Sterling Bancorp (STL) 27 Apr 192019 Q1 Earnings call transcript

Good day. Welcome to the Sterling Bancorp's Q1 2019 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jack Kopnisky, President and CEO. Please go ahead, sir.

Thanks. everyone. morning, Good

somebody slight that’s the back must the will be forth. Sorry this delay. – Draft pick Steelers Pittsburgh causing my communications the NFL Hopefully, for beloved It good. too and many

So the quarter for our first joining thanks of us for present results to XXXX.

Financial on the Chief Luis Massiani, is me Joining our call Officer.

We our results. detailed provides our quarterly press presentation information our site, Web on a release have which with along on

purchase of to this a call, review highlight balance will portfolio our year, repurchase and XXXX. Woodforest commercial residential of During in common our from the strong loan the program on of rate finally, the the describe start update sale $X.X we National our fixed highlight you for share mortgages, Bank, and billion runoff outlook

XX% in from quarter points. operating Adjusted $X.XX position. return common assets per ago. basis XXX of for the First, basis. strong income be XXXX. was to on an on XXXX average than million, average a X% $XXX.X Adjusted XX.X%. to continue begin We increase common a is equity available an return of year tangible strong. quarter shareholders share net Adjusted metrics tangible Operating earnings on greater Adjusted was was first

continued ratio was XX.X%, of Our efficiency leverage. resulting creation operating from positive

Bank’s and of business. in Woodforest acquisition growth quarter strong organic We continue last from quarter to volumes and balance $XXX ABL for the loans had loan X.X% and the the million the maximize sheet from first returns to The We resulted as evolve year-over-year. commercial and control growth equipment $XXX of quarter strong risk. grew XX% commercial million

residential growth. should continued of pipeline the mortgages opportunities at in have of million. rate gain billion we second net quarter quarter, very result $X.X that We the fixed $X.X sold loan a of a commercial in In strong

are objective assets declined and is of points. runoff assets with our pickup relationship-oriented million commercial anticipated. of by communicated yielding, the assets mortgages as capital previously we consistent loan trading to mortgage to exposure During basis $XXX Simply lower put, to yield non-relationship we higher-yielding for portfolio this XXX residential also a reducing quarter, reallocating and of our The XXX commercial loans. sale at

We will returns maximize transactional for for Deposit while mix quarter transition manage up deposits. flat chose the paying asset were to continue to to balances we relatively as we the limit interest-sensitive risk.

was ratio loan-to-deposit XX%. Our

We are the focused below on cost XX% maintaining lowering of and ratio the deposits.

of increased points see deposits of cost XX to linked XX in the quarter. a Our leveling to deposit over off But started points costs. basis March, we basis

XX% continues Our be savings, favorable deposit CDs. money mix and at to XX% demand market deposits, XX% XX%

quarter, interest from the our core to XXX XXX basis basis increased margin For points. net points

lower borrowing a to interest the basis of to balances to FHLB in XXX core Given XXX changes grow asset deposit anticipate margin and net by we points year-end. costs, mix, moderating range

expand We a and million quarter optimal profile. more have going margin forward. to businesses. at the million. year $XXX exclusive $XXX fee swap, expense, approximately expect million continue treasury amortization strategy fee the are creating balance This we loan our planned and mix a income as was consistent payroll and net to sheet our is of end were at will for expenses, we management, as $XX.X Core factory, with income that interest Core

financial FTEs. and lower in to end expenses. reduce core centers, are million locations back-office as We with $XXX continue we expenses confident will we that approximately trend The XXXX will

and X.XXx, real our that by call, total loans and service we Charge-offs credit coverage a declined estate percentage debt loan-to-value levels Our X strong. loans has inventory increase quarter. metrics basis and portfolio X receivable, book accounts equity over last remain first to capital appropriate of XX with XX% last per a the over a Nonperforming linked secured basis quarter. tangible X.XX%, value margin. commercial quarter. entire was our equipment Total On million over repurchase points share $X.XX basis decreased prior year capital within we quarter’s C&I portfolios of XX the at quarter, to points. In common highlighted substantially. point Delinquencies common and utilized as a strong common tangible also XX.X% prior were XX% over and Tangible assets shares. are that increased over

use We on will repurchase capital basis continue to our of shares. to quarterly review a the

still for has believe our authorization to increased for be growth million significant most management view XX amount the We repurchase of capital strategy opportunities Our share Board flexibility. by operating us the shares. and the gives

confident to targets return shows in We exceed past over our that on are X included the progression book Page future. ability growth we and earnings and our slide meet growth in value the the our and tangible of our years. seven model Lastly, and a

the EPS adjusted basis. beyond, return and the consistently of XX%. of a XX%. first less tangible and we average share XX% XXXX, expect since grew of of XX% equity efficiency growth common XXX on return assets value acquisition greater to been average legacy would been value tangible on Our tangible than growth, points and XX% basis book or growth per or and earnings a for CAGR of an greater CAGR has ratios quarter tangible on deliver XX% or annual over greater, In book XXXX our EPS has Again, Sterling

line the up for open questions. let’s Operator? now So

much, take Thank Please [Operator you first We’ll Jefferies. our with question from Casey ahead. Instructions]. sir. so go Haire

Thanks. guys. Good morning,

Good morning.

NIM on at portfolio you parts the the to in a lot NIM the clean a March quarter to sense divestiture. a the us trend. like just the Obviously, rate? a as start where run NIM It of with NIM. exited Can was and with moving the quarter looks March give deal look wanted the I decent

low continue of provided Casey, some for the we as sits shaking we past, NIM – as year. XXXX. to we’ve we the expect close. then that that transition X.XX progressively through going year. And where we of said December we slide the deck at the to that to out, through some Yes, to lower-yielding assets, continue in range what we’re of And balance the there rebalance the guidance provided. continue sheet that kind NIM to move the and this it’s see seeing improve core you’re see in X.XX of It to exited going out pretty we up end It

it’s much in guidance So previously provided. very line with the that we

Okay.

missed Sorry, I that.

March level? So X.XX that around was

Correct.

got Okay, you. All right.

there forward, guys it’s looking just going sticking you the So the a there. guide very point, deposit is at – side. with Woodforest on growth the was obviously If were track loan

under guys of XX. $X the and for And so loan-to-deposit you over would by need of my balance that deposit ratio generate billion growth the a year stay little math, about, to of

than XX? – you up will year are or about the room gathering go that that the balance comfortable So of deposit to there pick feeling for higher the is

Yes.

are we to ability deposits. comfortable So the generate in

you So kind the take I’ll steps of of through that.

and core So nonprofits, subsectors growth of commercial good especially and growth deposit with legal we’re seeing we on strong property That’s the prices. that the the where low management at have still growth, in focused commercial opportunities experiences good community, areas. very side, we some the on; relatively

pieces like some is The regard there other part of are some in municipal balances. higher commercial priced

especially good the where on growth focus focus subsectors the the, consumer there this on model of on competition, on been market certain the is some able on. again, Same mass But the thing most we side side. side, that is consumer we show around by some we we’ve far segments. So how to

couple experimenting with national We also products. are online a

We’re test looking those doing alternative deposit gathering. and in moderation again, and for And rate and cases between delivery at a learn that’s volumes.

targeted the comfortable side. So to right be at grow similar able on. It’s lending deposits we’re all we’d rates to that that time goes said, as the

your pick opportunities pick channels to and way. volume rate along the have You your

just come and You put that hope up in. can’t blanket rates they

at very been generation this, and on on returns of the the the flipside we’ve of adjusted that the how deposit obviously right types – we’re the on So strategic asset types categories side. gathering risk in provide looking of

purchase should deposit Okay. level deposit what And pricing for And – that of in the on, leveled the accounting, of expect first incremental here as the mentioned a just the the kind this cost What versus deposits competition is balance throw XXX we then off Jack, here. of is quarter? you year? the also cost

bottom that’s little we’ve things that of of Yes, been year – anticipated million to going – to new what assets. from exact XXX runoff little resi $XXX the to which I’ll opposite, we’re bit million. multifamily to origination going mortgage XXX we’ve off the a disclosed in the in the were we’re start so in side, had call multifamily yields expecting actually million quarter, to residential And some the has a to side. there be a by we saw there, that of another race on purchase of we we the runoff accounting seen first surprised that a of back perspective – saw leveling the to closer perspective about from as we is and where seeing We been bit – one the start are. But

some we’ve therefore to as So prepayment in paydown started that activity in see well. portfolio

perform. income of $XX runoff So going XX the it $XX because million million be $X runoff a And It’s to we purchase credit because the is – and related a based assets had accretion income to are faster million a on – $XX guided how we little about total uncertainty loans by bit more anticipated. how impaired – than XXXX. there’s for it that is we had to approximately we in originally seeing to and higher million to accretion likely again, than

to is say the or XX I’d that had guided number going XX to XX closer that million to likely that from income to about XX we it’s million to – accretion so. XX So move

or quarter. second deposit seeing third marginal a expenses more component been dollar we is had deposits, the the what increase quarter fourth so of the cost recently of more from interest I cost we’ve The about basis total this points to of XX think of than of

it first 'XX, signs leveling what say seeing basis show from to I and odd, points. Based off. the competition word XX I’d quarter of off. it’s started wouldn’t to that quarter So used we’re improvement. call we think say on fourth has leveling that today wouldn’t you saw deposit I I the of

today we’re that you’re foreseeable what the is today. that continue be increase and seeing So high-single couple mid I to think basis of next digits based at in I the points, going future the the dynamics deposits the that on we’re market cost competitive seeing seeing the increase But double-digit in for least that think to going more for to to XX XX of quarters.

to starting it level quarter-over-quarter. some to it’s going it cost of So should but improvement, – leveled still off deposits see increase show of yet it you’re and signs the in hasn’t

you. Thank Great.

O’Neill. Twerdahl Our next from Alex question with comes Sandler

morning, guys. Good Hi.

Good morning.

was it more us end your multifamily. bit said wondering of pipeline on was Then about pretty what on at you’re quarter. prepared in like a talking I the race strong the color if Luis, remarks. bottom can to loan little Jack, the you give another was you the

looking talk they’re types guys maybe that of about loan be enough was sheet? or and sort rates So such the the on balance complexion of you like not whether and the of what that spreads the to your are wide loans put going actually the pipeline

Yes, off macro. a so with I’ll maybe start

with of end growth incremental We’re year to very of gave the an billion. comfortable the that the for everybody X we X.X billion estimate we’ll do

in we’re So comfortable that.

You increased first million or so. quarter see can $XXX by we

are of are full. things. are buying the So well. general Many in growing, very pipelines very The Companies employees, performing secondly, the economy good. is adding sectors

the out So Obviously, there’s capital. there’s is there. flipside that capital of of a lots of for providers need

always it So particularly be, as it’s a competitive competitive. but environment will it’s

– and go that we find So fit. of the you you through kind pick process opportunities is through the that

one, So the full. aren’t pipelines very

rates the deals the a like have we for. lot of we structure and So good that

the funnel into have but you process. be there that But kind And really of want. seeing you quarter And that terms in you is deals more XX% higher. in I is last of think we think general funnels, that all meaningful we’re I selective opportunities opportunities to the year-over-year. I that again, of significantly range about continue volume said like think I’d them volume that down in

are we X.XX are yield there that And right What originated on a thing. the are X.XX them, that to of almost loans the loans – range that have about book. in this we generally So And is them more multi-broker on most of are relationship is seeing in still with they category of seeking. now. of that talking all kind come of of the categories side returns that multifamily runoff relationship were we Luis

again, to the back original So go statement.

We’re to strong pipelines X.X X The of billion. comfortable C&I, billion They’re traditional with very in are the especially CRE. kind traditional strong.

loans down, the spreads mortgage come over have it ABL down And the time. things we’re strong factoring particularly times. are because rates have and the mix. way. down this in lots Even warehouse to yields we or kind business We have Where not deals public opportunity do again, of mortgage the But a like finances along them. very warehouse popular of advantages the aren’t and strong come have come that where business as period economic is has put we there’s of volume of the opportunity, again, books, types of on things but the payroll prior rate selective of our one on as business in cycle finance that’s types the as

look to different allocate that it. portfolios different at the to and ability of the capital we levers have level can We right

we average have there the is building added those weighted in quarter. X.XX. pipeline deck, – levels. page you of right origination first the the but – in bullet yield It at a was there me, around if Alex, the slide And is added front I in for – we the don’t

classes So into up. being we’re the yields confident hold our and asset will selective pretty that spots, taking

And just Okay. you an can maybe Luis, process? then are on on CECL you the where update, guys us give

We’ve of that have substantial think tremendous we a I progress. amount done amount it and work around a of made

envision to be from not balance perspective. ready that around to But one-time a details a not disclose at we specifics going or capital impact or it’s are point confident be material publicly CECL. allowance very we’re anticipated sheet this is what to going under We a the

trying spending assumptions not are various identify so our and of and scenarios in now as I to – just would – think the and the models that and sensitive amount of changes the that rates surprisingly what what most fine-tuning book to bigger is you components are so envision. most we’re the forth time macroeconomic and

be what that we’re as because through that think bigger move class going not I term seeing the longer-term we classes upfront attractive the are or an continue have in to that there a modeling the the going asset beyond, to to we’ve it term. reserve built fixed to models been that to that’s – make as they to going are asset and past economic to the on rate the specific less impact it’s little going long is near as have XXXX attractive impact and be be going based requirement just going in make is bit

and material shorter-term going increase not the impact would But or material some that’s So capital things or types or working have are capital anticipate of think that we that those historically fixed-rate not us anything characterize I up on three- much to is we’d facilities have levels. the friendlier and CECL on kind to a seeing of on. be of loans long longer-term that fact to a one of focusing under be than change term, focused going term reasons banks five-year the for the

credit related correct just The then to And if that’s coming accounting. provision. Okay. the to piece switch to from yield back with NII wrong is me the market into the accreditable I’m purchase going

the accounting of correct? going XXXX, XXXX, some de purchase in of be minimis, time that’s on by to the we acceleration based get that to So pretty

That is correct.

have to it, an going component off. still interest the component fall but rate You’re credit Yes. will to

Thanks taking for questions. Great. my

Thank you.

From Nicholas. Stephens, Austin we’ll hear from

guys. Hi, Good morning.

Austin. morning, Good

level, you need X.XX sort the closer Can end? portfolio of gets quarter bulk midrange major to that what the that of further the back X.XX guidance get call you or it mortgage can at kind kind without to up of and what comments the purchases of for into maybe sales high involved? that go can the the and us get to year on from level the talk exiting would do to maybe midrange level any margin you you transactions Do you and to of to kind you

to We can the without midrange get involved. major transactions

even yield But loan or NIM the the Jack yields X.X% major a of that X%. of high that by average growth range hitting exceeding origination the it’s be loan runs core from saw core think weighted off of the I as you driver of over being what the loan perspective. first dollar X.X%, outlined and which a math, a every that more transactions, for – quarter a math would before, yield in end is transactions major the is, at core are or excluding replaced of

you delta of of assets But basis we the So you to acquisitions gets bunch the point be market it or the yielding off the assets we’re and the continue XXX that different to gets certainly that’s versus evaluating lower on portfolio are would reduce a on size commercial rolling you classes, that’s of higher-yielding and XXX there. and and focus assets lower for asset to progress accelerated yielding as continue you proportion trailing the assets asset on they into the in earning alternatives. –

to it’s to the midpoint range. that would But help. So certainly being get requirement of not a that able to

some Yes. that low runoff of of we communicated the we $XXX yields million are and to commercial $XXX we multifamily have Remember that those higher on loans yield. put worth that too, million at resi to between math, expect have

nature by yielding those are to So higher of numbers. the and gets math adding running the of down us those portfolios

and see dynamics don’t have about. a driven we the that really cost to think remain. bigger help that That is of Austin, the talked up I stops driver off competitive will What will of leveling crystal improvement – be obviously a be going that be we have ball, signs if but Upside too. could we deposits of would – and we too, if magic seen continue

of end think would I of closer to be catalysts upside. That to be the that us could range. one higher some there the get

give here you on what today the were and market year year? last just where of acquisitions, Understood. kind earlier just talking we And those is versus assets can about us then the sit of feel kind for as you portfolio any the maybe in maybe

there. an caution see – one of these the lot that biggest still we awful we frankly, Yes, portfolio is opportunities out side. the the on credit any on of And have

going opportunities going we sniff select time along even be a is that you we on of to we’re for has thoughtful a sure not we’re the go colored to the through. for on do way. play. estimates where tremendous This the we we priced But and a the credit bring include where that So that day-in this. something haven’t or that coming and to see purchases. make volume know to selectively and future on along at want we numbers poor But still just way organic We can the have They see amount of look not pure day-out today. the are control what on we

Got it.

Jack, great. the questions. Okay, Luis, thanks for

you. Thank

you. Thank

KBW, hear Collyn From Gilbert. from we’ll

guys. morning, Good Thanks.

Hi, Collyn.

Sorry, just to clarify. I apologize.

said understand. sure on want acquisitions, I make just the just portfolio to I You

not loan going of targeted billion – not right? Your get X.X portfolio billion there to growth acquisitions, includes you’re X to still That’s organically?

not. does It

we is – So billion, this going from X X.X forward. the today billion to

get and For organic. year, not the included in the to portfolio estimate billion not. billion does But of of first the to the include in billion the get to X It’s balance It’s billion done to the acquisitions. X.X We’ve quarter. from here does end and acquisition the portfolio one year, to already X.X X the overall number. our

thought you have guys X.X Is I Okay. been without billion X change? billion. a to would you saying that that thinking were organic recall acquisitions I

think so. don’t I

to – so if the acquired X billion X.X as you of factor X.X $XXX to is X Woodforest. billion billion thing to in million X.X billion of billion X growth billion Well, same

In the first quarter.

think I it’s the same. So

Okay.

say no change. I change. would there’s So no

just comfortable this a here potentially if found are to quarter get X.X those on to Yes, billion we on, X but magnify portfolio, from in, we number. the get organic. would with that from that will it And there to we billion, requirement

it. got Okay,

that – way that the just on aside environment structurally, accretable And NIM see trending XXXX see and sort if helpful. just component. the XXXX? Luis, year certainly of of that’s to from Okay, NIM do rate holds – the you really But in – the kind color that great just the this NIM it then yield might putting kind how alluded core is, of for we what you in

a Listen, will be which XXXX, mid-part balance working and early on of through I part – that think think it’s we’ll be I transition sheet able still once through the to the leveling I persists, we – in still support some this right. point the to of rate see that, this environment NIM start environment, – some you expansion. and think flat some at But you’d if off flatness that would

I it’s going that are had be will increase between and at is, – the when the long that multifamily X.XX almost there’s But – about think of flat residential have other there were in think and to NIM in most I mortgages, expand than dynamics fact over to today. that $X still will I billion that entirety support this you NIM rate have the NIM time of have assets whatever to what $X.X in expand to that be flat to I anybody the repricing isn’t will to approximately that time. still there right. a that But billion conducive we that period future So to million we’ll a X.XX new a they now, of don’t way book And think leveling we number that’s continued a but the a if point have that to $X factor we at today changed allow billion, be be to remains, environment the if point or help will provide better which somewhere helping going things into of have us rate secret off for and to have time us to is and yes, some we us that at adjust reality environment if term. that

would that environment remain this certainly forever. flat I doesn’t rate hope So

Yes.

that transition higher-yielding this indifferent or this to more we have; targeted acquired One opportunities. wrong is has a don’t know portfolio low we have right, I that we if attribute good of – the unique can or we bad but have yields is a attributes attribute,

have of can environment it we call know over this but I in – to period gain time. XXX think that point a a XXX basis some advantage, don’t competitive us it to of I kind if we allows pickup So

Yes.

And other clarification. point Okay. then one of

On a the 'XX, X.XX, full NIM? fourth year the That’s core guide quarter which is X.XX NIM that right? NIM of guide the to for not

Correct.

Correct.

Okay. substandard this just know just sort movement the kind quarter. just book and some But of in saw bit credit? of of And of then I of movement came a little – the you general was resolution from or expected for that about onboarding can talk some you there there Woodforest. of outlook in

call issues that mostly and and like are there have transaction Yes. component classified share/credit time to feature. didn’t we some you when where, tied that bring was we those was the of do No and level gas, the on always to earnings the those side. announced you that acquisition, lost assets were are alluded book we going energy credits so enhancement said a and we over we oil before, as prior to an Every the Woodforest some in to the the assets that

So we credits they those come do as assets. that still don’t anticipate but an issue, over classified will be

mention credits two estate in not moved that that any real are also we way, LTVs side but multifamily/commercial We shape the have substandard, concerned about or that had from form. on to special

metrics, of holistically credit feel you to the and a take that you quality step so continue And at think all we we they are. – if very look good about I where back

XX XX-day moved to bucket at million. nicely delinquency about million XX pretty $X NPLs by The points in about from and down to XX-day annualized. held substantial were have that million. showed charge-offs flat improvement relatively increased basis and essentially XX seen You’ve

major mention there this those causing nothing us by So over – almost actually had And point. OREO or perspective million. side, just also pretty from substandard – decreasing. at the a heartburn it And was balances, the quarter down is in $XX of any credits really also special good on we headache

commercial So that properties OREOs, forth NPL, in us we into loans continue rolled in we’re sell residential become work things have that have good of bit talked a and seen actually assets and that about when able have that. see we marketplace that out we so off the estate think confidence and one see to and we gives I the comfort to when real is past the and

So those aren’t we continued back, take credit a big very, moves for really a in be has substandard strong and concern. picture, very to step cause

Jack, update That’s of Okay, just the And market that’s Any one are it in or either your really there then in strategically traditional where to franchise? appetite question, bank to and helpful. or within in acquisitions. terms for movement relates fill as your just great. final M&A desires financially

Yes, of the beginning. it changed actually from hasn’t kind

On focused sellers can the will deposits cost out would look it, reduction Almost bank all lower the we the things of that find of side into primarily on model. add be potential you opportunities. cost to have the

kind have of that them strategic either some a And of interesting niches from are geographically or product standpoint.

them that are cost to look standpoint they you a from thing. then deposit-focused, order at want types the come – are challenged So of of niches. and this kind of most returns in And them put we the of you kind out of

how time that there out models this there. of focused before, this on and that we’ve of most you and are of we them them lot to. want if I’ve make we’ve think would complete said a sellers others, a sellers have though buy. no can that unique to this. So don’t that fairly is sense, And of there’s said kind ever – are lot a That’s look There things that I of we at

I’ll there. Okay, Thanks, guys. leave helpful. it that’s

you. Thank

you. Thank

Marinac Christopher hear Partners. with FIG from We’ll now

Good morning. Thanks.

morning. Good

incremental about on us funding you can match tell X.XX up cost comparable the a to trying Just Jack, the or deposits? of Luis with the number. loan side

side seeing to you of municipal not higher not basis deposits and marginal what bag not and XXX commercial to dollar higher we seeing had say that balance the not second on the in, market improvement we’re were XXXX the commercial basis XXX every half as much quarter, it But commercial and an where there’s points commercial the we yet we’re When on the on at between that It’s in of XX signs it’s more or it improvement. so somewhere rate on average side. that of that down. seeing basis the which of going rates has and improvement, that has a points versus by have what for changed showing accounts, what XXXX Blended the the first deposits actually side seen side is up in increase the points versus has mixed we’re more. come the is continued absolute half high balance in coming – is balance consumer rate seen especially

XXX And about to and consumer have municipal, on we that’s of the basis commercial a XXX various the side. is mix blended that So points. channels all

Okay, then if at you were to any end the this to that funding make ratio of loan-to-deposit that this incremental lower would gave rate? the difference great. year, And for range be you

Yes, that If had and – the you’d that at would. deposit be we lower if we be to it would so range accelerate growth, get rate were of the – plus. ratio X% had end blended loan-to-deposit would north

adjusted be? or TCE signed that from the sort sort the in the goes last it. or have you of off on Do quarter then back the would that of this post – Got perspective ratio regulators whatever And that mentioned Tier to X question, CETX buyback. the

plan Not is you think so off capital and comes off. on exactly to we have plans our assure as that that not – plans that, and execute it I sign the word don’t presented that going the demonstrated out. to are we to we that rest sign can but I – when we’ve it laid we’ve – have have used the capital sure would to regulators, anything capital that regulators the had our –

or plan off approved outlined, have I on capital it, So yes, signed that say we’re confident. not that, it have but but as we our very got we would – they’ve we again,

Sounds appreciate guys. it. Thanks for good. correcting I it

Thank you.

Chris. it, got You

From Piper Jaffray, let’s hear from Matthew Breese.

everybody. morning, Good

Hi, Matt.

Hi, Matt.

NIM? Hi. from What I earlier assuming piece resi wanted – million XXX that do sale. – follow in book that NIM from the you I’m just up some March X.XX the and how to sold on pickup and tag quarter. remaining be think do the is will There’s we still I on what a NIM the end, the

couple basis -- $XX of But points, of assets meaningful basis almost it drive a or million won’t helps. million $XX.X won’t X a XXX really always on a points. the earning difference. It’s hold have to X million

Okay. know. Yes, I

And are the you’re going selling clarification. you spreads like get it additional considering were backup with couple price selling? today than that you that potentially a curve, there of the the point better you’re those books a in And Just portfolios on then considering are are what to yield months on ago? of call

line potential from we with to to and average side. yield the to be spreads to or all-in so rate mostly maintain is similar with what to think be – I sales residential do on mortgage be would strategy the in and acquisitions so it the earning we – asset And would So did what sheet balance the increase assets. the that Woodforest really size it is is where They similar up organic here. did fixed today X.XX, would the X.X or the to growth and close

that before find perspective I’ve executing obviously to is from sales asset to that pretty want the but having creating doesn’t strategy don’t or term So by of anticipate to said, being create the happen we substantially. on would something, we that hole something up it lined sell be finding would not – something would able long earning something backfill an perfectly

and that. one work included tangible and the kind tangible were stream consistently sell off value and could and company book have do back we’ve and the in to Actually, history we’ve do chart it we on to doesn’t create easily trying We then to you or back, not booms value is at EPS accretion, it consistent. that a and that book earn pretty if the confidence been you busts quarters methodically earnings growth. so We’ve of to there is this through tried tried many look

Understood. Right.

or type at And the assets asset-sensitive balance today going there are to before? versus Okay. not a balance shift about sheet get an the we mix want you balance balance you think perspective. us for want sheet, And same an whether you like sheet sensitivity as then give that what drive and update an be more to or along from you rate you’re sheet of if in the helped neutral? on interest lines the where neutral Can you

rate going we’re that it non-multifamily the asset being quarter-over-quarter CRE significantly are we pretty reduce see guess commercial borrowings And that help decreased driven gets by and non-multifamily of we it’s than that the asset and the resi’s – substantially. real estate, like well, there? And that what mortgages there the down to commercial in have paid X.X talked by fixed been asset-sensitive and going doing the we about we of borrowings. and when to environment. going as asset strategy were growth being FHLB sector past. so a rate and in asset like, design we rate where want is has decrease after we that So we that was the today fixed is especially to to be the interest we billion, sensitivity happen lot over sold we by us the what year have – the when commercial, pay that borrowings second the the What more which down class have to sale is An did Public in component it’s estate because that, our you that business to going year-over-year, dynamics the which of a billion, X.X rate yields to knew be going about of is real going sensitivity. course class grow and the this almost that and I these we in

to from substantially to have slightly what and so asset rate going asset that to loans type us pretty going interest originating fixed right we us longer-term than have allow see you’re provide number that that the to more moved be sensitivity you’re part asset disclosures and want want neutral being We’re We see going be. to we position sensitive to to our – that as we’ll a Q, our of so that are dynamics reduce reduce of sensitive, forward. going going focus to kind of on rate

Okay. Understood.

I just us an ex-AIM, lower? by that are cost expenses you it’s lower then FTEs was have other areas the head lower going to XXX with The along branch what tracking mention And idea of probably projection on and give reinvesting saves, of million if in the the the Could count it how you’re you’re in the much in? one lower. XXXX,

the of the have this – optimum into significantly we count, network XXX XX-branch but XX we’re the down getting to Well, a and for obviously lower of that number is getting couple more XXXX, in us. opportunities to One, Yes. areas. the is of we’re kind going for branch down the to stick kind

Second half means a that and everybody back over of the of processing part transactional and to finding variable of all to to give task have lot either office. part year company able this a is, automate automate the using our I really in a to AI or want AI be other more the next opportunity outsourcing we and we costs. company support transaction in that to volume using the

down. some things So these cost estate still of disposition more those we and two as have drive to real obviously which go, we

have you invest it, is So the that where flipside value. areas of you in really

it’s to ahead those the where things. to like growing to. and we’re build areas curve But or and whereas on you commercial done, – value before move making don’t gets client the And types like So whether process, organic center more that through have that a the Those the areas just financial with the that. value with expense some can management capabilities had interact of in creates clients like we we part teams dollars from complicated risk and capital support, transaction else want along world the we volumes of more financial trying again CECL things and digital It client we’ve allocate into that little or areas have in processing supporting everything into teams the sure is done things things all the areas, it add environments M&A we’ve you of that enterprise areas interaction with our the model clients. are that have flexibility the the you either in that. technology, you are we’re centers in areas

say, I’d couple things. Matt, a of

were at post-acquisition Astoria, started we the So XXX branches. of we when

put XX branches today. in We’re deal out when already down announced XXXX. that exceeds the to we the of that And first quarter we target the had

deposits. to So that comfort that the is attrition we the branches in we’ve cut, of gives branches out thing to more able cut being us limited continue seen

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strategy that of count XX, of of need down restructuring XX down to the step to wave XX, get things some these to And financial charges are efficient talked branches you that – always XXXX have that always all perspective, we is the an From we since more next to to of OpEx you and investment XX-plus deemphasize you you and areas that is kind level reallocate So XXX the this time. be that you into reallocate take not which there’s center incurred plateau investment XXXX. as for continue or OpEx of areas about that are. reallocate deployed and that into

or million that lending, in so million maintenance the headcount run deposit when had commercial you $XXX financial can $X And is going and for costs in up financial perfect you forth to relative that allocate that you’re or of of branches that million cut can and if generate sense, makes out the center million side to reallocate revenue commercial balance Xx you that be Xx that volume, to you size, that in gathering the and team, $XX center factor side. do it so million every sheet what the under picking $X a spend we $XXX to where rent because

less basis. absolute dollar OpEx, positive the about less efficient, and able the necessarily reduce you every of in into you to grow think place. to to long we So operating Xx about will continue it’s much cost of it to the that into being revenue if expense which house We generate create economical continuing more is of growth, other term reinvest to can growth Xx areas fall where dynamic components a this scalable leverage deemphasize metric isn’t continue

is, but one the of and then in regards how your back, of understand overall qualitative very methodology, comments how day true-up in My I back quantitative change just your reserve, And look historical Understood, in of first terms is last in factor the CECL kind the helpful. to the of would the allowance, going? far terms to migrate? data going versus is change breakdown

good How far That’s going? back our is a question. data

there it could components think component to one – do or – to each portfolio different loan we so modeled a the and talk different those component is of you a loan different couple in about has going that portfolio have? how so I time of the way. each out many components be guess this So – hours, I each of for much these of so

dynamics debt other are. performance at dynamics six-plus says that And same ratio driven on all on and we’re lot we’re out or have based service information today, And their talking essentially component portfolio then years that the what and of of are as component the portions on components the five, says on being time. be portfolio a the whatever of CECL – historical a the nothing model of about, coverage there’s to LTD loan snapshot based what ratio portfolio of might how the depending you modeled of or of data – because are so going it by

components, out variety modeling methodologies. of approaches a lot so specific a portfolio and you you out model then as you using model and your of portfolio, different flexibility have you how how of how of segment And to that

rely could are there usually the much of is some information look that’s been for the and given data X data there, have the which that on into factors us So there a your allowance rely in, a there – we public factors. the where and models have and data you qualitative to that of credit isn’t macro available it as use, where points in and you component in more classes right are out that every characterize is for Listen, that’s is – today many can and relatively of snapshot these refining those way your vast from your – then you’re of as How you best of rely pretty available time the that out. able by feed publicly environment all – it as your lot points, – getting I you you sets. driven publicly as our by represented and points loan you for data do as don’t when as qualitative have you then data And small public quantitative information much data, as can asset losses and from available publicly loan it changes or of to the when data where have not doesn’t can classes not that’s own on benign the back is on when points looking asset that lot there data data plain-vanilla is feed at then that you own to the many point archives can getting run majority model these to bank place for be to much quantitative? your into historical

that more of to the that you’re is will since moving kind modeling your is. now approach requirement going might or to what of flip changing has your is forward-looking allowance – determine you’re going what more loan you’re in now of happened potentially the – what historically have happen determine quantitative to future, think a model approach, I to going level what because a that from

forward less than environment qualitative, now. in it some helps. has been we’ve benign that And going it’s credit to Hope flip given which believe time will what it that the so be been quantitative therefore, more for going I in

thanks answering for It’s more appreciate I it than questions. and sufficient. my

You it. got

time. to turn are this you back for any further Mr. closing no I’d Kopnisky, questions conference or And there additional at remarks. like to the

joining a for today. great everybody thanks Just Have day.