Q2 2019 Earnings Call
Good day and welcome any investors Bancorp second quarter earnings Conference call.
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Well begin this mornings call with the Companys standard forward looking statement disclosure.
On this call, but personally though some investors Bancorp Inc.
It may make some forward looking statements with respect to its financial position results of operations and does that.
It's worth looking statements are not guarantees of future performance and are subject to risks uncertainties and other factors some of which are beyond investor Bancorps control are difficult to predict and which can cause actual results to materially differ from those expressed or forecast in these forward looking statements.
And last Night's press release the company included its safe Harbor disclosure and refers you to that statement that document is incorporated into this presentation.
For a more complete discussion of the certain risks and uncertainties affecting investors Bancorp.
Let's see the sections entitled Risk factors management discussion and analysis of financial conditions and result of operations set forth in investor Bancorps filings with the FCC.
And now I'd like to turn the call over to Kevin Cummings, Chairman and CEO of investors Bancorp.
Thank you Lisa.
And good morning, welcome to the investors Bancorp second quarter 2019 earnings Conference call.
The company issued two press releases last night at the close of business, one being the normal quarterly earnings for the second quarter and the other being the announcement of the signing of a merger agreement to acquire gold coast Bancorp and a stock a cash deal valued at 63.6 million.
Oh coast with approximately 563 million in assets is a long island based institution, but said six branches and Nassau and Suffolk County, and one in Brooklyn.
This transaction is a 50 50 stock cash deal and we anticipate buying the stock back post transaction closing.
The transaction has minimal dilution to tangible book value.
And as an earn back back up approximately three years on the crossover method at four years on the static method.
We like the franchise as it roughly doubles up.
And the suburban long island market.
It is our first transaction post second step as opposed to the essay.
And the math works well for us as it is a good use of capital with an estimated are up 17%.
It creates a stronger presence in long island.
Where we recently expanded on our medical lending team and we believe we can leverage our balance sheet and expand opportunities to the Gulf coast customer base.
It is good message to our employees and customers that that this is on the move again and the math works well for our shareholders and as it is a low risk and market transaction with significant upside potential and I'm walking with strong demographics.
The company also reported last night.
Its earnings release, net income of 46.6 million or 18 cents per diluted share.
For the three months ended June Thirtyth June 2019.
Versus 18 cents per diluted share for the three months ended March 31st of this year and 20 cents per diluted share for the quarter ended June Thirtyth 2018.
For the six months ended June Thirtyth. This year net income totaled 94.8 million or 36 cents per diluted share compared to 115 million or 40 cents per diluted share last year.
In June .
Now this year as previously reported in our 10-K.
We early adopted a new accounting pronouncement, which allowed us to reclassify certain securities the held to maturity portfolio to available for sale.
He securities of approximately 400 million with that so at an after tax loss of 4.1 million or one cents per share.
The proceeds of the sale were reinvested in other debt securities, yielding approximately 79 basis points higher than the security so.
Simultaneously the bank modified tragic 50 million a day eight FHLB borrowings, which resulted in an interest expense savings of approximately 45 basis points net of modification costs.
We expect this transaction will yield a tangible book value earn back of approximately one year.
In a difficult interest rate environment, we continue to pull levers to improve operating results.
Over the last 18 months, we have closed 10 branches and we'll continue to evaluate our operating cost structure.
During the quarter, we manage our capital base with buybacks of approximately 3.8 million shares for $44 million at an average cost of 11 49 per share.
In addition at our Board meeting this week, our board approved a quarterly dividend of 11 cents per share.
Loans grew 253 million for the quarter, but business lending growing 154 million.
We continue to emphasize this lending at the bank as we evolve into a full service commercial bank.
We recently hired a new bankers to head up our cash management services and have improved our product offerings in this area with enhanced escrow products and improvements to the digital platform at both the consumer and business line.
With respect to the recent changes relating to rent regulation in New York City, We believe that we have a good understanding of our exposure at this time.
Well the regulation changes will bring some disruption to the industry, we do not see them, having a significant impact on our business.
Of our 8 billion and multifamily portfolio approximately half is in New York City.
After backing out our Cola free market units and properties subject to the city's tax exemption programs.
We estimate approximately one to one and a half billion up rent stabilization exposure in this market.
It is important to note that our multifamily portfolio has always been underwritten based on in place rents without anticipating increases and the LTV, but the weighted and I and the ltvs have a weighted average of less than 60%.
In addition, our customers in this space are generally larger substantial owners that are committed to the New York city market for the longer term.
As far as with respect to loan growth.
We are not particularly reliant on the New York City market.
As we've been successful diversifying the portfolio in terms of geographic locale and property type becoming stronger throughout our overall.
Footprint.
We do not anticipate growth in this loan group and in our residential or in our residential portfolio as the yields on these assets are not strong enough based on the incremental cost of deposits to fund these loan types.
Our focus continues to be on diversifying our loan portfolio into the business sector and the acquisition of gold calls will help this diversification in the long island market.
With respect to credit quality.
We continue to have strong metrics with the reserve coverage.
1%, while 1.05% to loans and a 280% coverage target, 8% coverage to non accrual loans.
I'm happy to report that our largest relationship and the multifamily non accrual category was paid off yesterday and will result in a $30 million reduction and our nonaccrual totals.
Adjusting for that payoff commercial non accrual loans totaled 30 million or 19 basis points of total commercial loans.
And our total adjusted non accrual loan ratio of 37 basis points to total loans.
This reduction in nonaccrual loans results and an allowance coverage ratio to non accrual loans.
Approximately 284%.
During the quarter, we had net recoveries of 221000.
For the quarter ended June Thirtyth 19.
With the improvement in our credit quality and modest loan growth, we recorded a reduction to our allowance of $3 million in the quarter.
With respect to our credit quality, we believe we are well positioned at this point in the credit quality.
Oh, the credit cycle as a significant portion of our nonperforming loans are in the residential portfolio, where we have 51 million representing 275 loans to nonaccrual status for an average loan of 185000.
We take a conservative approach to these credits as evidenced by the historical gains recorded by the bank on the sale of our read over the past five years.
We believe we are well positioned with our capital position should the economy slowed down in the second half of next year.
With respect to deposits.
We had marginal growth in the quarter and continue to see fierce competition for deposits.
Deposit costs increased eight basis points in the quarter, which impacted our net interest margin by a similar eight basis points.
We are busy adjusting our retail teams and have hired 16, new business development officers to drive deposits into the bank by calling on status of influences such as Cpis and attorneys and working with our branch managers to put more feet on the street.
We're also looking at revamping our processes and workflows in the branch system, the free up time for more sales and business development activities.
Our teams are working hard and our calling efforts are up over the previous year.
With the implementation of the Salesforce CRM system, we are actively monitoring our teams activities and adding resources to improved results.
It is a significant focus of the management team and comes up almost daily and almost every meeting at the bank.
We are not satisfied with the results, but we will continue to focus on these activities and adding the proper resources to the fight.
It is the top.
Priority of the bank at this time and we will continue to focus on it.
Now I'd like to turn the call over to Sean Burke, our CFO , who will give some additional comments on our operating results.
Thanks, Kevin our net interest margin was 2.47% decline of eight basis points from the prior quarter, lower prepayment fees and inverted yield curve and increasing deposit costs drove the decline.
Our provision for loan losses was negative 3 million for the quarter compared to a provision of $3 million in Q1. The provision was positively impacted by improved credit quality metrics, including the level of non accrual loans and net recoveries, coupled with modest loan growth, which was partially offset by an increase in multifamily reserves related to changes to New York city's rent regulation loss.
Our allowance remains among the strongest in our peer group at June 30, our allowance to nonaccrual loan ratio stood at 208% and our allowance as a percent of loans was 1.05%.
Noninterest income excluding the loss related to our securities repositioning totaled $12.7 million for the quarter, an increase of $1.5 million from the first quarter.
The increase was attributable primarily to a gain on a branch sales leaseback transaction and increased mortgage banking activity and deposit related fees.
Non interest expenses totaled 103.8 million, which was relatively flat compared with the prior quarter.
Our effective tax rate was 28.6%, which was also consistent with the prior quarter.
Our asset quality and capital ratios remained strong at June Thirtyth, our nonperforming asset ratio stood at 48 basis points, an improvement from 52 basis points in the previous quarter.
Now I would like to turn it back over to Kevin for some concluding remarks okay.
Thanks, Sean.
The operating environment continues to be a challenge for banks like investors with the liability sensitive balance sheet.
The potential for a rate reduction next week by the fed will help but we need to accelerate our transition to a full service commercial bank and improve our low cost funding of noninterest bearing deposits on both the consumer and commercial front.
The acquisition of gold coast improves our presence in long island and gives the team a shot in the arm, creating momentum for the bank.
We've been on the defensive last few years with RBS a issue.
This acquisition is a great first step moving forward.
We're on a mission at the bank to create a special bank that makes a difference first and foremost with as employees and customers and the communities that we serve.
We are leaders in the communities, we serve our communities and strive to make an impact.
The changes we are implementing will take some time.
But this time, but this team is committed to our strategic plan in creating a stronger commercial bank, serving the New York, New Jersey Metropolitan area.
We have a plan we have a mission.
And it's time to execute on that plan.
We thank you for your support and now I would like to turn the call opens to for some questions. Thank you.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
If you are using a speakerphone please pick up your handset before pressing the keys.
If at any time. Your question has been addressed or you would like to withdraw your question. Please press Star then too.
At this time, we will pause momentarily to assemble our roster.
Your first question today comes from Mark Fitzgibbon with Sandler O'neill and partners. Please go ahead.
Marlow Your line is open.
Hey, guys good morning.
Hi, good morning, Mark.
First a question related to the deal is it likely that we will see you guys doing more of these kinds of deals in an effort to bolster deposits and could you give us a sense for how.
In terms of deployment of capital how deals and buybacks rank in terms of priorities.
Hey, Mark Good morning, this is domenick the.
Yes.
As we reported over the years since we've taken the second step.
Capital deployment has been important to us and share repurchases has been a major.
Component of that strategy, we continue to believe that share repurchases, especially at this valuation play an important part in them.
In our capital strategy.
In terms of looking at this particular deal I think we've been vocal about our inability to do anything that was highly price we are very cognizant of.
Tangible book value dilution and so this was a transaction that was priced right that strategically fit within the realm of out where we want it to be loan to deposit ratio metrics will good credit quality was good as I said geography was good and.
We just thought this was another use of capital in addition to buying back strategy. So as we look out to the future.
Obviously, it's hard to say, what we may do but.
We're going to preserve tangible book value were going to make sure the metrics it correct.
Anything we do and.
Buybacks will always be part of that strategy going forward.
Okay, Yes, and I think market fit more physical yes, I think it fits in well with our strategy, it's not an either or we're going to continue to use both and do everything prudently.
Okay, and I'm going to chime in its Sean Quinn.
The only over the last comment I'd make care markets. Our bar is quite high on the M&A side, we see many opportunities and have passed on most of them. So we are cognizant of where we trade and.
Ultimately, what we look at has to fit.
Our profile, but also has to add something strategically and as Kevin pointed out they are not mutually exclusive.
Okay, and then Sean can you help us think about expenses for the back half of the year is that 103.8 million a good run rate.
Yes, our guidance remains 420, Mark for 2019, but we are hoping to come inside of that but.
We're going to stick with the 420 for now, but we like the run rate and it bodes well for the second half of the year.
And I know headcounts been trending down for a little while but it looked like it bounced up about 40 ft uses this quarter and I know.
Kevin You had mentioned I think 16, new business development people, whatever whereas the rest of the growth coming from.
The.
We have some summer interns arc that we.
That we hire.
And they will be add here I guess by the end of August when they will go back to school. So the number the real number is to one Kevin mentioned then that's.
Those 60, new business development officers.
Okay and could you share any updated guidance with us with respect to the margin.
Assuming and what your assumptions are and rate.
We expect margins to remain relatively stable throughout the rest of 2019, Mark that's based on the assumption that we will get a July rate cut.
Thank you.
Thank you.
Your next question comes from Austin, Nicholas with Stephens, Inc.
Please go ahead.
Hey, guys good morning.
Good morning.
So I appreciate the comment on the stable margin, which seems to assume just one rate cut in July .
If we were to get.
A rate cut in September and then another one and in December can you maybe talk about you know could could we see the the margin.
Inflect guide to that in the fourth quarter under that scenario.
Yes.
You would see that Austin and.
That would be.
Those those particular cuts the one in September and December if we do in fact get them they will be even more impactful for the following year when we get the full year impact of.
Thanks.
Understood and then can you maybe just talk a little bit about I know, we've talked about this before but the fixed to floating swap that you have on and it remind us when that runs off and what the kind of impact would be when that when that runs off assuming assuming we have a couple rate hike a couple of rate cuts here.
Yes, so we have approximately $1 billion that we have swapped to floating rates, but that swap comes offer ends in February of 2012.
And so.
Then you go back to having a $1 billion that turns back to fixed so that will be a benefit when that swap ends in February of 2020.
Understood that that's helpful. And then just maybe just on M&A can you.
On the acquisition announced today congrats on.
On that.
Yes can you maybe just talk about what assumptions you guys have on in terms of growth for that.
You know for that kind of that part of the.
The bank I know, it's small, but just any assumptions you have on on the on the growth in terms of loan growth.
Yes.
We're hopeful that the the acquisition and gold coast can deliver.
No more growth than we modeled in but our expectation was approximately about an 8% growth rate.
Okay.
That's helpful and then maybe just on the multifamily.
Portfolio.
Can you maybe.
Yes, I know you've talked about.
Well protected on credit low ltvs that all makes sense to me.
And while I understand that is there can maybe speak to if there is if there is any risk that.
You know from a from a risk weighting perspective is there any risk that that risk weightings could move up in any of those.
Certain certain types of those loans, where valuations may have gotten.
More may make it hit is there is there any risk to that and have you modeled anything that you could share with us.
Our risk weighting with respect to multifamily assets is pretty conservative relative to what others with large portfolios, how they risk weighted so there's less impactful to us but.
Austin, We don't we don't see a major impact there and the rationale for that is.
The ltvs, which would likely be impacted here.
Or could be impacted.
They are measured for regulatory purposes. The rule is the LTV as measured at origination.
Sure.
Okay. That's that's helpful.
And then I guess to that you just add to that a little bit less than.
During our underwriting the last couple of years, we we had adjusted.
And stressed in the underwriting process to a four and a half and 5% cap rate. So it's not like we were in the rates, especially in the Brooklyn market were coming into that for us.
Some and so for our underwriting.
We adjusted the underwriting.
For a four and a half 5% cap rate over that period of time, so that that bodes us well going into this type of situation should cap rates change, we feel we've been conservative in the underwriting.
Okay. That's helpful and then.
Some of some of your peers have broken down their portfolio in a similar way as you have but they've also.
Made a kind of the ring fenced a small portion of loans that they considered the arc could be considered value add or rather where the.
A borrower has a strategy or had a strategy to.
Meaningfully increase.
Stabilized rents to market rents have you have you done any analysis on that.
One to one and a half billion portfolio of what maybe is a little bit more exposed on on that from that perspective.
We haven't Austin in certainly we look at.
We look at the strategies as the loans come in but as Kevin mentioned, one one of the ways that we moderate that risk is by using a.
Low a higher cap rate, which essentially gives less dollars to the borrower and which also then translates into more equity.
And then the second item in our underwriting that.
Helps to protect US is we qualify the loans to a 10 year borrowing rates. So in the event. So even if a borrower is going to borrow for a five year term we have him.
He and I have to qualify at a 10 year rate.
So those are the two ways that we try to protect that and.
We try to protect the credit.
But we haven't really dug down deep into.
At this point understanding.
Who's buying it just simply to decimate the building and raise all the rents we havent done that.
Okay.
That up that makes sense and then maybe just one last one on loan growth.
I know the original guide was caught in that 6% to 7% range, but maybe just as we look out here can you give us some thoughts on.
How you think that number could look over the next couple of quarters and then when you layer in this new acquisition.
You know, what maybe what that what opportunities that could give you I know you kind of mentioned that you're on your assumptions on that.
Yeah the.
Asked in the pipeline for CRB is actually down.
At this point, it's down by about 50% and so we've seen now overall CRB pipeline.
Come down to about $450 million.
Which.
We believe is going to have an impact on growth going forward, we still have a healthy pipeline and now see an i. portfolio. That's the area that we remain focused on.
And I'm not sure how will bode for growth but.
Yeah, My feeling is that and we havent put pencil to paper at this point, but just going through these numbers over the last week or so.
Gives me pause for hitting our billion four in growth for 2019, that's not withstanding. The addition of the.
The portfolio that will come from gold coast, which is primarily CR rate so that may add to it.
That will help us get to our number but I don't really look at it that way I look at what current production is right now and it looks like on the CRB front with down and Thats truthfully is by design just given the shape of the yield curve in.
Just to risk in the market. We just believe it's a prudent thing to do at this point to limit growth in those areas.
Okay, Great and then maybe just one last one I know you have the online bank that you started a few quarters ago.
I think the goal was to maybe grow it to 250 million.
In deposits any any comments on how that's going have you been able to lower lower rates there a bit.
Recently.
And then maybe just any any goals to grow beyond that.
Yet as of second quarter, we had about 300 million in the online accounts.
And it's been doing well, if we look at it as an alternative to raising rates here in our market.
At this point, we've been monitoring the rates pretty closely and.
We feel this is not the right time to lower the rates, although we have seen some competitors lower rates, but there are a number of competitors who are at the same level that we're at.
We're looking at the impending fed rate cut as perhaps an opportunity.
To lower our rates and hopefully some of our competitors will do the same thing.
We continue to like the vehicle we continue to work on it we have a team that specifically dedicated to monitoring and to monitoring the website and the and the and the online bank and at this point, we've grown it above 300 million.
And we're going to continue to watch that but as I said, we're going to use it as an alternative to increasing all of our rates throughout the rest of the bank.
And use this as a.
Alternative funding tool.
Understood. Thanks for taking my questions. This morning.
Thank you.
Our next question comes from Jared Shaw with Wells Fargo Securities. Please go ahead.
Hi, good morning.
Okay, we are.
I guess, maybe on the credit.
Kevin You had said that there was a recovery post we ended the quarter.
Have any of that already been charged off and should we expect to see any type of a.
Additional provision release as a result of that.
David look really that far ahead, yet it's still early but theres a small recovery there nothing that.
We're really impact.
Our allowance, but I would say that our asset quality ratios continue to be strong and they are improving and to the extent that they do we wouldn't anticipate if it stays where it is we wouldn't anticipate large provisions for the remainder of the year.
Okay.
That's helpful. Thanks, and then on the.
C and high growth.
It was a good quarter for growth can you give a little detail on where you're seeing that and.
When we're looking at that sort of line items, specifically is that sustainable with the with the hires that you've been doing there.
Yes, we think it is you know we just.
I just met with the the Cnine folks this morning as matter of fact and.
We are just slightly below our budgeted number for the year, but.
We feel pretty good that we'll be able to hit our number.
Most of the business that we did was we now general market area. We did some some lending in New York City and in some of the boroughs and.
So.
It's it's starting to reap the benefit of the additional hires and the focus on the business.
It's too early to tell as to.
How those how this will pan out for the rest of the year, but so far so good.
Yes, a good part of their business comes in the second half of the year. It's a seasonal business first quarter is usually the slowest and the gain momentum in the second we expect to have a stronger third and fourth quarter.
Okay. That's helpful. Thanks, and then on on M&A.
You know what this deal I'm assuming that.
That you were discussing with the regulators along the way and that.
You're not anticipating any.
Any issues there is that.
Probably a good way to look at it.
Yes, Thats fair BSA order was lifted in December of 2018.
And yes in fact, we have been discussing this deal with.
All about regulators.
Since it.
It came to the table.
And then once this is.
Closed or I mean, I guess.
I understand that you are looking at M&A is very opportunistic and it has to meet specific criteria, but.
Could we see another deal before this is closed or before this is integrated or I guess when would you start to reevaluate opportunities out there.
No.
Jared I think Sean said it earlier that there are deals that we're looking at all the time and.
At this point, it's difficult to say, whether we're going to do and make another announcement before I would say, it's highly unlikely no. We haven't done a transaction in quite some time.
We have a lot of new members of the management, the operations and technology team and so.
This deal works from a number of perspective is not only all of the strategic perspectives that I.
Cited earlier, but also one in which.
Our teams can.
Can convert and handle.
Within a reasonable amount of time so.
Im hesitant to want to do something thats going to.
Put some undue burden on on the team I want to get through this one first since this is the first one we've done in quite some time.
Great. Thanks for the color.
Our next question comes from Brody Preston with Piper Jaffray. Please go ahead.
Good morning, everyone. How are you.
Good thank you.
Yeah. So a couple of questions on the on the deal.
I just want to know what the expected cost saves and intangibles were as a result.
The cost saves were 45% I think thats, what we modeled on the intangibles with $16 million.
I think it's $14 million of goodwill and approximately $6 million.
Core deposit intangible.
Okay, great. Thank you and I'm, assuming that the cost save number does not include any branch cuts just given the lack of overlap between the footprints.
That's correct.
Okay great.
And then.
With regard to their their underwriting specifically surrounding multifamily do they have a do they have a I guess a relatively larger rent regulated book and are the underwriting standards that they have similar to yours.
They are pretty clean bank, but Brody multifamily makes up a very small component.
Have there.
Their loan book I think it probably 13 or 14% if I'm not mistaken so it's very small.
Okay, Great and then in terms of the accretion from the deal whether it be any material impact to the margin as a result of accretion moving forward.
Once the deal is closed.
It's probably flat great, yes, it's a little too small brody really to to move the margin needle for us.
Okay, All right and then one last one.
Not on the deal, but just in terms of the pricing competition that you're seeing.
Specifically in fee and I.
Excuse me with LIBOR down as much as it is.
End of the first quarter or how how I guess, how competitive it is competitive conditions trended and are there any industries or segments, where you're seeing more or less competition.
We.
No I would say first let me just say that the market is competitive and everyone is out there chasing deals.
Many about deals get priced to treasuries actually.
A large portion of them get priced treasuries.
And to the extent that to the extent that LIBOR has fallen and we have a deal every prices.
To LIBOR or spreads to LIBOR, we do have.
Ray rock hurdles that we have to hit so when a lender brings a deal in when we run it through a model that tells us what the return on risk adjusted capital will be so even with the reduction in LIBOR will adjust to spread to ensure that we're hitting our re rock levels.
Okay, great and are there any lending segments that are more or less competitive.
Than any others.
I would say.
Not I would say that most segments a competitive we're active in the health care.
Segment and that remains competitive.
The.
Within the New York City market, we've done some high quality hospitality.
That also remains competitive we were bidding against a number of other banks in those particular deals, but I can't put my finger on any one segment of the.
Of the market that is less competitive than the others.
Okay, Great I guess, one last one for me just to follow over there are there is there any segment of the healthcare industry in particular that you're.
Focused on with regard to see an island.
No.
We run the gamut between hospitals Doctor practices.
Dentist's office.
There's a nursing home facilities.
So there's not one in particular that we focused on we really run the gamut there.
Alright, great. Thank you very much everyone.
Okay. Thank you.
Our next question comes from Laurie Hunsicker with Compass point. Please go ahead.
Hi, good morning.
Joining Meredith Kevin you could share with us as you all look out.
On the acquisition front and I appreciate that you're you're going slow.
How do you think about a bank that has a very concentrated multifamily buck or potential concentration and run regulation inside a bank that you would just step away from not interested or how are you approaching that.
Well certainly.
You know in our strategic plan, we want to diversify our portfolio and move more into the business lending.
The multifamily asset class has served us well and our our transition.
From a from a thrift to a more bank like and it served us very well, but too much of a good thing.
It's not a good thing so so certainly.
We love the asset class, it's a very profitable.
Credit metrics there is some uncertainty with the change in regulation. So we're being very mindful of that when we look at you know whether growing the portfolio or looking at potential acquisition targets is a low cost of entry into the business.
Well you have to do is.
No some brokers and you could you could lever it up pretty quickly, but in todays market with our funding costs is an area, where we're where we just want to maintain it or maybe shrink it a little bit to fund the business lending opportunities in the marketplace.
And also there is a greater opportunity for deposit gathering where we deal with the cnine customers, Okay that makes sense.
Can you remind us where you all would go geographically.
How far outside of your footprint you at luck.
Yeah, we know when you say outside our footprint I mean, we've been vocal Laurie about where we would go Nassau and Suffolk County has been one of the areas that Weve targeted and we've also targeted center city Philadelphia I think we've mentioned a number of occasions that.
The Philadelphia market. We believe is attractive we have a number of branches in the suburban areas.
Of Philadelphia on the New Jersey side, and we think by looking at the potential transactions in that.
Sent to center city, Philadelphia market could work to enhance the franchise so.
At this point it's.
Long Island in Philadelphia is is on the extreme where we would go right now as we speak.
Great. Thanks, and then.
I'm certainly go coast was small how much smaller would you go and then can you remind us potentially how much larger you would also consider what what's the plan there.
Well I don't think we would go much smaller than $500 million in assets. It just.
Especially.
Just given.
The work Thats required to get a transaction like this one done in terms of big transaction Laurie.
Also a difficult question to answer and.
All I would say to that is anything that we would look at would have to fit within.
The confines of the deal of the metrics that we believe.
A suitable for us in terms of tangible book value dilution earn back.
Okay, great and so I mean theoretically if you know if there was a 5678.
10 million dollar deal what would that be something you would look at if it fit within your tangible book and our back parameters or is that too big to Digest. How do you think about that I mean realistically Laurie. This is Sean just based on where we trade, we're very mindful of that and so you know.
Any anything that size is likely to trade at a premium to where we are and would create.
A situation where.
You may not be.
Hi deal or meet our return.
Profile and our expectations for teens book value dilution and earn back right. Okay. Thank you for that I'm. Just last quick question any deposits can you remind us how much they are and and.
Where are you guys currently are with cost of those thanks.
We have about $3.6 billion in Muni deposits here in New Jersey.
And what are those what are those costing.
Our weighted average cost is just a touch above 2%.
Okay, great. Thanks, I'll leave it there thank you.
Our next question comes from Collyn Gilbert with KBW. Please go ahead.
Thanks, Good morning, guys.
Wanting right I hopped on way late I apologize if you guys covered this already but just a couple questions did you can you just.
Confirm what the outstanding balances for your New York City rent regulated multifamily.
Loans.
Yes, Kevin mentioned it earlier.
Somewhere between a billion into billion five.
Okay, and and I again, yeah.
If you covered it I can just read the transcript, but did you cover what your growth outlook was within that portfolio and within multifamily in general.
Yeah. We you know we've been vocal about the fact that we don't see growth potential coming from multifamily as matter of fact.
When if I break down the billion for that we projected for the year 2019.
In our original strategic plan only about 100 million was being attributed to multifamily.
Truthfully as I look at.
The shape of the yield curve and where we are in terms of pipeline im not even sure that we'll be able to achieve that in 2019.
Okay. Okay Thats helpful. And then just on the NIM I'm sure you covered it a lot of what I would ask but youre it.
Can you just offer a little bit of guidance or thoughts on where you think your NIM would go in 2020, if we saw three rate hike rate rate cuts.
Or I don't know drilling on it that's counting the chickens before they hatch Burke.
Yes, we're just focused on July , but obviously it would it would tell about 50 basis points next week.
I don't know I rely a bit where liability sensitive so collin and every rate cut.
It's beneficial to us.
Did you we get caught we did cover some of the guidance with respect to the remainder of the year earlier in the call.
When we we said based on our July caught were expecting up.
Stable margin for 2019.
Okay me Okay. Okay did so did you did you quantify with every 25 basis point cut maybe what would happen with the margin.
I know you said stable with the first one but I just didn't know about that.
Thanks.
We did not and it will change because theres different dynamics at play here because we've talked about we had an asset swap on that that rolls off in February of 2020.
So obviously that will have an impact so when you look at it.
You know in totality and the balance sheet every 25 basis point cut helps but it helps to different degrees and it probably gets better.
The further off that we go.
Okay. Okay. All right. Thank you for that and then just finally and again sorry. If you covered it you can you say you did and I'll go back to the transcript on the on the buyback and what.
Where your appetite is maybe what caused you guys to buy back less than I guess I would've thought probably maybe less than maybe what the majority of the market would've thought but just.
Did you already talked cover that.
No.
Again comment as far as the buyback is concerned I mean, we believe in the buyback is an efficient use of capital.
You know we have bought back over a billion almost the billion 200 million in stock over the last five years since we took the second step so.
As we look out we continue to use the strategy of buying more stock back when the price falls and less stock when the price rises.
In terms of.
You know just buying less in direct to your question buying less for the quarter.
That was really more in line with you know just trying to balance our tangible common equity ratios fcr rig concentration levels and ensuring that.
We do maintain enough capital for continued growth.
Over the next 12 to 18 months so.
No im not saying that we're not buying back our stock and matter of fact, I'm, saying the opposite will continue to buy back. The degree obviously will vary based on the price changes that occur in the stock.
Over the over the future.
Okay, Okay very good I'll leave it there thanks guys.
Thank you.
This concludes our question and answer session I would now like to turn the conference back over to management for any closing remarks.
Okay. Thank you Elisa.
I'd like to thank you for participating on the call today.
We're very excited about the gold coast.
Potential and the acquisition in the market that they operated at Suffolk Nasser.
Market is very exciting to us I'd also like to say that buybacks are still an integral part of our capital management plan, along with dividends, along with organic growth and along with smart acquisitions that.
Meet the requirements of.
Of.
Tangible book value.
Dilution and those.
Metrics, where we are on the game plan.
To move this company forward, we're excited and.
Well I wish everyone a good remainder of the summer and I look forward to seeing you add on the road and have a good day. Okay. So thank you very much and.
Appreciate your participation on the call.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.