Q4 2020 Northeast Bank Earnings Call
[music].
Good day, everyone and welcome to the North East Bank fiscal year Twentytwenty fourth quarter earnings results Conference call. This call is being recorded what that's today from the bank, It's Rick Wayne President and Chief Executive Officer, JP, The point, Chief Financial Officer APAC Bacon.
<unk> Executive Vice President and Chief Credit Officer last night, and Investor presentation with uploaded to the banks website, which we my reference in this morning's call. The presentation can be accessed at the Investor Relations section of North East Bank that come on to events and presentation. You may find it helpful to download this investor presentation.
And follow along during the call also this call will be available for rebroadcast on the web site for future use.
The question and answer session for this call will be conducted electronically following the presentation.
Please note that this presentation contains forward looking statements about north East Bank forward looking statements are based upon the current expectations of North East banks management and are subject to risks and uncertainties.
Actual results may differ materially from those discussed in this forward looking statements North East Bank does not undertake any obligations to update any forward looking statements. At this time I would like to turn the call over to Rick Wayne. Please go ahead Sir.
Great. Thank you very much.
Good morning, Thank you all for joining us today.
Oh, I am Rick Wayne, the Chief Executive Officer Lewis's Bank.
And with me on the core GPU, a point her chief financial Officer.
And pet Big news her chief Credit Officer, and Executive Vice President.
After comments.
We would be happy to answer.
Your questions.
Before I start, let me say or thoughts.
Continue to be with the individuals families communities healthcare workers in first responders.
Thank you Goodbye quoted 19.
So unimaginable.
Recall that pandemic is continuing to take around the world.
We are doing their best to help.
Those affected by cold in 19, including.
Donating masks, a local hospitals contributing to local who pantries homeless shelters and new programs.
Well, we have been providing accommodations to borrowers through.
Payment forbearance.
And meeting the needs of our employees.
<unk> face many challenges while working at home.
I will discuss we've been actively participating in the payroll paycheck protection program as well.
Trends investors and other constituents of the bank.
Well open kindly genuinely asked how we're doing.
And we continue to do well.
To protect our employees and customers.
The only service deposit customers and his branches that have dried through windows.
Other than.
Other than employees and customers.
As an employees working in those branches almost all other employees are working at home.
Thanks to an exceptional I see an operations group.
And a dedicated team of other professionals.
We were able to conduct business virtually the same as before.
So with 19.
Oh, 'cause, it's certainly a different environment, where professional hard working adaptive and dedicated team has risen to the occasion.
On this call I'd like to focus on the pay check protection program or Triple B, which has been quite meaningful to our bank.
Our correspondent banking income.
LSG activity.
Deferments.
And also stock repurchases.
After my comments JP will provide a high level overview.
All of our financial results.
For the fourth quarter fiscal 2020.
After the close of the market yesterday.
Excuse me.
Almost record quarterly net income.
[laughter] excuse me.
The cost not say.
Record quarterly net income $11.2 million.
Or dollar and 33 cents per.
Diluted common share.
A return on average active <unk> equity of 28.4%.
And a return on average assets of 3.1% those are remarkable numbers I just want to repeat a return on average equity of 28.4%.
And the return on average assets of 3.1%.
A record for us.
A year, we also had a record with the earnings of $22.7 million.
Or $2.53 per diluted common share.
A return on average equity or 18.2%.
And the return on average assets of 1.8%.
Turning to slide four.
Through June Thirtyth, we originated.
Approximately 4400 Triple P. loans.
In the aggregate amount of 487.
Point $5 million.
The borrowers with tens of thousands.
Of associated jobs.
Late in the.
And our fourth fiscal quarter.
We sold $457.6 million.
Of our Triple peak loads to loan source.
Generating a pre tax net gain.
Was $9.7 million or.
Approximately 6.7 million of it that attacks.
29.9 million of loans not included in this sale.
Plus triple P. loans that we originated after June thirtyth.
A little bit tools, we will sell after June thirtyth.
So we can expect to see that in.
Our first fiscal quarter.
Turning to slide five.
We previously announced with entered into an arrangement with loan source.
To act as their corresponding with the federal reserve.
In order to facilitate their ability.
The purchase Triple PD Lones from other banks.
And financed the purchase through borrowings.
From the from the federal from the Federal Reserve under the.
Program known as PPP.
Yes.
Under this arrangement.
Eligible borrowers who affecting bar with 35 basis points.
And for all this has been a has been and potentially will be in the future.
They significant source of income.
Under our arrangement.
With loan source.
We share or where you get paid one half.
Of the net gain in any purchases.
Gross one half of the servicing income earned.
Hi, there Cripple Creek portfolio that they purchased.
Looking at the slide.
In June they purchased 1.3 billion around the a little bit of Triple P. loans.
Including the 457 million.
Purchased from northeast Bank.
That generated a three of us for us of $2.9 million.
Just this week loan source.
Purchased an additional $1.6 billion of loans.
Including 44 million from us relatively small amount.
Which generated an additional $5.6 million.
Correspondent fee income for the bank.
So where we are now.
We have been paid eight and a half million dollars correspondent fees.
Which we haven't recognize in any material way in income.
That eight and a half million will be recognized over the estimated life.
Of the 2.9 billion dollar Triple PE portfolio.
In addition to that.
Servicing income that's earned on that 2.9 billion dollar Triple PE portfolio.
We will.
Received half of that servicing income.
Okay, just yesterday was announced that the.
Triple P.L. laugh that is again the lending facility from the fed which permits these loan purchases by loan source.
Which was originally scheduled to terminate on September Thirtyth.
Has now been extended to December 31.
Meaning that loan source now has until.
Unless extended longer until December 31, too.
Purchase Triple P. loans, which if they did we generate income for us as I have described.
I'm, making prediction here, whether they will have they won't.
Let's start with on a lot so far.
If we turn now to slide six.
This is an interesting slide which shows.
The.
Neil and some of our LNG is she portfolio at the end of.
The last quarter March 31.
Through the balance at June Thirtyth.
And where you can see here, which is very unusual for us is that our portfolio.
Declined by 6% over those three months.
And as those of you know who follow us.
On we've had growth in our LSG portfolio.
Oh virtually every quarter.
And you know the reason that a decline is that we had relatively small number of.
Purchases only 13 million.
And small numbers over originations 33.6 million.
None of that's surprising we mentioned that our last call.
Which was in April we Didnt, we did not expect that we would have a lot of volume either in purchase originations for this quarter.
The petrochemicals is taking off people are getting adjusted to update for staying home.
Now focusing so much on.
Quarterly more money or.
Nine properties and banks not so much in other sellers thinking about selling loans.
We did have a fairly significant amount of payoffs the hunger.
Million dollars, a pay offs and amortization is.
And in this particular case one of the view that was a good thing because in particular.
Some of the only got paid off we were happy.
The haven't paid off not that we were concerned we would have principal loss.
As you recall in our conversation.
Last time.
In great detail, we went through all of our.
LSG portfolio and other portfolios estimating what the loan to values were.
When they were generally on a weighted average basis in the low fiftys, but we have some credits I could have had some problems bank. When we were just as a happy to see those borrowers payoff of sometimes on their own.
The listen sometimes with some urging them from us.
So.
No I would but were to summarize that on slide six I would say that that is actually.
Positive, even though it might be Taylor.
Two of.
Well one of the things that we have talked about for a while now is the opportunity that will present itself to us we believe.
To be able to particularly in the purchased area, but also as the originated area.
As we go into this real estate cycle.
As I said last time, our Pete again.
We want to be conservative.
We don't want to be aggressive and building a balance sheet now to regret. It later, we want to make our balance sheet as strong as possible. So when the opportunity really presents itself.
We're in a strong position with a lot of capital that we have.
The great skills that we have.
And underwriting on and managing commercial real estate loans.
We want to take advantage of the opportunity when it's the right time.
Well her the expression of catching a falling knife.
Sounds unpleasant even to say it and interested in doing that.
As we think about a year.
You heard the forward looking statements I'm going to make one but I expect that you know our volume both on originated in purchase will increase over the year.
As things tend to settle down.
And and so on the multiples being conservative is important and making sure that our existing portfolio as strong as possible is also important.
If we turn to slide seven.
I think this is a really great and interesting slide.
This is a slide.
Well, we use if we call. It covers modifications summary, I was call. It deferments all the same thing.
Well, we have put together a slide with more specificity that we could well we talked in April because it was too early than.
Once you can see that month by month made through July we indicate the amount of deferrals that we were granted so the grand total of those now these are.
Three months.
Total deferrals.
Principal interest no payments for three months.
You can see the Grand total of that was 135 million.
If we take that number and.
Use that over our loan balance at June Thirtyth.
It's 14%.
Let's see what happened to those where things could happen in March.
[noise] those.
And intelligence information as of July 27th in March.
We had original deferrals of 8.8 million.
They are now.
None of those asked for an additional deferral period.
As of June 2200, 27 7.2 million of paid.
1 million is under 30 days, which the call report purposes. As you know is considered current.
And only 600000 wasn't 30 days past due.
April is a bigger month.
Well, we had even.
$6.3 million deferrals.
And we had at of those.
19 point in call it $20 million of those.
Borrowers, who requested and we agreed to an additional three months.
The balance is very strong as of July 27, 45 million a little rounding up paid.
And 21.6 million around the 30 days again current per call report purposes.
None over 30.
And with respect to be deferments in May and June July.
Those.
Not scheduled to resume in August September and October.
We are hopeful they will look like those that.
Terminated.
For the ones.
Started in March and April.
And so we sum that up.
The where we are July 27.
We have $60 million of.
Total for parents.
The performance.
Now represents 6.19% of the balance on June Thirtyth.
And that number includes that.
19.8 million that rolled over.
From the original once in April that's quite a good number and it's performing well if we go to slide number eight.
These are different modification as these are modifications that we offer customers.
That they could go six months interest only.
Which frankly, we prefer this.
When we had you can see that.
In total those March through July.
That was $50.5 million.
And they're all paying.
39.6 million had a paid on July 27.
In 10 million that are less than 30 days with we expect will be current.
Now represents 5.2% of the of the total loans.
So that's a lot of detail on.
On the deferments, but we think those are very good numbers in a great. Thanks to our excellent asset management pool.
On slide number nine.
Our some metrics on.
Our asset quality.
I think as JP will mention.
Our delinquencies.
Or down to $16 million and change.
As of June Thirtyth, which is down from.
About $21 million, maybe more JP will give you a number on.
March 31, and our non accrual loans are also down as well.
Again on some not again, but on slide 10.
Some detail on our allowance we had provided this last quarter as well.
I always want to remind everyone.
As new accounting for purchase loans does not permit.
General Reserve.
On purchase loan.
And but we provided detail as to what that balances and what we have Pacific reserves.
What upgrade when Chris is.
That are.
Oh Wow once our originated loan book.
Is now eight and a half million dollars on 584 million.
That is coverage of 1.4 or five cents.
Which has increased dramatically.
Over the year.
Finally.
On slide 11.
Well, we have some detail on our repurchase plan.
As you may recall.
We recorded on.
March 31.
We indicated that out of the 900000.
Purchase plan approved.
For 2019.
We had purchased 416007 other cheers.
At an average price at $12, an 83 cents.
In the fourth quarter that as of quarter were reporting on now.
Our fiscal quarter.
We purchased 436003.
398 shares.
It was average price of 14 of poor so out of that 900000 repurchase plan.
We repurchased a total of 853098 shares.
At $13.45.
Remaining out of that plan.
Therefore is 46902 chairs roughly 47000 shares.
July 21, we received and we announced that we had regulatory approval.
The purchase repurchase an additional 600000 shares.
But spending no more than $10.2 million.
Which now gives us capacity of $646902.
And so that's all we have.
No we buy stock when we think it makes sense relative to where the stock is.
Trading at tangible book value is almost $20 now.
And so stock prices.
As its the prices given this opportunities to to buy stock from say.
That way and with that I will now turn the call over to JP.
Thank you Rick and good morning, everyone.
Today, I'll be providing a very high level review of our financial results and activities for the quarter ended June Thirtyth 2020.
As announced in our earnings release that was made public after the close of business yesterday.
Net income for the quarter was $11.2 million for $1.33 cents per diluted common share.
Diluted net income per common share was up $1.12 cents from the quarter ended March 31st 2020, which I will refer to it but linked quarter and up to $1.40 cents from the quarter ended June Thirtyth, two dozen 19 traditional referred to as a comparable prior year quarter.
Driving the results for the quarter ended June Thirtyth 2020 was a net gain from the show PPP loans as rate discussed in his remarks.
Compared to linked quarter aside from the previously mentioned gain on coal PPP loans net interest income increased by $1.1 million due to increased interest income of $750000 primarily from the PPP loans.
Along with interest expense savings of $305000, primarily from lower deposit costs.
Compared to the linked quarter to cost of interest bearing liabilities decreased by 40 basis points due to the lower rates from the FHLB Npls advances along with a 20 basis point in savings on interest bearing deposits.
Compared to go into quarter to provision for loan losses decreased by $2.6 million due to the large provision in the linked quarter to reserve from potential losses inherent in the loan portfolio.
Primarily for SP loans in response to the koby maintain pandemic, whereas email provided in the current quarter was primarily due to increase specific reserves on impaired loans.
Noninterest income increased by $9 million, primarily due to the net gain on sale of PPP loans.
Non interest expense increased $80000 from the linked quarter.
Compared to the comparable prior year quarter net interest income increased by $96000, primarily due to an $806000 decrease in interest expense, which was due to lower cost deposits as a cost of interest bearing deposits decreased 36 basis points from 2.02% in the comparable prior year quarter.
To 1.66% in the current quarter.
Additionally, interest income decreased $710000 in the comparable prior year quarter, primarily due to decrease in the rate earned on cash held at the credit reserve.
The provision for loan losses increased $643000 from the comparable prior year quarter.
Due to increase specific reserves identified in reserve report during the current quarter relative to the comparable prior year quarter.
Noninterest income increased by $8.7 million from the comparable prior year quarter.
Primarily due to the net gain on sale of PPP logs.
Interest expense decreased $8.3 million from the comparable prior year quarter, primarily due to equaling $3 million reorganization expenses incurred in the comparable prior year quarter.
So we're not incurred during the current quarter.
Additionally, the weighted average rate of deposits at June Thirtyth 2020 was 1.38%.
We also have an additional $151 million of Eagle and Bolton Board Cds at a weighted average rate of 2.35%, which are scheduled to mature in the first two quarters of fiscal year 2021.
Given our current funding conditions, we have not been bringing new Cds on or rolling over maturing Cds.
Therefore, the cash refund the cost of funds may remain elevated until we bring lower cost of funds on the balance sheet. However interest expense is expected to continue to decrease as a higher cost funds continue to roll off the balance sheet.
That concludes our prepared remarks at this time, we would like to open up the line to Q1 day.
If you wanted to ask a question. Please do so by pressing to stocky followed by the digit when I get touched Tom telephone. If you are using a speaker phone to ask a question. Please make sure you meet can meet fashion is turned off today I guess, they got to reach our equipment.
We will proceed into order that you guys signal that you signaled that.
And we'll take as many questions as time permits once again, please press star one I get touch Tom telephone to ask a question.
And your first question will come from the line of Alex photo.
Hey, good morning.
Moneyless morning, Alex.
First off one and two I'm, hoping maybe can you give a little bit more color on the purchase market.
I.
I guess, we've written sort of realize we weren't going to see.
Increased activity. So soon but you haven't a sense you think it's going to be the third quarter or I guess the calendar for the fiscal first quarter for you guys. We start to see.
Activity pick up and maybe talk a little bit about what sort of you're seeing in terms of the supply out there and then also kind of as it relates to that the the pricing on what you did buy this past quarter was a little bit better than what we've seen in the past is that a function of.
Fewer competitors out there, maybe just give us a little more color on on that market.
Well first of the the last part the there was a good bar I think it was that's only one data point I wouldn't read too much into the pricing on one or two transactions.
We have not seen a lot.
In the market you know.
As we sit here now.
The import.
[laughter].
Its like is seasonal.
In part is coated in court I think there is not a.
The bid ask is too wide seller expectations or.
Two I haven't recalibrated, yet to really were stuff will treat.
I'd like to give you a precise answer as to.
What we'll see we'll see it I know.
We're challenging in that regard the trend model.
But.
Mike.
I think the best I could say is that.
I would expect over.
This fiscal year for us we will buy a fair share, we will buy better pricing and I think it'll come.
Later kind of build over the year, let me ask Pat Incidentally, everybody were in different places so weak.
Honestly.
Replaces so if we took over each other it's because we're now looking at each other but Pat do you want to.
It to anything I've said.
Response to Alex's question about the.
Purchase.
Loan market and what might be in the future.
Sure. It. Thank you good morning, Alex.
Yes, I think traditionally our July and August are very very slow anyway.
And loan sales tend to pick up.
Toward the end of the year.
A calendar year as balance sheet repositioning becomes our priority and other strategies.
Well the pan out.
With respect to anything recorded related I think it's a little early for for any kind of cross sell off or your liquidity.
Events that would that would generate opportunities for us. She was a couple of hotel portfolios that are out.
Got you because as you would imagine that so.
Would come on first.
Couple of sellers looking to rotate exit that business, but otherwise, it's it's pretty quiet and it's difficult I think I think it will be several months before.
The kind of liquidity issues, but where would we create the opportunities that were we'd be looking for.
I would add to that.
Is that it's really it's consist similarly, that's a little bit unpredictable business, we can wake up tomorrow, and we give I'm not predicting this will happen here.
Based on anything that is happy with the wake up tomorrow.
And there could be a purchase opportunity for $200 million alone.
Yeah, it's true when we have the capital to do that again just to be clear I know where.
We said any expectations I'm, not saying that there is not there, but you know.
Companies decide to sell them because as I mean could be a lot of life.
Yeah I was thinking about this morning, if you go back.
The thing about this business you know, we first started buying loans.
Just going to make the capital crossing.
You know in their early nineties after the.
Problems in that.
Banking industry then.
After 1998.
After the financial we have to the financial crisis them, but we weren't doing this yet, but there were opportunities than they were huge opportunities loans.
We recently we're paying.
92 cents for the FDIC was selling for 60 cents.
And I think the most important thing if we're in and we are industry as a long term not trying to do well quarter by quarter, it's to be patient.
It has to be smart is not.
Either originate reply loans that were going to regret having.
He will be somewhat defensive now so the weaken playoff pennies.
It was appropriate.
I wanted to get on the greatest will probably every banker would say that but.
That's true in our case.
I mean things like a hotel loans, obviously, a lot of challenges in that industry right now.
Is that something you would avoid or some of these more at risk does not assistance.
Okay.
Yes.
I would say as I'm sure Pat was going to say that same thing. It was saying that there was a portfolio out there because those are less desirable.
Okay, Great no we're not buying hotel loans now you know this of course, when you make credit decisions as lot of things you'd think about but to really important ones are you know LTV.
And the ability of the borrower to pay.
And.
And you know when lpvs or values are sort of settling in not quite settled.
You want to be and it really low side and we don't want to be an asset classes that are not.
You know you know add too and we already have a fair amount of hotels.
That are not particularly like what that's not something we would bid on though.
Okay understood and then.
You know kind of under similar I guess topic on slide seven.
Maybe not so similar but slide seven with the co bed modification summary.
And some of these loans like that the 21.6 million that have gone to 30 day or less than 30 days past due key provides a level more context on.
What's going out those loans if they.
You know if there if they're not paying their non deferral, you know give us a little more comfort those are concerned.
Then we could have more granularity about that less than 30 days as.
As new could be.
Hey.
Borrowers that had a payment backed up this is as of July 27.
Great. So because we wanted to provide is completely up to date information as possible.
We often have loans that are less than 30 days past due and then they pay so either they are included in that for example.
Could be a borrower that added payment that was due on July 20-F.
And you Didnt pay in July 20th.
I feel reasonably comfortable.
When we do this slide again next.
Corridor.
We will see good performance out of that group.
The best way I could say it is not you shouldn't read looked at that list.
At all and think of that those are bad loans 21.6 or bad.
Just nature of our business a lot of them.
Purchased.
And that people don't always pay on time, but they generally pay.
Within 30 days and your line is I'm not so much on these because of the nature, but you only get late fees and all kinds of things.
Those are having those are good numbers as well with the color I would put on it.
Right I mean, they they would have been I guess these loans were in deferral. They whereas you would have had at least a conversation with them if they needed additional deferral and that's still be there. If there are loans that couldn't make the payments Oh right when think about it the same because.
As of the 86.3 million in April they were 19.8 million.
The wondering deferral went on three more months.
The rest of it in.
So.
No.
Yeah, if we were to.
This does exactly answer your first with your final record for those of you showed his current because they are less than 30 days.
I would give more concerned if there was a big chunk of those I prefer I wouldn't like to go crazy about it as it happens sometimes.
If they were and then 41.6 was in the 30 to 60 day bucket.
That would be caused for more alarm and being in the less than 30 day bucket.
Agreed.
Then you know.
Going to the to the the arrangement with alone source, which is just seems like.
Just I.
Obviously.
Nice tailwind for you guys over the next couple of months, but.
Do you have any sort of window into what the pipeline could be like for the long sources future purchases.
Well I'll just put some numbers.
Around so there were 508.
$50 billion are so a triple b loans originated.
By something like 5000 bags and 11 under credit unions.
Through their marketing plan.
And they have lots of.
Same extensive marketing plan.
They are probably going to touch most of those banks to see it.
They're interested in selling.
And banks the ones that have sold.
Mostly they've sold.
The main reason they sold as they wanted to get rid of the servicing part of it.
That's the reason we sold frankly because.
The rules change.
Any technology and need to.
Reallocate.
Yeah, Yeah, you people from doing what they are core business to learning how to serve as these.
And in doing that.
And that costs money and so you know these wounds typically sell last.
98, they have so somebody gives up a point they have to sell it but theres, both actual cost an opportunity cost to service it and the risk you're not going to get it right.
And so.
They're talking to a lot of folks they've done a lot of I'm already if we started this we would have been.
Happy So get out if we got to 3 billion, which we did.
They now have.
As I just mentioned in my comments is kind of fresh off the dress yesterday late never goes to September thirtyth.
I would be reluctant to estimate what more they'll do.
Could be not much could be a lot.
I'm, sorry to give you a such unhelpful answers Alex split.
It's not as if I I know that they're talking to a lot of banks, but.
We'll see what you're seeing with banks what they do.
And then and then.
We just have one or two other points that one legislation as to what how this all well is uncertain.
There is the ability to as everyone knows presumably in the house.
In the Senate there right years apart.
Have different.
Remedies for making that forgiveness process easier.
The more complicated it is the more likely a bank is going to sell.
That's not the only reason that are bank will sell but on the positive well. That's our negative. This is the fact and then also I think they're going to be other.
Triple P. opportunities in the future, namely you're talking about allowing existing borrowers to borrow again.
Certain amount of having a program for seasonal businesses.
And so there's lots of things that.
Possibly flow enter this again.
I'm trying to make a prediction as to what we will do or how much it will be.
But there seems to just seems to be the continuing opportunity.
Right.
And then.
Is there a way that you can help us frame, what that servicing piece could potentially be on $3 billion and loans.
Well.
I'm trying to be helpful. And then I think I will tell you again.
Okay.
So if you're thinking about the servicing the revenue.
As the difference between the.
Interest rate the borrower pays as 1%.
And.
The borrowing cost from the fed which is 35 basis points.
So on the revenue side on 3 billion.
And 65 basis points of.
Revenue.
You know there.
There are they're hoping that they can service this.
I'm reluctant to put a number out I'm just.
Well again, the trouble if I do but.
Got you I think you had put out in one of your release as Alex that you thought there.
Our share of it could be in the 20 basis.
Range.
I don't think Thats I think that says reasonable estimate as any.
So if we were to quantify that.
You know that's on a run rate of.
$6 million until the long as or.
Hey down.
I think thats reasonable I could be off I'm I won't bore everybody by reading the forward looking statement, but I think based on what I've seen that seems.
A reasonable prediction, it'll give or take a few basis points.
And so I wanted just.
Expands on what the income opportunity will be for a while.
One.
The eight and a half million dollars there were Howard Shapey, if we amortize over the original 3 million so for like 20 grant.
Yeah about $20000 in June so it isn't a half million over 20000 of that.
We'll be amortized into income roughly over the next couple of years.
It could be a little less of the own has the loans pay off earlier.
Okay. So that's one of the secondly, servicing income we just talked about.
And thirdly.
What you really have a mentioned but.
When they buy the loans.
They pay whatever they negotiate that braces say 98.5 cents.
But they usually wind up making like more like 99, because they have referral fees to source the business, but one of the things that happens is they have to.
Hey per the accrued interest up until the time they.
By the loans.
And at some point, they're going to get that back. So for example, this has a lot of rounding.
But.
The billion six that they just bought.
Let's say net of commissions they receive.
Got it for 99, so that $16 million.
So you would expect you know our share to be 8 million.
It was only five six because there is about two and a half million dollars of.
Interest expense that they paid for that they won't get back in total you know because alone start paying we're get forgiven.
So there's a lot of money coming in over the next.
A year or two years from this.
A lot rolling that into.
When that interest expense comes back upon forgiveness does that mean that the eight and a half.
A million or so.
You can actually does that actually goes higher.
And we'll be higher so, let's just think about the last transaction because he is the mill the billion six one.
So it's really insects.
You know if they if you get a little round numbers, but they as if they netted.
1% discount they would have made 16 million.
I'm just repeating what I said before so there was.
Our share would be we only got five to six that's because they had to pay the seller.
Almost $5 million of interest.
Then had accrued on those loans think about buying a body and your paper accrued interest.
So when those loans start paying they're going to get back the that interest they paid for and we only account for this when we actually get the cash so we're not the buyer the loans. They are so we'll have even more income coming in.
It's pretty helpful. Rick. Thank you for all the color on that and then just final question for me JP you gave some numbers on the CD maturities just into your prepared remarks I just missed those can you go through those one more time just on the the funding cost reductions.
Sure Alex.
Our weighted average rate on our deposits at the end of the fiscal year was a 1.3%.
In addition to that we have a $151 million in April and Bulletin Board Cds.
There are scheduled to mature over the next six months I get five month at this point to truck into July.
At a weighted average rate of about 2.35% on those so.
We'll see that money coming off the books and as you can tell on our financial back into the year. We do have some excess cash on hand. So you know right now we're not putting new cities on the books, but if we were you know the current cost to those cities that are running off to replace those would be around 30 basis points. So Tony the funding. So we do see.
Some streak always savings in the interest expense.
If we were to put them on.
30 basis points that would clearly bring the weighted average rate of our deposit portfolio down pretty dramatically when time comes and we need some of that funding.
Thank you for clarifying and going over that again, thanks for taking my questions guys.
Thank you Alex.
Thank you.
Once again, please press star one I get Touchtone telephone to ask a question.
And then I'm audio questions at this time now but tend to compliment to required for closing remarks.
Thank you.
Thank you Alex Freer.
Very thoughtful questions, which I hope we were responses on out there were helpful to you in the other.
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