Q1 2021 Investors Bancorp Inc Earnings Call
Good morning, and welcome to the investors Bancorp first quarter earnings call.
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Please note this event is being recorded.
Well begin this mornings call for the company's standard forward looking statement disclosure.
On this call Representatives of investors Bancorp incorporated may make some forward looking statements with respect to its financial position.
Lots of operations and business.
These forward looking statements are not guarantees of future performance and are subject to risks.
Uncertainties and other factors some of which are beyond investor Bancorp's control are difficult to predict and which can cause actual results to materially differ from those expressed or forecast in these forward looking statements.
In last nights press release, the company included its safe Harbor disclosure and refers you to that statement.
That document is incorporated into this presentation.
For a more complete discussion of the certain risks and uncertainties affecting investors Bancorp. Please see the sections entitled risk factors management discussion and analysis of financial conditions and results of operations set forth in investors Bancorp's filings out of the S. E C.
Now I'd like to turn the call over to Kevin Cummings, Chairman and CEO of investors Bancorp. Please go ahead.
Okay. Thank you Betsy.
Good morning, and welcome to the investors Bancorp first quarter earnings call for 2021.
Last night the company reported in its press release net income of $72 3 million on 31 cents per diluted share for the quarter ended March 31 2021.
As compared to $75 $1 billion on 32 cents per diluted share for the quarter ended December 30 of last year, and $39 5 million or 17 cents per diluted share for the three months ended March 31 2020.
The fourth quarter of last year.
Recorded some non core transactions that impacted results in improved earnings.
For a million or <unk> 35 per share.
Difference in core operating results of approximately 9 million for the fourth quarter was due to a $6 9 million reduction in prepayment fees, which are included in interest income.
This decrease in fees cost reduction on our net interest margin of eight basis points.
Excluding these penalties claims handling fees, our core margin increased by two basis points.
The quarter was also impacted by a reduction in gain on sale of loans from mortgage banking activities of $1 7 million and a more favorable tax rate due to R&D credits recognized in the fourth quarter.
These decreases in revenues were offset by.
Cost control by reduced core operating expenses of $2 7 million in the first quarter all day.
Thanks, Kevin.
On the solid quarter for the bank on a good start to 2021.
Last year, they were major concerns about liquidity capital and where the credit cycle was going to go.
And I'm happy to reported that the company declared a cash dividend of 14, especially at to be paid in May and this reflects a two tenths increase from the dividend paid at the height of the pandemic last may of 2020.
These results reflect our third straight quarter of double digit return on tangible equity and then on return on average assets has averaged over one point on seven over that three quarter period.
I look back where we were a year ago. It is remarkable what we have accomplished through this pandemic.
A year ago.
The Miss of the PPP process.
Customers are our employees wearing tier touching join ups or speaking with each other.
On the uncertainty and no one felt comfortable with the normal routine of everyday life.
True grit and determination, we were able to take care of our customers keep all our retail branches opened and most importantly.
Protect our employees.
Today, we are a stronger bank our capital ratios are up approximately 30 basis points, our credit culture is stronger than ever and our outlook for 2021 is bright.
We are anxious to get all of our corporate employees back to the office and look forward to be in that day.
That serves our customers and communities in both good times and times of crisis.
On the credit front on <unk>.
Non accrual loans are down $23 8 billion for 22% for the fourth quarter.
At $48 $7 million on 37% from September 30 of last year.
This reduction in non accrual loans was completed with no cumulative net charge offs as our net charge offs for the last six months were negative.
That resulted in net recoveries of $5 7 million for the last two quarters.
Our loan loss coverage ratio to non accrual loans is 341% this quarter versus charging a 48% last year had March 31.
In the commercial portfolio on total non accrual loans on $37 6 million.
Testing of 53 loans for an average loan of approximately 790.
Which is down from $79 8 million at September 30th of last year.
Our three largest non accrual loans at March 31.
On a multifamily loan for $4 6 million.
Our CRE loan for $3 1 billion net.
This low for $2 6 billion.
The remaining 50 loans into non accrual growth reflects an average exposure on $550000 and it's similar to the exposure in our mortgage and consumer portfolio, which has an average loan.
Non accrual of 191000.
We have a war room mentality with respect to credit.
But still believe we have a lot of work to do to get through this operating environment and the poster.
Effects of the bad debt.
Almost every week since June we have met to discuss our loan exposures and trends in deferred loans due to this pandemic.
At March 31st on total deferrals for down to $582 million.
And include approximately 500 million in loans that are currently paying us interest and are keeping their taxes card.
We have made a concerted effort to reach out for our customers. During this time to work with them through the crisis.
And then in a period of uncertainty we see these times as an opportunity to help our customers and build long term relationships.
With respect to principal and interest deferrals, we have approximately $83 million of which 23 million.
In the entertainment category commenced payments as of April 1st.
The remaining 60 million is made up of 20 laws.
And the two largest loans are both multifamily loans for $37 million and $10 million.
So of the remaining.
50 million 30 set above 60 billion for the remaining $60 million 37, and 10 are in two laws. We have recently visited.
Those two properties and earlier this month.
And then the Washington loan and one on one is in Washington D. C with an average low per unit of approximately 70000.
The complex was recording stronger cash collections in March that we collected a pro forma cash flow of a one 2% debt service.
It is a well maintained property and should retain is value and we expect it to be back to full payment at the end of the deferral period.
Other loans in Brooklyn, which we visited earlier this month and as of 'twenty unit relatively new building that is fully occupied and is recovering its cash flows after concessions to new apartment dwellers, I should not be a problem due to the strong sponsorship the quality of the building and its amenities.
The remaining exposure.
In this principal and interest deferral is $13 billion, which is made up 18 loans for an average loan of approximately 722000 and so at the end of the day, we feel we have a great handle on the exposure of this $60 million of principal and interest deferral, there's a lot of discussion.
On what's going on in Manhattan.
And then that deferral.
Portfolio on that Manhattan exposures, mainly in the hotel sector for $196 million of the total $367 million that we have in the Manhattan.
Area, All day long into the hotel sector and in Manhattan are paying interest and are showing improving trends.
The hotel also seeing increased tourist activity, but little business travel.
These properties are family businesses for multi generations and have strong sponsorship.
The remaining exposure in Manhattan is in multifamily and CRE for 88 million and $38 million, respectively and have good sponsorship and improving operations and do not show any major issues at this time.
As I mentioned early on credit and first of all I teams have been meeting on a weekly basis discuss the progress on the deferral of the portfolio and other trends on the total commercial portfolio.
Last week, we met for several hours to discuss our office portfolio, where we reviewed the top 25 loans for approximately $620 million.
All of these loans are current as to interest and principle and there was nothing discussed that we've set an awful lot sales at this time.
We will continue to monitor this and other portfolios at the highest level of management to make sure. We stay ahead of the leasing activities in both retail and office and the impact of changes in business practices and workplace activities.
Today, we are we feel we are doing everything possible to manage the credit risk with storm reserves.
Low delinquency trends and our strong credit and monitoring team in place to manage us through this pandemic.
With respect to loan growth on commercial loans grew one three per cent in the quarter compared to a reduction in loans of $1 four per cent and the 2021st quarter.
The first quarter is usually a slower quarter for us and we are optimistic of the activity we are seeing in the marketplace.
On lending teams are engaged and making calls in the market. They are out in the market out of the office.
We have a strong commercial pipeline, which totaled over three 3 billion and compares to $1 5 billion last year. This time and $2 2 billion at year end.
We believe we can grow loans at a seven to eight maybe 9% pace for 2021.
On the deposits time deposits were down 534 million, which related to planned run off of higher costing brokered deposits of $534 million and government deposits of $327 million.
As our cost of deposits went down 19 basis points for the quarter.
Our consumer and business deposits were up $328 million with our non interest deposits, increasing 174 million for 4.8 per cent for the quarter.
Non interest deposits now comprise 20% of deposits, which is a first for the company.
We are seeing great activity from the investments we have made in 2019 and 2020 with our business lenders.
Our business development teams generating core deposits and relationships and business loans.
We are moving forward with a Berkshire acquisition, which will bring approximately $300 million in loans and 600 million deposits.
We recently agreed to a marketing partnership with the Thunder, a local minor league baseball team and trend in the Berkshire tier market.
Now for the active and coordinating activities with the retail and business teams and debt market.
It is a great opportunity for us and we will expand our brand with two additional branches in Bucks County.
In Pennsylvania.
You know going into the year 2021, we have strong momentum and continue to see great opportunities in the marketplace.
Most larger banks are not showing the love of paying attention to the middle market. During this pandemic.
It takes it back that sees on the long view.
Whose management teams are local and that's access to decision makers and won't be there for their customers and the prospects during these difficult times.
We are that we are that community bank and we are looking forward to a record year in 2021 now.
Now I'd like to turn the meeting over to Sean Burke, Our CFO, who will give us some commentary on the operating results for the quarter, Sean. Thank you, Kevin what a difference a year makes Europe year over year net income and earnings per share were up over 80% with net income for the first quarter totaling $72 3 million for 31 cents per diluted share.
For.
Our net interest margin dropped eight basis points quarter over quarter to two 9% with prepayment fees driving the decline for <unk>.
Core net interest margin, however, expanded two basis points quarter over quarter as we continue to benefit from declining deposit costs.
On an encouraging note we have seen prepayment fees rebound and totaled $4 5 million in the month of April alone and expect our second quarter margin to rebound accordingly.
Total noninterest income totaled $20 million, a decrease of $2 7 million on a core basis quarter over quarter year over year. However, noninterest income increased $5 3 million or 36% driven by mortgage banking swap fees and wealth advisory fees.
Total noninterest expenses totaled $104 million for the first quarter, a decrease of $38 5 million quarter over quarter.
The decrease was driven by $23 million of costs from the early extinguishment of debt and 12 million of branch closure costs in the fourth quarter. Excluding these items noninterest expenses were down $4 million compared to the fourth quarter.
The decrease was primarily driven by incentive compensation.
Provision for credit losses was a negative $3 million for the first quarter compared to a negative $2 $7 million.
For lease for the fourth quarter. The decrease was primarily driven by an improving economic forecast and net loan recoveries in the quarter of $2 million.
Total loan balances were flat quarter over quarter, while C&I loans grew $66 5 million or 2% quarter over quarter.
Total deposits were down $534 million quarter over quarter, driven by the intentional runoff of brokered deposits, while non interest bearing deposits were up $174 million or 5% quarter over quarter on.
Our percentage of noninterest bearing deposits to total deposits improved to 20% at March 31, compared to 13% for a year ago.
Asset quality liquidity and capital continued to remain in a solid position at quarter end.
Non accrual loans represented <unk>, 4% on total loans at March 31, compared to 0.51% at December 31, while our allowance for loan losses to loans remained unchanged at one point for 4%.
Our common equity tier one ratio was 13% a quarter and now I'd like to turn it back over to Kevin for concluding remarks before I open it up for questions.
Just give a sort of on the longer view on.
The last 12 months have been an unbelievable year of social unrest and economic turmoil.
And when I look back on the last year.
The bank's leadership team that has grown in confidence and competence.
I've executed through this store as we continue to provide a platform for our employees for personal growth and successful business careers.
There is great optimism in the bank and in the communities that we serve.
We continue to serve our customers employees and our communities in partnership with our foundation it as part of our brand to be the different community bank that makes a difference.
This is not a new trend to a bank and as part of our DNA.
And with all the discussions of corporate social responsibility, we are and have been on the front lines and supporting and serving the underserved.
Yeah, let me assignments, he said without words.
And our actions speak volumes of who we are and what we've accomplished all foundation and banks have donated over $70 million since 2005, and our return to shareholders has been almost almost 280% since that time.
This compares very favorably to local community trips here in New Jersey up, 42% and New Jersey commercial banks of 58 per cent.
And if you compare on a return to the national banks during this period.
For our largest national banks, we surpassed that two and a half times with that 280% return for investors versus <unk> 78 per cent for the large national banks.
We have always taken for long term view something that our society, our government sometimes has difficulty doing.
The words on my predecessor, Bob casual we understand that we can do good and do well.
We recently added two new directors to our corporate board.
And I'd like to welcome Kevin Wilson, Jon Hamm on to our board.
They both bring a broad range of experience to our team and we are happy to happy to have them.
For a diverse background and experience will make us stronger.
With respect to DNI, we recently held a town hall meeting with Tom and I, taking questions on how we can create greater opportunities for our customers employees on.
Vendors and the communities that we serve.
And we are constantly looking forward.
Better communications and listening better God gave you two years from one mouth for a reason.
And I'm happy to report that all work force is 56% women and 41% diverse and.
Our emphasis on 42% women and 28% and diverse.
And that's a small senior level EVP level, it's 24% women at 6% diverse.
Yeah on the journey is the destination.
And we are on a journey of continuous improvement getting better every day I don't want to be better than that but I want to be better than I was yesterday.
And getting better and being a servant leader who serves on no.
On our leadership teams continues to be selfish southwest and they're serviced for others.
We have accomplished a lot in the past 15 months, we've accomplished a lot on the last 15 years, but we are stronger today and certainly more hopeful.
And as I said last time last year this time.
I was one of five employees at the bank.
Let's be faithful and not fearful.
The future looks bright there.
It was certainly great hope and optimism in the President's speech last night, and I look forward to a record and great year in 2021.
I'd like to now turn it over for questions and open the lines up.
To hear from you. Thank you.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys.
Anytime Youre question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Okay.
[noise] comes from Jared Shaw with Wells Fargo Securities.
Please go ahead.
Hey, good morning, guys.
Good morning.
Hum.
Maybe starting off on the on the funding side with the run off of that higher cost.
Funding.
You know your loan to deposit ratio is still pretty high should we expect you know are you seeing good trends sort of in the the D D. A.
Growth that that that should be sustainable and that we should see a maybe a faster pace of deposit growth from.
Beer or how should we be thinking about funding and.
That growth in light of the loan growth expectations.
Thank you Jerry and good morning.
Think that you will continue to see an increase in our funding on the deposit side.
Non interest bearing has been a nice surprise for us.
This quarter I think Sean mentioned net we were about $180 million in noninterest bearing growth.
Total deposit growth no. It was about $350 million in the branches. So I think you know when you when you compare that to 1 billion two and growth in 2020, I think we are on pace to two to match what we did in 2020.
Yeah.
Okay.
And then when do you when you look at the loan growth outlook.
Are we you know.
Where what categories should we see that and whats your appetite I guess for taking on additional New York City CRE at this point his pricing improved at all or has it gotten tighter I guess what what.
What does the growth mix outlook look like.
Yes.
On the way the pipeline is broken out I mean, the CRE pipeline is about $2 4 billion and the C&I pipeline is just about 900 million that equates to the $3 3 billion, Kevin referred to earlier.
There is you know we have seen some manhattan business pick up, especially on the CRE side and on the multifamily side.
Things are getting better they're not where they were pre COVID-19, but they are getting better and to the extent that we need some additional risk.
Risk mitigation in the CRE space, we're doing now we're doing that in the form of P. Geez, we're doing that in the form of asking customers to put.
Six months of payments.
Escrow with us and.
Yeah. So.
Where we are pretty comfortable we do you know Fortunately, we do a lot of business in New Jersey also so new Jersey is contributing nicely to the pipeline, but we're not we're not running away from Manhattan. At this point, we are simply being more cautious as we make those allowance you know when you look at alone that comes in.
From Manhattan, you, obviously have two the first question you ask is how would you how were you impacted during the COVID-19 crisis, and then you work from there.
Thanks, and then just finally for me you know we've seen some.
Some deal activity in your markets over the last few weeks and how do you think that impacts.
Your ability I guess to potentially higher some people or target some customers that maybe you weren't able to get before and then what's your outlook in terms of a participant in the M&A environment at this point.
Yeah I think.
Carried from the perspective of you know.
Competitive forces I think you're exactly right I mean, while a number of these institutions are you know doing debt deals and trying to integrate their respective financial institutions, I think there'll be an opportunity for us to bring over additional lending teams or two to cash.
True some additional business in our market I mean, we're starting to see a little bit of that already quite honestly.
For us it deal activity I mean, you know clearly I see and I think we agree as a management team that you know there is a compelling reason to do deals like that in terms of.
Just being bigger having more funds to contribute to technology investments and just being more diversified so you know.
As far as day institutions that I know personally the those in our area.
Congratulate them on the deals I thought they were good deals for.
Both institutions and.
Yeah, I wish them well.
Yeah, Jared I think the opportunities.
Dziedzic opportunities.
Be evaluated yeah, we've always said that.
And then on core pillars on organic growth M&A, both as either a buyer or a strategic partnership.
Dividends and stock buybacks and certainly those things are the pillars of our strategy moving forward.
There is a lot of chatter we're talking to.
Lot of people a lot of opportunities out there.
And I think it's a it's an exciting time, but either way.
For the long term view is we're in a very good position and either way there are great opportunities ahead of us.
Thank you appreciate it.
Our next question comes from Mark Fitzgibbon with Piper Sandler.
Go ahead.
Hey, guys. Good thanks, Kevin I loved the uplifting comments.
Hey, Mark.
First I wondered if you could give us any update on the timing of the expected closing on the Berkshire hills branches when that might be.
You will probably get that close before June 30, Mark.
Okay.
And then secondly on the expense front you guys did a nice job managing costs. This quarter I wondered if you could Sean maybe share your outlook for expenses for the next quarter or two.
Yes, I think we should be on a very good spot Mark there. We've provided a guide I believe it was around $425 million and we're doing a bit better than that.
So next.
Next quarter I expect it to be in a similar spot Berkshire, the Berkshire transaction when it closes will add some additional cost when that comes in but as Dominic mentioned, probably not a non.
Until sometime in the second quarter. So I was just looking for the second quarter expenses, probably in a very similar spot that they are on today.
Okay, and then last.
Given the increased Digitization for the business are you guys thinking more about being proactive with branch consolidations in the rest of your network.
Yeah, we are Mark as you know I think we mentioned in earlier releases, we planned on closing 10 branches, we closed those branches.
Earlier this month as a matter of fact, I think on April nine and so.
I think that we need to continue to evaluate those opportunities.
We continue to develop online products, which you know that that technology and that progress has been moving along nicely and I think that will be a catalyst for us to continue to trim the branch network around the region.
Thank you.
Our next question comes from Steven Duong from RBC capital markets. Please go ahead.
Hey, good morning, guys.
Okay.
Hey.
Sean I just wanted to share I heard it right. The prepay income through April so far or was that for and a half million.
That's correct for $5 million in the month of April.
Okay. So youre on.
We're on pace to be.
The above the fourth quarter level then.
Yeah, I wouldn't go that far Steve you know I think the.
The fourth quarter was elevated as far as our guidance for NIM that we gave for the full year. The 3% area, we were modeling in less than less than where we were in the fourth quarter.
Obviously for us.
Our budget was for $5 million of prepayment fees per quarter built into our budget and built into our guidance.
We are seeing a nice rebound there we do expect the margin to pop back up maybe eight to 10 basis points in the second quarter.
Yeah, usually a seasonal in the fourth quarter as you know if it was a tax provision to 31 exchange whatever it might be this usually prepayments are our highest fourth quarter.
Right right that makes sense.
So I guess, maybe if we just drill down on just the loan yields.
If we were to strip out just the prepay income.
I don't know if my calculations right, but I'm getting a core.
On your core loan yield down around 13 basis points or is that sounds right.
I'm just wondering if maybe just kind.
Kind of explain what the dynamics were.
With the core loan yield ex the prepay income.
Is he.
Steve I think the best way to try to answer that question is just to go through and kind of the average coupons that we see based on the categories.
For major categories.
We look at it Randy loans. These days <unk> loans are coming on the balance sheet and just yeah, probably around 3%.
Put them right. There you know multifamily is coming on you know somewhere between three and an $83 125 and $3 20.
CRE is coming on at about free in a quarter to three and three eights and then C&I as.
As you know has become more competitive, especially here in this market and you know those yields are coming in somewhere between three and three eights and three and three quarters. So.
It's obviously.
You know the interest rate environment has benefited us on the liability side, but you know clearly, it's having an impact on the asset side too. So I hope that answers your question.
Steve It's Sean you know your math is approximately correct and.
Just.
To add on what we probably saw the most compression is in our residential portfolio.
Current market rates are around the 3% area our portfolio.
Is yielding on the <unk>.
Residential side.
Was yielding higher than that and so it's kind of coming back down to the norm. So that's probably the spot where we're seeing the most compression.
Got it so I guess if rates are static I guess would you.
I think that we're kind of just be around this level on the core loan yields.
Yeah I think.
That's fair.
We took more compression this quarter and I think moving forward as we look through the year, we're not expecting to see that much compression on the loan yield side, some but not to the degree that we saw on the first quarter.
Okay and then just last one from me just on.
Your borrowings are I know you have.
You're planning on prepaid 250 million concurrent with the Berkshire deal.
This quarter.
But you still have you know as of right now about $3 6 billion bonds what are your thoughts about.
Doing more prepayments given up there.
Now over 200 basis points.
Yes, Steve.
Steve.
Obviously, we're looking at that you know as you point out we you know we have.
Have a $3 $5 billion or so.
And over 2%, so there's an opportunity to.
To pick up some NIM nearby.
But frankly burning capital by.
Paying the prepayment fees.
We'll look at that you know we've been talking about doing a larger trade than the one that we did.
That we projected for the Burke Shea transaction and so you know just given the Berkshire transaction. We may we may Super size, if you will the debt.
The prepayments.
Using the Berkshire transaction as a catalyst for doing that.
Got it appreciate the color. Thank you guys.
Our next question comes from Laurie Hunsicker with Compass point. Please go ahead.
Our next question coming from day one.
Kevin.
Yeah.
Yes.
I. Please ask a question.
You're not coming through very clearly whoever that is didn't sound like Laurie my apologies.
The next question comes from Michael Perito with K B W.
Michael You can go ahead and ask your question.
Hey, guys. Appreciate you taking the time.
I might come on.
On harder.
At first you can just expand a little bit more on on the residential mortgage gain on sale pipeline sorry, if I understand is it fair to think that that number could bounce back a little on the second quarter before normalizing.
Moving over the back half of the year.
Talking about the income that we generate the mortgage banking income.
Yeah.
Correct, Yeah, Mike we see activity has slowed on the mortgage banking front and we're seeing that we think that that number will trend down.
For the for the next quarter as a matter of fact, when we did our budgets we actually.
Projected that that number would come down in 2021, So I think the answer is yes.
That number will continue to trend down as we had.
To the rest of the year.
Helpful.
Thanks, Thomas Oops, Sorry go ahead, Mike So it's Sean I, just wanted to add to that.
Dominic mentioned, we are expecting net trend down, but we were all expecting we are expecting swap fee income to offset some of that decline as we go throughout the year. So that's how we see.
Fee income unfolding, where we're going to lose a little on the mortgage banking side, but we're going to pick up again and offset with swap income as we go throughout the year.
Got it.
Thanks for that expanded commentary on and then just lastly, the low 700% from strong how.
How do we balance kind of the provision expense from here between the improving economic conditions, but clearly the accelerating loan growth you guys on any kind of initial thoughts on on that.
Yes, I think.
Our models were showing obviously this quarter improved economic conditions, we think that can continue to improve if we stay on the current trajectory that we're on I think the New York City area. He has been a little slower to improve from a modeling perspective, and a forecasting perspective than some other parts of the country, but we do believe it's trending in the <unk>.
Direction and if we keep on the current path that will mean, maybe towards when we get towards the back half for the year there could be more release.
Coming in in the provision line item.
Okay.
And I hate to say it but I hopefully will have some loan growth that will offset offset debt relief so look for us.
Okay.
I'm very happy with.
Thanks for taking my questions I appreciate it.
Yes.
Our next question is from Laurie Hunsicker with Compass point.
Please go ahead.
Yeah, Hi, good morning can you hear me now.
Yeah, Hi, Laurie Okay, great. Thanks, sorry, I don't know what I did on of your of your $582 million of deferrals. How much of that is is New York City.
341, I believe.
Right and then would you just remind us of that on how much is is multifamily in New York and how much is his office in New York.
[noise], Yeah, one second.
Right.
Or are you talking about New York City, specifically right in Manhattan, Manhattan Borough Yeah.
Exactly New York City.
And maybe along those lines can you just have your billion to an office how much a bad placements from New York City is low.
And if we don't have two if I can follow up with you offline then will follow up with the office and.
In Manhattan.
$88 million as multifamily CRE is $38 million.
Margin is $195 million.
Okay perfect.
Okay C&I loans to zero.
Yeah, Yeah, okay, great and and the buybacks I have not seen them. Obviously, they were a little slower this quarter or any comments around that.
I think Laurie obviously, we saw on stock price accelerated pretty quickly so.
It gave us a reason to pause on our buybacks just trying to understand.
Where are we.
We're on tangible book value.
Where how tangible book value would compare it to where we're trading on a book value basis. So we'll.
We will continue to evaluate that.
<unk> got up there around $15. So as I said it just gave us reason to pause.
Just monitor how stable that would be going forward.
Got it Okay and then just last question going going back to what's yard a true can you help us think a little bit about M&A. Obviously, it's been a year. Since we saw you closed your last deal can you help us think about as you as you look forward, whether it's the strategic partnership for your buyer you're on the other side of it how you think about <unk>.
That's a nice target what makes sense, what's ideal how big would you go how do you think about it M. L E. How do how do all those things play into the very exciting M&A landscape for staying at the moment.
Laurie I would say yes.
Certainly we're on.
Any strategic discussions.
From a from an O M OE too I mean per shares of 600 million.
Deposit branch acquisition, so it fits in with the strategy.
If you look at the last two transactions for.
She is on one side of our franchise.
Gold Coast was on the east side of our franchise and I think we bring are we close to Berkshire deal on April 3rd a year ago.
Yeah on the height of the pandemic, we had to get.
Get out there and change all the signage for where.
Worried about the police shut us down from being outside during that period of time and in both of those transactions are very promising to us they were a little on the small size. It takes a lot on energy I think you know that.
715 billion dollar area would be a great.
Lock on type transaction to do but we are open and you know we'll do it you know whatever is necessary to enhance the shareholder value of the company.
There are a lot of discussions going on and.
Certainly looking at a lot of opportunities in the marketplace.
Great. Thanks for taking my question, yes.
Hey, Lori just on that on the numbers.
Let them early.
The total exposure in Manhattan is 367 million of which the hotel sector is 196.
Multifamily and CRE was $88 million and $38 million respectively.
As I mentioned earlier pretty good sponsorship and improving operations.
Great.
They're all paying us interest too I want to emphasize that there's no principal and interest from they're all paying us interest.
Right.
Yeah.
Our next question comes from Matthew Breese with Stephens. Please go ahead good morning.
Hey, Matt Good morning, Matt I know, we hit on a lot of the moving pieces, but maybe more directly talking about the core NIM ex prepayment penalty income how do you think the your kind of unfolds.
Unfolds for that metric in the cadence of expansion from here.
Matt I think that will continue to see benefit from falling rates, especially in our deposit portfolio. Like for example, we still have some room to go in on government banking portfolio. We're working on that we still have a.
A number of.
The CD buckets and.
Got on maturing through the year, and we will see some benefit from that so.
So I think the core NIM will continue to expand I know that there was a lot of focus on the overall NIM and prepayment fees, but you know that we just look at that as being seasonal so, but I think you're right focusing on the core NIM is reflective of the changes that we're making in our balance.
Chi, we're raising multi are falling and C&I and CRE are going up and see and noninterest bearing deposits and hit 20%. So I think we'll continue to see benefit in the core NIM.
Got it okay.
The other question I had was there's two pieces of legislation in the state of New York, They're talking about this eviction without good cause Thats in committee. It seems like it would impact market rate apartments, and then it seems that president Biden is talking about the 10 31 exchange how do you kind of view.
These pieces of legislation are impacting commercial real estate and multifamily and how would you kind of assess the the loan growth impact potential.
And credit quality impact potential.
Hey, Matt I think you have to look at it in light of the whole Democratic agenda.
Capital gains tax things like that it's not going to be good for business.
It's certainly not good for economic development for them.
Average productivity it.
It seems like everything is going to be free and.
So I certainly don't think it's a it's.
It's good for investment in the country.
A tendency to be.
Listen to Fox business, a little bit too much and.
I certainly think that the debt.
Certainly going to have a negative impact on business and business investment going forward.
So, but I think getting it through and putting in an operation you know you don't want to kill bite the hand that feature and commercial.
<unk> real estate, especially the multifamily sector is a very strong sector and pays a lot of taxes and they shouldnt like I look at it.
The handling fees as far as generating tax revenues.
And the city and the state.
Got it that's all I had I appreciate taking my questions. Thank you.
Thank you Matt.
This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks.
Well. Thank you for your participation today and I look forward to.
See you all at a shareholders meeting in May there will be a virtual meeting again and.
I think you know 2020 one's going to be a very strong year for the company.
<unk> had three quarters of double digit return on equity and that's probably a record for the company. The last nine months, so and I think it will continue throughout 2021. So thank you for your participation today and have great day and enjoy your spring B well.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.