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spk00: Hello and welcome to today's Sandy Spring Bancorp Incorporated earnings conference call and webcast for the first quarter of 2022. My name is Bailey and I will be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I would now like to pass the conference over to Daniel Schreider, President and CEO. Daniel, please go ahead.
spk05: Thank you, Bailey, and good afternoon, everyone. Thank you for joining us for our conference call to discuss Sandy Spring Bancorp's performance for the first quarter of 2022. As mentioned, this is Dan Schreider, and I'm joined here by my colleagues Phil Mantua, Chief Financial Officer, and Aaron Caslow, General Counsel for Sandy Spring Bancorp. As usual, today's call is open to all investors, analysts, and the media. There's a live webcast of today's call, and a replay will be available on our website later today. Before we get started covering highlights from the quarter and then taking your questions, Aaron will give the customary safe harbor statement.
spk01: Thank you, Dan. Good afternoon, everyone. Sandy Spring Bancorp will make forward-looking statements in this webcast that are subject to risks and uncertainties. These forward-looking statements include statements of goals, intentions, earnings, and other expectations, estimates of risks and future costs and benefits, assessments of expected credit losses, assessments of market risk, and statements of the ability to achieve financial and other goals. These forward-looking statements are subject to significant uncertainties because they are based upon or affected by management's estimates and projections of future interest rates, market behavior, other economic conditions, future laws and regulations, and a variety of other matters, including the impact of the COVID-19 pandemic, which by their very nature are subject to significant uncertainties. Because of these uncertainties, Sandy Spring Bancorp's actual future results may differ materially from those indicated. In addition, the company's past results of operations do not necessarily indicate its future results.
spk05: Thanks, Aaron. We're pleased to be on the line with you today to discuss our first quarter performance. On the heels of a record year in 2021, we feel we really carried that momentum and delivered a strong first quarter. We continue to provide excellent commercial loan production and growth, which is especially notable during a quarter that is traditionally soft. We maintained a strong pipeline all quarter long, and by continuously refilling that pipeline, we demonstrated our ability to grow client relationships, win new business, and set ourselves up for sustained success. Fueling the liability side of the balance sheet, our treasury management teams and branch colleagues continued to generate impressive deposit growth during the quarter. And while our wealth revenue was impacted by market forces outside of our control, our wealth group continued to drive new business that will benefit the company. into the future. We also successfully enhanced our regulatory capital through our sub-debt offering in the first quarter, and our sustainable margin remains a source of strength. And our efficiency ratio is a testament to our ability to manage this revenue to expense relationship. And I'll hit on all of these in more detail during my comments, but for now, let's get into the details of what made it such a successful quarter for the company. Today we reported net income of $43.9 million, which is $0.96 per diluted common share for the quarter ended March 31st, compared to net income of $75.5 million, or $1.58 per diluted common share for the first quarter of 2021, and $45.4 million, or $0.99 per diluted common share for the fourth quarter of 2021. Core earnings for the quarter were $45.1 million compared to $46.6 million for the linked quarter, and $83.5 million for the prior year quarter. The decline in core earnings is primarily the result of a charge to the provision compared to a significant credit for the prior year quarter. A slight decline in core earnings from the linked quarter is primarily driven by lower PPP income coupled with lower non-interest income partially offset by lower non-interest expense. The provision for credit losses was $1.6 million compared to the prior year's quarter's credit of $34.7 million. The provision this quarter reflects continued growth in the loan portfolio as well as our view of recessionary pressures. To clarify, given the looking forward nature of our CECL methodology, we proactively made changes in certain qualitative factors based on management's assessment of the probability for a recession within the next 12 to 18 months. Shifting to the balance sheet, total assets were $13 billion, a 1% increase compared to $12.9 billion at March 31 of 2021 and $12.6 billion at December 31 of 2021. Over the past two quarters, excess liquidity from deposit growth as well as PPP loan forgiveness was used to fund loan growth as well as growth in our investment securities portfolio. Total loans excluding PPP increased 10% to $10 billion compared to $9.1 billion at March 31, 2021, And excluding the impact of the PPP loan forgiveness, total commercial loans grew by 983.2 million, or 13%, during the previous 12 months. During this period, the company generated $3.8 billion of gross new commercial loan production, of which $2.5 billion was funded. This production more than offset the $1.5 billion in non-PPP commercial loan runoff. During the first quarter of 2022, funded commercial loan production increased to $545 million or by 90% compared to $288 million for the same quarter of the prior year. The growth in the commercial portfolio, excluding PPP, occurred in all commercial portfolios and was led by the $736 million or 20% growth in the investor-owned commercial real estate portfolio. Year over year, The consumer portfolio declined 15% due to refinancing activity in the residential mortgage markets. Looking forward, our commercial pipeline continued to be solid at $1.5 billion at the end of the quarter, which is comparable to the pipeline at year end and in prior quarters. Our outlook for loan growth continues to be in the 8% to 10% range, assuming the market competitive pricing is reasonable and meets our profitability targets. Looking at PPP at the end of the quarter, we had outstanding loans of $75 million compared to over $1 billion in the prior year quarter, and remaining fees to be earned total $1.7 million. PPP interest income and fees earned in the quarter totaled $3.22 million compared to $9.22 million in the linked quarter and $10.9 million in the prior year quarter. Shifting to the deposit side of things, year-over-year deposits grew 2%. This was driven by 7% growth in non-interest-bearing deposits and reflects the impact of PPP forgiveness and the growth in transaction relationships. Due to the planned attrition of time deposits, interest-bearing deposits declined 1%. Non-interest income for the current quarter decreased by 29% or $8.3 million compared to the prior year quarter. This anticipated reduction was primarily driven by a decrease in mortgage banking revenue given the increase in market rates as well as the reduction in refinance activity. As a result, income from mortgage banking activities declined 77%. Other non-interest income decreased 45% compared to the first quarter of 2021. And these decreases were partially offset by 7% growth in wealth management income, 26% growth in service charges on deposit accounts, and a 10% increase in bank card fees. We successfully executed on the strategy I mentioned last quarter to hold a larger percentage of mortgage production on the balance sheet in an effort to regrow this asset class. Compared to the linked quarter, mortgage loans held in portfolio grew 6.7%. We expect future levels of mortgage gain revenue to be comparable to that of the current quarter as refinancing activity is assumed to continue to decline with expected market rate increases. While wealth management income decreased 3% this quarter, our wealth group continues to successfully develop new and existing relationships that will translate into portfolio growth as the market rebounds. The net interest margin was 3.49% compared to 3.56% for the same quarter of 2021 and 3.51% for the linked quarter. The amortization of fair value marks derived from acquisitions did not affect this quarter's net interest margin compared to 3.46 for the first quarter of 2021 and 3.52% for the linked quarter. The current quarter's core margin, excluding the impact of PPP revenues, was 3.41%. On a go-forward basis, we expect the margin to show continued stability with the potential for slight expansion. In our forecast, we anticipate rates for the remainder of the year that would include anywhere between five to eight rate increases by the Fed, which depends on the size of each increase, but overall totaling 2.25% for the remainder of 2022. And we're also forecasting three additional moves in 2023 at this time. Non-interest expense for the current quarter decreased 6 million, or 9%, compared to the prior year quarter. But the prior year quarter included a $9.1 million loss from the redemption of FHLB borrowings and was the main driver of the quarter-over-quarter decline. Excluding that redemption, non-interest expense increased 5% compared to the prior year quarter, driven by an increase in compensation and benefit costs. The non-dap efficiency ratio for the first quarter was 49.34% compared to 42.65% for the prior year quarter and 50.17% for the lean quarter. The decline in non-interest income, primarily mortgage gains, and the increase in non-interest expense drove the increase of the non-GAAP efficiency ratio compared to the prior year quarter, but it does remain within our desired range. Shifting to credit quality, all credit-related metrics continue to be very strong. The level of non-performing loans was 46 basis points compared to 94 basis points at March 31 of 2021 and 49 basis points at December 31st. Loans placed on non-accrual totaled $1.5 million compared to $400,000 for the prior year quarter and $1.5 million for the linked quarter. Non-accrual loans at quarter end declined from the prior quarter due primarily to payoff activity. Net charge-offs for the first quarter were $200,000 compared to $300,000 for the first quarter of 2021 and $400,000 for the linked quarter. And the allowance for credit losses was at 110.6 million, or 1.09% of outstanding loans, and 239% of non-performing loans, compared to 109.1 million, or 1.1% of outstanding loans, and 224% of non-performing loans at the end of the prior quarter. Excluding PPP, the allowance for credit losses to outstanding loans was 1.1% at quarter end. The increase in the allowance compared to the previous quarter was a result of growth in the loan portfolio during the quarter, net of the impact of continued improvements in forecasted economic metrics, and an update to all other qualitative factors used to determine the allowance for credit losses. On the capital side, the tangible common equity ratio decreased to 8.7% of tangible assets at March 31st compared to 8.9% at March 31 of 2021. This decrease is a result of the $107.3 million repurchase of common shares during 2021 and the $66.6 million increase in the accumulated other comprehensive loss, coupled with the increase in tangible assets during the year. The company had a total risk-based capital ratio of 16.77%, a common equity Tier 1 risk-based capital ratio of 12.03%, a Tier 1 risk-based ratio of the same amount, 12.8%, and a Tier 1 leverage ratio of 9.66%. The increase to the AOCI was predominantly driven by the after-tax mark-to-market decline in the bank's investment portfolio. Its impact on our tangible capital levels will continue to be monitored in conjunction with any future decisions we make concerning share repurchase activity. As you know, the Board of Directors took action during the quarter to authorize the repurchase of $50 million worth of shares. And beyond our financial performance, there are a few other updates I'd like to share with you before we close and then move to your questions. As you know, we have a frozen defined benefit plan. We started the process of terminating our pension plan, and we expect the termination to occur in late 2023. At this point, there's no estimate of expense at this time. On the corporate recognition front, Sandy Spring Bancorp was named a top five bank by Forbes and S&P Global Market Intelligence. Both of these honors are in recognition of our financial performance and really grateful to our employees for making this performance possible. We also recently announced three exciting internal promotions. Melissa Kelly was promoted to Division Executive Marketing. Sherman Moore took on Division Executive of the Private Client Group. And Charlie Cullum was promoted to Division Executive and Corporate Treasurer, effective upon the retirement of our current Corporate Treasurer, Mark Duhamel. on June 30. We have exceptional talent at Sandy Sprink and really pleased that we are able to grow and promote from within the company. And finally, last month we issued our second annual corporate responsibility report. This report details where we are in our journey to address environmental, social, and corporate governance issues that we believe are most important to our stakeholders and to drive long-term value. You can find the report and read it on our website. Bailey, that concludes our general comments for today, and now we can move to your questions.
spk00: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. Our first question today comes from Casey Whitman from Piper Sandler. Casey, please go ahead. Your line is now open.
spk02: Hey, good afternoon, everyone.
spk05: Good afternoon, Casey. Hi, Casey.
spk02: Hi. So we've already heard from at least one of your competitors that they started to raise deposit rates, but are you seeing that at all? And also just maybe remind us what kind of betas you're assuming in your alcohol modeling and around your commentary that you can keep that core margin pretty stable here.
spk08: Yeah, Casey. So we have not ourselves made any moves towards increasing any of the deposit rates at this point, and we have rarely very little, if any, anymore that is completely tied to market rates with the exception of a couple of broker type transaction accounts that we have with a couple of other larger banks. We have not seen in this market an overall move by any of our competitors. I think I do know of one, and that may be the one you're referring to, that has jumped out there a little bit and made some changes to their offering rates. But I think we're like most others that are going to try to lag this as long as possible and minimize the impact until it's pretty well absolutely necessary. When we do model our deposit base, the kind of transaction-oriented accounts that would be subject to change, we use about a 35 to 40% data on those. We think that's actually pretty aggressive and would certainly hope to not have to go to that extent. I think as I've said before, And Dan alluded to this a little bit in his comments related to the number of moves the Fed's anticipating or, you know, the potential. The larger the movements, the more I think we end up being kind of pushed or compelled to have to move and move more in larger pieces. So if we do in fact get 50 basis point adjustments here, or bumps in the next couple of meetings, then I think that, you know, that may tend to change the equation. But I still think that we'll try as hard as we can to lag all of that as much as possible.
spk02: Okay. What about just some pressure in the second quarter from a full, I guess, quarter impact on the sub-debt? Would you expect that at all? Or can we still – can you still expect to hold the margin, I guess, in this low 340? Yeah.
spk08: Yeah, I've kind of taken that into consideration in terms of Dan's qualitative comments about it being some slight expansion. I think the bigger element of it is something else that he said, which is related to making sure that we get paid for the lending activities that we get involved in going forward. And that's probably got as big an impact as anything else relative to, you know, maintaining stability and having some additional expansion even in the face of rising rates.
spk02: Okay, I'll shift gears maybe to just a bigger picture question. Dan, can you remind us sort of your priorities for uses of capital and how that plays into sort of how aggressive you might be with the buyback and maybe just update us on your general appetite for M&A?
spk05: Yeah, Casey, first and foremost, you know, we've developed over the course of the last several quarters and really nice momentum of growth here organically within our market. And we don't, we really don't want that to, you know, be limited in any way. And so from a, you know, utilization of capital standpoint, that will remain a priority. You know, as you know, in this business, you know, scale continues to be important, which would, you know, have us continue to build relationships to, you know, and so I think, acquisitions, both bank and non-bank, would be something that we would still see as part of our going forward strategy from a capital utilization standpoint. We look forward to continue to be a dividend payer as long as performance warrants it. And share repurchases, you know, we were active in 2021. As we communicated, we've earmarked some dollars from our recent, you know, sub-debt offering to be utilized for that. And so we're evaluating when the best time to do that is. And so I think those are kind of the four different ways in which we look at capital. I think the most important thing is we don't want to put ourselves in a position, and I think we're in a great position, not to have to be concerned about organic growth and to be active in growing the company going forward.
spk02: Understood. Thank you.
spk05: Thank you, Casey.
spk00: Thank you. The next question today comes from Eric Zweig of Birmingham Scattergood. Eric, please go ahead. Your line is now open. Thank you.
spk04: Good afternoon.
spk08: Hi, Eric. Hi, Eric.
spk04: I wonder if I could start. I may have just overlooked this somewhere. Do you have the current kind of period end balance as well as the remaining unamortized fees for the PPP loans?
spk05: Eric, this is Dan. At quarter end, we were at 75 million in PPP outstandings and 1.7 in remaining fees to be earned.
spk04: Perfect. Thank you. And then just looking at the average earning balance, average interest earning balance for the quarter, they were down quarter over quarter. It looks like the driver was lower average balance of the interest-bearing deposits at banks. And as I looked at the period end, for the first quarter as well as the fourth quarter of last year. It looks like both of those balances were higher. So just kind of curious what transpired there in the quarter with those balances and how should we think about the trajectory of average earning assets going forward into 2Q?
spk08: Eric, this is Phil. I think all of that is just related to our ability to absorb the additional liquidity that we talked about in prior quarters. And a lot of that happened at the very end of last year, if you remember, in terms of the kind of back end load and loan growth. So that's gonna have a bigger impact on the average here in the first quarter, given where we're gonna start. And so I would think that the levels we're at now, where we ended this quarter, are those that we would probably look to manage at going forward, having really been, as Dan mentioned in his comments, really successful in our attempts to absorb that excess liquidity. So I think that's where I would kind of look at it as we move forward and not look for it to either shrink or grow significantly in either direction.
spk04: That's helpful. Thank you. And then just given the strong loan production in 1Q, can you provide an update on the dollar value of the pipeline at the end of the quarter and then how that compared to at the end of last year?
spk05: Yeah, Eric, Dan, if you look back over the past four quarters, including this quarter end, I think with the exception of end of the third quarter, we were about a billion and a half going into a quarter end. in the commercial pipeline. I think we had one quarter at the end of the third quarter where it had grown to 1.7. But where it is now or where it was at the beginning of the second quarter is where it was at the end of the year. And that is, from our perspective, pretty exceptional given the fact that the first quarter, if you go back many, many years, has traditionally been a pretty soft quarter in terms of commercial loan. production and growth. So I feel pretty good going into the second quarter.
spk08: Yeah. Hey, Eric, this is Phil again. Let me come back to your commentary around that cash and due front position. The other thing that I just thought about that did impact things as we got through the end of the quarter was the additional funds that were raised through the sub-debt issuance of $200 million. there wasn't enough time in a quarter for that to be fully absorbed. So that is a bit of an inflationary position in that cash number today that we would certainly hope to have redeployed into loan growth here as we move forward.
spk04: Got it. That makes sense. And so I guess going back to your earlier comment that kind of managing at the current level, we should look at that average earning, kind of the average balance instead as you kind of put some of that period into work. Okay, great, perfect. And then last one for me, just curious if you can provide any insight into the current kind of yield in the commercial pipeline and just curious how that compares to the existing yield in that portfolio, if you'd expect that to be able to kind of hold the line there or with the increase in interest rates recently, is there some opportunity to see some upward revisions?
spk05: Yeah, we'll probably tag-team this one. Phil can talk a little bit about the history from the quarter in terms of average yields. I think what we're experiencing is the competitive environment, and particularly in commercial banking, has been slow to react to the realities of where the Treasury curve has gone. We're seeing that play out appropriately in the residential mortgage space, but not as quickly as it needs to commercially. Our expectation, and a lot of it's driven by what we also think we need to do on the deposit funding side, is that we need to see some expansion in those yields as we move through 2022.
spk08: Yeah, and Eric, from a book yield standpoint here in the first quarter, in the more significant categories where we had growth, which would be the owner-occupied fixed and investor real estate fixed categories, those yields probably averaged out in the mid-350 in terms of investor real estate and probably in the 365 to 375, maybe 380 range on the owner-occupied side. So, you know, sub-4% rates as we look forward, would certainly not be optimal from my perspective.
spk04: Great. I appreciate the color. Thanks for taking all my questions today.
spk00: Thanks, Matt. Thank you. The next question today comes from Catherine Miller from KBW. Catherine, please go ahead. Your line is now open.
spk03: Thanks. Good afternoon.
spk08: Hi, Catherine. Hey, Catherine.
spk03: Just a question on expenses. The expense run rate came in a little bit lower than you had guided. Are you thinking we return to the $64 million, $65 million range next quarter, and how do you think that expense growth is moving forward this year? Thanks.
spk08: Yeah, Catherine. This is Phil. I think the direct answer to your question is more yes than not. This quarter, I think we, if you want to call it, we benefited from the fact that, I don't know if you really benefited from an expense standpoint, from the fact that we've got a fair number of vacant positions and things that we're trying to redeploy with to help us grow the company forward. And that ultimately, you know, should occur as we find the appropriate talent and resources that we're ultimately looking for. Because the large Joe Moore, Norcal PTAC, Majority of the variance here was in that that's you know salary and benefit area, and so I would I would run projections using that. Joe Moore, Norcal PTAC, That 64 to $65 million range as an estimate, and you know, as I think I said on the call last time on a kind of normalized basis about a 4% growth and expenses on a year over year basis as well.
spk03: And do we see any benefits from lower mortgage on the expense line as well?
spk08: It's not really evident in that number this quarter. It could be more so as we move ahead, as we try to react to, you know, kind of the now or new realities of where mortgage activities are and are probably going to be. You know, as we look at what the impact is going to be, certainly on the gain numbers, you know, and I think we got a pretty good handle on where that's at to then have some hopeful, you know, come back on the expense side. It certainly won't get anywhere near offsetting it, but there ought to be some, but that has not manifested itself in this quarter yet. Got it.
spk03: Okay, great. And then on the efficiency target, you've targeted a 50 to 51% target. Is that still, you know, where you're thinking that ratio should be or is Is there any, could you even push that lower just given a higher margin and a better revenue outlook?
spk08: I would maintain it in that same place, even with the possibility of some additional margin expansion there. Given what we're trying to do from a longer-term perspective in investments for the future, some of which, again, didn't really work its way into the first quarter based on the speed of accomplishment in certain projects, that will ultimately come through. And so I think that that'll temper the ability for that efficiency ratio to be a whole lot lower than where it is at this point. Great.
spk03: And then my last question just on fee outlook. I know, Dan, you gave us some guidance on mortgage, but how about other fees? Any guidance on where you think non-mortgage fee growth should land this year?
spk05: Yeah, when we put our plan together, we customarily, particularly in the wealth area and insurance area, plan for double-digit anywhere from 8% to 10%, 8% in the insurance, 10-ish in the wealth space, absent market moves. So even with, if you look back over prior year quarter, despite what we experienced in the first quarter in terms of asset values, we still grew the wealth business year over year. And I still think we'd aim for the same. Obviously, that was a greater volatility given the market side. Those are really, outside of mortgage, it's wealth and insurance and our service charge-related revenue, while we saw some growth just because the world opened back up again, not a significant piece of our overall fee-based revenue.
spk08: Yeah, Catherine, I will remind everyone that we will be subject to Durbin in the second half of the year. And we have, and maybe you have too, but we've built into the third and fourth quarters and beyond the reduction that's going to come from that kind of being legislated on us. And I think on a quarterly basis, it's probably somewhere in a million, a million two, a quarter.
spk03: All right, that's great. Yeah, we do have that in our numbers, but thanks for the reminder there. All right, that's all I got. Thank you so much.
spk08: Thanks, Catherine. You're welcome. Thank you.
spk00: Thank you, Catherine. The next question today comes from Russell Gunther from D.A. Davidson. Russell, please go ahead. Your line is now open.
spk06: Hey, good afternoon, guys.
spk08: Hi, Russell. Hey, Russell.
spk06: Can I circle back to the growth conversation? You guys reiterated the 8 to 10 on the commercial side, also talked about adding qualitatively to reserves for the potential for recessionary pressures in the next 12 months. So just curious if that 8 to 10 contemplates any softness in the back half of the year and you're comfortable there, you know, given where pipelines are and other catalysts, but what are your thoughts there?
spk05: Yeah, it does not anticipate a softness in the latter half of the year. We're benefiting, however, in the event things did soften up, a really strong beginning to the year with how we closed out 21 in the first quarter of 22. And even this first month in the second quarter is proving out to be strong. So the 8 to 10 is, we think, kind of a healthy level for us to maintain, you know, our view towards desired credit quality as well as our ability to take, you know, to win our fair share of opportunities at profitable levels within the year. So it does not anticipate a slowdown, so to speak, toward the end of the year.
spk06: It's helpful.
spk05: I appreciate it.
spk06: And then you touched on the growth in the single-family portfolio. Is that mostly the arm product? Would you continue to portfolio around current levels? And if so, how are you thinking about overall loan growth, depending on what you're thinking on the consumer side?
spk05: Yeah, I think on the res mortgage piece, we had seen over the course of several periods some runoff in that portfolio. We had not replenished it. And so when we kind of got into the third quarter of 2021, decided that from a diversification standpoint, it would be wise to rebuild that. I think future growth in that is really going to be determined by what we believe is most valuable to us, whether we push it off balance sheet into gain revenue or portfolio. So it is a blend of ARM product as well as some longer-term fixed rate, although not meaningful in the overall interest rate risk So I think what you've seen in the first quarter could be tempered in terms of growth. But at this point, we're still originating for portfolio. But like I said, if we feel like it's more beneficial probably to the earlier question about our ability to contract that business to push it into gain, then we'll look to do that as well.
spk06: Okay. I appreciate it. And then on the margin discussion, Could you remind us in terms of the five to eight hikes for this year, how does that stack up against what you have in terms of floors on the commercial side? Would you be through the bulk of them with that type of rate projection?
spk08: Eric, this is Phil. Most of our floors are around 4%, so it would take the first 75 to get us back even. We've had 25 already. If the next one is a 50 basis point move, then we're pretty much there and starting to see, you know, incremental improvement from there.
spk06: Okay. I appreciate that. And then so the guide for slight expansion alongside that rate move, is that in consideration of the deposit data that 35 to 40% that you guys think could prove aggressive, and so if it does not materialize, there's some upward bias to the slight expansion, or how should we think about tying this all together?
spk08: That's exactly how I would couch it, is exactly right. Using the betas that we talked about, you know, as being incorporated in the slight expansion within our ability to mitigate against that would only, in my view, allow the margin to expand in a better way. Yep.
spk06: Okay. Great. Well, thanks for taking my questions, guys. That's it for me. Thanks, Russell. All right. Thank you.
spk00: Thank you, Russell. As a reminder, if you would like to ask a question, please press star followed by 1 on your telephone keypad. The next question today comes from Brody Preston from Stevens. Brody, please go ahead. Your line is now open.
spk07: Hey, good afternoon, everyone. Hi, Brody. Hey, Brody. Most of my questions have been asked. I just had a couple other questions. the fee income front there's a it just looked like a unique dynamic this quarter where wealth management aum grew nicely but the fees came in a little bit so could you could you speak to what drove that um yeah very this is phil i'm not sure that the actual total aum quarter over quarter went up i think it actually i think it
spk08: contracted by about $285 billion, if I'm not mistaken. Mostly driven, well, probably exclusively driven by market conditions. That doesn't mean to say that we didn't have some wins in terms of new client origination type activity or whatever, but I think the overall market levels and pressure probably mitigated any of that. So I'm almost certain that AUM in total went down.
spk07: You're right. I'm like, I look at the wrong quarter, Phil. I'm sorry about that.
spk08: No worries.
spk07: Okay. On the mortgage front, could you remind us what the mix of purchase and refi is?
spk08: Yeah, I've got it here, Brody. So purchasing construction in the first quarter was 64%, and the refi was 36%. That's completely opposite of what it was last year this time, almost to the same percentages where it was 34 and 66. Got it.
spk04: Got it.
spk07: Okay. And then I would just ask one more. You mentioned earlier, Phil, that you had some vacant positions that drove the salaries and benefits decrease. Is there anything specific that's driving driving the vacancies or folks leaving for other institutions or retiring or just some color there would be helpful.
spk08: Yeah, so first let me clarify kind of what I meant there. So the quarter over quarter decline was, and we didn't talk about this, was as much for some of the things that we spent money on in the fourth quarter related to year-end incentive rules and things like that that drove that number higher then than what it ended up being here in the first quarter. And so that had a lot to do with why it declined. But as we look forward in terms of guiding towards a higher level of overall expenses, I'm suggesting that there are vacancies throughout the organization for people we want to hire to get some other different things accomplished that as filled will allow that number to go up to that guided level. So that's That's the essence of the commentary there. I would say, and Dan can certainly qualify these comments, we've got openings across the organization. It's everything from frontline to support positions in all facets of the company. Some of it, I think, is driven by some of the same things that are going on from a broader standpoint in the market, retirements and folks that are just walking away from the things they did for years and having a tough time finding qualified folks to come in and take their place.
spk07: You got it. And I would just ask one last one. I'm sorry if I missed this earlier. I think it was Casey that asked about the deposit data. Could you remind us what you have in the way of floating rate loans and percentage of those that are subject to floors?
spk08: Yeah, I think 24% of total loans are floating. And about half of those that float have floors on them. And as we just mentioned, the majority of them are at 4%. Got it.
spk07: Thank you very much.
spk09: Sure.
spk00: Thank you, Brody. There are currently no further questions registered. So as a reminder, it is star followed by one on your telephone keypad. There are no additional questions waiting at this time, so I'll pass the conference back over to Dan Schreider for closing remarks.
spk05: Thank you, Bailey, and thanks, everyone, for joining us today. I hope you found our time together valuable, and if you have any follow-up questions, please reach out to Phil or I. And so thanks again for participating, and have a great afternoon.
spk00: That concludes the Sandy Spring Bancorp Inc. Earnings Conference Decor and Webcast for the first quarter of 2022. Thank you for your participation. You may now disconnect your lines.
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