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Sandy Spring Bancorp, inc (SASR) Q3 2021 Earnings Call Transcript

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Sandy Spring Bancorp, inc (NASDAQ: SASR)
Q3 2021 Earnings Call
Oct 21, 2021, 2:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the Sandy Spring Bancorp Incorporated Earnings Conference Call and Webcast for the Third Quarter of 2021. My name is Harry, and I'll be your coordinator today. [Operator Instructions]

I would now hand over to your host, Dan Schrider, President and CEO of Sandy Spring Bancorp Incorporated to begin. Mr. Schrider, please go ahead.

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Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Thank you, Harry, and good afternoon, everyone. Really appreciate you joining us for our conference call to discuss Sandy Spring Bancorp's performance for the third quarter of 2021. Today, we'll also bring you up to date on our response to and impact from the COVID-19 pandemic. This is Dan Schrider speaking and I'm joined here by my colleagues, Phil Mantua, Chief Financial Officer; and Aaron Kaslow, General Counsel for Sandy Spring Bancorp.

Today's call is open to all investors, analysts, and the media. There will be a live webcast of today's call and a replay will be available on our website later today.

But before we get started covering highlights from the quarter and then taking your questions, Aaron will give the customary Safe Harbor statement.

Aaron M. Kaslow -- Executive Vice President, General Counsel and Secretary

Thank you, Dan. Good afternoon, everyone.

Sandy Spring Bancorp will make forward-looking statements in this webcast that are subject to risks and uncertainties. These forward-looking statements include statements of goals, intentions, earnings, and other expectations, estimates of risks and future costs and benefits, assessments of expected credit losses, assessments of market risk, and statements of the ability to achieve financial and other goals. These forward-looking statements are subject to significant uncertainties because they are based upon or affected by management's estimates and projections of future interest rates, market behavior, other economic conditions, future laws and regulations, and a variety of other matters, including the impact of the COVID-19 pandemic, which by their very nature are subject to significant uncertainties. Because of these uncertainties, Sandy Spring Bancorp's actual future results may differ materially from those indicated. In addition, the Company's past results of operations, do not necessarily indicate its future results.

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Thanks Aaron, and thanks again to everyone for joining us to discuss our third quarter financials. Our earnings performance remained strong and we delivered another solid quarter. Fueled by exceptional deposit growth and a record level of commercial loan production, we continue to grow new and existing client relationships across our lines of business.

In addition, our credit quality, margin, and efficiency ratios are all in great position and we continue to make great progress on PPP forgiveness. We do have momentum going into the fourth quarter and a lot of good news to share with you today. So, let's jump right into the highlights from the press release and the supplemental information.

Today, we reported net income of $57 million, or $1.20 per diluted common share for the quarter ended September 30, 2021. The current quarter compares to $44.6 million, or $0.94 per diluted common share for the third quarter of 2020, and net income of $57.3 million, or $1.19 per diluted common share for the second quarter of this year.

Core operating earnings for the third quarter remained stable at $52 million compared to $52.1 million for the prior-year quarter, and $55.1 million for the linked quarter. The provision for credit losses was a credit of $8.2 million compared to a $4.2 million credit for the second quarter of 2021 and the credits this year primarily reflect the improved forecast for the unemployment rate, and this quarter's provision also included updated metrics for determining the allowance for credit losses.

Shifting to the balance sheet, total assets were at $13 billion, or a 3% increase compared to $12.7 billion at September 30, 2020, as cash and cash equivalents grew by $890 million, primarily from the forgiveness of PPP loans. To that end, PPP loans declined $602 million during the same period and further funded by consistent deposit growth over the last 12 months.

Excluding PPP, the loan portfolio remained at $9.3 billion compared to the third quarter of the prior year. While residential mortgage and consumer loan run-off totaled $327 million, it was offset by the year-over-year commercial loan growth of $316 million, or 4%. Year-over-year gross commercial production increased 102%, or $416 million, and totaled $823 million for the quarter, and funded production increased 127%, or $298 million. On a linked quarter basis, gross commercial production increased 4%, or $32 million, and funded production increased 6%, or $30 million. So all great results in the commercial space.

We're pleased with this sustaining and expanded commercial production, because we know that when times normalize, it will translate to the kind of growth that we're accustomed to. While we continue to operate in the season of lower commercial line utilization, higher runoff, and excess liquidity on our balance sheet, we're taking actions to accelerate commercial loan growth in the fourth quarter. This includes adding new talent in our commercial line of business, looking at larger credits, proactively approaching new and prospective clients, and pursuing new opportunities across our market.

On the deposit side of things, year-over-year deposits increased 10%. This was driven by 15% growth in non-interest-bearing deposits, and 8% growth in interest-bearing deposits. This deposit growth is significant and a good indication of our ability to grow and deepen client relationships. Non-interest income decreased by 17% or $5 million compared to the prior-year quarter. The decline was a result of the 65% decline in income from mortgage banking activities, which we anticipated, as refinances continue to slow. Looking ahead, we expect our quarterly gain on sale to be roughly in the $4 million to $5 million range as we anticipate a more consistent rate environment and we move to stabilize the run-off from our mortgage portfolio by retaining more of our future production on the balance sheet.

We achieved 21% growth in Wealth Management income compared to the prior year. Our 2020 acquisition of Rembert Pendleton Jackson continues to make a positive impact in our results, as well as the performance in the financial markets and the expansion of the Wealth Management client base.

Other non-interest income also grew by 113% compared to the prior-year quarter, primarily driven by credit-related fees and contractual vendor incentives. The net interest margin improved to 3.57% for the first nine months of the year compared to 3.33% for the prior year. Excluding the amortization of the fair value marks derived from acquisitions, the net interest margin would have been 3.52% for the current year and 3.21% in 2020.

A significant aspect of success in the year-over-year improvement in the margin, was our ability to manage the cost of our interest-bearing liabilities down by 52 basis points through disciplined deposit pricing and the reduction of more costly wholesale-based borrowings and subordinated debt. Our ability to grow average non-interest bearing deposits by 18% over the prior year also contributed to the margin improvement.

Non-interest expenses increased $2.29 million, or 4% compared to the third quarter of 2020. While the increase was primarily driven by rising compensation costs and professional fees, it was partially offset by the lack of M&A expenses during the current quarter and a significant reduction in FDIC insurance. This decline in FDIC insurance expense reflects reduced risk factors in the regulatory agency's assessment of the Company.

Salary and benefits increased $2.6 million, as a result of staffing increases and the $1.2 million increase in professional fees is primarily due to the consulting fees associated with our various technology investments.

The non-GAAP efficiency ratio for the third quarter of 2021 was 46.67% compared to 45.36% for the second quarter of 2021. The change in non-GAAP efficiency ratio reflects the decrease in non-interest income from mortgage banking activities and the increase in personnel costs and professional fees that we experienced during the quarter.

Shifting to credit quality, the positive trend in the level of non-performing loans continued in this quarter at 80 basis points compared to 93 basis points in the linked quarter. Non-performing loans totaled $78.2 million compared to $94.3 in the linked quarter. Loans placed on non-accrual during the quarter amounted to $5.7 million compared to $900,000 for the prior-year quarter and $1.5 million for the linked quarter.

Non-accrual loans declined from the prior quarter, due primarily to the partial pay-offs and eventual charge-offs of a few large borrowings in the hospitality sector, with an aggregate balance of $32.9 million. It's important to note that these borrowings are contained to two relationships within the hotel portfolio that I've commented on in prior quarters. Charge-off amounts of these credits did not exceed their associated individual reserves, so it did not result in any additional impact on the current quarter's provision for credit losses.

Loans greater than 90 days or more increased from the prior quarter, as a result of maturities of existing portfolio loans, that were in the process of being extended. Loans amounting to $22.2 million were subsequently settled after September 30, 2021, and are no longer past due.

The company recorded net charge-offs of $7.8 million for the third quarter compared to net charge-offs of $200,000 for the third quarter of 2020 and $2.2 million for the linked quarter. Again, this increase was primarily a result of the previously mentioned charge-offs of non-accrual loans. The allowance for credit losses was $107.9 million, or 1.11% of outstanding loans and 138% of non-performing loans compared to $124 million or 1.23% of outstanding loans and 131% of non-performing loans at the linked quarter. Excluding PPP loans, the allowance for credit losses as a percentage of total loans outstanding was 1.17% compared to 1.34% at the linked quarter. Overall, our credit quality trends continue to be positive and as you'll see in our supplemental materials, nearly all loan accommodations have returned to making payments.

Tangible common equity increased to $1.1 billion, or 9.1% of tangible assets at September 30, compared to $1 billion or 8.31% at September 30 of 2020, as a result of accumulated earnings over the preceding 12 months. Excluding the impact of the PPP program from tangible assets at September 30, the tangible common equity ratio would be 9.44%.

At September 30, 2021, the company had a total risk-based capital ratio of 15.3%, a common equity Tier-1 risk-based capital ratio of 12.5%, a Tier-1 risk-based ratio at the same 12.5% and a Tier-1 leverage ratio of 9.2%. Given our strong capital position and growth during the past year, the company activated its approved stock repurchase program and repurchased over 1.2 million shares of its common stock at an average price of $43.04 per share.

So with that, we'll now turn to the supplemental information we also issued this morning. If you move to slide 2, you will see that the loans with payment accommodations as of September 30, totaled $14 million, resulting in well less than 1% of our loan portfolio remaining in some form of accommodation. This is great news, and an indication of the recovery that's going on, not only within the portfolio, but in the local economy.

On slide 3, we have detailed specific industry information, outstanding balances for each segment, and the loan and payment accommodations are as of September 30. And then, moving to slides 4 and 5, again, breaking out where we stand on forgiveness for rounds 1 and 2 of the program, we've also included this quarter the remaining fees to be earned so that you can see what is expected for the balance of the program. As of October 4th, 97% of all Round 1 loans have applied for forgiveness, and 99.5% of applications submitted to the SBA have received full forgiveness. And as detailed on slide 5, 65% of Round 2 loans have applied for forgiveness and 100% of those applications submitted have received full forgiveness. So we're making really good progress and we expect to be substantially complete on both rounds of forgiveness by the end of the year.

So with that, I'll turn it over to Phil Mantua, and he will walk through our CECL slides and capital position.

Philip J. Mantua -- Executive Vice President and Chief Financial Officer

Thank you, Dan. Good afternoon, everyone. I'm going to pick up on slide 6, where we have a waterfall representation of the movement in our allowance for the third quarter of 2021, broken into the components that reflect the key drivers of the change during the quarter. The change over the course of the current quarter was primarily driven by three main factors; the reduction in the projected near-term level of the unemployment rate; a change in individual reserves; and the update to our model inputs, which is part of our periodic review process.

On slide 7 is the comparison of our current more recent economic forecast variables. Our CECL methodology continues to use the Moody's baseline forecast, that for the third quarter was a version released by Moody's on September 20. This baseline forecast integrates the effect of COVID-19 and portrays an unemployment rate for our local market, that has essentially already peaked and ultimately recovers to a level of 3% in the third quarter of 2023. Additionally, the projected levels of year-over-year growth in business bankruptcies and the change in the home price index as presented, contribute to the provision credit for the quarter.

Key macroeconomic variables are further outlined on the next slide number 8 and for the current quarter, all of these variables have been applied in a consistent manner to those same factors as used in the prior quarters.

Slide 9 provides some additional granularity related to our reserve from a portfolio view, where you can see that all major categories of commercial loans, with the exception of AD&C reflect the continuing trend of reserve release. We should note that the 1.45% of reserve reflected here for commercial business loans includes PPP loans in the balance, although as we know, there is no reserve required on those loans. And as illustrated in the footnote at the bottom of the slide, when adjusting the balance, to exclude PPP loans outstanding, the reserve on our commercial business segment would be 2.04% and our total reserve would be 1.17% of total loans.

Finally, on slide 10 is a trend of our capital ratios with some brief explanations regarding the treatment of certain items and their impacts to the resultant ratios. Included in those comments is the adjusted tangible equity to tangible asset ratio, to reflect the impact of PPP loans on the current measure. We've also recently updated our capital stress tests. We've constructed a baseline severe forecast scenario, utilizing the same Moody's baseline forecast incorporated into our CECL calculations and the COVID-based S4 economy in the severe case. Having said that, we continue to feel confident about our capital position and therefore, during the quarter, we redeemed $56 million of outstanding subordinated debt, $25 million of which was acquired in the Washington First transaction and the other $31 million obtained in Revere acquisition.

And as Dave mentioned earlier in some of his earlier comments, we activated our share repurchase program during the quarter and we expect to complete the buyback of the total authorized amount of shares before year-end.

Dan, back to you.

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Thank you, Phil. Before we move to your questions, I want to let everybody know our return to office plans continue to move forward effective November 1, in person operations across all our offices will extend to pre-pandemic levels. We've also required that all employees be fully vaccinated by that time, November 1, so that we can do our part to ensure a safe and healthy workplace for our colleagues, clients, and the communities that we serve.

So with that, I will conclude our general comments for today, and we'll now move to your questions. So Harry, you can take it away.

Questions and Answers:

Operator

Thank you, Dan. Our first question comes from Casey Whitman from Piper Sandler. Casey, your line will be open now if you'd like to proceed with your question.

Casey Whitman -- Piper Sandler -- Analyst

Good afternoon.

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Hi, Casey.

Philip J. Mantua -- Executive Vice President and Chief Financial Officer

Hi, Casey

Casey Whitman -- Piper Sandler -- Analyst

Hello. Dan, you mentioned potentially adding new talent. You talked previously about some of the technology investments and other initiatives. So maybe help us sort of think about what a reasonable expectation for expense growth in 2022 is going to be, or perhaps easier just to update us on your efficiency ratio targets? Thanks.

Philip J. Mantua -- Executive Vice President and Chief Financial Officer

Yeah. Casey, this is Phil. I think, last we talked about this in terms of looking year-over-year in terms of core expense base, that we will probably be anticipating roughly about a 4% overall increase in '22 over '21, and that again takes into consideration the things that you were just asking about, and also some of the things that occurred during the course of time this year related to home loan bank advance prepayment fees and things that we don't believe will reoccur again next year.

Casey Whitman -- Piper Sandler -- Analyst

Makes sense. Thank you. Another question here for you, Phil. But maybe do you want to update us on your kind of core margin outlook. I'm sure this quarter there was more liquidity that impacted that core margin than maybe you were anticipating. But how are you thinking about the core margin over the next several quarters?

Philip J. Mantua -- Executive Vice President and Chief Financial Officer

Yeah. I'd be glad to talk about that too as well, Casey. So I think when you strip away as we did in the commentary here, first of all, any fair value marks and then though add to that, the impact of what we got back this quarter for PPP forgiveness, that core margin here in the third quarter was probably in the mid 3.30% range. And I would anticipate that that core would stay that way. In the fourth quarter, although the reported margin next quarter will probably be something comparable because of our expectations for finishing the forgiveness part of the PPP plan or program, and then I would think as we move into next year, and as we work toward trying to redeploy some of the excess liquidity, we're anticipating trying to keep that margin in that kind of low-to-mid 3.30% range throughout the course of next year as well.

Casey Whitman -- Piper Sandler -- Analyst

Okay. Understood. And what is your expectation for the timing of the latest round of PPP forgiveness? Do you think that will go through mid-2022 or do you think we will be kind of finished through that earlier?

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Yeah. Our expectation is to be [Phonetic] substantially complete this year, but we might have some fall over into the first quarter just by virtue of -- you can't control exactly what our clients do, but we're working hard to have it substantially behind us, so that we can go on to '22 clean from a margin perspective.

Casey Whitman -- Piper Sandler -- Analyst

Understood. Thank you.

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Thanks, Casey. You're welcome.

Operator

Thank you, Casey. Our next question comes from Erik Zwick from Boenning and Scattergood. Erik, your line is now open, if you'd like to proceed with your question.

Erik Zwick -- Boenning and Scattergood -- Analyst

Thank you. Good afternoon, guys.

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Good afternoon, Erik.

Philip J. Mantua -- Executive Vice President and Chief Financial Officer

Hey Erik.

Erik Zwick -- Boenning and Scattergood -- Analyst

First, I wanted to follow up a little bit on Casey's question about the loans and adding new commercial talent and looking at larger credits. May be in terms of not so much the growth rate, but in terms of the mix, I mean, over the past year or so, the mix of commercial loans, absent the run off of PPP has gotten larger, residential mortgage has gotten smaller. Would you expect that kind of remixing to continue or are you happy with the current mix of the portfolio?

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Yeah. Erik, Dan. Part of my comments earlier particularly related to the mortgage business, as we are going to look to try to stabilize that mortgage portfolio and eliminate the run-off that we've been seeing and perhaps might even see a little bit of growth in it, by virtue of just putting more on portfolio. In terms of future production, we've already begun that process and in terms of putting more portfolio on.

When we're looking for new talent and growing the commercial production, I mean we're doing that with the intent of being able to enhance our C&I and connected owner-occupied real estate lending in the middle market space, the gov con space, and so those are really where the specific efforts are in trying to grow that. Now, CRE, obviously, is a significant part of what we do and we're very good at it. So it's going to take some time for C&I to take on a bigger role overall from a mix standpoint, but that's where we're focused.

Philip J. Mantua -- Executive Vice President and Chief Financial Officer

Yeah. And Erik, my follow-up to Dan's comments related to talent on the mortgage side. I mean, we've been pretty successful here in recent times, some very recent times of pulling together a handful of individuals from some of the other larger organizations like Truist, etc, as we continue to want to build that out. And we are also looking, to Dan's point, about building the portfolio, as that being one of the means for kind of sopping up this excess liquidity here by trying to produce more in that area and putting it directly in the portfolio.

Erik Zwick -- Boenning and Scattergood -- Analyst

That's great color, and turning to the charge-offs in the quarter, just curious what prompted the decision to record the charge-offs now and how did you determine the size of the marks you took? And then, are those two relationships still with the bank at this point?

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

No. We've been, obviously, working to resolve these credits for a number of quarters as we had mentioned. Our initial set aside of specific reserves, based on the process we go through, the methodology to establish a reserve and assessing value and liquidation costs and the like and we were -- in those cases -- in both cases, they were resolved through note sales.

Erik Zwick -- Boenning and Scattergood -- Analyst

Got it. Thanks. And Phil do you happen to have the dollar amount of -- go ahead.

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

I'm sorry. They are no longer clients, to further answer your question.

Erik Zwick -- Boenning and Scattergood -- Analyst

Understood. Thanks, Dan. Phil, do you have the dollar amount of purchase accounting accretion that was recorded in 3Q?

Philip J. Mantua -- Executive Vice President and Chief Financial Officer

I don't necessarily have the dollar amount per se, but it's getting to be pretty much -- getting to be more and more insignificant, as we move ahead here. And I think my guidance, as it relates to the margin next year is, not only will it be core, but it will probably be as reported as well, because I think we're pretty well exhausting what's left to that accretive nature.

Erik Zwick -- Boenning and Scattergood -- Analyst

Okay. That sounds consistent with what I've got in my model. So, thanks for that. And then, just last one is, in the press release you mentioned in the non-interest income, I guess on the year-over-year comparison higher activity-based contractual vendor incentives. Can you just provide a little more color in terms of exactly what that's related to, and whether does that hit every quarter, or is that a kind of an annual, how does that flow through? That's probably more on a one-off basis, Eric as it relates to different types of incentive programs we have with various vendors for hitting certain thresholds or targets. Got you. So likely the next time we might see, it would be in 3Q again next year or are there multiple targets here [Speech Overlap]

Philip J. Mantua -- Executive Vice President and Chief Financial Officer

That's probably the most likely scenario. Yes.

Erik Zwick -- Boenning and Scattergood -- Analyst

Okay. Perfect. Thanks for taking my questions today, guys.

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Thank you.

Operator

Thank you, Erik. [Operator Instructions] And our next question comes from Catherine Mealor from KBW. Catherine, your line is now open if you'd like to proceed with your question.

Catherine Mealor -- KBW -- Analyst

Thanks. Good afternoon.

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Good afternoon. How about [Speech Overlap] breeze, Catherine?

Catherine Mealor -- KBW -- Analyst

I don't want to jinx them, but tonight is going to hopefully fun. So I wanted to start with growth. And I missed -- I came about five minutes late to the call, so you already gave a growth guidance, I apologize for missing it. But how are you thinking about growth moving into next year, what a good loan growth target is? And then, maybe within that conversation on securities, are you feeling more open to putting more of the excess liquidity into securities as well in the next couple of quarters, just given we're in a better rate environment?

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Hey Catherine, Dan. We did not cover that earlier. A couple of different things in response to your questions, specifically about loan growth. It is a little more challenging just by virtue of the current liquidity situation that we're sitting with, in terms of netting out asset growth. But on the loan growth side of things, we are looking at the type of production that we are driving in the last few quarters, just shy of $800 million. $822 million of commercial production this quarter. If we see any return to normal in terms of run-off, then commercial loan growth in that 8% to 10% should be a reality, and that's all the while trying to redeploy some of this liquidity in some strategies, I don't know if you heard Phil talk about the mortgage business, but finding some ways to put more on portfolio than we would customarily, by virtue of selling. So trying to drive some -- and here in the next couple of quarters, a little more utilization of that excess liquidity.

So I would say, on the commercial space, 8% to 10% we're looking at on a go-forward basis, and then, stabilizing that mortgage run off, stabilizing that portfolio and then modest low-to-mid single-digit growth in the consumer space.

Philip J. Mantua -- Executive Vice President and Chief Financial Officer

And Catherine, as it relates to investment portfolio, we currently don't really have any specific plans for increasing it relative to the size of the overall balance sheet. We did during the current quarter, do some repositioning, more specifically for interest rate risk management purposes, and shortening up on the duration of some of the asset-backed, mortgage-backed type components of the portfolio. But I think to Dan's comments, we certainly will look to redeploy into mortgage and other elements of the loan portfolio first before, we would think about or consider expanding the size of the investment portfolio.

Catherine Mealor -- KBW -- Analyst

Okay. That's great. It's better for the margin anyway, right?

Philip J. Mantua -- Executive Vice President and Chief Financial Officer

Yeah.

Catherine Mealor -- KBW -- Analyst

Okay. That's all I got. Thank you so much.

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Thanks, Catherine. Yeah. You are welcome.

Operator

Thank you, Catherine. [Operator Instructions] Our next question is from Brody Preston from Stephens Inc. Brody, your line is now open, if you'd like to proceed.

Brody Preston -- Stephens -- Analyst

Hey. Good afternoon, everyone.

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Hi, Brody.

Philip J. Mantua -- Executive Vice President and Chief Financial Officer

Hi, Brody.

Brody Preston -- Stephens -- Analyst

I guess I just wanted to stick on the growth. I know you talked a lot about it, but I actually thought this quarter was pretty solid for you on an ex-PPP basis, particularly on the C&I side. And so I guess I just wanted to ask, is there anything specific that drove the strength in the core commercial business portfolio, and the higher line utilization? I know that those are still pretty low, but what kind of drove the strength that you saw there?

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Yeah Brody, this is Dan. Our line utilizations are hovering right where they've been in the last three or four quarters. So we're not seeing anything material happening there. I have to credit the success with the hustle of our bankers that are out on the street developing new relationships. And while it is strong, I would tell you that with the degree of production and the level of production that we are putting out, the run-off that we've experienced that's a headwind against that is atypical, and it's curbing what could be really great growth in the commercial portfolio. And those are not -- that's not losing clients, that's clients that are having successful outcomes, whether the sale of the business or the sale of a large commercial real estate.

So the other good sign around the production this quarter is, about 25% of that is in our builder-related business. And as you might know, not very much of the dollars go out the door day one, and so we have over the course of the three quarters, built a nice kind of deposit on the future, so to speak, in terms of future fundings in that particular book. But I think the result is, our efforts are getting out, while at the same time, some of our competitors may still be a little more inwardly focused and we're winning more than our fair share of opportunities in the marketplace.

Brody Preston -- Stephens -- Analyst

Got it. Then, just as it relates to fees, do you happen to have what the assets under management was for this quarter?

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Yeah. I will grab that for you. Just give me a second, if you have another question. [Speech Overlap] Okay maybe -- go ahead Phil.

Philip J. Mantua -- Executive Vice President and Chief Financial Officer

Actually, well, Brody, while Dan is looking at that, let me follow back up on part of Eric's question earlier, which was the fair value mark impact to the earnings for the quarter. Actually, in the body of the press release, in the income statement review, it's mentioned that there's about $800,000 of net overall fair value amortization that was included in the quarter, relative to net interest income in the margin. Just to clarify. Go ahead Brody if you have something else though?

Brody Preston -- Stephens -- Analyst

Yeah. I wanted just -- maybe one for you, Phil is there -- just on the liability side, are there anymore -- I guess within the CD book, are there any more kind of natural maturities that are kind of rolling off here in the fourth quarter, in the first quarter of next year? And if there are, do you happen to know what the rates on those CDs look like?

Philip J. Mantua -- Executive Vice President and Chief Financial Officer

I don't exactly know the specific rate of what's going to roll off, but we continue to have portions of that CD portfolio, certainly as the higher rate levels continue to work their way down. And in terms of -- let's maybe look at it in terms of the impact on that, as we go through from this year to next, it could be probably worth another 10 to 12 basis point on the cost of the time deposit themselves, just looking at it, as we project it into next year. So there is still some additional room for that to run down and to have some impact to the overall cost of money, and to the margin. But that portfolio is getting smaller and smaller as we speak. So...

Brody Preston -- Stephens -- Analyst

Got it. Okay.

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

And Brody, AUM...

Brody Preston -- Stephens -- Analyst

Yeah, go ahead Dan.

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

In the second quarter, through our three wealth groups ended up at $5.8 billion at the end of the quarter.

Brody Preston -- Stephens -- Analyst

Okay. Great. Thank you very much. And then my last couple of questions just relate to the capital. I saw at the bottom of the slide deck on the capital position, the notes, you got about a little over 1 million shares left under the current authorization to be repurchased. Just wanted to get a sense for appetite here at the current price, just given it has moved up a bit from the $43.04 you were buying back this quarter?

Philip J. Mantua -- Executive Vice President and Chief Financial Officer

Yeah. I think we certainly will continue to evaluate as we trade and hopefully trade forward here, just to what degree in terms of price that we want to entertain. But I think by and large here, I think our general thought process is to stay committed to buying everything that is at least authorized at this point through the end of the year and to do so accordingly. So I think the other element of it will be -- the other end of that will be to look to reengage in another authorized plan, just so that we always have something out there in force, which will also give us as much flexibility as we possibly can have in that regard.

Brody Preston -- Stephens -- Analyst

Got it. All right. Thank you very much for taking my questions.

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Sure. Thanks Brody.

Operator

Thank you, Brody. And we currently have no further questions. So I would like to hand back to our speakers.

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Okay. Thank you, Harry. Thanks everyone for joining us today. If there are no other questions, that will conclude our call and we really appreciate you taking the time to participate. Have a great afternoon.

Operator

[Operator Closing Remarks]

Duration: 37 minutes

Call participants:

Daniel J. Schrider -- Vice Chairman, President and Chief Executive Officer

Aaron M. Kaslow -- Executive Vice President, General Counsel and Secretary

Philip J. Mantua -- Executive Vice President and Chief Financial Officer

Casey Whitman -- Piper Sandler -- Analyst

Erik Zwick -- Boenning and Scattergood -- Analyst

Catherine Mealor -- KBW -- Analyst

Brody Preston -- Stephens -- Analyst

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