Q1 2021 Bank Ozk Earnings Call
Good day and thank you for standing by welcome to the bank of the case first quarter 2021 earnings conference call. At this time all participants are in a listen only mode. After the Speakers' presentation. There was the question and answer session ask a question. During the session you will need the press star one on your telephone please be advised on today's call.
Is being recorded if you acquire any further assistance. Please press star Zero I would now like turn the conference over to your Speaker today, Tim Hicks. Please go ahead.
Good morning, I'm, Tim Hicks, Chief credit and the administrative all of the surf of Bank goes the K. Thank you for joining our call. This morning and participating in our question and answer session.
Today's Q&A session. We may make forward looking statements about our expectations estimates and outlook for the future.
Please refer to our earnings release management comments on other public filings for more information on the various factors and risks that may cause actual results or outcomes. The vary from those projected in or implied by such forward looking statements.
Joining me on the call to take your questions are George Gleason, Chairman and CEO Gregg.
Greg Mckinney, Chief Financial Officer, and Brannon, Hamblen, President and C O O of our real estate specialties group.
To make the most efficient use of the time, we have for this call. We'd ask that you. Please limit your questions to one or two at a time and then reenter the queue for any follow up questions if needed.
We will now open the lines for your questions. Let me ask our operator joelle to remind our listeners how to queue in for questions.
Thank you as a reminder to ask the question you will need the press star one on your telephone to withdraw your question press the pound key please standby, while we compile the Q&A roster.
Our first question comes from Ken Zerbe with Morgan Stanley. Your line is now open.
Alright, great Thanks, and good morning.
I was hoping you could actually talk a little bit about what drove the increase in non purchased loan yields. This quarter certainly it was good to see those trending a little bit higher it and how sustainable is that increase.
Yeah on this.
Tammy you go ahead, a few on take that yeah. Thanks, George Ken This is Tim.
We did mention in our management comments some additional recognition of.
Of fees from our PPP loans, there was about $3 $6 million of that from.
From the forgiveness of of certain loans of about $160 million of loans that were forgive the non.
Through the PPP process that debt dropped $3 $6 million of previously on accretive net deferred fees into the income that that was about eight basis points.
Contribution to our yield on non purchased loans will obviously have that for.
For a couple more quarters, we have.
$5 2 million remaining from PPP, one from those loans that the not not accreted. The those fees are not accreted into income fully yet.
We got the P. P. P. Two program that obviously started this year, we've got a little over $100 million of of loans that have been approved.
Through that process and that's got the just just under $5 million of fees related to that $4 6 million at March 31. So.
Both of those will contribute some in the in the second quarter in future quarters as those get forgiven over there over the time periods.
Got it okay perfect.
And then maybe just a little bit of a broader question.
So in terms of competition from the non banks and they are in the <unk> portfolio. We've certainly gone through a period, where the non bank should have pulled back on lending given the increased credit risks.
Certainly in the market, but now that we're actually coming out of that period.
And things do look to be getting a little bit better.
Should we assume the competition from the non banks really starts to pick up again from here and what does that imply as you're thinking about growing the RFG portfolio going forward.
Brandon you want to take that one sure sure yes.
Ken.
I think.
We're all very aware of how much liquidity there is in the market place right now on your assumptions for.
And the understanding is correct that the there is sort of the reawakening coming out of the.
COVID-19 pandemic, but yeah.
I would I would say that that's not unlike other.
The periods that we've been in the past.
We face significant competition.
You know 'twenty like late 17 early 18 was certainly a very competitive at the time period, and we continue to be able to.
For the doubling or tripling of the debt funds out there continue to produce really good volume. So yes, it's it's there they're gonna be more more folks out there.
But oftentimes not not groups that have you know the depth of experience and history with a lot of the the sponsors that we do so we expect the competitive environment, but expect to compete very well.
Alright, perfect. Thank you very much.
Thank you. Our next question comes from Brock Vandervliet with UBS. Your line is now open.
Great. Thanks very much.
We could maybe shift over to to deposit trends.
That figure of 48 was was great in terms of the disclosure.
But if you could just speak to that in terms of the consumer of commercial areas down.
Brokered and public funds.
Still heading up.
What what do you what should that look like what would you like that to look like in the coming quarters.
Rock, we've been working very hard over the last couple of years and really improving the quality and diversity of our deposit base and in our top 10 depositors now account for something.
Roughly in the range of seven per cent of total deposits where that used to be.
High teens or even even higher at one point of.
So we we have a very diverse deposit base.
We have no of version would be using a broker deposits all of public funds deposits, but are.
We certainly want to keep those levels, but a manageable level and we're seeing really good acquisition on on consumer and commercial business accounts and expect that to continue on that is our primary focus to just.
Well like a greater and greater core.
The nucleus of customers on the consumer small business side of tablets more.
Connections to those customers by having more and more product.
Connections and delivering to them service of that debt.
The more sticky and more dependent upon us to provide services to.
Two of them and <unk>.
Cindy Wolfe, our Chief Banking Officer, Carmen Mclennan, our chief retail banking officer of Naughty currently our chief deposit officer of just been doing a marvelous job with their respective teams and the.
And continuing to improve those initiatives of mobile.
Online banking or big parts of that we've had several upgrades on our mobile and online banking.
Technologies and products over the last year or so.
That has really been a big part of our story and will continue to be an important focus for us. So.
I'm very pleased with why things are going on the deposit front end.
We know that's not a one and done or five and done or tenant on sort of deal. It's a continuous focus that you've got to maintain and the guys are trying to improve it every day and I think really doing a good job.
Got it okay and as a follow up in the Rs Qi, just if you could talk about.
The guidance.
Going forward it sounds like.
We should expect day.
Up at least on originations later in the year.
Yeah.
Go ahead Bryan.
Yes Brock.
I think we've laid out for you of what we expect on the on the on the pay down side.
We're still expecting to have significant impact there at least in Q2, and hopefully let levels out, but but in terms of originations that we can.
Fight that battle with where.
I'm pleased with the pipeline that were.
Seeing today we're.
You know already.
In Q2 here.
We've already closed eight loans, it's one of the the stronger starts the quarter I've seen in a while.
So as I've said before the guys are fighting hard and not not being deterred by the fact that they're having to work on some smaller loans and getting all of those that they can and I would say that.
I mean, you know we noted that a large part of the difference between Q1 2021 in Q1 2020 was.
Just not as many of the large mixed use deals and some of the bigger metropolitan markets that we typically.
<unk> had a lot of business and.
We're available.
Well you are starting to see that trend reversed as.
On the country comes out of it you know.
Hum.
As the COVID-19 COVID-19 induced stupor and is that is that has been occurring the guys are starting to see some of those that they've been tracking and expecting to come on the market start to sort.
Hard to do that so.
In the.
Quarter to quarter, you know the the world can change, but we see the trend positive in and would hope that towards the back half you know a lot of these deals that are common to market the day or our back half 2021 early 2022 deals but.
We're encouraged at what we're seeing there.
That's great Okay. Thanks for the color.
Thank you. Our next question comes from Michael rounds of Raymond James Your line is now open.
Okay.
Hi, Michael.
Macro.
Can hear you.
And our next question comes from Joseph <unk> with Wells Fargo. Your line is now open.
Hi, good morning.
Good morning, Jim.
Again following up on.
Some of the commentary on our ESG I understand the <unk>.
Record level of the payoff activity of some of that pent up demand from last year is accelerating in the first half of this year, but I wanted to talk again on on your comments on the heightened competition and some of the.
Headwinds is that net debt that is producing I guess as youre looking at the competitive landscape are you seeing those pressures on the pricing side are you seeing those pressures on the structure side and as you get into the back end of the year.
Is it really the pipeline that youre seeing today, that's giving you optimism that you can outgrow some of those competitive pressures or should we expect to see the competition ramp up.
As the reopening of more broadly continues to take place.
Well some of our Lemay, let me answer that in the sense Brandon has already answered it let me, let me answer it and provide.
The enforcement I think of what Brian and sat in.
Number one is as Brandon observed were always on a very competitive environment, except for times when everybody else pulls back from the market as we saw in the.
Like first quarter, and second quarter and early third quarters last year, when everyone else sort of disappeared for the most part we were still out there.
Very reminiscent of the experiences in the great recession, when everyone disappeared from the space, except us pretty much so.
Barring those exceptional times.
Where are all of the visitors leave in the.
We were in the space all of the time are still out there we say a lot of competition. In this comes and goes in it's from different competitors from different angles of attack at different times. So the competition is nothing new and as Brian pointed out our guys are doing a great job.
Of the finding.
Finding transactions that meet our standards as is evident from the fact, we closed about twice as many loans on our USG in Q1 of this year as we did in Q1 of last year. They were just.
60% smaller more of less than the loans, we closed on average last year. So.
The guys are doing a really good job of competition as part of our business and as Brandon said are our expertise and ability to execute on.
Are always the distinguishing attributes the same to win the business for us and.
Certainly we're going to be leaning heavily on those relationships are proven track record of being reliable on executing well and having the expertise in the space to to win business going forward and those distinguishing characteristics had been invaluable to us in the past and winning business in.
We think that.
They will be in the future.
We do see a healthy pipeline of <unk>.
Margin for the second half of this year and next year.
And.
That is the source of our optimism and our experience in the space.
And you asked the question wasn't competition based on credit or is it competition based on pricing.
And I would say, yes, and yes to that and you guys. We've said this.
Multiple times.
Over many years is we will not give on credit we will not sacrifice on credit quality to get business, that's absolutely non negotiable.
We will negotiate some on pricing and.
As long as it achieves our minimum return standards.
Oh, yes, we are seeing some pricing pressure and we're certainly not getting as good of yield on loans originated.
This year.
And in the quarter. We're in now is we probably did on loans originated in the second quarter of last year when.
Everyone was absent from the space, but they are still going to meet our return standards and if they don't we're not going to do them.
Okay. Thank you that's the that's good color I appreciate that and then my follow up just looking at the community Bank.
And the optimism for that to grow in the back end of the year can you just maybe talk about where that growth is coming from I know you referenced that you brought on the new ABL team and that's going to start contributing I'm. Just wondering how much of that growth is going to be from reengagement and the indirect RV and marine space and then also to the ABL point and how much of that should be.
Contributing in the back end of the year.
When we refer to the community bank, we're not referring to our our corporate and business specialty group for ABL or indirect groups.
Corporate and business specialty group in ABL group that were.
We're building those report under brand and Hamlin.
Indirect reports too.
Alan Jessup, who is over our community Bank group as well, but what we really consider that a separate unit from the community Bank group. So we are hopeful to.
So the.
And the increase in growth and we've got a good pipeline of transactions for working on the brand's world on the corporate business specialty group side. That's an area. We think we get some growth over the next.
We went back half of this year really in the end of next year. We're excited about this new ABL business in the later ship that we powered for that and then our community Bank team.
The.
Under under Alan Jessup.
Those guys seem to have some growing momentum now they add net payoffs obviously in Q1.
And they'll be.
They'll have another challenge with payoffs in the second quarter.
But their pipelines seems to be getting better and they seem to be getting more optimistic about their ability to win business out there. So we are encouraged.
<unk> prospects across the board for growth in the back half of the year and into 2022.
Okay. Thank you I'll jump back into the queue.
Thank you.
Thank you as a reminder to ask a question you will need the press star one on your telephone and net.
Question comes from Matt Olney with Stephens. Your line is now open.
Great. Thanks, Good morning, I wanted to go back to the discussion around our ESG and you noted that you are closing more loans today than a year ago, albeit smaller deals we'd like to understand how much more capacity. The current <unk> team has.
For the current staff I appreciate the good deals are complicated and take a while to originate and close the just curious about the capacity issue.
Brandon you want to take that one absolutely it's a great question Matt.
On this this has a trend that's a trend that's been developing over time, we've been watching it we have always been very on top of the sort of the metrics around.
Who can handle what in what we can produce for the team that we have and as a result of that we have been adding.
Some folks in our ESG.
Predominantly.
On the on the the clothing side, where the sort of the sausage is made if you will.
But we're adding some slots on the origination side as well so.
We're on top of that ahead of it were staffed up for it.
And have capacity to run there.
Yes.
Okay. That's helpful.
And then also I was wondering if you could speak to one of your resi loans that you received some some press recently that the project in Arizona with the Ritz Carlton I think the media reports of highlighted some property leans in lawsuits and project delays I was the.
Wondering if you could address its project from the bank side and looking at your disclosures. This morning, it looks like that loan is not sub standard.
Help us understand how the bank grades alone like that that appears to be behind schedule sure sure. Matt Good question happy to answer it.
I guess first of all I'd say, we're we're we don't have any significant concern about that loan.
This is the situation thats not every day occurrence, but it's not all of that uncommon.
That project is an expansive and complicated project that covers 100 acres in the involves.
200, key Ritz Carlton Hotel, and an 80 rich branded villas.
Retail space and additional pads spreads out.
We're over a large area involves a lot of folks involves a lot of offsite and onsite work.
Just a lot lot to get done there and that's that's the kind of projected net debt.
Very well suits, our expertise and the way, we underwrite and close in and manage these deals. So we're very well aware of what's going on out there and.
And of market.
Tight labor type materials.
And of very high quality project and.
Some of those circumstances can can can lead to a situation where ultimately the.
The sponsor developer doesn't feel like the G fees getting their work done.
And the way that they should or in the time period that they should end and sometimes conclude that the solution is the.
To go a different direction it happens out there.
But that's why we stay on top of these loans like we do in monitor and.
And watch what's going on and why we structure alone like this it's got a very capable sponsor.
And the behind him of World class Mezz lending mezzanine lender.
And development of great product, that's proven itself and as much as they've had tremendous.
The pre sales on the Bill is it there.
If they have out there and we structure of that loan it where I think we're at 36% LTC and 34% LTV.
Got.
Partial repayment guarantees from from the sponsor that are backstopped by the Mezz and.
We're in a very good position on that loans. So.
Yes.
You ask how we grade it and how we think about it.
We have a very strong position in front of US great sponsorship of great mezzanine lender, who are ultimately responsible for figuring out.
When these things come up.
We're in a position to have the you know the.
The opportunity to sort of.
Yes.
Take advantage or take.
Stay with it with the project.
In the capacity, we're in are more or less because of where we are but but they're responsible for for resolving it we fully expect they will.
So it's.
It's a time impact and of course time is money on these projects, but there is those are all of those issues were watching and taking care of and making sure that debt when it moves forward. It moves forward in the right manner.
With the right folks you know the.
The GC of new DC will probably be engaged in and we will move forward again was phenomenal pre sales on the product that they produce so.
Again in short, we don't have any small concerned about that loan.
Okay. Thank you very much.
Thank you. Our next question comes from Brian Martin with Janney. Your line is now open.
Hey, good morning, guys.
Good morning, Brian Good morning.
Just wondering if you guys can comment a little bit about the.
The deployment of excess capital on just kind of talking about I think you mentioned in there some of the end.
Prepared remarks.
This is about the buyback about M&A, just kind of how you're how you're thinking about those two.
You know as you go forward here.
Alright, Jim you kind of tie grammar.
Yes, I'd be happy to George Thanks for the question Brian.
As we said in the management comments, obviously, our strong earnings profile and robust capital.
Gives us a lot of Optionality, we've got the full playbook open to us.
As we've always said our number one growth priority is organic growth. So you've heard us talk about the all the things that we're doing to continue to focus on that and look for.
Some positive momentum coming on the back half of this year and into next year.
Certainly mentioned, adding the new ABL business line, we will we'll be looking for other business lines that we can add as well.
We've had a strong track record of increasing our dividend.
Quarter over quarter year over year, what we did not mentioned here is we certainly have the option and had some conversation around the special dividend. We can do a special dividend if we wanted to as well obviously.
Obviously M&A.
Is.
<unk> is being talked a lot about in the industry, we're seeing a lot of deals that the.
That have come up.
<unk> recently.
We have spent more time, probably in the last couple of months than we have in the last couple of years analyzing and looking at that market and spending time on the M&A we would.
The open to do on a cash deal or some combination of cash to stock obviously, it's been for five years since we've been close the close the transaction there so.
Thinking about the size of the transaction, we do is probably going to be on the moderate end of the.
Of the.
Of the scale.
That we could do for cash or some combination of cash and stock and use use some of our capital to do that and then we also mentioned.
Share repurchases, obviously, it's not our first choice, but as we look at our earnings profile and look at our growth profile for the near term.
Certainly a lot of a lot of conversations being had at management and with the board are around the around that as well. So we've got the full playbook open we're looking at all of the options and we will continue to monitor that but.
I think we're in a very good position.
Two.
For the future.
Gotcha, and just the the geography or I guess, you talked a little bit about the size and but just geography of what.
End of what you would look for and the potential target on the M&A side I guess, the other priorities there as far as where with it for.
For the focus would be.
No I would also say the for M&A playbook is open when we did the 15 acquisitions from 2010 to 2016, we obviously looked within within our footprint, but we expanded our footprint certainly within the southeast.
But we also did did the transaction that was headquartered in New York that had branches in Florida. So.
We did.
A couple of transactions that had great deposit bases that 100 year old deposit franchises, but also.
Some of the add newer deposit franchises. So the we will look at a lot of different things, we always have that.
And we've got the flexibility with our capital on our management team to do that obviously, our ESG on.
Operates in a lot of different markets across the U S. So we've got a lot of good Intel on to a lot of top markets across the across the U S. So I think we would keep that playbook open as well.
Okay. Perfect day is just one follow up on I don't know, who for whom but just the new initiatives you talked about both the ABL and the.
Maybe a little bit more focus on the subscription finance.
Business could you just talk a little bit about kind of growth expectations over time or just how things are going to progress there.
Brendan you want to take that yeah sure sure well.
Start with the ABL side, and we're very excited about.
That opportunity and finding on individual to lead that that group that really has the the same sort of credit DNA and thought processes around on how to originate and close and manage it.
For those credits.
Really mirror the way, we think and our ESG. So we're excited about that opportunity.
It will take time to ramp that up.
Well hopefully.
<unk> had some wins here in 2021, but I would expect that.
It'll be the following year before we see material moves there and.
The CBS G group are in particular the subscription facilities.
They are ahead of the game there and moving.
Had.
The positive year last year, but we think we'll be.
Last year in 2021, and continuing to go from there and I think the some of the synergies that we're going to start to realize.
With bringing in these different in the specialty verticals will there'll be cross selling across those that we expect to.
The benefit from certainly that's that's the case of some level already with Cvs G in our ESG, but when we bring this ABL.
Linda renting and get that started we are we expect to see more of that so hopefully the the sum of the parts as well.
All of the whole is greater than the sum of the parks in that case.
Perfect. Okay. Thank you for taking the questions.
Thank you. Our next question comes from Michael Rose at the Raymond James Your line is now open.
Hi, everyone, sorry about before had some technical issues, but.
Just wanted to go back to the hotel credit that moved up on the the LTV Bubble chart can you just give some color there I'm sorry, if I missed it and then.
Just related to that.
On the CEO of a large hotel group basically came out and said the other day that there might be some more need for some.
Some properties what are you guys seeing in terms of opportunities for for hotel for the hotel book as we move forward. Thanks.
Brian on the monarch do you take that one.
You bet Ya, so I'll kind of start from the back and come back around on the opportunities.
<unk>.
We continued to see hotel opportunities not not as many.
As there were obviously pre COVID-19, but but.
And some of the mixed use projects that we've talked about there there are some opportunities there so.
I think the trends are extremely positive there everyone's still so obviously down relative to 2019, but moving in the right direction. So we we will continue to look for good hotel lending opportunities.
That meet the standards that we've held to.
Sort of through through the cycles and expect that hospitality lending will always be the part of what we do.
Switching to your question around the the credit the the bubble that you saw rise on the chart.
That was the result of the.
Of the new appraisal.
The recent new appraisal and.
As of in a situation where the.
The market was obviously very impacted by by COVID-19, but but we expect to see that turnaround on.
A little more detail the.
On the sponsor on that particular project, we actually have three other.
The hospitality loans with.
That one stands out.
1%, but across the four that we have with them. The average is more mid sixties.
And we have for repayment.
Guarantees on all of those in.
We're exploring the possibility of.
Of the Cros crossing all of those loans, so that effectively you've got on average LTV as I said in the mid $60. So.
At this point we don't.
We definitely definitely want to see the operations improve and ramp up there but.
We have a lot of confidence in that sponsor. He has contributed a lot of capital to that that and other projects. So.
Where we are.
I'm cautiously optimistic that all will.
And well on that and as other projects.
Okay very helpful. And then maybe as a follow up because of been able to hold expenses here relatively flat you talked about.
Some of the new initiatives, new ABL team.
Et cetera.
Can you just talk about the outlook for expenses of just balance cost reduction efforts like branch closures as you mentioned in the document versus reinvestment opportunities.
That should mean for expense growth moving forward. Thanks.
Greg when you check that yes.
I certainly will George thanks.
Thanks for the question.
As we look at expenses and look at kind of where we've come from.
Moving through COVID-19, and hopefully post COVID-19 here over the next the next few months of few quarters.
Our current thoughts are we would expect our while we had some noise in our Q1 expenses, we would expect that the.
To be of pretty good indication of where we would think our expense run rate would be for for the second quarter.
As we've talked about before we are continuing to evaluate positions evaluate branches.
And really make sure we've got the right combination of people in branches and products as we continue to.
Grow our bank and move forward into the future.
We're also continuing to hire.
No more talent better talent.
I really tried to increase the yield.
The the ability to serve our customers.
Book on the loan side on the deposit side as we move forward.
So certainly though the timing of some of that could have some some variation you know from a quarter to quarter standpoint, but we really think debt is we as we look at the next quarter or two debt.
We would expect expenses to be relatively flat.
You, possibly down slightly or even up slightly but really I think Q1 is a pretty good indication of where we would expect that run rate to day for the mixed.
For the next quarter or two.
And that would be excluding some of the one timers this quarter just to be clear rate.
Well I think that the.
Of those.
Thank you.
If you look at it in totality I think there will also be you know we've talked about a couple of branch closures in the Q2 of Q3 there'll be a little bit of noise from that as well and those quarter of I think if you just look at it from a GAAP standpoint.
I would expect it to be relatively flat from the GAAP standpoint, Michael.
Alright perfect.
Thanks for taking my questions.
Thank you. Our next question comes from Jennifer Dunbar with true of Securities. Your line is now open.
Yeah.
Hey, good afternoon.
Question on <unk>.
So can you just give us.
Your thoughts George and brand on.
The New York City market, and what you're seeing the changing there in terms of demand.
On our asset quality on on your current loans there.
Brendan you on Tiger.
Absolutely.
Thanks, Jennifer for the question.
You would say that generally speaking I feel pretty positive about New York.
It depends on which which property type you want to focus on.
And some are coming back more quickly than others, but that's totally to be expected.
We've had a really.
The strong resolved in our in our condo portfolio there and.
We talked in our comments about how our New York concentration is has been sort of steadily.
The coming down and.
I would tell you based on what we're seeing that will continue to be the case just from the standpoint of projects successfully completing.
The real real.
Strong condo sales activity occurring.
In that market and.
None of the other properties as well.
We've noted before that our office projects there.
Experienced historically, good leasing and we've seen some leasing.
And the last last quarter, there as well.
On that that particular product.
A lot more time to really understand what the long term impact is but but we are in terms of our credit quality there on our assets that we finance, where we're pleased with what we've seen hospitality.
No.
Our portfolio is.
It's come down over time, there, but we've we've.
Interestingly enough, while while there arent.
Yet as many.
Visitors and as many of beds being being reserved.
We've seen capital flow into the hospitality space there on.
A couple of our projects.
Sure.
On outside outside parties of come in and invested material amounts of capital on existing projects.
So.
We're very pleased to see that the.
The.
Multifamily space.
Good good return of of leasing velocity so.
Yes.
Net debt.
The market had a very severe reaction a year ago, and it's going to take a while for it to come back, but we have a very positive long term view of New York.
On.
It may the numbers may may have the potential to confuse you on that because you know.
Due to the natural maturation of the portfolio that we originated over the last 234 years youre going to see those that concentration come down.
Probably over the next couple of quarters doesn't mean, we don't.
Have the long term faith in that market, we're going to be looking we are looking at net.
The opportunities in the market.
But it'll the.
The velocity of pay downs there on the on really.
It really successful projects will outstrip, our originations volume there for the foreseeable future, but we're we're we're pro New York, where we're going to be looking for opportunities to fill.
Phil back some of that space that we're creating here of this year.
And Jennifer let me, let me just put a fine point on the comment Brandon might you know you could look at R. R.
Our peak portfolio of total commitments in New York, and our USG was back and.
Oh Q4 of 18 of our Q on of 19 at 6.95 billion and where it for eight 7 billion. So they were down over 2 billion from our peak commitment there that is not an intentional strategy.
Relative to run from New York. It just reflects the fact that we're a construction and development lender. There was a lot of really quality construction and development projects that were available in that 17 18.
Not tier timeframe in New York, So we were originating a lot of business day in and in the natural cycle of things as Brandon said, that's paying off now.
The pandemic and the fact that New York got really.
A little overbuilt and a lot of product types of <unk>.
Following that wave there have not been as many new products to finance in 19 of particularly 'twenty.
Very little new construction in 'twenty. So the fact that our portfolio is coming down and it's probably going to go down further probably going to go down below $4 billion in total commitments in New York I would guess.
The fact that bad.
What's happening is not a reflection of our view of New York.
A huge market and important market.
There's only there's only one new York rail or you're on and it's unique in a lot of respects.
But it just simply reflects the cadence of originations and payoffs and when construction and development opportunities for zoom in New York and a meaningful why are you. So we're going to be they are looking for the same quality projects to originate going forward that we've originated there in the past.
Thank you.
Thank you. Our next question comes from an icon of Itch with Citi. Your line is now open.
Thank you for your just kind of following up on on the last.
The line of questioning there.
In the pipeline that you have.
Now or for the opportunities you are seeing with developers.
Where are you seeing this from a kind of a.
A office or Im sorry on a property type or geography, it sounds like New York not quite coming back not surprisingly as quickly are there any parts of.
Of the business that are really kind of showing some some a little bit faster green shoots there.
And Brandon take that if you would.
You bet, yes, and really the answer is going to be similar to what it has been and I would say in the last quarter or two in terms of geographic.
The activity the the southeast and southwest have have.
Sort of dominated our.
Our originations in the.
In the past I'd say two quarters for sure and when we look at the pipeline and what's in it today.
That continues to be the case although.
Outside of New York, There's a lot of activity going in our northeast region. So we've we've done done well there as we've alluded to.
The in markets outside of New York So.
On those trends have been pretty pretty steady for a bit and I would say with respect of property type as well.
The closing.
Activity has been predominantly in the sort of the multifamily space.
We've had different markets outside of New York.
Some more condo activity and were.
Seeing our Miami condo portfolio has performed well in the past and we're looking for more business. There. There there are not as many deals there is perhaps in the past cycles, but youre starting to see those come back and we're very active there.
And as I said before on the mixed use side, we are starting to see that come back when I look we look forward to what may be coming there I'd say well, we hope to start seeing.
More of those and they tend to be larger so it doesn't have to be that many by by number of opportunities, but dollar volume can can get there pretty quickly. So that's sort of rounds out where we're seeing the.
The most activity I mean, all of offices office is still on active market, especially in some of the suburbs in the.
Not not core.
CBD markets.
Thank you.
But I would add on I would add a little color of that too I think the the <unk>.
Fact that the big urban markets that are such as New York that of really heavily dependent upon mass transit and density.
Which had been really slowed by the.
By the pandemic that has that a side effect of that is our guys in.
In their quest to continue to find adequate volumes of business for us.
We have been much more active in and out of the market's Brandon mentioned, we had an originator of the deal I don't know on a couple of quarters or more on New York, but we've had really strong growth.
In Boston and D C in Philly.
Here.
And in our other markets.
You've seen.
A greater diversification of the portfolio of Chicago or.
L a or whatever might have been.
San Francisco might have been less active.
<unk> seen other.
Suburban markets begun to play an important part in our mix and this is highlighted in a figure of 35 of our.
Our.
Management comments document, where we show every MSA that we've got.
On active loan Ann and the increased diversification in a number of markets represented buyer I think is a real strength for.
For our ESG portfolio of the diversification is good but also our ability to grow this portfolio.
And get above this kind of 2000 $22 billion area, where we've been for a while to get the 25 or 30 of $35 billion in RVO Street over the next several years.
That is the.
To do that we're going to have to tap more msas and the.
That's good.
Byproduct of good side effect of the adjustments we've made in that business over the last year.
18 months, we've been doing a lot more stuff in other markets and I'm excited about that I think it has good long term implications for us.
Thank you.
Thank you. Our next question comes to mind Chancellor of with Wells Fargo. Your line is now open.
Hi, Thanks for the follow up maybe just one more for Tom.
On the PPP.
On.
The income that was accelerated with $3 6 million you on the total PTP revenues for the quarter.
No Sameer I don't have that off of.
And you're talking about with the normal accretion.
Yeah.
Those were typically yielding around two 8% just on a normalized basis.
So.
Maybe you can back into it with that at all I just don't have that at my fingertips. So the $3. Six was in addition to kind of that normal two 8%.
Yield okay.
Maybe the the average balance for the quarter, you have that or no.
I don't have that either although we did have about $160 million that was forgiven.
Throughout the quarter. So you know.
You could probably use that as the is coming through on a pro rata basis of.
Throughout the month of May of Ben.
Slightly weighted towards March.
But.
I think that should get you get your clothes and we ended the quarter.
Let's see we ended the quarter with about $280 million.
For PPP, one in about $110 million.
For the PPP too.
Okay got it thank you.
Thank you.
Thank you I'm not showing any further questions at this time I would now like to turn the call back over to George Gleason for closing remarks.
Alright, guys. Thank you so much for joining the call today. We appreciate it we're glad to report our results. We look forward to talking with you on about three months of thanks have a great day that concludes our call.
This concludes today's conference call. Thank you for participating you may now disconnect.
Sure.
Okay.
The.
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Yes.
Yes.