Q1 2021 Allegiance Bancshares Inc Earnings Call
Okay.
Good day, and thank you for standing by welcome to the allegiance Bancshares first quarter 2021 earnings Conference call.
At this time all participants on them.
Good.
Thank you speakers presentation. Thank you for your question answer session.
So lots of questions on the session on the press Star one of your telephone.
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I would now like turn the conference on Cheeseburger day.
Courtney Theriot Executive Vice President and Chief Accounting Officer. Please proceed.
Thank you operator, and thank you to all who have joined our call. Today. This morning on this call will be led by Steve Retzloff E. L. F. The company regulatory precedent for the company and CEO of allegiance Bank Paul.
Uh-huh Executive Vice President and CFO took on.
Akin executive Vice President and Chief Risk Officer for the company and President of allegiance Bank, and Shannon Campbell Executive Vice President and General Counsel.
Before we begin today I need to remind everyone that some of the remarks made today constitute forward looking statements as defined in the private Securities Litigation Reform Act of 1995 as amended we intend all such statements to be covered by the safe Harbor provision for forward looking statements contained anymore.
Also note that if we give guidance about future results that guidance is only a reflection of management's beliefs at the time to statements made in for.
That's release are subject to change.
We disclaim any obligation to publicly update any forward looking statements, except as may be required by law.
Please see the last page of the text in this morning's earnings release, which is available on our website at allegiance Bank Dot com for additional information about the risk factors associated with forward looking statements.
We also have provided an investor presentation on our website, although it is not being used at the guidance for today's comments. It is available for review at this time.
At the conclusion of our remarks, we will open the line and allow time for questions.
And now I'll turn the call over to our CEO Steve Retzloff.
Thank you coordinate we welcome everyone to our conference call and thank you for your attendance.
The first quarter represented a very productive start for the year highlighted by record earnings per share of 89.
Significant deposit growth of $386 million during the quarter, bringing our total deposit growth over the past 12 months to one for $2 billion or 39%.
Assets increased to $6 43 billion as we have now funded over one point O 4 billion PPP loans with low.
$332 million being funded during the last quarter.
All in we remain on a strong position relating to capital and liquidity and we increased our dividend to <unk> 12 per share of common stock in the first for.
Our record earnings was aided by the accelerated recognition of PPP fees during the quarter and by the low provision number that came from having very little on the way of net charge offs and an improving economy.
It said, we absorbed added costs in the quarter due to asset write downs as Paul will describe and incurred increased overtime and third party staff augmentation expenses totaling approximately 400000 in the quarter, which furthered our PPP production.
Our stakeholders benefited from the continued extraordinary outpouring of effort from our staff as we not only book the large number of PPP loans, but also originated $325 million of core loans during the quarter for a total new loan production of $657 million in the quarter.
With the PPP now moving into the final completion and forgiveness phase our production staff will be able to redirect their entire focus to generating traditional core lending and depository relationships from which our pipelines are already solidly established and will be further enhanced as we use our proven relationship building muscle to deepen the connection for.
For the approximately 4000, new customers, who we assisted with our PPP effort.
We are pleased with our overall asset quality and were able to significantly reduce our O. Ari we continue to remain alert to the impact of the pandemic.
It has had on our community and our customers, particularly those in the higher risk sectors for the streets of Houston are showing signs of broader economic activity is heavy traffic once used to be cursed is now and every day welcome side.
Although with a sense of steadily growing optimism, we remain we remain cautious as to the timing of a full and complete rebound for all sectors.
On our growing market penetration and size and while we continue to focus on high service levels to smaller commercial customers and the market differentiation. This strategy affords us we are beginning to attract and retain larger lending relationships that said our average loan size is not expected to appreciably change, but we believe that a marginal well manage debt and.
On this direction not only warranted, but provides incremental quality growth opportunities from an operational perspective, we have acquired a more robust and more integrated loan origination system, which we deployed quite effectively as the platform and workflow for handling our handling our PPP loans and we are now beginning to implement this new system for.
Our entire lending platform.
Finally, the allegiance has built and continued to add to the value of our brand and has evolved into an extraordinary franchise value by accelerating our penetration into the market with more and more customers. We have now had firsthand experience and depreciation of what our service level commitment can bring to their table.
Given how we responded to the needs of this community over the past year I believe that we are the clear proven bank of choice in the Houston region, and we will be deepening our position even further over the coming year.
Next Ray will describe our loan and deposit production results as well as an outlook on credit followed by Paul who will cover our financial results. We will then open the call for questions.
Thanks, Steve.
First quarter of 2021 saw our bankers back in the PPP origination business as we work with our customers both existing and new to the second round on the program, while assisting first on borrowers with the forgiveness process.
As mentioned last quarter, we designed the second round effort and a way for our bankers to meet pvp demand, while allowing capacity to generate and expand customer relationships.
As a result, we're extremely pleased to report core loan originations of $325 million. The second highest level on the history of the bank driven by improving economic conditions market share gains and continued conversion of the nearly 4000, new customers from our Pvp effort.
And in addition to our new customers from PPP. We also attracted 1800, new non PPP customers over the past 12 months, bringing total customer acquisition to 5800, representing 19% growth over the past year.
We are also seeing increased adoption and utilization of nearly every electric electronic banking service for mobile remote deposit capture to ACI originations to wire transfers.
We continue to review, our electronic banking product offerings to meet customer demands and expectations and also monitor our brick and mortar footprint to optimize how we deliver service and position ourselves to execute on what we believe to be an extraordinary market share growth opportunity.
With regards to PPP forgiveness as of March 31, we received forgiveness applications for for 103 loans totaling over $505 million or about half of the $1 billion in PPP loans originated.
Of those 3324 had been submitted to the SBA totaling over $433 million with 2973 loans, having been approved and funds received of over $364 million.
In early March we incorporate it into our platform the new simple forgiveness application for loans up to 150000.
Which was welcome news for the majority of our PPP borrowers are able to use this for them.
In addition to helping our customers through the PPP process. We also provided assistance to eligible borrowers with payment deferrals on outstanding loan balances of $1, one 5 billion or 30% of core loans of.
Of this amount approximately $62 1 million of core loans remain on deferral at March 31, 2021 further reduced to $54 9 million as of April 22nd.
Moving now to our quarterly operating results total for loans, which excludes PPP loans ended the first quarter at $3 93 billion, an increase of $8 9 million during the quarter.
During the first quarter, our staff on lending team book $325 million of Newport loans debt funded to a level of 203 million by March 31.
Compared to the fourth quarter with $311 million of new core loans were generated which funded to a level of $220 million by December 31.
Paid off for loans for $180 million on the first quarter compared to $195 million in the fourth quarter of 2020.
The $180 million of paid off for loans during the quarter at a weighted average rate of five 5%.
Terry for loans experienced advances of $97 million at a weighted average rate of 493%.
And paydowns of $105 million, which were at a weighted average rate of five 1%.
We are pleased to report the weighted average interest rate charged on our new first quarter core loans of $4. Six was for six 3%, which is just below the fourth quarter 2020 weighted average rate of 464% and equal to the third quarter 2020 weighted rate.
All in the overall period end weighted average rate charge on our funded core loans decreased six basis points ending the quarter at five 2% compared to five 8% as of December 31 2020.
Over the past few quarters, we have provided information on several loan categories that could have heightened that could have heightened risk due to energy prices <unk>. The COVID-19 pandemic, those being our oil and gas portfolio, our hotel portfolio and our restaurant and bar portfolio.
As of March 31, our oil and gas portfolio totals totaled $72 million or one 6% of our funded loans with an average LTV of 53, 8% on the CRE portion.
The hotel portfolio totaled $125 million for $2 seven 8% of our funded loans with an average LTV of 68% on the CRE portion.
The restaurant and bar portfolio totaled $116 million or 258% of total loans with an average LTV of 59, 2% on the CRE portion.
In aggregate asset quality at quarter end continue to remain in a manageable position.
Non performing assets, including both non accrual loans and Owari ended the first quarter down from 63 to 55 basis points of total assets, primarily due to the sale of $8 6 million of other real estate owned during the quarter.
Non accrual loans increased on net of $6 2 million during the quarter from $28 9 million to $35 1 million, primarily due to $15 1 million in additions that were partially offset by $4 $7 million on payoffs $2 7 million on payments and $1 $5 million in upgrades placed back on accrual.
The largest addition was a $4 $9 million hospitality property.
The additional $10 $2 million increase in non accrual accruals was for 13 relationships two of which totaled $6 1 million and the remaining $4 1 million was from 11 smaller relationships.
<unk> decreased to $576000 during the quarter compared to $9 2 million for the fourth quarter, primarily due to the $8 6 million of our sales are.
Our <unk> is now comprised of one residential property.
Charge offs for the quarter were minimal at an annualized rate of three basis points.
In terms of our broader watch list our classified loans as a percentage of total loans increased to $3, 91% of total loans as of March 31.
Compared to 361% as of December 31.
Criticized loans increased to $5 nine 8% at March 31 from 595% at December 31.
Specific reserves for individually evaluated loans ended the quarter at 14% compared to 12% at December 31.
On the deposit front, we saw an increase in total deposits in the first quarter by $385 7 million from the fourth quarter and up one point for $2 billion over the year ago quarter.
The increase during the first quarter was primarily in the non interest bearing deposit category, which increased $209 6 million over the fourth quarter and $696 6 million over the prior year as a result of new accounts associated with PPP customers as well as higher balances in our carried accounts.
With that our non interest bearing deposits to total deposit ratio was 35, 6% for March 31, compared to 34, 2% for December 31, and 38% for the year ago quarter.
As previously mentioned, we are seeing signs of economic recovery that is reflected in our level of new for loan originations downward trend of loan deferrals and loan payment performance.
Recent data from the Texas Workforce Commission shows the Houston area to have created 34000 jobs in the month of March well above the historical monthly average of 13100 jobs.
And through March Houston has recovered 168400 jobs or 47% of the jobs lost last March and April.
With a healthy loan pipeline customer acquisition and conversion opportunities in front of us increased disruption on the banking industry for both business owners and bankers and an ever strengthening market position in the eastern region. We are poised to start referring to our organic loan growth prospects with a word that has been used to describe our PPP success that being.
On outsized.
I'll now turn it over to our CFO Paul.
Thanks, Ray we are very proud to be posting record first quarter net income of $18 million or <unk> 89 per diluted share as compared to $15 9 million or <unk> 77 per diluted share in the fourth quarter and $3 $5 million for 17 cents per diluted share in the first quarter of 2020 on.
Our record earnings for despite elevated expenses in the quarter. The most significant of which were approximately $1 5 million in nonrecurring asset write down expenses, most of which relating to a branch closure during the quarter.
Pre tax pre provision income for the first quarter was $22 5 million as compared to $24 $2 million from the fourth quarter and $15 $3 million for the year ago quarter.
Adding back $1 $5 million in non recurring expenses on adjusted measure for pre tax pre provision income would have been approximately $24 million.
Net interest income with the key driver to our pretax pre provision earnings power during the quarter, where we saw an increase of $796000 for one 4% to $55 7 million from $54 9 million in the fourth quarter.
Primarily due to lower interest expense in the quarter and higher revenue recognized on PPP loans, partially offset by lower core loan income.
Interest expense decreased by $1 million in the first quarter compared to the prior quarter.
In total fee revenue related to PPP loans, which were recognized into interest income during the quarter with $6 9 million on increased from $6 million from the fourth quarter.
Yield on loans in the first quarter was $5, one 5% as compared to five 9% for the fourth quarter and $5 five 9% for the year ago quarter.
Excluding PPP loans and related revenue yield on loans would have been five 6% for the first quarter five 7% in the fourth quarter and $5 five 9% in the year ago quarter.
Total yield on interest, earning assets was 467% for the first quarter down from $4 seven 1% in the fourth quarter and $5 two 8% in the year ago quarter, reflecting a changing earning asset mix that includes a higher proportion of securities as well as significant PPP loans within the loan totals.
Excluding PPP loans and related revenue total yield on earning assets would have been for five 4% for the first quarter versus $4 six 7% in the fourth quarter.
Before I move on I should note that as of quarter end, we had approximately $22 million net deferred fee income remaining relating to PPP loans.
With respect to interest expense our cost of interest bearing liabilities continued to decrease in the first quarter to 80 basis points from 93 basis points for the fourth quarter and 168 basis points for the year ago quarter.
The overall cost of funds for the first quarter was 54 basis points versus 62 basis points in the fourth quarter.
We expect to see continued improvement in our funding costs going forward, particularly on the CD book continues to reprice lower.
So with the help of lower interest expense in Q1, PPP peak net fee income recognition offsetting a significant shift in the competition for earning assets.
Our taxable equivalent net interest margin was $4, one 9% for the quarter as compared to $4, one 4% in the fourth quarter and for one 5% in the year ago quarter.
Excluding PPP loan balances and related revenue net interest margin would have been 395% for the first quarter.
Going forward, we feel well positioned to maintain a relatively strong core net interest margin through optimizing our funding mix and maintaining discipline on loan pricing.
That said excess liquidity and changes to our earning asset competition have potential to be a drag on nims, depending on how our core loan growth story plays out.
Noninterest income was lower quarter over quarter decreasing to $1 7 million for.
For the first quarter from $2 million for the fourth quarter, primarily due to a $176000 loss on the sales for your assets.
Total non interest expense increased in the first quarter to $34 9 million compared to $32 $7 million from the fourth quarter.
The difference is primarily due to increases in salary and benefits line and the other expenses line.
Other expenses include the aforementioned $1 5 million in nonrecurring asset write downs.
The efficiency ratio for the first quarter increased to 68, 5% compared to the 57, 3% from the fourth quarter and.
And decrease from the $68 one 3% for the prior year quarter.
<unk> the asset write down the efficiency ratio for the first quarter would have been $58 two 9%.
The provision for credit losses was $639000 for the first quarter and our allowance for loan losses ended the quarter at $52 $8 million, representing 113 basis points of total loans and 134 basis points on core or non PPP loan balances.
Bottom line, our first quarter produced in <unk>.
And our TCE of 118% from $14 eight 3%, respectively, both representing all time highs.
Quarter on tangible book value per share was $25 75.
Which makes for an increase of approximately 13, 5% since the year ago quarter, which is something we are proud of as well.
All in all we feel very well positioned to continue to drive franchise and shareholder value in 2021 and beyond.
To that end the company declared another dividend of <unk> 12 per diluted share on common stock and re upped, our 1 million share repurchase authorization to replace the authorization that expired at March 31 of 2021.
And on the topic of share repurchases I should note that during the first quarter. We did repurchase 161000 shares at a weighted average price of $35 11.
Reflecting on over a year and a COVID-19 impacted operating environment, we are very proud to be bigger and better than ever at over $6 $4 billion on assets.
And with capital reserves and liquidity levels at or near all time highs.
Thanks to tremendous PPP success, driven by the amazing dedication of the allegiance team we've been successful in adding to our market share in Houston's largest regionally dedicated bank.
I will now turn the call back over to Steve.
Thanks, Paul with that I'll now turn the call over to the operator to open the line for questions.
Thank you.
Finder to ask a question you will need to press star one on your telephone withdraw your question press the pound key please standby, while we compile the Q&A roster.
Our first question comes from David Feaster with display.
And James Your line is open.
Hey, good morning, everybody.
Good morning.
It sounds like originations were really strong despite distraction from the PPP.
Curious kind of how the pipeline is shaping up and maybe what you're hearing from customers how much of the production coming from existing clients that are more confident and willing to invest versus new client acquisition from either new lender hires or the PPP program and just.
I guess the pulse of your clients.
Hey, Hey, Thanks, David Good morning.
Yes, so it was strong net first quarter.
On the I'd say that while we while we would really like to target maybe a 50 50 of that growth coming from new.
And versus existing it's probably more a little bit more of existing as we work.
With our established customers were still doing this customer acquisition on the PPP side, but the mood is very good and the pipeline is at levels pre pre pandemic type pipeline levels.
That's when the pipeline grows that's coming from our field, saying. These are the obviously these are the request that we have in place and the deals that we're talking about so low.
Good about that and what the future prospects are for more originations.
Okay, that's encouraging and then just.
How are new hires turning you guys are always on a great job.
Picking up new lenders, just I guess with you now.
Bonuses being paid on some sort of disruption in the market.
<unk> seen an increase in conversations and maybe how is the pipeline for new hires.
Yes, we have conversations have picked up you're right first quarter is usually a little light because of that because of the bonus. We did have one one lender higher in the first quarter and if you look back over the past four quarters in a COVID-19 environment, we had six producer hires in one.
Out of our homegrown out of our analyst pools for a total of seven so given the circumstances over the past four quarters, we feel pretty good about being making those additions.
But the conversations are picking up and we do see some disruption and we will.
There's kind of two forms of disruption one is the what happens on the M&A world. The other one is as our on our space kind of in that business banking space as the competition continues to to change their rules of what business banking means.
That's disruption for customers and bankers and we.
We have those conversations and hanging around the hoop for that.
Okay.
That's great and then you know it's encouraging to hear.
The new loan yields in the originations it sounds like pricing might be crossing in year. I guess do you think that's a function of mix or just how has pricing trended more recently had the steepening of the curve allowed for better pricing at all in <unk>.
Think maybe the shift towards larger credits that you talked about may impact new loan yields or do you think youll still be able to get these premium levels of rate despite going upstream a bit.
Well I mean, we feel good about the past three quarters of that of that rate on the new production been hanging around this for $63 60 for it but it's still very competitive so.
Im.
Not sure about hitting.
Hitting the floor there but.
We're really pleased.
The last three quarters, and where we where things land is yes. This is Stephen it turned to the larger loans, it's really we're looking at larger loan relationships.
We have a number of a lot of customers that have multiple loans multiple projects.
If you restrict that to a certain maximum relationship size and youre going to Miss the next deal. So we're just kind of opening up the door a little bit it's not appreciably larger loans so much.
More.
On the door for bigger relationships.
Okay, that's great color thanks, everybody.
Thank you. Our next question comes from Brad Milsap Piper Sandler Your line is open.
Hey, good morning.
Good morning.
Ray I think I heard you correctly say you've added 5800 customers over the last 12 months, which is a tremendous number.
Looks like thus far.
It really translated in to deposit balances.
I know this is probably tough to handicap.
How much loan growth do you think you pulled forward with.
Your guidance participation in the PPP program.
Trying to get a sense of kind of when somebody is production youre seeing you can actually.
Translate into actual loans outstanding on the books.
Yes, great question.
When you look at the 4000 of the PPP as we try to penetrate that in what we call convert those to full customers I mean, we're seeing low.
And maybe a quarter of that at this moment has something other than the PPP loans. So it's a process to work through in and generate additional business and we're working on that so I mean I think it is.
We'll pick up gains every quarter.
And as we we have several touches with these customers not only on the origination side and on the forgiveness side and then a number of the second round.
We're to some to the sand cost to our existing customers from the first round. So we have a number of touch points plus an effort to convert these so I think it's just going to incremental over the next few quarters, but we have.
We're optimistic about what's ahead of us with that conversion opportunity.
And I think there's no doubt about it.
PPP customers.
Our getting liquidity through the PPP loan program, which.
Stan <unk> has an impact on their their loan demand and how they may be positioning for when theyre ready for their next loan.
It could be.
Could could involve some.
Some lag time being that they are the beneficiary of.
The PPP program in the near term.
The recent patent.
For incremental loans.
Sure sure and so rate would you say that you know maybe gross kind of low single digit type rate kind of in the near term and hopefully maybe by next year. You can guys can start ramping back up closer to what you've done historically.
Doug on all in on the whole.
<unk> growth on the hotel.
Yes ex PPP.
Yes, yes.
Yes, yes, yes, Carlos I think debt.
Okay.
Okay and then.
Just curious kind of how you guys are thinking about resolution on.
Some of the loans that are still having issues coming out of the paint they make I think it sounded like kind of criticized classified as had stabilized just under 6%.
Just kind of wanted to get a sense of kind of how you guys are thinking about.
Potential losses, as you kind of get in the back half of the year on how that might relate to Q.
Your how you're approaching the level of the reserve and the provision going forward.
Well, we obviously feel like we've got it.
We have them all identified properly.
Assess them every quarter.
We've experienced.
Very good low charge offs at this point.
Again that theyre, probably not at all.
A way to extrapolate that out into a quarter by quarter projection.
But we feel like we're in the right place.
Is that where we're participating with.
Deferrals.
And there are underlying business model is getting better over time, such as like local hotels and so for so.
I think we feel pretty.
Pretty good debt.
It shouldnt be outsized in terms of any kind of experience for.
No problem assets getting worse.
I really feel like it's actually more on the on the getting better from here.
Obviously, a lot depends on the pandemic and so forth, but and I might note that anything that merits individual evaluation under our under Cecil we have evaluated and considered.
For.
Provision and allowance for credit losses.
In addition to that this is oak on.
Add the fact that we.
We're seeing a deceleration of significant deceleration of downgrades in our portfolio.
Actually also experiencing in the numbers.
Instances.
Great.
And that's a pretty pronounced with our.
Our risk portfolio as well.
Sure.
That portfolio is hanging on.
Better than expected.
Regionally.
Great and just final question for Paul.
Excluding the branch ride down debt, that's $33 million or so of expenses this quarter.
What do you think that's a pretty good run rate or was there anything else that you may have benefited from maybe bad 91 related on PPP and <unk> that might cause that to go up appreciably or is $33 million or so at a decent run rate.
I think.
33 handle is a decent run rate.
Hedged to take.
<unk> 33, and a half give or take a half.
As ware.
Where you'll see things there is some level of noise in the second quarter will still be paying for some of the staff augmentation.
Used.
Used to kind of.
Really put our shoulder into the PPP effort, and we will now pivot a little bit more into the forgiveness effort.
So theres still some things hanging out there but.
But nothing I think you're in the zone.
Record earnings bring record.
You've kind of profit sharing accruals and things of that nature as well.
Great. Thank you.
Thank you. Our next question comes from Brady Gailey with <unk>. Your line is open.
Hey, Thank you good morning, guys.
Alright.
So I know accretable yield has been a fairly small number for you guys recently I think last quarter. It was only about $300000 did that remain.
Fairly small and immaterial this quarter.
Yes, getting more immaterial every quarter, which is really why.
We thought we might economize.
Here on our first <unk>.
First quarter of 2021.
If weaning off weaning away.
On <unk>.
Okay great.
And then when you look at the buyback.
Rate to see your active in the quarter. It looks like you bought stock at around 135 times tangible.
If you look at the stock now it's now one five to one six times tangible so it's not as cheap. So you still have a pretty good appetite to execute on the buyback despite the stock price being a little higher.
Price is one of many considerations that we look into when we're evaluating the share repurchases, but more so than ever are our number one use of excess capital.
Core loan growth.
Secondary to that we want to maintain the high level of flexibility for potential M&A activity.
And then of course there.
Pricing dynamics that drive.
A little bit of volume based appetite around.
The share repurchases so lot of moving parts.
Not not intimidated too much by the current.
Share price, but more focused on.
Executing on on the most accretive way for us to put that capital to work.
And then lastly for me is just on you know.
How allegiance.
On the M&A landscape, it's been a little quieter in Texas, So I would've thought on that we saw Bancorp, South Dakota, which was a.
Big deal and those backyard, but.
How do you think allegiance fits in.
Is it you guys would consider acquiring enough.
Some smaller more downstream targets or you.
Do you think it's more something either transformational like a <unk>.
Type of transaction.
Well, yes.
It's good to see the larger transactions out there and of course inside the pandemic.
They have been more appropriate to do a life sized transaction like that because of the kind of the risk profile of the uncertainty coming out of the uncertainties.
It opens the door for smaller transactions.
You have better currency.
So I'd say that we're actively assertive right now in terms of an M&A profile our posture.
We are probably still thinking.
We would think across the board but.
Acquisitions would be certainly welcomed around here smaller medium size.
I think you can make a difference.
We're working hard on the organic side, but we're also.
Stay in touch with the community bankers around.
Probably no debt community as well as anybody through all of our contact.
Great. Thanks, guys.
Thank you once again, ladies and gentlemen, if you wish to ask a question at this time. Please press Star then one on your Touchtone telephone. Our next question comes from Matt Olney with Stephens. Your line is open.
Thank you good morning.
PPP I wanted to circle back on that.
$92 million of on amortize net fees still as of March 31.
I'm curious kind of what the Crystal ball says about how.
Those will be recognized over the next few quarters.
As their weight.
Predicting the future is.
One of those things we think the second round is going to go faster than the first.
But we do recognize that there is potential.
For stragglers on as it relates to the way that that forgiveness profit is ultimately going to play out.
So tentatively the way we.
Marvel that for our own.
Purposes is around 70% or so.
Being forgiven by the end of the year it could be higher.
But we feel that it's.
Probably right for us.
To think about it in that context.
Okay.
And then circling back on some commentary that bad.
Steve made earlier, you mentioned a few times from some larger loans.
Curious I mean, its all relative I guess in terms of larger to allegiance wouldn't be larger to other banks is that more of a would you call. It a traditional middle market strategy or is it just a little bit larger on the small business loans side any any numbers you can put behind that thanks.
Say larger on the small business side is the kind of on the right way to put that.
We just don't have.
Loan relationships.
Exceed $20 million very few over 10.
And as you know.
Given our asset size and the loan footings.
On that we're willing to take a look at that more closely a lot of opportunity there.
Gradually I think it just <unk>.
Gives us a little bit for raw materials.
Look at that number one use of capital on that slow growth and we're really focused there.
And to clarify on that.
Is it going to be new producers and new individuals' Theyre doing this or is it just looking at existing team and existing customers that you'd be willing to grow at larger than before.
Existing team has.
You can calculate it different ways, but close to $800 million of capacity. When you look at the loans. The lenders that are below our kind of average norm. So we've got a lot of capacity in our current lending staff to build portfolio, we have a lot of <unk>.
Growth continuing though on those.
985, or so percent of our lending staff that are at or above our.
Our normal.
Portfolio size and they continue to grow their portfolios.
But when we tell them that we don't want we want we don't want.
Larger loan relationships day their customers go other places because they're continuing to do projects and this is a store so.
We're just kind of given them an opportunity to go back to those customers that.
Okay.
Can you actually add another loan or taken out of the loan back.
That type of thing so.
It's still smaller loans.
We believe that interest.
The entire lending staff the opportunity to grow that book, So that's a much new for new lenders or certainly don't want it to be interpreted as that go into the middle market.
Got it okay. Thanks for the clarification, that's all from it.
Thank you. Our next question comes from John <unk> with Janney. Your line is open.
Good morning, guys.
Got it.
Paul maybe just.
I guess I missed this but on the PPP loans, you said $22 million remaining what was on the first quarter.
We recognized in fee income.
$6 $9 million.
Into yield.
During the fourth.
First quarter pardon me.
Net fee income.
We've got a slide on PPP that detail in the investor presentation, but.
Yes.
Okay.
Total revenue was a little higher if you include the interest.
Okay. That's it for me. Thank you guys nice quarter.
Thanks, Jonathan.
Thank you and I'm currently showing no further questions at this time I'd like to turn the call back over to Steve Etzel for closing remarks.
Very good well, we just again, thank you everybody I appreciate your time and interest in the bank and we look forward to speaking to you again next quarter and thank you very much.
This concludes today's conference call. Thank you for participating you may now.
Okay.
Okay.
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On.
Yes.
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On.
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