Q1 2021 FIRST BANK (Hamilton) Earnings Call
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I'd now like to turn the conference over to Patrick Ryan. Please go ahead.
Thank you I'd like to welcome everyone today to first bank's first quarter 2021 earnings call.
I'm joined today by Steve Carman, our Chief Financial Officer, Peter Cahill, our Chief lending Officer, and Emilio Cooper, our chief deposits Officer.
Before we begin however, evil read the safe Harbor statement.
The following discussion may contain forward looking statements concerning the financial condition.
Lots of operation and business of first bank.
We caution that such statements are subject to a number of uncertainties and actual results could differ materially.
Therefore, you should not place undue reliance on any forward looking statements we make.
We may not update any forward looking statements, we make today for future events or developments.
Information about risks and uncertainties are described under item one a risk factors in our annual report on form 10-K for the year ended December 31st 2025 with the FDIC.
Pat back to you.
Thank you Steve I'll try to hit on a few of the highlights and then turn it back to you Peter and Emilio to provide some additional detail.
Overall I think it was a very strong start to 2021 here are a few highlights our cost of deposits continued to move lower pushing our net interest margin higher our noninterest income categories. All came in above budget for the first quarter.
Expenses looked a little higher than our guidance from last quarter, but those numbers also included over $300000 in accelerated expense tied to the consolidation of some of our back office space.
Our asset quality metrics continued to improve delinquencies declined deferrals declined and we saw net recoveries during the quarter PPP production in 2021 has been stronger than expected we have funded over $100 million in new PPP loans. So far this year.
<unk> income of $1 6 million did help during the quarter and we expect approximately 6 million in additional PPP fees going forward.
We did not use a lowering of our allowance ratio to support earnings in Q1, well on provision was negative that was based on lower loan balances at the end of the quarter.
If economic conditions continue to improve we may see opportunities to actually lower or a triple low ratio as we move forward throughout 2021.
So to misquote, Tom cruise in Jerry Maguire investors have been saying to us for some time show US the earnings that is exactly what we're trying to do with our evolution from an early stage growth.
<unk> focused entity, we are starting to show the true earnings power of the franchise and we think there's more to come we can continue to move deposit costs lower our fee income efforts are bearing fruit our expense savings initiatives will keep a tight lid on costs going forward and our loan pipeline remains.
Very healthy.
And above and beyond the core earnings strength.
<unk> fees and lower credit costs could also support earnings as we move through 2021.
At this time I'd like to turn it over to Steve Carman, our CFO to discuss additional financial details for the first quarter of 2021 results.
Thanks, Pat for.
For the three months ended March 31, 2021 were $92 7 million net income or <unk> 49 per diluted share.
That compares to $3 2 million or <unk> 16 per diluted share for the first quarter of 2020.
The factors contributing to our record profitability included a credit to the provision for loan losses increased non interest income and increasing net interest margin and controlling noninterest expense growth, which contributed to an efficiency ratio of below 50% for the first quarter of 2021.
After finishing 2020 with strong growth our loan portfolio in the first quarter, excluding PPP loans declined approximately $82 million due primarily to loan prepayments.
As a result in the first quarter of 2021, there was a credit to the provision for loan losses of about $1 $1 million due specifically to the reduction in the loan portfolio, excluding PPP loans.
Supporting our allowance for loan losses for the quarter were strong asset quality metrics for example, nonperforming assets as a percentage of assets was just 0.47%.
On our allowance for loan losses, as a percentage of nonperforming loans was 214, 74% a strong coverage ratio.
In the first quarter of 2021 total noninterest income totaled $2 3 million compared to $1 2 million from the same quarter in 2020.
An increase of $1 1 million or 89, 5%.
Three areas of notable increases were loan fees gains on sale of loans and gains on recovery of acquired loans.
Loan fees, primarily loan swap fees increased $415000 for the comparable quarters.
Gains on sale of loans, primarily from SBA loan sales.
$436000 improvement in Q1, 2021 to Q1 2020.
Lastly, there was $189000 increase in gains on recovery of acquired loans.
Over the last several quarters, we've discussed our efforts in enhancing and strengthening our core profitability.
We focused on moving our net interest margin higher and growing net interest income by continuing to make quality commercial loans, while lowering our cost of funds, which was a priority.
Looking back to the first quarter of 2020 interest rates had moved dramatically lower due to the pandemic at.
At that time, our cost of interest bearing deposits was 156%.
Factoring in noninterest bearing deposits, our total cost of deposits was $1 two 9%.
From that point forward, we worked on changes on our deposit composition and lowering our cost of deposits to peer levels or lower.
With stronger liquidity levels due primarily to the impact of the PPP loan program, we were able to lower rates on a more expensive time deposits as Cds matured, which lowered our cost of deposits and positively impacted our margin.
Time deposits, which represented 38% of deposits of $3 31, 'twenty declined to 25% of deposits just a year later.
From the first quarter of 2020 through the first quarter of 2021, we have also lowered rates on all interest bearing deposit types to market levels.
As a result of these and other actions our cost of interest bearing deposits declined to 51 basis points at $3 31 21.
And over a 1% decline from $3 31 of 2020.
Factoring in noninterest bearing deposit balances our overall cost of deposits was only 39 basis points for the three months ended March 31, 2021, a decrease of 90 basis points from the same period in 2020.
We certainly have benefited from interest rebalancing from PPP loans, but we've also benefited from successful initiatives implemented by management to grow noninterest bearing deposits and lower cost commercial deposits.
Noninterest bearing deposits as a percentage of deposits totaled 25, 4% at $331 21, a notable achievement a notable achievement when considering that just a year ago noninterest bearing deposits were 16, 9% of total deposits.
Our tax equivalent net interest margin, which bottomed out at the end of the second quarter of 2020 to three 7% has been on the rise ever since.
Our tax equivalent margin at the end of Q1 of this year was $3 six zero percent.
That's a 53 basis point improvement over the last nine months.
Our first quarter margin was positively impacted by $673000 in loan prepayment penalty income reflective of the increased level of loan prepayments, we experienced referenced earlier.
That level of prepayment penalty income was about double of what we had projected for the quarter.
As we look forward the actions we have taken over the last several months has enhanced our core profitability.
This is reflected in a non-GAAP financial measure we find useful on tracking core profitability trends pre provision net revenue.
Pre provision net revenue is calculated by adding net interest income and noninterest income and subtracting noninterest expense adjusted by certain non reoccurring items such as merger related expenses for example.
Pre provision net revenue at the end of Q1 of 2020 was $7 2 million.
By the end of 2020 pre provision net revenue had reached almost $10 million.
Reflective of our record Q1 2021 performance this measurement reached $11 7 million.
With commercial loan growth projected rebound after a challenging first quarter and a lower cost funding base, we are well positioned to continue the growth in our core profitability and achieve our financial goals for 2021.
At this time I'll turn it over to Peter Cahill, our Chief lending officer for his remarks Peter.
Thanks, Steve.
As outlined in the earnings release total loans in the first quarter were down $25 million or one 2%.
We did experience a reduction in commercial loans that we talked about on the last earnings call for 2024th quarter.
You might recall that we finished 2020, the very strong quarter.
For the fourth quarter alone, we reported loan growth of around $97 million exclusive of any impact from PPP.
That was the big quarter for Us and he came from a combination of both C&I loans and investor real estate loans.
We knew at the time, however that we had a number of loans, where our customers notified us of upcoming payoffs primarily in the investor real estate area.
I noted back in January that we'd see some first quarter prepayments offset by normal loan generation plus. The addition of new PPP loans that we had in process and that's what we have.
New loans funded in the first quarter exclusive of PPP approximated $70 million.
Unfortunately, but again as expected prepayments on Investor real estate loans were a little over 100 billion.
When you add to that some large reductions under lines of credit in the normal amortization of term loans. The result was the negative loan growth that Steve described.
We did earn some prepayment penalty income on many of the commercial loan payoffs.
Also adding to the payoffs I mentioned was the sale of the guaranteed portion of SBA loans, seven eight loans, which totaled around $5 billion.
Fee income related to these sales was mentioned in the release.
SBA lending is an area of talked about on previous calls.
We have a small team focused solely on SBA loans and concentrating mainly on seven eight loans they're on.
Off to a great start and I see them achieving expectations this year.
It was a busy quarter, but I am confident will make up the negative loan growth over the next three quarters as well.
Reported good growth for the year.
Our loan pipeline at $3 31, which is based upon probable funding has shown steady growth from the end of the fourth quarter.
At 12, 31 pipeline totaled $142 million.
At the end of March.
At $209 million that represents growth of 47% and positions us well for the next few months.
For comparison, the 12 month average for all of 2020.
It was $154 million.
We do project loans funding as well as pay offs looking out 60 days to assist Steve on the finance area was funding.
To support this idea of a strong pipeline.
Mentioned that we projected funding of six of $80 million for April and day.
These fundings will be offset by loan prepayments, which was forecasted at $22 million.
So the net positive amount of $58 million will help us to make a good dent.
And getting caught up the plan.
I should also mentioned asset quality there was a lot of good data on the earnings release and Steve touched upon some of it including the allowance.
Just reiterate the things continue to look very good nonperforming loans were up a few basis points.
Coverage exceeded charge offs for the quarter.
Delinquencies are.
Minimal I'm happy to report with past due loans at the end of the quarter of around 37 basis points down from where they were at year end.
Our deferred loans related to COVID-19 are also outlined in the release.
<unk> loans at year end had dropped to $37 million or one 8% on the portfolio.
At the end of the first quarter deferred loans further declined to $22 million or one 1%.
We continue to be in close contact with its diversified group of customers and we're optimistic that the number of deferred loans will continue to shrink.
So in summary, I think we had a decent first quarter in lending we continue to learn to deal with the challenges of working around COVID-19, while calling on commercial clients and prospects.
We assisted many small businesses in the quarter with PPP loans.
We were a little on lucky with the timing of new loans compared to early loan prepayments.
Pipeline and near term funding numbers look good.
Lastly, we believe asset quality is strong and we intend to grow the portfolio as we have in the past and hit our loan growth goal for the year.
That's my report for lending for the first quarter I will turn it over now to Emilio Cooper to discuss deposits Emilio.
Thanks, Peter I'm happy to report, we are off to an extremely positive start and our deposit side of the business.
For 2021, our focus remains consistent and intentional grow low cost core deposits improve the mix lower cost of funds deliver best in class service and growth fee income.
Thanks to great collaboration between the lending cash management and deposit teams. We are very pleased with the results we've seen for the first quarter.
We did a fantastic job in the first round of PPP in 2020. So it is no surprise that the team stepped up big time and is doing an even better job in the second round of PPP.
This round of funding certainly had a positive impact on our deposit growth in Q1.
Key highlights of our deposit performance for the quarter are as follows non.
Noninterest bearing deposits are up $76 million or 18% from the end of 2020 interest bearing checking is up $6 5 million money market and savings are up 14 million time deposits are down $30 million.
Total deposits have grown nearly $67 million from Q4.
Our growth goal for the year is $97 6 million. So we are off to a very strong start compared to goal.
It is important to mention that we do expect to see some reduction in deposit growth as we progress through the year as customers, who received PPP or other stimulus funds put that money to use in the economy.
As it relates to our focus on adjusting our mix, we achieved a huge milestone for the bank in Q1.
Noninterest bearing balances now represent 25, 4% of deposits and time deposits represent just 25, 1%.
This marks a major milestone as our noninterest bearing balances now represent a greater percentage of deposits that are time deposit balances.
Over the course of the last 12 months, we have increased the percentage of deposits comprised of non interest bearing balances by over eight 5%.
While we know the influx of liquidity and impacts from our strong performance with PPP accelerated this movement, we believe our investment in our cash management team business banking.
Capabilities and strong collaboration between lending and deposits will enable us to retain much of this benefit over time.
Our cost of deposits declined to 39 basis points for the three months ended March 31st 2021 down from 50 basis points for the December 31 2020 quarter.
This is a reduction of 99 basis points from Q1 2020.
A few factors are the key drivers of this reduction first as Steve mentioned, we continue to benefit from the ongoing repricing lower of our CD portfolio.
Secondly, the shift in our mix toward more noninterest bearing balances and last our execution in reducing rates paid on existing deposit portfolio of products.
We do expect to see continued modest improvement in this area in the near term.
As a community bank, we know that personal service is a differentiator that is often hard for larger institutions to replicate a.
A recent example, with what we saw during the initial phase of PPP.
To provide an ongoing mechanism for us to measure our delivery in this key area. We launched an initiative to survey our customers on our quality of service they receive from first bank.
We are using a net promoter score metric to track and monitor our performance.
Early results are very good as we gather more time tested data we look forward to sharing those results with you.
As I've mentioned on prior calls we've also been working on a number of initiatives to improve fee income. We track. These at a more granular level than the data that is summarized in the financial chart.
As a result, we were able to see positive trends developing in several areas.
In summary.
We are off to a strong start in deposit growth led by non interest bearing deposits.
We achieved a milestone in the improvement of our mix in the quarter.
We are continuing to reduce our cost of deposits.
And we are seeing positive trends developing in net promoter score and fee income growth.
All in all a fabulous start to the year back to you Pat.
Yes.
Great. Thanks, Emilio Thanks, Steven Peter at this point I'd like to turn it back to the operator to open things up for the question and answer session.
Yeah.
We will now begin the question and answer session Basket question. You May Press Star then one on your Touchtone phone.
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Our first question today will come from Nick to Shirley.
Per Sandler. Please go ahead.
So I wanted to start with expenses I heard your comments on the accelerated expense in the quarter, but can you help us quantify the impact of the branch consolidations and the reduced corporate office based on the occupancy line going forward.
Yeah, I mean, some of that was baked in neck. When we provided guidance last time around as I mentioned there was a specific.
Costs from the first quarter related to some accelerated depreciation and some other things we had to write down is part of.
Yeah.
Yeah.
Termination of a lease we had for us on back office space and the impact on the savings from the two branches that we closed.
Won't sort of fully on final in until later this year I think in one case to lease.
Run through August, although we have been able to reallocate the personnel.
The other one is it is an order of location so there won't be a rent savings but.
Depending on how we're able to either.
Redeploy that space or.
Potentially even look at a sale of a property there may be some impact going forward, but.
I think the biggest piece of it was the the lease that we didn't renew which was.
Roughly 300000 in annual rental cost plus.
Additional dip.
Depreciation maintenance et cetera. So.
I think there'll be some nice savings for us as we move forward that lease expired at the end of March and.
Just one of several areas that we continue to look at on the cost side.
Great. That's very helpful. So I appreciate the positive commentary on loan demand in the coming periods and the big increase in the pipeline since year end have the prepayments normalized in April or have they remained elevated.
Well I mean, we're obviously or I guess through April, but that's the only gets us a month into the.
Quarter, so to to try to estimate a trend on a three or four weeks is a little tricky in a loan prepayment and world.
I'll turn it over to Peter to see if you're seeing anything specific so far at the beginning of Q2, but.
Those are those are things that kind of come in bunches do you have a couple of them you don't have any for a while and then you have a couple more but Peter anything you'd add to that in terms of trends youre seeing so far.
No I would say you know we hope the normalized I mentioned on.
Our loan funding.
Projections, we do for our finance team and.
We were projecting for April and May you know when you look at we don't look out more than 60 days, but.
We were projecting payoff. So these are you know.
Prepayments basically.
$22 million and we haven't seen anything exceed that number that comes to mind. So no I think that's probably a more normalized number and that's kind of where we are that's a three three weeks ago.
Okay. So it's fair to say, you're expecting net growth to be pretty healthy in the second quarter outside of any.
Kind of on normal activity.
Yeah, I mean, we hope so our I think our plan for the year was to grow loans, 6%.
And we had planned basically a fairly flat first quarter, knowing what we're facing so yes, we plan on making it up.
The small hole oriented and achieving planned for the year.
Okay very helpful. And then in terms of funding costs, a really significant reduction year over year, where do you think that eventually stabilizes.
Yeah.
Net it sort of depends on the rate environment, and maybe more importantly that the competitive environment, but with short term rates seen seem to be staying low for the foreseeable future and perhaps more importantly, banks dealing with with excess liquidity I don't see there in the short run being a rail.
Impetus to drive competitive pressures on the deposit side I don't see the fed moving short term rates and so.
As we continue to.
Have term deposits mature, we will continue to re price some lower end Emilio and his team has done a great job.
Looking at our.
Our standard rates on deposit products and I think over the course of the first quarter in moving those lower once or twice as well. So I think it's a little bit a little bit here a little bit there.
The magnitude and the impact will start to shrink, but I think we'll continue to see those costs trickle lower over the next couple of quarters.
Thank you for taking my questions.
Yeah. Thank you Matt.
Okay.
Next question will come from price grow Humpty. Please go ahead.
Thanks, Good morning.
Good morning, sorry price.
I wanted to ask about the SBA business.
Obviously on a.
Nice nice hit here this quarter with fee income.
I'm just curious how how consistent those loans sales will be I mean, it sounds like you've put a little more Omar.
Ralph behind behind that effort.
Yeah, I mean listen I think it's it's something that won't be.
You know as smooth on a quarterly basis as some other lines of business, but as Peter mentioned.
Having a dedicated centralized team has made a significant difference and.
Our ability to in our funnel.
Those those opportunities that we were seeing in the past to a group that.
It's knowledgeable on the process can keep things moving quickly get things done faster and make sure all the administrative i's are dotted and t's are crossed I mean, all all of those I think give us.
Optimism for continued good results in that area as we move forward, but Peter anything you'd want to add there.
Oh well.
Just that their pipeline is very strong I mean, the SBA has attractive products out there now as you may know on the 780 side guarantees up to 90% and.
And there waving application fees from the borrower. So that's that's a selling point that we've been trying to.
Utilize whenever possible.
So yeah, I mean, having the team there can process these things and get them across the finish line. It's great previously we had had.
Your average commercial RM trying to.
Respond to the SBA needs and it got just kind a cumbersome deals were spread out all over 20, <unk> now, they're focused where the RMS make the make the referral to this team and they do the.
The underwriting and processing.
All of the guaranteed portion so it's much more efficient I think in the.
On the RMS are more apt to make a referral that then get bogged down trying to drag a deal through to approval.
Yeah, Yeah. That's it that's all fixed price. So I would just add to that and this is I think probably speculation at this point, but.
If you think about what's going to be happening in the small business world over the next 12 to 24 months right a lot of companies that obviously had challenges in 2020 are going to be looking for financing.
This year and next year based on historical results.
<unk> grade balance sheets have probably get damaged a little bit and so I think the SBA, maybe a good place for some folks that were able to survive the storm but.
Certainly.
Some damage and probably need a year or two or better results to get back to a point, where maybe they don't need SBA support. So I do think youre going to see higher percentage of small business financing happening through the SBA, partly because of the.
The financial results, they're going to be trying to use to get financing and the fact that the fees have been way make it a much more attractive option for them as well. So I just think that's going to be a bigger area of focus across banking over the next year or two and I think we should.
And be well positioned to benefit from that as well.
That's that's good good insight Pat appreciate it.
Wanted to kind of move on to capital and use of capital.
Maybe you can provide us an update on buyback activity for the first quarter it looked to be a little lighter than that.
Maybe maybe we saw on the first half of last year, and so any any commentary around kind of appetite to buyback the stock, especially with it now.
Below tangible book value.
Yeah I think.
There certainly is is appetite as I'm sure you're aware when you set up these 75 programs.
You don't always have as much discretion as you like in terms of periods of black out in <unk>.
Instructions you provide that can't be changed during periods of blackout and all sorts of rules about their inability to buy and to start off the trading day or to close out the trading day, so sometimes execution can be a little bit more challenging than you'd like but.
As it relates I think generally to your question do we think it's an attractive investment to buy our stock back at or below book value. The answer is absolutely yes.
Sometimes the execution doesn't go as quickly as you might like so.
Okay. That's fair and then one kind of Nitpicky model question, you guys have called out some level of prepayment activity here in the second quarter.
Any any kind of guidance in terms of what prepayment fees.
Well quite tied to that or just generally for for the second quarter as we as we think about margin.
Yeah, I mean I would.
I would say Steve alluded to it in his remarks, we've kind of budgeted.
330000, a quarter net that number is.
Pretty.
On a pretty significant standard deviation right some quarters, it's a 100000 from quarters like first quarter was 670000, but.
That number probably will end up doing better than that this year, just because of how strong the first quarter was but.
Prepayment income in from the kind of thing where if you have a good first quarter in prepayment income and good might be the wrong word there, but if you have a lot of prepayment income in the first quarter that doesn't mean, you'll have a lot in the second and third chances are it probably means it will be down in the second and third quarter, but you know over the course of the year.
You know I don't see any reason why the the average of 330 wouldn't still be the number we'd be looking at at this point.
Okay.
Thanks, Thanks for the comments I appreciate it.
Yeah. Thank you Brett.
Our next question will come from Erik Zwick with Boenning and Scattergood. Please go ahead.
Good morning, guys.
Good morning, Eric.
Maybe I'll just follow up what kind of on a follow on question to prices last question there about the the margin.
And thinking about kind of at the core margin first I think last quarter, you mentioned, excluding the impact of PPP. The core margin was about three 4%.
Fees from PPP. This quarter were $1 6 million to buy back that out get you around 3.3 per cent or so so you know you've mentioned the opportunity to continue bringing down deposit costs with the CD portfolio.
Specifically presenting an ongoing opportunity just curious about the trajectory of the core margin.
From here at this point.
Well I think the trajectory of the core margin.
Well improve I think you hit on one of the variables in the margin rate the PPP impact.
We also had elevated prepayment.
Fees that flow through the margin so.
That bumped it up a little bit in Q1, as well, but if we kind of stripped all of that out and I think well meals will hopefully.
Stay where they are maybe come down a little bit obviously, what happens in the long term.
Section on the right market will impact that to some degree but.
We can continue to move deposit costs down. So I think if you kind of stripped out prepayment penalty income fee income.
I think that core margin would be relatively stable, maybe get a little bit better.
Hey, Eric.
This is Steve I mean, I think our margins core margins, probably closer to $3 40, I mean, just make sure from modeling purposes. You also I'm sure you are backing out the P. P. P average balances and so we stay on our margin on just a little bit higher than that core of $3 30. After we back out the average balance of PPP loans.
Got it that makes sense. Thanks for the clarification, there and then just in terms of thinking about the kind of the all in reported margin going forward. I know you mentioned about $4 8 million in remaining unamortized fees curious if you could break that out into what is.
On a related to the 2020 PPP originations in 'twenty, one as I think about kind of the timing as those flow through.
Yeah, I don't know, Steve if you have that breakout I can take it.
Gasoline if you have the numbers handy.
I don't have the numbers directly in front of me, but you know, but clearly.
It's all obviously predicated I guess on some of the forgiveness, you know or if you take a look at the amortization of our you know round one.
Been close to.
$500000, a month or about $1 $5 million a quarter.
And then it's just impacted by low forgiveness obviously.
And two with $101 million as we're still get on our traction there it's.
It's a less type of run rate based on a five year type of payout as opposed to with the with round one.
Yeah, I mean, I would just add from that Eric I think if you looked at where we were at year end I think we had about 3 million in unamortized PPP feeds from the 2020 low end and we had a million six come into income during Q1.
Almost exclusively tied to that portfolio, so call it a million and a half left from that group, but then.
There is some some loans that we've made that we haven't.
Apply for forgiveness or for the fee.
So yeah I think the total of remaining PPP fees is probably closer to 6 million and I'd say three quarters of that is going to come from loans. We've made this year in 2021.
Sure.
Remainder of last year's of loans.
Okay, Great. That's helpful. And then last one from me switching gears to credit.
You mentioned in the prepared remarks that most of the.
Provision in the kind of a negative provision this quarter was driven due to the lower balances and really haven't had any release for you know on improved economic outlook or any other kind of factors improving in your in your loan portfolio. So as we think about the opportunity for additional reserve releases going forward, how do you feel or where do you feel kind of day equal.
Librium level for the reserve might be if we get back to a more normal.
Economy with.
Kind of steady growth and minimal credit risk looking forward.
Yeah. It's a good question. It's you know, it's a little hard to speculate because you don't really know what that new normal economy looks like but you know.
I'd say, one way to think about it Eric as you can look at what we set aside last year in provisions.
There's probably 556 million more than what we would have done in a typical year.
Now it is all of that going to come back out again, I don't know right I mean, our allowance model is going to dictate our overall level of the allowance, which will ultimately drive provisioning together with net.
Net charge offs on recoveries, but.
There obviously was a lot of you know additional provisioning last year that so far hasnt translated into significant additional credit problems. So.
Is it fair to think that some of that if the economy continues to prove what would come out I think you know that seems like a potential scenario that could play out but you know, we're just going to have to see what the data tells us and what the allowance on them.
<unk>.
I appreciate the thoughts there thanks for taking my questions today.
Okay, great. Thank you.
Yeah.
Kevin that you'd like to ask a question on the Star then one.
Our next question today will come from Christopher key with D. A Davidson. Please go ahead.
Hey, good morning, gentlemen, how are you.
Good morning, Chris How're you doing.
Good good hey, so just looking at the C&I portfolio, what portion of the portfolio was related to lines of credit and can you share where about the utilization rates are today.
Yeah. That's a good question I don't know Peter is that data you have handy or it might be something we will need to breakout for for next time, but.
Uh huh.
Really not something I can to utilization rates.
That's something we'd have to break out for next time of day.
That's okay no.
No worries.
And then can I tell you and I.
Yeah I would just.
As the numbers show C&I was about 2020% to 22% of the portfolio.
And that includes a P. P pedal forget so that number's, probably a little higher than it may normally be.
On the utilization rates I, just don't have right now.
Yeah.
Anecdotally.
We haven't seen Chris <unk>.
A significant change but.
We can we'll get some data to support that.
Okay I appreciate it.
And then can I just confirm that the guidance for 6% for the year is that is that excluding PPP loans.
Okay.
Yeah, I guess you'd have to clarify six the 6% I think of it more oh.
What did we say Peter $120 million in net non PPP loan growth for the year. Yeah. Yeah. That's that does exclude P. P T.
Yeah, We said 120 over what was it roughly $2 billion at year end. So that's.
6%.
Got it that's helpful. Thank you and then and then I guess just.
Turning to the the margin you made some commentary around the yield which I appreciate that I guess I'm just curious.
Overall.
Where where loan yields where the average loan yield is coming on today.
For new loans.
Yeah, but really it really depends on the type of loan.
I think in the <unk>.
Investor Real estate.
Segment, you're probably seeing things.
Plus or minus you know really strong credits, you're probably three and a half or a little less and you.
You know good credits, but maybe not as pristine year, probably closer to 4% and and probably getting better than that on the C&I in terms of the term loans and things but.
Peter I know you track.
The monthly board meetings.
The weighted average yield on on new loans et cetera that day that you have handy or not.
Uh huh.
So that's.
Those numbers relate to yeah do loans getting put on from a month I don't have it with me right now, but the numbers you described are what we're seeing roughly.
Mid threes to.
Four on average.
Yeah.
Got it that's helpful. Thank you and then and then just last one from me.
I noticed the average securities had declined and is that just a product of payoffs.
Kind of overlaying the ability to find new paper or is that more of a deliberate reduction.
Yeah, Let me maybe ask that question again, Chris I'm not sure I was following you there.
Just just looking at average securities.
I noticed that it had declined and I'm curious if paydowns on the securities portfolio drill.
Drove that or or it was the deliberate reduction in the securities portfolio and I guess, what I'm really getting at is if we can maybe kind of.
Getting an understanding of what what direction. The average securities portfolio might go over the next few quarters.
Yeah, I mean, I think we've been trying to put some excess cash to work in the securities portfolio over the last months ourselves, but I would also say we're doing it cautiously right I mean.
There's obviously concerned about inflation on what that might do to the long end of the yield curve and what that could do to the market value of securities purchased today, so and on.
I'd say, where we're taking a cautious approach, but obviously in an environment, where you're not earning much on your cash. It you know, it's there's a cost per sitting on the sidelines to so well.
Trying to strike the right balance I think.
At the end of the day.
If.
If our excess cash position remains elevated we'll.
B.
A net buyer here and there, but we're not looking to put.
Hundreds of millions to work on the bond market right now so.
Yes.
Got it. Thank you so much thanks for taking my questions.
Great. Thank you Chris.
Yes.
Yeah on if you ask a question on the Star then one.
There being no further questions. The spokes conclude our question and answer session I would like to turn the conference back over to Patrick Ryan for any closing remarks.
Great. Thanks, So I'd just like to thank everybody that took the time to listen in today, and we'll look forward to reconnecting with folks after the second quarter. So thanks, everyone.
Okay.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.