Welcome to the First Bank First Quarter 2021 earnings call. All participants will be in listen-only mode. Should you need assistance, please read more conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, please press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I'd 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 first quarter 2021 earnings call. I'm joined today by Steve Cartman, 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-K for the year ended December 31st, 2020, filed with the FDIC. Patrick, 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 continued to move lower, pushing our net interest margin higher. Our non-interest income categories all came in above budget for the first quarter. Expenses looked a little higher than our guidance from last quarter, but those numbers also included over $300,000 in accelerated expense tied to consolidation of some of our back office space. Our asset quality metrics continued to improve. Delinquencies declined, deferrals declined, and we saw net recoveries during the quarter. PPP production in 2021 has been stronger than expected. We have funded over $100 million in new PPP loans so far this year.
PPP income of $1.6 million did help during the quarter, and we expect approximately $6 million in additional PPP fees going forward. We did not use a 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. To misquote Tom Cruise in 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 costs going forward, and our loan pipeline remains very healthy. 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 Cartman, our CFO, to discuss additional financial details for the first quarter 2021 results. Steve?
Thanks, Patrick. For the three months ended March 31st, 2021, we earned $9.7 million in net income, or $0.49 per diluted share. That compares to $3.2 million or $0.16 per diluted share for the first quarter of 2020. The factors contributing to our record profitability included a credit to the provision for loan losses, increased non-interest income, an increasing net interest margin and controlled non-interest expense growth, which contributed to an efficiency ratio of below 50% for the first quarter of 2021. After finishing 2020 with strong growth, our loan portfolio in the first quarter, excluding PPP loans, declined approximately $82 million due primarily to loan prepayments. As a result, in the first quarter of 2021, there was a credit to the provision for loan losses of about $1.1 million 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%. Our allowance for loan losses as a percentage of non-performing loans was 214.74%, a strong coverage ratio. In the first quarter of 2021, total non-interest income totaled $2.3 million compared to $1.2 million for the same quarter in 2020, an increase of $1.1 million 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- Q1 2020. 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 first quarter 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 3/31/2020, declined to 25% of deposits just a year later. From the first quarter of 2020 through the first quarter 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 3/31/2021, an over 1% decline from 3/31/2020. Factoring in non-interest-bearing deposit balances, our overall cost of deposits was only 39 basis points for the three months ended March 31st, 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% at 3/31/2021, a notable achievement when considering that just a year ago, non-interest-bearing deposits were 16.9% of total deposits. Our tax equivalent net interest margin, which bottomed out at the end of the second quarter 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 points improvement over the last nine 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-recurring items such as merger-related expenses, for example. Pre-provision net revenue at the end of Q1 of 2020 was $7.2 million. By the end of 2020, pre-provision net revenue had reached almost $10 million. Reflective of our record Q1 2021 performance, this measurement reached $11.7 million. With commercial loan growth projected to rebound after a challenging first quarter 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 first quarter were down $25 million, or 1.2%. We did experience the reduction in commercial loans that we talked about in the last earnings call for 2020's fourth quarter. You might recall that we finished 2020 with a very strong quarter. For the fourth quarter alone, we reported loan growth of around $97 million, exclusive of any impact from PPP. That was a big quarter for us, and it came from a combination of both C&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'd see some first quarter prepayments offset by normal loan generation, plus the addition of new PPP loans that we had in process. That's what we had. New loans funded in the first quarter, exclusive of PPP, approximated $70 million. Unfortunately, but again as expected, prepayments of investor real estate loans were a little over $100 million. 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 four SBA loans, 7(a) loans, which total around $5 million. 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(a) loans. They're off to a great start, and I see them exceeding expectations this year. It was 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 3/31, which is based upon probable funding, has shown steady growth from the end of the fourth quarter. At 12/31, the pipeline totaled $142 million. At the end of March, it stood at $209 million. 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 million.
We did project loan funding as well as payoffs looking out 60 days to assist Steve and the finance area with funding. Just to support this idea of a strong pipeline, I'll mention that we projected funding of $80 million for April and May. These fundings will be offset by loan prepayments, which was forecasted at $22 million. The net positive amount of $58 million will help us make a good dent in getting caught up to plan. I should also mention asset quality. There's a lot of good data in the earnings release, and Patrick and Steve touched upon some of it, including the allowance. I'll just reiterate that things continue to look very good. Non-performing 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-19 are also outlined in the release. Deferred loans at year-end had dropped to $37 million or 1.8% of the portfolio. At the end of the first quarter, deferred loans further declined to $22 million 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. 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-19 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. Our pipeline and 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 first quarter. 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 first quarter. 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 second 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 million or 18% from the end of 2020. Interest-bearing checking is up $6.5 Million. Money market and savings are up $14 million. Time deposits are down $30 million. Total deposits have grown nearly $67 million from Q4. Our growth goal for the year is $97.6 million. We are off to a very strong start compared to goal. 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% of deposits, and time deposits represent just 25.1%.
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 three months ended March 31st, 2021, down from 50 basis points for the December 31st, 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. 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 the quality of service they receive from First Bank. 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, Patrick.
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.
We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question today will come from Nick Cucharale with Piper Sandler. Please go ahead.
I wanted to start with expenses. I heard your comments on the accelerated expense in the quarter. Can you help us quantify the impact of the branch consolidations and the reduced corporate office space on the occupancy line going forward?
Yeah. Some of that was baked in, Nick, when we provided guidance last time around. As I mentioned, there was a specific cost in the first quarter 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. The impact of the savings from the two branches that we closed won't sort of fully 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. Depending on how we're able to either redeploy that space or potentially even look at a sale of the property, there may be some impact going forward.
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, et cetera. I think there'll be some nice savings for us as we move forward. That lease expired at the end of March and it's just one of several areas that we continue to look at on the cost side.
Great. That's very helpful. 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?
We're obviously, or I guess through April, but that only gets us a month into the quarter. To try to estimate a trend out of three or four weeks is a little tricky in the loan prepayment world. I'll turn it over to Peter Cahill to see if he can see anything specific so far at the beginning of Q2. Those are things that kind of come in bunches. You have a couple of them, you don't have any for a while, and then you have a couple more. Peter Cahill, anything you'd add to that in terms of trends you're seeing so far?
No, I would say we hope they've normalized. I mentioned our loan funding projections we do for our finance team, and we're projecting for April and May. You look at all it's got more than 60 days, but we're projecting these are prepayments basically of $22 million. We haven't seen anything.
See that number that comes to mind. I think that's probably a more normalized number, and that's kind of where we are as that's at three weeks in.
It's fair to say you're expecting that growth to be pretty healthy in the second quarter outside of any kind of abnormal activity?
Yeah. 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 first quarter knowing what we're facing. Yeah, we plan on making up the small hole we're in and achieving plan for the year.
Okay. Very helpful. In terms of funding costs, a really significant reduction year-over-year. Where do you think that eventually stabilizes?
Yeah. I don't know, Nick. It sort of depends on the rate environment and maybe more importantly, that the competitive environment. With short-term rates, it seem to be staying low for the foreseeable future. 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. As we continue to have term deposits mature, we'll continue to reprice them lower. Emilio and his team have done a great job looking at our standard rates on deposit products. I think over the course of the first quarter, he moved those lower once or twice as well. I think it's a little bit here, a little bit there.
The magnitude and 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.
Yeah. Thank you, Nick.
Next question will come from Bryce Rowe with Hovde. Please go ahead.
Thanks. Good morning.
Morning, Bryce.
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 oomph behind that effort.
Yeah, listen, I think it's something that won't be as smooth on a quarterly basis as some other lines of business. As Peter mentioned, having a dedicated centralized team has made a significant difference. 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 I's are dotted and T's are crossed. I mean, all of those, I think give us optimism for continued good results in that area as we move forward. Peter, anything you'd want to add there?
Well, I'd say, 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(a) side, guarantees up to 90%, and they're waiving application fees from the borrower. That's a selling point that we've been trying to utilize whenever possible. Yeah, having a team there who 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 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 the underwriting and processing and sale of the guarantee portion. It's much more efficient, I think.
The RMs are more apt to make a referral than get bogged down trying to drag a deal through to approval.
Yeah. That's a good point, Bryce Rowe. 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- 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. I think the SBA may be a good place for some folks that were able to survive the storm. Certainly took some damage and probably need a year or two of better results to get back to a point where maybe they don't need SBA support.
I do think you're going to see a 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. The fact that the fees have been waived makes it a much more attractive option for them as well. I just think that's going to be a bigger area of focus across banking over the next year or two. I think we should be well-positioned to benefit from that as well.
That's good insight, Patrick. Appreciate it. Wanted to move on to capital and use of capital. Maybe you can provide us an update on buyback activity for the first quarter. It looked to be a little lighter than maybe we saw in the first half of last year. Any commentary around appetite to buy back the stock, especially with it now below tangible book value?
Yeah, I think there certainly is appetite, as I'm sure you're aware. When you set up these Rule 10b5-1 trading plans 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 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. Sometimes execution can be a little bit more challenging than you'd like. 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. One nitpicky model question. You guys have called out some level of prepayment activity here in the second quarter. 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?
Yeah. I would say, Steve alluded to it in his remarks. We kind of budgeted $330,000 a quarter, that number is pretty significant standard deviation, right? Some quarters it's $100,000 some quarters, like first quarter, it was $670,000. That number probably will end up doing better than that this year just because of how strong the first quarter was. Prepayment income is the kind of thing where if you have a good first quarter prepayment income is good, might be the wrong word there. If you have a lot of prepayment income in the first quarter, that doesn't mean you'll have a lot in the second and third. Chances are it probably means it'll be down in the second and third quarter. Over the course of the year, I don't see any reason why the average of 330 wouldn't still be the number we'd be looking at at this point.
Okay. Thanks for the comments. Appreciate it.
Yeah. Thank you, Bryce.
The next question will come from Eric Wick with Raymond James. Please go ahead.
Good morning, guys.
Good morning, Eric.
Maybe I'll just follow up with kind of a follow-on question to Bryce's last question there about the margin. Thinking about 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 $1.6 million. If I back that out, gets you around 3.3% or so. You've mentioned the opportunity to continue bringing down the deposit cost of the CD portfolio specifically presenting an ongoing opportunity. Just curious about the trajectory of the core margin from here at this point.
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. That bumped it up a little bit in Q1 as well. If you kind of strip all that out, I think loan yields will hopefully stay where they are and maybe come down a little bit. Obviously, what happens in the long-term section of the rate market will impact that to some degree. As I indicated, I think we can continue to move deposit costs down. I think if you kind of strip out prepayment penalty income, PPP income, I think that core margin would be relatively stable and maybe get a little bit better.
Hey, Eric, this is Steve. I think our margin, that core margin's probably closer to 340. Just make sure for modeling purposes I'm sure you're backing out the PPP average balances. We see our margin just a little bit higher than that core of 330 after we back out the average balance of PPP loans.
Got it. That makes sense. Thanks for the clarification there. Then just in terms of thinking about the kind of all-in and reported margin going forward, I know you mentioned about $4.8 million 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.
Yeah. Steve, if you have that breakout, I can take a guess or if you have the numbers handy.
I don't have the numbers directly in front of me, but clearly it's all obviously predicated, I guess, on some forgiveness. If you take a look at the amortization of round one, it's been close to $500,000 a month or about $1.5 million a quarter. It's just impacted by the level of forgiveness, obviously. Round two with the $101 million, as we're still getting our traction there. It's a less type of run rate based on a five-year type of payout as opposed to two with round one.
Yeah. 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 million in unamortized PPP fees from the 2020 loans, and we had a $1.6 million come into income during Q1. That was almost exclusively tied to that portfolio. Call it a million and a half left from that group. There's some loans that we've made that we haven't applied for forgiveness or for the fee yet. I think the total of remaining PPP fees is probably closer to $6 million, and I'd say three-quarters of that is going to come from loans we've made this year in 2021, and a quarter is the remainder of last year's loans.
Okay, great. That's helpful. 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. As we think about the opportunity for additional reserve releases going 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?
Yeah. 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. I'd say one way to think about it, Eric, is if you look at what we set aside last year and provisioned. It's probably $5.5 million, $6 million 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? Our allowance model's going to dictate our overall level of the allowance, which will ultimately drive provisioning together with net charge-offs or recovery. There obviously was a lot of additional provisioning last year that so far hasn't translated into significant additional credit problems. It's 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. We're just going to have to see what the data tells us and what the allowance model tells us.
Appreciate the thoughts there. Thanks for taking my questions today.
Yeah, great. Thank you, Eric.
If you'd like to ask a question, it is star then one. Our next question today will come from Christopher Lynch with D.A. Davidson. Please go ahead.
Hey, good morning, gentlemen. How are you?
Good morning, Chris. How are you doing?
Good. Hey, just looking at the C&I portfolio, what portion of the portfolio is related to lines of credit? Can you share where about the utilization rates are today?
Yeah, that's a good question. I don't know, Peter, is that data you have handy, or it might be something we will need to break out for next time.
It's really not something I have handy, utilization rates. That's something we'd have to break out for next time, I think.
That's okay. No worries.
C&I, just as the numbers show, C&I's about 20%-22% of the portfolio. That includes PPP, don't forget. The number's probably a little higher than it may normally be. Utilization rates I just don't have right now.
Yeah. I would say anecdotally, we haven't seen, Christopher, a significant change, but we'll get some data to support that.
Okay. Appreciate it. Can I just confirm that the guidance for 6% for the year, is that excluding PPP loans?
Yeah. I guess you'd have to clarify. The 6%, I think of it more as dollars. What did we say, Peter? $120 million in net non-PPP loan growth for the year?
Yeah. That does exclude PPP. Yeah, we said $120 over, what was it, roughly $2 billion at year-end. That's 6%.
Got it. That's helpful. Thank you. I guess just turning to the margin. You made some commentary around the yields, 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?
Yeah. 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 three and a half or a little less. Good credits, but maybe not as pristine, you're probably closer to 4%. You're probably doing better than that on the C&I in terms of the term loans and things. Peter, I know you track for the monthly board meetings, the weighted average yield on new loans. I don't know if that's data you have handy or not.
Those numbers relate to, yeah, new loans that we put on for the month. I don't have it with me right now. The numbers you described are what we're seeing, roughly mid threes to four on average.
Got it. That's helpful. Thank you. Just last one for me. I noticed the average securities had declined, and is that just a product of payoffs kind of overlaying the ability to find new paper? Or is that more of a deliberate reduction?
Yeah. Let me maybe ask that question again, Christopher. 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? I guess what I'm really getting at is if we can maybe kind of get an understanding of what direction the average securities portfolio might go over the next few quarters?
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? 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. I'd say we're taking a cautious approach, but obviously in an environment where you're not earning much on your cash, there's a cost to sitting on the sidelines, too. 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. We're not looking to put hundreds of millions to work in the bond market right now.
Got it. Thank you so much. Thanks for taking my questions.
Great. Thank you, Christopher.
Again, if you have a question, you hit star then one. There being 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'll look forward to reconnecting with folks after the second quarter. Thanks, everyone.