Fulton Financial Corp
NASDAQ:FULT
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Fulton Financial Corp
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Good day and thank you for standing by. Welcome to the Fulton Financial, First Quarter 2023 Results Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there'll be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Matt Jozwiak, Director of Investor Relations. Please go ahead.
Good morning, and thanks for joining us for Fulton Financial Corporation’s call and webcast to discuss our earnings for the first quarter which ended March 31, 2023. Your host for today's conference call is Curt Myers, Chairman and Chief Executive Officer. Joining Curt is Mark McCollom, Chief Financial Officer.
Our comments today will refer to the financial information and related slide presentation included with our earnings announcement which we released yesterday afternoon. These documents can be found on our website at fult.com by clicking on Investor Relations and then on News. The slides can also be found on the Presentations page under the Investor Relations tab of our website.
On this call, representatives of Fulton may make forward-looking statements with respect to Fulton's financial condition, results of operations and business. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, and actual results could differ materially.
Please refer to the safe harbor statement on forward-looking statements in our earnings release and on Slide 2 of today's presentation for additional information regarding these risks, uncertainties and other factors. Fulton undertakes no obligation other than as required by law, to update or revise any forward-looking statements.
In discussing Fulton's performance, representatives of Fulton may refer to certain non-GAAP financial measures. Please refer to the supplemental financial information included with Fulton's earnings announcement released yesterday in Slides 15 through 19 of today's presentation for a reconciliation of those non-GAAP financial measures to the most comparable GAAP measures.
Now, I’d like to turn the call over to your host, Curt Myers.
Well, thanks Matt and good morning everyone. Today I'll provide some high level thoughts on the banking industry and our business strategy. I'll also give you some perspectives on our balance sheet, liquidity, credit quality, and the impact of these items on our first quarter earnings. Then Mark will share more details on our financial results and step through a revised outlook for the remainder of 2023. After our prepared remarks, we'll be happy to take any questions you may have.
Fulton's business strategy is built on a community banking model, which focuses on taking local deposits, lending locally and banking all segments of our community. The events of the past few weeks have brought into sharp focus the benefits of our model and the value that can be created through cultivating lasting customer relationships.
On that point, I want to thank our team for the remarkable way that they've performed this past quarter. The team went above and beyond to truly make banking personal. These past few weeks we reached out to and talked with many of our customers. We talked to them about our financial position and our stability and our customer base continued to expand. We now serve more than 570,000 households.
Our industry is built on trust and the Fulton Bank team has been earning the trust of our customers for 141 years. With a long-term strategy, at times it is necessary to make decisions which may impact near-term results in order to strengthen the balance sheet, improve our liquidity, support our customers, and position our company for future success.
So let me talk first about our funding and the balance sheet. You can see on Slide 13 that we expanded the disclosures on our deposit base. We have approximately 734,000 accounts with an average life of 12 years on a balanced weighted basis. This highlights the loyalty, longevity, and value created by our stable customer base.
You will also notice on this slide that we've bolster our deposit funding by approving the utilization of broker deposits in the quarter. This was done prior to the market disruption as we focused on slowing the increase in our loan to deposit ratio, to maintain our internal target of 95% to 105% and to make sure we can continue to meet our customers borrowing needs.
Our balance sheet was also strengthened during the quarter as our tangible common equity ratio improved and our liquidity position increased to over $8.4 billion in committed funds. Early in the quarter we were buying back shares and utilized $40 million of our $100 million repurchased authorization. In total we repurchased about 2.4 million shares during the quarter. We paused that program in early March.
Turning to credit, we provided more detail on our loan portfolio and specifically on our office portfolio on slides six and seven. As noted last quarter we performed a comprehensive review of all real estate loans, casting a wide net to include any loans with an office component. Under this approach last quarter we reported balances of $1.05 billion.
On slides six and seven we isolated our discrete, office-only portfolio, which includes all loans with a primary revenue stream from office rents. As you can see this segment is a diversified and granular portfolio, originated consistently over time, spread throughout the footprint and with very limited large exposures.
As we discussed last quarter, we have a large office loan on non-accrual status, which was charged down in the fourth quarter. Given the challenge to office environment, we have further charged down this loan. Here are a few more details on this credit.
The loan was originated in 2019 in the DC Suburbs. The original loan balance was $42 million, with a loan-to-value at origination of 72%. COVID impacted the rent role and an underlying ground lease further impacts the marketability of this property. We have decided to further charge down this loan to enable a flexible work out strategy to maximize value. The remaining book balance of this loan is $8 million.
Looking at our overall credit, net charge-offs of $14 million were driven by the $13.3 million right down on the loan that I just discussed. Our remaining loan portfolio credit performance has been in line with our expectations. NPAs, NPLs and loan delinquency have all declined for the past two quarters. Our higher provision for credit losses this quarter is due to changes in macroeconomic factors and our loan growth.
Moving to our quarterly results, our first quarter earnings were $0.39 per share. Pre-provision net revenue or PPNR for the first quarter was approximately $108 million, an increase of 51% year-over-year. This was a result of asset growth and net interest margin expansion.
During the first quarter we saw deposit growth of $667 million and loan growth of $391 million. Fee income declined quarter, linked quarter and year-over-year as interest rates and seasonal declines impacted several of our business units.
We managed expenses prudently during the period as expenses declined $9 million from the fourth quarter. While our first quarter earnings did not meet our overall expectations, we took the necessary steps to strengthen the balance sheet, improve our liquidity, support our customers and position the company for future success.
Now, let's turn the call over to Mark to discuss our first quarter financial performance and our 2023 outlook in more detail.
Thank you, Curt and good morning to everyone in the call. Unless I note otherwise, the quarterly comparisons I will discuss are with the fourth quarter of 2022. And the loan and deposit growth numbers I will be referencing are annualized percentages on a linked quarter basis.
Starting on slide three, operating earnings per-diluted share this quarter were $0.39 on operating net income available to common shareholders of $65.8 million. This compares to $0.48 of operating EPS in the fourth quarter of 2022. These operating results in the fourth quarter, excluding $2.4 million of merger related charged and intangible amortization recorded during that quarter for our acquisition of Prudential Bank Corp.
Moving to the balance sheet, loan growth for the quarter was $391 million, 8% annualized. This is down from $584 million or a 12% annualized growth rate that we saw in the fourth quarter 2022 and this percentage decline is in line with what we typically see moving from the fourth quarter to the first quarter.
Commercial loans were $238 million of this increase or about 60% of our overall growth. C&I lending grew $123 million across a diversified customer base. Commercial real-estate lending grew $53 million or 3% annualized.
Consumer lending produced growth of $153 million or 9% during the quarter. Mortgage lending was still the majority of this consumer loan growth and increased $144 million, with most of this growth coming from adjustable rate products.
Total deposits increased $667 million during the quarter or 13% annualized. We did see a meaningful shift in our deposit mix during the quarter as our non-interest bearing DDA balances declined approximately $600 million during the period. Almost all of this shift in the deposit mix occurred earlier in the quarter as our non-interest bearing deposit balances were essentially flat from the end of February to the end of March.
We increased our deposit pricing across several products throughout the quarter, and we also acquired broker deposits early in the quarter, well ahead of the sector-wide concerns over liquidity. Our loan to deposit ratio ended the quarter at 97%, down from 98.2% at year-end. Our investment portfolio declined modestly during the quarter, closing at $3.95 billion.
Putting together this balance sheet trends on slide four, net interest income was $216 million, a $10 million decrease linked quarter. Our net interest margin for the quarter was 3.53% versus 3.69% in the fourth quarter. Loan yields expanded 41 basis points during the period, increasing to 5.21% versus 4.8% last quarter.
Our total cost of deposits increased 40 basis points to 82 basis points during the quarter. Cycle-to-date, our total deposit beta is 16% cumulatively. We have previously communicated to you that our deposit beta would accelerated in 2023. With the first quarter beta higher than we anticipated due to a mix shift away from DDAs, we now believe that through the cycle deposit beta of approximately 35% is more likely.
Turning to credit quality on slide five, our NPLs declined $7 million during the quarter, which led to our NPL loans ratio improving from 85 basis points at year end to 80 basis points at March 31. Overall loan delinquency was lower to 1.27% at March 31 versus 1.39% at year end. Despite these positive trends, changes to our macroeconomic outlook and loan growth during the period led to the increase in our provision for credit losses this quarter. Our allowance for credit loss as a percentage of loans increased from 1.33% of loans at year end to 1.35% at March 31.
Turning to slide eight, wealth management revenues were up modestly from the prior quarter at $18.1 million. We continue to build out this business line with new hires. New business activity continued and the market value of assets under management and administration increased to $14.2 billion at March 31, compared to $13.5 billion at year end.
Commercial banking fees declined $1.1 million to $17.5 million with seasonal declines in most categories. Year-over-year commercial banking fees increased $1.5 million or 9%. Consumer banking fees declined $0.9 million to $11.2 million, led by decreases in overdraft fees as a result of changes to our overdraft programs. Mortgage banking revenues declined as expected and were driven by a decline in both mortgage loan sales, as well as a decrease in gain on sales spreads.
Moving to slide nine, non-interest expenses were approximately $160 million in the first quarter, a $9 million decline linked quarter. As we noted last quarter, several items contributed to the linked quarter decline. Those included higher incentive compensation accruals in the fourth quarter of ’22; merger related charges in the fourth quarter of 2022 which did not repeat in the first quarter; branch closure cost in the fourth quarter of 2022 for the closure of five branches this year, one of which occurred in March with remaining four occurring later this month; lower legal and contingent liability accruals in the first quarter of 2023; and lastly, run rate expenses from the 2022 acquisition of Prudential Bank Corp. now being fully recognized.
Turning to slides 10 through 12, given recent industry events we are providing you with expanded metrics and a discussion on capital and liquidity this quarter. First on slide 10, as of March 31 we maintained solid cushions over the regulatory minimums for all of our regulatory capital ratios. Our tangible common equity ratio was 7% at year-end up to the 6.9% - sorry, at quarter end, up from 6.9% last quarter.
Included in tangible common equity is the accumulated other comprehensive loss on the available for sale portion of our investment portfolio and derivatives. This totaled $282 million after tax on a total AFS portfolio of $2.6 billion, including the loss on our held to maturity investments, which was $94 million after tax on a held to maturity portfolio of $1.3 billion, our tangible common equity ratio would still be 6.7% at March 31, which represents over $1.7 billion in tangible capital.
Despite share repurchases during the quarter, a combination of net income and an improvement in accumulated other comprehensive loss during the period combined to produce linked quarter growth of 3.3% and our tangible book value per share.
Slide 12 provides you with an expanded look at our liquidity profile. When combining cash, committed and available FHLB capacity, the Fed discount window, and unencumbered securities available to pledge under the Fed's bank term funding program, our committed liquidity is $8.4 billion at March 31. In addition, we maintain over $2.5 billion in Fed funds lines with other institutions.
Our uninsured deposits totaled $6.7 billion at March 31 or 31.3% of total deposits. Excluding municipal deposits for which we hold collateral, this balance drops to $4.6 billion or $21.4% of total deposits. Some investors have started to focus on a liquidity coverage ratio, which takes committed available sources of liquidity, divided by uninsured deposits less collateral held. Our calculation of these non-gap metric at March 31 shows coverage of 185%.
We have also provided you with details of our deposit portfolio shown on slide 13. As Curt noted, our deposits are granular with an average balance per account of $29,000 and have an average life of 12 years. On slide 14 we are providing our updated guidance for 2023. Our guidance now assumes a total of one additional 25 basis point increase to Fed funds occurring in May, followed by constant rates through the balance of the year.
Based on this rate outlook, our 2023 guidance is as follows: We expect our net interest income on a non-FTE basis to be in the range of $850 million to 870 million. We expect our provision for credit losses to be in the range of $55 million to $70 million. We expect our non-interest income excluding securities gains to be in the range of $220 million to $230 million. We expect non-interest expenses to be in the range of $645 million to $660 million for the year, and lastly, we expect our effective tax rate to be in the range of 18.5% plus or minus for the year.
Lastly, as Curt noted, PPNR for the first quarter was approximately $108 million, an increase of 51% year-over-year, as a result of earning asset growth and net interest expansion over the past year.
With that, we’ll now turn the call over to the operator for questions. Gigi?
Thank you. [Operator Instructions]. Our first question comes from the line of Daniel Tamayo from Raymond James.
Hey! Good morning, everybody.
Good morning Dan.
Well, thanks for all the additional disclosures this quarter. I mean we all appreciate that. I guess my first question just around the net interest income guidance, obviously a big decline from last quarter, and I appreciate the color that you gave in your prepared remarks there Mark. But I guess if we could just get a little bit more detail on the driver there. How much of it is margin? How much of it is balance sheet? If you're able to give any kind of period-end margin or funding cost there to give us a better sense of how things are trending through the quarter. Thanks.
Yeah, sure Dan. Yeah, so margin for the month of March was 3.45% during the month and the question of whether it was more margin or balance related, our outlook [inaudible] assumes. We really didn't back off at all from loan and deposit assumptions for the year. So I would say it is primarily the mix shift that occurred in the first quarter and as I noted, that mix shift largely stabilized in the month of March.
Hey Danny, it's Curt. I would just add that during the quarter we did both things. We kind of stepped in to a short funding through adding a broker deposit based on the outflows that we really saw from November 15 to about February 15 that have now stabilized, so we had the effect of that and then we had the effect of re-pricing our current deposits. You see the mix is going from non-interest bearing to growing the money market and the CD portfolios. So we really look at the first quarter as having a big impact because we had both of those occurrence. As we look forward we're going to continue to have mix changes, which should over time be more muted than the impact that we saw both times in the first quarter.
Understood, I appreciate that color. And then maybe just your guidance assumes one more rate hike and then flat rates. Where does the sensitivity of the balance sheet stand now and then if we do get rate cuts in the back of the year like the forward curve is assuming, how does that impact your guidance?
Yeah, we are modestly more asset sensitive from where we were at year end, but we continue to look at ways to mute that overall asset sensitivity. We have put on about a total of about $1.5 billion of either cash as card orders or flows to protect ourselves in a down rate environment. So we are thinking about that possibility. While our forecast assumes no declines, we are starting and to put on some protection should rates start to decline more quickly than what our models assume.
Okay. All right, thanks for the color guys. I'll step back.
Thank you. One moment for our next question. Our next question comes from the line of Chris McGratty from KBW.
Hey, good morning. Maybe some of the balance sheet questions that's top of mind. And Mark we’ve see some of your peers flex the balance sheet up or down based on the pressures that we're seeing on deposits. I guess number one, with your loan-to-deposit ratio where it is and kind of the environmental changes to deposits, is there a situation where you might consider just slowing. I think you're updated NII guide was just a margin play. Would you consider slowing the balance sheet since I would presume the profitability on a marginal loan is a little bit lower?
Yeah Chris, it’s Curt. As we look at future growth, I mean we want to continue to support our customers and grow on the loan side and the deposit side we expect those to be more in-line.
We really stepped in to slow the pace of increase in the loan deposit ratio and we think we've done that effectively and we will look for balanced growth and really be mindful of that incremental margin as we evaluate loan opportunities, as we move forward really focused on maximizing risk adjusted return.
Okay thanks. On capital, how should we – I totally appreciate the pause in the buyback seems like the right move. How do we think about the direction of capital ratios in today's environment?
We are going to continue to be prudent and grow our capital base as we typically do. We did pause the buyout. We would potentially reevaluate that as we move forward. But first and foremost, we are focused on capital preservation and being prudent with the balance sheet.
Okay. And then maybe just one more if I could go a little bit into credit. Your provision guide Mark would suggest that the last two quarters run rates, given the one credit you've been talking about would step down pretty notably. I'm just trying to get a sense of I guess why throw out the target that, I won’t say aggressive, but much lower given how uncertain the environment is and investors looking for reserve builds. Any thoughts there would be great.
Yeah Chris, as we look at credit, the last two quarters to the fourth quarter and first quarter we had combined $26 million in charge-offs and $25 million of that was this individual credit that we talked about. As we look at the credit portfolio right now and the forward look on credit and large end/or isolated credits, we feel comfortable with the guidance and we thought it was appropriate to give guidance. This one significant unique credit for us really had a significant impact over the last two quarters.
Yeah. And what I would also add Chris is, your provision is largely a function of growth, and the loan growth, 8% of linked quarter was a solid first quarter for us. Now again, stepping down from a very solid fourth quarter, I would anticipate that our first quarter loan growth is going to be higher than what our overall loan growth would be for the full year based on just kind of where you see macroeconomic factors go.
Okay, that's helpful. Thanks a lot.
Thank you. One moment for our next question. Our next question comes from the line of Feddie Strickland from Janney Montgomery Scott.
Hey! Good morning.
Good morning Freddy.
Was just curious, is the FHLB borrowing capacity you listed on slide 12, is that what's currently pledged at FHLB or is that inclusive of all potential loan and securities collateral in the balance sheet?
That is what we currently have that is committed.
Got it, okay. And then, kind of along that same line, I appreciate the detail on liquidity on slide 12, but was curious if you can talk about the bank term funding program and just how you view that versus other liquidity sources. I think it says on the additional that you haven't used any of it so far, but was just order of operations. How do you view it?
Yeah, correct. We view that similarly to the way we view the discount window and it's great that it's there, but we view that more as a lender of last resort for us. And we would tap FHLB and other things before we would consider using it.
Got it. And then just one more for me would be, most of the changes to your 2023 outlook make sense, but was curious what drove the slightly lower top end on non-interest expense? Are you seeing a little less wage pressure, just wondering what changed the guide there?
Yeah, yeah, so when you just consider the guide to NII and that results in lower earnings for the year. So a lot of that for us is going to be lower incentive compensation accruals.
Got it. That makes sense. I'll step back in the queue. Thanks for taking the question.
You bet.
Thank you. One moment for our next question. Our next question comes from the line of Matthew Breese from Stephens Inc.
Good morning everybody.
Good morning Matt.
Hey Matt!
I wanted to touch on the office loan. What was the ultimate change in value from origination to now? And was there anything else more idiosyncratic to this particular credit beyond COVID impact and pardon my ignorance, could you go into color, add a little more color on the ground lease impacts? It just feels like a Jurassic change in valuation from the rough math I have here, and I want to get a sense of the pin support direct picture for the rest of the theory office book.
Yeah Matt, so original value is $58 million. That gives the loan to value on the original balance. We currently have it on the books at $8 million, so you're correct. It is a drastic adjustment in value. So a specific impact on rent role based on COVID, the re-ramp ability in that market and then the contributing factor of a land lease is just a fee simple exit in a workout. It’s just easier than somebody jumping into a land lease. So we feel we wanted to get this credit at a bulk amount that gave us maximum flexibility to maximize the value over time.
Okay. And then stepping back, on your reserve at large, what kind of economic scenario does it contemplate and could you go through some of the high points, the unemployment, GDP, interest rates, and I just want to get a sense for if that kind of scenario were to play out, what kind of charge-offs are baked into there?
Yeah, so we assume the Moody's base case, but then from there adjust for certain overlays for any piece of the portfolio like office, where we think there may be heightened risk.
Okay. And is there an assumed charge-off amount in there that we should be contemplating?
Well, ultimately charge offs I mean, in the model we calculate every quarter just assumes what the allowance needs to be, right? It doesn't mean – so you're taking the net present value of all your future cash flows and all your loans that you have charge-offs implied in there, but ultimately you're calculating a balance sheet charge. I can tell you that our 10-year plus net charge off going back to – coming right out of the great financial crisis averaged about 17 basis points.
Okay. Okay, and this is more of a nit-picky one. Mark, one thing I noticed this quarter was that overdraft fees held down quite a bit and a lot obviously happened this quarter, so I could make up a narrative on forgiving a lot of what went on from a consumer standpoint. Should we expect that line item to come back to a normal kind of $4 million run rate as things get back to normal here?
No, as a reminder, we had made some changes to our overdraft programs, and we had implemented some of those in the fourth quarter and then the remainder of those changes were implemented in the first quarter. So we had highlighted for the last three quarters I think now that we would be doing that, and that it would impact that line item on a run rate basis going forward.
Okay, so the $2.7 million is probably a bit of a run rate here?
For that line, yeah, we think so.
Got it. Okay, I'll leave it there. Thanks for taking my questions.
You bet.
Thank you. One moment for our next question. Our next question comes from the line of Frank Schiraldi from Piper Sandler.
Good morning!
Hey Frank! Good morning.
Just a couple of a balance sheet questions. Just in terms of, Mark you mentioned that the mix shift at a non-interest bearing really sort of stabilized through March. I'm just wondering what your outlook assumes. Do you assume basically stabilization in that percentage of total loans or do you see it falling further, and if so, what kind of levels do you assume there?
Yeah no, we still assume that there's going to be some rundown of non-interest bearing DDA, but at a slower pace than what we saw from sort of thanksgiving through the end of February.
Okay. And if you could just remind me, what is your loan growth? You talked about the 8% is quarter and kind of maybe slowing from there. So is that sort of still mid-single digits I'm thinking for the full year.
Yeah Frank, we're looking at a pretty typical year for us, 4% to 6% loan growth. Certain categories we do expect to moderate as we move forward. So that's a pretty consistent organic loan growth rate for us than we would expect to be in that 4% to 6%.
Okay. And then on the credit side of things, just on that one property, is there any – sorry if I missed it, but is there any recent appraisal on that property, the value of which you can share with us?
Yeah, current appraisal on it is roughly $15 million, but it has come down over the last year and we are looking at just a conservative book balance to give again, us maximum flexibility as we go forward. But our current appraisal on that property is $15 million.
Okay. And as far as the ground lease, I mean I guess that appraisal takes that into account. I know those leases are generally pretty long, you know very long term. So just wondering, the timing of any sort of lease termination there or any buy-outs coming up they can share with us as it pertains to the ground lease?
Yeah. So the appraisal does contemplate the ground lease. The ground lease is long term in order to keep the property available that the building is located on. So we should require the ground lease to be long term.
Termination or dealing with the ground lease or buy out the ground lease would be – would potentially be part of the workout plan going forward, but it does create unique circumstances. Just so you all know, we only have one other in the entire portfolio that's on a ground lease, and we're very comfortable with the dynamics of that loan. So it is a very discrete and unique attribute given that overall portfolio.
Okay, great, that's helpful. And then just lastly on the LTVs, you gave up the office book a weighted average of 60% and you say on the deck that's as of most recent appraisal. Can you talk a little at all about what percentage of these underlying buildings have been re-appraised, call it less than a year or so or since the pandemic.
Well, the appraisal policy and how we worked through that from a – we're focused on getting the risk ratings accurate. We have a very disciplined approach to that. We would get updated appraisals if there is a credit reason to get that, where it’s a rent change or some change within the dynamics. So that would be what would lead to in a new appraisal. So the weighted average of all the appraisals is portfolio, so some of those are at origination and then we would get updated appraisals as the credit would need those. Our range in those appraised values are 35% to 75% with that average then that we have more in the investor deck on a weighted average basis.
Okay. And does that LTV, weighted average LTV change markedly at all for – if I just look at the larger size, either above $10 million or $20 million, are those LTV's pretty consistent – weighted averages pretty consistent.
Yeah the larger the credit the more conservative we are on loan-to-value and loan-to-cost. So if anything, they would be less.
Okay, all right. Thank you.
Thanks Frank.
Thank you. One moment for our next question. Our next question comes from the line of
Manuel Navas from D.A. Davidson & Co.
Hi! Good morning.
Hey Manual!
Hey! So that NIM that was around 3.45% in March. Does that have some stress on it or is that a good place to start going into April, going forward? I know some of the movements in the mix shift happened earlier in the quarter. Just wondering how much of leeway on the run at 3.45% in March we should use going forward.
Yeah, I think 3.45% is a good place to start from. I mean we had – we did see our non-interest bearing DDAs stabilize a little bit in March. As I mentioned, we still anticipate that there's going to be some runoff in there going forward, but at a slower pace than what we saw. And in the month of April, you would also then see the full effect of a 25 basis point rate increase that occurred in March.
Okay, that's helpful. And going forward as loan and deposit growth is a little bit more balanced and it looked like borrowings were already coming down by end of the quarter versus the average. Is most incremental dollars going towards borrowings? Could you just kind of talk about that mix of borrowings versus maybe brokered CDs, kind of your thoughts going forward there.
Yeah, we thought it was important in early March to just really have a stabilized, diversified funding base. So that led to wanting to tap the brokered market which we actually tapped largely in February. But going forward I wouldn't anticipate us needing to tap the brokered CDs markets and instead we're just going to focus on some of our internal rate break products and promotions that we have in place to a fund loan growth in the future.
Okay. And then in your disclosure that uninsured deposits kind of declined I guess around $300 million, was that just through normal exits, loss of market share or did you use litigation programs like the IntraFi Network ICS? Could you just talk about that for a moment?
Yeah, it was a little bit of a – IntraFi deposits grew a little bit, but some of it was just kind of normal seasonality of some of those larger customer basis. We typically see some run down in the first quarter and some of our uninsured deposits.
That actually probably brings up my last question. Is most of the mixed shift customers moving things around within the firm? You are not losing, you're not seeing customer's exit, things like that just touch on that.
No, we saw net account and household growth in the first quarter. So I would say it is largely more – some of them taking money out of either low or zero cost money and placing them you know with us, with other products. In some cases you have them going to other banks for higher rate products. But then in some cases our promotions are winning new customers.
Okay, that’s helpful. And the age of your customer base across the accounts, that was really good disclosure. Just kind of on a separate topic, what would kind of drive you to restart buybacks?
As we look at capital, as things settled now, we get more clarity as we move forward. We have
$60 million remaining in that authorization. We would utilize that if it's appropriate, but in this environment we're still looking at capital preservation and stability first. But we feel we are in a good position and at some point would reengage in that activity.
Thank you very much.
Thank you. One moment for our next question. Our next question comes on the line of David Bishop from Hovde Group.
Yeah, good morning gentlemen.
Hey David!
Hey! A quick question maybe on the turning the prism a bit on the loan side of the equation. Just curious what you're seeing in terms of new origination yields this quarter and maybe where you see those yields trending to?
Yeah so, it's obviously going to vary. David, this is Mark. Between product class, on the commercial side, our C&I in the first quarter, so we're kind of hovering right around 7% for new origination there. A little bit off that number, maybe 25 basis points or so off that number on commercial real estate and then on the mortgage side we're going to average for our own production. We're going to average in kind of the 5.5 to 5.75 range for adjustable rate mortgages right now. And then other consumer classes, you know depending on whether it's indirect versus other consumer classes are going to be higher.
Got it. In terms of – sort of a holistic question there. In terms of, as you look at the loan pipeline and ability to pass on the higher pricing, the higher yields, is that impacting the pipeline or the quality of loans or the number of loans. It's sort of can cash flow, you know debt service coverage loan-to-value in terms of what's happening from a broader macro environment. I guess another way of questioning it, is it getting tougher to find quality loans that sort of pass the credit underwriting and pricing there.
Yeah, it's Curt. We do not change our credit standards and if anything, are tightening credit standards, so we don't allow that to happen. From a pricing standpoint, we're really focused on risk adjusted returns and we need to get the appropriate pricing given the risk in each of these buckets as we move forward. So we will see pricing continue to move up, to get our risk adjusted return and we will hold or even tighten credit standards in certain buckets.
Got it. And then one final question, just curious if you can disclose the broker deposits rates. Just curious if you had any sort of color you could add in terms of duration and average cost of those funds. Thanks.
Yeah sure. We raised them in three separate trenches throughout quarter and we specifically went out of market. So these are retail customers, but they are not in our five state footprint at all and the coupons of those and duration, they are going to mature in early 2023. So these are all generally between nine and 13 months with coupons reaching the trenches between $470 million and $530 million for the last trench, which is only about $200 million. So, the majority of it came in a little bit below 5%.
Got it. I appreciate the color.
Thank you. I would now like to turn the conference back over to Curt Myers for closing remarks.
Well, thank you again for joining us today. We hope you'll be able to be with us when we discuss second quarter results in July. Thank you all.
This concludes today's conference call. Thank you for participating. You may now disconnect.