Q4 2021 TrustCo Bank Corp N Y Earnings Call
Good day and welcome to the Trustco Bank Corp earnings call and webcast all participants will be in a listen only mode should you need assistance. Please signal.
Speaker 1: Good day and welcome to the Trustco Bancorp earning call and webcast. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero on your telephone keypad.
Specialists by pressing the star key followed by zero on your telephone keypad.
Speaker 1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. To withdraw your question, you may press star and two.
After todays presentation, there will be an opportunity to ask questions.
To ask a question you May press Star and then one to withdraw your question you May press star on tape.
Before proceeding we would like to mention that the presentation may contain forward looking information about Trust Sky Bank Corp, New.
Speaker 1: Before proceeding, we would like to mention that the presentation may contain forward-looking information about TOSCO, Bancorp, New York.
New York.
Speaker 1: That is intended to be covered by the safe harbour and forward-looking statements provided.
The Doctor is intended to be covered by the safe Harbor on forward looking statements provided.
Speaker 1: by the Private Securities Litigation Reformat of 1995.
Boy, that's a cute private Securities Litigation Reform Act of 1995.
Speaker 1: Actual results and trends could differ materially from those set forth in such statements due to the variation risk.
Actual results on 10 trends could they saw.
Materially from those set forth in such statements due to the variation risks.
Speaker 1: Uncertainties and other factors, more detailed information about these and other risk factors can be found in our press release.
I'm, sorry, I didn't say is and I'll be fine pitch more.
Detailed information about these and other risk factors can be found in our press release.
That preceded this call and in the risk factors and forward looking statements section of our annual report on Form 10-K .
Speaker 1: that preceded this call and in the risk factors and forward-looking statement section of our annual report on Form 10K.
And as an update by our quarterly reports on Form 10-K .
Speaker 1: and as an update by our quarterly reports on Form 10Q.
Speaker 1: The statements are valid only as a date hereof and the company's disclaimer. Any obligations to update this information except as...
The statements are valid only I'll say state hey, Ralph on the company's disclaimer any obligations to update this information except us.
Speaker 1: may be required by applicable law. Today's presentation contains non-GAAP financial measures. The reconciliation of which measures to the most comparable GAAP figures are included in our earnings press release, which is available under Investor GAAP.
It may be required by up play.
Applicable law todays presentation contains non G. A a P financial my shows.
The reconciliation of which measures to the most comparable G. A a P figures are included in our earnings press release, which is available on the.
And that's the.
Speaker 1: Regulations tab of our website at trustcobank.com. Please also note today's event is being recorded. At this time I would like to turn the conference call over to Mr Robert J McCormick, Chairman, President and CEO . Please go ahead.
Regulations top of our website Trustco bank Dot com.
Also note todays event is being recorded.
This time I would like to turn the conference call I bought to Mr. Robert J Mccormick, Chairman President and C. I. Please go ahead.
Speaker 2: Thank you. Good morning everyone. As the host said, I'm Rob McCormick, president of the bank. Thank you for joining us this morning to hear a little bit about, a little more about our results. We had a very good year at the bank in 2021. Our net income was $61.5 million, up over 17% from the prior year, and an all-time record for our company.
Thank you. Good morning, everyone has the host said I'm, Rob Mccormick President of the bank. Thank you for joining US. This morning here a little bit about little more about our results. We had a very good year at the bank in 2021 on net income was 61 $5 million up over 17% from the prior year and an all time record for our company.
Speaker 2: Loans were up just under $200 million to $4.4 billion, which is also an all-time high.
Loans were up just under $200 million to $4 4 billion, which was also an all time high.
Speaker 2: Our performance ratios all showed improvement over prior periods. Non-performing loans to total loans and total assets were 0.42% and 0.31% respectively, with a coverage ratio of 236%, and the loan loss reserve amounting to 1% of loans. We are now operating under CECL, and Mike Ozimek will have detail on that in his presentation.
Performance ratios all showed improvement over prior periods nonperforming loans to total loans and total assets were 44, 2% and 43.
Three 1%, respectively with a coverage ratio of 236%.
And our loan loss reserve amounting to 1% of loans. We are now operating under Susana Michaels, Mike will have a tail on that his presentations.
Speaker 2: Deposits also posted nice growth in 2021, about $231 million to about $5.3 billion.
<unk> also posted nice growth in 2021 about $231 million to about $5 3 billion interest expense continued to drop in keeping with the market and growth of core accounts with less dependence on time deposits.
Speaker 2: interest expense continued to drop in keeping with the market and growth in core accounts with less dependence on time.
Speaker 2: We continue to have a large investment portfolio with a tremendous cash position. We have done this in anticipation of a changing rate environment.
Continue to have a large investment portfolio with a tremendous cash position. We have done this in anticipation of a changing rate environment.
Our financial services area continues their good performance on the over $1 billion under management.
Speaker 2: Our financial services area continues their good performance with over a billion dollars under management.
Speaker 2: ROA and ROE both showed improvement year over year. We increased our cash dividend, executed on a reverse stock split, and stayed active in our buyback program. We also increased our capital ratios and shareholder sector.
ROA and ROE both showed improvement year over year, we increased our cash dividend executed on a reverse stock split.
Stayed active in our buyback program, we also increase our capital ratios and shareholders' equity.
Speaker 2: continue to take a full service essential approach while operating under varying COVID product.
We continue to take the whole service essential approach, while operating under varying Covid protocols.
Speaker 2: close one branch and open one in Palm Coast, Florida.
Those one branch and opened one in Palm Coast, Florida.
Speaker 2: I think you all know Florida has become a large part of our business. We are taking the opportunity to introduce Eric Schreck who runs that operation for us.
I think you all know, Florida has become a large part of our business. We are taking the opportunity to introduce Eric Schreck.
Who runs that operation for us to give a brief update.
After Eric he will turn it over to Mike Olsen of extra detail on the numbers and Scot Salvador breakdown logs, leaving us time for some questions as.
Speaker 2: After Eric, he will turn it over to Mike Ozemek for details on the numbers and in Scott Salvador will break down loans leaving us time for some questions.
As we begin 2022 or 120th year by the way.
We do so with the optimism we're pleased with 2021 , but look forward to you weren't aware of 2022, Eric Thanks, Rob.
Speaker 2: do so with optimism. We are pleased with 2021, but look forward to and aware of 2022.
This is my first time on the call I thought I would briefly recap, some florida facts and milestones trustco.
Speaker 3: my first time on the call I thought I would briefly recap some Florida facts and miles.
Speaker 3: Trusco's Florida branch network of 53 offices encompasses 15 counties.
Trust Coast, Florida Branch network of 53 offices encompasses 15 counties.
Speaker 3: 37 of the offices are within central Florida. The remainder are split between the east coast, north of south Florida, and the west coast around the Sarasota area. All 53 locations were open to no-
37 of the offices are within Central Florida. The remainder are split between the east coast, North or South, Florida, and the West coast around the Sarasota area. All 53 locations were opened de Novo.
As of 12, 31, 19, Florida loans outstanding exceeded 1 billion for the first time.
Speaker 3: As of 12-31-19, Florida loans outstanding exceeded $1 billion for the first time.
Speaker 3: As of 12-31-20, deposits followed suit, ending the year over a billion as well.
As of 12, 31, 'twenty deposits, followed suit ending the year over 1 billion as well.
Speaker 3: Polo deposits in Florida ended 2021 up for the year, despite significant CD maturities, which rolled over into core savings and money market accounts.
Total deposits in Florida ended 2021 up for the year, despite significant CD maturities, which rolled over into core savings and money market accounts.
Taking advantage of more favorable Florida labor market.
Speaker 3: Trusco moved its deposit operations department to Florida in 2021.
Trustco moved its deposit operations Department to Florida in 2021.
Speaker 3: Operations joins our call center, which relocated from New York to Florida a few years earlier.
Operations joins our call center, which relocated from New York to Florida, a few years earlier.
Speaker 3: Deposit Operations is located at our Florida headquarters.
Deposit operations is located at our Florida headquarters in.
In Longwood, Florida.
Speaker 3: Among our 53 offices in Florida is our newest office, which opened in late September . Palm Coast is our first office in Flagler County, on the East Coast, and is adjacent to existing offices in Volusia.
Among her 53 offices in Florida is our newest office, which opened in late September Palm Coast is our first office in Flagler County on the East Coast and is adjacent to existing offices in Volusia County.
Speaker 3: Finally, we recently signed a lease to open a loan office in Naples, Florida.
Finally, we recently signed a lease to open a loan office in Naples, Florida.
Next is Mike <unk> to discuss the numbers.
Speaker 4: Thank you, Eric, and good morning, everyone. I will now review Trusco's financial results for the fourth quarter of 2021. As you noted in the press release, the company saw a net income of $16.2 million in the fourth quarter of 2021, an increase of 17.6% over the prior year, which yielded a return on average assets and average equity of 1.05% and 10.92%, respectively.
Thank you Eric and good morning, everyone I'll now review <unk> financial results for the fourth quarter of 'twenty one.
As we noted in the press release the company saw a net income of $16 2 million in the fourth quarter of 2021, an increase of 17, 6% over the prior year, which yielded a return on average assets and average equity of 1.15% and 10, 92% respectively.
Average loans for the fourth quarter of 'twenty, one grew four 4% or $185 3 billion to $4 4 billion from the fourth quarter of 2020.
Speaker 4: Average loans for the fourth quarter of 21 grew 4.4% or 185.3 million to 4.4 billion from the fourth quarter of 20...
Speaker 4: As expected, the growth continues to be concentrated within our primary lending focus, the residential real estate portfolio, which increased $223.3 million, or 5.9% in the fourth quarter of 2021, over the same period in 2020.
As expected the growth continues to be concentrated within our primary lending focus the residential real estate portfolio, which increased $223 3 million or five 9% in the fourth quarter of 'twenty one over the same period in 2020.
The average commercial loan portfolio decreased $22 7 million or 10, 1% over the same period in 2020 <unk>.
Speaker 4: The average commercial loan portfolio decreased $22.7 million, or 10.1% over the same period in 2020. This included approximately $23 million of new PPP loans originated in 2020.
This included approximately $23 million of new PPP loans originated in 'twenty One bank.
Speaker 4: bank currently has approximately $10 billion in the remaining of SBA PPP loans.
<unk> currently has approximately $10 million in remaining of SBA PPP loans.
Speaker 4: Total average investment securities, which include the AFS and HDM portfolios, decreased 32.8 million or 7.1% during the fourth quarter of 21, over the same period in 2020.
Total average investment securities, which include <unk>, and HTM portfolios decreased $32 8 million or seven 1% during the fourth quarter of 'twenty, one and the same period in 2020.
Speaker 4: the same period the bank had approximately $25.8 million of pooled securities that paid down.
For the same period, the bank had approximately $25 8 million of pooled securities paid down.
During the same period the bank also purchased approximately $3 $4 million of securities.
Speaker 4: Provision for loan loss for the fourth quarter was $3 million, a credit of $3 million, a decrease compared to the $600,000 provision for loan loss in the same period of 20 years.
Provision for loan loss for the fourth quarter was 3 million a credit of $3 million a decrease compared to the 600000 provision for loan loss in the same period of 2020.
As mentioned last quarter during 2020 management increased certain allows related qualitative factors based on its assessment of the impact of the current pandemic and economic conditions as well as the perceived risks inherent in specific industries as they relate to the bank's portfolio.
Speaker 4: As mentioned last quarter, during 2020, management increased certain allowance-related qualitative factors based on its assessment of the impact of the current pandemic on economic conditions as well as the perceived...
Speaker 4: risk inherent to specific industries as they relate to the bank's portfolio.
Speaker 4: The decrease in provision during the fourth quarter of 2021 was the result of sustained improvement in asset quality trends and economic conditions.
The decrease in provision during the fourth quarter of 21 2021 was the result of a sustained improvement in asset quality trends and economic conditions.
Speaker 4: The ratio of the allowance for loan losses to total loans was 1% as of December 31, 2020, compared to 1.17% as of the same period in 2020.
The ratio of the allowance for loan losses to total loans was 1% as of December 31, 2020, compared to $1 one 7% as of the same period in 2020.
As mentioned in prior quarters Bank did not early adopt Cecil is originally provided by the cares Act and as part of the COVID-19 relief Bill signed in December 2020, the bank adopted <unk> on January one 2022, the company expects to remain a well capitalized financial institution under current regulatory calculations.
Speaker 4: As mentioned in prior quarters, the bank did not early adopt CECL as originally provided by the CARES Act, and as part of the COVID-19 relief bill signed in December 2020, the bank adopted CECL on January 1, 2022. The company expects to remain a well-capitalized financial institution under current regulatory calculations.
As discussed in prior calls our focus continues to be on traditional lending and conservative balance sheet management, which has continued to enable us to produce consistent high quality recurring earnings our investment portfolio is and always has been a source of liquidity to fund loan growth and provide flexibility for balance sheet management. As a result, we held an average of $1 1 billion of overnight investments.
Speaker 4: As discussed in prior calls, our focus continues to be on traditional lending and conservative balance sheet management, which has continued to enable us to produce consistent high-quality recurring earnings. Our investment portfolio is and always has been a source of liquidity to fund loan growth and provide flexibility for balance sheet management. As a result, we held an average of $1.1 billion of overnight investments during the fourth quarter of 2021, an increase of $207 million compared to the same period in 2020.
The fourth quarter of 2021, an increase of $207 million compared to the same period in 2020.
Given the elevated level of cash as we head into 2022, the bank will continue to evaluate investing excess liquidity into the market.
Speaker 4: Given the elevated level of cash as we head into 2022, the bank will continue to evaluate investing excess liquidity into the market.
On the funding side of the balance sheet total average deposits increased $297 5 million or 6% for the fourth quarter of 2021 over the same period a year earlier the increase in deposits was a result of $52 9 million or seven 5% increase in average money market deposits of $203 million or 16.
Speaker 4: On the funding side of the balance sheet, total average deposits increased $297.5 million or 6% for the fourth quarter of 2021 over the same period a year earlier. The increase in deposits was a result of $52.9 million or a 7.5% increase in average money market deposits.
Speaker 4: A 203 million or 16.1% increase in average savings deposits, 115 or 11.1% increase in interest-bearing checking account averages, and 155 million or 24.2% increase in average non-interest-bearing checking balance.
1% increase in average savings deposits of 115, or 11, 1% increase in interest bearing checking account averages and $155 million or 24, 2% increase in average noninterest bearing checking balances.
Speaker 4: These are partially offset by the decrease in average time deposits of $228 million, or 17.8% over the same period last year.
These are partially offset by the decrease in average time deposits of $228 million or 17, 8% over the same period last year.
During the same period, our total cost of interest bearing deposits increased 11 basis points from 34 basis points. This.
Speaker 4: During the same period, our total cost of interest bank deposits increased 11 basis points from 34 basis points.
Speaker 4: is primarily driven by a decrease in money market deposits to 10 basis points from 25
This is primarily driven by a decrease in money market deposits to 10 basis points from 25 basis points over time deposits to 32 basis points from 95 basis points over the same period last year.
Speaker 4: over time deposits to 32 basis points from 95 basis points over the same period last year.
As we move into 2022 additional opportunities continue to exist as Cds reprice to lower market rates.
Speaker 4: As we move into 2022, additional opportunities continue to exist as CDs reprice to lower market rates.
That said the bank has approximately $277 million in Cds that will mature at an average rate of 37 basis points in the first quarter of 2020 to the.
Speaker 4: With that said, the bank has approximately $277 million.
Speaker 4: that will mature at an average rate of 37 base points in the first quarter of 2020.
Speaker 4: The second quarter of 20 to approximately 224 million in CDs will mature at an average rate of 24.
In the second quarter of 2000 to approximately $224 million in Cds will mature at an average rate of 24 basis points and in the second half of 2020 to approximately $372 million in Cds will mature at an average rate of 20 basis points.
Speaker 4: And in the second half of 2022, approximately 372 million of CDs will mature at an average
Speaker 4: Our financial services division continues to be a significant recurring source of non-interest income, and they had approximately $1.1 billion of assets under management as of December 31, 2021.
Our financial services Division continues to be significant recurring source of noninterest income and they had approximately $1 1 billion of assets under management as of December 31, 2021.
Now onto non interest expense.
Speaker 4: Total non-interest expense, net of ORE expense, came in at 26.2 million, up 1.6 million compared to the third quarter of 21, and slightly above our estimated range of 24.9 to 25.4 million.
Total noninterest expense net of <unk> expense came in at $26 2 million up $1 6 million compared to the third quarter of 'twenty, one and slightly above our estimated range of 24, 9% to $25 4 million increase.
Speaker 4: An increase from prior quarter is primarily a result of increases in seasonal net occupancy expenses and increased advertising.
The increase from prior quarter is primarily a result of increases in seasonal that occupancy expenses and increased advertising expenses.
Speaker 4: ORE expense came in net at an income of $28,000 for the quarter as compared to an expense of $32,000 in the prior quarter.
Oreo expense came in net income of 28000 for the quarter as compared to an expense of 32000 in the prior quarter.
Speaker 4: Given the continued low level of ORE expenses, we are going to decrease the anticipated level of expenses not to exceed $250,000 per quarter.
Given the continued low level of ore expenses, we are going to decrease the anticipated level of expenses not to achieve $250000 per quarter.
All the other categories of noninterest expense were in line with our expectations for the fourth quarter.
Speaker 4: All the other categories of non-interest expense were in line with our expectations for the fourth quarter. You would expect the 2022 total recurring non-interest expense, net of already expense, to be in the range of $24.9 to $25.5 million per quarter.
We would expect 2022 total recurring noninterest expense net of Oreo expense to be in the range of 24, 9% to $25 $5 million per quarter.
Speaker 4: Efficiency ratio in the fourth quarter of 21 came in at 58.5% compared to 57.31% in the fourth quarter.
The efficiency ratio in the fourth quarter of 'twenty, one came in at 58, 5% compared to 50, 731% in the fourth quarter of 2020.
Speaker 4: Finally, the capital ratios. Consolidated equity-to-asset ratio increased slightly. It was 9.7% at the end of the fourth quarter, up 14 basis.
Finally, the capital ratios consolidated equity to asset ratio increased slightly was nine 7% at the end of the fourth quarter up 14 basis points from $9 56 for the third quarter of 'twenty. One the bank continues to be proud of its ability to increase shareholder value for value. During these challenging economic times book value per share at December 31, 2002.
Speaker 4: 956 from the third quarter of 21. The bank continues to be proud of its ability to increase shareholder value during these challenging economic times. Book value per share at December 31, 2021 was $31.28, up 6.2% compared to $29.46 a year earlier. These amounts are adjusted for the reverse stocks which occurred in the second quarter of 21. Now Scott will review the loan portfolio and non-performing loans.
One was $31 28.
Up six 2% compared to $29 46, a year earlier. These amounts are adjusted for the reverse stock split which occurred in the second quarter of 'twenty. One now Scot will review the loan portfolio and nonperforming loans.
Good morning, and thank you Mike.
Speaker 3: The fourth quarter, total loans increased $42 million in actual numbers, or 0.96%. Year-over-year loans increased by $194 million, or 4.6%.
In the fourth quarter total loans increased $42 million in actual numbers are 96%.
Year over year loans increased by 194 million or four 6%.
Speaker 4: This marks another quarter of steady long growth, which has continued unabated over the last couple of years, despite the pandemic and the sort of challenges which have been presented.
This marks another quarter of steady loan growth, which has continued unabated over the last couple of years, despite the pandemic and the sort of challenges which have been presented.
We're very grateful to our employees for their combined efforts in achieving these results.
Speaker 5: We're very grateful to our employees for their combined efforts in achieving these results.
Residential real estate grew $47 million in the quarter of one 1%.
Speaker 5: Residential real estate grew 47 million on the quarter of 1.1 percent. Year over year the increase was 207 million.
Year over year, the increase was $207 million.
Speaker 5: Commercial loans decreased by $4.5 million on the quarter, which includes ongoing...
Commercial loans decreased by $4 5 million in the quarter, which includes ongoing PPP forgiveness.
Speaker 5: The growth in the residential portfolio was spread fairly evenly between our New York and Florida markets on the quarter.
The growth in the residential portfolio was spread fairly evenly between our New York and Florida markets on the quarter.
<unk> in both areas remains good although a slowdown during the holiday in mid winter periods as typical.
Speaker 5: Activity in both areas remains good, though a slowdown there in the holiday and midwinter periods is typical.
Speaker 5: Our expectations are that due to pent-up demand and interest rates remaining relatively low, we should see good levels of activity as we exit the mid-winter period.
Our expectations are.
That due to pent up demand and interest rates remaining relatively low we should see good levels of activity as we exit the mid winter period.
Our loan backlog at year end remains solid it.
It is down from September which is normal given the time of year. However, we are pleased with where we stand purchase money has remained active in all our regions and refinances have continued to drop this is reflected in the makeup of our current backlog.
Speaker 5: It is down from September , which is normal given the time of year. However, we are pleased with where we stand. Purchase money has remained active in all our regions, and refinances have continued to drop. This is reflected in the makeup of our current backlog.
Speaker 5: Interest rates have edged up a bit recently and our current base 30 year fixed rate stands at 3 3 8 percent.
Interest rates have edged up a bit recently and our current base 30 year fixed rate stands at three and three 8%.
Nonperforming delinquency numbers continue to be good.
Speaker 5: Non-performing loans dropped from 21.2 million to 18.7 on the quarter, while non-performing assets decreased from 20.7 million to 19.1. This were also shown year over year in both categories.
Nonperforming loans dropped from $21 2 million to $18 seven in the quarter, while nonperforming assets decreased from $20 7 million to $19 one.
Improvements were also showing year over year in both categories net.
Net charge offs totaled 83000 in the quarter.
The coverage ratio or allowance to nonperforming loans is at 236% as of December up slightly from the prior year Rob. Thank.
Speaker 6: The coverage ratio is at 236% as of December , up slightly from the prior year. Rob? Thank you, Scott. We're happy to answer any questions you may have.
Thank you Scott we're happy to answer any questions you have.
Kansas you there.
I'm here.
Are you ready for question and answer.
Yeah.
Whenever anyone else's.
Wonderful we will now begin the question and answer session to ask a question you May Press Star followed by one on your touch time fine. If you are using a speakerphone. Please pick up your handset before pressing the K. If at any time. Your question has been addressed and you would like to withdraw your question. Please press star.
Speaker 1: Wonderful. We will now begin the question and answer session. To ask a question you may press star followed by one on your touchtone phone. If you are using a speakerphone please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question please press star then two. At this time we will pause momentarily to assemble our roster.
<unk> been paid at this time, we will pause momentarily to assemble our roster.
Our first question comes from Alex Plateau Piper Sandler.
Speaker 1: Our first question comes from Alex Twerdal, Piper Sadler.
Alex Your line is on mute. Please go ahead.
Hey, good morning, guys.
Speaker 7: Hey, good morning, guys. Morning, Alex. Morning, Alex.
Good morning, Alex Alex morning out.
Speaker 7: The first question for me, just as I think about the book yield on the residential portfolio, $348 during the quarter, your new loan yield is only just a little bit below that.
First question for me just as I think about the the book yield on the residential portfolios $3 48 during the quarter of your new loan yield is only just a little bit below that.
Speaker 8: Can you talk a little bit about the distribution of rate in the book? If the bulk of the book is now in that $350 range, I guess what I'm getting at is how much more overall residential loan yield compression is possible to see if rates stay steady hovering just below $350-ish.
Can you talk a little bit about sort of the distribution of rate in the book and sort of what's.
If the if the bulk of the book is now in that $3 50 ish range and sort of I guess, what I'm getting at is how much more overall residential loan yield compression is it possible to see if if rate stay steady kind of hovering just below $3 50 ish.
Yeah sure. So Alex I mean, there is I mean, so let's start I mean to give you a little bit like you said a background of a book yield there are definitely loans that we have in the portfolio that are at higher rates that have not refinanced down at rates that we truthfully have been refinanced. So we're talking some that are in the fours and north of four range.
Speaker 5: Yeah, sure. So, Alex, I mean, there is, I mean, so let's start, I mean, to give you a little bit of, like you said, a background and a book yield, there are definitely loans that we have in the portfolio that are at higher rates that have not refinanced down at rates that would traditionally have been refinanced. So we're talking some that are in the fours and north of four range, you know, if we continue to, you know.
If we continue.
Put on mortgages in that three 3% and <unk> hundred a quarter range and what we've seen true book Youll start to compress as about a one to two basis points per month.
Speaker 4: put on mortgages in that 3, 3.8, 3.25 range, and what we've seen true book yields start to compress is about a couple, one to two basis points per month. What we've also seen that's also kind of, I guess, increasing that on a quarter to quarter basis because of the, I guess, I guess.
What we've also seen Thats also kind of.
I guess, increasing that on a quarter to quarter basis, because of the I guess, the I guess the.
The robust housing market that we've seen we have seen some loans that had been in non accrual for a period of time pay off right. So we've been able to recapture some of that non accrual interest and record that in the period in which they have.
Speaker 5: the robust housing market that we've seen, we have seen some loans that have been in non-accrual for a period of time pay off, right? And so we've been able to recapture some of that non-accrual interest and record that in the period in which they've, you know, in which they've paid off. So that's also kind of helped out that yield. But if you take all that out and go net, net, and if loan rates continue to stay down, you'll see a couple of basis points per month kind of, you know, compression, I would say. But just generally speaking, Alex,
In which they paid off so that's also kind of helped out that yield, but if you take all that out and go net net.
Rates continue to stay down you'll see a couple of basis points per amongst kind of compression.
Compression I would say.
Just generally speaking out.
Speaker 2: The refinance wave has really dramatically slowed, and I'm not sure we'll continue to see the rates drop off like we have in the past. And the vast majority of those loans are in the ranges that you're talking about right now. And we certainly have people, I think we probably have loans that are booked as high as 8 and 9 percent, and we send them a personal card every year. But for the most part, if people haven't refinanced by now, I think that tremendous activity has slowed.
The refinance wave is really dramatically slowed.
Im not sure we continue to see the the rates drop off probably we have in the past and the vast majority of those loans are.
In the in the ranges that you are talking about right now and we certainly have people I think we'd probably have loans on our books as high as 8% to 9% and we send them a personal part every year, but for the most part if people haven't refinanced by now I think that tremendous activity has slowed.
Got it.
Speaker 8: And then second question for me just you talked about the
And then a second question for me just you talked about the.
Speaker 8: your cash position and sort of waiting to be opportunistic around higher rates. And rates are up about 50 basis points on a 10-year depending on, I guess, which minute we're talking versus where we were about a quarter ago. So, I'm just wondering, you know, what are you looking for in order to put cash to work? And, you know, where do you feel comfortable with that cash position going over time? You know, how are you going to ladder it out because certainly rates have been
Sure.
Cash position and sort of waiting to be opportunistic around higher rates and rates are up about 50 basis points on the 10 year, depending on I guess, which minute we're talking.
Versus where we were about a quarter ago. So I'm. Just wondering you know what are you looking for in order to put cash to work and you know.
Where do you feel comfortable with that cash position going over time, you know how you can how you can a ladder it out.
Certainly rates have been certainly move it higher.
Speaker 2: I don't, we don't have a specific rate in mind that we're going to ring the bell and invest. Alex, uh, we're managing the balance sheet the way we feel is appropriate. And, uh, we'll invest that as we feel is, uh, we're comfortable with the rates and, uh, can move forward. Term is also a big issue too.
We don't have a specific rate in mind that we're going to ring, the bell and invest Alex we're managing the balance sheet. The way, we feel is appropriate and.
We'll invest that as we feel it is.
We're comfortable with the rates.
<unk> can move forward term is also a big issue too.
Speaker 2: You know, where do the rates fit in at the right time and where do the maturities fit into our plans going forward? So there are a number of things and a number of factors that are involved there. What opportunities there are at the time, what opportunities elsewhere there are at the time, what's happening with the deposits, all of those factors weigh in. But there's no specific rate that we're going to ring the bell and invest.
Where does where do the rates fit in at the right time, and where do the maturities feeling fit into our plans going forward. So.
There are a number of things in a number of factors that are involved there and what opportunities. There are at the time what opportunities elsewhere. There are at the time, what's happening with the deposits all of those factors.
But there's no specific rate that we're going to ring the bell on investment.
Speaker 7: Have you done any security purchases so far in the first quarter?
Okay have you done any security purchases so far in the first quarter.
Yes, just a modest amount.
Okay.
Speaker 8: And then as I think about the SEASOL adjustment and you know, where we are today versus kind of where your reserve is, where we are today in the economy versus where your reserve is, I would expect any adjustment for SEASOL, uh, which I guess was adopted 24 days ago, uh, to be pretty modest. Is there anything that I'm missing there? I mean, is there going to be any sort of real change to the reserve?
And then as I think about the seasonal adjustments and you know where we are today versus kind of where your reserve is where we are today and the economy versus where your reserve is I would expect.
The adjustment for <unk>, So, which I guess was adopted 24 days ago.
Can be pretty modest it is there anything that I'm missing there I mean is there going to be any sort of real change to the reserves.
No Alex I mean, as you know we haven't released we haven't released the adjustment you had type of thing as far as disclosing it but no I would not expect a material adjustment up or down from where we're at today.
Speaker 4: No, Alex. As you know, we haven't released the adjustment yet type of thing as far as disclosing it. But no, I would not expect a material adjustment up or down from where we're at today.
At the end of the year.
Speaker 8: And then as I think about the expense guide, which hasn't really changed much for 2022 or 2021, and it suggests that it's even possible that expenses could be close to flat, you know, I know that wage inflation has been a pressure at a number of other banks that we've been talking to so far this month. I'm just wondering if, you know, if there is some of that in sort of normal...
And then as I think about the expense guide, which hasn't really changed much for 2022 or 2020 wanted to suggest that it's impossible that expenses could be close to flat you know I I know that wage inflation has been a pressure at a number of other banks that we've been talking to so far this month.
I'm just wondering if you know if there is some of that in sort of a normal.
Speaker 8: salary increase is fully reflected in that $24.9 to $25.5 per quarter expense guide.
Salary increases are fully reflected in that $24 nine to 25 and a half per quarter.
The expense guide.
Speaker 2: No question, we've seen our share of that, Alex. I think that's not just even an industry, but a nationwide epidemic with regard to wages, just attracting people to work and retaining people takes more and more every day.
No question, we've seen our share of that Alex.
I think that's not just even an industry, but a nationwide.
Epidemic with regard to wages, just attracting people to work.
And retaining people takes more and more every day.
Speaker 4: Right, but you saw that in the year over year number. Sorry, go ahead.
Right I mean, you saw that in the year over year number.
Sure go ahead.
No I was going to ask if you're seeing a number of open spots today that need to be filled as the year progresses.
Speaker 8: So I was going to ask if you're seeing a number of open spots today that need to be filled as the year progresses.
Speaker 8: No question. We are encouraged by the progress of bringing that number down, but there are still a significant number of open positions.
No question, we are encouraged by the progress of bringing that number down but there.
There are still a significant number of open positions.
Okay.
And then final question Murdo moving.
Moving operations to Florida has certainly helped in that category.
Speaker 2: I hire very good people in Florida and they seem to stay with me for a long time.
We hired very good people in Florida.
They seem to stay with us a long time.
Is that just because there's more people down there that are that are qualified for the physicians or are you paid.
Speaker 8: Is that just because there's more people down there that are qualified for the positions or are you able to get less money?
Yeah, we lost money.
Probably there is a.
Speaker 2: Probably there's a it's a service-based economy and there are a number of employers that we can draw from Not only competitors, but other industries, and they're very well trained people typically and do very well with our company
It's a service based economy and there are a number of employers that we can draw from not only competitors, but other industries and they're very well trained people typically.
Do very well with our company.
Okay and then just a final question for me on capital and the dividend increase at a modest dividend increase in the fourth quarter is that just to kind of normalize the dividend with the with the stock split or is it indicative of maybe a new strategy to try to increase the dividend.
More regularly.
Speaker 2: Well, it certainly normalized the dividend, and I think everybody likes dividend increases. I can't give you a forward-looking statement on that, but I think everybody likes a little dividend increase.
Well, it's certainly normalize the dividend and I think everybody likes dividend increases like I could give you a forward looking statement on that but I think everybody likes a little dividend increase.
[laughter].
Yeah.
And then alright, well thank you for taking my questions.
Thanks Al Thanks off.
Speaker 1: Thank you, Alex. This now concludes our question and answer session. I would like to turn the conference back over to Robert J. McCormick for any closing remarks.
Thank you Alex This now concludes our question and answer session I would like to turn the.
The conference back over to Robert J Mccormick for any closing remarks.
Thank you for your time this morning and have a great day.
Yeah.
Uh huh.
Uh huh.
Yeah.
Okay.
Right.
Okay.
Yes.