Q1 2021 Flushing Financial Corp Earnings Call
Good day, and welcome to Flushing financial Corporation's first quarter 2021 on earnings conference call.
On the call today are John Buran, President and Chief Executive Officer, Susan Cullen Senior Executive Vice President Treasurer, and Chief Financial Officer, and Frank cause Acquaint ski senior Executive Vice President and C for real estate lending.
Today's call is being recorded.
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After todays presentation, there will be an opportunity to ask questions.
To ask a question on my Press Star then one on the touch on Sun.
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A copy of the earnings press release, and slide presentation that the company will be referencing today are available on its investor Relations website at Flushing Bank Dotcom.
Before we begin the company would like to remind you that discussions during this call contain forward looking statements made under the safe Harbor provisions on the U S. Private Securities Litigation Reform Act of 1995.
Such statements are subject to risks uncertainties and other factors that may cause actual results to differ materially from those contained in any sense.
Statements such factors are included in the Companys filings with the U S Securities and Exchange Commission.
<unk> Financial Corp, does not undertake any obligation to update any forward looking statements, except as required under applicable law.
During this call references will be made for non-GAAP financial measures as supplemental measures to review and assess operating performance.
These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared.
And presented in accordance with U S GAAP.
For information about these non-GAAP measures.
For a reconciliation to GAAP, please refer to the earnings release and the presentation.
On a dollar to introduce Mr. John Buran, President and Chief Executive Officer, who will provide an overview on the strategy and results.
The floor is yours Sir.
Thank you good morning, everyone and thank you for joining us for our first quarter 2021 earnings call.
On today's call I will discuss our first quarter highlights and our strategic objectives before turning the call over to our CFO, Susan Cullen, who will provide greater detail on our financial performance.
Following our prepared remarks, we will address your questions along with our Chief real estate lending officer, Frank consequence ski.
After a challenging year for all in 2020, we were cautiously optimistic heading into 2021.
With an accelerated vaccine rollout in.
Improving local economic activity and a steeper yield curve the environment is better than it was three months ago.
We continue to support our customers to get through this challenging but improving period.
The Best example of US of this was our efforts around the P. P. P program.
During the quarter, we originated more P. P. P loans than we did in all of 'twenty 'twenty.
We're also guiding on customers through the forgiveness process.
And for Barents has declined in the quarter and this will continue throughout the remainder of 2021.
Our supported these customers was rewarded unless as less than $10 million of loans that were on forbearance migrated to non accrual and we've only recorded a $100000 in losses to date.
Turning to slide three we outlined our strategic objectives, and how we measure up against them.
First objective is to ensure appropriate risk adjusted returns for loans, while optimizing the cost of funds by.
By focusing on this objective we reported our fourth consecutive quarter of record net interest income we.
We expanded on net interest margin during this quarter as funding costs declined more than loan yields.
Average noninterest bearing deposits increased 91% year over year, and now comprise 14% of deposits.
Our second objective is to maintain strong historical loan growth.
Net period end loans rose two 6% year over year, excluding Empire as we focused our attention on supporting our customers by originating P. P P loans and assisting in the forgiveness process.
Our third objective is to enhance core earnings by improving scalability and efficiency.
While our GAAP earnings per share improved to 60 cents from a loss of five cents a year ago on.
Core earnings of 54 cents increase of 184% year over year.
Additionally, our core pre provision net revenue improvement was 79% year over year and 6% quarter over quarter.
This improvement in earnings per share and core pre provision net revenue was due to the Empire transaction net.
Net interest margin expansion.
And lower loan loss provisions.
Importantly, essentially all of the Empire cost savings are in the run rate.
In first quarter 'twenty one.
And we're on track to achieve the expected benefits.
Also we remain confident in achieving our 20 per cent earnings per share accretion in 2021.
Our last strategic objective is to manage asset quality was consistent and disciplined underwriting.
Credit quality has always been a hallmark of Flushing.
While we had 17 basis points of net charge offs this quarter.
16 basis points were from charging off the remaining taxi medallion portfolio.
Our reserve coverage is strong at over 200% of nonperforming loans and our nonperforming assets are low.
At 26 basis points.
The average loan to value.
In our real estate collateralized portfolio is 38 per cent.
Overall, we performed well against our strategic objectives. During this quarter and are encouraged by the outlook as well.
Yeah.
I'll ask Susan to provide more details soon.
Susan.
Thank you John I'll begin on slide four are.
Our first strategic objective is to ensure appropriate risk adjusted return on the loan portfolio, while optimizing our cost to funds.
Average deposits rose 23 per cent year over year, excluding Empire growth was about 8%.
Our average non interest bearing deposits increased 91 per set from a year ago on a core deposits comprised 83% of average deposits and improvement from 75 per cent in the first quarter of 2020.
Our total cost of deposits declined to 108 basis points over the past year to 39 basis points and improved eight basis points from the linked quarter.
Our digital banking metrics continue to improve and we expect this trend to remain.
In addition to the 64% annual increase on a monthly active mobile users in March active online banking increased to 120 per cent monthly mobile deposit items processed increased 310 per cent and monthly mobile deposit volume processed climbed 850 for set.
On slide five we show the net interest margin trends as John noted, we reported our fourth consecutive quarter of record net interest income.
Core net interest margin expanded three basis points during the quarter as the cost of interest bearing liabilities decreased faster than a decrease on the yield on interest earning assets.
Our net interest margin can have some noise on putting net gains or losses from fair value adjustments on qualifying hedges.
And net amortization of purchase accounting adjustments.
To try to make your analysis easier we have removed these impacts plus the effects of prepayment penalties and then net reversals in interest recoveries from non accrual loans in the base net interest margin.
Courage, you tomorrow will be getting with the base net interest margin.
I want to take a minute to discuss the steepening of the yield curve and what it means for Flushing on slide six you can see the spread between the two year and 10 year treasuries.
Spreads widened during 2021 and the current spread as squares on average for the first quarter. This should bode well bode well for asset pricing and help keep funding costs low overall steeper curve should help protect or possibly grow the core net interest margin.
On slide seven we discuss our interest rate risk positioning we are liability sensitive but have tools on time to help mitigate sensitivity to rising short term rates.
For example, we will continue to lengthen the duration of our liabilities to one of several channels, we have and will continue to shorten the duration of our assets by continuing continuing to grow our commercial portfolio and focusing on the origination of other adjustable rate assets.
We have $480 million of forward, starting swaps that pay a fixed rate of 73 basis points compared to our federal home loan bank advance rate, including the existing swaps of $2 33 for the first quarter.
On average these forward starting swaps beginning late 'twenty 'twenty, two which is ahead of the fed's timing on rate increases in 2023. So.
So while we are liability sensitive we have levers to pull when short term rates rise to complement the protections currently in place.
Our next strategic objective is to meet historical loan growth on.
On slide eight you can see the composition of our loan portfolio and our growth.
As John mentioned earlier, we focused our attention this quarter on the PPP loan program.
We originated $123 million of PPP loans in the first quarter, which was acquired in the 2020 originations of $112 million.
To date, we have helped processed 49 million of loans for forgiveness and have another 34 million pending SBA approval.
Net P. P P fees collected for forgiveness in the first quarter with minimal.
And if the remainder of the portfolio are forgiven, we expect to collect $5 million of net fees well overall loan yields declined slightly on a linked quarter basis, when netting out the P. P. P loans, we were encouraged that yields on new originations improved as the quarter progressed.
However, new origination yields are still lower than the current corp portfolio yields were.
Were very successful this quarter with our customer swap offering program, but with higher rates offering is less attractive to customers.
Our third strategic objective as shown on slide nine is to enhance core earnings power by improving scalability and efficiency.
So far the merger is progressing in line with our expectations. We are on pace to achieve our cost savings target.
Both in deposits and on legacy Empire branches was 14% since closing we also are committing a significant portion of our marketing budget to Suffolk County, which is a new market for us.
As we do with all of our markets. We are looking for ways to support our communities and we are off to a good start in Suffolk County, we remain confident in achieving the 20 per cent earnings accretion in 2021 from the Empire transaction.
Yeah.
Slide 10 has our fourth strategic objective, which is to manage credit risk with consistent and disciplined underwriting.
We have supported our customers during the pandemic with various forbearance programs loans in forbearance total 296 million and 61 per cent of these loans are making interest payments, leaving only 115 million on one seven per cent of loans on full P&I forbearance.
We remained well collateralized on these loans as our borrowers have approximately 60% equity in the properties.
These forbearance as will remain throughout 'twenty 'twenty. One however over 80 per center scheduled to resume normal payments by the end of the year.
Most importantly, less than $10 million of loans that have exited forbearance have migrated to non accrual or law status.
We have recorded only $100000 on loss on all loans have entered forbearance. This further demonstrates the strength of our borrowers and the quality of our underwriting.
Hotels on the largest segment of our forbearance loans at 108 million or about a third of the balance some important points to make on this portfolio first occupancy rates in general are rising and should continue for the remainder of the year with continued vaccinations.
Second most of the hotels are outside of Manhattan, where economic activity is relatively better.
Greater than 90% hotel balances I'm, making at least the interest payments.
We remain convinced that these borrowers just need time for economies to normalize so they can resume regular payments with an average loan to value of 50 per cent. We view our risk of loss is low in this portfolio.
On slide 11, we provide the details of our allowance for loan losses, our provision for loan losses was $2.8 million, primarily due to the net charge off on the remainder of the taxi medallion portfolio charges totaling $2 9 million.
Going forward, we expect loan loss provisions to be primarily influenced by non PPP loan growth overall loan mix and economic factors.
The reserves to loans remained at 67 basis points.
Slide 12 is a reminder, that our low loss history has been significantly better than the industry for the past 20 years and even during the great recession, our losses on foreign half times below the industry's peak well.
We see no reason why this trend would be any different this cycle as weighted average loans value on our real estate portfolio is 38 per cent and there's minimal exposures for loans with the loan to value exceeding 75 per cent.
Slide 13 outlines from additional credit quality statistics on.
Our coverage ratio remains strong at over 200 per set of nonperforming loans.
Nonperforming assets for flat linked quarter and the overall level remains low.
The average loan to value on.
Real estate nonperforming loans was a low 31% overall, we remain comfortable with our credit risk profile and continued to expect minimal lost contact.
Before I wrap up my comments, let's review capital on Slide 14.
Our capital ratios have improved linked quarter, and we remain comfortable with our position book.
Book, and tangible book value per share increased to $20.65 and nearly $20 respectively.
We continue to expect to build capital during 2021 with our tangible common equity ratio approaching 8% by yearend our current dividend yield approximate three eight per cent.
Lastly, let me remind you of some items that could impact the second quarter.
The steeper yield curve should help asset repricing at the margin and help keep funding costs low.
We benefited from CD repricing in the first quarter and while additional opportunity does exist the impact will be lessened to going forward.
We expect core net interest margin to have modest expansion in 2021 as it will take time for the steeper yield curve impact asset yields and we have extended the duration of our liabilities.
Additionally, load growth to be a key driver of net interest income.
Well our loan pipelines are strong we have a headwind from the P. P. P forgiveness.
We are planning to use the benefits from the steepening of the curve to make investments in our business.
Purchase accounting accretion is expected to remain below a million dollars per quarter.
The strong fee income we had in the first quarter from the customer swap program totaled $1 $6 million is not expected to repeat given the change in market conditions.
The $3 3 million of the compensation related expenses in the first quarter are also not expected to repeat in the second quarter due to seasonality.
Our effective tax rate in 2021 should approximate 27% since New York passed a law increasing the state rate on April 19th.
Lastly, note that our period end outstanding shares are higher than the average for the quarter.
With that I'll turn it back to John.
Yeah.
Thank you Susan on Slide 15, we provide our outlook clearly we are a beneficiary of the steeper yield curve and we have levers to pull if short term rates rise.
We also have forward starting swaps that should help mitigate any impact of a rise in short term rates.
We are more optimistic about the operating environment, given the steeper yield curve fiscal stimulus.
An accelerated vaccinations.
Which should improve the local economy.
Our community outreach, especially in our Asian markets should accelerate in 2021.
As Susan mentioned.
We are using some of the benefit from a steepening yield curve to invest in our business and better prepare for our next stage of growth.
This includes investments in our digital offerings, our loan pipelines, which do not include any P. P. P loans improved during the quarter.
And we should return to more normal loan growth later in the year as we work through P. P. P forgiveness headwinds.
We remain comfortable with our credit risk profile.
Our support of our customers throughout this pandemic has increased customer loyalty.
Empire is on track to deliver the 20 per cent EPS accretion in 2021.
And we will continue to leverage this franchise to generate returns.
Overall, we're on the right path to achieve our long term goals of Anoro, a a greater than or equal to 1% and an increase our O E with that we will now open it up for questions.
Operator.
Turn it over to you.
Thank you, Sir and thank you, ladies and gentlemen.
We will now begin our question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If you're using a speakerphone please pick up perhaps it for four personally queues for them.
On the type of question husband, adjusted and like to withdraw your question. Please press Star then two.
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At this time, we'll just pause momentarily to assemble our roster.
That's the first question, we have will come from Mark Fitzgibbon of Piper Sandler. Please go ahead.
Hey, guys good morning.
First question.
Good morning first question I had for you.
Referenced in the press release, you extended out some borrowings I guess I'm curious how much you extend it out how far out did you go and is there a plan to do more of that.
So the let me answer the last part first yes, we plan to take.
Advantage of spots on the curve to take advantage of pricing, where we see it opportunistically going forward, we [noise] ex.
Extend it out as you may recall, we prepaid.
Federal home loan bank borrowings in the fourth quarter and had those at the end of the quarter kind of sitting in overnight and we extended those those prepayments back out a preponderance of them all over over the curves.
A lot of them out.
Okay.
And then secondly, Susan I'm curious are we likely to see any additional merger charges in the second quarter on the Empire or has that all gone now.
There's still a little bit it hanging over it.
It's not not big charges.
Okay.
And then next I guess I know that you all have recently reconfigured the branches, but given the increased digitization of the business as a whole I guess I'm curious are you rethinking the size of the branch network at all today.
Well right now in terms of the overall network.
We do see a couple of spots here on there, where we can actually add branches we.
We don't have a.
The branch network debt.
Blankets the area that we're in and despite the fact that we've got a nice.
On a nice improvement in the Suffolk County market Theres, a couple of areas there, where we can do some fill in.
And then the roll show is another area in another.
Another couple of areas in the in the boroughs to look at that look attractive to us.
We recently put in a branch and in Jamaica, Queens that seems to be seems to be doing well.
So while.
We do we are clearly leveraging our digital our new digital assets.
We also feel debt as a community bank debt, having a reasonable number of branches is as positive as.
As well in these branches are mark are in the.
2000 square foot or less.
Area in terms of their size and they are also in the debt.
The Russell limited and staff, usually around for FTE or so so you.
We expect that our we'll probably do another branch or two.
But you know largely were pretty well, we're pretty well set with our with our digital and our and our branch network. As it is we may see some other opportunities to reduce the size of some of our branches as leases that as leases come up.
Okay, and then lastly, John you know, we've seen a bunch of consolidation in the northeast it feels like the pace is picking up a little bit could you share with us at a high level your thoughts on sort of what role Flushing plays in that you know what kinds of things you might be interested in and just your general view on sort of.
How things are likely to play out in your market.
Sure. So we clearly are aware that the the the need for scale and the need for Oh size sufficient in order to deal with the technology imperatives of the of the institution going forward or are there so I.
I think in the short run where we feel very confident we can take advantage of some disruption that's taking place with respect to several.
Rather large.
On mergers that have taken or that are taking place in our market. So I think in the short to intermediate term, there's a significant opportunity there for us to pick up business.
That said a little bit longer term, we certainly are looking to.
Continue the process that we started with empire of improving improving scale.
In in market and on the fringes of our market.
Thank you.
Next we have Steve Comber of G research.
Hey, good morning.
Good morning.
Hum.
Yeah I appreciate the detail on on loan closings in the press release it looks like they ran ahead of most of the quarters last year, just any thoughts on on net growth and sort of.
What the headwinds may have been to net loan growth in this quarter are there any like prepayments or pay off type things going on there.
So the headwinds we would expect in the upcoming quarter would be the if we have a lot of forgiveness on the PPP loans.
Those loans, the average back $209 million for the quarter.
And yeah for if we lose the all of those loans and that would be a significant headwind to overcome.
For the loan growth that we have projected and previously announced.
So that said of course, we and substituting those loans, we would wind up picking up a margin because they were fairly.
Low low low yielding loans.
But I do think that.
While our expectation is and you know what happened in the last quarter of the last quarter of the year.
Was kind of a slowdown in what's happening in New York City have slowed down due to increasing.
Increasing concerns with respect to the pandemic during the fall during the fall and early winter season.
And that that impact that impacted our ability to to close some of the loans because of the availability of.
Of the various you know various other entities that we rely upon including the including the courts to Paul police things together, including legal legal areas. So.
I see that opening up as time goes on throughout the year clearly we're already seeing.
More things opening up in the New York market and where.
We just recently saw a 75% occupancy coming up with respect to our office space. So.
Our expectation is as we approach the second half of the year, we'll start to see some more generation of the.
Significant loan activity.
Okay. Thanks for that.
Susan I want to make sure I got this rate your comments on net interest margin expanding modestly I'm just just want to think about the breakdown there are like as the trajectory for loan yields continue to be maybe slightly down offset more than offset by deposits and is that the right way to think.
Uh huh.
The the loan yields on that.
The interest, earning asset yields will be lessened as time goes on in the short run and you know as we talked about we have taken advantage of the ability to reprice liabilities and that will be lessened as time goes on.
Have most of our Cds repricing this year were front loaded.
So there there's less opportunity going forward.
To re price.
Okay, Okay, but net net the deposit opportunity is still bigger than the potential decline in earning assets is that fair to say, yes, that's fair.
Okay. Okay, and then just kind of on the loans close disclosure appreciate that as well so ex P. P. P. It looked like loan yields on loans closed was was a bit higher this quarter than last quarter with mortgage flat does that mean that C&I yields in general increased in the quarter.
Or was there something else going on there.
Okay.
Okay.
I think what we're seeing is the opportunity to.
To take advantage of a little bit on the yield curve.
So I think we're we're seeing a little bit more pricing power as the yield curve has started to rise we're still not at the point, where the yields on the on new assets coming in exceed the portfolio yield, but we clearly are seeing the opportune.
82 price on loans I don't know if you want to add anything to that Frank.
Some of it has to do with a little bit of duration.
It will be gone in cases, a little bit beyond five years to take a little bit of an advantage of the back end of the loan curve.
The I'm not sure of the swap loans that we did in the fourth quarter I don't recall that but yeah.
Yeah, So I think that that should probably another factors that's a swap loans that we put on are clearly lower.
Lower lower yields as well so I think the expectation there between PPP and swap loans is that we can we can continue to see some of some growth on the asset yields.
Okay very good and then last one for me very strong deposit growth in the quarter, maybe just talk about customer liquidity preferences, and how that's changing and just how you would expect these deposit balances to trend going forward.
Okay.
So we've seen improvement across the board all of our.
Business deposits are up very nicely.
We've got some nice growth in a soft with new Suffolk County branches as part of the Empire transaction.
And we are seeing that our business customers in general are just of our our.
Managing their liquidity going forward. So certainly we will see some of that of some of that start to ease up as time goes on but with the new infusion.
Of.
Of liquidity coming into the market as a result of the newer.
Regulatory changes that are that are taking place of the new changes with respect to aid during the pandemic, we expect to see that liquidity that liquidity continued to grow and as a result of deposits to continue to grow continue to grow with it.
You know on the only other thing that we're seeing is.
We're not seeing take down on our on our floating rate loans being as significant as they have been in the past usually we run about 50% we're running about a bad.
10% less on those on team.
Yeah.
Okay. Thank you very much.
Thanks, Steve.
Next we have Christopher King of D. A davidson.
Hi, everyone warning.
Good morning.
You know it looks like CNI, what was really a bright spot for the core loan portfolio this quarter.
And so how much of that strength is a reflection.
The growth opportunity in Suffolk County.
It's early.
So a lot of it is on the pipeline at this point in time, but.
But we certainly are seeing business coming out of our average out of Suffolk County, and we expect to we expect to see more of the majority of obviously of the of the C&I growth was on the PPP side book.
But we are definitely seeing a.
Positive.
Positive growth, particularly.
Particularly in the owner occupied owner occupied.
C&I.
Got it perfect and then can you give us just a little color around some of where the different loan products originating at from a yield perspective today.
Okay.
Sure do you want to talk about yield Frank Yes, so yeah. We're.
Probably in the $3 50 range is what we're seeing more recently things have heated up.
The commercial real estate itself is probably a little bit higher depending on the asset class.
Price is high as 4%, but overall probably about $3 50.
Yeah.
Great. That's helpful. Thank you and then and then just a follow up on on the previous M&A question as you look down the line helped.
How far outside of your current operating footprint would you be willing to extend.
For the right deal.
So I think there's a couple of factors there obviously, the we do already have linkages to the lower upstate market, where we've done some lending.
Done some lending as far as as far south as a as.
For you in this in this immediate market and certainly in the in the new England space as well we've done some lending. So we're very very familiar with those markets. So those would be our priorities for us. However, there are.
Ethnic linkages that we have and I think we we would.
Take a serious look at following some of those ethnic linkages as well.
Got it thanks for taking my questions I appreciate it thank.
Thank you.
And next we have Chris O'connell, what's K B W.
Hi, good morning, good morning.
I just wanted to circle back.
Couple of questions.
And make sure I was getting is correct the loan closings ex PPP this quarter were down fairly substantially right.
Quarter on quarter, Yes, yes.
Okay got it.
I was hoping to get a little color it looks like the C&I Corp C&I.
Closings were down but you had pretty good had pretty good net growth what was the difference no sooner.
Okay.
The PPP loans are all included in there, yes PPP loans.
The PPP loans aren't included in SBA loans.
Yeah.
I'm, sorry, I'm talking about ex PPP on.
On the C&I.
Uh huh.
I'm just trying to look real quick well.
Well you can't even see.
I'll quit Chris.
Yeah ex P. P P theyre up.
$20 million, which is just kind of normal business quarter over quarter.
Okay got it.
And then.
As far as the PPP.
PPP fees during the quarter.
It looks like you guys had it had a good amount of forgiveness. So I guess what were the exact PPP fees during the quarter or why are they kind of de minimis as he does that.
So the fees we recognized during the quarter did any forgiveness was less than $500000.
And as we said on the call with approximately $5 million left if all of our loans.
The P. P P loans got received for forgiveness.
Okay got it.
And then as far as the swap fees a little bit outsized. This quarter. What are you guys like expecting you know I know I know, it's a pretty volatile line items, but you know kind of like a baseline.
Level for that to bounce around going forward.
But well see.
<unk> customers are interested in the swap program until they get to the closing table and they're backing off a little bit because of the interest rate environment. So we're not seeing so much demand for that product right now you'll given changes in market rates. We obviously would expect to see that pick back up a little bit.
Okay.
Got it.
And then.
Sure.
As for for operating expenses.
The $3 3 million in seasonal for sure.
For next quarter.
It seems like that kind of gets you got to just shy of about 34 million baseline level there.
Is there a.
There's no there's no remaining earn out very much remaining.
Cost savings from the Empire deal coming through for the rest of the year correct.
There, they're totally and bad I have a lot of pointed out that we're expecting a run rate to be around $35 million given the volume of the PPP loans from the way the accounting works that reduced the salary expense.
So our run rate for about $35 million.
Okay, great. Thanks, and that's because they usually holds fairly stable throughout the year after the first quarter seasonality right.
Yes.
Great.
And then if you can.
Just talk a little bit on I guess about the loan segments and you guys on the pipelines up.
Kind of year over year and quarter over quarter, a little bit and.
You know ex PPP kind of what the what you guys are seeing is the biggest demand or growth drivers near term.
So.
The ex PPP on C&I loans as Mr. Buran pointed out it pointed out earlier on.
The owner occupied C&I space has been on a very strong opportunity for us on the business banking side.
On the shorter end of the curve rates have come back quite a bit.
The owners are now taking advantage of this particular point in the yield curve to refinance a good number of loans that are coming mature are coming up to maturity excuse me.
On the real estate side, we continue to see the.
The normal blend of multifamily and commercial real estate.
That we have seen traditionally that space has gotten much better in the last.
Two or three months or so.
Volume was very strong in the fourth quarter as a result of.
A loosening of a lot of restrictions here in New York State.
Tended to slow down in November mid to late November as a result of some tightening up of.
The economy or local restrictions I know, we had the New York City, some orange zones coming to affect that.
It really put a big impact in our book.
In Queens.
Southern Nassau County marketplaces.
That seemed to have gotten much better as the restrictions are now.
Are being lifted in various capacities are in restaurants and theaters and whatnot are increasing.
We're seeing very good pickup in the local retail activity the local shopping.
Starting to see.
New commercial spaces being built out for tenants that are either signing new leases or renewing existing leases.
So it's pretty much a combination of an improvement in asset classes across the board.
Got it great.
On.
And then.
For us a forbearance is go.
I appreciate the detail that you guys have given surrounding the schedule them.
So set maturity dates coming forward.
How are you guys plan to.
Deal with those.
They come as they come said to mature over the coming quarters.
On the if they are coming back and asking for additional forbearance.
Why don't you cover that for sure so.
We've been very diligent in working with customers that are asking for additional relief.
We do ask them to provide us with.
Current financial data at times includes bank statements. If we don't hold the operating accounts here at Flushing to see what.
Level of banking activity is occurring in.
In the business or at the real estate projects that we finance.
We have seen.
A very strong improvement in record rent collections across all assets.
We will grant additional relief for.
Customers, who are continuing to experience significant disruptions in their cash flow on some of those could be.
Properties that had significant portions of their income coming from some sort of entertainment.
Tenancy on a restaurant.
For the most part.
We reach out to the customers generally 60 days prior to their exploration of the relief.
Have conversations asked some questions about the operations of the property in many cases, we'll send a loan officer out to visit with the customer to actually confirm what the customer is describing is the current situation either at the business. We're at the property.
I'm happy to report that as you can see.
On overwhelming majority of the customers that we've provided assistance to starting last spring and return to normal.
We the largest portion of that portfolio, we have left deals with small balance loans the largest portions in terms of number of loans.
And those properties are beginning to show signs of strength.
As we head out of the winter months and into the warmer seasons.
So also in terms of that debt forbearance I think it's important to.
Point out that.
Really only about $120 million of the total is really full.
Full P&I forbearance.
Yeah, Yeah, I saw that the 61 interest rate that's great. Thanks.
And just wanted to confirm is the structure.
For those that are granted additional forbearance from this point going forward.
That's gonna be under kind of like the cares Act modifications.
You know versus the traditional.
Judy Alright.
And as long as we believe that any holdup in payment or forbearance to be granted due to COVID-19, if for some reason we believe that the forbearance was not related to that than we would have regular T. D. Our accounting so that we need to make sure that it would be a COVID-19 COVID-19 relief item.
Okay got it.
That's great. Thank you for the time I appreciate it.
Thank you.
Well showing no further questions at this time, we will go ahead and conclude our question answer session I would now like to turn the conference call back over to Mr. John Buran, President and Chief Executive Officer for any closing remarks, Sir.
Well. This is Susan I just wanted to add one other comment we got a question a couple of questions last night on the PPP loan portfolio and I think we addressed most of the issues or questions that were raised last night. The one that was not asked but I did want to get out in public was that the yield for the first quarter on the PPP loans.
It was approximately 2%.
So with that I'll turn it over to John. Thank you. Thank you Susan and I just wanted to be sure we had that update for.
In the event anybody else had debt of that question in the background I'm going on thank you all for joining us.
I'm, obviously very pleased with the quarter and we look forward to a continuing growth of the franchise. Thank you very much for your attention.
Thank you.
And we think each of the management team also for your time today again the conference call has now concluded at this time you may disconnect. Your lines. Thank you again, everyone take care and everyone.
Wonderful day.
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