Q1 2026 Northeast Bank Earnings Call
This call is being recorded with US today from the Bank is Rick Wayne President and Chief Executive Officer, Richard Cohen, Chief Financial Officer, Centene, ODO, Malino, corporate controller, and Pat Dignan, Chief operating officer, and Chief Credit Officer.
Prior to the call an investor presentation was uploaded to the bank's website, which we will reference in this morning's call. The presentation can be accessed at the Investor Relations section of northeast Bank Dot com under events and presentations you may find it helpful to download this investor presentation and follow along.
During the call.
Also this call will be available for rebroadcast on the website for future use.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. During the question and answer session. If you have a question. Please press star one one.
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As a reminder, the conference is being recorded.
Please note that this presentation contains forward looking statements about northeast bank forward looking statements are based upon the current expectations of northeast Bank's management and are subject to risks and uncertainties.
Actual results may differ materially from those discussed in the forward looking statements.
North East Bank does not undertake any obligation to update any forward looking statements.
Ill now turn the call over to Rick Wayne Mr. Wayne you may begin.
Thank you and.
And good morning, everyone.
As they go through this presentation as we go through it.
Just outline of what the agenda will be for this morning, I'm going to first go over some highlights for the quarter.
And dig a little deeper in some of the material that we had put out yesterday.
And after that.
Pat will discuss the lending activity.
<unk> will go over the financial results for the quarter.
Finally.
I will make a few comments on Richard Cohen, who.
Moving on after tomorrow after almost two great years.
At the bank first as to the highlights we considered the quarter very strong.
Net income of $22 $5 million.
Our NIM of $4 five 9%.
Return on equity of 17 six 4%.
Our return on assets of $2 one 3%.
And diluted earnings per share of $2.
67.
And finally within a whisker.
That's a technical term I don't think it is actually of $60 of tangible book value was 59 point.
Nine eight.
I wanted to comment first on loan activity.
Purchases were strong.
We bought loans with <unk> of $152.7 million.
Invested amount of 144.
$6 million.
Now as you know in our.
Yes, we have had to <unk>.
Large quarters, where we purchased large transactions the first and the second quarter of our fiscal year 'twenty three.
And the second one in the first quarter of fiscal year 'twenty five.
If you exclude those.
Very large purchases.
This would have been our second largest purchase quarter going back three years and probably longer I just looked at the material for three years.
Yes.
One of the things that we are.
Frequently asked and Investor calls and otherwise is what is the purchase pipeline look like.
And with all of the caveats in the forward looking statements specifically.
We made by a lot or we may not buy any it's transactional I would say that the purchase pipeline is as large now as we have seen in quite some time.
A lot of it triggered by M&A activity.
And some balance sheet repositioning by other holders of commercial real estate.
<unk>.
We have both the capital.
And the human resources.
To do the appropriate diligence.
On the amount that's out there and we will look at every.
Virtually every opportunity that is within our parameters.
On originations.
We did a $134 million with a little rounding this quarter.
Pointed out that there is some seasonality.
To the origination business.
We went back and look.
Four years ago.
And we only had one.
First quarter and our fiscal year, which was in Q1 of 'twenty three.
Had a higher amount of originations.
Hundred $82 million that meant obviously.
That <unk> added in the last four years three of the quarters.
Did not do as much of origination volume as we have done this quarter.
And our origination pipeline is also quite robust.
I now want to comment brief.
Briefly on the SBA activity.
This quarter.
We funded $42 million and we sold $53 million of loans.
That of course includes some that were originated prior to this quarter.
As we discussed in the July call. There were changes made to the SBA rules, which suggested and we indicated that we would have lower volumes in some number of quarters to come.
Because we had less closings, we had less sales and because we had less sales we had less gains.
The gain in the linked quarter was $8 $2 million compared to $4 1 million.
For the current quarter.
And that difference of $4 $1 million.
Amounted to 34 cents.
Diluted EPS.
I think it's very helpful to understand that we expect a few things to happen of course, one at some point the government will reopen.
Pat May touch on the impact of that for us and we now have absent the government closing we have been seeing a ramping up of the volume.
That was temporarily.
Diminished for the reasons that I.
I described.
Finally.
A few comments on asset quality with Santana will expand on relative to.
Our balance sheet size.
Overall, our loan book was pretty flat.
Purchase loan book increased by $31 million.
In our originated loan book decreased by $39 million.
Because for purchases the allowance it comes out of the purchase price typically.
Rather than booking a provision.
And because our originated loan book.
<unk> decreased as I've mentioned before the amount of the allowance.
Also decreased.
And finally I want to make a point on the timing of transactions as I said, our loan book was mostly flat.
But our average loan balances were down $92 million.
Compared to the linked quarter because much of the activity around purchasing and some originations occurred.
Late in September so that had an impact on interest income in the quarter, but for the reasons I described.
It bodes well.
For the future because our average loan balances were higher.
And with that I will now ask Pat.
To talk about our loan activity.
That's correct.
We had solid activity this quarter, especially for the summer months as Rick pointed out the real estate and financing markets are very active.
This is fueling more loan payoffs than we'd like it is also creating a lot of opportunity.
First another note on the SBA.
On the $42 million close is comprised of 286 loans with an average rate of 11, 7%.
Although we saw increasing volume in each of the three months of the quarter and felt like we were making real progress toward our volume targets. The government shutdown essentially halted any new origination since October one we.
We continue processing loans in the hopes of funding soon after the government is reopening so we won't be wasting any time with that but obviously, it's out of our control.
Meanwhile, we're very optimistic about our new insured small business loan product with annuity, which is off to a great start since launching on October one with about 10 million closed since then.
And our purchase business, we bought 522 loans and seven transactions.
The $153 million of principal balance at a purchase price of $145 million.
Just under 95.
These were mostly smaller balance loans with no real concentrations of note.
Five of the seven transactions were from loan funds went from a small bag and one from a national insurance company.
Patrick Dignan: We beat you the three months of the quarter and felt like we were making real progress toward our volume targets. The government shutdown essentially halted any new origination since October 1. We continue processing loans in the hopes of funding soon after the government is reopening, so we won't be wasting any time with that, but obviously it's out of our control. Meanwhile, we're very optimistic about our new insured small business loan product with Nuity, which is off to a great start since launching on October 1, with about $10 million closed since then. In our purchase business, we bought 522 loans in seven transactions, with $153 million of principal balance and a purchase price of $145 million, or just under $0.95. These were mostly smaller balance loans with no real concentrations of note.
Yeah.
As Rick pointed out over the last few weeks, we've seen a significant uptick in purchased opportunities mostly from an M&A activity, which is likely to continue for some time.
This is a lumpy business and no guarantees will win at all or any of it but the sheer volume of new opportunities is very encouraging for the next several quarters.
In our origination business, we closed $134 million.
Which included 22 loans with an average balance of 6 million Ltvs, just over 50% and an average interest rate of just under 8%.
While lender finance product continues to dominate the origination business direct loan opportunities picked up significantly.
I believe from borrowers that interest rates will come down over the next year.
It's fueling new transactions and at the same time, creating an aversion to traditional debt, which typically includes significant prepayment protection.
Patrick Dignan: Five of the seven transactions were from loan funds, one from a small bank, and one from a national insurance company. As Rick pointed out, over the last few weeks, we've seen a significant uptick in purchased opportunities, mostly from M&A activity, which is likely to continue for some time. This is a lumpy business and there's no guarantees we'll win it all, or any of it, but the sheer volume of new opportunity is very encouraging for the next several quarters. In our origination business, we closed $134 million, which included 22 loans with an average balance of $6 million, LTVs just over 50%, and an average interest rate of just under 8%. While lender finance product continues to dominate the origination business, direct loan opportunities have picked up significantly.
Our pipeline is as full as it's ever been and we expect that we can remain disciplined in credit.
They'll show strong growth going forward.
Accurate.
Santana.
Correct.
As Rick mentioned this was another good quarter for the bank, we had earnings of $22 5 million or $2 67 per diluted share.
ROA was two 1% and ROE of 17, 6%.
Total assets ended the quarter at $4 $1 7 billion, which is down slightly from $4 to $4. Two 8 billion at June 30.
Loans were flat as purchases of $145 million in originations of $134 million were offset largely by Paydowns and payoffs.
Much of these purchases and originations occurred at the tail end of the quarter. So youll see our average balances were down quarter over quarter, partially which is partially impacting.
Patrick Dignan: The belief from borrowers that interest rates will come down over the next year is fueling new transactions and, at the same time, creating an aversion to traditional debt, which typically includes significant prepayment protection. Our pipeline is as full as it's ever been, and we expect that we can remain disciplined in credit and still show strong growth going forward. Back to you, Rick.
Our lower NII for the quarter.
The excess cash we carried on the balance sheet at June 30th.
You used during the quarter to pay down our brokerage Cds, So youll see some shrinkage in the deposit portfolio as well.
Capital remains strong with tier one leverage at $12 two 1% tangible book value came in just under $60 a share.
Santino Martino: Thanks, Rick. As Rick mentioned, this is another good quarter for the bank. We had earnings of $22.5 million or $2.67 per diluted share. ROA was 2.1% and ROE 17.6%. Total assets ended the quarter at $4.17 billion, which is down slightly from $4.28 billion at June 30th. Loans were flat, as purchases of $145 million and originations of $134 million were offset largely by paydowns and payoffs. Much of these purchases and originations occurred at the tail end of the quarter, so you'll see our average balances are down quarter over quarter, which is partially impacting our lower NII for the quarter. The excess cash we carried on the balance sheet at June 30th was put to use during the quarter to pay down our broker TD, so you'll see some shrinkage in the deposit portfolio as well.
Switching focus to the P&L NIM was strong this quarter coming in at four 6%, resulting in pre provision net interest income of $48 2 million.
Thanks Rick. Uh, as Rick mentioned, this is another good quarter for the bank. We had earnings of 22.5 million or 2 dollars in 67 cents per diluted. Share Roa was 2.1% in Roe 17.6%.
Down from NIM of five 1% in the prior quarter and pre provision net interest income of $59 4 million.
Total assets ended the quarter at 4.17 billion which is down slightly from 4.2 4.28 billion at June 30th.
Decrease here is largely a result of heightened transactional income that we saw in Q4 fiscal year 'twenty five.
Loans were flat as purchases of 145 million and originations of 134 million were offset largely by pay downs and payoffs.
Additionally, impacting that is the higher average cash balances, we carried during the quarter, which while accretive to net interest income did compress NIM a little bit.
Provision for loan losses was a credit in this quarter of 435000 as Rick mentioned.
Much of these purchases and originations occurred at the tail end of the quarter. So you'll see our average balance down quarter over quarter, which is partially impacting our lower need for the quarter.
It's due to a few things one being less loans put on the balance sheet that required a provision as well as a slight decrease in the allowance coverage ratio. This is largely a factor of our continued strong asset quality, particularly in the originated loan business.
Santino Martino: Capital remains strong with tier one leverage at 12.21%, and tangible book value came in just under $60 a share. Switching focus to the P&L, NIM was strong this quarter, coming in at 4.6%, resulting in pre-provision net interest income of $48.2 million, which is down from NIM of 5.1% in the prior quarter and pre-provision net interest income of $59.4 million. The decrease here is largely a result of heightened transactional income that we saw in Q4 fiscal year 2025. Additionally impacting that is the higher average cash balances we carried during the quarter, which, while accretive to net interest income, did compress NIM a little bit.
The excess cash, we carried on the balance sheet at June 30th was put to use during the quarter to pay down our broker TD. So you'll see some shrinkage in the deposit portfolio as well.
Capital remains strong with Tier 1, leverage at 12.21% and tangible Book, value came in just under $60 a share.
From an SBA front, we had gains on sales of $4 2 million on sales of $58 million compared to $8 2 million in gains on sales of $108 million last quarter as Rick and Pat previously mentioned this is largely due to rule changes that the SBA back.
Switching, Focus to the p&l. Nim was strong. This quarter coming in at 4.6%, resulting in pre-provision net interest income of 48.2 million.
Back in May which.
Down from Nim of 5.1% in the prior quarter and pre-provision net interest, income of 59.4 million.
We previously disclosed the <unk>.
The impact on this on earnings and.
On the expense side, we continue to be disciplined while strategically investing in our people and technology setup the bank for long term success.
Decrease here is largely a result of height and transactional income, that we saw in Q4 fiscal year 25.
Back to you.
Santino Martino: Provision for loan losses was a credit this quarter of $435,000, as Rick mentioned, which is due to a few things, one being less loans put on the balance sheet that required a provision, as well as a slight decrease in the allowance coverage ratio. This is largely a factor of our continued strong asset quality, particularly in the originated loan business. From an SBA front, we had gains on sales of $4.2 million on sales of $58 million, compared to $8.2 million in gains on sales of $108 million last quarter. As Rick and Pat previously mentioned, this is largely due to rule changes at the SBA back in May, which we previously disclosed the projected impact on this, on earnings.
Additionally, impacting that is a higher average, cash balances, we carried during the quarter which while a creative to net interest income did compress them a little bit.
Thank you <unk>.
All in now.
We would welcome any questions that you might have.
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Provision for loan losses. Was a credit, this quarter of 435,000 is Rick mentioned uh which is due to a few things 1 being less loans, put on the balance sheet that required a provision, as well as a slight decrease in the allowance coverage ratio. This is largely a factor of our continued, strong asset quality. Particularly in the originated loan business.
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We will now begin the Q.
Our first question comes from Mark Fitzgibbon from Piper Sandler Mark.
Santino Martino: On the expense side, we continue to be disciplined while strategically investing in our people and in technologies that are going to set up the bank for long-term success. Rick, back to you.
From an SBA front. Uh, we had gains on sales of 4.2 million on sales of 58 million compared to 8.2 million in gains, from on sales of 108 Million last quarter as Rick and Pat. Previously mentioned, this is largely due to rule changes at the SBA, uh, back in May, which we, uh, we previously disclosed, the, the projected impact on this, uh, on earnings.
Your line is now open.
Hey, guys good morning.
Good morning, Mark.
Rick I wondered if you could share with us I noticed in the press release, you said there was a change in the cost structure arrangement with nudity I assume over the SBA staff could you share with us how that.
Richard Wayne: Thank you, Santino, and now we would welcome any questions that you might have.
Back back to you.
Thank you Santino and now, um, we would welcome any questions that you might have.
Operator: Thank you. We will now begin the question and answer session. If you have a question, please press star 11 on your touch-tone phone. If you wish to be removed from the queue, please press star 11 again. If you are using a speakerphone, you may need to pick up the headset first before pressing the numbers. Once again, if you have a question, please press star 11 on your touch-tone phone. We will now begin the queue. Our first question comes from Mark Fitzgibbon from Piper Sandler. Mark, the line is now open.
That structure changed.
Yes, so that we put out an 8-K on that back in last October.
So beginning October <unk> of last year, the cost structure changed where instead of.
A split in the gain on sale of annuity there they're charging off.
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Flat fee on a per loan submitted basis.
So that that structure has been consistent for the past four quarters now.
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Really just arent comparing to the quarter end September 32024 that was definitely got it. Thank.
Um, we will now begin the queue.
And then just how do you think we should be thinking about gain on SBA loans for the fourth quarter I mean, assuming the government opens up maybe halfway through the quarter can.
[Analyst 1]: Hey guys, good morning.
Our first question comes from Mark Fitzgibbon from Piper. Sandler, Mark the Line is now open.
Richard Wayne: Morning, Mark.
Hey guys. Good morning.
Can you kind of get back on track and get to a volume level that looks something akin to what you had in the third quarter.
[Analyst 1]: Rick, I wondered if you could share with us, I noticed in the press release you said there was a change in the cost structure arrangement with Nuity, I assume over the SBA stuff. Could you share with us how that structure changed?
Good morning, Mark.
A little bit hard to say that.
Mark because there's a bunch of variables that can say that.
Richt I I wondered if you could share with us I noticed in the press release. You said there was a change in the cost structure arrangement with annuity I assume over the FBA stuff.
Starting in.
Santino Martino: Yeah, we put out an 8-K on this back in last October. Beginning October 1, 2023, the cost structure changed where instead of a split in the gain on sale with Nuity, they're charging us a flat fee on a per loan submitted basis. That structure's been consistent for the past four quarters now.
Can you share with us how that structure changed?
That we were seeing and Pat mentioned this we're seeing a ramp up in <unk>.
SBA.
<unk> each month in the past quarter.
Which is what we expected to happen as both from a technology perspective.
And.
No.
Yeah, so that that we put out an AK on this back in last October. Um, so beginning, October 1st of last year, the cost structure changed where instead of, uh, a split in the gain on sale annuity there, they're charging us, uh, a flat fee on a per loan submitted basis.
Retraining those annuity that are doing the first cut of underwriting and then.
[Analyst 1]: Okay, fair enough.
Santino Martino: It's really just when comparing to the quarter end September 30, 2024, it was different.
Our team as well.
And I think if absent the government shutting down any of those things that happened with <unk>.
[Analyst 1]: Got it. Thank you. How do you think we should be thinking about gain on SBA loans for the fourth quarter? I mean, assuming the government opens up maybe halfway through the quarter, can you kind of get back on track and get to a volume level that looks something akin to what you had in the third quarter?
Um so that that structure has been consistent for the past 4 quarters now, okay? Um it's really just when comparing to the the quarter end September 30th 2024, it was different got
We would have been reasonably comfortable saying that by the end of this calendar year, we would've been up to where we were but the reason there is less certainty about saying it now is what will the ramp up one how long will the government shut down.
Richard Wayne: A little bit hard to say that, Mark, because there's a bunch of variables. I could say that starting in that we were seeing, and Pat mentioned this, we were seeing a ramp-up in SBA activity each month in the past quarter, which is what we expected to happen as both from a technology perspective and retraining those at Nuity that are doing the first cut of underwriting and then our team as well. I think if absent the government shutting down, any of those things that happened, we probably would have been reasonably comfortable saying that by the end of this calendar year, we would have been up to where we were. The reason there's less certainty about saying it now is what will the ramp-up, one, how long will the government be shut down?
It, thank you. And then just how do you think we should be thinking about gain on SBA Loans for the fourth quarter? I mean, assuming the government opens up maybe halfway through the quarter can, can you kind of get back on track and get to a volume level? That looks something akin to what you had in the third quarter.
But now it's essentially other than doing as much as we can do there.
A little bit of hard to say that.
Critical things that we cannot do while the government shutdown, we can't get an SBA number.
Mark because there's a a bunch of variables, I could say that. Um,
Starting in.
And we can't get tax transcripts and.
You just can't get the loans closed and how long that will.
That ramp up will take its hard to say I would say this reasonably comfortably that once the government has reopened over some number of months.
That we were seeing in Pat mentioned. This we were seeing a ramp up in SBA activity each month in the past quarter. Um, which is what we expected to happen as both of them with technology perspective and
retraining, you know, those that knew that are doing the first cut of underwriting and then
Let's say six months this is really an estimate.
Our, our team as well.
I don't know this for sure we would expect we would.
Get back there is no reason to believe there will continually continue to be large demand for that product, but there are a bunch of variables that would what would impact that.
Okay fair enough.
Then.
It looked like there was a decent.
Richard Wayne: Because now it's essentially, other than doing as much as we can do, there are critical things that we cannot do while the government's shut down. We can't get an SBA number, and we can't get tax transcripts, and we just can't get the loan to close. How long that ramp-up will take, it's hard to say. I would say this reasonably comfortably, that once the government is reopened, over some number of months, let's say six months, this is really an estimate because I don't know this for sure, we would expect we would get back. There's no reason to believe there won't continue to be large demand for that product. There are a bunch of variables that would impact that.
Linked quarter increase in professional fees anything unique in there.
Um, and I think if absent the government shutting down, any of those things that happen, we probably would have been reasonably comfortable saying that by the end of this calendar year, we would have been up to where we were but the reason there's less certainty about saying it now is what will the ramp up 1? How long will the government be shut down?
Because now it's essentially other than doing as much as we can do.
A couple of things impacting that one is just some temporary employees for folks that we've had out on leave during the period.
So that that aspect of it shouldn't continue on a go forward basis.
So see we had some high end legal fees in relation to the new growth term loan property insured loan product.
As well as just general increases in professional fees period over period.
Wanted to just use that as a jumping off point, if I can mark and others on the call because I wanted to.
There are critical things that we cannot do. While the government shut down. We can't get an SBA number, um, and uh, we can't get tax transcripts and, you know, we we just can't get the, the loans are closed and how long that will, uh, that ramp up, will take, it's hard to say. I would say this reasonably comfortably that once the government is reopened, you know, over some number of months.
I wanted to comment about Richard before.
I don't want to I want to lead the Q&A before I've had a chance to.
I'll say this.
And the triggering thought to that was what <unk>.
[Analyst 1]: Okay, fair enough. It looked like there was a decent link quarter increase in professional fees. Anything unique in there?
Uh, let's say 6 months. This is really an estimate because I don't know this for sure. We would expect we would, um, get back. There's no reason to believe there. Won't continually continue to be large demand for that product. But there are a bunch of variables that would would would impact that
Just said because we had hired.
Okay, fair enough.
Our highly experienced.
Uh huh.
Auditor to come in and.
And then, um, it looked like there was a decent quarter-over-quarter increase in professional fees. Anything, uh, unique in their...
Santino Martino: A couple of things impacting that. One is just some temporary employees for folks that we've had out on leave during the period. That aspect of it shouldn't continue on a go-forward basis. We've also seen we had some heightened legal fees in relation to the new insured small business loan product, as well as just general increases in professional fees period over period.
Help us as we got through getting our financials, that's why that was.
More expensive but.
As everyone knows.
A while ago, we announced that.
Richard.
Leaving the bank at the end of this month.
This will be.
The last time, you'll hear him.
In this room I suspect you've made is it still a stock or may call up.
Richard Wayne: I want to just use that as a jumping-off point if I can, Mark, and others on the call, because I want to comment about Richard before I don't want anyone to leave the Q&A before I've had a chance to say this. The triggering thought to that was what Santino just said, because we had hired a highly experienced auditor to come in and help us as we got through getting our financials. That's why that was more expensive. As everyone knows, a while ago we announced that Richard would be leaving the bank at the end of this month. This will be the last time you'll hear him in this room. I suspect he may, because he still is a stockholder, he may call up and be a really aggressive questioner, but we'll have to see about that. I want to make a few points clear on this.
Really aggressive question.
But we'll have to see about that.
I want to make a few points clear on this one.
Richard left on its own.
Okay.
I tried to talk him out of it almost everyday but unsuccessfully.
Richard came to.
Came to us he moved his family boldly from South Africa. It was formerly a partner at KPMG, we came here without a job and.
You know, they I don't want anyone to leave the Q&A before. I've had a chance to uh, say this. Um and the triggering thought to that was what Santino just said, because we had hired, you know, a highly experienced
um,
Not knowing much.
Other than visiting from time to time, the states not knowing exactly what he would do we were lucky that we were able tourists we hired him as a consultant and then in this role he has really done an extraordinary job.
Uh uh auditor to come in and um help us as we got through getting our financials. That's why that was
For us.
<unk> grew a lot in the job and.
It sounds like with shape, because what people always say when someone leaves in this case it happens to be very true.
More expensive. But, um, as everyone knows. Um, a while ago we announced that, uh, Richard, um, would be leaving the bank at the end of this month. Uh, this will be, um, the last time you'll hear him.
He's really liked by everybody is respected by everybody. He had a lot of there's a lot of value.
To us and he will be it will be missed.
Richard Wayne: One, Richard left on his own. I tried to talk him out of it almost every day, but unsuccessfully. Richard came to us. He moved his family boldly from South Africa. He was formerly a partner at KPMG. He came here without a job and not knowing much, other than visiting from time to time the states, not knowing exactly what he would do. We were lucky that we were able, first we hired him as a consultant, and then in this role, he's really done an extraordinary job for us. He grew a lot in the job, and this sounds like cliché, because this is what people always say when someone leaves. In this case, it happens to be very true. He's really liked by everybody, he's respected by everybody. He added a lot of value to us, and he will be missed.
Just wanted to add one other thing because two things can be true as I suggested to the board yesterday, Richard can be all of those things.
In this room, I suspect, he may because he's still in stock or it may call up and be a, a really aggressive question, uh, but we'll have to see about that. Um, but I want to make a few points. Clear on this 1, you know, Richard left on his own.
Luckily we have deepened our bench at Santana row was our controller.
I tried to talk him out of it, uh, almost every day but unsuccessfully, um, Richard came to, uh,
Could step right up.
And Rebecca Joe now Rand married name sorry, Rebecca.
Who is our director of accounting will be here and we've hired a new controller. So we still continue to have a very very good and lots of other people in the accounting and finance roles, we have a very very deep bench, but.
I just wanted to be clear about Richard that.
He's going out too.
Start some business is figuring out and I suspect at some point I would bet that he'll be wildly successful.
I would say that I am Michael invest in it but.
I believe you will see Richard do you want to pull before we are.
Richard Wayne: I just want to add one other thing, because two things can be true, as I suggested to the board yesterday. Richard can be all of those things, but we're lucky we have a deep enough bench that Santino, who was our Controller, could step right up. Rebecca Jones, now Rand married name, sorry, Rebecca, who was our Director of Accounting, will be here, and we've hired a new Controller. We still continue to have a very, very, and lots of other people in the accounting and finance roles. We have a very, very deep bench. I just wanted to be clear about Richard, that he's going out to start some businesses figuring out, and I suspect at some point, I would bet that he'll be wildly successful. I say bet, I'm not going to invest in it, but I believe he will be.
I really do thank you Rick I mean, it's been a very difficult decision to leave the bank.
Uh, came to us, he moved his family boldly from South Africa. He was formerly a partner at kpmj. You know, we came here without a job and, um, not knowing much, um, other than visiting from time to time the stage, not knowing exactly what he would do. We were lucky that we were able first, we hired him as a consultant and then in this role he's really done an extraordinary job. Um, for us, uh, he, you know, grew a lot in the job, um, and um, he's this sounds like cliche because this is what people always say. When someone leaves in this case, it happens to be very true. You know, he's really liked by everybody's respected by everybody. He had a lot of, he added a lot of value, um, to us. And he will be, he will be missed.
Mentally privileged.
To be part of this fantastic organization.
Equally immensely grateful for the relationships that I have with all of you the investors with the board with the leadership of the <unk>.
Bank.
With my team and with the incredible staff, yes.
So it's not really enjoy the culture the amazing place to work.
The bank's solution oriented focus.
In place to work and it's a very open environment.
Maybe the last thing I'd like to say is a very special thanks to Rick in the past and to the board for their faith in me.
I just want to add 1 other thing because 2 things can be true. As I suggested to the board yesterday, Richard can be all of those things, but we're lucky. We have a deep enough bench at Santino who was our controller. Um, could step right up and uh, and and Rebecca Jones now. Ran married name, sorry, Rebecca, um, who was our director of accounting? Will be here and we've hired a, a new controller. So we still continue to have a very, very and the lots of other people in the accounting and finance roles. We have a very, very deep bench but um, I just wanted to be clear about Richard that um, he's going.
For the close relationship that I have been personally which will continue into the future.
And my very best wishes to Tina.
To my fantastic team and who might have immense confidence.
Blowing out to start some businesses figuring out. And I suspect at some point, I would bet that he'll be wildly successful
Richard Wayne: Richard, do you want to say anything before we?
Leave you in very very capable hands and I intend to stay very close and in contact with the bank of it yet.
Richard Cohen: I really do. Thank you, Rick. It's been a very difficult decision to leave the bank. I'm immensely privileged to have been part of this fantastic organization. I'm equally immensely grateful for the relationships that I have with all of you, the investors, with the board, with the leadership of the bank, with my team, and with the incredible staff here. I've so thoroughly enjoyed the culture. It's an amazing place to work. The bank's solution-oriented, it's focused, it's a warm place to work, and it's a very open environment.
Thank you for that Richard work lapping you can't Harrison.
Thank you Richard.
I hate that I'm not going to invest in it, but I believe he will be Richard. You want to, uh, throw everything before we... um, I really do. Thank you, Rick. I mean, it's been a very difficult decision to leave the bank. I'm immensely privileged.
Mark.
Uh, to be part of this fantastic organization.
Yes, I don't know quite well dies for jumping off on that but I wanted to make sure. Those things were said and heard back problems and well. Thank you and Richard Congratulations and best of luck in your new role and Tino to give you an opportunity to swing to defenses here can you tell us what the margin is going to look like next quarter.
I'm equally immensely grateful for the relationships that that I have with all of you. The investors with the board, with the leadership of the bank, with my team. And with the incredible staff here,
Um, I'm so thoroughly enjoy the culture. It's an amazing place to work.
Almost almost.
Richard Cohen: Maybe the last thing I'd like to say is a very special thanks to Rick and to Pat and to the board for their faith in me, for the close relationship that I have with them personally, which will continue into the future, and my very best wishes to Tino and to my fantastic team, in whom I have immense confidence. I'll leave you in very, very capable hands, and I intend to stay very close and in contact with the bank over here.
Uh, the bank solution oriented it's focused. It's a warm place to work and it's a very open environment.
No we generally don't give guidance on margin.
The real challenge as you know is with the transactional income they can it can be really lumpy, just depending on which loan payoff during during the period.
Maybe last, I'd like to say is a very special thanks to to Rick and to Pat and to the board for their faith in me.
Um, for the close relationship that I have with them personally, which will continue into the future.
Here's a stat, we don't mention often.
Um, and my very best wishes to Tino.
But.
We have.
$207 million of discount on our purchased loan book.
Richard Wayne: Thank you for that, Richard. We're clapping, you can't hear us. Richard, thank you. Richard, Mark, I don't know if I apologize for jumping off on that, but I wanted to make sure those things were said and heard. Now back to you, please.
And to my fantastic team, uh, in whom I have immense confidence. I leave you in very, very capable hands, and I intend to stay very close and in contact with the bank over here.
And what happened last.
For the linked quarter.
We had more.
Thank you for that, Richard. We're glad when you can hear us at the virtual Club. Thank you, Richard.
Primarily because of one big transaction.
But and it's hard for us to know when there are going to be.
Payoffs and some loans have very significant discount.
[Analyst 1]: No problem. Thank you. Richard, congratulations and best of luck in your new role. Tino, to give you an opportunity to swing for the fences here, can you tell us what the margin's going to look like next quarter?
Most of all what I describe as interest.
Discount from loans that we bought at a discount.
Um, Mark, I don’t know if I should apologize for jumping off on that, but I wanted to make sure those things were said and heard back. No problem, please. And, well, thank you. And, Richard, congratulations and best of luck in your new role. And, Tino, to give you an opportunity to swing for the fences here, can you tell us what the margin is going to look like next quarter?
Santino Martino: No, we generally don't give guidance on the margin. The real challenge, as you know, is with the transactional income, it can be really lumpy, just depending on which loans pay off during the period.
Interest rates, but that's always out there so it's hard for us.
Almost almost.
Say to predict what our margin will be because thats.
Really the.
Piece of it that is unpredictable and can be significant.
Thank you.
Richard Wayne: Here's a stat we don't mention often, but we have $207 million of discount on our purchase loan book. You know what happened last quarter, the link quarter, we had more, primarily because of one big transaction. It's hard for us to know when there are going to be payoffs. Some loans have very significant discount. Most of all what I described is interest discount from loans that we bought at a discount because of interest rates. That's always out there, so it's hard for us to say, to predict what our margin will be, because that's really the piece of it that is unpredictable and can be significant.
Um, no, we generally don't give guidance on margin. Um, the the the real challenge as you know, is um, with the transactional income it can, it can be really lumpy just depending on which Loans pay off during during the period.
Thank you Mark.
Yeah.
but um,
Our next question comes from Damon Delmonte from <unk> W. Damon Your line is now open.
We have.
207 million of discount on our purchase loan book.
Hey, good morning, everyone. Thanks for taking my questions and are Richard Richard Good luck with your new endeavors.
and you know what happened last
Thank you.
Sure.
A quick question on the NDA file lending has become a kind of a hot topic in the industry and the.
The last couple of months and you guys do a lot of.
A lot of similar financing in that regard just kind of curious how youre feeling about the quality of the people you're with and the underlying assets and if youre seeing any signs of stress or theres any any concern from your seats.
For the link quarter, you know, we had more in primarily because of 1, big transaction. Um but and it's hard for us to know when there are going to be um payoffs and some loans have very significant discount. Uh you most of all what I just described is interest
Discount, you know, from loans that we bought at a discount because of interest rates but that's always out there. So it's, you know, hard for us to
Alright.
I assume youre talking about that.
um say to predict what our margin will be because that's the really the
So sorry, following the first time.
the piece of it that is unpredictable and can be significant.
[Analyst 1]: Thank you.
The lender or mostly well, yes, but like the lender financing you do in general I mean.
Thank you.
Items in the news have been tied to subprime auto lending, but I think just overall just kind of how do you feel about the health of your your lender financing portfolio.
Operator: Thank you, Mark. Our next question comes from Damon Delmonte from KBW. Damon, your line is now open.
Thank you, Mark.
We've heard from a few investors concerned about the recent fraud issues.
[Analyst 2]: Hey, good morning everyone. Thanks for taking my questions. Richard, good luck with your new endeavors.
Our next question comes from, Damon, Delonte from KBW. Damon your line is now open.
There were in the news spin.
Specifically, the case, where a title policy was doctored through improve the lenders perception of a lead position.
[Analyst 1]: Thank you, Rick.
[Analyst 2]: Sure. Just a quick question on the, you know, NDFI lending has become a kind of a hot topic in the industry in the last couple of months. You know, you guys do a lot of similar financing in that regard. Just kind of curious how you're feeling about the quality of the people you're with and the underlying assets, and if you're seeing any signs of stress or there's any concern from your seats.
Resulting in significant credit deterioration.
And you know our approach is always been a trust but verify.
You know in the lender finance business, obviously, our borrowers the lender.
And they are collecting documents their borrower and so.
I think.
Patrick Dignan: All right. Sorry.
Hey, good morning everyone. Thanks for taking my questions and, uh, Richard Richard, good luck with, uh, your new Endeavors. Um, thank you. So just sure just, uh, quick question on the, you know, ndf. I lending has become a kind of a Hot Topic in the industry uh, in the last couple months. And you know, you guys do a lot of um uh, a lot of similar financing in that regard. Just kind of curious how you're feeling about the, the quality of the, the people you're with and the underlying assets. And if you're seeing any signs of stress or there's any, any concern for your seats,
Oftentimes, we're getting that documentation secondhand and so we have developed over time.
All right.
Richard Wayne: What was going on, Pat?
Patrick Dignan: I assume you're talking about that.
Richard Wayne: High-caller, first brand?
Patrick Dignan: Yeah, like the lender, mostly on.
Okay.
[Analyst 2]: Regarding the lender finance product you do in general, the items in the news have been tied to subprime auto lending. I think just overall, how do you feel about the health of your lender finance portfolio?
The way to 100% protect yourself from fraud, but we've we believe we're doing all we can to prevent this type of issue from happening.
We do complete third party background checks, all borrowers funds and principles.
Patrick Dignan: We've heard from a few investors concerned about that recent fraud issues that were in the news, specifically the case where a title policy was doctored to improve the lender's perception of a lien position, resulting in significant credit deterioration when the truth was revealed. Our approach is and has always been a trust but verify. In the lender finance business, obviously our borrower is the lender, and they are collecting documents from their borrower. I think oftentimes that we're getting that documentation secondhand. We have developed over time, you know, there's no way to 100% protect yourself from fraud, but we believe we're doing all we can to prevent this type of issue from happening. We do complete third-party background checks on all borrowers' funds and principals. We do independent verification of lien position and title insurance. We hold all the original loan documents in custody.
I assume you're talking about that. Um, the, the the thought, the lender? Well, yeah. But like the lender financing, you do in general. I mean, the the, the items in the news have been tied to subprime Auto lending. But um, I think just overall just kind of how how do you feel about the the health of of your, your lender financing portfolio.
Do independent verification of lean position in title insurance.
We hold all of the original loan documents in custody.
Do daily monitoring of all court and recording activity relating to our borrower the underlying borrower and the underlying collateral.
You know, we've heard from a few investors concerned about that, uh, recent Friday issues that were in the news. Specifically, the case where a title policy was doctored to improve the lender's perception of a lien position.
It's fairly frequent that we won't know that theres been a lean or some judgment on the underlying collateral news usually minor thing before our before our borrower does because we monitor it so closely and we have very robust monthly reporting from our borrowers and show all activity loan payments the communications with the borrowers.
Resulting in significant credit deterioration when the, when the truth was revealed and, you know, our approach is and has always been a trust but verify, um, you know, in the lender Finance business, obviously our borrower is the lender and they are collecting documents from their borrower. And so
I think the short answer is this is a business that.
You just got to stay very very closely on top of.
you know, I think it oftentimes that we're getting that documentation secondhand and so we have developed over time of of
In addition to what patches that apart from potential.
Fraud risk.
It's not really the same business. We're in I know, it's all alone and some people may consider that to be indirect financing and maybe that's true in some sense.
You know the the there's no way to 100% protect yourself from fraud but we've we've we've uh, we believe we're doing all we can to prevent this type of issue from happening.
We do complete third-party background, checks on all borrowers, funds and principles.
The other sense, it's totally different we underwrite every single wrong.
We do uh independent verification of lean position and title insurance.
So.
Virtually all of our transactions are structured into bankruptcy remote special purpose entities.
Patrick Dignan: We do daily monitoring of all court and recording activity relating to our borrower, the underlying borrower, and the underlying collateral. In fact, it's fairly frequent that we will know that there's been a lien or some judgment on the underlying collateral, and these are usually minor things, before our borrower does, because we monitor it so closely. We have very robust monthly reporting from our borrowers that show all activity, loan payments, and communications with the borrower. I think the short answer is this is a business that you just got to stay very, very closely on top of, and I think we do.
Um, we hold all the original loan documents and custody.
With carve out guarantees generally.
For any fraud or something.
Suffice in the document, but it's a guidance line underscored.
Meaning somebody comes in and they are aligned with us and they wanted they wanted to.
Taken advance under that line, we have to approve that advance and we underwrite that loan right next to them.
And so it's very different totally different than some kind of whole a warehouse line where.
We do daily monitoring of all court and recording activity relating to our borrower, the underlying borrower, and the underlying collateral. In fact, it's fairly frequent that we will know that there's been a lean or some judgment on the underlying collateral news. Usually minor things before our before, our borrower does, because we monitor it so closely and we have very robust monthly reporting from our borrowers that show all activity loan payments and Communications with the borrowers. So I think the short answer is is is this is a business that um, you just
Richard Wayne: It is just what Pat just said, apart from potential fraud risk, it's not really the same business we're in. I know it's loan on loan, and some people may consider that to be indirect financing, and maybe that's true in some sense. In another sense, it's totally different. We underwrite every single loan. Virtually all of our transactions are structured into bankruptcy remote, special purpose entities with carve-out guarantees generally for any fraud or something that's specified in the documents. It is a guidance line underscored, meaning somebody comes in and they have a line with us and they want to take an advance under that line. We have to approve that advance, and we underwrite that loan right next to them.
Borrower can borrow based on.
Just got to stay very very closely on top of and I think we do this is what Patrick said apart from potential.
um,
fraud risk.
Our borrowing base certificate without the lender focusing on the actual credit like we do.
It's totally different.
What we do so well.
Very comfortable with our asset quality and especially as you know from what we include in material below.
It's not really the same business we're in. I know what's going on with loans, and some people may consider that to be indirect financing, and maybe that's true in some sense. But in another sense, it's totally different. We underwrite every single loan.
So you know, virtually all of our transactions are uh structured into bankruptcy remote.
Ltvs.
Throughout our whole book.
Special purpose, entities.
Right Okay.
Great color kind of what I was looking to hear.
And then I guess just on the loan growth obviously.
Pipelines for both purchased and originated sound like they are pretty healthy and you have some strong optimism for closeout.
Calendar year going into next year, just wondering if you have any visibility on the payoffs thus far this quarter.
Um, with carveout guarantees generally, you know, for any fraud or something, you know, that's specified in the documents, but it's a, a guidance line underscored meaning. Somebody comes in and they have a line with us, and they want to, they want
To kind of help give us some perspective as to what the net growth could be for for loans.
Richard Wayne: It is very different, totally different than some kind of whole warehouse line where a borrower can borrow based on a borrowing-based certificate without the lender focusing on the actual credit like we do. It is totally different what we do. To answer you in a word, we're very comfortable with our asset quality, especially, as you know, from what we include in the material, the low LTVs throughout our whole book.
Loans outstanding for the quarter.
I'll just make a general comment let me ask Athena to fill in if he has.
The information, saying this.
Yes.
Quarter, we had a I would say a larger amount of payoffs suddenly typically have and then kind of.
Totally different than, you know, some kind of hole a warehouse line where, you know, a borrower can borrow based on, uh, a borrowing base certificate without the lender, you know, focusing on the actual credit. Like we do is, is totally different. Um,
Kind of something that is surprising you.
Usually when you have large payoffs in the purchase space you tend to have more transactional income, but in this quarter, we had larger payoffs.
What we do. So to answer your in in a word, we're very comfortable with our asset quality and especially as you know, from what we include in material, the low uh ltvs
[Analyst 2]: Right. Okay. That's great color. That's kind of what I was looking to hear. I guess just, you know, on the loan growth, obviously, pipelines for both purchased and originated sound like they're pretty healthy and you have some strong optimism to close out this calendar year and going into next year. Just wondering if you have any visibility on the payoffs thus far this quarter to kind of help give us some perspective as to what the net growth could be for, you know, loans outstanding for the quarter.
Um, throughout our whole book.
And.
We didn't have as much transactional income as I would have.
<unk>.
Estimated at the beginning of the.
Quarter.
We we.
We purchased.
$145 million, we can just think to this live in China were Rebecca will correct me when I go wrong here.
Purchased invested $145 million and our loan portfolio and purchase did what.
Right. Okay. Oh, that's, that's great color. That's kind of what I was looking to hear. Um, and then I guess just, you know, on the loan growth obviously, um, you know, pipelines for the both purchased and originated sound like they're they're pretty healthy and and you have some strong optimism to close out, um, this calendar year and going into next year, just wondering if you have any visibility on the payoffs, thus far this quarter, um, to kind of help, give us some perspective, as to what the, the net growth could be for for, you know, loans outstanding for the quarter.
Richard Wayne: I'll just make a general comment. Let me ask Tino to fill in if he has the information. He's saying no, that, you know, this quarter we had, I would say, a larger amount of payoffs than we typically have. It is kind of something that is surprising. Usually when you have large payoffs in the purchase space, you tend to have more transactional income. In this quarter, we had larger payoffs, and we didn't have as much transactional income as I would have estimated at the beginning of the quarter. We purchased $145 million. We can just think through this live, and Tino or Rebecca will correct me when I go wrong here. We purchased, invested $145 million, and our loan portfolio on purchase did what? What was the net change in it, Tino or Rebecca?
What was the net change in it.
I'll just make a general comment, let me ask, you know, to fill in if he has the uh,
But that change.
Richard.
<unk>.
Like <unk>.
<unk>.
Number right in front of me, but on slide three.
So I would say, we had $122 million of Paydowns and amortization that is high.
The information is saying know that you know this uh quarter. We had a I would say larger amount of payoffs than we typically have and it kind of a kind of something that would is surprising is usually when you have large payoffs.
That and.
I think that in a.
And interest rate environment that is declining.
In the purchase space, you tend to have more transactional income, but in this quarter, we had larger payoffs.
We would expect payoffs to increase when somebody didn't have a better offer on the table. They wouldn't refinance just for the support of it but historically, we've seen in lower interest rate environment.
Um, and um, we didn't have as much transactional income as I would have. Um,
estimated at the, at the beginning of the
We have seen.
More payoffs.
And so I would kind of I'm, not saying it will be more than $120 million. We had this quarter. This quarter was particularly high but we had some loans that we were you know sometimes when you have pay downs on the purchased in particular, it's a good thing.
Um, we purchased a $145 million loan portfolio. We can just think of this as live in Tina World. Rebecca will correct me when I go wrong here. We purchased and invested in $145 million in our loan portfolio.
Did what?
Santino Martino: Net change, purchase is up like 20, I don't know the number right in front of me, but on slide 3.
Because you have loans that we think are teetering.
What was the net change in it? Do you know where Rebecca that changed? Uh, purchase is up.
Like 20.
Peter maybe too strong, but loans, we would be happier if they were out of our portfolio and we made an effort.
Richard Wayne: $22 million. That would say we had $122 million of paydowns and amortization. That is high for that. In an interest rate environment that is declining, we would expect payoffs to increase. When somebody didn't have a better offer on the table, they wouldn't refinance just for the sport of it. Historically, we've seen in lower interest rate environments, we have seen more payoffs. I would kind of expect, I'm not saying it'll be more than the $120 million we had this quarter. This quarter was particularly high, but we had some loans that we were, sometimes when you have paydowns on the purchase in particular, it's a good thing because you have loans that we think are teetering. Teetering may be too strong, but loans we would be happier if they were out of our portfolio.
It was either last call or the one before we took a look and we probably have provided detail on.
On where we thought there was risk in the New York multifamily portfolio.
The number right in front of me but on slide so 24 million. Is that what day? We had 122 million of pay downs. And the amortization that is high for that and, and, um, I think that in a, uh, an interest rate environment, that is the declining, you know.
Based on rent stabilization and the possibility of a administration change going forward and we've made a concerted effort to reduce our exposure in the area of rent stabilized or rent control portfolio for that reason, so I think that was.
We would expect payoff to increase when somebody didn't have a better offer on the table. They wouldn't refinance just for the sake of it. But, you know, historically, we've seen in lower interest rate environments. Um, we have seen.
More payoff.
A big chunk of why the.
The purchase.
The pay off around purchase book was a result of that.
And just on that topic as it relates to.
Um and so I you know, I would kind of it. I'm not saying it'll be more than 120 million. We had this quarter, this quarter was particularly high, but we had some loans that we were, you know, sometimes when you have pay Downs on the purchased in particular, it's a good thing.
Originated loan one thing were seeing is were seeing borrowers.
Because you have loans that, you know, we think are teetering.
Borrowers now negotiate much more strongly for getting rid of floors or having a floor that is.
Richard Wayne: We made an effort, and it was either last call or the one before, we took a look and we provided detail on where we thought there was risk in the New York multifamily portfolio based on rent stabilization and the possibility of an administration change going forward. We've made a concerted effort to reduce our exposure in the area of rent stabilized or rent controlled portfolio for that reason. I think that was kind of a big chunk of why the purchase, the payoff around purchase book was a result of that. Just on that topic, as it relates to originated loan, one thing we're seeing is we're seeing borrowers now negotiate much more strongly for getting rid of floors or having a floor that is typically what we like to have, is the floor set at the rate when we originate a loan. Borrowers, that's not market anymore.
What we like to have as the fluids set at the rate we originate alone with borrowers that's not market anymore. So we're seeing some lowering of the floor also that sounds very pessimistic in terms of loan growth, but that's not my intention because we would expect both our originated loan book based.
On what we know what's in the pipeline.
And with the caveat I said about purchase loans earlier, you win or you don't win but theres, an awful lot out there we would expect.
I kind of give another caveat, but I won't you get the point.
We would expect a fair amount of volume and opportunity in both of those spaces.
Teetering may be too strong but loans we would be happier if they were out of our portfolio and we made an effort and I it was either last call or the 1 before. We took a look and we pee provided detail on on where we thought. There was risk in the New York multi family portfolio, uh, based on rent stabilization and the possibility of a Administration change going forward. And we've made a a a a concerted effort to reduce our exposure in the area of rent stabilized or rent controlled portfolio for that reason. So I think as I'm you know that was kind of a big chunk of why the um the the purchase.
The payoff around purchase book was a result of that.
Got it okay. That's good color. Thank you.
And just on that topic, as it relates to.
um,
I guess Ah.
I guess, just lastly on the tax rate.
Originated on 1 thing, where seeing is, we're seeing?
It came in lower this quarter is that just a function of taxable income or is there something.
I know there was like some state law changes does that carry through.
Next year.
Yeah few things there that are impacting our tax rate this quarter.
Richard Wayne: We're seeing some lowering of the floor also. That sounds very pessimistic in terms of loan growth, but that's not my intention. We would expect both our originated loan book based on what we know that's in the pipeline. With the caveat I said about purchase loans earlier, you win or you don't win, but there's an awful lot out there. We would expect, I got to give another caveat, but I won't, you get the point, that we would expect a fair amount of volume and opportunity in both of those spaces.
There are two state law changes that had a pretty significant impact.
One, Massachusetts, we're now paying very little taxes in the state of math because of their apportionment law changes.
California also changed their apportionment laws, which is positive which offset the decrease in Massachusetts, a little bit we're paying more in California now.
I know that's in the pipeline. Um, and with the caveat I said about purchase loans. Earlier you win, or you don't win, but there's an awful lot out there. We would expect
The third piece is in Q1.
Fiscal year is when we have all of our stock baskets and Graham.
Uh, I got to give another caveat but I won't you get the point um that you know we would expect fair amount of volume and opportunity in both of those spaces.
[Analyst 2]: Got it. Okay. That's a good color. Thank you. I guess just lastly on the tax rate that came in lower this quarter, is that just a function of taxable income or is there something, you know, I know there's like some state law changes. Does that like carry through for the next year?
So to the extent that tactic.
The.
Got it. Okay, that's a good caller. Thank you. Um,
The fair value of the vast exceeds what we booked for book expense on the on that restricted stock, we get a tax benefit for that.
I guess, uh,
So with where the stock price was at the date of vesting this quarter.
We saw a pretty good tax pickup on that front as well that won't be recurring through.
Santino Martino: Yeah, a few things there that are impacting our tax rate this quarter. There were two state law changes that had pretty significant impact. One, Massachusetts, we're now paying very little taxes in the state of Mass because of their apportionment law changes. California also changed their apportionment laws, which offset the decrease in Massachusetts a little bit. We're paying more in California now. The third piece is in Q1 of the fiscal year is when we have all of our stock vests and grants. To the extent that the fair value of the vest exceeds what we've booked for book expense on that restricted stock, we get a tax benefit for that. With where the stock price was at the date of vesting this quarter, we saw a pretty good tax pickup on that front as well. That won't be recurring through the rest of the year.
I guess this lastly on the the tax rate um that came in lower. This quarter is that the function of of taxable income or is there something? You know I know there's like some State Law changes. Does that like carry through for the next next year?
Through the rest of the year.
So on a go forward, we're expecting that the effective tax rate for the rest of the year to be somewhere in the realm of 31% to 32%.
Great Okay perfect.
That's all that I had thank you very much.
Thank you.
Thank you Jamie.
I would like to invite you to ask any questions.
If you have a question. Please press star one on your Touchtone phone.
Yeah, few few things there that are impacting our tax rate. This quarter, um, there were 2 State Law changes that had pretty significant impact, um, 1 Massachusetts. Uh, we're now paying very little taxes in the state of Mass because of their abortion and Law changes. Uh, California also changed their portion in laws, which is caused, which offset the the decrease in Massachusetts. A little bit, we're paying more in California now. Uh, and the third piece is in q1 of the fiscal year is when we have all of our stock bests and grants, um, so to the extent that taxi, uh,
Thank you now I will turn the call over to Rick Wayne for closing remarks.
Thank you.
On the call.
I'm sorry.
No. Thank you for those are on the call for listening. Thank you.
Santino Martino: On a go-forward, we're expecting the effective tax rate for the rest of the year to be somewhere in the realm of 31 to 32%.
Mark for very thoughtful questions.
And again, thank you Richard.
The fair value of the best exceeds, what we've booked for book, expense on the on that restricted stock, we get a tax benefit for that. Um, so with where the stock price was at the date of investing this quarter uh we saw a pretty good tax pick up on that front as well, that won't be recurring uh through the rest of the year. Um so I want to go forward, we're expecting the the effective tax rate for the rest of the year to be somewhere in the realm of 31 to 32%.
[Analyst 2]: Great. Okay. Perfect. That's all that I had. Thank you very much.
For.
Yeah.
Your work your friendship.
Richard Wayne: Thank you.
Great. Okay, perfect. Um that's all that I had. Thank you very much.
Thank you.
Your professionalism.
Operator: Thank you, Damon. We would like to invite you to ask any questions. If you have a question, please press star 11 on your touch-tone phone. Thank you. Now I will turn the call over to Rick Wayne for closing remarks.
So much appreciated.
Thank you, Damon.
And we will.
To you again.
Uh, we would like to invite you to ask any questions.
At the end of January.
If you have a question, please press star, 1 1 1 on your touchtone phone,
Thank you all with that now we will say goodbye.
Thank you Shannon.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.
Thank you. Now, I will turn the call over to Rick Wayne for closing remarks.
Richard Wayne: Thank you for those of you on the call. Thank you for those that are on the call for listening. Thank you, Damon and Mark, for very thoughtful questions. Thank you, Richard, for your work, your friendship, your professionalism. So much appreciated. We will talk to you again at the end of January. Thank you all. With that note, we will say goodbye.
Cool.
I'm sorry.
No, thank you for those that are on the call for listening. Um thank you Damon and Mark for very thoughtful questions.
Um and again, thank you, Richard.
for um,
Your your work, your friendship, uh, your professionalism?
um,
So much appreciated and we will.
Talk to you again.
Um,
at the end of January.
Thank you all with that note. We will say goodbye
Operator: Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.
thank you, ladies and gentlemen, goodbye
Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.