Q2 2021 Investors Bancorp Inc Earnings Call
1 of the earnings call.
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We'll begin this morning's call for the company's standard forward looking statement disclosure.
On this call Representatives of investors Bancorp incorporated may.
May make some forward looking statements with respect to its financial position.
<unk> 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 could cause actual results to materially differ from those expressed or forecast in the.
The results 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.
These forward through 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 the investors Bancorp. Please go ahead.
Thank you Betsy.
Good.
Good morning, and welcome to the investors Bancorp first quarter earnings call of 2021.
Last night of the company reported in the press release net income of $72.3 million of 31 cents per diluted share for the quarter ended March 31.2021.
This compares to $75.1 billion.
Risk factor of the 2 cents per diluted share for the quarter ended December 30 of last year at $39.5 million or 17 cents per diluted share for the 3 months ended March 31.2020.
The fourth quarter of last year, we recorded some non core transactions that impacted results in improved earnings.
84 million or <unk> 35 per share.
The difference of core operating results of approximately 9 million for the fourth quarter.
Due to a $6.9 million reduction of prepayment fees, which are included in interest income.
The decrease in piece of course, the reduction of on net interest margin of 8 basis points.
Excluding these penalties.
Our core margin increased by 2 basis points.
The quarter was also impacted by a reduction in gain on sale of loans mortgage banking activities of $1.7 million and a more favorable tax rate to the R&D credits recognized in the fourth quarter.
These decreases in revenues were offset by <unk>.
Cost control by reduced core operating expenses of $2.7 million in the first quarter.
All things considered it was a solid quarter for the back of the good start to 2021.
At this time last year, there 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 <unk> 14 cents per share to be paid in may and this reflects the 2 set of increase for the dividend paid at the height of the pandemic last may of 2020.
These results reflect the third straight quarter of double.
Double digit return on tangible equity and our return on average assets has averaged over 1 point on 7 over that 3 quarter period.
When I look back where we were a year ago. It is remarkable what we have accomplished through this pandemic.
A year ago, where you are in the midst of the P.
The process cost.
The most of our employees were in the peer touching doing ups or speaking with each other there was uncertainty and know what the comfortable with the normal routines of everyday life.
True grit and determination, we were able to take care of our customers.
Keep all our retail branches opened the most importantly.
Currently the protect our employees.
Today, we are a stronger bank our capital ratios are up approximately 30 basis points.
Our credit culture, the stronger than ever.
The outlook for 2020.1 is bright.
We are anxious to get all of our corporate employees back to the office.
P P and look forward to be in that time line.
Service of our customers and communities in both good times and times of crisis.
On the credit front or on non accrual loans are down $23.8 billion for 22 per cent for the fourth quarter.
At $48.7 million on 37 per cent from September.
September 13th of last year.
This reduction in non accrual loans was completed with no cumulative net charge offs.
Net charge offs for the last 6 months were negative.
And resulted in net recoveries of $5.7 million for the last 2 quarters.
Although the loss coverage ratio to non accrual loans.
Is 341% this quarter versus charging of 48% last year of at March 31st.
On the commercial portfolio of total non accrual loans of $37.6 million consisting of 53 loans for an average loan of approximately 709000.
Which is down from $79.8 million.
Of the 13th of last year.
Our 3 largest non accrual loans at March 31, or a multifamily loans of $4.6 million.
Our CRE loans, the $3.1 million and of business loans, the $2.6 million the.
The remaining 50 loans into non accrual.
Group.
Flex on average exposure of $550000.
And is similar to the exposure in our mortgage and consumer portfolio, which has an average loans non accrual of 191000.
We have a war room mentality with respect to credit for.
But still believe we have a lot.
That's the type of due to get through this operating environment and the post the.
The effect of the pandemic although.
Every week since June we have met to discuss our loan exposures and trends of deferred loans due to this pandemic.
At March 31st of all of total deferrals of down to 582 billion.
And include approximately 500 million of laws that are currently paying us interest that are keeping the taxes correct.
We have made of a concerted effort to reach out to our customers. During this time to work with them through the crisis.
And then in a period of uncertainty we see these times.
<unk> is an opportunity to help our customers.
And the bill of long term relationships.
With respect to principal and interest deferrals, we have approximately 83 million of which $23 million and the.
Entertainment category.
<unk> payments as of April 1st.
The remaining.
$60 million.
Made up of 20 loans.
And the 2 largest loans of bulk multifamily loans for $37 million and $10 million.
So of the remaining.
50 million 30 set of up 60 billion for the remaining 60 million 37 of 10 are in 2 loans.
So we have recently visited the.
Those 2 properties earlier this month.
And then the Washington loan and 1 loans in Washington D. C with an average loans per unit of approximately 70000.
The complex was recording stronger cash collections in March.
It would be collected of pro.
Form of cash flow of of 1.2% debt service.
It is the world maintain property and should retain its value and we expect it to be back to full payment at the end of the deferral period the.
The other arms of Brooklyn, which we visit as early as this month and is the 20 unit relatively new building.
<unk> that is fully occupied and is the recovering as cash flows at the concessions 2 new apartment dwellers and should not be of problem due to the strong sponsorship the quality of the building and its amenities.
The remaining exposure.
In this principal and interest deferrals is.
The $13 million, which is made up of 18 loans for an average loan of approximately 722000 and so at the end of the day, we feel we have the.
Great handle on the exposure of the $60 million of principal and interest of the problem. There's a lot of discussion of what's going on in Manhattan.
And then that the deferral.
Portfolio on that Manhattan exposures, mainly in the hotel sector for $196 million of the total 300 of $67 million that we have in the Manhattan.
Area.
All of the loans at the hotel sector and in Manhattan on paying the interest and.
Showing improving trends.
The hotels of 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 the multifamily and CRE for $88 million and $38 million.
Respectively.
Have good sponsorship and improving operations and do not show any major issues at this time.
As I mentioned early on credit at the first line teams have the meeting on a weekly basis discuss the progress of the deferral of the portfolio and other trends in the total commercial.
Actual portfolio.
Last week, we met for several hours to discuss our office portfolio, where we reviewed the top 25 loans for approximately 600 of $20 billion.
All of these loans are current as the interest and principal and there was nothing discussed that would set an awful lot of balance 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 at 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.
Credit for.
Risk with the storm reserves low delinquency trends and our strong credit and monitoring team in place to manage us through this pandemic.
With respect of loan growth of commercial loans grew 1.3 per cent in the quarter compared to a reduction in loans.
Just quick 4 per cent and the 2021st quarter.
The first quarter is usually a slower quarter for us and we are optimistic of the activity we're 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.
Line, which totals over $3.3 billion and compares to $1.5 billion last year at this time and $2.2 billion at year end.
We believe we can grow loans at a 7% to 8 maybe 9% pace for 2021.
On the deposit front deposits were down 5.
<unk> hundred $34 million, which related to planned runoff 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.
Non interest deposits, increasing 174 million or for 0.8 per cent for the quarter.
Non interest deposits now comprise 20% of deposits, which is the first for the company.
We are seeing great activity from the investments we have made in 2019 and 2020.
With with our business lenders.
The 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 of loans and $600 million in deposits.
We recently agreed to a marketing partnership.
'twenty.
With the Thunder of local minor league baseball team and trend in the Berkshire market and have been active in coordinating activities with the retail of business teams in that market.
It is of great opportunity for us and we will expand our brand with 2 additional branches in Bucks County.
In Pennsylvania.
Dania.
Going into the year 2020, 1 we have strong momentum and continue to see great opportunities in the marketplace.
Larger banks are not showing the love of paying attention to the middle market Darden disband Devin.
It takes a bank the.
On the shape of the long view.
Whose management teams of local and that's access to decision makers and we will be there for their customers and the prospects during these difficult times.
We are on that we all of that community Bank and we are looking forward to a record year in 2021.
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 1 of the difference of 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.
The diluted share.
Our net interest margin dropped 8 basis points quarter over quarter to 2.9% with prepayment fees driving the decline for.
The coordinated interest margin, however, expanded 2 basis points quarter over quarter as we continue to benefit from declining deposit costs.
On an encouraging note we have seen prepayments.
Payment 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, non interest.
Increased $5.3 million or 36% driven by mortgage banking swap piece and wealth advisory fees.
Total noninterest expenses totaled the $104 million for the first quarter of decrease of $38.5 million quarter over quarter. The.
The decrease was driven by $23 million.
In 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.
Of course, compared to a negative $2.7 million.
The release for the fourth quarter. The decrease was primarily driven by an improving economic forecast of net loan recoveries in the quarter of $2 million.
The total loan balances were flat quarter over quarter, while C&I loans grew $66.5 million or 2% quarter.
Over a quarter.
Total deposits were down $534 million quarter over quarter, driven by the intentional run off of brokered deposits, while non interest bearing deposits were up $174 million or 5% quarter over quarter.
Our percentage of noninterest bearing deposits to total deposits improved.
Quarter of 20% at March 31, compared to 13% a year ago.
Asset quality liquidity and capital continued to remain in a solid position at quarter end non.
Non accrual loans represented 4% of total loans at March 31, compared to 0.51%.
Sent at December 31, while our allowance for loan losses to loans remained unchanged at $1.44 per cent for.
Common equity tier 1 ratio was 13% at quarter end now I'd like to turn it back over to Kevin for concluding remarks before I open up for questions I just wanted to.
Just give the.
So on the longer view.
On the last 12 months have been an unbelievable year of social unrest and the economic turmoil.
When I look back on the last year I.
I see the bank's leadership team that has grown and confidence of competence.
They've executed through this store as we continue to provide a platform for us.
For personal growth and successful business careers.
There is of 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 is part of our brand to be the different community banks that makes the difference.
This is.
The new trend to our bank of as part of our DNA.
And with all of 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, we said without words.
And our actions speak volumes of who we.
And what we have 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.
The 42% and new Jersey commercial banks of 58%.
And if you compare it on a return to the national banks during this period the.
The 4 largest national banks, we surpassed the 2 and a half times with that 280% return for investors versus 78%.
<unk> for the large national banks.
We have always taken the long term view something that our society of the government sometimes has difficulty going.
In the words of my predecessor, Bob casual we understand that we can do good and do well.
We recently added 2 new directors to our corporate board and I'd.
Welcome Kevin Wilson drawn on and to our board the.
They both bring a broad range of experience to our team and we are happy to happy to have them.
For the diverse background and experience will make us stronger.
With respect of DNI, We recently held the town Hall meeting with Tom and I, taking questions on how we can create greater.
Greater opportunities for our customers employees vendors and the communities that we serve.
And we are constantly looking forward to better communications and listening Center God gave you 2 years of 1 mouth for a reason.
I'm happy to report that on our work force is 56%.
I'd like to weighted 41% diverse and our emphasis of 42% women and 28% of diverse.
And that's the most senior level the EVP level, it's 24% women at 6% diverse.
And of the journeys the destination and.
And we are on a journey of continuous improvement Kevin.
Getting better every day I don't want to be better than that but I want to be better than it was yesterday.
And getting better and it being a servant leader who serves and on our leadership teams continues to be selfish south with <unk>.
In the air service to others.
We have accomplished a lot in the past 15 months.
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 when I was 1 of 5 employees at the bank.
Let's be faithful and not fearful.
The future looks bright there.
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.
To hear from you. Thank you.
Yeah.
We will now begin the question and answer session.
To ask a question you May press Star then 1 on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys.
And the time. Good question has been addressed and you would like to withdraw your question. Please press Star then 2.
At this time, we will pause momentarily to assemble our roster.
[noise].
[noise]. That's the question comes from Jared Shaw with Wells Fargo Securities.
Please go ahead.
Hey, good morning, guys.
Good morning.
Yeah, maybe starting off on the on the funding side with the run off of that higher cost of funding.
Your loan to deposit ratios, so pretty high should we expect you know where you're seeing good trends sort of in the low.
The DDA grew.
Growth that that that should be sustainable and that we should see.
Maybe a faster.
A piece of deposit growth for.
Fear or how should we be thinking about funding and.
Deposit growth and by the loan growth expectations.
Thank you Jerry and good morning, I think that you will continue to see an increase in our funding on the deposit side.
Our noninterest bearing has been.
Nice surprise for us.
This quarter I think Sean mentioned net of about $180 million in noninterest bearing growth total deposit growth, though was about $350 million in the branches. So I think you know when you when you compare that 2 of 1 billion.
Growth in 2020, I think we are on pace to 2 to match what we did in 2020.
Okay.
And then when do you when you look at the the loan growth outlook.
Are we you know where we.
2 categories should we see that any of what's your appetite I guess for taking on additional New York City CRE at this point is pricing.
Improved at all or has it gotten tighter I guess what what.
What does the growth mix outlook look like.
Yes.
The way the pipeline is broken out I mean the.
Where are your pipeline is about 2.4 billion in the C&I pipeline is just about 900 million that equates to the $3.3 billion, Kevin referred to earlier there.
There is you know we have seen some manhattan business pick up, especially on the CRE side and on the multifamily side.
Right.
You know 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.
The risk mitigation in the CRE space, we're doing now we're doing that in the form of Pge's, we're doing that in the form of.
I'm asking customers to put.
6 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.
We're not we're not running away from Manhattan at this point, we're simply being more cautious as we make goes allowance.
Yeah.
When you look at alone that comes in from Manhattan, You. Obviously have to the first question. You ask is how is how were you impacted during the Covid crisis and then.
You work from there.
Okay. So then just finally for me you know, we're seeing some sort.
So the deal activity in your markets over the last few weeks, how do you think that impacts you.
Your ability I guess to potentially higher some people or target some customers.
Maybe you Werent able to get before and then what's your outlook in terms of a participant in the M&A environment at this point.
I think.
From the perspective of.
Competitive forces I think youre exactly right I mean, while a number of these institutions are.
Doing the 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 2 to capture some additional business and our market share.
Starting to see a little bit of that already.
It honestly.
As far as the deal activity I mean, you know clearly I see and I think we agree is the management team.
There is a compelling reason to do deals like that in terms of.
Just being bigger.
Adding more funds to contribute.
<unk> 2 technology investments and.
Just being more diversified so.
As far as the institutions that I know personally the those in our area.
Gratulate them on the deals I thought they were good deals for both institutions and.
I wish them well.
Yeah, Jared I think the opportunities.
Strategic opportunities.
All of these be evaluated we've always said that.
And you know the core pillars of organic growth M&A.
As either a buyer or a strategic partnership.
Dividends and stock buybacks and certainly those things.
While the pillars of our strategy moving forward.
There is a lot of chatter with talk of pill.
A lot of people a lot of opportunities out there.
And I think it's the it's an exciting time, but either way.
The long term view is we're in a very good position at either.
The way there are great opportunities ahead of us.
Thank you appreciate it.
Our next question comes from Mark Kevin with Piper Sandler.
Please go ahead.
Hey, guys Good Inc.
Kevin I love the uplifting comments.
Okay 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 of its mark.
Okay.
And then secondly on the expense front you guys did a nice job managing costs this quarter I wondered if you.
Could the Sean maybe share your outlook for expenses for the next quarter or 2.
Yes, I think we should be on a very good spot mark there.
Provided of guide I believe it was around $425 million and we're doing a bit better than that.
Next quarter I expect it to.
Similar spot Berkshire, the Berkshire transaction when it closes will add some additional cost when that comes in but as Dominic mentioned.
Probably not not until sometime in the second quarter. So I was just looking for the second quarter expenses, probably in the very similar spot that they are on today.
Okay and then.
Given the increase did you the date for the business are you guys thinking more about being proactive with branch consolidations in the rest of your network.
We are a market.
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 9th and so.
I think that we need to continue to evaluate those opportunities we continue to develop online products, which.
Net debt technology and that progress has been moving.
Moving along nicely and I think that will be of 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.
It's true.
Sean I just wanted to share I heard of it right. The the prepay income through April so far.
Is that for $5 million.
That's correct for $5 million in the month of April.
Okay. So youre on it.
Youre on pace.
The.
The.
The above the fourth quarter level then.
Yeah, I wouldn't go that far Steve you know I think.
The fourth quarter was elevated as far as our guidance for NIM that we gave for the full year of the 3% area, we were modeling in less than less.
Less than where we were in the fourth quarter.
Lee.
For our budget was for $5 million of prepayment fees per quarter built into our budget and built into our guidance.
But we are seeing a nice rebound there we do expect the marching of pop back up maybe 8 to 10 basis points in the second quarter.
Okay.
Yeah, usually of seasonal in the fourth quarter as you know because of tax for using 10.31 exchange whatever it might be this usually prepayments of our highest fourth quarter.
Right right makes sense.
So I guess, maybe if we just drill down on just the loan yields.
If we weren't.
The strip now just the prepay income.
I don't know if my calculation is right, but I'm getting a core.
Your core loan yield down around 13 basis points of is that sounds right. So I'm just wondering if maybe just.
Kind of explain what the dynamics were.
But the core loan yield ex.
The prepay income.
[noise] cause he Steve.
Steve I think the best way to try to answer that question is just to go through.
The average coupons that were see based on the categories.
For major categories, you know when we look.
Look at resi loans these days, whereas the loans are coming on the balance sheet and just you know probably around 3%.
Put them right. There you know multifamily is coming on you know somewhere between 3 and <unk> $3.125, and $3.20.
CRE is coming on at about free in a quarter.
Quarter, 3 and 3 eights and then C&I.
As you know has become more competitive, especially here in this market and those yields are coming in somewhere between 3 and 3 eighths and 3 and 3 quarters. So.
Obviously.
You know the interest rate environment has benefited us on the liability side, but clearly it's having an impact on the asset side too. So I hope that answers your question.
Steve and Sean your math is approximately correct and.
Just to add on what.
Some of the most compression is in our residential portfolio.
The current market rates are around the 3% area our portfolio.
Is yielding on the residential side.
Was yielding higher than that and so it's kind of coming back down to the norm. So.
We price probably the spot where we're seeing the most compression.
Got it so I guess if rates are static I guess would you.
We're kind of just be around this level on the core loan yields.
Yes, I think that's.
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.
Got it Okay and then just last 1 for me just on.
The.
Your borrowings.
You have.
Youre planning on prepaid 250 million concurrent with the Berkshire deal.
This quarter so for.
And you still have as of right now about $3.6 billion bonds what are your thoughts about.
Doing more prepayments given that there.
Now over 200 basis.
Prince.
Yeah, you know I'm Steve.
Obviously, we're looking at that you know as you point out we you know we have the $3.5 billion of so.
At over 2%, so there's an opportunity to.
To pick up some NIM, thereby.
If I frankly.
This is <unk> capital by.
Paying the prepayment fees.
I'll look at that you know we've been talking about doing a larger trade than the 1 that we did.
That we projected for the Berkshire transaction and so you know just given the Berkshire transaction, we may up.
We burn we made super size, if you will the the.
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.
Next question coming from the 1 off.
Kevin.
Okay.
Your line is open.
We've had the question.
You're not coming through very clearly whoever that it 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.
It might come on.
What are the.
The first you can just expand a little bit more on on the residential.
Residential mortgage gain on sale of pipeline, sorry, if I missed it.
Is it fair to think that that number of could bounce back a little on the second quarter before normalizing, presumably over the back half of the year.
Talking about the income that we generate the mortgage banking income.
Yes.
And on sale of correct, yes, Mike we see activity has slowed on the mortgage banking front.
Front, and we're seeing that we think that that number will trend down.
For the next quarter the matter of fact, when we did our budgets we actually.
The projected that that number will come down in 2021, So I think.
The answer is yes.
That number.
We will continue to trend down as we head on.
And to the rest of the year.
Helpful. Thanks.
Thanks, Amit sorry go ahead, Mike So it's Sean I, just wanted to add though that it's on.
Nick mentioned, we are expecting that the trend down.
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 of gain and offset the swap income as we go throughout the year.
Got it.
Thanks for that it's been the commentary on it and then just lastly, the low 79%.
The strong.
How do we balance kind of the provision expense of here between the improving economic conditions, but the clearly the accelerating loan growth you guys on any kind of initial thoughts on on that.
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 has been a little slower to improve for.
From a modeling perspective, and a forecasting perspective than some other parts of the country, but we do believe it's trending in the right direction and we keep on the current path that will mean, maybe towards when we get.
The back half of the year, there could be more release.
Coming in in the provision line item.
Based on their behalf.
And the third but hopefully we'll have some loan growth that will offset the upset that released so we're looking for us.
The only.
Neither of them very hard.
Afterwards.
Alright. Thank you guys for taking my questions I appreciate it.
Our next question is from Laurie Hunsicker with Compass point.
Please go ahead.
Yeah, Hi, good morning can you hear me now.
We can hi, Laurie okay, great. Thanks, sorry, I don't know what I did of your of your 580.
Towards clean of deferrals, how much of that is is New York City.
341, I believe.
And then would you just remind us of that on how much is is multifamily in New York and how much of his office in New York.
[noise].
2 months.
The 1 SEC.
Okay.
What are you talking about New York City, specifically right in Manhattan, The Manhattan Borough of Yeah, exactly New York City, the checking and maybe along those lines can you just of your billion to an office how much of that.
For instance, in New York City is low.
And if we don't have these I can follow up do off line. They will follow up with the office and the in Manhattan.
$88 million multifamily CRE is $38 million.
Lodging is the $195 million.
Okay perfect.
Okay, C&I loans as Europe.
Yeah, Yeah, okay, great and and the buybacks I have not seen them. Obviously, they were a little slower this quarter 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.
Where tangible book value.
We of how tangible book value would compare it to where we're trading on a book value basis. So.
We will continue to evaluate that.
The stock.
Got up there of around $15. So as I said it just gave us reason to pause and just monitor how.
The stable that would be going forward.
Got it Okay and then just last question going going back to what's there. That's true can you help us think of little bit.
About M&A, obviously, it's been a year since we thought of you closed your last deal can you help us think about as you as you look forward, whether it's the strategic partnership of you're a buyer of your on the other side of it how you think about asset size targets, what makes sense, what the deal how big would you go how do you think about it in Maui.
How do all of those things play into the very exciting M&A landscape, we're seeing at the moment. Thanks for.
I would say yes.
Yes, certainly.
Any strategic discussions.
You know from.
From a L M O way too I mean, berkshires of $600 million deposit franchise.
How do the physician so if it fits in with the strategy.
At the last 2 transactions Berkshares on 1 side of our franchise gold coast was on the east side of our franchise and I think we bring a you know we closed the Berkshire the deal on April 3rd a year ago.
Yeah on the hydro.
Academic we had as you know.
Get out there of change all of the signage when we were worried about the police shutting us down from being outside during that period of time and both of those transactions of a very promising to us they were a little on the small size. It takes a lot of energy I think you know that 715 billion dollar of area would be.
Great.
Lock on type of transaction to do but we're open and we'll do it you know whatever is necessary to enhance the shareholder the value of the company.
There are a lot of discussions going on and.
You know we are certainly looking at a lot of opportunities in the marketplace.
Great. Thanks for taking my question.
Hey, Lori just on the on the numbers of it shut them earlier.
Yes.
The total of exposure in Manhattan is 367 million of which the hotel sector is 196.
The family of CRE.
V the $8 million and 38 million respectively.
As I mentioned earlier pretty good sponsorship improving operations.
Great.
They're all paying the interest to I want to emphasize that there's no principal and interest of problems, they're all paying us interest.
Okay.
For us.
Our next question comes from Matthew Breese with Stephens. Please go ahead.
Morning.
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 the your kind of.
On.
It was for that metric in the the cadence of expansion from here.
Yeah.
[laughter], Matt I think that will continue to see benefit from falling rates, especially in our deposit portfolio of like for example, we still have some room to go in on government banking.
Banking portfolio, we're working on that we still have a.
Number of.
The C D buckets.
Got on maturing through the year, and we will see some benefit from that.
So I think the core NIM will you know continue to expand I know the there was.
A lot of focus on the overall NIM and per.
Prepayment fees, but you know that we we just look at that as being seasonal so, but I think you're right focusing on the core NIM is.
Is it reflective of the changes that we're making in our balance sheet, where you know ramsey and multi falling and C&I and CRE.
We are going up and seat 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 2 pieces of <unk>.
Distillation and the.
State of New York, they're talking about this eviction.
C of Rudolf good cause.
That's 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 these pieces of legislation of impacting commercial real estate and multifamily and how would you kind of assess the the loan growth impact potential.
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. So it's certainly not growth for economic development for the productivity.
It seems like everything is going to be free and.
So I certainly don't think it's it's.
It's good for investment in the country.
Have a tendency to be.
Listen to Fox business, a little bit too much on.
I certainly think that the the.
It's certainly going to of a negative impact on business.
Business investment going forward.
So, but I think getting it through and putting in an operation.
Don't want to kill the bite the hand of feature and you know the.
Commercial real estate, especially on the multifamily sector is the very strong sector on pays a lot of taxes and they shouldn't.
I look at it.
<unk> bite the hand of feed the as far as generating tax revenues and the.
And the city and the state.
Yes.
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.
Senior all of our shareholders meeting in May and will be of virtual meeting again in the.
I think.
For 2020 ones can be of very strong.
On year for the company.
We've had 3 quarters of double digit return on equity and that's probably a record for the company the last 9 months.
And I think it will continue throughout 2021. So thank you for your participation today of great day, and enjoying the Springer B well.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.