Investors Bancorp, Inc.
Q2 2018 Earnings Call Transcript

Published: 27 Jul 2018

[Operator:]

Good morning and welcome to the Investors Bancorp Second Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. We will begin this morning’s call with the company’s standard forward-looking statement disclosure. On this call, representatives of Investors Bancorp, Inc. may make some forward-looking statements with respect to its financial position, results of operation and business. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond Investors Bancorp’s control and are difficult to predict and which can cause actual results to materially differ from those expressed or forecast in these forward-looking statements. In last night’s press release, the company included it's Safe Harbor disclosure and refers you to that statement. That document is incorporated into this presentation. For a more complete discussion of the certain risks and uncertainties affecting Investors Bancorp, please see the sections entitled Risk Factors and Management’s Discussion & Analysis of Financial Conditions and Results of Operations set forth in Investors Bancorp’s filings with the SEC. And now I would like to turn the call over to Kevin Cummings, President and CEO of Investors Bancorp. Please go ahead.

[Kevin Cummings:]

Thank you, Kate. And good morning and welcome to the 2018 second quarter Investors Bancorp earnings call. The company and the bank reported earnings of $57.1 million or $0.20 per diluted share for the three months ended June 30, 2018 versus $39.6 million or $0.14 per diluted share in the quarter ended June 30, 2017 and $57.9 million or $0.20 per diluted share for the previous quarter ended March 31, 2018. For the six months June 30, 2018, net income totaled a $115 million or $0.40 per share compared to the $85.7 million or $0.29 per share. This represents a 34% increase in earnings year-to-date and is attributable to the benefit of the new tax law, better expense management and growth in earning assets offset by nine basis points decline in net interest margin. We continue to diversify our balance sheet and leverage our capital. During the quarter, we purchased 3.1 million shares for approximately $21 million and year-to-date we have purchased over a 100 million in share buybacks. Post second step, we have purchased 75 million shares for approximately $908 million at an average price of $12.12 per share. During the quarter, we declared a $0.09 dividend, which is an increase of $0.01 from prior year and flat to last quarter. Since our second step in 2014, we have raised our dividend from $0.04 per share to $0.09 and have leveraged our capital through organic growth, dividends and stock buybacks. Our tangible capital ratio now stands at 11.8%, which is down from 19.7% from the second quarter of 2014 and our assets have grown from $17 billion to over $25 billion. Our asset quality remained strong. We have excess capital to grow and we will continue to manage our equity through stock buybacks and dividends. We think our regional economy is moving along nicely as a result of the tax stimulus. Despite some noise in Washington and [ph] Trenton, our customers, the real estate developers and business owners in our area are feeling pretty good right now. The creation of opportunity zones has the potential to drive further investment in New York and New Jersey, will allow deferring capital gains over a period of 5 years to 10 years and we believe is a tremendous opportunity for our area. During the quarter, our loan portfolio grew a $182 million, of which a $122 million was in the C&I portfolio. For the year, the C&I portfolio has increased $522 million or 32% and reflects organic growth and the purchase of d equipment leasing portfolio in February of this year. Our total loans are up $695 million for the year-to-date. And we still believe that we can hit our growth target of $1.5 billion for the year. Loan originations, including the purchase of the leasing portfolio, totaled $1,928 million in 2018 versus $1,889 million in 2017. So, our actual loan originations are up for the year, although the growth has not been the same. Our loans grew over $1 billion in the first six months of last year versus $695 million this year. In the month of June, our loan growth was a $170 million and we have a strong pipeline. We look forward to a strong second half of the year and hopefully slowing of the prepayment activity which has impacted our growth year-to-date. We believe that our strategy to continue to diversify our portfolio to business lending will improve our market and our funding. We recently hired 5 funding [ph] officers in the C&I business which will help us continue to our penetration of this market. During the quarter, total deposits grew $371 million and the competition remained strong. Due to seasonality and the tax reform, our municipal deposits were down $347 million for the quarter. As you may recall, many homeowners prepaid their real estate taxes in December of last year to accelerate the tax deduction which has all been eliminated by the tax law change. The market remains very competitive for our deposit funding. In reaction to these competitive pressures, we have launched deposit campaigns for the branches and have rolled out our online money market product which is currently being marketed on a test basis in three states. At June 30, we have approximately $22 million in deposits at a rate of 1.9% on our digital platform. Our asset quality remained strong as net charge-offs totaled $4.3 million versus the provision of $4 million. During the quarter, our non-performing assets were flat at 60 basis points versus 61 basis points at March 31. Total non-accrual loans in our commercial loan portfolio totaled $65 million or 44 basis points. Of that total, close to $30 million is current principal and interest. And our largest non-performing loan in the C&I portfolio for $10.6 million is expected to be paid off in full in the third quarter. As we move through to this credit cycle, our portfolio appears well positioned to weather any potential downturn in the real estate market with general economic conditions as 66% of our loan portfolio is in the multi-family and residential assets which have performed well for us in previous economic cycles. On that front, our risk management teams continue to work hard enhancing our procedures and improving our processes at the bank. For two years now, we had included in our -- we had incorporated in a lot of areas of risk management, invested in all of our areas of risk management including BSA, credit, technology n operations. We continue to improve our management team as we have brought on new executives to build and invest in our organization for the future. Over the last three years, we have a new Chief Risk Officer, Chief Credit Officer, General Counsel, CFO, Chief Operations and Technology Officer, a new Chief Marketing Officer and a new Head of Human Resources. These investments are significant to build our bank for the future. We had the team in place for manage a $35 billion to $40 billion organization. And as we were work out of our regulatory BSA issues, we are in a good spot to doing small acquisitions to enhance the organic growth that we have experienced. On the BSA front, the FKIT has completed its field work and a formal exit meeting is scheduled for August. We have received a preliminary feedback and we will remain cautiously optimistic as the regulators fill through their review in the regional office in Washington. On the CRE side, we have improved our [ph] MIS, data analytics, which has helped us manage our portfolio and better understands the risk in our loan book. We will continue to make these investments as we continue to grow. Now, I would like to turn the call over to Sean Burke, our CFO, who will give us some commentary on our operating results for the quarter.

[Sean Burke:]

Thank you, Kevin. In line with our expectations, net interest margin for Q2 was 2.8%, which represents five basis points of margin compression quarter-over-quarter driven by rising deposit costs. Net loans grew a $186 million during the quarter with the majority of the growth driven by C&I lending. On an annualized basis, C&I loans grew 24% from the end of the first quarter. Deposits increased $371 million compared to the prior quarter or 9% on an annualized basis. Our provision for loan loss is totaled $4 million for the quarter compared to $2.5 million in Q1 with the increase driven by C&I loan growth and slightly higher net charge-offs. Non-interest expenses totaled $102.6 million, up slightly from the first quarter, the increase was primarily driven by advertising spending and technology-related investments. Our effective tax rate was 25.1% for the quarter, which we expect to increase slightly due to the New Jersey Tax Reform Act or tax reform enacted in July of 2018. Our asset quality and capital ratios remained strong at June 30. Our non-performing asset ratio stood at 0.60%, an improvement from 0.61% in the previous quarter. Looking forward, we have no significant changes to convey to our previously communicated guidance. Specifically, we reiterate the 2.75% area for full year 2018 net interest margin and $415 million for non-interest expenses. Now, I would like to turn it back over to Kevin for some concluding remarks.

[Kevin Cummings:]

Thanks Sean. As we wrap up the formal remarks of our earnings call, I want to emphasize the four-pronged strategy of Investors that has served us well over the past 13 years as a public company. Our goal is to be the large community bank that serves the New York, New Jersey region. To be a different bank that makes a difference to its customers and the communities that we serve. We have a motivated team that has weathered a difficult 24 months with respect to the regulators and economic conditions posed by the flattening yield curve. We will continue to lever our excess capital through stock buybacks, dividends and organic growth. With respect to M&A, we will continue to be prudent in our approach as we have done in the past when we completed eight transactions with limited dilution to tangible book value. We continue to be a force in the community through the commitment of our employees who believe that you can do good and do well at the same time. I’m proud of their efforts and we are optimistic that as we get stronger in all areas of the bank, we have the infrastructure and the confidence to grow. We are a much stronger bank today than we were two years or three years ago. And I thank our teams and our employees for their efforts and commitment to our mission. We appreciate the continued support of our shareholders and look forward to a strong second half 2018. Now I’d like to open up the call to any questions.

[Operator:]

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Dave Rochester of Deutsche Bank. Please go ahead.

[Dave Rochester:]

Hey, good morning, guys.

[Kevin Cummings:]

Good morning.

[Sean Burke:]

Hey, Dave.

[Dave Rochester:]

Hey, just really quick on the expense guide, it seems like that’s a bit conservative given the level you’re at in 2Q. You guys aren’t anticipating any big step-up there in the back half of the year for any build-outs or systems enhancements or anything like that, are you?

[Kevin Cummings:]

Nothing meaningful, Dave, but we are, and we continue to make technologies-related investments to continue to improve our systems technology to drive additional deposit gathering and improve our customer relationship management efforts. So, nothing major there. I think you are right that’s 415, if you look at our current run rate is probably a dip on the conservative side, but that’s where we are right now.

[Dave Rochester:]

Got you. There is definitely nothing wrong with beating that. So, that’s good. Just switching to your loan growth guidance, are you guys making the assumption that pay downs slow in the back half?

[Sean Burke:]

Dave, I think we’re not making that assumption. Pay downs have definitely picked up a little bit, but our pipelines are pretty strong, and we combine that with the fact that our production is usually stronger in back half of the year. So, we’re pretty comfortable that we’ll be able to hit our growth targets for 2018.

[Dave Rochester:]

And then on the stronger pay downs for this quarter, are you guys seeing anything unique in the market at lower pricing at certain competitors, anything that you think is driving that?

[Sean Burke:]

We lost some construction loan business. That is -- those are loans that once construction is completed, we’re missing the perms. And what we’re finding is that these developers are going to life companies and even the agencies. What we found is that we can’t match some of the IO terms that the life companies are offering and some of the proceeds terms that these two entities are offering. So, that’s the anomaly that we’re seeing in the market right now.

[Kevin Cummings:]

It’s not about listing up, it’s about that $80 million in loans that six loans. And our pay-offs actually and amortization for the year was up $230 million over last year.

[Dave Rochester:]

Okay. Got it. I appreciate the color. Just curious where you’re guys pricing multi-family five loans and CRE at this point?

[Sean Burke:]

It’s 4.25 and 4.38. That’s monthly CRE respectively.

[Dave Rochester:]

Okay. And then just one last one. Given what you were saying on the BSA front, it seems like the light at the end of the tunnel is a lot closer now. Do you feel like you’re close enough that you can take an even closer look at M&A or at least lay the ground work with discussions with potential candidates at this point?

[Sean Burke:]

Not yet, Dave. We still -- we don’t want to count out chickens here before they’re hatched. It’s important to us that we just kind of remain focused on resolving this. So, it’s premature really to say one way or another where this is going to go. We want to make sure again we don’t get ahead of ourselves. It’s one thing to talk to the folks in the field, but we’ve learned in the past that there could be difference of opinion in the regional offices and the Washington office. So, at this point, we’re just going to stay cautiously optimistic.

[Dave Rochester:]

Okay, great. Thanks guys.

[Operator:]

The next question comes from Austin Nicholas of Stephens. Please go ahead.

[Austin Nicholas:]

Hey guys. Good morning.

[Kevin Cummings:]

Good morning.

[Austin Nicholas:]

Maybe just on the margin, the full year margin outlook of 275, just given where the margin has been in the first half of the year. It seems like that implies call it a 10 or so basis point decline as you’ve towards -- moving to the back half. Is that an accurate I guess read through from that comment and then is that really driven by maybe some of the growth that you’re seeing in the back half that you’re needing to be funded by maybe some incremental borrowings?

[Sean Burke:]

Yeah. So if you think about the 275 guidance and think about the first two quarters, yeah you can back into and then imply the certain amount of margin compression for the back half of the year. And that is a little bit elevated relative to what we’ve experienced to date. And again, we expected that given some of the increased competition for deposits. And that is why we’re also not coming off our full year guidance. So, everything is kind of marching along in terms of the expectations there.

[Austin Nicholas:]

Understood. That’s helpful. And then maybe as we look out to 2019 on the margin, is there any opportunity for stabilization there outside of the organic deposit gathering and kind of the transition to C&I? And I guess what I’m getting at is, is there any type of swaps or anything that could be layered on to help stabilize that margin and if not already being done?

[Kevin Cummings:]

We have discussed, and we have debated the possibility of trying to reduce our liability sensitivity and given the slightness of the yield curve, we think that it’s a very legitimate of risk mitigating tool that we’re exploring. Also, 2019 now we are anticipating less in the way of Fed fund increases right now. So, we do think that there will be some relief relative to 2018.

[Sean Burke:]

And Austin, I think the other fact to hear is that C&I continues to grow as a percentage of portfolio. And we continue to see the benefit from being invested in C&I and the higher rates. So, we’re reaping that benefit also despite the fact that our cost of fund is increasing.

[Austin Nicholas:]

Understood. That’s helpful. And then maybe just one last one. Could you maybe share with us or remind us of your view on M&A. Should you exit the BSA, AML agreement towards the end of this year?

[Kevin Cummings:]

I think Austin, we are always -- we’re always going to be cautious about M&A especially at this point. And right now, we’re in BSA and assuming that at some point we come out of it. Yeah, I mean I guess we’ll always take a look, but we have several factors here. Our valuation is not at a point where we can really execute any meaningful M&A here, but also, we also take notice of the fact that our stock is trading at 125% of book value. And that’s probably a pretty good investment for us right now. And we’ll just stay focused on that. But as we move forward, certainly we’ll look at M&A but we’re going to be very cautious there.

[Austin Nicholas:]

Okay great. Thanks for the questions guys.

[Operator:]

The next question is from Brody Preston of Piper Jaffray. Please go ahead.

[Brody Preston:]

Good morning, guys. How are you?

[Kevin Cummings:]

Hi.

[Brody Preston:]

I just wanted to circle back to the NIM real quick, specifically the guidance. You guys have put on I guess a decent slog on CDs just based on the release, it sorts of implies the non-interest-bearing account sort of dipped again this quarter, whereas CDs made up a large percentage of the growth, at least your average balances were up sort of 18% quarter-over-quarter. And I know you’ve got some promos that are going on in the low-to-mid-2s right now. So, I guess I just wanted to get a better sense for what the offset is considering the CDs you are putting on above 75 basis points to a 100 basis points better than your current cost to funds?

[Sean Burke:]

Well, Brody, we’re getting -- again, we’re getting the benefit of the C&I portfolio. That portfolio that pipeline is up to about $900 million. And when I look at what the average yield that we’ve booked on C&I over the last month, it’s up around the 450, 405 base range. So, we are getting some relief there especially given the fact that C&I is the primary driver of the growth these days that’s helping to offset that additional cost coming from the CD book. We’ll continue to grow our non-interest bearing. Non-interest bearing is when I compare it to March is actually up compared to March. It’s the interest portion that’s down and that’s due primarily to the seasonality of municipal accounts. So, all-in-all, our plan to diversify the balance sheet even in this environment has helped us given the fact that we are putting more C&I business on and we’re bringing more non-interest bearing checking accounts in.

[Brody Preston:]

Okay, all right. Great. And then I guess, I just wanted to I guess touch upon the tax rate guidance. We’ve heard from some of your New Jersey peers some pretty big variability surrounding the impacts to the new sort of New Jersey Tax Law that was enacted. And so, I guess I just wanted to better understand what -- how that will impact you and I guess like what the percentage of increase in your tax rate is as a result of that moving forward?

[Kevin Cummings:]

We estimate right now, and this is preliminary, but about a 50 basis point increase to our overall tax rate. So, not too meaningful in terms of the change.

[Brody Preston:]

Okay, okay. And do you guys have like I know that some of the New York and New Jersey your peers have underlying REIT statuses, do you guys have any of that?

[Kevin Cummings:]

No, but we do operate in outside of the state in New Jersey as well. And so, when you’re thinking about our tax rate you have to think about beyond just the State of New Jersey.

[Brody Preston:]

Okay, all right. And then I guess just with the tax law being enacted, I know you said that your business customers are still feeling pretty optimistic, but I know that the New Jersey business outlook survey just sort of came out at the beginning of this year and I guess only like 14% of business has surveyed, so they would expand within the state. So, I just wanted to get a better sense for I guess maybe why your customers feel better than other businesses?

[Kevin Cummings:]

Well, I think certainly with the opportunity zones that are here in New Jersey and New York, there is a tremendous opportunity for real estate development. It could be – probably the most significant tax flow change, the development since the Reagan tax law change in the last 30 years. I was out with a developer yesterday, one of the largest developers in the state and he is trying to put a multi-high network, almost $200 million to develop these different areas in the state and the opportunity he feels is tremendous. So, when you look at that and you look at people’s balance sheets and what they are doing, I think people will feel pretty good about things. Now the reality is, are we going to attract more businesses, would we expand in the area, that’s the negative of New Jersey over regulation. I mean everyone always complaints to New Jersey regarding getting approvals, working with the municipalities to get projects done, different things, not in backyard and all those good things. It’s a tough state to do business, but still it’s the most and that’s one of the best education forces, work forces, location is tremendous, and the network and the media may come as one of the highest in the nation. So, I think overall, I think businesses feel pretty good, we’re a lot stronger, but are we going to attract new business into the area, that’s the challenge that the new leadership has.

[Brody Preston:]

Okay, all right. And then I guess with where your stocks currently trading right now on the mid-12, I just wanted to know if we should expect an increase in the buyback moving forward?

[Kevin Cummings:]

I think you know we find this stock attractive. We will continue to buy back at levels that we think makes sense. Just trying to determine how much compared to last quarter is difficult to do. So, let’s just say that we believe this stock is really attractive at this point. We’ve been involved in the market and we’ll continue to be involved.

[Sean Burke:]

And I just would add on top of that, just we previously communicated that our appetite as the stock falls, there is more appetite, as the stock rises, there is a little less appetite. So, as the stock has dropped, there is obviously more appetite.

[Brody Preston:]

Right, okay. And then one last one for me. I noticed it in the 30 to 59 day bucket there is a little bit of a pick-up, about $27 million in multi-family. I just wanted to get a better sense for what was happening there?

[Kevin Cummings:]

Yeah. That relates to one borrower in the Pennsylvania region, in Philadelphia region. He got involved, he had turnover in the collection in Section 8 housing and really in more administrative issues. He had some other investments outside of real estate that have been a distraction to him and we’ve been in communication with him and it’s -- we don’t think it’s a problem at this time and we’re well collaterized.

[Brody Preston:]

Thank you very much, guys.

[Operator:]

The next question is from Laurie Hunsicker of Compass Point. Please go ahead.

[Laurie Hunsicker:]

Yeah. Hi, good morning.

[Kevin Cummings:]

Hey, good morning.

[Laurie Hunsicker:]

Just wanted to circle back on the buyback. Was there anything that slowed you down this quarter relative to last because obviously 3 million share is a great run rate, but it’s substantially less than 1Q at 4.5 million and your stock was obviously cheaper this quarter than last. Was there anything that slowed you down or how are you thinking about that?

[Sean Burke:]

Laurie, typically what we do is we talked about the higher stock price or the lower the stock price the more aggressive we are. But the stock price didn’t really fall throughout the quarter until the end of the quarter and that’s really what’s driving that, Laurie. If you look at the beginning of the quarter, we’re trading at a much higher point. So, it really just is a timing. So, I would look into it in terms of appetite [ph] waning.

[Laurie Hunsicker:]

Okay. Fair enough. On expenses, obviously nice drop at occupancy that was just the six branch closure that you had identified at the end of last year, is that what that was?

[Kevin Cummings:]

Yes, it is. The actual closure occurred in March because we had -- even though we had announced it at the end of the year, we had to give the proper notice to the customers. So, the branch is closed on March 6.

[Laurie Hunsicker:]

Okay. So, basically fully -- this quarter fully reflects everything, there is nothing else coming out, is that right?

[Kevin Cummings:]

Yes. And also, we had less cost related to snow removal.

[Laurie Hunsicker:]

All right. Okay. Good point. Okay. And then just can you refresh us just in terms of any de novo plans for the duration of this year, any closures, just how you’re thinking about branch rationalization?

[Kevin Cummings:]

Yeah. We’re continuing to look at it. We’re happy with the success of the closure of the six branches and the retainage of those deposits in the branches that we kept. But that success has led us to continue to look at more opportunities. I don’t think those opportunities are going to come to fruition this year in 2018, but something that we’re definitely looking at. In terms of new branches in new markets, it’s very minimal at this point. We don’t have any plans to open significant number of branches over the next 12 months.

[Laurie Hunsicker:]

Okay, great. And then on advertising expense that was a big jump linked-quarter from $2 million to $3.8 million. How should we be thinking about that line. Was there some sort of promotional jump there or should it be running closer to that level?

[Kevin Cummings:]

Yeah. I think it’s timing. It’s -- what I would do is take two quarters and divide them by two. It’s just the matter of when the bills come in.

[Sean Burke:]

And we did some more TV advertising.

[Kevin Cummings:]

And yeah, we had launched TV campaign with the promotion that we have going on. So, but no significant change there in our strategy.

[Laurie Hunsicker:]

Okay, great. And then just last question. Do you have any more plans to purchase any more leasing portfolios and then also how do you think about leasing portfolios in your loan growth guidance? Thanks.

[Kevin Cummings:]

We are very happy with the purchase of the leasing company that we bought in the early part of the year. As a result of that, we’ve had some opportunities to come across our desk. And we will still remain cautious there with not interested in trying to do a leasing company that lease smaller ticket items for example. So, we’re looking for the right deal. We haven’t found one yet, but they are continuing to come across our desk and we are looking to add some if the right opportunity comes along.

[Laurie Hunsicker:]

Okay. And then just last question. Does your loan growth guide include that purchase?

[Kevin Cummings:]

Yes.

[Laurie Hunsicker:]

Okay, great. Thank you very much for taking my questions.

[Operator:]

The next question is from Collin Gilbert of KBW. Please go ahead.

[Unidentified Analyst:]

Good morning, gentlemen. This is Chris calling -- filling in for Collin.

[Sean Burke:]

Hey Chris.

[Kevin Cummings:]

Hey Chris.

[Unidentified Analyst:]

So, just wanted to follow up on the expense talk. Is there any more temporary BSA-related expenses that are going to fall off in the back half of this year or fall-off potentially post a resolution kind of going into 2019 or is everything pretty much permanent now in this run rate?

[Sean Burke:]

Yeah. We don’t anticipate any fall off in expenses directly attributed to the potential of the order being listed. So, a lot of the expenses were baked into 2017 numbers. And to the extent that at some point we do come out of the order, as you would expect, we certainly will look for efficiency, but there’s no correlation, there will be no correlation between the drop in expenses and the listing of the BSA order at least in the near term.

[Unidentified Analyst:]

Got it. And then I guess just more on kind of following into 2019 and on the expenses. Do you think the operating expense growth will fall back into kind of its historical range or it’s less de novos and less expansionary activity could still kind of remain at a more muted levels?

[Sean Burke:]

It could remain at more muted levels. We haven’t given any guidance in terms of 2019 outlook. But if I hit it on head in terms of this less de novo growth, the significant step we’ve made in terms of building our infrastructure that we can get back to a normalized run rate of expenses.

[Unidentified Analyst:]

Great. That’s all I had. Thank you.

[Operator:]

The next question is from Sean Tobin of FIG Partners. Please go ahead.

[Sean Tobin:]

Good morning, guys.

[Sean Burke:]

Good morning.

[Kevin Cummings:]

Good morning.

[Sean Tobin:]

Most of my questions have been asked already, but thinking about betas moving up this quarter, I’d love to hear more about what the strategy is going forward for bringing in new deposits and how your three year deposit betas will fare given the next rate hike?

[Sean Burke:]

As far as strategy is, going forward, I think we’ve been pretty vocal about the fact that we believe that building a C&I business is one way that we’re going to continue to drive low cost deposits into the company. Well, we’re also looking at strategy in which -- where employee what we call relationship anchors that are specifically paid based on the generation of low cost deposits also. Of course, given our loan growth and where that’s been, it’s not enough. And so, we’ve had to supplement that in this competitive deposit volume with some promotional money, some CD funding. So, at this point, our strategy is to continue to drive non-interest bearing deposits from C&I through a program of hiring individual bankers that are paid to drive that business into us. And to the extent that we need to supplement our funding, we’ll use a combination of promotional money market in CDs in the short-term.

[Sean Tobin:]

Got you. And then on those upticks in CDs, do you have the average duration on the new CDs that you’re putting on this quarter or if not just the entire CD book?

[Sean Burke:]

Just on the promotional items that we’re offering, the products range from money market accounts out to 30 month. And I can tell you approximately 41% of the promotional products are in the money market. So, they are shorter term in nature. And the majority of the money sits in the money market and then on the CD front, it’s evenly distributed between 13 month, 15 month and the 30 month, 19%, 18% and 15% waiting for each of those terms. So, again, the bulk is in that money market bucket.

[Sean Tobin:]

Got you. That’s helpful. Thanks for taking my questions. Nice quarter.

[Sean Burke:]

Thank you.

[Operator:]

This concludes our question-and-answer session. I would like to turn the conference back over to management for closing remarks.

[Kevin Cummings:]

Okay, Katie. Thank you very much. I’d like to thank you all for your participation on the call today. It was a solid quarter with good earnings, strong expense management and we look forward to a good and a strong second half of the year despite some of the headwinds as a result of the yield curve. We think the hiring of additional C&I lenders makes a good headway in that side of the business and we’re pretty optimistic moving forward. I want to thank everyone for participating on the call today. And I wish everyone the rest of this summer safe summer and be well. Thank you very much and this concludes our call. Thank you.

[Operator:]

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.