Welcome to Wintrust Financial Corporation's fourth quarter and year-to-date 2020 earnings conference call. Following a review of the results by Edward Wehmer, Founder and Chief Executive Officer, and David Dykstra, Vice Chairman and Chief Operating Officer, there will be a formal question and answer session. During the course of today's call, Wintrust management may make statements that constitute projections, expectations, beliefs, or similar forward-looking statements. Actual results could differ materially from the results anticipated or projected in any such forward-looking statements. The company's forward-looking assumptions that could cause the actual results to differ materially from the information discussed during this call are detailed in our earnings press release and in the company's most recent Form 10-K and any subsequent filings on file with the SEC. Our remarks may reference certain non-GAAP financial measures.
Our earnings press release and slide presentations include a reconciliation of each non-GAAP financial measure to the nearest comparable GAAP financial measure. As a reminder, this conference call is being recorded. I will now turn the conference call over to Mr. Edward Wehmer.
Hi, everybody. Welcome to our fourth quarter earnings call, and thanks for dialing in. With me, as always, are Dave Dykstra. Dave is our CFO. Kate Boege, our General Counsel, Tim Crane, our President, and Rich Murphy, our Vice Chairman in charge of credit. We have the same format as usual, where I give some general comments regarding our results, turn it over to Dave Dykstra for more detailed analysis of other income and other expenses and taxes. Back to me for some summary comments and talks about the future. Of course, time for questions. Given all that 2020 brought to the table, I think Wintrust really had a remarkable year. Pre-tax, pre-provision earnings increased 13%, which exceeded our 10-year CAGR, which stood at 10%. Not too shabby. I know that we may not have beat the annual assessments this quarter for PPP income.
We're much closer than you think, considering the one-timers of $13 million and the $7 million of foregone income when we made the decision to keep 10% of mortgage production on our books. More on this later. CECL required huge provisions, $214 million versus $54 million in 2019, an increase of $160 million. Meanwhile, net charge-offs in 2020 were $40.3 million, $9.2 million less than the previous year. NPLs and NPAs as a percent of loans and assets, respectively, were each 4 basis points lower than last year. Last year in and of itself was an excellent credit year. They closed the year at 40 basis points and 32 basis points, respectively. One would think there wasn't even a crisis going on. I'm going to have to write a nice note to Moody's, FASB, and AICPA and thank them for putting CECL in when they did.
Asset deposits and loan growth exceeded 10-year averages. Assets grew 23.2% versus a 12% CAGR over 10 years. Loans grew 19.7% versus a 12% CAGR, and deposits 23% during the year versus a 13% CAGR. We now have over $45 billion in assets. Mortgage area hit the cover off the ball. By design, we hoped it would do that because when rates go low, we use the mortgages to cover until we can catch up on the margin side. What's most amazing is we accomplished this really by working remotely for the most part. Taking 5,300 people and flipping to remote and being able to accomplish what we did, our asset growth, what we did with PPP and the like is just incredible to me. Incredible. It just really is incredible. The entire Wintrust team showed great strategic ability and a can-do attitude that is unsurpassed.
Couldn't be prouder of them, and I told our board this, and truly was. 2021, this really continues to be our finest hour. On to some earnings statistics. $101.2 million for the year, down 6% from the third quarter, but up 18% from the same time last year. Earnings per share of $1.63, down 2% from the first quarter or from the third quarter, and 13% from the fourth quarter last year. Year- to- date, we made $293 million at a $4.68 per share, down 22%, mostly because of the huge CECL provision we had to take. Other than that, we're in pretty good shape. Pre-tax, pre-provision of $135 million or $604 million year-to-date, which was up over 9% over the same period last year and 13% over the prior year.
Net interest margin of 254 was down 3 basis points. The net interest income was up $3 million as we had great loan growth in spite of the fact that it didn't look like it, but we'll get into that in a second, because of the first levels of PPP loans starting to get repaid or forgiven. Say we had loans break even, but really core loans were up nicely during the period. We'll talk about that in a second. ROE at 10.3% for the quarter, 12.95% for the year. ROE is 7.5% for the year. Return on tangible equity for the full year, 9.54%. The overhead ratio is 112 basis points. As compared to 87 basis points last quarter, 153 basis points year before, 105 basis points year-to-date. We would've probably been a lot lower had we not had the one-timers, et cetera.
I think we feel pretty good about where we are in that regard. I'll talk about it in a second. Tangible book value, again, grew nicely during the year. Again, as we go through all the time, that's one of our primary drivers is earnings growth, tangible book value growth, and asset growth. The margin was again affected by excess liquidity on our balance sheet. We began to do a number of things to improve the NII and NIM. Some of these are listed below. Note that our goal is to maintain an interest rate sensitivity position throughout these efforts. Our goal is to maintain a gap of 12%-15%. In other words, we have to stay disciplined here and not go along and lock in the margin at these goofy rates.
Our loan pipelines remain consistently strong in all facets of the business. We made a decision during the year or during the quarter to keep 10% of mortgage production on our books. Really beats buying back, buying mortgage backs in this market. This did affect our earnings in the quarter as we held, I'd say, $180 million on our books in Q4. There's an eight to 12 month breakeven point on holding versus selling, in that we have to take all the expenses related to the production up front, and we'll get it back in the margin, which is probably a good thing. Let's see. We also pulled back $272 million of mortgages from Ginnie Mae, that were always on our books, but upon which we were receiving no earnings. Earnings were going to the security holders and not us. We retained their guarantee, but earn the income.
Earning asset growth is actually, when you think of it, earning asset loan growth was actually up over $850 million during the quarter. Most of the growth took place towards the end of the quarter. We're going to have a really good head start going forward into this year. We commenced investing on some of our liquidity assets of a longer duration. Currently, aggregate duration on our liquidity portfolio is 1.3 years, as opposed to five to six year duration we usually operate with. We have some room to do some accretive investing without messing up the desired GAAP goals. We also want to know we've been taking applications for PPP Part III for over 10 days. Currently, we have applications in the process of over 5,500 to $1.175 billion. 30% have already been submitted to the SBA for approval.
Fees related to these loans approximate $44 million, they amortize over the life of the loans, so at least through December of this year. Average ticket size of these loans is $214,000. The mean size is $72,000. We really beat everybody to the market by almost 10 days. Our decks are pretty clear right now. We've got this down, and we hope to add more to this portfolio, not just because we need it, but to help our clients out there who need this to get through the last draw prongs of this current problem or crisis. Pardon me. Not related to margin, but on the earning asset front, we did complete round one of our branch retail rationalization approach. Sold three southwestern Wisconsin branches that are not in our prime footprint, and we record a small gain, approximately $4 million in quarter two 2021.
We also announced plans to close an additional 10 branches and took a $1.4 million charge this quarter related to the closings. These branches were all acquired over the years and were determined not to be needed due to proximity to other Wintrust locations. This will save us probably $5 million± a year. It should also be known that we're down over 100 positions in retail due to attrition. We're not replacing staff that left. We believe there to be a like amount of additional excess capacity in our existing footprint due to continued use of online services really brought about by the pandemic. These additional savings will offset the cost of branches currently on the drawing board for 2021 and 2022.
I'm just a little bit worried that we're much bigger now, and when life does get back to normal, we want to keep our service level enhanced. Don't want to bite to the bone right now, so we'll see where we go with it. We always continue to look for other additional efficiencies in the market. Also, in quarter four, we were able to restart our stock purchase program, acquiring almost 925,000 shares in the quarter. We were able to do this at an average price that made the acquisition accretive to both earnings and tangible book value. We will continue to monitor for additional opportunities. On the other income side, not to take Dave's thunder, but the mortgage area hit the cover off the ball all year. Fourth quarter, as mentioned, indicated the start of our program to be booking 10% of production on our books.
Hurts current earnings, but it's profitable over the long run. Wealth management also had a good year, especially a good fourth quarter, that we can build on going forward. Total assets under administration surpassed $30 billion, $30.1 to be exact, of growth. Growth of $1.19 billion in the quarter. Rebounding markets helped, but the majority of the growth was from new accounts. Bodes well for the future. On the balance sheet front. Assets grew $1.3 billion, $350. The average earning assets are up $937 million. Loans, as we said earlier, without PPP, were up $606 million in all facets of the business. To add back the Ginnie Maes we bought back, or really had on the books but made earning, closer to $850 million of earning asset growth we had. The majority of which took place, as I mentioned, the last part of the quarter.
By almost $678 million + the buyback of the Ginnie Maes. This really holds $678 million of average versus quarter end in the fourth quarter. Again, that's a number. Plus the Ginnie Maes that we started earning on this quarter bodes pretty well. Deposits are up $1.2 billion. That's after the repayment of $600 million of high-cost institutional money we returned during the quarter. Again, we continue to grow through the cycle. Loan deposit ratio is 86.5%, down from 89% as the first two rounds of PPP continue to pay off. That's a good thing. Loans and deposits. As I mentioned, loan growth is good across the board. We feel good, our pipelines are strong. We feel very good about where we are right now. We think the deposit growth is extraordinary, both the quarter and the year.
We hope to continue that growth because that really is the franchise value of the company. On the credit side, we discussed right at the beginning of the presentation. Needless to say, the numbers which were good to begin with have even gotten even better. The pretty low provision we took of $1.18 million. It's not really a reserve release, in my opinion, based on economic factors, rather indication of overall portfolio improvement. It's the hard work of our credit team. $275 million of loans were upgraded and $40 million of nonaccruals paid off. This was accomplished through portfolio sales, the use of Fed's Main Street Lending Program, successful execution of lending exit strategies. We continue to cull the portfolio for cracks to understand that your first loss is your best loss. We can always look good on recovery.
I'll now turn the call over to Dave, who's going to provide some additional detail on other income, expenses, and taxes. Dave?
All right. Thanks, Ed. As usual, I'll briefly touch on the significant non-interest income and non-interest expense sections that had changes from the prior quarter. Starting with the non-interest income section, our wealth management revenue increased $1.8 million to $26.8 million in the fourth quarter, compared to $25 million in the third quarter of 2020, and up 7% from $25 million recorded in the year-ago quarter. This revenue source has been positively impacted by higher equity valuations, which impact the pricing of a portion of our managed asset accounts. Mortgage banking revenue, as Ed referred to, was seasonally strong due to the continuing low interest rate environment, but declined 20%, or $21.7 million, to $86.8 million in the fourth quarter from the record level of $108.5 million posted in the prior quarter and was up a strong 81% from the $47.9 million recorded in the fourth quarter of last year.
The company originated approximately $2.4 billion of mortgage loans for sale in the fourth quarter, a record, up from approximately $2.2 billion in the prior quarter and up substantially from the $1.2 billion of loans that we originated for sale in the fourth quarter of last year. The decline in the category's revenue from the prior quarter resulted from, first, a decrease in the value of the mortgage servicing rights related to the fair value model assumptions of $5.2 million in the fourth quarter as compared to a decrease of $3.0 million in the prior quarter, and a drop of approximately $500 million in the pipeline of mortgages being originated for sale, including a reduction of approximately $200 million that the company has earmarked to be originated and held for investment during the first quarter of 2021.
The company's required to record the value of the mortgage-related derivatives related to loans in the pipeline at quarter end that are estimated to close and to be sold. As such, when the pipeline of the loans declines, the revenue declines accordingly. Similarly, if the pipelines of loans for sale increases, then we would see associated increases in that revenue. The reduction of the pipelines by $500 million sacrifices revenue in the current quarter. As Ed mentioned, that revenue should be recognized through net interest income going forward. Likewise, we retained $192 million of mortgage loans on our balance sheet in the fourth quarter, and we also sacrificed the revenue on those loans in the current quarter. Again, should recognize the revenue through the margin going forward.
Approximately $192 million that we kept on the books and $200 million that was in the pipeline that we sacrificed the revenue on the current quarter for the benefit of future quarters. While the mortgage revenue declined, it remains a very strong quarter for our mortgage banking business. We currently expect originations in the first quarter to be very strong again due to the continuation of the refinance activity and a strong committed pipeline. Table 16 of our earnings release provides a detailed compilation of all the components of the origination volumes, the mortgage servicing, right capitalization, servicing costs, et cetera. Again, a record quarter. In total, we originated $2.5 billion of loans that closed either for sale or that we kept on our balance sheet. Other non-interest income totaled $19.7 million in the fourth quarter, up approximately $6.4 million from the $13.3 million recorded in the prior quarter.
The primary reasons for the higher revenue in this category included $901,000 of higher swap fee revenue and $2.6 million of higher income investments in partnerships, which are primarily related to SBIC investments to support CRA purposes. Additionally, BOLI income was up approximately $1.6 million from the third quarter, primarily as a result of $0.9 million of higher earnings on BOLI investments that support deferred compensation benefit plans, which were positively impacted by the equity market returns, and also a $0.9 million death benefit that we recorded during the quarter. I should note that the $0.9 million of increase related to the deferred compensation plan would show a similar increase in expenses. The amounts, in essence, offset each other between the other income and the compensation expense by $0.9 million. Turning to the non-interest expense categories.
Non-interest expenses totaled $281.9 million for the fourth quarter, up approximately $17.6 million or 7% from the $264.2 million recorded in the prior quarter. There are a handful of categories that account for the increase that I will focus on. First, the salary employee benefits expense category increased approximately $7.1 million in the fourth quarter from the prior quarter. The salary expense component of that category was up approximately $3.7 million. The primary cause of the increase related to increased staffing to support the overall increase in mortgage originations and technology-related staffing to support our ongoing development of enhanced digital products and capabilities. The reported amounts also saw the increase in the deferred compensation expense of a net $0.7 million that was impacted by the BOLI returns that I previously discussed. Turning to commissions and incentive comp.
That category is up $3.9 million in the fourth quarter relative to the third quarter, with that change being driven largely by the additional commissions related to higher amount of closed mortgages and slightly higher wealth management brokerage trading activity, as well as a little bit of higher incentive compensation expense recorded in the fourth quarter. You have to remember that the commissions expense on mortgages are paid when the mortgage loans close. We had record closings in the current quarter that exceeded the prior quarter, whereas revenue is also recorded on the pipelines. A little bit of a disconnect there, higher commissions due to higher closings. Offsetting the aforementioned increases in employee benefits was a decrease in employee benefits of approximately $520,000 from the prior quarter due to a slight decrease in employee insurance claims and a slightly lower level of payroll taxes.
Equipment expense totaled $20.6 million in the fourth quarter, an increase of $3.3 million as compared to the prior quarter total of $17.3 million. The increase is due to increased software licensing expenses, including some increases related to online mortgage usage, PPP loan servicing enhancements, network upgrades to support our growth and digital enhancements, and various other software upgrades, as well as the write-off of certain software systems that had been retired early as a result of our implementation of certain new systems. We continue to invest in software and technology to enhance our customer delivery systems and products, as well as invest in our systems that support our continued growth. Occupancy expense totaled $19.7 million in the fourth quarter, increasing $3.9 million.
The increase was due to the $1.4 million impairment charge associated with the planned closures of the 10 branches that Ed referred to, increased real estate tax assessments from the prior quarter, and a higher level of utility charges. Advertising and marketing expenses increased by $2 million in the fourth quarter compared to the prior quarter. This was primarily related to increased digital advertising campaigns and community impact and sports sponsorship spending, as various community-based and sports venues have begun to increase their events again. In summary, if you look at this and add up the components, there was roughly $11 million of the increase relates to mortgage activity, including $6.6 million of an additional earn-out on the mortgage acquisitions we had and roughly $4.5 million of increased salary and benefit costs for the record level of mortgage closings during the quarter.
We would expect that to decrease in the future quarters as the pipelines are down, and we believe we won't have any significant additional contingent consideration going forward. We had the $1.4 million of branch closures. Between those items, that's roughly a $12+ million of expenses that were related to the mortgage and/or branch closures that we would expect to decline in the future quarters. Other than those expense categories, no other expense categories had any significant change from the amounts recorded in the third quarter. Ed mentioned that our net overhead ratio was 1.12%, was up slightly from the third quarter. On a year-to-date basis, the net overhead ratio was 1.05%, down 52 basis points from the 1.57% recorded in 2019. With that, I will throw the discussion back over to Ed.
Thank you, Dave. 2020 was a pretty interesting and challenging year to say the least. In some respects, it was a very rewarding year. That being said, it'd be nice to return to some degree of normalcy. We always, in the company, our mascot is Sisyphus. Remember with Sisyphus, I think I said this before in earlier calls, had to push the rock up the hill every day, and every night it would fall down, and he'd have to push it up the next day. On 12/31 every year, I tell everybody, listen for the rock falling down, we've got to push it back up. We're well on our way of pushing up this year. I think we're very well-positioned to start 2021 in a very good place.
We have to take what the market gives us, and we need to grow through this low interest rate period, invest in a way that maintains an above normal interest rate sensitivity position, maintains our always conservative credit standards. Earlier, we discussed all the levers we're pulling to increase earnings in the margin. Loan pipelines remain strong and PPP Round 3 gave us an unexpected lift for the year. We continue to cull the portfolio for problem credits to improve on our already stellar credit statistics. We will also continue to find other cost-saving ideas. However, we're always going to invest in the business. Not to do so would be absolutely fatal. Capital levels remain at more than adequate levels. The expansion front, number of new branches planned for the next 24 months in the areas we do not currently serve.
On the acquisition front, we continue to search out deals in all areas of our business. The recent rebound in our stock price. We would now have currency to use in deals. Remember how much we abhor dilution. It's nice to get a little bit of currency back. You can be assured of our consistent conservative approach on potential deals. I want to end by saying, 2021 marks our 30th year in business. On December 27th, 2021, we will hit the 30-year anniversary opening our first bank. We have come a long way from the card tables and beer, 1,100 sq ft and 11 employees. We've never lost sight of our basic operating principles. This has served us well. It's kind of funny. I think there's a reasonable chance that we could hit $50 billion in 30 years.
I can assure you that 30 years ago, this was never in our wildest dreams. It's kind of cool if you think about it. As always, you can be assured of our best efforts. We appreciate your support. We can go over to questions if there are any out there.
As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Jon Arfstrom from RBC Capital. Your line is now open.
Thanks. Morning, guys.
Hi, Arf. How you doing?
Hey, good. Doing well. Question on the decision to put some mortgages on the balance sheet. Can you just, not critical of it, but talk a little bit about that decision strategically, why you did it, what you're putting on the balance sheet, and how far you want to take that?
Well, we're going to stay within that 10%-15% gap position that we always desire, but I don't want to go out and buy a bunch of mortgage backs at $140 when I can keep jumbo loans on the books at three to three and a quarter. I know it's got a payback of call it a year, but why not? We have to put this liquidity to work. These are very good deals. The returns are pretty good on them. We probably gave up between the 200 that we booked this quarter, 200 next quarter, gave up probably $8 million in revenue. If you figure 4% production margin, $400 would be more than that. Be a lot more. $16 million, maybe $13 million, $14 million we would've had additional revenue this quarter. Certainly would've kept everybody happy on the PTPP growth .
It just makes sense that rather than go out and do it that way, we can book them and put them in the margin and make some money as opposed to buying mortgage backs at half the price.
Okay. Got it.
Jon, as Ed mentioned, we're targeting maybe 10% of our production, so it hurts a little bit, but we're not doing half of our production. It still provides a long-term benefit and an earning lever to use going forward, although it sacrifices current quarter revenue.
Right. Yeah. Okay. Dave, just sticking on mortgage, I know this kind of comes up every quarter, but talk a little bit about maybe your near-term expectations for volumes and maybe this matters more than ever, but just remind us of your ability to accordion some of the mortgage expenses if volumes do really continue to come down in 2021. Is that something we should be concerned about for the bottom line? Thanks.
Yeah. We'll have to see where applications come in. The pipelines are down $0.5 billion. If you look at that and say between investments and closings, we did $2.5 billion. We'll probably be ±$2 billion as far as production in the first quarter. Quite frankly, we'll have to see what the spring buying season's like. Second quarter could be more than that. I think all in, including investments and for sale, ±$2 billion is reasonable. We still think it's going to be a strong quarter. A lot of the increase in the salaries expense related to temporary and contract workers. That goes to your accordion. Those can go up and down rather quickly. I think we can accordion the expenses well, and we manage for that. We're focused on that.
Fortunately, the pipeline and the production has been strong recently, so we haven't had to do this. It's more of an issue of, do you have enough people to process record volumes of production? We added this quarter to it because we did have record production volume quarter and record quarter. We do think we can accordion well. We do think the volume will be strong in the first quarter. Not quite as strong as $1.5 billion all in closings we did this quarter, but still, historically, a very strong quarter.
Okay. All right. Thanks a lot, guys.
Thank you. Our next question comes from the line of Terry McEvoy from Stephens. Your line is now open.
Hey, Terry. Terry?
Yep. Can you hear me?
Now we can hear you.
Okay. Sorry about that. The old mute button. My apologies. Start with the net interest margin. Could you just talk about the outlook for the margin with and without kind of PPP fees? A couple of times you've mentioned that 15 basis point-30 basis point margin expansion as you kind of redeploy that excess liquidity and just over the next 12 months, the opportunity to achieve that NIM expansion through that event.
Well, it'll depend really on loan growth and deposit. Deposit costs are still at room to come down. That's going to happen. Loan growth is going to happen. What it really depends on is, we figure we could put $1 billion-$1.5 billion worth of work in the investment portfolio. We're going to lag that in, though, because rates seem like they're going up. Why put it all on now when I've hedged our bet a little? I think they'll go up before they go down. I think you got to deal with those numbers we gave you. It might be a little bit more staccato than you'd like, but we'll take advantage of what the market gives us. I think that the next quarter, you should start seeing some benefit of it, depending on where LIBOR goes.
We think we'll be in pretty good shape. I can't give you more than that just because I gave you all the tools, the levers we're pulling, just a timing issue, and we gave you the ranges of where it's going to come. I don't want to be totally specific because it's all a function of where market rates are, where we think they're going, and we don't want to lock in this margin, but we do want to leave room for expansion. Like today, I think we've put about $600 million to work, I think that's a fair number, in the first quarter. It'll go to work in the first quarter of the $1.5 billion we think we have to play with in the investment portfolio, and we'll see where it goes from there. Dave, you got any other comment on that? Yeah.
The thing I would say, Terry, is that I think the margin's basically bottomed out, though. It went down a few basis points this quarter, but we had significant liquidity come in again. That you're earning 12 basis points or 13 basis points on. Barring additional significant liquidity coming in, which I think you might have a little pressure if that happens. We think the margin's really bottomed out and the margin goes up from here as we do the investments that Ed talked about. The new PPP loans will come in to help offset the runoff of the old PPP loans. I think we're in pretty good shape. I think the margin has really bottomed out here.
Barring some big swing in the curve environment that would be negative to us, if the curve flattened even more or went inverted, but we don't expect that. We think the margin's bottomed out, and we have lots of leverage. I think that's one of the great stories that we have here, because we have a lot of liquidity that can be put to use, and there's an earnings lever there. We believe we bottomed out, and now it's just trying to time how and when to put that liquidity to work.
Thank you. Then just as a follow-up question, the advertising and marketing costs lower this year because of just the pandemic, and I believe earlier you mentioned stadium sporting events starting to open up again.
Yeah.
Could you just talk about your thoughts for 2021 on that line? I don't want to be surprised, assuming they go back to more normal levels, which a year ago in the fourth quarter was $12.5 million.
Yeah. Well, it just all depends on when people are allowed back in stadiums. We cut deals. If nobody's in the stadium, we shouldn't have to pay as much as we paid in the past. We don't have tickets and ticket issues and the like. I think by June or July, you're going to have people in there. I don't know if it's going to be as high as it was in our highest years. We are still obligated to pay it if it is, but I just don't think you're going to have fans in the stands for half the year, in which case it'll be less. What can I say? I mean, just follow the baseball. Baseball's our biggest cost.
If they don't have fans in the stands, they don't have to pay as much. Basketball, same thing. We have Northwestern, Marquette, and DePaul. With no fans in the stands, we don't have to pay as much. Because they're playing, it'll be more than last year, but less than our high points. Does that make sense?
Understood. Yep. Appreciate it. Thanks, guys.
Thanks, Terry.
Thank you. Our next question comes from the line of Chris McGratty from KBW.
Hey, good morning.
Chris.
Hey, Ed. David, I just wanted to go back on the question on the mortgages you're putting on the balance sheet. I've seen some of your broader peers do similar strategies. They've bought loans out of the warehouse. I'm wondering if you could speak to the credit characteristics of these loans that are being put on.
Paul, why don't you do that? Why don't we let Murph do that?
Yeah. Chris, as you probably have seen from other banks, right now, credit quality through our bank and also through our warehouse customers has really never been better. If you look at average Empirica scores, the box obviously got tighter over the last number of years, but what we're seeing right now is just outstanding credit quality. I feel very good about holding these on our balance sheet.
Are these conforming? You said they're jumbo. Are they prime? Are there Alt-A characteristics of them?
No, these are all prime jumbos.
Okay. Cool. Just another question tying growth into capital. I guess I was positively surprised you bought back stock in the quarter. Maybe you could speak to expectations going forward. I've always kind of viewed yourselves as more optimized capital versus massive excess, but interested in your thoughts with the pandemic easing a bit. Thanks.
Well, we don't like dilution at all. We love the accretive aspects of what we've done to date. Being able to buy below tangible book value, and in terms of helping earnings, it all worked. Right now, the stock price is up. It's a little tougher, but you never know with what's going on in the world. It could go down again. We're prepared to buy it back. We hate dilution. We abhor dilution. We want to be accretive. As long as it makes good sense, we'll buy some. We still have some capacity to buy now by the existing authority. Dave, how much do we have?
Yeah. Our initial authority was $125 million, and we've bought back $92 million to date. In the first quarter of 2020, we did $37 million, and then in the fourth quarter of 2020, we did $54.9 million. A total of $92 million out of that program. We have $32.9 million left that we could do. As Ed says, generally, we try to be opportunistic and buy it. Generally, our average price on this in the fourth quarter was $56 a share. We'll monitor the price. We'll look at what other opportunities are out there for capital deployment as far as the growth and the like, and play it by ear.
Maybe one more, if I could. Obviously, there's a big merger in the Midwest with Huntington and TCF. Obviously, TCF Chicago is a little bit different, but interested in any potential opportunities from dislocation, either from that or from Fifth Third's deal a couple of years back. Thanks.
Dislocate. We love it when that happens. Dislocation is our middle name. With the Huntington deal, TCF was not really that strong in Chicago, with most of their locations being in grocery stores. Not really our cup of tea. Recall, TCF, years ago, was the fee king of the world. We don't play that game. Really, those customers are welcome in our place. I don't think they'll care. It's just going to be a product sort of thing. We'll see where that goes. The other side, the disruption caused by Fifth Third buying MB is still ongoing. We've hired a number of their bankers. We're getting good business from them. We actually started a new currency division that's coming from them. It's a business that indirectly, well, very directly in our previous group, Dave and Murph and I were all involved with.
We were the largest in the Chicago Fed District in terms of handling these guys. When MB bought the, of course , they took it, Fifth Third didn't want it, that business is up for grabs. We hired good people from them, very profitable business. It's not just the business you pick up, it's the line of business you can pick up too, which is kind of interesting. Disruption's good. There's recently announced a $1 billion local bank where in a market we compete being bought by a downstate Illinois bank. That'll be an opportunity for us. We love the disruption. We love to take advantage of it. Right now, we're excited about our prospects in the PPP world. The way our system works, opening up really before anybody else in the market with flawless execution. Really goes from soup to nuts very quickly.
Actually, we're seeing a lessened demand from our customers now, trying to do outreach to prospects. We've always done for low to moderate. The low to moderate side of the equation, we're running local workshops, to where people come in and actually do their applications with a proctor kind of there. They answer questions and help them get through it. We think that the halo effect from the previous PPP 1 and 2, hopefully, will carry over into this one. Our decks are pretty well cleared because of the efficiency and the hard work of our people getting them cleared. It's been awesome. There's a lot of disruption, a lot of opportunity in the market. As I said, our pipelines are extremely full. It's coming from someplace. We're not making it up. It's not expansion just by happen. We continue to take business from our competitors.
Thanks a lot for the color. Appreciate it.
Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Our next question comes from the line of Nathan Race from Piper Sandler. Your line is now open.
Yeah. Hi, guys. Good morning.
Hey, Nathan.
Just going back to that last point, Ed, on PPP. I guess with the third round opening up here recently, what are your expectations in terms of volumes coming out of that over the next quarter or two?
Well, we're already at, what did I say? $1.175 billion. I think that there's still some room there if it goes to $1.5 billion or $2 billion. It gets kind of funky where we don't really want to open it up in general because of the fraud aspects. I think knowing your customer is important. We have so many on the prospect list so that we do know in one shape or form or another. We're now in the outreach. We're calling people and asking them about it, both prospects and existing customers who we think are eligible who haven't taken advantage of it. Prospects, and certainly the low to mods. We're working very hard on those. I would think we could be anywhere between $1.5 billion and $2 billion.
If we're $1.1 billion now, I think $1.4 billion, $1.5 billion on the low side, $2 billion on the high side be a good number. Just depends how long it goes and if they restock it with money or not. SBA is being kind of funky on deals over $2 million. If you never drew on the first one, for the second one, you go up to $10 million on this if you want. They're being kind of strange on the larger deals where they're holding them in advance if it's a second round. Murph, you want to talk about that a little?
Yeah, you hit it right on the head. We're just getting some interesting feedback from the SBA as it relates to some of these larger borrowers.
I think there's going to be a heightened audit attention placed on these, and with the transition going on in Washington right now, it's a little bit up in the air. Generally speaking, I think as it relates to volumes, Ed's right. We've seen a tremendous amount of growth early on in this latest round by those highly affected customers. It's obviously good from outstandings and some of the fee recognition. Most importantly, it's just seeing these customers who've really been pounded over the course of the last 10 months getting some help here. It's really great to see just from just watching them and then watching our own portfolio.
Got it. That's helpful. Kind of changing gears along those lines. If we back out PPP, it looks like loans are up 10% year-over-year in 2020. With onboarding more production on the residential side in 2021, what are your kind of growth expectations in 2021, keeping in mind the hires and so forth? Rich or Tim, Chris, do you want to take that?
I would just say, just in general our guidance has been that mid to high single-digit growth over a number of years here. Going into this year, I think we were thinking that it was going to be maybe one of the more challenging years to get that. Fortunately, we have so many different loan engines that we utilize. If you take a look at this year, we saw every one of them really have a pretty solid year. The Premium Finance group had just a spectacular year. CRE had a good first half of the year. C&I had a great second half of the year. It's really one of the benefits of having this more granular approach to portfolio growth.
I look at this year coming up, and based on the pipelines and based on the feedback that we're getting from the business leaders, we should be pretty much right back at that mid to high single-digit growth range. Obviously, a lot depends on how the economy continues to rebound. Overall, feeling pretty good.
Okay, got it. If I could just ask one more. Sorry.
Tim, anything you want to say about that?
No, I think Rich covered it. We do believe the PPP process will continue to yield good prospects for us, and that will help us get to those numbers. Nothing otherwise.
Yeah.
Okay, great.
It also seems that as these shots start, I'm getting my shot on Monday, by the way. I'm an old guy, getting my shot. As that starts happening, there's so much pent-up demand, I think it's going to explode. If you ever try to buy a refrigerator or any sort of hard asset right now, it takes forever to get it because inventories are so low. You're going to see an inventory build coming up. We don't even consider what's going on there. That'll require probably more line usage. Our line usage sits today at 49% and 50%. I think you may see a little bit more coming with. I think we're going to roar out of this thing come June and July when you get the herd immunity, if everything works right. Who knows?
I think that with that, we're saying that we were going to be in high single digits this year based on all the information we have right now. It's just going to enhance it, I think.
Okay, great. If I could just ask one more on expenses, just trying to put together all those items that were discussed earlier. The MBA is forecasting volumes to be down 20%-22% this year, and with advertising spend perhaps not likely to get back to full run rate levels. Then you got the branch consolidations and closures and the contingent consideration perhaps going away entirely. I mean, is it fair to expect expenses versus 2020 to be up low single digit or flattish? Any thoughts just overall along those lines?
A lot of it really depends on where that mortgage number comes out at. If you follow the MBA forecast, then all else sort of being equal, it's probably mid-single digits expense growth is sort of where I would expect it to come out. We do some salary increases, and we are growing, and we are investing in the digital improvements, et cetera. Mid-single digits is about right.
Okay, great. That's very helpful.
One thing to keep in mind is we did double up with the mortgage sales by keeping 10% of the books this quarter and taking 10% out of the next quarter. We had all the expenses and none of the revenue of that. A little bit wild there, too, but I don't think expenses are as bad as everybody thinks they are. Take the one-timers plus that little move we made. It's a timing issue with a lot of it, but we shall see.
Yep, sounds good. Thanks, guys.
Thank you. Our next question comes from the line of Michael Young from Truist Securities. Your line is now open.
Hey, thanks for taking the question.
That's the first Truist Securities I've heard from anybody.
Well, glad to make the introduction.
What's up, Mike? Everything good?
Yeah. Doing well. Just wanted to ask maybe kind of a higher-level question. You've in the past kind of referred people to the net overhead ratio to kind of balance growth and investment with earnings and profitability. Is that still kind of how you're thinking and managing the business? Obviously coming out of kind of this fog of war, if you will, where do you think we could get to on that ratio, if that's still the right ratio to look at?
Oh, yeah. I think it is. We're fortunate that why we have the mortgage business, why we invest in it, is for times exactly like this. When rates go down, it can pick it up for us. That certainly helps that overhead ratio if you look at almost equal to what the run off of the margin was. There'll be a period of time in there where you're going to get kind of an influx here. There'll be an influx where it's got to go up, and the margin will be moved. We hope to have the margin moving as fast. We shall see. We always said less than one and a half was good. We've lowered that down to one, but with our size down to about 135, would 125 - 135 be a good number for us? In the budget, it's what, Tim, do you remember?
Well, yeah. We typically don't give out the budget numbers, but I think in a sort of a more normal mortgage market, I think in the 130s is probably where we would think we could be given the current environment. We're better than that right now because mortgage is so strong. If mortgages fall off, then I think Our target is 150. Before we've grown so much, we think that's probably in the 130s now.
Yeah. We would hope that if we go up 30 basis points, the margin goes up 30 basis points, too. That's kind of how we work it. You can follow the math there.
Maybe just as a follow-up, you've kind of mentioned efforts to cut some branches. You still have kind of the multiple bank subsidiaries. Would there be any opportunities to consolidate maybe one or two of those? I know you've used it as part of the wealth strategy in the past, and you haven't thought that made sense. In this environment, have things changed at all there?
Everything's open, but right now we're very happy with where we are. That overhead ratio, put it this way, it's not just a cost issue because the costs are minimal. As you think about everything behind the scenes is already consolidated and runs that way. It's strictly a morale and a marketing issue for us, plus the ability to get low-cost deposits because of our ability to offer 15 x FDIC coverage. Would we consider merging some together? Yes. That would come, I think, with geographic expansion. If we're going to move out of the Chicago area, which will probably have to happen in the next two or three or four years, we probably would start collapsing charters here. I like the number 15. It's nice to have people who know the markets running their shops and feeling good about it.
Yeah, we could do it, but I think it would be a function of expansion out of our current market area, where we'd want to keep a charter in a different area. It'd be a function of growth really, to get down to it, but nothing on the horizon now. We're growing awfully fast. We're doing pretty well. Credit's good. Why would you try to screw it up?
That makes sense. All right. Thanks.
Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to Mr. Edward Wehmer for closing remarks.
Well, thank you. We appreciate you all listening in today. Get your shots if you can. I'll let you know how it goes for me. They never bothered me that much, but this is going to be an interesting time and interesting year. I think you can see that we kind of have our hands around what we want to do, and let's see if we can get there. If you look at our history, we've had 10% PTPP growth and with our growth in loan, our historical 10-year growth in loans. You take it back 30 years and see the numbers are even better. Over the last 10 years, we've had terrific growth in earnings and net book value in assets and deposits. I'd put our results up next to anybody. Keep the faith.
We're working on everybody's best behalf, and everybody, we'll talk to you soon. If you have any additional questions, feel free to call me or Dave or Murph or Tim or Dave Stoehr or Kate Boege. Have a great day, everybody, and thank you very much.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.