and welcome to the First Bank First Quarter 2021 Earnings Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Note this event is being recorded. I would now like to turn the conference over to Patrick Ryan.
Please go ahead.
Thank you. I'd like to welcome everyone today to First Bank's Q1 2021 earnings call. I'm joined today by Steve Carman, our Chief Financial Officer Peter Cahill, our Chief Lending Officer and Emilio Cooper, our Chief Deposits Officer. Before we begin, however, Steve will read the Safe Harbor statement.
The following discussion may contain forward looking statements concerning the financial condition, results of operations and business of First Bank. We caution that such statements are subject to a number of uncertainties and actual results could differ materially, and therefore, you should not place undue reliance on any forward looking statements we make. We may not update any forward looking statements we make today for future events or developments. Information about risks and uncertainties are described under Item 1A, Risk Factors, in our annual report on Form 10 ks for the year ended December 31, 2020, filed with the FDIC. Pat, back to you.
Thank you, Steve. I'll plan to hit on a few of the highlights and then turn it back to you, Peter and Emilio to provide some additional detail. Overall, I think it was a very strong start to 2021. Here are a few highlights. Our cost of deposits continue to move lower, pushing our net interest margin higher.
Our non interest income categories all came in above budget for the Q1. Expenses looked a little higher than our guidance from last quarter, but those numbers also included over $300,000 in accelerated expense tied to the consolidation of some of our back office space. Our asset quality metrics continue to improve. Delinquencies declined, deferrals declined and we saw a net recovery during the quarter. PPP production in 2021 has been stronger than expected.
We have funded over $100,000,000 in new PPP loans so far this year. PPP income of $1,600,000 did help during the quarter and we expect approximately $6,000,000 in additional PPP fees going forward. We did not use the lowering of our allowance ratio to support earnings in Q1. While our provision was negative, that was based on lower loan balances at the end of the quarter. If economic conditions continue to improve, we may see opportunities to actually lower our ALLL ratio as we move forward throughout 2021.
So to misquote Tom Cruise and Jerry Maguire, investors have been saying to us for some time, show us the earnings. That is exactly what we're trying to do. With our evolution from an early stage growth to profit focused entity, we're starting to show the true earnings power of the franchise and we think there's more to come. We can continue to move deposit costs lower. Our fee income efforts are bearing fruit.
Our expense savings initiatives will keep a tight lid on cost going forward and our loan pipeline remains very healthy. And above and beyond the core earnings strength, PPP fees and lower credit costs could also support earnings as we move through 2021. At this time, I'd like to turn it over to Steve Carman, our CFO, to discuss additional financial details for the Q1 of 2021 results. Steve?
Thanks, Pat. For the 3 months ended March 31, 2021, we earned $9,700,000 in net income or $0.49 per diluted share. That compares to $3,200,000 or $0.16 per diluted share for the Q1 of 2020. The factors contributing to our record profitability included a credit to the provision for loan losses, increased non interest income and increasing net interest margin and controlled non interest expense growth, which contributed to an efficiency ratio of below 50% for the Q1 of 2021. After finishing 2020 with strong growth, our loan portfolio in the Q1, excluding PPP loans, declined approximately $82,000,000 due primarily to loan prepayments.
As a result, in the Q1 of 2021, there was a credit to the provision for loan losses of about $1,100,000 due specifically to the reduction in the loan portfolio, excluding PPP loans. Supporting our allowance for loan losses for the quarter were strong asset quality metrics. For example, non performing assets as a percentage of assets was just 0.47 percent and our allowance for loan losses as a percentage of non performing loans was 214.74 percent, a strong coverage ratio. In the Q1 of 2021, total non interest income totaled $2,300,000 compared to $1,200,000 for the same quarter in 2020, an increase of $1,100,000 or 89.5%. Three areas of notable increases were loan fees, gains on sale of loans and gains on recovery of acquired loans.
Loan fees, primarily loan swap fees increased $415,000 for the comparable quarters. Gains on sale of loans, primarily from SBA loan sales, showed a $436,000 improvement in Q1 2021 to Q1 2020. Lastly, there was $189,000 increase in gains on recovery of acquired loans. Over the last several quarters, we've discussed our efforts in enhancing and strengthening our core profitability. We focused on moving our net interest margin higher and growing net interest income by continuing to make quality commercial loans, while lowering our cost of funds, which was a priority.
Looking back to the Q1 of 2020, interest rates had moved dramatically lower due to the pandemic. At that time, our cost of interest bearing deposits was 1.56%. Factoring in non interest bearing deposits, our total cost of deposits was 1.29%. From that point forward, we worked on changing our deposit composition and lowering our cost of deposits to peer levels or lower. With stronger liquidity levels due primarily to the impact of the PPP loan program, we were able to lower rates on more expensive time deposits as CDs matured, which lowered our cost of deposits and positively impacted our margin.
Time deposits, which represented 38% of deposits at threethirty onetwenty declined to 25% of deposits just a year later. From the Q1 of 2020 through the Q1 of 2021, we have also lowered rates on all interest bearing deposit types to market levels. As a result of these and other actions, our cost of interest bearing deposits declined to 51 basis points at threethirty onetwenty 1, an over 1% decline from threethirty onetwenty 20. Factoring in non interest bearing deposit balances, our overall cost of deposits was only 39 basis points for the 3 months ended March 31, 2021, a decrease of 90 basis points from the same period in 2020. We certainly have benefited from interest rebalances from PPP loans, but we've also benefited from successful initiatives implemented by management to grow non interest bearing deposits and lower cost commercial deposits.
Non interest bearing deposits as a percent of deposits totaled 25.4 percent at threethirty onetwenty 1, a notable achievement when considering that just a year ago, non interest bearing deposits were 16.9 percent of total deposits. Our tax equivalent net interest margin, which bottomed out at the end of the Q2 of 2020 to 3.07% has been on the rise ever since. Our tax equivalent margin at the end of Q1 of this year was 3.60%. That's a 53 basis point improvement over the last 9 months. Our first quarter margin was positively impacted by $673,000 in loan prepayment penalty income, reflective of the increased level of loan prepayments we experienced referenced earlier.
That level of prepayment penalty income is about double of what we had projected for the quarter. As we look forward, the actions we have taken over the last several months has enhanced our core profitability. This is reflected in a non GAAP financial measure we find useful in tracking core profitability trends, pre provision net revenue. Pre provision net revenue is calculated by adding net interest income and non interest income and subtracting non interest expense adjusted by certain non reoccurring items such as merger related expenses, for example. Pre provision net revenue at the end of Q1 of 2020 was $7,200,000 By the end of 2020, pre provision net revenue had reached almost $10,000,000 Reflective of our record Q1 2021 performance, this measurement reached $11,700,000 With commercial loan growth projected to rebound after a challenging Q1 and a lower cost funding base, we are well positioned to continue the growth in our core profitability and achieve our financial goals for 2021.
At this time, I'll turn it over to Peter Cahill, our Chief Lending Officer for his remarks. Peter?
Thanks, Steve. As outlined in the earnings release, total loans in the Q1 were down $25,000,000 or 1.2%. We did experience the reduction in commercial loans that we talked about in the last earnings call for 2020 Q4. You might recall that we finished 2020 with a very strong quarter. For the Q4 alone, we reported loan growth of around $97,000,000 exclusive of any impact from PPP.
That was a big quarter for us and it came from a combination of both C and I loans and investor real estate loans. We knew at the time, however, that we had a number of loans where our customers notified us of upcoming payoffs, primarily in the investor real estate area. I noted back in January that we see some Q1 prepayments offset by normal loan generation plus the addition of new PPP loans that we had in process, and that's what we had. New loans funded
in the
Q1, exclusive of PPP, approximated $70,000,000 Unfortunately, but again as expected, prepayments of investor real estate loans were a little over $100,000,000 When you add to that some large reductions under lines of credit and the normal amortization of term loans, the result was the negative loan growth that Steve described. We did earn some prepayment penalty income on many of the commercial loan payoffs. Also adding to the payoffs I mentioned was the sale of the guaranteed portion of 4 SBA loans, 7 loans, which totaled around $5,000,000 Fee income related to these sales was mentioned in the release. SBA lending is an area I've talked about on previous calls. We have a small team focused solely on SBA loans and concentrating mainly on 7 loans.
They're off to a great start and I see them exceeding expectations this year. It's a busy quarter, but I'm confident we'll make up the negative loan growth over the next three quarters and we'll report good growth for the year. Our loan pipeline at threethirty one, which is based upon probable funding, has shown steady growth from the end of the 4th quarter. At twelvethirty one, the pipeline totaled $142,000,000 At the end of March, it stood at $209,000,000 That represents growth of 47% and positions us well for the next few months. For comparison, the 12 month average for all of 2020 was $154,000,000 We did project loan funding as well as payoffs looking out 60 days to assist Steve in the finance area with funding.
Just to support this idea of a strong pipeline, I'll mention that we projected funding of $80,000,000 for April May. These fundings will be offset by loan prepayments, which we've forecasted at $22,000,000 So the net positive amount of $58,000,000 will help us make a good dent in getting caught up the plan. I should also mention asset quality. There's a lot of good data in the earnings release, and Pat and Steve touched upon some of it, including the allowance. I'll just reiterate that things continue to look very good.
Nonperforming loans were up a few basis points, but recoveries exceeded charge offs for the quarter. Delinquencies are minimal, I'm happy to report, with past due loans at the end of the quarter around 37 basis points down from where they were at year end. Our deferred loans related to COVID-nineteen are also outlined in the release. Deferred loans at year end had dropped to $37,000,000 or 1.8 percent of the portfolio. At the end of the Q1, deferred loans further declined to $22,000,000 or 1.1%.
We continue to be in close contact with this diversified group of customers, and we're optimistic that the number of deferred loans will continue to shrink. So in summary, I think we had a decent first quarter in lending. We continue to learn to deal with the challenges of working around COVID-nineteen while calling on commercial clients and prospects. We assisted many small businesses in the quarter with PPP loans. We were a little unlucky with the timing of new loans compared to early loan prepayments, but our pipeline in near term funding numbers look good.
Lastly, we believe asset quality is strong and we intend to grow the portfolio as we have in the past and hit our loan growth goal for the year. That's my report for lending for the Q1. I'll turn it over now to Emilio Cooper to discuss deposits. Emilio?
Thanks, Peter. I'm happy to report we are off to an extremely positive start in our deposit side of the business. For 2021, our focus remains consistent and intentional: grow low cost core deposits, improve the mix, lower cost of funds, deliver best in class service and grow fee income. Thanks to great collaboration between the lending, cash management and deposit teams, we are very pleased with the results we have seen for the Q1. We did a fantastic job in the first round of PPP in 2020, so it is no surprise that the team stepped up big time and is doing an even better job in the 2nd round of PPP.
This round of funding certainly had a positive impact on our deposit growth in Q1. Key highlights of our deposit performance for the quarter are as follows: non interest bearing deposits are up $76,000,000 or 18 percent from the end of 2020 interest bearing checking is up $6,500,000 money market and savings are up $14,000,000 time deposits are down 30,000,000 Total deposits have grown nearly $67,000,000 from Q4. Our growth goal for the year is $97,600,000 so we are off to a very strong start compared to GOL. It is important to mention that we do expect to see some reduction in deposit growth as we progress through the year as customers who receive PPP or other stimulus funds put that money to use in the economy. As it relates to our focus on adjusting our mix, we achieved a huge milestone for the bank in Q1.
Non interest bearing balances now represent 25.4 percent of deposits, and time deposits represent just 25.1 percent. This marks a major milestone as our non interest bearing balances now represent a greater percentage of deposits than our time deposit balances. Over the course of the last 12 months, we have increased the percentage of deposits comprised of non interest bearing balances by over 8.5%. While we know the influx of liquidity and impact from our strong performance with PPP accelerated this movement, we believe our investment in our cash management team, business banking, capabilities and strong collaboration between lending and deposits will enable us to retain much of this benefit over time. Our cost of deposits declined to 39 basis points for the 3 months ended March 31, 2021, down from 50 basis points for the December 31, 2020 quarter.
This is a reduction of 99 basis points from Q1 2020. A few factors are the key drivers of this reduction. First, as Steve mentioned, we continue to benefit from the ongoing repricing lower of our CD portfolio. Secondly, the shift in our mix toward more non interest bearing balances and last, our execution in reducing rates paid on existing deposit portfolio products. We do expect to see continued modest improvement in this area in the near term.
As a community bank, we know that personal service is a differentiator that is often hard for larger institutions to replicate. A recent example is what we saw during the initial phase of PPP. To provide an ongoing mechanism for us to measure our delivery in this key area, we launched an initiative to survey our customers on quality of service they received from FirstBank. We are using a net promoter score metric to track and monitor our performance. Early results are very good.
As we gather more time tested data, we look forward to sharing those results with you. As I've mentioned on prior calls, we've also been working on a number of initiatives to improve fee income. We track these at a more granular level than the data that is summarized in the financial charts. As a result, we are able to see positive trends developing in several areas. In summary,
we are off to
a strong start in deposit growth led by non interest bearing deposits. We achieved a milestone in the improvement of our mix in the quarter. We are continuing to reduce our cost of deposits, and we are seeing positive trends developing in net promoter score and fee income growth. All in all, a fabulous start to the year. Back to you, Pat.
Great. Thanks, Emilio. Thanks, Steve and Peter. At this point, I'd like to turn it back to the operator to open things up for the question and answer session.
Our first question today will come from Nick Tucciarelli with Piper Sandler. Please go ahead.
So I wanted to start with expenses. I heard your comments on the accelerated expense in the quarter. But can you help us quantify the impact of the branch consolidations and the produced corporate office space on the occupancy line going forward?
Yes. I mean, some of that was baked in, Nick, when we provided guidance last time around. As I mentioned, there was a specific cost in the Q1 related to some accelerated depreciation and some other things we had to write down as part of a termination of a lease we had for some back office space. And the impact of the savings from the 2 branches that we closed won't sort of fully to funnel in until later this year. I think in one case, the lease runs through August, although we have been able to reallocate the personnel.
The other one is an owned location, so there won't be a rent savings. But depending on how we're able to either redeploy that space or potentially even look at sale of the property, there may be some impact going forward. But I think the biggest piece of it was the lease that we didn't renew, which was roughly $300,000 in annual rental cost plus additional depreciation, maintenance, etcetera. So I think there'll be some nice savings for us as we move forward. That lease expired at the end of March and just one of several areas that we continue to look at on the cost side.
Great. That's very helpful. So I appreciate the positive commentary on loan demand in the coming periods and the big increase in the pipeline since year end. Have the prepayments normalized in April? Or have they remained elevated?
Well, I mean, we're obviously or I guess through April, but that only gets us a month into the quarter. So to try to estimate a trend out of 3 or 4 weeks is a little tricky in the loan prepayment world. I'll turn it over to Peter to see if he can see any specifics so far at the beginning of Q2. But those are things that kind of come in bunches. You have a couple and you don't have any for a while and you have a couple more.
But Peter, anything you'd add to that in terms of trends you're seeing so far?
No. I would say we hope to have normalized. I mentioned our loan funding projections we do for our finance team. And we're projecting for April May. We look at we don't have more than 60 days, but they're projecting payoffs.
So these are prepayments basically of $22,000,000 And we haven't seen anything exceed that number that comes to mind. So I think that's probably a more normalized number, and that's kind of where we are as Pat said 3 weeks in.
Okay. So it's fair to say you expected net growth to be pretty healthy in the Q2 outside of any kind of unnormal activity?
Yes. I mean, we hope so. I think our plan for the year was to grow loans 6%, and we had planned basically a fairly flat Q1 knowing what we're facing. So yes, we plan on making up the small hole we're in and achieving plan for the year.
Okay. Very helpful. And then in terms of funding costs, a really significant reduction year over year. Where do you think that eventually stabilizes?
Yes. I don't know. And maybe it sort of depends on the rate environment and maybe more importantly, that's a competitive environment. But with short term rates seem to be staying low for the foreseeable future and perhaps more importantly, banks dealing with excess liquidity, I don't see there in the short run being a real impetus to drive competitive pressures on the deposit side. I don't see the Fed moving short term rates.
And so as we continue to have term deposits mature, we'll continue to reprice them lower. And Emilio and his team has done a great job looking at our standard rates on deposit products. And I think over the course of the Q1, he moved those lower once or twice as well. So I think it's a little bit here, a little bit there. The magnitude in the impact will start to shrink, but I think we'll continue to see those costs trickle lower over
the next couple of quarters.
Thank you for taking my questions.
Yes. Thank you, Nick.
Next question will come from Bryce Goh with Hovde.
I I
wanted to ask about the SBA business. Obviously, a nice hit here this quarter with fee income. Just curious how consistent those loan sales will be? I mean, it sounds like you've put a little more else behind that effort. Yes.
I mean, listen, I think it's something that won't be as smooth on a quarterly basis as some other lines of business. But as Peter mentioned, having a dedicated centralized team has made a significant difference. And our ability to now funnel those opportunities that we were seeing in the past to a group that is knowledgeable in the process, can keep things moving quickly, get things done faster, make sure all the administrative Is are dotted and Ts across. I mean, all of those, I think, give us optimism for continued good results in that area as we move forward. But Peter, anything you'd want to add there?
Well, like the just that their pipeline is very strong. I mean, the SBA has an attractive product out there now, as you may know, on the 7 side, guarantees up to 90%, and they're waiving application fees from the borrowers. So that's a selling point that we've been trying to utilize whenever possible. So yes, I mean, having the team there that can process these things and get them across the finish line is great. Previously, we had had your average commercial RM trying to respond to SBA needs, and it's got just kind of cumbersome.
Deals were spread out all over 20 odd RMs, and now they're focused where the RMs make the referral to this team, and they do underwriting and processing and sale of the guarantee portion. So it's much more efficient, I think. And the RMs are more apt to make a referral than get bogged down trying to drag a deal through to approval.
Yes. That's a good point, Frank. I would just add to that, and this is, I think, probably speculation at this point. But if you think about what's going to be happening in the small business world over the next 12 to 24 months, right, a lot of companies that obviously had challenges in 2020 are going to be looking for financing this year and next year based on historical results that won't look great, balance sheets that probably get damaged a little bit. And so I think the SBA may be a good place for some folks that were able to survive the storm, but certainly took some damage and probably need a year or 2 of better results to get back to a point where maybe they don't need SBA support.
So do think you're going to see higher percentage of small business financing happening through the SBA, partly because of the financial results they're going to be trying to use to get financing. And the fact that the fees have been waived makes it a much more attractive option for them as well. So I just think that's going to be a bigger area of focus across banking over the next year or 2, and I think we should be well positioned to benefit from that as well. That's good insight, Pat. I appreciate it.
Wanted to kind of move on to capital and use of capital. Maybe you can provide us an update on buyback activity for the Q1. It looked to be a little wider than maybe we saw in the first half of last year. So any commentary around kind of appetite to buy back the stock, especially with it now below tangible book value? Yes.
I think there certainly is appetite. As I'm sure you're aware, when you set up these 10b5 programs, you don't always have as much discretion as you like in terms of periods of blackout and instructions you provide that can't be changed during the periods of blackout and all sorts of rules about their inability to buy, to start off the trading day or to close out the trading day. So sometimes execution can be a little bit more challenging than you'd like. But as it relates, I think generally to your question, do we think it's an attractive investment to buy our stock back at or below book value? The answer is absolutely yes.
It's just sometimes the execution doesn't go as quickly as you might like. Okay. That's fair. And then one kind of nitpicky model question. You guys have called out some level of prepayment activity here.
In the Q2, any kind of guidance in terms of what prepayment fees look like tied to that or just generally for the second quarter as we think about margin? Yes. I mean, I would say, Steve alluded to it in his remarks, we've kind of budgeted $330,000 a quarter, and that number is pretty significant standard deviation, right? Some quarters, it's $100,000 and some quarters like Q1, it was $670,000 But that number probably will end up doing better than that this year just because of how strong the Q1 was. But prepayment income is the kind of thing where if you have a good Q1 and prepayment income when good might be the wrong word there.
But if you have a lot of prepayment income in the Q1, that doesn't mean you'll have a lot in the second and third. Chances are it probably means it will be down in the second and third quarter. But over the course of the year, I don't see any reason why the average of $330,000,000 wouldn't still be the number we'd be looking at, at this point. Okay. Thanks for the comments.
Appreciate it. Yes. Thank you, Brett.
Our next question will come from Eric Zwick with Boenning and Scattergood. Please go ahead.
Good morning, guys.
Good morning, Eric.
Maybe I'll just follow-up a kind of a follow on question to Bryce's last question there about the margin and thinking about kind of the core margin first. I think last quarter you mentioned excluding the impact of PPP, the core margin was about 3.4%. The fees from PPP this quarter were $1,600,000 So if I back that out, it gets you around 3.3% or so. So you've mentioned the opportunities to continue bringing down the deposit costs of the CDE portfolio, specifically presenting an ongoing opportunity. Just curious about the trajectory of the core margin from here at this point?
Well, I think the trajectory of the core margin will improve. I think you hit on one of the variables in the margin, right, the PPP impact. We also had elevated prepayment fees that flow through the margin. So that bumped it up a little bit in Q1 as well. But if you kind of stripped all that out, I think loan yields will hopefully stay where they are, maybe come down a little bit.
Obviously, what happens in the long term section of the rate market will impact that to some degree. But as I said, we can continue to move deposit costs down. So I think if you kind of stripped out prepayment penalty income, PPP income, I think that core margin would be relatively stable, maybe get a little bit better.
Hey, Eric. This is Steve. I think our margin net core margin is probably closer to $340,000,000 I mean, just make sure for modeling purposes, you're also I'm sure you're backing up the PPP average balances. And so we see our margin just a little bit higher than that quarter of fleet 30 after we back out the average balance of PPP loans.
Got it. That makes sense. Thanks for the clarification there. And then just in terms of thinking about the kind of the all in and reported margin going forward, I know you mentioned about $4,800,000 in remaining unamortized fees. Curious if you could break that out into what is kind of related to the 2020 PPP originations and 2021 as I think about kind of the timing as those flow through?
Steve, if you have that breakout, I could take a guess or
if you have the numbers, Andy.
I don't have the numbers directly in front of me, but clearly, it's all obviously predicated, I guess, on some of the forgiveness. If you take a look at the amortization of round 1, it's been close to $500,000 a month or about $1,500,000 a quarter. And then it's just impacted by the loan forgiveness, obviously, around 2 with the $101,000,000 as we're still getting our traction there. It's a less type of run rate based on a 5 year type of payout as opposed to 2 with the with Round 1.
Yes. I mean, I would just add to that, Eric. I think if you looked at where we were at year end, I think we had about $3,000,000 in unamortized PPP fees from the 2020 loans, and we had $1,600,000 come into income during Q1. That was almost exclusively tied to that portfolio. So call it $1,500,000 left from that group, but then there's some loans that we made that we haven't applied for forgiveness or for the fee yet.
So I think the total of remaining PPP fees is probably closer to $6,000,000 and I'd say 3 quarters of that is going to come from loans we've made this year in 2021 and the quarter, it's remainder of last year's loans.
Okay, great. That's helpful. And then last one for me, switching gears to credit. You mentioned in the prepared remarks that most of the provision, the kind of negative provision this quarter was driven due to lower balances and really haven't had any release for an improved economic outlook or any other kind of factors improving in your loan portfolio. So as we think about the opportunity for additional reserve leases go forward, how do you feel or where do you feel kind of the equilibrium level for the reserve might be if we get back to a more normal economy with kind of steady growth and minimal credit risk looking forward?
Yes. It's a good question. It's a little hard to speculate because you don't really know what that new normal economy looks like. But I'd say one way to think about it is if you look at what we set aside last year and provisioned, it's probably $5,500,000 $6,000,000 more than what we would have done in a typical year. Now is all of that going to come back out again?
I don't know, right? I mean our allowance model is going to dictate our overall level of the allowance, which will ultimately drive provisioning together with net charge offs or recovery. But there obviously was a lot of additional provisioning last year that so far hasn't translated into significant additional credit problems. So is it fair to think that some of that, if the economy continues to improve, would come out? I think that seems like a potential scenario that could play out.
But we're just going to have to see what the data tells us and what the analysis of the results is.
Appreciate the thoughts there. Thanks for taking my questions today.
Great. Thank you,
Eric.
Our next question today will come from Christopher Key with D. A. Davidson. Please go ahead.
Hey, good morning, gentlemen. How are you?
Good morning, Chris. How are you doing?
Good. Good. Hey, so just looking at the C and I portfolio, what portion of the portfolio is related to lines of credit? And can you share where about the utilization rates are today?
Yes. That's a good question. I don't know, Peter, is that data you have handy? Or it might be something we'll need to break out for next time, but
It's really not something I have handy, utilization rates.
That's something we have to break out for next time, I think.
That's okay. No worries. And then can I just C
and I yes, just as the numbers show, C and I is about 20% to 22% of the portfolio? And that includes PPP, you'll forget. So the number is probably a little higher than it may normally be. The utilization rates, I just don't have right now.
I would say anecdotally, we haven't seen, Chris, a significant change, but we can we'll get some data to support that.
Okay. Appreciate it. And then can I just confirm that the guidance for 6% for the year, is that excluding PPP loans?
Yes. I guess you'd have to click at 6 percent. I think of it more
as Oh.
And we what did we say, Peter, dollars 120,000,000 in net non PPP loan growth for the year?
Yes. Yes. That does exclude PPP. Yes. We said $120,000,000 over what was it, roughly $2,000,000,000 at year end.
So that's 96%.
Got it. That's helpful. And then I guess just turning to the margin, you made some commentary around the yield, which I appreciate. I guess I'm just curious, overall, where loan yields where the average loan yield is coming on today for new
loans? Yes, it really depends on the type of loan. I think in the investor real estate segment, you're probably seeing things plus or minus really strong credits, you're probably 3.5% or a little less and good credits, but maybe not as per senior, probably closer to 4% and probably getting better than that on the C and I in terms of the term loans and things. But Peter, I know you track for the monthly Board meeting, the weighted average yield on new loans, I don't know if that's data you have handy or not.
Well, that's those numbers relate to, yes, new loans can be put on for the month. I don't have it with me right now. But the numbers you described are what we're seeing, roughly mid-3s to 4 on average.
Got it. That's helpful.
Thank you. And then just last one for me. I noticed that avid securities had declined. And is that just a product of payoffs kind of over weighing the ability to find new paper? Or is that more of a deliberate reduction?
Yes. Let me maybe ask that question again, Chris. I'm not sure I was following you there.
Just looking at average securities, I noticed that it had declined. And I'm curious if pay downs in the securities portfolio drove that or if it was a deliberate reduction in the securities portfolio. And I guess what I'm really getting at is, if we can maybe kind of get an understanding of what direction the Abbott Securities portfolio might go over the next few quarters?
Yes. I mean, I think we've been trying to put some excess cash to work in the securities portfolio over the last month or so, but I would also say we're doing it cautiously, right? I mean, there's obviously concern about inflation and what that might do to the long end of the yield curve and what that could do to the market value of securities purchased today. So I'd say we're taking a cautious approach, but obviously, in an environment where you're not earning much on your cash, it's there's a cost to sitting on the sidelines too. So we're trying to strike the right balance.
I think at the end of the day, if our excess cash position remains elevated, we'll be a net buyer here and there, but we're not looking to put $100,000,000 of work in the bond market right now.
There are no further questions. This will conclude our question and answer session. I'd like to turn the conference back over to Patrick Ryan for any closing remarks.
Great. Thanks. I'd just like to thank everybody that took the time to listen in today, and we look forward to reconnecting with folks after the Q2. So thanks, everyone.