FIRST BANK (Hamilton) (FRBA) 2021 Q4 法說會逐字稿

Good morning, and welcome to today's First Bank Fourth Quarter 2021 Earnings Conference Call. My name is Candice, and I will be your moderator for today's call. (Operator Instructions)

I would now like to pass the conference call over to our host, Patrick Ryan, President and CEO of First Bank. Patrick, please go ahead.

Thank you. I'd like to welcome everyone today to First Bank's Fourth Quarter 2021 Earnings Call. I am joined by Andrew Hibshman, our Chief Financial Officer; and Peter Cahill, our Chief Lending Officer. Before we begin, Andrew will read the safe harbor statement. Andrew?

Thanks, Pat. The following discussion may contain forward-looking statements concerning the financial condition, results of operations and business of First Bank. We caution that such statements are subject to a number of uncertainties and actual results could differ materially, and therefore, you should not place undue reliance on any forward-looking statements we make. We may not update any forward-looking statements we make today for future events or developments. Information about risks and uncertainties are described under Item 1A, Risk Factors, in our annual report on Form 10-K for the year ended December 31, 2020, filed with the FDIC.

Pat, back to you.

Thanks, Andrew. Overall, I think Q4 was a great finish to a really strong year. I'd like to start by hitting on a couple of the key financial performance milestones. In Q4, we had really strong return on average assets of 1.27%, which actually calculate to 1.33%, if you back out the merger-related costs associated with our branch acquisition, which we finalized in December.

Looking at return on tangible common equity, we were at 12.63%, which when adjusted for merger costs, was 13.26%, very good ratios there as well. Our efficiency ratio came in below 50% for the fourth straight quarter. Our pre-provision net revenue almost [to] $12 million when you exclude merger-related costs. Our pre-provision net revenue return on assets has been over 1.85% in each of the past 4 quarters, and our net interest margin was over 3.5% for the past 5 quarters. While many banks are performing well right now, our performance clearly places us within the top quartile based on our peer comparison of these important financial metrics.

Looking at the lending side of the house, we basically did the equivalent of a year's worth of lending in the fourth quarter. Our growth came primarily from C&I and owner-occupied commercial real estate, which are 2 areas where we're strategically trying to increase market share. So we are pleased to see not only the growth in the quarter but where it came in and the impact on our mix. Most of the growth during Q4 came at the very end of the year. So the full benefit of those loans will show up in this year 2022. We're glad to see that asset quality is holding up quite well, given what appears to still be a very uncertain market for a lot of folks.

Our SBA group continues to perform very well, helping to drive improved noninterest income, and we continue to explore additional C&I growth opportunities to drive growth in C&I lending as we move forward. On the deposit side, we brought in $100 million in new low-cost deposits from the branches we acquired from OceanFirst, and that money came in at just the right time as we had fresh, low-cost funding available for the strong loan growth that we saw in Q4, and obviously, it was helpful, not to be sitting on lots of excess liquidity during the quarter.

We continue to move our deposit costs lower. We reduced them to an overall cost of 21 basis points during Q4, which was down from 25 basis points in the prior quarter. We also saw continued success in our commercial deposit and cash management area, and cash management deposits now make up almost half of all of our nonconsumer deposits. So good progress in that area.

A couple of quick thoughts regarding profitability. When you look at the expense side and you actually take a look at the impact of the higher variable incentive comp that was accrued in Q4, our core employee salary and benefit number actually came down in the fourth quarter compared to the third quarter. So while we obviously need to keep a close eye on labor costs in this inflationary period, it's clear that past efforts to control costs are working. And we view the high variable comp as a positive since it only materializes when the bank delivers really strong results.

And when you look at our core results, backing out onetime income and expense-related items, we continue to see a core return on average assets of right around 1.2%, which is a very good number compared to historical standards. And as we look out to 2022, if the impact of the Fed moving on interest rates is a stretching out of the slope of the yield curve, we might be able to see some even improved profitability over that current level. So we're optimistic about 2022.

In summary, we view this as another overall very strong quarter and a really great year. We feel like we're hitting on all cylinders on lending. Our growth has been strong. Our pipeline remains robust. Our yields are holding in or rising, and our asset quality looks good. Deposits remain very good. We've seen good noninterest-bearing growth. We're having continued success in cash management and funding costs continue to move a little bit lower. The core business is growing nicely, and we're actively exploring niche lending and deposit opportunities to keep on track as we move forward.

So at this time, I'd like to turn it over to Andrew to give us some additional information on the results in the fourth quarter. Andrew?

Thanks, Pat. For the 3 months ended December 31, 2021, we earned $7.8 million in net income or $0.40 per diluted share. This resulted in net income of $35.4 million for the year ended December 31, 2021, or $1.79 per diluted share. The factors contributing to another strong quarter included a stable net interest margin and improved noninterest income. Net income declined slightly compared to the prior quarter, primarily due to, what Pat mentioned, the higher noninterest expenses related to the acquisition and the higher incentive compensation expenses during Q4.

From a balance sheet perspective, as Pat mentioned, we had a very strong loan growth quarter. Excluding PPP loan forgiveness, loans were up $134.4 million in Q4 compared to an increase of non-PPP loans of approximately $13 million in Q3. That loan growth did include approximately $11 million from the OceanFirst branch acquisition that was completed during December of this year. Net loan growth, excluding PPP activity, was $150.5 million for the full year. A significant amount of the year-to-date and Q4 growth was towards the back end of fourth quarter, which Pat mentioned, which we do expect to help propel our interest income in 2022.

During Q4 2021, $26.7 million in PPP loans were forgiven, leaving approximately $51 million in PPP loans outstanding at the end of the year. During Q4 2021, we realized $1.1 million in PPP fee income and that compared to $1.8 million in Q3 2021. As of the end of the year, we have $1.7 million in deferred PPP loan fees remaining. Even after our strong loan growth quarter, we feel good about the strength of our commercial loan pipeline and prospects for loan growth, which Peter will mention in additional detail later.

Total deposits were up $68.6 million during Q4. While we continue to reduce our reliance on higher cost time deposits, we obtained approximately $100 million from our branch acquisition which translates to a decline of approximately $31 million in other deposit activity during Q4. This was a targeted and strategic decline to minimize our excess liquidity in anticipation of the branch acquisition. For example, during Q4, we reduced our broker deposit balances by just over $15 million. Noninterest-bearing demand deposits as a percentage of total deposits increased slightly during Q4 to 26.4%. This compared to 26.3% at the end of September, while time deposits dropped to 18.5% of total deposits at the end of the year compared to 20.6% at September 30, 2021.

In addition to shifting our deposit mix, we have been able to lower the cost of our interest-bearing deposits, which, coupled with the deposit mix shift has contributed to a significantly lower cost of deposits, which Pat previously mentioned.

Our tax equivalent net interest margin, which bottomed out during the second quarter of 2020 to 3.07%, held steady at 3.52% for the quarter ended Q4 2021 compared to 3.54% in the previous quarter. Our margin continues to benefit from lower cost of deposits and minimizing the decline in the average yield on interest-earning assets. Excluding PPP fee income, our margin would have been approximately 3.3% in Q4 versus 3.23% in Q3. So a nice uptick in margin during the quarter.

With the anticipation of rising rates in 2022, we are well positioned for the rising rate environment and anticipate that excluding the impact of PPP fees, we should be able to maintain a fairly stable margin in 2022. And as Pat mentioned, if we get some expansion in the yield curve, we could see a slight improvement in the margin in 2022.

Based on another low quarter in terms of charge-offs and continued strong asset quality profile, we reduced our allowance for loan losses as a percentage of loans to 1.15%. This is excluding the impact of PPP loans, though the level was 1.19% at September 30, 2021. Nonperforming loans were up slightly from the prior quarter, but past due loans and COVID-related deferrals were both down. COVID-related deferrals now total only $1.6 million at December 31, 2021. In spite of a decline in the allowance as a percentage of loan, we recorded an $825,000 provision for loan losses in Q4, which was primarily due to the loan growth during the quarter. This compared to a provision of $158,000 in Q3 2021.

In spite of the positive trends, our allowance as a percentage of loans continues to be elevated compared to pre-COVID levels, which was right around 1% at December 31, 2019, the last quarter before we made some COVID adjustments during 2020.

In the fourth quarter of 2021, total noninterest income increased to $2.2 million from $1.9 million in Q3. The increase from Q3 2021 mainly related to an increase in loan fees, which was primary loan swap fees and an increase in gains on recovery of acquired loans. The increase was offset somewhat by a decline in gains on sales of loans and a decline in other noninterest income. SBA [loan sales income], which is our primary source of loan sale gains, actually increased slightly in Q4 2021 compared to Q3. The overall decline compared to Q3 was due to some non-SBA loan sales that occurred in Q3. The decrease in other income compared to Q3 was primarily due to $159,000 gain on the sale of a closed branch building that occurred in the third quarter. While noninterest income levels may continue to fluctuate, the underlying strength of our noninterest income generation capabilities has improved from prior years.

In Q4 2021, we continued to focus on controlling noninterest expenses, which resulted in the fourth straight quarter of our efficiency ratio under 50%. Our efficiency ratio did increase slightly during the quarter compared to the prior quarter, and this was primarily due to the elevated level of incentive comp, which we mentioned previously. In total, noninterest expense was up $1.3 million or 12.4% to $11.8 million in Q4 versus $10.5 million in Q3 2021. The increase was due to the aforementioned incentive comp increases, which was approximately $850,000 higher than Q3 and our merger-related expenses associated with the OceanFirst transaction.

The merger-related expenses during the quarter are all recorded, and there should be no significant additional expenses related to the actual merger of those branches. With a strong commercial loan pipeline, the continued trend of lower cost funding base and effective management of noninterest expense, we are well positioned to continue our strong and improving core profitability trends in 2022.

At this time, I'd like to turn it over to Peter Cahill, our Chief Lending Officer, for his remarks. Peter?

Thanks, Andrew. The earnings release outlines well the overall results for lending, and Pat and Andrew highlighted what we accomplished. All in all, after a slow start to 2021, we finished very strong and exceeded our organic non-PPP loan growth goal of $120 million by $19 million or 16% of plan. The noise in the lending results are PPP loans, which are in the forgiveness stage and continue to decline, as Andrew mentioned and loan payment deferrals related to COVID, which are down to just a little over $1 million, both are detailed in the earnings release.

Lastly, as you know, we picked up $11 million of consumer loans with our acquisition of the 2 OceanFirst branches. I'll focus my comments on everything other than these things, which amounts to organic loan growth. 2021 was heavily impacted by loan payoffs. Organic loans were down significantly in Q1. We recovered in the second quarter and overall growth was a little over breakeven for the first 6 months. We grew a bit in Q3, but most of our loan growth for the year took place in the fourth quarter. When we look at the fourth quarter growth, 60% of that growth took place in December. December growth was approximately 50% of our total growth for the year. So clearly a back-ended year in 2021.

I spent some time during the third quarter earnings call describing the nature of the payoffs that we've been experiencing all year. I thought I'd recap the extraordinary level of repayment as well as how we ended up exceeding plan. Comparisons to 2020, where we had a good year and also met our plan are telling. Total loans closed and funded for 2021, totaled $475 million, an increase of $133 million or 39% over 2020. Offsetting new loans funded, however, are extraordinary loan payoffs. Total loan payoffs for 2021 were $246 million, 78% more than we had in 2020.

For those interested in where these payoffs came from, in terms of dollars, 71% were loans from our investor real estate segment. When we look down at the reasons behind all of the payoffs, the largest group, 42% were from borrowers who sold the underlying asset. Those sell mainly in the investor real estate area. The next largest group at 29% were borrowers who refinanced their loans elsewhere. Most of these were investor real estate loans as well, a request to lower the rate or upsize the loan amount are the most common reasons for refinancing in this area.

In certain cases, we chose to protect our overall yield or preserve credit quality rather than change the loan terms.

The third group is 18% relates to situations where we chose to improve our portfolio mix by reducing exposure to certain borrowers or industries. While payoffs hurt because they reduce our earning assets, they also allow us to accelerate fee income and reposition our loan portfolio. One thing I'd like to highlight during -- about the year was our ability to grow C&I loans. When I talk about C&I, I'm including owner-occupied real estate loans as well. As you know, we've been focused, over the past few years, on increasing our level of C&I relationships. We know that they bring better levels of deposits with them, and we know they are stickier than investor real estate loans. 2021 was a good year for us regarding growth in C&I. Historically, our mix of commercial loans has been around 55% to 58% investor real estate and 42% to 45% C&I. Kind of our simplified goal is to try to move towards 50% or 50% investor real estate, growing the C&I portion organically.

In 2021, we were happy to see our focus on C&I is paying off. When we look at where our growth for the year came from, approximately 77% of growth came from the C&I segment. We still grow investor real estate loans as we plan to always do, but just not at the rate of C&I loans.

I was asked a couple of quarters ago about utilization rates on our working capital lines of credit, which for us are exclusively C&I in nature. The past year showed some interesting things regarding utilization rates. If you look at the numbers, rates declined over the course of the year. For example, at year-end 2020, our utilization rate was 54%. The rate for year-end 2021, however, was lower at 45%, the difference, obviously, is 9%. This reduction is a result of lower utilization on existing facilities and the addition of new facilities that came into the bank late in the year with minimal utilization.

At this point, I'll segue over to our loan pipeline, which remains strong. At our last earnings call for the third quarter of 2021, I reported that the pipeline stood at $265 million which was a record level for us at the time and the basis for the strong fourth quarter. I'm happy to report that the loan pipeline at year-end right after closing, much of our loan growth for the year, stood at $262 million, a reduction of only a shade over 1%.

We continue to source good business in our market and the pipeline continues to be well diversified. A review of the pipeline leads to the discussion of projected loan fundings. As I've mentioned before, each month, we look at 60 days and project funding and payoffs for Andrew's team in finance. Despite a very strong end to the year, January and February looks solid and represent a big turnaround from the start we projected and experienced in 2021 -- early 2021.

So in summary, despite loan growth being back-ended for the year, we exceeded our point-to-point organic loan growth plan in 2021, and the outlook continues to be positive as we enter 2022. New hires we made in the middle of 2021 are doing very well. Andrew mentioned our SBA lending group earlier. It hit its stride in 2021, doubling its goal for the year, and we expect continued growth with this team in 2022.

As the earnings release mentioned, we received SBA preferred lender status near -- right near the end of the year, and that should also help us make -- help make us more responsive to customers going forward. And we're also -- as we always do, we're augmenting support staff this year to allow for additional growth in our regional sales teams.

Lastly, regarding asset quality. Andrew commented on that in the earnings release, provides the normal data on where we are. I'll just reiterate that things, from my perspective, continue to look good. Delinquencies were very low, near record levels at year-end and the normal credit metrics are still solid.

That concludes my report for lending for the fourth quarter. I'll turn it back over to Pat for some final comments. Pat?

Thank you, Peter. Well, at this point, I'd like to turn it over to the operator to open it up for Q&A.

(Operator Instructions) Our first question comes from Nick Cucharale from Piper Sandler.

So I'd like to start with expenses. I appreciate your commentary on the $850,000 linked quarter increase in variable comp. If you remove that impact and the merger expenses, is a good run rate? And how do you think about the expense base playing out throughout 2022, especially in light of the wage pressure in the economy?

Yes. I'll give you a couple of thoughts and then let Andrew dive in here, Nick. But I think the incentive comp in Q4 was higher, a, because we performed better, but there's also a component of a catch-up, right? So we're running an accrual all year based on sort of budgeted performance. And then over time, as we start to realize that we're performing in excess of budget then we start to bump up the accruals.

So I think the short answer is you can't just back it all out and assume that's the normal run rate. But Andrew, compared Q4 to Q3, which is probably closer to a normal run rate if we hit budget. So we've made some changes to make our variable comp a little more variable, if that makes sense. So I think the good news is, we're a little more aligned in terms of making sure the pay-for-performance is there. But it makes it a little harder to predict the run rate because you don't necessarily know you're going to hit budget a little below, or a little above. So I think Q3 is probably a decent proxy for a run rate, but even that's not a perfect number.

And on your second point, we're certainly keeping a close eye on expenses and wage inflation. Obviously, there's a lot of information out in the press about what's happening both in terms of the ability to retain folks and what you need to do to attract folks.

So I think we're trying hard to make sure we can keep a lid on that expense growth as best we can. But I certainly expect that kind of the base rate salary levels next year will be higher. Traditionally, I think we were looking at 2% to 3% kind of inflation-based increase, and I suspect that number will be higher by a point or 2 this year. But we've got other ways to manage that, right? And you've got what you pay per person, then you've got how many people you have and how you reallocate work to make sure you can stay lean. And so we're looking at all those factors. And short answer is, I think expenses will be up almost certainly. But I think we'll do a good job trying to manage that growth. Anything you'd add there, Andrew?

No, I think you hit it. There will clearly be some bit of a creep. I mean we did -- we added a couple of branches towards the end of the quarter, which will -- but they're fairly -- they're consistent with our model, which is fairly cost-effective branches that aren't significantly expensive. But $10.5 million was the noninterest expense in September quarter and $11.8 million was the expenses in the fourth quarter. Probably the run rate going forward somewhere in between there, a little bit higher than the third quarter, but not nearly as high as the 11.8% we had in the fourth quarter.

Okay. That's very helpful. And then back to your remarks for a stable NIM in 2022, excluding PPP. Does that include rate hikes? And is your anticipation to show some NIM expansion through the first several rate hikes?

Pat, do you want to take that first? Do you want me to take a crack at it and then you can jump in.

No, no, go ahead.

Yes. I mean I think we're well balanced. So I think we're in a good position for rate hikes. It's really going to depend on what happens with the yield curve. If the yield curve short end moves up, the long end doesn't and tightens. That's obviously bad for banks across the board. But we do feel like the way we position ourselves, we're in pretty good shape for rising rates. I don't want to predict exactly where we'll be at, but I think we can, at the very least, keep a stable margin, but I think it will be a little bit difficult, at least early in the process, typically as rates move curve kind of tightens at least at first. But again, I think we're in a pretty good position to not see a big -- there's a lot -- there's not much downward risk, I think, on our margin at this point as I see it, but we'll see how kind of everything shakes out during the year.

Okay. And then nice we're getting the loan growth target this year. What are you targeting for loan growth in 2022? And do you expect that to be back-end loaded, given such strong growth in the fourth quarter?

Well, it's always kind of been -- it's always tended to be back-end loaded a little bit, but we don't -- we're not projecting much of that this year. I don't believe Andrew could jump in there in a minute. But the growth plan for the year is a little under 10%, I think, right around $200 million, where the plan for this year was $120 million.

Our next question is from Bryce Rowe from Hovde Group.

Maybe just a little more follow-up around the margin discussion there. Obviously, you've seen a pretty material improvement in your -- in the funding mix, in the funding side of your balance sheet. I was curious how you're thinking about kind of deposit betas with the prospects for rate hikes coming in here in 2022.

Yes. I mean we obviously model deposit increases as rates move higher. We do it based on historical evidence of what we've seen in prior rate moves higher. As you know, every market is a little bit different, and the key variables is competitive dynamics. I think we're starting from a point of very strong liquidity in the system overall, which you would expect would lead that maybe deposit betas won't go up quite as quickly as they have in other environments, but we don't know how quickly the money is going to get sucked out of the system. And you're starting to see signs that loan growth might be picking up, which obviously could put some excess liquidity to work, and therefore, put some pressure on deposits maybe later in the year. So I think the numbers we have in our model are reflective of what you usually see in these rising rate environments. But whether it will come in a little better or worse than that, it's hard to say. I don't know, Andrew, anything you want to add there?

No, I think you hit it. I mean, we're still seeing, for example, I mean, we've let a lot of our brokered money go, but brokered money is still very cheap because there's just -- there's a lot of money out in the system and they're looking for places to put it. A lot of municipal -- we're seeing a lot of bids for municipal money and the bids are not crazy in terms of what we've seen historically. So yes, we'll see, I mean, to Pat's point, about how quickly the liquidity gets sucked out of the market is the best point. But right now, we're still seeing a lot of liquidity. And if that kind of sticks and rates move and there's still a lot of liquidity that should help with beta pressure, but we'll see how it all shakes out.

Okay. That's good color. Maybe one for Peter just around the loan prospects here for '22. Peter, any sense for how payoffs are kind of shaping up? I mean you talked a lot about the investor real estate pressure, so to speak, from '21. Just curious how you're -- how that feels right now? Do you still see some of these investor real estate projects maybe wanting to get pushed out or refinanced -- sold or refinanced? And does that kind of play into the increased budget from a loan growth perspective for '22?

Good question. I don't think we're seeing any tremendous pressure on payoffs. I mean, this time last year, we knew the first quarter of 2021 is going to be tough. And we're just not seeing it. When we do a 60% -- or 60-day lookout on loan funding, we're also looking at payoffs. And it's never -- it's not an exact science, but we're not seeing a degree of payoffs that we have been seeing this year. I don't think that's what's driving the plan. I think the overall teams come together better. We had a number of openings in our team through most of 2021. We've filled those. We just feel good about prospects and what the pipeline looks like and what folks are out there looking at. So that's kind of where we are.

Okay. That's great. That's helpful. Last one for me. You guys highlighted the preferred SBA status. And obviously, that's been a highlight here. Within the income statement with the loan sale gains coming from the SBA group, can you speak to any kind of impact from a positive perspective that you might see for having that SBA preferred status relative to that fee income line? That would be helpful.

I can tell you that -- go ahead, Pat.

No, no, no. It's okay. I'll jump in after you.

Yes. I'll just say that when you look back over the last 3 years, we did a handful of deals in 2019. I think we did 5 SBA loans in 2020 and 14 in 2021, and those were not as a preferred lender. And you layer on top of that PPP and the pressure that's put the SBA under to turn around deals or be responsive if you're not a preferred lender, it was a handicap on us. We're not projecting or nor is our plan to blow up SBA business and do 5x the number of deals we've done. But we're -- we did what should I say, 14 -- 13, 14 deals in 2021. And I'd be disappointed if we didn't do 20, roughly. So it's going to help us.

Yes. I would add to those comments, right? So I mean we've got 2 things helping us heading into the year, well, 3 things. We've got momentum, right? Now that we've built a better system and process that should help continue to flow. We've added a quality person to the group. And now we've got preferred status, which means we can move faster on deals. So -- as Peter said, our expectation is to do even better in '22 than we did in '21, and I think we've got good reason to be optimistic there. So...

Our next question is from Erik Zwick from Boenning and Scattergood.

Wondering, first, can you remind me with the 2 branches that were acquired, were any commercial lenders included with that acquisition?

No.

Okay. And where does your kind of total commercial lenders stand today, the headcount?

We're roughly around 25. We break it up by regions. New Jersey, which is primarily Mercer County in North and then the Pennsylvania, South Jersey market. And then we also have teams focused on investor real estate and SBA, obviously, we just talked about that, and a couple of consumer lenders that are responsive to business brought in through the branches.

Great. Thank you for the update there. And then Pat, in your prepared comments, you mentioned, I think that the language used was continue to explore new C&I opportunities and Peter certainly mentioned a little bit in his comments as well. But I'm curious, is that -- and those new opportunities purely just having -- adding some new lenders in the year and making sure calling efforts are staying diligent, are you also considering kind of expanding into your markets a little bit and maybe lending to new industries? Or just curious if you could add a little bit to that comment.

Yes. I think it's a combination of anything you mentioned, right? We continue to incentivize and coach our folks to focus a little more on C&I. As we bring in new folks, they have connections or expertise in areas where maybe we haven't done much in the past. So get a little bit of additional new C&I exposure through some of those new hires. And then we're actively looking for opportunities as we get bigger as our lending limit grows, we have opportunities to move up into more of a true middle market as opposed to the lower end of the middle market where we've been. And so I think there's just a variety of new opportunities emerging that we're exploring that won't fundamentally change the composition of the balance sheet overnight. But I think it will allow us to continue the really good results we saw in '21, which is a loan mix, which is evening out a little bit more between CRE and C&I. So...

That's helpful. And just last one for me, for Andrew, I guess. I think that the effective tax rate for 2021 was a little bit above 24%. Is that a good rate to use again? Or would you expect any differences in '22?

No, we don't expect any significant changes. There's a lot of things that can impact the tax rate. But yes, I think we're still thinking mid-24s low 24% for a run rate unless things change, but there shouldn't be a huge swing in the tax rate unless obviously, there's some kind of a tax rate change or tax law change, but that's a pretty good estimate for what we expect the run rate to be going forward.

Our next question is from Manuel Navas from D.A. Davidson.

Can you help describe the loan yields you're seeing either in the fourth quarter or in the pipeline currently?

I mean I would describe them as up a bit, right? I mean you see what's going on in the treasury market, and that is our primary benchmark on 5- and 7-year loans and our folks have been trained to price off of treasuries, and we haven't seen huge compression in that spread over treasury. So the short answer is, I think the stuff we're looking at today is up 25, 50 bps over where it was 3 months ago. Peter, anything you'd add there?

No, I agree. I would say, overall, specific yields we're looking at are in the high 3s to 4%, where prior for top credit, you might be down in the lower 3s to 3.5%. So we're up a bit in fourth quarter.

Given where the pipeline is -- and how much kind of close with the comparable pipeline in the fourth quarter, is there some definite upside to the loan growth outlook?

Well, I think there's upside. We don't anticipate quite the level of payoffs that we had in 2021. And the pipeline now is arguably is about the same level as it was heading into a strong fourth quarter. So we talked about our goal going up fairly significantly from $120 million to $200 million, almost 10%, so I think we're expecting some upside.

There are currently no further questions registered. (Operator Instructions) There are no additional questions waiting at this time. So I will pass the conference over to the management team for closing remarks.

Thanks very much. I'd just like to thank everybody for taking their time to listen in and ask questions on the call today. And we look forward to regrouping with everybody after the end of the first quarter. Thank you very much.

That concludes our First Bank's Fourth Quarter 2021 Earnings Conference Call. You may now disconnect your lines.