Good day, and thank you for standing by. Welcome to the Fulton Financial first quarter 2023 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised.
To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Matt Jozwiak, Director of Investor Relations. Please go ahead.
Good morning, and thanks for joining us for Fulton Financial Corporation's conference call and webcast to discuss our earnings for the first quarter, which ended March 31st, 2023. Your host for today's conference call is Curt Myers, Chairman and Chief Executive Officer. Joining Curt is Mark McCollom, Chief Financial Officer. Our comments today will refer to the financial information and related slide presentation included with our earnings announcement, which we released yesterday afternoon.
These documents can be found on our website at fult.com by clicking on Investor Relations and then on News. The slides can also be found on the presentations page under the Investor Relations tab on our website. On this call, representatives of Fulton may make forward-looking statements with respect to Fulton's financial condition, results of operations, and business.
These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, and actual results could differ materially. Please refer to the safe harbor statement on forward-looking statements in our earnings release and on slide two of today's presentation for additional information regarding these risks, uncertainties, and other factors. Fulton undertakes no obligation other than as required by law to update or revise any forward-looking statements.
In discussing Fulton's performance, representatives of Fulton may refer to certain non-GAAP financial measures. Please refer to the supplemental financial information included with Fulton's earnings announcement released yesterday in slides 15 through 19 of today's presentation for a reconciliation of those non-GAAP financial measures to the most comparable GAAP measures. Now, I'd like to turn the call over to your host, Curt Myers.
Well, thanks, Matt, and good morning, everyone. Today, I'll provide some high-level thoughts on the banking industry and our business strategy. I'll also give you some perspectives on our balance sheet, liquidity, credit quality, and the impact of these items on our first quarter earnings. Mark will share more details on our financial results and step through our revised outlook for the remainder of 2023. After our prepared remarks, we'll be happy to take any questions you may have.
Fulton's business strategy is built upon a community banking model, which focuses on taking local deposits, lending locally, and banking all segments of our community. The events of the past few weeks have brought into sharp focus the benefits of our model and the value that can be created through cultivating lasting customer relationships.
On that point, I wanna thank our team for the remarkable way that they've performed this past quarter. The team went above and beyond to truly make banking personal. These past few weeks, we reached out to and talked with many of our customers. We talked to them about our financial position and our stability. Our customer base continued to expand. We now serve more than 507,000 households. Our industry is built on trust.
The Fulton Bank team has been earning the trust of our customers for 141 years. With a long-term strategy, at times it is necessary to make decisions which may impact near-term results in order to strengthen the balance sheet, improve our liquidity, support our customers, and position our company for future success. Let me talk first about our funding and the balance sheet.
You can see on slide 13 that we expanded the disclosures on our deposit base. We have approximately 734,000 accounts with an average life of 12 years on a balance weighted basis. This highlights the loyalty, longevity, and value created by our stable customer base. You will also notice on this slide that we bolster our deposit funding by approving the utilization of broker deposits in the quarter.
This was done prior to the market disruption as we focused on slowing the increase in our loan-to-deposit ratio to maintain our internal target of 95%-105% and to make sure we can continue to meet our customers' borrowing needs. Our balance sheet was also strengthened during the quarter as our tangible common equity ratio improved, and our liquidity position increased to over $8.4 billion in committed funds.
Early in the quarter, we were buying back shares and utilized $40 million of our $100 million repurchase authorization. In total, we repurchased about 2.4 million shares during the quarter. We paused that program in early March. Turning to credit, we have provided more detail on our loan portfolio and specifically on our office portfolio on slides six and seven . As noted last quarter, we performed a comprehensive review of all real estate loans, casting a wide net to include any loans with an office component. Under this approach, last quarter we reported balances of $1.05 billion.
On slides six and seven , we isolated our discrete office-only portfolio, which includes all loans with a primary revenue stream from office rents. As you can see, this segment is a diversified and granular portfolio, originated consistently over time. Spread throughout the footprint and with very limited large exposures.
As we discussed last quarter, we have a large office loan on non-accrual status, which was charged down in the fourth quarter. Given the challenged office environment, we have further charged down this loan. Here are a few more details on this credit. The loan was originated in 2019 in the D.C. suburbs. The original loan balance was $42 million, with a loan to value at origination of 72%. COVID impacted the rent roll and an underlying ground lease further impacts the marketability of this product, property.
We have decided to further charge down this loan to enable a flexible workout strategy to maximize value. The remaining book balance of this loan is $8 million. Looking at our overall credit, net charge-offs of $14 million were driven by the $13.3 million write down on the loan that I just discussed.
Our remaining loan portfolio credit performance has been in line with our expectations. NPAs, NPLs and loan delinquency have all declined for the past two quarters. Our higher provision for credit losses this quarter is due to changes in macroeconomic factors and our loan growth. Moving to our quarterly results, our first quarter earnings were $0.39 per share. Pre-provision net revenue or PPNR for the first quarter was approximately $108 million, an increase of 51% year-over-year.
This was a result of asset growth and net interest margin expansion. During the first quarter, we saw deposit growth of $667 million and loan growth of $391 million. Fee income declined quarter, linked-quarter and year-over-year as interest rates and seasonal declines impacted several of our business units.
We managed expenses prudently during the period as expenses declined $9 million from the fourth quarter. While our first quarter earnings did not meet our overall expectations, we took the necessary steps to strengthen the balance sheet, improve our liquidity, support our customers and position the company for future success. Now I'll turn the call over to Mark to discuss our first quarter financial performance and our 2023 outlook in more detail.
Thank you, Curt. Good morning to everyone on the call. Unless I note otherwise, the quarterly comparisons I will discuss are with the fourth quarter of 2022. The loan and deposit growth numbers I will be referencing are annualized percentages on a linked quarter basis. Starting on slide 3, operating earnings per diluted share this quarter were $0.39 on operating net income available to common shareholders of $65.8 million.
This compares to $0.48 of operating EPS in the fourth quarter of 2022. Those operating results in the fourth quarter excluded $2.4 million of merger-related charges and intangible amortization recorded during that quarter for our acquisition of Prudential Bancorp. Moving to the balance sheet, loan growth for the quarter was $391 million or 8% annualized.
This is down from $584 million or a 12% annualized growth rate that we saw in the fourth quarter of 2022. This percentage decline is in line with what we typically see moving from the fourth quarter to the first quarter. Commercial loans were $238 million of this increase, or about 60% of our overall growth. C&I lending grew $123 million across a diversified customer base. Commercial real estate lending grew $53 million or 3% annualized. Consumer lending produced growth of $153 million or 9% during the quarter.
Mortgage lending was still the majority of this consumer loan growth and increased to $144 million, with most of this growth coming from adjustable-rate products. Total deposits increased $667 million during the quarter or 13% annualized.
We did see a meaningful shift in our deposit mix during the quarter as our non-interest-bearing DDA balances declined approximately $600 million during the period. Almost all of this shift in deposit mix occurred earlier in the quarter as our non-interest-bearing deposit balances were essentially flat from the end of February to the end of March. We increased our deposit pricing across several products throughout the quarter, and we also acquired broker deposits early in the quarter, well ahead of the sector-wide concerns over liquidity.
Our loan-to-deposit ratio ended the quarter at 97%, down from 98.2% at year-end. Our investment portfolio declined modestly during the quarter, closing at $3.95 billion. Putting together those balance sheet trends on slide four, net interest income was $216 million, a $10 million decrease linked quarter.
Our net interest margin for the quarter was 3.53% versus 3.69% in the fourth quarter. Loan yields expanded 41 basis points during the period, increasing to 5.21% versus 4.8% last quarter. Our total cost of deposits increased 40 basis points to 82 basis points during the quarter. Cycle to date, our total deposit beta is 16% cumulatively. We had previously communicated to you that our deposit beta would accelerate in 2023.
With a first quarter beta higher than we anticipated due to mix shift away from DDAs, we now believe a through the cycle deposit beta of approximately 35% is more likely. Turning to credit quality on slide 5, our NPLs declined $7 million during the quarter, which led to our NPL to loans ratio improving from 85 basis points at year-end to 80 basis points at March 31st.
Overall loan delinquency was lower to 1.27% at March 31st versus 1.39% at year-end. Despite these positive trends, changes to our macroeconomic outlook and loan growth during the period led to the increase in our provision for credit losses this quarter. Our allowance for credit loss as a percentage of loans increased from 1.33% of loans at year-end to 1.35% at March 31st.
Turning to slide eight. Wealth management revenues were up modestly from the prior quarter at $18.1 million. We continue to build out this business line with new hires. The market value of assets under management and administration increased to $14.2 billion at March 31st, compared to $13.5 billion at year-end.
Commercial banking fees declined $1.1 million to $17.5 million, with seasonal declines in most categories. Year-over-year, commercial banking fees increased $1.5 million or 9%. Consumer banking fees declined $0.9 million to $11.2 million, led by decreases in overdraft fees as a result of changes to our overdraft programs. Mortgage banking revenues declined as expected and were driven by a decline in both mortgage loan sales as well as a decrease in gain on sale spreads.
Moving to slide nine. Non-interest expenses were approximately $160 million in the first quarter, a $9 million decline linked-quarter. As we noted last quarter, several items contributed to the linked-quarter decline. Those included higher incentive compensation accruals in the fourth quarter of 2022.
Merge related charges in the fourth quarter of 2022, which did not repeat in the first quarter. Branch closure costs in the fourth quarter of 2022 for the closure of five branches this year, one of which occurred in March, with the remaining four occurring later this month. Lower legal and contingent liability accruals in the first quarter of 2023. Lastly, run rate expenses from the 2022 acquisition of Prudential Bancorp now being fully recognized.
Turning to slides 10 through 12. Given recent industry events, we're providing you with expanded metrics and a discussion on capital and liquidity this quarter. First, on slide 10. As of March 31st, we maintained solid cushions over the regulatory minimums for all of our regulatory capital ratios. Our tangible common equity ratio was 7% at year-end, up from 6.9%.
Sorry, at quarter end, up from 6.9% last quarter. Included in tangible common equity is the accumulated other comprehensive loss on the available for sale portion of our investment portfolio and derivatives. This totaled $282 million after tax on a total AFS portfolio of $2.6 billion. Including the loss on our held to maturity investments, which was $94 million after tax on a held to maturity portfolio of $1.3 billion, our tangible common equity ratio would still be 6.7% at March 31st, which represents over $1.7 billion in tangible capital.
Despite share repurchases during the quarter, a combination of net income and an improvement in accumulated other comprehensive loss during the period combined to produce linked quarter growth of 3.3% in our tangible book value per share.
Slide 12 provides you with an expanded look at our liquidity profile. When combining cash, committed and available FHLB capacity, the Fed discount window, and unencumbered securities available to pledge under the Fed's Bank Term Funding Program, our committed liquidity is $8.4 billion at March 31st. We maintain over $2.5 billion in Fed funds lines with other institutions. Our uninsured deposits totaled $6.7 billion at March 31st, or 31.3% of total deposits.
Excluding municipal deposits for which we hold collateral, this balance drops to $4.6 billion or 21.4% of total deposits. Some investors have started to focus on a liquidity coverage ratio, which takes committed available sources of liquidity divided by uninsured deposits less collateral held.
Our calculation of this non-GAAP metric at March 31st shows coverage of 185%. We have also provided you with details of our deposit portfolio shown on slide 13. As Curt noted, our deposits are granular with an average balance per account of $29,000 and have an average life of 12 years. On slide 14, we are providing our updated guidance for 2023. Our guidance now assumes a total of one additional 25 basis point increase to Fed Funds occurring in May, followed by constant rates through the balance of the year.
Based on this rate outlook, our 2023 guidance is as follows: We expect our net interest income on a non-FTE basis to be in the range of $850 million-$870 million. We expect our provision for credit losses to be in the range of $55 million-$70 million. We expect our non-interest income, excluding securities gains, to be in the range of $220 million-$230 million. We expect non-interest expenses to be in the range of $645 million-$660 million for the year. Lastly, we expect our effective tax rate to be in the range of 18.5% ± for the year.
Lastly, as Curt noted, PPNR for the first quarter was approximately $108 million, an increase of 51% year-over-year as a result of earning asset growth and net interest margin expansion over the past year. With that one, I'll turn the call over to the operator for questions. Gigi.
Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Daniel Tamayo from Raymond James.
Hey, good morning, everybody.
Good morning, Dan.
First of all, thanks for all the additional disclosures this quarter. I know we all appreciate that. I guess my first question just around the net interest income guidance. Obviously it's a big decline from last quarter, and I appreciate the color that you gave in your prepared remarks there, Mark. You know, I guess if we could just get a little bit more detail on the driver there, you know. How much of it is margin? How much of it is balance sheet? If you're able to give any kind of period-end margin or funding costs there to give us a better sense of how things are trending through the quarter. Thanks.
Yeah, sure, Danny. Yeah. Margin for the month of March was 3.45% during the month. You know, and the question of whether it was more margin or balance related. You know, our outlook on NII, you know, assumes, you know, we really didn't, you know, back off at all from, you know, loan and deposit assumptions for the year. You know, so I would say it is primarily the mix shift that occurred in the first quarter. As I noted that that mix shift, you know, largely stabilized in the month of March.
Hey, Danny, it's Curt. I would just add that, you know, during the quarter, we did both things. We kind of stepped in to assure funding through adding a broker deposits based on the outflows that we really saw from November 15th to about February 15th that have now stabilized. we had the effect of that, and then we had the effect of repricing current deposits. You know, you see the mix is going from non-interest bearing to growing money market and the CD portfolio. we really look at the 1st quarter as having big impact because we had both of those occurrence.
As we look forward, we're gonna continue to have mix changes, you know, which, you know, should over time be more muted than the impact that we saw of both things in the first quarter.
Understood. I appreciate that color. and then maybe just, you know, your guidance assumes one more rate hike and then flat rates. You know, where does the sensitivity of the balance sheet stand now? you know, if we do get rate cuts in the back half of the year, like the forward curve is assuming, how does that impact your guidance?
Yeah. we are, you know, modestly, you know, more asset sensitive, you know, from where we were at year-end. We continue to look at ways to, you know, mute that overall asset sensitivity. You know, we have put on, you know, about a total of about $1.5 billion, of either cashless collars or floors, you know, to protect ourselves, you know, in a down rate environment. We are, you know, thinking about, you know, that possibility.
While our forecast assumes, no declines, you know, we are starting, you know, and have put on some protection, you know, should rates start to decline more quickly than what our models assume.
Okay. All right. Thanks for the color, guys. I'll step back.
Thank you. One moment for our next question. Our next question comes from the line of Chris McGratty from KBW.
Hey, good morning.
Good morning.
Maybe start with a balance sheet question since that's top of mind. Mark, you know, we've seen some of your peers flex the balance sheet, you know, up or down based on, you know, the pressures that we're seeing on deposits. I guess, number 1, with your loan-to-deposit ratio where it is and kind of the environmental changes to deposits, is there a situation where you might consider just slowing. I think your updated NII guide was just a margin play. Would you consider slowing the balance sheet since I would presume the profitability on a marginal loan is, you know, a little bit lower?
Yeah, Chris, it's Curt. You know, we as we look at future growth, I mean, we want to continue to support our customers and grow on the loan side, and the deposit side. We expect those to be more in line. You know, we really stepped in to slow the pace of increase in the loan-to-deposit ratio, and we think we've done that effectively, and we will look for balanced growth and really be mindful of that incremental margin as we evaluate loan opportunities as we move forward. We're really focused on maximizing risk-adjusted return.
Okay. Thanks. Thanks, Curt. On capital, how should we? I totally appreciate the pause on the buyback. Seems like the right move. How do we think about, you know, the direction of capital, ratios in today's environment?
Yeah, we're gonna continue to be prudent and grow our capital base as we typically do. We did pause the buyout. We would potentially reevaluate that as we move forward. First and foremost, we're focused on capital preservation and being prudent with the balance sheet.
Okay. Then maybe just one more if I could, go a little bit into credit. Your provision guide Mark, would suggest that the Last two quarters. Fourth quarter and first quarter, we had a combined $26 million in charge-offs, and $25 million of that was this individual credit that we talked about. As we look at the credit portfolio right now and the forward look on credit, and large and/or isolated credits, we feel con-
You know, the loan growth, 8% linked quarter, you know, was a solid first quarter for us. Again, stepping down from a very solid fourth quarter, you know, but, you know, I would anticipate that our first quarter loan growth is gonna be higher, you know, than what our overall, you know, loan growth would be for the full year based on, you know, just kind of where you see macroeconomic factors going.
Okay. That's helpful. Thanks. Thanks a lot.
Thank you. One moment for our next question. Our next question comes from the line of Feddie Strickland from Janney Montgomery Scott.
Hey, good morning.
Morning, Feddie.
Hey.
Was just curious, is the FHLB borrowing capacity you list on slide 12, is that what's currently pledged at the FHLB, or is that inclusive of all potential loan and securities collateral on the balance sheet?
That is what we currently have that is committed.
Got it.
Mm-hmm.
Okay. Then kind of along that same line, appreciate the detail on liquidity on slide 12. Was curious if you can talk about the Bank Term Funding Program and just how you view that versus other liquidity sources. I think it says on there that you haven't used any of it so far, but was just order of operations, you know, how do you view it?
Yeah. Yeah, correct. You know, we view that, you know, you know, similarly to the way we view the discount window in that it's great that it's there, you know, but we view that more as a lender of last resort for us. You know, we would tap FHLB, you know, and other things before we would consider using that.
Got it. Just one more for me would be, you know, most of the changes to your 2023 outlook make sense. Was curious what drove the slightly lower top end on non-interest expense. Are you seeing a little less wage pressure? Just wondering what changed the guide there.
Yeah. Yeah. you know, when you just consider the guide to NII, you know, and, you know, that would result in lower earnings for the year. you know, a lot of that for us is just gonna be lower, uh, incentive compensation accruals.
Got it. That makes sense. I'll step back in the queue. Thanks for taking my question.
You bet, Feddie.
Thank you. One moment for our next question. Our next question comes from the line of Matthew Breese from Stephens Inc.
Good morning, everybody.
Good morning, Matt.
Hey, Matt.
I wanted to touch on the office loan. What was the ultimate change in value from origination to now? Was there anything else more idiosyncratic to this particular credit beyond COVID impacts? Pardon my ignorance, you know, could you go provide a little more color on the, on the ground lease impacts? Just feels like a drastic change in valuation from the rough math I have here. I want to get a sense if it paints a more dire picture for the rest of the CRE office book.
Matt. Original value is $58 million. That gives the loan-to-value on original balance. We currently have it on the books at $8 million. You're correct. It is a drastic adjustment in value. You know, a specific impact on rent roll based on COVID, the re-rent ability in that market, the contributing factor of a land lease is just a fee simple. Exit in a workout is just easier than somebody jumping into a land lease. We feel, we wanted to get this credit at a book amount that gave us maximum flexibility to maximize the value over time.
Okay. Stepping back on your reserve at large, you know, what kind of economic scenario does it, you know, contemplate? Could you go through some of the high points, the unemployment, GDP, interest rates? I just wanna get a sense for, you know, if that kind of scenario were to play out, what kind of charge-offs are baked into there?
Yeah. We assume the Moody's base case, but then from there, you know, adjust for certain overlays for, you know, any piece of the portfolio like office, you know, where we think, you know, that there may be heightened risk.
Okay. Is there an assumed charge-off amount in there that we should be contemplating?
You know, ultimately, charge-offs, I mean, the model, you know, that we calculate every quarter just assumes what the, you know, allowance needs to be, right? It doesn't. I mean, so, you know, you're taking the net present value of all of your future cash flows and all your loans, so you have charge-offs implied in there. You know, ultimately you're calculating, you know, a balance sheet, you know, charge. You know, I can tell you that our, you know, our 10-year + net charge-offs, you know, going back to, you know, coming right out of the Global Financial Crisis averaged about 17 basis points.
Okay. Okay. This is more of a nitpicky one. You know, Mark, you know, one thing I noticed this quarter was that overdraft fees fell down quite a bit. A lot obviously happened this quarter, so I could make up a narrative on forgiving a lot of what went on from a consumer standpoint. Should we expect that line item to come back, you know, to a normal kind of $4 million run rate as things get back to normal here?
No. No. As a reminder, we had made some changes, you know, to our overdraft programs. You know, we had implemented some of those in the fourth quarter, and then the remainder of those changes, you know, were implemented in the first quarter. We had highlighted, you know, for the last three quarters, I think now that we would be doing that and that it would impact, you know, that line item on a run rate basis going forward.
Okay. The $2.7 million is probably a better run rate here.
It, for that line, yeah, we think so.
Got it. Okay. I'll leave it there. Thanks for taking my questions.
You bet, Matt.
Thank you. One moment for our next question. Our next question comes from the line of Frank Schiraldi from Piper Sandler.
Morning.
Hey, Frank. Good morning.
Morning, Frank.
Just a couple of balance sheet questions. Just in terms of, you know, Mark, you mentioned that the mix shift at a non-interest bearing really sort of stabilized through March. I'm just wondering what your outlook assumes. Do you assume basically stabilization in that percentage of total loans, or do you see it falling further? If so, you know, what kind of levels do you assume there?
Yeah. No, no. We still assume, you know, that there's gonna be some rundown of non-interest bearing DDA. You know, but, you know, at a slower pace than what we saw, you know, from sort of Thanksgiving through the end of February.
Okay. If you could just remind, what is your loan growth? You talked about the 8% this quarter and kind of maybe slowing from there. Is that sort of still mid-single digits kind of thinking for the full year?
Yeah, Frank. We're looking at a pretty typical year for us, 4%-6% loan growth. You know, certain categories we do expect to moderate as we move forward. You know, that's a pretty consistent organic loan growth rate for us, and we would expect to be in that 4%-6%.
Okay. On the credit side of things, just on that one property, is there any? Sorry if I missed it, but is there any recent appraisal on that property, the value of which you can share with us?
Yeah. Current appraisal on it is roughly $15 million. It has come down over the last year. You know, we are looking at just a conservative book balance to give, again, us maximum flexibility as we look forward. Our current appraisal on that property is $15 million.
Okay. As far as the ground lease is concerned, I mean, I guess that appraisal takes that into account. I know those leases are generally pretty long, you know, very long-term. Just wondering, you know, the timing of any sort of lease termination there or any buyouts coming up, that you could share with us as it pertains to the ground lease.
Yeah. The appraisal does contemplate the ground lease. The ground lease is long-term in order to keep the property available that the building is located on. We usually require the ground leases to be long-term. Termination or dealing with the ground lease or a buyout of the ground lease would potentially be part of the workout plan going forward. It does create unique circumstances. Just so you all know, we only have one other in the entire portfolio that's on a ground lease. We're very comfortable with the dynamics of that loan. It is a very discrete and unique attribute given the overall portfolio.
Okay, great. That's helpful. Just lastly, on the LTVs you give of the office book a weighted average of 60%, and you say in the deck that's as of most recent appraisal. Can you talk a little at all about what percentage of these underlying buildings have been reappraised, you know, call it last year or so, or since the pandemic?
Well, appraisal policy and how we work through that from a, you know, we're focused on getting the risk ratings accurate. We have a very disciplined approach to that. We would get updated appraisals if there is a credit reason to get that where, you know, it's a rent change or some change within the dynamics. That would be what would lead to a new appraisal. The weighted average of all appraisals is portfolio. Some of those are at origination, and then we would get updated appraisals as the credit would need those.
Our range, in those appraised values are 35%-75%, with that average then that we have on the investor deck, on a weighted average basis.
Okay. Does that weighted average LTV change markedly at all for, if I just look at, you know, the larger size either above $10 billion or $10 million or, you know, above $20 million, the weighted average is pretty consistent?
Yeah. The larger the credit, the more conservative we are on loan-to-value and loan-to-cost. If anything, they would be less.
Okay. All right. Thank you.
Thanks, Frank.
Thank you. One moment for our next question. Our next question comes from the line of Manuel Navas from D.A. Davidson & Co.
Hi. Good morning.
Hey, Manuel.
Hey. That NIM that was around 3.45% in March, does that have some stress on it, or is that a good place to start going into April going forward? I know some of the movements in the mix shift happened earlier in the quarter. Just wondering how much of leeway around that 3.45% in March we should use going forward.
Yeah. I think 345 is a good place to start from. You know, I mean, we had, you know, we did see our non-interest-bearing DDAs, you know, stabilize a little bit, you know, in March. You know, as I mentioned, we still anticipate that there's gonna be some runoff, you know, in that going forward, but at a slower pace than what we saw. In the month of April, you know, you would also then see, you know, the full effect of the 25 basis point rate increase that occurred in March.
Okay. That's helpful. Going forward as loan and deposit growth is a little bit more balanced, and it looks like borrowings were already coming down by end of quarter versus the average. Is most incremental dollars going towards borrowings? Can you just kind of talk about that mix of borrowings versus maybe brokered CDs, kind of thoughts going forward there?
Yeah. You know, we thought it was important, you know, in early March, you know, to just really have a stabilized, you know, diversified funding base, you know. That led to, you know, wanting to tap, you know, the brokered market, which we actually tapped in, you know, largely in February. Going forward, I, you know, I wouldn't anticipate us, you know, needing to tap the brokered CD markets. Instead we're just gonna, you know, focus on, you know, some of our internal, you know, fee-free products and promotions that we have in place to fund loan growth in the future.
Okay. In your disclosure that uninsured deposits kind of declined, I guess, around $300 million, was that just through normal exits, loss of market share, or did you use mitigation programs like the IntraFi network, ICS? Can you just talk about that for a moment?
Yeah. It was a little bit of a, you know, IntraFi deposits grew a little bit. But some of it was just, you know, kind of normal seasonality of some of those larger customer bases. We typically see, you know, some rundown in the first quarter in some of our uninsured deposits.
That actually probably brings up my last question. Is most of the mix shift customers moving things around within the firm? You're not seeing customers exit, things like that. Just touch on that.
No. We saw net account and household growth in the first quarter. You know, I would say it is largely, you know, more, you know, some of them taking money out of either low or zero cost money and placing them, you know, with us, you know, with other products. In some cases, you do have them going to other, you know, banks, you know, for higher rate products. In some cases, you know, our promotions are winning new customers.
Okay. That's helpful. The age of your customer base across accounts is that was really good disclosure. Just kind of on a separate topic, what would kind of drive you to restart buybacks?
Yeah. As we look at capital, as things settle down, we get more clarity, as we move forward, you know, we have $60 million remaining in that authorization. You know, we would utilize that if it's appropriate. In this environment, we're still looking at
You know, capital preservation and stability first. You know, we feel we are in a good position and, at some point would reengage in that activity.
Thank you very much.
Thank you. One moment for our next question. Our next question comes from the line of David Bishop from Hovde Group.
Yeah. Good morning, gentlemen.
Hey, David.
Good morning, David.
A quick question on maybe the turning the prism a bit on the loan side of the equation. Just curious what you're seeing in terms of new origination yields this quarter and maybe where you see those yields trending to.
You know, it's obviously going to vary, David, this is Mark, you know, between product class. You know, on the commercial side, you know, our C&I, in the first quarter, you know, so we're kind of hovering right around 7%, you know, for new originations there. You know, a little bit off that number, you know, maybe 25 basis points or so off that number on commercial real estate. On the mortgage side, you know, we're going to average for our ARM production, we're going to average in kind of the 5.5%-5.75% range, you know, for adjustable rate mortgages right now.
Then, you know, other consumer classes, you know, depending on whether it's indirect, you know, versus, you know, other consumer classes are going to be higher.
Got it. And in terms of, you know, sort of a holistic question there in terms of as you look at the loan pipeline and ability to pass on, you know, the higher pricing, higher yields. Does the pipeline or the quality of loans or the number of loans that sort of can cash flow, you know, debt service coverage, loan to value in terms of, you know, what's happening from a broader macro environment? I guess another way of questioning, is it getting tougher to find, you know, quality loans that sort of pass the credit underwriting and pricing test?
Yes, Curt. We, we do not change our credit standards, and if anything, are tightening credit standards. We, we don't allow that to happen. From a pricing standpoint, we're really focused on risk-adjusted returns, and we need to get the appropriate pricing given the risk in each of these buckets as we move forward. We will see pricing continue to move up to get our risk-adjusted return, and we will hold or even tighten credit standards in certain buckets.
Got it. One final question. Just curious if you can disclose the broker deposits raised. Just curious if you had any sort of color you could add in terms of duration and average cost of those loans. Thanks.
Yeah, sure. Yeah, we raised them in three separate tranches throughout the quarter. We specifically went out of market. You know, so these are, you know, retail customers, but they are not in our five-state footprint at all. The coupons of those and duration, you know, they are going to mature in early 2023. You know, so these are all generally between nine and 13 months with coupons, you know, for each of the tranches between 4.70% and 5.30% for the last tranche, which was only about $200 million. The majority of it came in, you know, a little bit below 5%.
Got it. Appreciate the color.
Yep.
Thank you. I would now like to turn the conference back over to Curt Myers for closing remarks.
Well, thank you again for joining us today. We hope you'll be able to be with us when we discuss second quarter results in July. Thank you, all.
This concludes today's conference call. Thank you for participating. You may now disconnect.