First Bank (FRBA) Q2 2021 Earnings Call Transcript

Image source: The Motley Fool.

First Bank (FRBA -0.82%)
Q2 2021 Earnings Call
Jul 27, 2021, 9:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day and welcome to the First Bank Second Quarter 2021 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Patrick Ryan, President and CEO. Please go ahead.

Patrick L. Ryan -- President and Chief Executive Officer

Thank you. I'd like to welcome everyone today to First Bank's first [Phonetic] quarter 2021 earnings call. I'm joined today by Andrew Hibshman, our Chief Financial Officer; Peter Cahill, our Chief Lending Officer; and Emilio Cooper, our Chief Deposits Officer. Before we begin, however, Andrew will read the safe harbor statement.

Andrew L. Hibshman -- Executive Vice President and Chief Financial Officer

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.

Patrick L. Ryan -- President and Chief Executive Officer

Thank you, Andrew. I'd like to start off with some high level comments before turning it over to Andrew for some additional information on the financials, as well as Peter and Emilio on lending and deposits.

I think Q2 was another very good quarter for us. We saw the continuation of positive trends from the past several quarters, namely our cost and deposits continued to move lower, our net interest margin held in at a very strong level, and our deposit growth continued to be driven by non-interest bearing deposits.

Furthermore, credit metrics continued to improve, our delinquencies declined, our deferrals were down and we experienced a very low level of net charge-offs during the quarter. We also saw improvement in areas that lagged a bit in Q1.

Our core non-PPP commercial loan growth returned to very healthy levels in the second quarter and our non-interest expense was down from Q1 showing our expense control initiatives were proving successful. We did realize a decline in non-interest income from prior quarters, but the underlying trends related to SBA loans and loan swap fees remained strong, and we expect we'll have some good quarters in the second half of this year in those areas.

PPP did come to an end in Q2, but we had another strong effort in round two generating nearly $108 million in addition of PPP loans in 2021. PPP income of $1.3 million helped during the quarter, and we still have about $4.5 million in PPP fees that have yet to come into earnings. The improved credit trends and solid economic growth during the quarter allowed us to reduce our ALLL, down from 1.24% to 1.118% excluding PPP.

The future direction of the ALLL will be data driven, based on credit quality metrics and underlying economic trends. Our efforts to focus on quality earnings and earnings growth are clearly bearing fruit. Our return on average assets came in at 1.48% and our return on tangible common equity was 15.37%. These are very strong levels of profitability and up significantly from a couple of years ago.

Even with a more normalized provision for loan losses, and the elimination of the impact of PPP loans, we'd still be looking at an estimated ROA between 1.1% and 1.2%, which are very strong levels compared to historical community bank standards.

And as we look forward, profit opportunities still exist. If rates remain low, we can continue to move deposit costs lower, albeit at a slower pace.

Non-interest income should continue to improve, thanks to investments we've made in the SBA lending business. The SBA pipeline is at its highest level that it's even been. Expense control can continue to help drive improved profitability as we continue to scale and grow the business. Loan demand appears to be on the upswing with our pipeline showing the highest number of deals under review at any point in our history. We are excited about our results year-to-date and we think we can have a great second half to the year.

At this time, I'd like to turn it over to Andrew to discuss the financial results in more detail.

Andrew L. Hibshman -- Executive Vice President and Chief Financial Officer

Thanks Pat. For the three months ended June 30, 2021 we earned $8.9 million in net income or $0.45 per diluted share. That compares to $4.1 million or $0.21 per diluted share for the second quarter of 2020 and $9.7 million in net income or $0.49 per diluted share during Q1, 2021. The factors contributing to another strong quarter included a stable net interest margin, controlled non-interest expense and a credit to the provision for loan losses.

We also had a nice bounce back quarter as Pat mentioned in non-PPP loan growth. Excluding PPP loan activity, loans were up $85.7 million in Q2, 2021, compared to a decline in non-PPP loans of approximately $82.1 million in Q1. During Q2, 2021 we originated $5.7 million in new PPP loans as the program came to an end and $59.6 million in PPP loans were forgiven during the current quarter, leaving $139.9 million in PPP loans outstanding at June 30, 2021.

During Q2 we realized $1.3 million of PPP fee income compared to $1.6 million in Q1, 2021. As of June 30, 2021, as Pat mentioned, we still have $4.5 million in deferred PPP loans remaining. The strong non-PPP loan growth during the quarter gets us back on track to meet our loan growth goals for the year and we continue to feel good about the strength of our commercial pipeline which Peter will expand on in his remarks.

We also had a strong deposit growth quarter while continuing to improve our deposit mix. Total deposits grew $65.7 million during Q2, 2021 and non-interest bearing demand deposits now represent 26.3% of total deposits, up from 23.9% at June 30, 2020 and 25.4% at March 31, 2021.

Since the first quarter of 2020 we have seen significant influx of deposit, as is our peer group, we typically use about a 37 bank peer group for internal analysis; however, we have seen an improvement in regards to our deposit mix compared to our peers. As a 3/31/2021 which is the latest data we have, we were the 13th highest of that 37 bank peer group in non-interest bearing balances compared to total deposits. That compares to 19th out of that list as of 3/31/2020.

While we believe we are holding some inflated non-interest bearing deposit balances due to PPP loan activity, we have not seen a significant run-off in these accounts to-date. With the significant amount of liquidity in our markets and our strong pipeline of potential new customers, we feel confident in our ability to generate new, low cost core deposits, which Emilio will expand on in his remarks.

In addition to shifting our deposit mix, we have been able to lower the cost of our interest bearing deposits, which has contributed to a significantly lower cost of deposits. Our cost of deposits was 1.29% during Q1, 2020. It declined to 98 basis points in Q2, 2020 and was down to 30 basis points during Q2, 2021 or a decrease of 68 basis points from last year. We have benefited from successful initiatives implemented by management to grow non-interest bearing deposits, grow lower cost commercial accounts and reduced rates on all of our interest bearing deposit products.

Our tax equivalent net interest margin which bottomed out during the second quarter of 2020 to 3.07% increased to 3.57% for the quarter ended Q2, 2021, benefiting from the lower cost of deposits and minimizing the decline in the average yield on interest earning assets. That's a 50 basis point improvement over the last 12 months.

Compared to the linked prior quarter our margin declined 3 basis points primarily due to lower PPP fee income. In this low rate environment, we also -- our margin also benefited from loan prepayment penalty income. Pre-penalty income totaled $730,000 in Q2, 2021 compared to $674,000 in Q1, 2021 and are $184,000 for the quarter ended June 30, 2020. As a result of our continued strong asset quality profile and improving economic outlook, we recorded a credit to the provision for loan losses of $162,000 compared to a credit to the provision of $1.1 million in first quarter of 2021. That compares to a provision of $3 million in Q2 of last year.

With the credits of the provision during Q2, 2021, our allowance for loan losses, as Pat mentioned, is now down to 1.18% from 1.24% at the previous quarter end that is excluding PPP loans. Supporting our allowance for loan losses for the quarter were strong asset quality metrics. For example, non-performing loans as a percentage of total loans were only 47 basis points at June 30, 2021, improved from 53 basis points at March 31, 2021. Also COVID related deferrals loans were down to only $11.7 million or 57 basis points of total loans, compared to $22.1 million or 1.09% of total loans at March 31, 2021.

With all that our allowance coverage ratio still remains healthy with allowance as a percentage of non-performing loans increasing to 236.95% from 214.74% at March 31, 2021. In the second quarter of 2021, total non-interest income declined to $1.3 million compared to $2.3 million [Phonetic] in Q1, 2021 and $1.9 million for Q2, 2020. The reduction in Q1, 2021 mainly related to loan fees, which is primarily loan swap fees, which decreased $542,000 for the comparable quarter.

There was also a decrease in gains on recovery of acquired loans and gains on sale of loans compared to Q1, 2021. These fees tend to fluctuate based on timing related factors, while non-interest income levels may continue to fluctuate. As Pat mentioned the underlying strength of our non-interest income generation capabilities has significantly improved from prior years, especially related to loan swap income and SBA loan sales, which we expect to generate additional non-interest income throughout the year.

In Q2, 2021 we continued our focus on controlling non-interest expense, which resulted in a 46.66% efficiency ratio, which is 100 basis point improvement compared to 47.66% for Q1, 2021. During the quarter we benefited from the branch and admin space closures that we discussed last quarter, which helped reduce our non-interest expense to $10.2 million in Q2 2021 versus $10.7 million in Q1, 2021.

With commercial loans growth rebounding after a challenging first quarter, the continuing trend of lower cost funding base and effective management of non-interest expense, we are well positioned to continue our strong profitability and exceed our financial goals for 2021.

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

Peter Cahill -- Executive Vice President, Chief Lending Officer

Thanks Andrew. As has been outlined in the earnings release and commented on by both Pat and Andrew, total loans in the second quarter increased nicely by $31.8 million or 1.6% from the end of the first quarter 2021. They also mentioned our participation in PPP. With that program winding down and entering the forgiveness stage, I'll focus my comments here on non-PPP lending topics.

So after a first quarter that was driven by loan prepayments over $100 million alone in our Investor Real-Estate segment, non-PPP loans in the first quarter ended up being down by around $82 million. A quarter ago I talked about a strong loan pipeline and non-PPP loan fundings were in fact very solid in the second quarter.

In Q2 alone we had growth in non-PPP loans of around $85 million, which more than offset the non-PPP loan decline in Q1. A lot of the second quarter growth was due to new investor real estate loans replacing the volume that paid off in the first quarter. Any changes in loan mix overall were minor and are reflected in the financial highlights section of the earnings release. You'll see movement in both commercial and industrial loans, which is where PPP loans are carried, as well as an increase in investor real-estate loans.

Our loan pipeline at June 30 remains strong, even though we're closing and funding loans continually throughout the quarter. As we'd mentioned previously, we apply a probability factor to the principal amount of each loan in our pipeline, which basically makes an assessment of how likely it is that the loan will be approved, accepted by the borrower, and then ultimately documented and funded.

An example would be, you know a loan that's already been through the process and is scheduled to close later this week, will have a lot higher probability factor than will a loan that just went into underwriting yesterday.

So at the end of June after a strong quarter from the standpoint of loan fundings, our pipeline stood at $200 million and that's probability affected, right in line with the March 31 figure I talked about a quarter ago of $209 million. To further put loan pipeline in perspective, the $200 million pipeline we have now is the third highest it's been at month end, over the past three years and the two months when it was higher were March and April of this year. Another comparison is the 12-month average for 2020, which was $154 million, so we are significantly above that number.

Another thing I like about the pipeline and I think Pat pointed it out, is it's just not a bunch of large loans, you know fewer loans that are bigger and they create higher risks. As Pat mentioned, the number of loans in the pipeline at June 30 was the most at any month-end ever for us. We also project loan fundings and payoffs out 60 days from each month-end. With the pipeline just described I think we're in very good shape to meet loan growth plans for the year.

So in my view loan growth projections continue to look good. Organizationally, relationship managers are back out calling on customers, as well as prospective customers. We recently hired what we think is a very solid team leader for our Pennsylvania market, and he's out making calls and will be building out his team over time. Our SBA group, as I think Pat mentioned, has a very strong pipeline and we recently applied for preferred lender status to help move things through the pipeline in that unit. We've also grown our staff in the credit area by adding an experienced underwriter to support one of the Pennsylvania regional locations.

Lastly regarding asset quality, again I think Pat and Andrew covered this. I'll just reiterate that things continue to look very good, all metrics moving in the right direction, delinquencies are minimal, past due loans at the quarter were around 30 basis points, most of which were workout-related loans. So they are being worked on daily and that number is much better than they were even at year-end at March 31.

Differed loans, I think Andrew mentioned, they continue to improve. What's left are centered in lodging and hospitality, as well as transportation, and are from just a few borrowers that we know very well, and the loans are adequately secured. Differed loans at year-end had dropped to $37 million or 1.8% of the portfolio. At the end of Q1 they further declined to $22 million and as I think Andrew mentioned, they are down by about 50% to $11 million, which is roughly 57 basis points relative to the total portfolio.

So to summarize, I think we had an excellent second quarter in lending. We continue to assist many small businesses seeking forgiveness of their PPP loans, asset quality continues to look strong, and our loan pipeline is solid, and we intend to grow the portfolio as we have in the past and hit our loan growth goal for the year.

That's my report for lending in the second quarter. I'll turn it over now to Emilio Cooper to discuss deposits. Emilio?

Emilio Cooper -- Executive Vice President, Chief Deposits Officer

Thanks, Peter. Building upon the momentum from last year in Q1, the team rallied to post a stellar outcome in deposits for Q2. As Pat and Andrew have shared, we made strong forward progress on our key strategic objectives related to the deposit side of our business. We continued to lower the cost of deposits, improve the mix and grow non-interest-bearing balances. What we see happening is the result of great collaboration, partnership, and teamwork between the lending cash management, marketing, and deposit teams.

A core competency of our people is the ability to work together to achieve positive results for our customers and prospects. We get excited about providing tremendous value and unmatched personalized service to our customers and exceeding their expectations of service delivery from the bank. Leveraging the success of the work we did in both rounds of PPP, the team continued to advance the ball and move the needle in winning operating relationships of targeted prospects in head to head matchups against large national and smaller regional and community banks.

Our investment in technology and in our team is paying us back in huge dividends as our acquisition is strong and our deposit pipeline continues to grow. While we are pleased with our performance to date, it is important to note we're not resting on our laurels. We fully expect to see some pullback in balances as customers continue to get back to full productivity and begin to utilize stores of cash stockpiled during the pandemic. Our goal, and it's an ambitious one, is for us to match our rate of acquisition to outpace any potential reductions when this occurs. To accomplish this, the team is focused on outbound prospecting activities supported by targeted and customized marketing.

We also are seeing success in converting referrals from customers and key centers of influences within our markets. We prize word-of-mouth referrals from satisfied customers and take pride in converting them into one business. Market leaders continue to coach and help reinforce the use of the skills we developed in sales training last year.

Key highlights of our deposit performance for the first half of the year and quarter are as follows: noninterest-bearing deposits are up $110 million or 26% for the year and grew by $34 million in the quarter; interest-bearing checking is up $10 million for the year and up $3 million for the quarter; money market and savings are up $64 million for the year and grew by $50 million in the quarter; time deposits are down $50 million for the year and were further reduced by $21 million in the quarter; total deposits have grown nearly $133 million for the year and were up $66 million from Q1.

Our cost of deposits declined to 30 basis points for the quarter, down from 50 basis points from fourth quarter 2020. And when compared to a year ago, this represents a reduction of over 68 basis points from Q2 of last year.

We ended the month of June with the cost of deposits under 27 basis points, and I expect to continue to drive costs lower, though at a slightly slower pace as we progress through the second half of 2021. We achieved a significant milestone for the quarter as total deposit balances grew to exceed the $2 billion mark.

Related to our focus on adjusting our mix, on the last call, we mentioned the milestone we achieved in Q1 as noninterest-bearing balances grew to exceed the percentage of time deposit balances for the first time.

In Q2, we were able to further extend that trend and noninterest-bearing balances now represent over 26% of total deposits and time deposits represent just 23% of total deposits. This is a shift we are tremendously focused on. And as we look out over the next six months, feel confident about our ability to maintain.

In summary, we continue to grow low-cost core deposits led by noninterest-bearing balance growth. We achieved another milestone in the business by exceeding the $2 billion mark in deposits for the first time. Noninterest-bearing balances represent over 26% of deposits and time deposits just 23%. Our performance was solid. Our pipeline is strong, and our momentum is motivating.

All in all, another excellent quarter to build upon our trend of solid low-cost core deposit growth and lower funding costs. I want to end my remarks by congratulating and thanking our team for doing such a tremendous job in delivering a fantastic first half of 2021.

Back to you, Pat.

Patrick L. Ryan -- President and Chief Executive Officer

Thank you, Emilio, and thank you, Peter and Andrew, for the additional information. At this point, I'd like to turn it back to the operator to open it up for question-and-answer.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Bryce Rowe with the Hovde Group. Please go ahead.

Bryce Rowe -- Hovde Group -- Analyst

Thanks. Good morning and appreciate you taking the questions here. Maybe I'll start with Emilio and certainly appreciate all the comments you made around the funding base and the funding profile and was kind of most interested in continuing the momentum that you talked about in terms of the noninterest-bearing versus the time deposit percentages. So I'm kind of curious what you kind of mean by that? Do you have a specific goal in mind in terms of target as a percentage of the portfolio? And is there kind of a floor in terms of where you want that time deposit model to be?

Emilio Cooper -- Executive Vice President, Chief Deposits Officer

Yes. Thank you for the question. Quite frankly, we had set a goal a couple of years ago, and obviously, with what's happened with the pandemic, we've been able to exceed the goal that we have set for our three to five-year time horizon. So our goal is to ensure that noninterest-bearing continues to make up beyond where we are with time deposits. Ideally, I'd like to see that number north of 30%, and that's what we're working hard to drive to.

Patrick L. Ryan -- President and Chief Executive Officer

Emilio, I agree with that, and Bryce, I would just add that sometimes the metrics are set at a certain level. But a lot of times on the deposit side, we tend to focus on where we're lining up relative to our peer group because depending on the interest rate environment and other macro factors, the absolute level within a certain category is difficult to predict, but we're closely tracking how we're performing relative to the peer group. So we make sure that our goals are factoring in what's happening outside as well.

So in the world we're in right now, getting to 30%, I think, is a great goal. But I think we also realize that depending on how things unwind with the Fed and other areas, that 30% year from now may not be a particularly realistic goal. But as long we're moving up in the rankings relative to our peer group, we think we're pushing them all forward in the right direction. So I hope that helps.

Bryce Rowe -- Hovde Group -- Analyst

Yes. That's a good perspective. And then maybe one follow-up on pricing from a deposit perspective. You saw -- you've seen very good declines in the cost of CDS. And curious kind of where you're seeing new CDs renew or reprice in this environment relative to where the average cost is here in the second quarter?

Emilio Cooper -- Executive Vice President, Chief Deposits Officer

Sure. So if you look out over the next half of the year, we've got about $200 million of CDs that will reprice on average about 15 to 20 basis points lower than what they're at today.

Bryce Rowe -- Hovde Group -- Analyst

Okay. And Emilio, what are the kind of retention rates you're seeing with those renewing CDS?

Emilio Cooper -- Executive Vice President, Chief Deposits Officer

Yes. So we're seeing a good retention rate. I mean, our teams have empowerment where there are customers that have full relationships with the bank and who are not pure rate shoppers. They've got empowerment to adjust our standard rate up about 10 basis points. And they're doing a very nice job differentiating to make sure we retain core relationships. And so on average, we're seeing about an 80% retention at the current rates that we're priced at.

Our 12-month CD today is priced at 25 basis points. And so that's in line with most of the competition. We track competitive rates in market. There certainly are some that are higher, but we feel very good about where we are, and we've been doing a nice job retaining in CDS. And then we've seen some movement into savings or money market products as well.

Bryce Rowe -- Hovde Group -- Analyst

Okay. All right, I'll step back in the queue. Appreciate the time.

Patrick L. Ryan -- President and Chief Executive Officer

Thanks, Bryce.

Operator

Our next question comes from Erik Zwick with Boenning and Scattergood. Please go ahead.

Erik Zwick -- Boenning and Scattergood -- Analyst

Good morning, everyone.

Patrick L. Ryan -- President and Chief Executive Officer

Good morning, Erik.

Erik Zwick -- Boenning and Scattergood -- Analyst

Maybe just to continue the line of questioning from Bryce a little bit, but flip it to the other side of the balance sheet and then thinking about the net interest margin. Curious if you could provide any color in terms of kind of where new loan originations are coming for or kind of within the pipeline, what the average yield looks like and how that compares to the existing portfolio and how that might impact the outlook for the core margin going forward?

Peter Cahill -- Executive Vice President, Chief Lending Officer

Andrew, do you want me to take a stab at that?

Andrew L. Hibshman -- Executive Vice President and Chief Financial Officer

Yes. Why don't you talk about the new loan rates, and then I can talk about some of the work we've done on plan with the margin and what we think might be a run rate after some of the PPP stuff falls off.

Peter Cahill -- Executive Vice President, Chief Lending Officer

Okay. Yes, we got a snapshot at month end of all the new loans that got booked during the month and spits out a weighted average there. So it gives us some decent idea of what we've just done. And for June, for example, the number was 3.89%. So that was the weighted average rate on all new loans booked during the month of June. And if you go back throughout the year, it's been kind of fluctuating between 3.40% some months up to 3.97%, but somewhere around that 3.75%, 3.8% range.

Obviously, we're out competing in the market every day and what our competitors are doing impacts where we end up on good assets. But if we see a loan we like and there's hopes of bringing an additional business along with it, i.e., deposits and other loans, we'll compete pretty hard for that business. But as I mentioned for the month of June, to give you some perspective, the number was 3.89%.

Erik Zwick -- Boenning and Scattergood -- Analyst

Great. That's helpful. [Speech Overlap] Go ahead.

Andrew L. Hibshman -- Executive Vice President and Chief Financial Officer

Yes. Just to add a little bit more color on the margin. I mean, as I mentioned in my remarks, we were -- if you match PPP fees and you match prepayment penalties to where we were last quarter, we would have been up 2 basis points compared to last quarter.

So we've seen, obviously, a significant improvement in the margin. I think we're still -- this last quarter, we saw the cost of deposits go down more than the cost of interest-earning assets.

Also, if you kind of normalize some of the PPP activity, we're closer to around a 3.4% margin. It's a little bit of a tricky analysis, right, because you have to take the PPP loans out of your average assets. And you also got to think about how that impacts the liability side.

So it's not an exact science. But obviously, strong prepayment penalties, strong PPP fee income boosted up the margin somewhat. But I think looking at 3.40%, 3.50% is probably -- if you kind of strip out PPP loans and you kind of try and do some analysis, that's probably more of where our core margin was during the quarter. But we did again see kind of improvement in our core margin, although it's smaller than it had been in the previous quarters, but we still saw some improvement in that core margin based on being able to drive down deposit costs faster than we've had to move down some of our interest-earning asset rates.

Erik Zwick -- Boenning and Scattergood -- Analyst

Appreciate the color from both of you guys there. Switching gears to the noninterest expenses. I guess I was impressed with how much of a benefit came through from the branch closures. And just curious if that's all kind of expected to be ongoing? Is this kind of $10.2 million a good run rate to start with? Or if you have any planned growth initiatives or tech investments that you might utilize some of those savings?

Andrew L. Hibshman -- Executive Vice President and Chief Financial Officer

Pat, I'll address it first, and then you can jump in if I miss anything. I think this is a fairly good run rate. I think we'll start seeing expenses creep up a little bit as things get back to normal. As Pat mentioned, we have folks back on the road, more people are getting into the office. But there wasn't really any kind of unusual activity this month as either positive or negative.

As you might remember, we did have a $300,000 write-off of leasehold improvements based on the closure of our admin space last quarter. So last quarter's numbers were a little bit artificially inflated.

So I think this is a good kind of normal run rate. Like I said, I think you will see it creep up a little bit as we move through the rest of the year and into the next year. Obviously, that doesn't take into account any kind of large or unusual items. But this is a fairly normal quarter for us on the expense side, no large unusual items, either positive or negative. But again, I think you will start to see it creep up a little bit, but we should be able to manage that number in and around that $10.5 million range, I would think, going forward.

Patrick L. Ryan -- President and Chief Executive Officer

Yes. I'll add to that, Erik, that from an overall strategic perspective, I mean, our company continues to look for growth opportunities. So our goal on the expense side is to reduce them, but keep the rate of growth in the low single digits and hopefully well below the pace of growth on the revenue side, so that we're generating some operating leverage. And we've done that historically. I think we can continue to do that.

We remain opportunistic when it comes to key opportunities in terms of new hires or new market opportunities. And at the same time, we're constantly looking for areas where we can tighten up and reduce costs, as we pointed out in the last call with closure of a couple of branches and some sizable admin space that had a lease come due that we didn't renew.

So that's kind of our goal going forward is to manage the expenses in a low single-digit growth rate. And I think we can do that.

Erik Zwick -- Boenning and Scattergood -- Analyst

Got it. And then within the prepared remarks, you guys mentioned a couple of times, confidence in being able to meet the loan growth target for the year. I just want to make sure I've still got kind of that range in mind. I think it was kind of 5% to 7% exclusive of the impact of PPP. Is that still kind of what you guys are shooting for?

Patrick L. Ryan -- President and Chief Executive Officer

Yes, I think that number is right. Peter, I don't know if you have the actual number.

Peter Cahill -- Executive Vice President, Chief Lending Officer

Yes. I mean, our overall growth non-PPP was $120 million. So I mean, we're right around $2 billion. What's that, 6%? So that's in that range.

And my view -- I was just going to add, my view is we're still relatively flat through six months, we made up for the hole in Q1. But based upon the pipeline and what we're seeing in the market, we still think we're going to make that growth goal by December.

Erik Zwick -- Boenning and Scattergood -- Analyst

And then last one for me. It looked like maybe the pace of buybacks slowed a little bit in 2Q relative to the first quarter. Just curious about your appetite to continue buying back shares at this point.

Andrew L. Hibshman -- Executive Vice President and Chief Financial Officer

Yes. I mean, we have plans in place where we sort of give guidance to the firms that are managing it for us. So we're not day-to-day managing it and adjusting it. But I think we believe that when our stock was down below book value, it was an obvious buy opportunity.

And even as we move forward, given our prospects and we think our ability to grow book value, I think we'll continue to look for opportunities. But as the stock has moved higher, probably not surprising that the pace slowed a bit in Q2. But we continue to be believers in our own story and the value we can create. So I think we will continue to look for opportunities.

Erik Zwick -- Boenning and Scattergood -- Analyst

Thanks for taking my questions today.

Andrew L. Hibshman -- Executive Vice President and Chief Financial Officer

Thank you, Erik.

Operator

[Operator Instructions] Our next question comes from Nick Cucharale with Piper Sandler. Please go ahead.

Nick Cucharale -- Piper Sandler -- Analyst

Good morning, everyone, how are you doing?

Patrick L. Ryan -- President and Chief Executive Officer

Hey, good morning, Nik.

Nick Cucharale -- Piper Sandler -- Analyst

In loan growth this quarter, were there any particular geographies that were driving the growth? Or was the advance broad based across the footprint?

Peter Cahill -- Executive Vice President, Chief Lending Officer

Broad-based, Nick, really nothing unusual about it. Still, our lending is primarily in our geographic market, and there was nothing I could think of any significance outside of that.

Nick Cucharale -- Piper Sandler -- Analyst

Great. And then just to hit on the noninterest income side from the prepared remarks. It sounds like you're optimistic for the back half. Can you quantify your expectations there, especially on the SBA and swap fee lines, which tend to be historically volatile?

Andrew L. Hibshman -- Executive Vice President and Chief Financial Officer

Yes. I would tell you, Nick, that I think, overall, Q1 was probably a better-than-average quarter in terms of overall noninterest income and Q2 was probably a little bit below average. So every quarter, because the components of the noninterest income can be somewhat lumpy, it's start to predict on a quarter-by-quarter basis. But I think if you kind of look at the first two quarters of this year, as one being a little above, one being a little below, that gives you an overall sense with the understanding that within any specific 90-day window the number can jump around a bit, so.

Operator

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

Patrick L. Ryan -- President and Chief Executive Officer

Well, I would just like to close by thanking everybody for taking their time to listen into the call today. We appreciate the interest in First Bank and the questions received, and we look forward to regrouping with everybody at the end of the third quarter. Thank you very much.

Operator

[Operator Closing Remarks]

Duration: 40 minutes

Call participants:

Patrick L. Ryan -- President and Chief Executive Officer

Andrew L. Hibshman -- Executive Vice President and Chief Financial Officer

Peter Cahill -- Executive Vice President, Chief Lending Officer

Emilio Cooper -- Executive Vice President, Chief Deposits Officer

Bryce Rowe -- Hovde Group -- Analyst

Erik Zwick -- Boenning and Scattergood -- Analyst

Nick Cucharale -- Piper Sandler -- Analyst

More FRBA analysis

All earnings call transcripts