were more mid fives little higher with lender finance.
The terms and durations of the Cressa loans generally around several years extending sometimes the three years and then the lender finance facilities tend to be a little bit longer as those are operating businesses and so they they may have.
Different structures, sometimes if your financing pools of assets they'll have some term wind down otherwise they may have a five year average.
Duration and have some sort of bullet maturity at the end with respect to those or some sort of automated wind down based on the asset base and the single family or five one arms as you know.
That's helpful and then just in terms of.
In terms of just the.
On capital your total capital a little bit petard close to 12% just wondering any any thoughts around capital levels there.
Yes, I think thats something we continue to look at obviously, we have to look at both of those ratios and to the extent that loan books shifts into more 100% capital those ratios will converge on each other so we have to pay attention to those and there's a number of ways to to work through and deal with that.
With respect the type of capital that we raise and push down so I think what you'll probably end up seeing overtime is that there's more opportunity obviously, particularly in this low rate environment for some sorts of tier two capital, probably and net that likely would end up replacing some tier one.
Capital, Although we have no absolute definitive plans on that but it is something we're keeping an eye on we're aware of.
That's helpful and then on the factoring credit that when nonperforming this quarter, just wondering what type of factoring quite that was.
It was a staffing company.
That.
Engaged in a in a fairly interesting.
Set of activities that impacted a number of institutions.
Okay.
All right that's helpful and.
Last question for me just on expenses here.
Even I guess FDIC expense clearly benefit total expenses just wondering if we get some color around expense run rate in the second quarter it sounds like reasonably stable.
Going forward here.
With a modest I think theres, Rick I think thats reasonable stability I think I.
I think said looking we may have some small operating leverage on the efficiency ratio basis, but I think that the the real benefits from all the investments were making our they're going to take a little time to develop a lot of the the software that we're launching is slated in the June 2020 period obviously.
Takes a while to get those things going for getting benefits from from that from from these products on a standalone basis, but I don't I don't think Theres really much change, we're expecting associated with that maybe a little more software expense were putting in some new risks systems things like that but they're not particularly material from from a from a top.
Line perspective.
Alright, Thank you very much.
Thank you.
Thank you. Our next question comes from the line, Gary Tenner with D.A. Davidson. Please.
Thanks.
Two questions one of them one on fees.
Again, the in the press release that commented on.
A bit of a decline in fee income from the third party banks would it's actually a fiduciary.
Services.
Can you tell me.
Get more of those deposits in.
There should be less of a fee stream from those third party next growth.
That's correct and I hear your started.
Sorry go ahead.
As you can save you give us incentive kind of where that number is and what the what the delta is as more of those positive move over.
Sure. So so the year over year Delta was about one.
Point $4 million.
Year over year, so when you look at the overall.
In our deposits are.
Advisory deposits during that period, you come up with a number.
In the neighborhood of.
400 million 400, 500 million roughly in that period. So.
1.31, 0.4 times titles for.
Divided by that amount gets you the rough rate so north of 100 basis points roughly.
Okay. Thank you and then.
The comments regarding.
Yes.
Security investments LLC, Greg I think we're talking about that with regard to single family.
Physicians. So it sounds like is this a vehicle to allow you to put more through your pipeline and or get a better better rate or the on the on the yesterday.
I think there's theres several purposes for it is that with a single family market changing a bit and.
Securitization market frankly, accepting credits that we really wouldnt, except on the balance sheet, we have an opportunity to originate some of those credits we neither width to secure wish to securitize them through the bank assets is not the most efficient.
Place to do it or added side. It's also.
The isolation that we've created with respect to the security subsidiaries also beneficial from any residual liability perspective. So we have a very broad network, we have lots of relationships.
There are products that fall outside our portfolio guidelines that can be originated and there are people who are very eager to buy those.
Thank you.
Thank you.
Question comes the line of Michael Perito KBW. Please proceed.
Hi, Michael Hey, Mike.
Hey, good afternoon guys.
Just two questions I wanted to address and I apologize.
Hello.
I'm sorry.
On the on your comments earlier right and then it's kind of seems like fiscal 2019 was a year, where you guys were adding lots of products and services and then fiscal 2000 20000 to be a year, where you hope to kind of integrated all in and rip out some of the synergies and revenue opportunities but.
From our perspective kind of analyzing the company are there any things you think we should kind of look for weather in the financial statements or other that that would be good indicators of kind of the success you guys are happening as you move forward and some of those areas.
Yes, I think that with respect to the the securities subsidiaries really looking at starting in in the fiscal year 2020 improvements in earnings will be.
There will be gradual but they should be occurring we have good pipelines on the clearing side, there's lots of operating efficiencies to be gain there.
The trading business on the retail side, we will start to go through the same operational.
Framework in the same operations team that services all the independent broker dealers. So I think those are things to look for the interesting thing about the clearing business. It's it's a nice complement more broadly to the banking business in the sense that it.
It can have it can have a it has a positive effect obviously when interest rates go up with respect to the deposits that it has so it reduces interest rate risk. It also has it also has an income decline as a result of lower rates as well.
Where we are able we think to be able to compensate for that with the growth of the business. There's good pipelines.
And then also the we think that the the invest side in the trading side will be a nice complement for us to develop sustained long term relationships on the checking side. So look for continued.
Deposit growth there as well so we think all of those all of those areas should be should be.
Items that you can look for in fiscal 2020.
Helpful. Thank the neutral wanted to confirm a couple things on the Durbin disclosure.
So it was 45 million of pre tax revenue at risk related to HR block and then an additional 4 million.
Relative to the rest of the business pre tax so 29 total is that correct.
Yes, as as we described with the contingencies previously discussed.
And.
I guess just.
Trying to reconcile than the 18 cents.
Yes at risk number just some quick.
Yes, a little mascara.
A little higher there.
That's for consideration.
If you calculate that per share.
That was that 18 cents was stated in related to the 25 million.
Got it okay.
Okay.
Thank you, where we stand of our question and answer session allow me to handle flow back over to management for closing remarks.
Thank you everyone. Appreciate you following us and we'll talk to you next quarter.
Okay.
Concludes today's conference you may disconnect your lines at this time and thank you for your participation.
Okay.