Q4 2021 Eastern Bankshares Inc Earnings Call
Hello, and welcome to Eastern Bancshares, Inc, fourth quarter 2021.
Earnings Conference call. Today's call will include forward looking statements, including statements about eastern speech or financial and operating results outlook business strategy citizens as well as other opportunities and potential risks that management foresees such forward looking statements reflect management's screens.
And that's our beliefs and are subject to known and unknown risks and uncertainties that may cause actual results or the timing of events to differ materially.
Terry Lee from those expressed or implied in such forward looking statements.
Listeners are referred to the disclosures set forth under the caption forward looking statements in the earnings press release as well as the risk factors and other disclosures contained in the company's recent filings with the Securities and Exchange Commission for more information about such risks and uncertainties any forward looking statements made during this.
Calls represents managements views and estimates only as of today, while the company may elect to update forward looking statements at some point in the future. The company specifically disclaims any obligation to do so even if management's views or estimates change and you should not rely on such statements as representing management views as.
As of any date subsequent to today.
During the call. The company will also discuss certain non-GAAP financial measures for a reconciliation of such non-GAAP financial measures to the comparable GAAP figures. Please refer to the company's earnings press release, which can be found at the investor Doc Eastern back Dot com.
Note. This event is being recorded all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time.
Simply press Star followed by the number one on your telephone keypad. If you would like to withdraw your question press. The pound key. Thank you I'd now like to turn the call over to Bob Raiford Chair and CEO . Please go ahead Sir.
Great. Thank you Patricia good morning, everyone and thank you for joining our fourth quarter earnings call with me today is Jim Fitzgerald, our chief administrative officer, and Chief Financial Officer.
We hope your new year is off to a good start and you and your families are safe and doing as well as possible amidst this latest chapter of the pandemic.
Eastern finished the fourth quarter and fiscal year 2021, with strong financial results capping off another milestone year for the company, which we will most remember for the acquisition of century Bank and Trust company by far our largest acquisition to date and one that we believe will help us further enhance our commitment to delivering outstanding customer.
<unk> and provide competitive financial products and services to award winning technology, all while serving as an important resource to our communities.
At more than four times the asset size of any prior transaction. This acquisition was made possible by the completion of our initial public offering only slightly more than a year ago quickly validating our commitment to grow and expand our capacity to better serve our customers.
For our 56000, new customers joining us from century. These benefits have been immediately realize through expanded access to both service locations throughout eastern Massachusetts, and Southern New Hampshire.
Enhanced digital and online tools.
Greater wealth management capabilities, and a suite of insurance offerings like.
Likewise these benefits collectively have enabled us to solidify eastern is the largest community bank headquartered in Massachusetts, increasing our total assets to 24 billion and our deposit share position in the very attractive greater Boston market to four from fifth.
While forming the largest dedicated government banking department headquartered in Massachusetts, and adding expertise and relationships within some of the largest sectors of our regional economy, such as health care and higher education.
We also added 12 net new branch locations, expanding Eastern's branch network to 99 offices, while welcoming 252, new colleagues representing more than 10% of our workforce today.
Most recently, we announced that eastern has entered into an agreement to transfer approximately $500 million and cannabis related and money service business deposit relationships, which were acquired from century to need them back.
Large local mutual Mac.
Although the marijuana industry represents a fast growing industry in Massachusetts, we evaluated it and concluded that this business is not well aligned with our approach to serving our business customers due to the special handling required with meeting the banking needs of cannabis related businesses at this time.
We think that Needham bank has solid capabilities to improve to provide expense extensive service to this important business sector and we applaud the strong commitment they are making to supported.
The successful integration of century represented yet another landmark achievement amidst the ongoing COVID-19, pandemic, which required our teams to virtually worked together almost entirely over the course of seven months. However, this was just the main headline of another landmark year, and which eastern insurance grew.
<unk> closed on two insurance agency acquisitions are 33 and 34 since we entered this business in 2002.
In addition, we ended fiscal year 2021 with record earnings along with strong organic growth in both commercial loans, excluding PPP loans and total deposits as well as new highs in residential mortgage volumes in wealth management sales.
In Eastern benefits group, a division of Eastern Insurance group was ranked by the Boston business Journal as the second largest employee benefits broker in Massachusetts.
Our continued investments in digital and analytical tools for our small business customers earned us multiple accolades during the year, while also continuing to receive among the highest ratings for customer service among banks nationwide.
As another example of our continued focus on improving our service levels through new technology platforms, we contracted with a fintech company called blend to provide an improved digital borrowing experience for our customers and bankers launching an integrated online application platform designed to make the process of getting a home equity line.
Simpler and faster.
This platform has driven a significant improvement in online application completion rates and an increase in their overall home equity line originations by over 20%.
We believe that the continued growth and success of our company provides greater resources to increase the support we provide to our customers. The communities. We serve and our employees are focused it is more important than ever during these challenging times. It also allows us the opportunity to deliver greater value to our shareholders as demonstrated by.
The second increase in our quarterly dividend over the past four quarters, which Jim will discuss later.
In 2021 eastern continued to be an outsized participant in the small business administrations Paycheck protection program with Otis over 6500 loans, the second highest in Massachusetts, increasing our total PPP originations since the beginning of the pandemic to over 15500 loans.
These totals were in addition to being named the number one SBA lender for seven eight loans in Massachusetts for the 13th consecutive year generating twice the number of seven eight loans originated by the four largest banks in the Commonwealth combined.
In an effort to address the lack of affordable housing Easter.
Eastern made a low cost $65 million line of credit to mass housing partnership the single largest loan we've ever originated while increasing our commitment to Massachusetts affordable housing alliances one mortgage program.
Eastern was again ranked among the most charitable companies in Massachusetts, our fifth consecutive year in the top 10 with total donations by the Eastern Bank Foundation exceeding $15 million.
Although most of this continued to support local nonprofits addressing a wide array of community needs. The Eastern Bank Foundation invested an increasing amount with those working to facility greater economic inclusion and mobility in our region.
Most notably eastern led the establishment of the Massachusetts business Coalition for early childhood education, which now includes 83 companies representing over 270000 employees along with another 20 business associations.
In 2021, the foundation increased its community Covid relief with another $3 $4 million designated to support culturally competent outreach and greater vaccine access within our most at risk communities food security and other related COVID-19 support bringing our total contribution.
Addressing pandemic relief to $16 $5 million over the past few years.
We also increased our commitment to advancing ratio and gender equity through the implementation of our road to equity plan designed to drive greater transparency and accountability and faster progress in the recruitment and development of diverse talent, particularly within our senior and executive management ranks. This initiative also includes similar actions.
Measures designed to enhance our products and services for people of color and women within our customer base and to foster greater diversity, among our vendor relationships and charitable grant recipients and for the ninth consecutive year Eastern received a perfect score on the human rights campaign's corporate equality index the nation's foremost.
Asia of LGBTQ, plus workplace equality.
Of course. These many achievements are the result of the hard work and incredible commitment of our 2081 employees.
Many of those who brought our company public in 2020 also played a central role in the century acquisition through subsequent in new work streams.
40% of our colleagues have been in our frontline's everyday in our branches are insurance offices and in other critical functions meeting the needs of our customers while bearing the greatest health risks those working from home are also working hard amidst the disappearing separation between work and home, especially those with child and other care respond.
<unk> abilities, we could never think our colleagues enough for all that they have endured and overcome to support our company our customers and our communities while delivering value to our shareholders. Once again, we thank you for your interest in eastern and now I'll turn things over to Jim for an in depth review of our financial performance.
Great. Thank you Bob and good morning, everyone as Bob mentioned, we had a great milestone in the quarter with the closing and conversion of century in mid November was a significant financial transaction and we are confident we came through the conversion and initial integration and very very good shape. It was a great effort by our all our colleagues, including the former century employees who joined us.
And the entire former team at century.
Conversions and integrations require a lot of energy and focus. So we were very pleased with our with our continued organic growth in loans in Q4, especially commercial loans and the strong results in our fee generating businesses.
We look forward to combining this organic revenue growth with our larger operating platform post conversion.
GAAP net income in Q4 was $35 1 million or <unk> 20 per share capping off a record year of earnings for eastern.
Operating earnings for the quarter, which exclude which primarily excludes century related merger charges were $44 9 million or 26 per share given.
Given the closing with century was a noisy quarter as expected.
We provide detail on the non operating items in the tables at the back of the press release and the presentation and we would encourage everyone to review those disclosures and the reconciliation of non-GAAP earnings.
I will also incorporate some comments on those items in my review.
On the capital management front, we remain very committed to enhancing long term shareholder value.
To that end our board of directors approved a 25% increase in our quarterly dividend to <unk> 10 per share payable on March 15th.
This increase reflects the higher level of earnings from the century transaction and is our second dividend increase since going public.
We also commenced our share repurchase program in Q4 and by the end of the quarter had repurchased one 1 million shares at an average price of $20 42.
Per share excluding commissions.
Book value at December 31 was $18 28 per share and tangible book value was $14 80 per share.
At September 30th book value per share was $18 36 and.
And tangible book value was $16 33.
The reduction in book value per share reflects the increase in retained earnings being offset by reductions in other comprehensive income and the impact of share repurchases the.
The reduction in tangible book value reflects those items plus the goodwill and intangibles created in the century transaction.
We included a roll forward of our tangible equity in appendix II to show the changes from the prior quarter.
The century transaction closed in mid November and change the balance sheet significantly.
From the prior quarter assets increased by $6 1 billion loans increased by $2 8 billion securities by $2 8 billion and deposits increased 6 billion century accounted for most of those increases excluding.
Excluding century, and PPP runoff organic loan growth overall was 6% annualized in the quarter and organic commercial loan growth was 7% annualized we're very pleased with these results acquisitions can be an interruption from business as usual and we were happy to see the same general level of organic growth in these categories as we.
<unk> in the prior quarter.
We also added appendix G to provide the quarterly loan flows to show the impact of century in PPP on our organic loan growth activity.
Deposits increased $6 billion in the quarter century added $6 1 billion of deposits and we experienced some modest run off of higher cost funds post acquisition, including some seasonal declines in municipal deposits.
As we have mentioned, we expect some repositioning of the century funding over the next few quarters and some reduction in overall deposits.
This was always part of our plan to optimize our balance sheet post acquisition and improve improve our overall financial performance. We are pleased with the very nominal increase in our overall cost of funds post acquisition.
For the fourth quarter and the fact that our deposit mix remained very strong at 60% checking products as is outlined in the presentation on page 12.
Asset quality continued to be sound through the fourth quarter as annualized net charge offs were five basis points NPL.
Npls decreased by $7 million and the reserve coverage ratio to nonperforming loans increased from 246% to 280%.
All of the measures were very strong, especially in light of adding $2 9 billion of century loans.
Any of our credit statistics were stronger after the acquisition than they were prior which is a very very good outcome.
Our COVID-19 modifications continued to reduce and ended the quarter at $107 million down from $111 million at September 30th.
We continue to work with all the customers of modified loans and are comfortable with their progress and the terms of the modifications there were no COVID-19 modifications within the century acquired loan portfolio.
For the fourth quarter post acquisition capital remained very strong with a tangible equity to tangible assets ratio of over 12% and our regulatory capital ratios were far above the well capitalized minimums.
I'll now focus on earnings.
Net interest income was $124 6 million on a fully tax equivalent basis for $26 million above the third quarter.
The increase was due in part to an increase of $4 9 million PPP fee recognition compared with the prior quarter and an increase in average earning assets due primarily to the century acquisition.
The net interest margin on a fully tax equivalent basis for the quarter was $2 $5 for essentially the same as Q3's net interest margin of 253.
I will add some comments on the overall purchase accounting impact from the transaction later in my presentation.
We continue to provide a look at the core margin in appendix D to strip out the impact of PPP loans and the excess cash position as you will see the core margin was 245% or nine basis points less than the overall margin.
We expect that with the additional runoff of PPP loans and the further reduction of our cash position in 2022, there will be less of a difference between the core and stated margin than there has been over the last year and a half.
We included an update of our PPP portfolio on page 14 of the presentation at December 31 outstanding PPP loans originated by eastern totaled $267 million.
And included $10 6 million of remaining fees to be recognized.
We expect most of these loans to runoffs in the remaining fees to be recognized in 2022.
Operating noninterest income showed good growth in the quarter and totaled $44 5 million up from $43 million in the third quarter deposit service charges trust fees and debit card fees all had good growth quarter over quarter insurance revenues experienced an expected seasonal decline compared to the third quarter.
Noninterest expense in the quarter was $143 6 million and $110 3 million on an operating basis.
The merger expenses related to century were $30 7 million in the quarter and are outlined in appendix H as we mentioned last quarter. We look forward to leveraging our operating platform post acquisition and are confident that 45% cost savings we outlined at the time of the acquisition will be realized in 2022.
As mentioned earlier asset quality continued to be sound and we had a reserve release of $4 3 million for the fourth quarter compared to a $1 5 million release for the third quarter.
As we have mentioned previously we adopted <unk> as of January one 2022, and I'll provide some insights into our expectations on that later in my remarks.
We had a reduction in a deferred tax valuation allowance in the quarter, which created a tax benefit of $2 9 million in the quarter compared to the $11 $3 million of expense in Q3.
We created the valuation allowance in 2020 after the IPO due to the uncertainty of getting the full deduction for the charitable contribution to the Eastern Bank Foundation.
Our higher level of earnings, including the higher levels anticipated post century allowed us to reduce the valuation allowance.
I wanted to provide some updates on our outlook and some comments on some recent announcements since our last call our expectation of the interest rate environment has changed our most recent forecast expects 325 basis point increases by the fed in 2022.
This improves our net interest income outlook, particularly for the second half of 2022, and we are currently expecting net interest income between $505 to $520 million for the full year, which is up $10 million to $15 million from our prior outlook.
Approximately 40% of our loan portfolio will just immediately with a fed hike, providing an immediate lift asset yields.
But we expect a more significant impact from these rate increases to be felt in 2023.
There's no change in the outlook for noninterest income noninterest expense and our 2022 tax rate from the outlook provided last quarter. We continue to expect non operating noninterest income to be in the range of $180 million to $190 million and noninterest expense to be in the range of 445 to 460 million.
For the full year.
As previously mentioned, we adopted <unk> on January one 2022, and expect the day, one adjustment that will reduce our tangible book value per share by 10 to 15 cents.
The adjustment will flow through retained earnings and includes what is generally referred to as the acquisition double count for the century portfolio.
As mentioned, we commenced our share repurchase program in Q4 <unk>.
Through January 27th we purchased 2 million shares.
At a weighted average price of 20 of approximately $20 70.
Our first priority is to buy shares to offset the dilutive effect of equity grants under our new shareholder approved equity plan, which include a director shares that were granted in Q4 of 2021, and then management awards that we expect to grant later in Q1.
The remaining authority, we have under existing approval is approximately 7 million shares.
We expect future activity to based on market conditions.
We announced earlier this month the transaction with Needham Bank to assume centuries cannabis business. It includes approximately $500 million of deposits and the team, including compliance staff that was dedicated to the business.
There is no deposit premium for the transaction.
Our goals when we announced the century acquisition were to leverage the larger operating platform to improve our overall financial returns cannabis business has a number of complexities and compliance risks that we evaluated and concluded didn't align with our strategy.
We were looking for a home for the business, who would serve our customers well and are very confident that Needham bank, especially with the team that's pointing to join them, we'll do that.
The transaction is pending regulatory approval and we look to close in Q2.
We're very happy with the terms of this transaction.
A few additional comments, we filed an amended 8-K earlier this week that provided additional required information on the century acquisition and related accounting.
There are a few things I would like to point out that are included in the filing the.
The mark to market on the loan portfolio was very small at a discount of $7 million. The mark on the deposit portfolio portfolio was also very modest at $1.8 million.
The accretion of these marks will be over the lives of the loans and deposits and we expect that they will have a very modest annual impact on our net interest income in 2022 and beyond.
Also in the disclosures the fair value of the century securities portfolio, which had a discount of $37 million to century's carrying value.
At the time of the merger announcement, we expected a premium on the portfolio of $17 million.
That swing in valuation was due to interest rates and created additional goodwill. However, we projected that going forward yield is higher than we originally expected as we point out on page 11 of the presentation. The overall securities yield at year end was one 4% compared to the average yield of one point to 8% in the fourth.
Quarter. This includes the benefit of that securities Mark to market.
We were even more positive about the century transaction now that it's complete than we were when we announced it back in April the successful customer conversion provided us a quick return to business as usual and the expanded footprint gives us a better market penetration and a bigger opportunity. We expect the strong organic loan growth that we've experienced the continued.
And our ability to leverage our platform and technology is enhanced.
We're working very hard to capitalize on these opportunities and believe that the changing interest rate environment will likely create some tailwind at our back.
The all cash nature of the century acquisition means any improvements in earnings at eastern will benefit solely our existing shareholders.
We're particularly excited by that aspect of the transaction. We felt it was one of the strongest benefits of the transaction and its great to see this benefit being realized so quickly.
In conclusion, we're very pleased with our Q4 results. The combination of continued strong organic results complemented by the success of the largest acquisition in the company's history with a fantastic finish to 2021.
We believe our larger platform expectations for continued strong organic growth and the prospect for a higher interest rate environment puts us in great position in 2022, and we look forward to capitalizing on all these opportunities and we'd be happy to take any questions.
No.
Thank you and at this time I would like to remind everyone.
To ask a question. Please press Star then the number one on your telephone keypad will foster for just a moment to compile the Q&A roster.
Yes.
Your first question comes from the line of Steven Fisher from Barclays. Sir Your line is open.
Hey, good morning, gentlemen.
Okay.
Okay.
Quick question just remind us.
Maybe in terms of the balance sheet repositioning post the century deal no. Obviously, we have the cannabis deposit sale, but.
Maybe some of the other puts and takes there just in terms of their loan portfolio of securities.
Speaker 1: and just getting maybe a sense of size of maybe the core attrition you might expect over here over the next couple quarters.
Just getting maybe it's emphasized that maybe the core attrition you might expect over here over the next couple of quarters. Thanks.
Sure David I'll.
Speaker 2: Sure, I'll take that Bob can certainly add in as well. But I think if you take it one at a time, unpack your question because there's a lot there. And the deposit side, really there's one or two areas. The first one you mentioned, which is cannabis, which we've articulated is about 500 million deposits. We will see that run off later this year.
I'll take that Bob can certainly add in.
As well, but I think if you take it one at a time.
Unpack your question because there's a lot there on the deposit side really theres theres, one or two areas. The first one you mentioned, which is cannabis which we've.
<unk> articulated is about $500 million in deposits.
You will see that run off later this year as I said, we expect that in Q2 the other key.
Speaker 2: As I said, we expect that in Q2. The other key variable in the deposit side is their municipal business. Eastern had always been in the municipal deposit business as well.
Variable on the deposit side is there a municipal business eastern had always been in the music municipal deposit business as well.
We're going to basically look to conform the way they did their business to make it look more like ours.
Speaker 2: Basically, look to conform the way they did their business to make it look more like ours. They offered things like collateral and paid higher rates than we did.
<unk> offered things like collateral and paid higher rates than we did and as we see going forward in sort of on a day by day basis will just trying to move those considerations to again eliminate the reduce it and ultimately eliminate the collateral and bring the pricing. So it's more aligned towards as that happens and we have a lot of overlap in.
Speaker 2: And as we see going forward on a day-by-day basis, we'll just try and move those considerations to again, eliminate the, reduce it, and ultimately eliminate the collateral and bring the pricing so it's more aligned to ours. As that happens, then we have a lot of overlap and customers as well. We do expect some runoff. We don't expect that to be material.
<unk> is while we do expect some run up we don't expect that to be material.
Speaker 2: But as you know, just that's our expectation.
But that's our expectation.
Speaker 2: On the loan side, we're very happy with the loan portfolio. I mentioned the credit quality earlier. The only issue that we see there is, there are a couple of sectors where there are some loans that were out of market.
On the loan side, we're very happy with the loan portfolio I mentioned.
You mentioned the credit quality earlier, the only issue that we see there is there are a couple of sectors, where there are some loans that were out of market.
Speaker 2: and areas that we haven't historically done business in, geographic areas we haven't historically done business in. And I think as, you know, on a case by case basis, whether or not those are core loans to us or not will make that determination. We've, as I said, we very much like the business, but just want to be realistic that as we go forward and we operate in more of an eastern style that, you know, loan runoff could have.
And areas that we havent historically done business in geographic areas, we havent historically done business in and I think as you know on a case by case basis, whether or not those are core loans to us or not we'll make that determination.
As I said, we'd very much like the business, but just want to be realistic that as we go forward and we operate in a more of an eastern style that loan run off could happen on.
On the security side as I mentioned, there was $2 8 billion.
Speaker 2: On the security side, as I mentioned, there was $2.8 billion coming over. We have retained initially all of that. We do expect a little bit of modest repositioning as we go. But assume that would just take place over the next couple of quarters. I wouldn't consider that significant.
Coming over we have retained initially all of that we do expect a little bit of modest repositioning as we go.
But assume you'll just be I assume that would just take place over the next couple of quarters and I wouldn't consider that significant.
Okay got it.
And then <unk>.
Speaker 1: And then I appreciate that's the guy from the feed income and operating expenses. Notice the I-
The guidance on the fee income and operating expenses noticed.
You mentioned I guess in the preamble have done a couple of insurance agency acquisitions, but.
Speaker 1: I guess the preamble has on a couple insurance agency acquisitions, but maybe some weakness in the fourth quarter or just year over year in those in those fees, maybe any color in terms of what's driving that the quenchilier over year to climb.
Maybe some some weakness in the fourth quarter or just year over year.
And then maybe any color in terms of what's driving that.
Sequential and year over year decline.
Yeah, no. Thanks, David so.
Speaker 2: Yeah, no, thanks, David. Good. So just one reminder, you may have implicitly included your question, there isn't a seasonality to the insurance business. So the, the drop from Q3 to Q4 is expected. And if you go back and look historically, you'll see a very similar drop there. So that's one factor just to keep in front of everybody. A couple of things on the year over year decline. There's really a couple things.
So just one reminder.
May have implicitly included in your question there isn't a seasonality to the insurance business. So the the drop from Q3 to Q4 is expected and if you go back and look historically, you will see a very similar drop there.
So that's one factor just to keep in front of everybody a.
A couple of things on a year over year decline.
Okay.
There's really a couple of things going on.
Profit Theres a component we used to call. It profit sharing that is not the right technical accounting is sexually incentive payments that are paid its actually about 10% of the revenue of the business. Each year is a little bit different those payments are.
Speaker 2: There's a component we used to call profit sharing, that's not the right technical accounting, it's actually incentive payments that are paid. It's actually about 10% of the revenue of the business.
Speaker 2: Each year is a little bit different. Those payments are depending on the carrier, either based on volume or based on underwriting statistics.
Depending on the carrier either based on volume, where based on underwriting statistics and they're a little bit volatile there based on those factors. If you look what's happening in that year to year decline theres changes both in the timing of them because sometimes are paid differently each year and also the amount that's what's driving a lot of that there are a few other things.
Speaker 2: And they're a little bit volatile. They're based on those factors. If you look what's happening in that year, year to climb, there's changes both in the timing of them because sometimes they're paid differently each year and also the amount. That's what's driving a lot of that. There are a few other things as well. We took a breather from acquisitions back in 2021. We implemented a new operating system there as we've articulated in prior calls.
As well, we took a breather from acquisitions back in 2021, we implemented a new operating system. There as we've articulated in prior calls and really year, two which would have been this year would have been when the revenue from those acquisitions that we would have normally done would've occurred. So there were none this year I think fundamentally those.
Speaker 2: And really year two, which would have been this year, would have been when the revenue from those.
Speaker 3: acquisitions that we would have normally done would have occurred so there were none this year. I think fundamentally those explained it and I think we're very confident that going forward and over the long term insurance business is going to be a great success force. And David just to add to that the pipeline for agency acquisitions continues to be very strong and would expect to continue that pattern as we have in the past.
Explain it and I think we're very confident that.
Going forward and over the long term the insurance businesses.
Going to be a great success for us and David just to add to the pipeline or.
Agency acquisitions continues to be very strong.
And would expect to continue that pattern as we have in the past.
Got it appreciate the color.
Your next question comes from the line of Dana.
Speaker 4: Your next question comes from the line of the mondel monteon kV W. your line is open. Morning guys, whoever reason. Well today.
On the Monza from Keybanc your.
Your line is open.
Hey, good morning, guys hope everybody's doing well today.
Hey, David.
First question just wanted to.
They are a bit more perspective on the expense outlook. Jimmy I know you gave the full year guidance, but as we think of the first full quarter of the combined operations you were at 110.3 on an operating basis. This quarter, what's kind of the starting point for the first quarter of 'twenty to give a range for that.
Yeah.
Speaker 2: You know, we don't, Damon, I think, you know, we spent a lot of time crafting the annual numbers. I think a couple of things I would say, yeah, there are a few.
We don't David I think we spent a lot of time crafting the annual numbers I think a couple of things I would say to you there are a few.
Branches eastern branches that we actually are consolidating in the month of January so there is a.
Speaker 2: Eastern branches that we actually are consolidating in the month of January . So there's a little bit of a timing to the, and that's included in the guidance that we gave you just to be clear on that. But there are some timing considerations there. And also the equity plan doesn't really kick into the second quarter. So we do spend a lot of time on the annual event, on the annual number, and that's what we've focused.
Little bit of a timing to the and that's included in the guidance that we gave you just to be clear on that but there are some timing considerations. There and also the equity plan doesn't really kick in until the second quarter. So we did spend a lot of time on the annual event on the annual number and.
That's what we've focused on.
Speaker 4: Okay, and have you quantified publicly what the expected impact of the equity plans going to be?
Got it okay and have.
Have you quantified publicly what the expected impact of the equity plan going to be.
Speaker 2: We haven't provided a number. It is in the guidance that we've given you. One thing I'm would articulate here is
We haven't provided a number it is in the guidance that we've given you.
One thing.
I would articulate here is prior pre IPO, we had a long term incentive plan for management cost was about $10 million to $11 million, a year of 11% to $12 million a year and as we think about the equity plan. We're just basically looking to replace that expense obviously, there's differences in the plans in <unk>.
Speaker 2: Prior at pre IPO, we had a long term incentive plan for management. Cost was about $10 to $11 million a year, $10 to $12 million a year. And as we think about the equity plan, we're just basically looking to replace that expense. Obviously there's differences in the plans and differences in timing, but in terms of our approach, it was in essence replaced the cost of the prior plan.
<unk> and timing, but in terms of our approach was to in essence replace the replacement cost of the prior plan.
Got it okay. That's helpful.
Speaker 4: Got it. Okay, that's helpful. And then as you look at your outlook for loan growth, another decent quarter for you guys, you know, how you feel about your pipelines right now, going into 2022, what areas of the commercial platform seem to be presenting the best opportunity for growth? What are some of the trends and expectations that you have?
And then as you look at your outlook for loan growth.
Another decent quarter for you guys.
How do you feel about your pipelines right now going into 2022, what areas of of the commercial platform seem to be presenting the best opportunity for growth what are some of the trends and expectations with GAAP.
So I think Damon.
Just by starting work, we're proud of our commercial teams across the board they all really.
Speaker 2: you know just by starting we're proud of our commercial teams across the board. They all really
Are very well positioned and have a great history and track record.
Speaker 2: are very well positioned and have a great history in track record. You know, as a middle market lender that has a speciality in real estate and commercial and then what we call community development lending, which you might refer to as nonprofit lending. We feel like those are three key strengths. The market here in Eastern Massachusetts and Southern New Hampshire where we operate is very strong in all of those sectors.
As a middle market lender that has a first specialty real estate and commercial and then what we call community development lending, which you might refer to as nonprofit lending we feel like those are three key strengths the market here in eastern Massachusetts, and Southern New Hampshire, where we operate is very strong and all of those sectors.
Speaker 3: demand seems very good. We're a very good competitor. So it isn't any one place. It's really the combination of those areas that we expect growth and you know there's obviously variability quarter to quarter but if you look at our track record over time all three of those units have grown and we expect that to continue. And as Jim's comments indicated and as the numbers indicate those teams have been able to be focused really throughout the integration of century.
Demand seems very good were very good competitor. So it isn't any one place it's really the combination of those areas that we expect growth in there is obviously variability quarter to quarter, but if you look at our track record over time, all three of those units have grown.
And we expect that to continue and as Jim's comments indicated as the numbers indicate those teams have been able to be focused really throughout the integration of century.
Centuries book is very clean it didn't have a big team.
Speaker 3: centuries book is very clean. They didn't have a big team. As a result, our team could continue to focus on being out in the market. Pipelines are good in all sectors and we continue to add to the team through recruitment.
As a result, our team could continue to focus on.
Being out in the market pipelines are good in all sectors and we continue to add to the team through recruitment.
Speaker 3: So, and that's, you know, as we wait for another opportunity for acquisitions, that's what we're entirely focused on is how do we continue to drive growth, particularly commercial loan growth, and again, as Jim mentioned, the team is fantastic to start with, has been for a long time and continues to grow.
And that's.
As we wait for another opportunity for acquisitions.
That's what we're entirely focused on is how do we continue to drive growth, particularly commercial loan growth.
And again as Jim mentioned the team is fantastic to start with has been for a long time and continues to grow.
Speaker 4: Great, okay, that's helpful. Thanks. And if I get squeezed one more inch, I'm sorry. And nobody thought the team comment, by the way, just because we happen to know them and like them. Okay. I got it. And just to squeeze one more in, and the outlook with credit, you know, you've had four quarters in a row of provision reversal. Hannah, what are your thoughts going into 2022, especially with the adoption of Cecil? You know, do you feel you're gonna have to start to provide for loan losses or do you think you could?
Great. Okay. That's helpful. Thanks, and if I could squeeze one more in.
It's not the team comment by the way just because we happen to know them and like them.
I got it.
And just to squeeze one more in on the outlook with credit you know you've had four quarters in a row.
<unk>.
Provision reversal.
What are your thoughts going into 2022, especially with the adoption of seasonal you know do you feel you're going to have to start to provide for for loan losses or do you think you could.
Maybe keep it really lower or even maybe more more relief.
Speaker 2: It's a tough question, right? We just sort of laughing, brag about our commercial losing is that I'm gonna go, maybe brag about our credit and accounting team now. But we just completely, not just, but we really have been a lot of work to adopt Cecil and get everything up and running. I think generally that creates a different accounting than we had in the past. So it's hard for us to give any guidance on that, but we believe the overall credit environment continues to be very...
It's a tough question right we just.
Sort of lapping bragged about our.
Commercial Logan is that going to go it may brag about our credit and accounting team now, but we just completed not just but we're really.
It's been a lot of work to adopt Cecil and get everything up and running I think generally that creates a different accounting than we had in the past. So it's hard for us to give any guidance on that but we believe the overall credit environment continues to be very.
Strong.
Speaker 2: strong, the economic environment is very strong and that leads to a good credit performance. I don't believe the reserve releases will continue for that much longer but it's hard for us to give any guidance on that given the adoption of CSU.
The economic environment is very strong and that leads to a good credit performance.
I don't believe the reserve releases will continue for that much longer but it's hard for us to give any guidance on that given the adoption of seasonal.
Speaker 4: Fair enough, that's good, great. Thanks, Cindy. Good luck with the Blizzard this weekend. Yeah, thank you.
Fair enough Thats good great. Thanks, and good luck with the Blizzard this weekend.
Okay.
Your next question is from the line of Laurie Hunsicker from Compass point Your line is open.
Speaker 5: Your next question is from the line of Laurie Hansiker from Compass Point, your line is o-
Yeah, Hey, thanks, good morning, and yes.
Speaker 3: Yeah, I think good morning. And yeah, I would go with hate and said, good luck with the snow. Yeah, the forecast. I'm glad we look at it. Oh, yeah.
Good luck with us now.
Yeah.
That forecast.
When we look at it.
Yes.
Speaker 6: Absolutely. So just, just circling back on expenses.
Absolutely. So just just circling back on expenses.
Can you help us think about and this is just one of the line items. It looks like you break this out now and I Didnt see it before this operational losses.
Speaker 6: Can you help us make it out? And this is just one of the line items. It looks like you break this out now, and I didn't see it before, this operational losses for the quarter of 1.6 million in December , and you break it out in this shortly. Is that something that's going away, or what is that number? How do we think about that?
For the quarter of $1 6 million in Canberra, and you break it out and historically is that something thats going away or what is that number how do we think about that.
Speaker 2: No five five. Go ahead. Yes. Those generally Laurie and
Bye bye.
Yes.
Those generally Laurie.
Admire you're going for details, but let's generally are.
Speaker 2: admire your going for details, but let's generally are operational losses in the branches or ACH. They tend to be pretty modest. And we think of them as business as usual. We do a lot of transactions through the branches and through the ACH mechanism. And that's just the cost of doing business.
Operational losses in the branches or ACTH, they tend to be pretty modest and we.
We think of them as you know.
Business as usual.
We do a lot of transactions through their branches and through the <unk> mechanism and that's that's just the cost of doing business.
Speaker 6: Got it. Okay. Okay. Great. That's helpful. And then can you just refresh us in terms of?
Got it.
Okay. Great. That's helpful. And then can you just refresh us in terms of.
Speaker 6: Merger charges, where you are in terms of taking that, I know you had said you were going to be at 64 million. Is that still the right number? Is it higher?
Merger charges.
Where you are in terms of taking out I know you had said you were going to be at $64 million is that still the right number or is it higher.
Speaker 2: and any thoughts on the timing of when we see it, I mean, guessing most of this in the first task, but can you help us think about that? Sure. So, and I didn't cover my comments, maybe I should have. Yes, you were right there. The initial anticipated amount we had at the time and the announcement was much higher than what we recorded. If you look at the fourth quarter and prior is $35 million.
And any any thoughts on the timing of when we see it I mean guessing most of it is in the first half right can you help us think about that.
Sure So and I didn't cover my comments, maybe I should have.
Yes, you are right the initial.
Anticipated amount we had at the time of the announcement was much higher than what we record. If you look at the fourth quarter and prior is $35 million.
Speaker 2: And that compares to the 63 or 64 million dollars you referenced. A couple of comments I'd make. We are pretty much done with that. We've done all of the branch things and etc. We're booked in November .
And that compares to the 63 or $64 million you referenced.
A couple of comments I'd make we are pretty much done with that we've done all of the branch things and et cetera were booked in November .
Speaker 2: And so we believe we're complete there. That's not to say there wouldn't you know, there might be a cannabis transaction related straggler But generally we don't anticipate Much in the way of those expenses this year one comment on the reconciliation is century So we did have a we came well under as you referenced
And so we believe we're complete there that's not to say there wouldn't there might be a canvas transaction related straggler, but generally we don't anticipate.
Much in the way of those expenses. This year one comment on the reconciliation is Serge. So we did have a we came well under as you referenced.
Speaker 2: One honest reminder is, Century actually paid a fair amount of...
One honest reminder, as century actually paid a fair amount of.
Speaker 2: The expenses that were century-related were paid by century. So even though they were in our numbers back in April , the accounting actually went through their books pre-closing. Yeah.
The expenses that were century related were paid by century, so even though they are in our numbers back in April .
April the accounting actually went through their books pre closing.
Got it and hopeful.
Okay. That's helpful. That's great. Thanks.
Speaker 6: Okay, that's helpful, that's great, thanks. And then cost-save. I think your cost-save will projected to be 45% 37 million or so. How much of that?
And then cross sell them.
I think your cost saves were projected to be 45% $37 million or so how much of that.
Or I guess, where are we with realizing that how are you thinking about that is that ahead of schedule or can you help us think about that.
Speaker 2: I guess where are we with realizing that? How are you thinking about that? Is that ahead of schedule or can you help us think about that? Yeah, so I think here's what we've said, Lauren, what I would...
Yeah, So I think.
Here's here's what we've said Laura and what I would.
Say again at the time, we announced 45% we actually thought I would take through into 2023 to get the full amount what we articulated at the end of last quarter is that the guidance that we've given you and confirm today $445 million to $460 million of operating expenses includes <unk> 45.
Speaker 2: say again, at the time we announced 45 percent, we actually thought it would take through into 2023 to get the full amount. What we articulated at the end of the last quarter is that the guidance that we've given you and confirmed today, 445 to 460 million of operating expenses, includes
Speaker 2: 45% reduction, or that $37 million you referenced, will be in 2022. As I mentioned earlier, I think you know, we did the conversion in November . A lot of the expenses come out at that point. There were some branch...
Percent reduction for that $37 million, you referenced is or will be in 2022 as I mentioned earlier, we and I think you know we did the conversion in November a lot of the expenses come out at that at that point there were some branch.
Speaker 2: closures and repositioning that are taking place in January this year and maybe February . But those essentially all the branch transactions were done in the fourth quarter last year. So one of the strongest things we felt was as we entered 2022, we were trying to get back to business as usual and have all of that sort of in the rearview mirror and that's what we believe you will see.
Closures and repositioning that are taken place in January of this year and maybe February but those essentially all the branch transactions were done in the fourth quarter of last year. So one of the strongest things. We felt was as we entered 2022, we're trying to get back to business as usual and have all of that sort of in the rearview mirror and.
That's what we believe you will see.
Speaker 6: Okay, great. And then just last one for me, on net interest margin,
Okay, Great and then just last one for me.
On net interest margin.
Hopefully if we look at that is can we let me say, okay. We strip out that remaining 10, $710 6 million in PPP fees.
Speaker 6: So if we look at this and we say, okay, we strip out that remaining 10.6 million in PPP fees, century, obviously we're going to see a full quarter reflected.
I mean, obviously, we're going to see a full quarter reflected.
In the March quarter, but they were running at 180 margin you mentioned that Youre doing some repositioning there you obviously still have cash how should we think about it in other words, if we strip out what's going to be probably the remainder of their PPP gains. If we just looked at where you would be core in March.
Speaker 6: you know, in the March quarter, but they were running at a 180 margin. You mentioned that you're doing some repositioning there. You obviously still have cash. How should we think about, in other words, if we strip out what's going to be probably the remainder of your PPP gains, if we just looked at where you would be core in March.
Speaker 6: you know, prior to that potentially moving, how should we be thinking about that on a pro forma combined basis?
Prior to that.
Potentially moving how should we be thinking about that profile.
Pro forma combined basis.
Speaker 2: Right, so there's, there's a number of things to unpack there so I'm going to try and go sort of one at a time or take it a little bit slow. First, first place I point you to is our guidance right so we we've.
Right. So there's a number of things to unpack there so I'm going to try and go.
Is sort of one at a time or taking a little bit slow.
First I'd first place I'd point, you to is our guidance right. So we've.
Previously, we were a little bit lower but we've increased that to between 505 $520 million for the year.
Speaker 2: Previously, we were a little bit lower, but we've increased it to between $505 and $520 million for the year. To your point, if you want to focus on the margin, there's a couple of things going on that are detractors there. You referenced the PPP fees, which are down significantly from where they had been in 2021, and there's about $10 million left.
To your point, if you want to focus on the margin.
There's a couple of things going on that are detractors there.
You referenced the PPP fees, which are down significantly from where they had been in 2021, and there's about $10 million left.
Speaker 2: There is not as I've tried to make clear, there's not much in the way of purchase accounting that's going to roll through and make an impact there. The century margin was below ours. So that's also a detractor. And as we disclosed in prior 10-K 's and 10-Q 's, we had some hedge.
There is not as I've tried to make clear theres not much in the way of purchase accounting, that's going to roll through and make an impact there. The century margin was below ours. So that's also a detractor and as we disclosed in prior 10, Ks and 10 Qs we had some hedge.
Speaker 2: Gains that we had closed out in prior years that amortized and they basically finish up at the end in early 2022 as well so those are kind of the detractors and
Gains that we had closed out in prior years that amortize that Nate basically finish up at the end or in early 2022 as well. So those are kind of the detractors in.
What you see going forward, though is the impact of.
Speaker 2: What you see going forward, though, is the impact of the securities repositioning tried to articulate, as well as the rate, the complexion of the rate change, and also the continued organic loan growth on the pace that we've been talking about.
The securities repositioning tried to articulate as well as the rate to complexion of the rate change and also the continued organic loan growth on the pace that we've been talking about.
What we said in the past and I think is still a fair very fair comment is.
Speaker 2: what we said in the past and I think is still a fair very fair comment is we in 2022
In 2022, I don't know how much the margin is actually going to change from where it is now but we do think the full impact of all these rate changes will be really seen in 2023.
Speaker 2: I don't know how much the margin is actually going to change from where it is now.
Speaker 2: But we do think the full impact of all these rate changes will be really seen in 2023.
Okay. Just one more question around that because I feel like maybe something is wrong in my math I'm looking at that sort of pro forma all combined and obviously without knowing the actions, we're taking around country and im closer to about $2 three margin.
Speaker 6: Okay, so sorry, just one more question around that, because I feel like maybe something is wrong in my math. I'm looking at this sort of pro forma all combined, and obviously without knowing the actions you're taking around century, and I'm closer to a 2.3 margin versus obviously the 2.54 that you reported. Am I missing something?
Obviously that ship in Q4 that you reported at the mine.
Missing something or.
Is there any help you can give us thinking about even just the June quarter margin.
Speaker 6: Is there any sort of help you can give us thinking about even just a June quarter margin, what it would look like?
Okay.
One question I would ask is.
Speaker 2: One question I'd ask is, you know, make sure you have the cannabis and some of the deposit runoff that we've talked about in there. That's obviously not going to change net interest income, but it is going to improve the net interest margin.
Make sure you have the candidates and some of the deposit runoff that we've talked about in there. That's obviously not going to change net interest income, but it is going to improve the net interest margin.
Speaker 6: Got it. Got it. Okay. Okay. I will follow up with you guys offline. I guess just Bob maybe just one one question for you. Now that you've done this deal and
Got it okay.
Okay. Okay, I will follow up with you guys offline I guess just Bob maybe this one one question for you now that you've done this deal and.
Speaker 7: Obviously, you now have some stock currency. How are you thinking about future acquisitions and any thoughts in terms of what you're seeing in M&A? Yeah, really the same as before, Laurie. I mean, we continue to be ready to undertake partnerships.
I guess that you you know helpful. Bob currently how are you thinking about pizza acquisition.
Any thoughts in terms of what youre seeing in M&A.
Really the same as before Laurie I mean, we continue to be ready to undertake partnerships.
Primarily focused on the banking sector, but obviously continued insurance agencies.
Speaker 7: You know, primarily focused on the banking sector, but obviously continued in insurance agencies.
Speaker 7: and possibly well if we could find something smaller that fit in that particular space. So really the posture and the interests and the conversations.
And possibly well if we could find something smaller that fit.
In that particular space, so really the posture and the interest in the conversations haven't changed it's really sort of a constant flow of engagement around ideas.
Speaker 7: haven't changed. You know, it's really sort of a constant flow of engagement around ideas. But really, our primary focus is really finishing up Century, continuing to drive organic growth, particularly in our commercial and small business businesses, as well as investment in technology, which continues. So again, you know, we have the capital, we have the interest, and again, stand ready when an opportunity should arise. Right. Thanks for taking
But really our primary focus is is really finishing up century.
Continuing to drive organic growth, particularly in our commercial and small business businesses.
As well as our investment in technology, which continues so again, we have the capital we have the interest and.
Again stand ready when an opportunity should arise.
Great. Thanks for taking my question.
Okay. Thanks.
And again to ask a question. Please press star one on your telephone.
Speaker 5: And again to ask questions, please press star 1 on your telephone. Your next question is from Janet Lee from J.P. Morgan. Your line is open.
Next question is from Janet Lee from Jpmorgan. Your line is open.
Hello, everyone.
Hi, good morning.
Speaker 8: To clarify on your NII guide, is this 10 to 15 million increase in NII guide just incorporating that additional two rate hikes in the guide? Can you just tell us the annualized NII impact from, say, a 25 basis point rate hike?
Alright.
Alright.
AI guidance, so obviously, you're incorporating three rate hikes now versus one in the third quarter. So is this $10 million to $15 million increase in NII guide just incorporating that additional two rate hikes in the guide and can you just tell us the annualized NII impact from say, a 25 basis point rate hike.
Sure So again.
Speaker 2: Sure. So again, for a couple of components, I'm going to.
For a couple of components I'm going to.
Go slowly and take them one at a time. So the guidance is up as you had mentioned $10 million to $15 million.
Speaker 2: goes slowly and take them sort of one of the time. So the guidance is up, as you mentioned, 10 to $15 million. The reason it's up is dominated by the change in rates. There are other small changes, obviously, we do a lot of work to put that together. So there are other small changes, but I think...
Dominant and the reason it's up is dominated by the change in rates. There are other small changes obviously, we do a lot of work to to put that together. So there are other small changes, but I think the way you asked the question. It is rate driven rate outlook, driven and as you said, we went from one rate increase at the <unk>.
Speaker 2: The way you asked the question, it is rate driven, rate outlook driven. And as you said, we went from one rate increase at the end of the year to now three, so that accounts for that at a high level, I think a single 25 basis point increase by the Fed on an annual.
End of the year to now three so that accounts for accounts for that.
At a high level I think.
A single 25 basis point increase by the fed.
On an annualized basis adds about $8 million to $10 million of net interest income for eastern.
Speaker 2: adds about 8 to 10 million dollars of then interest income for Eastern.
Speaker 2: Assuming our normal betas are normal deposit betas.
Assuming our normal betas are normal deposit betas.
Again, so it's $8 million to $10 million, that's annualized which as Mike comment about why the second half of 2022 is why you'll see that and in particular in 2023, but it's $8 million to $10 million annualized assuming our normal deposit betas.
Speaker 2: Again, so it's $8 to $10 million that's annualized, which is my comment about why the second half of 2022 is why you'll see that, and in particular in 2023. But it's $8 to $10 million annualized, assuming our normal deposit beta.
Okay. That's helpful and to follow up on that I heard that you are.
Speaker 8: Okay, that's helpful. And to follow up on that, I heard that you're assuming lower cash level for 2022. But can you just give us more details around what level of cash you're assuming versus $1.2 billion in the fourth quarter? And what's your current appetite for deployment of cash into security?
Assuming lower cash level.
'twenty two but can you just give us more details or at what level of cash you're assuming versus one 2 billion in the fourth quarter and what's your current appetite for deployment of cash into securities.
Speaker 2: Just to make sure I understood the first party question, Janet, was the tax rate...
Just to make sure I understood. The first party question generally the tax rate.
Speaker 2: No, no, no, no, cash. Sorry. Cash. Cash. I'm sorry. Yeah. Got it. Got it. I didn't connect the dots there. So I got it. Thanks for clarifying. So if you look at our securities portfolio at year end, it's between eight and nine billion dollars.
No cash sorry cash flow cash I'm, sorry, yes got it.
Got it.
I Didnt connect the dots there now so I got it thanks for clarifying.
So if you look at our securities portfolio at year end it's.
It's between eight eight and $9 billion.
Speaker 2: We expect some modest repositioning there.
We expect some modest repositioning there.
Speaker 2: But a similar size portfolio, we don't, the cash that we had at the end of the year that you can see, a reminder, we've talked about a little bit of deposit runoff from the repositioning of Century and then also the cannabis.
But a similar sized portfolio, we don't have the cash that we had at the end of the year that you can see a reminder, we've talked about a little bit of deposit runoff from the repositioning of century and then also the cannabis. So we do expect the cash position to normalize as we get through those elements.
Speaker 2: So we do expect the cast position to normalize as we get through those elements, which we think are the first half of this year. So we don't envision a year ago when we were talking about how much money we're gonna invest quarterly in securities.
Which we think are the first half of this year. So we don't envision.
A year ago, when we were talking about how much money, we're going to best quarterly in securities.
Speaker 2: We're at kind of a steady state now. The portfolio is relatively large and we see managing that, but we don't see it much bigger than where it is today, given the balance sheet size that we have right now.
Kind of a steady state now the portfolio is relatively large and.
We see managing that but we don't see it much bigger than where it is today given the balance sheet size that we have right now.
Okay. That's helpful.
Speaker 8: Okay, that's helpful. And just to start following up on Damon's question earlier on, on, on long growth, I don't think that's heard. What, what is your current outlook for total organic long growth?
And just you sort of following up on Damon's question earlier on loan growth.
What is your current outlook for total organic loan growth.
Speaker 8: for an XPP and XCENTRY acquisition. I think last quarter, you said you're targeting Mr. High single that is commercial loan growth and obviously this quarter we've seen many regional banks coming out more bullish on the and I growth outlook. So just wanted to see if there's any update on your commercial loan growth outlook as well as just total organic loan growth outlook for 2022.
Or ex PPP and ex century acquisition I think last quarter. You said you are targeting mid to high single digit commercial loan growth and.
Obviously this quarter with many regional banks coming out more bullish on C&I growth outlook.
Just wanted to see if there is any update on your.
Commercial loan growth outlook as well as just total organic loan growth outlook for 2020.
Speaker 2: Sure. So, just to, again, try and be precise in the answer. So, when we say our commercial loans, that includes commercial real estate, our commercial loans,
Sure. So just to again try big quick.
The precise in the answer I saw it when we say our commercial loans that includes commercial real estate or commercial loans.
Speaker 2: typically called C&I, and then also our community development lending group, which is part of our, that's our commercial rollup. What we articulated in the past and still see is organic loan growth that we've had historically, which is in the high single digits. So you know, last quarter was 8%, this quarter was 7%. That kind of, that is, that aligns very much with what we've done historically.
Typically called C&I, and then also our community development lending group, which.
As part of our that's our commercial rollout, while we articulated in the past and still see is organic loan growth that we've had historically, which is in the high single digits. So.
Last quarter was 8% this quarter was 7% that kind of that is that aligns very much with what we've done historically.
And even though the balances are a little bit bigger now we're still comfortable with that expectation going forward. So again high single digits for commercial loan growth.
Speaker 2: And even though the balances are a little bit bigger now, we're still comfortable with that expectation going forward. So again, high single digits for commercial long growth.
Speaker 2: And as I said, if you look at our track record over an extended period of time, we think that's very consistent. Mortgage and consumer loans, you know, we've had it last, the early part of this year, we had a nice increase in mortgage loans. We do portfolio, jumbo loans, that's something we've done for the last year and a half or so with the excess as a good way to use the excess liquidity up.
And as I said, if you look at our track record over an extended period of time, we think that's very consistent.
Mortgage and consumer loans.
We've had last early part of this year, we had a nice increase in mortgage loans, we do portfolio.
Jumbo loans, that's something we've done for the last year and a half or so with the excess as a good way to use the excess liquidity.
This quarter, we had.
Speaker 2: This quarter we had, you know, call it five to six percent annualized growth there. We think that's probably sustainable. One trend that we're starting to see the beginning of is a little bit of a life in our home equity lines and loans. And with higher rates and probably less mortgage activity, there might be a little bit of a subtle shift from mortgage into home equity. But those consumer categories in total, we think somewhere, you know, five-ish percent loan growth organic.
Call it 5% to 6% annualized growth there, we think thats, probably sustainable one trend that we're starting to see the beginning of us a little bit of a life in our home equity lines and loans and with higher rates and probably less mortgage activity there might be a little bit of a subtle shift from mortgage into home equity, but those consumer.
Categories in total, we think somewhere five ish percent loan growth organically.
Okay. So excluding PPP commercial loan growth of high single digits.
Speaker 8: Okay, so excluding PPP commercial loan growth of high single digits and for consumer around mid-singles digit 5%
And for consumer around mid single digit 5% ish right.
Alright correct.
Speaker 8: Okay, that's helpful. And lastly, my question on your share repurchases.
Okay. That's helpful and lastly, my question on your share repurchases.
Speaker 8: offsetting dilution from your equity plan grants. Am I understanding your earlier commentary correctly that the amount of repurchases required to offset dilution plan is 1.2 million shares and the rest of 7 million of shares that are currently available are sort of dependent up-to-pal market condition. Where?
Offsetting dilution from equity grants.
Bren.
Am I understanding your earlier commentary correctly that the amount of repurchases required to offset dilution plant is one 2 million shares in the rest of $7 million of shares that are currently available.
Alright, so it is dependent upon market conditions.
Speaker 2: No, let me just go back and try and say slowly what our plan is. So what we have repurchased at the end of the year was 1.1 million. And what I articulated is through yesterday, in essence, we've repurchased 2 million shares.
No. Let me just go back and try and say slowly what what our plan is so the what we have.
Repurchased at the end of the year was $1 1 million and what I articulated is through yesterday in essence, we've repurchased 2 million shares.
That's one kind of that's just a status update if you will okay.
Speaker 2: That's one kind of, that's just a status update, if you will. Oh, okay. Our strategy for that is to be very prioritized buying in shares to offset the dilutive effects of those of the equity plan, which includes the shares that you can see that were issued last year and would be in the year-end counts and are disclosed. And then also the upcoming management grants under the equity plan. So the goal is to.
Strategy for that is to be very.
Prioritize buying in shares to offset the dilutive effects of those of the equity plan, which includes the shares that you can see that were issued last year and would be in the yearend counts in our disclosed and then also the upcoming management grants under the equity plan. So the goal is to.
Priority not the goal the priority is to make sure we offset that dilution we haven't disclosed the number of shares there, but we're on track to do that and then once we complete that priority.
Speaker 2: you know, priority, not the goal. The priority is to make sure we offset that delusion. We haven't disclosed a number of shares there, but we're on track to do that. And then once we complete that priority, we still have considerable amounts still in our authorization and future purchases beyond that would be based on market conditions.
We still have considerable amounts still in our authorization and future purchases beyond that would be based on market conditions.
Uh-huh, Okay got it alright, thanks for taking my question.
Speaker 8: Okay, it got it. All right, thanks for taking my question.
There are no further questions at this time I will now turn to <unk>.
Speaker 5: There are no further questions at this time. I will now turn over to Bob the press for closing room.
For closing remarks.
Again, thank you Patricia Thanks to all of you I really appreciate you taking the time to join US This morning.
Speaker 7: Again, thank you Patricia. Thanks to all of you. I really appreciate you taking the time to join us this morning and wish you the best for the rest of the winter. I look forward to talking with you again in the spring. I hope you let it in the spring.
And wish you the best.
For the rest of the winter, we look forward to talking with you again in the spring.
This concludes today's conference call you may now disconnect.
[music].
Speaker 9: Three notes to two or fixed B????? Ex it
Okay.
[music].