Q2 2019 Earnings Call
Okay.
Good morning.
And well go to the Burnisher he'll Hills Bancorp.
Q2 earnings release conference call.
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I would now like to turn the conference over to Aaron Dougan.
Investor Relations manager.
Please go ahead had good morning, and thank you for joining this discussion of second quarter results, our news release and a presentation outlining our ongoing strategic review, which we will discuss today is available on the Investor Relations section of our website, Berkshire Bank Dot com and will be furnished to the FCC.
Our remarks will include forward looking statements and actual results could differ materially from those statements.
For detail on related factors. Please see our earnings release and most recent FCC reports on forms 10-K and 10-Q.
In addition, certain non-GAAP financial measures will be discussed on this conference call.
References to non-GAAP measures are only provided to assist you in understanding Berkshires results and performance trends and should not be relied upon as financial measures of actual results for future projections.
A comparison and reconciliation to GAAP measures is included in our news release and with that I'll turn the call over to CEO Richard Marotta. Thank you Aaron Good morning, everyone and thank you for joining us today for our second quarter earnings call with me. This morning are Jamie Moses our CFO , Sean Gray, our President George Amulets, our Chief Credit Officer, and George Bacigalupo, Our commercial leader I'll begin the call today with a high level overview of the quarter and then turn it over to Jamie who will dive deeper into our results and provide an update on our ongoing strategic review, we had a good quarter. Our earnings were in line with our expectations as we completed our acquisition of ESI financial and made good progress on our strategic initiatives.
In the second quarter, we delivered 65 cents inquiry P.S. and 52 cents in gap bps difference being outlined in the earnings release table. Our NIM came in at 319 and included 11 basis points of benefit from purchase loan and time deposits accretion.
The integration of ESI financial operations that started this movie for US and remains on plan, we've been impressed with the talent and customer focused manner at which they operate as well as their enthusiasm to expand their businesses. We continued to deploy resources to work with their teams prior to our systems conversion, which is planned for October .
ESI financial added approximately $1.7 billion in assets for balance sheet, what 18 branches in eastern Connecticut.
And five in Rhode Island.
We've experienced positive deposit growth in those markets, thus far and we look forward to capitalizing on new opportunities markets and teams provide us an anticipated achieve our projected cost savings on schedule as Jamie will discuss shortly we have continued to move forward with our strategic initiatives and have begun to see results from our efforts.
We plan to continue to build on this momentum and to meet the goals. We set forth last quarter. Overall, we're pleased with the progress we've made towards our financial and strategic goals for 2019.
I talked a lot about our culture and core values over the past few quarters and we are beginning to see the untapped potential of diversity building trusting relationships with all of our communities will help us bank the growing numbers, the millennials and people of color throughout our footprint.
And the second quarter, we officially launched our beef first internal values as well as our be first commitment to the communities. We serve we are invested in not only our outward facing products and work, but also in building our internal capacity and diversity.
Through our beat first programs, we have established or concept for community fronts to be based on our my bankers success develop new community deposit loan products and established a bank level diversity and inclusion committed.
I am proud to say that during the second quarter, Berkshire Bank was named the 2019 recipient of the north.
American employee engagement award for social responsibility and work Brooks Your beat our global companies across many industries in winning this honor a true Testament of the strong work environment dedicated to service and culture now I'm going to turn the call over to James.
Jamie.
Thanks, Richard and good morning, everyone I'm going to begin with a few comments around the second quarter, and then give an update on our strategic initiatives at which time I'll direct my comments to the presentation that was posted to our IR website.
As Richard said, we delivered 65 cents in core EPS, and 52 cents and GAAP EPS with a difference coming from our ESI financial acquisition and restructuring efforts.
During the quarter, we saw improvement to our capital and liquidity metrics.
At this point, we're roughly 60% through our projected ESI financial merger costs with the remainder of though is expected to come through in the back half of the year.
This merger strengthens our balance sheet as we move forward with our plans.
The economics of this deal remains strong.
We had expansion in our core profitability metrics as core ROA was 101 basis points up from 92 in the first quarter and return on tangible common equity was 12.2% up from 11.4 in the first quarter.
GAAP ROI was 79 basis points in GAAP, our OE was 6.1% due to the impact of merger related and other non core charges as you would expect.
Our efficiency ratio improved to 56% from 60% in the first quarter.
Loans to deposits were 94% at the end of the quarter as we move forward with our plans deleveraging.
Yes, I financial loans and deposits came on at roughly a 100% loan to deposit ratio.
On the loan side, we reclassified our aircraft portfolio to held for sale during the quarter.
Prior to this reclass and excluding ESI financial commercial loans were down 1% for the quarter as we exited some non strategic commercial loans as planned.
Turning to revenues fee income was down from first quarter results, primarily in our loan related income tied to two items first recall that we had $1 million in additional SP a fee income in the first quarter related to the government shutdown delaying revenues from fourth quarter 2018.
Second we took a $700000 fair value Mark on our back to back swap book due to the steep decline in rates quarter over quarter.
Moving forward, we expect fee income returning to a more normalized run rate.
On the expense side overall, we're pleased with the disciplined quarter over quarter as we execute on the strategic plan.
That being said professional services showed an increase quarter over quarter that we expect to move back in line going forward.
This was primarily tied to an indemnification claim on a prior acquisition.
Overall, we're pleased with our progress and execution during the quarter as we continued to take steps toward repositioning and optimizing our balance sheet.
Developing high quality sustainable earnings and driving efficiencies through targeted cost reductions, while maintaining and enhancing product and services.
Turning to the slides and beginning with slide three our balance sheet optimization is on track.
The indirect auto portfolio continues to run off as planned and our securities portfolio continues to naturally run off.
And as I just mentioned, we have moved our aircraft portfolio balance of $178 million to held for sale.
Turning to slide four as you can see in our earnings release, the first choice loan services operations had a good quarter, taking advantage of a boost in the refi market due to lower rates.
As we said in the past this is a team of good operators and we continue to receive interest in the operations from potential partners, where the strategic fit makes sense.
Moving on to slide five we taken key steps in our expense management initiatives evidenced by a 56% efficiency ratio.
We have enacted company wide policy changes reduced our full time organic ft count by 6% year to date and have additional expense management initiatives that will be enacted in the back half of the year.
We continue to see improvement as we remain on target to maintain an efficiency ratio in the mid fiftys by the end of the year.
Moving on to capital management in slide six.
We received regulatory approval for share repurchases in mid June as of last night, we've repurchased 310000 shares and plan to remain active as a purchaser again subject to market conditions.
We've modeled our average share count to be around 51, and a half million dollars in the back half of the year again, that's subject to market conditions and as a reminder, our board approved share repurchase authorization includes 2.4 million shares and expires on March 30, Onest 2020.
Shifting gears and looking at the broader picture for a moment.
Based on the forward curve, we expect further rate cuts and we've already begun to see the impact of lower short and long term rates.
And this updated environment, we anticipate our reported NIM to remain relatively stable subject to the timing of purchase loan accretion.
We remain on track to meet our full year core EPS targets due to the overall benefit to the site merger and our strategic initiatives.
At this time, we cannot provide GAAP EPS guidance do the due to the impact of noncore items, which includes F. CLS.
I will turn it back over to Richard now for closing remarks, Richard Thank you Jamie good up the discussion on slide seven of the deck and to reiterate with Jamie said, we remain on track to meet our targeted performance goals. This includes a 260 plus core EPS and a car or way above one for 2019 with a focus on improving ROTC overtime.
During the quarter, we welcome three new members to our board of directors by Adult Bill Wilson Railed Brew yard and Bill use these additions provide deeper insights into our newer markets and bring enhanced city and new perspectives, if our boardroom.
Including expertise in cyber security and community development financing.
In addition, during the quarter, we officially welcome Lee allows you to our management team has a newly appointed executive Vice President Chief experience in Culture Officer. This position will be instrumental in building on the momentum of our diversity inclusion initiatives. We also appointed Jackie Court right to the position of senior Vice President Chief Human Resource Officer, Jackie brings more than 25 years of human resource experience to the physician as she leads all aspects of the human resource function.
We're moving forward on all fronts, we expect to see strong results in the next several quarters as our initiatives come together to drive value as we meet with the new networks within our communities. We are beginning to understand the value of inclusion we're excited to explore the growth potential of our new programs. Our teams are energized and fully engaged within our markets as they continue to focus on building relationship oriented business.
There's a lot of opportunity ahead with the ESI financial expansion and our be first efforts have been met with optimism from our communities and our employees were taken key steps in order to fortify our franchise and truly define what it means to be a 21st century community bank with that I'll open it up to questions.
We will now begin the question and answer session.
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At this time, we'll pause momentarily to assemble our roster.
The first question comes from Brody Preston from Piper Jaffray. Please go ahead.
Good morning, everyone and are you.
Abroad.
Hi quick question.
I guess are you guys hearing a bit of an echo.
Not on our end.
Okay, all right well that's fine then.
I guess I, just want to get a sense on the.
Core NIM Jamie.
That it would likely be I guess sort of flat moving forward just given the outlook for the forward curve.
Yes, so the reported NIM, we expect to be relatively flat for the back half of the year and again thats going to include.
The purchase loan accretion and CD marks things like that.
In the back half of the year, our core NIM, we expect with.
With rates being cut we expect that will.
Decline a little bit in the back half of the year, maybe in total 567 basis points, something like that again, depending on timing and.
And when and if those rate cuts happen.
Okay, all right I appreciate that.
And then I guess.
As we look to.
The fee income.
Excuse me if I missed that I hopped on a few minutes later, Jim you said, you expect fee income to normalized and moving forward.
What would that run rate look like.
I think.
We look at that as probably 20, plus when you include.
Syfy in this deal so we're pretty confident that that's going to go to the 20 number.
Okay and is the is the impact from Durbin.
Still anticipated to be about $5 million per year.
Yes, we think it's right around there.
Okay, Great and then I guess moving the total loan growth.
I understand that you move the aircraft portfolio held for sale I guess, even adjusting for that loan balances came in a little bit.
Lower than what I was looking for.
Could you help me sort of explain.
Or help me understand what what drove the Delta and what you would expect for loan growth moving forward should we expect maybe a slower pace of growth to continue.
Brody this is George Bacigalupo.
So that for the second quarter core regional lending was flat.
The reductions as Richard mentioned were almost totally in our non relationship and syndicated lending.
Assets.
And so as we move into the third quarter, we are looking to us.
Despite some additional pay offs associated with those non core.
Transactions, we were looking at a range of probably too.
Or so percent upward for the second quarter.
And specifically we have some good momentum in our.
Business banking in New York in Eastern mass appeal, as well as eastern mass commercial real estate.
So so we're fairly bullish on.
The next quarter.
Yes, Brody if I could just as Richard if I could just add one thing I guess the way I would look at it is our our our pipeline is strong as in robust as it has been I think we're just being very selective when it comes to the relationship and also the rates on the loans.
Okay.
Okay and then.
I have a question surrounding I guess, maybe some of the recent hires that you that you.
That you've made I think.
Forgive me, if I am mispronouncing name, but I guess Malia Plaza.
Holy Moly allow Leah.
Okay I just wanted to better understand I understand that you sort of have.
A separate business that is focused around sort of.
I guess diversity and inclusion I wanted to better understand what some of the I guess, maybe some of the key things she brings to the organization.
In terms of like Devon is going to implement going forward.
Yes, I guess, the as we kind of look at.
Into the future and to be in the 21st century bank part of that whole aspect is to deal with the communities that we service and part of that.
Those communities are major part of those communities are people of color on and just overall diversity and multi has built a strong business and she is a 20 year vet in the Boston not only Boston, but nationally. So when she brings is just the ability to take our vision and then to tie it in ticket and tied back to the communities.
That we serve.
Okay, great. Thank you very much guys.
The next question comes from Laurie.
Hunsicker with Compass point. Please go ahead.
Hi, Thanks, good morning.
Hey, Larry.
I just wanted to go back to your comments on noninterest income for Superfast Okay.
And I just wanted to make sure I heard this right is as you look forward you're thinking that run rate is 20 million a quarter.
Yes, yes, thats right.
We think will be north of that.
North of that Okay. So maybe can you help me think about it and I'm looking this quarter, it's Kevin Stein and a half.
Seifi comes over they were running at 2.9, I'm, taking out 410 change for Darpin.
The 2.3 half a quarter impact.
Steve you should only be adding a little over $1 million for your fully baked run rate I guess, what else. So I would look at it going from 17 and a half to round numbers called 18, and happy even 19, I guess, what am I missing here.
Well I don't I don't think.
You may not be necessarily missing anything in that fee income line that we had.
Decline based on.
The.
A fair market value of our of our swaps.
That we don't.
Typically youre not going to see much movement in that quarter over quarter.
And so we.
We had this dramatic decrease in rates from end of Q1 to end of Q2. So we had to take a mark on that so you would add you sort of just re add that back in and contract that got it okay, and that's showing up in that.
Loan related income line.
Unrelated income got it okay, and then ill.
To do we also expect to do better and SP fees.
Going forward in Q3 and Q4, we've made some investments in that business that we really like.
We expect to see the payoffs on those start to happen in the back half year.
Okay, all right. Thanks.
Okay and then just just to go back to your comments on margin can you help us think about Adam.
It does to core Mark Burnett contracting four or five basis points, suggesting that your accretion income.
In your model is running higher than the fourth quarter was $3.2 million.
How are you thinking about accretion income just the last two quarters of 19 and I realize that number can move around yes. The timing on that is a tough one.
It could be we don't know for sure but in our model we are sort of.
Having the purchase loan accretion remained relatively flat thats about $2.2 million or so.
But then we also had a.
Mark on the acquired CD portfolio.
Thats contributing to the reported NIM as well.
And so thats at that added about three basis points or so this quarter.
I should add roughly double that in Q3, and Q4 and so you know the accumulation of those purchase loan accounting.
And and deposit marks should keep us relatively stable.
Back half of the year, while that sort of underlying.
Balance sheet is contracting somewhat based on the forward curve.
Okay.
Okay, Great and then tax rate, what should we be using going forward.
Yes, I think 20%.
For the back half of the year plus 20% for the full year seems about like a good number for us.
Okay, all right great and then.
Can you just update us.
I guess, where we are with the way the taxi book.
Sure Yeah, I'll kick that over to George If you can help me again, hi, good morning, Laurie its George and Mike.
Balances or just under $26 million Theres really no material changes to the overall credit or the portfolio I mean, it's continuing to perform along our expectations.
Delinquency did tick up a little bit from last quarter. However, when we adjust for matured loan loans that are current with their payments. It was actually flat. So it's it's continuing to perform.
I'm sorry, what is the delinquency number.
Well it is at 68%, but that includes loans that have matured.
That are current so if you were to back those out it falls back to where we were last quarter, which is roughly around the 60% range.
Okay, Great and then were there any charge offs this quarter no.
Not in the pool of portfolio now.
Okay, Great and then same question can you just update me on the fires Chuck just give 'em balance origination nonperformers and charge offs.
Yep balances are up slightly from last quarter at 270 million I think it was up about 2% quarter over quarter.
NPL.
Or just under 2 million, which were down from from last quarter and delinquency is at 1.3% or roughly three basis points of the total loan portfolio.
10 minimal.
And minimal charge offs, okay, and what were the originations this corner.
Okay.
Maybe when you're looking for that too.
Do you have what is substandard.
As we said as of June 30, total substandard and then also what piece of that is and I.
Okay, well $36 million in Firestone originations for the quarter Okay.
And I'm sorry. Your question on criticized was that specific to Firestone or no I am sorry, just overall, what you're like you're substandard.
It's currently running I guess is that comparable that Archie with $152 million.
And then also looking for the piece, that's standard and I only one comparable at March it was around 55 million.
Well sub standard is flat.
It was roughly 157 at March 31st and its 158 at June 30.
158, Okay, and then you have the piece of that that is.
I see and I.
I do not have.
The breakout.
We can follow up with you on that okay. Okay that sounds good Okay, and then just one more question on.
I guess when you're when we're looking more broadly.
At your income statement.
You guys are putting a lot and our restructuring.
In some of these are charges I think that other banks. We just consider part of operating course of business can you help us think about when that line goes to zero.
And then how we should be thinking about restructuring expenses for the remainder of 2019.
Yes, so that line should go to zero after the fourth quarter of this year right. So this is.
I would say that the restructuring charges that were putting through this line are related to our strategic review.
Are moving forward with.
Different lines of businesses and getting out of certain lines of businesses that sort of thing.
So we should have that completed by the end of the year. So I think.
First Q.
2020.
That line should be zero, along with the sort of merger and acquisition line as well.
Our conversion happens in Q4 so.
We're sort of stuck with charges that will tail off into Q4 of this year.
But but those those numbers should.
Should go to zero in in Q1, and again I just want to remind that we are likely to have some some more branch closures that happened in Q4, as well that we will likely call that a restructuring charge.
Okay, and and how many branches or your classic.
So probably somewhere between two and three.
That's right, Okay still trying to identify which ones and were but were we think thats, probably the right number okay and that goes into that number. Okay. So then I guess just as we're looking forward, assuming you get down to another.
Acquisition.
One Q2 0 March we're going to see your first clean quarter in terms of restructuring and merger charges in like a decade and is that the right way to be thinking about that I think that is the right way Larry yes, Okay. That's great.
Yeah, that's great.
One more question and then sorry, if I've taken up a lot of time here the aircraft leasing sale that's expected.
Can you share with us that's a gain or loss.
I don't feel real comfortable talking too much about that right now in terms of whether it's a gain or loss, but you'll you'll see the impact.
On the next call, hopefully or or or released that when the when the thing closed as well.
We'll let you know what the impact will be.
Okay, and that's also probably going to run through your restructuring line as well.
I don't think so.
I don't think that will run through the restructuring okay, Okay, great and I'll follow up with you on substandard. After thank you very much thats perfect. Thanks, Laurie Thanks, Laura.
The next question comes from Collyn Gilbert with KBW. Please go ahead.
Thanks, Good morning, everyone.
Total good thanks.
So maybe just starting Jamie with the NIM discussion.
And I appreciate the color through the back half of this year, but then as we look at 2020 and if we just assume no rate no change in the rate environment from the for Q1 9 position.
Can you just confirm what percent of accretion income will go away in 2020, and then very broadly how you think that core NIM can trend in 2020.
So almost almost all of the of the accretion income will go away in 2020.
What's going to remain is an interest rate marks on acquired portfolios, which is a very small.
Piece of the of the overall loan accretion and in the first quarter and in a small piece of the second quarter, you're also going to get Mark income that comes through on that acquired CD portfolio that we that we have.
Again said this quarter that was worth about three basis points on the reported NIM.
And we expect that will roughly double.
As in the in the full run rate here in Q3 Q4.
In Q1.
That was a not to get too technical around it but we have that is like an 11 month straight line run off and so at month 11 that that income goes to zero on that so that so that there will be.
Almost all the call it no noise in the reported NIM versus what we would describe as our adjusted NIM.
The Delta would only be what's in the interest rate Mark and we would expect that to be.
A minimal number and roughly stable and running off over time.
Okay. Okay. That's helpful. And then just generally kind of how you're seeing the core NIM or maybe more importantly, the movements in the core NIM through 2020, and tying into like strategies on Syfy and all that kind of stuff. Yes. So as we as we've talked about before you know I mean part of the balance sheet restructuring that were doing is to try to protect our NIM as best as we can.
You know we are at the moment, a slightly asset sensitive banks so.
The initial rate movements down are going to.
Impact our assets quicker than they will our liabilities, we expect that to.
To abate by Q1 next year and then we would we would expect that last time, we talked about sort of grinding higher basis point by basis point, a couple of basis points here quarter over quarter based on balance sheet restructuring and I think thats, what we will see.
Starting in 2020, we would expect that to that core NIM to sort of just rise.
Slightly and slowly over time.
Okay. That's helpful and then.
You had indicated so 20% tax rate can you just give us color as to what that would assume in terms of future tax investments and just where where you guys are positioning that for the remainder of this year and into next.
Yes. So you are breaking up a little bit that column, but I think your questions around the tax rate and where we're looking at going forward and those investments in general correct track. Okay. So in the quarter, you'll know in F. Nine in this statement you can see the actual breakout of the charge related to the income the tax credit.
And the income associated with it. So this quarter, we had about $440000 net benefit.
Two.
You know to the bottom line because of the tax benefit this quarter.
We continue to look at these as.
You know relationship deals, where we where we know.
No the operators, who are going to do it for example, a commercial real estate deal.
That his historic tax credits might be involved in.
We think it's good business if it makes sense from a from an ROI perspective, we'll do both the.
Both alone and the tax credits.
And so we think thats good business for us and we'll continue to do those types of things.
We do not do any solar tax credits.
And I think Richard did you have seen I know the only thing I would add kolon is just to highlight the point Jamie just made I mean these are relationship.
That we are in our footprint, we don't do anything national and we're not just out there chasing tax credits for the sake of tax credits. These are part of an overall relationship we have with the entity or the or the person.
Okay. Okay. That's great. That's helpful and then and I missed it you guys I'm, sorry, I hopped on the call late if you answered this already I apologize, but can you just update us on how you're thinking about buyback.
Yes, certainly our appetite is there.
Absolutely so we got approval.
Mid to late June .
For fed approval to do buybacks, we did about 110000 in Q2 over those say 10 or so trading days.
We have done 310000 in total as of yesterday.
We will continue to be in the market.
You know as long as nothing Crazy happens on.
In terms of stock price.
We will continue to be in the market, we have 2.4 million authorization from our board.
Number of shares that expires in Q at the end of Q1 next year.
We can do we continue to believe that we will.
Use that entire authorization.
And of course, the pace of those things will depend on market conditions.
And then the last thing I guess I would I would say about that.
You know is that.
You know, we really think that this is a sort of best use of the excess capital that we have and.
What we will continue to do that overtime.
Okay, that's really helpful and then.
I thought I would say my last question I forgot I think have to Mark I'm, just really quickly on the on the indirect auto the 500 million that you're running down or well about 450 left is there any sort of seasonality with the way that's going to run off.
The only I think seasonality is probably not the right way to think about it but since they are.
Amortizing loans, the the run off will accelerate over time.
Yes, I think that so less seasonality in more just the structure of those loans.
Okay. That's helpful and then just finally.
How are you guys thinking about some of the.
Consolidations occurring in your market.
Do you see that as an opportunity to take customers to take lenders or any change.
You are seeing kind of on an offensive strategic positioning as it relates to some.
Your market areas.
Yeah, Collin the answer those questions is yes, and yes. So anytime there is a a merger or an acquisition or whatever there is always disruption and disruption. If you play it right is opportunity and so we are looking for the clients that aren't aren't happy with the new with the new regime and or.
Employees that are not happy so yes, we are strategic in that in that regard.
I'd also just add that.
When competitors are eliminated that naturally reduces the sort of.
Competition that you have so that should help on both sort of asset generation and the liability side of things.
Okay. Okay.
Okay, that's great I will leave it there thanks guys.
Thank you Alan.
The next question comes from David Bishop with D.A. Davidson. Please go ahead.
Hey, good morning, guys how are you.
Hey, Doug.
A quick question.
You may not have an answer but in terms of the.
First choice loans, given what that mortgage market is there a potential for a gain in terms of.
The divestiture of that.
For that segment.
You know.
That real comfortable talking too much about that we're in discussions at the moment.
So I probably would leave that one month.
Okay got it.
Bob uptick in terms of commercial loan and CA.
Just curious some color around that and maybe the outlook for the provision as we head into the back half of the year maybe 2012.
Hi, good morning, its Georgia.
Yes, we did see it was about a 5 million dollar increase in Npls.
That's primarily due to one single C. and I relationship in our Vermont market.
I mean overall, though the nonperforming loans as a percentage of total loans is basically flat quarter over quarter inclusive of Syfy at about 36 basis points.
We don't really see anything else going into non accrual at least not in the near future. So.
I I think it's on like I said, it's it's due primarily to that one loan.
And we continue to work off obviously, a lot of the smaller loans.
And Dave This is Richard joining I would add is that the that one transaction seems to be adequately collateralized at this point.
Indeed, I guess I would also add on the provision I would expect you would see that provision go up commensurate with the size of the balance sheet.
Moving higher as well into into Q3 and Q4.
Got it and then.
On the on the core deposit funding.
Some decent.
Growth in non interest bearing there maybe just talk about some of the core deposit trends, you're seeing within the within the market and maybe on the pricing front as well.
Dave we're seeing good growth in our my banker in our private banking.
Franchise.
We closed six branches deployed our my bankers and actually grew deposits post the closing of those branches. So were seeing that as a an incredible value proposition in an alternative to traditional banking and we think it will give us flexibility going forward.
Got it and then all the parts and parts just curious what you know from a competitive standpoint.
In terms of Europe for the market.
Yes, I mean, we continue to see that.
Less pressure.
From from competition and rates you know as the.
There is a rate cut started to be anticipated we saw.
Competition sort of reduce their specials weve reduced our specials ahead of that.
As well, we've come down probably 15 or 20 basis points or so.
You know it over the past say 15 or 20 days.
And with anticipated continued rate cuts I imagine that what we'll see is less and less competition.
HM.
A better better and better rates.
Overtime.
Got it and then one final question in terms of the organic loan growth just curious, earning some of the core markets.
In the newer markets like golf ball west or what's the what you're seeing on the commercial loan front there.
We're seeing.
We're seeing good activity and opportunity in the eastern mass Boston and speed.
In general and where we have a very robust pricing model that we adhere to and where you don't being selective in our deals, but we certainly have good deal flow and we feel optimistic about winning our share of transactions.
Got it thank you for the color.
The next question comes from Mark Fitzgibbon with Sandler O'neill.
Please go ahead.
Hey, guys good morning.
Hi, Mark.
Just one clarification question on non interest expenses I assume you're going to extract the SIFI will begin to extract the cost synergies in this upcoming quarter can we look for noninterest expense down a touch from what we saw in Twoq.
Yes, so mark the right way to think about that is Q4 is where you'll see the.
Full benefit of the expense saves come in Thats when conversion happens.
So you will see you'll see a rise in expenses in Q3 relative to Q2, and then the decline would happen there in Q4 afterwards.
Okay. Okay, and then just to clarify your guidance in the slide deck says you are projecting for Dps.
To 60 to 65.
Does that assume any additional restructuring or merger charges or any other nonrecurring items in the third and fourth quarters.
No. It doesn't include any restructuring charges or anything like that in the third quarter.
Or fourth quarter.
Thank you.
Okay.
This concludes the conference for this morning.
Thank you for attending today's.
That concludes the question and answer session I would like to turn the conference back over to Berkshire for any closing remarks.
Thank you for joining us today, we look forward to speaking again in October for third quarter call. Thank you.
Thank you for attending today's presentation you may now disconnect.