Q1 2022 Valley National Bancorp Earnings Call
Ladies and gentlemen, please standby your conference call will begin momentarily once again. Please stand by your conference call will begin momentarily. Thank you for your patience and please continue to hold.
[music].
Thank you for standing by and welcome to the first quarter of 2020 to Valley National Bancorp Earnings Conference call. At this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone as a reminder, today's program may be recorded I would now.
Like to introduce your host for today's program.
Head of Investor Relations. Please go ahead.
Okay.
Good morning, and welcome to Valley's first quarter 2022 earnings conference call presenting on behalf of Valley today are CEO IRA Robbins, President, Tom <unk>, Chief Financial Officer, Mike Hagadorn before we begin I would like to make everyone aware that our quarterly earnings release and supporting documents can be found on our company website at valley Dot com when discussing.
Our results, we refer to non-GAAP measures, which exclude certain items from reported results.
Please refer to today's earnings release for reconciliations of these non-GAAP measures. Additionally, I would like to highlight slide two of our earnings presentation and remind you that comments made during this call may contain forward looking statements relating to valley National Bancorp and the banking industry.
Valley encourages all participants to refer to our SEC filings, including those found on form 8-K, 10-Q, and 10-K for a complete discussion of forward looking statements with that I'll turn the call over to IRA Robbins.
Thank you Travis.
Welcome to those of you on the call.
A few comments to make this morning, and then we'll ask Todd to provide some insight on our loan growth and strategic progress Mike.
Mike will then discuss the quarters financial results in more detail.
In the first quarter of 2022 gathering reported net income of $117 million earnings per share of <unk> 27.
Return on average assets of 1.07%.
Exclusive of non core charges.
And ROE would have been 28 and.
And 110% respectively.
The benefits of our diverse and agile business model and strong balance sheet were evident during the quarter.
Strong organic net interest income growth and robust swap revenues more than offset both a $10 million reduction in triple fee income and mortgage banking headwinds.
Tangible book value was also preserved as of March 31 valuation of our relatively modest available for sale portfolio had limited impact on our equity.
Over the last few years, we have made significant investments in both people and technology to capitalize on the enormous and diverse growth opportunities we have identified.
The organic growth results that we continue to generate justify these investment efforts.
Exclusive of Triple T.
Gross loans increased $1 $4 billion during the quarter or over 17% on an annualized basis.
These impressive results are a continuation of the success, we have seen over the last year.
In the past 12 months, we have generated nearly $4 billion of organic loan growth.
Representing a 13% increase from March 31 2021.
Tom will provide additional details on our loan growth and strategic efforts in a moment.
As it relates to bank Leumi, we were very pleased to close the transaction is expected on April one.
Onboarding and integration efforts are proceeding in line with our expectations and we are already observing exciting collaboration between the teams.
Let me generate strong commercial loan growth in the first quarter and noninterest income is running ahead of schedule.
Importantly, they are differentiated technology banking business also has seen a solid increase in deposits since announcement.
The compelling strategic rationale for the transaction is more evident than ever and we are extremely excited for our collective future.
During my tenure as CEO Valley has proven the ability to grow both organically and through acquisition.
Our current focus is on successfully integrating bank leumi and driving continued organic growth within our combined organizations.
While we strongly believe M&A provides opportunities to accelerate our strategic initiatives, we do not anticipate being active in the traditional bank M&A market in the near future.
I wanted to ask Tom to discuss our loan results and what we view as key strategic drivers for our revenue growth.
Thank you IRA as IRA mentioned during the quarter, we generated $1 4 billion up non PPP loan growth as expected growth was primarily concentrated in our commercial segment and was diversified across geographies.
Specifically CRE growth was split approximately $75 25 between our northern and southern regions.
C&I growth was more balanced at approximately 60 40.
On the construction side, we saw an increase in advances on previously approved projects, while our sequential growth in construction loans is strong on an annualized basis. The dollar increase was relatively modest and this segment continues to comprise only 6% of our total loan portfolio.
Palio.
We remain optimistic on our prospects for organic loan growth throughout the year.
As of March 31.
<unk> pipeline was historically high at over $3 5 billion.
While the first quarter results benefited from some pull forward, we anticipate generating 2022 loan growth in the low double digits.
Over the last few quarters, we have discussed our new market expansion efforts at lending hires we.
We are pleased to report that as of March 31. These initiatives have contributed $750 million and $600 million of loans respectively.
While total deposits were flat during the quarter, we continue to have a diverse set of funding channels available to us.
Specifically, we benefited from meaningful commercial checking account growth over the last few years.
Also continue to grow our niche efforts targeting homeowners associations cannabis companies and professional services firms.
This enabled us to allow retail Cds Toronto, a further during the quarter.
Rounding out the revenue discussion we saw non interest income improved modestly.
Swap revenue was robust and helped to offset a challenging mortgage banking environment during the quarter.
We are working hard to develop and grow sustainable sources of noninterest income.
During the quarter, our diverse revenue streams helped to absorb the headwinds of a volatile market.
All in non PPP revenue increased 17% from the first quarter of 2021.
We are heading into the second quarter from a position of strength and expect a combination of loan growth and rising interest rates to contribute with strong revenue growth throughout through the remainder of the year.
Thanks, Tom.
As you can tell we are laser focused on driving organic loan and revenue growth, which we believe will result in additional positive operating leverage over time.
Admittedly over the last two quarters, we have seen expense growth outpaced revenues.
This is due to a combination of proactive investments on our part.
And broader external expense pressure seen across the entire industry.
We continuously work to limit and offset when possible growth in expenses and are confident that revenues will accelerate as a result of our commercial lending engine and the expectation of rising interest rates.
We continue to focus on positive operating leverage and believe this progress will emerge throughout the year.
With that I'll turn the call over to Mike to update our guidance and discuss some of the quarters financial highlights.
Thank you IRA I will start this morning on slide five with an update on certain guidance items that we provided in January .
Due to the exceptional growth generated in the first quarter and an improved outlook for the rest of the year. We are increasing our 2022 organic loan growth projections to a range of 10% to 12%.
As a result of this higher growth and using the forward curve as of March 31, we.
We now anticipate 2020 twos net interest income growth of between eight and 12%.
As a reminder, we projected growth compared to reported 2021 net interest income, which included approximately $85 million, a PPP loan interest and fee income.
Slide six illustrates valleys recent net interest income and margin trends.
Net interest income increased over $2 million from the linked quarter, Despite a $10 million reduction in triple fee income.
This reflected the benefits of liquidity deployment into loans as well as a full quarter's impact from the Westchester Bank acquisition.
Our reported net interest margin declined seven basis points to three 6%.
Exclusive of PPP. However, the margin increased one basis point to 311% from $3 one zero percent in the fourth quarter.
We estimate that the first quarter's lower day count weighed on both reported and Triple P. Adjusted margin by approximately five basis points.
Additionally, we saw the margin expand throughout the quarter as cash was put to work.
We anticipate further benefits from rising interest rates as origination yields expand and our floating loans reprice higher.
While lagging deposit costs may not be easy in the future our focus on less sensitive commercial operating accounts and the diversity of our funding sources should provide a relative benefit as rates rise.
Slide seven details our loan balances and the key drivers of our strong growth during the quarter.
As Tom mentioned earlier, our non PPP loans increased over $1 4 billion or four 3% from December 31 2021.
Our growth results continue to benefit from geographic and asset class diversification.
We were also pleased that loan origination yields increased nine basis points during the quarter.
Turning to our deposit composition on slide eight you will see that total deposits were flat as compared to the fourth quarter.
That said noninterest bearing and other transaction account balances continued to increase replacing a further reduction in our CD balances.
Yes.
You will see that noninterest in transaction accounts comprised 33% and 57% of total deposits up from 31% and 52% in the first quarter of 2021, respectively.
During the quarter, our CD and non maturity deposit costs declined four basis points and one basis point respectively.
Over the last few years, our deposit transition has benefited in part from our focus on commercial operating account originations.
The niche focus areas that Tom mentioned earlier also contributed to the growth in transaction balances during the quarter.
Moving to slide nine we generated noninterest income of $39 million for the quarter as compared to $38 million in the fourth quarter and $31 million in the first quarter of 2021.
The linked quarter increase reflected higher swap income and advisory fees, which offset a meaningful compression in mortgage banking income.
As the expectation for higher interest rates accelerated we saw more customers opting for floating loans within associated swap.
Mortgage banking results were pressured by both lower sales activity in a negative valuation marks on our loans held for sale at the end of the quarter.
On Slide 10, you can see that our adjusted expenses were over $189 million for the quarter.
As depicted in the waterfall chart. This includes approximately $7 million of expenses related to elevated seasonal factors.
A portion of the non seasonal expense increase as for investments we have made to position ourselves for the significant growth that we continue to achieve that.
That said, we acknowledge that pressures on other business as usual expenses continue to build.
We are working to maximize efficiencies to ensure that more of our anticipated revenue growth will drop to the bottom line.
As a result of our ongoing review of delivery channels. We are targeting approximately 13 branch locations for closure by the end of the year.
Turning to slide 11, you can see our credit trends for the last five quarters are.
Our allowance for credit losses declined to 1.08% of non PPP loans at March 31.
From 111% at December 31.
For the second consecutive quarter, we recognized modest net recoveries still we recorded a $3 5 million provision.
Largely to account for the significant growth that we experienced.
Nonaccrual balances continue to decline in the first quarter, driven primarily by our Cree and C&I portfolios.
While early stage delinquencies ticked up in the quarter much of the increase is associated with what we consider non credit issues.
We remain confident in the quality of our underwriting and our future credit performance.
On Slide 12, you can see the tangible book value was flat for the quarter and approximately seven 5% higher than a year ago.
The lack of quarterly tangible book value growth is primarily the result of the modest negative OCI impact associated with our available for sale securities portfolio.
Relative to peers. This headwind was minimized as a result of our relatively small securities portfolio and modest Asf's exposure, which reflects our continued focus on tangible book value preservation.
As our loan and securities growth was primarily funded with excess cash during the quarter tangible common equity to tangible asset ratio was effectively flat.
However, our risk based regulatory ratios declined as we replace cash with loans carrying a higher risk weight.
With that I will turn the call back to the operator to begin Q&A. Thank you.
Certainly ladies and gentlemen, if you have any questions. At this time. Please press Star then one on your Touchstone telephone.
Question has been answered and you'd like to remove yourself from the queue. Please press the pound key.
And our first question comes from the line of Frank Schiraldi from Piper Sandler Your question. Please.
Good morning.
Just on the.
Updated guidance it seems like the NII growth the change there.
Just really a function of the increased loan growth.
Just wondering.
I would assume the revised guidance is more rate hikes baked in and just wondering given your.
Alco positioning if thats sort of de Minimis or how you have that baked into guide.
Frank It's Mike I'll go ahead and take a stab at this one we do have seven fed rate hikes included in our modeling.
And then also I would point out that the lower end of our NII guide reflects potential beta stress test that while we don't anticipate will actually happen. We wanted to be prepared for so we have stress test stress tested that range for various data outcomes, which I think will be the bigger driver down the road.
Okay. So the low end is if you it seems like given where liquidity is in the banking system.
You don't really expect to get to debate is that we're.
The implied by the low end of guide Alright, and the low end Thats correct, yes.
And then just.
Continuing on that vein just a follow up.
The loan growth guide.
What's a more normalized utilization rates look like versus where they are now.
Just wondering if you have any of that pick up.
Ached into your expectations.
Hey, Frank it's Tom.
We're seeing a slight uptick on the utilization rates from 39% to 40, so nothing material, but with our focused relationship driven C&I and commercial growth. We are seeing an increase in our committed lines. So we're going to get a natural real dollar increase but we haven't baked in anything above that 40%.
<unk> utilization rate.
Got you okay, great. Thank you.
Thank you Frank.
Thank you. Our next question comes from the line of Michael Perito from <unk>. Your question. Please.
Hey, good morning, everybody. Thanks for taking my questions.
Good morning.
I wanted to start piggybacking on <unk> question. So.
You guys, obviously updated some of the revenue guide on the top line. The efficiency guide is unchanged. So I guess just kind of a simple question I guess does it.
Do you guys have kind of increasing confidence given the updated NII outlook, that's more going to be towards the below 50% at 50 part of that range or are there other kind of accelerated expense growth items or investments, we should be mindful of that that might have pay off longer term, but near term, we will offset some of that pick up in the top line.
I'll take a stab at this one.
The guide that we would give is that we're fairly confident with the core run rate being around $183 million.
But as a reminder, I wanted to make sure but he knows the first quarter of this year included the Westchester Bank.
Which we estimate contributed around $2 million of non seasonal sequential increase so thats somewhat overstates the growth rate.
But to the degree that there is any expense growth in the second quarter, we would expect it to be much more modest and obviously to achieve positive operating leverage we understand the need to lag that expense growth as our revenue growth accelerates and so that's really the strategic imperative.
Mike This is Travis just to follow up on that and it goes back to Mike's prior response.
The unchanged guidance is more tied to the low end of the NII range.
We have that data stress, that's one that would be otherwise you would anticipate some improvement to the efficiency ratio.
Great that's helpful.
Will.
And then secondly, just on some of the newer platforms that you guys are well I guess already have good access to on April 1st like to thank you for breaking side some of the commercial lending.
On kind of traditional valley markets.
That's not the best way to put it, but but Miami and Chicago.
Curious how those.
Have performed over the first quarter and if theres any kind of notable updates there that are worth mentioning in terms of the growth profiles of those newer platform. So you guys are bringing on.
Yes, Michael I'll kind of explain it in.
Separately, our new platforms at legacy Valley.
Was our entrance into Philadelphia, Nashville, and Atlanta, and we have seen very strong growth and keep in mind a lot of it is following our existing customers who go into those markets as our starting point then we build we put feet on the street and we start building more locally from there and we've seen that success first in Philly and now in the others.
When you mentioned Chicago and <unk>.
Miami I think you mentioned loss of not sure that's really related to <unk> and the new businesses that that we obtained through the leoni merger.
The first quarter all of those were active they had very strong pipelines and origination results annualized growth for the <unk> portfolio in total on the loan side was there a little over 13%.
I think that answers your question, yes, it's two different markets question, So valley legacy and the new Leoni.
Yes, that's great color just steel.
Right.
And that was just on the.
Venture banking side.
Mike This is that right I think as Tom alluded to they are really not in any of our numbers yet, but we're really excited about the opportunities that theyre going to bring to us.
Tech business as you know is really focus more on the deposits from the time of announcement to where we are today, we've seen significant increases north of 30% and those deposits.
So we continue to be really excited about what that business is going to bring to us from a core funding perspective.
Awesome helpful. And then just lastly from me and I'll step back just on the buyback I know you guys have historically had an authorization outstanding.
It seems to be a little bigger.
Shorter time period around it.
I appreciate your comments on bank M&A near term here. So is it fair for us to think that with some of this pullback here clearly.
Positive outlook you guys have for your business that that could be utilized to some degree or with some regularity or is it not necessarily is that reading too much into it.
I think you're probably reading a bit too much into it but I think from a normal governance process perspective, it absolutely makes sense for us to have a buyback and we haven't had a new ones since 2007, so to be able to put something with some significant.
Optionality and I think makes a lot of sense for us that said I think the priority continues to be to support the strong organic loan growth. When we think about the capital utilization, 17% is a tremendous organic growth number what that may not continue we do anticipate strong organic growth to continue for for Valeant.
Obviously, the best use of capital continues to be for that utilization.
Very good helpful. Thanks on all accounts I appreciate it.
It's Mike.
Thank you. Our next question comes from the line of Steven Alexopoulos from Jpmorgan. Your question. Please.
Hey, good morning, everyone.
Good morning.
So.
Not to beat a dead horse on the NII outlook, but if I look at the loan to deposit ratio at 100, So I would assume you're going to need to fully fund loan growth with deposit. So one is that correct and then secondly.
What is the range of deposit beta youre, assuming at the low and high end of the NII Guide.
So the average.
For our modeling is 30%.
The range on the higher strength that you maybe gets up to about 45 <unk> five.
Yes.
So I mean those.
Those are pretty extreme examples youre not wrong, obviously deposit growth for the kind of loan engine that we have is really important and maybe I would remind everybody on the call today, that's kind of why we have the various delivery channels that we have and when you look at our organic growth both in personal and business accounts, we are growing.
Both.
Every quarter over the last two years.
And maybe it's times like this that it is.
Right to have the retail footprint that we have that makes up roughly a third of our total funding sources because in the consumer space they tend to be a little less right.
Our rate sensitive and even if they are as rate sensitive as the commercial side. It's another avenue another product offering that we can.
Offer to meet the needs of this growing balance sheet on the lending side.
Given that just maybe add to that a little bit I think over the last few years.
Been an intense strategic focus in this organization to diversify the funding source and while organic loan growth has been.
<unk> priority as well for many in the industry assets had been really the focus for us the strategic focus has really been on the liability side in conjunction with the assets we entered into the cannabis market. We work more on the HLA market, Tom talked about some of the areas from the financial perspective businesses that we've gone after the shift in balance sheet from Cree to C&I that.
Brings a lot of deposits as well has really transformed what the balance sheet looks like and I think you can sort of take a look at what happened from that the NIM. This quarter traditionally gone from fourth quarter to first quarter is a challenge for us, especially in a rising interest rate environment and when you look at value historically say, where accrete organized northeast bank that wed had a.
Ability sensitive structure.
Asset sensitive and you saw that in the NIM.
Specific quarter, that's obviously going to bode well for us as rates continue to rise, but really reflects the changing funding structure of this organization and we think there's a lot of optionality for us out there today that wasn't necessarily prevalent a few years ago as to how we fund this balance sheet without having some of the negative impact to NIM that maybe you would have historically seen Steve.
And it's the only thing I'll add to that and on our business deposits. The new account openings traditionally over 60% of those deposits come in as noninterest bearing deposits and they are very sticky deposits. That's been our focus of growth on the depository side.
And maybe one more tidbit that will help.
Looking forward keep in mind, leaving these loan to deposit ratio was 75% and their cost of funds was cheaper than ours. So that provides a ready source on April 1st funding to help fund our loan growth.
Okay. That's helpful, but I just wanted to sense, so it sounded like 55% to 60%.
Beta assumed at the 8% growth range, so to get to the upper end of the NII guide, what's the data that you would need to be able to get to that around about around 30, you have it right in the answers around 30.
That's helpful.
And then thank you on that so I wanted to ask so if we look at the $750 million of loans from the expansion to Philly Atlanta, Nashville, It's always great to see banks doing what youre doing but.
Please go back to having covered value for a long time your predecessor, Jerry would always say the only way to grow in new markets was to offer a better deal than the banks that were already there are you just offering a better deal maybe you could give some color on why you're seeing such strong growth out of these new markets. So quickly.
I think it's a differentiated approach we didn't go into these markets largely was setting up an LPL and saying we're going to be out there offering the best rate in individual market.
As Tom alluded to and maybe you can provide a little more color. It was really relationship driven as following some of our new customers into there.
And having them really provide sort of what that introduction to some of the other borrowers in this footprints look like so the yields on those for US are right in line with the overall portfolio.
I think a very different perspective as to how we're looking at.
And those markets versus maybe what some others are doing but Tom probably some more color, but probably be helpful. There.
And I was right we entered those markets following our good customers into those we've maintained the same margins and yields in those markets and more importantly, we maintain our underwriting standards to those markets stress testing.
Interest rates and cap rates on all of the allowance. So we're not compromising to go in either on credit standards or on return.
Okay, and Dave become deposit we've.
<unk> been successful in raising deposits in those markets also.
Okay. Thanks last question for me the comment I heard that you don't expect to be active in M&A for traditional banks at least over the near term is that just reflective of theres not many great opportunities out there today or the environment is tough to close deals or is this a longer term strategic shift that you are really announcing to the market today.
I think one of the things I've tried to do with CLO of the organization and the board has really been supportive of is looking at M&A from a strategic lever perspective, we have a pretty defined approach as to how we think about growth is going to look like in this organization and from environment perspective, I mean, there is an opportunity to layer strategic M&A that really accelerates that.
Growth is something that we prioritized over the last few transactions that we've done where historically M&A what might have been how do we think about cutting cost within an acquisition and then really what is the overall organization looks like so a very different approach for me organic growth drives valuation organic growth drives our right from an independent perspective, so we need to.
Create strategic opportunities and partly through M&A to help us create organic organic growth I would say today, there is theres less options out there that really provide that.
But the last couple of deals that we've done really provided us amazing organic op opportunities today, and Youre seeing that was 17% loan growth and you go back and look at what the organic loan growth. In this organization has been since I took over as CEO .
Or can you just around 9%.
Been able to do that without doing M&A, we created a juggernaut when it comes to organic loan growth in this organization and we're really excited about what those opportunities look like prestige.
Okay. So maybe think about it that theres a higher bar today for you to do a traditional bank deal than maybe what we would've thought about one or two years ago is that right. I think the bar is I think the bar is higher but I think the tide is higher which to me is more important right doing a deal where you're just looking at cost saves across an organization.
To me Mr.
<unk> sort of what the opportunities are for us.
It is an opportunity from a strategic perspective to lever growth is something we would potentially look at but that said I think we have amazing opportunities today, and it's not really a huge priority for us right now.
Great. Thanks for taking my questions. Thanks.
Thanks, Steve.
Thank you as a reminder, if you have a question at this time. Please press Star then one our next question comes from the line of Matthew Breese from Stephens. Your question. Please.
Hi, Good morning, everybody, Hey, I want to go to the NII Guide.
Maybe tackle this a different way throughout the course of this year I think it's expected that we're going to see a sequence of <unk>.
Fed fund hikes potentially 50 50.
$50 or 50 50 25.
If I were to look at <unk> 21, NII versus <unk> 22 NII.
How do you think that compares would it be towards the upper end of the guidance or the law.
Lower than the 8% range using kind of median assumptions on your end.
I want to make sure I understand the question correctly.
You can see what our previous guide was which would be more related to the fourth quarter at 5% to 7%.
That guide at that time did not incorporate the kind of variability that I talked about earlier related to various betas and it's mostly because of the size of projected fed increases right 125 bps, but maybe 50 and correctly.
Celebrate the number of them, which could drive a higher beta potentials. So we wanted to make sure that our guide included on the lower end of the guide included the potential for those higher data is to actually be reality.
Got it okay. So let me try it this way.
No.
What is the kind of interest rate sensitivity profile, and a plus 200 basis points.
Environment for.
The combined for the combined organization.
It would be approximately 910% positive NII impact.
That would be great yes.
And again I would just Matt just to try and simplify it right like the guide that we gave you in January of 5% to 7% was based on the 12 31 balance sheet and at 12 31 curve fast forward three months, our starting position on loans is much higher than we guided to higher loan growth and then the curve is more beneficial to our NII.
Look as well so the range goes up because of those two factors. The reason that the bottom end of the range I would say is expanded is because we think it's prudent to provide a beta shock scenario.
To the degree there is additional funding pressure beyond what we anticipate so we've told you what our historical betas have been and what goes into our internal modeling, but to be conservative and appropriate and give the right range of results. That's what the low end of that guide.
Captors got it okay.
I did want to go back to expenses just for a moment Mike.
Mike You had mentioned.
The core rate is $183 million and I just want to make sure when you referenced there being modest growth in the second quarter that we're basing that off of the 183 Mark.
And.
Could you give us some idea of off that 183.
What the all in expenses are expected to be for the second quarter kind of the baseline assumptions with with Les Omi at that point.
I don't have the with Lamy numbers at my fingertips, but I can answer the first part with clarity, yes, 183 is the baseline quarter.
Similar to the second quarter.
But exclusive of Leoni, yes.
Can you hear me contributed I mean, just on a standalone basis, they would contribute and call it $45 $47 million of expense in the quarter.
So obviously there are some early stage cost saves that you get that would reduce that impact.
Right Okay.
Okay. Thanks for the clarification.
The swap fee income how sustainable do you think that is where do you think there was a number of kind of quote unquote fence jumpers.
They wanted to get into it.
Higher to rates going higher.
Yes, Matt it's Tom I think.
Some acceleration.
In the first quarter I think we will return to normalized levels, which is probably that $8 million to $10 million a quarter.
Okay.
Okay.
The last one from me is.
This quarter, we're not really seeing any signs of credit deterioration across across any of the northeast banks, but the one area I continue to get questions on is the health of office.
And I was curious one could you just remind us of what your exposure is the office and then two are you seeing any sorts of signs of deterioration on that front or do you have kind of concerns with it.
On a go forward basis.
Yes, I mean, obviously, it's something that we focus on office.
Office is less than 10% of our total real estate.
Portfolio and very little we have minimal and the Manhattan high rise market most of our office portfolio.
Suburban non urban and attracts more towards the growing southeast markets, where we're seeing any new business in any growth beyond just what.
To remind.
You, Matt that we've always stressed at a much higher cap rate than some of our competitors have even in the better times, we do not have a large office exposure in general and it's very spread out very diverse.
A point of context, our average loan in our <unk>.
New business for the first quarter average real estate loans was $5 5 million with 62% weighted average LTV. So we continue to grow at a very granular fashion, 65% of our new business production was with existing customers. So we get a lot of repeat business from people that have been through these <unk>.
Cycles, but were very conscious of what's going on in the office space and very careful in how we proceed there.
Got it.
Okay. That's all I had thank you for taking my questions.
Thanks, Matt.
Thank you. Our next question comes from the line of Dave Bishop from Fig.
Group Your question please.
Yes, good morning, gentlemen.
Hi, guys, maybe keeping along the credit life.
Rather modest pickup, but a little bit of a hiccup or pick up in the early stage delinquencies.
The narrative noted two loans, just maybe any sort of granularity you can provide in terms of.
Those invoice.
Sure David Simon here, it was about a $37 million pick up in that.
$27 million of that is administrative and they're in a process of being removed. There were two real estate loans that are paying but slow pay one has an LTV at below 35%. The other has an LTV in the 70% range.
Both are well collateralized. It again, we stress our cap rates and we underwrite with cap rates that were much higher than I would say our competitors have so we don't expect any losses.
Got it then maybe.
One final question in terms of new money yields on new originations this quarter, just curious how that compare to.
Origination yields in the fourth quarter. Thanks.
Yeah, Dave So total origination yields increased nine basis points during the quarter, but I would tell you as we exited March those origination yields ticked up even further.
And they're just there's a chart on our loan page. The bottom left chart will show your origination yields over the last couple of quarters to put that in context that's.
On slide seven at the bottom if you want another reference.
Okay, Great I think I missed that I appreciate that.
Thank you.
Thank you.
That does conclude the question and answer session of today's program I'd like to hand, the program back to IRA Robbins for any further remarks.
Thank you I just want to thank everyone for taking the time to join US today and once again just reiterate how excited we are about the opportunities for organic growth within this organization most of what we've been doing on our own and in conjunction with the excitement around bank Leumi closing on April 1st. Thank you and look forward to talking to you next quarter.
Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
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Okay.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Yes.
Okay.
Yes.
Yes.
Okay.
Okay.
Sure.
Yes.
Okay.
Yeah.
Okay.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Okay.
<unk>.
Okay.
Okay.
Okay.
Great.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Okay.
Yeah.
Yes.
Okay.
Yeah.
[music].
Yes.
Yes.
Okay.
Yes.
Yes.
Yes.
Yes.
Sure.
Yes.
Okay.
Please.
Yes.
Yes.
Okay.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Okay.
Sure.
Okay.
Okay.
Okay.
Sure.
Okay.
Sure.
Yes.
Okay.
Okay.
Yes.
Yes.
Okay.
Okay.
Yes.
Okay.
Yes.
Yes.
Okay.
Yes.
<unk>.
Yes.
Okay.
Thanks.
Yes.
Okay.
Yes.
Okay.
Okay.
Thanks.
Yes.
Okay.
Yes.
Yes.
Okay.
Yes.
Yes.
Yes.
Yes.
Sure.
Okay.
Sure.
Okay.
Yes.
Okay.
Yes.
Thanks.
Yes.
Sure.
Okay.
Sure.
Yeah.
Yes.
Yes.
Okay.
Okay.
Yes.
Yes.
Sure.
Sure.
Okay.
Sure.
Yes.
Okay.
Okay.
Okay.
Yes.
Yes.
Okay.
Yes.
Yes.
Okay.
Okay.
Thanks.
Yes.
Yes.
Okay.
Yes.
Yes.
Yes.
Yes.
Okay.
Yes.
Yes.
Yes.
Okay.
Okay.
Yes.
Yes.
Okay.
Okay.
Okay.
Okay.
Yes.
Yes.
Okay.
Okay.
Yes.
Okay.
Okay.
Sure.
Okay.
Okay.
Yes.
Okay.
Okay.
Okay.
Yes.
Okay.
Okay.
Okay.
Okay.
Yes.
Sure.
Okay.
Okay.
Sure.
Okay.
Yes.
Okay.
Yes.
Hum.
Okay.
Yeah.
Yes.
Yes.
Okay.
Yes.
Okay.
Yes.
Yes.
Yes.
Yes.
Okay.
Yes.
Okay.
Yeah.
Yes.
Yes.
Okay.
Yes.
Yes.
Yes.
Okay.
Okay.
Yes.
Okay.
Sure.
Okay.
Sure.
Yes.
Yes.
Okay.
Okay.
Yes.
Okay.
Okay.
Yes.
Yes.
Yes.