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Sterling Bancorp (STL) Q4 2020 Earnings Call Transcript

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Sterling Bancorp (NYSE: STL)
Q4 2020 Earnings Call
Jan 21, 2021, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Sterling Bancorp 4Q '20 Earnings Call. Today's conference is being recorded. And at this time, I would like to turn the conference over to Jack Kopnisky. Please go ahead, sir.

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Jack L. Kopnisky -- President & Chief Executive Officer

Good morning, everyone, and welcome to the fourth quarter and year-end 2020 call. Joining me today is Luis Massiani, Bea Ordonez, Rob Rowe, and Emlen Harmon. We invited more people to this call.

Maybe I'll start with just some recent announcements from a structural standpoint. I think as you all have seen, Luis was promoted to the Chief Operating Officer of the Corporation and he'll operate as the Bank President and will oversee the lines of businesses' operations and technology and I'll take care of the staff areas. Luis and our new CFO, Bea Ordonez will report to me also. We're really excited to have Bea join us and I'd really encourage you to get to know her. She's terrific and brings a lot to our Company and I look forward to working with our over a long period of time.

So let's turn to the fourth quarter and year-end results. To say 2020 was challenging would be a massive understatement. We aggressively met the challenges of this near-zero interest rate environment, a global pandemic, and the resulting credit challenges. As you will see from our results, we have been adjusting our model to set ourselves up for a strong 2021. Our fourth quarter results are reflective of those actions during the year to continue to be a high performing Company.

We had a strong fourth quarter, driven by three factors. One, we had really strong growth in core adjusted EPS, driven by improved revenue growth. Secondly, we had margin expansion, improved returns, and increasing tangible book value. And third, we had improved credit metrics.

So let's start with our strong run rate profitability. As you've seen from the press release, adjusted earnings per share increased $0.04 to $0.49, compared to the third quarter. Adjusted PPNR, excluding accretion income, was $130 million, which was a $7 million increase or about 6% versus the linked quarter, and frankly, it was down just $1 million relative to the fourth quarter of 2019. Adjusted total revenue grew by $10.5 million versus the third quarter. And what we've focused on over many, many quarters is trying to create positive operating leverage. We created approximately 2.5 times positive operating leverage, as our core margin increased by 15 basis points quarter-over-quarter.

Commercial loans, loans net of the sale of PPP loans, were up 1% in the quarter. Deposits declined as expected due to seasonal outflows of municipal deposits. Fee income, we had a strong quarter for fee income as the economic activity continued to improve. Of the fee income, $3 million worth of fees came in the sale of the PPP loans. And expenses were in line with our outlook. We had one extraordinary item, which on the expense line, was a $13 million charge for disposition of the financial centers as we've continued to decrease the amount of physical locations we have.

Secondly, our margin expansion profitability drove strong improvements in return metrics and tangible book value. Core net interest margin improved by 15 basis points from last quarter. Earning asset yields increased by 6 basis points, cost of funding liabilities decreased 9 basis points to 33 basis points. Adjusted ROATA improved by 12 basis points to 133 basis points. Adjusted ROATCE improved 66 basis points to 14.03%. Adjusted operating efficiency was stable at 43% and total book value increased by $0.30 per share over the linked quarter. Year-over-year total book value increased approximately 6%. We also continue to have robust levels of capital as we have created strong earnings flow. We pay out a very specific dividend and we have a lot of excess cash coming off of the earnings side. TCE over TA was 9.55% versus 9.15% last quarter; about 40 basis point increase. Tier 1 leverage at the bank level was 11.33 versus 10.5 last quarter. And then during the quarter, we've repurchased approximately 1.9 million shares. We will continue to look at repurchasing shares as the opportunities present themselves.

Third, we are confident in our credit position. Our non-performing assets declined during the quarter and we continued to carry strong loan loss reserves. Charge-offs for the quarter were $27.3 million. $11.5 million of that represents the core charge-offs and the balance was primarily related to the exit of our remaining taxi medallion portfolio. We wanted to get taxi medallion behind us once and for all. Non-performing loans continued to improve, decreasing by $14 million during the quarter. Portfolio delinquency remains relatively constant. Loan modifications under the Cares Act are down to 1% of total loans, with a majority comprised of residential real estate borrowers. Remaining commercial modifications are primarily low loan to value real estate properties. Criticized and classified loans did increase significantly from 2.6% to 4.5%, and these loans are coming off of the Cares Act mods that are experiencing some degree of cash flow challenges. We virtually rerated every loan in our portfolio. These loans are, we feel very confident in the loan to value and the borrower supporting these loans, but they are struggling a little bit on the cash flow side.

We've kept the allowance for credit losses at around $326 million or 1.49% of total loans. We think that's very appropriate and very prudent. We consciously decided not to release reserves. We believe that having very strong levels of capital and strong reserves are the right thing to do at this point in the cycle and we'll continue to do so. We are confident in our ability to manage credit in this challenging time. We're generally again a secured lender. Our loan to values on the real estate side continue to be in the 50% to 60% range. 97% of our C&I loans are secured by receivables, inventory, or equipment. As 2021 evolves, we'll continue to work through the issues in the credit portfolio and we're very confident in the outcome and our ability to mitigate losses, given the secured nature of the majority of these credits.

Finally, we continue to evolve this model and invest in our colleagues, technology, and risk management in the future. That's really the targeted three groups that we are investing. Colleagues, we've been able to continue to hire and retain some of the best and the brightest, and as we evolve this model, we have different types of skill sets that we're bringing on. If you do the calculation, our revenue and earnings per FTE is at the top of the peer groups. So, we get a lot out of our colleagues and they work hard and they're really well positioned for the future.

From a technology standpoint, we are doing two things -- two big things. One, we are automating the back office using technology resources; a lot of AI, a lot of automation along the process, and we are trying to digitize everything for our clients and our colleagues. So the investment we're making in technology is meaningful. And then secondly, in the technology bucket, we are really confident in our ability to provide technology solutions and back office solutions to technology companies as banking as a service. Our view is that we will have up to six clients completed and booked by the end of the first quarter and we view this as a means to create diversity in funding and fee income, and frankly, learn about other companies -- top performing technology fintech companies out there providing service to organizations like us.

Third piece I'd mention on this is around risk management. We've been very succinct in creating a contemporary environment relative to risk management. We've built out our risk management group, including credit, to be regional bank like rather than community bank like. So we've tried to grow into a high level of enterprise risk management. We're trying to anticipate the future and invest significantly in risk management as we go along. Now, last thing I'll say about evolving the model is size does matter. So we look to continue to grow both organically and through M&A. We think the economies of scale allows us to attract the best and the brightest in colleagues to invest heavily in technology and data and invest heavily in enterprise risk management.

Two items before we open the call to questions. First, you will note our forecast on Page 12 of the presentation. We expect we will run core NIM higher than all of last year -- all of 2020. Fee income will continue to grow as improving economic trends and initiatives that we are undertaking will be executed against. We believe that there will be an improving economic and revenue outlook. Core expenses are expected to grow modestly, but we will be investing, as I mentioned, in people, risk management and technology that will enable revenue growth initiatives to happen into the future. And we also expect to return more capital to shareholders, both on an absolute basis and as a portion of earnings. We have targeted a 50% number to return capital to our shareholders.

And last before I open this up, I really want to thank a lot of folks. 2021 [Phonetic] was a very difficult year, and we're still in obviously some of the pandemic, but through this process, we really have fantastic folks that work in our Company as colleagues. They constantly went above and beyond and they constantly adjusted and changed as the conditions changed. We have great clients. Our clients really worked diligently with us. The relationship structure that we have with the teams on both the commercial and the consumer side enabled us to really deal effectively with clients through this transition, and by the way, we think that there is great opportunity to capture incremental clients into the future, because I think we did it better than others. We appreciate the strong board members. We had many, many meetings in 2020 as conditions changed, and we appreciate all of you as dedicated investors. I think we have a model that is effective and will continue to evolve and we are optimistic about the year and beyond. I think there'll be a lot of opportunities as we go forward. There'll be challenges also, but I think there will be a lot of great opportunities for us to take advantage of.

So with that, why don't we open up for questions you have?

Questions and Answers:

Operator

[Operator Instructions] We'll take our first question from Casey Haire from Jefferies. Please go ahead. Your line is open.

Casey Haire -- Jefferies LLC -- Analyst

Great, thank you. Good morning, everyone.

Jack L. Kopnisky -- President & Chief Executive Officer

Good morning, Casey.

Casey Haire -- Jefferies LLC -- Analyst

I wanted to start on -- good morning, Jack. I wanted to start on the credits, the uptick in criticized classified. Just curious, do you expect this to be the high watermark, number one, and then you also mentioned you're very well secured on a lot of these properties based on the LTVs. It's more of a cash flow issue. If you can just provide some coverage on -- some color rather on the debt service coverage.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Sure. So there is a couple of different things there and I'll chime in first and then Rob Rowe will also provide some color there. Two things, I think that the positive aspect of this is that the, as we called out in our release, the vast majority of the migration is contained to loans that were already in some form of deferral or some form of COVID-related modification or whatever we want to call, some modified payment plan, right? So, what we are very positively encouraged by the fact that we're not seeing non-deferred or non-modified loans that are part of this migration, right. So it continues to be contained to that part of the population of loans that we've been working on and that we've been talking about for the past two or three quarters. And that up until this point, you'll see that there has not been any correspondent migration in non-performing loans.

So, even though these loans have migrated from a credit perspective, they have continued to perform in many instances is because they are overlying on secondary and tertiary form of repayment with guarantor support and strong borrowers, but the most encouraging sign is that we continue to see folks. So, these properties or these various relationships have a tremendous amount of equity in them, and therefore, you're seeing guarantors and owners of property stepping up to essentially maintain kind of cash flows and payment streams.

The reason for migrating them is that, yes, when you look at the underlying credit statistics of the individual property, of the individual loan relationship or of that particular loan, you are getting the debt service coverage ratio that today, because of the pandemic, don't cover the credit statistics that we require for a loan to not be classified, right? And so, the negative side is that you're seeing credit migration, the positive side is that you're seeing people step up and continue to maintain these loans on a performance status.

Is it the high watermark? I don't have the magic crystal ball, I'm shaking the Magic 8-Ball here and it's telling me we're not sure yet. But what I can assure you is that the migration that you saw between the third and the fourth quarter, we do not anticipate seeing something like that continuing to progress, because again, these are loans that we have been dealing with for three quarters now. These are not loans that popped up as issues in the fourth quarter for the most part. And so that gives us a fair amount of confidence and comfort that we are going to continue to manage out of this population. There is going to be some charge-offs in the first and the second quarter, where we are cognizant of that fact. That's why our reserve is what it is. The reserve was contemplating that there was going to be some credit migration. We feel very confident with where that reserve is today, and again, to the extent that there is further migration, it's not going to be, as we don't anticipate that it's going to be as significant as what you saw between the third and fourth quarter because it's contained to that same population of loans.

Rob, what do you -- anything you add?

Robert Rowe -- Chief Credit Officer

Yes. So, Casey, what I would add is that a couple of the pressure points that we and other banks have talked about and you've been asking about are would be the hotel portfolio and then in retail. And hotel has really been exactly as we described last quarter in that we are talking to all our borrowers, of the $450 million, about $120 million of it is operating below 1 times debt service coverage ratio, half of that -- about half of that are really with sponsors and guarantors that have so much liquidity that they could go years coming out of pocket if necessary to cover the cash burn at the project level. So then the other half of that $120 million or so is something that we're watching very closely and working with. So that's a very -- that's contained for us in terms of what it could mean down the road in terms of potential loss.

Retail is interesting because it's actually performing probably a little better than we would have expected. We do an analysis every month for the Top 50 borrowers and we go and look at the paid through rate from the tenant to our borrowers, and that was up to 89% in the month of December. That was a little higher than we would have thought, given everything that was going on and that's -- and that trend had increased through the balance of the second half of the year. Nonetheless, there are still deals there that are below -- as we said, below 1 times DSCR. In our view, that is very clear that if that's the case, they need to either be criticized or classified and really it would be the liquidity of the sponsor/guarantor that would make that determination of whether they're criticized or classified.

Casey Haire -- Jefferies LLC -- Analyst

Great, thank you.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Hope that helps.

Casey Haire -- Jefferies LLC -- Analyst

Yeah, yeah, no, that's great. Okay. So just switching to the outlook for 2021. The loan growth guide, I was little surprised to see it at $1 billion and $1.5 billion. Just some color as to what's driving that. I know -- I mean surprised to see resi consumer you expect to stabilize. Does this bake in more PPP, is it portfolio of acquisitions? Just some color here.

Jack L. Kopnisky -- President & Chief Executive Officer

No, I was just going to say this is organic growth. So there is no acquisitions in this and we think that that's a good net number to grow. So we have -- we -- our pipelines now for the remainder of the first quarter and the second quarter are pretty strong. They're actually stronger than they have generally been in the past. So, areas like certain sectors of CRE, traditional C&I, as we mentioned, affordable housing and public sector, we actually think there'll be continued significant growth in the public sector balances as this new administration takes hold on this thing and then it would counteract the potential run-off of some of the other multifamily and some of the resi run-off.

So we're pretty confident given what we see in the market today that is creditworthy and priced appropriately to be able to achieve that target.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

It doesn't include PPP. So that guide in the target doesn't include PPP and the abating of the run-off of resi consumer is because we're now -- that portfolio started $5 billion, that portfolio had liquidated quickly over time when we -- post the Astoria merger. So for the past three years, we've seen pretty significant run-off, but then, at some point, you do get to a place for that portfolio because of consumer behavior just will extend out some period -- for some period.

So we anticipate seeing -- to the extent that there haven't been loans that have refi-ed yet in this low rate environment, you don't anticipate seeing that same type of refinance activity continuing throughout 2021, which is going to slow down the accelerated prepayments that we've seen, and we're now down to a level where the small amounts of originations that we do on the residential mortgage side are likely going to offset pretty substantially whatever run-off we see in the existing book.

So net-net, you are -- this is going to be the first year where you're going to see a residential mortgage book that should not decrease the overall loan growth that could -- as it's happened in the past couple of years.

Casey Haire -- Jefferies LLC -- Analyst

Got it, thanks. And just last one from me. The buyback came in a little bit higher than that 50% and you guys are now seeing above 50%. How high could that go and what would be the catalyst to be more aggressive than the 62% here in the fourth quarter?

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

So, we are -- the target that we're setting for next year is a minimum of 2 million shares per quarter. So we are at 1.9 million in the fourth quarter. We think that 2 million at a minimum is going to be -- 2 million shares, sorry, is going to be a good number to use for how we're thinking about that progression in '21. How high can it go? Again, I'm shaking the Magic 8-Ball here, Casey, it depends on what we see from a growth opportunity out there, right? What we do know is what we have been talking about for quite some time, which is our long-term target for TCE is 8.25%. We're sitting on -- 8% to 8.25%, sorry, we're sitting on 9.5%. To the extent that we continue to generate the internal -- we continue to generate that amount of internally generated capital, we would be in a position to substantially be above that. So, at -- the current available capacity under the program is just over 14.5 million shares. That's not to say that we wouldn't reup whenever we get through that type of level, but it's -- at a minimum 2 million and to the extent that we don't see growth opportunities in other components of the business, we'd likely increase it from there.

Casey Haire -- Jefferies LLC -- Analyst

All right, great. Thanks, guys.

Jack L. Kopnisky -- President & Chief Executive Officer

Thank you.

Operator

Moving on to our next question comes from Steve Moss from B. Riley Securities. Please go ahead. Your line is open.

Steven Moss -- B. Riley FBR -- Analyst

Good morning, guys.

Jack L. Kopnisky -- President & Chief Executive Officer

Good morning.

Steven Moss -- B. Riley FBR -- Analyst

Just starting off on the -- or circling back to the credit migration here, was the driver of this quarter a refresh of the data? Or are you just seeing maybe more vacancy in delinquencies? I guess I would have probably expected debt service coverage level to have been over 1 times already in the third quarter and showing up in your classifieds.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

So, it is a refresh of data. So this is -- as Jack alluded to in his comments, this is now a review kind of a reunderwriting, and let's not call it a full review, but an updated underwriting and view of every loan that was in some first or second stage of COVID deferral, working with borrowers, getting updated financial information, rent rolls, tax returns, etc. and then making an educated underwriting decision regarding the kind of the current- and near-term prospects for cash flow and debt service coverage ratio on the loan.

So again, one of the things that we have talked about in prior calls is when we first started the kind of the COVID deferral process in the early -- late first quarter, early part of the second quarter, it wasn't a carte blanche approach like everybody who ask for one gets one, but for the most part, everybody who asked for a COVID deferral, got a COVID deferral. And so that triggered the start of a comprehensive review of what was the position of each one of those borrowers.

And so, the reason for migrating those credits now is that there has been a first round of deferrals and the second round of payment deferral. They have now for the most part all fallen off of a deferral program because you see that the loan deferrals are down to just 1%, but at that point we're now making an updated underwriting decision of what is the cash flow dynamics of this property now, LTV being a secondary measure, but for us a key triggering point of what classifieds alone is, what are the near-term cash flow prospects of it.

So, it was updated information, and as we've said before, we're seeing good secondary and tertiary sources of repayment and guarantors stepping up, but under our credit policies, to the extent that a property or loan is in a debt service below 1x, that requires that we classify that as special mention or substandard, and we are now going to work on getting our money back with each one of these folks.

Steven Moss -- B. Riley FBR -- Analyst

Okay, that's helpful. And then in terms of the drivers of charge-offs in the first and second quarter, are you guys thinking about it's perhaps remaining elevated in the first half of the year and then moderating? Just kind of curious on charge-off formation.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

More likely, second quarter is what we would see -- I would see elevated charge-offs. I think that we are -- as you think about the substandard population of loans, those are loans that again we think -- the way to think about the progression of those loans is a good chunk of those may over some period of time become longer-term TDRs. One of the things that gives us a lot of confidence as we were talking about before is the fact that there is a substantial amount of equity that's embedded in these relationships, right. And so, we are seeing -- we are very encouraged by the behavior that we're seeing from borrowers, which is folks are not turning, nobody is coming in here to handover key at this point in time, right.

And so, the -- it's in everybody's best interest, particularly when you see that type of equity in the property to essentially continue to work with those borrowers, right. So I think that as a first stage, as you think about substandards, there's going to be updated conversations, discussions, negotiations with borrowers will likely result in some TDR formations to the extent that there isn't a faster economic recovery. And then, over some period of time, as you identify properties and business models and businesses that are going to be permanently impaired, which is probably going to take another 90 days to 180 days, that when you would start seeing some greater charge-off content, but that manifest itself more we think in the second quarter than in the first quarter.

Rob, what do you -- anything to add there?

Robert Rowe -- Chief Credit Officer

No, I agree completely that the broader trend, we would not see that right away, because typically, if there are challenged situations, it takes a while for them to resolve to their finality. And from a broader standpoint, we do have various mechanisms to rate the portfolio. We have our actual -- just risk rating of every single loan, we do all our quantitative and qualitative reserves, and then we have our at-risk, but next six to nine months out that we all go through everything and that's the entire executive management team.

And when you look at the at-risk report that has grown slightly, but it has not grown anywhere near in relationship to what the criticized and classified has grown at, and so that would tell us that this is not something that's just right in front of us, but it's the uncertainty why we can't really give you more clarity about for quarters two, three and four.

Steven Moss -- B. Riley FBR -- Analyst

Okay. That's helpful. And then, just with better loan demand, kind of, curious as to where you guys are seeing loan pricing these days. Any color there would be helpful.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

So, weighted average origination yields in the fourth quarter were 3 -- just under 3.7%. They were 3.68% or 3.69%. The pipeline of business that we're seeing is right around that level and that's a mix of fixed and floating rate loans across both the CRE and diversified commercial real estate and affordable housing and public sector side for the fixed rate loans, and then loans that we're seeing and factoring in asset-based lending and so forth in some of the diversified C&I new verticals.

So one of the things that gives us, again, some comfort and confidence as we move into '21 is that the weighted average origination yields of about 3.7% are pretty darn close to the weighted average yields that we're seeing on the entirety of the loan portfolio, which was about 3.76% -- 3.75%. So, to the extent that we could continue to see a pipeline that has that type of weighted average yield, we should have some good support for loan growth that shouldn't chew in too much into the weighted average yield on loans.

So, we feel pretty good about that. And again, the pipeline of business will change from a proportion perspective over the course of the year, but this is the second quarter in a row that we've had about a 3.7% weighted average yield on originations and that's where the pipeline continues to -- that's where it continues to -- we see it building for '21.

Steven Moss -- B. Riley FBR -- Analyst

Great. Thank you very much.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Great. Thanks.

Operator

We will now take our next question. It comes from Alex Twerdahl from Piper Sandler. Please go ahead. Your line is open.

Alexander Twerdahl -- Sandler O'Neill & Partners -- Analyst

Good morning, guys.

Jack L. Kopnisky -- President & Chief Executive Officer

Good morning.

Alexander Twerdahl -- Sandler O'Neill & Partners -- Analyst

I wanted to dig in a little bit more to the moving parts of the NIM guide for 2021. Maybe just starting with, in the fourth quarter, the prepaid -- the contribution from prepayment penalties, etc. that kind of boosted the loan yield you just talked about, Luis, a little bit higher?

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Yeah. So the total -- it was just under -- just over 4 basis points that the prepays added to NIM and we're seeing pretty steady volumes there. We don't want to get into -- we'll see what happens from a quarter-over-quarter perspective as we move into '21. But we're still going to see some prepay activity. Tough to say if it's going to be exactly 4 basis points next quarter, but it will be -- it should be right around there. And we've seen some greater activity in the fourth quarter than we did in the third quarter, but it wasn't materially different. So although it's -- I'd say that that 3 basis points to 4 basis points of prepay has been pretty steady for the second, third, and fourth quarter of 2020. So it was a little bit higher, but not meaningfully higher.

What are we seeing? We still -- yeah, we are still seeing a fair amount of it, particularly in the multifamily side of the house, there is going to be some great incremental prepay activity in first and second quarter, and it will vary somewhere around there, but it shouldn't -- it's not a main driver of what the NIM trajectory is for next year.

Jack L. Kopnisky -- President & Chief Executive Officer

And then the classifieds?

Alexander Twerdahl -- Sandler O'Neill & Partners -- Analyst

So -- yeah, I guess I was just looking as I kind of just push it into my model and kind of starting with the fourth quarter, I am kind of come out with the NIM to be a little bit higher than the guide. So with the loan yields kind of being pretty close to the book yields as we said, some contribution from -- and to clarify, the prepay, is that 4 bps of NIM or 4 bps of loan yield, I guess those sort of, where are you seeing the most pressure right now?

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

So -- yeah, I guess I was just looking as I kind of just push it into my model and kind of starting with the fourth quarter, I am kind of come out with the NIM to be a little bit higher than the guide. So with the loan yields kind of being pretty close to the book yields as we said, some contribution from -- and to clarify, the prepay, is that 4 bps of NIM or 4 bps of loan yield, I guess those sort of, where are you seeing the most pressure right now?

It was 4 bps of NIM and the place where we're going to see the most pressure in '21 is in the securities book. So in the securities book, which our weighted average yield is, 3.05% to 3.10% depending on the quarter, that's where you're seeing the greater reinvestment risk, right.

So, as we're going to see somewhere between -- you'll see between the third and the fourth quarter, there was about a $200 million decrease in the total securities book size. That was largely driven by just cash flowing of the securities book, it wasn't really sale activity that we did. So we -- you continue to see that type of prepay activity in the securities book and you essentially factor in having to buy back $700 million -- or kind of reinvest $750 million to a $1 billion of cash that's filling off of that securities book, that's where you would see the most amount of margin pressure. It will be difficult to maintain that securities yield, that with the three handle on it.

Jack L. Kopnisky -- President & Chief Executive Officer

Then the flip side of it is, is the cost of funding. There's still some room to continue to move down the cost of funding on this thing. So we're trying to be conservative and under-promised, and hopefully, over-deliver on that -- on the NIM. So, but there is -- offsets a little bit of that is that we still have room to move some of the funding costs down.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Plenty of balance sheet action to take, that is for sure.

Alexander Twerdahl -- Sandler O'Neill & Partners -- Analyst

Okay. I mean, if you just look into the first quarter based on all the things you just said, with obviously, these repricing and prepays coming in, would you expect the NIM to kind of come in a little bit above that range and then kind of trend into that range as the year progresses?

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Yes.

Alexander Twerdahl -- Sandler O'Neill & Partners -- Analyst

Okay.

Jack L. Kopnisky -- President & Chief Executive Officer

Well said.

Alexander Twerdahl -- Sandler O'Neill & Partners -- Analyst

And then I just wanted to -- I wanted to touch on something you mentioned in your prepared remarks, Jack. Just on scale and just talking a little bit about M&A, which I guess, it's been a couple of quarters, maybe since you've really mentioned M&A. But I just wanted to know if the parameters that kind of changed in this interest rate environment for what kind of deals you would consider. Is it just still traditional banks or if you're kind of looking outside the box into some other types of businesses?

Jack L. Kopnisky -- President & Chief Executive Officer

Yeah. I -- so one, I think there is kind of three types of M&A. One is traditional banks and the criteria hasn't changed. We look at funding sources, ability to reduce costs by putting things together, and the ability to either get new products or new markets in there. So -- and frankly, there is lots of opportunity nowadays at, in my view, reasonable prices.

The second bucket is still on the commercial finance side. So buying portfolios or commercial companies that allow us to adjust and change the asset mix is something we're looking at. There's not as many portfolios and businesses out there today as there have been this time last year, for example. But those -- there are some and some interesting pieces. There are some pieces of that though that are more fee-oriented, which is something that we're looking at, capital markets-oriented, syndication-oriented, things like that, that allows us to get more deeply into institutional types of fee income opportunities. So we have those on tap.

And then the third area is on the fintech area. We have a lot of terrific vendors and supporters that we're using on fintech to accelerate that, but there are some opportunities to potentially acquire fintech companies along the way that can supplement what we're doing and how we're doing it. That's one of the advantages of working with our vendors, working as banking as a service. And frankly, we've invested in a couple of funds that are fintech-oriented funds that allow us to see technology from an investment standpoint. So it's those three categories that we're reviewing, and as you see, we have lots of capital and we're pretty good about acquiring and integrating things into our model. So it's those three areas.

Alexander Twerdahl -- Sandler O'Neill & Partners -- Analyst

Okay. And then, on the lots of opportunities on the traditional banks, can you just remind us the geographic and size parameters that you'd consider?

Jack L. Kopnisky -- President & Chief Executive Officer

Yeah. Probably Northeast from a geographic standpoint, probably wouldn't go outside of the Northeast, unless there is an exceptional situation. And again, all these would have to be EPS accretive, year one, we'd probably target 10% or more on EPS accretion that have to be tangible book value dilutive, no more than a year or two from an earn back standpoint, and the IRRs would have to be 18%, 20% plus. And virtually all the deals that we have done to date have mirrored those criteria.

Alexander Twerdahl -- Sandler O'Neill & Partners -- Analyst

Thank you for taking my questions.

Jack L. Kopnisky -- President & Chief Executive Officer

Yeah. Thanks, Alex.

Operator

We'll now take our next question from Christopher Keith from D.A. Davidson. Please go ahead. Your line is open.

Christopher Keith -- D.A. Davidson & Co. -- Analyst

Hey, good morning, guys. How are you?

Jack L. Kopnisky -- President & Chief Executive Officer

Good morning, thank you.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Good.

Christopher Keith -- D.A. Davidson & Co. -- Analyst

Good. Hey, so I just wanted to dig in a little more to the loan growth. So, my first question is, do you or how much impact do you expect the new PPP rollout to have on C&I loans? And so what I'm really talking about is, I would imagine that that program may cause some pressure on demand from a C&I loan perspective. Am I right in assuming that?

Jack L. Kopnisky -- President & Chief Executive Officer

Yeah. Actually, what we have done in this round of PPP, we've outsourced PPP processing. So, for that exact reason, we do want to provide our clients a resource so we've partnered with a company to outsource that business, so as to our ability to focus on some of the categories that we've highlighted.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

So, sorry, I think Chris is asking slightly a different question. So the target of, kind of, the middle market or lower end of middle market commercial that we target for C&I, maybe some of those folks, maybe recipients of PPP money, but that's not where PPP money is being kind of directed toward in this go around. It's very smaller business profile of clients. So, is there some impact that where some of our borrowers may be able to access PPP? Yes, but we don't anticipate that that's going to have a material change. Again, we're targeting more of middle market commercial and middle market -- kind of smaller corporate and middle market commercial for that C&I growth.

Christopher Keith -- D.A. Davidson & Co. -- Analyst

Okay, great. That's helpful. Thank you. And then so, to get to that $1 billion to $1.5 billion in loan growth, I mean, do you expect some of your lending segments like C&I and CRE to return pretty close to pre-pandemic growth levels on an organic basis?

Jack L. Kopnisky -- President & Chief Executive Officer

We do. Yes.

Christopher Keith -- D.A. Davidson & Co. -- Analyst

Okay.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

We're going to see growth across the board in public sector business, in the diversified CRE, affordable housing is still doing well even through the pandemic. So there is a -- the good thing about what we have built on the asset side is that we have seven to eight different business lines. At any given point in time have different loan origination and volume dynamics to them. And so you can -- there is -- we're well positioned in many of those verticals to continue to see similar type growth that what we have seen pre-pandemic -- in both in 2019 and 2020.

So, if you go look at the progression of 2020 public sector, it still grew by about $350 million to $400 million. That's going to continue this year. So you're going to continue to see some of those verticals that we've been growing for the past couple of years growing at the same level or more than what we've seen in 2019 and 2020.

Christopher Keith -- D.A. Davidson & Co. -- Analyst

Okay, great. Thank you. And then just on the CRE side, I'm curious of the impact of kind of the run-off of broker originated multifamily. Number one, how much of an impact do you expect that to continue to have?

And then I guess, second part of that question is that, it seems to imply that there are -- transactions are happening, at least refinance activity maybe with the banker or away from the bank and multifamily despite what I would assume are pressured debt service coverage ratios. So, are you seeing continued activity in multifamily as well or is most of that going outside of the bank?

Jack L. Kopnisky -- President & Chief Executive Officer

No, we do see increased activity. So not everybody is having challenges with cash flows on multifamily. The vast majority of properties are cash flowing just fine and they are looking at -- given wherever they are rate wise, they are looking at opportunities to refinance on a lower rate environment. So, there are many, many properties there. The flows aren't the same as they were pre-pandemic, but the flows of refinance or new multifamily properties are still solid.

Christopher Keith -- D.A. Davidson & Co. -- Analyst

Got it. Great. Thank you. And then, I guess just one last question on the deposit side and I wonder if your comments on PPP feed into this a bit. But I mean the industry experienced excess liquidity and strong deposit growth and I think a lot of that was related to the PPP and government stimulus. So do you expect to be able to retain that -- those deposits and continue to see deposit growth through 2021? Or do you think that there is going to be some run-off since your customers are not necessarily recipients of the new program and as those funds start to get kind of put to work?

Jack L. Kopnisky -- President & Chief Executive Officer

Yeah. So to start, that's a smart question. So the structure of the PPP arrangement that we have, the funds that our clients would get still come through our deposits -- our deposit structure. So there'd be a flow just like there was before. The government stimulus side of this thing, we do think that there will be a higher level of deposits through 2021. We also think that there is a lot of companies, as you've seen on the commercial side, that have continued to create and hold liquidity on their balance sheet. Frankly, just like Luis mentioned on the security side for us, there's not many places where those companies would put the money from an investment standpoint. So we think that companies in general and individuals specifically will continue to hold cash back in these kind of uncertain time. So, bottom line is we think that there will still be a pretty solid and strong deposit flow in 2021.

Christopher Keith -- D.A. Davidson & Co. -- Analyst

That's great. That makes sense. Awesome. Thank you.

Jack L. Kopnisky -- President & Chief Executive Officer

Thank you.

Operator

Moving on to our next question, comes from Dave Bishop from Seaport Global Securities. Please go ahead. Your line is open.

David Bishop -- Seaport Global Securities -- Analyst

Yeah. Thank you. Good morning, guys. How are you?

Jack L. Kopnisky -- President & Chief Executive Officer

Hi, David. Good morning.

David Bishop -- Seaport Global Securities -- Analyst

Hey, Jack. Quick question, in the 2021 outlook for non-interest expenses, obviously, bumped up a bit there but offset what you're expecting on the fee income side. Just curious in terms of some of the drivers you mentioned, I think you call out these, there were significant higher commercial banking and small business verticals. Just curious if there is any sort of new niches you're looking to get into? Or specifically, where are you really looking hire significantly on the lending front for next year?

Jack L. Kopnisky -- President & Chief Executive Officer

Yeah. So from a lending standpoint, we're continuing to invest in places like we have -- we had a great year with our Innovation Finance Group, which is a technology lending area. There are certain sectors of the C&I and public finance side, there are certain types of things like lender finance and our securitization group, more capital markets oriented types of lending. I would say those are the ones we'd add to the ones we kind of modify and not add to would be on the CRE side, so as a -- as a kind of a trade-off. The -- so that's one piece of the investment in people from a personnel standpoint.

The other side of expense increases is the money we're spending on technology. So, as we kind of continue, if you look at it this way, it kind of downsized physical distribution in the financial centers, we're spending more money on digitizing the offering to our client and automating the back offices and there is a pretty good road map that we've created both on the technology side and the data side to improve our offering.

David Bishop -- Seaport Global Securities -- Analyst

And then as it relates to -- as you just alluded to the downsizing of the physical branch footprint, I think you ended the year at 76 financial centers. Just curious maybe where you see that migrating to over the course of 2021, 2022?

Jack L. Kopnisky -- President & Chief Executive Officer

It's kind of interesting because it's causative factors, as more people use digital and automated and mobile banking, allows us to continue to downsize. So my view of all banking is that there's probably 50% too many branches in all of banking. We've been pretty good. I think we started with over 150 branches. We're down to -- on a combined basis, we're down to the 78, and we'll probably look at five to 10 per year as potential downsizing.

David Bishop -- Seaport Global Securities -- Analyst

Got it. Thanks. And then one housekeeping question. I'm not sure you disclosed this, but the outlook for purchase accounting accretion income in 2021, just curious if you have an update on that?

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

$15 million to $20 million, David, for the full year.

David Bishop -- Seaport Global Securities -- Analyst

For the full year. Okay, great. Thank you.

Jack L. Kopnisky -- President & Chief Executive Officer

Yeah. Just as a point on that, David, one of the criticisms we had in the model is we have too much accretion income. We're down to about zero. So, these are core non-accretion income. People loved accretion income three years ago, two years ago, they hated accretion income. So we're now down to our fighting weight on this one.

David Bishop -- Seaport Global Securities -- Analyst

Got it. Appreciate the color guys.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Thanks, David.

Operator

We'll take our next -- our next question comes from Matthew Breese from Stephens Incorporated. Please go ahead.

Matt Breese -- Stephens Inc. -- Analyst

Good morning.

Jack L. Kopnisky -- President & Chief Executive Officer

Good morning, Matt.

Matt Breese -- Stephens Inc. -- Analyst

Few questions. First, I couldn't help but think with the increase of the substandard and special mentioned loans, during this whole process, you guys have taken a real proactive approach to problem asset disposition. With the increase this time, is that part of the plan at all? If there's loans where you don't see "light" at the end of the tunnel, could we see something similar to what we saw earlier this year in the form of an asset sale of loans that are in the substandard classified bucket?

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Yes.

Jack L. Kopnisky -- President & Chief Executive Officer

Yes. Yeah, absolutely. I would tell you -- just a point to be made that criticized classified level that we're at right now is still better than I think the median of peer banks. So we're pretty close to that. So it's just the way we got there maybe a little bit different from what people disclosed in the third quarter. But if we see pressure as you suggested in all portfolios, again, we feel pretty confident the loss given default on any of these deals in the future will be very minimal given the security levels.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

The math -- and so the operational dynamics of the types of loans that are in substandard are different than what we saw, right. So remember the loans that we've sold, so the sales of the third quarter focused on small balance transportation/equipment and residential mortgage, which working out of credits like that is a fundamentally different proposition and the type of substandard loans that Rob and I have been mentioning, right. So the majority of that substandard migration is in the commercial real estate asset class. It's in three -- the three pressure points that we've been talking about for three quarters of hotel, retail, some office. These are exactly the types of loans that we are very good at working out of because it's much more manageable for a workout function of a bank to be able to manage these types of credits.

So the equation for us on going forward is slightly different because when we were talking about the transportation finance book, there was an element of, I am not going to say that we were unable to essentially -- to work out of those, but it's very different to have to go and repossess a truck in Wyoming or Idaho and manage a credit that's in Midtown Manhattan for us, right.

And so, if you think about going forward to the extent that we see prices for particular verticals, for example, in hotels that makes sense in the secondary markets, we will absolutely execute those, but we have plenty of capital, we have a big reserve against these things, and so to the extent that we have to work these out over some period of time, TDRs and get them cash flowing again, we are in many respects the best owner of these types of assets, and so we have full flexibility there.

So it's not -- we are -- always a part of what we evaluate is getting rid of some of these sooner than later, but [Technical Issues] we don't need to give a form away here to be able to work out of those credits. We're very confident that we can realize a substantial amount of value by working these out long term.

Jack L. Kopnisky -- President & Chief Executive Officer

And Matt, I'm glad you said substandard because I think you know that special mention, those are with guarantors, owners who have plenty of liquidity to carry this thing through to the other side of the pandemic and then as it -- as tough [Phonetic] the economy builds back, right. So, as we referenced substandard, certainly for those the special mentioned names, we're working with those always and it's probably going to be just fine on those names.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Yeah. Great point.

Matt Breese -- Stephens Inc. -- Analyst

And just as a follow-up there, you mentioned you expect the elevated charge-off to occur mostly in the second quarter. Can you maybe better define for us elevated charge-offs, what we could be looking at there? And then you also mentioned the reserve is putting ample. Should we expect any sort of charge-offs to really come from the reserve bucket so there is minimum income statement construction?

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Yeah. So the specific question of what is an elevated charge-off level, we don't know that yet, Matt. What we do know is that we have stressed the portfolio that we have, particularly that substandard book, we stressed it from the perspective of moving down LTVs and expected LTVs. We've moved them down from the perspective of what percentage of that portion of the book moves into 30-day, 60-day, 90-day delinquency buckets, which again, we have not seen yet any migration from a delinquency perspective because of the vast majority of the loans that we migrated have actually continued to perform.

And so it's difficult to say charge-offs will be X or they will be Y, what we are very confident in is that we have stressed the portfolio and we are very comfortable with where the level of reserves are even when you put that portfolio under a substantial amount of stress and that's not all going to happen at one point in time.

So again, a good thing about having -- the good thing about the substandards being in these larger -- kind of being larger commercial real estate exposures is that each one of these loans will have a different dynamic to them and they will -- and they are exposed to different types of economic recovery time frames. They are -- they're not a homogeneous pool of loans that we're going to say, everything goes bad at the same time.

So there is -- the ability to manage this over time is how we are -- what we think is going to result in the highest possible outcome or best in -- best outcome from a valuation perspective. And up to the extent that it makes more sense, the charge-off more versus less in the second quarter, we will, but we can't really pinpoint the specific number because each one of these is a little bit different, but the stressed numbers are there and the reserves are there against the stress levels that we put under that portfolio.

Jack L. Kopnisky -- President & Chief Executive Officer

And I'd add on. On the income statement, the question you asked about income statement, for what we see today, we would not expect that to really affect the income statement.

Matt Breese -- Stephens Inc. -- Analyst

Okay. The last one for me, just on the margin. Alex had asked a question on prepay impact. The release indicated that there might have been some interest recovery on residential loans that were in forbearance. What was the impact on that and to what extent do you expect that to continue?

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

It was 1 or 2 basis points, it was not significant. That is going to continue and there is a glide path for the next two or three quarters of that happening just because we took a very conservative view regarding the initial move of residential mortgages into forbearance because of the broader government programs regarding 12 months of deferrals and so forth that has in some way, shape, or form also kind of transitioned into the non-agency non-government loan world. But we have been very encouraged from the perspective of borrowers on the residential mortgage side taking us up on various programs that we've put out there to essentially modify and extend loans and so forth.

And so, as we continue to see deferred and you'll see that the loan deferrals that we have in this quarter, the majority of them are still in the residential mortgage side. And so, as you continue to work out of those loans and you start putting those loans on longer-term payment programs, that's where you're seeing that increased interest income being recognized on that component of the loans. So -- but it was not big, it was 1 or 2 basis points.

Matt Breese -- Stephens Inc. -- Analyst

Understood. Okay. Well, I appreciate it. Thank you.

Jack L. Kopnisky -- President & Chief Executive Officer

Thank you.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Great. Thanks, Matt.

Operator

And our final question comes from Chris O'Connell from KBW. Please go ahead. Your line is open.

Chris O'Connell -- KBW -- Analyst

Hey, good morning, gentlemen.

Jack L. Kopnisky -- President & Chief Executive Officer

Good morning, Chris.

Chris O'Connell -- KBW -- Analyst

Most of my questions have already been asked. I just wanted to do a couple of cleanups. One, if you guys note -- or if you guys disclosed the remaining size of the taxi portfolio and what the carrying value of those are?

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Carrying balance is down to about $6 million.

Chris O'Connell -- KBW -- Analyst

Got it, great. And then on -- as far as your remaining PPP fees, did you guys disclose that?

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Sorry, what was the question, Chris?

Jack L. Kopnisky -- President & Chief Executive Officer

The remaining PPP fees.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Not so -- negligible amount as well. So with the loan sale that we have, with the loan sale of the $450 million this quarter, there's still about $120 million in total loans that are PPP related and the forgiveness process or time frame for forgiveness of those loans is not all that clear because these are borrowers that are not taking us up on necessarily a kind of holistic and quick time frame for resolution of that.

So if you set aside the PPP gain on sale from the fourth quarter, net interest income had about $700,000 of PPP interest income being recognized and we anticipate that it should be somewhere close to those numbers for first and second quarter of this year. But it's not a big driver of -- remaining PPP fees are not a driver of the guide that we have for '21.

Chris O'Connell -- KBW -- Analyst

Got it. And then just circling back, and I know it was covered a bit earlier on the NIM guidance, I mean, obviously, you're above the range right now and it seems like there is a couple of moving parts that are going to benefit on the funding side over the next couple of quarters at least, while the asset yields going to held up pretty well this quarter, even it's backing up some of the higher prepay income. So I guess what -- what's coming on the asset side or where is the compression coming that's going to be driving down from 5 bps above that range down into that range over the course of the year?

Jack L. Kopnisky -- President & Chief Executive Officer

Yeah. Again remember, this is the full year, and frankly, we just believe that in a zero rate environment or near-zero rate environment, you're going to have pressure on asset yields going forward. We think we can manage that, and as Luis said, frankly, the biggest pressure point is the securities book, it's going to absolutely come down.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

It's a combination. So it's the securities portfolio for sure, and then second is that the way that we think about it is, to the extent that you have that weighted average origination yields stay close to the levels that we have seen for the third and fourth quarter of about 3.7%, I think that that would give us substantial comfort that we would be close to the high-end of the range if not slightly above the high-end of the range that we've provided. However, we're being conservative there, because there is the potential for greater credit spread compression on new loan originations, there is a chance that commercial real estate and multifamily loans and credit spreads there could compress further because they are not at all-time lows at this point in time.

So, a portion of -- we do -- that the 3.25% is above the range that we provided, we are being conservative in that, we feel good about where the weighted average origination yields are today. But there is potential that those -- that credit spread compression could drive those numbers lower and so therefore that would result in some pressure as well over the course of '21 if that happens.

Chris O'Connell -- KBW -- Analyst

Got it. Understood. That's all I had. Thank you.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Great, thank you.

Operator

[Speech Overlap] Please go ahead.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

I was going to charge you. So you only get one go around.

Alexander Twerdahl -- Sandler O'Neill & Partners -- Analyst

Sorry, is my line open?

Jack L. Kopnisky -- President & Chief Executive Officer

Yeah, yeah, yeah.

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Go ahead, Alex.

Jack L. Kopnisky -- President & Chief Executive Officer

We're just teasing you.

Alexander Twerdahl -- Sandler O'Neill & Partners -- Analyst

I didn't hear myself come back into the queue. If I missed it, I'm sorry but I don't think we actually really talked about the level of the reserve. And I think you said in your prepared remarks that you decided consciously to keep or to not release reserves. And I was just wondering if you could go through sort of the moving parts in there and whether or not there's still wiggle room to actually justify having the reserve stay in that sort of 1.5% [Phonetic] level?

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Yeah. So we've talked about this for a couple of quarters, Alex, and that composition of the CECL reserve, I think when everybody first adopted CECL, we thought that the CECL reserve was going to be largely quantitative and not as much qualitative. And what's happened since adoption and through the first two quarters of the pandemic is, is that the quantitative models have continued to reflect a reserving requirement that was not nearly to the degree of the $325 million and 1.5% that we've had for since June 30. And so, a substantial chunk of our reserve has historically been and continues to be qualitative factor-driven. The reason for that was in anticipation of some credit migration that we were going to see, right.

And so, we knew full well that as we were putting some of these loans in the first and second go-arounds of deferrals, that not all of those loans we're going to all magically come back at the end of this year and with things being just perfectly fine and getting back to normal status and so that some of those loans or a good portion of those loans were going to migrate into criticized and classified, which requires a higher level of reserve against them under a quantitative -- under the quantitative reserve requirement.

So today, the allowance is now more -- relative to what it was in the third quarter, we have more quantitative reserves. We still have a very good chunk of qualitative factors that are associated with this. And so what we would need to see in order for that number to start coming down is to see some improvement in substandard, particularly in the substandard component to the extent that you start seeing those balances of substandard loans decrease, you would start to materially move down that 1.5%. And we think that again, we -- over time, we will figure out what the right level of reserve is, but pre-pandemic, we were thinking that our portfolio should have a 1% to 1.1% to 1.15% reserve to total loans. We think that over some period of time, as we continue to work out of some of these problem credits and some of these problem credits get to more regular way economic activity, we would see some migration back toward those levels over the course of '21.

So it's too early to say if you're going to see that in the first or second quarter, but by the end of this year we would anticipate seeing a substantially lower reserve than the 1.5% that we have today. And again a lot of this continue to be driven by qualitative factors because we are being conservative and until we understand what's fully going to happen with that substandard book.

Jack L. Kopnisky -- President & Chief Executive Officer

Yeah. Luis answered that 100% the right way. The other -- the Jack Kopnisky qualitative way to answer that is, we've been through cycles like this. I've been through seven cycles like this, I think in my career. The right way to do this over time is keep the reserves high until, as Luis said, you see very specific improvement in the outcomes on this. There is -- our view is there is no reason to release reserves right now. There will be hopefully as the year goes on, but you know, time will only tell.

Alexander Twerdahl -- Sandler O'Neill & Partners -- Analyst

Well said, Jack. Appreciate the color.

Jack L. Kopnisky -- President & Chief Executive Officer

Thanks, Alex.

Alexander Twerdahl -- Sandler O'Neill & Partners -- Analyst

Thank you.

Operator

[Speech Overlap] appears to be no further questions. I'd like to hand it back to you, Jack, for any additional or closing remarks.

Jack L. Kopnisky -- President & Chief Executive Officer

Thanks to everybody for taking the time today and have a great day. Thanks.

Operator

[Operator Closing Remarks]

Duration: 64 minutes

Call participants:

Jack L. Kopnisky -- President & Chief Executive Officer

Luis Massiani -- Senior Executive Vice President & Chief Financial Officer

Robert Rowe -- Chief Credit Officer

Casey Haire -- Jefferies LLC -- Analyst

Steven Moss -- B. Riley FBR -- Analyst

Alexander Twerdahl -- Sandler O'Neill & Partners -- Analyst

Christopher Keith -- D.A. Davidson & Co. -- Analyst

David Bishop -- Seaport Global Securities -- Analyst

Matt Breese -- Stephens Inc. -- Analyst

Chris O'Connell -- KBW -- Analyst

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