Q4 2021 Peoples Bancorp Inc Earnings Call
Good morning, and welcome to the Peoples Bancorp, Inc. Conference call. My name is Eileen and I will be your conference facilitator today's call will cover a discussion of the results of operations for the quarterly period in fiscal year ended December 31 2021.
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After the Speakers' remarks, there will be a question and answers period. If you would like to ask a question. During this time simply press Star then one on your telephone keypad and questions will be taken in the order they are received.
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Please be advised that the commentary in this call will contain projections or other forward looking statements regarding peoples' future financial performance or future events.
These statements are based on management's current expectations.
The statements in this call, which are not historical fact are forward looking statements and involve a number of risks and uncertainties detailed in Peoples' Securities and Exchange Commission filings.
<unk> believes these forward looking statements made during the call are based on reasonable assumptions within the bounds of their knowledge of peoples business and operations.
However, it is possible actual results may differ materially from these forward looking statements.
<unk> disclaims any responsibility to update these forward looking statements. After this call except as may be required by applicable legal requirements.
People sports quarter of 2021 earnings release was issued this morning and is available at peoples Bancorp Dot com under Investor Relations.
A reconciliation of the non-GAAP financial measures discussed during this call to the most directly comparable GAAP financial measures is included at the end of the earnings release.
This call will include about 20 to 25 minutes of prepared commentary followed by a question and answer period, which I will facilitate.
Archived webcast of this call will be available on peoples Bancorp Dot com in the Investor Relations section for one year.
Participants in today's call will be Chuck for Lariscy, President and Chief Executive Officer, and Katie Bailey, Chief Financial Officer, and Treasurer, and each will be available for questions. Following opening statements.
Mr. <unk> you may begin your conference.
Thank you Lee good morning, everyone. Thank you for joining us.
Started to report our earnings for the fourth quarter, which included the full quarter impact of Premier Financial Bancorp, Inc. Acquisition, we have many positives including record earnings for the quarter at 27 $9 million net interest income grew 28% compared to the linked quarter.
And was up 24% for the full year compared to 2020.
Our fee based income improved 13% compared to the linked quarter and 8% compared to the full year of 2020.
Total revenue increased 24% compared to the linked quarter, 43% compared to the fourth quarter of 2020, and 19% compared to the full year of 2020.
Our cost of funds declined to 17 basis points for the fourth quarter, which is our best ever.
The efficiency ratio, both reported and adjusted for noncore items.
Klein compared to the linked quarter.
Considerable loan growth in our core portfolio, along with our acquired businesses.
Demand deposits stood at 47, 9% of total deposits and all time high.
Noninterest bearing deposits comprise 28% of our total deposits at December 30.
2021.
And we met our year end target of 90% forgiveness of SBA PPP loans originated by people.
To summarize our financial performance, we reported earnings of 99 cents per diluted share for the fourth quarter and net income of $47 7 million or $2 16 per diluted share for the full year.
Our results were positively impacted by four cents per diluted share for the fourth quarter due to the gain of approximately $60 million of loans acquired from Premier that we sold at par.
This loan sale represented an opportunity to improve credit and concentration metrics.
Of this $60 million, we sold $52 million was considered criticized loans 19.
$19 million of the sold loans fell within hospitality category reductions of which we see as an opportunity to reinvest in other areas.
Sale will reduce our revenue by around $3 million annually, but the upgrades in credit and segment concentration are more favorable to our shareholders going forward.
As you have seen over the past five years in our investor deck, our criticized and classified portfolios have been below the Midwest average for several years.
We believe that this sale of loans is a move in maintaining a very high credit quality standards, while also improving our capital ratios.
Acquisition related costs reduced diluted EPS by <unk> <unk> for the fourth quarter and 76 for 2021.
All COVID-19 related expenses negatively impacted diluted EPS by <unk> <unk> for the fourth quarter and four <unk> for the year.
Additionally, we had a revision in the expenses associated with the renegotiation of our core processing and digital banking contracts, which resulted in a benefit of <unk> <unk> per diluted share for the fourth quarter.
For the fourth quarter, we leased nearly $8 million and provision for credit losses, which positively impacted diluted EPS by <unk> 21.
This was driven by the $60 million in loans, we sold during the quarter for which we released around $6 million of related allowance, reducing provision for credit losses.
<unk> of the economic forecast improved relative to the linked quarter, whether reducing the provision for credit losses.
We continue to take a conservative approach to the assumptions within our seasonal model and work to reflect what we believe are the most reasonable economic indicators.
At year end, our allowance for credit losses comprised one 5% of total loans and we believe there may be opportunities for future reductions.
Compared to the end of the third quarter, our loan balances declined $12 million.
As I mentioned earlier, we completed the sale of about $60 million of loan balances and we also received $49 million in PPP forgiveness payments during the fourth quarter.
Excluding the loan sale and PPP balances loan growth was $95 million or nearly 9% annualized compared to September 32021.
We had over a $5 billion of commercial loans originated during 2021, which is over $100 million more than our best previous year our commercial.
Industrial loans led the increase with $82 million and growth of 45% annualized excluding PPP loans and loans sold.
At the same time, our construction balances grew $35 million.
80% annualized in our leasing business added $11 million or 40% annualized.
As we have noted in previous earnings call. The line of credit utilization rates have remained below historic levels since the beginning of the pandemic.
During the fourth quarter, we grew our commitment on the commercial lines of credit by $50 million and expanded our commercial lines of credit utilization rate from 34% at the end of September to 39% at year end.
Compared to December 31, 2020, all loan balances grew 7%, excluding premier ETP and lease balances.
At year end, our PPP loans stood at 87 million, which included $23 million acquired from Premier.
As far as PPP forgiveness, we are over 90% forgiveness of all PPP loans originated by people.
While it is early in the first quarter, we expect our loan growth for the first quarter of 2022 to be in the mid to high single digits on an annualized basis.
From a credit quality perspective, many of our metrics improved compared to the linked quarter end.
Our quarterly annualized net charge off rate improved seven basis points compared to the linked quarter and totaled 11 basis points for the fourth quarter.
Our nonperforming assets declined.
$5 million or 9% compared to the linked quarter, while our criticized and classified loan balances also decreased.
The current portion of the loan portfolio stood at 98, 8% compared to 98, 9% at September 30.
For the full year of 2021 on net charge off rate was 13 basis points, an increase compared to five basis points for 2020.
This increase was driven by net charge offs from the new leasing portfolio, along with recoveries recognized during 2020, lowering the net charge off rate for that year.
Our nonperforming assets declined $5 million compared to the linked quarter.
And while our criticized and classified loans were down, 17% and 25% respectively over the same period.
As I mentioned earlier the loan sale improved these metrics during the fourth quarter.
As a preferred SBA lender, we are proud to report that we ranked in the top five in Ohio Top 10 in West, Virginia, and top 15% nationally in terms of SBA <unk> approved for the fiscal year ending September 32021.
We are also working to grow our business and the premier footprint.
Our teams have successfully added new business and continued to have strong referral activity.
We have had success introducing insurance embezzlement investment Treasury management indirect lending and other opportunities that were not previously available to premier clients.
Since the acquisition, we've closed business in each of these areas and expect growth in each of our businesses going forward.
As we have done over the past two years, we are trying to be proactive in reducing the exposure to COVID-19 for both our associates and clients.
At this time, 80% of our associates are fully vaccinated.
As an employer we were recognized by the American banker as one of the best banks to work for in 2021 of which only 90 banks nationwide were included on the list and only 12 of these banks, where our size or larger.
We continue to make our associates, a high priority and a positive culture has been a key to our various accomplishments as.
As we have done on occasion previously we granted shares to our associates, who were up to the assistant Vice president level during the fourth quarter of 2021.
This comes at a cost we value the opportunity to make our associates shareholders of the company and provide them with an ownership stake.
To reward their efforts and to align their interest with the success of the organization.
In an effort to help our local communities. Our associates have collectively donated 117000 to local food banks during 2021 and a total of 233000 since the beginning of the pandemic.
Our commitment to our communities as an organization starts with our associates, who take deep pride in helping others and taking care of their community.
Additionally, in the wake of the tornadoes that impacted Kentucky in recent months.
Foundation, along with our employees and third party partners donated nearly 53000 to immediate relief efforts associated with communities impacted by the tornadoes I will now turn the call over to Katy for additional details around our financial performance.
Thank you Chuck.
For the fourth quarter, our net interest income improved by 28% compared to the linked quarter, reflecting a full quarter impact of the premier acquisition.
At the same time, we have some noise in our net interest margin, which was 13 basis points lower than the linked quarter and was driven by higher high cash balances, which were at an average balance of $350 million for the quarter and negatively impacted margin by 19 basis points.
We anticipate our cash balances will continue to be inflated for the foreseeable future as we continue to see strong core deposit growth trends and seasonal governmental deposit increases will also put upward pressure on cash balances.
We also had lower lease accretion income, which declined $676000 compared to the third quarter driving down our lease yield while reducing net interest margin by four basis points.
For the fourth quarter accretion income net of amortization expense from acquisitions added nine basis points to net interest margin, while PPP income provided seven basis points.
Compared to the linked quarter, we had an 11 basis point decline in our net interest margin due to the lower PPP income as we had fewer loans forgiven during the quarter and therefore less income on deferred fees and costs recognized.
We continue to be proactive in managing our funding costs as we have been throughout the pandemic, which declined another six basis points compared to the linked quarter.
Compared to the fourth quarter of 2020, our net interest income grew 59%, which was driven by the acquired lease and premier portfolio.
Our net interest margin grew 24 basis points compared to the prior year quarter.
The leasing business added 23 basis points of margin compared to the fourth quarter 2020, while we cut our funding costs nearly in half, which was offset by lower PPP income.
Again cash was the drag on the margin for the fourth quarter and reduced margin by 18 basis points compared to six basis points for the fourth quarter of 2020.
For the full year of 2021 net interest income grew 24% as we completed the lease leasing and premier acquisitions, coupled with the full year impact of the premium finance acquisition and our own core growth.
Our net interest margin expanded 15 basis points compared to 2020.
We actively managed our funding cost which were down 18 basis points.
Positive impact was muted by our high cash balances, which reduced margin by 15 basis points for 2021 compared to seven basis points for 2020.
For the year PPP income added 15 basis points of margin compared to two basis points for 2020, well the leasing portfolio added 21 basis points during 2021.
For the quarter, our reported efficiency ratio declined significantly as we experienced much lower acquisition related expenses compared to the linked quarter.
When adjusted for noncore items, our adjusted efficiency ratio improved to 61, 6% compared to 63, 9%.
The linked quarter.
We expect to continue to see this metric declined as we reap the benefits of our recent acquisition and associated cost savings.
We continue to focus on our fee based businesses as we benefit from diversified revenue sources of revenue.
Paired to the linked quarter, our fee based income grew $2 2 million or 13%.
This was driven higher by our higher increased electronic banking income and deposit account service charges.
Both of which were bolstered by the Premier acquisition.
We have also seen some growth in recent periods in our deposit account service charges, excluding the acquired accounts.
Fee based income grew 10 grew 10% compared to the fourth quarter of 2020, which was positive positively impacted by electronic banking income and deposit account service charges.
We also benefited from higher income from our trust and investment and insurance Division, which were up 16% and 7% respectively.
For the full year, our fee based income grew 8%.
Higher electronic banking banking trust and investment and insurance income drove much of the increase.
These were partially offset by reductions in mortgage banking income and commercial swap fee income both of which were impacted by the interest rate environment and client demand.
Moving onto our expenses.
Total noninterest expense was down 17% compared to the linked quarter, mostly due to the acquisition related expenses recognized last quarter.
At the same time, our run rate of expenses was higher due to the Premier acquisition.
Acquisition, and COVID-19 related expenses totaled $1 $5 million for the fourth quarter.
Professional fees also declined to the third quarter recognition of the expense associated with our core comps are contract negotiations for our core processing and digital banking contract.
Total noninterest expense increased 44% compared to the prior year quarter and was up in nearly every category due to our recent acquisition and associated ongoing costs.
For the full year, our total noninterest expense grew 36% and was driven by the acquisition related expenses of $21 4 million and COVID-19 related expenses of $1 2 million.
Coupled with the associated ongoing costs of our recent acquisition.
From a balance sheet perspective, our investments grew over $100 million compared to the linked quarter.
At December 31, our investments to total assets ratio grew 12% with 24% and grew compared to the linked quarter end.
We've reinvested cash from securities that we acquired from Premier and solidly in the third quarter.
Our total deposits grew by $31 million.
Most of which was due to an influx of noninterest bearing deposits grew $82 million.
The increase was partially offset by reductions in our governmental deposits, which were seasonally higher last quarter, along with lower retail Cds.
Excluding acquired deposits are core deposit growth was 11% annualized compared to the linked quarter end and was up 5% from December 30, 31 2020.
During the fourth quarter, our capital ratios continued to improve and were positively impacted by our higher net income.
Our common equity tier one ratio was 12, 7% our tier one ratio was 13% and our total risk based capital ratio was 14, 1%.
As we had anticipated our leverage ratio declined to eight 8% as it was inflated last quarter due to a full court.
Capital impact of the shares issued to acquire Premier well, our average assets only reflected a half months of the acquired asset.
Our tangible equity to tangible assets ratio improved to eight 1% at December 31, 2021 and continues to be impacted by.
The remaining PPP loans, which negatively impacted this ratio by 11 basis points at year end.
Our book value per share improved 44, or 6% annualized compared to the linked quarter and while our tangible book value per share grew 41 or 9% annualized over the same period.
I will now turn the call back to Chuck for his final comments.
Katy I am more optimistic about our business now that I have been.
At any time during my nearly 11 years with people.
Based on feedback both internally and externally we are doing well servicing our clients taking care of our communities and providing a topnotch workplace.
Our associates are success not only comes from our financial performance, but from the impact we make throughout our organization and helping our associates and making a meaningful contribution to our communities. We completed the business the biggest acquisition in our company's history during 2021 and.
And also brought in a high yielding experienced leasing business.
We're benefiting from our acquisitions and already seeing success as we expand new services to our new clients.
We've experienced teams in place who worked well together to focus on doing what's best for our clients throughout our footprint.
Our market teams are happy to share clients between lines of business, creating an active pipeline of referrals to grow not only our banking income, but also our fee based income.
I would also like to note as we customarily do that our first quarter expenses are generally higher due to a few expenses that are typically expected to recognize during the first quarter, which include employer contributions to health savings accounts.
<unk> based compensation expense for certain employees.
Roll taxes and annual Merit increases.
We also recognized insurance contingent income annually during the first quarter of the year, which will benefit our fee based income.
As far as our performance for 2022, we gave some early guidance last quarter, which excluded non core items and I would like to refresh.
We expect loan growth to be between six and 8% excluding PPP loan.
We anticipate a stabilization in credit cost as the economy becomes less impacted by the pandemic.
We also believe our annual gross charge off rates in future periods will.
We will return to a more historic level, including leases will be between 25% to 40 basis points as a percent of balances.
We expect net interest margin for the full year of 2022 of between three five and three 6%, which does not include any anticipated rate hike.
We expect margin to increase throughout the year with Q1 coming in below this range.
Fee based income growth is expected to be up between 14, and 16% compared to 2021.
We anticipate the quarterly total noninterest expense will be between 46 and $48 million with the exception of the first quarter, which is typically higher and we expect that our efficiency ratio would be in the high fifty's as.
As far as our performance for 2022.
<unk> to reap the benefits of our collaboration between lines of business and look for the opportunity for interest rates to rise, which will positively impact our net interest income and margin.
As always we continue to actively seek opportunities for acquisitions are fee based and specialty finance businesses, while we continue to absorb almost recent bank acquisitions.
This concludes our commentary and we will open the call for questions. Once again. This is Chuck <unk> and joining me for the Q&A session is 80 Bailey, our Chief Financial Officer.
I'll now turn the call back into the hands of our facilitator.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys.
Withdraw your question. Please press Star then two.
Our first question today comes from Scott <unk> with Piper Sandler.
Hey, Chuck and Kelly good morning, and thanks for taking the question.
Morning, Scott.
Hi, I was hoping we could start on the margin either chocolate cake. If you just maybe from some of the nuances regarding how the margin advances from the fourth quarter is $3 36 up to that $3 50 to $3 60 range as the year progresses here what are you thinking on excess liquidity deployment deposit betas et cetera.
Sure so.
I'll start with <unk>.
North Star leasing we commented inherent had lower accretion income, which I think hit margin about four basis points from the third quarter to the fourth quarter and that was some correction or some cleanup as.
As we finalized the accounting as it relates to Northstar, So and I think we will get some of that back you can see the yield on a year to date basis is closer to the 18% and that portfolio versus the fourth quarter, we printed a little under 16% I think next year, you can expect something closer to the yearly.
<unk> of.
2017% to 18% on that portfolio and then on the cash deployment again, we quoted 18 basis point impact on the fourth quarter for the excess liquidity cash we had anticipated that cash would kind of go down quarter over quarter for the reasons, we noted last quarter, where our seasonal in governmental deposits.
And those dead, but we saw it.
Significant growth in noninterest bearing deposits so.
Assuming some of that cash does get deployed in the loan growth.
And potentially a little in the investment portfolio, but hopefully in the loan growth.
That will help and then some asked as we talked last quarter asset mix shift so.
We will fund some of the loan growth.
Both in leasing and the other businesses with the investment portfolio as we do.
Strive to get that percentage right now, we're sitting at 24% of our.
Assets are in investments, we'd like to get that closer to the range, we've quoted before of 18% to 20%.
Okay. Thank you.
Items.
Yes, that's great.
Thank you Katie.
Additionally, maybe a couple of other margin related to sort of clean up questions here, but sort of a good rule of thumb has regarding how you would think of the margin or NII benefits for each 25 basis point hike from the fed and then the final one is I think last quarter, we were thinking maybe 10% to 15 basis points in purchase accounting accretion this year does that bill.
Roundabouts of where you're thinking.
Sure. So I'll start with the 25 basis point hike.
Quantify that on a pretax basis that impact would be about 1 million and a half on an annual basis. So again.
The forecast is March will be the first time, we see that so we wouldnt get the full year benefit in 'twenty, two but we'd get a large portion of that one and a half I just quoted.
And.
Oh, sorry.
Okay, and then as far as the purchase accounting accretion added nine basis points in.
In the fourth quarter again that was reduced a little bit by the Northstar leasing adjustment that I noted so I think.
The 10 basis point range is a fair estimate for that line as well.
Perfect Alright, Thank you guys very much.
Scott.
Our next question comes from Kenneth Switzerland, K B W.
Hi, How's it going.
Thanks for taking my question.
If I could have one more on kind of the NII and NIM impacts that we're talking about.
What is the kind of breakdown between floating rate and fixed rate among your earning asset portfolio across securities in the loan book.
On the loan portfolio, it's about 50 50.
And on the investment portfolio is largely correct.
Okay, great. Thank you and then if we can move on to the Premier acquisition, you guys talked about how you've had some pretty good revenue opportunities it sounds like.
Across the different business lines offerings, some new products could you talk about that a little bit.
I don't know if youre able to quantify anything yet now that it's closed but if you just kind of talk about how it could.
Maybe provide some upside to 2022.
Well a couple of different thoughts just kind of go through the lines of business on the retail operation.
Did not provide home equity loans I think we've already.
Over a half a million dollars of home equity loans, and I think that number will grow as the employees.
More comfortable with it they didn't have insurance options and they did not have.
Investment options in particular 401, K plan and we have closed some of those already and I think that will accelerate those along.
Lead times in terms of getting.
Getting sales completed so as the time goes on we'll see more and more of that and on commercial.
The largest mcdonalds lender in the state of Ohio and <unk>.
They didn't have any of that opportunity.
Sure.
Deal flow our plan, which is a good business for us is something that they did not have the capability to open and we've already gotten a couple of those two.
To the to.
To the finish line.
Plus the simply just the logic capacity where.
Our house limit is $30 million in there.
There is.
Was quite a bit less and then finally, just the treasury management capabilities.
<unk>.
Much more robust and this is kind of packaged into how we do the things that we do so all of that is just upside gravy for us.
That's awesome. Thanks for the detail that's all from me.
Thank you.
Our next question comes from Bryce Rowe with Husky group.
Thanks, Good morning.
Maybe wanted to follow up on that.
The questions around NIM and asset sensitivity one more for you Kt in terms of the.
The disclosures there in the 10-Q.
You noted what the impact would be from.
An increase by the fed what kind of deposit beta assumption do you have baked into that al.
Yes of course it varies five.
Product, but I would say on average it's about a 25%.
Okay. That's great that's helpful.
And then just around kind of deposit mix.
And obviously you all you all see seasonal flows from time to time with the government government deposits.
Just curious how you are.
How are you.
Now your product offering kind of stacks up your pricing kind of stacked up.
Two two.
Retain.
Deposits across the deposit portfolio.
Do you kind of expected the same level of seasonal inflows.
That you generally see.
From the from the government side of things.
I think on the governmental side, we do expect the same seasonality.
Amped up and it'll be a high point in March and then again in September .
The low point is usually December 31.
Okay great.
And then maybe one more on the guidance I appreciate all the all the updates or the refresh.
You have given here.
The 14% to 16% increase in.
The noninterest income or the fees can you can you talk a little bit about.
Maybe what's driving that.
What what what.
What line items within that within that.
Fee income.
Driving that it seems like.
Certainly a nice number to hit in blood would help drive what helped drive earnings.
Look forward. Thanks.
Sure. So we saw some significant growth well sizable growth in the fourth quarter and again, we will have premier the premier acquisition in there for the full year next year. So that will provide another almost three full quarters.
Incremental to what we had in 2021, so that's some growth both in the electronic banking line item you can think and then the deposit account service charge line as well couple of other things I would note is as it relates to the commercial loan swap fee income that we.
We recorded this year was pretty light for us given the environment.
And so we expect some recovery in that line item and you can look at the past trends where we've been.
<unk> been higher than what we saw this year. The other line. The other item I would note is just the leasing business that we acquired back in April .
There is some opportunity there.
To get some fee income from that and we expect to see some growth. There again, we'll have them for another quarter in their production continues to increase year over year.
The other thing that I would add to that is in 'twenty, one our investment business had growth over 20%, so while 14% to 16% may sound ambitious than it is.
Very much in the realm of possibility.
Okay.
Alright, I'll hop back in the queue. Thanks, a lot. Thank you.
And again, if you do have a question. Please press Star then one.
Our next question comes from Steve Moss with B Riley Securities.
Good morning, Steve.
Maybe just I apologize if I missed it here Chuck but I was just on the loan growth guide of six 8% for the year.
It sounds like to me like a good chunk of it is going to be driven on the commercial side just kind of if you could just go through the <unk>.
Drivers underneath there.
No I think youre right it will be heavily on the commercial including the leasing and the premium finance business. During the course cost of the year.
The consumer side I am hopeful.
Okay cooks up in the second half of the year, but I'm not counting on it at this point in time.
Okay.
Helpful. And then just in terms of maybe just looking at the bigger picture here.
You've closed a couple of deals that you are kind of curious as to what your thoughts are around doing a transaction this year.
Whats the level chatter.
Hearing out there.
Well when you say a transaction.
Okay.
Bank transaction or any transaction.
They are on <unk> line of business, So, yes, I'm not dying to do a bank transaction.
I would love to see US do some insurance transactions investment transaction specialty finance transactions that would be more exciting.
For me, we'd still like to Digest the bank debt.
Acquired that'd be instead.
Wouldn't be surprised if some deal got announced this year, but I do not see us closing a deal a bank deal this year.
I would say the level of chatter.
<unk>.
Modest.
It's.
Relative to different points in time.
But it is.
Ongoing with certain institutions.
I remain optimistic.
Okay.
Alright. Thank you very much appreciate all the color. Thank you thanks, Steve.
Our next question is a follow up from Scott <unk> with Piper Sandler.
Hey, guys. Thanks for taking the follow up.
Wanted to ask on the <unk>.
Loan growth just make sure im sort.
Sort of squaring the circle correctly.
6% to 8% is that off the.
Fourth quarter end of period basis, and does that also sort of absorbed.
$60 million in loan sales in other words would reported or excuse me would underlying growth be stronger than the six 8%.
Or is the 6% to 8% sort of exclusive of the loan sale.
Yes.
Loans were gone from the end of the year balances in the loan sale is already out of the balances okay perfect.
That span from that standpoint.
Alright, perfect. So that's just a clean totally sort of pretty pretty unclear type number that's good okay.
And then Chuck I was hoping.
Imagine, it's sort of it's sort of putting the two together I am guessing there.
Yes.
Some some relationship but.
There was another of your competitors have hired a team away from the legacy Premier maybe you can just.
A thought or two.
Sort of where you are in terms of.
Sort of the lenders that legacy premier sticking around sort of where you are in terms of.
How do you feel about the overall credit quality of that portfolio et cetera.
Yes.
Obviously, when you do a deal you hoped people stick, but that doesn't necessarily always happen.
If we look at the portfolio and the things that we like about it and the things that we don't like about it.
It had a greater concentration of hotels than we would like it.
A lot of specialty real estate are single purpose real estate that we're not particularly filled up and they probably.
We put money out the door more on appraisal values and cash and cash flows, but we may be.
Inclined to so.
SaaS stuff that we're comfortable doing and it's probably better for us and better for them.
<unk> to a comfortable originating that business.
And grateful that they took our portfolio at our I mean anytime you can unload $60 million of assets 52 of which is criticized.
Criticized and classified.
So at par.
It's a pretty good day, so we feel very good about.
Loan sale, we feel very good about the colleagues who are with us and what they can do we feel very good about the associates that were adding and we feel very good about the market opportunity in front of us and as far as the credit quality outlook.
As indicated earlier and comments, we got one 5% reserved against the portfolio and I think that that is.
Hi, and I think youll see that decrease over time. So we're very excited about the improvements in.
All of our credit metrics that we went through.
And we feel really good about it.
Perfect. Okay. Good. Thank you guys very much.
Thanks Scott.
Our next question comes from Daniel Cardenas with Denny I'm Scattergood.
Good morning, guys, Hi, Dan Hi, Dan.
So.
Kind of a quick follow up on the loan sales is that kind of a one and done or should we expect additional <unk>.
Sales.
Going forward.
Yes.
The first loan sale that we've done in the 11 years that I have been here.
If somebody wants to buy.
$60 million 52 of which is criticized and classified.
Paul I'd do it again.
I think thats likely I don't so.
I think we're probably we're probably done but I'll never say never.
Excellent.
Alright, and then in terms of your loan growth outlook, I guess more specifically looking to see if there is any categories of loans that perhaps youre going to try to avoid over the near term.
As you grow that portfolio.
Well I think we'll stick to our disciplines of what we've been.
What we've been doing.
Heavily focused on C&I or CRE stuff is generally multifamily and good.
In good markets.
We like some of the ancillary stuff that we've added like the Mcdonald's franchise business.
But we like the dealer floor plan.
We're comfortable I think that one of the things that distinguishes our.
Our portfolio is the diversification.
Asset classes, and obviously, we bolted on the premium finance and leasing.
I think we're going to stay in the lanes that we're in and just try to get bigger and better.
Okay.
And then as I look at your capital levels.
Nice increase.
Intra quarter basis.
What are your thoughts about capital deployment.
As we look forward.
Hello.
<unk>.
Obviously like the dividend.
We will continue to support the dividend.
Over time.
<unk>.
In terms of buyback.
We kind of look at the buyback as an acquisition in early.
We really focus on what the earn back is in.
Price.
Comfortable buying back shares currently.
And we remain focused on looking at acquisitions.
We're happy to.
C all of the.
Capital levels improving them.
And the tangible book value per share.
Increasing.
Okay, and just to just to reminder, whats left in your current buyback program.
I think it's about $20 million I don't think we went out with a new plan last in January of last year, and we have not used anything under it.
Okay, Great. All my other questions have been asked and answered thanks guys.
Thank you Dan.
At this time there are no further question, Sir do you have any closing remarks.
Yes, I want to thank everyone for joining our call. This morning, please remember to root for the Bengals This weekend.
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