Citizens Financial Group, Inc. (CFG) Q2 2019 Earnings Report, Transcript and Summary

Good day, and welcome to the Investors Bancorp Second Quarter Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. We'll begin this morning's call with the company's standard forward-looking statement disclosure. On this call, representatives of Investors Bancorp, Inc. may make some forward-looking statements with respect to its financial position, results of operations and business. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond Investors Bancorp's control, are difficult to predict and which can cause actual results to materially differ from those expressed or forecast in these forward-looking statements. In last night's press release, the company included its safe harbor disclosure and refers you to that statement. That document is incorporated into this presentation. For a more complete discussion of the certain risks and uncertainties affecting Investors Bancorp, please see the sections entitled Risk Factors, Management Discussion and Analysis of Financial Conditions and Result of Operations set forth in Investors Bancorp's filings with the SEC. And now I'd like to turn the call over to Kevin Cummings, Chairman and CEO of Investors Bancorp.

Thank you, Lisa, and good morning. Welcome to the Investors Bancorp Second Quarter 2019 Earnings Conference Call. The company issued 2 press releases last night at the close of business, one being the normal quarterly earnings for the second quarter and the other being the announcement of the signing of a merger agreement to acquire Gold Coast Bancorp in a stock and cash deal valued at $63.6 million. Gold Coast, with approximately $563 million in assets, is a Long Island-based institution with 6 branches in Nassau and Suffolk counties and one in Brooklyn. This transaction is a 50-50 stock-cash deal, and we anticipate buying the stock back post transaction closing. The transaction has minimal dilution to tangible book value and has an earn-back of approximately 3 years on the crossover method and 4 years on the static method. We like the franchise as it roughly doubles our presence in the suburban Long Island market. It is our first transaction post second step and post BSA, and the math works well for us as it is a good use of capital with an estimated IRR of 17%. It creates a stronger presence in Long Island, where we recently expanded our Melville lending team, and we believe we can leverage our balance sheet and expand opportunities to the Gold Coast customer base. It is good message to our employees and customers that Investors is on the move again, and the math works well for our shareholders as it is a low-risk in-market transaction with significant upside potential in a market with strong demographics. The company also reported last night its earnings release, net income of $46.6 million or $0.18 per diluted share for the three months ended June 30, 2019, versus $0.18 per diluted share for the three months ended March 31 of this year and $0.20 per diluted share for the quarter ended June 30, 2018. For the six months ended June 30 this year, net income totaled $94.8 million or $0.36 per diluted share compared to $115 million or $0.40 per diluted share last year. In June of this year, as previously reported in our 10-K, we early adopted a new accounting pronouncement, which allowed us to reclassify certain securities in the held-to-maturity portfolio to available-for-sale. These securities of approximately $400 million were then sold at an after-tax loss of $4.1 million or $0.01 per share. The proceeds of the sale were reinvested in other debt securities yielding approximately 79 basis points higher than the securities sold. Simultaneously, the bank modified $350 million of FHLB borrowings, which resulted in an interest expense savings of approximately 45 basis points net of modification cost. We expect this transaction will yield a tangible book value earn-back of approximately one year. In a difficult interest rate environment, we continue to pull levers to improve our operating results. Over the last 18 months, we have closed 10 branches and will continue to evaluate our operating core structure. During the quarter, we managed our capital base with buybacks of approximately 3.8 million shares for $44 million at an average cost of $11.49 per share. In addition, at our Board meeting this week, our Board approved our quarterly dividend of $0.11 per share. Loans grew $253 million for the quarter with business lending growing $154 million. We continue to emphasize biz lending at the bank as we evolve into a full-service commercial bank. We recently hired a new banker to head up our cash management services and have improved our product offerings in this area with enhanced escrow products and improvements to the digital platform at both the consumer and business lines. With respect to the recent changes relating to rent regulation in New York City, we believe that we have a good understanding of our exposure at this time. While the rent regulation changes will bring some disruption to the industry, we do not see them having a significant impact on our business. Of our $8 billion in multifamily portfolio, approximately half is in New York City. At the back end, our co-ops, free market units and properties subject to the city's tax exemption programs, we estimate approximately $1 billion to $1.5 billion of rent stabilization exposure in this market. It is important to note that our multifamily portfolio has always been underwritten based on in-place rents without anticipating increases, and the LTVs with the weighted -- and the LTVs have a weighted average of less than 60%. In addition, our customers in this space are generally larger, substantial owners that are committed to the New York City market for the longer term. With respect to loan growth, we are not particularly reliant on the New York City market as we've been successful diversifying the portfolio in terms of geographic locale and property type becoming stronger throughout our overall footprint. We do not anticipate growth in this loan group and in our residential -- or in our residential portfolio as the yields on these assets are not strong enough based on the incremental cost of deposits to fund these loan types. Our focus continues to be on diversifying our loan portfolio into the business sector, and the acquisition of Gold Coast will help this diversification in the Long Island market. With respect to credit quality, we continue to have strong metrics with a reserve coverage of 1% -- 1.05% to loans and a 280% coverage -- 208% coverage to nonaccrual loans. I'm happy to report that our largest relationship in the multifamily nonaccrual category was paid off yesterday and will result in a $30 million reduction in our nonaccrual totals. Adjusting for that payoff, commercial nonaccrual loans totaled $30 million or 19 basis points of total commercial loans and a total adjusted nonaccrual loan ratio of 37 basis points to total loans. This reduction in nonaccrual loans results in an allowance coverage ratio to nonaccrual loans of approximately 284%. During the quarter, we had net recoveries of $221,000 for the quarter ended June 30, '19. With the improvement in our credit quality and modest loan growth, we recorded a reduction to our allowance of $3 million in this quarter. With respect to our credit quality, we believe we are well positioned at this point in the credit quality -- credit cycle as a significant portion of our nonperforming loans are in the residential portfolio, where we have $51 million, representing 275 loans in nonaccrual status for an average loan of $185,000. We take a conservative approach to these credits as evidenced by the historical gains recorded by the bank on the sale of ORE over the past 5 years. We believe we are well positioned with our capital position should the economy slow down in the second half of next year. With respect to deposits, we had marginal growth in the quarter and continued to see fierce competition for deposits. Deposit cost increased 8 basis points in the quarter, which impacted our net interest margin by a similar 8 basis points. We are busy adjusting our retail teams and have hired 16 new business development officers to drive deposits into the bank by calling on centers of influences, such as CPAs and attorneys, and working with our branch managers to put more feet on the street. We're also looking at revamping our processes and workflows in the branch system to free up time for more sales and business development activities. Our teams are working hard and our calling efforts are up over the previous year. With the implementation of the Salesforce CRM system, we are actively monitoring our team's activities and adding resources to improve results. It is a significant focus of the management team and comes up almost daily in almost every meeting at the bank. We're not satisfied with the results, but we'll continue to focus on these activities and adding the proper resources to the fight. It is the top priority of the bank at this time, and we will continue to focus on it. Now I'd like to turn the call over to Sean Burke, our CFO, who will give some additional comments on our operating results.

Thank you, Kevin. Our net interest margin was 2.47%, a decline of 8 basis points from the prior quarter. Lower prepayment fees and inverted yield curve and increasing deposit costs drove the decline. Our provision for loan losses was negative $3 million for the quarter compared to a provision of $3 million in Q1. The provision was positively impacted by improved credit quality metrics, including the level of nonaccrual loans and net recoveries, coupled with modest loan growth, which was partially offset by an increase in multifamily reserves related to changes to New York City's rent regulation laws. Our allowance remains among the strongest in our peer group. At June 30, our allowance in nonaccrual loan ratio stood at 208% and our allowance as a percent of loans was 1.05%. Noninterest income, excluding the loss related to our securities repositioning, totaled $12.7 million for the quarter, an increase of $1.5 million from the first quarter. The increase was attributable primarily to a gain on a branch sales-leaseback transaction and increased mortgage banking activity and deposit-related fees. Noninterest expenses totaled $103.8 million, which was relatively flat compared with the prior quarter. Our effective tax rate was 28.6%, which was also consistent with the prior quarter. Our asset quality and capital ratios remained strong. At June 30, our nonperforming asset ratios stood at 48 basis points, an improvement from 52 basis points in the previous quarter. Now I'd like to turn it back over to Kevin for some concluding remarks.

Okay. Thanks, Sean. The operating environment continues to be a challenge for banks like Investors with a liability-sensitive balance sheet. The potential for a rate reduction next week by the Fed will help, but we need to accelerate our transition to a full-service commercial bank and improve our lower-cost funding of noninterest-bearing deposits on both the consumer and commercial front. The acquisition of Gold Coast improves our presence in Long Island and gives the team a shot in the arm, creating momentum for the bank. We've been on the defensive in the last few years with our BSA issue, and this acquisition is a great first step moving forward. We're on a mission at the bank to create a special bank that makes a difference, first and foremost, with its employees and customers and the communities that we serve. We are leaders in the communities who serve our communities and strive to make an impact. The changes we are implementing will take some time, but this time -- but this team is committed to our strategic plan in creating a stronger commercial bank serving the New York, New Jersey metropolitan area. We have a plan, we have a mission, and it's time to execute on that plan. We thank you for your support. And now I'd like to turn the call -- open to -- for some questions. Thank you.

[Operator Instructions]. Your first question today comes from Mark Fitzgibbon with Sandler O'Neill + Partners.

First, a question related to the deal. Is it likely that we'll see you guys doing more of these kinds of deals in an effort to bolster deposits? And could you give us a sense for how -- in terms of deployment of capital how deals and buybacks rank in terms of priority?

Mark, this is Domenick. The -- as we reported over the years since we've taken the second step, capital deployment has been important to us and share repurchases has been a major component of that strategy. We continue to believe that share repurchases, especially at this valuation, play an important part in our capital strategy. In terms of looking at this particular deal, I think we've been vocal about our inability to do anything that was highly priced. We're very cognizant of tangible book value dilution. And so this was a transaction that was priced right, that strategically fit within the realm of our -- where we want it to be. Loan-to-deposit ratio metrics were good. Credit quality was good. As I said, geography was good. And we just thought this was another use of capital in addition to buying back strategy. So as we look out to the future, obviously, it's hard to say what we may do. But we're going to preserve tangible book value. We're going to make sure the metrics are correct on anything we do. And buybacks will always be a part of that strategy going forward.

And I think, Mark, this is Kevin. I think it fits in well with our strategy. It's not an either/or. We're going to continue to use both and do everything prudently.

And I'm going to chime in. It's Sean. The only -- the last comment I'd make here, Mark, is our bar is quite high on the M&A side. We see many opportunities and have passed on most of them. So we are cognizant of where we trade. And ultimately, what we look at has to fit our profile but also has to add something strategically. And as Kevin pointed out, they're not mutually exclusive.

Okay. And then, Sean, can you help us think about expenses for the back half of the year? Is that $103.8 million a good run rate?

Our guidance remains $420 million, Mark, for 2019, but we are hoping to come inside of that. But we're going to stick with the $420 million for now. But we like the run rate and it bodes well for the second half of the year.

And I know headcount has been trending down for a little while, but it looked like it bounced up about 40 FTEs this quarter. And I know, Kevin, you had mentioned I think 16 new business development people. Where is the rest of the growth coming from?

We have some summer interns, Mark, that we hire. And they'll be out of here, I guess, by the end of August, when they all go back to school. So the number -- the real number is the one Kevin mentioned, and that's -- those 16 new business development officers.

Okay. And could you share any updated guidance with us with respect to the margin, assuming -- and what your assumptions are, right?

We expect margin to remain relatively stable throughout the rest of 2019, Mark. That's based on the assumption that we will get a July rate cut.

Our next question comes from Austin Nicholas with Stephens Inc.

So I appreciate the comment on the stable margin, which seems to assume just one rate cut in July. If we were to get a rate cut in September and then another one in December, can you maybe talk about -- could we see the margin inflect kind of in the fourth quarter under that scenario?

Yes. You would see that, Austin, and that would be -- those particular cuts, the one in September and December, if we do, in fact, get them, they will be even more impactful for the following year when we get the full year impact of the cuts.

Understood. And then can you maybe just talk a little bit about, I know we've talked about this before, but the fixed to floating swap that you have on. And remind us when that runs off and what the kind of impact would be when that runs off, assuming we have a couple of rate hikes -- or a couple of rate cuts here.

Yes. So we have approximately $1 billion that we have swapped to floating rates, but that swap comes off or ends in February of 2020. And so -- then we go back to having $1 billion that turns back to fixed. So that would be a benefit when that swap ends in February of 2020.

Understood. That's helpful. And then just maybe just on M&A, can you -- on the acquisition announced today, congrats on that. Can you maybe just talk about what assumptions you guys have in terms of growth for that kind of -- that part of the bank? I know it's small, but any assumptions you have on the growth in terms of loan growth.

Yes. We're hopeful that the acquisition in Gold Coast can deliver more growth than we modeled in, but our expectation was approximately about an 8% growth rate.

Okay. That's helpful. And then maybe just on the multifamily portfolio. Can you maybe -- I know you've talked about well protected on credit, low LTVs. That all make sense to me. And while I understand that, is there -- can you maybe speak to if there's any risk that -- from a risk weighting perspective, is there any risk that risk weightings could move up in any of those certain types of those loans where valuations may have gotten or may get hit? Is there any risk to that? And have you modeled anything that you could share with us?

Our risk weighting with respect to multifamily assets is pretty conservative relative to what others with large portfolios, how they risk weight it, so there's less impact to us. But Austin, we don't see a major impact there, and the rationale for that is the LTVs, which would likely be impacted here or could be impacted, they are measured for regulatory purposes. The rule, it's the LTV is measured at origination.

And just to add to that a little bit, Austin. During our underwriting the last a couple of years, we had adjusted and stressed in the underwriting process to a 4.5% and 5% cap rate. So it's not like we were -- in the rates especially in the Brooklyn market where we're coming in, in that 4 and sub-4, our underwriting, we adjusted the underwriting for a 4.5%, 5% cash rate over that period of time. So that bodes us well going into this type of situation. Should cap rates change, we feel we've been conservative in the underwriting.

Okay. That's helpful. And then some of your peers have broken down their portfolio in a similar way as you have, but they've also made a kind of -- they've ring-fenced a small portion of loans that they considered or could be considered value-add or rather where the borrower has a strategy or had a strategy to meaningfully increase stabilized rents to market rents. Have you done any analysis on that $1 billion to $1.5 billion portfolio of what maybe is a little bit more exposed on that -- from that perspective?

We haven't, Austin. And certainly, we look at the strategy as the loans come in. But as Kevin mentioned, one of the ways that we moderate that risk is by using a low -- a higher cap rate, which essentially gives less dollars to the borrower and which also then translates into more equity. And then the second item in our underwriting that helps to protect us is we qualify the loans to a 10-year borrowing rate. So in the event -- so even if a borrower is going to borrow for a 5-year term, we have him -- P&I has to qualify at a 10-year rate. So those are the two ways that we try to protect that and we try to protect the credit. But we haven't really dug down deep into at this point understanding who's buying, just simply to decimate the building and raise all the rents. We haven't done that.

Okay. That makes sense. And then maybe just one, last one on loan growth. I know your original guide was kind of in that 6% to 7% range. But maybe just as we look out here, can you give us some thoughts on how you think that number could look over the next couple of quarters. And then when you layer in this new acquisition, what maybe -- what opportunities that could give you? I know you kind of mentioned your assumptions on that.

Yes. Austin, the pipeline for CRE is actually down at this point. It's down by about 50%. And so we've seen our overall CRE pipeline come down to about $450 million, which we believe is going to have an impact on growth going forward. We still have a healthy pipeline in our C&I portfolio. That's the area that we remain focused on. And I'm not sure how it will bode for growth, but my feeling is that -- and we haven't put pencil to paper at this point. But just going through these numbers over the last week or so, gives me pause for hitting our $1.4 billion in growth for 2019. That's notwithstanding the addition of the portfolio that will come from Gold Coast, which is primarily a CRE. So that may add to it. That will help us get to our number. But I don't really look at it that way. I look at what current production is right now. And it looks like on a CRE front, we're down. And that truthfully is by design just given the shape of the yield curve and just the risk in the market, we just believe it's a prudent thing to do at this point, to limit growth in those areas.

Okay. Great. And then maybe just one last one. I know you have an online bank that you started a few quarters ago. I think the goal was to maybe grow it to $250 million in deposits. Any comments on how that's going? Have you been able to lower rates there a bit recently? And then maybe just any goals to grow beyond that?

Yes. As of second quarter, we had about $300 million in the online accounts. And it's been doing well. We look at it as an alternative to raising rates here in our market. At this point, we've been monitoring the rates pretty closely and we feel this is not the right time to lower the rates, although we have seen some competitors lower rates. But there are a number of competitors who are at the same level that we're at. We're looking at the impending Fed rate cut as perhaps an opportunity to lower our rates. And hopefully, some of our competitors will do the same thing. We continue to like the vehicle. We continue to work on it. We have a team that's specifically dedicated to monitoring the website and the online bank. And at this point, we've grown it above $300 million and we're going to continue to watch that. But as I said, we're going to use it as an alternative to increasing all of our rates throughout the rest of the bank and use this as an alternative funding tool.

Our next question comes from Jared Shaw with Wells Fargo Securities.

I guess maybe on the credit. Kevin, you'd said that there's a recovery post the end of the quarter. Had any of that already been charged off? And should we expect to see any type of additional provision release as a result of that?

We haven't looked really that far ahead yet. It's still early, but there's a small recovery there, nothing that would really impact our allowance. But I would say that our asset quality ratios continue to be strong and they are improving. And to the extent that they do, we wouldn't anticipate -- if it stays where it is, we wouldn't anticipate large provisions for the remainder of the year.

Okay. That's helpful. And then on the C&I growth. That was a good quarter for growth. Can you give a little detail on where you're seeing that. And when we're looking at that sort of line item specifically, is that sustainable with the hires that you've been doing there?

Yes. We think it is. We just -- I just met with the C&I folks this morning, as a matter of fact. And we are just slightly below our budgeted number for the year, but we feel pretty good that we'll be able to hit our number. Most of the business that we did was, in our general market area, we did some lending in New York City and in some of the boroughs. And so it's starting to reap the benefit of the additional hires and the focus on the business. It's too early to tell as to how this will pan out for the rest of the year. But so far, so good.

Yes. The good part of that business comes in the second half of the year. It's a seasonal business. First quarter is usually the slowest and they gain momentum in the second. We expect to have a stronger third and fourth quarter.

Yes. That's helpful. And then on M&A, with this deal, I'm assuming that you are discussing with the regulators along the way and that you're not anticipating any issues there. Is that probably a good way to look at it?

Yes, that's fair. Our BSA order was lifted in December of 2018. And yes, in fact, we have been discussing this deal with all of our regulators since it came to the table.

And then once this is closed -- or I guess, I understand that you're looking at M&A as very opportunistic and it has to meet specific criteria. But could we see another deal before this is closed or before this is integrated? Or I guess when would you start to reevaluate opportunities out there?

Jared, I think Sean said it earlier that there are deals that we are looking at all the time. And at this point, it's difficult to say whether we're going to do and make another announcement before. I would say it's highly unlikely. We haven't done a transaction in quite some time. We have a lot of new members of the management, the operations and technology team. And so this deal works from a number of perspectives, not only all of the strategic perspectives that I cited earlier, but also one in which our teams can convert and handle within a reasonable amount of time. So I'm hesitant to want to do something that's going to put some undue burden on the team. I want to get through this one first since this is the first one we've done in quite some time.

Our next question comes from Brody Preston with Piper Jaffray.

I just had a couple of questions on the deal. I just want to know what the expected cost saves and intangibles were as a result.

The cost saves were 45%. I think that's what we modeled. On the intangibles, what, $16 million or...

I think it's $14 million of goodwill and approximately $6 million of core deposit.

Okay. Good. And I'm assuming that the cost save number does not include any branch cuts just given the lack of overlap between the footprints?

That's correct.

Okay. Great. And then with regard to their underwriting specifically surrounding multifamily, do they have, I guess, a relatively larger rent-regulated book? And are the underwriting standards that they have similar to yours?

They are a pretty clean bank, but Brody, multifamily makes up a very small component of their loan book. I think it's probably 13% or 14%, if I'm not mistaken, so it's very small.

Okay. Great. And then in terms of the accretion from the deal, will there be any material impact to the margin as a result of accretion moving forward once the deal is closed?

Probably flat, right?

Yes. It's a little too small, Brody, really to move the margin needle for us.

All right. And then one last one, not on the deal, but just in terms of the pricing competition that you're seeing specifically in C&I. With LIBOR down as much as it is end of the first quarter, how -- I guess, how competitive conditions trended? Are there any industries or segments where you're seeing more or less competition?

I would say first, let me just say that the market is competitive and everyone is out there chasing C&I deals. Many of our deals get priced to treasuries, actually. A large portion of them get priced to treasuries. And to the extent that LIBOR has fallen and we have a deal that we price to LIBOR or spread to LIBOR, we do have RAROC hurdles that we have to hit. So when a lender brings a deal in, we run it to a model that tells us what the return on risk-adjusted capital will be. So even with the reduction in LIBOR, we'll adjust the spread to ensure that we're hitting our RAROC levels.

Okay. Great. And are there any lending segments that are more or less competitive than any others?

I would say not. I would say that most segments are competitive. We're active in the health care segment, and that remains competitive. Within the New York City market, we've done some high-quality hospitality. That also remains competitive. We were bidding against a number of other banks in those particular deals. But I can't put my finger on any one segment of the market that is less competitive than the others.

Okay. Great. I guess one last one for me. Just a follow-up. Is there any segment in the health care industry in particular that you're focused on with regard to C&I lending?

No. We run the gamut between hospitals, doctor practices, dentist office.

Nursing home.

Nursing home facilities. So there's not one in particular that we focus on. We really run the gamut there.

Our next question comes from Laurie Hunsicker with Compass Point.

I just wondered if, Kevin, you could share with us as you all look out on the acquisition front, and I appreciate that you're going slow. How do you think about a bank that has a very concentrated multifamily book or a potential concentration in rent regulation? Is that a bank that you would just step away from, not interested? Or how are you approaching that?

Well, certainly, in our strategic plan, we want to diversify our portfolio and move more into the business lending. The multifamily asset class has served us well in our transition from a thrift to a more bank-like. And it served us very well. But too much of a good thing is not a good thing. So certainly, we love the asset class. It's very profitable with the credit metrics. There is some uncertainty with the change in rent regulation, so we're being very mindful of that when we look at whether growing the portfolio or looking at potential acquisition targets. There's a low cost of entry into the business. All you have to do is get to know some brokers and you could lever it up pretty quickly. But in today's market, with our funding costs, it's an area where we just want to maintain it or maybe shrink it a little bit to fund the business lending opportunities in the marketplace. And also, there is a greater opportunity for deposit gathering when we deal with the C&I customers.

Great. That makes sense. Can you remind us where you all would go geographically? How far outside of your footprint you would look?

Yes. We -- when you say outside our footprint, I mean we've been vocal, Laurie, about where we would go. Nassau and Suffolk County has been one of the areas that we've targeted. And we've also targeted center city Philadelphia. I think we've mentioned on a number of occasion that the Philadelphia market, we believe, is attractive. We have a number of branches in the suburban areas of Philadelphia on the New Jersey side, and we think by looking at the potential transactions in that center city Philadelphia market could work to enhance the franchise. So at this point, it's -- Long Island and Philadelphia is on the extreme of where we would go right now as we speak.

Great. And then certainly, Gold Coast was small. How much smaller would you go? And then would you remind us potentially how much larger you would also consider? What's the band there?

Well, I don't think we would go much smaller than $500 million in assets. It's just -- especially just given the work that's required to get a transaction like this one done. In terms of a big transaction, Laurie, it's also a difficult question to answer. And all I would say to that is anything that we would look at would have to fit within the confines of the deal -- of the metrics that we believe are suitable for us in terms of tangible book value dilution and earn-back.

Okay. Great. And so I mean theoretically, if there was a $5 billion, $6 billion, $7 billion, $8 billion, $10 billion deal, would that be something you would look at if it sit within your tangible book and earn-back parameters or is that too big to digest? How do you think about that?

I mean realistically, Laurie, this is Sean, just based on where we trade, we're very mindful of that. And so anything that size is likely to trade at a premium to where we are and would create a situation where it may not be ideal or meet our return profile and our expectations for tangible book value dilution and earn-back.

Right. Okay. Just last quick question. Muni deposits, can you remind us how much they are and where you guys currently are with cost of those?

We have about $3.6 billion in muni deposits here in New Jersey.

And what are those costing?

Weighted average cost is just a touch above 2%.

Our next question comes from Collyn Gilbert with KBW.

I hopped on way late. I apologize if you guys covered this already. But just a couple of questions. Can you just confirm what the outstanding balance is for your New York City rent-regulated multifamily loans?

Yes. Kevin mentioned it earlier. Somewhere between $1 billion and $1.5 billion.

Okay. And again, if you covered it, I can just read the transcript. But did you cover what your growth outlook was within that portfolio and within multifamily in general?

Yes. We've been vocal about the fact that we don't see growth potential coming from multifamily. As a matter of fact, when -- if I break down the $1.4 billion that we projected for the year 2019 in our original strategic plan, only about $100 million was being attributed to multifamily. Truthfully, as I look at the shape of the yield curve and where we are in terms of pipeline, I'm not even sure that we'll be able to achieve that in 2019.

Okay. Okay, that's helpful. And then just on the NIM, I'm sure you covered it, a lot of what I would ask. But your -- can you just offer a little bit of guidance or thoughts on where you think your NIM would go in 2020 if we saw 3 rate cuts?

That's really counting -- that's counting the chickens before they hatch. We're just focused on July. But obviously, it would help...

50 basis points next week.

We're liability-sensitive, Collyn, and every rate cut is beneficial to us. We did cover some of the guidance with respect to the remainder of the year earlier in the call when we said based on a July cut, we're expecting a stable margin for 2019 -- for the remainder of 2019.

Okay. Okay. So did you quantify with every 25 basis point cut maybe what would happen with the margin? I know you just said stable with the first one, but I just didn't know about the...

We did not, and it will change because there's different dynamics at play here because we've talked about we had an asset swap on that rolls off in February of 2020. So obviously, that will have an impact. So when you look at it in totality, the balance sheet, every 25 basis point cut helps but it helps to different degrees. And it probably gets better the further up that we go.

Okay. Okay. All right. And then, just finally, and again sorry if you covered it. You can just say you did and I'll go back to the transcript. On the buyback and what -- where your appetite is, maybe what caused you guys to buy back less than, I guess, I would have thought, probably maybe less than maybe what the majority of the market would have thought? But just did you already cover that?

No. Again, Collyn, as far as the buyback is concerned, I mean we believe in the buyback as an efficient use of capital. We have bought back over $1 billion, almost $1.2 billion in stock over the last 5 years since we took the second step. So as we look out, we continue to use the strategy of buying more stock back when the price falls and less stock when the price rises. In terms of just buying less and direct to your question, buying less for the quarter, that was really more in line with just trying to balance our tangible common equity ratios, our CRE concentration levels and ensuring that we do maintain enough capital for continued growth over the next 12 to 18 months. So I'm not saying that we're not buying back our stock. As a matter of fact, I'm saying the opposite. We'll continue to buy it back. The degree obviously will vary based on the price changes that occur in the stock over the future.

This concludes our question-and-answer session. I would now like to turn the conference back over to management for any closing remarks.

Okay. Thank you, Lisa. I'd like to thank you for participating on the call today. We're very excited about the Gold Coast potential, in the acquisition in the market that they operate in. That Suffolk, Nassau market is very exciting to us. I'd also like to say that buybacks are still an integral part of our capital management plan along with dividends, along with organic growth and along with smart acquisitions that meet the requirements of tangible book value dilution and those metrics. We're on a game plan to move this company forward. We're excited. And I wish everyone a good remainder of the summer, and I look forward to seeing you out on the road, and have a good day. Okay. So thank you very much and appreciate your participation on the call.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.