Propel Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
April 17, 2024

There are 11 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the Fulton Financial First Quarter 2024 Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

Operator

I would now like to hand the conference over to your speaker today, Matt Jozak, Director of Investor Relations. Please go ahead.

Speaker 1

Good morning and thanks for joining us for Fulton Financial's conference call and webcast to discuss our earnings for the Q1 ended March 31, 2024. Your host for today's conference call is Curt Myers, Chairman and Chief Executive Officer. Joining Curt today is Betsy Chubinski, Interim 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 atfult.com by clicking on Investor Relations and then on News.

Speaker 1

The slides can also be found on the Presentations page under Investor Relations 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 2 of today's presentation for additional information regarding these risks, uncertainties and other factors. Fulton undertakes no obligation other than required by law to update or revise any forward looking statements.

Speaker 1

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 and Slide 17 through 20 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.

Speaker 2

Well, thanks, Matt, and good morning, everyone. For today's call, I'll be providing high level thoughts on our performance for the quarter and provide a few comments on the company. Then I'll turn the call over to Betsy Chubinski, Interim Chief Financial Officer to review our financial results in more detail and step through our guidance for 2024. After our prepared remarks, we will be happy to take any questions you may have. We were pleased with our Q1 results.

Speaker 2

Operating earnings of $0.40 per share were a solid start to the year. We saw both deposit and loan growth. The net interest margin was in line with our expectations. We continue to have stable asset quality metrics and our capital position remains strong. During the quarter, we also increased our committed liquidity by 1,000,000,000 dollars We repurchased 1,900,000 shares of Fulton stock.

Speaker 2

I'd like to note that with this repurchase, we've now repurchased all 6,200,000 shares of common stock issued in connection with the Prudential Bancorp Inc. Acquisition in 2022. As of March 31, dollars 95,000,000 remains from our $125,000,000 2024 repurchase authorization. Turning to growth for the quarter. 1st quarter deposits outpaced loan growth at $204,000,000 or 4% annualized.

Speaker 2

Pricing, growth and mix remain our focus as we continue to position our product offering to support and grow our customer base. Loan growth as anticipated moderated to $93,000,000 or 2% on an annualized basis. Profitable growth and prudent credit decisions remain our focus. Our loan to deposit ratio ended the quarter at 98.6%, a linked quarter decline and well within our long term operating target of 95% to 105%. Despite ongoing market pricing pressures, net interest margin remained in line with our expectations, drifting lower by 4 basis points to 3.32%.

Speaker 2

Our non interest expense income was solid at 57,100,000 dollars We delivered record results in Wealth Management that helped offset a decline in customer interest rate swap income this quarter. Overall, we are pleased with our fee income performance and continue to benefit from the diversification of this revenue stream. Now let me provide some comments on credit. The provision for credit losses was $10,900,000 up slightly from $9,800,000 last quarter and in line with our expectations. While overall credit metrics remain historically strong, we saw some migration in certain credit metrics during the quarter.

Speaker 2

Criticized and classified loans drifted modestly higher. This migration is not specific to any particular industry, portfolio or region and we continue to focus on how higher interest rates and higher costs are impacting our customers. We remain cautious in our outlook for 2024. Now looking forward, as I mentioned last quarter, our Fulton First initiative is an internal to evaluate and improve how we operate. 3 key tenants of this initiative to drive our strategic transformation are simplicity, focus and productivity.

Speaker 2

During the quarter, we made good progress on this initiative with more work ahead of us. We anticipate sharing more details as appropriate in coming quarters. Overall, a solid start to the New Year. Now I'll turn the call over to Betsy to discuss our financial performance and 2024 guidance in more detail.

Speaker 3

Thank you, Kurt, and good morning. Unless I note otherwise, the quarterly comparisons I mentioned are with the Q4 of 2024 and loan and deposit numbers I'll be referencing are annualized percentage growth on a linked quarter basis. So starting on Slide 8, operating earnings per diluted share this quarter were $0.40 on operating net income available to common shareholders of $65,400,000 This compares to $0.42 of operating EPS in the Q4 of 2023. As Curt noted, loan growth was modest during the quarter, increasing $93,000,000 or 2%. Commercial lending contributed $73,000,000 of this growth or 2%.

Speaker 3

The primary contributors included commercial real estate of $124,000,000 or 6% and construction loan growth of $24,000,000 or 9%, offset by a decline in C and I loans of $78,000,000 primarily due to slightly lower line utilization. Our CRE growth was not concentrated in any one category or geography and as shown in our earnings deck remains well diversified. Consumer lending produced growth of $20,000,000 or 1% during the quarter, an increase of $70,000,000 in residential mortgages, primarily adjustable rate, was offset by decreases in other categories, including consumer direct and indirect loans, residential construction and home equity. Total deposits increased $204,000,000 during the quarter. Growth in time deposits, primarily with maturities less than 1 year, more than offset the seasonal outflows in our municipal deposits of $137,000,000 Non interest bearing DDA balances ended the quarter at $5,100,000,000 or 23.4 percent of total deposits in line with our expectations.

Speaker 3

Our net interest income guidance for 2024 assumes we will continue to see migration from non interest bearing to interest bearing products throughout this year, but at a slower pace than we saw last year. Our investment portfolio was up modestly for the quarter closing at $3,800,000,000 or 13.7 percent of assets. During the quarter, we purchased $210,000,000 of MBS and CMO securities. These balance sheet trends are summarized on Slide 10. You can see net interest income was $207,000,000 a $5,000,000 decline linked quarter, primarily driven by the modest change in the mix of our deposit portfolio.

Speaker 3

And as a result, net interest margin declined 4 basis points to 3.32 versus 3.36 last quarter. Loan yields increased 7 basis points during the period, increasing to 5.9% versus 5.83% last quarter. And cycled to date, our loan beta has been 50%. Our cost of total deposits increased 16 basis points to 195 basis points during the quarter. And cycle to date, our total deposit beta has been 36%.

Speaker 3

Turning to asset quality on Slide 11. NPLs increased $2,800,000 during the quarter, resulting in a slight increase in the NPL to loans ratio from 72 basis points at twelvethirty one to 73 basis points at quarter end. Net charge offs were $8,600,000 or 16 basis points. Gross charge offs of $11,000,000 were fairly granular with the largest being $2,500,000 on a C and I loan. Our allowance for credit losses as a percentage of loans increased slightly to 1.39% at quarter end.

Speaker 3

Turning to non interest income on Slide 12. Wealth Management revenues were 20,200,000 dollars up $766,000 compared to the 4th quarter, passing the $20,000,000 mark for the first time in company history. Wealth Management represents about a third of our fee based revenues with over 80% of those revenues recurring. Also, the market value of assets under management and administration increased over $700,000,000 to $15,500,000,000 at March 31, also a new record for our company. Commercial banking fees declined $2,000,000 to $18,800,000 as customer swap revenue heavily reliant on new originations declined compared to a strong 4th quarter.

Speaker 3

Consumer banking fees declined approximately $400,000 to $11,700,000 1st quarter seasonality played a part in that linked quarter decline. Our consumer banking business continues to deliver a very consistent income stream. Mortgage banking revenues increased $802,000 to $3,100,000 and were driven by a seasonal increase in mortgage originations as well as gain on sales spreads that rebounded from a low last quarter. We have a number of investments that are accounted for under the equity method on which we recorded a loss of $1,600,000 reflected in the other income line. Moving to Slide 13.

Speaker 3

Non interest expenses on an operating basis were $170,000,000 in line with the prior quarter and in line with our guidance. The material items we exclude from operating expenses include charges the following charges: $1,000,000 for special FDIC assessment $3,600,000 related to the closure of some financial centers, dollars 2,500,000 of consulting expense and $200,000 of severance expense. Slide 14 shows a snapshot of our capital base. And you can see as of March 31, we maintained solid cushions over the regulatory minimums. Also both bank and parent company liquidity improved during this quarter.

Speaker 3

On Slide 16, we are reiterating our guidance for 2024. Our guidance assumes that a total of 75 basis points of Fed funds decreases will occur in the second half of twenty twenty four. So our guidance is as follows. We expect net interest income on a non FTE basis to be in the range of $790,000,000 to $820,000,000 We expect the provision for credit losses to be in the range of $45,000,000 excluding security gains to be in the range of $235,000,000 to $250,000,000 expect non interest expenses on an operating basis to be in the range of $670,000,000 to $690,000,000 for the year. And to reinforce, that estimate excludes potential non operating charges we may incur as we move through the year.

Speaker 3

And lastly, we expect our effective tax rate to be in the range of 17% to 18% for the year. With that, we'll now turn the call over to Abigail for questions.

Operator

Thank you. Our first question comes from Frank Schiraldi with Piper Sandler. Please proceed with your question.

Speaker 4

Good morning. Good morning, Frank. Just on the Fulmin First initiative, I get that it's sort of a work in progress and you're looking for efficiencies kind of across the board. But I assume that includes some expense saves as you close financial centers and so forth. So can you just remind us when we look at the guide, I know there's no you take out the non operating stuff, but in terms of run rate expenses, does that include some benefit from Fulton First?

Speaker 4

Is it sort of your best guess at this point or what you get from Fulton First? Or is that something that could as we go through the year move that expense guide lower?

Speaker 2

Yes, Frank. We have certain expense saves in the back half of the year as we begin to implement Fulton First. So we really are in the analysis stage and building our plan. So the overall plan is really driven to accelerate growth in certain areas as we focus even more in certain areas. But we do expect to see benefits from operating efficiencies and doing things a little differently as well.

Speaker 2

So there are some expense components to the save. I'd just like to remind everybody that the Fulton First initiative is really an 18 month to 24 month journey. And we're in that 4 or 5 months of that work. So what you're really seeing right now is the investment or spend to develop the plan for implementation. And when we get to the point of implementing, we'll be able to share more details with you around expected benefits.

Speaker 4

Okay. And then on the loan growth, just looking at your guide on NII, is it fair to say, does that just assume sort of 1Q like loan growth spread across the year? And then as a follow-up to that, if you could just remind us what the on the deposit side, what the muni outflows were this quarter and how the timeframe for those to flow back in?

Speaker 5

Yes. Let me talk a little

Speaker 2

bit about loan growth then I'll give it to Betsy for the municipal outflows, just the seasonality to that. So on loan growth, we've talked about our long term organic growth targets in the 4% to 6% range. I think in this environment, we're going to be at the low end or maybe even under the low end of that long term range. So I think the growth in the Q1, we may exceed that as we look forward, but it's going to be in the same ballpark. We are being prudent and disciplined on pricing and credit as we originate loans moving forward.

Speaker 3

And the municipal outflows were $137,000,000 so with at least in certain of our areas, certain taxes are paid in the Q2. We should see a blip up, not huge in the Q2 and then the 3rd quarter is where we tend to see those spike.

Speaker 4

Got you. Okay. Thanks for the color.

Speaker 6

Thanks, Mike.

Operator

One moment for our next question. Our next question comes from Daniel Tamayo with Raymond James. Please proceed with your question.

Speaker 7

Thanks. Good morning, everyone.

Speaker 2

Good morning, Jamie.

Speaker 7

Maybe first just on the NII guidance. I reiterated from last quarter and you kept the 3 rate cuts assumed, which I understand given where we were at the end of the quarter. But maybe if you could give us your best guess as to what that guidance might look like without the June cut and if there's any kind of other details in terms of how you're thinking about the impact of fewer rate cuts on that guidance, that would be helpful.

Speaker 3

So Dan, this is Betsy. We've kind of modeled that out. Really, we can tell on our loans that reprice immediately, it's $25,000,000 on an annualized basis, but the harder thing to protect is deposits. But we've kind of modeled all that out. And with no cuts, we think we're going to tilt towards the high end of the range, maybe a little bit higher.

Speaker 3

But again, they're going to occur later in the year, so the impact on the year is going to be moderated.

Speaker 7

Okay. All right. That's with no cuts, high end of the range. Okay. All right.

Speaker 7

And then switching gears here, if I can, just to the office portfolio, appreciate all the detail you guys put in the deck on that. Just wanted to know if you had within that group of loans, what the amount that's either substandard or criticized or classified or however you think about the early stage for that. I'm just curious how that portfolio is trending relative to the rest of your book?

Speaker 2

Yes, Danny. We've seen stability in that overall portfolio. Balances are stable. We've done we've moved some out or paid off. We've had some originations that we did not much this past quarter, but we did some in the 4th quarter.

Speaker 2

So that portfolio is really stable. We're pretty direct in sharing what we have in classified criticized there and it's shown stability as of today.

Speaker 7

Okay. All right. Understood. All right. Appreciate you taking my questions.

Speaker 2

You bet, Danny.

Operator

One moment for our next question. Our next question comes from Freddie Strickland with Janney Montgomery Scott Research Division. Your line is open.

Speaker 5

Hey, good morning everybody. Good morning, Fady. Just wanted to continue on that last question on office. Appreciate the detail on the deck. But I see that there's $146,000,000 located in the central business districts.

Speaker 5

Is that pretty evenly distributed across geographies? Or is it more Philly or DC or elsewhere? Just trying to get a sense of where which central business district those might be in?

Speaker 2

Yes, our largest is Philadelphia and it's not a lot of loans. We're getting in handy here. It's 7 loans and Philly is the biggest portion. And then actually the next biggest portion as we look at the distribution is spread throughout. And then D.

Speaker 2

C. And Baltimore would be less than half of what we have in Philadelphia. And again, those numbers overall are pretty granular. Philadelphia is 255 of that total. So none of those are a significant portion.

Speaker 2

It's pretty diversified and spread out.

Speaker 5

Got it. That's helpful. Switching gears for a second, it's great to see credit relatively stable this quarter and your net charge offs are actually lower than what I had modeled. Can you talk about what you're seeing in terms of trends in criticized and classified?

Speaker 2

Yes. So criticized and classified is moving up slightly. I think the number is about $77,000,000 linked quarter. So not a significant move, but it is trending up a little. We are adding, so there's generation there and then there's resolution as well.

Speaker 2

So we're watching that very closely. When you look at the loans that are moving in to criticize and classified like they're pretty diversified and granular around C and I, CRE. So we don't see any specific thing in the migration that gives us concern about any individual portfolio. It really comes down to the individual borrower being able to navigate or being in a position to handle the current economic environment.

Speaker 5

Got it. Appreciate the color. One last quick one. Forgive me if I missed this, but what was the balance of AOCI this quarter?

Speaker 2

Let me see if we have that here quick. Sure we

Speaker 6

do.

Speaker 2

We don't have it handy. We'll follow-up with you, Feddy, to give you that specific number. We don't have the reconciliation right here in front of us.

Speaker 5

No problem. Thanks so much for taking my question.

Speaker 4

Sure.

Operator

One moment for our next question. Our next question comes from Chris McGratty with KBW. Please proceed with your question.

Speaker 8

Hey, how's it going? This is Andrew Leichner on for Chris McGratty.

Speaker 1

Good morning, Andrew.

Speaker 8

Hi, how's it going? So just on the NII guide, just wondering what assumptions you're using for deposit mix and downbeat on those rate cuts to get to your low and high end of the guide?

Speaker 3

So on the deposit mix, we are assuming some continued decline in the percentage of non interest bearing deposits. We feel like we've been conservative in those projections relative to the longer term history. The beta on that is probably I don't want to quote that, but I think we're going to see a relatively low beta on that just based on competition.

Speaker 2

We really see a stabilizing on the deposit as we get to CD rolls. As we look forward, the pressure of pricing up on CD rolls begins to stable it's not as significant, begins to stabilize. So I think there's a lot of stabilizing forces as we kind of look forward. The biggest impact is going to be mix shift non interest bearing to interest bearing and that is moderating but is continuing.

Speaker 8

Okay, great. Thank you. And do you have the amount of CDs that are maturing this year and what those are rolling off that compared to what you're offering today?

Speaker 3

So through the end of this year, there's probably about $1,900,000,000 and that weighted average rate is I have it for the next 12 months. So I'm doing math in my head here. Apologies. The weighted average rate is probably about a 4 roughly $4.40 I will tell you on average that rate over the past couple of months, we're putting on new CDs at a weighted average rate of about $4.40 So as we get toward the end of the year, again, absent other changes, which we know there'll be, those we're not going to really see an impact from those renewals or new CDs.

Speaker 2

Yes. So we feel really good about how we've managed the duration in that book. And each month, as we move forward, we get again to that role being a more stabilizing impact on the overall balance sheet.

Speaker 8

Got it. Thank you. Appreciate the quick math there. And then just last one if I can. With that, you repurchased 1,900,000 shares and you have 95,000,000 remaining on the authorization.

Speaker 8

Are you still comfortable with the operating environment and your current capital levels to contemplate further buybacks? Thanks.

Speaker 2

Yes. Great question. And we continue to evaluate that. Our priority is to support organic growth, 1st. 2nd priority would be any corporate initiatives that we have that would require capital and then buybacks.

Speaker 2

So we would evaluate that environment and we feel that based on our capital levels we could be active in our buybacks throughout the remainder of the year, but we may not depending on the situation. We have the authorization remaining for the $95,000,000 And if you look back over recent history, we've used that almost every quarter to some degree based on the environment that we see. But again, it is the last priority in our capital utilization.

Speaker 9

All right.

Speaker 8

Thanks for taking

Speaker 2

my questions.

Speaker 8

I'll step back.

Speaker 9

Thanks, Andrew.

Operator

One moment. Our next question Our next question comes from David Bishop with Hovde Group. Your line is open.

Speaker 6

Yes, good morning.

Speaker 2

Good morning, David.

Speaker 10

Hey, Kirk, a question circling back to the first. I know you sort of focused on the maybe the expense side of the things, but are there revenue enhancements that could emanate from this project longer term?

Speaker 2

Yes, definitely. The focus part of that initiative is really to accelerate growth in areas where we deliver high value for customers, have more differentiation and we feel we can we're doing well and can do even better with some of the initiatives and strategies that we're contemplating. So that is the first priority for us is how to grow the company effectively going forward. So we do think those accelerators exist. But there's also an efficiency and operating environment and tech benefit realization, things like that that will enhance efficiency and productivity too.

Speaker 2

But that focus part is really on the growth side.

Speaker 10

Got it. And I know there was some noise this quarter with some of the branch closures and such. Did that flow through to the I saw occupancy expense was up a smudge. I don't know if that was weather related or related to that initiative. I thought those were another expenses, but I don't know if Betsy occurred.

Speaker 10

Any guidance in terms of the run rate on the occupancy side of the equation?

Speaker 5

I'll let Betsy take this

Speaker 2

one because she loves this expense item.

Speaker 3

I'm sorry, we're laughing here. Yes, the increase in occupancy was weather related. So snow removal costs. So that should moderate.

Speaker 2

It's life in the Northeast.

Speaker 10

Yes. We've got to love it up here. You never know what's going to hit. Also maybe a high level question, Kurt, just in terms of capital allocation. Appetite for more M and A, I know that the Providence Lakeland deal has some interesting appendages to it.

Speaker 10

I don't know if that sobers your outlook for additional M and A and maybe how comfortable you'd be maybe looking at maybe some distressed bank sales out there. Just curious your M and A appetite at this point. Thanks.

Speaker 5

Yes. So our M and

Speaker 2

A strategy remains the same. I've talked about looking at it in 2 buckets, the $1,000,000,000 to $5,000,000,000 community bank, really additive to our organization and we're focused on those. We do think we have opportunity in that category. We also focus on the $5,000,000,000 to $15,000,000,000 $15,000,000,000 probably being the largest we would consider, more strategic partnership. There's a handful of those, but we would consider those as well.

Speaker 2

So the strategy is the same. The environment is we feel we have opportunities for M and A. We evaluate those when we have the opportunities. And if we can work on something that positively impacts our shareholders over the long haul, we certainly would be active.

Speaker 10

Got it. Appreciate the color.

Speaker 2

You bet.

Operator

One moment for our next question. Our next question comes from Manuel Nieves with D. A. Davidson. Please proceed with your question.

Speaker 6

Hey, good morning. Can you just go into a little bit more detail on what's kind of driving the bid, I guess, slower end of the guide on loan growth? I understand the pricing side. Does borrower demand at high rates also have an impact and just is deposit gathering also slowing it at all?

Speaker 1

So deposit

Speaker 2

gathering, we're doing a great job I think in that. That is not hindering our growth at all. If anything, I think it's an opportunity to fuel our growth as we're doing a good job there. The biggest thing on loan growth is our pipeline commercial loans pipeline is up linked quarter and up year over year. But what we're seeing is the what we call the pull through rate on that pipeline continues to be challenged.

Speaker 2

Customers are very cautious and projects are not happening because costs are up, rates are up, things like that. So the biggest impact is not opportunity. It's either borrowers deciding to move forward on a project or spending or us making sure we get the right pricing credit terms.

Speaker 6

I appreciate that. Does that mean that no cuts gets you to the high end of the NII range, but perhaps there would be an increase in loan demand if we did get Fed cuts. Is that kind of a right way to think about it? And what would be where you would be happiest?

Speaker 2

We like stability. That's the easiest thing to navigate. So just some level of stability would be good. We really position the company, to effectively perform no matter what happens. We have puts and takes on rates up or rates down.

Speaker 2

Rates up, we benefit in some ways and have more pressure in some ways. Rates down, we benefit in certain ways and have more pressure in certain ways. So there are a lot of different variables and what we really focus on is having the company in a position that we perform effectively no matter what happens to rates.

Speaker 6

I have one last kind of like more specific modeling question. I had that you expected the non interest bearing mix getting around 22% by year end. Is that change at all with a little bit more outflows this quarter? Is that still right around the same mix that you end the year at?

Speaker 3

So we ended the quarter at 23.4%. I think for your modeling, 22% certainly a reasonable. If you look back over the past 15 years, that's a good range. You have to go way back to get much slower than that.

Speaker 6

Okay. I appreciate that. Thank you very much.

Speaker 2

Thank you, Emmanuel.

Operator

One moment for our next question. Our next question comes from Matthew Breese with Stephens. Your line is open.

Speaker 8

Good morning, everybody.

Speaker 2

Good morning, Matt.

Speaker 9

Hey, I wanted to go back to Fulton first. How much more onetime costs do you expect? And over what timeframe do you think the majority of those onetime costs are going to occur?

Speaker 2

Yes. So we do expect increased one time costs as we get into implementing the changes that we're designing and working on right now. So right now we just have the spend to develop the plan. And then as we implement that plan there certainly would be one time costs from contracts and other things that we would consider efficiencies overall. So we do have those planned and we would be disclosing those as we move forward.

Speaker 2

Our real goal is to get to showing everyone the plan, what costs we have and what benefits we're going to derive. We're just not there yet, but we wanted to be transparent with that we're spending money and investing money to figure that plan out.

Speaker 9

Okay. But should we expect kind of this quarter's $6,400,000 in one time cost to recur for at least the near term or is that an elevated figure in your view?

Speaker 2

Yes. We really have those planned out. Again, it's 18 to 24 month project overall. The one time cost would be concentrated more at the front end of that. So thinking over the next couple of quarters, we would have more of the one time cost and then we would be getting the benefits then over the full 24 months.

Speaker 2

So that I think you're thinking about it the right way, Matt.

Speaker 9

Okay. I wanted to go back to the office portfolio. You have 8 office relationships over $20,000,000 dollars You discussed kind of the 3 in the central business districts. But I was hoping within the 8, you could talk about maybe the 3 or 4 largest relationships. What are the sizes there?

Speaker 9

How are they performing, maturity schedules and any sort of details on kind of LTV debt service coverage ratios for just overall color on the biggest stuff?

Speaker 2

Yes. So the top 5 borrowers there are in the $25,000,000 to $30,000,000 range in balance. Our largest deal is about $30,000,000 in balances. We don't have any maturities that are coming up that we either aren't comfortable with or don't have a resolution for. So we feel good about the position of those largest borrowers at this point.

Speaker 2

And we are paying close attention to every office loan we have from the $400,000 one we originated in the Q1 to our largest one of $30,000,000 Are they all current? Yes.

Speaker 9

Okay. And then you had a $3,100,000 loss on asset disposals this quarter. What was in there?

Speaker 3

Those were 5 branches that we have committed to close. I believe they're closing the end of this month.

Speaker 2

Yes, next week they will close.

Speaker 9

Okay. And then, the last one is just on commercial swap activity. My gut here is with slower growth, that will remain kind of at a depressed level, but I wanted your thoughts on whether we can get back to kind of a north of $3,000,000 run rate there.

Speaker 2

Yes. It really comes down to mix of origination versus overall growth. So obviously when you have higher overall growth, your mix is better too. You have volume in every category. So it really, what drives those numbers is the larger originations.

Speaker 2

So large C and I and large CRE originations are what really drive the number. We have a good core kind of recurring business. So that's why you see that there's kind of a floor on that fee income each quarter. But to get the $3,000,000 $4,000,000 quarters that we've seen historically, you really have to have a few larger originations that are a derivative or a swap done on those.

Speaker 9

Got it. Okay. That's all I had. I appreciate taking my questions. Thank you.

Speaker 3

Thanks, Matt.

Operator

That concludes the question and answer session. At this time, I would like to turn the call back to Kurt Myers for closing remarks.

Speaker 2

Well, thank you again for joining us today. We hope you'll be able to be with us when we discuss Q2 results in July. Thanks everyone.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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