BankFinancial (NASDAQ: BFIN) Q1 2019 Earnings CallApril 18, 2019 10:30 a.m. ET
Contents:
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- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Bank Financial Corporation first-quarter 2019 earnings conference call. [Operator instructions] Now it’s my pleasure to turn the call to F. Morgan Gasior, chairman and CEO. You may begin.
F. Morgan Gasior — Chairman and Chief Executive Officer
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Good morning and welcome to the Bank Financial, conference call for first-quarter 2019 earnings and performance. Once filing is complete, we will have our 10-Q and call reports filed later on schedule. But at this time, I’d like to have our forward-looking statement read.
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The remarks made at this conference may include forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for the purposes of invoking the safe harbor provisions. Forward-looking statements involve significant risks and uncertainties and are based on assumptions that may or may not occur. They often — they are often identifiable by the use of words like believe, expect, intend, anticipate, estimate, project, plan or similar expressions.
Our ability to predict results or the actual effect of our plans and strategies is inherently uncertain, and actual results may differ significantly from those predicted. For further details on the risks and uncertainties that could impact our financial condition and results of operation, please consult to the forward-looking statements declarations and risk factors we have included in our reports to the SEC. These risks and uncertainties should be considered in evaluating forward-looking statements. We do not undertake any obligation to update any forward-looking statement in the future.
And now I’ll turn over the call to Chairman and CEO F. Morgan Gasior.
F. Morgan Gasior — Chairman and Chief Executive Officer
Thank you. As we noted, we have our five quarter supplement and press release, for the first quarter of 2019 released and on file. At this time, we are ready to take any questions.
Questions and Answers:
Operator
Thank you.[Operator instructions] And our first question is from Kevin Reevey with D. A. Davidson.
Kevin Reevey — D.A. Davidson — Analyst
Good morning, Morgan.
F. Morgan Gasior — Chairman and Chief Executive Officer
Good morning, Kevin.
Kevin Reevey — D.A. Davidson — Analyst
So first question is, related to the NIM. Looks like you had some really nice, linked quarter NIM expansion. Were there anything — was there anything unusual going on in the first quarter, like prepayment fees or anything like — or recoveries that would’ve, resulted in that? And how should we think about the NIM going forward, for the remainder of the year?
F. Morgan Gasior — Chairman and Chief Executive Officer
Well, there wasn’t anything unusual in, the results for first quarter. If anything, the mix skewed a little bit, toward, multifamily, loans for the quarter. So we have more of a fixed rate and,lower-yielding quarter. Going forward, you know, as we noted in first quarter, we had certain closings that we are hoping to get closed in the first quarter but were delayed by the shutdown.
Those now appear to be ready for a second quarter close. So we’re starting to see C&I, be more of a factor for originations in the second quarter or early third quarter. And therefore, we would hope that the mix will skew a little bit more toward C&I growth in the second quarter. We also hope to see a little bit more in line utilization from existing customers, in the second quarter, maybe not fully recover, the paydowns that we saw in the first quarter, but we’re starting to see some indications of, additional business going through those lines, as activity picks up for those customers.
So, you know, being with our usual cautious optimism, we would hope that for, at least, second quarter, our mix will skew a little bit more to C&I and provide a little bit more, possibility for a NIM expansion on the loan yield side. On the funding side, we continue to manage the funding base carefully.That’s always part of the equation. So I think, again, depending on how deposit, flows work in the second quarter, we recover a little bit of funding on the commercial side. And, you know, we’re getting just past tax season now, which is usually the drain on funding, for customers.
But as those balances start to recover, we should also see potentially, you know, a little help from the funding side. So we’re pretty cautiously optimistic about the asset side for second quarter. It could change if the current closings, don’t close on schedule. Funding should be stable, we might see a slight benefit from that as well.
Kevin Reevey — D.A. Davidson — Analyst
And then, loan growth, I know when we talked last quarter, I think your outlook for lo– loan growth was roughly about 5% year over year with C&I being kind of leading the pack here. I assume that’s still the case given kind of the slower start to the first quarter.
F. Morgan Gasior — Chairman and Chief Executive Officer
Yeah, I think so.Iif you look at kind of where the markets are, we’re seeing that tremendous activity on the leasing side. We had a good quarter for leasing, especially if you look at it year over year. But we are now talking to customers and, some of our lessors are, you know, somewhat active and some of them are less active. So I’m concerned about leasing going forward.
That’s going to be a focus for the remainder of the year. As we noted, C&I had some growth potential, and I would expect to, you know, continue that, that process going forward. Right now, the issues are, you know, going through the risk profiles that are presented by the opportunities carefully and in seeing which ones make the most sense for us. Multifamily, you know, as we’ve said before, we again, we’ll see opportunities in that.
The opportunities are getting a little thinner because the market is so mature. We were working with the borrower just the other day on our transaction here in Chicago, and the borrower decided not to proceed with the purchase because the profitability was just too thin. It didn’t help that Chicago released, real estate tax assessments, earlier in the month. And he ran the numbers on what that purchase would cost him in real estate taxes and decided the purchase were just a little too rich for him.
So the maturity of the market and the fact that some of the expenses are catching up to what will probably be at best flat rents are going to put a little bit of a damper on multifamily opportunities. Even though rates might look to improve the funding cost for those borrowers a little bit, the overall market conditions are somewhat of an inhibitor. So it’s pretty consistent, what we thought. I think 5% seems like a good growth goal.
But I will caution you that a lot depends on line utilization by our C&I customers. You know, the upside for us as we get more lease growth than we’re currently looking at right now, the downside is we don’t see as much in line utilization, on the C&I side.
Kevin Reevey — D.A. Davidson — Analyst
OK. Thanks, Morgan.
Operator
Thank you. [Operator instructions] Our next question is from Brian Martin with FIG Partners. Your line is open.
Brian Martin — FIG Partners — Analyst
Hey, Morgan. How are you doin’?
F. Morgan Gasior — Chairman and Chief Executive Officer
Pretty well. How are you, Brian?
Brian Martin — FIG Partners — Analyst
Not too bad, say, I apprecite you taking the questions and you know one, just on that last point, Morgan, you mentioned the part about the line utilization and kind of that being a question mark. Can just tell us, I mean, what was the line utilization this quarter versus kind of what it’s been previously? I mean, was it significantly different? Or just kind of give us some background on kind of where it is relative to, you know, whether it be normal or last quarter, how you can frame it?
F. Morgan Gasior — Chairman and Chief Executive Officer
Well, we had a strong fourth quarter. Ffor us, line utilization can work in two dimensions. For our commercial lessor credits, those are project related. So if customers draw on the lines to complete projects, some of those projects may be relatively short draws, they pay vendors and then convert the lease, convert the lease to a discounted lease and pay off the line.
Some of them may be longer-period projects. We are starting to talk to people about longer-duration projects. So I would tell you that, in the, in, in the fourth quarter or first quarter, the line draws were shorter-duration projects. I think going forward, we’re going to start to see line utilization on longer-duration projects, which means the line utilization goes up.
That’s why we’re cautiously optimistic about better line utilization going forward. So — but it is volatile. You know, you could see borrowers draw on the lines and have it out there for 30, 60, 90 days. And usually, when you get to quarter end part of their profitability model is to convert that, executory lease to a fully executed lease and discount it to the market, get their gain on sale treatment as appropriate.
And so they’re motivated to pay down those balances right at quarter end. So as I’ve said before, we’ll get the benefit of the line utilization during the period and have a little bit higher average utilization during a given quarter. But when you look quarter over quarter at period-end balances, you could see some volatility.
Brian Martin — FIG Partners — Analyst
OK. That’s helpful. And, and how about just on the C&I side? I mean, you guys have kind of — I mean, you sound as if you’re optimistic that that’s still the lead grower this year. But, you know, there’s some cautious optimism here.
I guess when you look at kind of your long-term target, I mean, you also talked about maybe the leases maybe not being as optimistic on the leases going forward? I think your longer-term targets seem like it was 50% for kind of the C– kind of the combination of C&I and leases. I mean given the outlook on leases, I guess, is — I mean, I guess, can you talk about the opportunity to kind of work toward that goal of 50% you know, over time? I realize it’s a — you know multiyear, you know a– strategy, but I guess does the, the outlook for leases kind of, you know, inhibit that a little bit more in the short term?
F. Morgan Gasior — Chairman and Chief Executive Officer
It could, mostly because of the rapid amortization of the portfolio.You know, leasing opportunities to put equipment on the books for 84 months, but when you looked at the underlying lessee, you know, they’re in the retail business. And obviously, that might not be as good of a bet on the credit side, for an 84-month duration. So we’re always striking the balance between what’s the appropriate credit exposure and maintaining the assets working in the portfolio. But I will say that, as time goes on, we’ll probably see a somewhat extended duration in the lease portfolio.
The lessors are shifting more and more to financing harder equipment. We still see some balance in, say, 36-month paper, people doing shorter IT assets. But that is shifting away from owning the asset to leasing software, software as a service, which technically is more commercial finance than leasing anyways. So I think leasing presents a challenge principally because of the rapid amortization.
And in some cases, you’re still seeing quite a bit of yield, and credit spread compression, where some of these credits, you know, probably are underpriced and we have to keep that in mind. But the goal remains the same. We’re still gonna — we don’t expect multifamily to grow all that rapidly. Commercial real estate, you know, is going to stay even at best.
So we’re still going to be pushing the C&I, portfolio forward. I would say probably the line utilization in the healthcare side will, in the short term, will be faster growing. But our medium term over the next 12 to 15 months to 18 months on the very outside is to continue to strengthen lease originations and get that portfolio growing again.
Brian Martin — FIG Partners — Analyst
OK. And, and then the actions — I guess the reduction in the investment-grade lease portfolio this quarter, I guess, is that largely done now? Or is there more to come on what you were doing there as far as reducing that, some of the impact?
F. Morgan Gasior — Chairman and Chief Executive Officer
You know, that’s a function of several things. One is pricing in the market. There are, there are occasions where you’ll still get investment-grade credits, but they’re more on the governmental side.And those can have somewhat more favorable yields. You’re taking in, some inherent risk to governmental credits like non-appropriation risks and, and there is a bit of a premium for that.
But, you know, if we’re looking at straight corporates, I would say we’re probably letting more of that portfolio run off than attempt to retain it. And we’re going to be focused on the, you know, BB, single B+ space. We’re also gonna take a little bit of a look at tax exempts as part of the mix going forward because as our federal tax position, warrants, we’ll be able to potentially reduce our effective tax rate modestly going forward. So those are all potentials in the, in the lease portfolio.
But corporate investment grade will probably not be much of an originations factor for us. The yields are still too thin. And with the move down in the yield curve, it made that situation even a little bit worse. But noncorporate investment grade could still be an opportunity for us.
Brian Martin — FIG Partners — Analyst
OK. So I mean, you would expect the lease, you know, the lease portfolio to grow in 2019, even though it’s off to, you know, a little bit of a decline in the first quarter?
F. Morgan Gasior — Chairman and Chief Executive Officer
Yeah. I think that, it, it could grow. I would say it probably won’t grow much more than 10% to 15% at the absolute max from where we are today because of the amortizations involved. One of the factors in that is we will see annual payments on the governmental leases as opposed to quarterly.
So usually, you can see in third and fourth quarter, you’ll see a balance drop simply because it’s time for the annual payments on the, governmental leases and it’s tied to their appropriation in fiscal cycles. So again, that’s why I’d say the cash flow — the good news about the portfolio is, it provides an excellent repricing opportunity. The bad news is, it’s sometimes hard to grow.
Brian Martin — FIG Partners — Analyst
Yeah.
F. Morgan Gasior — Chairman and Chief Executive Officer
So 10% to 15% growth from this point on the leasing portfolio for 2019 is, I’d say, on the high side of it unless we see a pool or something else that’s, you know, more of a unique opportunity. And I would say probably, you know, 10% — 5% to 10% would be, you know, more of a realistic range if we can get all the ducks to walk in a row.
Brian Martin — FIG Partners — Analyst
OK. And so really, the dominant line of growth in the loan side will, will continue to be the C&I book? I mean, that’s really where the opportunity is?
F. Morgan Gasior — Chairman and Chief Executive Officer
Yes. I’d say from a growth perspective, C&I first. Multifamily will continue to grow probably a little bit more reliably because of the longer-duration cash flows. And leasing will be, from a growth perspective, leasing will probably have the greatest variability of growth rate.
Brian Martin — FIG Partners — Analyst
OK. Perfect. That’s helpful. And just, you know, the new yields, I mean, with the yield curve, where it’s at, Morgan, I mean, I appreciate the color this quarter, you know, on the yield you’re getting on new business and versus what the payoffs are.
I mean, if it was skewed toward, and, you know, at least not toward the C&I this quarter, I mean, could that pick up, that you’re getting on the, you know, basically the new origination yields even be greater next quarter if you skew more toward, you know, the C&I part of the book? Is that — does that seem fair that I use that gap?
F. Morgan Gasior — Chairman and Chief Executive Officer
That’s correct.
Brian Martin — FIG Partners — Analyst
OK. So that’s the opportunity for the margin expansion is, if you’re able to hold that — I guess if you’re able to expand that yield you’re getting there, maybe a stable funding base, that’s kind of the opportunity for the upside in the margin?
F. Morgan Gasior — Chairman and Chief Executive Officer
Yeah. I would say there’d be, you know, a couple of sources. One is the C&I book, especially the line utilization and adding business to that is the No. 1 opportunity.
I think, secondly, the repositioning of leases from corporate investment grade to corporate non-investment grade is your second biggest opportunity. And your third opportunity is you will see some repricing upward of the multifamily loan portfolio as loans come out of — as loans either come out of reset or they’re out of prepay and the borrowers want to lock in funding at what we think are relatively attractive levels. It’s just not as optimum for us as it was 90 days ago. So you’ll still see some upside.
I just saw a loan the other day that went from three and a quarter to four and a half. But ideally 90 days ago, that would’ve been closer to five.
Brian Martin — FIG Partners — Analyst
OK. So the pickup you’re getting on average, you know, these pieces, I guess can you kind of quantify what type — if it’s not the — is it the 125 basis points you just talked about? Is that kind of more the normal versus what it was earlier? Is that kind of fair how to think about it?
F. Morgan Gasior — Chairman and Chief Executive Officer
You know, I — It’s, it’s really — there’s so many moving pieces to this, Brian. I know you’re tryin’ to put pieces on a slide. I would tell you that the multifamily side probably would see more of a 50-to-75 point repricing at this point compared to what might have been 100 to 125, you know, 90 days ago.
Brian Martin — FIG Partners — Analyst
OK.
F. Morgan Gasior — Chairman and Chief Executive Officer
You have loans from the mid- to high 3s that will refinance into the mid-4s probably, I’d say, at this point. Then the C&I thing, you’ll have loans going on somewhere around prime plus 1.5 on average. So that’s a pretty healthy yield. And leases, if we’re in the mid-5s — low to mid-5s on the leases in a 36-month duration, we’re doing pretty good.
And we have consistently been able to do that. The volume is the big wildcard. But we’re only going to put the asset on the books if it meets our risk and pricing parameters and not underprice risk, for duration.
Brian Martin — FIG Partners — Analyst
OK. That’s helpful. And just on the funding side, Morgan. I guess you, you talked about in the release or just a little bit of commentary on the shift in just the funding strategy as far as CD is going, kind of some of the moving parts here.
Can you just talk about what you’re, you know, I guess, going forward, you know what — I guess do you have more changes to make in the funding side or is there a strategy you guys are undertaking? And just kind of the outlook on, you know, deposit price increases? If the Fed is on pause, are you starting to see some signs of abatement on the increase in funding costs? And maybe just as it relates to your strategy. I mean, I know that’s a factor as well.
F. Morgan Gasior — Chairman and Chief Executive Officer
Yeah. I think, you know — let’s talk about market conditions. We’ve seen some moderation. I would not say it’s a great deal of moderation.
But we have seen some moderation in at least the rate of increase with competitors. So let’s call it a flattening of trends. That won’t necessarily translate to a decline in cost of funds. I think the Fed would actually have to move, you know, to precipitate that.
But we do see the rate of change stabilizing. And obviously, we’re going to do everything we can to enhance that, consistent with taking care of customers and dealing with competition. To the extent that we can reduce the wholesale funding that, as you saw in the data we provided, still provides a certain amount of additional beta and we like to reduce that whenever possible. We’ll use it if we have a bunch of closings and draws to fund, it’s there for a reason.
But then our goal would be to replace it. And CDs and money markets are priced almost on top of one another right now. So if you’re going to have the choice of making the interest expense, why not get some duration protection? Maybe that’s less important now the Fed’s on hold. But we’re not entirely sure what the Fed’s gonna do.
The Fed’s probably not entirely sure what they’re gonna do. And I would just probably observe that through this rate cycle, the strategy has produced some, I would say, reasonably effective results on maintaining a neutral interest rate risk posture and allowing us to benefit from higher rates, while protecting our downside from higher rates and we need to keep that neutrality firmly in position.
Brian Martin — FIG Partners — Analyst
OK. And it seems like your talk on just kind of as it relates to the margin, seems just like the bias would be upward, which kind of seems we’re near the high end of kind of, you know, what you guys were looking for, you know, kind of getting to over time. I guess does that seem fair to you that the bias is upward based on, you know, kind of — I know there’s a lot of moving parts, but the bias generally seems like it would be upward and maybe it’s a little bit above the range, you know, you guys had talked about previously on how we think about the margin prospectively if you’re able to execute on, you know, growing the C&I book and, you know, with the Fed now being on pause.
F. Morgan Gasior — Chairman and Chief Executive Officer
Yeah. I think the one thing about the Fed being on pause is it does give us a little bit more, you know, breathing room, if you will, on the funding cost. And as we’ve said last quarter, you know, the improvement in asset yield, wasn’t necessarily indexed to the Fed moving. So I would agree with your statement that the bias could be to the upside, if the pieces fall into place.
We should be able to generate, you know, better asset yields and we should have at least a little bit more chance to have a stable funding base. And that would be where the upside bias to net interest margin can come from. If we get the mix completely where we want, then it’s theoretically possible to exceed the kind of ranges we were talking about last year, and earlier this year. But that mix would have to happen and that would have to sustain itself.
So that’s probably the trickiest part of all.
Brian Martin — FIG Partners — Analyst
OK. That’s fair. And how about just on expenses? I guess, if you can — I know there’s an unusual — at least that seemed like an unusual item a little bit last quarter, there’s a little bit this quarter. Just kind of as you start to think about the normal first-quarter seasonality dissipating and just kind of the, I guess, initiatives you’ve taken in the last couple of quarters on putting some efforts in place to reduce expenses going forward, I mean, is there a lot of change to your annual outlook on expenses? Or just how should we be thinking about that?
F. Morgan Gasior — Chairman and Chief Executive Officer
Well, I’ll turn this over to Paul in just a second. But just broadly, you’ve correctly noted that we’ve been positioning the last couple of quarters for, you know, reduced comp levels. And again, given the shape of the yield curve and the bias down in market yields, you know, that focus needs to continue. It’s the one thing we can control the most of.
But let me have Paul address it on a more specific level.
Paul Cloutier — Chief Financial Officer, Treasurer, and Executive Vice President
For 2019, our expenses will still be aligned with what guidance we gave previously. It was just kind of front loaded, some of the comp expenses. But the expenses should normalize in second quarter to somewhere around $9.5 million for the quarter and then trend down from there in the second half of the year as some of the compensation expense, falls off. So when you look at first quarter, I mean, we had a couple of unusual items, the 215 cap.
We had snow removal expense of $327,000, which hopefully won’t be repeated in second or third quarter. So when you take those two out, you’re looking at a $9.5 million base for second quarter. And then we’ll start to trim that as some of these compensation cost work their way out. So if you look over the course of the year, we’ll still be in that $38 million, $38.5 million total for the year.
But when you get to third, fourth quarter, you’ll see it moderating down below $9.5 million a quarter.
Brian Martin — FIG Partners — Analyst
OK. Perfect. That’s helpful, Paul. I appreciate it.
And yes, I hope we don’t have the snow removal cost in second quarter, although we did have a snow day. I know you guys noted that. So maybe just the last two things. Just on fee income.
I mean there’s a couple, I guess, a little bit of a downtick this quarter relative to kind of previous run rates. And I know it’s not a major component of the earnings, you know, in general. But just any, any, unusual items on the fee income side or there’s maybe a little bit lower rate here absent the securities gains? You know, better way to think about, you know, the outlook prospectively?
F. Morgan Gasior — Chairman and Chief Executive Officer
Yeah. Well, obviously, the securities gains in fourth quarter and first quarter were two, you know, two events that we do not expect to recur. On the deposit side, we — I would expect those long-term trends to remain, just as life changes. We, we, do see some of the products that we have on the deposit side generating some additional fee income.
I’m not sure that will be enough to completely offset the broader trends in retail deposit fee income. The trust side is, we’ll see a little bit more volatility. You know, it’s a balance between adding new trust business, depending on the fee structure and the asset management structure that the customer selects, versus any distributions. You know, in an aging population, you’ll see, you know, trust to start to disperse, sometimes larger ones, and those could be anywhere in the spectrum.
It just so happened in the first quarter we had a distribution of a long-term customer that was a full trust management relationship and therefore at the highest fee level. On the other hand, we replace those assets and as we start to grow the trust assets, but the average rate on that growth was lower than the one we lost. So you’ll just see, just like in any fee income business, you will see a little bit of volatility on that. But we hope that the trust income has a little bit of an upward bias over time just from the growth we get out of it.
And then managing the expenses in the trust department are important too and we’ve taken steps on that to improve the overall profitability from the Trust Department. And we’re pretty comfortable and confident with that direction. On the loan side, we’re starting to see a little bit more fee income from line usages and draws from loan originations. So that will be a modest positive going forward.
And we are seeing capital markets transactions coming in that market as incredibly, competitive. We’ve seen people doing deals at zero fees, and then they get a kickback from the DUS lender. So it’s kind of interesting how the market is pricing their services right now. So that one we’re, you know, we’re less confident and candidly because we haven’t gotten a handle on, on the secret sauce for success in that formula.
But since we really have no dedicated expense base to that, anything we do get out of that is almost gravy and therefore, pure profit to us.
Brian Martin — FIG Partners — Analyst
OK. So I mean, it doesn’t sound like there’s anything that unusual in this lower number this quarter. Maybe there’s — some of it’s more on the deposit side. So maybe we just think about that being, you know, a little bit above where we’re at today but not a whole lot.
So it’s still down from where it was previously but up a little bit from first quarter is fair to think about. So —
F. Morgan Gasior — Chairman and Chief Executive Officer
Yes. I would agree with that assessment.
Brian Martin — FIG Partners — Analyst
OK. And the last one was just on share repurchases or just kind of capital utilization at this point, kind of where the priorities are. And you guys have taken a lot of steps on this front on the buyback. But just kind of where you are in the buyback and just maybe in terms of M&A or other uses of capital?
F. Morgan Gasior — Chairman and Chief Executive Officer
Well, before we leave the balance sheet and the income statement, one thing to note is, obviously, the asset quality has continued to improve and the asset selection continues to remain focused. And one of the benefits of that is the loss ratios on the portfolio continue to improve. So we are very much hoping that we get the C&I growth from the second quarter, that we’re looking forward to. But at the moment, we think that we could see a ALLL recovery, somewhere between 200,000 to 300,000, for second quarter because of changes in the loss ratio.
If you recall, we sold the loan in 2016 on the commercial real estate side and booked a loss. That loss is rolling off on the three-year look back. And it will significantly improve the reserve ratios for CRE. Now we’re again hoping to absorb as much as possible in loan growth for the second quarter.
So if the world really works in our favor, you won’t see any income statement at all in the ALLL and we’ll have terrific interest income for second quarter and in going into the third quarter. Turning to the share repurchases. Again, that, that is working. You know, we’ve been able to, you know, repurchase the shares, and create an effective impact on EPS.
And at the same time, we’re still growing the tangible book value per share. With that in mind, especially where we’ve been trading in the first quarter then we would look to, continue that. I would say that if we could get ourselves at or under 15 million shares, more or less ratably over the next 12 months, that would be a good goal to have. Obviously, if the share price improves significantly, you know, if it recovers to where we were in second quarter last year, that gets a little more challenging because, you know, it’s a little more expensive to buy the shares.
So we may not get to that goal if the equity price recovers substantially to where we were in second quarter last year. That would be good news for everyone. But that would still be the goal if we’re in the environment we are today. And on the M&A front, we are looking at a couple of smaller opportunities, that initially fit our parameters in terms of, low credit risk exposure overall.
And they’re smaller community bank opportunities. But we’re still working through the precise composition of the deposit base looking through what latent credit risk there might be in the portfolio, but it looks — the portfolios look pretty clean now from a point-in-time perspective. But it’s too early to say whether we’ll get something done or not. But we are seeing some opportunities out there and, and those will help on two fronts.
We would certainly, get the benefit of a — just a greater earning asset base. We get better efficiency ratio out of that. Certainly, deploy capital even more effectively. And that could provide another strong boost to earnings per share if we’re careful about it.
Brian Martin — FIG Partners — Analyst
OK. And just remind me, Morgan. I mean what’s — the activity you’ve done on the buyback side, increasing the authorization, and, you know, then doing the repurchase you did in the quarter. I mean where is the — I guess how much is left on the authorization as we stand today? And at quarter end after the repurchases?
F. Morgan Gasior — Chairman and Chief Executive Officer
Not much, under 100,000 shares. So I’m expecting the board to take a look at that, you know, very, very soon. And I expect they’ll continue to extend and expand the authorization, more or less consistent with what we’ve said before. No guarantee that we’ll use it all, but I know that they want it out there, so it’s available if we see the opportunities to execute on it.
Brian Martin — FIG Partners — Analyst
OK. So only 100,000 left on current authorization as of first quarter. So — and that the decision to —
F. Morgan Gasior — Chairman and Chief Executive Officer
Stay tuned.
Brian Martin — FIG Partners — Analyst
Yes, stay tuned. OK. All right. Look, I think, that’s all the questions I had guys.
I appreciate you taking the time, Morgan. Thanks so much.
Operator
Thank you. [Operator instructions]
F. Morgan Gasior — Chairman and Chief Executive Officer
Well, at the moment, it appears there are no further questions. We thank everyone for their insightful questions and participations in the conference. And we look forward to talking to you after the end of second quarter. Have a good spring and summer.
Operator
[Operator signoff]
Duration: 35 minutes
Call Participants:
F. Morgan Gasior — Chairman and Chief Executive Officer
Elizabeth Doolan — Senior Vice President and Controller
Kevin Reevey — D.A. Davidson — Analyst
Brian Martin — FIG Partners — Analyst
Paul Cloutier — Chief Financial Officer, Treasurer, and Executive Vice President
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