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Sterling Bancorp Inc (SBT) Q3 2019 Earnings Call Transcript

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Sterling Bancorp Inc (NASDAQ: SBT)
Q3 2019 Earnings Call
Oct 28, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon and welcome to the Sterling Bancorp, Inc. Third Quarter 2019 Earnings Conference Call. My name is Rocco and I will be your operator today. [Operator Instructions].

This call is being recorded and will be available for replay through November 11, 2019 starting this afternoon, approximately one hour after the completion of this call.

I would now like to turn the conference over to Mr. Tony Rossi from Financial Profiles. Please go ahead, Mr. Rossi.

Tony Rossi

Thank you, Rocco and good afternoon, everyone. Thanks for joining us today to discuss Sterling Bancorp's Financial Results for the Third Quarter Ended September 30, 2019. Joining us today from Sterling's management team are Gary Judd, Chairman and CEO; Tom Lopp, President, Chief Operating Officer and Chief Financial Officer; and Michael Montemayor, President of Retail and Commercial Banking and Chief Lending Officer, who will be participating in the Q&A portion of the call. Gary and Tom will discuss the third quarter results, and then we'll open up the call to your questions.

Before we begin, I'd like to remind you that this conference call contains forward-looking statements with respect to the future performance and financial condition of Sterling Bancorp, that involve risks and uncertainties. Various factors could cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. These factors are discussed in the company's SEC filings, which are available on the company's website. The company disclaims any obligation to update forward-looking statements made during the call.

Additionally, management may refer to non-GAAP measures, which are intended to supplement, but not substitute, for the most directly comparable GAAP measures. The press release, available on the website, contains the financial and other quantitative information to be discussed today, as well as the reconciliation of the GAAP to non-GAAP measures.

At this time, I'd like to turn the call over to Gary Judd. Gary?

Gary Judd -- Chairman and Chief Executive Officer

Thank you, Tony and good afternoon, everyone. And again, thank you for joining us today. As many of you have seen, I recently announced my retirement, which will be effective November 30. As this will be my last earnings call, I want to take a minute to thank each of you, our covering analysts and also our shareholders, for all of your support. I appreciate your insights and have enjoyed my interactions with all of you. I wish you great success in your careers and future pursuits.

I leave sterling in the extremely capable hands of Tom Lopp, whom you know very well. When Tom takes over as CEO and Chairman, and joins the Board as a Director on November 30th, Steve Huber will be promoted to Chief Financial Officer and Treasurer of Sterling. Tom and Steve are exceptional at what they do, and are well deserving of their promotions. I congratulate them for their successes. Additionally, they have what, in my opinion, is one of the best teams of associates and executives in the community banking sector today. I have been fortunate to work with the entire Sterling team.

Now, let me begin with a brief overview of our third quarter, and then Tom will continue the discussion in more detail. Overall, our financial results for the third quarter were in line with our expectations. We continued to generate top quartile returns, as our annualized return on average assets was 1.67%, and our annualized return on tangible common equity was 16%. Our moderately higher EPS for the quarter was driven by higher non-interest income and well-managed expenses. Net income for the quarter was $13.9 million or $0.28 per diluted share, up from $13.4 million or $0.26 per diluted share in the second quarter. Our prior-quarter results included a $1.2 million valuation allowance taken against our mortgage servicing rights, which impacted our second quarter diluted EPS by approximately $0.02. This quarter, we experienced a much lower valuation allowance at $100,000. So, if you strip out the impact of the MSR valuation for both quarters, EPS was essentially flat.

Our total loans, including both those held for investment and held for sale, declined by $20 million in the second quarter. This was primarily driven by lower production during the third quarter. Loan production was lower during the quarter, as we maintained our underwriting and pricing discipline in a very competitive lending market. In addition, we are still experiencing some caution among some of our customers with respect to the ongoing trade friction in China and tighter enforcement of currency controls, as well as inventory and general affordability concerns in the housing market, particularly in the Bay Area. Furthermore, our construction and commercial real estate production was relatively flat quarter over quarter, as a number of loans are taking longer to close.

That being said, we currently have a strong pipeline of commercial loans and we expect higher overall production in the fourth quarter. In fact, just in October alone, we have either closed, or expect to close, approximately $45 million of construction and CRE loans. That number compares to $40 million of origination of these types of loans in the entire third quarter. On the deposit side, total balances were up $25 million from the prior quarter. The increase for the quarter was primarily attributable to growth in time deposits and non-interest bearing deposits. This was partially offset by decreases in money market, savings and NOW deposits. Our deposit mix continues to shift as customers rotate out of lower-yielding accounts into CDs. However, we feel that this trend has about run its course, and the CDs have reached the tipping point, and our CD balances should start to decline. Within our time deposits, retail deposits increased by $103 million, and brokered CDs decreased by $50 million. The bottom line is that our core deposits increased during the quarter.

During the quarter, net interest margin of 3.7% was negatively impacted by our increased liquidity and lower yields on our loan portfolio, while our cost of interest-bearing liabilities was down slightly. Tom will get into more detail.

As you know, another component of managing our balance sheet liquidity is loan sales. During the quarter, we sold $76 million of residential loans, including agency loans. Institutional demand in the secondary market for our loans remains healthy, reflecting the high quality of the loans we originate and allowing us to realize continued attractive premiums for the loans we sell. While we continued to opportunistically utilize loan sales to diversify our revenue going forward, we may significantly reduce these sales in the fourth quarter and retain the majority of our new loan production on our balance sheet. Loan sales will remain a tool for us going forward to help balance our loan growth with our core deposit gathering, and to provide a supplemental source of revenue, enhancing the compensation of our earnings stream.

Finally, productivity levels remained high as our non-interest expenses were essentially flat quarter over quarter, after taking into account the lower FDIC assessments we benefited from in the third quarter. Focused expense control and strong productivity are always a priority for us.

We remain optimistic in our outlook as we end the year. We are focused on converting our healthy loan pipeline into closed loans, while maintaining solid credit quality and reducing deposit costs. During the fourth quarter, we expect to resume our loan growth and achieved NIM stability, which should translate into continued strong returns for our shareholders.

With that as an overview, let me turn the call over to Tom to provide additional details on our financial performance for the third quarter. Tom?

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

Thank you, Gary. Before I get into the results, I'd like to say a word about Gary. It's been an honor to work with Gary for the past 11-plus years, and to benefit from his extensive banking experience. He's been a source of great guidance and mentorship, and I want to thank him and wish him well in his retirement.

I am equally honored to be chosen by the Board as Sterling's next CEO and Chairman, and will work hard to build on Gary's legacy. I'm excited to take the helm of this great company, and I'm deeply committed to carrying forward our bank's pattern of growth and expansion, while safeguarding the trust and confidence of our customers and shareholders.

In addition, I want to congratulate and welcome Steve Huber in his newly expanded roles. Steve has been an outstanding CFO for our bank, and is the obvious choice to assume the additional roles of CFO and Treasurer for Sterling. We appreciate his contributions since joining Sterling 24 years ago, and we look forward to many more to come.

Now turning to the results for the quarter. As I review our financial results, I will focus just on those items where some additional discussion is warranted. I'll start with net interest margin. Our NIM for the third quarter was 3.7%, down 14 basis points from the second quarter. The decrease was primarily the result of a 15 basis point decline in the average yield on earning assets, partially offset by a 2 basis point decrease in the cost of average interest-bearing liabilities.

The decline in average yield was driven by three main factors. First, our average yield on loans in the second quarter benefited from elevated loan fees, mainly driven by higher prepayment fees. We did not experience the same magnitude of fees in the third quarter, which had an approximate 4 basis point negative impact on the average loan yields.

Second, we were carrying increased liquidity during the quarter, which drove up the percentage of lower yielding, other interest-earning assets, relative to the total average interest-earning assets. This had the effect of reducing our yield on total interest-earning assets by approximately 6 basis points.

Third, we experienced headwinds on our loan yields. Excluding the impact of fees in the amount of 2 basis points, the recent decline in rates drove lower resets on our prime-based loans, and the benefit that we had been experiencing on mainly LIBOR-based mortgage loans. These loans that repriced at higher rates have decreased, given the drop in LIBOR. During the quarter, approximately a $132 million of LIBOR-based mortgage loans repriced at an average of 80 basis points higher, whereas that differential was a positive 126 basis points in the second quarter.

As of September 30, we have approximately $1.1 billion in LIBOR-based loans that will reprice over the next two years. LIBOR declined by approximately 15 basis points in the third quarter and 98 basis points for the first nine months of the year. We expect that prior to pay-offs, approximately $175 million of LIBOR-based loans will reprice in the fourth quarter at a weighted average rate that is approximately 5 basis points lower.

In addition, we have approximately $108 million of prime-based commercial, construction and home equity loans that will reprice if the Fed cuts rates by 25 basis points, as expected this week. This represents approximately 49% of our total prime-based loans, as the remaining 51% are currently at their floor rates. If rates were to drop by an additional 25 basis points, then $59 million more in loans would reprice, resulting in 73% of the total prime-based portfolio being subject to floor rates.

Although we continue to see aggressive loan pricing among some competitors, we have been able to keep the pricing on our new production of residential loans relatively stable. That being said, we are putting new loans on the balance sheet at rates that are lower than the current average loan yield, therefore putting pressure on our average loan yields going forward.

The decrease we saw on our average interest-earning assets during the third quarter was partially offset by a 2 basis point decrease in our average cost of interest-bearing liabilities, which was a function of both rate and mix. Our deposit costs were flat quarter over quarter, as our money market, savings and NOW accounts declined by 11 basis points, but the shift in mix to time deposits, combined with a 2 basis point increase in those costs, essentially offset the benefit of the lower rates on our non-maturity deposits. However, as Gary mentioned, we feel that our CD balances should start to decline, positively impacting the mix going forward.

Despite declining rates, we are still attracting new retail deposits, and we remain mindful of our deposit pricing, as we don't want to lose momentum on our deposit-gathering activities, which will enable us to fund our loan growth when it resumes. We also believe that the absolute level of our cost of funds relative to our competition gives us more flexibility with our deposit pricing going forward. So while the environment for deposit gathering remains competitive, we do expect to see some benefit from lower interest rates in the fourth quarter.

Overall, with respect to our loans and deposits, we will remain diligent in managing the variables that we have control over. All things considered, we would expect NIM to stabilize in the fourth quarter. Our total non-interest income increased $1.1 million from the second quarter to $3.2 million. The increase was primarily attributable to a lower mortgage servicing rights valuation allowance taken this quarter, as compared to the prior quarter, as Gary mentioned.

Our gain on loan sales was slightly lower, due to a different mix of mortgages that were sold. The amount of gain on sale income we generate from quarter to quarter will vary based on a number of factors, including our loan production levels, our success in gathering deposits and our short-term liquidity needs.

Our total non-interest expense decreased $0.3 million from the second quarter to $13.4 million, due mainly to lower FDIC assessments, advertising and marketing expenses, data processing and other expenses, partially offset by higher salaries and employee benefits and professional fees, a portion of which were related to increased regulatory compliance initiatives. We have added personnel to drive and support our loan, deposit and revenue growth, and to increase our corporate backoffice operations team to support that growth. We expect that our operating expenses will increase in the coming quarters, as we hire additional loan officers and business development professionals, and corporate backoffice support. In addition, we expect to incur increased regulatory compliance costs, both ongoing and one-time in nature, in order to comply with our recent agreement with the OCC.

Moving to our asset quality, during the third quarter, we again experienced net recoveries and positive credit metrics in the portfolio. Non-performing assets were essentially flat quarter over quarter, and represent 37 basis points of total assets. We did see an increase in non-performing loans of $3.3 million due to one $3.5 million construction loan that was placed on non-accrual during the quarter. We don't believe that there is any impairment on this loan, and there is more than sufficient collateral value supporting it. We do not see any meaningful losses in any of our past due loans or rated credits.

We had recoveries of $35,000 and no charge-offs during the quarter, and our provision for loan losses was $251,000. Our allowance for loan losses was relatively steady at 72 basis points of total loans at September 30, up 1 basis point from the end of the second quarter.

Finally, we remained active in buying back our shares, both during the third quarter and year-to-date. During the quarter, we repurchased approximately 0.4 million shares at an average price of $9.89 per share. Year-to-date, we have repurchased 2.7 million shares, at an average price of $9.64 per share. If our shares continue to trade at a significant discount to fair value, it is likely that we will remain active on this front. Our share repurchases demonstrate that we remain confident in the long-term prospects for our business, and our commitment to creating shareholder value.

With that, let's open up the call to answer any questions you may have. Operator, we are ready for questions.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Today's first question comes from Aaron Deer of Sandler O'Neill & Partners. Please go ahead.

Aaron Deer -- Sandler O'Neill & Partners -- Analyst

Hi, good afternoon, everyone.

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

Hi Aaron.

Aaron Deer -- Sandler O'Neill & Partners -- Analyst

First I want to wish Gary congratulations on your pending retirement here, and Tom, congratulations on your new role.

Gary Judd -- Chairman and Chief Executive Officer

Thank you, Aaron.

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

Thanks Aaron.

Aaron Deer -- Sandler O'Neill & Partners -- Analyst

I would like to start on the origination volumes, because it seems like they've continued to come down, and I know you highlighted the inventory and affordability concerns, but it's really surprising that I'm seeing a number of other banks that kind of traffic in your same space that seems to be, where their volume seem to be holding up OK. I'm just wondering, you mentioned in the press release that it's partly related to competition. If that's really the driver here, what types of things are you seeing the competition doing that you guys are unwilling to do? Or, are there other factors that I'm just not getting?

Michael Montemayor -- President Commercial and Retail Banking, Chief Lending Officer

Aaron this is Michael Montemayor. I would say that some of the competition has offered longer-term fixed rates on some of the products that we hadn't . We are looking at some of those currently and evaluating whether that's right for us. But they have gone out longer on the maturity and that maybe we weren't competing with.

Aaron Deer -- Sandler O'Neill & Partners -- Analyst

Okay. And then I guess with the decision to start retaining more of your production, I mean, you're obviously leaving yourself a lot of flexibility in it, in terms of your balance sheet management, and I'm sure what the secondary market is offering, but as I had at least anticipated the outlook for your earnings, that was a fairly good-sized contributor heading into next year, like north of 10% of my EPS number. Just trying to understand, if you are retaining that, obviously that's going to weigh in on the near-term earnings, but will help build the balance sheet faster.

What are you kind of prospectively looking for in terms of overall balance sheet growth next year? Obviously, it seems like if you're retaining more, we should do a lot better than what we saw in 2019, or at least year-to-date. I mean, can we get back closer to some of the historical growth stories that you had, or somewhere in between? What are your thoughts on that front?

Michael Montemayor -- President Commercial and Retail Banking, Chief Lending Officer

Aaron, I think it's probably somewhere in between. I think it is really driven by our ability to grow our originations. But obviously, we look at the amount of liquidity we're currently holding, the mix in terms of maturities that we're holding, when we come up to these decisions. We thought it would just be prudent given our current liquidity, our origination volumes, but we're doing a lot of different things to return to a higher growth rate than we've seen in the past quarter or two.

Aaron Deer -- Sandler O'Neill & Partners -- Analyst

Okay. And then on the margin, I guess, three months ago when we spoke, I think you had guided toward moderate margin pressure for the third quarter. It seems like maybe it was a little worse than that, but now you're talking about stabilization here in the fourth quarter. Can you give us some more color behind what's supporting your expectation of stabilization? Have you really started to see your deposit rates come down in a material way, that's going to give you some relief on that front?

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

Absolutely, Aaron. This is Tom. In the third quarter, we decreased our CD rates five times, and our money market rates, or at least a portion of our money market rates, three times, I can share with you that our September NIM was higher than the Q3 average, so we're very encouraged by that, and we honestly think there if the rates cut, or the Fed cuts rates here, we will likely cut deposit rates again and make some further progress.

Aaron Deer -- Sandler O'Neill & Partners -- Analyst

Okay. That's encouraging. Okay. I've got a few other questions, but I'll get back in queue. Thank you.

Operator

Our next question today comes from Matthew Clark of Piper Jaffray. Please go ahead.

Matthew Clark -- Piper Jaffray -- Piper Jaffray

Hey, good afternoon and congrats to you, Gary, Tom and Steve.

Gary Judd -- Chairman and Chief Executive Officer

Thank you.

Matthew Clark -- Piper Jaffray -- Piper Jaffray

Do you happen to have the spot rate on interest-bearing deposit costs at the end of September? Or maybe even the month of September? Either one.

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

We can dig that up for you here, as we're going through it. Any other questions, Matt?

Matthew Clark -- Piper Jaffray -- Piper Jaffray

Sure. Yeah, and then just on the new production this quarter, if you can give us a sense for the weighted average rate on those new loans?

Michael Montemayor -- President Commercial and Retail Banking, Chief Lending Officer

For the third quarter -- Matt, this is Michael -- they were down 15 basis points from the second quarter of 2018.

Matthew Clark -- Piper Jaffray -- Piper Jaffray

Down 15 basis -- sorry, it was hard to hear you, Down 15 to?-

Michael Montemayor -- President Commercial and Retail Banking, Chief Lending Officer

That's right, yeah. They were down to 4.98 in Q3, that was down 15 basis points from Q2 of 5.13.

Matthew Clark -- Piper Jaffray -- Piper Jaffray

Great, thank you.

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

And Matt, I'm sorry, to your earlier question, we have a spot rate of 1.76 on interest-bearing deposits.

Matthew Clark -- Piper Jaffray -- Piper Jaffray

Was that at the end of September or was that the month of September?

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

That's the end of September.

Matthew Clark -- Piper Jaffray -- Piper Jaffray

Thank you. And then just on the excess liquidity that you've accumulated this quarter, I guess, what are your thoughts in terms of redeploying those proceeds and in terms of the timing? I assume they will go into more of the balance sheet growth, you know, retaining more loans.

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

Yeah, I think with further rate cuts on the deposit side, that's one thing we're going to do with the excess liquidity, as well as a different thought on loan sales, as we alluded to. That is a factor. We also, and this kind of goes to Aaron's question as well, we have a pretty significant number of CDs coming up for maturity in November, so we have the opportunity to let some of that higher-cost funding move on and right-size the cash.

Matthew Clark -- Piper Jaffray -- Piper Jaffray

Okay. And then just on the buyback, a little slower this quarter. Just thoughts behind that, and whether or not you might be able to finish the authorization by the end of the year?

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

Yeah, I don't think we'll finish by the end of the year, Matt. I think we're just over halfway of what we've been authorized, and as you acknowledge, it's slowed down. I don't think we'll get through there by the end of the year.

Matthew Clark -- Piper Jaffray -- Piper Jaffray

Okay, thank you.

Operator

And our next question today comes from Anthony Polini of American Capital Partners. Please go ahead.

Anthony Polini -- American Capital Partners -- Analyst

Hey, guys, congratulations.

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

Thank you.

Anthony Polini -- American Capital Partners -- Analyst

I just had a couple of questions. As far as the balance sheet growth and perhaps lower gains going forward, is this something that is kind of definitive? Like, don't model any gains for next quarter? Or, is this something that you expect to, it's a process that you're starting now and we'll see? Outlook for next year, lower gains, more growth, more balance sheet growth, but it doesn't mean zero gains.

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

I think the latter, Anthony. You know, we're in the middle of looking at what to do here in Q4. There is a lean toward not selling much, maybe not selling any. That's not definitive yet. That's really the thought for Q4, to be revisited for 2020, again with the bigger picture thought of, as we've always guided slightly weaning off over time. We'll revisit it for Q1 2020, with potentially a completely different look and try to communicate, as accurately as we can, what our plan and thought process is.

Anthony Polini -- American Capital Partners -- Analyst

Okay. I realize 2020 is way out there, but if we look at what's happening to the margin so far this quarter, and let's say we get two more 25 basis point cuts on the Fed, and the yield curve steepens a little bit over the next few weeks, how does that bode for the margin in 2020?

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

Yeah, I think that we're neutrally positioned pretty well. I think with what you're describing, we'd probably fare pretty well. I'd be optimistic that we can make some headway on the margin with where we are in on our deposit pricing, in particular, relative to competition. The biggest unknown factor would be the one-year LIBOR and the repricing impact on our loans.

Anthony Polini -- American Capital Partners -- Analyst

Okay. Now, when I look at overall expense growth this year, it's going to be something like 7%, 7.5%, obviously much lower than previous years when balance sheet growth was much greater. You have a little bit of regulatory issues here that you're working through. What expansion plans do you have for 2020, and is that 7% growth rate, at this stage, a good ballpark for next year?

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

I believe it is. I think that's fair, and you've nailed the two issues. As the growth has slowed somewhat, the expenses do reflect that, as well as some incremental costs for regulatory compliance. But I think 7.5% is a fair estimate, and every quarter we will try to guide the best we can, at least a quarter out.

Anthony Polini -- American Capital Partners -- Analyst

Okay, great. Thank you, guys.

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

Thank you.

Operator

[Operator Instructions] Today's next question comes from Andrew Tucker of Jennison Associates. Please go ahead.

Andrew Tucker -- Jennison Associates -- Analyst

Yes, good afternoon, guys. Thanks for taking the question. I guess just two questions. First, just quickly, if you could give us more granularity on the one apartment loan, just in terms of whatever metrics you can disclose about LTV or guarantor, just give you the comfort that there is no loss content there, just given the overall size of it.

And then secondly, if you could talk about in the same vein as some of the other questions on balance sheet growth and sales and the like. If you could talk about your efforts to diversify your origination platform. I know, obviously you have a great franchise in the Chinese-American and Chinese National borrower, but we don't know how long that's going to take to resolve the issues today. I know you've been building other platforms and you even have other web portals in other languages. If you could just talk about your efforts to diversify on the origination side as well. Thank you.

Michael Montemayor -- President Commercial and Retail Banking, Chief Lending Officer

This is Michael Montemayor, thanks for the question. I would start with the one problem loan. It's actually a single-family residence in San Francisco. We've had it recently appraised, so we've looked at it consistently over time. We have decided to move on from the relationship due to the time that it has taken this developer to move the asset through its progression to completion. We feel very confident, based on a number of different factors, including like I said, the appraisal that there is a significant amount of equity in the project. While things can be delayed, we do anticipate a potential resolution with that in the coming months, potentially by quarter end, but there are various things that could happen that could delay that. I don't want to get ahead of with it, but we believe that there are opportunities for this developer to move the relationship out of the bank, and for him to continue with this project elsewhere. That's what gives us the confidence that we don't have any pending loss on that large project, in a very high-end area of San Francisco.

As for loan diversification and product diversification, we've been working very diligently on on-boarding new staff over the course of the year for our commercial originations, multifamily development loans, and C&I. We've been able to really expand our pipeline for originations in that regard. The pipeline currently is as high as we've ever seen it. We do have a new hire that was on-boarded just this quarter that's going to continue to expand our staff and that allows us to put that side of the balance sheet, part of the balance sheet.

On the residential side, we've expanded our origination staff to include some ethnic Spanish and Indian and Korean-speaking, to target different market segments. As you mentioned, we even have a website landing page that's dedicated to Spanish-speaking individuals, so we're hopeful that that expansion within some of the products, and the expansion of some of our TIC lending down to the LA market is starting to gather some momentum over the last quarter or so, to increase our volumes and pipelines in those regards.

So, it's a continued effort on all of those fronts. We are beginning to see some progress on several of those fronts.

Andrew Tucker -- Jennison Associates -- Analyst

Great. Okay guys, thanks.

Michael Montemayor -- President Commercial and Retail Banking, Chief Lending Officer

Thank you.

Operator

And our next question is a follow-up from Aaron Deer of Sandler O'Neill & Partners. Please go ahead.

Aaron Deer -- Sandler O'Neill & Partners -- Analyst

Hi, thanks, guys. Actually, Andrew's question nailed kind of one of the areas that I was curious about, in particular the TIC, so thank you for addressing that. And then one other, just kind of clean-up thing, the FDIC credit in the third quarter, I'm guessing it was right around $200,000 but can you give us the exact dollar amount on that, just for modeling purposes?

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

$240,000.

Michael Montemayor -- President Commercial and Retail Banking, Chief Lending Officer

Okay. And the remaining credit on that, I'm guessing, is probably going to last, at least at some point into the new year?

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

Yeah, we believe two more.

Andrew Tucker -- Jennison Associates -- Analyst

Okay. Good stuff. Thanks, guys.

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

Q4 and Q1 of '20.

Andrew Tucker -- Jennison Associates -- Analyst

Terrific. Thank you.

Operator

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to the management team for any final remarks.

Gary Judd -- Chairman and Chief Executive Officer

Thank you very much, everyone for joining us today. We do appreciate the time, and appreciate the opportunity to talk with you. And again, from my personal standpoint, a sincere thank you for all of your support and guidance and insight that I've experienced over the last several years. So, thank you. That will finish the call.

Operator

[Operator Closing Remarks].

Duration: 36 minutes

Call participants:

Tony Rossi

Gary Judd -- Chairman and Chief Executive Officer

Tom Lopp -- President, Chief Operating Officer and Chief Financial Officer

Michael Montemayor -- President Commercial and Retail Banking, Chief Lending Officer

Aaron Deer -- Sandler O'Neill & Partners -- Analyst

Matthew Clark -- Piper Jaffray -- Piper Jaffray

Anthony Polini -- American Capital Partners -- Analyst

Andrew Tucker -- Jennison Associates -- Analyst

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